U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-KSB


[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended  December 31, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from                     to
                               -------------------    ----------------------

Commission file number 0-21635


                         GLOBAL DIAMOND RESOURCES, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)


            Nevada                                                33-0213535
-------------------------------                              -------------------
(STATE OR OTHER JURISDICTION OF                               (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)


     836 Prospect Street, Suite 2B
        La Jolla, California                                          92037
----------------------------------------                         ---------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                           (ZIP CODE)

          ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (858) 459-1928
                                                         --------------

SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:

     TITLE OF EACH CLASS                          NAME OF EACH EXCHANGE ON WHICH
     TO BE SO REGISTERED                          EACH CLASS IS TO BE REGISTERED

             None                                             N/A
-------------------------------                   ------------------------------


SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT:

                         Common Stock, $.0005 par value
--------------------------------------------------------------------------------
                                (TITLE OF CLASS)


<PAGE>


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No __

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

The market value of the voting stock held by non-affiliates of the registrant as
of March 22, 2001 was approximately $2,993,000.

The number of shares of the Common Stock outstanding as of March 22, 2001 was
53,171,678.

                   DOCUMENTS INCORPORATED BY REFERENCE: NONE.


<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

Business Development
--------------------

         CERTAIN MINING AND GEOLOGICAL TERMS USED BELOW ARE DEFINED IN THE
SECTION "GLOSSARY," BELOW. THE COMPANY HAS ENTERED INTO CERTAIN FINANCIAL
COMMITMENTS PAYABLE IN RAND, THE UNIT OF CURRENCY OF THE REPUBLIC OF SOUTH
AFRICA. ALL RAND BASED AMOUNTS ARE DESIGNATED BY THE SYMBOL R. AS OF MARCH 22,
2001, THE RAND-DOLLAR EXCHANGE RATE WAS 7.97 RAND TO ONE U.S. DOLLAR.

         Global Diamond Resources, Inc., a Nevada corporation ("Company"), was
formed under the laws of the State of Nevada on January 7, 1987. We are engaged
in diamond mining and exploration through our wholly owned subsidiary Global
Diamond Resources (SA) (Pty) Limited, a South African corporation.

         On June 16, 1999 the Company increased its authorized Common Stock from
50 million shares of $0.0005 par value Common Stock to 100 million shares of
$0.0005 par value Common Stock.

         Unless the context otherwise requires, all references to "we" and "the
Company" include its wholly owned subsidiaries:

     |X| Global Diamond Resources Inc., a British Columbia corporation (GDR-BC),
     |X| Global Diamond Resources (SA) (Pty) Limited, a South African
         corporation (GDR-SA),
     |X| Global Diamond Resources International Limited, a British Virgin
         Islands corporation (GDR-BVI),
     |X| Nabas Diamonds (Pty) Limited, a South African corporation (Nabas).
     |X| GDR Drilling (Pty) Limited, a South African corporation (GDR Drilling)

 Our executive offices are located at 836 Prospect Street, Suite 2B, La Jolla,
California 92037; Telephone (858) 459-1928.

Business of the Issuer
----------------------

         GENERAL

         The Company is engaged in diamond exploration and mining. We have
acquired two mining properties (the Grasdrif Deposit and the Caerwinning
Deposit), and own an option to purchase a third mining property (the Montrose
Kimberlite Pipe), all of which are located in the Republic of South Africa.

         BACKGROUND

         Diamond is the name attributed to a chemically inert mineral, which
normally occurs as crystals formed when the element carbon is subjected to
extraordinary heat and pressure. Diamond is believed to have been formed at a
depth of 200-400km below the surface of the earth and is then transported to the
earth's surface by the upward movement of molten rock. The molten rock
solidifies as semi-circular (pipes) or linear bodies (fissures). The solidified
rock is known as kimberlite. Pipes and fissures are eroded over time, and the
diamonds thus released from such formations are transported and are eventually
deposited in ancient or existing riverbeds and on beaches. In these deposits,
the diamonds are typically associated with the coarser (gravel) fraction of the
sediments, which are collectively known as alluvial deposits. The process of
erosion grinds and crushes the poorer quality diamonds thereby enhancing greatly
the average quality of the diamonds eventually deposited.

         DIAMOND EXPLORATION

         Diamond exploration typically begins with aerial photography, surface
sampling and magnetic surveys for purposes of locating indicator minerals or
geophysical anomalies, which may indicate the presence of kimberlite or an
alluvial deposit. In the event a pipe is located, follow-up sampling is
conducted to determine if it is diamondiferous. If the pipe is determined to be
diamondiferous, bulk sampling is then conducted to evaluate the value of the
diamonds present and the grade of the prospect and thereby establishing proven
or probable reserves.

                                       1
<PAGE>

         The exploration and evaluation of an alluvial diamond deposit is
similar to that of kimberlite but typically more complex and less conclusive
because of what is termed the "nugget-effect" which pertains to the scarce and
irregular distribution of diamonds in the gravel. Drilling can only determine
the three-dimensional extent of the gravel while bulk sampling is of necessity
substantially more complex than for kimberlite.

         DIAMOND MINING

         Kimberlite pipes are mined through a combination of open pit excavation
and underground mining. The mining of a kimberlite pipe typically commences with
an open pit mine to a shallow depth, generally 30 meters. Initially, a mining
zone is designed and then bulldozers are used to remove the topsoil, which is
set aside for reclamation. Hydraulic excavators are then employed to excavate an
open pit. As the mining operations expand, digging benches into the pit wall
enlarges the open pit. Since kimberlite pipes are relatively confined bodies, it
becomes impractical at a certain depth, approximately 30 to 100 meters, to
continue mining operations through open pit excavation. At this point, shafts
are sunk away from and parallel to the ore body, and from these shafts, adits to
the ore body are developed at various levels. The kimberlite ore is hoisted to
the surface and hauled to a recovery plant by trucks.

         Alluvial deposits are mined by open cast methods generally known as
strip mining. Removing any overburden present exposes the gravel. The gravel is
then removed by hydraulic excavator, loaded onto trucks and transported to the
recovery plant where it is then screened to remove all particles larger than
25mm. The larger fraction is discarded while the smaller fraction is then
processed by gravity separation (rotary pans) or centrifugal separation (DMS) to
recover the particles with a relative density of larger than 2.9 as concentrate.

         RECOVERY

         Each recovery plant consists of screens and associated separators that
employ water, agitation, gravity and centrifugal force as a primary method to
separate the heavier diamondiferous concentrate from the lighter tailings. The
two methods employed are rotary pans and dense media separation (DMS). Both
methods are well tried, the only difference being that pans are much cheaper to
construct and operate; however a DMS can be monitored electronically.

         Electronic sorting machines conduct final recovery from the
concentrate. These machines utilize the luminescent properties of diamond when
it is irradiated with X-rays. Photo multiplier tubes sense the luminescence and
activate a trap door, which diverts the diamond to a safe box. This concentrate
is then finally sorted by hand.

         MARKETING

         The Company sells its diamonds directly to private diamond dealers and
manufacturers through a tender system. There are no formal rules by which the
prices of diamonds are determined. Sale prices are set by the diamonds' color,
clarity, cut and weight which the prospective buyer expects to obtain through
the polishing process, and the evaluation process is generally subjective. We
expect that the sales of diamonds will be transacted in U.S. dollars on a cash
basis.


                                       2
<PAGE>

         GLOSSARY

         Set forth below are definitions of certain mining and geological terms
used in this report.

Adit                                       The main horizontal or
                                           near-horizontal underground opening,
                                           with single access to the surface,
                                           through which a kimberlite pipe is
                                           mined and the ore is excavated.

Alluvial Deposit                           A mass of gravel, sand or similar
                                           material resulting from the crumbling
                                           and erosion of solid rocks. In the
                                           sense that it is used here, it also
                                           implied an association with precious
                                           minerals such as diamond. A deposit
                                           of alluvium (deposits made by water)
                                           is made by a stream where it runs out
                                           onto a level plain or meets a slower
                                           stream.

Bedrock                                    The solid or weathered rock
                                           underlying  mineral-bearing gravel,
                                           sand clay, etc. and upon which
                                           alluvial deposits rest.

Bench Cuts                                 The excavation of a flat bench
                                           or dirt on a slope to stabilize the
                                           slope or to remove material of value
                                           in open pit mining.

Bulk Sampling                              Acquiring a large (often several
                                           thousand tons) sample of rock
                                           obtained by mining, excavation,
                                           digging or drilling large diameter
                                           holes. Bulk sampling is necessary to
                                           determine the grade and value of
                                           diamonds contained in a deposit.

Carat                                      A unit of weight used for precious
                                           stones equal to 200 milligrams or 0.2
                                           grams.

Concentrate                                That fraction of the processed ore
                                           which contains all or the largest
                                           portion of the economic mineral to be
                                           recovered. In the case of alluvial
                                           deposits, approximately 0.5-1.5% of
                                           the ore reports as concentrate from
                                           the primary recovery process. Of this
                                           a further 0.1-0.5% reports as
                                           concentrate from the electronic
                                           sorters.

Diamondiferous                             Containing diamonds.

Geophysical Surveys                        Measuring and recording any
                                           geophysical properties over a
                                           specific area, e.g., gravity,
                                           magnetics, electrical conductivity,
                                           acoustical velocities (seismics),
                                           etc., utilizing instruments on land,
                                           water or airborne.

Grade                                      The number of carats (weight) in a
                                           physical unit of ore, normally in
                                           carats per 100 tonnes.

Gravel                                     A comprehensive term applied to the
                                           water-worn mass of broken down rocks
                                           making up an alluvial deposit.
                                           Alluvial gravels are sometimes
                                           arbitrarily described in terms of
                                           size as "pebble," "cobble" or
                                           "boulder" gravel.

Hectares                                   Unit of measurement of surface area.
                                           One hectare approximates 2.47 acres.

Kimberlite                                 One of two primary types of
                                           diamond-bearing rock and the most
                                           common, often characterized by a more
                                           or less vertically orientated
                                           carrot-shaped structure referred to
                                           as a kimberlite "pipe."

Magnetic Surveys                           Measuring the magnetic variations in
                                           the earth's magnetic field caused by
                                           the variations in the magnetic
                                           properties of different rocks in the
                                           earth's crust with an instrument
                                           known as a magnetometer either as
                                           ground-based or mounted within or
                                           towed by an aircraft. Useful in
                                           detecting kimberlite bodies due to
                                           the presence of magnetite and/or
                                           ilmenite.

                                       3
<PAGE>

Mineralogy                                 The science dealing with inorganic,
                                           solid, homogeneous, crystalline,
                                           chemical elements or compounds
                                           (minerals), their crystallography,
                                           physical and chemical properties,
                                           classifications and distinguishing
                                           characteristics.

Mining                                     The activity, occupation, and
                                           industry concerned with the
                                           large-scale extraction of minerals
                                           and includes both surface and
                                           underground excavations. The making
                                           of any excavation for the purpose of
                                           recovering diamonds in commercial
                                           quantities. Of primary importance in
                                           the Republic of South Africa where
                                           mining laws draw a distinction
                                           between "mining" and "prospecting."
                                           See "Prospecting."

