NEVADA MANHATTAN MINING INC, SB-2/A, 1997-09-12

NEVADA MANHATTAN MINING INC
SB-2/A, 1997-09-12
GOLD AND SILVER ORES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 12, 1997.

REGISTRATION NO. 333-27923
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2

TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

NEVADA MANHATTAN MINING INCORPORATED
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
NEVADA 1041 88-0219765
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

5038 NORTH PARKWAY CALABASAS, SUITE 100
CALABASAS, CALIFORNIA 91302
(818) 591-4400
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)
------------------------

JEFFREY S. KRAMER
CHIEF FINANCIAL OFFICER
NEVADA MANHATTAN MINING INCORPORATED
5038 N. PARKWAY CALABASAS, SUITE 100
CALABASAS, CALIFORNIA 91302
(818) 591-4400
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------

COPIES TO:

LLOYD S. PANTELL, ESQ.
LLOYD S. PANTELL, APLC
10940 WILSHIRE BOULEVARD, SUITE 1550
LOS ANGELES, CALIFORNIA 90024
TELEPHONE (310) 443-9559
FACSIMILE (310) 443-3281
------------------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this Registration Statement.
------------------------

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C> <C>
==================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM PRICE MAXIMUM OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Common Stock, $0.01 par
value(2)..................... $ $22,755,000 $6,896(3)
- --------------------------------------------------------------------------------------------------
Total............................................................................ $6,896(3)
==================================================================================================
</TABLE>

(1) Estimated solely for the purpose of completing the amount of the
registration fee pursuant to Rule 457 based upon a bona fide estimate of the
maximum offering price.

(2) Includes 612,593 shares of Common Stock held by, or to be issued to, certain
shareholders referred to in the Prospectus as "Selling Shareholders."

(3) The Prospectus contained in this Registration Statement is identical to the
Prospectus contained in Amendment No. 1 to Form SB-2 filed in connection
with Registration No. 333-17423 on May 1, 1997. Applicant hereby combines
such Prospectus pursuant to Rule 429(a). For the purposes of Rule 429, all
securities sought to be registered pursuant to Registration No. 333-17423
(i.e. $22,755,000) are being carried forward. The entire filing fee ($6,896)
associated with the securities sought to be registered pursuant to this
Registration Statement has been previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2

NEVADA MANHATTAN MINING INCORPORATED

CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM SB-2

<TABLE>
<CAPTION>
FORM SB-2 REGISTRATION
STATEMENT ITEM AND HEADING LOCATION IN PROSPECTUS
---------------------------------------------------------- -------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover of
Prospectus................................................ Outside Front Cover
2. Inside Front and Outside Back Cover Pages of Prospectus... Inside Front Cover Page
3. Summary Information and Risk Factors...................... Summary of Offering; Risk
Factors
4. Use of Proceeds........................................... Use of Proceeds
5. Determination of Offering Price........................... Risk Factors
6. Dilution.................................................. Risk Factors; Description of
Securities Being Offered
7. Selling Security Holders.................................. Principal and Selling
Shareholders
8. Plan of Distribution...................................... Plan of Distribution
9. Legal Proceedings......................................... Legal Matters, Auditors, and
Legal Proceedings
10. Directors, Executive Officers, Promoters and Control
Persons................................................... Management; Principal and
Selling Shareholders
11. Security Ownership of Beneficial Owners and Management.... Management; Principal and
Selling Shareholders
12. Description of Securities................................. Description of Securities Being
Offered
13. Interest of Named Experts and Counsel..................... Management
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................ Management -- Limitations on
Director and Officer Liability
15. Organization Within Last Five Years....................... Inapplicable
16. Description of Business................................... Description of Company's
Business and Property
17. Management's Discussion and Analysis of Financial Position
and Results of Operations................................. Management's Discussion and
Analysis of Financial Position
and Results of Operations
18. Description of Property................................... Description of Company's
Business and Property
19. Certain Relationships and Related Transactions............ Management -- Significant
Employees and Consultants;
Management -- Summary
Compensation Table;
Management -- Options and Stock
Appreciation Rights;
Description of Company's
Business and Property -- the
Nevada Property
</TABLE>
<PAGE> 3

<PAGE> 4

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED SEPTEMBER 12, 1997

NEVADA MANHATTAN MINING, INC.
[LOGO] MINING - DEVELOPMENT - EXPLORATION

OF COMMON STOCK
($.01 PAR VALUE)
AT $ PER SHARE

Nevada Manhattan Mining, Inc. (The "Company"), is a Nevada corporation
which was formed in 1985 (originally under the name "Epic Enterprises, Ltd.")
for the purpose of engaging in the mining of precious metals with an emphasis in
the mining of gold and silver.

On the terms and conditions which follow, the Company hereby offers a
minimum of $1,500,000 of its common stock shares and a maximum of $9,000,000 of
its common stock (the "Common Stock") at a price of $ per share which shall
be issued, if at all, on or before the Offering Commitment Date (presently
scheduled for December 31, 1997). The balance of the shares hereby offered
(1,270,349 shares) represent Common Stock in the possession of certain of the
Company's existing securities holders (the "Selling Shareholders") or which are
required to be registered in order to effect the conversion of convertible debt
securities recently issued by the Company. The Selling Shareholders and the
entities holding the convertible debt securities or registration rights will be
entitled to sell any portion of their shares of Common Stock being registered
pursuant to this Offering regardless of whether the minimum aggregate amount of
Subscriptions are accepted by the Company on or before the Offering Commitment
Date. The Company will receive no proceeds from the sale of Common Stock by the
Selling Shareholders. The Common Stock hereby offered by the Company will be
made only to persons who meet the suitability requirements outlined elsewhere in
this Prospectus. The minimum investment for each prospective Investor will be an
investment of $5,000 in shares of Common Stock. The minimum aggregate amount of
Subscriptions which may be accepted by the Company prior to the Offering
Commitment Date in order to activate this Offering will be $1,500,000. Prior to
that time, all Subscription funds will be held in an interest-bearing depository
account in a bank or financial institution selected by the Company. If at least
$1,500,000 in Subscriptions are not accepted by the Company by the Offering
Commitment Date, all Subscription funds, plus any interest earned thereon (at
the rate of 3% per annum) will be promptly returned to the prospective Investors
who tendered such Subscriptions. The Company reserves the right to continue the
Offering Commitment Date for one or more periods through March 31, 1998. As soon
as Subscriptions equal to at least $1,500,000 are accepted, the Company will
terminate the escrow and utilize Subscription funds in the manner elsewhere
described in this Prospectus. Additional Subscriptions will be put to immediate
use by the Company.

The Company's Common Stock is currently traded on the Electronic Bulletin
Board. As of August 29, 1997, the "bid" and "ask" prices of the Common Stock
were $4.25 and $4.50, respectively.

The offering represented by this Prospectus (the "Offering") involves
certain factors which should be considered by all prospective Investors. See
"RISK FACTORS."
(Cover continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C>
=========================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(2) COMPANY(3)
- ---------------------------------------------------------------------------------------------------------
Per Unit..................................... $ $ $
- ---------------------------------------------------------------------------------------------------------
Total Minimum................................ $ $ $
- ---------------------------------------------------------------------------------------------------------
Total Maximum................................ $ $ $
=========================================================================================================
</TABLE>

(1) The minimum amount of shares which may be purchased by a prospective
Investor will be Five Thousand Dollars ($5,000) in shares of Common Stock.
The Company reserves the right to sell the Common Stock in additional
increments of one hundred (100) shares provided the minimum number of shares
( ) is purchased.

(2) The Company intends to offer the Common Stock on a best-efforts basis. Sales
will only be made by Affiliates of the Company including the Company's board
of directors and executive officers. The Company may also enter into
Underwriting Agreements with broker-dealers who are members of the National
Association of Securities Dealers, Inc. It is anticipated that sales and
underwriting commissions equal to ten percent (10%) of Subscriptions will be
paid to those persons or entities entering into Underwriting Agreements.

(3) Does not include the provision of up to One Hundred Twenty Thousand Dollars
($120,000) for Organization and Offering Expenses or the use of proceeds
relative to the sale of Common Stock by the Selling Shareholders. See
Section of the Prospectus entitled "USE OF PROCEEDS."

THE DATE OF THIS PROSPECTUS IS , 1997.

<PAGE> 5

(Cover page continued)

In particular, prospective Investors should consider that:

- the Company has recently commenced the mining and extraction of precious
metals from the Nevada Property, timber production on certain of the
Brazilian Timber Properties, and exploration activities on certain of the
Indonesian Concessions. The Company has not identified any proven and
recoverable reserves on the Nevada Property and the Indonesian
Concessions. The Company has generated approximately $290,000 in revenues
as of May 31, 1997, due primarily from its operations in Brazil. No
revenue has been generated to date from the Indonesian Concessions. The
Company has realized a net loss of $4,362,509 for the fiscal year ending
May 31, 1997, and has accumulated a deficit of $16,513,084 since
inception. No assurance can be given that the Company will be able to
profitably conduct mining or timber operations even if all Subscriptions
are sold pursuant to this Offering.

- mining and natural resource operations are speculative by their nature.
Present management of the Company has in the past selected mining
properties which have proven to be uneconomic. Prospective Investors
should consider that unexpected problems (such as permitting, title
problems, governmental and environmental regulation, acts of God, and
fluctuating commodity prices and demand), expenses, and delays are
typically encountered in the development of complex mining and timber
properties thereby further complicating the ability of companies to
successfully develop its properties.

- there are significant title and land use problems associated with the
Company's properties which pose a risk of forfeiture or reduced ownership
interest.

- the Company's operations are subject to substantial governmental
regulation including federal, state, and local regulations concerning
mine safety and environmental protection. Compliance with these
regulations may cause significant delays in the ongoing permitting
process or may prevent the Company from ultimately maintaining the
permits necessary to continue commercial mining operations on the Nevada
Property, to continue operations on the Brazilian Timber Properties,
and/or continue its exploration activities on the Indonesian Concessions.
In addition, the Company's operations in Indonesia are subject to the
potential inability to obtain adequate legal protection through the
Indonesian legal system.

- while the Company is currently trading on the Electronic Bulletin Board
of NASDAQ, no assurance that the current market for the Common Stock can
be maintained.

- prospective Investors who subscribe to the Common Stock will be subject
to an immediate dilution of up to Dollars Cents ($ ) per
share.

- the Company does not currently intend to pay dividends and the rights of
shareholders of the Common Stock to receive dividends are subordinate to
the holders of the Company's Preferred Stock.

i
<PAGE> 6

SUMMARY OF THE OFFERING

This summary is provided for quick reference only and is qualified in its
entirety by the terms and conditions outlined in the remainder of this
Prospectus and by the financial statements including the notes thereto appended
to this Prospectus. Prospective Investors are urged to carefully review the
entire Prospectus and to consult with their legal and/or professional advisors
before reaching an investment decision.

THE COMPANY

The Company was initially formed to develop the Nevada Property and other
gold mining properties which it had previously owned and has since abandoned.
The Company has recently acquired the rights to harvest various species of
hardwoods in up to 750,000 hectares (approximately 1,900,000 acres) of virgin
timber properties located on various tracts throughout the state of Para, Brazil
and the rights to acquire a sawmill facility near the town of Sao Miguel do
Guama. In addition, the Company has also acquired the rights to seven (7) gold
mining concessions and three (3) coal mining concessions in Indonesia.

The Company has its principal executive offices at 5038 North Parkway
Calabasas, Suite 100, Calabasas, California 91302. Its telephone number is (818)
591-4400, and its facsimile number is (818) 591-4411. See "DESCRIPTION OF
COMPANY'S BUSINESS AND PROPERTY."

PRINCIPAL OBJECTIVES OF THIS OFFERING

The Net Proceeds derived from this Offering will be used for the following
purposes:

<TABLE>
<CAPTION>
MINIMUM SUBSCRIPTIONS MAXIMUM SUBSCRIPTIONS
--------------------- ---------------------
<S> <C> <C>
Acquisition and Development of Brazilian Timber
Properties(1)..................................... $ 500,000 $ 3,800,000
Expansion of Mine, Exploration and Development of
Nevada Property, and Mill Expansion(2)............ $ 400,000 $ 1,500,000
Exploration Activities on Indonesian
Concessions(3).................................... $ 225,000 $ 1,500,000
General and Administrative Expenses(4).............. $ 150,000 $ 1,000,000
</TABLE>

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

(1) The Company, through its eighty-percent (80%) subsidiary, Equatorial
Resources, has acquired the rights to harvest timber on up to 750,000
hectares of virgin timber properties located throughout the state of Para,
Brazil and to acquire a sawmill facility near Sao Miguel do Guama, Brazil.
The Company intends to expend up to $3,800,000 in connection with its
harvesting operations and to make improvements to its sawmill facility. The
Company is in various stages of due diligence and development as more
particularly described in the Section of the Prospectus entitled
"DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY."

(2) The Company anticipates expending up to $1,500,000 to expand mining
operations on the Nevada Property consistent with the Nevada Business Plan
described more thoroughly in the Section of the Prospectus entitled
"DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY."

(3) The Company currently projects that up to $1,500,000 will be expended in
connection with the Indonesian Concessions on exploration activities
including data collection, reconnaissance surveying, reporting, field work,
sampling, data processing, laboratory analyses, prospect evaluation,
mineralization mapping, additional acquisitions, and exploration drilling
activities.

(4) Up to $1,000,000 of Net Proceeds has been allocated for working capital and
general and administrative expenses.

THE OFFERING

The Offering represents a proposal by the Company to sell up to $9,000,000
in shares of Common Stock at $ per share and to register up to 612,593
shares of Common Stock held by or which may be issued to the Selling
Shareholders for the benefit of such Shareholders. A minimum of $1,500,000 in
shares of Common Stock and a maximum of $9,000,000 are being offered by the
Company. The Selling Shareholders and the entities which hold convertible debt
securities recently issued by the Company and/or registration rights with

1
<PAGE> 7

respect to existing securities will be entitled to sell all or any portion of
the shares of Common Stock being registered on their behalf pursuant to this
Offering.

The Offering will expire at 5:00 p.m. (PDT) on December 31, 1997 (the
"Offering Commitment Date"), unless the Offering is extended by the Company for
a period or periods up to and through March 31, 1998 (the "Offering Termination
Date"), or unless this Offering is terminated prior to such date by the Company.
The Company has designated U.S. Stock Transfer Corporation, Glendale,
California, its current transfer agent and registrar, to act as Transfer Agent.
Prior to the Offering Commitment Date, all Subscription funds will be held in an
interest-bearing depository account with (the "Bank"). The account
will earn interest at the rate of three percent (3%) per annum. Provided the
minimum number of Subscriptions are accepted by the Offering Commitment Date,
the Company will offer and sell shares of Common Stock through the Offering
Termination Date. If the minimum amount of Subscription funds are not accepted
by the Offering Commitment Date (i.e. $1,500,000), all funds held in the escrow
account will be promptly returned to the prospective Investors who tendered such
funds. Any interest earned on Subscription funds will be distributed to the
prospective Investors tendering such funds upon activation or termination of the
Offering, as the case may be. The minimum Subscription will be $5,000. The
Company reserves the right to sell additional one hundred (100) share lots of
Common Stock provided each prospective Investor agrees to subscribe to a minimum
of $5,000.

SUITABILITY REQUIREMENTS
Offers and sales of shares of Common Stock will only be made to persons who
meet the following minimum suitability requirements:

1. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of Fifty
Thousand Dollars ($50,000); or

2. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of
Thirty-Five Thousand Dollars ($35,000) plus, during the year of investment,
anticipates gross income as defined by Internal Revenue Code section 61 in
excess of Sixty-Five Thousand Dollars ($65,000).

The Company will require all prospective Investors to execute and deliver
prospective investor questionnaires and subscription agreements so as to assure
that each prospective Investor meets the suitability requirements noted in the
previous paragraph.

PLAN OF DISTRIBUTION

The Common Stock will be offered by the Company and its Affiliates on a
"best-efforts" basis to persons whom the Company believes possesses the minimum
suitability standards. In cases where offers and sale of the Common Stock are
effected by the Company and/or its Affiliates, no sales or underwriting
commissions will be paid. In the event the Company enters into Underwriting
Agreements with persons or entities who are broker-dealers and members of the
National Association of Securities Dealers, Inc. ("NASD"), the Company may allot
up to ten percent (10%) of the Subscription price for the Common Stock as sales
and underwriting commissions and an additional two percent (2%) of such
Subscription price as "due diligence" fees and expenses.

NO BOARD RECOMMENDATION
An investment in the Common Stock must be made pursuant to a prospective
Investor's independent investment evaluation. The advisability of such an
investment will depend upon a number of factors unique to each prospective
Investor as well as such independent evaluation of the merits of an investment
in the Common Stock. Accordingly, the Company's board of directors makes no
recommendation to prospective Investors or others regarding whether they should
purchase Common Stock.

2
<PAGE> 8

RISK FACTORS

THE PURCHASE OF SHARES OF COMMON STOCK INVOLVES A SUBSTANTIAL DEGREE OF
RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL MEANS WHO HAVE NO NEED FOR
LIQUIDITY IN THEIR INVESTMENT. THIS SECTION OF THE PROSPECTUS SETS FORTH THE
RISKS AND SPECIAL CONSIDERATIONS WHICH THE COMPANY BELIEVES MAY EXIST CONCERNING
AN INVESTMENT IN THE COMMON STOCK. PROSPECTIVE INVESTORS SHOULD RECOGNIZE THAT
FACTORS OTHER THAN THOSE SET FORTH BELOW MAY ULTIMATELY AFFECT AN INVESTMENT IN
A MANNER AND TO A DEGREE WHICH CANNOT BE FORESEEN AT THIS TIME. ALL PROSPECTIVE
INVESTORS ARE URGED TO CONSULT WITH THEIR ADVISORS PRIOR TO MAKING AN INVESTMENT
IN COMMON STOCK SO THAT THEY UNDERSTAND FULLY THE NATURE OF THE UNDERTAKING AND
THE RISKS WHICH MAY BE INVOLVED PRIOR TO INVESTING. FURTHERMORE, ALL PROSPECTIVE
INVESTORS ARE URGED TO REVIEW WITH THEIR COUNSEL, ACCOUNTANTS, AND PROFESSIONAL
ADVISORS THE FINANCIAL STATEMENTS ATTACHED TO THE PROSPECTUS. ANY DOCUMENTS
DESCRIBED IN THIS PROSPECTUS WHICH HAVE NOT BEEN ATTACHED AS EXHIBITS MAY BE
OBTAINED BY PROSPECTIVE INVESTORS AND/OR THEIR ADVISORS UPON REQUEST FROM THE
COMPANY. THIS REGISTRATION STATEMENT ALSO CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS AND INFORMATION THAT ARE BASED UPON MANAGEMENT'S BELIEFS AS WELL AS
ON ASSUMPTIONS MADE BY AN UPON INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT.
WHEN USED IN THIS REGISTRATION STATEMENT, THE WORDS "EXPECT," "ANTICIPATE,"
"INTEND," "PLAN," "BELIEVE," "SEEK" AND "ESTIMATE" OR SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. HOWEVER, THIS REGISTRATION
STATEMENT ALSO CONTAINS OTHER FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN
RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING, BUT NOT LIMITED TO, THE
FOLLOWING RISK FACTORS, WHICH COULD CAUSE THE COMPANY'S FUTURE RESULTS AND STOCK
VALUES TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY OR ON BEHALF OF THE COMPANY. MANY OF SUCH FACTORS ARE BEYOND
THE COMPANY'S ABILITY TO CONTROL OR PREDICT. READERS ARE CAUTIONED NOT TO PUT
UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY INTENT
OR OBLIGATION TO UPDATE PUBLICLY ANY AND ALL FORWARD-LOOKING STATEMENTS, WHETHER
AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

NO COMMERCIALLY VIABLE ORE DEPOSITS

Even though the Company has reviewed reports and records of its mining
properties, there is no assurance that there are commercially viable ore
deposits.

HISTORY OF LOSSES

Although the Company was formed in 1985 to engage in precious metal mining
activities, its net worth is limited. The Company has a net worth of $7,537,653
as of May 31, 1997. As of May 31, 1997, the Company has realized an aggregate
net loss (since inception) of $16,513,084, or $1.35 per share. Until the fiscal
year ended May 31, 1997, the Company had failed to post revenues from
operations. The Company has generated approximately $290,000 in revenues as of
May 31, 1997, due primarily from its operations in Brazil. Prospective Investors
should be aware that the Company was a development-stage company that only
recently has begun to report sales. There is no guaranty that the Company's
operations will be successful or realize a profit in the future. Moreover, the
Company's net worth and the value of its Common Stock will ultimately be
dependent upon the overall success of timber operations conducted on the
Brazilian Timber Properties, currently and in the future mining operations
conducted on the Nevada Property and the Indonesian Concessions.

