SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  Annual report under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934 for fiscal year ended
        
                               December 31, 1997.

[ ]  Transition report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 for the transition period from __________ to __________.

                         Commission file number 0-23726


                        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:                 None
Name of each exchange on which registered:                                  None

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

                          $.0001 par value Common Stock
                          -----------------------------
                                (Title of class)

Indicate by checkmark  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 [ X ] No

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
thereto.                                                                   [   ]

Issuer's revenues for its most recent fiscal year:                      $101,459

Aggregate  market  value of the voting  stock held by  non-affiliates  of Golden
Eagle International,  Inc. as of October 28, 1998 was approximately  $9,717,275.
The  estimate  is based on the last sale price per share  ($.15 on  October  28,
1998) and 64,781,836 shares estimated to be held by non-affiliates.

At October 28, 1998, there were 108,594,903 shares of common stock outstanding.

The following documents are incorporated hereunder by reference:  (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.

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


<PAGE>

                                     PART 1
                                     ------


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

(a)  GENERAL

     Golden Eagle  International,  Inc.,  formerly  Beneficial Capital Financial
Services Corp. (hereinafter referred to as "Registrant"), is a development-stage
company (as that term is defined in Statement of Financial  Accounting Standards
No.  7 ["SFAS  No.  7"]),  incorporated  pursuant  to the  laws of the  State of
Colorado on July 21, 1988. Its name change  occurred on February 2, 1995.  Prior
to November 1994,  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.  During the period of time  Registrant was engaged
in such business,  it achieved no significant  operating  revenues and generated
operating losses.

     In November  1994,  Golden  Eagle  Mineral  Holdings,  Inc.,  a  previously
unaffiliated  Colorado  corporation,  acquired control of Registrant through the
issuance  (approved  by  the  then  disinterested   Board  of  Directors)  of  a
controlling  number of shares of common stock.  Golden Eagle  Mineral  Holdings,
Inc.,  is owned by Mary A.  Erickson,  currently the  secretary-treasurer  and a
director of Registrant.  New management of Registrant resulting from this change
of control  changed  Registrant's  business  focus into the  minerals  industry.
Through a  subsidiary,  Eagle  Mining of Bolivia,  Ltd.,  Registrant  acquired a
contract for mining rights in the state of La Paz,  Bolivia,  as more completely
described below.

     Registrant's  Bolivian  advisors  recommended to management that it conduct
operations in Bolivia through subsidiaries.  Initially, Registrant formed Golden
Eagle Bolivia Mining S.A.  ("GEBM") in January 1996, and Eagle Mining of Bolivia
("EMB")  in  October  1996 to conduct  Registrant's  operations  and to hold its
property in  Bolivia,  respectively  (See,  "Certain  Relationships  and Related
Transactions",  Item 12).  GEBM owns  equipment,  has  carried  out  exploration
operations  and has  achieved  limited  production  of gold  from  the  Cangalli
deposit, which is the subject of the EMB contract for the mining rights with the
United Cangalli Cooperative.

     EMB's   initial   constitution,   the   equivalent   of  its   Articles  of
Incorporation,  provided that  Registrant  will act as the funding  shareholder,
providing any necessary  operating or development  capital to EMB, as a "capital
contribution"  and not as a loan. The other EMB  shareholders are not liable for
their share of any capital contributions;  all EMB shareholders share profits in
accordance with their interests.

     In 1996,  Registrant,  through EMB, acquired mineral properties in Bolivia,
South America,  which are prospectively valuable for gold (referred to herein as
the "Cangalli  properties").  The properties have no established reserves, but a
significant amount of mineralization  has been identified.  The exploration work
and property  investigations  which  Registrant has accomplished on the Cangalli
properties  are  described  in more  detail in Item  1(b),  below.  Registrant's
subsidiary has achieved no significant operating revenues from these properties,
although  it did  produce  approximately  13,678  grams of gold (with a value of
approximately  $126,000 [before royalty  payments]) from exploratory  operations
during 1997.  (Hereinafter,  all references to Registrant's  holding subsidiary,
"EMB", or its operating subsidiary, "GEBM", or Golden Eagle International, Inc.,
shall  all  be  referred  to as  "Registrant,"  unless  specific  references  to
Registrant or its subsidiaries are called for.) There has been a small amount of
gold produced in 1998  resulting in gross sales of $61,000,  and  Registrant has
continued  its  investigation  and  exploration  of  the  Cangalli   properties.
Registrant has been unable to conduct significant operations during 1998 because
of adverse weather conditions and substantial working capital shortages.

     Registrant's  majority-owned subsidiary,  GEBM, continued through 1997, and
to the date of the filing of this report,  as the operator of the Cangalli shaft
and surface  operations  which were  attempted  during 1997.  GEBM, at one point
during  1997,  had  106  employees  including  executives,   purchasing  agents,
secretaries,  accountants,  administrative  assistants,  a  mining  engineer,  a
geologist,  two mechanical engineers,  warehousemen,  personnel managers,  shift
foremen, and miners,  including drillers,  muckers,  hoist operators,  and other
essential  support  personnel.  GEBM, and its sister  subsidiary,  EMB, shared a
suite of offices, consisting of 2,500 square feet, with Registrant in the La Paz
city center business district.

                                       2
<PAGE>


     Prior  to  acquiring  the  contract  mining  rights  on the 11  concessions
comprising 2,004 hectares (4,952 acres)  constituting the Cangalli properties in
1996,  Registrant  attempted  to acquire  several  properties  within the United
States.  These  U.S.  properties  were not  acquired  because  Registrant's  due
diligence  investigation did not support the representations  made to Registrant
by the property owners.

     In 1997, Registrant entered into an agreement with a non-affiliated La Paz,
Bolivia  company to provide  certain  services to Registrant on a  non-exclusive
basis.  These services include  performing the necessary studies for, and making
recommendations  regarding,  the following:  an environmental  impact statement;
topographical studies;  appropriate production methods for the Cangalli deposit;
current  mining  on the  Cangalli  deposit;  earth-moving  equipment;  fine gold
recovery  systems on  plants;  relocation  of  tailings  and  dumps;  industrial
security;   interfacing   with  and  supporting  the  community;   the  executed
investments to date; production costs;  administrative  systems; mine personnel;
inventory control;  future acquisitions and project growth; and public relations
activities  in Bolivia and,  where  warranted,  in the United  States  regarding
Bolivian  activities.  These  services  do not  include  the  offer  or  sale of
securities.  Registrant  agreed to pay this entity a total of $400,000 in shares
of Registrant's common stock as a fee for these services.

     In 1998,  Registrant  entered into an agreement  with two related  entities
(which are not  affiliated  with  Registrant)  to provide  certain  services  to
Registrant  on  a  non-exclusive   basis.  These  services  include  introducing
Registrant to investment bankers and accredited investors. These services do not
include  the offer or sale of  securities.  Registrant  has  agreed to pay these
entities a total of 1,500,000 shares of its restricted common stock as a fee for
these services.

     On May 7,  1998,  the SEC  filed a  civil  action  (SEC  vs.  Golden  Eagle
International,  Inc.,  et al, No.  98-Z-1020  [D.  Colo.])  against  Registrant;
Registrant's  former  president,  Ronald A.  Knittle  (resigned in May of 1996);
Registrant's  current  secretary/treasurer  and a  director,  Mary A.  Erickson;
Registrant's  former public  relations  firm (which had not  performed  work for
Registrant since before May 1996); and two individuals, regarding acts which had
occurred  between 1994 and  mid-1996.  Among the  allegations  made in the SEC's
complaint  were that  Registrant and the  individuals  involved had issued press
releases  which  were  false and  misleading  in an attempt to hype the value of
Registrant's stock.  Registrant and its management are continuing to discuss the
resolution  of these  and other  issues  with the  staff of the  Securities  and
Exchange  Commission,  but have denied any  wrongdoing  which may be  actionable
under the federal securities laws.

     As noted,  the future conduct of Registrant's  business and its response to
issues raised by third parties are dependent upon a number of factors, and there
can be no assurance  that  Registrant  will be able to conduct its operations as
contemplated. Certain statements contained in this report using the terms "may,"
"expects to," and other terms denoting future possibilities, are forward-looking
statements.  The accuracy of these  statements  cannot be guaranteed as they are
subject to a variety  of risks  which are  beyond  the  Registrant's  ability to
predict or control and which may cause actual results to differ  materially from
the projections or estimates contained herein.  These risks include, but are not
limited  to, the risks  described  above,  and the other risks  associated  with
start-up  mineral  exploration  operations,  and  Registrant's  operations  with
insufficient  liquidity and no historical  profitability.  It is important  that
each person reviewing this report understands the significant risks attendant to
Registrant's  operations  and that of its  subsidiaries.  As noted,  the  future
conduct of Registrant's business and its subsidiaries is dependent upon a number
of factors,  and there can be no assurance  that any of these  companies will be
able to conduct its operations as contemplated herein.  Registrant disclaims any
obligation to update any forward-looking statement made herein.

(b)  BUSINESS OF ISSUER

     The Cangalli Properties
     -----------------------

     In October 1995,  Registrant began reviewing potential mining opportunities
in Bolivia.  A site visit to the Tipuani  River Basin  (approximately  100 miles
north of the  Bolivian  capital of La Paz)  followed  in  December,  1995,  with
Registrant's representatives traveling to Cangalli, approximately two kilometers
down  river  from  the  Tipuani  township.  Included  in the  expedition  was an
independent  geologist  hired to evaluate the  Cangalli  area.  This  consultant
reported that the area merited further study.

                                       3
<PAGE>


     Based on this favorable report,  along with other  pre-existing  reports on
the  Tipuani/Cangalli  area, in January 1996 Registrant,  through GEBM,  entered
into an agreement with United Cangalli Gold Mining Cooperative,  Ltd. ("UCL"), a
Bolivian  cooperative.  This contract included the rights to explore and mine an
area consisting of 11 concessions  along the Tipuani River,  covering an area of
2,004  hectares  (4,952  acres)  for a  25-year  period  with an  option  for an
additional 25 years. While binding according to Registrant'  counsel in Bolivia,
this  contract was not  "protocolized"  (recorded)  with the Bolivian  Notary of
Mines.  Registrant then formed a new majority-owned  Bolivian subsidiary,  Eagle
Mining  of  Bolivia,  Ltd.  ("EMB")  in  October  1996  to hold  the  concession
interests.  EMB assumed the contract rights with UCL,  renegotiated the contract
with UCL,  and caused the  renegotiated  contract  to be  protocolized  with the
Notary  of  Mines in La Paz on  November  11,  1996.  As  renegotiated,  the UCL
contract provides for a gross royalty interest of 18% in gold production to UCL.
It also imposed certain work  obligations,  which  Registrant  asserts have been
fulfilled:

     *    completion  of  first-phase  exploration  and the  opening of one work
          front (in  addition  to the  Cangalli  shaft)  by April 20,  1997 (the
          contract called for the opening, but not the sustained  operation,  of
          this work front);

     *    opening  of two  additional  work  fronts  by  December  6,  1997 (the
          contract called for the opening, but not the sustained  operation,  of
          these work fronts);

     *    investing a minimum of $3 million in the project  (no  specific  term,
          other than the 25-year life of the contract, was fixed to fulfill this
          obligation); and

     *    providing to UCL $200,000  for  reduction of UCL's prior  obligations,
          including  $100,000 in the form of a loan, or advanced royalty payment
          (which is repayable out of production),  and $100,000 in the form of a
          grant, or land-right acquisition payment.

     History of the Tipuani/Cangalli District of Bolivia
     ---------------------------------------------------

     Gold mining in the Cangalli area can be traced back to pre-Inca times (1000
to 1500 A.D.). During the Inca dominion, gold placers were worked in the Tipuani
River  and  her  tributary  rivers,  the  Ancoma  and  Yani,  and  also  in  the
gold-bearing quartz veins of the Cordillera (the high Andes mountains).

     Early Spanish historians  recorded that the province of Larecaja,  in which
Cangalli  is located,  contributed  about 126 kg (4,051 ozt) of gold per year to
the Inca Emperor at Illabaya.  For this and other  purposes,  a network of roads
was constructed in Bolivia and Peru, some of which are still in use today.

     During the Spanish  rule,  after the  "Conquest",  the Indians  stopped all
mining. They destroyed roads,  blocked entrances to the mines, and established a
death penalty for those  disclosing to the  conquerors  the  whereabouts  of any
mining centers.

     After many  hardships  and loss of life,  the  Spaniards  re-started  their
mining  attempts  from 1562 to 1566 at Roman Playa on the Tipuani  River.  Great
amounts of gold were  produced.  The use of iron tools and  gunpowder for mining
was  inaugurated  about 1571. In 1602, the Spaniards  reached the site where the
town of Tipuani  now stands (2 km upriver  from  Cangalli).  For the first time,
they met  Portuguese  expeditions  in search  of gold  advancing  up the  Amazon
tributaries from Brazil.  During the years  thereafter,  several pitched battles
were waged over these goldfields between the Spanish and Portuguese, and one was
fought on the current site of the Cangalli township. In 1620, black workers were
imported from Brazil into the Bolivian  goldfields as large  fortunes were being
made with great  success.  In 1780,  the revolt of  mitayos,  or slave  workers,
stopped the mining in the area for a few years.

     In 1782, a miner named  Rodriguez and the two Novos  brothers  successfully
worked the Tipuani River terraces.  Andres Coll and Idelfonso  Villamil  Blanco,
and their descendants,  worked in the area until 1867. Villamil was the first to
exploit the rich lower terraces and river gravels below water level. Also during
this period,  several  foreign-based  companies arrived from Great Britain,  the
United States, Germany, and other countries.

                                       4
<PAGE>


     At the beginning of the 20th century, the Bolivian Gold Exploration Company
(BOLGO)  introduced  the first  methods of mechanized  work.  Acting as a modern
large enterprise,  BOLGO leased its large concessions to the Companie Aramayo de
Mines en Bolivia in 1932,  who in turn spent a lot of time,  money and energy to
efficiently mine the gold deposits in their concessions.  They were the first to
sink  deep  shafts  into  the  Cangalli  conglomerate  to work the  terraces  in
Unutuluni, some 15 km (9 mi) upriver from the town of Tipuani.

     In 1952, all of the BOLGO and Aramayo  concessions were nationalized by the
Bolivian  Government and  administered  through the Bolivian Miners' Bank, which
leased them to the Federation of Mining  Cooperatives.  This group  preferred to
work the river  gravels  using small  vertical  shafts and adits to make contact
with the bedrock, even beneath the river itself. Some of the upper terraces were
also worked by the  cooperatives by booming and sluicing when  sufficient  water
was available.

     In 1956, a North American company,  South American Placers,  Inc. ("SAPI"),
obtained large concessions in the lower Tipuani,  Challana, Mapiri, Coroico, and
Kaka  Rivers.  It began  dredging  at  Teoponte  on the Kaka River in 1959,  and
continued working successfully for nearly 30 years. This SAPI dredge set records
for gold production for day, month and year during its active work period at the
mouth of the Tipuani River. In the 1960's,  the Tidewater Co. and Condor Mining,
Inc. entered the same areas with some success.

     Due to the perceived  near-exhaustion  of the best known  deposits of river
gravels,  many people have abandoned the Tipuani area. Lately,  others have been
trying  to work the  remaining  river  areas and  terraces,  while  making  some
technical improvements such as deeper shafts and better underground workings.

     Historical  sources have estimated  that the total  production of gold from
the Tipuani  District (in which the Cangalli  properties  lie) may reach figures
close to 200 tons (6,430,000  ozt) of gold for each of the 16th,  17th, and 18th
centuries.  It was near 200 tons  (6,430,000 ozt) for the 19th century and about
500 tons (16,052,500 ozt) for the 20th century. Therefore, for its known history
of almost 1,000 years of mining,  according  to these  historical  sources,  the
Tipuani  District may have  produced no less than 1,000 metric tons of gold,  or
more than 32 million  troy ounces.  Based on  information  from Aramayo  Company
records  from the 1930s and 1940s,  the ore grades mined were usually very high,
from a few  tens  of  grams  to  many  troy  ounces  of gold  per  cubic  meter.
(Registrant  has relied upon an  independent  geological  consulting  firm,  and
historical  information,  for the  foregoing  history,  and  cannot  assure  its
accuracy.)

