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, 1998.

[   ] 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.                     [ X ] Yes [ ] 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:                      $52,471

Aggregate  market  value of the voting  stock held by  non-affiliates  of Golden
Eagle International, Inc. as of April 9, 1999 was approximately $16,351,204. The
estimate  is based on the last sale price per share  ($.25 on April 9, 1998) and
65,404,818 shares estimated to be held by non-affiliates.

At December 31, 1998, there were 109,217,885 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, and  approximately  7,000 grams of gold in 1998 with an approximate
value (before  royalty  payments) of $65,030.  (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.)

     Registrant's  majority-owned subsidiary,  GEBM, continued through 1998, and
to the date of the filing of this report,  as the operator of the Cangalli shaft
and surface  operations.  GEBM,  at one point  during 1997,  had 106  employees;
however, at December 31, 1998,  Registrant's  majority-owned  subsidiary,  GEBM,
employed 42  personnel  including  its  president,  one  purchasing  agent,  one
secretary,   one   accountant,   and  one   administrative   assistant   in  the
administrative offices in La Paz, Bolivia. The remaining 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 27 miners,  including drillers,  muckers,  hoist
operators,  and  other  essential  support  personnel.   GEBM,  and  its  sister
subsidiary, EMB, share 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,  in part, 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  paid  this  entity a total of  $400,000  in  shares  of
Registrant's restricted 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.  In addition, in the first quarter of 1999, Registrant agreed in
principle to pay these same entities a total of an additional  1,500,000  shares
of its  restricted  common  stock as a fee for  similar  services to be rendered
during 1999, with the addition of public  relations  activities  included in the
new agreement.

     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,  (who  resigned  in May of 1996);  Registrant's
current secretary/treasurer and a director, 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.

     On  November  14,  1998,  the  SEC  filed  an  Amended   Complaint  in  the
above-referenced   action,  alleging  that  Registrant  and  its  president  had
inadequate  basis  for  making  the May 22,  1998,  press  release  regarding  a
geological report  Registrant had received from an independent  geophysicist and
mining engineer.

     In  February  1999,  Registrant  entered  into a Consent  and  Undertaking,
neither  admitting nor denying any of the  allegations in the SEC's action,  but
resolving any and all issues as to the SEC's Complaint and Amended  Complaint as
they relate to Golden Eagle International,  Inc., by agreeing to the issuance of
a Permanent  Injunction not to violate  certain  securities  laws in the future.
Pursuant to that Consent and Undertaking, on March 4, 1999, the Federal District
Court for the  District  of  Colorado  entered  a Final  Judgment  of  Permanent
Injunction  ordering  Registrant not to violate  certain  securities laws in the
future.  Registrant  was not  assessed any civil or monetary  penalty.  Although
Registrant  has resolved  the SEC's  allegations  against it,  other  defendants
remain in the civil action,  including two current  officers and  directors,  as
well as a former officer and director.  Negotiations are currently  underway for
the settlement of the allegations  against the remaining  defendants,  but those
individuals  have denied any  wrongdoing  which may be actionable  under 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

                                       3

<PAGE>

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  in this  annual  report,  and the other risks
associated with start-up mineral  exploration  operations.  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

     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's 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. This $200,000 obligation has
          been met.

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

     Note: Registrant has relied upon an independent  geological consulting firm
and  historical  information  for the following  history,  and cannot assure its
accuracy.

     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).

                                       4

<PAGE>


     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,  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.

     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.

                                       5

<PAGE>


     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  restricted  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.)

     Registrant's  operations  and  future  planning,  based  on  the  foregoing
discussion, is limited to, and by, its ability to raise financing through equity
funding.  Continued  rehabilitation and maintenance of the Cangalli shaft, which
is a necessary  component of Registrant's  future operations,  is dependent upon
this equity funding.  Future  projections for open pit operations on Chaco Playa
(the accumulated  tailings from the decades-old Chaco face booming  operations),
as well as the  Chaco  face,  again,  are  dependent  on its  ability  to  raise
additional  financing.  Registrant  cannot  assure that market  confidence  will
enable the  Registrant to raise needed  additional  debt or equity  financing on
reasonable terms for further  exploration,  operations,  and plant  construction
capital.

     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 normal  precipitation  received  during the 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


                                       6

<PAGE>

          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 1997 and 1998,  Registrant  projected that its subsidiary,  GEBM,  would
enter into commercial scale  production.  To date,  Registrant's gold production
has primarily been the product of its  exploration  work on the  properties,  as
well as unsuccessful attempts at mounting commercial open-pit operations.  While
the Bolivian subsidiary did produce small quantities of gold, overall production
during  1998  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,  through  1998,  Registrant  contracted  Bolivian  and American
metallurgists  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.

     Due to these technical and financial  issues on staging its own operations,
Registrant's  management  projected  that within the fourth  quarter of 1998, or
within the first quarter of 1999,  Registrant would have the initial  geological
report from its current  consulting firm,  evaluating its Cangalli gold deposit.
Registrant  set having this report in hand as one of its  criteria  for inviting
intended  joint  venture  partners  onto the Cangalli  properties.  The delay in
receiving this report has delayed any  negotiations  with other  potential joint
venture  partners.  Registrant  cannot assure that any  potential  joint venture
partners  will  be  interested  in  evaluating  the  Cangalli  prospects  or  in
negotiating a relationship with Registrant.

     Registrant's  management was desirous of firming up other strategic  issues
before inviting  potential joint venture partners onto its Cangalli  properties.
Foremost  among these  other  strategic  moves,  Registrant's  management  began
implementing  a program of land  acquisition  during the fourth  quarter of 1998
through the first quarter of 1999,  which included  negotiating the ownership of
the  Cangalli  properties  currently  under  Registrant's   contractual  control
(thereby  extinguishing  the 18% UCL royalty and  eliminating  the  "cooperative
risk" factor explained below under "Business Atmosphere"),  as well as acquiring
surrounding  properties  in  the  Paleo-Tipuani  Trend.  Meetings  scheduled  in
mid-April  1999  between  an  appointed   negotiating  committee  from  UCL  and
Registrant's  management  will strive to resolve  pending  issues for  acquiring
UCL's interest in the Cangalli  properties.  Registrant cannot assure that these
meetings  will  produce  a  positive  result  for  Registrant;   however,  these
negotiations  have been advanced in previous  meetings with UCL's leadership and
general  membership.  The  completion  of any  acquisition  by Registrant of the
surrounding  properties or the UCL interests is subject to the  availability  of
adequate financing, of which there can be no assurance.

     Registrant also cannot assure that its current surrounding land acquisition
program will be  successful in acquiring  all, or even many, of the  significant
land holdings in the Paleo-Tipuani Trend. Nevertheless,  Registrant's management
believes that it is essential,  from various  strategic  perspectives,  to begin
these acquisitions and the formal legal proceedings  required by Bolivian law to
perfect titles on these properties.

     Any  shareholder,  or potential  shareholder,  should  carefully  weigh the
foregoing  highly  significant  factors and the other factors  described in this
annual report (including,  without  limitation,  volatility of commodity prices,
environmental  risks associated with mining  activities,  and the economic risks
associated  with doing  business in South  America) 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


                                       7

<PAGE>

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 a sampling and geological mapping program on the Cangalli
property.  As  reported,   Mr.  Paravicini's  initial  results  underscored  two
principle points regarding the Cangalli properties:

     *    first,  that the Cangalli  property  continued to show very  promising
          sampling results; 

     *    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.

     On October 7, 1998,  Registrant  entered into a consulting  agreement  with
Behre Dolbear & Co., Inc. ("BD&C") of Denver, Colorado, an internationally-known
consultant to the minerals industry.  BD&C agreed to make a site visit to Golden
Eagle's Cangalli,  Bolivia prospects and attempt to confirm the presence of gold
at a  limited  number  of sites to  determine  the  suitability  of areas of the
prospect  for further  exploration  and,  based on the results of the  foregoing
efforts,  generate a work plan which, if successful,  would enable Registrant to
identify  sufficient  resources on the Cangalli property for mining.  Registrant
previously reported the results of work by other consultants, but concluded that
the techniques used by those other  consultants were insufficient to justify the
calculations made.