Ore                                        A body of rock or sediment containing
                                           a mineral that has sufficient utility
                                           and value to be extracted at a
                                           profit. See "Reserves."

Overburden                                 A body of rock or sediment that does
                                           not contain a mineral that has
                                           sufficient utility and value to be
                                           extracted at a profit (i.e. waste).

Petrology                                  The science that deals with the
                                           origin, history, occurrence,
                                           structure, chemical and mineralogical
                                           composition and classification.

Probable Reserves                          Reserves for which quantity and grade
  (Indicated Resource)                     and/or quality are computed from
                                           information similar to that used for
                                           proven reserves, but the sites for
                                           inspection, sampling, and measurement
                                           are farther apart or are otherwise
                                           less adequately spaced. The degree of
                                           assurance, although lower than that
                                           for proven reserves, is high enough
                                           to assume continuity between points
                                           of observation. See "Reserves" and
                                           "Proven Reserves."

Prospecting                                Searching for minerals (including
                                           diamond) by any means such as
                                           geophysical, drilling and pilot plant
                                           recovery methods, but does not
                                           include "mining" (i.e., excavation
                                           for purposes of recovering diamonds
                                           in commercial amounts). See "Mining."

Proven Reserves                            Reserves for which (a) the quantity
  (Measured Resource)                      is computed from dimensions which can
                                           be measured from outcrops, trenches,
                                           workings or drill holes. Certain
                                           grades and/or qualities computed from
                                           the results of detailed sampling, can
                                           be allocated to the quantity thus
                                           delineated and (b) the sites for
                                           inspection, sampling and measurement
                                           are spaced so closely and the
                                           geologic character is so well defined
                                           that size, shape, depth and mineral
                                           content of the reserves are
                                           well-established. See "Reserves" and
                                           "Proven Reserves."

Reserves                                   That part of a total mineral deposit
                                           (resource) that can be economically
                                           and legally processed or produced
                                           from at the time of the reserve
                                           determination. Reserves are
                                           customarily stated in terms of "ore."

Stripping Ratio                            The overburden that must be removed
                                           to gain access to an amount of ore.
                                           Expressed as a ratio in meters or
                                           tonnes of overburden: one meter or
                                           tonne of ore. The standard in this
                                           Company is to use a m:m ratio.

Tailings                                   The washed material that issues from
                                           a recovery plant after the economic
                                           portion of the ore has been removed
                                           as a concentrate.


                                       4
<PAGE>

         THE GRASDRIF DEPOSIT

         PROPERTY RIGHTS. The Company holds a prospecting permit for the
Grasdrif Deposit through its wholly owned subsidiary company, Nabas. The
prospecting permit expires on August 4, 2003. We will apply for a mining permit
when the level of activities warrant such an application. In terms of the
prospecting permit, we are required to pay to the government a surface rental
amounting to R5, 200 ($652 as of March 22, 2001). This amount was increased to
R10, 400 per year, beginning in 2001. Additionally, an agreement was reached in
August 2000, whereby the Company has agreed to pay the Namaqualand District
Council a minimum of R50, 000 ($6,274 as of March 22, 2001) per year, considered
a usage fee. We are in the process of delineating ore reserves on these
extensive deposits with the view of applying for a mining permit in the near
future.

         GEOGRAPHY. The Grasdrif deposit is an alluvial diamond deposit located
on the inner bank of the Orange River in the Northern Cape Province.

         GEOLOGY. The Grasdrif Deposit is an alluvial gravel deposit situated on
a bedrock of shale and greywacke of the Dwyka formation. The gravels of the
Grasdrif Deposit have been preserved at three distinct elevations, all of which
seem to have been deposited on the inner bank of the paleo- and present Orange
River. The upper terrace (elevation 215 meters above sea level) appears to have
been deposited as a point bar of a channel incising in a westerly direction,
while all other terraces are associated with a gradual eastward migration of the
channels towards its present position.

         RESERVES. Based upon the following, we estimate that the Grasdrif
deposit contains approximately 80 million tonnes of diamondiferous gravel:
         |X| the results derived from a 10,000 meter drilling program completed
             by the Company in 1997,
         |X| ongoing second phase drilling and bulk sampling, and
         |X| the results of previous exploration programs on the property
             conducted during the early 1980's.

         MINING ACTIVITIES. We have completed site establishment at Grasdrif,
including roads, power, housing and water reticulation, erection of a primary
and final recovery plant on the lower terrace, and a primary recovery plant on
the upper terrace. Bulk sampling operations on the lower terrace commenced
during the last quarter of 1998 and trial mining on the upper terrace during the
last quarter of 1999.

         See "Item 6. Management's Discussion and Analysis or Plan of
Operations" for a discussion of the results of operations and capital
requirements of the Grasdrif Deposit.

         THE CAERWINNING DEPOSIT

         PROPERTY RIGHTS. The Company has acquired the exclusive rights to
conduct mining operations at Caerwinning, a 2, 333-hectare alluvial deposit
located in the Northern Cape Province of the Republic of South Africa. Pursuant
to the mineral lease, we have an initial 10-year right to mine at the
Caerwinning deposit, expiring March 31, 2008 (with a 10 year renewal option). In
terms of the mineral lease, we are required to pay to the government a 5%
royalty of the gross selling price of the monthly production from the deposit,
with a minimum payment of R65,000 per year, ($8,156 as of March 22, 2001), and
to be increased by R5, 000 per year.

         GEOGRAPHY. The Caerwinning Deposit is an alluvial gravel deposit
situated in the Griqualand area of the Northern Cape province, approximately 70
kilometers west of Kimberley. It borders to the east along the Vaal River,
approximately 20 kilometers downstream of the confluence of the Vaal and Hart
Rivers. Access to the Caerwinning property is available by way of public paved
and gravel roads. The property is serviced by the state electric utility.

         GEOLOGY. The gravel of the Caerwinning deposit is underlain by
quartzite and shale of the Schmidtsdrif formation of the Transvaal Sequence, as
well as carboniferous shale and tillite of the Dwyka Formation of the Karoo
Sequence. Rock types of both sequences found on the deposit are horizontally or
near horizontally bedded, and are not conducive to pothole formation. Outcrops
of rocks of the Transvaal Sequence occur along the western and southern
boundaries of the deposit. Rock types belonging to the Dwyka formation do not
outcrop and were only found in drill holes and excavations. The gravel occurs in
three distinct terraces, of which the oldest is located, the furthest from the
present riverbed. The terraces are named T1, T2 and T3 with T1 being the oldest.
Secondary calcification is extensive in the oldest terraces but negligible in
the later and recent deposits. The gravel of both terraces mainly consists of
cobble and pebble sized clasts in a sandy matrix. Boulder sized particles are
extremely rare except where local tributaries have introduced large, slightly
angular boulders into the mainstream deposits.

                                       5
<PAGE>

         RESERVES. We have completed a drilling program covering the entire T1
terrace east of the main road and T2 terraces. The results of this drilling
program indicate that the T1 terrace contains 21.5 million tonnes of gravel and
the area drilled on the T2 terrace contains 1.2 million tonnes of diamondiferous
gravel. During 1999, a drilling program was conducted on the T1 terrace to the
west of the main road. The results of this program still need to be interpreted
further but preliminary indications are that the T1 gravel extends into this
area. Prior to incorporation of the Company, Mr. Pieter Van Wyk, currently the
Director of Mining and Exploration of the Company, worked this deposit in his
private capacity and extracted 3,685 carats from 344,400 tonnes of ore for an
average grade of 1.07 carats per hundred tonnes between 1989 and 1994. Diamonds
thus produced were sold for an average price of $488 per carat.

         MINING PLAN. We commenced production at the T2 terrace at Caerwinning
when we commissioned the primary and final recovery plant on site in the last
quarter of 1998. We commissioned an additional diamond recovery plant during the
last quarter of 1999. The combined capacity of the recovery plants now amounts
to 240 tonnes per hour.

         See "Item 6. Management's Discussion and Analysis or Plan of
Operations" for a discussion of the results of operations and capital
requirements of the Caerwinning Deposit.

         THE MONTROSE KIMBERLITE PIPE

         PROPERTY RIGHTS. The Company has the exclusive prospecting rights and
an option to purchase a farm in the Gauteng Province in the Republic of South
Africa, which includes a mining prospect known as the Montrose No. 3 (referred
to herein as the "Montrose Pipe"). Pursuant to a Notarial Prospecting Contract
between Maria Anna Gobey and our wholly-owned subsidiary, GDR-SA, we have
extended the exclusive rights to prospect on the property until October 10, 2001
in consideration of a payment of R60, 000 ($8,268 at September 20, 2000 ) and
10% of the value of all diamonds recovered by us during the prospecting period.
We also have the exclusive option until October 10, 2001 to purchase the farm
for a purchase price of $600,000. We have filed an Environmental Management
Program Report (EMPR) with the local government, who have accepted this report
and have issued us a prospecting permit for this property.

         GEOGRAPHY. The Montrose Pipe lies 500 meters north of Rayton and 30 km
east of Pretoria in the Gauteng Province. The area forms part of the temperate
eastern plateau and has an average elevation of 1,500 meters, with warm summers
and cool winters. Annual rainfall during the summer months averages 785
millimeters and year round mining is undertaken in the vicinity. The region is
accessible by the N4 Freeway and the Transnet Railway. Ingress to and egress
from the Montrose property is available by way of public paved and gravel roads.
The property is serviced by the state electric utility and water for mining
purposes is available from the Bronkhorstspruit Dam, 20 kilometers to the east.

         GEOLOGY. The Montrose Pipe is intruded into the upper part of the
Rayton Formation, Pretoria Group. The area is underlain by a north-east striking
succession of quartzite, shale and subgraywacke of Precambrian age. The Pretoria
Group has been intruded by a number of kimberlite pipes and to a lesser extent
by kimberlite fissures, the latter striking mainly east-west. A total of ten
kimberlite bodies are known to exist around Rayton, six of which, the Montrose
No. 1, Montrose No. 2, Montrose No. 3, Schuller-Kaalfontein, National and Annex,
have been prospected and exploited to a limited extent in the past.

         RESERVES. The results derived from a geophysical survey, a drilling
program, as well as a large diameter drilling program completed in April of 1998
indicate the existence of a kimberlite pipe with a surface area of approximately
1.25 hectares as well as a 12m wide fissure on the southeastern boundary of the
farm. A sample of 28 mainly gem quality macro diamonds obtained from the drill
samples indicate that the diamonds are distributed throughout the pipes at all
levels. We estimate the pipe to contain in excess of 9 million tonnes of
kimberlite ore to a depth of 400 meters.

         See "Item 6. Management's Discussion and Analysis or Plan of
Operations" for a discussion of the results of operations and capital
requirements of the Montrose Pipe.

                                       6
<PAGE>

         COMPETITION

         The diamond mining industry is intensely competitive. The principal
areas of competition are the exploration and acquisition of mineral properties.
A large number of companies are engaged in the exploration and development of
diamond properties, many of which have substantially greater technical and
financial resources than the Company. Competition among the members of the
diamond mining industry also affect the marketing of the diamonds produced by
the members, including the price of cut and uncut diamonds.