3
<PAGE> 9

The financial information accompanying this Prospectus reflects the current
financial condition of the Company. It should be noted that the Company has not
yet reported a profit from operations since its inception to the present.
Although management projects that the further exploration and development of its
properties will result in profitable operations, for the reasons stated
elsewhere in this Prospectus, no guaranty to that effect can be made.

HISTORY OF UNSUCCESSFUL OPERATIONS

Mining and natural resource operations are speculative by their nature.
Present management of the Company has in the past selected mining properties
which have proven to be uneconomic. There is no assurance that the present gold,
coal, and timber properties will prove to be economic or profitable to the
Company. If all or most of the properties prove to be uneconomic, the Company
may be unable to realize a profit from its operations which may have a profound
impact upon the value of the Company and the liquidity of the Common Stock.

TITLE PROBLEMS TO BRAZILIAN TIMBER PROPERTIES

The Company has acquired its rights to the Brazilian Timber Properties
pursuant to harvesting agreements entered into by and between the Company's
subsidiary, Equatorial Resources, Ltd. ("Equatorial Resources"), and third
parties. The Company will also acquire its rights to purchase the sawmill
facility in Sao Miguel do Guama pursuant to an acquisition agreement with Jonasa
Maderias Ltda.

The Company has performed preliminary title work on the tracts of
properties on which current harvesting operations are being conducted. These
examinations have been conducted by legal counsel in Belem, Brazil, who are
competent to examine title. While Equatorial Resources has commenced timber
production from these properties, there can be no assurance that title problems
and other claims hostile to the chain of title on which the Company has relied
will not arise in the future.

Before any sums are expended by the Company on timber operations on the
other tracts of properties on which it has acquired harvesting rights, the
Company intends to employ legal counsel to advise it of the status of title to
these concessions.

In addition to the title problems and environmental problems commonly
associated with the development of timber properties in the United States,
foreign ownership of timber rights in foreign countries subjects a U.S.-based
company to the additional risk of political instability.

The Company has expended considerable sums to improve the sawmill facility
located in Sao Miguel do Guama, Para Brazil even though transfer of ownership
has not been completed. The terms of the acquisition agreement require Jonasa
Maderias Ltda. (the current owner) to transfer the sawmill facility free and
clear of all liens. The Company has discovered that the sawmill facility is
burdened by certain taxes due to various governmental authorities. If the
current owner does not remove these liens from the sawmill facility, the Company
will likely complete the sale of the facility and assume such obligations.

RISKS OF FORFEITURE TO BRAZILIAN TIMBER PROPERTIES

A recent federal law in Brazil grants certain rights to indigenous peoples
who invade individually-owned property in various regions of the country. In
cases where such invasion has occurred, the federal government has condemned the
properties and paid "just compensation" to the owners. Some of the properties in
which the Company has acquired rights are subject to this legislation. In the
case of its agreement relating to the Jonasa Concessions, any tracts
appropriated by the federal government, under this legislation are required to
be replaced by Jonasa. In the case of the tracts subject to the Terranorte
Agreement, a physical inspection of the tract will be made prior to commencement
of harvesting operations. The Company and its subsidiary, Equatorial Resources,
will be subject to the risk of forfeiture of its rights in both the Jonasa
Concessions and the Terranorte Concessions in the event that Jonasa fails to
perform its obligation in the first instance or all or a portion of the tracts
on which operations are conducted on the Terranorte Concessions are condemned by
the federal government in the second instance.

It should be noted that the Company and many of its key personnel have
limited operating experience in Brazil and in timber operations. Such
inexperience could result in unsuccessful operations or unfavorable returns to
the Company

4
<PAGE> 10

TITLE FAILURE TO THE NEVADA PROPERTY

The Company has acquired its rights to the Nevada Property through a
variety of agreements with predecessors-in-interest. The precise nature and
amount of interest owned by the Company is now the subject of a lawsuit pending
in Nye County and more particularly described in the Section of the Prospectus
entitled "LEGAL PROCEEDINGS." The Company is seeking to obtain an order from the
court declaring that the Company is the owner of the undivided 100% interest in
a substantial number of the mining claims comprising the Nevada Property. If the
Company is unsuccessful in its request for declaratory relief, title to 50% of
the interests in the Nevada Property may be retained by persons or entities
other than the Company.

The Company has recently executed a deed of trust encumbering the Nevada
Property in the principal amount of Two Million Dollars ($2,000,000) to Silenus
Limited pursuant to a privately-negotiated placement of 8% Senior Secured
Convertible Debentures described elsewhere in this Prospectus. Until such time
as all obligations due under the Debentures issued to Silenus Limited are paid,
converted or redeemed, and the encumbrances on the Nevada Property are
reconveyed to the Company, one of the primary assets of the Company, namely the
Nevada Property, will be subject to the terms and conditions of such
instruments. Any default under such agreement or the Deed of Trust which remains
uncured would subject the Company to the possible loss of the Nevada Property.

TITLE PROBLEMS ASSOCIATED WITH THE INDONESIAN CONCESSIONS

Mineral interests in Indonesia are controlled exclusively by the federal
government through the Ministry of Mines and Energy. Title to a mineral property
in Indonesia is subject to obtaining various forms of licenses for the
extraction of commercial quantities of minerals after obtaining property rights
from the fee owner. Title is confirmed by the issuance of a government seal
affixed to specific property location maps.

Because direct foreign ownership of mining concessions is difficult, if not
prohibited by Indonesian law, the Company and its subsidiary, Kalimantan
Resources, must rely upon its contractual rights under the various agreements
into which they and/or their predecessors have entered. These contracts are
described in greater detail elsewhere in this Prospectus. Should a dispute arise
as to the interpretation or enforcement of such agreements, resort to the
Indonesian judicial system will likely be required. It should be noted that
since members of the judicial branch are employed by the executive branch of the
government, a fair opportunity to assert a foreign company's rights under such
agreement may be limited.

Even if the contractual rights of Kalimantan Resources are clearly
delineated in its agreements, the Company's interests in the Indonesian
concessions are subject to title failures associated with the entities with whom
Kalimantan Resources has contracted. The Company has not currently completed its
title investigations with respect to any of the Indonesian Concessions. However,
prior to the time at which any payments will be made to the current holders of
the licenses, the Company will have satisfied itself that either it, Kalimantan
Resources, or the parties with whom it has contracted (and/or their predecessors
in interest) will have good and merchantable title to the particular licenses
purported to be owned by such third parties.

Ownership of licenses to explore for and/or exploit natural resources in
foreign countries is also subject to political risks. The United States has
important economic, commercial, and security interests in Indonesia because of
its growing economy and markets and its strategic location in relation to key
international straits. The U.S. and Indonesia maintain cordial and cooperative
relations, although the two countries are not bound by formal security treaties.

Indonesia is a republic based upon its 1945 constitution providing for a
limited separation of executive, legislative, and judicial power. The president,
elected to a five-year term, is the overwhelmingly dominant governmental and
political figure. The president appoints the cabinet, currently composed of four
coordinating ministers (in the fields of political and security affairs,
economic and financial affairs, people's welfare, and industrial and trade
affairs), thirteen state ministers, twenty-four ministers, and three high
officials with the status of state ministers. Moreover, judges are employees of
the executive branch.

Unlike Western democratic systems, the legislative branch meets only once
during its five-year term, to formulate the overall principles and aims of the
government and to elect the president and vice president.

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Representative bodies at all levels in Indonesia eschew voting, preferring to
arrive at decisions through "consultation and consensus."

Because of the presence of a strong executive branch, some foreign
companies have been forced to accede to government demands to revise licenses to
include the participation of Indonesian-owned companies, larger foreign
companies and, in some instances, the Indonesian government. The inability of a
foreign company to effectively enforce its rights in licenses issued by the
Indonesian government through the judicial branch of government represents a
risk of doing business in a developing country as compared to the United States.

GOVERNMENTAL REGULATION

Mining operations on the Nevada Property are and will be subject to
substantial federal, state, and local regulation concerning mine safety and
environmental protection. Some of the laws and regulations which will pertain to
mining operations include maintenance of air and water quality standards; the
protection of threatened, endangered and other species of wildlife and
vegetation; the preservation of certain cultural resources and the reclamation
of exploration, mining and processing sites. These laws are continually changing
and, as a general matter, are becoming more restrictive. The location of the
Nevada Property is found in an area which strongly encourages mining operation.
However, the Company's inability to comply with such federal, state, or local
ordinances and regulations on an ongoing basis may cause significant delays in
the permitting process or in the operations anticipated to be conducted on the
Nevada Property. In addition, delays in such compliance could result in
unexpected and substantial capital expenditures. Although no such problems or
delays are anticipated, no assurances can be given that the Company will be able
to comply with all applicable law and regulations and maintain all necessary
permits, licenses and approvals or, in the alternative, that compliance and/or
permitting will be obtained without substantial delays and/or expenses.

With regard to the Nevada Department of Conservation and Natural Resources,
Division of Environmental Protection ("NDEP"), the Company has received
authorization to proceed with its currently planned mining operations on the
Nevada Property pursuant to the applicable statutes and regulations relating to
a small mining operation. In the event, however, the Company's operations exceed
the designated limits for a limited mining operation, a full reclamation plan
will need to be prepared, submitted and approved by NDEP. The Company is
currently preparing such a reclamation plan. While the Company believes that it
will be able to obtain such approval, there is no guarantee that the required
approval will in fact be obtained by the Company.

A change in the nature or magnitude of the Company's presently anticipated
operations on the Nevada Property may trigger the need to obtain additional NDEP
and other federal, state, or local governmental approvals, licenses, or permits.
For example, water processing discharge needs may trigger the requirement that
the Company obtain a water pollution control permit. The Company is currently
preparing for submission of an application for a water pollution control permit.
Other significant permits, required by a change in operations on the Nevada
Property, might include an NDEP permit, air quality permit, waste management
permit, archeological clearance, and wildlife permit. There is no guaranty that
the Company will be able to obtain any or all of the required federal, state, or
local permits that might be required to expand its operations on the Nevada
Property.

Even if the Company does not change its currently planned operations on the
Nevada Property, the Company is nevertheless vulnerable to the various federal,
state, and local laws and regulations governing the protection of the
environment, occupational health, labor standards, and other matters. The reason
for this is that these laws are continually changing, and as a general matter,
are becoming more restrictive.

To comply with these federal, state and local laws, the Company may in the
future be required to make capital and operating expenditures on environmental
projects both with respect to maintaining currently planned operations and the
initiation of new operations. Such projects may include, for example, air and
water pollution control equipment; treatment, storage and disposal facilities
for solid and hazardous waste; remedial actions required for the containment of
tailings pond seepage; continuous testing programs; data collection and analysis
land reclamation (specifically including existing mine and processing waste on
the Nevada Property);

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landscaping and construction projects. There is no guaranty that the Company
will technically or financially be able to comply with any or all of these
potential requirements.

ENVIRONMENTAL REGULATION AND LIABILITY

The Company's proposed mineral operations on the Nevada Property are and
will be subject to environmental regulation by federal, state, and local
authorities. Under applicable federal and state law, the Company may become
jointly and severally liable with all prior property owners for the treatment,
cleanup, remediation and/or removal of substances discovered at the Property
which are deemed by federal and/or state law to be toxic or hazardous
("Hazardous Substances"). Liability may be imposed among other things for the
improper release, discharge, storage, use, disposal, or transportation of
Hazardous Substances only in the areas which the Company disturbs.

Applicable law imposes strict joint and several liability on, among others,
"owners" and "operators" of properties contaminated with Hazardous Substances.
Such liability may result in any and all "owners," "operators" and
"transporters" of contaminated property being required to bear the entire cost
of remediation. The Company may utilize substances which have been deemed by
applicable law to be Hazardous Substances. The potential liability of the
Company under such laws will be derived from the Company's classification as
both an "owner" and "operator" of a contaminated property. While the Company
intends to employ all reasonably practicable safeguards to prevent any liability
under applicable laws relating to Hazardous Substances, mineral exploration by
its very nature will subject the Company to substantial risk that remediation
may be required. If the cleanup or remediation of hazardous substances is
required on the Nevada Property, substantial delays could occur in the
permitting process and/or in the further extraction of gold and other precious
minerals on the Nevada Property.

Much like environmental laws found in the United States, both the federal
and state governments in Brazil have adopted laws and standards relating to the
harvesting and reclamation of forests. While the Company and its subsidiary,
Equatorial Resources, have not yet fully familiarized themselves with all of
these laws and standards, Equatorial Resources has entered into an agreement
with Eco-Rating International, Incorporated ("Eco-Rating"), Zurich, Switzerland,
to better assist the Company and Equatorial Resources in understanding and
complying with such laws and standards. Under the terms of its agreement with
the Company, Eco-Rating has agreed to establish an "eco-efficiency model"
designed to enable Equatorial Resources to establish environmental management
guidelines for the conduct of activities on the Jonasa Concessions and
ultimately on the remainder of the Brazilian Timber Properties consistent with
all applicable environmental laws and standards.

The Indonesian Concessions may also be subject to federal and provincial
environmental laws in place or being contemplated by those governmental
entities. Mining in certain locations in Indonesia may be restricted because of
difficulties associated with mine reclamation, water quality, air quality,
endangered species or local cultural conditions similar to those restrictions of
other international mining operations in Indonesia.

LIQUIDITY OF COMMON STOCK

The Company's Common Stock is currently traded on the NASDAQ Electronic
Bulletin Board. Over the past six (6) months, the average monthly trading volume
has been approximately 800,000 shares. Trading volumes on the Electronic
Bulletin Board have been limited and there is no assurance that the Electronic
Bulletin Board will provide an effective market for a prospective investor to
sell his or her shares of Common Stock.

SIGNIFICANT DILUTION

The net book value of the Company per share as of May 31, 1997, was
approximately fifty-two cents ($.52) per share. After taking into consideration
the conversion rights of the shareholders holding or entitled to hold Preferred
Stock as of May 31, 1997 (but exclusive of any dividends paid in stock), the
total number of shares of Common Stock outstanding as of May 31, 1997, other
transactions described elsewhere in this Prospectus requiring the Company to
issue shares to others within sixty (60) days, and assuming all

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<PAGE> 13

$9,000,000 of the Company's Common Stock are sold pursuant to this Offering, the
net tangible book value of the Common Stock immediately after the Offering after
deducting One Million Two Hundred Thousand Dollars ($1,200,000) in Organization
and Offering Expenses will be approximately Dollar and Cents ($ )
per share of Common Stock. Investors who subscribe to shares of Common Stock
will therefore realize an immediate dilution of Dollars and
Cents ($ ) per share of Common Stock. Assuming only the minimum number of
shares are sold pursuant to this Offering, the net tangible book value of the
Common Stock immediately after the Offering after deducting One Hundred Eighty
Thousand Dollars ($180,000) in Organization and Offering Expenses will be
approximately cents ($. ) per share. Investors who subscribe to shares of
Common Stock under these circumstances will therefore realize an immediate
dilution of Dollars and Cents ($ ) per share. The price to be paid
by Investors pursuant to this Offering should be compared to the prices paid by
and the options granted to certain of the Company's executive officers,
directors, and the Selling Shareholders. See "DESCRIPTION OF SECURITIES BEING
OFFERED" and "PRINCIPAL AND SELLING SHAREHOLDERS."

DIVIDENDS

The Company has not paid cash dividends on any of its Common Stock and does
not anticipate paying any cash dividends on any of its Common Stock in the
foreseeable future. Holders of the Preferred Stock are entitled to an annual
cash or stock dividend offered at the rate of eight percent (8%) per year,
payable out of any funds legally available therefor, and payable on January 1,
April 1, July 1, and October 1 of each year. Such dividends are cumulative so
that if full dividends in respect of any previous dividend period are not paid,
holders of the Preferred Stock are entitled to receive any deficiency before any
dividend or other distribution may be made or declared by the Company with
respect to any other class of stock including other series of preferred shares
should the Company elect to issue such additional series.

As of the date of this Prospectus, no accrued quarterly dividends payable
to the holders of the Preferred Stock (which were $160,500 as of May 31, 1997)
have been paid. Management of the Company is presently scheduling payment of
accrued dividends in Common Stock as authorized in the Company's "Certificate of
Determination of Preferences of Series A Preferred Stock" filed with the Nevada
Secretary of State on October 25, 1995, at the time that the Preferred Stock is
converted into Common Stock on or before the earlier of the effective date of
this Prospectus or December 31, 1997.

CLASSIFICATION OF SECURITIES

Currently the Company's stock is not considered to be "penny stock"
pursuant to Rule 3a51-1 of the Securities Exchange Act of 1934. The Company's
Common Stock has primarily had a price of $5.00 or more for the latter part of
1996 and for most of 1997. In the event the price of the Company's Common Stock
decreases below $5.00 per share and its net tangible assets (i.e., total assets
less intangible assets and liabilities) are less than $2,000,000, the Common
Stock will be considered "penny stock." In such case, the Company would be
required to be delisted from any national exchange on which the Common Stock was
then trading, and will be subject to the increased disclosure requirements
associated with the issuers of such securities. In addition to increased
disclosure requirements, such situation may also result in either a decrease in
the liquidity of the stock or a total disappearance of a market for the Common
Stock. In either instance the difficulty associated with disposition of the
shares would greatly increase.

DEPENDENCE UPON MANAGEMENT

The business of the Company is and will be greatly dependent upon the
active participation of Christopher D. Michaels and Jeffery S. Kramer. The
Company also anticipates that it will be dependent upon the active participation
of other key personnel and/or consultants in the future. The Company presently
has employment agreements with both Mr. Michaels and Mr. Kramer and has entered
into agreements with key consultants; nevertheless, the loss of the services of
Mr. Michaels, Mr. Kramer and/or other key personnel (including such consultants)
regardless of reason could adversely affect the Company and the Company's
business. The Company does not maintain any life insurance policies enabling it
to receive benefits in the case of either Mr. Michaels' or Mr. Kramer's death.
In addition, Messrs. Michaels and Kramer are parties and

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subject to a consent judgment wherein they are restrained from selling
securities in interstate commerce in violation of the provisions of section 5 of
the Securities Act of 1933, as amended (the "Act"), or from engaging in any
transaction, practice, or course of conduct resulting in a violation of the
antifraud provisions of the Act. A violation of these provisions could result in
the resignation of these officers. To the extent that the services of Mr.
Michaels or Mr. Kramer would be unavailable to the Company for any reason, the
Company might be required to employ other executive personnel to manage and
operate the Company. There is no assurance that the Company under such
circumstances would be able to employ qualified persons on terms suitable to the
Company to assure the fulfillment of the objectives stated in this Prospectus.

LACK OF DIVERSIFICATION

The Company has, in the past, maintained other mining properties for
exploration and development. These properties were located in Bolivia, South
America and Vancouver, British Columbia. Through its board of directors and
shareholders, the Company elected to abandon such other properties as a result
of uneconomic results. Presently, the Company's primary assets consist of the
Brazilian Timber Properties, the Nevada Property, and the Indonesian
Concessions. No assurance can be given that once the Company increases or
continues its timber operations in Brazil and completes its present exploration
and development of the Company's properties in Nevada and Indonesia as described
in further detail in this Prospectus, it will be able to establish and produce
significant revenues from such operations or become profitable. In addition,
there can be no assurance that continued development activities on the Nevada
Property and/or exploration activities currently being conducted on the
Indonesian Concessions will result in the establishment of commercial quantities
of mineralization. As a result, persons reading this Prospectus should be aware
that investment in the Common Stock represents an additional risk because the
Company's activities are presently confined to the conduct of timber operations
on the Brazilian Timber Properties, the exploration, development and gold
production on the Nevada Property, and preliminary exploration activities on
certain of the Indonesian Concessions.

STOCK ISSUANCES UNDER MINING CONTRACTS

The Company has entered into various contracts with third parties to issue
Common Stock in consideration of services rendered in relation to various mining
properties. Common Stock has been issued to the following parties: Harrison
Western Construction Company (100,000 shares); Maxwells Energy & Metals
Technology Ltd. (400,000 shares); and Singkamas Agung Ltd. (200,000 shares).
Maxwells Energy & Metals Technology Ltd. is entitled to receive an additional
4,000,000 shares of Common Stock if an investment banker confirms by independent
appraisal that the value of the properties subject to the Principles of
Agreement dated August 19, 1996 equals or exceeds $12,000,000. Singkamas Agung
Ltd. is entitled to receive an additional 3,800,000 shares of Common Stock if an
independent evaluation confirms that the value of the properties subject to the
Acquisition Agreement dated January 26, 1997 equals or exceeds $40,000,000. Of
the additional shares which may be issued to Singkamas Agung Ltd., 950,000
shares are entitled to "piggy-back" registration rights. Once these shares are
issued to the various parties and such shares become unrestricted, the sales of
such securities could adversely affect the price of Common Stock.