     BD&C  completed its  first-phase  field  evaluation  on certain  designated
target areas within  Registrant's  Cangalli gold deposit in October  1998.  BD&C
advised  Golden Eagle that its field  geologist  confirmed the existence of gold
mineralization on Registrant's  properties.  The work BD&C has performed to date
confirms  Registrant's  management's initial conclusion that earlier studies had
focused on too broad an area within the property  and that a greater  likelihood
of success could be realized by Registrant  focusing on smaller target areas for
more extensive sampling and analysis.

     In  mid-February,  1999,  BD&C  carried  out  a  further  site  review  and
additional analysis on Registrant's  Cangalli properties.  As a result of BD&C's
investigation  to date,  BD&C is now working  with  Registrant's  management  to
identify target areas for more extensive sampling with the intent of identifying
sufficient resources to be considered for future possible mines.

     BD&C has  emphasized  to Registrant  that it is not in a position,  at this
time, to confirm third party  estimates or to make its own estimates of existing
or potential reserves or resources which the property may contain. BD&C's report
on its field work done in October  1998 and  February  1999 is pending as of the
date of the filing of this report.

     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 26  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  16  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


                                       8

<PAGE>

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.

     Weather, access, and remoteness issues (in general as they apply to Bolivia
and the Tipuani Mining  District,  and  specifically as discussed in this annual
report  regarding  Registrant's  Cangalli  operations),  create a number of risk
factors.  These risk factors,  and the other risks described  herein,  should be
carefully  considered by shareholders  and potential  shareholders in evaluating
any investment in Registrant's securities.

     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.

     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
three 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.

                                       9

<PAGE>


     To underscore and promote amicable  relations  between  Registrant and UCL,
UCL's president,  German Nunez,  and its General  Secretary,  Julio Duran,  were
invited to a  confirmation  and  planning  meeting in Miami,  Florida,  December
15-17,  1998. Rene Velasquez,  President of GEBM and EMB,  attended,  as well as
Terry C. Turner,  Registrant's  President,  and Mary A.  Erickson,  Registrant's
Corporate Secretary.  Registrant and UCL confirmed the existence of amicable and
productive  relations  between the two  organizations.  Discussions were held on
issues ranging from a buyout of UCL's  interests in the Cangalli gold deposit to
integration of UCL's membership into the body of Registrant's shareholders.

     As a reciprocal  gesture,  Registrant's  Board of Directors  and  officers,
together with Mr. Velasquez,  attended UCL's annual general assembly on February
27, 1999 in Cangalli,  Bolivia.  Registrant's  Board and officers  were received
very cordially,  and the same agenda discussed in Miami,  Florida, was discussed
at length during a day-long meeting with UCL's entire membership.

     Meetings are scheduled for mid-April, 1999, with a committee appointed from
UCL's  general  membership  for  purposes  of  negotiating  the  buyout of UCL's
interests in the Cangalli  gold  deposit.  This UCL  negotiating  committee  was
authorized  and empowered by the full UCL  membership  during its annual general
assembly  in  February,  1999,  to  negotiate a final  resolution  of all buyout
issues.  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.

     During the last quarter of 1998 and the first quarter of 1999, Registrant's
officers  attended  several   substantive   meetings  with  Bolivian  government
officials at the highest levels,  including:  Bolivia's President,  Hugo Banzer;
the Minister of Economic Development, Jorge Pacheco; the Vice Minister of Mining
and  Metallurgy,  Rene  Rengel;  and the  Governor of the State of La Paz,  Luis
Alberto  Valle,  among  others.  Registrant's  management  believes  that  these
meetings  foster an important  atmosphere  of trust and  confidence in promoting
both Bolivia's national interests, as well as Registrant's corporate objectives.

                                       10

<PAGE>


     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.)

     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, 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.

                                       11

<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.

     Registrant  has  retained  an  engineering  firm  to  monitor  Registrant's
subsidiary's  compliance with  environmental  laws in Bolivia and to produce any
necessary reporting and filing.

     Number of total employees and number of full-time employees.
     ------------------------------------------------------------

     At  December  31,  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, 1998, Registrant's  majority-owned  subsidiary,  GEBM,
employed 42 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 27 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

                                       12

<PAGE>

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.

     In 1997,  Registrant  entered  into a five-year  office  lease 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,  with no  escalation  during the term of the
lease.  (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 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

                                       13

<PAGE>

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
focus on a smaller target area for more extensive sampling and analysis.

     On  November  14,  1998,  the  SEC  filed  an  Amended   Complaint  in  the
above-referenced   action,  alleging  that  Registrant  and  its  president  had
inadequate  basis  for  making  the May 22,  1998,  press  release  regarding  a
geological report  Registrant had received from an independent  geophysicist and
mining engineer.

     In  February  1999,  Registrant  entered  into a Consent  and  Undertaking,
neither  admitting nor denying any of the  allegations in the SEC's action,  but
resolving any and all issues as to the SEC's Complaint and Amended  Complaint as
they relate to Golden Eagle International,  Inc., by agreeing to the issuance of
a Permanent  Injunction not to violate  certain  securities  laws in the future.
Pursuant to that Consent and Undertaking, on March 4, 1999, the Federal District
Court for the  District  of  Colorado  entered  a Final  Judgment  of  Permanent
Injunction  ordering  Registrant not to violate  certain  securities laws in the
future.  Registrant  was not  assessed any civil or monetary  penalty.  Although
Registrant  has resolved  the SEC's  allegations  against it,  other  defendants
remain in the civil action,  including two current  officers and  directors,  as
well as a former officer and director.  Negotiations are currently  underway for
the settlement of the allegations  against the remaining  defendants,  but those
individuals  have denied any  wrongdoing  which may be actionable  under 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.  When MMMC  refused  to enter  into a
definitive  agreement,  no  acquisition  of the property was made and Registrant
filed litigation to recover its damages. Based on the recommendations of counsel
upon analysis of the ability of MMMC to pay any award of 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.

     On November 25, 1998, this consultant filed a spurious  criminal  complaint
for fraud against  Registrant's  president and vice president in La Paz, Bolivia
for the collection of the  consultant's  claimed  unpaid  services and expenses.
After a short  investigation  by the  National  Bolivian  Police in La Paz,  the
consultant's criminal complaint was summarily dismissed.  Registrant's president
and vice president have been unfortunately compelled by the consultant's actions
to begin a criminal proceeding against him in La Paz for malicious  prosecution,
fraudulent use of professional  credentials,  misrepresentation,  and extortion.
That criminal  complaint has been  investigated by the National  Bolivian Police
and the case is proceeding to trial against the consultant.

     Registrant  continues to assert that no jurisdiction  exists in Bolivia for
an action by the  consultant,  and that his  misrepresentation  of  professional
credentials and attempted extortion of Registrant's officers will,  necessarily,
be dealt with severely by Bolivian authorities.

                                       14

<PAGE>



     Litigation/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 (Paul Enright vs. Golden
Eagle International,  Inc., 98-CV-5118,  Div. 1, District Court, City and County
of Denver, State of Colorado).  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


                                     PART II


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

     (a) Market Information

     During 1998, Registrant used its common stock directly to raise capital and
to  satisfy  some of its  obligations.  Registrant  issued a total of  1,200,000
restricted common shares to eight unaffiliated,  accredited investors at a price
of $.10 per share (as  described in Note E to the Financial  Statements).  These
were accomplished pursuant to the exemptions from registration found in Sections
4(2)  and  4(6) of the  Securities  Act of  1933,  as  amended,  and  the  rules
thereunder.  The funds  received  from  these  investors  were  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. These were accomplished  pursuant to the exemptions from
registration  found in Sections 4(2) and 4(6) of the  Securities Act of 1933, as
amended,  and the rules  thereunder.There  was no underwriter  involved in these
transactions.

