UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB

    [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998

    [ ] 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: 0-17874

                                  XPLORER, S.A.
             (Exact name of registrant as specified in its charter)

                                     Nevada
         (State or other jurisdiction of incorporation or organization)

                                   88-0199674
                     (I.R.S. Employer Identification Number)

                            2929 S. Maryland Parkway
                             Las Vegas, Nevada 89109
                    (Address of principal executive offices)

                                 (702) 699-5400
                           (Issuer's telephone number)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act 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[]

As of September 30, 1998,  Xplorer,  S.A. had 19,779,705  shares of Common Stock
Outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ]No [ X ]

                                                   [XPLORER\10-QSB:093098.QSB]-1

<PAGE>

                                  XPLORER, S.A.
                                      INDEX

                                                                            Page

                                     PART I

Item 1.        Financial Statements

               Consolidated Condensed Balance Sheet
               as of September 30, 1998 (unaudited) .......................1

               Consolidated Condensed Statements of Operations
               for the Three and Nine Months Ended September 30, 1998
               and 1997 (unaudited) .......................................2

               Consolidated Condensed Statements of Shareholders' Equity
               for Nine Months Ended September 30 (unaudited) .............3

               Consolidated Condensed Statements of Cash Flows for the Nine
               Months Ended September 30, 1998 and 1997 (unaudited) .......4

               Notes to Consolidated Condensed Financial Statements .......5


Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations...................................9

                                     PART II

Item 1.        Legal Proceedings..........................................11

Item 2.        Changes In Securities......................................11

Item 3.        Defaults Upon Senior Securities............................11

Item 4.        Submission Of Matters To A Vote Of Security Holders........11

Item 5.        Other Information..........................................11

Item 6.        Exhibits And Reports On Form 8-K...........................11

               Signatures.................................................12



                                        I

                                                   [XPLORER\10-QSB:093098.QSB]-1

<PAGE>
<TABLE>
<CAPTION>



                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
                           CONSOLIDATED BALANCE SHEET
                               September 30, 1998


ASSETS
<S>                                                                             <C>

Current Assets
         Cash and cash equivalents                                              $       15,414
     Receivables                                                                        39,166
                                                                                --------------
         Total Current Assets                                                           54,580

     Property and equipment                                                             98,720

     Other investments                                                                  34,978

TOTAL ASSETS                                                                    $      188,278
                                                                                ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
     Current Liabilities
         Accrued expensed                                                       $      368,176
         Related party payable                                                         364,675
         Note payable                                                                  450,000
         Current portion of long-term debt                                           1,065,847
                                                                                --------------
              Total Current Liabilities                                              2,248,698

     Long-term debt                                                                    689,974

              Total Liabilities                                                      2,938,672

Minority Interest                                                                     (965,000)

     Shareholders' Equity (Deficit)
         Preferred  stock,  par  value  $.001;   authorized  15,000,000  shares;
         convertible beginning in 2001; 1,280,550 shares
         issued and outstanding                                                          1,281
         Common stock, par value $.001; authorized 60,000,000
         shares; 19,779,705 issued and outstanding                                      19,780
         Additional paid in capital                                                  2,790,714
     Accumulated deficit during development stage                                   (4,597,169)
         Total Shareholders' Equity (Deficit)                                       (1,785,394)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                            $      188,278
                                                                                ==============
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                                   [XPLORER\10-QSB:093098.QSB]-1
                                       -1-

<PAGE>
<TABLE>
<CAPTION>

                                  XPLORER, S.A.
                            Statements of Operations
                       For the Three and Nine Months Ended
                     September 30, 1998 and 1997(Unaudited)

                                                          For the Three Months Ended             For the Nine Months Ended,
                                                                 September 30,                          September 30,
                                                    --------------------------------------- ------------------------------------
                                                            1998               1997                   1998            1997
                                                    --------------------- ----------------- ------------------- ----------------
<S>                                                 <C>                   <C>               <C>                 <C>