REGULATORY PROCEEDINGS

In May 1989, the Company received notice that the Securities and Exchange
Commission (the "Commission") had commenced an informal investigation into the
Company's compliance with the registration and disclosure requirements of the
Securities Act of 1933 (the " '33 Act") and the Securities Exchange Act of 1934
(the " '34 Act"). Thereafter the Commission commenced an extensive review of the
Company's books and records relating to the Company's business and mining
operations, its capital raising activities, and its financial condition and
history. Through all stages of the investigation, the Company voluntarily
cooperated with the Commission.

On August 3, 1993, the Commission and the Company agreed to terminate the
Commission's investigation by the entry of a consent judgment against the
Company and certain of the Company's past and

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<PAGE> 15

present key employees. These key employees include Christopher D. Michaels,
Jeffrey Kramer, and Stanley Mohr. The terms and conditions of the consent
judgment can be summarized as follows:

1. The Company and its officers, agents, servants, employees and
others receiving actual notice of the consent judgment neither admitted nor
denied any of the allegations alleged by the Commission;

2. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained and enjoined from violating section 5 of the '33 Act or from
selling securities in interstate commerce unless and until a registration
statement is in effect or the security or transaction is exempt from the
registration provisions of the '33 Act and/or the '34 Act;

3. The Company and its officers, agents, servants, employees, and
others receiving actual notice of the consent judgment are permanently
restrained from engaging in any transaction, practice, or course of
conduct, employing any course of conduct, or obtaining any money or
property by means of an untrue statement of a material fact, or any
omission to state a material fact, necessary to make the statements made in
light of the circumstances under which they were made not misleading in
violation of the antifraud provisions of the '33 Act and '34 Act.

As part of the consent judgment, the Company was required to engage an
independent certified public accountant to conduct a full and complete analysis
of the disposition of all funds received by the Company from investors and, to
the extent so discovered, to disgorge all ill-gotten gains.

On April 7, 1994, in response to the audits completed by the certified
public accountant, the Company and the Commission entered into a stipulation
regarding the resolution of all outstanding issues which then existed, which
stipulation was entered as an order by the United States District Court for the
Central District of California. Such stipulation contained an acknowledgement
that the Company and its executive officers had received no ill-gotten gains as
a result of prior activities by the Company in offering and selling its
securities, and that the consent judgment resolved once and for all, all issues
raised by the Commission as a result of the Company's prior activities. The
Company and the persons named in the formal order of investigation were not
required to pay any fines or required to disgorge any monies previously received
by it in connection with its securities.

On February 27, 1989, the Pennsylvania Securities Commission issued a cease
and desist order against the Company and Christopher D. Michaels, Jeffrey S.
Kramer, Stanley J. Mohr, and William Michaels prohibiting them from violating
section 201 of the Pennsylvania Securities Act of 1972 relating to the sale of
unregistered "penny stocks."

As a result of the foregoing regulatory and judicial actions, the Company
may not be able to utilize the exemptions from registration available under
Regulation A and Rule 701 promulgated under the '33 Act and may not be able to
rely upon certain private placement exemptions afforded by applicable state blue
sky laws in connection with the offer and sale of securities in a transaction
which qualifies as exempt from registration under the '33 Act. In such cases,
the Company would be required to register/qualify the transaction under said
blue sky laws, which would likely increase the cost of, and extend the time for
completing, any private placement of securities.

RELATIONSHIP WITH OTHER OFFERINGS

This Offering has been registered pursuant to Regulation S-B promulgated by
the Commission pursuant to the Securities Act of 1933 and the Securities
Exchange Act of 1934 (the "Federal Securities Laws"). From the period March 1,
1994, through February 28, 1997, the Company offered and sold 8,342,619 shares
of its Common Stock and 228,319 shares of Preferred Stock. In addition, the
Company concluded the private placement of its Debentures in a negotiated
transaction with certain investors more particularly described in the Section of
the Prospectus entitled "PRINCIPAL AND SELLING SHAREHOLDERS." With the exception
of the placement of the Debentures, these sales were made primarily to its
existing shareholders. The Company has relied upon applicable exemptions from
the registration requirements of the Federal Securities Laws and upon compatible
exemptions from securities registration under applicable state ("blue sky")
laws. In the event that it is determined that the Company sold and issued these
securities without complying with either the Federal Securities Laws or blue sky
laws, the purchasers of these securities may

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<PAGE> 16

have the right to rescind the sale of these securities and to recover the
purchase price paid to the Company plus interest accrued on such purchase price.
The Company does not currently have funds with which it could repay the purchase
price and accrued interest from any prior sale of securities. Moreover, it is
doubtful that the Company could continue operations if a significant number of
existing shareholders were to seek to rescind their purchases of securities. The
financial statements of the Company do not reflect a contingent liability for
any such rescission rights.

FINANCIAL RISK OF PROPOSED ACTIVITIES

If substantially less than all of the Common Stock hereby offered by the
Company pursuant to this Offering is sold, the Net Proceeds derived from this
Offering will not be sufficient to finance all of the activities contemplated by
this Offering. The Company's activities in Indonesia and on the Nevada Property
in particular will be financed primarily, if at all, from the Net Proceeds
derived from this Offering and from existing capital which the Company then
possesses as a result of revenue earned from its Brazilian operations. The
Company's future operations in Brazil are projected to be financed from the Net
Proceeds derived from this Offering and from current operations being conducted
in Brazil. If the activities contemplated by the Company's Business Plan and its
operations in Brazil do not prove to be profitable or successful, the Company
may suffer a loss with respect to operations conducted on the Properties, or in
the alternative, may be required to abandon the Brazilian Timber Properties, the
Nevada Property and/or Indonesian Concessions as noneconomic. If such is the
case, prospective Investors may risk all or a substantial loss of their
investment in the Common Stock.

VALUATION OF COMMON STOCK

The price per share of the Common Stock has been established based upon the
current market price for the Common Stock. The current price is substantially
higher than the average share price paid by existing shareholders of the
Company. The Company has also considered several factors in determining the
purchase price per share for the Common Stock including the state of development
of the Properties, the Company's management, the Company's current financial
condition, and the general condition of the securities market. Prospective
Investors should be advised that the price per share is not related to the
Company's value of its assets, net worth, or results of operations conducted on
the Properties. As a result, there is no assurance that prospective Investors
will be able to liquidate their investment in the Common Stock or on terms
resulting in any ultimately favorable return on their investment or upon any
terms.

FLUCTUATION OF COMMODITY PRICES

Since its deregulation in August 1971, the market price for gold has been
highly speculative and volatile. Since 1980, gold has fluctuated from a high of
approximately $850 per ounce in January 1980 to a low of approximately $285 per
ounce in 1985. Currently, gold is trading at approximately $320 per ounce. In
1996, gold averaged over $380 per ounce. Instability in gold prices may effect
the profitability of the Company's future operations.

Similarly coal and timber prices fluctuate. Natural resources have
traditionally evidenced volatile swings in pricing, thereby affecting overall
the relative profitability of engaging in these lines of business. For example,
timber prices increased fifty-two percent (52%) in 1996. Coal prices, which
historically have been heavily dependent upon mining conditions, location of
deposits, and freight variations, have remained relatively stable for the past
several years.

USE OF FORWARD-LOOKING STATEMENTS

This Prospectus contains "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are found in the Sections of the Prospectus entitled "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION," "DESCRIPTION OF COMPANY'S BUSINESS AND
PROPERTY," and elsewhere. Prospective Investors are cautioned that the
assumptions upon which such statements are based cannot be guarantied by the
Company

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to occur in the future or that the overall success of the Company might be
materially adversely affected should such bases (or some of them) not occur.
Moreover, the safe harbor afforded by the Private Securities Litigation Reform
Act of 1995 is not available to the Company or management because such safe
harbor does not apply to initial public offerings.

TERMS OF THE OFFERING

GENERAL

The Company is hereby offering a minimum of $1,500,000 in shares of Common
Stock and a maximum of $9,000,000 in shares of its Common Stock. An additional
612,593 shares of Common Stock held in the names of or which may be issued to
the Selling Shareholders are being registered pursuant to this Offering. Selling
Shareholders will be entitled to sell all or any portion of the shares so
registered on their behalf pursuant to this Offering.

The primary purposes for which Net Proceeds derived from this Offering are
to be used include the following:

1. Expending up to Three Million Eight Hundred Thousand Dollars
($3,800,000) to further develop the Brazilian Timber Properties, to make
improvements and additions to the sawmill facility located near Sao Miguel
do Guama, and to acquire and develop additional timber concessions or
properties located adjacent to, in the vicinity of, or in areas comparable
with the Brazilian Timber Properties;

2. Further developing the Nevada Property consistent with the Nevada
Business Plan;

3. Expanding and/or delineating (to increase reserves and potential
reserves) the Nevada Property, acquiring up to a fifty percent (50%)
interest in the mill constructed approximately one mile from the Nevada
Property and/or constructing its own mill on the Property. In addition or
in the alternative, the Company may enter into a contract for milling
services with New Concept Mining or to purchase all of the equipment
necessary to construct a mill on site at the Nevada Property;

4. Expending up to One Million Five Hundred Thousand Dollars
($1,500,000) to explore and develop the Indonesian Concessions; and

5. Paying up to One Million Dollars ($1,000,000) in general and
administrative expenses and/or retaining all or a portion of said sum as
working capital.

SUBSCRIPTION

There are hereby offered a total of $9,000,000 in shares of the Company's
Common Stock at a price of $ per share. In addition, the Selling Shareholders
are registering 612,593 shares pursuant to this Offering. Each prospective
Investor must purchase a minimum of $5,000 in shares of Common Stock. In
addition, each prospective Investor will have the right to purchase additional
blocks of 100-share lots of Common Stock.

The Offering Commitment Date is presently scheduled for December 31, 1997,
although the Company hereby reserves the right to extend this Offering through
March 31, 1998 (the "Offering Termination Date"). On or before the Offering
Commitment Date, the Company will be required to accept Subscriptions amounting
to the purchase of at least $1,500,000 in shares of Common Stock or to terminate
the Offering without having sold any of the Common Stock. The Company reserves
the right to accept Subscriptions through the Offering Commitment Date unless
this Offering is terminated by the Company prior to such date.

Each Subscription for the Common Stock will be held in an escrow account
established with ________ (the "Bank"). Until such time as a minimum number of
Subscriptions are accepted or the Offering Commitment Date is reached without
the acceptance of the minimum number of Subscriptions necessary to activate this
Offering, Subscription funds will be held in the escrow account, but may be
invested in short-term certificates of deposit, short-term government
securities, demand deposits, and bank money market accounts.

If Subscriptions amounting to at least $1,500,000 (i.e. shares) are
not accepted on or before the Offering Commitment Date, all Subscription funds
together with any interest earned (at the rate of 3% per

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<PAGE> 18

annum) on such funds held in the escrow account will be promptly returned to the
persons whose funds were deposited in the escrow account. If Subscriptions
amounting to at least $1,500,000 are accepted by the Offering Commitment Date,
further Subscriptions which are accepted by the Company will be deposited into
an account opened up on behalf of the Company at the Bank and will not be
subject to the terms and conditions of the escrow account. Any interest earned
on Subscription funds will be distributed to prospective Investors tendering
such funds upon activation or termination of the Offering, as the case may be.

The Company reserves the right to discontinue this Offering at any time and
also reserves the right, in its absolute discretion, to reject, in whole or in
part, any Subscription. No assurance can be given that any or all of the Common
Stock will be sold.

SUITABILITY OF INVESTORS

Sales of Common Stock may be made pursuant to this Offering only to persons
who represent that they meet the following minimum requirements:

1. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of
$50,000; or

2. He/she (either alone or together with his/her spouse) has a net
worth (exclusive of home, furnishings, and automobiles) in excess of
$35,000 and during the year of investment anticipates gross income as
defined by Internal Revenue Code section 61 in excess of $65,000.

PLAN OF DISTRIBUTION

The Common Stock will be offered by the Company through its Affiliates on a
"best-efforts" basis to prospective Investors whom the Company believes
possesses the minimum suitability standards outlined elsewhere in this
Prospectus. In cases where offers and sales of the Common Stock are effected by
the Company and/or its Affiliates, no sales or underwriting commissions will be
paid. In the event the Company enters into Underwriting Agreements with persons
or entities who are broker-dealers and members of the National Association of
Securities Dealers, Inc. ("NASD"), the Company may allot up to ten percent (10%)
of the Subscription price for the Common Stock as sales and underwriting
commissions and an additional two percent (2%) of such Subscription price as
"due diligence" fees and expenses.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE AND/OR THE
PHILADELPHIA STOCK EXCHANGE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.

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DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY

THE COMPANY

Nevada Manhattan Mining Incorporated (the "Company") was formed on June 10,
1985, in the state of Nevada under the name of Epic Enterprises, Ltd. On
September 11, 1987, the Company amended its Articles of Incorporation changing
its name to Nevada Manhattan Mining Incorporated. The Company's articles
currently authorize the issuance of 49,750,000 shares of Common Stock with a par
value of one cent ($.01) per share and 250,000 shares of Series A Preferred
Stock with a par value of $1.00 per share (the "Preferred Stock") convertible
into Common Stock on the terms and conditions described elsewhere in this
Registration Statement. There were 12,273,565 shares of the Company's Common
Stock and 228,319 shares of the Preferred Stock issued and outstanding as of May
31, 1997. The average price per share paid for the Common Stock issued directly
by the Company has been approximately $2.00 per share. Holders of the Preferred
Stock have paid $10.00 per share with an effective purchase price for the Common
Stock (after giving effect to the conversion thereof on a one-for-ten basis) of
$1.00 per share. In addition, the Company has recently issued approximately
$3,500,000 of 8% Senior Secured Convertible Debentures in two
privately-negotiated transactions.

The Company was formed primarily to develop the Nevada Property, other gold
mining properties which it had previously owned, and certain gold mining
properties which it has recently acquired. Pursuant to prior action of both the
Company's directors and its shareholders, certain gold mining properties have
been abandoned as uneconomic. The Company has recently acquired various timber
concessions and a sawmill facility in Brazil and the rights to seven (7) gold
mining concessions and three (3) coal mining concessions in Indonesia.

Management of the Company presently consists of a five-member board of
directors (two of which are neither executive officers nor employees). The
Company employs two (2) full-time executive officers as well as seven (7)
full-time employees at its principal offices. The Company's subsidiary,
Equatorial Resources, Ltd., also employs approximately 90 persons in Brazil who
are employed in various capacities relating to either its sawmill facility or
its harvesting operations being conducted on the Brazilian Timber Properties.

THE COMPANY'S SUBSIDIARIES

Equatorial Resources, Ltd. Equatorial Resources, Ltd., (hereinafter
"Equatorial") was incorporated in the British Virgin Islands as an international
business company on December 13, 1996. Equatorial currently maintains offices in
Road Town, Tortola, British Virgin Islands with its primary business office
located in Calabasas, California. Equatorial's board of directors consists of
three (3) members with such number being able to increase to seven. Its
authorized capitalization is 25,000 shares of common stock and 25,000 shares of
preferred stock with its largest single shareholder being Nevada Manhattan
Mining Incorporated which owns 80% of Equatorial's outstanding common shares.

Equatorial's primary business purpose is the acquisition and development of
timber producing property in the Amazon Basin of Brazil. Since Equatorial's
inception, it has acquired the right to develop and/or harvest virgin timber
properties on up to approximately 750,000 hectares located in the state of Para,
Brazil, and the right to acquire a sawmill facility located near the town of Sao
Miguel do Guama, Brazil. In the development of such properties, Equatorial
currently employs approximately 90 persons, most of whom are Brazilian nationals
employed in connection with the operations being conducted at the sawmill or in
connection with the timber harvesting operations on the Terranorte Concessions.

Kalimantan Resources, Ltd. Kalimantan Resources, Ltd., (hereinafter
"Kalimantan") was incorporated in the British Virgin Islands as an international
business company on September 16, 1996. Kalimantan currently maintains offices
in Road Town, Tortola, British Virgin Islands with its primary business office
located in Calabasas, California. Kalimantan's board of directors consists of 3
members with such number being able to increase to seven. Its authorized
capitalization is 1,000 shares of common stock with its sole shareholder being
Nevada Manhattan Mining Incorporated.

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<PAGE> 20

Kalimantan's primary business purpose is to enter into contracts for the
exploration and if warranted the development and extraction of coal and gold ore
in Indonesia. Since Kalimantan's inception it has: entered into an agreement to
acquire a fifty-one percent (51%) interest in a gold exploration property
comprising 10,000 hectares (25,000 acres) located in East Kalimantan; entered
into two (2) additional agreements to acquire an additional six (6) gold mining
concessions aggregating over 23,400 hectares (58,500 acres) and three (3) coal
mining concessions comprising 290,000 hectares (725,000 acres); and entered into
an agreement with Maxwells Energy and Metals Technology Ltd. to substitute the
acquired original 10,000 hectare property for a 16,000 hectare (40,000 acre)
tract located elsewhere on the island of Kalimantan.

SHAREHOLDER ADVISORY COMMITTEE

In 1989, the Company formed a Shareholder Advisory Committee (the "Advisory
Committee") comprised of up to 12 outside shareholders. The purpose of the
Advisory Committee is to participate in directors' meetings and compensation
meetings, as well as planning meetings related to all aspects of corporate
development. Members are selected annually from a group of shareholders who
respond to Company inquiries regarding interest in participating on the Advisory
Committee. Membership is rotated annually. One of the primary purposes of this
Committee is to provide independent, shareholder participation in critical
decisions relating to overall corporate strategy.

SIGNIFICANT CONTRACTS WITH CONSULTANTS

The Company has contracted with Harrison Western Mining and Construction,
Lakeland, Colorado, to supply labor, service, materials, and equipment for
Nevada property operations. The Company has also entered into agreements with:
Gold King Mines Corporation to provide mining consulting services with respect
to the Nevada Property; Behre Dolbear & Company, Inc. and its affiliates, to
provide oversight and third-party validation services relative to the
exploration and development activities on the Indonesian Concessions; Eco-Rating
International, Inc., to provide an economic and environmental evaluation of the
Company's Brazilian Timber Properties; and with British Far East Holdings Ltd.
to provide certain financial and management consulting services.

THE COMPANY'S BUSINESS

The Company's business is the harvesting of timber and the production of
rough sawn lumber and other finished wood products in Brazil and the exploration
and mining of precious metals in Nevada and the exploration of precious metals
and coal in Indonesia. To this end, the Company has within the last year
acquired the right to conduct exploration activities on seven (7) gold
properties and three (3) coal properties in Indonesia, and the right to develop
and/or harvest virgin timber properties on up to approximately 750,000 hectares
located in the state of Para, Brazil, and the right to complete its acquisition
of a sawmill facility located near the town of Sao Miguel do Guama, Brazil which
it currently operates. The Company holds various rights in and to the following
properties: (i) various timber properties aggregating up to approximately
750,000 hectares and sawmill facilities all of which are located in the state of
Para, Brazil (the "Brazilian Timber Properties"); (ii) twenty-eight (28)
patented and sixty-five (65) unpatented claims aggregating approximately 1,800
acres (the "Nevada Property") which are located near the town of Manhattan,
Nevada (approximately 45 miles northeast of Tonopah, Nevada); (iii) seven (7)
gold concessions aggregating 39,400 hectares (98,500 acres) which are located in
both the gold belt area of Kalimantan, Indonesia, and on the island of Sumatra
(the "Indonesian Gold Concessions"); and (iv) three (3) coal properties located
in Kalimantan, Indonesia, comprising 290,000 hectares (725,000 acres) (the
"Indonesian Coal Concessions"). A more thorough description of the properties is
contained within portions of this Section of this Prospectus entitled "The
Brazilian Timber Properties," "The Nevada Property," and "The Indonesian
Concessions."

Management of the Company generally reviews all proposed natural resources
projects submitted by third parties. The Company initially will be heavily
dependent upon the operations presently being conducted in Brazil.

The Company has budgeted the sum of One Hundred Thousand Dollars ($100,000)
from sums anticipated to be spent for compliance with applicable environmental
laws. However, the Company can

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<PAGE> 21

provide no assurance that the amount so budgeted for environmental compliance
will be consistent with the amounts actually spent for compliance or that the
actual amount of such compliance may not be substantially greater than that
which has been projected to be spent by the Company pursuant to the budget.

THE BRAZILIAN TIMBER PROPERTIES

The Company has acquired sundry rights in up to 750,000 hectares of timber
properties located on various tracts of land in the state of Para, Brazil. In
addition, the Company has entered into an agreement to acquire and is currently
operating a sawmill facility located near the town of Sao Miguel do Guama, Para,
Brazil. The property areas contain a variety of timber species of which
initially only the seventeen (17) most commercial of the one hundred twenty-five
(125) available species have been selected and factored into the Company's
economic forecasts. The other species will be harvested at the appropriate time.