     Registrant's Operations
     -----------------------

     Working Capital  Shortages.  Although the operations in Bolivia are carried
on through  Registrant's  majority-owned  subsidiaries,  the  financing of those
operations  is solely  dependent  on  Registrant's  ability to  provide  capital
resources.  From  November  1997  through the date of the filing of this report,
Registrant experienced significant cash shortages in its operating funds. During
January  1997,  Registrant  negotiated  a one-time,  short-term  bridge loan for
$240,000  from a Texas  bank.  On March 6, 1997,  this same Texas bank agreed to
loan Registrant $1 million pursuant to a revolving line of credit.  This loan is
guaranteed   by   affiliates.   (See,   "Certain   Relationships   and   Related
Transactions,"  Item 12.) The first  proceeds from the revolving  line of credit
were used to retire the short-term bridge loan. In addition, Registrant paid its
interest  payments on the revolving line of credit during 1997, and subsequently
through the filing of this  report.  This line of credit has been renewed and is
due June 1, 1999;  there are,  however,  no further  funds that can be  advanced
under this line of credit.  As a result of these capital  shortages,  Registrant
has been forced to issue  Registrant's  common  stock in private  placements  as
compensation to some employees and consultants,  as well as for equipment. These
issuances do result in dilution to current and future  shareholders.  Registrant
continues  to  require  working  capital  and  is  not  likely  to  receive  any
significant  cash flow from  operations  in the  foreseeable  future.  It is not
likely that any unaffiliated party will advance debt to Registrant on commercial
terms.  Thus,  Registrant may have to continue  financing its operations through
the sale of equity if it can do so in accordance with all legal  requirements on
terms acceptable to the Board of Directors.  (See,  "Management's Discussion and
Analysis,"  Part II,  Item 6, for  further  information  regarding  Registrant's
liquidity shortages and capital requirements.)

                                       5
<PAGE>


     Activities on the Cangalli Properties.  To date, Registrant's operations on
the Cangalli  properties  under contract (which have all been conducted  through
GEBM, with EMB as the holding company for the contract interests) have consisted
of exploration  work  (including a limited amount of production) and documentary
investigation.  To accomplish the work necessary on the properties,  in February
1997,  Registrant  purchased  metallurgical  and mining equipment in Bolivia for
$319,319,  using  $20,000 in cash,  and the  balance  through  the  issuance  of
2,993,161  shares  of  Registrant's  restricted  common  stock.  (See,  "Certain
Relationships  and  Related  Transactions,"  Part III,  Item 12, of this  Annual
Report.) The majority of the equipment acquired in this purchase was transported
to the Cangalli mine site and put into  operation on the  properties in 1997. In
addition, during 1997, Registrant's operating subsidiary, GEBM, purchased all of
UCL's  machinery,  equipment,  real  property,  installations,  warehouses,  and
dwellings,  for $200,000.  GEBM also rented during 1997 a substantial  amount of
earth-moving  equipment  for  opening  its other work  fronts at the Cueva Playa
open-pit  operation,  the Cueva Playa Lower Terrace operation,  and the Cangalli
tailings operation.

     During the 1997  fiscal  year  (through  December  31,  1997),  Registrant,
through its Bolivian subsidiaries, completed a substantial amount of work on the
Cangalli  properties.  These  activities  included  ongoing  rehabilitation  and
exploration of the Cangalli shaft,  and  exploration of several  open-pit mining
sites within the concession area. Some of this work continued during early 1998,
but two material factors affected work on the property during the latter part of
1997 and early 1998:

     *    The "El Nino" world-wide weather phenomenon which resulted from warmer
          water  temperatures  in the  Pacific  Ocean  off the  coast  of  South
          America.  The impacts of "El Nino" included  substantial  increases in
          rainfall  over the usual  precipitation  received  during  the  normal
          Bolivian rainy season. The super-saturation of the soil in the Tipuani
          River Basin caused a mudslide in the town of Mokotoro,  15  kilometers
          upriver  from  the  Cangalli  properties,  which  resulted  in over 60
          deaths.  The extremely wet weather caused  Registrant to reduce mining
          operations  and  to  implement  costly  de-watering  and  mine  timber
          replacement measures in the Cangalli shaft.

     *    Registrant's  inability to finance any significant  operations,  other
          than its overall  exploration  work,  on the  property in 1998.  (See,
          "Management's Discussion and Analysis," Part II, Item 6, below.)

     In early 1997,  Registrant had projected that its subsidiaries  would enter
into  commercial  scale  production  by September  1997.  During 1997,  however,
Registrant's  gold  production had primarily been the product of its exploration
work on the properties. While the Bolivian subsidiary did improve its production
figures over the results of previous months,  overall production during 1997 did
not reach the goal of commercial production. Management concluded that fine gold
recovery losses were the primary cause of the failure to achieve a greater level
of production. In response, at the end of the fourth quarter of 1997, Registrant
contracted a well-respected Bolivian metallurgist to study the losses and design
a circuit  which would solve the problem.  Management  expects that the Bolivian
operations will continue to experience  fine gold losses until the  installation
of fine gold  recovery  circuits  on  Registrant's  metallurgical  plants can be
accomplished on the Cangalli properties. These fine gold losses might jeopardize
the  profitability of those  operations,  and therefore,  Registrant's  economic
viability.  Any shareholder,  or potential  shareholder,  should carefully weigh
this highly significant factor in any investment decision regarding Registrant's
common stock. As a result of these factors, however,  Registrant continues to be
a development stage company as that term is defined in SFAS No. 7, which has not
yet produced minerals in commercial quantities.

     Investigations  by  Independent  Consultants.  To evaluate its  conclusions
regarding the prospective value of the Cangalli properties,  Registrant retained
Mr. Guido  Paravicini,  Eng., M.A., an independent  Bolivian mining engineer and
geophysicist.  Commencing in December 1996, Mr. Paravicini  carried out a review
of the geological  literature  relevant to the Tipuani Mining  District in which
the Cangalli concessions are located. In addition, Mr. Paravicini,  and his team
of  exploration  field  geologists,   samplers,  panners,  and  other  auxiliary
personnel,    conducted   field   studies   and   sampling.   Mr.   Paravicini's
recommendations  in his reports of January and April,  1997 included  additional
exploration and confirmation  work which would be required to further  establish
the mineralization.  In July, 1997, Mr. Paravicini,  and his team of exploration
field geologists,  began an extensive sampling and geological mapping program on
the Cangalli property. As reported, Mr. Paravicini's initial results underscored
two principle points regarding the Cangalli properties:

                                       6
<PAGE>


     *    first,  that the Cangalli  property  continued to show very  promising
          sampling results on a wide-spread basis; and

     *    second, that the bedrock underlying the Quaternary deposit on the site
          was also mineralized.

     In May 1998,  Mr.  Paravicini  issued his final report which  confirmed the
existence of significant gold  mineralization  on the Cangalli  properties under
Registrant's  subsidiary's  control,  but further  analysis of Mr.  Paravicini's
results indicated that he had not established "reserves" on the properties.

     Management Experience.  Registrant's management has only limited experience
in mining  operations  and no experience in  large-scale  underground or surface
mining operations.  Rene Velasquez, a Bolivian national who is president and CEO
of  Registrant's  operating  and  holding  subsidiaries,  has  over 25  years of
experience  operating  small  open-pit  mining  operations  in the Tipuani River
Basin. Mr. Velasquez  successfully  operated an open-pit  operation at Cangalli,
Bolivia for several years in the 1980's for other,  unaffiliated companies, when
the  particular  gold deposit he and his company were working was deemed to have
been  exhausted.  In  addition,  Terry C.  Turner,  Registrant's  President  and
Chairman,  has  15  years  of  mining  administration,   exploration  and  legal
experience  in Bolivia.  In June 1997,  Registrant  formed a Technical  Advisory
Board to assist management in analyzing the data being assembled relating to the
Cangalli   properties.   The  members  of  the  Technical  Advisory  Board,  all
experienced  executives  formerly with major mining companies,  are described in
more detail under "Management," Part III, Item 9, below.

     Geography and Climate of the Cangalli Deposit.  Registrant's properties and
substantially  all of its  operations  are  conducted  in  remote  areas  of the
province  of Larecaja  in the state of La Paz in the South  American  country of
Bolivia.  Bolivia is a landlocked country straddling the central Andes Mountains
in west central South America. It is bounded on the north and east by Brazil, on
the southeast by Paraguay,  on the south by Argentina,  and on the west by Chile
and  Peru.  Sucre  is  the  judicial/constitutional   capital  and  La  Paz  the
administrative capital of Bolivia.

     The Tipuani Valley,  where the Cangalli  properties are located,  is in the
west-central  portion of Bolivia which is dominated by the Andes  Mountains.  In
Bolivia,  the Andes are divided into two great mountain chains,  or cordilleras,
separated  by a  broad  upland  plateau  known  as the  Altiplano.  The  Eastern
Cordillera  (in which the Tipuani  Valley is located)  rises  abruptly  from the
eastern  Altiplano and is dominated by the  snow-capped  peaks of Illampu (6,326
m/20,754 ft) and Illimani  (6,402  m/21,004 ft).  Narrow,  steep-sided  valleys,
known as Yungas,  are deeply incised into these eastern slopes, the more notable
being those in which the cities of  Cochabamba,  Sucre,  and Tarija are located.
Between  the  Western and Eastern  Cordilleras  is the  Altiplano,  which has an
average  elevation  of  about  3,600 m  (11,810  ft)  and is one of the  highest
populated areas in the world. The Altiplano is about 840 km (520 mi) long and an
average  of 140 km (87 mi) wide and is  dominated  at its  northern  end by Lake
Titicaca, the world's highest navigable lake, located on the Peruvian border.

     The Bolivian  climate is harsh much of the year,  as is  reflective  of its
mountainous location.  However,  internal transportation within Bolivia is good,
with  paved,  gravel,  or dirt  all-weather  roads to the  edge of the  Cangalli
properties.    Access   may   become   difficult   during   the   rainy   season
(November-March), but is never at issue for more than a short period.

     Business  Atmosphere.   Mining  and  subsistence  agriculture  continue  to
dominate  Bolivia's  economy,  as they have since the 16th century.  Efforts are
being  made to  expand  manufacturing,  stimulate  commercial  agriculture,  and
otherwise  diversify the economy.  Although  employing less than 3% of the labor
force, mining has traditionally  provided most of Bolivia's exports. In colonial
times, Bolivia was one of the world's principal producers of silver. After 1870,
tin replaced  silver as the main export.  In the 1980's,  zinc mining  surpassed
that of tin.  Other  important  metals are  antimony,  tungsten,  lead,  copper,
silver,  and gold, most found together with tin and zinc.  Major oil and natural
gas deposits are located in the eastern llanos, or plains,  near Santa Cruz, and
natural gas is now a major export.

     After the 1952 revolution, the principal tin mining enterprises,  which had
been foreign-owned, were taken over by the state. As described above, many local
cooperatives were then formed to hold the rights to mine in Bolivia. In spite of
an  aggressive  program of  privatization  in the 1980's and  1990's,  Bolivia's
largest   mining  company   remains   government-owned.   In  addition,   mining
cooperatives  continue to exert a substantial  amount of political  influence in
Bolivia, although diminished from their heyday in the 1980's.

                                       7
<PAGE>


     Registrant  believes  that a substantial  and material  risk exists,  which
Management  has termed  the  "cooperative  risk  factor."  This risk  relates to
various  aspects of  Registrant's  relationship  with the UCL,  an  organization
consisting of 118 members of all socio-economic, education, and political levels
and  criteria.  Registrant's  Management  has sought and  received,  repeatedly,
assurances  from  UCL's  president  and  board of  directors  that  Registrant's
subsidiary's  contract  position and right to the quiet  pursuit of its contract
rights of exploration, development, and mining will remain undisturbed. Over the
course of the contract between Registrant's  subsidiary and UCL, approximately 2
1/2 years,  Registrant has received  informal and formal  complaints  from UCL's
administration regarding Registrant's contract compliance.  However,  Registrant
believes it has always been able to  satisfactorily  resolve  any  complaint  or
dispute.  Registrant's  management believes that this problem resolution process
will continue for the life of the contract,  25 years from January 1996. Factors
which are  somewhat  out of  Registrant's  management's  control  regarding  the
"cooperative risk factor" are: tortious interference by unrelated third parties,
force majeure,  commodities  and metals market  fluctuations,  or the failure of
governmental  institutions to support  Registrant's  legitimate rights vis-a-vis
some illegal  action on the part of UCL or third  parties.  Registrant  is aware
that certain third parties are attempting to disrupt  Registrant's  relationship
with UCL. Registrant has defended, and intends to continue to defend, its rights
aggressively. Although management believes it will be able to defend its rights,
there  can be no  assurance  that  it  will be  successful.  While  Registrant's
management's  analysis is very  positive  for future  relations,  any  potential
investors  or current  shareholders  must take notice of the  "cooperative  risk
factor," and weigh it carefully  when making any investment  decision  regarding
Registrant's securities.

     Relationship  with Local and National  Governments.  Although  Bolivia is a
democratic republic and has had democratically-elected presidents since 1982, it
has been the subject of military coups in the past. Inflation in Bolivia appears
to be under control at the current time (averaging less than 10% annually),  but
other economic  signs are not so favorable.  The per capita income in Bolivia is
less than $1,000 per year and literacy is less than 80%.  Bolivia has a negative
balance of trade  (importing more goods than it exports),  and is  significantly
dependent on the  stability of the other  countries of South America for its own
stability.  Management  has not noted any  significant  civilian  unrest or high
incidences of crime affecting Registrant's  operations,  and management does not
believe  that,  in the current  situation,  such  problems  are likely to have a
material adverse affect.  However, should the Latin American economy in general,
or the  economy  of  Bolivia  in  specific,  suffer  adverse  changes,  times of
political and economic  unrest would likely  return,  and it would likely have a
material adverse impact on Bolivia and Registrant's operations.

     In all  jurisdictions,  it is important  for  businesses  to maintain  good
relations with governments and the governmental leaders. Registrant's management
has  attempted to do so.  Registrant  has kept the local and national  political
leaders  informed as to its proposed  operations,  and has  attempted to utilize
local management and laborers in all appropriate positions. As a result of these
efforts, Registrant's President, Terry C. Turner; its Secretary/Treasurer,  Mary
A. Erickson;  and the members of its Technical Advisory Board:  Ronald L. Atwood
Ph.D.;  Donald  Hausen,  Ph.D.;  and Max Staheli;  were all awarded the Medal of
Civic Merit by the Prefect  (Governor)  of the State of La Paz,  Bolivia  during
1997 for their work in promoting investment in the Bolivian mining industry, and
for their  contribution  to the progress  within the La Paz state.  The Medal of
Civic Merit is the highest honor which can be awarded by the state government in
Bolivia.  Consequently,  management  believes  that  its  relationship  with the
national and state  governments  is good,  and does not  anticipate  any unusual
difficulties  as it continues its work of exploring and  developing the Cangalli
properties under its control and the identification of mineral resources.

     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.  (Registrant  has sold the gold resulting from
its  exploration  and  development  activities  within the Bolivian gold market,
which  is  subject  to the  same  international  conditions  affecting  all gold
markets.  In 1997 and 1998, gold  experienced a substantial  decline in price in
the international markets.)

                                       8
<PAGE>


     Distribution methods of the products or services
     ------------------------------------------------

     When, if ever,  Registrant is  successful  in  commencing  and  maintaining
commercial  production  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. 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,  and has used  this  network  of  buyers  for its  gold  sales to date.
Registrant  has  not  yet  determined  if it  will  sell  any of the  commercial
production  of these  precious  metals or  minerals  which may  result  from its
operations 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.

     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  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,  1997 and October  20,  1998,  Registrant  required no
significant raw materials,  other than mine timbers and routine mining supplies.
If it ever conducts  substantial,  sustained  mining  operations,  in Bolivia or
elsewhere,  it will need more  significant  quantities  of 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.
     -------------------------------------------

     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.  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.  Concentration,  or single
focus, creates a risk which Registrant's  management has termed the "cooperative
risk factor," which should be reviewed more carefully in "Business  Atmosphere,"
Part I(b), page 7.

     Patents, trademarks, licenses, franchises,  concessions, royalty agreements
     or labor contracts, including duration.
     ---------------------------------------------------------------------------

     Registrant,  through 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 as described above.  This contract has a duration of
25 years, and is renewable for an additional 25 years.


                                        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  Registrant,  nor  either of its  subsidiaries,  are  obligated  to
receive  approval of their  principal  products or services.  Some activities in
which Registrant'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  Registrant'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.
     ------------------------------------------------------------

     At  December  31,  1997 and  October 20,  1998,  Registrant  employed  four
full-time  personnel,  consisting of its president,  executive  vice  president,
corporate  secretary/treasurer,  and one administrative assistant. While certain
of these individuals periodically engage in other activities,  due to the amount
of  time  required  to  fulfill  their  obligations  with  Registrant  they  are
considered  full  time.  In  addition,   Registrant  had  at  year  end  several
consultants and advisors as necessary to provide assistance to management.