         REGULATION

         The Company's mining and prospecting operations in the Republic of
South Africa and elsewhere are subject to various government regulations
governing the protection of the environment, prospecting, production, labor
standards and mine safety. Failure to comply with applicable laws and
regulations may result in operations to cease or to be curtailed, require
further expenditures or possibly the loss of mining rights. Existing and future
legislation and regulations could also cause restrictions and delays in the
development of our properties and additional expense and capital expenditures.
We believe we are in substantial compliance with all laws and regulations.

         Our mining operations are also subject to governmental regulations
regarding environmental considerations, including regulations relating to air
quality standards, pollution of stream and fresh water sources and
rehabilitation. We may be required to prepare and present to governmental
authorities data pertaining to the effect or impact that any proposed
exploration or mining may have upon the environment. As well, we will be
responsible for rehabilitation costs. We currently engage in ongoing
rehabilitation as well as provide funds, on an annual basis, for final mine
closure rehabilitation. Rehabilitation requirements may vary depending on the
location and the nature of the mining operations. However, they aim to restore
the pre-mining landforms and vegetation and control possible deleterious
effluents. We do not consider the existing environmental regulations in the
Republic of South Africa to represent a material cost or burden on our proposed
mining operations. However, new environmental legislation has been tabled, and
other legislation has been passed which places significantly more emphasis on
the protection of the environment and, as a consequence, more closely regulates
our mining operations. Such legislation, together with legislation which may be
tabled in future, as well as future interpretation of existing laws, may require
substantial increases in equipment and operating costs, and may cause delays,
interruptions or a termination of operations, the extent of which, at present,
cannot be predicted with certainty.

         Mining rights in the Republic of South Africa are governed by the
Minerals Act No. 50 of 1991. Pursuant to the Minerals Act, the right to prospect
or mine is dealt with in terms of the common law, which entitles the holder of
the right to prospect for and mine the minerals concerned. This common law right
is, however, made subject to the provisions of the Minerals Act, which state
that no common law right to prospect or mine minerals may be exercised unless
the prescribed statutory authorization has been obtained in the form of a permit
to prospect or an authorization to mine. A prerequisite for the granting of the
authorizations that the applicant must be the holder of the common law right to
the minerals.

          Pursuant to cessions from the holders of the common law mineral
rights, we have obtained government authorization to prospect the Grasdrif
Deposit and mine the Caerwinning Deposit. We have applied for the necessary
authorization to bulk sample the Montrose Kimberlite pipe. We believe we will be
granted the necessary authorization to mine the Grasdrif Deposit and the
Montrose Kimberlite Pipe when required.

EMPLOYEES

         As of December 31, 2000, the Company employed 132 persons, including 2
management level employees in the U.S. and 6 managers and 124 other employees in
the Republic of South Africa. None of our employees are unionized or otherwise
subject to a collective bargaining agreement and we believe that our
relationship with our employees is excellent. Subsequent to year-end,
approximately 60 employees were terminated as part of our efforts to streamline
production costs and reduce unnecessary payroll costs. All terminated employees
were given retrenchment packages as well as assurances that, upon future labor
demands, they will be rehired.

                                       7
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY.

         The Company's executive offices are located in La Jolla, California and
consist of approximately 599 square feet of leased premises. Our lease for these
premises expires on March 31, 2002 and provides for monthly rent of $1,462. We
also lease approximately 260 square feet in the SA Diamond Center in
Johannesburg, South Africa. The lease provides for monthly rental of R1, 660
($208 as of March 22, 2001) and expires on February 28, 2003. We lease
approximately 750 square feet of office space in Somerset West from a director
of the Company for R1800 ($226 as of March 22, 2001) per month with no
expiration. Subsequent to year-end, we moved our office from Somerset West to
our property in Delportshoop, South Africa. We purchased a property in August
1998 in Delportshoop, South Africa, which is near the Caerwinning Deposit, by
issuing 151,171 shares of Common Stock and an extension of certain warrant
terms. The property, which consists of an office and employees and visitors
housing totaling 5,880 square feet, is used for the Caerwinning Deposit. See
"Item 1. Business and Properties - The Caerwinning Deposit; The Montrose
Kimberlite Pipe; and The Grasdrif Deposit" for a description of the Company's
mining properties.

ITEM 3.  LEGAL PROCEEDINGS.

         In July 1999, the Company and its Chairman, Johann de Villiers, were
named as defendants in an action Mr. Abu Bakr Bin Ali Al-Akhdar Mood brought in
the United States District Court for the Southern District of California. Mr.
Abu Bakr is a former director of the Company. In that action, Mr. Abu Bakr
alleges that he acted as a finder in connection with the sale of a total of
$6,000,000 of the Company's common stock to two private investors and that in
connection with that offering, he was entitled to a finders' fee equal to
approximately 28% of the gross proceeds. Mr. Abu Bakr alleges that the Company
and Mr. de Villiers fraudulently forced Mr. Abu Bakr to participate in a binding
arbitration regarding his finders' fees and that as a result of this
arbitration, he was forced to return the finders' fee and resign from his
position with his then current employer. Mr. Abu Bakr has alleged causes of
action for breach of contract, unjust enrichment, fraud, misrepresentation and
duress. Mr. Abu Bakr also alleges interference with and breach of his employment
contract with his then current employer. Mr. Abu Bakr seeks compensatory and
punitive damages in an unspecified amount.

         In August 1999, the Company and Mr. de Villiers filed an answer to Mr.
Abu Bakr's complaint in which they denied all of the allegations contained
therein. The Company believes that the allegations of Mr. Abu Bakr are frivolous
and, accordingly, the Company is vigorously defending this case. The parties are
currently conducting discovery and depositions are being taken. Plaintiff Mood
has filed a Motion to Vacate the Arbitration Award which was made against him in
Saudi Arabia with the Court. The Company has opposed the Motion. However, the
Court has not yet made a ruling on the Motion. A Motion for Summary Judgment
will be filed after the Court rules on the Motion to Vacate the Arbitration
Award. No trial date has yet been set for this matter.

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

         There were no matters submitted to the security holders of the Company
in 2000.



                                       8
<PAGE>

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

         The Company's Common Stock has been listed on the OTC Bulletin Board
under the symbol "GDRS" since August 12, 1996. Set forth below are the high and
low closing prices for the Company's Common Stock for each quarter during 2000
and 1999. The quotations represent inter-dealer quotations without retail
markups, markdowns or commissions and may not represent actual transactions.

              Quarter Ended            High               Low
              -------------            ----               ---
            December 31, 2000         $.3438            $.0781
            September 30, 2000        $.5312            $.2500
            June 30, 2000             $ .8750           $.4375
            March 31, 2000            $.9375            $.1250

            December 31, 1999         $.2500            $.0781
            September 30, 1999        $.3438            $.1250
            June 30, 1999             $.2344            $.1094
            March 31, 1999            $.4375            $.1562

         As of March 22, 2001, there were approximately 154 record holders and
426 beneficial holders of the Company's Common Stock.

         We have not paid any cash dividends and do not contemplate paying
dividends in the foreseeable future. It is anticipated that earnings, if any,
will be retained for the operation of the Company's business.

         During 2000, we had the following transactions in common stock:

o     During March 2000, we issued 1,711,000 shares of common stock for $342,200
      as follows:
      o      3-9-00 Rosemary Investments 875,000 shares for $175,000
      o      3-9-00 Nathan Plafsky 75,000 shares for $15,000
      o      3-9-00 Cohen Family Limited Partnership 75,000 shares for $15,000
      o      3-14-00 Stephen Radez 100,000 shares for $20,000
      o      3-17-00 William Cohen 75,000 shares for $15,000
      o      3-17-00 Nathan Plafsky 75,000 shares for $15,000
      o      3-17-00 Betty Cohen 75,000 shares for $15,000
      o      3-17-00 Donald G. Wood 184,000 shares for $36,800
      o      3-20-00 John Sylvester 25,000 shares for $5,000
      o      3-20-00 Steven Blau 50,000 shares for $10,000
      o      3-23-00 Jarrow Limited 75,000 shares for $15,000
      o      3-23-00 Donald Wood 27,000 shares for $5,400

         These shares were accompanied by 1,711,000 common stock warrants
         exercisable at $.20 per share and expire in March 2003.

o     During April 2000, we issued 335,000 shares of common stock for $67,000
      as follows:
      o      4-7-00 Donald Wood 60,000 shares for $12,000
      o      4-13-00 Dandy, Ltd. 275,000 shares for $55,000

     These shares were accompanied by 335,000 common stock warrants, exercisable
     at $.20 per share and expire in April 2003.
o     During May 2000, we issued 360,000 shares of common stock to Thatcham
      Limited for services, valued at $90,000.
o     During June 2000, we issued 1,040,000 shares of common stock for $520,000
      as follows:
      o      6-13-00 Pierre de Villiers 20,000 shares for $10,000
      o      6-16-00 Morton Siegler 20,000 shares for $10,000
      o      6-19-00 Nacoma/Titan 1,000,000 shares for $500,000
     These shares were accompanied by 1,040,000 common stock warrants,
     exercisable at $.50 per share and expire in June 2003.

                                       9
<PAGE>

o     During August 2000 we issued 100,000 shares of common stock for services
      valued at $37,500 as follows:
      o      Pamela A. Ford 33,334 shares valued at $12,500
      o      Margaret L. Pienaar 33,333 shares valued at $12,500
      o      Mary Ann Daubmann 33,333 shares valued at $12,500
o     During November 2000, we issued 25,000 shares of common stock to Ronald de
      Jong for services, valued at $4,688. In addition, we issued 100,000 common
      stock warrants at $.50 per share. 25,000 of these warrants are immediately
      exercisable, 25,000 are exercisable when the average seven day closing
      value of the stock reaches $1.00 per share, and 50,000 are exercisable
      when the average seven day closing value of the stock reaches $1.50 per
      share. The warrants expire on July 1, 2005.
o     On December 31, 2000, we issued 3,500,000 shares of common stock for
      $437,449 as follows:
      o      LIWA Diamond Co. 1,200,000 shares for $149,980
      o      New Diamond Co. 1,200,000 shares for $149,985
      o      Buckmore 400,000 shares for $50,000
      o      Dandy Ltd. 400,000 shares for $50,000
      o      Omar AZ Baaboud 200,000 shares for $24,990
      o      Abdullah M. Ibrahim 100,000 shares for $12,494
o     On December 31, 2000, we issued 500,000 shares of common stock to Albert
      de Villiers, an employee of the Company, valued at $39,050 as an
      incentive. Title to the shares vest at 100,000 per year, due upon
      completion of each year for five years.

         During 1999, there were no sales of common stock.

         During 1998, we had the following transactions in common stock:
o     During March 1998, we issued 172,286 shares of common stock from warrants
      exercised at $.75 per share or $45,896.
o     During August 1998, we issued 151,171 shares of common stock, as well as
      an extension of certain warrant terms, for the purchase of property in
      Delportshoop, South Africa. The common stock was valued at $61,980.
o     During December 1998, we issued 19,986,950 shares of common stock totaling
      $6,146,104.
o     During December 1998, we issued 666,667 shares of common stock valued at
      $133,333 to a shareholder as a fee for their assistance in the return of a
      disputed finder's fee.
o     During December 1998, we issued 720,000 shares of common stock for
      services valued at $90,000.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

BACKGROUND
         The Company is engaged in diamond exploration and mining. The Company
has acquired the rights to two mining properties, the Grasdrif Deposit and the
Caerwinning Deposit, and owns an option to purchase a third mining property, the
Montrose kimberlite pipe, all of which are located in the Republic of South
Africa.