Shipping and associated transportation services will be provided by the
Jonasa Group, one of the largest private shipping companies in the Amazon Basin.
Their expertise and political position are anticipated to provide substantial
support to the operation and as a participant in the joint venture, allow for
operating efficiencies that greatly enhance profitability.

To date, One Million Four Hundred Thousand Dollars ($1,400,000) has been
provided by the Company for initial start-up of its operations in Brazil. The
Company has budgeted up to an additional Three Million Eight Hundred Thousand
Dollars ($3,800,000) for the additional expansion noted above.

The United Nations Food and Agricultural Organization (F.A.O.), Simons
Corporation (Canada), and Reid, Collins & Associates, Ltd. (Canada), highly
respected forestry experts, have evaluated 24,000 hectares of the total holdings
and have posited that each hectare will yield approximately 200 cubic meters of
raw timber. If these evaluations are accurate with respect to all of the Jonasa
Concessions, the total potential asset value of all 276,000 hectares would be
approximately 55.2 million cubic meters of raw hardwood timber.

The Company has also agreed to pay the sum of Three Million Dollars
($3,000,000) or issue One Million (1,000,000) shares of Common Stock to Ignatius
Z. Theodorou on or before December 31, 1998 in consideration of Mr. Theodorou's
services rendered and transfer of rights to various business opportunities
including the rights to the Jonasa Concessions and the sawmill facility at Sao
Miguel do Guama.

The Company has received approximately $290,000 for the sawed lumber
produced through May 31, 1997. All of this revenue has been reinvested in
improvements to the mills and infrastructure on the property. The Company's
subsidiary, Equatorial Resources, Ltd., currently employs approximately 90
persons to operate the mills and conduct the activities contemplated under the
agreements pertaining to these concessions. Potential markets for the lumber
include the Far East, Brazil, Europe, and the United States.

The description of the Company's proposed activities relating to the
Brazilian Timber Properties which follows summarizes the activities more
particularly described in the 1997 Business Plan which is appended to this
Registration Statement of which this Prospectus is a part.

Terranorte Concessions. On May 30, 1997, the Company's subsidiary,
Equatorial Resources, entered into an Agreement to Harvest Timber and Develop
Timber Properties with Terranorte S.A. (the "Terranorte Agreement"). Under the
terms of the original agreement, Terranorte granted to Equatorial Resources the
exclusive right to either harvest the timber on or to purchase certain species
of logs extracted by Terranorte which are located on approximately 20,000
hectares of virgin timber property located near the town of Moju, Para, Brazil.
Under the terms of its current authorization from the Brazilian federal agency
having jurisdiction over timber operations, Terranorte has the right to
currently extract various commercially marketable Brazilian timber species of up
to 2,000 hectares of the Terranorte Concessions. In May 1997, Equatorial
Resources began harvesting operations employing its own crews and purchasing
harvested logs from Terranorte. Based upon the current market prices for export
quality Brazilian hardwood of $500 per cubic meter, the Company is projecting
its cost to harvest, produce, and sell such product to be approximately $300 per
cubic meter, thereby resulting in a pretax profit of $200 per cubic meter. The
above projection assumes that the price of Brazilian hardwoods will sell at
prices quoted in the Asian markets for such species and that the Company will
obtain an export license to sell such hardwoods.

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<PAGE> 22

Terranorte and Equatorial Resources amended the Terranorte Agreement to
include the rights to harvest up to an additional 463,000 hectares of virgin
timber properties located in the vicinity of the Terranorte property.

Purchase of Sao Miguel Sawmill. On May 30, 1997, Equatorial Resources and
Jonasa Madeiras Limitada ("Jonasa Madeiras") entered into an Agreement to
Acquire Sawmill. Under the terms of the agreement, Jonasa Madeiras agreed to
convey all right, title, and interest in and to the sawmill facility, all
equipment relating to the sawmill facility, and 246 hectares of adjacent real
property, all of which is located near the town of Sao Miguel do Guama, Para,
Brazil. At present, Equatorial Resources has expended the sum of approximately
$335,000 for the sawmill facility and anticipates that an additional $350,000 in
improvements will be made over the next several months.

The sawmill facility currently consists of two manually-operated sawmills
and two semiautomated sawmills. Equatorial Resources has made deposits on
certain additional equipment to repair the semiautomated sawmill, to install a
third semi-automated sawmill, and to purchase additional specialty sawblades
designed to upgrade the sawmills and increase production.

The Jonasa Concessions. On May 30, 1997, Jonasa Navigation, S.A. ("Jonasa")
and Equatorial Resources entered with an agreement to jointly develop various
tracts of virgin timber properties comprising up to 268,000 hectares located in
the state of Para, Brazil. Under this agreement, Jonasa has granted to
Equatorial Resources the exclusive right to harvest all of the timber which
Jonasa now or hereafter has the right to extract from the properties comprising
the Jonasa Concessions. In consideration of this grant, Equatorial Resources has
agreed to pay to Jonasa fifty percent (50%) of the net proceeds received on the
sale of all timber and related products produced and sold pursuant to the
agreement. The term "net proceeds" is defined to be the gross sales price
received for lumber sold, less the costs of harvesting, reclamation,
transportation to the mill, milling expenses, physicalization duties,
transportation f.o.b. to the ports of Belem and Breves, and certain operating
expenses associated with Equatorial Resources' operations in Brazil. The parties
have also designated Equatorial Resources as its exclusive export agent for all
products produced and sold under the joint venture.

THE NEVADA PROPERTY

Current Ownership Interest. The Nevada Property consists of twenty-eight
(28) patented and sixty-five (65) unpatented claims aggregating approximately
1,800 acres. The Company believes it owns an undivided one hundred percent
(100%) interest in the Nevada Property based upon the agreements described below
in greater detail. The primary areas of current development are the Litigation
Hill Area and the White Caps Mine Area. Both areas will be discussed in greater
detail below. The Company has recently sold approximately $40,000 of gold
produced from the Nevada Property. The Company has not identified any reserves
at the Nevada properties defined as proven and probable.

The Company originally acquired its rights to the Nevada Property pursuant
to a mining agreement dated April 4, 1987 (the "Nevada Property Agreement") with
Anthony C. Selig and related entities (the "Selig Entities"). On December 9,
1987, the Selig Entities and the Company entered into an amendment to the Nevada
Property Agreement reducing both the area of interest and the purchase price of
the Nevada Property from Two Million One Hundred Thousand Dollars ($2,100,000)
to Six Hundred Thousand Dollars ($600,000) and modifying, amongst other things,
the schedule of semiannual payments due from the Company to the Selig Entities
in consideration of the purchase of the Nevada Property.

On March 2, 1989, the Company entered into an agreement entitled "Manhattan
Mining Property Agreement" with Argus Resources, Inc., a Nevada corporation, and
Argus Mines, Inc., a Nevada corporation (the "Argus Companies"); and the Selig
Entities (the "Nevada Mining Agreement"). This agreement was entered into after
a dispute had arisen between Argus Resources, Inc., and the Selig Entities under
the lease/purchase agreement which had been previously entered into between such
parties and which originally formed the basis upon which the Company derived its
rights to the Property. This agreement also modified certain terms and
conditions contained within the Nevada Property Agreement.

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<PAGE> 23

Under the terms of the Nevada Property Agreement, as amended, the Company
was required to pay, and did pay, to the other parties the sum of Twenty-Five
Thousand Dollars ($25,000) upon execution of the agreement. The Company also
agreed to pay the Argus Companies the additional sum of One Hundred Sixty-Five
Thousand Dollars ($165,000) in monthly installments of Seven Thousand Five
Hundred Dollars ($7,500) commencing on April 15, 1989, and continuing thereafter
until the entire sum was paid in full. The Nevada Property Agreement, as
amended, further required the Company to issue 1,000,000 (pre-reverse split)
shares of Common Stock as additional consideration to Argus Resources, Inc. In
fact, the Company paid the Argus Companies, Inc., and the Selig Entities all
amounts due under the Nevada Property Agreement, as amended, and issued 100,000
(post-reverse split) shares of Common Stock to Argus Resources, Inc.

Pursuant to the terms and conditions of the Nevada Property Agreement, as
amended, the Argus Companies executed a Corporation Quitclaim Deed conveying a
forty percent (40%) undivided interest in the Nevada Property to the Company on
March 9, 1989. Concurrently therewith, the Company delivered a Deed of Trust and
Assignment of Rents (the "Deed of Trust") to the Selig Entities to further
secure the obligations under the Nevada Property Agreement. Both the Corporation
Quitclaim Deed and the Deed of Trust were duly recorded in the office of the
county records by and for Nye County, Nevada.

In June 1993, the Company entered into a Joint Venture Agreement with
Marlowe Harvey/Maran Holdings, Inc. ("Marlowe Harvey"), Argus Resources, Inc.,
and the Selig Entities respecting the Nevada Property. Under the terms of the
Joint Venture Agreement, Marlowe Harvey was entitled to a fifty-one percent
(51%) interest in the Nevada Property in consideration of Marlowe Harvey
assuming certain obligations, including the purchase of the Deed of Trust from
the Selig Entities. The remaining forty-nine percent (49%) interest in the
Nevada Property was to be held equally by Argus Resources, Inc., and the Company
in consideration of their payment of their pro rata share of all amounts due
under the promissory note (the "Nevada Note") secured by the Deed of Trust
created by the Nevada Property Agreement, as amended. The failure of either
Argus Resources, Inc., or the Company to pay any amounts due under the note
during the first year of the joint venture was to be deemed a default requiring
the defaulting party to quitclaim its interest in the Nevada Property to the
remaining parties. The Argus Companies, Marlowe Harvey, and the Company were
also responsible for their pro rata share of all property development expenses.
At the time, Marlowe Harvey was the operator of the Nevada Property and
responsible for all operations relating to maintaining the Nevada Property in
accordance with the Mining Agreement.

On October 20, 1995, the Company and Mr. Harvey "as an individual and for
Maran Holdings and Argus Resources" executed an agreement (the "Amended Joint
Venture Agreement") which purports to amend the June 1993 Joint Venture
Agreement. The Amended Joint Venture Agreement obligates Marlowe Harvey to
convey to the Company within ten (10) days of the date of execution of such
Agreement fifty-two percent (52%) of the outstanding and issued stock in Argus
Resources, Inc.("Argus"), in exchange for the payment of One Hundred Forty-Seven
Thousand Dollars ($147,000) to be paid in the future from a percentage of Argus'
share of the net proceeds realized from the sale of gold production on the
Nevada Property. In addition, Marlowe Harvey agreed to convey a one percent (1%)
interest in the Nevada Property to the "management" of the Company (Messrs.
Michaels and Kramer) in exchange for a "production payment" of Forty-Seven
Thousand Dollars ($47,000) likewise to be paid from future production
attributable to Argus Resources, Inc. It was, and is, the intention of the
Company's officers to convey their rights under the Amended Joint Venture
Agreement to the Company in exchange for the Company's assumption of such
officers' obligations under such Agreement.

Both the obligations of the Company and its officers under the Amended
Joint Venture Agreement were to be secured by the pledge of Common Stock (in the
case of the Company, 1,235,429 shares) with "piggyback" registration rights to
be granted to Marlowe Harvey in two (2) years in the event $147,000 is not paid
from production by that time. If only a portion of the production payment is
made by October 20, 1997, the obligation to seek registration was to be ratably
reduced. The Company was further required to issue 1,186,981 shares of its
Common Stock to Maran Holdings, Inc., an affiliate of Argus, at the time at
which it was obligated to issue to Argus the shares to be used as security for
the production payment.

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<PAGE> 24

The Amended Joint Venture Agreement also required both the Company and its
joint venture partners to each make one-half of the property tax payments and
the payments due to the Selig Entities under the Nevada Property Agreement. Both
of these payments are due in January of each year.

In January 1996, the Company notified Marlowe Harvey that it had been
"ready, willing, and able" to convey the Common Stock pursuant to the terms of
the Amended Joint Venture Agreement. In addition, the Company made all of the
required property tax payments relating to the Nevada Property and the payments
due to the Selig Entities in reliance upon the terms of the Amended Joint
Venture Agreement. Marlowe Harvey has failed to reimburse the Company for its
one-half share of the property tax payments and the payments due to the Selig
Entities which were advanced on its behalf by the Company and has failed to make
the conveyances required by the terms and conditions of the Amended Joint
Venture Agreement. As a result, the Company instituted an action in Nye County,
Nevada, on November 4, 1996, originally seeking specific performance and damages
against Marlowe Harvey, Maran Holdings Inc., Calais Resources Inc., and Argus
Resources, Inc. The Company has recently amended the complaint to seek a
judicial determination that the Harvey Entities have forfeited all rights in and
to the Joint Venture Agreement and the Nevada Property thereby relieving the
Company of any obligations including the payments identified in the Amended
Joint Ventures Agreement. This action is described in further detail under the
Section of this Prospectus entitled "LEGAL PROCEEDINGS." Depending on the
outcome of the action, the Company will either own 100% of the Nevada Property
if successful or 50% if it does not prevail. However, regardless of the outcome
the Company will continue to operate its portion of the Nevada Property.

In March 1997, the Company entered into a Sale and Purchase Agreement with
the Selig Entities. The Selig Entities were the original owners of the patented
and unpatented mining claims comprising the Nevada Property, having perfected
their rights to ownership pursuant to Federal and local law. Under the terms of
this agreement, the Selig Entities agreed to sell to the Company one hundred
percent (100%) of their interests in the Nevada Note, the Deed of Trust, and the
Nevada Property for the sum of Three Hundred Seventy Five Thousand Dollars
($375,000) payable as follows: One Hundred Thousand Dollars ($100,000) in March
1997 and the balance plus all accrued and unpaid interest (calculated at the
rate of 5.25%) on or before February 6, 1999. The Company in fact paid the first
installment of One Hundred Thousand Dollars ($100,000) in March 1997 and prepaid
the remaining balance in June 1997. As a result, all obligations to the Selig
Entities have been fulfilled by the Company and the original note and deed of
trust have been delivered by the Selig Entities to the Company. The agreement
also acknowledges that the Company is the only person or entity legally entitled
to conduct mineral operations on the Nevada Property. The Company is also
required to pay all U.S. Bureau of Land Management annual maintenance fees
associated with the claims comprising the Nevada Property. Such fees have been
paid by the Company through August 1998.

The Company entered into a Subscription Agreement with Silenus Limited on
April 14, 1997 (the "Subscription Agreement"). As a result of entering into the
Subscription Agreement, the Company granted to Silenus Limited a $2,000,000 deed
of trust encompassing the Nevada Property until the Debentures issued to Silenus
are converted, redeemed, or paid in full.

Property Description. The Nevada Property is located in an historic mining
district which has experienced mining operations from 1866 to the present with
the major activity in the late 1860s, between 1906 and 1921, and from 1960 to
the present. Placer and lode mining took place principally in the Reliance Mine,
the White Caps Mine, the Union Amalgamated Mine, the Manhattan Consolidated
Mine, the Earle Mine, the Big Four Mine, and the April Fool Mine.

The Nevada Property lies in several shallow gullies in a general area which
is located between 7,500 to 7,800 feet in elevation. Mineralization of the
Nevada Property appears to be structurally controlled by a series of parallel
east-northeast trending faults dipping from 50 to 75 degrees southwest and with
some cross or perpendicular faults. The Nevada Property consists of two distinct
areas which require different mining and production techniques. Gold
mineralization in the vicinity of "Litigation Hill" is near the surface and much
less expensive to mine. The lower grade mineralization can be "leached" while
higher grades must be milled. Gold mineralization located in the White Caps Mine
has revealed two delineated mineralized areas below the 600-foot level and a
deeper exploration target requiring substantially higher costs for extraction as
compared to "Litigation Hill." "Dewatering" the mine and driving a decline to
the 800-foot level could become quite

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<PAGE> 25

costly. Additionally, any ore obtained from the White Caps Mine may be required
to be processed using autoclave technology or other proven methods in order to
comply with environmental regulations due to the mineralization's high content
of antimony, mercury, arsenic, and sulphur; nevertheless, the Company believes
that the deep mineralized area located within the White Caps Mine may have
sufficient potential to justify the large development program. Both the
"Litigation Hill" and White Caps Mine areas of the Property will be discussed
below.

The White Caps Mine is located in the Manhattan Mining District. Production
of gold began in 1911 and remained in production until 1935 when the vein was
lost and the lower levels of the mine encountered water. A total of 120,000
ounces of gold were produced during that period. The mine was closed in 1942 by
executive order relating to all "mining activities nonessential to the [World
War II] effort."

The mine was found to be flooded from its deepest point at the 1,300-foot
level to the 450-foot level. Beginning in 1957, a $400,000 program was put in
place to "dewater," renovate, and reactivate the mine. Pumping of water began
that year and by 1958, the water level was down to the 800-foot level. At that
time some exploration resumed at the upper levels of the mine. At the 300-foot
level, antimony-mercury mineralization grading 60 percent and 8 percent,
respectively, was discovered.

An extensive antimony deposit (also containing gold and mercury values) was
located near the 500-foot level and plans were made to begin mining activities
after the renovation of the mine was completed. While continuing to explore for
gold mineralization on the lower levels of the mine, the owners leased out the
right to mine antimony-gold-mercury mineralization above the 600-foot levels in
1962 and production thereafter began.

A diamond drilling program in 1962 relocated the gold-bearing vein which
had been lost in 1935 when it faulted out at the 600-foot level. Drilling of the
formation began at the head of the winze (i.e. incline shaft) and continued down
to the 1,200-foot level. Eight regularly-spaced holes of approximately 100 feet
in length were drilled. These holes revealed a gold mineralized area 65 feet
wide with values ranging as high as 7.7 ounces per ton and averages over .8
ounces per ton. This mineralization is found in the foot wall of the old winze.

The next phase of the 1962 drilling program consisted of diamond drilling a
"hole" starting at the 1,200-foot level. Six holes of approximately 100 feet in
length each were drilled and revealed gold values averaging over 3 ounces per
ton with a high of 6 ounces per ton. This drilling program blocked out gold
mineralization of over 14,000 ounces of gold according to a 1964 report
published by the California Mining Journal. The program also indicated that a
mineralized area containing several hundred thousand ounces of gold is present
in the relocated vein which runs from the 600-foot level down to the 800-foot
level and from the 1,200-foot level down to at least the 1,300-foot level.

Before production could begin, a fire was accidentally started by a pumping
subcontractor at the 300-foot level. The ore bins, shaft and head frame were
destroyed and the mine was closed in 1964. The low price of gold (then $35 per
ounce), high costs to rebuild the damaged mine, and the lack of funds caused the
White Caps Mine to close in 1964, and it has remained closed since that time.
The Company's plans include reentering this mine and resuming gold exploration
and production.

By contrast, "Litigation Hill" was the site of both Earle and Consolidated
Mines, all early producers of high-grade areas until the veins ran out. Recent
geomagnetic activity and a drilling program have located several small
commercial-sized deposits of medium-grade gold mineralization which can be
either milled or heap leached.

The Company has conducted a geophysics and geochemical survey of
"Litigation Hill." A Schlumberger resistivity survey indicated gold
mineralization down to a depth of 1,000 feet (the limit of the instrument's
sensitivity). Bulk sampling conducted by Nevada Gold Fields and the Placer
Management Group of the mine dumps remaining at these mines indicated an overall
average grade of .206 ounces of gold per ton.

The 1987 exploration of underground workings on "Litigation Hill" showed
that the Earle Mine had experienced massive cave-ins. Two samples were taken
from channel cuts. These samples, which were

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<PAGE> 26

performed by Nevada Gold Fields and the Placer Management Group, indicated
values of .120 ounces of gold per ton. The Bath Mine was accessible through a
stope which leads directly to the main haulage decline. Channel cut samples were
taken on pillars left in previously-worked stopes. Values varied from .64 to
1.288 ounces of gold per ton.

The Company initiated a rotary drilling program in 1988. Holes drilled
pursuant to the program varied in depth from 200 feet to 525 feet. Gold values
located in the carbonates at a depth of 70 feet indicate that open pit mining is
suitable for the lower grade present.

The Company commenced an exploration program during the years 1989 and
1990. This program consisted of two parts: conducting a magnetic survey of the
property and drilling 25 reverse circulation drill-angle holes varying in depth
from 50 to 150 feet. The magnetic survey identified the areas around "Litigation
Hill" and the White Caps Mine as strong targets for further exploration. The
drilling program located several areas of gold mineralization.

In September 1993, the joint venture partners began a decline (i.e. tunnel)
in order to intercept a drill hole which had been drilled by Freeport Mining
Company in 1983. The drill hole revealed that from 465 feet to 505 feet below
the surface, an average gold grade of .886 ounces of gold per ton over 40 feet
existed. The decline was completed during the Spring of 1994 and drill stations
were prepared. Exploration and drilling activities commenced and are ongoing as
of the date of this Prospectus. The decline is approximately nine feet by nine
feet and runs at an approximate twelve-degree grade. At the 500-foot level, a
turnaround or transfer bay has been added to enable the operators of the mine to
successfully remove ore in a cost-effective method.