     Also at December 31, 1997, Registrant's  majority-owned  subsidiary,  GEBM,
employed 60 personnel  including its president,  Rene Velasquez;  one purchasing
agent; one secretary;  one accountant;  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 superintendent, one geologist, one mechanical engineer,
one topographer,  one mine accountant, two warehouse supervisors,  one personnel
manager, two shift foremen, and 46 miners,  including drillers,  muckers,  hoist
operators, and other essential support personnel.

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

     Registrant's executive office in the United States is located at 4949 South
Syracuse, Suite 300, Denver, Colorado 80237. This office and associated services
are leased from a non-affiliated third party at a cost of approximately $190 per
month on a  month-to-month  basis.  This consists of access to a single  office,
conference  room  facilities,  secretarial  services,  and other  administrative
services in an executive suites complex.

     As  of  February  14,  1997,   Registrant   also  leased  offices  from  an
unaffiliated  party in La Paz,  Bolivia located at Avenida Arce, Plaza Isabel La
Catolica,  Edificio Torre de las Americas,  and utilized,  at no cost,  computer
equipment,  fax machine and general office furnishings owned by Terry C. Turner.
The office  consisted of  approximately  900 square feet and cost  approximately
$600 per month.

                                       10
<PAGE>


     In July, 1997, Registrant leased office space at Av. 16 de julio, No. 1525,
Edif.  Mutual La Paz  Penthouse.  These  offices  are in the heart of the La Paz
business  district in the city center and consist of 2,500 square feet at a cost
of $1,666 per month. (This office space is shared with a private mining company,
Bolivian Copper Chemical Company, S.A., ["BCCC"], which contributes one-third of
the office lease costs, phones, and utilities.  Registrant's president, Terry C.
Turner,  is also the  president of BCCC.  Registrant's  Board of  Directors  has
received  notice of, and  approved  of, Mr.  Turner's  dual role.  Additionally,
Registrant's  Board has received full disclosure as to any conflicts of interest
which may develop  from this  relationship,  and has  instructed  Mr.  Turner to
disclose any conflicts which may arise in the future.)

     Registrant's operating subsidiary, GEBM, owns the mining equipment which is
located on the Cangalli  properties  under its control or at its warehouse in El
Alto,  Bolivia,  15 kilometers from its La Paz offices.  This equipment includes
two D85 Komatsu  bulldozers,  an electric  generating set, two compressors,  jaw
crusher,  150 ton-per-hour  ball mill,  thickener,  classifier,  spiral recovery
equipment,  centrifugal bowls,  vibrating tables, a  one-by-five-meter  rotating
trommel,  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.  In addition,
GEBM acquired  during 1997 all of UCL's equipment which included one Caterpillar
933 front-end loader,  real property in proximity to the Cangalli shaft, as well
as the dwellings  found thereon,  two  warehouses,  the mine shaft head frame, a
mine  hoist,   assorted  pumps,  an  electric  generating  set,  all  electrical
installations,  an inventory of parts,  assorted tools,  mine rail and cars, two
double-deck shaker screens,  and various other pieces of mining equipment.  GEBM
also owns one Toyota  Landcruiser  purchased  during  1996 and one  Toyota  mine
pickup truck.

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:

     SEC Investigation and Enforcement Action
     ----------------------------------------

     On May 7,  1998,  the SEC  filed a  civil  action  (SEC  vs.  Golden  Eagle
International,  Inc.,  et al, No.  98-Z-1020  [D.  Colo.])  against  Registrant;
Registrant's  former  president,  Ronald A.  Knittle  (resigned in May of 1996);
Registrant's  current  secretary/treasurer  and a  director,  Mary A.  Erickson;
Registrant's  former public  relations  firm (which had not  performed  work for
Registrant since before May 1996); and two individuals, regarding acts which had
occurred  between 1994 and  mid-1996.  Among the  allegations  made in the SEC's
complaint  were that  Registrant and the  individuals  involved had issued press
releases  which were false and misleading in an attempt to hype the value of the
Registrant's stock.

     On May 22, 1998, Registrant issued a press release which discussed a number
of aspects of a report on the  Cangalli  properties  prepared by an  independent
consultant, Mr. Guido Paravicini. The staff of the SEC's Central Regional Office
raised  concerns  regarding  the  accuracy of that report and  interviewed  both
Registrant's  president and Mr. Paravicini.  As a result of subsequent  internal
review of the Paravicini report,  Registrant's management has concluded that the
techniques used by Mr.  Paravicini were insufficient to justify the calculations
made,  and the term  "reserves"  may be an  inaccurate  characterization  of the
mineralization  found on the properties under Registrant's  subsidiary's control
in the Cangalli  district.  Based on the  information  that Mr.  Paravicini  and
others  have  developed   regarding  the  Cangalli  district  in  general,   and
Registrant's  properties in specific,  management  still  believes that there is
significant gold  mineralization  within  Registrant's  properties,  and ongoing
verification  work has been  undertaken  by Behre  Dolbear & Company,  Inc.,  an
internationally-recognized consultant to the mining industry.

     As a result of the foregoing,  Registrant  developed material  reservations
regarding the May 1998 report by its  independent  consultant,  Mr.  Paravicini.
Management is continuing to analyze the  Paravicini  report and other  available
information regarding the Cangalli property.  Management's initial conclusion is
that  Registrant  has  focused  on too broad an area  within  the  property  and
believes that a greater likelihood of success can be realized were Registrant to

                                       11
<PAGE>


focus on a smaller  target area for more  extensive  sampling and analysis.  The
staff  of the  regional  office  of the SEC has  advised  Registrant  that it is
contemplating a recommendation  to the full Commission that it amend the pending
civil action to include other  violations which allegedly may have resulted from
the May 22, 1998 press release.

     Registrant  and its  management are continuing to discuss the resolution of
these issues with the regional staff of the Securities and Exchange  Commission,
but have  denied  any  wrongdoing  which may be  actionable  under  the  federal
securities laws.

     Civil Action Related to Arizona Investment
     ------------------------------------------

     Registrant  is Plaintiff in Case No.  96-043428  in Superior  Court,  Pinal
County, Arizona. Registrant sued Mineral Mountain Mining Co. and James and Diane
Brown  alleging fraud and  misrepresentations  and for refund of monies paid and
benefits  received.  This suit  arose out of a letter  of  intent  with  Mineral
Mountain  Mining Co.  ("MMMC") to acquire a 50% equity  interest in MMMC, at the
time the owner of the Silver Bar Mine,  located near Apache  Junction,  Arizona.
Registrant   has   advanced   substantial   funds  to  MMMC  in  reliance   upon
representations  made  and  in  anticipation  of  the  closing  of a  definitive
agreement in the first quarter of 1995.

     During this time, management 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.  In view of such facts, Registrant declined to close the
transaction.   Consequently,  no  acquisition  of  the  property  was  made  and
Registrant  filed  litigation to recover its damages.  This case was settled and
defendants  agreed  to pay  Registrant  $20,000.  However,  defendants  have not
observed the terms of the Settlement Agreement, and Registrant has moved for the
entry of a  judgment  against  defendants  on the terms and  conditions  of that
Settlement Agreement.

     Potential Litigation With Consultant
     ------------------------------------

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

     In addition,  this  consultant  has  threatened  to bring a legal action in
Bolivia; however,  Registrant believes that no jurisdiction would exist for such
an action,  and that this  consultant's  misrepresentation  of his  professional
credentials would be dealt with severely by Bolivian authorities.

     Potential Litigation With Former Employees/Officers
     ---------------------------------------------------

     On June 29, 1998, a former  employee and officer of  Registrant  filed suit
for enforcement of the terms of an employment contract. Registrant believes, and
asserted in its Answer and Counterclaim,  that the former  employee/officer  did
not earn  the  compensation  sought,  breached  his  employment  agreement  with
Registrant,  violated  his  fiduciary  duty  while  acting  as  an  officer  for
Registrant,  violated  his  duties of good  faith  and  loyalty  to  Registrant,
breached  his  obligation  to  avoid  self-dealing  to  Registrant's  detriment,
disclosed  confidential  information,  failed  to return  Registrant's  property
including  trade  secrets,  created  a  competing  corporation  contrary  to the
non-compete provision of his employment agreement,  interfered with Registrant's
prospective   business   advantages,   took   actions  to  defame  or  disparage
Registrant's  business,  engaged  in unfair  competition  with  Registrant,  and
tortiously  interfered  with  Registrant's  business  relations.  Registrant  is
committed to vigorously  pursue its defense  against this  employee/officer,  as
well  as  prosecute  its  claims  against  same.  In  addition,   Registrant  is
contemplating  bringing  an action  against  other  employees/officers  who have
combined with this former  employee/officer  in a competing  corporation  and in
carrying out the tortious acts and competing activities mentioned above.

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

     Since  late  1994,  Registrant  has been  publicly-traded  under the symbol
"MINE" on the OTC Bulletin Board which is operated under the  supervision of the
National  Association  of Securities  Dealers,  Inc. The OTC Bulletin Board is a
securities  market  utilizing a  sophisticated  computer and  telecommunications
network.  Market participants comprise market makers generally dealing in "penny
stocks", independent dealers who commit capital and stocks and compete with each
other  for  orders.  The OTC  Bulletin  Board has  adopted  rules  that  require
companies  quoted on its system to be current in their reporting  obligations to
the SEC, among other things. The Securities and Exchange  Commission has adopted
rules,  such as Rule 15c2-6,  which  impose  restrictions  on a  broker-dealer's
ability to trade in penny stocks.

     On June 22,  1998  the SEC  issued  a  ten-day  suspension  of  trading  of
Registrant's  securities,  until July 6, 1998, on the OTC Bulletin Board. At the
end of that ten-day suspension,  Registrant's  securities again began trading on
the "pink  sheets," a  less-sophisticated  manual  system for  posting  relevant
market  information.  The "pink sheet"  status of  Registrant's  securities  has
created a  substantial  problem with  liquidity for  shareholders  and potential
shareholders interested in trading Registrant's  securities.  Once Registrant is
current on its  filings of annual and  quarterly  reports,  its  securities  can
return to the OTC Bulletin  Board upon the filing by a prospective  market maker
of a Form 211 pursuant to the Securities  Exchange Act of 1934.  There can be no
assurance, however, that any market maker will file on behalf of the Registrant.
Until a market  maker so files,  the  liquidity  of the market for  Registrant's
common stock will be impaired.

     Registrant  is  authorized  to issue Eight  Hundred  Million  (800,000,000)
Common Shares, of which  approximately  108,594,903 shares are outstanding as of
October 20, 1998.  In addition,  Registrant  is  authorized to issue Ten Million
(10,000,000)  Preferred  Shares.  No shares of Preferred Stock have been issued.
The  following  table shows the high and low bid of  Registrant's  Common  Stock
during the last two years and the current fiscal year.

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

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

         1997                           Low Bid               High Bid
         -------------------------------------------------------------

         First Quarter                  $.21875               $.84375
         Second Quarter                 $.21875               $.71875
         Third Quarter                  $.1625                $.38
         Fourth Quarter                 $.10                  $.30

         1998                           Low Bid               High Bid
         -------------------------------------------------------------

         First Quarter                  $.05                  $.19
         Second Quarter                 $.075                 $.55
         Third Quarter                  $.1875                $1.75

     It  should  be noted  that,  in some  cases,  these  prices  may have  been
established with a very low trading volume.  As a result, a small trading volume
may result in significant price fluctuation.


                                       13


<PAGE>


     (b)  Holders

     As of September 30, 1998,  there were  approximately  631  shareholders  of
record  of  Registrant's   Common  Stock.   This  number  does  not  include  an
undeterminable  number  of  beneficial  holders  who own  their  shares  through
broker-dealers, nominees, and otherwise.

     (c)  Dividends

     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.  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
        ------------------------------------------------------------------------

     Liquidity and Capital Resources
     -------------------------------

     At December 31, 1997,  and  subsequently,  Registrant  has had  significant
working  capital  shortages.  In fact,  since its inception  through the present
time,  Registrant's  current  liabilities  have exceeded  current  assets.  This
situation  has created  significant  hardship for the  Registrant in meeting its
obligations  to  pay  its  bills  currently,  although  at  December  31,  1997,
Registrant  was  able to pay or  subsequently  arrange  for the  payment  of all
salaries and Christmas bonuses for its Bolivian  operations,  as well as most of
its  suppliers'  billings  and  other  current  expenses.  As  discussed  below,
Registrant's  working capital deficit is currently due to short-term  loans made
from  affiliates and unrelated  parties,  and no  substantial  amount of current
liabilities are due to suppliers or trade creditors.

     During the first half of 1997,  Registrant had a working capital surplus as
a result of loans obtained from an unaffiliated Texas bank which were guaranteed
by an affiliate of Registrant or unaffiliated  family members of that affiliate.
Registrant acquired the first loan, a short-term bridge loan in the total amount
of $240,000,  in February 1997.  Registrant then acquired a second, term loan in
the total amount of $1,000,000 in May 1997. The term loan repaid the bridge loan
and is currently due and payable June 1999. Both loans bear interest at 8.5% per
annum and were  collateralized  by Mary  Erickson,  an officer  and  director of
Registrant.  Ms. Erickson personally guaranteed repayment of the amounts due and
pledged  13,500,000  shares of  Registrant's  common stock owned by Golden Eagle
Mineral  Holdings,  Inc. (a  significant  shareholder of Registrant as described
below  in  Item  11,  "Security  Ownership  of  Certain  Beneficial  Owners  and
Management").  These  loans  were  further  collateralized  by assets  owned and
guarantees issued by Ms.  Erickson's  family members;  these family members were
not  affiliates of Registrant  at the time of these  transactions.  As a fee for
consideration  of  the  family  members'  guarantees  of the  $1  million  loan,
Registrant  issued a total of 20,000,000 shares of Common Stock which was valued
at $.10 per share.

     After expending the working  capital  provided by the bank loan to purchase
equipment and for operations,  and in order to obtain the liquidity necessary to
continue  Registrant's  operations in late 1997, Registrant obtained $100,000 by
the  issuance of a 10%  convertible  debenture  on October 23, 1997 to a foreign
corporation.  This  debenture is  convertible at the lesser of $.16 per share or
50% of the average  closing bid price during the  three-day  period prior to the
notice of conversion.  These funds were used  primarily for working  capital and
operating  expenses.  This  debenture  was  subsequently  converted to 3,062,821
shares of Registrant's common stock in October 1998.

     In 1998,  Registrant issued a $250,000  convertible  debenture to a foreign
corporation  at  8%,  of  which  $125,000  was  exercised.  This  debenture  was
convertible at 50% of the average closing bid price during the three-day  period
prior to the notice of  conversion.  These funds were used primarily for working
capital and operating  expenses.  The $125,000  issued under this  debenture was
converted to 2,560,000 shares of Registrant's common stock in October 1998.

     Registrant's  majority-owned  subsidiary,  GEBM,  received  loans  totaling
$35,850 in cash from Registrant's  president,  Terry C. Turner,  and $90,331 (in
equipment  rentals and cash) from GEBM's  president,  Rene Velasquez.  The funds
provided by these loans were used to maintain Registrant's ongoing operations in
Bolivia.  These  loans bear  interest  at 24% per annum and are  repayable  upon

                                       14
<PAGE>


demand.  In 1998,  Mr.  Turner  received  substantial  repayment of his debt and
accrued interest through the conveyance of a vehicle owned by Registrant, valued
at $27,575,  and payment of $9,500 in cash.  Mr.  Velasquez has not indicated an
intention  to  require  repayment  of his  loan at the  present  time,  although
Registrant deems the debt due and payable.

     Registrant  also used its common  stock  directly  to raise  capital and to
satisfy  some of its  obligations.  During  1997,  Registrant  issued a total of
10,126,350 shares to ten unaffiliated,  accredited  investors at a price of $.10
per share.  The funds  received from these  investors  were also used to satisfy
Registrant's  working  capital  obligations  associated with its exploration and
evaluation  activities  in  Bolivia,  and to meet  Registrant's  goals under its
agreement with the UCL. Also in 1997, Registrant satisfied some of its liquidity
requirements by issuing shares of its common stock to purchase  equipment and to
pay  non-U.S.  persons for  services  rendered to  Registrant.  As noted  above,
Registrant  also issued shares of common stock to certain  affiliates  and their
unaffiliated    family   members   as   consideration   for   guaranteeing   and
collateralizing loans made to Registrant.

     Registrant's ability to use its capital stock and other securities to raise
working capital and to pay its indebtedness is subject to extensive  federal and
state  regulation.  Although  Registrant  has exerted its best efforts to comply
with all  applicable  regulations,  there can be no assurances  that it has been
able to do so. To the extent  there may be any  non-compliance,  Registrant  may
incur  certain  liabilities,  although  no such  claims  have,  to  Registrant's
knowledge, been asserted to date.