         To date, our activities have included the investigation and acquisition
of mining property interests, exploratory work, site establishment and the
purchase and operation of mining plant and equipment in the process of
development as well as full-scale mining operations at its properties.

RESULTS OF OPERATIONS

CAERWINNING
         The Company's principal mining activities are conducted at its
Caerwinning property. The following chart details production information for the
three years ended December 31, 2000, 1999 and 1998:


                                       10
<PAGE>
<TABLE>
<CAPTION>

                                                 2000             1999           1998
                                                 ----             ----           ----

<S>                                           <C>               <C>           <C>
Number of tons treated                           552,000          186,000        37,000
Number of carats yielded                           5,017            1,080           219
Estimated $ Value at recovery*                $2,000,000         $457,000       $87,000
Estimated$ Value per Carat at recovery*             $399             $423          $398
Operating Profit/(Loss)                        ($432,278)       ($536,649)    ($122,209)
*May not reflect actual sales value due to changing inventory levels.
</TABLE>

         Notwithstanding an operating profit of $411,177 for the first nine
months of 2000 operations at Caerwinning resulted in an operating loss of
$432,278 for the year. In the third quarter of 2000 a calcified conglomerate was
discovered, necessitating the need to add crushers to process the gravel. During
this time, we were forced to mine in an area where the overburden ratio was
quite high, resulting in increased production costs in the fourth quarter. This,
coupled with a much lower average value per carat obtained in this area, caused
the losses of the fourth quarter. During the first quarter of 2001, the crushers
were fully operational, thereby allowing us to process the gravel expeditiously
and work in areas with a lower overburden ratio. The result was an operating
profit for the first two months of 2001.

         During the quarter ended September 30, 2000 the Company's consulting
geologists completed the ground magnetic survey of the two geomagnetic anomalies
on the Caerwinning property. The survey indicates two large geomagnetic
anomalies, both which warrant drilling, and are expected to be completed in
2001.

GRASDRIF
         Development and trial mining activities continued at the Grasdrif
Deposit during the year ended December 31, 2000. The following chart details the
exploration and trial mining information for both the upper and lower terraces
for the three years ended December 31, 2000, 1999 and 1998:
<TABLE>
<CAPTION>
                                                      2000           1999          1998
                                                      ----           ----          ----

<S>                                               <C>              <C>           <C>
Number of tons treated                               287,000        117,000        68,000
Number of carats yielded                                 611            255            54
Estimated $ Value at recovery*                      $577,000       $272,000       $24,000
Estimated $ Value per Carat at recovery*                $944         $1,066          $438
Trial Mining Costs                                $1,109,520       $741,032      $632,824
* May not reflect actual sales value due to changing inventory levels.
</TABLE>

MONTROSE
         During 2000 we applied for a permit to conduct a 5,000 tonne bulk
sample with the purpose of determining the actual grade of the deposit and the
value per carat of the diamonds. This information is required to complete a
feasibility study on the production potential of the Montrose Pipe. The
authorities approved the Environmental Management Program Report (EMPR) for the
bulk sample during the first quarter of 2001. The prospecting rights as well as
the option to acquire the property were extended to October 2001 to allow for
the completion of the bulk sample .

FINANCIAL RESULTS

                                 2000             1999             1998
                                 ----             ----             ----
Diamond Sales                 $2,564,600         $714,679          $36,990
Operating Loss                $2,589,137       $2,706,032       $2,332,552
Net Loss                      $2,536,303       $2,192,731       $3,595,167
Loss per Share                     $0.05            $0.05            $0.15



                                       11
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

         Management is continuing its efforts to streamline overhead costs and
general and administrative expenses. General and administrative expenses for the
year ended December 31, 2000 and 1999 were $1,604,592 and $1,681,078,
respectively.

CURRENCY CONSIDERATION

         Our mining properties, mining properties under development, and mining
equipment are all situated in the Republic of South Africa, where the currency
is the Rand. Under current accounting pronouncements, the Company is required to
translate the period end assets and liabilities of its South African subsidiary
at the current exchange rate, while maintaining equity accounts at the exchange
rate in place at the time of the original transaction. The resulting changes in
the balance sheet accounts due to exchange rate fluctuation must be accumulated
and accounted for in the equity section as foreign currency translation reserve.
The translation of our property and equipment to reflect the Rand/US$ exchange
rate of $7.564 and $6.2485 at December 31, 2000 and 1999, respectively, caused
most of the foreign currency translation adjustment of $1,090,625 for 2000 and
$350,803 for 1999. This resulted in accumulated foreign currency translation
adjustments of $2,276,409 and $1,185,784 at December 31, 2000 and 1999
respectively.

FIRST QUARTER 2001

         On January 13, 2001 Mr. Pieter van Wyk resigned as Director of
Exploration and Mining and Director of the Company and Director of Global
Diamond-SA. Mr. Albert de Villiers, who had been appointed Chief Operating
Officer of South African operations, assumed responsibility for all day-to-day
management activities of the Company in South Africa.

         During the first quarter of 2001 management-reviewed operations in
depth and a program of cost cutting and a focus on production was implemented.
Operations at Caerwinning returned to an operational profit and the recovery of
a number of large high quality gemstone diamonds at Grasdrif placed both the
operations at Grasdrif and the entire operations of the Company on a profitable
basis. These results support our belief that, given the nature of alluvial
deposits, operations on a large scale could be conducted profitably.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has financed its activities to date through revenue derived
from diamond sales, the sale of its equity securities as well as short-term loan
facilities.

         We believe that we require additional working capital of approximately
$500,000 to satisfy our working capital requirements for the next 12 months.
Should any of the following events occur, additional working capital might be
needed during the next 12 months. The events are:

a)    that the Caerwinning Deposit has negative cash flow from operations;
b)    the trial mining at the Grasdrif property returns to an operating loss or
      negative cash flow.

         Our belief concerning our working capital requirements are based on
certain assumptions concerning, among other things, the estimated grade of
processed ore, average price per carat, scale of mining operations, Rand-U.S.
dollar exchange rate, and cost of production. If any of these assumptions prove
incorrect, the Company may require further additional capital. Any such
additional financing may require an additional pledge or mortgage of the
Company's properties and/or any production therefrom. There is, of course, no
assurance that satisfactory financing could be obtained. In addition to
financing individual and available projects, the Company may also borrow funds
from time to time for working capital and other general corporate purposes.

         As stated in the Auditors' Report to the accompanying financial
statements, the financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.


                                       12
<PAGE>

FORWARD-LOOKING STATEMENTS

         This report contains various forward-looking statements that are based
on our belief as well as assumptions made by and information currently available
to us. When used in this report, the words `believe', `expect', `anticipate',
`estimate', and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks, uncertainties and
assumptions, including, without limitation, that we only recently commenced
mining operations at the Caerwinning Property, have not engaged in commercial
mining operations at the Grasdrif Property, mining risks in general, political
risks associated with our operations in the Republic of South Africa, general
economic conditions, currency fluctuations, and estimates of costs of
production. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or projected. We caution potential
investors not to place undue reliance on any such forward-looking statements,
all of which speak only as of the date made.






                                       13
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS


Independent Auditors' Report..................................................15
Consolidated Balance Sheet at December 31, 2000...............................16
Consolidated Statements of Operations for the years
   ended December 31, 2000 and 1999...........................................17
Consolidated Statements of Stockholders' Equity
   for the years ended December 31, 2000 and 1999.............................18
Consolidated Statements of Cash Flows for the years ended
December 31, 2000 and 1999....................................................19
Notes to Consolidated Financial Statements....................................20


                                       14
<PAGE>


             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
             --------------------------------------------------


The Board of Directors and Shareholders
Global Diamond Resources, Inc.

We have audited the accompanying consolidated balance sheet of Global Diamond
Resources, Inc. and subsidiaries (the "Company") as of December 31, 2000, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the two year period ending December 31, 2000.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, on a test
basis, examination of 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 consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Diamond
Resources, Inc. and subsidiaries as of December 31, 2000, and the results of
their operations and their cash flows for each of the years in the two year
period ending December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses
from operations. This condition raises substantial doubt about its ability to
continue as a going concern. Management's plans regarding these matters are also
described in Note 2. The consolidated financial statements do not include any
adjustments that might results from the outcome of this uncertainty.




                                         /s/ CACCIAMATTA ACCOUNTANCY CORPORATION


Irvine, California
March 29, 2001



                                       15
<PAGE>
<TABLE>

                 GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheet
<CAPTION>

                                                                   December 31, 2000
                                                                     -------------
<S>                                                                  <C>
                                   ASSETS

Current assets:
  Cash and cash equivalents                                          $    387,181
  Inventory
                                                                           92,450
  Prepaid expenses and other                                                3,910
                                                                     -------------

          Total current assets                                            483,541

 Deferred foreign tax asset                                             1,402,598

 Mining properties and equipment                                        4,309,605
                                                                     -------------

                                                                     $  6,195,744
                                                                     =============

                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                   $    784,031
  Accrued liabilities:
      Accrued interest                                                    225,000
      Accrued salaries and related taxes                                  178,531
      Accrued professional fees                                            83,441
      Other                                                               134,662
                                                                     -------------
            Total accrued liabilities                                     621,634

  Note payable to director                                                183,765
                                                                     -------------

          Total current liabilities                                     1,589,430

Long-term debt                                                          3,000,000
                                                                     -------------

          Total liabilities                                             4,589,430

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

Commitments and contingencies                                                  --

Stockholders' equity:
  Preferred stock, $0.001 par value, 10,000,000 shares authorized,
    no shares issued and outstanding                                           --
  Common stock, $0.0005 par value, 100,000,000 shares authorized,
   53,171,678 shares issued and outstanding,                               26,586
  Additional paid-in capital                                           15,051,321
   Unamortized stock award                                                (33,192)
  Accumulated deficit                                                 (11,161,992)
  Accumulated other comprehensive income:
    Foreign currency translation adjustment
                                                                       (2,276,409)
                                                                     -------------

          Total stockholders' equity
                                                                        1,606,314
                                                                     -------------

                                                                     $  6,195,744
                                                                     =============

See accompanying notes to consolidated financial statements.
</TABLE>

                                       16
<PAGE>
<TABLE>

                 GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
<CAPTION>

                                                             YEAR ENDED DECEMBER 31,
                                                        -----------------------------
                                                            2000            1999
                                                        -------------   -------------
<S>                                                     <C>             <C>
Diamond Sales                                           $  1,969,847    $    448,651
                                                        -------------   -------------

Operating expenses:
Production                                                (2,341,133)       (936,541)

Development and exploration                               (1,109,520)       (741,032)
Less diamonds recovered                                      594,753         266,028
                                                        -------------   -------------
      Net development and exploration                       (514,767)       (475,004)

Royalty                                                      (98,492)        (62,060)