The 1993 drilling program also included the mapping and sampling of the old
workings of the Consolidated Mine (which was closed in 1939) as well as the
drilling and sampling of the decline itself in the immediate potential ore zones
contained within the decline.

The Nevada Business Plan. In July 1995, the Company engaged the services of
William R. Wilson, a minerals industry consultant, to prepare a plan to develop
the Nevada Property (the "Nevada Business Plan"). According to the Nevada
Business Plan, two alternative plans for exploration and development of the
Property exist. The first plan would extend the existing decline in the White
Caps Mine to the 565-foot level, rehabilitate and mine old workings in the
Consolidated Manhattan Mine, drift and mine a new area near the drill hole which
was intercepted by the decline formed during the 1993 program, rehabilitate the
White Caps Shaft, and mine the 565-foot level, 670-foot level, 800-foot level,
910-foot level, 1,120-foot level, 1,200-foot level, and 1,300-foot level of the
White Caps Mine.

According to the Nevada Business Plan, the major advantage to this
alternative would be that access to the lower levels of the White Caps Mine
would be considerably improved. It is anticipated that the lower levels may
yield higher grades as compared to the yields anticipated at current levels of
the mine.

The second alternative identified in the Nevada Business Plan would extend
the decline in the White Caps Mine to the 565-foot level, rehabilitate and mine
old workings in the Consolidated Manhattan Mine, drift and mine a new area near
the drill hole which was intercepted by the decline formed during the 1993
program, mine the 565-foot level only in the White Caps Mine, and conduct
underground sampling in the White Caps Mine in the 670-foot through 1,300-foot
levels.

The Nevada Business Plan identifies the major advantage to this alternative
to be significantly reduced capital costs combined with the opportunity to
sample underground the White Caps Mine without rehabilitating the White Caps
shaft. The disadvantages of this alternative are that mining access to the lower
portions of the White Caps Mine may not be completed, and it is still not known
whether access can be obtained to each of the levels below the 560-foot level.

Cash flow analyses pertaining to both alternatives project a positive cash
flow for the initial development. Management utilized these analyses in reaching
a decision to proceed with the second alternative.

The cash flow calculations are on a "cash basis," an industry standard in
comparing mining operations. The cash basis includes exploration, development,
equipment, mining, hauling, processing, and refining costs. Some overhead costs
were not included in the cash flow analysis as of the time the analysis was
prepared

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<PAGE> 27

because the Company had not determined what its actual mine-related overhead
costs would be. A ten percent allowance for general and administrative expenses
was included. Since the Company uses a mining contractor, Harrison Western
Construction Company, the majority of the mine related overhead is included in
the contractor's cost. The costs of the Company's on-site geologist and project
manager are included as the 10% general and administrative costs in the cash
flow analysis. The following major assumptions were used in the Cash Flow
projections:

- Gold price of $390.

- Mining costs of $43 per ton.

- Processing and environmental costs of $15 per ton.

- Mining General and Administrative costs of $6 per ton.

- Refining charges of $2 per ounce.

The Nevada Business Plan concludes by recommending the second alternative
as the preferable alternative for the Company to follow. In June 1996, the
Company initiated the second alternative by contracting with Harrison Western
Mining and Construction Company, Lakeland, Colorado, to execute this plan.

In July 1995, the Company notified Marlowe Harvey and related companies,
then the operator of the Nevada Property, that Marlowe Harvey was not in
compliance with contractual operations under the Nevada Property Agreement as
well as several applicable mining laws and regulations. At that time the Company
assumed the position of operator and continues to act in this capacity.

All permits for this operation have been issued, and the Company is in
compliance with all state, federal, and environmental regulations to the best of
its knowledge and belief.

Initially, the Company's operations in Nevada will be heavily dependent
upon the mill constructed approximately one mile from the Nevada Property which
is currently owned and operated by New Concept Mining, Inc. ("New Concept"). The
Company presently intends to use the New Concept mill for milling the ore
produced from the Nevada Property and selling gold bullion dore bars or
concentrate for sale to third-party buyers. Under the terms of an agreement
entered into with the Company, New Concept has agreed to provide the Company
with the capacity to initially process between 1,000-1,200 tons of ore per
month. New Concept has also agreed to increase processing capacity once the
Company's development program expands. The Company has also been engaged in
preliminary discussions with New Concept to purchase up to one half of the mill.
These discussions have not yet resulted in a binding agreement between the
Company and New Concept.

The Company has also budgeted the sum of One Hundred Thousand Dollars
($100,000) to be spent in the foreseeable future for compliance with applicable
environmental laws. However, the Company can provide no assurance that the
amount so budgeted for environmental compliance will be consistent with the
amounts actually spent for compliance or that the actual amount of such
compliance may not be substantially greater than that which has been projected
to be spent by the Company pursuant to the budget.

Over the past three (3) years, the Company has expended approximately One
Million Five Hundred Thousand Dollars ($1,500,000) on development expenses on or
relating to the Nevada Property. These expenses relate primarily to developing
the most effective means by which to extract the ore and transport it to the New
Concept mill approximately one mile from the Nevada Property.

THE INDONESIAN CONCESSIONS

General. In August 1996, the Company entered into an agreement to acquire a
fifty-one percent (51%) interest in a gold exploration property comprising
10,000 hectares (25,000 acres) located in East Kalimantan, Indonesia (the
"Kalimantan Property"). More recently, the Company has entered into two (2)
additional

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<PAGE> 28

agreements to acquire an additional six (6) gold mining concessions aggregating
over 23,400 hectares (58,500 acres) and three (3) coal mining concessions
comprising 290,000 hectares (725,000 acres). In January 1997, the Company and
Maxwells Energy and Metals Technology Ltd., a Bahamian Company ("Maxwells"),
agreed to substitute the original 10,000 hectare property (i.e. the Kalimantan
Property) for a 16,000 hectare (40,000 acre) tract (the "Sopang Property")
located elsewhere on the island of Kalimantan. Ownership of the Indonesian
Concessions will be acquired through the Company's new wholly-owned subsidiary
formed under the laws of the British Virgin Islands known as Kalimantan
Resources, Ltd. ("Kalimantan Resources"). NONE OF THE PROPERTIES IDENTIFIED
ABOVE HAVE ANY PROVEN AND RECOVERABLE RESERVES.

Mineralization of the Indonesian islands known as Kalimantan (the
Indonesian section of Borneo) and Sumatra occurred as a result of rifting of the
earth's crust at the ocean floor. There are approximately fifteen known
mineralized "arcs" comprising all of Indonesia. Six (6) of these arcs contain
the majority of the gold and copper deposits currently discovered in Indonesia.
Although significant work is also being undertaken in other areas of Indonesia,
the Central Kalimantan Arc is the area which has evidenced the majority of
recent attention of mineral exploration efforts. Located within the Central
Kalimantan Arc is the Kelian Mine which has been operating since 1992 and
produces approximately 450,000 ounces of gold per annum from ore grading
approximately 1.8 grams per tonne of gold. Over seventy (70) tonnes of gold has
been produced to date. Based upon current estimated reserves, the mine is
scheduled to operate until 2003. Further south is the Mt. Muro Mine. Production
for 1996 at this mine was 187,000 ounces of gold. At present, it is impossible
to predict whether the Indonesian Concessions possesses any recoverable reserves
of gold ore or whether the yields noted in the above-described mines will be
indicative of the yields to be established on the Indonesian Concessions.

Three (3) agreements cover the various concessions which the Company and
Kalimantan Resources have acquired: (i) the Principles of Agreement by and
between the Company and Maxwells, as amended; (ii) the Acquisition Agreement
dated January 26, 1997, by and between Kalimantan Resources and Singkamas Agung
Ltd.; and (iii) the Acquisition Agreement dated February 18, 1997, by and
between Kalimantan Resources and Kaliman Jaya Ltd.

As described in further detail elsewhere in this Prospectus, the Company
has developed a business plan (the "1997 Business Plan") relating to the
activities to be conducted on the concessions acquired under the above-described
agreements as well as the Brazilian Timber Properties. The proposed activities
described in this section of this Prospectus summarizes a portion of the 1997
Business Plan.

The Sopang Property. The Company acquired its interest in the Sopang
Property pursuant to a document entitled "Principles of Agreement" dated August
19, 1996 ("POA"). The parties to the POA are Maxwells and the Company. The
Company and Maxwells originally agreed to conduct exploration activities on a
10,000 hectare tract, but pursuant to an addendum to the POA, substituted the
16,000 hectare Sopang Property.

In exchange for a fifty-one percent (51%) interest in the concession
relating to the Sopang Property, the Company agreed to convey to Maxwells Four
Hundred Thousand (400,000) shares of its Common Stock. In addition, the Company
must issue an additional Four Million (4,000,000) shares of its Common Stock to
Maxwells should an investment banker confirm by independent appraisal that the
Sopang Property is valued to be at least Twelve Million Dollars ($12,000,000
U.S.) and/or such investment banker provides financing to the Company based upon
an evaluation of at least Twelve Million Dollars ($12,000,000 U.S.) or upon the
appreciation of the Common Stock in an aggregate amount exceeding Twelve Million
Dollars ($12,000,000) within ninety (90) days of an announcement by the Company
of its acquisition of the Indonesian Property. The Company recently received a
letter from Maxwells acknowledging that other than the issuance of 10,800
shares, no additional shares of Common Stock will be required to be issued until
the independent appraisal mentioned above has been performed. A provision of the
POA allows Maxwells to obtain a "nondilutive" percentage ownership in the Common
Stock to be issued under the POA should the Sopang Property produce at least
2,000,000 ounces of gold.

While the Company was entitled to defer exploration activities for six (6)
months, exploration activities have commenced and are ongoing on the Sopang
Property.

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<PAGE> 29

Under the POA, the Company is responsible for one hundred percent (100%) of
all exploration and operating expenses relating to the Sopang Property. Maxwells
also enjoys antidilution rights with respect to the Common Stock to be issued
under the POA provided exploration activities result in a valuation evidencing a
yield of at least two million (2,000,000) ounces of gold.

Maxwells has agreed to provide a voting trust in favor of existing
management. Maxwells is not, however, required to vote its shares with existing
management in connection with the registration of Common Stock issued or to be
issued to Maxwells. Maxwells' consent is also required in the case of any
issuance of the Company's capital stock exceeding Two Hundred Fifty Thousand
Dollars ($250,000).

The Company has undertaken efforts to confirm the chain of title which it
believes to exist with respect to the Sopang Property.

Silobat Property. On January 26, 1997, the Company's wholly-owned
subsidiary, Kalimantan Resources, entered into an Acquisition Agreement with
Singkamas Agung Ltd., a Bahamian corporation ("Singkamas"), relating to one (1)
gold mining concession and three (3) coal mining concessions located in
Kalimantan, Indonesia (the "Acquisition Agreement"). Singkamas is an affiliate
of Maxwells and is owned and controlled by the same persons who own and control
Maxwells.

The gold mining concession subject to the Acquisition Agreement relates to
a 62-hectare (155-acre) tract located in West Kalimantan and is known as the
"Silobat Property." Currently, PT Kajiwahida Mandiri, an Indonesian limited
liability company ("PT Kajiwahida"), holds a Kuasa Pertambangan Eksploitasi
license ("KPE") and a Kuasa Pertambangan Pengangkutan and Penjualan license
("KPPE") issued by the Indonesian Directorate General of General Mining and the
Ministry of Mines and Energy on October 7, 1996. On December 21, 1996, PT
Kajiwahida entered into a Mining Authorization Transfer Agreement with PT Duta
Sena Rahayu, an Indonesian limited liability company ("PT Duta"), whereby PT
Kajiwahida agreed to transfer its KPE and KPPE licenses to PT Duta in exchange
for $5,000,000 payable as follows: $100,000 at the time of execution of the
Acquisition Agreement; four consecutive installment payments of $100,000 each on
the fourth days of February, March, April and May 1997; and a final payment of
$4,500,000 at such time as official test results from exploration activities
demonstrate the existence of at least 2,000,000 ounces of gold reserves. Should
exploration activities reveal gold reserves of less than 2,000,000 ounces, the
final payment is to be adjusted in relation to the amount of gold reserves so
established. In addition, PT Kajiwahida is obligated to seek the appropriate
governmental authority to expand its licenses to include a 2,000-hectare tract
contiguous to the 62-hectare tract currently comprising the Silobat Property.

On December 21, 1996, the shareholders of PT Duta and Kalimantan Resources
entered into a Cooperation Agreement whereby in exchange for assuming the
financial responsibilities under the Transfer Agreement, the shareholders of PT
Duta agreed to hold the shares of such limited liability company for the benefit
of Kalimantan Resources. On the same date, Kalimantan Resources entered into a
Participation Agreement with Singkamas whereby Kalimantan Resources agreed to
grant to Singkamas a net profits interest derived from the exploitation of the
Silobat Property.

The Acquisition Agreement with Singkamas requires Kalimantan to secure the
issuance by the Company of Four Million (4,000,000) shares of Common Stock as
follows: Two Hundred Thousand (200,000) upon execution of the Acquisition
Agreement and the balance to be issued upon verification by an independent
evaluation that the value of the Silobat Property and the three (3) Indonesian
Coal Concessions equal or exceed Forty Million Dollars ($40,000,000). In the
case of the initial issuance of shares and twenty-five percent (25%) of the
balance of the shares of Common Stock to be issued, Singkamas is entitled to
"piggyback" registration rights. The Company has issued Four Hundred Thousand
(400,000) shares of its Common Stock to Singkamas as of the date of this
Prospectus.

To date, no funds have been transferred by Kalimantan to PT Kajiwahida or
any other party. However, Kalimantan Resources has been given authority to
conduct trenching and pitting and has conducted preliminary mapping, sampling,
and trench hole pitting under the supervision of Behre Dolbear & Co. for the
purpose of evaluating the Silobat Property. Under the supervision of Behre
Dolbear, three separate sampling programs were conducted at the Silobat
Property. Based on that work which indicates the presence of

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<PAGE> 30

analogous gold values in four sampling pits, the Company intends to initiate a
core drilling program at the Silobat Property in the third quarter of 1997. The
Company (through its association with Singkamas) is currently in negotiations
with PT Kajiwahida to amend the terms of the Acquisition Agreement to reflect
the accord reached by the parties to enable Kalimantan to conduct further
exploration activities on the Silobat Property and to forego any payments due
under the Acquisition Agreement until such time as all governmental approvals
associated with annexing the 2,000-hectare tract have been secured.

The Silobat Property forms part of what was known as the Chinese District
of Western Borneo and has been the location of substantial exploitation by the
Chinese since the 1880s. In the 1960s, a Dutch company was granted a concession
to conduct mining operations on the Silobat Property, but such property was
abandoned shortly thereafter because of political unrest, sabotage and lack of
funding.

The property is located 1 degree 1 minute north longitude and 109 degrees
12 minutes east latitude in the subdistrict of Sambas, Kalimantan Barat. The
topography of the property is characterized by swampy lowlands with isolated
hilly outcrops covered mainly with revegetation and local rubber plantations.
The geology is characterized by green-black mudstone, fine silt stone,
quartz-feldspar porphyry, and quartz diorite rock types.

In 1977, 21 rock chip and 7 stream sediment samples were submitted for
analysis to the Superintendent Laboratories in Jakarta. Only small traces of
gold were detected in all rock samples submitted while stream sediment samples
yielded values of .5 to 1.05 ppm in four of the seven samples.

Munung (Monroe) Property. The Company's wholly-owned subsidiary, Kalimantan
Resources, entered into an Acquisition Agreement for Gold and Coal Concessions
on February 18, 1997, with Kalimas Jaya Ltd., a Bahamian corporation
("Kalimas"), relating to five (5) gold mining concessions (the "Kalimas
Acquisition Agreement"). Kalimas is also an affiliate of Maxwells and is owned
and controlled by the same persons who own and control Maxwells. Kalimas
acquired its rights to the concession relating to the Monroe Property pursuant
to a Development Agreement dated February 14, 1997, by and between PT Muara
Mayang Coal Utama ("PT Muara") and Kalimas. Under the Development Agreement,
Kalimas obtained the right to acquire an 80% interest in a Kuasa Pertambangan
Penyelidikan ("KP") issued to PT Muara for the sum of $1,000,000 payable as
follows: $150,000 upon execution of the Development Agreement and verification
by Kalimas that PT Muara possesses marketable title to the concession without
encumbrances and $850,000 upon commencement of production and generation of net
profits.

The Monroe Property comprises 6,096 hectares and is located in Central
Kalimantan, Indonesia. It is located in the same general area of the Kelian gold
mining concession which has produced over 450,000 per annum ounces of gold since
1992.

The existing KP issued on the Monroe Property allows PT Muara to conduct a
general survey and perform exploration activities for gold and other precious
metals. The Development Agreement requires PT Muara to use its "expert abilities
and efforts" to obtain additional licenses for the exploitation, production and
refining, and transportation and sale of all minerals obtained from the Monroe
Property.

The Kalimas Acquisition Agreement requires Kalimas to convey a 51% interest
in all current and future licenses which it acquires with respect to the Monroe
Property.

To date, no sums have been paid by Kalimas or Kalimantan Resources to PT
Muara nor has any exploration work been performed on the Monroe Property.
Kalimantan Resources currently intends to complete title work prior to engaging
in any exploration activities.

Telen (Tomak) Property. The second gold concession in which Kalimantan
Resources received rights under the Kalimas Acquisition Agreement is known as
the Telen or Tomak Property. This property comprises 687 hectares and is located
in East Kalimantan, Indonesia. Kalimas acquired its rights to the property
pursuant to a Development Agreement dated February 14, 1997, which it entered
into with PT Walea Bahimas, an Indonesian limited liability company. PT Walea
Bahimas currently holds a KP for general survey and exploration on the property.
Kalimas is required to pay a purchase price of $1,000,000 to acquire an 80%
interest in the current KP. The Development Agreement contains provisions
similar to those contained within

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<PAGE> 31

the Development Agreement relating to the Monroe Property with respect to
payment terms. Moreover, PT Walea Bahimas will only be entitled to receive the
final $850,000 payment upon commencement of commercial production and obtaining
licenses for exploration and exploitation, production and refining, and
transportation and sale.

Kalimas is obligated to commence exploration at such time as agreed upon by
the parties. In addition to being required to dig test pits as part of the
exploration program, Kalimas has agreed to: conduct shallow drilling to a depth
of approximately 60 meters during the first 90-day period, conduct deep drilling
to a depth of at least 200 meters during the second 90-day period, and securing
a commitment of at least $300,000 during the first three (3) years of
exploration activities.

The Kalimas Acquisition Agreement requires Kalimas to convey a 51% interest
in all current and future licenses which it acquires with respect to the Tomak
Property. The Kalimas Acquisition Agreement further provides that the value of
the Common Stock is to be determined at $10 per share, which was the approximate
value as of January 26, 1997.

To date, no sums have been paid by Kalimas or Kalimantan Resources to PT
Walea Balimas nor has any exploration work been performed on the Tomak Property.
Kalimantan Resources currently intends to complete title work prior to engaging
in any exploration activities.

Long Beleh (La Bella) Property. The La Bella Property represents the third
gold concession in which Kalimantan Resources acquired rights pursuant to the
Kalimas Acquisition Agreement. This property currently comprises 4,637 hectares
and is located in East Kalimantan, Indonesia. Kalimas acquired its rights in and
to a KP for general survey and exploration pursuant to a Development Agreement
dated February 14, 1997, with PT Muara Koman Mas ("PT Muara Koman"). The terms
and conditions for the acquisition of an eighty percent (80%) interest in the
current license and all future licenses held or to be held by PT Muara Koman are
identical to the terms and conditions described above and relating to the Tomak
Property. The obligations of Kalimas under the Kalimas Acquisition Agreement are
identical to the obligations which it possesses with respect to the Tomak
Property.

To date, no sums have been paid by either Kalimas or Kalimantan Resources
to PT Muara Koman nor has any exploration been performed on the La Bella
Property. Kalimantan Resources currently intends to complete title work prior to
engaging in any exploration activities.

Sengingi Property. The Sengingi Property is the fourth gold concession in
which Kalimantan Resources acquired rights pursuant to the Kalimas Acquisition
Agreement. Unlike the previous gold concessions mentioned in this Section of the
Prospectus, the Sengingi Property is a 4,000-hectare (10,000-acre) tract which
is located on the island of Sumatra in the province of Riau, Indonesia. Kalimas
acquired the right to obtain an eighty percent (80%) interest in a KP for
exploration and a KPE for exploitation with respect to 3,000 hectares of this
property from PT Aksara Mina Artha ("PT Aksara") pursuant to a Development
Agreement dated February 14, 1997. Under the terms of its agreement with PT
Aksara, Kalimas is obligated to pay PT Aksara $1,000,000 to be paid from
production derived from the property. In all other material respects, the terms
and conditions of the Development Agreement between Kalimas and PT Aksara and
the terms and conditions of the Kalimas Acquisition Agreement between Kalimas
and Kalimantan Resources are identical to the terms and conditions described
above with respect to the other gold concessions subject to the Kalimas
Acquisition Agreement.

