SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                            Annual Report Pursuant to
                       the Securities Exchange Act of 1934


                   For the fiscal year ended December 31, 1996
                          Commission file number 023726


                        GOLDEN EAGLE INTERNATIONAL, INC.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

        Colorado                                               84-1116515
-------------------------                                  ------------------
 (State of incorporation)                                   (I.R.S. Employer
                                                           Identification No.)

         4949 South Syracuse Street, Suite 300, Denver, CO        80237
         --------------------------------------------------     ---------
             (Address of principal executive offices)           (Zip Code)

        Registrant's telephone number, including area code: (303)694-6101
           Securities registered pursuant to Section 12(b) of the Act:

                            Title of each class: None
                                                 ----

                 Name of each exchange on which registered: N/A
                                                            ----

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

                    Title of each class: Common No Par Value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.

                             Yes          No   X
                                 -----       -----

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

                                       1

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State issuer's revenues for its most recent fiscal year:   $0.
Transitional Small Business Disclosure Format:

                                Yes           No    X
                                    -----         -----

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
Registrant as of December 31, 1996 was  $6,522,999  based upon the closing price
of the common stock on December 31, 1996.

Number of outstanding  shares of the  Registrant's no par value common stock, as
of December 31, 1996: 44,517,143*.

*an additional 2,384,500 common shares were issuable at year end.


DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by reference and the
Part of this Form 10-KSB into which the document is incorporated: (1) Any annual
report to  security  holders - None;  (2) Any proxy or  information  statement -
None;  (3)  Any  prospectus  filed  pursuant  to  Rule  424(b)  or (c) under the
Securities Act of 1933 - None.

                                       2

<PAGE>
                                     PART 1
                                     ------


Item 1. Business Development
        --------------------

HISTORY
-------

     Golden Eagle  International,  Inc.,  formerly  Beneficial Capital Financial
Services Corp.  (hereinafter  referred to as the  "Registrant") is a development
stage  company,  incorporated  pursuant  to the laws of the State of Colorado on
July  21,  1988.  Prior  to  the  change  of  control  described  in  subsequent
paragraphs,  which  occurred on November 8, 1994,  the Registrant was engaged in
the business of providing financial services to emerging growth companies in the
United  States,  as well as  development  stage  companies  located in  selected
developing countries,  primarily in Central and South America.  Since the change
in control,  the  Registrant  intends to engage in the  business  of  exploring,
acquiring, developing, and operating gold, silver and other mineral properties.

     The business  activities of Registrant  for the fiscal year ended  December
31, 1996 were limited to negotiating,  evaluating and purchasing the exploration
and mining  rights on 11 mining  concessions  owned by the United  Cangalli Gold
Mining  Cooperative,  Ltd.  ("UCL"),  and in  evaluating  several  other  mining
projects.  Registrant  had no revenues  for the fiscal year ended  December  31,
1996.

     On  February  2,  1995,   Registrant  changed  its  name  to  Golden  Eagle
International, Inc.

REORGANIZATION
--------------

     On January 10, 1994,  Registrant  held a special  shareholders  meeting and
approved a 150-to-1  reverse split  reducing  issued and  outstanding  shares to
1,123,500.

     On November 8, 1994, a change of control of  Registrant  occurred by virtue
of the issuance of previously  authorized  shares,  the  appointment  of two new
directors  to the  incumbent  Board of  Directors,  and the  appointment  of new
Officers of Registrant.

     After the change in control previously  described,  the Board of Directors,
pursuant to the Business  Corporation Act of the State of Colorado,  on December
6, 1994,  authorized and declared a forward five-for-one  (5-for-1) split of the
then 5,123,500  issued and outstanding  Common Stock of the Registrant,  thereby
increasing  issued and outstanding to 25,617,500.  Notwithstanding  such forward
split, the par value and the authorized capital of Registrant remain unchanged.

     On November 8, 1994, Registrant issued 20,000,000 (adjusted post split on a
5-for-1 basis) common restricted shares to Golden Eagle Mineral Holdings,  Inc.,

                                       3

<PAGE>

a  Colorado  corporation  controlled  by  Mary  Erickson,  the  Secretary  and a
Director.  Consideration  for the  issuance of such shares was the delivery of a
Secured  Corporate  Promissory  Note in the amount of  $25,000.00 at ten percent
(10%) interest, due on demand.

     Also upon the change of control previously described, the Registrant agreed
and appointed to its existing Board of Directors consisting of Messrs. Robert A.
Hildebrand and Kenneth P. Bottoms two additional  directors consisting of Ronald
A. Knittle and Mary A. Erickson.  Ronald A. Knittle was appointed  President and
Chief Executive Officer and Mary A. Erickson was Secretary and Treasurer. Robert
A.  Hildebrand  and  Kenneth  Bottoms  resigned as  directors  in 1994 and 1995,
respectively.  Ronald A. Knittle resigned as President,  CEO and director in May
1996.  Ronald  Sparkman was appointed  interim  President in May 1996 and served
until July 4, 1996.  Mary A. Erickson,  then Secretary of the  corporation,  was
appointed  as  President  on July 4,  1996 and  served  in that  capacity  until
February 14, 1997. Terry C. Turner was appointed as the Company's  President and
a director on February 14, 1997. Ms.  Erickson has resumed  serving as Corporate
Secretary and also continues as a director.

     Other  than as  specified  herein,  there  were no  other  arrangements  or
understandings  among the members of both the former and new  control  group and
their  associates  with respect to election of directors or other matters except
that Registrant intends to convene a special meeting of the shareholders for the
purposes of electing a new slate of  directors,  and to approve other matters as
deemed necessary, essential or appropriate.


(b) BUSINESS OF ISSUER

General Information
-------------------

Former Business
---------------

     From inception to November 1994,  Registrant was engaged in the business of
providing  financial services to emerging growth companies in the United States,
and also  contemplated  such  activities for companies in developing  countries.
Registrant's  activities during this period of time were insignificant in nature
and amount.  Registrant's  total revenues from such activities  amounted to only
Twenty Two Thousand One Hundred  Sixteen  Dollars  ($22,116.00)  while incurring
operating  losses of Two Hundred  Sixty Three  Thousand  Eight Hundred Fifty Six
Dollars ($263,856.00) for the same. (See "Financial Statements.")

Business Activities in Mining
-----------------------------

     Registrant's  management acquired control on November 8, 1994. Management's
activities were primarily devoted to organizational matters following the change
in control and the identification of precious metal and mineral properties which
it deemed suitable for evaluation and possible acquisition.

                                       4

<PAGE>


Plan of Operation
-----------------

     Registrant's  plan of operation is to engage in the business of evaluating,
acquiring,   developing,   owning,   and  operating   gold,   silver  and  other
mineral-producing properties.  Registrant will also, in accordance with industry
custom and when the opportunity is available, enter into partnerships,  business
associations and other arrangements to directly or indirectly,  jointly and with
others,  engage  in  similar  activities  with a view  toward  becoming  a fully
operating mineral exploration, development, mining and marketing company.

     During the fiscal year ended  December 31, 1994,  Registrant  commenced its
initial  activities  toward this objective.  Such  activities  were  exclusively
concentrated on negotiating  the acquisition of mineral  properties or interests
in mineral  properties  which had the  potential of commercial  development  and
production,  in  management's  opinion,  and were  deemed  worthy  of  continued
corporate activities to acquire such properties.

     One of Registrant's affiliates entered into a Letter of Intent with Mineral
Mountain Mining Co. ("MMMC") to acquire a 50% equity interest in MMMC,  which is
the owner of the Silver Bar Mine, located near Apache Junction, Arizona. In that
connection,  in reliance upon  representations  made, and in anticipation of the
closing of a  definitive  agreement  in the first  quarter  of 1995,  Registrant
advanced  substantial  funds  to  MMMC.   Registrant  commenced  preparation  of
documentation  and continued  negotiations of technical  matters relating to the
acquisition during late 1994 and early 1995.

     During this time, Registrant became aware of undisclosed  unfavorable facts
concerning the proposed acquisition which it considered material to its decision
and which had induced it to enter into the Agreement. MMMC refused to enter into
a definitive agreement. Registrant, in view of such facts, declined to close the
transaction. Consequently, no acquisition of the property was made.

     As of the date of this report,  Registrant has abandoned efforts to acquire
the  property.  Registrant  has filed a lawsuit in  Arizona  to  recover  monies
advanced toward acquisition of this property. (See Item 3.)

     In addition,  Registrant  entered into  negotiations  to acquire a precious
metals property known as the Long Point Placer Mining claims,  Parcels I and II,
located in Siskiyou County,  California.  Registrant  proposed to acquire all of
the assets  and assume  certain of the  liabilities  of Cash Plus  Mining,  L.P.
("Cash Plus"), a Missouri Limited Partnership which owned the property. An Asset
Purchase Agreement dated December 28, 1994 between Registrant's affiliate,  Cash
Plus and F.R.S.,  Inc., Cash Plus' corporate  general  partner,  and all limited

                                       5

<PAGE>

partners,  was  signed by  one of  Registrant's  affiliates  and  the  corporate
general  partner  of Cash  Plus on  December  31,  1994.  Cash  Plus  thereafter
undertook  procedures to have the Agreement  approved by its limited partners on
or about January 28, 1995.

     During  November  1994,  Registrant  negotiated  for the  acquisition  of a
precious  metals  property  known as the Evergreen  Nos. 1 through 12 unpatented
lode mining  claims  located in Siskiyou  County,  California.  The property was
owned by Mark 1 Limited, a Delaware corporation.

     Mark I Limited on December 4, 1994,  confirmed to Registrant  that a Letter
of Intent dated  November 29, 1994 was  acceptable  and the  preparation  of the
definitive agreement commenced.

     These  transactions  have  all been  abandoned  due to  unsatisfactory  due
diligence results.


History of Prospective Mining Property in Bolivia
-------------------------------------------------

     More  than ten  thousand  years  ago,  an  ancient  river  flowed  from the
Cordillera  Real  Mountains  of the Andes to the  tropical  jungle area where it
converged with two other rivers.  This ancient river, known today as the Tipuani
River,  carried  with it deposits of gold which were  disbursed in its bed along
its length, from the head of the river to the convergence. As time passed, these
deposits  were  covered by other  alluvial  deposits  as the valley  filled with
material washed away from the surrounding  mountains with each season's flooding
and erosion. The Tipuani River,  containing significant amounts of alluvial gold
deposits,  was for centuries one of the Incan Empire's sources of gold. Tipuani,
Bolivia is located just 2 km from Cangalli, Bolivia and the site of Registrant's
current exploration operations.

     In 1562,  Juan de Roda arrived at Roman Playa near Tipuani,  Bolivia.  This
was the first colonial  expedition to the Tipuani River.  Mining reached Chuqini
in 1580 and  Tipuani in 1602.  The Tipuani  River was found to hold  significant
deposits of gold from the surface  down to the  ancient  riverbed,  known as the
Paleocanal, up to 1,200 ft. below the surface.

     Early in the 19th  century the first  attempts at  large-scale  mining were
made by Ildefonso Villamil.  According to historical reports,  Villamil produced
more than 150,000  ounces of gold from several areas  upstream from Tipuani from
1813 to 1833 and again from 1850 to 1866.  The first  attempts at  mechanization
were made with the use of water pumps in 1840 by J. Wheathey, an Irishman.

     Heavy  equipment  was not  introduced in the area until near the end of the
19th century.  In 1898, the Incahuira  Dredging Company brought  machinery and a
dredge to the nearby Kaka River.  It was the  "Compania  Aramayo de Minas" which

                                       6

<PAGE>

conducted  major  mining  activities  between  1936 and 1949,  putting  the main
emphasis on the exploration and mining of the Old Channel of the Paleotipuani.
Since 1952 (following the  nationalization of the mines and the forced return of
all gold  concessions  held by Aramayo to the State on  November 7 of that year)
and until  1961,  the gold  placers of the  Tipuani  Valley were mined by groups
controlled  by the  National  Mining Bank,  which  bought the gold.  In 1961 the
government  annulled  all  previous  licenses  and  recognized  the gold  mining
cooperatives,  which in 1963  formed the  "Regional  Federation  of  Gold-mining
Cooperatives", which are currently mining the placer deposits.