     Since  late  1994  through  the  first  quarter  of  1999,  Registrant  was
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. ("NASD"). However, in February, 1999, the NASD assigned the "MINE"
symbol to a NASDAQ  company,  and has assigned to Registrant  the trading symbol
"MYNG".  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
became  current on its filings of annual and quarterly  reports,  its securities
were  eligible  to  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.  In  February,  1999,  one of  Registrant's  market  makers  filed  the
requisite  Form  211  with  the  NASD  requesting  the  return  of  Registrant's
securities to the OTC Bulletin  Board.  Registrant's  market maker, a registered


                                       15

<PAGE>

broker-dealer,  has  exchanged  correspondence  with the NASD,  and has provided
necessary documentation.  There can be no assurance, however, that the NASD will
find the Form 211, and accompanying  documentation,  adequate.  Until Registrant
has received formal notice that its market maker's Form 211 application has been
approved, the market for Registrant's common stock will be impaired.

     Registrant's  common  stock has been the subject of  significant  rumor and
innuendo  published by unaffiliated  parties on the Internet and in other media.
These rumors have had significant  impact on the market for Registrant's  common
stock.  Registrant does not, and legally cannot, respond to each rumor, and must
advise its shareholders,  and potential shareholders,  to investigate the source
of any statement with respect to Registrant before relying upon that statement.

     There  is  a  significant   amount  of  restricted  stock  overhanging  the
over-the-counter  market,  although no person may sell restricted stock into the
over-the-counter  market without first filing a Form 144 with the Securities and
Exchange Commission announcing his or her intention to make such sales, or until
after holding the shares for at least a two-year period.

     The public market for Registrant's  common stock is extremely volatile both
as to price and volume.  There can be no assurance  that the public  market will
continue, or if it does so continue, that the market will stabilize.

     Registrant  is  authorized  to issue Eight  Hundred  Million  (800,000,000)
Common Shares, of which  approximately  109,217,885 shares are outstanding as of
December 31, 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.

          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
          Fourth Quarter                 $.062                 $.35

          1999                           Low Bid               High Bid
          -------------------------------------------------------------
          First Quarter                  $.125                 $.450

     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.

     (b) Holders

     As of December 31,  1998,  there were  approximately  656  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.


                                       16


<PAGE>



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

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

     At December 31, 1998,  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,  1998,
Registrant  was  able  to pay or  subsequently  arrange  for  the  payment  of a
substantial  portion of its subsidiary's  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
due to short-term loans made from affiliates and unrelated  parties,  bank debt,
accrued compensation, and accounts payable.

     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  restricted  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 restricted common stock which
was valued at $.10 per share.

     However,  during  1998,  Registrant  did  not  enjoy  the  benefits  of the
availability of this revolving line of credit on the magnitude of the Texas bank
loan from  1997.  Instead,  an  engineering  firm in La Paz,  Bolivia,  provided
working and operating capital loans on an "as needed" basis during the course of
1998. Small operating loans from this engineering firm totaled  $424,884.  These
loans,  advanced under a revolving line of credit,  accumulated  interest at 15%
per  annum  from the date of each  disbursement.  Interest  accumulated  through
December 31, 1998 was $27,792.  This loan was due on December 31, 1998; however,
it has been extended to June 30, 1999.  In the first quarter of 1998,  this same
Bolivian engineering  consulting firm paid a financial advisor 666,666 shares of
Registrant's  common  stock for  services  provided  by the advisor on behalf of
Registrant.  As consideration  for the transfer of the stock,  Registrant issued
999,999 shares of restricted common stock to the consulting firm.

     Also, during the first quarter of 1998, a significant  shareholder paid two
financial advisors and an investor relations firm 450,000 shares of Registrant's
common  stock for  services.  As  consideration  for the  transfer  on behalf of
Registrant,  675,000 shares of Registrant's  restricted common stock were issued
to this shareholder.

     The  foregoing  two share  issuances  by  Registrant  were  recorded at the
estimated value of the stock  transferred,  approximately  $.13 per share, for a
total of $217,500,  which was  comprised of $145,000 for services and $72,500 as
interest expense.

     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 was  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 February 1998.

     In April 1998,  Registrant  issued a $250,000  convertible  debenture  to a
foreign  corporation  at 8%, of which only $125,000 was advanced to  Registrant.
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

                                       17

<PAGE>

primarily for working capital and operating  expenses.  The $125,000 advanced to
Registrant   under  this   debenture  was  converted  to  2,560,000   shares  of
Registrant's  common stock in October 1998.  The $125,000  which  remained under
this convertible debenture was not subsequently exercised.

     Through December 31, 1998, Registrant's  majority-owned  subsidiary,  GEBM,
received loans totaling $32,200 in cash from  Registrant's  president,  Terry C.
Turner, and $169,216 (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 demand. In 1998, Mr. Turner received substantial repayment of
prior loans 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  1998,  Registrant  issued a total of
1,200,000 shares of restricted  common stock to eight  unaffiliated,  accredited
investors at a price of $.10 per share. These were accomplished  pursuant to the
exemptions from  registration  found in Sections 4(2) and 4(6) of the Securities
Act of 1933, as amended, and the rules thereunder. 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.

     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 1999.  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 1998
Registrant  produced  approximately  7,000  grams  of  gold,  which  it sold for
approximately $65,030 (before payment of $12,559 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 a negotiated sum which will be determined in meetings
in mid-April,  1999,  between  Registrant and  representatives of UCL. 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.  Registrant  will only be able to acquire these  interests if it is
able to obtain a significant amount of working capital, of which there can be no
assurance.  (Please see "Registrant's  Operations:  Working Capital  Shortages,"
Item 1(b), page 6.)

     Given  Registrant's  working  capital  shortages  and current  world market
conditions  for  commodities,   including  minerals  and  metals,   Registrant's
management  has set the  following  priorities  for the use of  proceeds as they
become available:


                                       18


<PAGE>


     (a)  Maintenance  of current  operations,  contractual  payments,  and land
          patent payments;

     (b)  Acquisition  of  surrounding  or  adjacent   landholdings  within  the
          Paleo-Tipuani Trend;

     (c)  Acquisition of UCL's ownership interests in the Cangalli properties;

     (d)  Receipt  of  pending   geological  and   metallurgical   reports  from
          consultants who have already performed the necessary fieldwork, or who
          are currently concluding their field testing;

     (e)  Implementation   of   recommendations    from   the   geological   and
          metallurgical reports, including, but not limited to:

          i.   Constructing a metallurgical recovery plant at Chaco Playa, Chaco
               Face, begin commercial production;

          ii.  Entering    second-stage    resource   confirmation   work   with
               Registrant's geological consulting firm;

          iii. Entering  into  negotiations,  including  site visits and initial
               field studies, with interested joint venture partners.

     As stated above,  implementation of any or all of these planned  strategies
by Registrant requires  significant  infusions of working and operating capital,
and Registrant  cannot assure that it will be successful in raising that capital
through a secondary offering or private placements.

     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 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 "Registrant's Operations:  Business
Atmosphere," Item 1, page 10.

     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  ($52,471  in
post-royalty  revenues in 1998),  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 1998 compared with 1997.

     Registrant  incurred  operating  expenses  totaling  $1,789,752 in 1998, as
compared to $2,524,710 in 1997, a decrease of 29%. As a result of having limited
revenues from operations,  Registrant  incurred operating losses of ($1,737,281)
in 1998 and ($2,423,251) in 1997, a decrease of 28%.