                                                         (Unaudited)        (Unaudited)         (Unaudited)        (Unaudited)
Revenues
     Other income                                   $                 0 $          141,461  $                0 $         206,481
                                                    ------------------- ------------------- ------------------ ----------------
          Total revenues                                              0            141,461                   0           206,481
                                                    ------------------- ------------------- ------------------ -----------------
Costs and expenses:
    General and administrative                                    1,000             49,103              86,269           436,232
    Net loss on investments and settlement
       of gold contracrs                                              0                  0             121,705                 0
    Interest expense                                                  0            111,250               3,750           130,000
                                                    ------------------- ------------------- ------------------ -----------------
          Total expenses                                          1,000            160,353             211,724           566,232
                                                    ------------------- ------------------- ------------------ -----------------
Net income (loss)                                               (1,000) $         (18,892)  $         (211,724)$        (359,751)
                                                    =================== =================== ================== =================
Net income (loss) per common share                  $             (.00) $             (.00) $             (.01)$            (.02)
                                                    =================== =================== ================== =================
Weighted average common
 shares outstanding                                          19,779,705         18,839,290          19,779,705        18,839,290
                                                    =================== =================== ================== =================

</TABLE>

    The accompanying notes are an integral part of these financial statements

                                                  [XPLORER\10-QSB:093098.QSB]-1

                                       -2-

<PAGE>

<TABLE>
<CAPTION>

                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

                                              Common Stock                    Preferred Stock             Additional
                                                                                                            Paid-In
                                     -------------------------------  ------------------------------       Capital
                                         Shares           Amount          Shares          Amount
                                     ---------------  --------------  --------------- --------------  ------------------
<S>                                  <C>              <C>             <C>             <C>             <C>

Balance January 1, 1998                  19,779,705   $      19,780        1,280,550  $        1,281  $        2,790,714
Net loss for period
                                     ---------------  --------------  --------------- --------------- -------------------
Balance, March 31, 1998                  19,779,705          19,780        1,280,550           1,281           2,790,714
Net loss for period
                                     ---------------  --------------  --------------- --------------- -------------------
Balance, June 30, 1998                   19,779,705          19,780        1,280,550           1,281           2,790,714
Net loss for period
                                     ---------------  --------------  --------------- --------------- -------------------
Balance, September 30, 1998              19,779,705   $      19,780        1,280,550  $        1,281  $        2,790,714
                                     ===============  ==============  =============== =============== ===================

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                                        -3A-

<PAGE>

<TABLE>
<CAPTION>

                                  XPLORER, S.A.
                        (A Development Stage Enterprise)
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

                                     Accumulated
                                       During
                                 Development Stage            Total

                             -------------------------- -------------------
<S>                          <C>                        <C>

Balance January 1, 1998      $              (4,385,445) $       (1,573,670)
Net loss for period                            (49,265)            (49,265)
                             -------------------------- -------------------
Balance, March 31, 1998                     (4,434,710)         (1,622,935)
Net loss for period                           (161,459)           (161,459)
                             -------------------------- -------------------
Balance, June 30, 1998                      (4,596,169)         (1,784,394)
Net loss for period                             (1,000)             (1,000)
                             -------------------------- -------------------
Balance, September 30, 1998  $              (4,597,169) $       (1,785,394)
                             ========================== ===================

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                                        -3B-

<PAGE>

<TABLE>
<CAPTION>

                                                   XPLORER, S.A.
                                          (A Development Stage Enterprise)
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                                                        Nine Months Ended
                                                         September 30, 1998          September 30, 1997
                                                      -------------------------    -----------------------
<S>                                                   <C>                          <C>

Net (Loss)                                            $              (211,724)     $             (359,751)
Non Cash Items                                                               0                   (181,900)
Adjustments to Reconcile Net Income to
             Increase in Receivables                                        -                     (66,356)
         Increase in marketable securities                                  -                    (173,476)
         Decrease in other investments                                121,705                          -
         Increase in prepaid commissions                                    -                     (43,498)
         Increase in related party payable                                  -                      59,017
         Increase (decrease) in accrued expenses                       34,309                     (61,522)
         Increase in contracts and notes payable                            -                     174,665
                                                      ------------------------     -----------------------
          NET CASH PROVIDED BY (USED IN)
                OPERATING ACTIVITIES                                  (55,710)                  (652,821)
                                                      ========================     =======================