Selling, general and administrative                       (1,604,592)     (1,681,078)
                                                        -------------   -------------
      Total operating expenses                            (4,558,984)     (3,154,683)
                                                        -------------   -------------

Operating loss                                            (2,589,137)     (2,706,032)
                                                        -------------   -------------

Other (expense):
   Loss on sale of fixed assets                             (213,766)             --

   Interest expense, net                                    (481,186)       (367,334)
                                                        -------------   -------------

Loss before deferred foreign tax benefit                  (3,284,089)     (3,073,366)

   Deferred foreign tax benefit                              747,786         880,635
                                                        -------------   -------------

Net loss                                                  (2,536,303)     (2,192,731)

    Other comprehensive loss -
      Foreign currency translation adjustment             (1,090,625)       (350,803)
                                                        -------------   -------------

Comprehensive loss                                      $ (3,626,928)   $ (2,543,534)
                                                        =============   =============

Basic and diluted loss per share                        $       (.05)   $       (.05)
                                                        =============   =============
Basic and diluted weighted average shares outstanding     48,064,538      45,600,678
                                                        =============   =============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       17
<PAGE>
<TABLE>

                 GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity
                 For the years ended December 31, 2000 and 1999
<CAPTION>

                                                                                          FOREIGN
                                         COMMON STOCK        ADDITIONAL                   CURRENCY     UNAMORTIZED       TOTAL
                                  -------------------------   PAID-IN      ACCUMULATED   TRANSLATION       STOCK     STOCKHOLDERS'
                                     SHARES        AMOUNT     CAPITAL        DEFICIT     ADJUSTMENT        AWARD        EQUITY
                                  -------------  ---------- ------------- ------------- ------------- ------------- -------------

<S>                                 <C>          <C>        <C>           <C>           <C>           <C>           <C>
Balance at December 31, 1998        45,600,678   $  22,800  $ 13,457,899  $ (6,432,958) $   (834,981) $          -- $  6,212,760

Foreign currency translation
  adjustment                                --          --            --            --      (350,803)            --     (350,803)

Net loss                                    --          --            --    (2,192,731)           --             --   (2,192,731)
                                  -------------  ---------- ------------- ------------- ------------- ------------- -------------

Balance at December 31, 1999        45,600,678      22,800    13,457,899    (8,625,689)   (1,185,784)           --     3,669,226

Issuance of shares for cash          6,586,000       3,293     1,363,356            --            --            --     1,366,649

Issuance of shares for services        485,000         243       131,945            --            --            --       132,188

Stock award                            500,000         250        38,800            --            --       (39,050)           --

Amortization of stock award                 --          --            --            --            --         5,858         5,858

Value of options issued for
   services                                 --          --        59,321            --            --            --        59,321

Foreign currency translation
  adjustment                                --          --            --            --    (1,090,625)           --    (1,090,625)

Net loss                                    --          --            --    (2,536,303)           --            --    (2,536,303)
                                  -------------  ---------- ------------- ------------- ------------- ------------- -------------

Balance at December 31, 2000        53,171,678   $  26,586  $ 15,051,321  $(11,161,992) $ (2,276,409) $    (33,192) $  1,606,314
                                  =============  ========== ============= ============= ============= ============= =============


See accompanying notes to consolidated financial statements
</TABLE>
                                       18
<PAGE>
<TABLE>

                 GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
<CAPTION>
                                                           YEAR END DECEMBER 31,
                                                        ---------------------------
                                                            2000           1999
                                                        ------------   ------------
<S>                                                     <C>            <C>
Cash flows from operating activities:

  Net loss                                              $(2,536,303)   $(2,192,731)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Depreciation and amortization                         490,037        442,468
      Net loss on sale of fixed assets                      213,766             --
      Shares issued for services                            132,188             --
      Value of options issued for services                   59,321             --
      Amortized stock award                                   5,858             --
      Increase in deferred foreign tax asset               (747,786)      (866,485)
      Decrease in prepaid expenses                           (1,510)            --
      Decrease in accounts receivable -
        Trade                                                 6,734         15,859
        Officer                                                  --         25,000
      Decrease (increase) in inventory                      (58,700)        10,366
      Increase (decrease) in accounts payable               591,441       (352,520)
      Increase (decrease) in accrued liabilities            500,597       (205,972)
                                                        ------------   ------------

     Net cash used in operating activities               (1,344,357)    (3,124,015)
                                                        ------------   ------------

Cash flows provided by financing activities:
   Net proceeds from issuance of common shares            1,366,649             --
   Proceeds from note payable to Director                        --        222,453
                                                        ------------   ------------

   Net cash provided by financing activities              1,366,649        222,453
                                                        ------------   ------------

Cash flows used in investing activities:
   Proceeds from sale of assets                             246,377             --
   Additions to mining properties and equipment             (37,316)    (2,359,264)
                                                        ------------   ------------

     Net cash provided (used) in investing activities       209,061     (2,359,264)
                                                        ------------   ------------

Effects of exchange rates on cash                           (26,272)       (18,309)
                                                        ------------   ------------

Net increase (decrease) in cash and
  cash equivalents                                          205,081     (5,279,135)

Cash and cash equivalents, beginning of year                182,100      5,461,235
                                                        ------------   ------------

Cash and cash equivalents, end of year                  $   387,181    $   182,100
                                                        ============   ============

Other supplemental disclosures:
              Interest paid                             $   260,716    $   452,176
                                                        ============   ============

              Income taxes paid                         $       800    $       800
                                                        ============   ============


See accompanying notes to consolidated financial statements.

</TABLE>
                                       19
<PAGE>

                 GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                                December 31, 2000


(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

         DESCRIPTION OF BUSINESS

         Global Diamond Resources, Inc. (the "Company") was incorporated in the
state of Nevada on January 7, 1987 and commenced significant mining operations
in South Africa during 1994.

         PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the financial statements
of the Company and its wholly-owned subsidiaries, Global Diamond Resources Inc.,
a Canadian corporation ("Global BC"), Global Diamond Resources International
Limited, a British Virgin Islands corporation ("Global BVI"), Global BVI's
wholly-owned subsidiary, Global Diamond Resources (SA) (Pty) Limited ("Global
SA"), a South African corporation and Global SA's wholly owned subsidiaries,
Nabas Diamonds (Pty) Limited ("Nabas"), a South African corporation and GDR
Drilling (Pty), a South African corporation. All amounts are in U.S. dollars
unless otherwise indicated. All significant intercompany balances and
transactions have been eliminated in consolidation.

         CASH EQUIVALENTS

         Cash equivalents include all highly liquid investments with an original
maturity of three months or less.

         FOREIGN EXCHANGE TRANSLATION

         The financial position and results of operations of the Company's
foreign subsidiaries are measured using local currency as the functional
currency. Assets and liabilities of the subsidiaries are translated at the
exchange rate in effect at each year-end. Statement of Operations are translated
at the average rate of exchange prevailing during the year. Translation
adjustments arising from differences in exchange rates from period to period are
included in the foreign currency translation adjustment account in stockholders'
equity.

         INVENTORY

         Inventory consists of diamonds ready for sale valued at the lower of
cost or estimated net realizable value. Diamonds are ready for sale when they
have been separated from the alluvials or broken ore, have been processed, and
are in a deliverable form. No value is ascribed to diamonds in the alluvials or
in the broken ore. Also included in inventory is fuel, spare parts and rations
of $39,500.

         MINING PROPERTIES AND EQUIPMENT

         Mining properties and equipment consisting of mineral rights, mining
properties under development, mining equipment and office equipment (primarily
computers) are recorded at cost. Depreciation is provided for mineral rights,
mining equipment and office equipment using the straight-line method over the
estimated useful lives of 10 years, 3-10 years and 3 years, respectively, of
such assets. Mining properties under development are depreciated over the life
of the mine using the straight-line method once commercial production is
reached. Value of diamonds recovered from bulk sampling and drilling activities
are offset against mine development costs.

         MINING OPERATIONS

         Initial exploration and evaluation costs are expensed as incurred. The
decision to develop or mine a property is based on an assessment of the
viability of the property and the availability of financing.

         The Company's method of accounting for exploration and related costs on
unproven reserves is to expense all costs, other than acquisition costs, prior
to the completion of a definitive feasibility study which establishes proven and
probable reserves.


                                       20
<PAGE>

         REHABILITATION COSTS

         Estimated site restoration and post closure rehabilitation costs are
charged against earnings over the expected economic useful life of each mine.
Accrued rehabilitation costs are subject to review by management on a regular
basis and are revised when appropriate for changes in future estimated costs
and/or regulatory requirements. At December 31, 2000, $59,492 of rehabilitation
reserve is included in accrued liabilities.

         STOCK OPTIONS AND WARRANTS

         The Company has elected to adopt the disclosure provisions only of SFAS
123 and continues to measure compensation cost related to stock and stock
options issued to employees using the intrinsic method of accounting prescribed
by Accounting Principles Board Opinion No. 25 ("APB25"), "Accounting for Stock
Issued to Employees," and related interpretations.

         INCOME TAXES

         Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating losses. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

         FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

         The carrying amounts of cash and cash equivalents, inventory, accounts
payable and accrued liabilities approximate fair values due to the short-term
nature of these instruments. The carrying amount of the long term debt
approximates fair value because the terms are comparable to the current market.

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash. The Company's policy is to
maintain cash at high credit quality financial institutions to minimize risk,
but from time to time account balances may exceed Federally insured limits.

         LOSS PER COMMON SHARE

         Basic EPS is calculated using income available to common stockholders
divided by the weighted average of common shares outstanding during the year.
Diluted EPS is similar to Basic EPS except that the weighted average of common
shares outstanding is increased to include the number of additional common
shares that would have been outstanding if the dilutive potential common shares,
such as options, had been issued. The treasury stock method is used to calculate
dilutive shares which reduces the gross number of dilutive shares by the number
of shares purchasable from the proceeds of the options assumed to be exercised.
Diluted earnings per share is the same as basic earnings per share in both 2000
and 1999 due to net losses in both years.

         Net loss per share for 2000 and 1999 is computed based on the
weighted-average number of common shares outstanding of 48,064,538 and
45,600,678, respectively. Common equivalent shares from stock options and
warrants excluded from the computation because their effect is anti-dilutive for
2000 and 1999 were 12,822,374 and 10,866,980, respectively.

         USE OF ESTIMATES

         Management has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenue and expenses to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.

         IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

         Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Long-lived assets are reviewed annually
for impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable.

                                       21
<PAGE>

         COMPREHENSIVE INCOME

         The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
This statement requires that certain items of comprehensive income other than
net earnings or loss be reported in the financial statements. For the two years
in the period ended December 31, 2000 and 1999, the Company's comprehensive
income (loss) relates to foreign currency translation adjustments.

         SEGMENT REPORTING

         The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major customers.
An operating segment is defined as a component of an enterprise that engages in
business activities from which it may earn revenues and incur expenses, and
about which separate financial information is regularly evaluated by the chief
operating decision maker in deciding how to allocate resources. All of the
Company's operations are aggregated into one reportable segment given the
similarities of economic characteristics between the operations represented by
the various mines. The Company's administrative headquarters is located in
Southern California.