     Registrant  has  accrued   compensation   and  related   payroll  taxes  of
approximately   $907,577  through  December  31,  1998.  (Neither   Registrant's
president nor its secretary/treasurer were paid salary in 1998; in 1999, 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 1998 Registrant paid consultants  approximately $563,202 in
cash and stock.  The  combination of 1998  compensation  and consulting  fees of

                                       19

<PAGE>

$1,125,000 compared to $1,410,000 in 1997, a decrease of 20%. Compensation costs
are  expected to  increase in 1999 and beyond if  Registrant  is  successful  in
expanding its operations.

     Registrant's costs and operating expenses for 1998 actually decreased as to
general and administrative expenses, totaling $1,512,347, compared to $1,848,603
in 1997. However, exploration expenses in 1998 decreased significantly, totaling
$195,348  compared  to  $627,606  in 1997 as a result of  decreased  exploration
activities  conducted on the property  during  1998.  In addition,  depreciation
increased in 1998 to $82,057 from $48,501 in 1997,  representing  an increase of
69%. This increase in  depreciation  is due  principally  to bringing into use a
substantial number of pieces of previously acquired mining equipment.

     Legal  expenses in 1998 increased  significantly  as a result of efforts to
settle the SEC investigation of Registrant's activities,  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. The expenses totaled approximately $110,000 in 1998, as
compared to $75,001 in 1997.  Accounting and other professional expenses in 1998
decreased from 1997, due to decreased  exploration expenses and accounting fees.
1998 expenses for accounting and other  professional  expenses  totaled $86,938,
compared to $108,310 in 1997.  Registrant expects that future legal,  accounting
and other  professional  expenses will increase in 1999.  These  increased costs
will be due to Registrant's  litigation with one of Registrant's former officers
regarding issues  surrounding  employee's  contract and this officer's  tortious
activities;  ongoing  efforts to maintain  corporate  records  and SEC  filings;
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;
and increased general and  administrative  expenses in connection with increased
corporate activity to the extent the Company's limited financing will allow.

     Capital expenditures for property and equipment decreased  significantly in
1998 to $749. By comparison,  1997 results show capital expenditures of $822,192
(excluding  stock valued at $299,316 issued for mining  equipment) as Registrant
funded  exploration  costs and investment on the Bolivian mining prospect.  This
decrease  resulted  from  Registrant  not  acquiring  additional  equipment  for
operations  due to  evaluation  of plant  designs,  and  significant  cash  flow
shortages for such acquisitions.

     Registrant  incurred interest  expenses in 1998 of $339,715,  as opposed to
1997  interest  of  $184,204.  The  increased  amount  of loans  led to this 84%
increase.  This  increased  interest  cost  will  continue,  and  probably  rise
significantly,  in 1999  because of increased  borrowings  necessary to maintain
liquidity for operating  purposes.  As of December 31, 1998,  capitalized  costs
related to the Bolivian  prospect  are  principally  $100,000  paid for prospect
acquisition rights and $813,529 for mining equipment.

     Registrant  had a net loss for 1998 of  ($2,073,025),  compared  to its net
loss in 1997 of  ($5,963,554).  Registrant  anticipates  that  the  trend of net
losses  will  continue  in 1999,  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, 1996, 1997 or 1998. 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.

     Year 2000 Compliance
     --------------------

     The year 2000 ("Y2K") may present problems for computer  programs,  as well
as  other  embedded   technologies   which  use  date  recognition   methods  or
time-sensitive  logic based upon two digits.  The date "00" may be recognized as
the  year  1900,   rather   than  the  year  2000,   resulting   in   widespread
miscalculations or system failures which could adversely affect business.

     Registrant  expects  little  impact  of the  Y2K  issues  on  cash  flow or
financial  conditions.  Nevertheless,  Golden  Eagle,  in an  attempt to prevent
financial  risk  including  the loss of  revenue  and  unanticipated  costs,  is

                                       20

<PAGE>

devoting all resources  necessary to resolve  significant Y2K issues in a timely
fashion.  The  internal  assessment  phase  is  complete  and all  software  for
computers utilized by Golden Eagle is, in all material respects,  Y2K compliant.
With  respect to banks  with  which  Golden  Eagle has  material  relationships,
Registrant  intends to complete a  verification  of Y2K  compliance  by June 30,
1999. Such verification  process includes  contacting each vendor's  information
technology department to determine the vendor's state of Y2K readiness,  as well
as requesting written documentation outlining each vendor's Y2K compliance plan.
Y2K  non-compliance by any bank in the United States or Bolivia where Registrant
has its bank accounts could adversely affect Registrant's assets and liquidity.

     Estimated  expenditures  for Y2K issues are expected to be less than $1,000
for fiscal 1999. However,  Golden Eagle is not able to determine the total costs
for its  Y2K  program,  nor is it  able to  determine  the  material  effect  on
Registrant's financial condition, results of operations or cash flow.


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,  1998.  These people  continue to hold the stated  positions as of April 12,
1999.
<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)               46      President, Chairman &
                                          CEO                              2/14/97 to present

Harlan M. (Mac) Delozier III      55      Executive Vice President         3/1/97 to present

Rene Velasquez                    55      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.

                                       21

<PAGE>
     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
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

                                       22
<PAGE>

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 Registrant's  Board
of Directors  formed a Technical  Advisory Board to assist  Registrant  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.

     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


                                       23

<PAGE>

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. He filed his Form 3 in March 1999.

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

     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 October
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. She filed her Form 3 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, 1998. 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.

                                       24
<PAGE>
<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 &               1998        $0         $0           $0             0       10,000,000(B)      $0           $0
   Chief Executive
   Officer

Rene Velasquez               1996        $0(C)      $0           $0         2,000,000(D)      0            $0           $0
   President
   of GEBM                   1997        $0         $0           $0         2,000,000(E)      0            $0           $0
   and
   EMB                       1998        $0         $0           $0             0             0            $0           $0
</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 was
     paid  in  1998.  This  accrued  but  unpaid  salary is  a liability  of the
     Registrant but bears no interest.
(B)  Does not include 5,000,000 options which do not vest until November 1999.
(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
Registrant.  However,  its  president and its  secretary/treasurer  have accrued
salary during 1998 in an aggregate amount of $350,000, which sum will be paid to
these  individuals  as  Registrant  is able;  $678,951 has been accrued  through
December 31, 1998.

     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 debts owed him.

     Options/SAR Granted During Year Ended December 31, 1998
     -------------------------------------------------------

     No stock appreciation  rights were granted to any person in 1998.  However,
in 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 restricted  shares subject to the options are as
follows:

Terry C. Turner:    10,000,000  restricted shares currently vested and 5,000,000
                    restricted 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  restricted  shares currently vested and 5,000,000
                    restricted 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.

                                       25

<PAGE>

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

     No executive  officer  exercised any options or stock  appreciation  rights
during the 1998 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 1998.

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

     In  October  1998,  Registrant  adopted  a medical  insurance  plan for its
employees, which plan became effective on November 1, 1998. Registrant currently
has no stock  ownership  or other  profit-sharing  or  pension  plans,  nor life
insurance or any other benefit plan for its employees,  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 1998,  except for
compensation  of  Officers  who are also  Directors  which is  described  in the
Summary Compensation Table above.  Registrant's  Technical Advisory Boardmembers
accrued compensation for a total of approximately  $12,000 in 1997 in connection
with certain consulting services rendered by them, which remained unpaid through
1998.

     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.

     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 Registrant.  Registrant has no plan or arrangement with respect to any such
persons  which will result from a change in control of Registrant 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, 1998.

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

     At December 31, 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 December 31, 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.


                                       26


<PAGE>

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

 Mary A. Erickson                                  19,441,467 (2)        17.8%
 4949 S. Syracuse St., Ste. 300
 Denver  CO  80237

 Terry C. Turner                                   10,000,000 (3)         9.2%
 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            30.6%

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

(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
     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 Registrant, except the pledge by
Golden Eagle Mineral  Holdings,  Inc. of 13,500,000  restricted  shares to Frost
Bank described above in Note (2). This loan is not in default.