Kuantan Property. The last gold concession subject to the Kalimas
Acquisition Agreement is known as the Kuantan Property. The Kuantan Property is
also located in Riau Province, Sumatra, Indonesia, and comprises 8,000 hectares.
Kalimas derives its rights pursuant to a Development Agreement dated February
14, 1997, between it and PT Aksara Tama Pramita ("PT Aksara Tama"). PT Aksara
Tama currently holds a KP for general survey and exploration. The general terms
and conditions upon which Kalimas is to acquire an eighty percent (80%) interest
in all current and future licenses on the Kuantan Property are similar to the
terms and conditions upon which all other licenses subject to the Kalimas
Acquisition Agreement have been acquired. The purchase price which Kalimas will
be required to pay for the Kuantan Property is $1,000,000 payable as follows:
$250,000 upon execution of the Development Agreement and verification by

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<PAGE> 32

Kalimas that PT Aksara Tama possesses marketable title to the concession without
encumbrances, and $750,000 to be paid upon commencement of production and
generation of net profits.

Indonesian Coal Concessions. As previously mentioned, Kalimantan Resources
and Singkamas entered into an Acquisition Agreement on January 26, 1997. In
addition to acquiring rights to the Silobat Property, Kalimantan Resources
obtained rights to three coal mining concessions aggregating over 286,000
hectares. Singkamas acquired its rights to these three coal mining concessions
pursuant to Development agreements entered into with the PT Andhika Group of
Companies, three Indonesian limited liability brother-sister companies
(collectively referred to as "PT Andhika"). Under the terms of these Development
Agreements, Singkamas received the right to acquire seventy-seven and one-half
percent (77.5%) interest in the three contracts of work ("COWs") currently held
by PT Andhika.

Under the terms of the Acquisition Agreement between Singkamas and
Kalimantan Resources, Singkamas has agreed to assign a fifty-one percent (51%)
in and to the COWs (as well as a fifty-one percent [51%] interest in the Silobat
Property) in consideration of the issuance of 4,000,000 shares of the Company's
Common Stock described elsewhere in this Prospectus in greater detail.

In March 1997, Kalimantan Resources engaged an Indonesian exploration crew
to travel to the properties and to perform preliminary evaluations of possible
coal reserves in place on the three (3) coal concessions located in Indonesia
where the Company and Kalimantan Resources have entered into contracts to
acquire certain exploration and exploitation rights. Behre Dolbear & Co. will
review the results of these activities and present recommendations based upon
such review.

The Company has been contacted by several large coal mining companies for
the purpose of entering into proposed joint ventures to conduct further
exploration and subsequent development of such properties. At present, no joint
venture agreements have been entered into by the Company.

The Company has entered into an agreement with Behre Dolbear & Company,
Inc. ("Behre Dolbear"), an internationally recognized mining consulting firm
which was established in 1911. Behre Dolbear will be responsible for providing
independent technical advisory third-party validation services to the Company as
more particularly outlined in the agreement. Under the supervision of Behre
Dolbear, three separate sampling programs were conducted at the Silobat
Property. Based on that work which indicates the presence of analogous gold
values in four sampling pits, the Company intends to initiate a core drilling
program at the Silobat Property in the third quarter of 1997. A more thorough
description of this agreement is described in the Section of this Prospectus
entitled "MANAGEMENT."

LEGAL PROCEEDINGS

On August 3, 1993, the Commission and the Company agreed to terminate the
Commission's investigation by the entry of a consent judgment against the
Company and certain of the Company's past and present key employees. These key
employees include Christopher D. Michaels, Jeffrey Kramer, and Stanley Mohr. The
terms and conditions of the consent judgment can be summarized as follows:

1. The Company neither admitted nor denied any of the allegations
alleged by the Commission;

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<PAGE> 33

On February 27, 1989, the Pennsylvania Securities Commission issued a cease
and desist order against the Company and Christopher D. Michaels, Jeffrey S.
Kramer, Stanley J. Mohr, and William Michaels prohibiting them from violating
Section 201 of the Pennsylvania Securities Act of 1972 relating to the sale of
unregistered "penny stocks."

As a result of the foregoing regulatory and judicial actions, the Company
may not be able to utilize the exemptions from registration available under
Regulation A and Rule 701 promulgated under the '33 Act and may not be able to
rely upon certain private placement exemptions afforded by applicable state blue
sky laws in connection with the offer and sale of securities in a transaction
which qualifies as exempt from qualification under the '33 Act. In such cases,
the Company would be required to register/qualify the transaction under said
blue sky laws, which would likely increase the cost of, and extend the time for
completing, any private placement of securities.

On November 4, 1996, the Company filed a complaint (the "Action") in Nye
County, Nevada against Marlowe Harvey, Maran Holdings Inc., Calais Resources
Inc., and Argus Resources, Inc. (the "Harvey Entities"). The complaint in the
Action alleges, amongst other things, that the Harvey Entities breached their
obligations under various agreements (including the October 20, 1995 amendment
to the Joint Venture Agreement discussed in further detail in the Section of
this Prospectus entitled "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY -- The
Nevada Property"). The Action, as amended is seeking a judicial declaration that
the Harvey Entities do not have any joint venture or real property interest in
the mining claims included within the Nevada property. The Action also seeks
compensatory damages and other financial relief based on the Harvey Entities'
breach of contract and other causes of action.

During April 1997, the Company through its counsel, filed a first amendment
to its Complaint in the Action. Counsel for the Harvey Entities filed an answer
and a counterclaims in the action during July 1997. In their answer, the Harvey
Entities have generally denied the allegations of the first amended complaint
and have raised various affirmative defenses. In their Counterclaims, the Harvey
Entities are seeking an injunction preventing the Company from conducting
activities related to the Manhattan Project pending resolution of the issues in
the action and compensatory and punitive damages and other financial relief
based on breach of contract and other causes of action.

In July 1997, the Harvey Entities moved for a preliminary injunction
against the Company preventing it from conducting further activities at the
Manhattan Project without their consent, from issuing press releases describing
certain real property as being wholly owned by the Company, and from using the
same as security for loans. After a two-hour hearing on September 4, 1997, the
court refused to issue an injunction against the Company. Pursuant to
stipulation, the parties have agreed not to interfere with one another's
operations on the

28
<PAGE> 34

Nevada Property. Additionally, the Company has agreed not to further encumber
the Nevada Property pending trial. A trial date has been set for April 30, 1998.

If the Company is successful in obtaining specific performance of the
agreements alleged in the Action, it will effectively continue to own or control
an undivided 100% interest in the Nevada Property. Regardless of whether the
Company is successful in the Action, it will continue to own at least a fifty
percent (50%) undivided interest in the Nevada Property by virtue of its
contractual rights.

29
<PAGE> 35

USE OF PROCEEDS

The gross proceeds from the sale of the Common Stock by the Company will
range from a minimum of $1,500,000 to a maximum of $9,000,000. The Company
expects the proceeds derived from the sale of the Common Stock to be expended as
follows:

<TABLE>
<CAPTION>
MINIMUM MAXIMUM
SUBSCRIPTIONS SUBSCRIPTIONS
------------- -------------
<S> <C> <C>
Subscriptions(1)................................. $ 1,500,000 $ 9,000,000
Sales and Underwriting Commissions(2)............ 180,000 1,080,000
Legal and Accounting Fees........................ 45,000 120,000
NET PROCEEDS TO COMPANY.......................... 1,275,000 7,800,000
========== ==========
Acquisition and Development of Brazilian Timber
Properties(3).................................. $ 500,000 $ 3,800,000
Expansion of Mine, Exploration and Development of
Nevada Property, and Mill Expansion(4)......... 400,000 1,500,000
Exploration Activities on Indonesian
Concessions(5)................................. 225,000 1,500,000
General and Administrative Expenses(6)........... 150,000 1,000,000
========== ==========
</TABLE>

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

(1) A minimum of $1,000,000 of shares and a maximum of $9,000,000 of shares of
Common Stock will be sold at a price of $ per share.

(2) The Company has allocated up to $1,080,000 from the sale of the Common Stock
for sales and underwriting commissions. The Company may enter into
Underwriting Agreements with broker-dealers who are members in good standing
with the National Association of Securities Dealers, Inc. Under the terms of
these agreements, the Company will pay up to ten percent in sales
commissions and an additional two percent for "due diligence" fees and
expenses.

(3) Up to 750,000 hectares of timber properties and a sawmill facility are under
the control and/or management of the Company's subsidiary, Equatorial
Resources, Ltd. The Company has budgeted $350,000 in improvements to the
sawmill facility in Sao Miguel do Guama with the balance of the funds
allocated toward the cost of extracting harvested timber from Terranorte and
others, the costs of employing crews to extract timber from the jungle and
transport it to barges, the cost of additional equipment for harvesting
operations, other timber operating costs, reforestation expenses, and
general or administrative expenses including the costs of maintaining a
regional office in Belem, Para, Brazil.

(4) The Company anticipates expending up to $1,500,000 to expand mining
operations on the Nevada Property consistent with the Nevada Business Plan
as more fully described in the Section of the Prospectus entitled
"DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY." Such expansions would
likely include extending the existing decline to the White Caps Mine at the
565-foot level, rehabilitation and mining old workings in the White Caps
Mine, drifting and mining a new area near a drill hole which was intercepted
by the decline formed during the 1993 drilling program, rehabilitation of
the White Caps Shaft, and mining the 565-foot level, 670-foot level,
800-foot level, 910-foot level, 1120-foot level, 1200-foot level, and
1300-foot level of the White Caps Mine. If only the minimum number of
Subscriptions are raised pursuant to this Offering, the Company will
continue with its present course of business and use revenues derived from
ongoing operations to finance and execute the above-described expansion. The
Company has also been engaged in discussions with the owner of the mill, New
Concept Mining, Inc., concerning the acquisition of up to a fifty percent
interest in the mill currently adjacent to the Nevada Property. To date, no
definitive agreement has been reached. The Company anticipates that if such
an agreement is reached, the Company intends to expend up to $250,000 in
consideration of acquiring up to a fifty percent interest in the mill. In
the alternative, the Company will utilize such amount to help finance the
construction of its own mill on the Nevada Property.

30
<PAGE> 36

(5) The Company anticipates that up to $1,500,000 will be expended on data
collection, reconnaissance surveying, reporting, field work, sampling, data
processing, laboratory analyses, prospect evaluation, mineralization
mapping, additional acquisitions, and exploration drilling activities. All
of these activities will be undertaken subject to the advice and independent
consulting services provided to the Company by Behre Dolbear & Company, Inc.
("Behre Dolbear"), pursuant to a Consulting Services Agreement dated October
7, 1996, and more particularly described elsewhere in this Prospectus. The
actual work on the Indonesian Property will be performed by Five Engineering
Consultants, Bandung, Indonesia, under the supervision of Behre Dolbear.

(6) The Company currently expends approximately $100,000 per month in general
and administrative expenses. These expenses include salaries of all
employees (including its executive officers and directors), rent, health
insurance, travel and entertainment expenses, postage and courier, and stock
transfer expenses. It is anticipated that once exploration and development
occurs on the Properties, general and administrative expenses may be paid
from such operations. To the extent that the Company does not utilize all
funds allocated for general and administrative expenses, such excess will be
retained by the Company as additional working capital.

31
<PAGE> 37

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's Bylaws authorize the creation of the offices of President,
Treasurer (Chief Financial Officer), one or more Vice Presidents, Secretary, and
one or more Assistant Secretaries and Assistant Treasurers as the Board of
Directors deems proper. The Bylaws also provide for not less than three
directors and not more than seven directors who shall hold office until the
following annual meeting of the shareholders. The Bylaws further provide that
the number of directors may be increased by the affirmative vote of the Board of
Directors or a majority in interest of the shareholders at an annual or special
meeting.

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- -----------------------------------------------
<S> <C> <C>
Christopher D. Michaels 54 President and Chairman of the Board
Jeffrey S. Kramer 43 Senior Vice President, Chief Financial Officer,
Chief Operating Officer, Secretary-Treasurer,
and Director
Stanley J. Mohr 61 Vice President of Shareholder Relations and
Director
Edna Pollock 60 Director
Joe Rude III, M.D. 52 Director
William Michaels 79 Vice President of Client Relations
Ignatius Z. Theodorou 55 President and Director of Equatorial Resources,
Ltd.
</TABLE>

CHRISTOPHER D. MICHAELS cofounded the Company in June 1986. Since then he
has served as President, Chief Executive Officer, and Chairman of the Board and
is entitled to retain his positions with the Company until the next annual
meeting of the Company's shareholders. Mr. Michaels is also a director, vice
president and chairman of the Board of Equatorial Resources, Ltd. and the
chairman and a director of Kalimantan Resources, Ltd., subsidiaries of the
Company. Mr. Michaels received a bachelor of arts degree from Alfred University
located in New York. After graduation, he accepted a post with the United States
government overseas in the Peace Corps. Since 1980, Mr. Michaels has acted in
sales and management positions in corporations whose primary business consists
of mining and minerals. Mr. Michaels has extensive background and experience in
international relations and has spent considerable time at the Company's
Bolivian mine site (closed in 1992) as well as on the Nevada Property. Mr.
Michaels is a party and is subject to the permanent injunction more particularly
described in the Section of the Prospectus entitled "LEGAL PROCEEDINGS." Mr.
Michaels has also been and is subject to a cease and desist order issued by the
Pennsylvania Securities Commission issued February 27, 1989, prohibiting the
Company, Mr. Michaels, and other executive officers from violating Section 201
of the Pennsylvania Securities Act of 1972 relating to the sale of unregistered
"penny stocks."

JEFFREY S. KRAMER, Senior Vice President, Chief Financial Officer, Chief
Operating Officer, Secretary-Treasurer and Director, has held these positions
since 1989 and is entitled to retain these positions with the Company until the
next annual meeting of the Company's shareholders. Mr. Kramer is also a
director, vice president and the secretary-treasurer of Equatorial Resources,
Ltd. and a director and the secretary-treasurer of Kalimantan Resources, Ltd. He
has held management positions with Continental Cafes. As Chief Financial
Officer, Mr. Kramer's responsibilities include business affairs, contract
administration, public relations and broker and shareholder relations. Mr.
Kramer was also responsible for management oversight of the Nevada Property
operations since 1995 and was management's liaison in negotiating the Company's
settlement with the Securities and Exchange Commission more particularly
described in the Section of this Prospectus entitled "LEGAL PROCEEDINGS." Mr.
Kramer is a party and is subject to the regulatory proceedings described in the
Section of this Prospectus entitled "LEGAL PROCEEDINGS" and the action taken by
the Pennsylvania Securities Commission detailed above with respect to Mr.
Michaels.

STANLEY J. MOHR, has been Vice President of Shareholder Relations with
Nevada Manhattan since 1986. Mr. Mohr became a Director in 1992 and is entitled
to retain his current positions with the Company until the next annual meeting
of the Company's shareholders. He is also a director of Kalimantan Resources,
Ltd. Mr. Mohr has been employed as a marketing executive with several mining and
mineral related companies

32
<PAGE> 38

and has gained extensive experience in many phases of operations in the mining
industry. Mr. Mohr held a real estate license issued by the state of California
from 1976 to 1984. Mr. Mohr was a party and is subject to the regulatory
proceedings more particularly described in the Section of the Prospectus
entitled "LEGAL PROCEEDINGS."

EDNA POLLOCK was elected to the Board of Directors on April 3, 1995, and is
entitled to retain her position as director until the next annual meeting of the
Company's shareholders. Ms. Pollock is a court reporter in North Carolina and
has been a shareholder of record since 1989. She has been an active member of
the Shareholders' Advisory Committee for several years representing shareholders
at Director's meetings. Ms. Pollock is a graduate of Columbia University, New
York, New York, having received her bachelor of arts degree in Journalism. She
spent twenty-eight years as a freelance reporter for both the federal and state
courts in North Carolina and acted in her official capacity as a court reporter
at numerous depositions, arbitrations, hearings, and conventions.

DR. JOE RUDE' III was elected to the Board of Directors on April 3, 1995,
and is entitled to retain his position as a director until the next annual
meeting of the Company's shareholders. Dr. Rude' is a radiologist and has been
practicing his medical specialty since 1977 in Georgia. Dr. Rude' has been a
shareholder of record since 1989 and has been an active member of the
Shareholders' Advisory Committee for several years representing shareholders at
Director's meetings. Since 1995, Dr. Rude' has been a diagnostic radiologist at
Quantum Radiology, Atlanta, Georgia. From 1977 to 1995, he was associated with
Cobb Radiology Associates, Austell, Georgia, which merged with Quantum Radiology
in 1995. Dr. Rude' is a graduate of the University of Texas, Austin, Texas,
where he received his bachelor of arts degree in 1966. In 1970, he was awarded a
medical degree from the University of Texas Southwestern Medical School, Dallas,
Texas. Dr. Rude' is board certified in radiology and served in the United States
Air Force as a flight medical officer from 1971 to 1973.

WILLIAM MICHAELS, Vice President of Client Relations, has served in such
capacity or in other capacities since the Company's inception. Mr. Michaels is
the father of Christopher D. Michaels, the Company's President and Chairman of
the Board. Mr. Michaels is a party and is subject to the regulatory proceedings
more particularly described in the Section of the Prospectus entitled "LEGAL
PROCEEDINGS."

IGNATIUS Z. THEODOROU, President and Director of Equatorial Resources, Ltd.
has served in such capacities since the formation of the Company's
Brazilian-based subsidiary. Mr. Theodorou is the remaining shareholder of
Equatorial Resources, owning twenty percent (20%) of such company. Mr. Theodorou
was born in Greece, but has spent a substantial portion of the last thirty-seven
(37) years in the United States. Mr. Theodorou holds dual citizenship (Greek and
U.S.) and is currently managing the Company's operations in Brazil. His
employment experience has included consulting arrangements with Dames & Moore
Consulting Company, employment as Managing Director of the Liberian-owned
shipping company Crest Lines Inc., and founder and chief executive officers of
the timber companies known as Madira Intex, S.A. International Imports and
United Amazonian Resources, Limited.

SIGNIFICANT EMPLOYEES AND CONSULTANTS

The Company has entered into employment agreements dated January 1, 1995,
with Christopher D. Michaels and Jeffery S. Kramer relating to their respective
positions as executive officers and directors of the Company. Under the terms
and conditions of these employment agreements, both Mr. Michaels and Mr. Kramer
are required to devote substantially all of their business time and effort
during normal business hours to the Company through December 31, 1997. As
compensation for the services rendered and to be rendered to the Company, Mr.
Michaels is entitled to receive an annual salary equal to One Hundred Forty-
Eight Thousand Seven Hundred Twenty-Seven Dollars ($148,727) per annum and Mr.
Kramer is entitled to a salary of One Hundred Thirty-Seven Thousand Two Hundred
Twelve Dollars ($137,212) per annum. Both the salaries of Mr. Michaels and Mr.
Kramer are to be reviewed on each anniversary date of the Agreement by the board
of directors for the purposes of either increasing or decreasing such base
salary. The Board, however, may not reduce the base salary of either Mr.
Michaels or Mr. Kramer by more than twenty percent (20%) of the base salary for
the immediately preceding year. In addition, both Mr. Michaels and Mr. Kramer
have each received 900,000 shares of the Company's Common Stock as part of their
compensation under the terms of their employment agreements.

33
<PAGE> 39

In addition to the base salaries and stock options, both Mr. Michaels and
Mr. Kramer are entitled to receive reimbursement on a monthly basis for all
reasonable expenses incurred in connection with the performance of their duties
under the employment agreement. Mr. Michaels and Mr. Kramer are also entitled to
certain fringe benefits (including, but not limited to, paid vacation and
participation in medical insurance plans and employee benefit plans) which now
are or may thereafter become available to all executive officers of the Company
and such other benefits (if any) as may be authorized from time to time by the
board of directors of the Company. The amount of such yearly fringe benefits is
approximately $6,500 and $7,700 for Mr. Michaels and Mr. Kramer, respectively.
The employment agreements also authorize these officers to receive a "merit
bonus" ranging between twenty-five percent (25%) and seventy-five percent (75%)
of such officer's base salary in the event the Company experiences operating
cash flow for a fiscal year equal to not less than One Million Dollars
($1,000,000). Specifically, if the Company's operating cash flow for any fiscal
year ranges between One Million Dollars ($1,000,000) and Two Million Dollars
($2,000,000), both Mr. Michaels and Mr. Kramer will be entitled to a "merit
bonus" equal to twenty-five percent (25%) of his base salary; if the operating
cash flow is between Two Million Dollars ($2,000,000) and Three Million Dollars
($3,000,000) for any fiscal year, the "merit bonus" will be equal to fifty
percent (50%) of such officer's base pay; and if the Company's operating cash
flow is over Three Million Dollars ($3,000,000) or more during any fiscal year,
during the term of the Agreement, such officer's "merit bonus" will be equal to
seventy-five percent (75%) of such officer's base salary. In the event of
termination of the employment agreement by the Company for cause or by such
officer without cause, the "merit bonus" is not required to be paid. In the
event of termination for any other reason, the "merit bonus" will be prorated
for the fiscal year in which termination occurs.