CASH FLOWS FROM INVESTING ACTIVITIES
Increase (Decrease) in:
         Costs added to property, plant &
           equipment                                                        -                    (119,623)
             Other Investments                                              -                     500,000
         Increase in paid in capital                                        -                     180,882
                                                      ------------------------     -----------------------
          NET CASH PROVIDED BY (USED IN)
               FINANCING ACTIVITIES                                         0                     561,259
                                                      ========================     =======================

NET INCREASE (DECREASE) IN CASH                                       (55,710)                     91,562
CASH, at Beginning of Period                                           71,124                     166,000
                                                      ------------------------     -----------------------
CASH, at End of Period                                $                15,414      $               74,438
                                                      ========================     =======================

</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                                        -4-

<PAGE>

                 XPLORER, S. A. (A Development Stage Enterprise)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   Nine Month Period Ended September 30, 1997

Note 1        Organization and Presentation:

         Xplorer,  S. A., the "Company"  (successor to Gerant Industries,  Inc.)
         was  organized  by  adoption  of  amended  and  restated   Articles  of
         Incorporation  dated  July 5, 1996  which were filed with the office of
         the Secretary of State of Nevada on August 15, 1996.

         Gerant Industries,  Inc. ("Gerant") filed a petition for reorganization
         under  Chapter 11 of the United States  Bankruptcy  Court ("the Court")
         for the Central  District of  California  on March 1, 1994. On July 24,
         1996 the Court confirmed  Gerant's Third Amended Plan of Reorganization
         (the "Plan"). The Plan approved the amendment of the of the Articles of
         Incorporation and By-Laws,  change of corporate name,  authorization of
         common and preferred shares of stock, payment of claims and issuance of
         stock by the successors to this debtor-in-possession, Xplorer, S. A.

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

         The Company,  a development  stage  enterprise,  has been attempting to
         obtain cash  resources from the sale of investment  contracts,  warrant
         exercise,  operations, or private placement of equity securities.  Such
         proceeds  have been  necessary  to assure the  funding  of  anticipated
         operating costs and  satisfaction of any negative working capital as of
         the current period.

         The  Company  owns 59% of  Atlanta  Pacific  Trust,  LLC  (APT) and its
         wholly-owned  subsidiary  Atlantic-Pacific  Finanzprodukte,  Gmbh  (APT
         Germany).  APT is the owner of the  Evening  Star Mine and  through its
         subsidiary  APT  Germany  secures  financing  for its  exploration  and
         development activities.

         The Company's  consolidated financial statements have been presented on
         the  basis  that  it  is  a  going  concern,   which  contemplates  the
         realization  of  the  mineral  properties  and  other  assets  and  the
         satisfaction  of  liabilities  in the normal  course of  business.  The
         Company has incurred  losses of $4,597,169  from inception to September
         30, 1998.  The Company has not realized  economic  production  from its
         mineral  properties  as of September  30,  1998.  These  factors  raise
         substantial  doubt about the  Company's  ability to continue as a going
         concern.  Management  continues to actively seek additional  sources of
         capital to fund  current and future  operations.  There is no assurance
         that the Company will be successful  in continuing to raise  additional
         capital,  establishing  probable or proven ore reserves, or determining
         if the mineral properties can be mined economically. These consolidated
         financial  statements do not include any adjustments  that might result
         from the outcome of these uncertainties.


Note 2        Summary of Significant Accounting Policies:

         Principles of Consolidation

         The  consolidated  financial  statements  include  the  accounts of the
         company  and its 59% owned  subsidiary,  Atlantic  Pacific  Trust,  LLC
         (APT),   and   APT's    wholly-owned    subsidiary,    Atlantic-Pacific
         Finanzprodukte,  GmbH. In consolidations,  all significant intercompany
         balances and transactions are eliminated.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                       -5-

<PAGE>

         Use of Estimates

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

         Mineral Properties and Mining Equipment

         Mineral   properties   and  mining   equipment  are  carried  at  cost.
         Depreciation on equipment is provided on a straight-line basis over its
         estimated  useful lives ranging from three years to five years.  Mining
         equipment not in service is not depreciated.