Current Status of Company Interests
-----------------------------------

     In  October  1995  the  Registrant   began   reviewing   potential   mining
opportunities  in Bolivia.  A site visit to the Tipuani River Basin  followed in
December,   with  representatives  of  the  Registrant  traveling  to  Cangalli,
approximately  2 km downriver  from Tipuani.  Included in the  expedition was an
independent  geologist  hired to evaluate the  Cangalli  area.  This  consultant
reported that the area merited further study.

     Based on this favorable report,  along with other  pre-existing  reports on
the Tipuani area, the Registrant  formed a majority-owned  Bolivian  subsidiary,
Golden Eagle Bolivia Mining S.A.  ("GEBM") in January 1996, of which  Registrant
initially  owned 74% and later  acquired  an  additional  19% from its  Bolivian
partners, for a total of 93%.

     On January 25, 1996,  GEBM entered into an agreement  with United  Cangalli
Gold Mining Cooperative, Ltd. ("UCL"), a Bolivian cooperative, for the rights to
explore and mine an area  consisting of 11 concessions  along the Tipuani River,
covering an area of 2,004  hectares  (4,810 acres) for a 25- year period with an
option for an  additional  25 years.  While  binding  according to the Company's
counsel in Bolivia,  this contract was not  "protocolized"  (recorded)  with the
Bolivian Notary of Mines.

     Registrant's  directors  elected  to  form  a new  majority-owned  Bolivian
subsidiary,  Eagle Mining of Bolivia,  Ltd. ("EMB"), in October 1996 to hold the
concession interests. Registrant owns 84% of EMB; Registrant's former president,
Mary A. Erickson, owns 3%; and Rene Velasquez owns 13%. EMB subsequently assumed
GEBM's contract rights and proceeded to renegotiate the contract with UCL, which
was  protocolized  with the Notary of Mines in La Paz on November 11, 1996.  The
new contract  provides for a gross royalty interest of 18% in gold production to
UCL and commits EMB to complete first-phase exploration and open one work front,
in addition to the Cangalli  shaft,  by April 20, 1997;  to open two  additional
work fronts by  December  6, 1997;  and to invest a minimum of $3 million in the
project.  Management is working to meet its contractual commitments of April 20,
1997 and December 6, 1997, as well as the $3 million commitment.

                                       7

<PAGE>

     In addition,  EMB is obligated to provide to UCL $200,000 for  reduction of
UCL's prior obligations: $100,000 in the form of a loan and $100,000 in the form
of a grant. EMB has loaned the entire $100,000  obligation to UCL as of December
31, 1996, with terms which allow EMB to control the repayment of the loan out of
production on a "reasonable" basis which will not unduly impact UCL's percentage
of  participation.  As of March 31, 1997,  EMB had also met more than 16% of its
grant obligation to UCL, and had confirmed the finalization of the grant payment
by the end of the 2nd  quarter  of  1997,  which  term  had  been  confirmed  as
acceptable by UCL.

     As of March 28,  1997,  GEBM  continues  to be the operator of the Cangalli
mining prospect; however, EMB will assume operations in the Second Quarter 1997.

     Giovanni  Viscarra,  a geologist  with  regional  experience in the Tipuani
River Valley of Bolivia,  was hired by GEBM in January  1996 as chief  geologist
and mine superintendent. In March 1996, Rene Velasquez joined GEBM as President.
Velasquez is an economist who has served as head of collections for the Bolivian
Internal  Revenue  Service,  as well as having been in charge of the development
corporation  for the  State of La Paz  ("CORDEPAZ").  Velasquez  has run his own
construction/mining  company,  which  worked  extensively  in the Tipuani  River
Basin. Both Viscarra and Velasquez assumed their respective positions in the new
Bolivian  subsidiary,  Eagle Mining of Bolivia,  Ltd.;  however,  Viscarra is on
leave of absence as of the date of this filing due to health reasons.

     Hereinafter,   "Registrant"  shall  signify  Registrant  and  its  Bolivian
subsidiaries,  Golden Eagle  Bolivia  Mining,  S.A. and Eagle Mining of Bolivia,
Ltd., unless either of these subsidiaries is referred to specifically.

     Principal products or services and their markets.  Registrant has begun its
operations as a minerals and metals exploration company; however, Registrant has
not yet  commenced  operation of its  proposed  business  activities  as a gold,
silver and other minerals mining and marketing company. When such activities are
commenced, its principal products obviously will be such minerals and metals.

     Distribution methods of the products or services. When, if ever, Registrant
is successful in commencing and maintaining  operations in its proposed business
activities,  it will utilize distribution methods which are customarily employed
within the mining  industry.  Registrant does not  contemplate  that it would be
employing  any  distribution  methods  which would be  considered  innovative or
unusual.  The Registrant has established,  through its legal counsel in Bolivia,
buyers  for  any  precious  metals  or  minerals  that it may be  successful  in
producing from its properties in Bolivia.  The Registrant has not yet determined
if it will sell these  precious  metals or minerals to the local buyers or if it
will ship to other worldwide locations for sale to various well-known refiners.

     Status of any publicly announced new product or service. Not applicable.

                                       8

<PAGE>


     Competition,   business   conditions  and  the  small   business   issuer's
competitive  position in the industry and methods of competition.  Registrant is
an  insignificant  participant  among the firms which engage in the same line of
business  (mining) which Registrant has chosen as its principal area of business
concentration. Many of Registrant's competitors are companies with significantly
greater  financial and personnel  resources  and  technical  expertise  than the
Registrant.  The combined  financial  resources  and  management  experience  of
Registrant's  officers  and  directors  are  very  limited  and  Registrant  has
encountered,   and  will   continue  to   encounter,   substantial   competitive
disadvantages compared to Registrant's competitors.

     Sources  and  availability  of raw  materials  and the  names of  principal
suppliers. As of December 31, 1996, the Company required no raw materials. If it
ever conducts mining  operations,  in Bolivia or elsewhere,  it will need mining
equipment  and  supplies.  Such  items  are  often  in short  supply  and may be
unavailable.  In addition,  high import tariffs may make mining equipment either
very expensive or of restricted availability due to import difficulties.

     Dependence  on one or a few major  customers.  The  Registrant is currently
dependent upon one contract with United Cangalli Gold Mining  Cooperative,  Ltd.
(UCL) to explore,  develop, and mine 11 concessions along the Tipuani River in
Bolivia,  and  market  precious  metals  and  minerals  which  may  be  produced
therefrom. The Registrant has not commenced its business activities on any other
property nor can there be any assurances that there will be any other properties
in the future.

     Patents, trademarks, licenses, franchises,  concessions, royalty agreements
or labor contracts,  including duration.  Registrant, through its majority-owned
subsidiary,  Eagle  Mining of  Bolivia,  Ltd.  ("EMB"),  has  contracted  for 11
concessions  along the  Tipuani  River to  explore,  develop,  mine,  and market
precious  metals and minerals that it may be able to extract from the properties
involved in the concessions.  In the same contract the  Registrant's  subsidiary
has granted an 18% royalty to UCL in exchange for the rights to the concessions.
The duration of the contract between the Registrant's  subsidiary and UCL is for
25 years, with an automatic  extension for another 25 years. The subsidiary made
a commitment to complete  first-phase  exploration  and open one work front,  in
addition to the Cangalli  shaft,  by April 20, 1997; to open two additional work
fronts  by  December  6,  1997;  and to invest a minimum  of $3  million  in the
project.  Registrant is working to meet the contractual commitments of April 20,
1997 and December 6, 1997, as well as the $3 million commitment.

     In addition,  EMB is obligated to provide to UCL $200,000 for  reduction of
UCL's prior obligations: $100,000 in the form of a loan and $100,000 in the form
of a grant. EMB has loaned the entire $100,000  obligation to UCL as of December
31, 1996, with terms which allow EMB to control the repayment of the loan out of
production on a "reasonable" basis which will not unduly impact UCL's percentage
of  participation.  As of March 31, 1997,  EMB had also met more than 16% of its
grant obligation to UCL, and had confirmed the finalization of the grant payment
by the end of the 2nd  quarter  of  1997,  which  term  had  been  confirmed  as
acceptable by UCL.

                                       9

<PAGE>

     Need for any  government  approval of principal  products or  services.  If
government  approval  is  necessary  and the small  business  issuer has not yet
received that approval, discuss the status of the approval within the government
approval process.  Neither the Company nor either of its operating subsidiaries,
Golden  Eagle  Bolivia  Mining,  S.A.  or Eagle  Mining of  Bolivia,  Ltd.,  are
obligated to receive  approval of their  principal  products or  services.  Some
activities  in  which  the  Company's   subsidiaries   are  engaged  do  require
permitting,  such as the harvesting of lumber for mine timbers and the transport
of  explosives.  However,  UCL has had those  permits  for many  years,  and the
Company's  subsidiaries  are allowed to  piggy-back  onto those  permits and any
others which are occasionally required for moving heavy equipment, etc.

     Effect of existing or probable  governmental  regulations  on the business.
Registrant  intends to  concentrate  its  immediate  efforts in  developing  its
Bolivian mining prospect and obtaining all necessary governmental approvals. The
effect  of such  governmental  regulations  on its  business  should  not  cause
Registrant to incur any delays in commencing  operations but may directly affect
its ability to continue operations once commenced. It is impossible at this time
to  determine  within  any  reasonable  degree of  certainty  the effect of such
regulations on its proposed business.

     Research and development  activities.  Registrant does not intend to engage
in  any  research  and  development  activities,   other  than  those  regularly
associated with the exploration, evaluation and mining of minerals and metals.
         

     Costs  and  effects  of  compliance  with  environmental  laws.  Registrant
proposes to engage in an industry  which is  historically  subject to assertive,
time consuming,  and expensive  compliance with  environmental law. There is and
can be no assurance  that  Registrant,  with its small  financial  resources and
limited  personnel,  will be able to comply with such environmental laws and yet
operate in a commercially profitable manner.

     Number of total employees and number of full-time employees.  Registrant at
year end employed two (2) full-time  persons in its offices in Denver,  Colorado
consisting  of its  then-president,  Mary A.  Erickson,  and one  administrative
assistant.  However, by February 14, 1997, Registrant's new President,  Terry C.
Turner,  resided in La Paz,  Bolivia,  and directed the  Company's  affairs from
there. In addition, Registrant had at year end several consultants and advisors,
including Guido Paravicini,  M.A., a mining engineer and geophysicist working on
a full-scope evaluation of the Cangalli properties; and Ronald L. Atwood, Ph.D.,
former chief  metallurgist  for Newmont Gold,  who is  evaluating  the Company's
metallurgical  issues on the Cangalli  property.  Other consultants and advisors
provide expertise in disciplines directly related to mining activities.

                                       10

<PAGE>

     Also at year end,  Registrant's  majority-owned  subsidiary,  Golden  Eagle
Bolivia  Mining,  S.A.,  employed 96 personnel  including  its  president,  Rene
Velasquez;  two purchasing  agents;  one  secretary;  two  accountants;  and one
administrative  assistant in the administrative  offices in La Paz, Bolivia. The
additional  personnel  were  employed in the mine offices and shops in Cangalli,
Bolivia,  and consisted of one mining engineer/mine  supervisor,  one geologist,
two mechanical engineers,  one mine accountant,  two warehouse supervisors,  one
personnel  manager,  three shift  foremen,  and 78 miners,  including  drillers,
muckers, hoist operators, and other essential support personnel.


Item 2.  Property
         --------

     The Registrant's executive offices in the United States are located at 4949
South Syracuse, Suite 300, Denver, Colorado 80237. These offices are leased from
a  non-affiliated  third party. At year end,  Registrant  utilized,  at no cost,
computer,  fax machine and other  general  office  furnishings  owned by Mary A.
Erickson and located on the premises.  Registrant has since  purchased  computer
equipment, a fax machine and a copier.

     As of February 14, 1997,  Registrant also leases offices in La Paz, Bolivia
located  at  Avenida  Arce,  Plaza  Isabel La  Catolica,  Edificio  Torre de las
Americas,  Piso 9, Of. 902, and utilizes,  at no cost, computer  equipment,  fax
machine and general office furnishings owned by Terry C. Turner.