                                       27


<PAGE>

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. Seydler 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.

     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.

                                       28


<PAGE>
                                                                     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
                                             (185,719)              2 $123,551

           Family members 3                   $32,683
                                              ($8,092)                 $24,591

1996       Mary A. Erickson                   $84,500
                                             $169,417 4
                                            ($116,500)                $268,975 5

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

           Rene Velasquez                     $41,900                  $41,900

1997       Mary A. Erickson                       $75                  $55,250
                                             ($48,800)
                                            ($165,000) 7

           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                  $326,662
                                             ($47,000)              $1,112,171 5

           Mary Erickson                           $0                  $55,250

           Rene Velasquez                     $78,885  5              $169,216

           Terry Turner                       $33,425
                                             ($37,075)                 $32,200


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.

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.

7    Cancellation of loan assumption.

     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,

                                       29

<PAGE>

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's  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 restricted 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 December  31, 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.


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, 1998               F-4

            Consolidated      Statement of Operations for the years ended
                              December  31,  1998 and 1997 and from  July
                              21, 1988 (inception) through
                              December 31, 1998                              F-5

            Consolidated      Statement of Cash Flows for the years ended
                              December  31,  1998 and 1997 and from  July
                              21, 1988 (inception) through
                              December 31, 1998                              F-6

            Consolidated      Statement of Stockholders' Equity (Deficit)
                              for the years ended  December  31, 1998 and
                              1997 and from July 21, 1988 (inception)
                              through December 31, 1998                      F-7

            Notes to Consolidated Financial Statements          F-8 through F-22

                                       30

<PAGE>


     (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, 1998, and subsequently:

    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
    November 13, 1998, reporting an event under Item 5 of Form 8-K
    February 4, 1999, reporting an event under Item 5 of Form 8-K
    March 17,  1999, reporting an event under Item 5 of Form 8-K
    March 29,  1999, reporting an event under Item 7 of Form 8-K


                                   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.


         April 12, 1999                    /s/  /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.


    April 12, 1999                     /s/  Terry C. Turner
                                       ----------------------------------------
                                       Director and Principal Executive Officer


    April 12, 1999                     /s/  M. A. Erickson
                                       -----------------------------------------
                                       Director, Principal Financial Officer and
                                       Principal Accounting Officer

                                       31


<PAGE>
--------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Financial  Statements
 Table of Contents
--------------------------------------------------------------------------------


                                                                       PAGE
                                                                       ----

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

 Financial Statements

              Consolidated Balance Sheet                                F-4

              Consolidated Statement of Operations                      F-5

              Consolidated Statement of Cash Flows                      F-6

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

              Notes to Consolidated Financial Statements                F-8



                                      F-1




<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

April 7, 1999

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, 1998, and the related consolidated  statements of operations,  cash
flows and changes in stockholders' equity (deficit) for the years ended December
31, 1998 and 1997, and the related  amounts  included in the cumulative  amounts
for the period  from July 21,  1988  (inception)  to December  31,  1998.  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 93% of total
assets as of December  31, 1998 and revenues  constitute  100% of total 1998 and
1997 revenues,  of the related  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, 1998 and for the years ended  December 31, 1998
and 1997, and the related  amounts  included in the  cumulative  amounts for the
period from July 21, 1988  (inception)  to December  31, 1998 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,  based on our audit and the report of the other  auditors,  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, 1998,  and the results of its operations and its cash flows
for the years ended December 31, 1998 and 1997, and the related amounts included
in the  cumulative  amounts  for the period from July 21,  1988  (inception)  to
December 31, 1998, 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, 1998
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.



Oatley Bystrom & Hansen
Greenwood Village, Colorado


                                      F - 2

<PAGE>
                           INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Shareholders
Golden Eagle Bolivia Mining S.A.
(A development stage enterprise)
La Paz, Bolivia

We have  audited  the  balance  sheet of Golden  Eagle  Bolivia  Mining  S.A. (a
development  stage enterprise) as of December 31, 1998 and 1997, and the related
statements of operations and cash flows for the years then ended.  The 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 statements presentation.
We believe that 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. (a development  stage enterprise) as of December 31, 1998 and 1997, and the
results  of its  operations  and its cash  flows for the years  then  ended,  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  have 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
                            Member Firm
                            Pannell Kerr Forster - PKF Worldwide International

                            /s/ Lic. Hugo Berthin Amengual (Partner)

                             MAT PROF. No. CAUB 0482
                             RUC 2190931

La Paz - Bolivia
March 5, 1999
                                   
                                      F - 3



<PAGE>
--------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Balance Sheet
--------------------------------------------------------------------------------
                                                                   December 31,
                                                                       1998
--------------------------------------------------------------------------------
 ASSETS

 CURRENT ASSETS
    Cash                                                          $      1,305
    Prepaid expense other costs                                         56,087
                                                                  ------------
       Total current assets                                             57,392
                                                                  ------------

 PROPERTY AND EQUIPMENT
    Mining equipment                                                   813,529
    Acquisition cost of mining prospect                                100,000
    Vehicles                                                            59,796
    Office equipment                                                    46,682
                                                                  ------------
                                                                     1,020,007
    Less accumulated depreciation                                     (147,780)
                                                                  ------------
                                                                       872,227
                                                                  ------------

 OTHER ASSETS
    Advance royalties                                                   44,634
    Deposits                                                            12,275
                                                                  ------------
                                                                        56,909
                                                                  ------------

                                                                  $    986,528
                                                                  ============
                                                                  
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 CURRENT LIABILITIES
    Loans from related parties                                    $  1,249,240
    Bank loan payable                                                1,000,000
    Other notes payable                                                448,816
    Accounts payable                                                   213,898
    Payable to related parties                                          19,468
    Accrued compensation and taxes                                     907,577
    Accrued interest payable                                           166,526
    Other accrued liabilities                                            1,863
                                                                  ------------
       Total current liabilities                                     4,007,388
                                                                  ------------

 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 an
       outstanding 109,217,885 shares                                   10,920
    Additional paid-in capital                                       8,154,810
    Deficit accumulated during the development stage               (11,186,590)
                                                                  ------------
       Total stockholders' (deficit)                                (3,020,860)
                                                                  ------------
                                                                  $    986,528
                                                                  ============
                                                                  
See accompanying notes.
                                      F-4

<PAGE>
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Statement of Operations
---------------------------------------------------------------------------------------------------------------------
                                                                                                        July 21, 1985  
                                                                       Year Ended                        (Inception)
                                                                       December 31,                        Through
                                                            -----------------------------------            December
                                                                1998                  1997                 31, 1998
   ------------------------------------------------------------------------------------------------------------------

<S>                                                         <C>                   <C>                   <C>          
REVENUES                                                    $      52,471         $     101,459         $     153,930

COSTS AND OPERATING EXPENSES
   General and administrative                                   1,512,347             1,848,603             6,377,134
   Exploration                                                    195,348               627,606               871,795
   Depreciation                                                    82,057                48,501               141,183
                                                            -------------         -------------         -------------

      Total costs and operating expenses                        1,789,752             2,524,710             7,390,112
                                                            -------------         -------------         -------------

OPERATING (LOSS)                                               (1,737,281)           (2,423,251)           (7,236,182)
                                                            -------------         -------------         -------------

OTHER INCOME (EXPENSE)
   Interest expense                                              (339,715)             (184,204)             (630,844)
   Interest income                                                    903                   193                14,549
   Loan financing costs, net                                         --              (2,475,000)           (2,475,000)
   Write-down of mining prospect                                     --                (873,462)             (873,462)
   Gain on marketable securities                                     --                    --                 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                                         --                    --                 (17,314)
   Other income                                                     5,826                12,460                21,967
   Other expenses                                                  (2,758)              (20,290)              (23,048)
                                                            -------------         -------------         -------------

      Total other income (loss)                                  (335,744)           (3,540,303)           (3,945,108)
                                                            -------------         -------------         -------------

NET INCOME (LOSS)                                           $  (2,073,025)        $  (5,963,554)        $ (11,181,290)
                                                            =============         =============         =============

BASIC EARNINGS (LOSS) PER SHARE                             $        (.02)        $        (.08)        $        (.43)
                                                            =============         =============         =============

WEIGHTED AVERAGE SHARES OUTSTANDING                           103,856,108            76,564,776            26,210,426
                                                            =============         =============         =============



See accompanying notes.