(2)      GOING CONCERN

         The Company believes that it requires additional working capital of
approximately $500,000 to satisfy its working capital requirements for the next
12 months. Should either of the following events occur, additional working
capital may be needed during the next 12 months. The events are:

1. the Caerwinning Deposit has negative cash flow from operations;
2. the trial mining on the Upper Terrace at the Grasdrif property results in an
   operating loss or negative cash flow.

         The Company intends to raise additional working capital through diamond
sales and private placement of common stock as well as using available lines of
credit.

         The Company's belief concerning its working capital requirements are
based on certain assumptions concerning, among other things, the estimated grade
of its processed ore, average price per carat, commencement and scale of mining
operations, Rand-U.S. dollar exchange rate, and cost of production. If any of
these assumptions prove incorrect, the Company may require further additional
capital. Any such additional financing may require an additional pledge or
mortgage of the Company's properties and/or any production therefrom. There is,
of course, no assurance that satisfactory financing, if necessary, could be
obtained. In addition to financing individual and available projects, the
Company may also borrow funds from time to time for working capital and other
general corporate purposes.

         There is no assurance that the Company will be able to raise the
additional capital it requires through the equipment refinancing or otherwise.
In the event that the Company is unable to raise the working capital it needs,
it will focus its efforts on the profitable activities that its resources can
support at that time.

         The financial statements have been prepared assuming the Company will
continue as a going concern. The Company has suffered recurring losses from
operations that raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


                                       22
<PAGE>

(3)      MINING PROPERTIES AND EQUIPMENT

                                                                    DECEMBER 31,
                                                                        2000
                                                                    ------------

         Mining property:
           Caerwinning deposit, at cost                             $   436,022
           Less accumulated amortization                                (85,368)
                                                                    ------------

                                                                        350,654
                                                                    ------------

         Mining properties under development:
           Grasdrif deposit                                             972,100
                                                                    ------------


         Mining equipment, at cost                                    3,853,110
         Less accumulated depreciation                                 (873,437)
                                                                    ------------

                                                                      2,979,673
                                                                    ------------

         Office equipment, at cost                                       51,862
         Less accumulated depreciation                                  (44,684)
                                                                    ------------

                                                                          7,178
                                                                    ------------

                                                                    $ 4,309,605
                                                                    ============

         Depreciation expense for 2000 and 1999, respectively, amounted to
         $490,037 and $442,468. During 2000, the Company sold assets with a book
         value of $460,143 for $246,377, resulting in a loss on sale of fixed
         assets of $213,766.

(4)      LONG-TERM DEBT

         The $3,000,000 secured note payable has a prepayment requirement that
if on December 31, 2000 or 2001, the Company has in excess of $2,000,000 in cash
and cash equivalents on hand, that excess must be paid on the note. The note
does not contain any penalties for prepayment. The note is due on December 5,
2002 and carries interest at 15%, payable every six months in arrears. The note
is secured by the pledge of 100% of the stock of Global SA, which holds all of
the Company's mining properties, plant and equipment. The agreement related to
the note restricts the payment of dividends by the Company. During 2000, the
option to convert principal and interest into a maximum of 1,807,816 common
shares expired. As of December 31, 2000, the Company was in arrears on its
semi-annual interest payment of $225,000. The Company has obtained a waiver and
an extension to June 30, 2001.

(5)      AUTHORIZED SHARE CAPITAL

         On June 16, 1999 the Company increased its authorized common stock from
50,000,000 shares of $.0005 par value common stock to 100,000,000 shares of
$0.0005 par value common stock.

(6)      INCOME TAXES

         The Company has no significant taxable temporary differences which
would require recognition of deferred tax liabilities. Utilization of the
deferred foreign tax asset of $1,402,598 from net operating loss carry forwards
in South Africa is dependent on future taxable profits in excess of profits
arising from existing taxable temporary differences. Although there was a
reported loss for the year ended December 31, 2000 and 1999, the asset has been
recognized because forecasts for the mining operation indicated the carry
forwards will be realized. Additionally, federal deferred tax assets of
approximately $2,822,000 and state deferred tax assets of approximately $384,000
were not recognized due to the uncertainty of future realizability and a 100%
valuation allowance was set up to reduce the asset to zero.

                                       23
<PAGE>

         At December 31, 2000, the Company had available net operating loss
carry forwards of approximately $8,300,000 for federal income tax reporting
purposes which begin to expire in 2010. The net operating loss carry forwards
for state purposes are approximately $4,000,000 and begin to expire in 2000. The
net operating loss carry forwards are subject to certain limitations under
Section 382 of the Internal Revenue Code.

(7)      FOREIGN OPERATIONS

         The Company's wholly owned subsidiary, Global SA, operates in the
Republic of South Africa. During 2000 and 1999, Global SA's sales represented
100% of consolidated sales, while Global SA's expenses represented 39% and 36%,
respectively, of consolidated non-production expenses. All production occurs in
the Republic of South Africa and thus Global SA represents 100% of the
production, development and exploration expenses for 2000 and 1999. At December
31, 2000 and 1999, Global SA's total assets (primarily cash, mining properties
and equipment) represented 97% and 96%, respectively, of consolidated total
assets. In the past, the Republic of South Africa experienced political and
economic instability. While current indications are that it appears to be
becoming more stable, there can be no assurance that the Company's business or
interests in mining properties and related options will not be materially
adversely affected by local political or economic developments.

(8)      RELATED PARTY TRANSACTIONS

         At December 31, 1999, the Company granted 2,000,000 common stock
warrants to Weir International Limited ("Weir") in consideration for the
termination of a marketing agreement whereby Weir would be paid 5% of all
diamonds sold. The warrants are exercisable at $.40 and will only vest once the
Company's publicly traded stock reaches a minimum price of $1.00 and the Company
has earnings of $.05 per share. The warrants will expire three years after
vesting. Weir is a stockholder of the Company and the Company's Chairman and
Chief Executive Officer has a beneficial interest in Weir. Total commissions
paid during 1999 were $25,000 and are included in Royalty expense for the year
ended December 31, 1999.

         As of December 31, 1999, the Company entered into an agreement with
Elite Diamond Cutters ("Elite") to market and sell its diamonds. A director of
the Company is a partial owner of Elite. The Company believes that the terms of
its transactions with Elite are no less favorable than could be obtained from an
unaffiliated party.

         As of December 31, 2000, the Company owed R1,390,000 ($183,765 at
December 31, 2000) to a director of the company. The note bears interest at 17%
per annum, payable monthly, and is due on demand. Interest expense on this note
was $31,900 and $918 for 2000 and 1999, respectively.

         Included in prepaid expenses and other at December 31, 2000 is $2,400
due from an officer of the Company.


(9)      STOCK OPTIONS AND WARRANTS

         All issuances of options and warrants were at prices at or above market
at the time of issuance except for the 174,374 warrants issued for services in
December 2000.

         In August 1999, the Company granted 100,000 common stock options to an
employee of the Company. The options are exercisable at $.25 per share with
25,000 exercisable at any time, 25,000 after February 1, 2000, 25,000 after
August 1, 2000 and 25,000 after August 1, 2001. The options expire August 1,
2009 or 60 days after termination of service, whichever occurs first.

         In December 1999, the Company granted 167,000 common stock warrants to
a consultant, immediately exercisable at $0.0781 per share and expiring on
December 31, 2004.

                  In December 1999, the Company granted Weir International
Limited ("Weir") 2,000,000 common stock warrants. The warrants are exercisable
at $.40 and will only vest once the Company's publicly traded stock reaches a
minimum price of $1.00 per share and the Company has earnings of $.05 per share.
The warrants will expire three years after vesting.

                  In January 2000, the Company issued 50,000 common stock
warrants to each of nine non-executive directors, totaling 450,000 common stock
warrants, immediately exercisable at $.21 per share and expire in January 2003.

         In March 2000, the Company issued 1,711,000 common stock warrants at
$.20 per share and exercisable at any time until they expire in March 2003.

                                       24
<PAGE>

         In April 2000, the Company issued 335,000 common stock warrants at $.20
per share and exercisable at any time until they expire in April 2003.

                  In June 2000, the Company issued 1,040,000 common stock
warrants at $.50 per share and exercisable at any time until they expire in June
2003.

         In July 2000, the Company issued 100,000 common stock warrants to a
consultant for services at $.50 per share. 25,000 of these warrants are
immediately exercisable, 25,000 will vest when the average seven day closing
value of the stock reaches $1.00 per share and 50,000 will vest when the average
seven day closing value of the stock reaches $1.50 per share. These warrants
expire on July 1, 2005.

         In November 2000, the Company issued 100,000 common stock options to an
employee of the Company, exercisable at $.25 per share with 75,000 immediately
exercisable and 25,000 exercisable at the end of 2001. These options expire on
November 14, 2005 or the date of termination, whichever occurs first.

         In November 2000, the Company issued 100,000 common stock options to an
employee of the Company, exercisable at $.25 per share with 25,000 immediately
exercisable and the remaining 75,000 exercisable at 25,000 per year. These
options expire on November 14, 2005 or the date of termination, whichever occurs
first.

         In December 2000, the Company issued 174,374 common stock warrants to a
consultant, immediately exercisable at $.01 per share and expiring on December
31, 2005. These values of these warrants were included in the operations of the
Company in 2000.

         In July 2000, the Company extended the expiration date of 2,000,000
options held by an officer of the Company to July 25, 2001.

         The per share weighted-average fair value of stock options and warrants
granted to directors, officers and employees during 2000 and 1999 was $0.06 and
$0.16, respectively, on the date of grant using the Black Scholes option-pricing
model with the following weighted-average assumptions; 2000 - expected dividend
yield 0%, risk-free interest rate of 5.97%, expected life of 5 years and an
expected volatility of the stock over the expected life of the options and
warrants of 75%; 1999 - expected dividend yield 0%, risk-free interest rate of
5.97%, expected life of 2.5 years, and an expected volatility of the stock over
the expected life of the options and warrants of 68%.

         The Company applies APB Opinion No. 25 in accounting for its stock
options and warrants granted to directors, officers and employees. No
compensation cost has been recognized for its stock options and warrants issued
to employees or directors of the Company in the consolidated financial
statements as they were issued at or above market. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options and warrants under SFAS No. 123, the Company's net loss and net loss per
share would have been increased to the pro forma amounts indicated below:

                                                  2000           1999
                                              -------------  -------------

         Net loss, as reported                $ (2,536,303)  $ (2,192,731)
         Net loss, pro forma                    (2,675,475)  $ (2,304,644)

         Basic and diluted net loss per
           share, as reported                        ($.05)         ($.05)
         Basic and diluted loss per
           share, pro forma                          ($.06)         ($.05)


                                       25
<PAGE>

         Stock option and warrant activity during the periods indicated is as
follows:

                                                                   WEIGHTED-
                                                  NUMBER OF         AVERAGE
                                                   SHARES        EXERCISE PRICE
                                                 ------------     ---------


         Balance at December 31, 1998              9,863,552      $   0.57

           Granted                                 2,717,000          0.38
           Canceled                               (1,713,572)         0.47
                                                 ------------     ---------

         Balance at December 31, 1999             10,866,980          0.54
           Granted                                 4,010,374          0.28
           Canceled                               (2,104,980)         0.49
                                                 ------------     ---------

         Balance at December 31, 2000             12,772,374      $   0.47
                                                 ============     =========


         At December 31, 2000, the range of exercise prices and the
weighted-average remaining contractual life of outstanding options and warrants
were $0.01 to $0.85 and 2.27 years, respectively.