     Registrant owns the mining equipment acquired in the San Silvestre purchase
initiated in September 1996 and  consummated  in February 1997.  Included in the
equipment  purchase  were an  electric  generating  set,  two  compressors,  jaw
crusher,  150 ton-per-hour  ball mill,  thickener,  classifier,  spiral recovery
equipment, centrifugal bowls, vibrating tables, mine rail, ore cars, mine hoist,
lighting system,  ventilators,  ventilator sleeve, two welders,  radio sets with
receiver and transmitter, fuel tanks, support housings, and various supplies and
small equipment.

     Registrant's   majority-owned   subsidiary,   GEBM,  owns  one  new  Toyota
Landcruiser  purchased  during  1996,  one mine  pickup,  and several  pieces of
recovery equipment.  GEBM also leases office space located at Avenide Arce 2131,
Edificio Illampu 1er Mezz in La Paz,  Bolivia,  and owns computer,  fax and copy
equipment.  In  addition,  GEBM leases  offices and shops  located in  Cangalli,
Bolivia.


Item 3. Legal Proceedings
        -----------------

     At year end there were no actual or threatened  legal  proceedings  against
     Registrant, any Officer, Director or affiliate, except as follows:

                                       11

<PAGE>


     There is an active civil  investigation  of the company and its officers by
     the Denver Regional  Office of the Securities and Exchange  Commission into
     violations of the  Securities  Act of 1933 and  Securities  Exchange Act of
     1934.  There is no  disposition  at this  date but it could  result  in SEC
     actions  against  the  Company  and its  officers,  directors,  or  control
     shareholders  for  injunctive  relief and  penalties.  In February 1997 the
     Company  proposed an offer of settlement  following  negotiations  with the
     local  regional  office  of the SEC in  Denver,  Colorado,  which  offer is
     pending approval with the Securities and Exchange Commission in Washington,
     DC.

     The Company is Plaintiff in Case No.  96-043428  in Superior  Court,  Pinal
     County, Arizona. The Company sued Mineral Mountain Mining Co. and James and
     Diane Brown alleging fraud and  misrepresentations and for refund of monies
     paid and benefits received. A jury trial has been set for July 8, 1997. The
     future outcome cannot be predicted at this time.


     During 1995,  the Company  engaged a person it believed was an  independent
     mining  engineer  as a  consultant.  In 1996,  the  consultant  claimed the
     Company  liable for unpaid  services and  expenses  totaling  $78,440.  The
     Company   believes  that  the  consultant  did  not  provide  the  services
     contracted, usurped business opportunities,  and tortiously interfered with
     the Company.  No litigation  has been filed to date between the parties and
     the  Company is still  assessing  its  position.  An  evaluation  as to the
     outcome of this matter cannot be made at this time.

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

     None


                                       12


<PAGE>
                                     PART II
                                     -------


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

     The following table shows the high and low bid of Registrant's Common Stock
during the last four years.

1993                                Low Bid                            High Bid
--------------------------------------------------------------------------------

First Quarter                     did not trade
Second Quarter
Third Quarter
Fourth Quarter

1994                                Low Bid                            High Bid
--------------------------------------------------------------------------------

First Quarter                     did not trade
Second Quarter                    did not trade
Third Quarter                     did not trade
Fourth Quarter                      $2.50                               $6.25

1995                                Low Bid                            High Bid
--------------------------------------------------------------------------------

First Quarter                       $.125                               $5.50
Second Quarter                      $.1875                              $.75
Third Quarter                       $.21875                             $.53125
Fourth Quarter                      $.125                               $.43275

1996                                Low Bid                            High Bid
--------------------------------------------------------------------------------

First Quarter                       $.21875                             $.75
Second Quarter                      $.25                                $.96875
Third Quarter                       $.0625                              $.5625
Fourth Quarter                      $.1875                              $.59375


(b) Holders

     As of  December  31,  1996,  there were 566  shareholders  of record of the
Registrant's Common Stock.

     Registrant  is  authorized  to issue Eight  Hundred  Million  (800,000,000)
Common Shares par value $0.0001. In addition,  Registrant is authorized to issue
Ten  Million  (10,000,000)  Preferred  Shares  par  value  $0.01.  No  shares of
Preferred Stock have been issued.

                                       13

<PAGE>


     The  Registrant  has never paid a cash dividend on its Common Stock and has
no present intention to declare or pay cash dividends on the Common Stock in the
foreseeable  future.  The Registrant intends to retain any earnings which it may
realize in the foreseeable  future to finance its operations.  Future dividends,
if any, will depend on earnings, financing requirements and other factors.


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

         Changes in Financial Condition
         ------------------------------

     At year end 1996 the  Company's  assets  increased to $824,760  compared to
$79,031 at the end of 1995.  The increase was a result of  operations in Bolivia
and  expenditures  for the exploration  and development of the  Tipuani/Cangalli
prospect.

     Liabilities  also  increased  significantly  as a result of  operations  in
Bolivia. At year end 1996, liabilities were $1,666,870, an increase of 223% over
1995 year end liabilities of $515,271.

     Stockholders'  deficit at year end 1996 was ($842,110),  an increase of 93%
over the 1995 stockholders' deficit of ($436,240).  The Company, in other words,
continued to increase the  stockholders'  deficit.  This was  exacerbated by the
Company's  failure  to  generate  any  revenues  from  any  source,  in spite of
continued expenses and mining prospect investment and exploration costs.

     From the aspect of whether  the Company can  continue  toward its  business
goal of commencing production from its Cangalli mining prospect,  the Company is
critically deficient in needed capital. Without a capital infusion or loans or a
combination  thereof, it is unlikely that the Company can carry out its business
goals regarding the mine operations on the Bolivian Cangalli prospect.

     Subsequent  to December  31,  1996 the  Company  received a bridge loan for
$240,000 from a Texas bank, as well as a loan  commitment from the same bank for
$1,000,000  pursuant  to a  revolving  line of credit  which  would  retire  the
$240,000 bridge loan.

     The  Company  also  received   additional  funding  through  private  stock
purchases.  Management  believes  that  these  cash  infusions  will  contribute
substantially  to  satisfying  a portion  of the  needed  capital.  However,  no
guarantee  can be made that the loan  amount,  nor the  capital  raised  through
private placements, will entirely satisfy the Company's capital needs.

                                       14

<PAGE>

     Comparison of Results of Operation for the Fiscal Years Ended  December 31,
     1996 and 1995
     ---------------------------------------------------------------------------

     The Company had no operating  revenues in either 1996 or 1995.  The Company
had gains on sales of  marketable  securities  of  $19,167 in 1996 and $9,666 in
1995. These are non-recurring gains and would not be considered regular income.

     The  Company  incurred  operating  expenses,  all of which are  general and
administrative in nature, totaling $1,982,768 in 1996 as compared to $815,507 in
1995. As a result of having no operating income,  the Company incurred operating
losses of ($1,982,768) in 1996 and ($815,507) in 1995.

     Salaries and consulting  fees decreased in 1996 to $191,635 from a total of
$317,938 in 1995. This, however, excludes common stock issued to consultants and
others  in 1996  valued  at  $1,230,842  compared  to  $171,983  in 1995.  These
continuing  costs  are  the  result  of  the  use  of  consultants   related  to
negotiations and  investigations  concerning the Bolivian mining prospect.  This
trend will continue in 1997.

     Travel  expenses in 1996 were about the same as 1995,  $71,649 and $69,429,
respectively;  they are  expected to remain at  approximately  the same level in
1997.

     Office expenses,  including telephone, were $101,984 in 1996 and $31,714 in
1995. This may increase again in 1997 due to expanded operations.

     Legal   expenses   in  1996   increased   significantly   due  to  the  SEC
investigation,  Arizona litigation effort,  negotiation of the agreement for the
Bolivian mining  prospect,  and efforts to update the corporate  records and SEC
filings. The expense totaled $229,037 in 1996 as compared to $51,284 in 1995.

     Likewise,   accounting  and  other  professional   expenses  in  1996  were
materially  larger due to efforts  required  to bring the  Company's  accounting
current. 1996 expense for accounting totaled $34,373,  while 1995 accounting and
other  professional  expenses  were  $10,754.  It should be expected that future
legal and accounting expenses will continue in amounts comparable to 1996.

     The  per-share  loss  amounted  to ($.05) in 1996 as  compared to ($.03) in
1995.

     Capital    expenditures    for    property    and    equipment    increased
disproportionately  in 1996 to $741,696 as the Company funded  exploration costs
and investment on the Bolivian  mining  prospect.  By  comparison,  1995 results
showed capital expenditures of only $34,516.

     The  Company  incurred  interest  expenses in 1996 of $79,141 as opposed to
1995  interest  of  $9,289.  The  increased  dollar  amount  of loans led to the

                                       15

<PAGE>

eight-fold  interest  category  increase.  This  increased  interest  cost  will
continue, and probably double, in the coming year with projected borrowings.

     The Company lost $16,000 in 1996 on the sale of equipment,  but had no such
loss  in  1995.   The  Company   hopes  to  avoid  future  losses  on  equipment
purchases/sales.

     The  Company  had a net loss for 1996 of  ($2,058,742)  compared to its net
loss in 1995 of ($908,130). The Company anticipates that the trend of net losses
will  continue in 1997 as it continues to incur major  expenses in attempting to
start up  mining of its  Bolivian  prospect  without  initially  generating  any
significant revenues from mining.

     Comparison of Results of Operation for the Fiscal Years Ended  December 31,
     1995 and 1994
     ---------------------------------------------------------------------------

     During the fiscal year ended December 31, 1994,  the Registrant  realized a
net loss on  operations  of $119,354  compared  to $908,130  for the fiscal year
ended  December 31, 1995. In 1994,  $899 in interest  income was generated  from
business loans and in 1995 no revenue was generated.

     Operating  expenses  increased during 1995 to $815,507  compared to 1994 at
$114,212 as a result of the increase in administrative,  travel and professional
costs involved in negotiating  and evaluating  potential  mining  prospects.  In
addition,  only in 1995 did the Company  begin  activities  in mineral  prospect
analysis and evaluation and incurred greatly  increased  expenses as a result of
its attempts to negotiate,  evaluate and acquire  mineral  prospects.  It had to
write off  $78,000 in  expenditures  for the Mineral  Mountain/Arizona  proposed
acquisition.  In 1995,  the Company issued or agreed to issue stock for services
of $171,983 in relation to  operations  and attempts to find mining  properties.
Accounts payable increased by $215,516 related to ongoing  operations.  It wrote
off a loan to an investment  advisor of $15,000.  It received  advances or loans
from officers and related  parties of $297,846 and repaid $168,811 of such loans
or advances.  It issued  stock,  and agreed to issue stock  related to financing
activities  that the company  valued at $391,693.  The Company  issued notes for
funds advanced of $110,422.


(b) Liquidity and Capital Resources

     At year end 1996, the Company had cash of $11,741 as compared to $32,979 in
1995.  Its total  current  assets  were  $51,584 at year end 1996 and $42,645 in
1995.  The  Company  investment  in  exploration  and  development  costs of its
Bolivian  mining  prospect at 1996 year end,  and mining and related  equipment,
totaled  $762,870  whereas in 1995 the Company had  property  and  equipment  of
$34,516.

                                       16

<PAGE>

     At year end 1996 the total assets, less depreciation,  were $824,760, while
at year end 1995 total assets stood at $79,031.