                                                    F-5

<PAGE>

----------------------------------------------------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Statement of Cash Flows
----------------------------------------------------------------------------------------------------------------------------
                                                                                                          
                                                                                                               July 21, 1988
                                                                               Year Ended                       (Inception)
                                                                                December 31,                     Through
                                                                       -----------------------------             December
                                                                           1998                 1997             31, 1998
                                                                       -----------------------------------------------------
 CASH FLOWS FROM OPERATING ACTIVITIES
    Net income (loss)                                                   $ (2,073,025)       $ (5,963,554)       $(11,181,290)
    Adjustments to reconcile net income (loss)
       to net cash provided by operating activities:
         Stock issued for services                                           463,000             816,000           2,684,919
         Stock issued for accrued interest                                   113,963              27,271             141,234
         Depreciation expense                                                 82,057              48,501             141,183
         Loss on retirement of vehicle, equipment and other                    2,758               4,163               8,235
         Stock issued for loan pledges and renewals                             --             2,500,000           2,500,000
         Write-down of mining prospect                                          --               873,462             873,462
         Loss (gain) from investments                                           --                  --              (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                                     (50,429)             25,239             (56,087)
         Income tax refund receivable                                          8,946                --                  --
         Payables and accrued liabilities                                    312,311             481,874           1,309,332
                                                                        ------------        ------------        ------------

    Net cash flows (used for) operating activities                        (1,140,419)         (1,187,044)         (3,580,682)
                                                                        ------------        ------------        ------------

 CASH FLOWS FROM INVESTING ACTIVITIES
    Investment in property and equipment                                        (749)           (822,192)         (1,603,181)
    Advance royalties                                                         27,280             (71,914)            (44,634)
    Deposits                                                                  26,500             (35,500)            (13,775)
    Proceeds from investment sales                                              --                  --               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                            53,031            (929,606)         (1,632,388)
                                                                        ------------        ------------        ------------
 CASH FLOWS FROM FINANCING ACTIVITIES
    Loans from related parties                                               333,996             221,329           1,765,205
    Repayment on loans from related parties                                   (4,000)            (98,174)           (435,376)
    Proceeds from other notes payable                                        441,540                --               581,098
    Repayments of other notes payable                                           --               (58,724)            (69,146)
    Proceeds from convertible debentures                                     125,000             100,000             413,500
    Proceeds from bank loan                                                     --             1,000,000           1,000,000
    Common stock issued                                                      120,000           1,012,635           2,022,158
    Stock issuance costs                                                        --                  --               (63,064)
                                                                        ------------        ------------        ------------

    Net cash flows from financing activities                               1,016,536           2,177,066           5,214,375
                                                                        ------------        ------------        ------------

 NET INCREASE (DECREASE) IN CASH                                             (70,852)             60,416               1,305

 CASH - BEGINNING OF PERIOD                                                   72,157              11,741                --
                                                                        ------------        ------------        ------------

 CASH - END OF PERIOD                                                   $      1,305        $     72,157        $      1,305
                                                                        ============        ============        ============



See accompanying notes.
                                                              F-6

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
 Golden Eagle International, Inc.
 (A Development Stage Company)
 Consolidated Statement of Stockholders' Equity (Deficit)
-----------------------------------------------------------------------------------------------------------------------------------
                                                             Common Stock         Common       Additional           
                                                        ----------------------     Stock        Paid-in     Accumulated
                                                          Shares       Amount     Issuable      Capital       Deficit      Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>          <C>           <C>           <C>         <C>
 Inception July 21, 1988                                        -       $ -        $ -             $ -           $ -           $ -
    Issued June 1, 1989 for cash 
     ($.00006 per share)                                1,666,665       167          -             (67)            -           100
    Issued in 1990 for cash ($.003 to
      $.03 per share)                                     666,665        67          -          10,033             -        10,100
    50,000 to 1 stock split                                     -         -          -           4,900             -         4,900
    Issued in 1991 for cash ($.30074
      per share from stock                               (268,335)       27          -          59,253             -        59,280
    November 1, 1993, acquisition of subsidiary                 -         -          -           2,600        (5,300)       (2,700)
    Fair value of officer salary                                -         -          -          20,000             -        20,000
    November 7, 1994, convert debt to
      equity ($.003 per share)                          2,640,830       264          -           7,659             -         7,923
    Issued in 1994 for note receivable
      from affiliate                                   20,000,000     2,000          -          23,000             -        25,000
    Issued in 1994 for legal services
      ($.00125 per share)                                 375,000        37          -             432             -           469
    Issued for cash in June and August 1995
      ($.01 to $.05 per share), less $41,644
      issuance costs                                   10,052,250     1,005          -         164,044             -       165,049
    Issued for services in 1995 ($.07 per share)        2,009,000       201          -         148,799             -       149,000
    Convert notes payable in 1995 ($.15625
      per share)                                          800,000        80          -         124,920             -       125,000
    Issuable for cash in 1995 ($.125 to
      $.282 per share),                                         -         -     80,000               -             -        80,000
    Issuable in 1995 for services and 
      additional consideration
      for loan ($.07 per share), 328,333 shares                 -         -     22,983               -             -        22,983
    Shares previously subscribed issued in 1996           568,333        57    (52,983)         52,926             -             -
    Issued for cash in 1996 ($.05 to
      $.25 per share)                                      21,150         2          -           5,528             -         5,530
    Issuable for cash in 1996 ($.10 to
      $.20 per share),                                          -         -    396,500               -             -       396,500
    Issued for services in 1996 ($.07 to
      $.30 per share)                                   5,448,985       545          -       1,230,297             -     1,230,842
    Other                                                     (70)        -          -           2,625             -         2,625
    Net loss for the periods                                    -         -          -               -    (3,144,711)   (3,144,711)
---------------------------------------------------------------------------------------------------------------------------------

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

    Shares previously subscribed issued                 2,407,000       238   (446,500)        446,262             -             -
    Issued for cash ($.10 per share)                   10,126,350     1,013          -       1,011,622             -     1,012,635
    Issued to related parties for loan guarantees
       and renewals ($.10 per share)                   25,000,000     2,500          -       2,497,500             -     2,500,000
    Issued for services ($.03 to $.17 per share)        9,276,398       928          -         815,072             -       816,000
    Issued for equipment ($.10 per share)               2,993,161       299          -         299,017             -       299,316
    Issued for conversion of debenture and
       note payable ($.09 and $.26 per share)             689,060        69          -         104,347             -       104,416
    Issued for vehicle ($.10 per share)                   350,000        35          -          34,965             -        35,000
    Net loss for the year                                       -         -          -               -    (5,963,554)   (5,963,554)
----------------------------------------------------------------------------------------------------------------------------------

 Balance at December 31, 1997                          95,359,112     9,534          -       7,065,734    (9,113,565)   (2,038,297)

    Issued for cash ($.10 per share)                    1,200,000       120          -         119,880             -       120,000
    Issued for services ($.10 to $.16 per share)        3,704,172       370          -         462,630             -       463,000
    Issued for conversion of debentures and
       accrued interest ($.03 to $.07 per share)        8,396,268       840          -         434,122             -       434,962
    Issued for interest ($.13 per share)                  558,333        56          -          72,444             -        72,500
    Net loss for the year                                       -         -          -               -    (2,073,025)   (2,073,025)
-----------------------------------------------------------------------------------------------------------------------------------

 Balance at December 31, 1998                         109,217,885    $10,920        $ -     $ 8,154,810 $(11,186,590)  $ (3,020,860)
====================================================================================================================================
</TABLE>

See accompanying notes.
                                                                      F-7
<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 under contract
     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's intent is
     to  eventually  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. In 1998,  the $28,086
     balance due for 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,  1998,  capitalized  costs
     related to the prospect are principally $100,000 of acquisition rights paid
     to UCL and $813,529 of mining equipment.