The employment agreements with Messrs. Michaels and Kramer contain a
covenant prohibiting such officer from engaging directly or indirectly as a
principal partner or director or officer of any business competitive with the
Company. However, such officer may hold up to a five percent (5%) equity
interest in any entity engaged in a business competitive with the Company
without violating such covenant.

The agreements contain provisions for termination in the event of such
officer's permanent disability, death, or for cause. In addition, the agreements
provide for severance compensation equal to such officer's highest monthly base
salary times thirty-six. Both Mr. Michaels and Mr. Kramer also possess an option
to acquire up to twenty-five percent (25%) of the number of then outstanding
shares of the Company's capital stock at a price of five cents per share in the
event of an occurrence of a "Change in Control." For the purposes of such
employment agreements, the term "Change in Control" shall be deemed to have
occurred if the Company sells substantially all of its assets to a single
purchaser or to a group of associated purchasers in a single transaction or
series of related transactions; shares of the Company's outstanding capital
stock constituting more than twenty percent (20%) of the voting power of the
Company's outstanding capital stock are sold, exchanged, or otherwise disposed
of in one transaction or in a series of related transactions; or the Company is
a party to a merger or consolidation in which the Company is not the surviving
entity or the Company's shareholders receive shares of capital stock of the new
or continuing corporation constituting less than eighty percent (80%) of the
voting power of the new or continuing corporation.

The Company has engaged the services of Arthur J. Mendenhall to act as
project geologist for the Nevada Property. His duties include acting as the
on-site representative of the Company and to provide geological exploration and
mining grade control of the Nevada Property on a daily basis.

Mr. Mendenhall is an experienced mining geologist. He received his bachelor
of science degree in 1971 and his master of science degree in geology from Utah
State University, Logan, Utah. Mr. Mendenhall's work experience includes roles
supervising and monitoring the work of senior geologists in the coring and
sampling of ore; working as senior geologist in the sampling and mapping of
tertiary volcanic rock formations in gold exploration projects; collecting
cuttings and core samples for geochemical analyses; drafting drill hole cross
sections; and supervised drilling operations for bentonite and iron ore. Mr.
Mendenhall has completed the Occupational & Safety Hazard Agency ("OSHA")
forty-hour hazardous waste site training course and OSHA'S refresher course, and
has attended other geological seminars and courses relevant to mining. Mr.
Mendenhall is a registered geologist in the Commonwealth of Pennsylvania and a
member of the Geological Society of America.

34
<PAGE> 40

AGREEMENT WITH GOLD KING MINES CORPORATION

On April 1, 1995, the Company entered into an Agreement with Gold King
Mines Corporation ("Gold King"), Denver, Colorado. Under the terms of this
Agreement, Gold King has agreed to provide the services of William R. Wilson on
a consulting basis at the rate of $400 per day. The initial term of the
consulting agreement was through December 31, 1995, and extended for one-year
periods upon mutual agreement between Gold King and the Company. Gold King and
the Company have extended this consulting agreement for two years.

Mr. Wilson has provided various services to the Company including the
preparation of the Business Plan. Mr. Wilson possesses a professional degree in
metallurgical engineering from the Colorado School of Mines, Golden, Colorado,
and has been awarded a Master's in Business Administration from the University
of Southern California, Los Angeles, California. In his more than thirty years
of experience, Mr. Wilson has, for the past fifteen years, served in various
seniority executive capacities with engineering, construction, and consulting
firms, many of such capacities as president or the chief executive officer of
mining companies operating in the United States and internationally. Mr. Wilson
is the past chairman of the Colorado Mining Association. Gold King is a
subsidiary of Sheridan Reserve Corporation, a publicly-traded resource company
based in Toronto, Canada.

Mr. Wilson's primary responsibility to the Company has been and will be to
act as project manager for the Nevada Property and to act as the Company's
representative to Harrison Western Mining & Construction Company, the mining
contractor for the Nevada Property. Mr. Wilson will also provide technical and
managerial consulting to the Company on the Indonesian Property.

AGREEMENT WITH BEHRE DOLBEAR & COMPANY, INC.

The Company entered into a Consulting Services Agreement (the "Consulting
Agreement") with Behre Dolbear & Company, Inc. ("Behre Dolbear"), an
internationally recognized mining consulting firm. Under the terms of the
Consulting Agreement, Behre Dolbear will be responsible for providing
independent technical advisory services relating to the Indonesian Property.
Such services initially require Behre Dolbear to advise and validate the
exploration program contemplated by the Company and would include related
technical input for other aspects of project development. The term of the
Consulting Agreement is for six months or upon satisfactory completion of the
consulting services contemplated prior to such expiration date. The Company has
agreed to pay Behre Dolbear the hourly rate of $137.50 up to a maximum of $1,100
per diem for the services contemplated under the Consulting Agreement and has
committed to utilize Behre Dolbear a minimum of two days per month. Unused days
will accrue under the Consulting Agreement, but will be forfeited if not
utilized prior to the expiration of the term of the agreement. The Company must
also reimburse Behre Dolbear for any travel, reasonable and necessary lodging
expenses (including meals), telegram, cable, telex charges; a 2.5% "flat" labor
charge in lieu of actual telephone charges; printing, copies, reproduction, and
fax charges; postage, courier, express, and freight charges; use of personal
automobiles; royalties on computer software; professional liability insurance
(assessed on a 1.5% flat fee basis); clerical fees at the rate of $35 per hour;
and other costs and expenses incurred by Behre Dolbear and/or its personnel in
performing the services contemplated by the Consulting Agreement.

AGREEMENT WITH BRITISH FAR EAST HOLDINGS LTD.

On April 30, 1997, the Company entered into a financial and management
services agreement with British Far East Holdings Ltd. ("BFE"). Under this
agreement, BFE has agreed to provide the personal services of Arthur Lipper III
to the Company for a period of thirty-six months to assist the Company with
respect to financial and business matters. The Company has agreed to pay BFE
$5,000 per month for the first three days of service and $1,000 per diem for
each additional day of service rendered by Mr. Lipper under the contract. The
agreement also grants to BFE warrants to purchase up to 100,000 shares of the
Company's Common Stock at one hundred twenty percent (120%) of the April 30,
1997 market price of $5.75 per share (subject to adjustment for certain events)
vesting at the rate of thirty-three and one-third percent (33 1/3%) per year
after the first twelve months of service. In addition to the services provided
under the contract, Mr. Lipper has also tentatively agreed to join the Company's
Board of Directors subject to his completion of due dilegence of the Company's
operations.

35
<PAGE> 41

AGREEMENT WITH ECO-RATING INTERNATIONAL

In order to better assure compliance with applicable Brazilian
environmental laws and regulations, the Company has entered into an agreement
with Eco-Rating International, Zurich, Switzerland ("Eco-Rating"). Under the
terms of the agreement, Eco-Rating has agreed to develop an "eco-efficiency
model" designed to establish environmental management guidelines for the
Company's operations in Brazil. It is the objective of the Company to establish
a reputation as a leader in the timber industry in environmentally-related
issues and to develop its properties in a manner best designed to properly
reclaim any areas harvested pursuant to its concessions.

SHAREHOLDERS' ADVISORY COMMITTEE

In 1989, the Company formed a Shareholder Advisory Committee (the "Advisory
Committee") comprised of up to 12 outside shareholders. The purpose of the
Advisory Committee is to participate in directors' meetings and compensation
meetings, as well as plan meetings related to all aspects of corporate
development. Members are selected annually from a group of shareholders who
respond to Company inquiries regarding interest in participating on the Advisory
Committee. Membership is rotated annually. One of the primary purposes of this
Committee is to provide independent, shareholder participation in critical
decisions relating to overall corporate strategy.

EXECUTIVE COMPENSATION

The table set forth below identifies the compensation paid to the Company's
executive officers for the last three completed fiscal years (i.e. fiscal years
ending May 31, 1995; May 31, 1996; and May 31, 1997):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------- -----------------------
------------------------------------------------ RESTRICTED SECURITIES ALL
NAME AND OTHER STOCK UNDERLYING LTIP OTHER
PRINCIPAL ANNUAL AWARD(S) OPTIONAL/ PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) ($) SARS(#) ($) ($)
- ----------------------- ---- --------- -------- ------------------ ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $251,299 -- $ 6,264 -- 10,000(2) -- --
Christopher Michaels,
President 1996 $100,449 -- $ 6,316 $225,000(3) 10,000 -- --
and Chairman of the
Board 1995 $148,727 -- $ 5,712 -- 10,000 -- --
--
1997 $224,397 -- $ 8,080 -- 10,000(2) -- --
Jeffrey Kramer, Senior
Vice 1996 $117,791 -- $ 7,658 $225,000(3) 10,000 -- --
President and
Director............. 1995 $137,212 -- $ 6,564 -- 10,000 -- --
</TABLE>

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

(1) The Company incurs the annual cost of health insurance for Messrs. Michaels
and Kramer and their respective dependents.

(2) The Company has granted stock options to all members of its board of
directors in the amount of 10,000 shares per full year of service as an
active member of the board. These options may be exercised at $1.00 per
share of Common Stock. Options may not be exercised after the expiration of
10 years from the date of the grant and are nontransferable other than by
inheritance. As of the date of this Prospectus, the Company has granted
options aggregating 110,000 shares to Mr. Michaels and 80,000 shares to Mr.
Kramer.

(3) The Company granted Messrs. Michaels and Kramer the option to purchase
900,000 shares of Common Stock each at an average price of $1.50 per share.
These options were exercised during the year ended May 31, 1996, at which
time the Company's board of directors agreed to issue these shares for
services rendered. The Company has valued these restricted securities to be
worth twenty-five cents ($.25) per share.

<PAGE> 42

OPTIONS AND STOCK APPRECIATION RIGHTS

The table set forth below provides certain information concerning
individual grants of stock options and stock appreciation rights (whether
granted in connection with stock options or as "freestanding" rights made during
the last fiscal year ending May 31, 1997) to each of the named executive
officers, directors and others noted below:

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE EXPIRATION
NAME GRANTED IN FISCAL YEAR PRICE($/SH) DATE
- ---------------------------------------------- ----------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Christopher D. Michaels(1).................... 110,000 10% $ 1.00 May 31, '06
Jeffrey S. Kramer(1).......................... 80,000 14% $ 1.00 May 31, '06
Stanley Mohr(1)............................... 50,000 25% $ 1.00 May 31, '06
Edna Pollock(1)............................... 20,000 100% $ 1.00 May 31, '06
Joe Rude' III(1).............................. 20,000 100% $ 1.00 May 31, '06
Lloyd S. Pantell, Esq.(2)..................... 100,000 100% $ 4.00 May 31, '06
</TABLE>

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

(1) The Company has granted stock options to all members of its board of
directors pursuant to Stock Option Agreements executed at various times.
Under the terms of these agreements, each director has been granted options
to purchase 10,000 shares of Common Stock per full year of service. The
exercise price for such options is $1.00 per share. The years in which stock
options were initially granted to each respective board member are as
follows: Christopher Michaels, 1986; Jeffrey Kramer, 1989; Stanley Mohr,
1993; Edna Pollock, 1996; and Joe Rude' III, 1996. In 1996, the Stock Option
Agreements relating to Messrs. Michaels, Kramer and Mohr were extended so
that they may be exercised through May 31, 2006. The remaining may not be
exercised after the expiration of ten (10) years from the date of grant and
are nontransferable other than by inheritance.

(2) Mr. Pantell is an attorney who is a principal in Lloyd S. Pantell, APLC who
has performed substantial legal services to the Company. Under the terms of
the option agreement, Mr. Pantell has been granted options to purchase
100,000 shares of common stock. The exercise price for such options is $4.00
per share. The options may be exercised at any time through May 31, 2006 and
are nontransferable other than by inheritance.

<PAGE> 43

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND

FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF
SECURITIES UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED OPTIONS/SARS OPTION/SARS
ON AT MAY 31, 1997 AT MAY 31, 1997
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------- -------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Christopher D. Michaels....................... 0 0 110,000 $550,000
Jeffrey S. Kramer............................. 0 0 80,000 $400,000

</TABLE>

LIMITATIONS ON DIRECTOR AND OFFICER LIABILITY

The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination may be made by the shareholders, by a majority of the directors
who were not parties to the action, suit, or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit, or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees, and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable.

38
<PAGE> 44

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Company is a timber and mining company, with corporate offices in
Calabasas, California, owning interest(s) in certain timber or mining properties
located in the (1) state of Para, Brazil (the "Brazilian Timber Properties");
(2) Manhattan Mining District, Nye County, Nevada, (the "Nevada Property"); (3)
Indonesian Gold Belt, Kalimantan, Indonesia (the "Indonesian Gold Concessions");
(4) Kutai District of East Kalimantan, Indonesia (the "Indonesian Coal
Concessions"); and (5) on the island of Sumatra, Indonesia. The terms and
conditions of these acquisitions and the risks and contingencies associated with
such ownership interests are more particularly described in the Section of the
Prospectus entitled "DESCRIPTION OF COMPANY'S BUSINESS AND PROPERTY" AND "RISKS
FACTORS."

COMPARISON OF RESULTS OF OPERATIONS -- YEAR ENDED MAY 31, 1997
COMPARED TO YEAR ENDED MAY 31, 1996

Net loss for the year ended May 31, 1997 was $4,213,009 as compared to
$1,325,094 for the year ended May 31, 1996. The Company experienced its first
sales of Brazilian timber during the year ended May 31, 1997, resulting in
revenues of $287,178 with a gross profit of $26,089. The principal increases in
expenses during the year ended May 31, 1997, were attributed to expenses in
Brazil (approximately $145,000), office salaries (approximately $145,000),
travel (approximately $215,000), stock for services to employees ($240,000),
consulting fees ($115,000), legal fees ($175,000), discount on options
($150,000), warrant expenses ($1,200,000), financing expense of $677,000 related
to conversion of debt to common stock and a general increase in other expenses
attributable to the Company's increased activities from the previous year.
During the year ended May 31, 1997, the Company invested $2,600,000 in Common
Stock toward the purchase of certain contractual rights to the seven (7) gold
mining concessions comprising the Indonesian Gold Concessions, $227,000 toward
certain exploration activities relating to the Silobat Property (one of the
Indonesian Gold Concessions), $1,670,000 ($700,000 in Common Stock) toward the
acquisition of and improvements to the infrastructure relating to the Brazilian
Timber Properties, and $2,350,000 ($250,000 in Common Stock) in development
activities on the Nevada Property.

As of July 1, 1997, Brazil is no longer considered a highly inflationary
economy under SFAS 52. Therefore, translation adjustments will begin to be
accumulated in a separate component of equity. Translation adjustments during
the year ended May 31, 1997 were taken to income and were not material to the
Company's results of operations.

YEAR ENDED MAY 31, 1996 COMPARED TO YEAR ENDED MAY 31, 1995

During the year ended May 31, 1996, the Company reported an operating loss
of $1,325,094 as compared to an operating loss of $698,103 for the year ended
May 31, 1995. The difference between these two periods was principally due to
the issuance of stock to officers for services rendered of $485,000. There was
an increase of $233,981 in cash and cash equivalents for the year ended May 31,
1996 as compared to a decrease in cash and cash equivalents of $78,613 for the
previous fiscal year. The improvement in the availability of cash and cash
equivalents to the Company was the result of the sale of $1,255,325 in stock
offered and sold through private placements. By contrast, the Company sold
$726,013 in stock through private placements for the year ended May 31, 1995.

YEAR ENDED MAY 31, 1995 COMPARED TO YEAR ENDED MAY 31, 1994

The Company incurred a net loss of $698,103 in fiscal 1995 compared to a
net loss of $572,140 during fiscal 1994. The principal reason for the increased
loss was due to an increase in salaries of approximately $150,000. The Company
used $703,043 cash in operating activities in 1995 compared to $749,057 in 1994.
Investment in property and equipment was similar each year: $59,466 in 1995
compared to $116,777 in 1994. Proceeds from issuance of stock amounted to
$726,013 in 1995 compared to $975,469 in 1994.

39
<PAGE> 45

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital position as of May 31, 1997, was a deficit of
approximately $762,000. Almost since inception, the Company has experienced
pressure on its working capital position due to operating losses and the need to
continually invest in exploration and development activities on the Nevada
Property and, more recently, the Silobat Property, the remainder of the
Indonesian Concessions, and the Brazilian Concessions.

To raise funds in the past, the Company has relied upon private placements
of its equity securities. Over the past three years, the Company has raised
approximately $5,755,941 pursuant to three such private placements of the
Company's Equity Securities. The Brazilian operations represent an immediate
opportunity for the Company to generate significant cash flows for the first
time. The Company has also recently concluded a privately-negotiated placement
of approximately Three Million Five Hundred Thousand Dollars ($3,500,000) of 8%
Senior Convertible Debentures within certain investments. This private
placement, together with the cash flow anticipated from the Company's operations
in Brazil, should satisfy the Company's immediate need for the significant
amounts of capital for its overseas acquisitions and operations in both
Indonesia and Brazil. The Company believes that with the anticipated increase in
daily production at its Brazilian operations, much of its continued operations
in Brazil, Indonesia, and on the Nevada Property will be funded by the cash flow
generated on the Terranorte Concessions.

The Company believes that the Debentures will be converted into Common
Stock in accordance with their provisions. However, the Company also projects
that the cash flow from its Brazilian operations will be adequate to satisfy the
Company's need for current liquidity and liquidate the Debentures in the event
that the Debentures are not converted into Common Stock. The Company's
$3,000,000 payable in December 1998 to its officer in Brazil will be paid in
cash, if available, from cash flow, or the Company has an option to "put"
1,000,000 shares of Common Stock to the officer to satisfy the obligation.

EXPENDITURES FOR BRAZILIAN OPERATIONS

The Company has budgeted up to $3,800,000 during fiscal year 1998 (ending
May 31, 1998) for its Brazilian operations. This amount is projected to be
expended as follows:

- Improvements to sawmill facility -- $350,000

- Timber harvesting operations -- $1,950,000

- Additional property acquisitions $1,500,000

EXPENDITURES FOR NEVADA FOR FURTHER DEVELOPMENT

A total of $1,500,000 has been budgeted for fiscal 1998 for expenditure on the
Nevada Property as follows:

- Complete access to the White Cap Mine -- $800,000

- Continue exploration/development of open pit mining targets -- $200,000

- Acquire up to a 50% interest in the New Concepts Mining, Inc.,
mill -- $500,000

EXPENDITURE FOR INDONESIA FOR FURTHER DEVELOPMENT

A total of $1,500,000 has been budgeted for fiscal 1998 for expenditure on the
Indonesian Concessions as follows:

- Preliminary drill program for Silobat -- $100,000

- Expanded drill program for Silobat -- $300,000

- Drill program for three coal properties -- $500,000

- Reconnaissance/sampling program for other gold properties -- $600,000

40
<PAGE> 46

CONTINGENCIES REGARDING NEVADA PROPERTY

Management has anticipated various contingencies regarding the Nevada
Property in addition to following the Nevada Business Plan. Included are plans
to develop open pit mining prospects on the existing property controlled by the
Company. Mining would be conducted by the current mining contractor and the ore
would be milled at the New Concepts Mill. Efforts will continue in order to
acquire an interest in adjoining properties adjacent to the Nevada Property and
an interest in the New Concepts Mining, Inc., mill either through joint venture
arrangements or through purchase. The Company cannot quantify the costs of these
efforts, but the efforts are limited to funds available from sources described
in various parts of this offering.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information as of May 31, 1997,
regarding the record and beneficial ownership of the Common Stock and Preferred
Stock with respect to: (i) any individual or group of affiliated individuals or
persons owning, of record or beneficially, five percent (5%) or more of the
outstanding shares of the Common Stock or the Preferred Stock; (ii) the amount
of shares of Common Stock or Preferred Stock owned by each executive officer and
director of the Company; and (iii) the number of shares of Common Stock and/or
Preferred Stock owned, of record or beneficially, by the directors of the
Company as a group. Except as otherwise indicated, the Company believes that the
beneficial owners listed below, based upon information provided by such owners,
have sole voting and investment power with respect to such shares.