     This situation has continued  during 1998.  Registrant has been required to
seek  financing  from  other  sources,  including  affiliates  and their  family
members,  to allow it to continue its exploration  and evaluation  operations on
its Bolivian properties,  and to pay its general and administrative  expenses in
the United  States and  Bolivia.  Although  Registrant  has been  successful  in
obtaining funds to date,  there can be no assurance that Registrant will be able
to continue to be  successful in doing so.  Registrant's  ability to finance its
operations  will, in the end, be dependent on  Registrant's  ability to generate
cash flow from operations, of which there can be no assurance.

     To date,  Registrant  has only been able to achieve  limited cash flow from
the limited  non-commercial  mining  operations  it has  conducted.  During 1997
Registrant  produced  approximately  13,678  grams  of  gold,  which it sold for
approximately  $126,000  (before  payment of $25,000 in royalties).  These funds
were all used in the Bolivian  operations.  Although Registrant believes that it
will be able to generate a significant amount of additional revenues from mining
gold from its properties,  no reserves have been established to date, Registrant
has not developed a formal mining plan,  and there can be no assurance  that any
revenues received will exceed the expenses incurred.

     Registrant has no significant capital commitments other than to continue to
evaluate  and  explore  its  properties  in Bolivia  with the goal of  achieving
commercial   production  if  the   properties  are  capable  of  producing  gold
commercially.

     In   addition,   Registrant   has   offered  to  purchase   the   interests
("Certificados de Aporte" or "Certificates of Contribution")  from each of UCL's
118 members. If the offer is accepted,  and if certain conditions  precedent are
met,  Registrant will pay each member  approximately  $10,000,  including $3,000
cash  and the  balance  in  shares  of  Registrant's  common  stock.  Among  the
conditions  precedent  that must be met  before  the offer can be  completed  is
compliance with U.S. and Bolivian  securities laws, as well as acceptance by the
UCL members.

     In summary, therefore, Registrant believes that it does not have sufficient
liquidity or capital  resources to purchase the  interests of the UCL members or
to accomplish  its other  operational  objectives.  Registrant's  current status
makes it more difficult for Registrant to raise such funds on reasonable  terms.
Issues that  Registrant  believes would be of concern to  prospective  investors
include (without  limitation) the pending litigation filed by the Securities and
Exchange  Commission,  the  significant  working capital  shortage,  the lack of
proven  mineral  reserves  or a mine  plan,  the  difficulties  associated  with
international  operations,  the concentration of Registrant's assets in a single
prospect  in  Bolivia,  the  significant  dependence  on  management,   and  the
"cooperative risk factor" discussed above in Item 1, page 9.

                                       15
<PAGE>


     Results of Operations
     ---------------------

     Registrant's  operations  have resulted in significant  losses and negative
cash flow from  operations  during the past several years.  Notwithstanding  the
limited  amount of  revenues  generated  from  mining  operations  ($101,000  in
post-royalty  revenues in 1997),  Registrant's  general and  administrative  and
other costs have vastly  outstripped  the  resources  generated by  Registrant's
operations.  As described above in "Liquidity and Capital Resources," Registrant
has been dependent on loans from affiliated and unaffiliated  parties (including
certain family members of  affiliates) to meet its working  capital  obligations
and  to  finance  Registrant's  continuing  operating  losses.  There  can be no
assurance  that  Registrant  will be able to continue  to finance its  operating
losses in such a manner.

     The following sets forth certain information regarding  Registrant's result
of operations during 1997 compared with 1996.

     Registrant  incurred  operating  expenses  totaling  $2,524,710 in 1997, as
compared  to  $1,982,768  in 1996,  an  increase  of 27%.  As a result of having
limited  revenues  from  operations,  Registrant  incurred  operating  losses of
($2,423,251) in 1997 and ($1,982,768) in 1996, an increase of 22%.

     Registrant accrued  compensation and related payroll taxes of approximately
$717,000  in 1997.  (Registrant's  president  was paid  salary  of  $48,592  and
Registrant's  secretary/treasurer  was not paid salary in 1997; in 1998, neither
Registrant's   president   nor  the   secretary/treasurer   has  been  paid  any
compensation, although salaries are continuing to accrue at the rate of $200,000
per year for the president  and $150,000 per year for the  secretary/treasurer.)
In addition,  during 1997 Registrant  paid  consultants  approximately  $693,000
(including  issuance of common stock valued at $400,000 to a Bolivian consulting
engineering firm, $126,000 to an investor relations  consultant,  and $70,000 to
two public relations firms). The combination of 1997 compensation and consulting
fees  of  $1,410,000   compared  to  $1,422,000  in  1996,  a  decrease  of  1%.
Compensation  costs are expected to increase in 1998 and beyond if Registrant is
successful in expanding its operations.

     Registrant's costs and operating expenses for 1997 actually decreased as to
general and administrative expenses, totaling $1,848,603, compared to $1,926,921
in 1996. However, exploration expenses in 1997 increased significantly, totaling
$1,030,000  in 1997  (including  $402,609  of 1997 costs  written  down in 1997)
compared to $520,000 in 1996  (including  $470,853 of 1996 costs written down in
1997) as a result of increased exploration  activities conducted on the property
during 1997. In addition, depreciation increased in 1997 to $48,501, from $7,006
in 1996,  representing an increase of 592%. This increase in depreciation is due
principally to the acquisition of mining equipment.

     Legal expenses in 1997 decreased  significantly as a result of Registrant's
counsel in Bolivia  joining the Company as its  president  and CEO in 1997.  The
expenses  totaled  $75,001 in 1997, as compared to $229,037 in 1996.  Accounting
and other professional  expenses in 1997 were materially larger than in 1996 due
to efforts required in bringing  Registrant's  accounting current. 1997 expenses
for  accounting  and  consulting   engineering  totaled  $108,310,   while  1996
accounting and other professional expenses were $34,373. Registrant expects that
future legal,  accounting and other professional expenses will increase in 1998.
These  increased  costs  are  due  to  the  SEC  investigation  of  Registrant's
activities, the Arizona litigation effort, negotiations with a former consultant
regarding the settlement of issues surrounding consultant's contract, litigation
with one of Registrant's former officers regarding issues surrounding employee's
contract  and this  officer's  tortious  activities,  and  efforts to update the
corporate records and SEC filings. In addition,  these expenses will increase as
a result of efforts to audit and confirm previous geological studies provided to
Registrant and to further verify mineralization on the Cangalli deposit by Behre
Dolbear & Company,  Inc.,  internationally-recognized  consultants to the mining
industry.

     Capital expenditures for property and equipment increased  significantly in
1997 to $822,192,  as Registrant funded  exploration costs and investment on the
Bolivian mining prospect. By comparison,  1996 results show capital expenditures
of $741,696. This reflects an increase in 1997 of 11%.

                                       16
<PAGE>


     Registrant  incurred interest  expenses in 1997 of $184,204,  as opposed to
1996  interest  of  $79,141.  The  increased  amount  of loans  led to this 133%
increase.  This  increased  interest  cost  will  continue,  and  probably  rise
significantly,  in 1998  because of increased  borrowings  necessary to maintain
liquidity for operating  purposes.  During 1997, due to uncertainties  regarding
the  recoverability  of  Registrant's   investment  in  the  Bolivian  prospect,
Registrant  elected to  write-down  $873,462  of costs  previously  capitalized,
including  $470,853  which were  incurred  in 1996.  As of  December  31,  1997,
capitalized costs related to the Bolivian prospect are principally $100,000 paid
for prospect acquisition rights and $813,529 for mining equipment.

     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  subsequently  converted the debentures
into  2,993,161  shares of common  stock as provided for in the  agreement.  All
voting  rights  associated  with the stock  issued were placed in a voting trust
with the Company's  board of directors as trustee.  The Company has recorded the
stock issued at $299,316 ($.10 per share),  the estimated  value of its stock at
the date of the transaction.

     Registrant  had a net loss for 1997 of  ($5,963,554),  compared  to its net
loss in 1996 of  ($2,058,742).  Registrant  anticipates  that  the  trend of net
losses  will  continue  in 1998,  as it invests  further in  exploration  on its
Cangalli  prospect  and in general  and  administrative  expenses  in the United
States and Bolivia, without generating significant revenues from those efforts.

     Impact of Inflation and Changing Prices
     ---------------------------------------

     Registrant  has not  experienced  any impact from the effects of  inflation
during  the  last  three  operating  periods,  1995,  1996,  or  1997.  Bolivian
inflation,  while  astronomical  at points  during  the early  1980's,  has been
relatively  stable, at less than 10% since 1985, and during the last three years
has been less than 8% per annum.

     Y2K Issues
     ----------

     Registrant  does not foresee any  negative  impacts as to its business as a
result of Year 2000  issues,  other than those  which may  generally  affect the
North and South  American  populations  at large,  such as banking  disruptions,
power failure,  inconveniences due to governmental slowdowns,  and other similar
effects,  if any.  Registrant has attempted to analyze any  potential,  specific
impacts, but cannot guarantee that its business activities will not be impacted.
Generally,  software  available  in  South  America  is  less  likely  to be Y2K
compliant,  but  Registrant  does not believe that a requirement  to replace its
existing hardware or software, if necessary, will materially affect Registrant.

Item 7. Financial Statements 
        --------------------

     Please refer to pages F-1 through F-23.

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

     There were no disagreements with Registrant's accountants on any matters of
accounting principles,  practices or financial statement disclosures during 1997
through the present.


                                    PART III


Item 9.  Directors and  Executive  Officers of 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 Registrant (including its subsidiaries) as of December
31, 1997.  These people continue to hold the stated  positions as of October 20,
1998.

                                       17
<PAGE>
<TABLE>
<CAPTION>


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

     <S>                              <C>     <C>                       <C>                    
     Mary A. Erickson (1)             41      Secretary, Treasurer &
                                              Director                  11/8/94 to 7/4/96

                                              President & Director      7/4/96 to 2/14/97

                                              Secretary, Treasurer &
                                              Director                  2/14/97 to present

     Terry C. Turner (1)              45      President, Chairman &
                                              CEO                       2/14/97 to present

     Harlan M. (Mac) Delozier  III    54      Executive Vice President  3/1/97 to present

     Rene Velasquez                   54      President & Director,
                                              GEBM, EMB                 3/15/96 to present
     -----------
</TABLE>

     (1)  Director,  Eagle  Mining of Bolivia,  Ltd.  and Golden  Eagle  Bolivia
          Mining, S.A.

     No  arrangement  exists  between any of the above  officers  and  directors
pursuant  to which  any one of those  persons  was  elected  to such  office  or
position.

     Directors  hold office until the next meeting of  shareholders  and until a
successor  is elected  and  qualified,  or until  their  resignation.  Executive
officers  are elected at annual  meetings of the Board of  Directors.  Each such
officer holds office for one year or until a successor has been duly elected and
qualified or until death, resignation or removal. No director of Registrant is a
director of another company having securities registered under Section 12 of the
Securities  Exchange Act of 1934 or a company  registered  under the  Investment
Company Act of 1940.

     Biographical Information
     ------------------------

     A brief summary of the business  experience of each person who is currently
an officer or director of Registrant, and such person's service with Registrant,
is as follows:

     Terry C. Turner is  President  and a director of  Registrant,  appointed to
such positions 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 also a member of the Bolivian  College of Lawyers  (Bolivian Bar
Association)  and is the first  American  attorney  admitted to practice  law in
Bolivia.

     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
General Counsel to Minas del Glaciar, S.A., La Paz, Bolivia, which was a mineral
exploration company.  From 1995 to 1997 Mr. Turner was in private practice in La
Paz,  Bolivia.  From 1995 to date, Mr. Turner has also served as President and a
Director  of  Bolivian  Copper  Chemical   Company,   S.A.,  a  Bolivian  copper
exploration  and mining  company.  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

                                       18
<PAGE>


January 1996 until his appointment  with Registrant in February 1997, Mr. Turner
was corporate  counsel in Bolivia for  Registrant and its  subsidiaries,  Golden
Eagle  Bolivia  Mining,  S.A. and Eagle Mining of Bolivia,  Ltd. Mr.  Turner was
awarded the Medal of Civic Merit by the  Prefect  (Governor)  of the State of La
Paz, Bolivia,  during 1997 for his work in promoting  investment in the Bolivian
mining  industry,  and for his  contribution  to the progress  within the La Paz
state. The Medal of Civic Merit is the highest honor which can be awarded by the
state government in Bolivia.

     Mary A.  Erickson  is  corporate  Secretary,  Treasurer,  and a director of
Registrant,  having served in such capacities since November 1994. She served as
President from July 4, 1996 to February 14, 1997. She is the sole shareholder of
Golden Eagle Mineral Holdings, Inc., one of Registrant's principal shareholders.
Prior to her  association  with  Registrant,  Ms.  Erickson  was an officer  and
director of Timberline Consultants, Inc., an investor relations consulting firm,
from January 1991 until September 1, 1994. Ms. Erickson was awarded the Medal of
Civic Merit by the Prefect  (Governor) of the State of La Paz,  Bolivia,  during
1997 for her work in promoting  investment in the Bolivian mining industry,  and
for her contribution to the progress within the La Paz state. The Medal of Civic
Merit is the  highest  honor  which can be  awarded by the state  government  in
Bolivia.

     Harlan M. (Mac)  Delozier  III was  appointed  to the position of Executive
Vice President for Bolivian Operations for Golden Eagle  International,  Inc. on
March 1, 1997.  Mr.  Delozier is a 1966 graduate of Oklahoma  State  University,
where he  received  Bachelor  of Arts  degrees  in  Political  Science,  Foreign
Language and History. He served in the Peace Corps in Bolivia from 1966-1971 and
was a cattle rancher in Beni, Bolivia from 1972-1990. From 1976 to 1980 he was a
representative of Homeline/Textron in Bolivia, and from 1980-1981 was manager of
gold mining  operations for Kerani,  in the Murillo  Province,  La Paz, Bolivia.
From 1981 to 1985, Mr.  Delozier was the purchasing  agent for the U.S.  Embassy
Commissary in La Paz,  Bolivia and was an exporter for leather products to Chile
and Peru from 1986-1988.  From 1989 until his  appointment  with Golden Eagle in
1997,  Mr.  Delozier  was an  international  sales  representative  for  Toyota,
Chevrolet,  and Hyundai in Bolivia. From May 1997 to date, Mr. Delozier has also
served as Executive Vice President of Bolivian Copper Chemical Company,  S.A., a
Bolivian copper exploration and mining company. (Registrant's Board of Directors
has received notice of, and approved of, Mr. Delozier's dual role. Additionally,
Registrant's  Board has received full disclosure as to any conflicts of interest
which may develop from this  relationship,  and has instructed  Mr.  Delozier to
disclose any conflicts which may arise in the future.)

     Rene Velasquez is 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.

     Technical Advisory Board
     ------------------------

     In addition to relying on its management,  in May, 1997 the Company's Board
of Directors  formed a Technical  Advisory  Board to assist the Company with the
evaluation, exploration and operation of its current Bolivian gold prospect, and
any future  acquisitions.  This Advisory Board will  initially  consist of three
members  with broad  backgrounds  and  extensive  experience  with major  mining
companies. They are as follows:

     Max S. Staheli.  Mr. Staheli received a B.A. in Finance and an MBA from the
University  of Utah.  He has worked for KPMG  Peat,  Marwick & Co. in  Honolulu,
Hawaii in the late 60's, and nine years as a manager with Atlantic Richfield Co.
(1973-82).  Mr.  Staheli spent the last 14 years with Barrick Gold  Corporation,
most recently as their Controller of South American Operations  headquartered in
Lima, Peru. Mr. Staheli  developed and implemented  administrative  policies and
procedures for Barrick's launch into South America.  He also successfully  built
the corporate  structure for Barrick's  extensive  exploration  and  development
program,  which  included  Bolivia.  Mr. Staheli was  instrumental  in the rapid
growth of Barrick Gold  Corporation in the South Amercan market between 1994-96.
Mr.  Staheli was awarded the Medal of Civic Merit by the Prefect  (Governor)  of
the State of La Paz, Bolivia,  during 1997 for his work in promoting  investment
in the Bolivian mining industry, and for his contribution to the progress within
the La Paz state.  The Medal of Civic  Merit is the  highest  honor which can be
awarded by the state government in Bolivia.