         In  the  past,  the  Company  deferred  direct  costs  related  to  the
         acquisition,  exploration and development of mineral properties pending
         determination  of  their  economic  viability  which  normally  entails
         performing an in-depth  geological and geophysical study. If no minable
         ore body was discovered,  previously capitalized costs were expensed in
         the period the  property  was  abandoned.  Any revenue  generated  from
         pre-production   costs.  When  a  property  was  placed  in  commercial
         production,    such   deferred    costs   were   depleted   using   the
         units-of-production method.

         During  1997,  the  Securities  and  Exchange  Commission  (SEC)  staff
         reconsidered  existing accounting practices for mineral expenditures by
         United  States junior mining  companies.  They now interpret  generally
         accepted  accounting  policy  for  junior  mining  companies  to permit
         capitalization  of acquisition,  exploration and development costs only
         after   persuasive   engineering   evidence   is  obtained  to  support
         recoverability  of these costs  (ideally upon  determination  of proven
         and/or  probable   reserves  based  upon  dense  drilling  samples  and
         feasibility studies by a recognized independent engineer). Although the
         company has performed drilling samples, and an independent engineer has
         deemed the gold  properties  contain  profitable  reserves in excess of
         property  and  equipment  costs  incurred  through  December  31, 1997,
         management  has  chosen  to  follow  the more  conservative  method  of
         accounting by expending the previously  capitalized gold mineral costs,
         for which there is no  feasibility  study as of the year ended December
         31, 1997.

         Office Furniture and Equipment

         Office  furniture and equipment are recorded at cost.  Depreciation  is
         computed by the straight-line  method,  based upon the estimated useful
         lives of the respective assets, generally three to five years.

         Income (Loss) per Common Stock

         Income  (loss)  per  share of  common  stock is  computed  based on the
         weighted average number of shares  outstanding.  Warrants,  options and
         convertible  debentures  have not been included in the  calculation  as
         their effect would be anti-dilutive.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                       -6-

<PAGE>

NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Income Taxes

         The Company  accounts for income taxes using the liability method which
         requires  recognition  of deferred tax  liabilities  and assets for the
         expected  future tax  consequences of events that have been included in
         the  financial  statements  or tax  returns.  Deferred  tax  assets and
         liabilities  are  determined  based  on  the  difference   between  the
         financial  statements  and tax basis of assets  and  liabilities  using
         enacted tax rates in effect for the year in which the  differences  are
         expected to reverse.

         Stock Based Compensation

         In October  1995,  the  Financial  Accounting  Standards  board  issued
         Statement of Financial  Accounting  Standards No. 123,  "Accounting for
         Stock-Based  Compensation,"  (SFAS 123), which is effective for periods
         beginning  after  December 15, 1995.  SFAS 123 requires that  companies
         either  recognize  compensation  expense  for  grants of  stock,  stock
         options,  and other equity  instruments  based on fair value or provide
         proforma  disclosure of the effect on net income and earnings per share
         in the  Notes to the  financial  Statements.  The  Company  intends  to
         continue to account for its stock-based  compensation  under Accounting
         Principles  Board  No.  25;  however,   the  Company  has  adopted  the
         disclosure  provisions  of SFAS 123 for the fiscal year ended  December
         31, 1997.

         Cash and Cash Equivalents

         For purposes of reporting cash flows, cash and cash equivalents include
         highly liquid debt instrument purchased with a maturity of three months
         or less.


Note 3   Property, Plant and Equipment:

         The values  reflected  in the 10 KSB of  December  31, 1997 are carried
         forward  here.  These values are at the defined cost of $918,120,  with
         accumulated  depreciation  of $819,400,  with the net  reflected on the
         balance sheet.  Depreciation for the current year will be added at year
         end.