     Other than its cash on hand,  the Company had no other  capital  resources.
Its  investment in mining  equipment not yet placed in service was illiquid.  In
order to fund future operations and capital expenditures,  the Company will have
to borrow  monies or make private  equity  placements  on terms which may not be
favorable to the Company.  The  Company's  subsidiary,  Eagle Mining of Bolivia,
Ltd.,  committed in its contract with United  Cangalli Gold Mining  Cooperative,
Ltd.  ("UCL") to complete  first-phase  exploration  and open one work front, in
addition to the Cangalli  shaft,  by April 20, 1997; to open two additional work
fronts  by  December  6,  1997;  and to invest a minimum  of $3  million  in the
project.  Management  of  the  Company's  subsidiary  is  working  to  meet  its
contractual  commitments.  As of December  31,  1996 the  Company  had  expended
$762,870 in Bolivia,  and  considers  that a major  portion of its  overhead and
expenses in the United States are allocable toward the $3,000,000  commitment in
its efforts to complete  title and commence  mining  operations  in Bolivia.  In
addition,  subsequent to December 31, 1996, the Company has acquired  $1,000,000
worth of recovery and other mining  equipment,  which will be applied toward the
$3,000,000  commitment to UCL. The Company has also received a commitment from a
Texas bank for a $1,000,000 line of credit, which amount in its entirety will be
allocable  to the UCL contract  commitment;  and has raised  additional  capital
through  private  stock  purchases.  In 1997 the  Company  will  continue in its
efforts to obtain  additional  capital and mining  equipment which it will apply
against the $3 million commitment.


Item 7.  Financial Statements and Supplementary Data

                     Please refer to pages F-1 through F-19.


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

     There were no disagreements  with the Company's  accountants on any matters
of accounting  principles,  practices or financial statement  disclosures during
1996.


                                       17


<PAGE>
                                    PART III


Item 9.   Directors and Executive Officers of the Registrant and Compliance with
          Section 16(a) of the Exchange Act.
          ----------------------------------------------------------------------
                  
     The following table sets forth certain information concerning the Directors
and Executive  Officers of the Registrant as of December 31, 1996 and subsequent
appointments.

                                                                 Office 
      Name              Age       Position                        Term
--------------------------------------------------------------------------------

Mary A. Erickson        39       President*                7/4/96 to 2/14/97

Mary A. Erickson        39       Director                  11/8/94 to present

Terry C. Turner         44       President & Director      2/14/97 to present

     * Resigned as  President  and was  appointed  Secretary  as of February 14,
1997.

     Directors are elected at the annual meeting of  shareholders to serve for a
period of one year or until their  successors  are  elected and have  qualified.
Vacancies  on the Board of  Directors  are  filled  by the  Board of  Directors.
Officers serve at the discretion of the Board of Directors.


BIOGRAPHICAL INFORMATION
------------------------

     The  following  biographical  information  is  presented  for  the  present
Officers and Directors of Registrant as of March 31, 1997.

     Terry C. Turner,  current President and Director (appointed on February 14,
1997). Mr. Turner received a Bachelor of Arts in Political  Science (1977) and a
Bachelor of Arts in Spanish  (1977) from the University of Utah. He received his
Juris  Doctorate in 1980 from Brigham  Young  University.  He is a member of the
Utah State Bar  Association  and  admitted  to practice in the State and Federal
Courts  of Utah and the 10th  Circuit  Court of  Appeals.  He is a member of the
Bolivian College of Lawyers (Bolivian Bar Association) and is the first American
attorney admitted to practice law in Bolivia. Under the Andean Pact Accord, this
also qualifies him to practice in Columbia, Ecuador, Peru and Venezuela.

     From  1980-1983  Mr.  Turner  was a partner  in Day,  Barney  and  Tycksen,
Attorneys, in Salt Lake City, Utah, with practice emphasis in mining and natural
resources,  international law, business,  and litigation.  From 1983 to 1989 Mr.
Turner was  President  of High Andes Mining Co., La Paz,  Bolivia.  From 1989 to
1991 he was General Counsel to Panworld Minerals  International,  Inc., a public
company with mineral prospects in North and South America. From 1991 to 1993 Mr.
Turner was  General  Counsel  to  Tipuani  Development  Company,  S.A.,  La Paz,
Bolivia,  a gold dredging  company.  From 1993 to 1995 he was Vice President and

                                       18

<PAGE>

General Counsel to Minas del Glaciar, S.A., La Paz, Bolivia, which was a mineral
exploration  company.  From 1995 to 1997 Mr. Turner has been in private practice
in La Paz, Bolivia. During the entire period of 1983 through 1997 Mr. Turner has
been affiliated with and "of counsel" to Cordero and Cordero,  a La Paz, Bolivia
law firm,  dealing with mineral and  international  law. From January 1996 until
his  appointment  with  Registrant  in February  1997,  Mr. Turner was corporate
counsel in Bolivia for Golden Eagle  International,  Inc. and its  subsidiaries,
Golden Eagle Bolivia Mining, S.A. and Eagle Mining of Bolivia, Ltd.

     Mary A. Erickson,  President at December 31, 1996 (July 4, 1996 to February
14,   1997);   currently   serving   as   Secretary.   Ms.   Erickson   was  the
Secretary/Treasurer  of the  Company  from  November 8, 1994 until July 4, 1996,
when she was appointed to the office of  President.  She resumed her position as
Secretary on February 14, 1997. She has served as a director of the Company from
November 8, 1994 to the  present.  She is the sole  shareholder  of Golden Eagle
Mineral Holdings,  Inc. Prior to her association with Golden Eagle, Ms. Erickson
was employed as an executive  assistant in publishing  and  administration  with
Jones Intercable,  Inc. (1984-1987),  Jones Spacelink, Ltd. (1987-1988),  AIRCOA
Hospitality  Services  (1988-1989),  and  CIBER,  Inc.  (1989-1991).  She was an
officer and director of  Timberline  Consultants,  Inc.,  an investor  relations
consulting firm, from January 1991 until September 1, 1994.

     Rene  Velasquez,  53,  President of Golden Eagle Bolivia  Mining,  S.A. and
Eagle  Mining of Bolivia,  Ltd. Mr.  Velasquez  graduated in 1979 from the Major
University of St. Andrews in La Paz, Bolivia with a degree in Economics.  He had
previously  served in the  Bolivian Air Force  between  1959 and 1963.  He was a
member of the  Customs  Police  from 1964 to 1966.  In 1967 he formed the mining
company  Minera  Velasquez  and began working in the Tipuani area from that time
through 1995, either as Minera Velasquez,  Bolintex S.R.L., or  Burgoa/Velasquez
Joint  Venture.  Mr.  Velasquez  was also head of  collections  for the Bolivian
Internal Revenue Service from 1978-1979.  He has been an economic advisor to the
Mayor's Office of the City of La Paz  (1992-1993),  and economic  advisor (1995)
for Canac, a Canadian  consulting firm attempting to capitalize ENFE,  Bolivia's
national  railroad.  From 1995 through his  employment  with GEBM he was General
Manager of CORDEPAZ, the development corporation for the State of La Paz.

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), requires the Company's officers and directors,  and persons who
own more than 10% of a registered class of the Company's equity  securities,  to
file reports of ownership  and changes in ownership of equity  securities of the
Company  with the  Securities  and  Exchange  Commission  and NASDAQ.  Officers,
directors  and  greater-than-10%  shareholders  are required by  Securities  and
Exchange  Commission  regulations  to furnish  the  Company  with  copies of all
Section 16(a) filings.  No  then-current  officer or director had failed to file
Form 5 at year end.

                                       19

<PAGE>

Item 10.  Executive Compensation
          ----------------------

     The  Company  paid  or  accrued  a total  of  $96,142  compensation  to the
executive  officers  as a group for  services  rendered  to the  Company  in all
capacities during the 1996 fiscal year. No one executive  officer  received,  or
has accrued for his benefit,  in excess of $60,000 for the year. No cash bonuses
were or are to be paid to such persons.

     The Company does not have any employee incentive stock option plans.







                     [This space intentionally left blank.]

                                       20


<PAGE>
<TABLE>
<CAPTION>

                                       SUMMARY COMPENSATION TABLE OF EXECUTIVES



                                            Annual Compensation                                  Awards
------------------------------------------------------------------------------------------------------------------------------------
Name and Principal                                                         Other Annual       Restricted       Securities Underlying
 Position                Year          Salary ($)          Bonus ($)       Compensation($)    Stock Award(s)($)  Options/SARs (#)
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>           <C>                 <C>             <C>                   <C>              <C>
President,                1993          0                   0               0                     0                0
Ronald A. Knittle**
                        ----------------------------------------------------------------------------------------------------------
                          1994          0                   0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1995          35,583              0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1996          12,050              0               0                     0                0
----------------------------------------------------------------------------------------------------------------------------------
Secretary,                1993          0                   0               0                     0                0
Mary A. Erickson***
                        ----------------------------------------------------------------------------------------------------------
                          1994          0*                  0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1995          58,499*             0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1996          50,400*             0               0                     0                0
---------------------------------------------------------------------------------------------------------------------------------
President,                1993          0                   0               0                     0                0
Ronald Sparkman**
                        ----------------------------------------------------------------------------------------------------------
                          1994          0                   0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1995          0                   0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1996          14,671              0               0                     0                0
----------------------------------------------------------------------------------------------------------------------------------
Vice President,
Paul Enright**            1993          0                   0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1994          0                   0               0                     0                0
                        ----------------------------------------------------------------------------------------------------------
                          1995          24,304              0               0                     $14,000          0
                        ----------------------------------------------------------------------------------------------------------
                          1996          19,021              0               0                     0                0
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

*    Designates unpaid accruals for management services.

**   Resigned during 1996.

***  Secretary from November 8, 1994 until July 4, 1996;  President from July 4,
     1996 until February 14, 1997; re-appointed Secretary on February 14, 1997.

     Option/SAR Grants Table (None)

                                       21

<PAGE>

     Aggregated  Option/SAR  Exercises in Last Fiscal Year an FY-End  Option/SAR
value (None)

     Long Term Incentive Plans - Awards in Last Fiscal Year (None)


                   DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
                   ------------------------------------------

(Except for  compensation of Officers who are also Directors which  Compensation
is listed in Summary Compensation Table of Executives)

<TABLE>
<CAPTION>

                                  Cash Compensation                      Security Grants
-----------------------------------------------------------------------------------------------------
Name                        Annual                  Consulting                   Number of Securities
                            Retainer     Meeting    Fees/Other     Number of     Underlying Options/
                            Fees($)      Fees ($)   Fees($)        Shares (#)    SARs (#)
-----------------------------------------------------------------------------------------------------
<S>                         <C>          <C>        <C>            <C>          <C>
Mary A. Erickson,           0            0          0              0            0
Director
=====================================================================================================
</TABLE>


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

     The following table sets forth information,  as of December 31, 1996, as to
the number of shares of the  Registrant's  Common Stock owned by (a)  beneficial
owners of more than five percent of the  Registrant's  outstanding  Common Stock
who are known by the  Registrant,  and (b) the  Officers  and  Directors  of the
Registrant,  individually,  an the Officers and Directors of the Registrant as a
group,  and (c) the  percentage  of  ownership of the  outstanding  Common Stock
represented by such shares.

<TABLE>
<CAPTION>

Stock                      Names and Address                   Beneficial         Percent of
Title of Class             of Beneficial Owner                  Ownership          Ownership
--------------             -------------------                  ---------          ---------

<S>                       <C>                                    <C>               <C> 
Common Stock               Mary A. Erickson (*1)                14,697,717         33% (*2)
                           4949 S. Syracuse St., #300
                           Denver, CO  80237
</TABLE>

-------------
*1   Owned  indirectly  and  beneficially  as sole  shareholder  of Golden Eagle
     Mineral Holdings, Inc.
*2   Computed not including shares issuable to others at year end.

                                       22

<PAGE>

     The following table sets forth  information,  as of December 31, 1996, with
respect to the  beneficial  ownership of the  Company's  $.0001 par value common
stock by the directors and officers of the Company,  both  individually and as a
group.

<TABLE>
<CAPTION>


Name and address of Beneficial
Ownership                                     Shares owned                   %Ownership
---------------------------------------------------------------------------------------
<S>                                            <C>                             <C> <C> 
Golden Eagle Mineral Holdings, Inc.            14,697,717                      33% (*2)
4949 S. Syracuse St., #300
Denver, CO  80237

Mary A. Erickson                               14,697,717                      33% (*2)
4949 S. Syracuse St., #300                     *1
Denver, CO  80237

Present Officers and Directors
as a Group                                     14,697,717                      33% (*2)
</TABLE>


*1   Mary A.  Erickson owns these shares  indirectly  and  beneficially  as sole
     shareholder of Golden Eagle Mineral Holdings, Inc.
*2   Computed not including shares issuable at year end.