         At December 31, 2000 and 1999, the number of options and warrants
exercisable was 10,572,374 and 8,791,980, respectively.

(10)     COMMITMENTS AND CONTINGENCIES

         LEASE AGREEMENT

         As of December 31, 2000, the Company had a non-cancelable operating
lease commitment for the Company's corporate office expiring in March 2002. The
monthly rent payment on this operating lease is $1,462. The Company also leases
office space from a director of the Company for R1800 ($226 at March 22, 2001)
per month, which is cancelable on demand. In addition, Global SA had a
non-cancelable operating lease commitment for the South African corporate office
expiring in March 2003. The monthly rent payment on this operations lease is R1,
660 ($208 at March 22, 2001). Rent expense for 2000 and 1999 was $23,148 and
$20,356, respectively.

         Minimum lease obligations for non-cancelable leases for each of the
next five years are:

                       2001                   $ 20,178
                       2002                   $  7,020
                       2003                   $    658
                       2004                   $    -0-
                       2005                   $    -0-

         Benefit Plan

         The Company sponsors a defined contribution pension plan in both the
United States and South Africa. Contributions to the plans for 2000 and 1999,
respectively, were $57,900 and $31,900.

         LEGAL MATTERS

         In July 1999, the Company and its Chairman, Johann de Villiers, were
named as defendants in an action Mr. Abu Bakr Bin Ali Al-Akhdar Mood brought in
the United States District Court for the Southern District of California. Mr.
Abu Bakr is a former director of the Company. In that action, Mr. Abu Bakr
alleges that he acted as a finder in connection with the sale of a total of
$6,000,000 of the Company's common stock to two private investors and that in
connection with that offering, he was entitled to a finders' fee equal to
approximately 28% of the gross proceeds. Mr. Abu Bakr alleges that the Company
and Mr. de Villiers fraudulently forced Mr. Abu Bakr to participate in a binding
arbitration regarding his finders' fees and that as a result of this
arbitration, he was forced to return the finders' fee and resign from his
position with his then current employer. Mr. Abu Bakr has alleged causes of
action for breach of contract, unjust enrichment, fraud, misrepresentation and
duress. Mr. Abu Bakr also alleges interference with and breach of his employment
contract with his then current employer. Mr. Abu Bakr seeks compensatory and
punitive damages in an unspecified amount.

                                       26
<PAGE>

         In August 1999, the Company and Mr. de Villiers filed an answer to Mr.
Abu Bakr's complaint in which they denied all of the allegations contained
therein. The Company believes that the allegations of Mr. Abu Bakr are frivolous
and, accordingly, the Company is vigorously defending this case. The parties are
currently conducting discovery and depositions are being taken. Plaintiff Mood
has filed a Motion to Vacate the Arbitration Award which was made against him in
Saudi Arabia with the Court. The Company has opposed the Motion. However, the
Court has not yet made a ruling on the Motion. A Motion for Summary Judgment
will be filed after the Court rules on the Motion to Vacate the Arbitration
Award. No trial date has yet been set for this matter.



                                       27
<PAGE>

PART III

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

Directors and Executive Officers
--------------------------------

         Set forth below, effective as of July 1, 1999, are the directors and
officers of the Company and its South African subsidiary, Global Diamond
Resources (SA)(Pty) Limited ("Global Diamond-SA"). Each person holds the stated
positions with the indicated companies.

Name                           Age           Position

Johann de Villiers             48            Chairman of the Board, Director of
                                             the Company, Chief Executive
                                             Officer and Chief Financial Officer
                                             Director of Global Diamond-SA

Pieter van Wyk                 50            Director of Exploration and Mining
                                             and Director of the Company and
                                             Director of Global Diamond-SA

John Tyson                     53            Director of the Company

Charles MacDonald              47            Director of the Company and
                                             Director of Global Diamond-SA

Said H. Ghachem                59            Director of the Company

Ahmed M. Basodan               39            Director of the Company

Yassin Abduaalh Kadi           46            Director of the Company

Mattar Abdulla Al Muhairy      57            Director of the Company

Amin Koudsi                    57            Director of the Company

Andries Janzen                 57            Director of the Company and
                                             Managing Director of Global
                                             Diamond-SA

Gasem S. Al-Shaikh             47            Director of the Company

Paulus Vries                   49            Director of Global Diamond-SA

Eugene Brill                   36            Secretary of the Company

Albert W. de Villiers          44            Chief Operating Officer of Global
                                             Diamond-SA (effective October 2000)

         Mr. de Villiers founded the business of the Company in 1993 and has
served as Chairman and Chief Executive Officer since inception. From 1984 to
1990, Mr. de Villiers served as Chief Executive Officer of Kensington Finance
Corp., an options trading firm and member of the American Stock Exchange. From
1990 to 1994, Mr. de Villiers acted as investment advisor to the Monitrend Gold
Mutual Fund. From 1976 to 1984, Mr. de Villiers was the managing director of the
Octha Group; a South Africa based international diamond mining, polishing and
trading company. He was appointed Chief Financial Officer in July 1999. Mr.
Johann de Villiers is not related to Mr. Albert de Villiers.

         Mr. van Wyk has served as Chief Consulting Geologist of Global
Diamond-SA from July 1994 to February 1998. In February 1998, Mr. van Wyk was
appointed to serve as Director of Exploration and Mining of the Company and as
member of the Company's Board of Directors. Mr. van Wyk holds a M.Sc. (Geology)
and has lectured in Sedimentology at the University of Pretoria and in Economic
Geology at the Rand Afrikaans University. He was the Senior Field Geologist for
Rand Mines before operating his own diamond mining and exploration concern with
interests in southern Namibia (alluvials), south of Kimberley (kimberlite
fissures), and west of Kimberley along the Vaal River (alluvials) at
Caerwinning. He is the published author of a number of articles. Effective
January 13, 2001, Mr. van Wyk resigned as director of the Company.

                                       28
<PAGE>

         Mr. Tyson has served as director of the Company since 1994. Since 1990,
Mr. Tyson has served as President of Tyson & Associates, an international
consulting firm headquartered in Washington, D.C. specializing in providing
investment, business development and promotional services to African countries.

         Mr. MacDonald has served as a director of the Company since July 1995.
Since 1990, Mr. MacDonald has been engaged in the practice of law in Cape Town,
South Africa.

         Mr. Said H. Ghachem has served as a director of the Company since
December 1997. He has also served as the Vice President of PCM since 1994 and is
President of IPCM. Mr. Ghachem serves on the Board of Directors of the Company
as the nominee of International PCM Holdings Limited.

         Mr. Basodan has served as a director of the Company since December
1998. Mr. Basodan is the President of the Caravan Group Company based in the
Kingdom of Saudi Arabia. Mr. Basodan holds a B.SC in Industrial Management. Mr.
Basodan serves on the Board of Directors as the nominee of New Diamond Holdings
Limited.

         Mr. Kadi has served as a director of the Company since December 1998.
Mr. Kadi is the Chairman of Saudi National Consulting Center and Qordoba Real
Estate Co. based in the Kingdom of Saudi Arabia, Chairman of Caravan Co. based
in Turkey, board member of Himont Chemical based in Pakistan and Cariba Bank
based in Kazakhstan. Mr. Kadi holds a B.SC in Engineering. Mr. Kadi also serves
on the Board of Directors as the nominee of New Diamond Holdings Limited.

         Mr. Al Muhairy has served as a director of the Company since December
1998. Mr. Al Muhairy is vice chairman of Al Muhairy Group based in United Arab
Emirates. Al Muhairy Group was established in 1981 and its activities are
diversified in many fields: Contracting, Oil Drilling - Petroleum Services,
investments in other major companies in United Arab Emirates and in other fields
in United Arab Emirates and other countries overseas. Mr. Al Muhairy serves on
the Board of Directors as the nominee of LIWA Diamond Company Limited.

         Mr. Koudsi has served as a director of the Company since December 1998.
Mr. Koudsi has served as Deputy General Manager of Al Muhairy Group based in
United Arab Emirates since 1981. Al Muhairy Group was established in 1981 and
its activities are diversified in many fields: Contracting, Oil Drilling -
Petroleum Services, investments in other major companies in United Arab Emirates
and in other fields in United Arab Emirates and other countries overseas. Mr.
Koudsi serves on the Board of Directors as the nominee of LIWA Diamond Company
Limited.

         Mr. Janzen has served as Managing Director of Global Diamond-SA since
July 1994 and a director of the Company from February 1998 to December 1998. He
was reappointed as a director of the Company in May 1999. Mr. Janzen is a
qualified engineer with a degree in commerce, and a shareholder and general
manager of Elite Diamond Cutting Works (Pty) Ltd., a South African based diamond
cutting and trading company. He was the general manager of the Octha Group,
having established its Johannesburg and Taiwan diamond cutting factories. In
this position he was responsible for the operations of five producing diamond
mines, an active mine exploration program, two diamond-polishing factories, as
well as the marketing organization of the group that extended to Belgium,
Switzerland and the United States.

         Eng. Gasem S. Al-Shaikh as served as a director of the Company from
December 1997 to December 1998. He was reappointed as a director of the Company
in June 1999. He has also served as the Deputy Managing Director of the
Petroleum Chemicals and Mining Division and an Executive Board Member of PCM
since 1994. He also serves as Chairman of International PCM Holdings Limited.
Eng. Gasem S. Al-Shaikh serves on the Board of Directors of the Company as the
nominee of International PCM Holdings Limited.

         Mr. Paulus Vries has served as a director of Global Diamond-SA from
April of 1999 to present. He is a partner of Nabas Holdings. He received his
South African matriculation degree and has 20 years experience in mining
administration.

         Mr. Brill has served as Vice President of Investor Relations of the
Company since January 1994. In July 1999, he was appointed Secretary of the
Company. Since January 1993, he was a Vice President at Kensington Finance
Corp., an options trading firm and investment trader for the Monitrend Gold
Mutual Fund. He holds Series 7, 63, 4 and 24 as a securities representative with
the National Association of Securities Dealers, Inc. He holds a certificate in
diamond grading from the Gemological Institute of America as well as a
certificate in rough evaluation from the Diamond Institute of Africa.

         Mr. Albert de Villiers started his career at Iscor in South Africa from
where he moved to the Freddies Gold Mine as mine overseer. He joined Sasol
Limited as the underground manager at their Bosjespruit Colliery. He then joined
the Anglo American Corporation (later Anglo Gold) where he was the mine manager
at Western Deep Levels (WDL). There he assumed overall responsibility for the
WDL south shaft-deepening project, which he managed on schedule and on budget.
He had 16,000 people report to him. Mr. Albert de Villiers holds a BSC Mining
Engineering degree and joined Global in April 2000. He was appointed as Chief
Operating Officer in October 2000. Mr. Albert de Villiers is not related to Mr.
Johann de Villiers.