         During 1997, the Company expensed  previously  capitalized  development
         costs of its Evening Star mine.

         During 1997, the Company considered its mining equipment to be impaired
         and provide an allowance for 90% of its original cost.

Note 4   Note Payable:

         Note payable in the amount of $450,000  with  interest at 10% per annum
         payable  monthly,  with all  outstanding  principal and interest due on
         demand.  The note is  convertible at any time for 150,000 shares of the
         common stock of the Company at the option of the holder.

Note 5   Investment Contracts Payable:

         Atlantic has issued investment  contracts under German securities laws.
         Investment  contracts  payable consist of the following at December 31,
         1997:

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                       -7-

<PAGE>

         Contract of $9,645 per kilo  received in U.S.
         dollars for  purchase of undelivered kilos
         (32.15 troy ounces) of gold bullion.
         All contracts have a one-year maturity.                    $   118,636

         Zero-coupon contract of $12,500 payable
         in U.S. dollars and bearing interest at
         9.00% per annum.  Such contracts are
         payable with related interest in one to five years.            192,231

         Zero-coupon  contract payable in 5,000 German
         Deutsche Marks (DM) units and bearing  interest at
         9.00% per annum.  Such  contracts  are payable
         with related interest in DM in one to five years.              868,913

         Zero-coupon  contract  payable  in DM or  gold
         at the  rate  of 600 DM principal per unit and
         bearing  interest at 9.00% per annum.  Contracts
         are payable with related
         interest in DM in one to five years.                           576,041
                                                                    -----------

                                                                    $ 1,755,821

         Less current portion of long-term debt                       1,065,847
                                                                    -----------

                                                                    $   689,974

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

                  Investment contracts are due as follows:

                  1998                       $1,065,847
                  1999                          282,674
                  2000                          134,462
                  2001                          208,454
                  2002                           64,384
                                             ----------
                  Total                      $1,755,821
                                             ==========

Note 6        Related Party Payable:

         In 1995, Atlantic entered into agreements with Sequoia Trust, a related
         party,  to lease surface and mineral rights related to 57 acres of land
         adjacent to Evening Star Mine and certain  improved real property known
         as the Weldon Research Center for total cost of $6,000 per month. These
         lease are renewable after a five year term and require a future minimum
         annual payment of $72,000 to Sequoia Trust.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                       -8-

<PAGE>

         These  properties  provide the Company with the  opportunity to develop
         three patented  mining claims with probable  commercial  grade ore (12%
         royalty  due to Sequoia  Trust),  construct  a primary  ore  processing
         refinery,  and utilize 13,000 square feet at the Weldon Research Center
         for its mineralization analyzes and other testing procedures.

         Atlantic  also has a cancellable  contract with EMTEC,  Inc., a related
         party,  for  development  of all  eleven  mining  claims and the future
         operation of the mine and refinery.  The contract  requires the Company
         to pay EMTEC bi-monthly at invoiced cost plus 18% overhead.

         As of  September  30, 1998  Atlantic  owed the above  related  entities
         development costs and accrued interest in the amount of $364,675.



ITEM 2.       MANAGEMENT' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

For the nine months ended September 30, 1998:

Going Concern:

         The  Company's  working  capital  resources  during  the  period  ended
September  30, 1998 were  provided by utilizing the cash on hand at December 31,
1997.  The formal  business  activity of mining did not begin this quarter since
the  activity  is just in the  process of being  funded.  Sufficient  funds have
previously  been made  available  by related  parties  for the  working  capital
requirements  not  filled by other  sources.  Management  anticipates  this will
continue until the commencement of operations.

         The Company has  experienced  recurring net losses,  has limited liquid
resources,  and negative  working  capital.  Management's  intent is to continue
searching for additional sources of capital and the Company intends to continue
operating with minimal  overhead and key  administrative  functions  provided by
consultants who are compensated in the form of the Company's common stock. It is
estimated, based upon its historical operating expenses and current obligations,
that the  Company  may need to  utilize  its common  stock for future  financial
support  to  finance  its  needs  during  1998.  Accordingly,  the  accompanying
consolidated  financial  statements have been presented under the assumption the
Company will continue as a going concern.