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

     During 1994, an officer (and former president),  Mary Erickson,  advanced a
total of $44,107 to the Company.  In 1995, the officer advanced  additional sums
totaling $265,163, was repaid $160,719, and applied $25,000 against a promissory
note issued the Company in 1994 in  connection  with the  purchase of stock.  In
1996,  repayment of the advances was agreed to,  providing for interest at eight
percent.  Also during 1996, the officer loaned the Company an additional $84,500
and was repaid $116,500.  As of December 31, 1996, $98,424 plus accrued interest
of $1,134 was owed the officer (a net  decrease  of $25,727  during  1996).  The
loans are  unsecured  and due on demand.  In addition,  as of December 31, 1996,
$169,417 owed the officer for out-of-pocket operating expenses and unpaid salary
are included in accounts payable,  a net increase of $94,355 during 1996. In the
First  Quarter  1997,  $39,565  was repaid to the  officer in  reimbursement  of
certain expenses.

     During 1995, relatives of an officer (and former president), Mary Erickson,
advanced the Company a total of $32,683 and were repaid $8,092 (amount due as of
December 31, 1995 was  $24,591).  In 1996,  repayment of the advances was agreed
to, providing for interest at twelve percent.  Also,  during 1996, the officer's
relatives loaned an additional $195,658 to the Company. As of December 31, 1996,
$228,341 plus accrued interest of $16,691 was  outstanding.  The loans have been
extended  to  January  1, 2000 and are  unsecured.  In the First  Quarter  1997,
$70,000 was repaid against the advances.

                                       23

<PAGE>

     During 1995,  the Company  agreed to issue 80,000  shares of common  stock,
valued at $.07 per share, to a relative of a former  president for services.  As
of December 31, 1995,  the shares had not been issued,  and are reflected in the
accompanying  financial  statements  as  "issuable."  The shares  were issued in
October 1996.

     During 1995,  non-cash  transactions  consist of a $20,000  promissory note
received from a corporation in partial payment of 800,000 shares of common stock
upon  conversion  of short-term  loans  totaling  $105,000;  issuance of 700,000
common  shares  and  83,333  common  shares  issuable  to former  employees  for
services,  valued at $.07 per share;  issuance of  1,309,000  common  shares and
80,000 common shares  issuable to consultants  for services,  valued at $.07 per
share  (1,080,000  shares) and $.10 per share  (309,000  shares);  and,  165,000
common shares issuable as additional consideration to an individual for making a
$50,000 loan to the Company, valued at $.07 per share.

     During 1996,  non-cash  transactions  consist of 5,448,985 common shares to
former  employees  and others for  services  with an  estimated  total  value of
$1,230,842  (316,667  shares at $.07 per share;  900,000  shares at $.15625  per
share;  2,017,318  shares at $.20 per share;  and  2,215,000  shares at $.30 per
share).

     During 1996,  the Company issued  $188,500 of 6% Convertible  Debentures to
International  Futures  Holdings,   Inc.,  a  foreign  corporation,   which  are
convertible to common stock at the lesser of 80% of the NASDAQ closing bid price
the day prior to notice or $.30 per share.  International Futures Holdings, Inc.
currently owns  1,750,000  shares;  if the debentures  were converted at $.30 it
would have owned 5.34% of the Company's common stock at December 31, 1996.

     On  September  18,  1996,  the Company  initiated  an agreement to purchase
certain mining equipment  located in Bolivia from an individual for $20,000 cash
and convertible debentures totaling $1 million.  Closing of the agreement was on
February 10, 1997. The debentures  holder has subsequently  notified the Company
of his desire to convert his debentures  into 2,993,191  shares of common stock.
All voting rights  associated with the stock issued are to be placed in a voting
trust with the Company's Board of Directors as trustee.

     On February 11, 1997, a Texas bank loaned the Company $240,000  pursuant to
a short-term  bridge loan at the bank's prime rate, due August 1, 1997. On March
6,  1997,  the same  bank  committed  to a loan to the  Company  for $1  million
pursuant to a revolving line of credit agreement due June 1, 1998. The loan will
bear interest at the prime rate (8 1/2% as of March 28, 1997). In addition,  the
loan  will be  personally  guaranteed  by an  officer  of the  Company  (and its
principal shareholder),  including a pledge of 13,500,000 shares of Common Stock

                                       24

<PAGE>

of the Company owned by a corporation wholly-owned by the officer. The loan will
be  further  secured  by  certain  assets of the same  officer's  relatives.  As
consideration for the relatives'  guarantees of the $1 million loan, the Company
has agreed to issue a total of 20,000,000  shares of Common Stock.  The proceeds
from the $1 million loan will retire the earlier $240,000 bank bridge loan.

     Four notes  payable  totaling  $450,000 at 10.5%  interest were issued from
January through July 1996 to a relative of Mary Erickson, an officer. Said notes
have been extended to January 1, 2000, are unsecured and  personally  guaranteed
by the officer and her husband.

     Loans totaling $228,341 were issued from January 1995 through December 1996
from relatives of Mary Erickson, an officer. These loans, which bear interest at
12% and are unsecured,  have been extended to January 1, 2000. In February 1997,
payments totaling $70,000 were made against these loans.

     The  Company  has also agreed to issue an  additional  5,000,000  shares of
Common Stock in payment of $25,000  interest  and for  extension of the $450,000
loan and the  $228,341  loan made to the Company by relatives of an officer (and
former president).

     Also,  as part of the renewal  agreement,  the  Company  agreed to assume a
$165,000 personal loan of an officer (and former president) from a relative,  as
a partial  offset to total  amounts  owed the same  officer  of  $268,975  as of
December 31, 1996  (consisting of $98,424 in loans,  $1,134 of accrued  interest
and $169,417 of  out-of-pocket  expenses and unpaid salary).  The $165,000 loan,
which was previously  advanced to the Company by the officer,  has been extended
to January 1, 2000 and is unsecured,  bearing interest at the prime rate (8 1/2%
at March 28, 1997).

Borrowings from Related Parties
-------------------------------

     Loans totaling $98,424 were issued from December 1994 through December 1996
by Mary  Erickson,  an officer.  These loans bear interest at 8%, are unsecured,
and due on demand.  In the First Quarter 1997,  payments  totaling  $39,565 were
made to the officer against these loans.

     Non-interest  bearing  advances of $41,900 from March 1996 through December
1996 from Rene  Velasquez,  an officer of GEBM and EMB, are unsecured and due on
demand.

     A note for $5,000 in  December  1996 from a relative of Mary  Erickson,  an
officer,  was unsecured and due on demand.  This note was  subsequently  paid in
March, 1997.

                                       25

<PAGE>

     An  officer,  Mary  Erickson,   retained  3%  of  the  stock  ownership  of
newly-formed  Eagle  Mining of Bolivia,  Ltd.,  an 84% owned  subsidiary  of the
Company, in partial  consideration of the loans and advances made to the Company
by her and her family.

     On January 17,  1997  relatives  of the former  president,  Mary  Erickson,
loaned the Company $10,000.

Other Arrangements to Issue Common Stock
----------------------------------------

     During February and March 1996, the Company issued a total of 21,150 shares
of common stock to two individuals  (non-affiliates) for a total of $5,530 ($.25
and $.46 per share).

     A $50,000 note payable,  due in October  1998,  was  convertible  to common
stock at the lender's option at the bid price on October 16, 1996 (approximately
$.46875  per  share).  This note was  subsequently  paid in full,  with  accrued
interest, on March 14, 1997.

     In addition,  on March 27, 1997 an agreement was reached to convert another
$50,000 note payable,  including accrued  interest,  to 260,000 shares of common
stock of the Company.

     As a result of certain private purchases in 1996,  457,000 shares of common
stock were issuable at year end.






                     [This space intentionally left blank.]


                                       26



<PAGE>


Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K
         ----------------------------------------------------------------

     The following documents are filed as part of this report:         Page
                                                                       ----

        Reports of Independent Public Accountants                   F-2 & F-3

        Consolidated Balance Sheet as of December 31, 1996                F-4

        Consolidated  Statements  of  Operations  for the years  ended
          December  31,  1996 and 1995 and from  July 21,  1988
          (inception of development stage) through
          December 31, 1996                                               F-5

        Consolidated  Statements  of Cash  Flows for the  years  ended
          December  31,  1996 and 1995 and from  July 21,  1988
          (inception of development stage) through
          December 31, 1996                                               F-6

        Consolidated Statements of Stockholders'  Equity (Deficit) 
          for the years ended  December  31, 1996 and 1995 and from
          July 21, 1988 (inception of development
          stage) through December 31, 1996                                F-7

        Notes to Consolidated Financial Statements                        F-8

     The  following  exhibits  are filed with this Form  10-KSB or  incorporated
herein by the following references:

                  Reports on Form 8-K:

                           September 18, 1996
                           December 19, 1996

Exhibits:

     Registrant hereby incorporates by reference all exhibits identified in Par.
III, Item 1 Exhibit Index of its Report on Form 10-SB, effective June 17, 1994.

         27.1     Financial Data Schedule.

         No other exhibits.

                                       27


<PAGE>


                                   SIGNATURES

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

                                          GOLDEN EAGLE INTERNATIONAL, INC.
                                          (Registrant)

Date: March 28, 1997                       /s/  Terry C. Turner            
     ------------------                   --------------------------------------
                                          President

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

                                            GOLDEN EAGLE INTERNATIONAL, INC.
                                                     (Registrant)

Date: March 28, 1997                        /s/  Terry C. Turner
      -----------------                     ------------------------------------
                                            Director
                                            /s/  Mary A. Erickson  
                                            ------------------------------------
                                            Director


                                       28

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Financial  Statements
Table of Contents
================================================================================



                                                                    PAGE
                                                                    ----

Reports of Independent Public Accountants                        F-2 and F-3

Financial Statements

        Consolidated Balance Sheet                                       F-4

        Consolidated Statement of Operations                             F-5

        Consolidated Statement of Cash Flows                             F-6

        Consolidated Statement of Changes in
         Stockholders' Equity (Deficit)                                  F-7

        Notes to Consolidated Financial Statements                       F-8



                                      F-1

<PAGE>

                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANT



March 28, 1997

To the Board of Directors
Golden Eagle International, Inc.
Denver, Colorado

I have  audited the  accompanying  consolidated  balance  sheet of Golden  Eagle
International,  Inc.  (a  development  stage  company)  and  subsidiaries  as of
December 31, 1996, and the related consolidated  statements of operations,  cash
flows and changes in stockholders' equity (deficit) for the years ended December
31, 1996 and 1995, and the related  amounts  included in the cumulative  amounts
for the period from July 21, 1988  (inception  and beginning of the  development
stage) to December 31, 1996. These financial  statements are the  responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.

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

I did not audit the financial statements of Golden Eagle Bolivia Mining, S.A., a
93% owned  subsidiary,  which statements  reflect total assets of $739,630 as of
December 31, 1996.  Those statements were audited by other auditors whose report
has been  furnished to me, and my opinion,  insofar as it relates to the amounts
included for Golden Eagle Bolivia  Mining,  S.A. as of December 31, 1996 and for
the year then ended, is based solely on the report of the other auditors.

In my opinion,  the accompanying  consolidated  financial statements referred to
above present fairly, in all material respects, the financial position of Golden
Eagle  International,  Inc.  at  December  31,  1996,  and  the  results  of its
operations  and its cash flows for the years ended  December  31, 1996 and 1995,
and the related amounts  included in the cumulative  amounts for the period from
July 21, 1988  (beginning  of the  development  stage) to December 31, 1996,  in
conformity with generally accepted accounting principles.

The accompanying  consolidated financial statements have been presented assuming
that the  Company  will  continue as a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business. As more fully discussed in Note A to the financial statements,  the
Company  had  significant  working  capital  and  stockholders'  deficits  as of
December 31, 1996 and has incurred  substantial losses since its inception.  The
Company   presently  has  no  product  or  producing   properties  and  requires
significant  additional  financing to satisfy its  outstanding  obligations  and
commence   operations.   Unless  the  Company   successfully   obtains  suitable
significant  additional  financing as discussed in Note A, there is  substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to these  matters are also  discussed  in Note A. The  financial
statements do not include any  adjustments to reflect the possible future effect
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification  of  liabilities  that  may  result  from  the  outcome  of  this
uncertainty.