                                       19
<PAGE>


     Donald M. Hausen,  Ph.D.  Dr. Hausen  received a B.S. in Geology from Idaho
State College,  an M.S. in Geology from the University of Oregon, and a Ph.D. in
Geology from  Columbia  University in New York. He has served as the Chairman of
the Process Mineralogy Commitee of the SME-AIME on several occasions. Dr. Hausen
is a  member  of  the  Mineralogic  Society  of  America;  Society  of  Economic
Geologists;  CIM;  Ore.  Geol.  Reviews  (Editorial  Advisory  Board);  and  the
International Congress of Applied Mineralogy. Dr. Hausen has worked for the U.S.
Army Corps of Engineers,  U.S. Bureau of Mines,  Atomic Energy Commision,  Union
Carbide  Nuclear  Company,  Newmont  Exploration  Limited  (Chief  Mineralogist,
1964-87), and Newmont Metallurgical Services (Chief Mineralogist,  1987-90). Dr.
Hausen was awarded the Medal of Civic  Merit by the  Prefect  (Governor)  of the
State of La Paz,  Bolivia,  during 1997 for his work in promoting  investment in
the Bolivian mining  industry,  and for his  contribution to the progress within
the La Paz state.  The Medal of Civic  Merit is the  highest  honor which can be
awarded by the state government in Bolivia.

     Ronald  L  Atwood,  Ph.D.  Dr.  Atwood  received  a B.S.  in  Metallurgical
Engineering,  and a Ph.D.  in  Metallurgy  from the  University  of Utah. He has
published  nine  papers on various  aspects  of  metallurgy.  He holds  numerous
patents in the field of extractive  metallurgy.  Dr. Atwood has been a professor
of metallurgy at Michigan Tech (1972-74) and the University of Idaho  (1974-75).
Dr.  Atwood  has served on the board of  Newmont  Exploration,  as well as Chief
Metallurgist for Foote Mineral (1975-82),  Director of Research for Newmont Gold
(1986-87) and Newmont Metallurgical Services (1987-89), all divisions of Newmont
Mining.  Dr.  Atwood  currently  serves as Vice  President  of  Bolivian  Copper
Chemical Company,  S.A., in La Paz, Bolivia,  which has recently entered into an
agreement  with an Australian  resource  company for the  development of a large
copper  deposit in Bolivia.  Dr.  Atwood was awarded the Medal of Civic Merit by
the Prefect (Governor) of the State of La Paz, Bolivia, during 1997 for his work
in  promoting   investment  in  the  Bolivian  mining  industry,   and  for  his
contribution to the progress  within the La Paz state.  The Medal of Civic Merit
is the highest honor which can be awarded by the state government in Bolivia.

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

     Section  16(a) of the  Securities  Exchange  Act of 1934,  as amended  (the
"Exchange Act"), requires  Registrant's officers and directors,  and persons who
own more than 10% of a registered class of Registrant's  equity  securities,  to
file reports of  ownership  and changes in  ownership  of equity  securities  of
Registrant  with the  Securities and Exchange  Commission and NASDAQ.  Officers,
directors and  greater-than-ten-percent  shareholders are required by Securities
and Exchange  Commission  regulations to furnish  Registrant  with copies of all
Section 16(a) filings.

     Based  solely on its review of the copies of the reports it  received  from
persons  required  to file,  Registrant  believes  that  during the period  from
January  1,  1997  through  1998,  all  filing  requirements  applicable  to its
officers,  directors  and  greater-than-ten-percent  shareholders  were complied
with, except as follows:

     Terry C. Turner became a director and executive  officer of Registrant  and
(therefore)  subject to the Section 16(a) filing  requirements in February 1997.
Mr. Turner filed his Form 3 in October, 1998.

     Golden  Eagle  Mineral  Holdings,  Inc.  ("GEMH"),  an affiliate of Mary A.
Erickson,  became  subject to the Section  16(a)  filing in November  1994.  Ms.
Erickson became subject to the filing  requirements  at the same time.  Although
they filed the initial Form 3 that was required  and filed  subsequent  Forms 4,
the subsequent forms were not complete,  and certain transactions  occurred that
were not reported.  In October 1998,  GEMH and Ms.  Erickson filed seven Forms 4
reporting events in November 1994,  December 1994, May 1995, June 1995,  October
1995, November 1996 (amending an earlier report), and December 1997.

     Rene Velasquez  became a Section 16(a)  reporting  person in June 1996 when
his position with  Registrant's  subsidiaries  became equivalent to an executive
officer  of  Registrant.  It is  expected  that  this Form 3 will be filed on or
before November 10, 1998.

     Mac Delozier  became a Section  16(a)  reporting  person in March 1997.  He
filed his Form 3 in October 1998.

                                       20
<PAGE>


     The  Herbert  M.  Seydler,  Jr.  Trust  became  subject  to  the  reporting
requirements  of  Section  16(a) in June 1997  when it  acquired,  directly  and
indirectly,  12,500,000 shares of Registrant's  common stock,  constituting more
than 10% of the  outstanding  stock at the time. He filed his Form 3 in November
1998.

     The Betty Jane Seydler Trust became  subject to the reporting  requirements
of  Section  16(a) in June  1997  when it  acquired,  directly  and  indirectly,
12,500,000  shares of Registrant's  common stock,  constituting more than 10% of
the outstanding stock at the time. This Form 3 was filed in November 1998.

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

     Summary Compensation Table
     --------------------------

     The following table sets forth information  regarding  compensation paid to
the chief executive  officers of Golden Eagle  International,  Inc. for the year
ended  December 31, 1997. No other person who is currently an executive  officer
of Golden Eagle earned salary and bonus  compensation  exceeding $100,000 during
any of the last three years. The table below includes all  compensation  paid to
them by the Registrant and any subsidiary.
<TABLE>
<CAPTION>

                                Annual Compensation            Long Term Compensation
                             -------------------------    --------------------------------
                                                                  Awards            Payout
                                                          ------------------------  ------
                                                                        Securities
                                                                        Underlying               All
   Name and                                               Restricted    Options &    LTIP       Other
   Position          Year    Salary      Bonus   Other      Awards        SAR's     Payout   Compensation
-----------------------------------------------------------------------------------------------------------------

<S>                  <C>    <C>            <C>   <C>          <C>           <C>       <C>        <C>
Terry C. Turner      1997   $48,592(A)     $0    $2,250       $0            $0        $0         $0
   Chairman,
   President &
   Chief Executive
   Officer

Mary A. Erickson     1996        $0(B)     $0        $0       $0            $0        $0         $0
   Chief Executive   
   Officer 7-4-96    1997        $0        $0        $0       $0            $0        $0         $0
   through           
   2-17-97;
   Secretary,
   Treasurer &
   Director

Rene Velasquez       1996        $0(C)     $0        $0    $400,000(D)      $0        $0         $0
   President of
   GEBM and          1997        $0        $0        $0    $200,000(E)      $0        $0         $0
   EMB

-----------
</TABLE>

(A)  Mr.  Turner  has  accrued  salary at the rate of  $200,000  per year  since
     February 17, 1997, although only $48,592 was paid in 1997 and no salary has
     been paid in 1998.  This  accrued but unpaid  salary is a liability  of the
     Registrant but bears no interest.
(B)  Ms.  Erickson  has accrued  salary at the rate of $50,400 per year  through
     July 1, 1997 and $150,000 per year  thereafter.  No salary has been paid to
     Ms.  Erickson  since  November  1994.  This accrued but unpaid  salary is a
     liability of the Registrant but bears no interest.
(C)  Mr.  Velasquez  has  accrued  salary at the rate of $60,000  per year since
     March 15, 1996. No salary has been paid to Mr.  Velasquez  since that time.
     This accrued but unpaid salary is a liability of the  Registrant  but bears
     no interest.
(D)  Registrant  granted Mr.  Velasquez  2,000,000 shares of restricted stock in
     October 1996 valued at $.20 per share.
(E)  Registrant  granted Mr.  Velasquez  2,000,000 shares of restricted stock in
     May 1997 valued at $.10 per share.


     There are no plans to pay bonuses or deferred  compensation to employees of
the Company.  However,  its president and its  secretary/treasurer  have accrued
salary  for the year  ending  December  31,  1997,  in an  aggregate  amount  of
$276,408,  which sum will be paid to these individuals as Registrant is able. An
additional  $341,667 has been  accrued  through  October 31,  1998,  for a total
cumulative unpaid salary of $717,489.

                                       21
<PAGE>


     Registrant  has no plans which result in the payment or accrual for payment
of  any  amounts  to  any  executive  officer  in  connection  with  his  or her
resignation, retirement, or other termination, or change of control or change in
the executive officer's responsibilities.

     Although  Registrant had  employment  agreements  with Ms.  Erickson in the
past, Registrant did not consider those agreements to be material. In any event,
those agreements have been terminated by mutual consent. There are no employment
agreements with Registrant's other employees.

     Registrant  acquired a vehicle  during the 1997  fiscal year for the use of
Mr.  Turner.  Registrant  conveyed that vehicle to Mr. Turner in January 1998 in
partial satisfaction of a debt.

     Options/SAR Granted During Year Ended December 31, 1997
     -------------------------------------------------------

     During  fiscal 1997,  no stock options were granted by Registrant to any of
its employees or officers.  During the same period, no stock appreciation rights
were  granted to any  person,  and there  were no  outstanding  options.  During
October 1998,  Registrant granted Mr. Turner and Ms. Erickson options to acquire
shares of Registrant's  common stock in consideration of their continued efforts
on behalf of  Registrant,  their  willingness  to defer their salary,  and their
financial  assistance  to  Registrant,  including  loans  they and their  family
members made to Registrant or guaranteed  for the benefit of  Registrant.  These
options are exercisable at $.16 per share,  100% of the closing price on October
20, 1998,  the date the options  were  granted.  Each of the options  expires on
November 1, 2001. The number of shares subject to the options are as follows:

    Terry C. Turner:     10,000,000 shares currently vested and 5,000,000 shares
                         which will vest and become exercisable if Mr. Turner is
                         still  employed  by, or an officer or director  of, the
                         Registrant on November 1, 1999.

    Mary A. Erickson:    5,000,000 shares currently vested and 5,000,000  shares
                         which will vest and become exercisable  if Ms. Erickson
                         is still employed by, or an officer or director of, the
                         Registrant on November 1, 1999.

     Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
     --------------------------------------------------------------------------

     No executive  officer  exercised any options or stock  appreciation  rights
during the 1997 fiscal year.

     Long Term Incentive Plan - Awards in Last Fiscal Year
     -----------------------------------------------------

     Registrant has no long-term  incentive plans, and consequently made no such
awards in fiscal year 1997.

     Defined Benefit or Actuarial Plan Disclosure
     --------------------------------------------

     As of  December  31,  1997,  the  Registrant  had  not  adopted  a  medical
insurance,  life  insurance,  or  other  benefit  plan  for its  employees.  The
Registrant  adopted a medical  insurance plan for its employees in October 1998,
which plan will become effective on November 1, 1998.  Registrant  currently has
no stock ownership or other  profit-sharing or pension plans, but may adopt such
plans in the future. Registrant has no retirement plans and, therefore, has made
no contributions to any such plan on behalf of the named officers.

     Compensation of Directors
     -------------------------

     There was no Director  Compensation  for the fiscal  year 1997,  except for
compensation  of  Officers  who are also  Directors  which is  described  in the
Summary  Compensation  Table above.  Members of Registrant's  Technical Advisory
Board accrued  compensation  in the amount of $12,000 in 1997 in connection with
certain consulting services rendered by them.

     Except as described  herein,  no officer or director of the  Registrant has
been or is being  paid any cash  compensation,  or is  otherwise  subject to any
deferred   compensation   plan,   bonus  plan  or  any  other   arrangement  and
understanding  whereby such person would  obtain any cash  compensation  for his
services for and on behalf of the Registrant.

                                       22
<PAGE>


     Employment  Contracts and  Termination of Employment and  Change-in-Control
     Arrangements.
     ---------------------------------------------------------------------------

     Registrant  has no  compensation  plan or  arrangement  with respect to any
executive  officer  which plan or  arrangement  results or will  result from the
resignation, retirement or any other termination of such individual's employment
with the Company. Registrant has no plan or arrangement with respect to any such
persons which will result from a change in control of the Company or a change in
the individual's responsibilities following a change in control.

     Report on Repricing of Options/SARs
     -----------------------------------

     Not applicable,  as no options or SARs were repriced during the fiscal year
ended December 31, 1997.

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

     At October 26, 1998,  Registrant had only one class of  outstanding  voting
securities,  its common stock  (referred to herein as the "Common  Stock").  The
following  table sets forth  information  as of October 26, 1998 with respect to
the ownership of the Common Stock for all directors, individually; all executive
officers named in the compensation  table; all executive  officers and directors
as a group;  and all  beneficial  owners of more than five percent of the Common
Stock.

     Name of                                     Shares owned           Percent
     beneficial owner                            beneficially (1)       of class
     ----------------                            ----------------       --------

     Mary A. Erickson                            19,441,467 (2)           17.1%
     4949 S. Syracuse St., Ste. 300
     Denver  CO  80237

     Terry C. Turner                             10,000,000 (3)            8.4%
     4949 S. Syracuse St., Ste. 300
     Denver  CO  80237

     Herbert M. Seydler, Jr. and Ravia Seydler   12,861,600 (4)           11.8%
     c/o Hirsch & Westheimer, P.C.
     700 Louisiana, 25th Floor
     Houston  TX  77002

     Betty Jane Seydler                          12,510,000 (5)           11.5%
     c/o Hirsch & Westheimer, P.C.
     700 Louisiana, 25th Floor
     Houston  TX  77002

     All officers and directors
     as a group (3 persons)                      33,441,467               27.1%

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

(1)  As used in this section,  the term  beneficial  ownership with respect to a
     security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
     as consisting of sole or shared voting power  (including  the power to vote
     or direct the vote) and/or sole or shared  investment  power (including the
     power to dispose or direct the  disposition)  with  respect to the security
     through  any  contract,   arrangement,   understanding,   relationship   or
     otherwise.  Unless otherwise  indicated,  beneficial ownership is of record
     and consists of sole voting and investment power.

(2)  Includes  14,441,467  shares  owned  indirectly  and  beneficially  by  Ms.
     Erickson as sole  shareholder of Golden Eagle Mineral  Holdings,  Inc., the
     record holder of the shares,  of which 13,500,000  shares have been pledged
     to Frost  National Bank as collateral on a revolving  line of credit issued

                                       23
<PAGE>


     to  Registrant,  and 800,000  shares  have been  pledged as  collateral  to
     certain  family  members for amounts  owed to those  family  members.  Also
     includes  5,000,000 shares underlying stock options issued to Ms. Erickson,
     of which all are presently exercisable. Does not include options to acquire
     an additional 5,000,000 shares exercisable at $.16 per share, which vest on
     November 1, 1999.

(3)  Comprises  10,000,000 shares underlying stock options issued to Mr. Turner,
     of which all are presently exercisable. Does not include options to acquire
     an additional 5,000,000 shares exercisable at $.16 per share, which vest on
     November 1, 1999.

(4)  Includes  11,250,000  shares owned by The Herbert M.  Seydler,  Jr.  Trust,
     1,250,000  shares  owned  jointly  by  Herbert  M.  Seydler,  Jr. and Ravia
     Seydler;  360,000 shares directly owned by Ravia Seydler;  and 1,600 shares
     directly owned by Herbert M. Seydler, Jr.

(5)  Includes 11,250,000 shares owned by The Betty Jane Seydler Trust; 1,250,000
     shares owned directly by Betty Jane Seydler,  which were erroneously issued
     in the name of The Betty  Jane  Seydler  Trust;  and  10,000  shares  owned
     directly by Betty Jane Seydler.

     Registrant  knows of no  arrangement  of the  operation  of which may, at a
subsequent date,  result in change in control of the Company,  except the pledge
by Golden  Eagle  Mineral  Holdings,  Inc.  of  13,500,000  shares to Frost Bank
described above in Note (2). This loan is not in default.

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

     Stock Issuances
     ---------------

     Golden  Eagle  Mineral  Holdings,  Inc.  ("GEMH"),   became  a  controlling
shareholder of Registrant in November 1994 when it acquired 20,000,000 shares of
Registrant's  restricted common stock. GEMH paid Registrant a secured promissory
note payable to Registrant in the amount of $25,000 at ten percent interest, due
on demand.  GEMH paid this note in full with all accrued interest in 1995. Since
then,  GEMH has  transferred  certain of these shares to repay certain of GEMH's
financial obligations incurred as a result of GEMH's investment in Registrant.