                                       29
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

         CASH COMPENSATION OF EXECUTIVE OFFICERS. The following table sets forth
the cash compensation paid by the Company to its executive officers for services
rendered during the fiscal years ended December 31, 2000, and 1999.
<TABLE>
<CAPTION>
                                       ANNUAL COMPENSATION             LONG-TERM COMPENSATION
                            --------------------------------------------------------------------
                             YEAR    SALARY    BONUS       OTHER      RESTRICTED     COMMON     PAYOUTS   ALL OTHER
                                      ($)       ($)        ANNUAL        STOCK       SHARES             COMPENSATION
    NAME AND POSITION                                   COMPENSATION    AWARDS     UNDERLYING                ($)
                                                            ($)           ($)        OPTIONS
                                                                                     GRANTED
                                                                                   (# SHARES)
-------------------------------------------------------------------------------------------------------------------
<S>                          <C>   <C>          <C>         <C>           <C>          <C>        <C>        <C>
Johann de Villiers, CEO(1)   2000  $ 250,000    -0-         -0-           -0-          -0-        -0-        -0-
                             1999    250,000    -0-         -0-           -0-          -0-        -0-        -0-
                             1998    241,667    -0-         -0-           -0-          -0-        -0-        -0-

Pieter Van Wyk, Director     2000  $ 180,000    -0-         -0-           -0-          -0-        -0-        -0-
of Exploration and Mining    1999    180,000    -0-         -0-           -0-          -0-        -0-        -0-
Director of GDR Inc. and     1998    162,740    -0-         -0-           -0-          -0-        -0-        -0-
Director of GDR SA (2)

</TABLE>

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

(1)      The Company has entered into a five year employment agreement with Mr.
         de Villiers effective as of February 4, 1998. Pursuant to the
         agreement, Mr. de Villiers receives a monthly salary of $20,833 and a
         monthly car allowance of $750. In addition, Mr. de Villiers is entitled
         to participate in a senior management bonus pool in the amount of 10%
         of the Company's annual after tax earnings. Mr. de Villiers was
         appointed Chief Financial Officer on July 1, 1999.

(2)      The Company had entered into a five-year employment agreement with Mr.
         Van Wyk effective as of February 4, 1998. Pursuant to the agreement,
         Mr. Van Wyk receives a monthly salary of $15,000 and a car allowance of
         $500. In addition, Mr. Van Wyk is entitled to participate in a senior
         management bonus pool in the aggregate amount of 10% of the Company's
         annual after tax earnings. Mr. Van Wyk resigned as Director on January
         13, 2001.

COMPENSATION OF DIRECTORS. Effective January 1, 1998, all non-officer directors
receive an attendance fee of $1,000 per meeting of the Board of Directors and
$250 per telephone meeting. Directors' fees incurred in 2000 and 1999 were $13,
000 and $15, 000, respectively. All directors receive reimbursement for
out-of-pocket expenses in attending Board of Directors meetings. From time to
time the Company may engage certain members of the Board of Directors to perform
services on behalf of the Company. The Company will compensate the members for
their services at rates no more favorable than could be obtained from
unaffiliated parties.


                                       30
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of March 22. 2001 by (i)
each person who is known by the Company to be the beneficial owner of more than
five percent (5%) of the issued and outstanding shares of Common Stock, (ii)
each of the Company's directors and executive officers and (iii) all directors
and executive officers as a group.

             NAME AND ADDRESS               NUMBER OF SHARES  PERCENTAGE OWNED
-----------------------------------------   ----------------  ----------------

Johann de Villiers(1)(2)                      4,211,067            6.4%
Pieter van Wyk(1)(3)                            921,220            1.4%
John Tyson(1)(4)                                381,920            (6)
Charles MacDonald(1)(5)                         275,000            (6)
Said H. Ghachem(5)(7)(8)                        150,000            (6)
Ahmed M. Basodan(9)(10)(11)                     200,000            (6)
Yassin Abduaalh Kadi(9)(10)(11)                 200,000            (6)
Mattar Abdulla Al Muhairy(9)(12)(13)            200,000            (6)
Amin Koudsi(9)(12)(13)                          200,000            (6)
Andries Janzen(1)(9)                            200,000            (6)
Gasem S. Al-Shaikh(7)(8)(15)                    100,000            (6)
Eugene Brill(1)(9)                              371,140            (6)
International PCM Holdings Limited(7)(14)     9,924,576           15.0%
New Diamond Holdings Limited(10)              9,188,096           13.9%
LIWA Diamond Company Limited(12)             10,438,096           15.8%
All officers and directors as a group         7,410,347           11.2%
---------------

(1)      Address is 836 Prospect, Suite 2B, La Jolla, California 92037.
(2)      Includes 1,866,667 shares of Common Stock underlying immediately
         exercisable options and 2,000,000 shares of Common Stock underlying
         options exercisable only upon certain vesting requirements.
(3)      Includes 600,000 shares of Common Stock underlying immediately
         exercisable options.
(4)      Includes 350,000 shares of Common Stock underlying immediately
         exercisable options.
(5)      Includes 150,000 shares of Common Stock underlying immediately
         exercisable options.
(6)      Less than one percent.
(7)      Address is P.O. Box 33251, Jeddah 21448, Saudi Arabia..
(8)      Serves on the Board of Directors of the Company as the nominee of
         International PCM Holdings Limited.
(9)      Includes 200,000 shares of common stock underlying immediately
         exercisable options.
(10)     Address is Almahmal Center, 18th Floor, Jeddah, Saudi Arabia.
(11)     Serves on the Board of Directors of the Company as the nominee of New
         Diamond Holdings Limited.
(12)     Address is P.O. Box 95, Abu Dhabi, United Arab Emirates.
(13)     Serves on the Board of Directors of the Company as the nominee of LIWA
         Diamond Company Limited.
(14)     Address is Parade House, The Parade, Castletown, IM9 1LG, Isle of Man,
         British Isles.
(15)     Represents 100,000 shares of Common Stock underlying immediately
         exercisable options.

                                       31
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         During the year ended December 31, 1999, the Company had engaged Weir
International Limited ("Weir") to market and sell the Company's diamond
production. The Company was responsible for all direct costs relating to the
sale of the diamonds, such as insurance, freight, import and export duties, and
all applicable taxes and levies. Weir was responsible for all sales and
marketing expenses. In consideration of its services, the Company would pay Weir
a commission of five percent (5%) of the gross sale amount. Weir is a
stockholder of the Company and the Company's Chief Executive Officer, Johann de
Villiers, has a beneficial interest in Weir. The Company believes that the terms
of its transactions with Weir are no less favorable than could be obtained from
an unaffiliated party. During the year ended December 31, 1999 the Company paid
to Weir $25,000 commission from sales of diamonds. On December 31, 1999, in
consideration for the termination of this marketing agreement, the Company
issued 2,000,000 warrants to purchase common stock at $.40 per share to Weir.
These warrants will only vest once the Company's publicly traded stock reaches a
minimum of $1.00 per share and the Company has earnings of $.05 per share. The
warrants will expire three years after vesting.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)

         2.1*     Securities Purchase Agreement and Plan of Reorganization dated
                  July 17, 1995 between Western Capital Financial Corporation
                  and Global Diamond Resources, Inc.

         3.1*     Articles of Incorporation of the Company

         3.2*     Bylaws of the Company

         3.3      Certificate dated December 17, 1997

         3.4      Amendment dated June 16, 1999 to Articles of Incorporation

         4.1*     Specimen of Common Stock Certificate

         10.1*    Notarial Prospecting Contract dated March 22, 1995 between
                  Global Diamond Resources (SA)(Pty) Limited and Maria Anna
                  Gobey (Montrose Kimberlite Pipe).

         10.2*    Deed of Assignment between Lama Minerals CC and Global Diamond
                  Resources (SA)(Pty) Limited (Caerwinning Deposit).

         10.3*    Deed of Assignment dated March 25, 1995 between Global Diamond
                  Resources (SA)(Pty) Limited and Nabas Holdings (Pty) Limited
                  (Grasdrif Deposit).

         10.4**   Securities Purchase Agreement dated December 5, 1997 between
                  the Company and International PCM Holdings Limited.

         10.5***  Securities Purchase Agreement dated December 29, 1998 between
                  the Company and New Diamond Holdings Limited

         10.6***  Securities Purchase Agreement dated December 29, 1998 between
                  the Company and LIWA Diamond Company Limited

         10.7***  Amendment No. 1 dated June 28, 1999 to Securities Purchase
                  Agreement dated December 29, 1998 between the Company and New
                  Diamond Holdings Limited

         10.8***  Amendment No. 1 dated June 28, 1999 to Securities Purchase
                  Agreement dated December 29, 1998 between the Company and LIWA
                  Diamond Company Limited

         21.1     The Company's subsidiaries are Global Diamond Resources, Inc.,
                  a British Columbia corporation, and Global Diamond Resources
                  (SA)(Pty) Limited, a South African corporation, Global
                  Diamonds Resources International Limited, a British Virgin
                  Islands corporation, and Nabas Diamonds (Pty) Ltd., a South
                  African corporation

                                       32
<PAGE>

*        Previously filed as part of registration statement on Form 10-SB (SEC
         File No. 0-21635) filed with the Securities and Exchange Commission on
         October 29, 1996.

**       Previously filed as part of Annual Report on Form 10-KSB for the year
         ended December 31, 1997.

***      Previously filed as part of Annual Report on Form 10-KSB for the year
         ended December 31, 1998.




                                       33
<PAGE>


                                   SIGNATURES

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

                                            GLOBAL DIAMOND RESOURCES, INC.

Date:  March 22, 2001                       By: /S/ JOHANN DE VILLIERS
                                               ---------------------------------
                                               Johann de Villiers, Chief
                                                  Executive Officer

         In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>

Signature                                  Title                                       Date
---------                                  -----                                       ----
<S>                                        <C>                                         <C>
/S/ JOHANN DE VILLIERS                     Chairman of the Board, Director,            March 22, 2001
------------------------------------       Chief Executive Officer and Chief
JOHANN DE VILLIERS                         Financial Officer


/S/ JOHN TYSON                             Director                                    March 22, 2001
------------------------------------
JOHN TYSON


/S/ CHARLES MACDONALD                      Director                                    March 22, 2001
------------------------------------
CHARLES MACDONALD


/S/ SAID H. GHACHEM                        Director                                    March 22, 2001
------------------------------------
SAID H. GHACHEM

/S/ AHMED M. BASODAN                       Director                                    March 22, 2001
------------------------------------
AHMED M. BASODAN


/S/ YASSINABDUALLAH KADI                   Director                                    March 22, 2001
------------------------------------
YASSIN ABDUALLAH KADI


/S/ MATTAR ABDULLA                         Director                                    March 22, 2001
  AL MUHAIRY
------------------------------------
MATTAR ABDULLA
  AL MUHAIRY


/S/ AMIN KOUDSI                            Director                                    March 22, 2001
------------------------------------
AMIN KOUDSI


/S/ ANDRIES JANZEN                         Director                                    March 22, 2001
------------------------------------
ANDRIES JANZEN


/S/ GASEM S. AL-SHAIKH                     Director                                    March 22, 2001
------------------------------------
GASEM S. AL-SHAIKH

</TABLE>