                                             /s/  GAYLEN R. HANSEN
                                             ----------------------------------
                                             Gaylen R. Hansen
                                             Certified Public Accountant
                                             Greenwood Village, Colorado

                                      F-2

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Shareholders
Golden Eagle Bolivia Mining S.A.
La Paz


We have audited the  accompanying  balance sheet of Golden Eagle Bolivia  Mining
S.A. as of December  31,  1996,  and the  related  statement  of cash flows from
January 23, 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 financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Golden Eagle Bolivia  Mining
S.A. as of December 31, 1996, and its cash flows for the period from January 23,
1996 to December 31, 1996,  in conformity  with  generally  accepted  accounting
principles in the United States.

The financial  statements  referred to above assume Golden Eagle Bolivia  Mining
S.A.  will continue as a going concern which  contemplates  the  realization  of
assets and the  satisfaction  of  liabilities  in the normal course of business.
Currently,  Golden Eagle Bolivia  Mining S.A. is not in a commercial  production
stage and does not have producing  properties.  The Company requires significant
additional  financing to satisfy its needs and commence  operations.  Unless the
Company obtains suitable  additional  financing there is substantial doubt about
the Company's ability to continue as a going concern.


                                        BERTHIN AMENGUAL Y ASOCIADOS
                                        Member of Ernst & Young International

                                        /s/ HUGO BERTHIN AMENGUAL
                                        ------------------------------------
                                        Lic. Hugo Berthin Amengual (Partner)
                                        MAT. PROF. No. CAUB 0482
                                        RUC 2190931

La Paz - Bolivia
April 9, 1997

                                       F-3

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Consolidated Balance Sheet
================================================================================

                                                                 December 31,
                                                                    1996
--------------------------------------------------------------------------------
ASSETS

CURRENT ASSETS
  Cash                                                          $    11,741
  Prepaid expense other costs                                        30,897
  Income tax refund receivable                                        8,946
--------------------------------------------------------------------------------
       Total current assets                                          51,584
--------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
  Exploration and development costs of mining prospect              570,853
  Mining equipment and vehicles not placed in service               158,448
  Mining equipment                                                   33,569
  Office equipment                                                   13,342
--------------------------------------------------------------------------------
                                                                    776,212
  Less accumulated depreciation                                      (7,811)
--------------------------------------------------------------------------------
                                                                    768,401
--------------------------------------------------------------------------------
DEPOSITS                                                              4,775
--------------------------------------------------------------------------------
                                                                $   824,760
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Notes payable and loan                                        $    89,558
  Loans from related parties                                         46,900
  Convertible debentures                                            188,500
  Accounts payable                                                  400,581
  Accrued interest                                                   74,566
  Other accrued liabilities                                          40,000
--------------------------------------------------------------------------------
        Total current liabilities                                   840,105
--------------------------------------------------------------------------------

LONG-TERM DEBT                                                      826,765
--------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (DEFICIT)
  Preferred stock, par value $.01 per share;
    shares authorized 10,000,000; none issued                          --
  Common stock, par value $.0001 per share; authorized
    800,000,000 shares; issued and outstanding
    44,517,143 shares                                                 4,452
  Common stock issuable, 2,384,500 shares                           446,500
  Additional paid-in capital                                      1,856,949
  Deficit accumulated during the development stage               (3,150,011)
--------------------------------------------------------------------------------
         Total stockholders' (deficit)                             (842,110)
--------------------------------------------------------------------------------
                                                                $   824,760
================================================================================

                                      F-4

<PAGE>
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Consolidated Statement of Operations
===============================================================================================================

                                                                                                  July 21, 1988
                                                                                                   (Inception)
                                                                    Year Ended                       Through
                                                                   December 31,                      December
                                                            1996                 1995                31, 1996
---------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                    <C>                 <C>  
REVENUE
  Interest from loans                                    $     --               $    --            $     11,727
  Commissions                                                  --                    --                   6,708
  Other                                                        --                    --                   3,681
---------------------------------------------------------------------------------------------------------------
     Total revenue                                             --                    --                  22,116
---------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES                                        1,982,768               815,507             3,075,650
---------------------------------------------------------------------------------------------------------------

OPERATING (LOSS)                                         (1,982,768)             (815,507)           (3,053,534)
---------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)
  Gain on marketable securities                              19,167                 9,666               124,336
  Loss on sale of equipment                                 (16,000)                 --                 (17,314)
  Interest expense                                          (79,141)               (9,289)             (106,925)
  Interest income                                              --                    --                   1,726
  Write off advances to Mineral Mountain Mining Co.            --                 (78,000)              (78,000)
  Write off loan to investment advisor                         --                 (15,000)              (15,000)
---------------------------------------------------------------------------------------------------------------
    
     Total other income (loss)                              (75,974)              (92,623)              (91,177)
---------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                      $ (2,058,742)         $   (908,130)         $ (3,144,711)
===============================================================================================================

EARNINGS (LOSS) PER SHARE                              $       (.05)         $       (.03)         $       (.29)
===============================================================================================================

WEIGHTED AVERAGE SHARES OUTSTANDING                      44,130,185            31,852,522            10,964,608
===============================================================================================================



                                                              F-5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Consolidated Statement of Cash Flows
==================================================================================================================
                                                                                                     July 21, 1988
                                                                                                      (Inception)
                                                                             Year Ended                 Through
                                                                             December 31,               December
                                                                        1996             1995           31, 1996
                                                                     ---------------------------------------------
<S>                                                                  <C>              <C>               <C>  
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                 $(2,058,742)     $  (908,130)     $(3,144,711)
   Adjustments to reconcile net income (loss)
     to net cash provided by operating activities:
        Stock issued and issuable for services                         1,230,842          171,983        1,405,919
        Depreciation expense                                               7,006              805           10,625
        Loss (gain) from investments                                     (19,167)          (9,666)        (124,336)
        Write off advances to Mineral Mountain Mining Co.                   --             78,000           78,000
        Write off loan to investment advisor                                --             15,000           15,000
        Loss on retirement of equipment                                     --               --              1,314
        Fair value of officer salary expensed                               --               --             20,000
     Changes in operating assets and liabilities:
        Marketable securities                                              9,666             --              9,666
        Prepaid expense and other costs                                  (30,897)            --            (30,897)
        Income tax refund receivable                                      (8,946)            --             (8,946)
        Accounts payable and accrued liabilities                         258,440          215,516          515,147
------------------------------------------------------------------------------------------------------------------

   Net cash flows (used for) operating activities                       (611,798)        (436,492)      (1,253,219)
------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from investment sales                                         29,589             --            184,380
   Investment in property and equipment                                 (741,696)         (34,516)        (780,240)
   Deposits                                                               (2,100)          (2,675)          (4,775)
   Advances to Mineral Mountain Mining Co.                                  --            (68,000)         (78,000)
   Loan to investment advisor                                               --            (15,000)         (15,000)
   Purchase of investment securities                                        --               --            (59,478)
   Purchase of subsidiary (net of cash acquired)                            --               --             (2,700)
------------------------------------------------------------------------------------------------------------------

   Net cash flows (used for) investing activities                       (714,207)        (120,191)        (755,813)
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Loans from related parties                                            812,023          297,846        1,209,880
   Repayment of loans from related parties                              (116,500)        (168,811)        (333,202)
   Proceeds from notes payable                                            29,136          110,422          139,558
   Repayments of bank note payable                                       (10,422)            --            (10,422)
   Proceeds from convertible debentures                                  188,500             --            188,500
   Common stock issued and issuable                                      402,030          391,693          889,523
   Stock issuance costs                                                     --            (41,644)         (63,064)
------------------------------------------------------------------------------------------------------------------

   Net cash flows from financing activities                            1,304,767          589,506        2,020,773
------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                          (21,238)          32,823           11,741

CASH - BEGINNING OF PERIOD                                                32,979              156             --
------------------------------------------------------------------------------------------------------------------

CASH - END OF PERIOD                                                 $    11,741      $    32,979      $    11,741
==================================================================================================================
                                                   

                                                        F-6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Consolidated Statement of Stockholders' Equity (Deficit)
====================================================================================================================================
                                                                                
                                                Common Stock           Common    Additional
                                            ------------------         Stock       Paid-in   Stockholder    Accumulated
                                            Shares       Amount       Issuable     Capital   Receivable      Deficit        Total
------------------------------------------------------------------------------------------------------------------------------------

<S>                                      <C>             <C>           <C>         <C>         <C>            <C>           <C>
Inception July 21, 1988                         --       $  --         $ --        $  --       $ --           $ --          $  --

   Issuance of common stock:
     June 1, 1989 for cash at
      $.00006 per share                    1,666,665        167          --            (67)      --             --              100
     June 30, 1990 for cash at
      $.03 per share                         300,000         30          --          8,970       --             --            9,000
     July 3, 1990 for cash at
      $.003 per share                        366,665         37          --          1,063       --             --            1,100
      50,000 to 1 stock split                   --         --            --          4,900       --             --            4,900
     January and March 1991 for
      cash at $.30074 per share
      from stock offering                    268,335         27          --         59,253       --             --           59,280
   November 1, 1993 - deficit
    of acquired subsidiary                      --         --            --           --         --           (5,300)        (5,300)
   Acquisition of subsidiary                    --         --            --          2,600       --             --            2,600
   Fair value of officer salary                 --         --            --         20,000       --             --           20,000
   November 7, 1994, convert
    debt to equity at $.003 per share      2,640,830        264          --          7,659       --             --            7,923
   November 8, 1994, $.00125 per share:
     Note receivable from affiliate       20,000,000      2,000          --         23,000    (25,000)          --             --
     Legal services                          375,000         37          --            432       --             --              469
   Other                                         (70)      --            --          2,625       --             --            2,625
   Net loss for the periods                     --         --            --           --         --         (177,839)      (177,839)
------------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1994              25,617,425      2,562          --        130,435    (25,000)      (183,139)       (75,142)

   Issued for cash in June and August
    ($.01 to $.05 per share), less
    $41,644 in stock issuance costs       10,052,250      1,005          --        164,044       --             --          165,049
   Issued for services ($.07 per share)    2,009,000        201          --        148,799       --             --          149,000
   Convert notes payable
    ($.15625 per share)                      800,000         80          --        124,920    (20,000)          --          105,000
   Payment of note by affiliate                 --         --            --           --       25,000           --           25,000
   Issuable for cash ($.125 to
    $.282 per share), 417,500 shares            --         --          80,000         --         --             --           80,000
   Issuable for services and additional
    consideration for loan
    ($.07 per share),
    328,333 shares                              --         --          22,983         --         --             --           22,983
   Net loss for the year                        --         --            --           --         --         (908,130)      (908,130)
------------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1995              38,478,675      3,848       102,983      568,198    (20,000)    (1,091,269)      (436,240)

   Collection of receivable
    January 9, 1996                             --         --            --           --       20,000           --           20,000
   Shares previously subscribed issued       568,333         57       (52,983)      52,926       --             --             --
   Issued for cash ($.05 to
    $.25 per share)                           21,150          2          --          5,528       --             --            5,530
   Issuable for cash ($.10 to
    $.20 per share),
    2,207,000 shares                            --         --         396,500         --         --             --          396,500
   Issued for services ($.07 to
    $.30 per share)                        5,448,985        545          --      1,230,297       --             --        1,230,842
   Net loss for the year                        --         --            --           --         --       (2,058,742)    (2,058,742)
------------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1996              44,517,143     $4,452      $446,500   $1,856,949   $   --      $(3,150,011)   $  (842,110)
====================================================================================================================================

                                                                 F-7
</TABLE>

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Note A - Organization and Business

Organization and Nature of Business
-----------------------------------

Golden Eagle  International,  Inc. (a development stage company, the "Company",)
was  incorporated  in Colorado  July 21,  1988.  The Company is to engage in the
business of acquiring, developing, and operating gold, silver and other precious
mineral  properties.  Activities  of the Company  since  November 1994 have been
primarily  devoted to  organizational  matters  and  identification  and limited
sampling of precious mineral properties  considered for acquisition.  Presently,
substantially all of the Company's operations and business interests are focused
on a prospect in the Tipuani River area of the Republic of Bolivia.