     Herbert  M. and  Ravia  Seydler  (the "H.  Seydlers")  are Mary  Erickson's
parents;  Betty Jane Seydler ("B.  Seydler") is Ms. Erickson's aunt. Neither the
H.  Seydlers  nor B. Seydler  control,  are  controlled  by, or are under common
control with Ms.  Erickson.  They each  maintain  separate  households  from Ms.
Erickson  and  her  family.  Until  the  H.  Seydlers  and  B.  Seydlers  became
significant shareholders of Registrant as a result of the April 1997 transaction
described hereafter, neither was an affiliate of Registrant.

     During 1996, B. Seydler had advanced $450,000 to Registrant on an unsecured
basis.  As of January 1, 1997 Golden Eagle also owed  approximately  $314,000 to
the H. Seydlers.  In April 1997,  Registrant agreed to issue 5,000,000 shares of
its restricted common stock to H. Seydler, B. Seydler, and H. Seydler's trust in
payment of accrued  interest of $25,000 and for their  renewal and  extension of
these loans for three years.

     Also in April 1997, Mr. Seydler's trust and a related trust established for
the benefit of B. Seydler  guaranteed  the  repayment of a $1,000,000  loan from
Frost  Bank  of  Houston,  Texas,  made to  Registrant.  The  Registrant  issued
10,000,000 shares of its restricted common stock to each of the H. Seydler Trust
and the B. Seydler Trust for their guarantee of the obligation to Frost Bank. In
the opinion of management, Frost Bank would not have made the loan to Registrant
without the guarantees from the two trusts.  Furthermore,  Registrant was unable
to repay the loans due to H. Seydler or his trust,  or B.  Seydler,  at the time
they  agreed to extend the  obligations.  Consequently,  the Board of  Directors
believes that its agreement with H. Seydler,  B. Seydler,  and their trusts were
in the best  interests of the  Registrant  and its  shareholders,  and were more
favorable than the terms that could have been obtained from  unrelated  parties,
if any terms for similar  transactions  could have been  obtained.  Based on its
discussion with Frost Bank, among others, the Board of Directors doubts that any
other party would have assisted the  Registrant  as did H. Seydler,  B. Seydler,
and their trusts. As a result of these  transactions,  however,  H. Seydler,  B.
Seydler,  and their trusts have become  affiliates of the registrant  because of
their stock ownership.

                                       24
<PAGE>


     Loans to Registrant from Affiliates
     -----------------------------------

     As  described  elsewhere  in this Annual  Report,  Registrant  has suffered
chronic working capital  shortages.  To provide short-term relief to Registrant,
Ms.  Erickson  (Registrant's  Secretary/Treasurer)  and  certain  of her  family
members have advanced funds to Registrant. In addition, Ms. Erickson and certain
of her family members have guaranteed  certain of Registrant's  obligations,  as
outlined below. In each case, loans from Ms. Erickson accrued interest at 8% per
annum,  while loans from her family members  accrued  interest at 10.5% and 12%.
Each of the loans are unsecured loans due January 1, 2000;  however,  due to the
related party nature of these  transactions,  Registrant has classified  them as
current liabilities.  In Registrant's  opinion, the loans are significantly more
favorable to Registrant than could have been obtained from any other source;  in
fact, given Registrant's  financial condition and lack of profitable  operations
or assets within the United States, it is unlikely that any unaffiliated  person
would have advanced funds to Registrant on any terms or conditions.

     In addition,  as described  elsewhere in this Annual Report,  Mr. Velasquez
(president of Registrant's subsidiaries in Bolivia) and Mr. Turner (Registrant's
president) have advanced funds to Registrant for operations in Bolivia.

                                                                    Balance
                                                Amount          Outstanding
     Date           Affiliated Lender      (Repayment) 1        at Year End
     ----------------------------------------------------------------------

     1994           Mary A. Erickson           $44,107              $44,107

     1995           Mary A. Erickson          $265,163

     1995           Mary A. Erickson          (185,719)          2 $123,551

     1995           Family members 3           $32,683

     1995           Family members 3           ($8,092)             $24,591

     1996           Mary A. Erickson           $84,500

     1996           Mary A. Erickson          $169,417 4

     1996           Mary A. Erickson         ($116,500)            $268,975 5

     1996           Family members 3          $645,658             $724,068 5

     1996           Rene Velasquez             $41,900              $41,900

     1997           Family members 3          $239,687
                                             ($165,000) 6          $832,509 5

                    Rene Velasquez             $48,431              $90,331

                    Terry Turner               $35,850              $35,850

     1998           Family members 3          $159,179
                                              ($47,000)            $944,583

1    Registrant made all the described repayments in cash except as follows:

2    Including  $25,000  canceled in repayment  of a promissory  note payable to
     Registrant  in  connection  with the  issuance  of shares  to Golden  Eagle
     Mineral Holdings, discussed above.

                                       25
<PAGE>


3    It  should  be noted  that,  although  these  persons  are  related  to Ms.
     Erickson,  these persons are not affiliated with Ms. Erickson or Registrant
     inasmuch  as they  are  adults,  not  living  with  Ms.  Erickson,  and not
     controlling, controlled by, or under common control with, Ms. Erickson.

4    Unreimbursed  expenses  incurred for the benefit of  Registrant  and unpaid
     salary.

5    Including accrued interest.

6    Excluding $25,000 in abated interest.

     On February  11,  1997,  Frost  National  Bank loaned  Registrant  $240,000
pursuant to a  short-term  bridge loan at the bank's  prime rate,  due August 1,
1997. In April 1997,  the same bank loaned  Registrant $1 million  pursuant to a
revolving  line of credit  agreement  (which  has now been  extended  to June 1,
1999).  The loan bears  interest  at the prime rate (8.25% as of  September  30,
1998). In addition,  the loan is personally guaranteed by Ms. Erickson and GEMH,
including a pledge of 13,500,000  shares of Registrant  restricted  common stock
owned by GEMH, as described above. The loan is further secured by certain assets
of Ms. Erickson's unaffiliated family members and all of Registrant's assets. As
a fee for  consideration  of the family  members'  guarantees  of the $1 million
loan,  Registrant  issued a total of 20,000,000 shares of Common Stock which was
valued at $.10 per share.  The  proceeds  from the $1 million  loan were used to
retire the  earlier  $240,000  bank bridge  loan and for other  working  capital
expenses  incurred  in  connection  with  Registrant's  1997  operations  on the
Cangalli  properties.  As of September 30, 1998,  there were no funds  available
under the line of credit.

     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.

     Formation of Bolivian Subsidiaries
     ----------------------------------

     Registrant  formed Golden Eagle Bolivia Mining,  S.A.,  ("GEBM") in January
1996 to conduct its  operations in Bolivia.  Registrant  initially  owned 74% of
GEBM and later  acquired an  additional  19% from its Bolivian  partners,  for a
total of 93%.  Registrant formed a second  subsidiary,  Eagle Mining of Bolivia,
Ltd.  ("EMB")  in  October  1996 to own the  contract  for  mining  rights  and,
eventually, to operate the property. Registrant owns 84% of EMB; an affiliate of
Registrant,  Mary A. Erickson,  owns 3%; and Rene Velasquez (a Bolivian national
who is the  president  and  CEO of  Registrant's  subsidiaries)  owns  13%.  Mr.
Velasquez'  13%  ownership in EMB resulted  from the initial  agreement  between
Registrant and Mr. Velasquez, which resulted in Registrant's introduction to the
United  Cangalli  Cooperative  and  the  original  business   opportunity.   Ms.
Erickson's  3% ownership  was taken in partial  consideration  for the loans and
advances  made to  Registrant  by Ms.  Erickson  and her family.  EMB's  initial
constitution,  the  equivalent of its Articles of  Incorporation,  provided that
Registrant  will  act  as  the  funding  shareholder,  providing  any  necessary
operating or development capital to EMB as a "capital contribution" and not as a
loan. The other EMB  shareholders  are not liable for their share of any capital
contributions;  all EMB  shareholders  share  profits in  accordance  with their
interests.  Neither Mr.  Velasquez  nor Ms.  Erickson,  or any other  officer of
Registrant, own any interest in Registrant's other subsidiary, GEBM.


                                       26
<PAGE>


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

     (a)  Financial Statements

          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, 1997               F-4

            Consolidated  Statement  of  Operations  for the  years
                 ended December 31, 1997 and 1996 and from July 21,
                 1988 (inception) through December 31, 1997                  F-5

            Consolidated  Statement  of Cash  Flows  for the  years
                 ended December 31, 1997 and 1996 and from July 21,
                 1988 (inception) through December 31, 1997                  F-6

            Consolidated   Statement   of   Stockholders'    Equity
                 (Deficit)  for the years ended  December  31, 1997
                 and  1996  and  from  July  21,  1988  (inception)
                 through December 31, 1997                           F-7 and F-8

            Notes to Consolidated Financial Statements          F-9 through F-23

     (b)  Exhibits

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

          3.1  Articles of Incorporation as amended *
          3.2  Bylaws *
         10.1  Mineral   Concession   with  the  United   Cangalli  Gold  Mining
               Cooperative, Ltd. ^
         22.1  Subsidiaries
                    Golden Eagle  Bolivia  Mining S.A.,  incorporated  under the
                    laws of Bolivia Eagle Mining of Bolivia, Ltd.,  incorporated
                    under the laws of Bolivia

          *    Incorporated  by  reference  from the  Registrant's  registration
               statement on Form 10-SB which became effective June 17, 1994.
          ^    Incorporated by reference from Registrant's Form 8-K reporting an
               event of December 19, 1996.

     (c)  Reports on Form 8-K:

          The  following  reports on Form 8-K were filed during the last quarter
     of the year ended December 31, 1997, and subsequently:


          October 30, 1997 reporting an event under Item 5 of Form 8-K.
          December 30, 1997 reporting an event under Item 5 of Form 8-K.
          July 7, 1998, reporting an event under Item 5 of Form 8-K
          July 24, 1998, reporting an event under Item 5 of Form 8-K
          September 25, 1998, reporting an event under Item 5 of Form 8-K 
          October 8, 1998, reporting an event under Item 5 of Form 8-K

                                       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.


     October 31, 1998                   /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.


     October 31, 1998                   /s/ Terry C. Turner
                                        ----------------------------------------
                                        Director and Principal Executive Officer

     October 31, 1998                   /s/ Mary A. Erickson
                                        ----------------------------------------
                                        Director, Principal Financial Officer
                                        and Principal Accounting Officer

                                       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 and F-8


         Notes to Consolidated Financial Statements                    F-9

   

                                       F-1
<PAGE>

                                                         Oatley Bystrom & Hansen
                                             A Professional Corporation of CPA's
                                              6061 South Willow Drive, Suite 230
                                               Greenwood Village, Colorado 80111
                                             (303) 770-8383 C Fax (303) 721-6925

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS'

October 20, 1998

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

We have  audited the  accompanying  consolidated  balance  sheet of Golden Eagle
International,  Inc.  (a  development  stage  company)  and  subsidiaries  as of
December 31, 1997, and the related consolidated  statements of operations,  cash
flows and changes in stockholders' equity (deficit) for the years ended December
31, 1997 and 1996, and the related  amounts  included in the cumulative  amounts
for the period  from July 21,  1988  (inception)  to December  31,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We did not audit the  financial  statements of Golden Eagle Bolivia
Mining, S.A., a 93% owned subsidiary,  which statements reflect total assets and
revenues   constituing  84%  and  100%,   respectively,   of  the  related  1997
consolidated  totals.  Those financial statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts  included for Golden Eagle Bolivia  Mining,  S.A. as of December 31,
1997 and for the years ended December 31, 1997 and 1996, and the related amounts
included in the cumulative amounts for the period from July 21, 1988 (inception)
to December 31, 1997 is based solely on the report of the other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we 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.
We believe that our audits provide a reasonable basis for our opinion.

In our 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,  1997,  and  the  results  of its
operations  and its cash flows for the years ended  December  31, 1997 and 1996,
and the related amounts  included in the cumulative  amounts for the period from
July 21, 1988  (inception)  to December 31, 1997, 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 discussed in Note A to the financial statements, the Company had
significant  working capital and stockholders'  deficits as of December 31, 1997
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.  In
addition,  the Company's ability to conduct future operations remains subject to
other risks, including inexperienced management,  operations in isolated regions
of Bolivia,  and the concentration of efforts on a single undeveloped  prospect.
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  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.


                                       F-2
<PAGE>

BERTHIN AMENGUAL Y ASOCIADOS    

                        1.1 INDEPENDENT AUDITOR'S REPORT

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


We have  audited the balance  sheet of Golden  Eagle  Bolivia  Mining S.A.  (the
"Company",  - in the development stage) as of December 31, 1997, and the related
statements of operations and cash flows for the year ended on December 31, 1997,
and the statement of cash flows from January 23, 1996 (inception of the Company)
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 audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Golden Eagle Bolivia  Mining
S.A. at December 31, 1997,  and the results of its operations and its cash flows
for the year ended  December 31, 1997,  and its cash flows from January 23, 1996
(inception  of the Company) to December 31, 1996 in  conformity  with  generally
accepted accounting principles.

The financial statements referred to above assume 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.  At present the
Company's  operations  has not achieved  significant  levels of  production  and
substantial  additional  financing  is  required  in order to attain  commercial
levels. Unless the Company obtains significant  additional  financing,  there is
substantial  doubt about whether the Company can continue as a "going  concern".
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.


                                       BERTHIN AMENGUAL Y ASOCIADOS

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

La Paz - Bolivia
June 17, 1998


                                       F-3


<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Balance Sheet
-----------------------------------------------------------------------------------
                                                                       December 31,
                                                                           1997
-----------------------------------------------------------------------------------
 ASSETS

 CURRENT ASSETS
<S>                                                                    <C>        
    Cash                                                               $    72,157
    Prepaid expense and other costs                                          5,658
    Income tax refund receivable                                             8,946
-----------------------------------------------------------------------------------
        Total current assets                                                86,761
-----------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT

    Mining equipment                                                       813,529
    Acquisition cost of mining prospect                                    100,000
    Vehicles                                                                94,796
    Office equipment                                                        45,933
-----------------------------------------------------------------------------------
                                                                         1,054,258
    Less accumulated depreciation                                          (70,389)
-----------------------------------------------------------------------------------
                                                                           983,869
-----------------------------------------------------------------------------------

OTHER ASSETS
    Advance royalties                                                       71,914
    Deposits                                                                38,775
-----------------------------------------------------------------------------------
                                                                          110,689
-----------------------------------------------------------------------------------

                                                                       $ 1,181,319
===================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


CURRENT LIABILITIES
    Loans from related parties                                         $   946,819
    Convertible debentures                                                 268,500
    Other note payable                                                       7,276
    Accounts payable                                                       191,635
    Payable to related parties                                             128,361
    Accrued compensation and taxes                                         533,085
    Accrued interest payable                                               101,944
    Other accrued liabilities                                               41,996
-----------------------------------------------------------------------------------
        Total current liabilities                                        2,219,616
-----------------------------------------------------------------------------------

BANK LOAN PAYABLE                                                        1,000,000
-----------------------------------------------------------------------------------

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 95,359,112 shares         9,534
    Additional paid-in capital                                           7,065,734
    Deficit accumulated during the development stage                    (9,113,565)
-----------------------------------------------------------------------------------
        Total stockholders' (deficit)                                   (2,038,297)
-----------------------------------------------------------------------------------
                                                                       $ 1,181,319
===================================================================================


                                      F-4

See accompanying notes.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Statement of Operations
----------------------------------------------------------------------------------------------------
                                                                       
                                                                                       July 21, 1988
                                                                Year Ended              (Inception)             
                                                               December 31,               Through
                                                       ---------------------------       December
                                                             1997          1996          31, 1997 
----------------------------------------------------------------------------------------------------

<S>                                                    <C>             <C>             <C>         
REVENUES                                               $    101,459    $       --      $    101,459


COSTS AND OPERATING EXPENSES

   General and administrative                             1,848,603       1,926,921       4,864,787
   Exploration                                              627,606          48,841         676,447
   Depreciation                                              48,501           7,006          59,126
---------------------------------------------------------------------------------------------------

      Total costs and operating expenses                  2,524,710       1,982,768       5,600,360
---------------------------------------------------------------------------------------------------

OPERATING (LOSS)                                         (2,423,251)     (1,982,768)     (5,498,901)
---------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)

   Loan financing costs, net                             (2,475,000)           --        (2,475,000)
   Write-down of mining prospect                           (873,462)           --          (873,462)
   Interest expense                                        (184,204)        (79,141)       (291,129)
   Interest income                                              193            --            13,646
   Gain on marketable securities                               --            19,167         124,336
   Commissions                                                 --              --             6,708
   Write off advances to Mineral Mountain Mining Co.           --              --           (78,000)
   Write off loan to investment advisor                        --              --           (15,000)
   Loss on sale of equipment                                   --           (16,000)        (17,314)
   Other income                                              12,460            --            16,141
   Other expenses                                           (20,290)           --           (20,290)
---------------------------------------------------------------------------------------------------