Results  of  Operations -  Quarter  Ended September 30, 1998 Compared to Quarter
Ended  September  30, 1997 Nine Months Ended September 30, 1998 Compared to Nine
Months Ended September 30, 1997

         There has not been  sufficient time since the emergence from Chapter 11
Proceedings to begin operations. There is currently no schedule as to when these
operation activities will begin, accordingly,  there were no revenues or cost of
revenues recorded during the current quarter or comparable quarter.


                                                   [XPLORER\10-QSB:093098.QSB]-1

                                       -9-

<PAGE>

         Total  expenses were $1,000 in the current  quarter and $211,724 in the
current nine months compared to $160,353 and $359,751 in the comparable  periods
last year.  The change is  attributable  to  continued  utilization  of services
provided by  professional  consultants and other advisors and a minimal level of
activities in 1998. Additionally, during the second quarter of 1998, the Company
wrote off an investment at the Atlantic  level due to the  bankruptcy  filing of
the company in which the investment was made.

Estimations of Management:

         Each year,  Atlantic  Management  estimates  or reserves and prepares a
comprehensive mining plan for the then-anticipated  remaining life of the mining
property.  Other metals could also be present in the ore  reserves.  Significant
changes to the Company's plans could occur as a result of mining experience, new
ore  discoveries,  changes in mining  process,  new  investment in equipment and
technology.  Also  permits  may  not be  renewable  under  the  same  terms  and
conditions as originally  granted.  Exploration  could not result in recoverable
metals,  and the  anticipated  pilot  refinery  could not be completed and other
factors.

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

         Given the above  uncertainties,  Atlantic  utilizes  the values for its
gold ore  resources  based upon a  comprehensive  geological  report  updated by
Christopher L. Pratt, Geologist, dated December 31, 1996, as to ore reserves.

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

Liquidity and Capital Resources

         As of September 30, 1998, the Company had a working  capital deficit of
$2,194,118 a decrease of  $1,300,386  from  September  30, 1997.  The change was
attributable to the operating  losses  experienced and impairment  recognized in
the last three months of 1997 and the first nine months of 1998.

         The Company had cash balances of  approximately  $15,414 and $74,438 at
September  30, 1998 and 1997,  respectively.  The limited  cash  balances  are a
direct result of the Company having no operations during the quarters.

         The  Company's  plan is to keep  searching  for  additional  sources of
capital and new operating  opportunities.  Furthermore,  the Company may have to
utilize its common stock for future financial support to finance its needs. Such
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  As such,  the Company's  independent  accountants  have modified
their report for the  Company's  latest  fiscal year ended  December 31, 1997 to
include an explanatory paragraph with respect to the uncertainty.

         The Company has no commitments  for capital  expenditures or additional
equity or debt financing and no assurances can be made that its working  capital
needs can be met.

         Additionally,  as of September 30, 1999,  the Company had no operations
or employees other than its President.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                      -10-

<PAGE>

PART II:      OTHER INFORMATION

Item 1.       Legal Proceedings

              None.

Item 2.       Changes In Securities

              None

Item 3.       Defaults Upon Senior Securities

              None.

Item 4.       Submission Of Matters To A Vote Of Security Holders

              None

Item 5.       Other Information

              None

Item 6.       Exhibits And Reports On Form 8-K

              None.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                      -11-

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Company  has duly  caused  this  Report to be  signed on its  behalf by the
undersigned thereunto duly authorized.

                                        XPLORER, S.A.
                                        (Registrant)

Dated:   October 3, 1998                By:  /s/  Leonard J.Roman
                                             ----------------------------------
                                                  Treasurer, Chief Financial
                                                  Officer and Director;
                                                  Xplorer, S.A.

                                                   [XPLORER\10-QSB:093098.QSB]-1

                                      -12-