Organization of Subsidiaries and Bolivian Mining Venture
--------------------------------------------------------
In January  1996,  the Company  organized a Bolivian  corporation,  Golden Eagle
Bolivia  Mining,  S.A.  ("GEBM").  The Company has a 93% ownership in GEBM;  the
remaining  7% is owned  by two  Bolivian  nationals.  In  October  1996 a sister
subsidiary was formed, Eagle Mining of Bolivia, Ltd. ("EMB"), for the purpose of
assuming,  together  with GEBM,  the  responsibilities  under a contract  with a
Bolivian gold mining cooperative,  United Cangalli Gold Mining Cooperative, Ltd.
("UCL").  The Company has an 84%  ownership  in EMB;  13% is owned by a Bolivian
national,  and the  remaining 3% is  personally  owned by an officer (and former
president).  As a shareholder  in GEBM, the Company has elected to dissolve GEBM
and  cease  all  operations  in its name  after  the  First  Quarter  1997.  All
continuing  operations  by the  Company  in Bolivia  will be carried  out by EMB
commencing in the Second Quarter 1997.

On January 25, 1996, GEBM entered into an agreement with UCL for 25 years,  with
an option for an  additional  25 years,  to  explore  and mine a group of mining
concessions  owned by UCL. That  agreement,  while  binding  according to GEBM's
Bolivian  counsel,  was never "protocolized" (recorded by the Bolivian Notary of
Mines).  A new agreement was completed  between EMB and UCL and was protocolized
on November 11, 1996.

The mining  agreement  with UCL provides for a gross royalty  interest of 18% in
gold  production  to  UCL  and  commits  the  Company  to  complete  first-phase
exploration and open one work front, in addition to the Cangalli shaft, by April
20, 1997; to open two additional  work fronts by December 6, 1997; and to invest
a minimum of $3 million in the project. In addition, EMB is obligated to provide
UCL $200,000:  $100,000 as a non-interest  bearing loan and $100,000 in the form
of a grant. As of December 31, 1996, the $100,000 loan had been funded.

                                      F-8

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Going Concern Considerations
----------------------------

The accompanying  financial  statements have been presented assuming the Company
will continue as a going concern,  which  contemplates the realization of assets
and the  satisfaction  of  liabilities  in the normal  course of  business.  The
Company  had  significant  working  capital  and  stockholders'  deficits  as of
December 31, 1996 and has incurred  substantial losses since its inception.  The
Company   presently  has  no  product  or  producing   properties  and  requires
significant  additional  financing to satisfy its  outstanding  obligations  and
commence   operations.   Unless  the  Company   successfully   obtains  suitable
significant additional financing, there is substantial doubt about the Company's
ability to  continue as a going  concern.  Management's  plans to address  these
matters  include  proposed  private  placements of stock,  obtaining  short-term
loans,  putting  properties  currently under contract into  production,  and the
acquisition of operating  properties  that will provide cash flow. The financial
statements do not include any  adjustments to reflect the possible future effect
on  the   recoverability  and  classification  of  assets  or  the  amounts  and
classification  of  liabilities  that  may  result  from  the  outcome  of  this
uncertainty.


Note B - Summary of Significant Accounting Policies


Principles of Consolidation
---------------------------

The  financial  statements  include the accounts of Golden Eagle  International,
Inc. and its subsidiaries  Golden Eagle Bolivia Mining, S.A. and Eagle Mining of
Bolivia, Ltd. All inter-company transactions and balances have been eliminated.


Foreign Currency Translation
----------------------------

The  Company's  primary  functional  currency  is the U.S.  dollar.  Its foreign
subsidiaries  translate monetary assets and liabilities at the year-end exchange
rates while  non-monetary  items are translated at historical rates.  Income and
expense  accounts are translated at the average rates in effect during the year,
except for depreciation which is translated at historical rates. Gains or losses
from changes in exchange rates are recognized in the year of occurrence.


Use of Estimates
----------------

Preparation  of financial  statements  in  conformity  with  generally  accepted
accounting principles requires Management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results inevitably will differ from those estimates, and such differences
may be material to the financial statements.

                                      F-9

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Marketable Securities
---------------------

Marketable  securities  consist of equity securities stated at fair market value
in  accordance  with  Statement of Financial  Standard No. 115, "Accounting  for
Certain  Investments in Debt and Equity  Securities." Market values are based on
quoted prices.  Realized and unrealized  gains and losses are computed using the
first-in, first-out method of determining the cost of securities.


Property and Equipment
----------------------

Property  and  equipment  are  recorded  at  cost.  Costs  associated  with  the
acquisition,  exploration and development of mining prospects are capitalized on
a  country-by-country  basis,  subject to a  limitation  so as not to exceed the
present value of future net revenues from estimated production.  Maintenance and
repair costs are charged to expense as incurred,  and renewals and  improvements
that extend the useful life of assets are capitalized.

Depreciation  is  computed  using  the  straight-line  method  over the  assets'
estimated useful lives which range from five to seven years for office equipment
and  seven  years  for  mining  equipment.  After  mining  properties  have been
evaluated,  associated  capitalized costs are amortized on a unit-of- production
method based on proven reserves.


Income Taxes
------------

The Company has adopted the  provisions  of Statement  of  Financial  Accounting
Standards No. 109,  "Accounting for Income Taxes", which incorporates the use of
the asset and liability  approach of accounting for income taxes.  The asset and
liability   approach  requires  the  recognition  of  deferred  tax  assets  and
liabilities  for the  expected  future  consequences  of  temporary  differences
between the financial  reporting  basis and tax basis of assets and  liabilities
(see Note D).


Statement  of  Cash  Flows  Information  and  Supplemental   Non-Cash  Financing
Activities
--------------------------------------------------------------------------------

Cash and cash equivalents include cash and short-term  investments with original
maturities  of three  months or less.  During 1996 and 1995,  the  Company  paid
interest of $13,258 and none, respectively.

1996  non-cash  transactions  consist of issuance of 5,448,985  common shares to
employees and others for services with an estimated total value of $1,230,842.

                                      F-10

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

1995 non-cash  transactions consist of a $20,000 promissory note received from a
corporation in partial payment of 800,000 shares of common stock upon conversion
of short-term  loans totaling  $105,000 (see Note E); issuance of 700,000 common
shares and 83,333  common  shares  issuable to former  employees  for  services,
valued at $.07 per share;  issuance of 1,309,000 common shares and 80,000 common
shares issuable to consultants for services, valued at $.07 per share (1,080,000
shares) and $.10 per share (309,000 shares);  and 165,000 common shares issuable
as additional  consideration  to an individual  for making a $50,000 loan to the
Company, valued at $.07 per share (see Note C).


Earnings (Loss) Per Share
-------------------------

Earnings  (loss)  per share of  common  stock are  computed  using the  weighted
average number of shares  outstanding  during each period plus common equivalent
shares  (in  periods in which they have a  dilutive  effect).  Weighted  average
shares include common shares issuable from the date they became issuable.

                     [This space intentionally left blank.]



                                      F-11

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Note C - Long-term Debt and Notes Payable

6%  Convertible  debentures  issued April  through
June 1996 to a foreign corporation,  due September
15,  1997,  convertible  to  common  stock  at the
lesser  of 80% of the  closing  bid  price the day
prior to notice or $.30 per share.                                $188,500

15%  Note  payable  dated  April  5,  1995  to  an
individual,   due   July   5,   1995.   Personally
guaranteed  by an  officer  and  her  husband  and
200,000  shares  of  common  stock.  (On March 27,
1997,  the note holder elected to convert the note
and related accrued  interest to 260,000 shares of
common stock - see Note H.)                                         50,000

10% Note  payable to an  individual,  due  October
1998,  convertible  to common stock at $.46875 per
share. In addition, 165,000 shares of common stock
was issued  February 1, 1996 (issuable at December
31, 1995) as additional  consideration.  (The note
was paid March 14, 1997.)                                           50,000

Non-interest  bearing equipment loans in 1996 from
a  Bolivian  gold  mining   cooperative,   net  of
$104,092 loaned the cooperative. Due July 1, 1997.                  23,558

Other 6% to 8% notes payable,  unsecured.  ($5,000
subsequently paid.)                                                 16,000


Borrowings from Related Parties:
--------------------------------

10.5% notes  payable  issued from January  through
July 1996 to a relative of an officer,  unsecured,
due January 1, 2000,  personally guaranteed by the
officer and her husband (see Note H).                             450,000

12%  loans   issued  from   January  1995  through
December  1996  from   relatives  of  an  officer,
unsecured,  due  January  1,  2000  (see  Note H).                228,341

8%  loans  issued  from   December   1994  through
November   1996   by  an   officer   (and   former
president),  unsecured,  due  January 1, 2000 (see
Note H).                                                           98,424

Non-interest  bearing  advances  from  March  1996
through   December  1996  from  an  officer  of  a
subsidiary, unsecured, due on demand.                              41,900

12% loan in  December  1996 from a relative  of an
officer,  unsecured, due on demand. (This loan was
paid in March 1997).                                                5,000
                                                                ---------

                                                                1,151,723

Less current maturities                                          (324,958)
                                                                ---------

Long-term maturities                                          $   826,765
                                                              ===========

                                      F-12

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Note D - Income Taxes


As of  December  31,  1996,  the Company had net  operating  loss  carryforwards
totaling  approximately  $3,074,000  that may be offset  against  future taxable
income,  if any. These loss  carryforwards  expire in varying  amounts from 2005
through 2011. Furthermore,  use of the loss carryforwards are limited by certain
changes in the Company's ownership.

A tax benefit has not been reported in the accompanying financial statements for
the  operating  loss  carryforwards  because the Company is  uncertain as to the
likelihood of utilization.  Accordingly, the approximate tax benefit of $461,000
of the loss  carryforward  has been offset by a valuation  allowance of the same
amount.


Note E - Stockholders' Equity

Authorized Shares
-----------------

The Company initially  authorized 10,000 shares of no par value common stock. On
June 1, 1990, the Company authorized a 50,000-for-one stock split and authorized
800,000,000  shares of $.0001 par value  common stock and  10,000,000  shares of
$.01 par value preferred stock, and additional capital of $4,900 was contributed
to allow enough equity for the split to take place.

Common Stock Issued
-------------------

On June 1, 1989, the Company issued 1,666,665 shares of common stock for cash of
$100.

In 1990,  the Company issued 300,000 shares of common stock for cash at $.03, or
$9,000;  and 366,665 shares of common stock to individuals for cash at $.003 per
share, or $1,100.

From  January   through  April  1991,  the  Company  met  the  minimum   funding
requirements  of a stock  offering and sold 268,335 units at $.30 per unit which
consisted  of one  share of common  stock  and four  warrants  to  purchase  one
additional share each of common stock at $.60. After deferred  offering costs of
$21,221, the Company received net proceeds of $59,280.

On November 7, 1994, the Company issued  2,640,830  shares stock for a reduction
of amounts owed related parties in the amount of $7,923 ($.003 per share).


                                      F-13

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

On November 8, 1994, the Company issued 20,000,000 common restricted shares to a
corporation solely owned by a former president of the Company. Consideration for
the common shares (valued at $.00125) was a $25,000  promissory note, secured by
equipment,  at 10% interest, due on demand. The note receivable was satisfied in
1995 as a result of  application  of 1995 advances from the former  president in
excess of the outstanding balance.

Also on November 8, 1994,  375,000  common  restricted  shares valued at $.00125
were issued to an attorney for services.

During 1995, the Company issued a total of 10,052,250  shares of common stock to
individuals for a total of $206,693 (ranging from approximately $.01 to $.05 per
share) and incurred  $41,644 in stock issuance  costs,  for net cash proceeds to
the Company of $165,049.