      Total other income (loss)                          (3,540,303)        (75,974)     (3,609,364)
---------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                      $ (5,963,554)   $ (2,058,742)   $ (9,108,265)
===================================================================================================

EARNINGS (LOSS) PER SHARE                              $       (.08)   $       (.05)   $       (.83)
===================================================================================================

WEIGHTED AVERAGE SHARES OUTSTANDING                      76,564,776      44,130,185      10,964,608
===================================================================================================


See accompanying notes    

                                                F-5
</TABLE>
 
<PAGE>
<TABLE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Statement of Cash Flows
--------------------------------------------------------------------------------------------------------------------------
                                                                                                            
                                                                                                             July 21, 1988 
                                                                                       Year Ended             (Inception)  
                                                                                       December 31,             Through      
                                                                               --------------------------      December      
                                                                                   1997           1996         31, 1997
                                                                               ------------------------------------------- 
 CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                            <C>            <C>            <C>         
         Net income (loss)                                                     $(5,963,554)   $(2,058,742)   $(9,108,265)
         Adjustments to reconcile net income (loss)
                  to net cash provided by operating activities:
                    Stock issued for loan pledges and renewals                   2,500,000           --        2,500,000
                    Stock issued and issuable for services                         816,000      1,230,842      2,221,919
                    Write-down of mining prospect                                  873,462           --          873,462
                    Depreciation expense                                            48,501          7,006         59,126
                    Stock issued for conversion of accrued interest                 27,271           --           27,271
                    Loss on retirement of equipment and other                        4,163           --            5,477
                    Loss (gain) from investments                                      --          (19,167)      (114,670)
                    Write off advances to Mineral Mountain Mining Co.                 --             --           78,000
                    Write off loan to investment advisor                              --             --           15,000
                    Fair value of officer salary expensed                             --             --           20,000
                  Changes in operating assets and liabilities:
                    Prepaid expense and other costs                                 25,239        (21,231)        (5,658)
                    Income tax refund receivable                                      --           (8,946)        (8,946)
                    Payables and accrued liabilities                               481,874        258,440        997,021
------------------------------------------------------------------------------------------------------------------------

         Net cash flows (used for) operating activities                         (1,187,044)      (611,798)    (2,440,263)
------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
         Investment in property and equipment                                     (822,192)      (741,696)    (1,602,432)
         Advance royalties                                                         (71,914)          --          (71,914)
         Deposits                                                                  (35,500)        (2,100)       (40,275)
         Proceeds from investment sales                                               --           29,589        184,380
         Advances to Mineral Mountain Mining Co.                                      --             --          (78,000)
         Loan to investment advisor                                                   --             --          (15,000)
         Purchase of investment securities                                            --             --          (59,478)
         Purchase of subsidiary (net of cash acquired)                                --             --           (2,700)
------------------------------------------------------------------------------------------------------------------------

         Net cash flows (used for) investing activities                           (929,606)      (714,207)    (1,685,419)
------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from bank loan                                                 1,000,000           --        1,000,000
         Loans from related parties                                                221,329        812,023      1,431,209
         Repayment on loans from related parties                                   (98,174)      (116,500)      (431,376)
         Proceeds from other notes payable                                            --           29,136        139,558
         Repayments of other notes payable                                         (58,724)       (10,422)       (69,146)
         Proceeds from convertible debentures                                      100,000        188,500        288,500
         Common stock issued and issuable                                        1,012,635        402,030      1,902,158
         Stock issuance costs                                                         --             --          (63,064)
------------------------------------------------------------------------------------------------------------------------

         Net cash flows from financing activities                                2,177,066      1,304,767      4,197,839
------------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH                                                     60,416        (21,238)        72,157

CASH - BEGINNING OF PERIOD                                                          11,741         32,979           --
------------------------------------------------------------------------------------------------------------------------

CASH - END OF PERIOD                                                           $    72,157    $    11,741    $    72,157
========================================================================================================================



                                                     F-6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



Golden Eagle International, Inc. 
(A Development Stage Company)               
 Consolidated Statement of Stockholders' Equity (Deficit)
-------------------------------------------------------------------------------------------------------
                                                                                             Common
                                                                    Common Stock             Stock
                                                              -------------------------     Issuable
                                                                Shares         Amount     
-------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>           <C> 

Inception July 21, 1988                                             --      $      --     $      --   



Issuance of common stock:

   June 1, 1989 for cash at $.00006 per share                  1,666,665            167          --   
   June 30, 1990 for cash at $.03 per share                      300,000             30          --   
   July 3, 1990 for cash at $.003 per share                      366,665             37          --   
   50,000 to 1 stock split                                          --             --            --   
   January and March 1991 for cash at
      $.30074 per share from stock offering                      268,335             27          --   
November 1, 1993 - deficit of acquired subsidiary                   --             --            --   
Acquisition of subsidiary                                           --             --            --   
Fair value of officer salary                                        --             --            --   
November 7, 1994, convert debt to equity
   at $.003 per share                                          2,640,830            264          --   
November 8, 1994, $.00125 per share:
   Note receivable from affiliate                             20,000,000          2,000          --   
   Legal services                                                375,000             37          --   
Issued for cash in June and August 1995 ($.01 to
   $.05 per share), less $41,644 issuance costs               10,052,250          1,005          --   
Issued for services in 1995 ($.07 per share)                   2,009,000            201          --   
Convert notes payable in 1995 ($.15625 per share)                800,000             80          --   
Payment of note by affiliate                                        --             --            --   
Issuable for cash in 1995 ($.125 to $.282 per share),
   417,500 shares                                                   --             --          80,000
Issuable in 1995 for services and additional consideration
   for loan ($.07 per share), 328,333 shares                        --             --          22,983
Other                                                                (70)          --            --   
Net loss for the periods                                            --             --            --   
-----------------------------------------------------------------------------------------------------

Balance at December 31, 1995                                  38,478,675          3,848       102,983

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

Balance at December 31, 1996                                  44,517,143          4,452       446,500

   Shares previously subscribed issued                         2,407,000            238      (446,500)
   Issued for cash ($.10 per share)                           10,126,350          1,013          --   
   Issued to related parties for loan guarantees
            and renewals ($.10 per share)                     25,000,000          2,500          --   
   Issued for services ($.03 to $.17 per share)                9,276,398            928          --   
   Issued for equipment ($.10 per share)                       2,993,161            299          --   
   Issued for conversion of debenture and
            note payable ($.09 and $.26 per share)               689,060             69          --   
   Issued for vehicle ($.10 per share)                           350,000             35          --   
   Net loss for the year                                            --             --            --   
------------------------------------------------------------------------------------------------------

Balance at December 31, 1997                                  95,359,112    $     9,534   $      --   
======================================================================================================


                                                F-7

<PAGE>


Golden Eagle International, Inc. 
(A Development Stage Company)               
 Consolidated Statement of Stockholders' Equity (Deficit)
Continued
--------------------------------------------------------------------------------------------------------------------
                                                           Additional
                                                            Paid-in       Stockholder    Accumulated
                                                            Capital        Recivable       Deficit        Total
--------------------------------------------------------------------------------------------------------------------



Inception July 21, 1988                                    $      --      $      --      $      --      $      --



Issuance of common stock:

   June 1, 1989 for cash at $.00006 per share                        (67)          --             --              100
   June 30, 1990 for cash at $.03 per share                        8,970           --             --            9,000
   July 3, 1990 for cash at $.003 per share                        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                       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                                              7,659           --             --            7,923
November 8, 1994, $.00125 per share:
   Note receivable from affiliate                                 23,000        (25,000)          --             --
   Legal services                                                    432           --             --              469
Issued for cash in June and August 1995 ($.01 to
   $.05 per share), less $41,644 issuance costs                  164,044           --             --          165,049
Issued for services in 1995 ($.07 per share)                     148,799           --             --          149,000
Convert notes payable in 1995 ($.15625 per share)                124,920        (20,000)          --          105,000
Payment of note by affiliate                                        --           25,000           --           25,000
Issuable for cash in 1995 ($.125 to $.282 per share),
   417,500 shares                                                   --             --             --           80,000
Issuable in 1995 for services and additional consideration
   for loan ($.07 per share), 328,333 shares                        --             --             --           22,983
Other                                                              2,625           --             --            2,625
Net loss for the periods                                            --             --       (1,085,969)    (1,085,969)
---------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1995                                     568,198        (20,000)    (1,091,269)      (436,240)

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

Balance at December 31, 1996                                   1,856,949           --       (3,150,011)      (842,110)

   Shares previously subscribed issued                           446,262           --             --             --
   Issued for cash ($.10 per share)                            1,011,622           --             --        1,012,635
   Issued to related parties for loan guarantees
            and renewals ($.10 per share)                      2,497,500           --             --        2,500,000
   Issued for services ($.03 to $.17 per share)                  815,072           --             --          816,000
   Issued for equipment ($.10 per share)                         299,017           --             --          299,316
   Issued for conversion of debenture and
            note payable ($.09 and $.26 per share)               104,347           --             --          104,416
   Issued for vehicle ($.10 per share)                            34,965           --             --           35,000
   Net loss for the year                                            --             --       (5,963,554)    (5,963,554)
---------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1997                                 $ 7,065,734    $      --      $(9,113,565)   $(2,038,297)
=====================================================================================================================



See accompanying notes

                                                       F-8
</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,  South
America.
   
Organization of Subsidiaries and Bolivian Mining Activities
-----------------------------------------------------------

In January  1996,  the Company  organized a Bolivian  corporation,  Golden Eagle
Bolivia  Mining,  S.A.  ("GEBM").  The Company has a 93% ownership in GEBM;  two
Bolivian  citizens own the remaining  seven  percent.  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  contract  with a
Bolivian gold mining cooperative,  United Cangalli Gold Mining Cooperative, Ltd.
("UCL").  The Company has an 84% ownership in EMB; a Bolivian  citizen owns 13%,
and an officer (and former  president)  owns the remaining  three percent.  As a
shareholder  in GEBM,  the Company  has  elected to dissolve  GEBM and cease all
operations in its name. All continuing operations by the Company in Bolivia will
be carried out by EMB.
   
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
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, the Company is obligated to
pay UCL  $200,000:  $100,000 as prospect  acquisition  rights and  $100,000  for
advance royalties.  In 1997, the $100,000 for acquisition rights and $71,914 for
advance  royalties  were paid.  Subsequent to December 31, 1997, the balance due
for the advance royalties was paid.
    
During  1997,  due to  uncertainties  about the  presence  of  Bolivian  mineral
reserves, the Company elected to write-down $873,462 of prospect exploration and
development costs previously  capitalized,  including $470,853 incurred in 1996.
As of  December  31,  1997,  capitalized  costs  related  to  the  prospect  are
principally  $100,000 of  acquisition  rights paid to UCL and $813,528 of mining
equipment.

                                      F-9
<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, 1997 and has incurred  substantial losses since its inception.  The
Company  presently  has no  substantial  product  or  producing  properties  and
requires significant additional financing to satisfy its outstanding obligations
and commence  operations.  In addition,  the Company's ability to conduct future
operations remains subject to other risks, including inexperienced management in
open-pit and high-volume mining,  operations in isolated regions of Bolivia, and
the  concentration  of  efforts  on a single  undeveloped  prospect.  Unless the
Company   successfully   obtains  suitable   significant   additional  financing
arrangements  there is substantial doubt about the Company's ability to continue
as a going concern.

Management's plans to address these matters include private placements of stock,
obtaining  short-term loans, seeking suitable joint venture  relationships,  and
putting the prospect being developed into production.

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.

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.
Significant  areas  requiring  the use of  management  estimates  relate  to the
determination of mineral reserves, useful lives for depreciation,  depletion and
amortization,  and valuation of deferred taxes.  Actual results  inevitably will
differ  from  those  estimates,  and such  differences  may be  material  to the
financial statements.

                                      F-10
<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

Foreign Currency
----------------

The  Company's  functional  currency and its foreign  activities  are  conducted
primarily in U.S. dollars.

Revenue Recognition
-------------------

Mineral  sales,  to date  related to limited  amounts of gold  produced  through
exploratory and development  work, are recognized when produced,  net of related
production royalties.

Property, Equipment and Mineral Development
-------------------------------------------

Property  and  equipment  are  recorded  at  cost.  Costs  associated  with  the
acquisition 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 as follows:
 
                    Mining equipment              7-8  years
                    Vehicles                        5  years
                    Office equipment             4-10  years
    
Mineral exploration costs are expensed as incurred.  When it has been determined
that a mineral  property can be  economically  developed,  the costs incurred to
develop such  property,  including  costs to further  delineate the ore body and
remove overburden to initially expose the ore body, are capitalized.  Such costs
and estimated future  development costs are amortized using a unit-of production
basis over the estimated life of the ore body. On-going development expenditures
to maintain production are charged to operations as incurred.
  
Significant  expenditures  directly  related to the  acquisition  of exploration
interests are capitalized.  If a mineable ore body is discovered, such costs are
amortized  using  a  unit-of-production  method.  If no  mineable  ore  body  is
discovered,  such costs are expensed in the period in which it is determined the
property has no future economic value.
       
                                      F-11
<PAGE>
   
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
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 1997 and 1996,  the  Company  paid
interest of $156,826 and $13,258, respectively. Non-cash investing and financing
transactions during the periods consists of the following:
<TABLE>
<CAPTION>


1997                                                                          Shares        Amount
----                                                                          ------        ------
<S>                                                                         <C>          <C>        
Common stock issued to related parties for loan guaranties and renewals     25,000,000   $ 2,500,000
Common stock issued to employees and others for services                     9,276,398       816,000
Common stock issued to individual for mining equipment                       2,993,161       299,316
Common stock issued upon conversion of note payable, accrued interest
    and convertible debentures                                                 689,060       104,416
Common stock issued to individual for vehicle                                  350,000        35,000
                                                                           -----------   -----------
                                                                            38,308,619   $ 3,754,732
                                                                           ===========   ===========
1996
----
Common stock issued to employees and others for services                     5,448,985   $ 1,230,842
                                                                           ===========   ===========
</TABLE>

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).

Concentrations
--------------

Concentrations include: reliance on a single area mining prospect in an isolated
region of a foreign  country;  limited  financial  capacity  of related  parties
and/or  others to  continue  funding  operations;  and,  reliance  on the future
stability,  capacity and  cooperation  of UCL. UCL  controls  locally  available
prospect  site labor,  services,  supplies and  infrastructure  support.  If the
Company is successful in commencing sustained commercial levels of production in
Bolivia,  it will need  significant  quantities of mining equipment and supplies
that are presently in short supply or unavailable. Also, high import tariffs may
make  equipment  either  very  expensive  or  of  restricted  availability;  and
transportation of heavy equipment in the region poses practical difficulties and
is weather dependent.
        
                                      F-12
<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

Note C - Long-term Debt and Notes Payable

Bank note  payable  at the prime  interest  rate (8 1/4 % at
     December 31, 1997) dated January 31, 1997. Interest due
     quarterly  beginning  July 1, 1997,  until June 1, 1998
     when principal and unpaid  interest is due.  Secured by
     substantially  all  assets  of the  Company,  pledge of
     certain  assets of  relatives of an officer (and former
     president)  until  January 31,  2002,  and 13.5 million
     shares of Company  stock of the  officer.  June 1, 1998
     the due date was extended to June 1, 1999 with interest
     payments  required  monthly  beginning  July  1,  1998.         $1,000,000

6%   Convertible  debentures  issued  in 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.  The
     conversion rate was subsequently  reduced to 50% of the
     closing bid price, and a total of 2,773,447 shares were
     issued in 1998 upon  conversion of the debentures  plus
     accrued interest of $3,932.                                        168,500

10%  Convertible  debenture  issued  October  23,  1997 to a
     foreign corporation, due March 24, 1998, convertible to
     common  stock  at the  lesser  of  50%  of the  average
     closing  bid price for  three  days  prior to notice or
     $.16 per share.  February  19, 1998,  3,062,821  shares
     were  issued  upon  conversion  of  the  debenture  and
     accrued interest of $3,370.                                        100,000

Other, 6% note payable, unsecured, due October 31, 1998.                  7,276

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

10.5%notes  payable  issued  in  1996  to a  relative  of an
     officer,  unsecured,  due  January 1, 2000,  personally
     guaranteed  by the officer and her husband.  Classified
     as  current  liability  due to  related  party  nature.            450,000

12%  notes   payable   issued  from  November  1996  through
     December  1997 to relatives  of an officer,  unsecured,
     due January 1, 2000.  Classified  as current  liability
     due to related party nature.                                       314,389

24%  advances from officers of a subsidiary,  unsecured, due
     on demand.                                                          90,330

8%   loans  issued  in 1996 by an  officer,  unsecured,  due
     January 1, 2000. Classified as current liability due to
     related party nature.                                               55,250

24%  advances from the Company's president,  unsecured,  due
     on demand.                                                          35,850

Other                                                                     1,000
                                                                      ---------

                                                                      2,222,595

Less current maturities                                              (1,222,595)
                                                                     ---------- 

Long-term maturities                                                 $1,000,000
                                                                     ==========


                                      F-13


<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

Note D - Income Taxes
        
As of  December  31,  1997,  the Company had net  operating  loss  carryforwards
totaling  approximately  $9 million that may be offset  against  future  taxable
income,  if any. These loss  carryforwards  expire in varying  amounts from 2005
through 2012. Furthermore,  use of the loss carryforwards are limited by certain
changes in the Company's  ownership.  The primary temporary  difference  between
reported book and tax income is the  recognition  of stock as  compensation  for
book  purposes. 