                                      F-8

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     Going Concern Considerations
     ----------------------------
     The  accompanying  financial  statements  have been presented  assuming the
     Company  will  continue  as  a  going  concern,   which   contemplates  the
     realization  of assets and the  satisfaction  of  liabilities in the normal
     course of  business.  The  Company  had  significant  working  capital  and
     stockholders' deficits as of December 31, 1998 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-9

<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.  Foreign currency  transaction gains recorded in
     1998 and 1997 were $5,904 and $1,825, respectively.

     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.  Ongoing  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.

     Stock-Based Compensation
     ------------------------
     The Company  has  elected to follow  Accounting  Principles  Board  ("APB")
     Opinion No. 25,  "Accounting  for Stock  Issued to  Employees"  and related
     interpretations in accounting for its employee stock options. Under APB 25,
     because the  exercise  price of employee  stock  options  equals the market
     price of the underlying stock on the date of grant, no compensation expense
     is  recorded.  The Company has adopted the  disclosure-only  provisions  of
     Statement of Financial  Accounting  Standard ("SFAS") No. 123,  "Accounting
     for Stock-Based Compensation, " (see Note E).

                                      F-10

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     Long-Lived Assets
     -----------------
     The Company  reviews  for the  impairment  of  long-lived  assets,  certain
     intangibles,  and  associated  goodwill,  whenever  events  or  changes  in
     circumstances  indicate  that the  carrying  value  of an asset  may not be
     recoverable.  An  impairment  loss would be  recognized  when the estimated
     future cash flows are less than the  carrying  amount of the asset.  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.

     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 1998 and 1997,  the
     Company paid  interest of $161,170  and  $156,826,  respectively.  Non-cash
     investing and  financing  transactions  during the periods  consists of the
     following:

     1998                                                Shares         Amount
     ----                                                ------         ------
     Common stock issued to advisors
      and consultants for services                      3,704,172    $   463,000
     Common stock issued upon conversion
      of convertible debentures,
      and accrued interest                              8,396,268        434,962
     Common stock issued in lieu of interest              558,333         72,500
                                                      -----------    -----------
                                                       12,658,773    $   970,462
                                                      ===========    ===========
     Vehicle sold to president
      for reduction of loans                                  N/A    $    27,576
                                                                     ===========
     1997
     ----
     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
                                                       ==========    ===========

                                      F-11

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     Earnings (Loss) Per Share
     -------------------------
     Basic earnings per share are computed using the weighted  average number of
     shares  outstanding  during  each  period.  Diluted  earnings  per share is
     computed on the basis of the average  number of common  shares  outstanding
     plus the dilutive  effect of outstanding  stock options using the "treasury
     stock" method.

     The basic and diluted earnings per share are the same since the Company had
     a net loss for 1998 and 1997 and the  inclusion of stock  options  would be
     antidilutive.

     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.  As of December  31,  1998,  the  carrying  amount of net assets
     located in Bolivia was approximately $131,000.




                                      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 its prime  interest rate
          (7 3/4% at  December  31,  1998),  dated
          January 31,  1997.  Interest due monthly
          until  June 1, 1999 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),  and
          13.5 million  shares of Company stock of
          the officer.                                               $1,000,000

     Note payable  dated to a Bolivian  consulting
          engineering firm at 15% per annum; dated
          January  7, 1998:  unsecured;  principal
          and accrued  interest  due  December 30,
          1998,  subsequently extended to June 30,
          1999.                                                         424,884

     Other, unsecured.                                                   23,932

     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 1998 to relatives of an
          officer, unsecured, due January 1, 2000.
          Classified  as current  liability due to
          related party nature.                                         537,143

     24%  advances  from officers of a subsidiary,
          unsecured, due on demand.                                     174,647

     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.                                      32,200
                                                                     ----------
                                                                     $2,698,056
                                                                     ==========

     Note D - Income Taxes

     As of December 31, 1998, the Company had net operating  loss  carryforwards
     totaling  approximately  $6.9  million  that may be offset  against  future
     taxable income, if any. These loss carryforwards  expire in varying amounts
     from 2005 through  2018.  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 $1.0 million of the loss  carryforward  has been offset by a
     valuation allowance of the same amount, a decrease of $318,000 in 1998.

                                      F-13
<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     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).

     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.

                                      F-14

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

     During  April 1997,  a $1 million bank loan (see Note C) was secured by the
     pledge of certain  assets of  relatives  of an officer for a period of five
     years.  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),  their estimated fair value. 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.

     From  October to December  1998,  the Company  issued a total of  1,200,000
     shares of common stock to eight individuals (non-affiliates) for a total of
     $120,000 ($.10 per share).

     During  1998,  a total of  3,704,172  shares of common stock were issued to
     financial  advisors and public  relations  consultants for services with an
     estimated total value of $463,000.

                                      F-15

<PAGE>
--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     During  1998,  a  Bolivian  consulting  engineering  firm paid a  financial
     advisor 666,666 shares of the Company's common stock for services  provided
     by the advisor on behalf of the Company.  As consideration for the transfer
     of the stock,  the Company  issued  999,999  shares of common  stock to the
     consulting  firm.  Also during 1998,  a  significant  shareholder  paid two
     financial  advisors and an investor  relations  firm 450,000  shares of the
     Company's common stock for services.  As consideration  for the transfer of
     the stock,  the Company  issued the  shareholder  675,000  shares of common
     stock.  The new shares issued by the Company were recorded at the estimated
     value of the stock  transferred,  approximately  $.13 per share, a total of
     $217,500 ($145,000 for services and $72,500 as interest expense).

     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  $168,500 of
     debentures and $3,092 of related accrued  interest into 2,773,447 shares of
     common  stock at an  average  conversion  rate of  approximately  $.062 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  of  $16,659  into  260,000  shares of common  stock
     ($.25638 per share).

     On April 24, 1998, the Company issued a $125,000 convertible debenture to a
     foreign corporation. On October 15, 1998 the debenture was converted, along
     with $35,000 of accrued  interest,  to 2,560,000  shares of common stock at
     50% of the OTC Bulletin  Board  average  closing bid price the day prior to
     notice - $.0625 per share.

                                      F-16

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     Employee Stock Options and Pro Forma Stock Based Compensation
     -------------------------------------------------------------
     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.  As of December 31,  1998,  none of the
     options had been exercised.

     Pro forma  information  regarding net income (loss) and earnings (loss) per
     common  share is required by SFAS 123,  and has been  determined  as if the
     Company had accounted  for its employee  stock options under the fair value
     method of that Statement. The fair value for these options was estimated at
     the date of grant  using the  Black-Scholes  option-pricing  model with the
     following weighted average assumptions:

                 Risk-free interest rate                     5.0%
                 Dividend yield                              None
                 Volatility factor                           197%
                 Weighted average expected life              36 months


     The  Black-Scholes  valuation model was developed for use in estimating the
     fair value of traded options,  which have no vesting  restrictions  and are
     fully transferable.  In addition, option valuation models require the input
     of  highly  subjective  assumptions  including  the  expected  stock  price
     volatility.   Because   the   Company's   employee   stock   options   have
     characteristics  significantly  different  from those traded  options,  and
     because changes in the subjective input  assumptions can materially  affect
     the fair value estimate,  in management's  opinion,  the existing models do
     not necessarily  provide a reliable single measure of the fair value of its
     employee stock options.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
     options is  amortized  to expense over the  options'  vesting  period.  The
     Company's pro forma net income (loss) and earnings  (loss) per common share
     were as follows for the year ended December 31, 1998:

          Net Income (Loss) - as reported                       $(2,073,025)
          Net Income (Loss) - pro forma                         $(4,567,998)

          Earnings (Loss) Per Common Share - as reported              $(.02)
          Earnings (Loss) Per Common Share - pro forma                $(.04)

          Weighted average fair value of options
              granted during the year                         $.15 per share

     There were no options  granted or  outstanding  during 1997.  The pro forma
     amounts may not be representative of future disclosures since the estimated
     fair value of stock options is amortized to expense over the vesting period
     and additional options may be granted in future years.