During  1995,  a total of  2,009,000  shares of  common  shares  were  issued to
employees  for  services  (700,000  shares  valued  at $.07  per  share)  and to
consultants  for services  (1,000,000  shares valued at  approximately  $.07 and
309,000 shares at approximately $.10 per share).

In August and  September  1995,  a total of 800,000  shares of common stock were
issued a corporate  investor for $125,000  ($.15625  per share),  consisting  of
conversion  of $105,000 of short-term  loans made the Company in August  through
October 1995, and a $20,000  receivable which was  subsequently  paid January 9,
1996.

During  February and March 1996,  the Company issued a total of 21,150 shares of
common stock to two individuals (non-affiliates) for a total of $5,530 ($.25 and
$.46 per share).

During  1996,  a total of  5,448,985  shares  of  common  stock  were  issued to
employees  and others for services  with an estimated  total value of $1,230,842
(316,667 shares at $.07;  900,000 shares at $.15625 per share;  2,017,318 shares
at approximately $.20 per share; and, 2,215,000 shares at $.30 per share).


Common Stock Issuable
---------------------

As of December 31, 1995, a total of 745,833 shares of common stock were issuable
for the following:  177,500  shares for $50,000 cash ($.282 per share);  240,000
shares for $30,000 cash ($.125 per share);  83,333 shares for employee  services
(valued at $.07); 80,000 shares to a consultant for services (valued at $.07 per
share);  and 165,000  shares to an individual as  additional  consideration  for
making a $50,000  loan to the Company  (valued at $.07 per share).  During 1996,
with  exception of the 177,500  shares  subscribed  for cash, the foregoing were
issued.

                                      F-14

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

As of  December  31,  1996,  a total of  2,384,500  shares of common  stock were
issuable for stock  subscribed for cash  (including  177,500  shares  originally
subscribed in 1995). The additional shares issuable as of December 31, 1996 were
for cash as follows:  425,000 shares ($.10 per share);  32,000 shares ($.125 per
share);  and,  1,750,000  shares ($.20 per share) by the holder of the Company's
Convertible Debentures (see below and Note C).


Convertible Debt
----------------

During 1996,  the Company  issued  $188,500 of 6%  Convertible  Debentures  to a
foreign  corporation  which are convertible to common stock at the lesser of 80%
of the NASDAQ  closing  bid price the day prior to notice or $.30 per share (see
Note C).

On March 27, 1997,  the holder of a $50,000  note payable  agreed to convert the
note and accrued interest into 260,000 shares of common stock (see Note C).


Note F - Related Party Transactions


During 1994,  an officer (and former  president)  advanced a total of $44,107 to
the Company.  In 1995, the officer advanced  additional sums totaling  $265,163,
was repaid  $160,719,  and applied  $25,000 against a promissory note issued the
Company in 1994 in connection with the purchase of stock. In 1996,  repayment of
the advances was agreed to, providing for interest at eight percent. Also during
1996,  the  officer  loaned the  Company an  additional  $84,500  and was repaid
$116,500.  As of December 31, 1996,  $98,424 plus accrued interest of $1,134 was
owed the  officer  (a net  decrease  of  $25,727  during  1996).  The  loans are
unsecured and due upon demand.  In addition,  as of December 31, 1996,  $169,417
owed the officer for out-of  pocket  operating  expenses  and unpaid  salary are
included in accounts  payable,  a net  increase of $94,355  during  1996.  As of
December  31, 1996 a total of $268,975  was owed the officer for loans,  accrued
interest and amounts included in accounts payable. On March 22, 1997 the Company
assumed $165,000 of other obligations of the officer (see Note H).

During 1996, the officer (and former  president)  discussed above received 3% of
the stock ownership of Eagle Mining of Bolivia, Ltd. in partial consideration of
the loans and advances made to the Company by the officer and her family.

                                      F-15

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

During 1996, four one-year notes payable,  totaling $450,000 at an interest rate
of 10 1/2%, were issued to a relative of an officer (and former president).  The
notes are  unsecured  and are  personally  guaranteed by the officer (and former
president)  and her husband.  On March 22, 1997,  the notes were renewed with an
extended due date of January 1, 2000 (see Note H).

During 1995, relatives of an officer (and former president) advanced the Company
a total of $32,683 and were repaid  $8,092  (amount due as of December  31, 1995
was $24,591).  In 1996,  repayment of the advances was agreed to,  providing for
interest at twelve percent.  Also during 1996, the officer's relatives loaned an
additional  $195,658 to the  Company.  As of December 31,  1996,  $228,341  plus
accrued  interest of $16,691 is outstanding.  The loans are unsecured.  On March
22, 1997 the notes were  renewed  with an  extended  due date of January 1, 2000
(see Note H).

During 1995, the Company  agreed to issue 80,000 shares of common stock,  valued
at $.07 per share,  to a relative  of a former  president  for  services.  As of
December 31,  1995,  the shares had not been  issued,  and are  reflected in the
accompanying  financial  statements  as  "issuable".  The shares  were issued in
October 1996.


Note G -  Commitments and Contingencies

Securities and Exchange Commission Investigation
------------------------------------------------
There is an active  civil  investigation  of the Company and its officers by the
Denver Regional Office of the Securities and Exchange Commission into violations
of the Securities Act of 1933 and Securities  Exchange Act of 1934.  There is no
disposition  of this  matter as of March 28,  1997,  but it could  result in SEC
actions against the Company and its officers, directors, or control shareholders
for injunctive relief and penalties.


Disagreement with Consultant
----------------------------
During 1995, the Company engaged a person it believed was an independent  mining
consultant.  In 1996,  the  consultant  claimed  the  Company  liable for unpaid
services and expenses totaling $78,440.  The Company believes the consultant did
not  provide  the  services  contracted,  usurped  business  opportunities,  and
tortiously interfered with the Company. No litigation has been filed to date and
the Company is still  assessing  damages that it has incurred as a result of the
consultant's  conduct.  An evaluation as to the outcome of this matter cannot be
made at this time.

                                      F-16

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

MMMC and Silver Bar Mining Prospect
-----------------------------------
During 1994, a  corporation  owned by an officer (and former  president)  of the
Company  conducted  negotiations  with Mineral  Mountain  Mining Co. ("MMMC") to
acquire a 46% equity  interest in MMMC, the owner of the Silver Bar Mine located
near Apache Junction,  Arizona. As a result of the foregoing, a letter of intent
was entered into with MMMC. The rights and obligations pursuant to the letter of
intent  were  assigned  to the  Company.  The  purchase  price of the 46% equity
interest was to be $1.2 million cash and a $4.3 million loan at two percent over
the prime  rate.  The  letter of intent  also  provides  an option to acquire an
additional  four  percent  equity  in MMMC  for  nominal  amounts  upon  certain
conditions. In partial performance and pursuant to the negotiations, the Company
advanced $10,000 to MMMC in 1994.

In 1995, the Company  continued  negotiations  with MMMC in attempts to conclude
the stock  purchase  agreement,  advancing  an  additional  $68,000 to MMMC (for
cumulative total advances of $78,000).

Principals of MMMC subsequently refused to execute or acknowledge the agreement.
On  January  18,  1996,  the  Company  filed  suit  against  MMMC and two of its
principals for breach of the joint venture agreement.  The case has been set for
a jury trial on July 8, 1997.  Litigation is subject to many  uncertainties  and
the Company is unable to predict the outcome of this  matter.  Accordingly,  the
$78,000 in advances to MMMC were written off during 1995.

Obligation to Bolivian Gold Mining Cooperative
---------------------------------------------- 
The  November 11, 1996 mining  agreement  with the United  Cangalli  Gold Mining
Cooperative,  Ltd.  ("UCL") provides for a gross royalty interest of 18% in gold
production  to UCL and commits the Company to complete  first-phase  exploration
and open one work front,  in addition to the Cangalli  shaft, by April 20, 1997;
to open two additional  work fronts by December 6, 1997; and to invest a minimum
of $3 million in the Bolivian mining project.  In addition,  EMB is obligated to
provide UCL $200,000:  $100,000 as a  non-interest  bearing loan and $100,000 in
the form of a grant. As of December 31, 1996, the $100,000 loan had been funded.
(See Note A.)


Facility Leases
---------------
The Company leases its principal offices in Denver, Colorado on a month-to-month
basis at $1,475 per month.  In  addition,  the Company  entered  into a one-year
office lease in La Paz, Bolivia at $1,500 per month,  effective January 1, 1996,
and  thereafter  on a  month-to-month  basis;  these offices are occupied by the
Company's  subsidiary.  As of February 14, 1997, the Company also leased offices
for its corporate  operations in La Paz,  Bolivia on a  month-to-month  basis at
$600 per month.

                                      F-17

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Note H -  Events Subsequent to December 31, 1996 (Unaudited)

Bank Financing
--------------
On February  11, 1997,  a Texas bank loaned the Company  $240,000  pursuant to a
short-term  bridge loan at the bank's prime rate,  due August 1, 1997.  On March
13, 1997 the bank agreed to loan the Company $1 million  pursuant to a revolving
line of credit agreement due June 1, 1998 and bearing interest at the prime rate
(8 1/2% as of March 28, 1997).  The loan is personally  guaranteed by an officer
of the Company (and its former president and principal  shareholder),  including
13,500,000  shares  of  common  stock  of the  Company  owned  by a  corporation
wholly-owned  by the officer,  and is further  secured as described  below.  The
proceeds  from the $1 million loan will retire the earlier  $240,000 bank bridge
loan. As of March 28, 1997 the loan had not closed.

Related Party Loan Pledge and Renewal Agreements for Common Stock
-----------------------------------------------------------------
The $1  million  bank loan  described  above  will be  secured  by the pledge of
certain assets of relatives of an officer (and former president) for a period of
five years from closing of the loan. As consideration for the relatives' pledge,
the Company has agreed to issue a total of 20,000,000  shares of common stock to
the relatives.

The Company also agreed to issue an additional  5,000,000 shares of common stock
for renewal and extension of $450,000 and $228,341 in prior loans to the Company
by relatives and abatement of $25,000 in previously  accrued  interest (see Note
C).

Also,  as a part of the  renewal  agreement,  the  Company  agreed  to  assume a
$165,000 personal loan of an officer (and former president) from a relative,  as
a partial  offset to total  amounts  owed the same  officer  of  $268,975  as of
December  31, 1996 (see Note F). The  $165,000  loan is due January 1, 2000,  is
unsecured and bears interest at the prime rate (81/2% as of March 28, 1997).


Sales of Common Stock to Investors
----------------------------------
The Company has issued or will issue a total of 7,114,700 shares of common stock
to ten individual  investors for cash received through March 28, 1997,  totaling
$711,470.

                                      F-18

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)

Notes to Consolidated Financial Statements
================================================================================

Purchase of Equipment and Common Stock Issued
---------------------------------------------
On September 18, 1996,  the Company  initiated an agreement to purchase  certain
mining  equipment  located in Bolivia  from an  individual  for $20,000 cash and
convertible  debentures  totaling $1 million.  Closing of the  agreement  was on
February 10, 1997. The debenture holder has subsequently notified the Company of
his desire to convert the debentures into 2,993,191  shares of common stock. All
voting  rights  associated  with the stock  issued  are to be placed in a voting
trust with the Company's board of directors as trustee.


Conversion of Note Payable to Common Stock
------------------------------------------
On March 27, 1997, an individual  elected to convert a $50,000 15% note payable,
plus accrued interest, to 260,000 shares of common stock (see Note C).


Related Party Loans and Repayments
 ----------------------------------
On January 17, 1997  relatives of an officer (and former  president)  loaned the
Company $10,000.  During February 1997, the Company repaid $70,000 of loans that
had previously  been made to the Company by these  individuals  (see Notes C and
F).

In February and March 1997, an officer (and former president) was repaid $39,465
of  expenses  which had been  accrued  and  included  in the  December  31, 1996
accounts payable (see Notes C and F).

During March 1997,  $5,000 loaned by a relative in December 1996 was repaid with
interest. (See Note C).


Other Loan Repayments
---------------------
On March 14, 1997, the Company paid a $50,000,  10% convertible note payable and
accrued interest. (See Note C).

                                      F-19