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
$1,350,000 of the loss carryforward has been offset by a valuation  allowance of
the same amount, an increase of $889,000 in 1997.

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
-------------------
         
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.

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-14
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------


November 8, 1994, the Company issued 20 million  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 ten percent  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 per
share 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 from 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 was 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).

During  1997,  a total of  10,126,350  shares of common  stock was issued to ten
individual  investors  (non-affiliates)  for a total  of  $1,012,635  ($.10  per
share).

During 1997, a total of 9,276,398 shares of common stock was issued to employees
and others for  services  with an estimated  total value of $816,000  (4,000,000
shares at $.032 per share;  2,200,000 shares at $.10 per share; 2,666,666 shares
at $.15 per share; and 409,732 shares at $.17084 per share).

                                      F-15
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
 

During April 1997, a $1 million bank loan (see Note C) was 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,  the Company issued 20
million  shares and an additional 5 million  shares of common stock for renewals
and extensions of loans from the relatives,  less $25,000 in previously  accrued
interest.  The 25 million  restricted shares were recorded at $2.5 million ($.10
per share),  the estimated  fair value based on the sale of restricted  stock to
individual  investors  in April  1997.  The cost of the  pledges,  renewals  and
extensions  ($2.5 million less $25,000 of abated  interest) was expensed in 1997
since the bank loan is subject to annual  renewal.  As part of the  arrangement,
the Company was to assume a $165,000  personal  loan of the officer,  as partial
offset of Company  amounts owed the officer.  In 1998,  the Company was released
from its agreement to assume by offset the $165,000 loan.

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

During  1996,  the  Company  issued  $188,500  of  6%  debentures  to a  foreign
corporation  which are  convertible  to common stock at the lesser of 80% of the
OTC Bulletin  Board  closing bid price the day prior to notice or $.30 per share
(see Note C). December 15, 1997, the holder converted  $20,000 of the debentures
plus accrued  interest of $17,757 into 429,060 shares of common stock ($.088 per
share).  During 1998, the conversion  factor was reduced from 80% to 50% and the
holder  converted  the remaining  $158,500 of  debentures  and $3,932 of related
accrued  interest into 2,773,447  shares of common stock at conversion  rates of
ranging from $.056 to $.065 per share.

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. The agreement was closed on February
10, 1997. The debenture  holder  subsequently  converted all the debentures into
2,993,161  shares of common stock as provided for in the  agreement.  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.  The Company has recorded the stock
issued at $299,316  ($.10 per share),  the  estimated  value of its stock at the
date of the transaction.

On October 23, 1997,  the Company issued a $100,000  Convertible  Debenture to a
foreign corporation which is convertible to common stock at the lesser of 50% of
the OTC  Bulletin  Board  average  closing bid price for the three days prior to
notice or $.16 per share.  On February  19, 1998,  3,062,821  shares were issued
upon  conversion of this debenture and related  accrued  interest of $3,370 at a
conversion rate of $.03375 per share.

On March 27, 1997,  the holder of a $50,000 note payable  converted the note and
accrued  interest  $16,659  into  260,000  shares of common  stock  ($.25638 per
share).
         
                                      F-16
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

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.  In 1997,  the officer was repaid  $48,800 on the loan. As of December
31, 1997,  $55,250  plus accrued  interest of $1,520 was owed the officer (a net
decrease of $42,788  during  1997).  The loans are  unsecured and due January 1,
2000. The loans are included in current liabilities due to related party nature.

In  addition,  as of December  31,  1997,  $214,360  owed the officer for out-of
pocket operating  expenses and unpaid salary is included in accounts payable,  a
net increase of $44,943 during 1997. As of December 31, 1997 a combined total of
$271,130 was owed the officer for loans,  accrued  interest and amounts included
in accounts payable (a combined net increase of $2,155).

During 1996, the officer (and former  president)  discussed above received three
percent 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.

During 1996, four one-year notes payable,  totaling $450,000 at an interest rate
of 10'%,  were issued to a relative of an officer  (and  former  president).  On
March 22, 1997 the notes were  renewed  with an extended  due date of January 1,
2000.  Due to related  party  nature of the  loans,  the notes are  included  in
current  liabilities.  In April 1997,  $12,500 of accrued interest was abated in
partial payment of the issuance of common stock for a loan guarantee and renewal
(see below).  As of December 31, 1997,  $450,000 and accrued interest of $67,949
is outstanding (a net increase of $51,258 during 1997).  The notes are unsecured
but are  personally  guaranteed  by the officer (and former  president)  and her
husband.

During 1995, relatives of an officer (and former president) advanced the Company
a total of $32,683 and were repaid  $8,092.  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. In 1997, the
relatives were repaid  $165,000,  of which $161,230 was applied to principal and
the balance to accrued  interest.  Also in 1997,  additional  advances  totaling
$239,687 were made to the Company. On March 22, 1997 the notes were renewed with
an  extended  due date of January 1, 2000.  Due to related  party  nature of the
loans, the notes are included in current liabilities.  In April 1997, $12,500 of
accrued  interest was abated in partial  payment of the issuance of common stock
for a loan guarantee and renewal.  As of December 31, 1997, $314,389 and accrued
interest of $171 is  outstanding  (a net increase of $69,528  during 1997).  The
loans are unsecured.
        
                                      F-17
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

During 1995,  the Company  issued 80,000 shares of common stock,  valued at $.07
per share, to a relative of a former president for services.

During 1997,  the Company  issued 4 million shares of common stock to a relative
of a former president for services valued at $84,000 ($.032 per share).

During April 1997, a $1 million bank loan (see Note C) was 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,  the Company issued 20
million  shares and an additional 5 million  shares of common stock for renewals
and extensions of loans from the relatives,  less $25,000 in previously  accrued
interest.  The 25 million  restricted shares were recorded at $2.5 million ($.10
per share),  the estimated  fair value based on the sale of restricted  stock to
individual  investors  in April  1997.  The cost of the  pledges,  renewals  and
extensions  ($2.5 million less $25,000 of abated  interest) was expensed in 1997
since the bank loan is subject to annual  renewal.  As part of the  arrangement,
the Company was to assume a $165,000  personal  loan of the officer,  as partial
offset of Company  amounts owed the officer.  In 1998,  the Company was released
from its agreement to assume by offset the $165,000 loan.

During March 1997,  $5,000 loaned by a relative in December 1996 was repaid with
interest.

Through  December 31, 1997,  officers of GEBM have loaned the subsidiary a total
of $126,181 to support operations in Bolivia. The loans bear interest at 24% per
annum,  are  unsecured,  and due on  demand.  $84,900  of the loans are for rent
charged by an officer for the use of mining equipment.

Note G - Commitments and Contingencies

Securities and Exchange Commission Investigation
------------------------------------------------
     
On May 7, 1998 the Securities and Exchange Commission (the 'Commission') filed a
civil injunctive  action in the United States District Court of Colorado against
the  Company,  one current  officer  and a former  officer of the  Company.  The
primary  allegations  relate  to  the  possible   distribution  of  unregistered
securities and the publication of misleading  statements regarding the Company's
interest in a joint venture with Mineral  Mountain Mining Company and the Silver
Bar Mine (see below).  Management intends to contest the case vigorously but has
and will continue to explore potential settlement opportunities, and believes it
unlikely the Company will suffer any financial losses as a result of the action.
There is no disposition of this matter as of October 20, 1998.

                                      F-18
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

The Commission staff has also informed the Company that it is investigating  the
issue of whether a May 22, 1998 Company press release may have violated  federal
securities laws. The staff has questioned  whether the Company and its president
issued the press  release  concerning  a geological  report and related  mineral
reserves on its Bolivian  prospect  without  factual basis as to the validity of
the  report.  As a  result  of a  subsequent  internal  review  of  the  report,
management  has  concluded   that  the  techniques   used  in  the  report  were
insufficient  to justify the  calculations  made although it still believes that
there is  significant  gold  mineralization  within the prospect.  Management is
continuing to discuss the  resolution  of these issues with SEC staff,  but have
denied any  wrongdoing.  It is  impossible  to determine at present  whether the
earlier  filed  injunctive  action  will be amended to include  the  allegations
related to the press  release,  however,  management  believes it  unlikely  the
Company would suffer any financial losses as a result.

Former Officer and Other Employees
----------------------------------

In June 1998,  a former  officer  filed a lawsuit  against the  Company  seeking
540,659 shares of common stock for  compensation in 1995 and 1996 pursuant to an
employment  agreement.  The Company vigorously denies the allegations and claims
the employee  breached the  employment  agreement,  including  its fiduciary and
confidentiality  provisions. As a result, the Company has filed a counter-claim.
Trial of the dispute is scheduled  for trial August 30, 1999 in Denver  District
Court.  Litigation is subject to many uncertainties and the Company is unable to
predict the outcome of this matter.

The Company is  considering  a claim  against two other  former  employees,  the
former officer  discussed above, and a company formed by the individuals that is
alleged to have usurped  corporate  opportunities  of the Company and tortuously
interfered in its operations.

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  approximately  $78,440. The Company believes the
consultant   did  not  provide  the  services   contracted,   usurped   business
opportunities,  and tortuously  interfered  with the Company.  No litigation has
been filed to date and the Company is still  assessing  damages it 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-19
<PAGE>


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 50% 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  provided  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 advances of $78,000).

Principals of MMMC subsequently refused to execute or acknowledge the agreement.
January 18, 1996,  the Company filed suit against MMMC and two of its principals
for breach of the joint venture agreement.  Accordingly, the $78,000 in advances
to MMMC was written off in the 1995 financial statements.  The case subsequently
settled  for  $20,000;  however,  defendants  have  failed  to  comply  with the
settlement   agreement,   and  the  matter  is  pending  before  the  court  for
disposition.  Litigation  is subject to many  uncertainties  and the  Company is
unable to predict the outcome of this matter.
          
Obligations to Bolivian 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 invest a minimum of $3 million in
the  Cangalli  prospect.  In  addition,  the  Company  is  obligated  to pay UCL
$200,000:  $100,000  for  prospect  acquisition  rights and $100,000 for advance
royalties.  As of December 31, 1997, the $100,000 acquisition rights and $71,914
of the advance  royalties had been paid.  Subsequent  to December 31, 1997,  the
balance of the advance royalties was paid. (See Note A.)

Obligations to Issue Common Stock to Advisors (see below and Note H)
--------------------------------------------------------------------

The Company is obligated to issue common stock to financial and public relations
advisors for services. The public relations obligation is pursuant to agreements
dated October 29, 1997 and effective  August 1, 1997,  with two  individuals  at
$7,000 each per month,  as  determined  by the average  first three days trading
price for the quarter. In the event the stock certificates are not issued within
15 calendar  days of the quarter  additional  shares  equal to five  percent per
month shall be issued.  The  agreements are for six-month  term's  automatically
renewable  for an  additional  six months unless either party objects in writing
within 30 days.  In 1997,  a total of  409,732  shares  were  issued and in 1998
through October 31, 1998 an additional 864,524 shares have been issued.

                                      F-20
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

Office Leases
-------------
 
July 1, 1997,  the  Company  entered  into a five-year  office  lease in La Paz,
Bolivia  at $1,666 per month.  The  office  previously  was leased on a month-to
month basis at $1,500 per month.  Rental expense paid for the office was $18,996
and $16,850 in 1997 and 1996, respectively. Future minimum lease payments are as
follows:

     Year ended December 31,
                       1998                          $  19,992
                       1999                             19,992
                       2000                             19,992
                       2001                             19,992
                       2002                              9,996
                                                     ---------
                                                     $  89,964
                                                     =========

The Company  also leases an  executive  suite in Denver,  Colorado on a month-to
month basis at $188 per month.
         
Note H - Events Subsequent to December 31, 1997 (Unaudited)

1998 Operations
---------------

During  1998,  the  Company has been  unable to conduct  significant  operations
because  of  adverse  weather  conditions  in  Bolivia  (the  so-called  El Nino
phenomenon) and due to substantial working capital shortages.

Extension of Bank Note Payable
------------------------------

On June 1, 1998,  the $1 million bank note payable due June 1, 1998 was extended
for an additional year and required  interest payments were changed from monthly
to quarterly effective July 1, 1998 (see Note C).

Sale of Common Stock to Investors
---------------------------------

In 1998,  the  Company has issued a total of 800,000  shares of common  stock to
five individual  investors for cash received through October 23, 1998,  totaling
$80,000.

Convertible Debentures
----------------------

March 26, 1998, the Company issued a $250,000 ten percent Convertible  Debenture
to a foreign  corporation  which is convertible to common stock at the lesser of
50% of the OTC Bulletin Board average  closing bid price for three days prior to
notice or $.16 per share (see Note C). The Debenture requires quarterly interest

                                      F-21
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------


payments  beginning  June 30, 1998 and was due June 30, 1998.  As of October 14,
1998,  $125,000 of the  Debenture  had been  funded.  On October 15,  1998,  the
Debenture holder and the Company agreed to conversion of the $125,000  debenture
plus accrued  interest and penalty  totaling  $35,000 into  2,560,000  shares of
common stock at a conversion rate of $.0625. In addition,  the Company agreed to
file a  registration  statement  covering the issued  shares  within 90 days and
granted the holder the right to purchase up to $200,000 of stock  within 30 days
of the  effectiveness  of the  registration  statement  in the event  additional
securities are registered.

During  1998,  all  outstanding  debentures  as of December 31, 1997 and accrued
interest of $7,302 were  converted  into  5,836,268  shares of common stock (see
Note E).

Shareholder Loans and Obligations to Issue Common Stock
-------------------------------------------------------

Through  October 20, 1998, a total of $367,754 had been borrowed on an unsecured
basis from a Bolivian consulting engineering firm at 15% per annum. In addition,
the same  consulting  firm paid a financial  advisor with 666,666  shares of the
Company's  common stock for 1998  services  provided by the advisor on behalf of
the  Company.  As  consideration  for the  transfer  of stock,  the  Company  is
obligated to issue 999,999 shares of common stock to the  consulting  firm prior
to January 1, 1999.

A significant  shareholder paid two financial advisors and an investor relations
firm a total of 450,000 shares of the Company's  common stock for 1998 services.
As  consideration  for the transfer of stock,  the Company is obligated to issue
675,000 shares of common stock to the shareholder prior to January 1, 1999.

Issuance of Common Stock to Advisors
------------------------------------

In October  1998,  the  Company  formalized  agreements  to issue a total of 1.5
million  shares of common stock to two financial  advisors as  compensation  for
identification of prospective investors in 1998 and January 1999. One million of
these shares are to be issued  immediately  and 200,000  shares are to be issued
October 31, 1998 and January 31, 1999. The agreements  also provide the advisors
the right (but not the  obligation)  to purchase  up to  $100,000  of  privately
offered securities.

From January through October 1998, the Company became obligated to issue a total
of 864,524 shares of common stock to two public relations  advisors for services
(see Note G).

                                      F-22
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

Grant of Stock Options to Officers
----------------------------------

On October 20, 1998, the Company granted options,  covering 25 million shares of
common  stock to two  officers  at an  exercise  price of $.16 per  share  until
November 1, 2001; 15 million of the options vest  immediately  and 10 million on
November 1, 1999.

Other Related Party Transactions
--------------------------------

In January  1998,  a vehicle  acquired in 1997 for stock  valued at $35,000 (see
Note  B) was  sold to the  Company's  president  at its  estimated  fair  value,
$27,575.  From January through October 1998, relatives of an officer (and former
president) loaned the Company approximately $159,000 and were repaid $47,000. In
addition,  the officer (and former president) was repaid $9,300 of out-of pocket
expenses, which had been accrued at December 31, 1997. (See Notes C and F.)


                                      F-23