                                      F-17

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     Note F - Related Party Transactions

     During  1994,  an officer  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, 1998,  $55,250 loan principal plus accrued  interest of $6,232
     was owed the officer (an increase of $4,712),  respectively.  The unsecured
     loans are due January 1, 2000,  and due to their related party nature,  the
     loans are included in current liabilities.

     In  addition,  as of  December  31,  1998,  $369,082  was owed the  officer
     discussed above for out-of pocket operating  expenses and unpaid salary and
     is included in accounts payable, a net increase of $154,722 during 1998. As
     of December 31, 1998 a combined  total of $430,564 was owed the officer for
     loans,  accrued  interest  and amounts  included  in  accounts  payable (an
     increase of $159,434 during 1998).

     During 1996,  the officer  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 the
     officer's family.

     During 1996, four one-year notes payable,  totaling $450,000 at an interest
     rate of 10 1/2%,  were issued to a relative  of an  officer.  The notes are
     unsecured  but  personally  guaranteed  by the officer and her husband.  In
     April 1997, $12,500 of accrued interest was abated in partial payment for a
     loan  guarantee  and  renewal  (see  below).  As of  December  31, 1998 the
     $450,000 loan  principal and accrued  interest of $125,028 was  outstanding
     (an  increase of  $57,079).  March 22, 1997 the notes were  renewed with an
     extended  due date of  January  1,  2000;  and due to their  related  party
     nature, the notes are included in current liabilities.

     During 1995,  relatives of an officer advanced the Company $32,683 and were
     repaid $8,092. In 1996,  repayment of the advances was agreed to, providing
     for interest at twelve  percent,  and the  relatives  loaned the Company an
     additional $195,658.  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. In
     April 1997,  $12,500 of accrued  interest  was abated in partial for a loan
     guarantee  and  renewal  (see  below).  In 1998,  the  relatives  loaned an
     additional  $170,790.  As of December 31, 1998,  $537,143 of loan principal
     was outstanding  (an increase of $222,754).  March 22, 1997 these unsecured
     notes were renewed with an extended due date of January 1, 2000; and due to
     their related party nature the notes are included in current liabilities.

                                      F-18

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     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  1997, a $1 million bank loan (see Note C) was secured by the pledge
     of certain assets of relatives of an officer for a period of five years. 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),  their
     estimated  fair value.  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.

     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. Payment was accomplished by reducing outstanding loans owed
     to the officer by the  Company.  In  addition,  in 1998 the  president  was
     repaid  $9,500 cash and advanced the Company an additional  $33,425.  As of
     December  31,  1998,  the  president  was owed $32,200 for loans which bear
     interest at 24% per annum, are unsecured, and due on demand.

     Through  December  31,  1998  officers  of GEBM  have  loaned it a total of
     $174,647 (in equipment rentals and cash).  These loans bear interest at 24%
     per annum, are unsecured, and due on demand.

     Note G - Commitments and Contingencies

     Securities and Exchange Commission Investigation
     ------------------------------------------------
     On May 7, 1998 the Securities and Exchange  Commission  (the "SEC") 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  related to the possible  distribution of
     unregistered securities, 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),  and  subsequently,  whether a
     May 22, 1998 Company  press release may have  violated  federal  securities
     laws.

     In February 1999, the Company entered into an agreement,  neither admitting
     nor denying any of the allegations in the SEC's actions,  but resolving any
     and all issues as to the SEC's  complaints  as they relate the Company,  by
     agreeing to a permanent  injunction not to violate certain  securities laws
     in the  future.  Pursuant  to the  consent,  on March 4, 1999,  the Federal
     District Court for the District of Colorado entered a judgment ordering the
     Company not to violate certain  securities laws in the future.  The Company
     was not  assessed any civil or monetary  penalty.  Although the Company has


                                      F-19

<PAGE>

--------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
     resolved the SEC's  allegations  against it, other defendants remain in the
     civil action,  including two current  officers and directors.  Negotiations
     are currently  underway for the settlement of the  allegations  against the
     remaining  defendants,  but those  individuals  have denied any  wrongdoing
     under federal securities laws.

     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 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
     tortiously 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 tortiously  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.

     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.

                                      F-20

<PAGE>

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

     Office Leases
     -------------
     July 1, 1997, the Company entered into a five-year  office lease in La Paz,
     Bolivia at $1,666 per month. Rental expense paid for the office was $18,000
     and $18,996 in 1998 and 1997,  respectively.  Future minimum lease payments
     are as follows:

                   Year ended December 31,
                            2000                           $ 19,992
                            2001                             19,992
                            2002                              9,996
                                                           --------
                                                           $ 49,980
                                                           ========

     The  Company  also  leases an  executive  suite in  Denver,  Colorado  on a
     month-to month basis at $188 per month.

     Note H - Fair Value of Financial Instruments

     Disclosures  about the fair value of financial  instruments  are  presented
     below. The determination of fair value is subjective in nature and involves
     uncertainties  and  significant  matters of judgement  and does not include
     income tax considerations. Therefore, the results cannot be determined with
     precision and cannot be substantiated  by comparison to independent  market
     values  and  may not be  realized  in  actual  sale  or  settlement  of the
     instruments.  Also,  there may be inherent  weaknesses  in any  calculation
     technique,   and  changes  in  the   underlying   assumptions   used  could
     significantly affect the results. The following table presents a summary of
     the Company's financial instruments as of December 31, 1998:

                                      F-21


<PAGE>
-------------------------------------------------------------------------------
Golden Eagle International, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
   
                                             Carrying           Estimated
                                              Amount            Fair Value
     Financial assets:
     Cash and cash equivalents              $     1,314         $     1,314

     Financial Liabilities:
     Notes and loans payable                  2,698,056           2,698,056

     The carrying  amounts for cash and cash  equivalents,  accounts payable and
     accrued expenses approximates fair value because of the short maturities of
     these instruments.  The fair value of notes and loans payable  approximates
     fair value because of the market rate of interest on the debt.

     Note I - Events Subsequent to December 31, 1998 (Unaudited)

     Short-term Borrowings
     ---------------------
     On February  17, 1999,  the Company  borrowed  $25,000  from an  individual
     pursuant to a two-percent promissory note that is secured by 500,000 shares
     of unissued,  restricted  common  stock.  As additional  compensation,  the
     lender also  received  75,000 shares of  restricted  common  stock.  At the
     Company's  option,  it may extend the due date of the loan from May 3, 1999
     to May  17,  1999  for  75,000  additional  shares  of  common  stock.  The
     obligation is also personally guaranteed by the Company's president.

     Sale of Common Stock to Investors
     ---------------------------------
     In January and March 1999,  the Company issued  1,060,000  shares of common
     stock to eight  individual  investors  (non-affiliates)  for cash  totaling
     $106,000 ($.10 per share).

     Issuance of Common Stock to Advisors
     ------------------------------------
     In the first  quarter of 1999,  the Company  agreed in principle to issue a
     total of 1.5 million  shares of common stock to two  financial  advisors as
     compensation  for  identification  of  prospective  investors and financial
     public relations in 1999.

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

     Through April 7, 1999,  relatives of an officer loaned the Company  $91,300
     (see Note F).



                                      F-22