PRINCIPAL SHAREHOLDERS

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNER CLASS(1)
- -------------- ------------------------------- ------------------- ----------------
<S> <C> <C> <C>
Common Christopher D. Michaels 1,294,510(2) 8.66%
876 Ballina Court
Newbury Park, California 91320
Common Jeffrey S. Kramer 1,180,000(3) 7.89%
6053 Paseo Canyon Drive
Malibu, California 90265
Common Joe C. Rude' III, M.D. 1,284,150(4) 8.59%
3065 River N. Pkwy.
Atlanta, Georgia 30328
Common David Weissberg, M.D. 1,109,900 7.43%
29 Blair Drive
Huntington, New York 11743
Common All Officers and 4,042,160(5) 27.04%
Directors as a Group
(6 persons)
</TABLE>

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

(1) In addition to the 12,273,565 shares of Common Stock outstanding as of May
31, 1997, the percentages noted in this column assume the conversion of
228,319 shares of Preferred Stock into 2,283,190 shares of Common Stock, and
the issuance of 390,000 shares of Common Stock pursuant to various options
primarily to existing management which may be issued in whole or in part
within 60 days of the date of this Prospectus.

(2) Includes options to purchase up to 110,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.

(3) Includes options to purchase up to 80,000 shares of Common Stock which may
be exercised in whole or in part within 60 days of the date of this
Prospectus.

(4) Includes shares owned by Carolyn Rude and Cobb Radiology (an affiliate of
Dr. Rude) as well as options to purchase up to 20,000 shares of Common Stock
which may be exercised in whole or in part within 60 days of the date of
this Prospectus.

41
<PAGE> 47

(5) Includes options to purchase up to 280,000 shares of Common Stock by all
Directors or Officers as a group which may be exercised in whole or in part
within 60 days of the date of this Prospectus.

SELLING SHAREHOLDERS

None of the following Selling Shareholders have held any position, office
or been a party to a material relationship with the Company, any predecessor in
interest, or affiliates within the past three years.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
SHARES BENEFICIALLY NUMBER OF SHARES --------------------------------
OWNED PRIOR TO
OFFERING BEING OFFERED NUMBER PERCENT
---------------------- ---------------- -------------- -------------
NAME NUMBER PERCENT(1) MIN. MAX. MIN. MAX. MIN. MAX.
- ----------------------------- --------- ---------- ---- --------- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Silenus Limited
c/o Betuvo AG,
Baoerostrase 73
Postfach 6302
Zug, Switzerland 42,244(2) .28% 0 700,000(3) 0 700,000 0 4.69%

Mary Park Properties
3 Tora Mezion Street
Jerusalem, Israel 98,431(4) .66% 0 98,431 0 98,431 0 .66%

UFH Endowment, Ltd.
c/o CH Financial Services
160 Central Park South
Suite 3212
New York, NY 123,040(4) .82% 0 123,040 0 123,040 0 .82%

Austat Anstalt Schaan
7440 Fuerstentium
Liechtenstein,
Landstrassa 163 123,040(4) .82% 0 123,040 0 123,040 0 .82%

Mendel Group, Inc.
17 West 17 Street
8th Floor
New York, New York 10011 25,838(4) .17% 0 25,838 0 25,838 0 .17%

Irv Reneisson
660 Newtown/Yardley Road
Newtown, Pennsylvania 18940 100,000 .67% 0 100,000 0 100,000 0 .67%

Harrison Western
Construction Company
1208 Quail Street
Lakewood, Colorado 80215 100,000 .67% 0 100,000 0 100,000 0 .67%
</TABLE>

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

(1) Except where otherwise described in these footnotes, the percentages noted
in this column represent the ratio that a shareholder's beneficial ownership
bears to the total number of shares outstanding and issued as of May 31,
1997, 12,273,565; the conversion of all Preferred Stock issued and
outstanding as of May 31, 1997, into the Common Stock on a ten-to-one basis
(2,283,190 shares of Common Stock); plus the number of stock options issued
and outstanding as of February 28, 1997, 380,000.

(2) Pursuant to the terms and conditions of the April 14, 1997, Subscription
Agreement and related documents, Silenus redeemed $200,000 in Debentures on
July 25, 1997, and received 42,244 shares of Common Stock.

(3) The Subscription Agreement requires the Company to register shares of Common
Stock to account for the conversion of the 8% Senior Secured Convertible
Debentures and the exercise of warrants to purchase Common Stock. To date,
only $2,000,000 in Debentures have been issued. 700,000 shares of Common
Stock are hereby being registered to assure that there are a sufficient
number of shares of Common Stock registered to account for the conversion of
all remaining Debentures and the exercise of all 62,500 warrants. If the
exercise price for the conversion of the Debentures is less than $1.90 per
share, additional shares of Common Stock may be required to be registered
pursuant to this offering.

42
<PAGE> 48

(4) Assumes the conversion of all Debentures at $5.10 per share (based upon 75%
of the "bid" price of $6.825 as of July 16, 1997), plus the exercise of all
warrants to purchase Common Stock issued in conjunction with the Debentures.

OUTSTANDING WARRANTS

The Company has issued warrants to purchase Common Stock to a number of
persons and entities. The following chart summarizes such issuances and details
the terms of each parties warrants:

OUTSTANDING WARRANTS

<TABLE>
<CAPTION>
EXERCISE ISSUANCE EXPIRATION
NAME AMOUNT PRICE DATE DATE
- ----------------------------------------- ------- -------- -------------- --------------
<S> <C> <C> <C> <C>
Holston, John 100,000 $ 1.50 Oct. 8, 1996 Apr. 7, 1998
Weissberg, David 125,000 $ 2.50 Nov. 26, 1996 Nov. 25, 1998
Renneisen, Irv 125,000 $ 2.50 Nov. 26, 1996 Nov. 25, 1998
Silenus Limited 62,500 $ 8.00 April 17, 1997 April 16, 2002
British Far East Holdings, Ltd. 100,000 $ 6.90 April 30, 1997 N/A
Magerman, Alan 350,000 $ 4.06 June 2, 1997 June 1, 2002
Austat Anstalt Schaan 25,000 $ 6.75 July 15, 1997 July 16, 2002
Mary Park Properties 20,000 $ 6.75 July 15, 1997 July 16, 2002
UFH Endowment, Ltd. 25,000 $ 6.75 July 15, 1997 July 16, 2002
Mendel Group, Inc. 5,250 $ 6.75 July 15, 1997 July 16, 2002
</TABLE>

Several of the warrant holders listed above were granted registration
rights on the underlying Common Stock. As a result, the Company is registering
such shares pursuant to this Offering. Specifically, Silenus Limited, Austat
Anstalt Schaan, Mary Park Properties, UFH Endowment, Ltd. and the Mendel Group,
Inc. were granted such rights. See "SELLING SHAREHOLDERS."

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the last fiscal year the Company entered into certain transaction
with Jeffrey S. Kramer, an officer and Director of the Company who is more
particularly described in the Section of this Registration Statement entitled
"MANAGEMENT." Specifically, as of August 2, 1997, Mr. Kramer has lent the
Company an aggregate of $258,000 which is evidenced by promissory notes payable
in his name (the "Notes"). The Note are: unsecured, payable on demand and bear
interest at the rate of 6.6%. As of this time, no payment demand has been made
on the Notes.

DESCRIPTION OF SECURITIES BEING OFFERED

The following description of the capital stock of the Company and certain
provisions of the Company's Amended Articles of Incorporation and Certificate of
Determination of Preferences of Series A Preferred Stock is a summary and is
qualified in its entirety by the provisions of those documents which have been
filed as exhibits to the Company's Registration Statement of which this
Prospectus is a part.

COMMON STOCK

The issued and outstanding shares of Common Stock, including the shares
being offered hereby, are validly issued, fully paid, and nonassessable. Subject
to the rights of holders of Preferred Stock, the holders of outstanding shares
of the Common Stock are entitled to receive dividends out of assets legally
available therefor at such time and at such amounts as the board of directors
may, from time to time, determine. See "Dividend Policy." The shares of Common
Stock are neither redeemable nor convertible and the holders thereof have no
preemptive or subscription rights to purchase any securities of the Company.
Upon liquidation, dissolution, or winding up of the Company, the holders of the
Common Stock are entitled to

43
<PAGE> 49

receive, pro rata, the assets of the Company which are legally available for
distribution after payment of all debts and other liabilities and are subject to
the rights of any holders of the Preferred Stock then outstanding. Before
declaring any dividends, the board of directors may set apart, out of any funds
of the Company available for dividends, such sum or sums as they may, from time
to time, deem in their discretion to be proper working capital or as a reserve
fund to meet contingencies or for equalizing dividends or for such other
purposes as the directors shall deem conducive to the interests of the Company.
Each outstanding share of Common Stock is entitled to one vote on all matters
submitted to a vote of stockholders if there is no cumulative voting in the
election of directors.

PREFERRED STOCK

The Company's Amended Articles of Incorporation and its Certificate of
Determination of Preferences of Series A Preferred Stock authorized the Company
to issue up to 250,000 shares of the Preferred Stock. The holders of the
Preferred Stock are entitled to receive dividends at the rate of eight percent
per annum of the original issue price per share out of any funds legally viable
therefor payable on each January 1, April 1, July 1, and October 1 after the
issuance of the Preferred Stock. Dividends on the Preferred Stock are cumulative
so that if the full dividends in respect of any preference dividend is not paid,
the deficiency will be fully paid or declared and set apart for such shares
(without interest) before any dividend or other distribution is paid on or
declared or set apart for any other class or series of the Common Stock or
preferred shares of the Company. The Company enjoys the right to pay any
dividend on the Preferred Stock in cash or through the issuance of additional
shares of Preferred Stock or Common Stock having an issue price equal to the
amount of the dividend or through a combination of cash and stock. In the event
of any liquidation, dissolution, or winding up of the Company, either
voluntarily or involuntarily, the holders of the Preferred Stock will be
entitled to receive prior and in preference to any distribution of any of the
assets or surplus funds of the Company to the holders of the Common Stock or any
other class of preferred shares of the Company an amount equal to $10 per share
plus a further amount equal to any dividends declared, but unpaid on such
shares. In the event of any consolidation or merger of the Company, or a sale of
all or substantially all of the assets of the Company, or a series of related
instructions in which more than fifty percent of the voting power of the Company
is disposed of, holders of the Preferred Stock will not be entitled to treat
such event as a liquidation, dissolution, or winding up of the Company. The
Company has and intends to implement the right granted to each holder of the
Preferred Stock to convert each such share into 10 shares of fully priced and
nonaccessible shares of the Common Stock as of the date of this Prospectus.

CONVERTIBLE DEBENTURES

The Company recently completed two private placements of Convertible
Debentures in the aggregate amount of $3,505,000. The private offerings were
made in reliance upon the exemption from registration afforded by Section 4(2)
of the Securities Act of 1933. The terms of the offerings were as follows:

On April 14, 1997, the Company entered into a Subscription Agreement with
Silenus Limited ("Silenus") in a negotiated private placement. This transaction
was made in reliance upon the exemption from registration afforded by Section
4(2) of the Securities Act of 1933. As a result, the Company issued $2,000,000
of 8% Senior Secured Convertible Debentures due March 31, 2000 (the
"Debentures") and granted to Silenus a warrant to purchase 62,500 shares of the
Company's Common Stock (the "Warrant").

The Debentures may be converted into shares of Common Stock at any time
commencing June 2, 1997 through August 16, 1997 at a price equal to the lesser
of: seventy-five percent (75%) of the closing bid price of the Common Stock on
April 16, 1997 (i.e. 75% X $8.00, or $6.00 per share); seventy-five percent
(75%) of the closing bid price of the Common Stock on the day prior to the
funding of any subsequent funding ("tranche"); or seventy-five percent (75%) of
the average closing bid price for the five trading days immediately preceding
the actual date of conversion of the Debentures. If conversion is made after
August 16, 1997, the conversion price will be seventy-two and one-half percent
(72.5%) of the above-referenced valuation standards.

44
<PAGE> 50

The Company is required to use its "best efforts" to cause the Registration
Statement to become effective prior to August 16, 1997. If the Registration
Statement does not become effective by August 16, 1997, the Company is required
to pay liquidated damages to Silenus equal to two percent (2%) of the Debentures
for the first thirty (30) days and three percent (3%) per month thereafter until
the Registration Statement becomes effective.

Provided Silenus and the Company fund at least two tranches of $2,000,000
each, Silenus will be entitled to a right of first refusal for one year to
participate in all or any part of any equity securities (i.e., stock or
securities convertible into equity) subsequently issued or proposed to be issued
by the Company. In addition, the Company will be prohibited from issuing any of
its securities at a discount (other than in connection with any merger,
acquisition, or certain benefit plans) for a period of ninety days following the
funding of the last tranche. The Company may notify Silenus that a funding is
requested at any time after the effective date of the Registration Statement
until the funding of the last tranche. In such event, should Silenus elect not
to fund the tranche so requested, the Company may issue its securities at a
discount to a third party, provided a public distribution of the securities sold
to such third party is not made until at the earlier of: ninety days following
the effective date of the Company's Registration Statement on Form 10 or the
date on which at least seventy-five percent (75%) of the Debentures are
converted.

Until Silenus has converted at least seventy-five percent (75%) of the
Debentures, a deed of trust on the Nevada Property and the pledge of 1,000,000
shares of Common Stock will secure the Debentures.

In July 1997, Silenus notified the Company that it had elected to convert
$200,000 of the Debentures on July 14, 1997, the Company issued 42,244 shares
and returned $200,000 of the Debentures issued to Silenus.

On July 17, 1997 the Company entered into Subscription Agreements with,
Mary Park Properties, UFH Endowment Fund, Ltd., Austat Anstalt Schaan, and the
Mendel Group (the "Investor Group") in a negotiated private placement. This
transaction was made in reliance upon the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933. As a result, the Company issued
$1,505,000 of 8% Senior Convertible Debentures due July 1, 2002 (the "July
Debentures") and granted to the Investor Group warrants to purchase an aggregate
of 75,250 shares of the Company's Common Stock (the "July Warrants").

The July Debentures may be converted into shares of Common Stock at any
time commencing July 18, 1997 through July 1, 2000 at a price equal to
Seventy-five percent (75%) of the Market Price (as defined below) of the Common
Stock for all conversions for which notice is received after the date hereof.
For purposes of this Section 4, the "Market Price" shall be the lesser of (a)
the closing bid price of the Common Stock on the day prior to closing; or (b)
the average closing bid price of the Common Stock for the five (5) New York
Stock Exchange Trading days immediately preceding each conversion date, in each
case as reported by the National Association of Securities Dealers Automated
Quoting System, or as reported by the American Stock Exchange of the Common
Stock shall then be listed in trading upon such exchange.

The July Debentures bear interest at a coupon rate of 8% per annum. Such
interest is payable quarterly on the last calendar day of June, September,
December and March of each year. Interest may be paid in either cash or Common
Stock and will continue to accrue until payment in full of the principal amount
of the July Debentures has been made or duly provided for.

The Company is required to use its "best efforts" to cause the Registration
Statement to become effective prior to November 14, 1997. If the Registration
Statement does not become effective by November 14, 1997, the Company is
required to pay liquidated damages to the Investor Group equal to two percent
(2%) of the Debentures for the first thirty days and three percent (3%) per
month thereafter until the Registration Statement becomes effective.

The Company has also issued to the Investor Group warrants to purchase
75,250 shares of Common Stock. The warrant may be exercised at any time up to
and through July 16, 2002 at the price of $6.75 per share. The exercise price is
subject to adjustment to account for payments of dividends, stock splits,
reverse stock splits, and similar events.

45
<PAGE> 51

In order to provide for the issuance of all shares of Common Stock which
may be issued pursuant to the Subscription Agreement and Warrants, the Company
agreed to register approximately 370,000 shares of Common Stock.

DIVIDEND POLICY

The Company has established a policy of not paying dividends on the Common
Stock and anticipates that this policy shall remain in effect until further
notice. To date, the Company has not paid any dividends in cash or in stock on
the Preferred Stock. Management of the Company is currently planning and
arranging for payment of all cumulative dividends on the Preferred Stock through
the issuance of shares of Common Stock after giving effect to the conversion of
Preferred stock to Common Stock on a ten-for-one basis.

DILUTION

The net tangible book value of the Company at May 31, 1997, was
approximately fifty-two cents ($.52) per share. After taking into consideration
the conversion rights of the shareholders holding Preferred Stock as of May 31,
1997 (but exclusive of any dividends paid in stock), the total number of shares
of Common Stock outstanding as of May 31, 1997, the conversion by Silenus
Limited of all Debentures at an effective conversion price of $ per share
and assuming all shares of the Company's Common stock are sold pursuant to this
Offering, the net tangible book value of the Common Stock immediately after the
Offering (after deducting $ for Organization and Offering Expenses)
will be approximately per share of Common Stock. Investors who
subscribe to shares of the Common Stock under circumstances whereby all shares
of Common Stock are sold pursuant to this Offering will therefore realize an
immediate dilution of Dollars Cents ($ ) per share of Common Stock.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Offering price per share........................................ $
Net tangible book value before Offering(1)...................... $
Increase attributable to new Investors.......................... $
Pro forma net tangible book value after Offering................ $
-----
Dilution to new Investors(2).................................... $
-----
</TABLE>

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

(1) Determined by dividing the tangible net worth of the Company at May 31, 1997
by the number of shares outstanding as of that date (after taking into
consideration the conversion rights of Preferred Shareholders).

(2) The difference between the Subscription price of the Common Stock and the
net tangible book value per share of Common Stock after the Offering,
assuming all shares are sold pursuant to the Offering.

By contrast, the net tangible book value of the Common Stock immediately
after the Offering (after deducting $ in Organization and Offering
Expenses) will be approximately ($ ) per share of Common Stock.
Investors who subscribe to Common Stock under these circumstances will therefore
realize an immediate dilution of ($ ) per share of Common Stock.
The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Offering price per share........................................ $
Net tangible book value before Offering(3)...................... $
Increase attributable to new Investors.......................... $
Pro forma net tangible book value after Offering................ $
-----
Dilution to new Investors(4).................................... $
-----
</TABLE>

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

(3)Determined by dividing the tangible net worth of the Company at May 31, 1997
by the number of shares outstanding as of that date (after taking into
consideration the conversion rights of Preferred Shareholders).

46
<PAGE> 52

(4) The difference between the Subscription price of the Common Stock and the
net tangible book value per share of Common Stock after the Offering,
assuming only shares are sold pursuant to the Offering.

The Offering price for the Common Stock offered pursuant to this Offering
must be compared to the prices paid by and options granted to certain of the
Company's executive officers and the Selling Shareholders. In the case of all
options to purchase Common Stock, each recipient has the right to purchase
shares for a period of ten (10) years from the date of the grant as described in
further detail in the Sections of this Prospectus entitled
"MANAGEMENT -- Executive Compensation" and "MANAGEMENT -- Options and Stock
Appreciation Rights." In the case of the sale of Common Stock, Messrs. Michaels
and Kramer have paid, on the average, $2.53 and $2.03 per share, respectively,
while the Selling Shareholders have paid between $ and $ per share for the
Common Stock.

REGISTRATION RIGHTS

The Company has entered into agreements with various shareholders (the
"Selling Shareholders") to attempt to effect registration of their shares of
Common Stock. The Company has obtained registration of all persons who are
Selling Shareholders pursuant to Form SB-2 filed in connection with this
Offering. The Selling Shareholders and their relation to the Company are more
particularly described in Form SB-2 and in the Section of the Prospectus
entitled "PRINCIPAL AND SELLING SHAREHOLDERS."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock and the Preferred
Stock is US Stock Transfer Corporation, Glendale, California.

MARKETS FOR SECURITIES AND RELATED STOCKHOLDER MATTERS

PUBLIC MARKET

The Company received approval for trading of its Common Stock on the
Electronic Bulletin Board (NASDAQ) in March 1996. From the period from December
1995 until March 1996, the Company published "bid" and "ask" prices on the "pink
sheets." The low and high prices for the Common Stock since commencement of
quotations are as follows:

<TABLE>
<CAPTION>
HIGH DATE LOW DATE
- ------ ---------------------------- ------ ----------------------------
<C> <S> <C> <C>
$14.50 March 3, 1997 $1.25 December 1995
</TABLE>

Over the past six months the average monthly volume of trading of the
Company's Common Stock has been approximately 800,000 shares. Prospective
Investors should be aware that the volume of trading on the Electronic Bulletin
Board traditionally has been limited and there can be no assurance that the
Electronic Bulletin Board will provide an effective market for a shareholder to
sell his or her Common Stock of the Company.

The Company's Registration Statement on Form 10 pursuant to section 12(g)
of the Securities Exchange Act of 1934 (the "Exchange Act") became effective on
June 2, 1997. The Company is now a "fully-reporting company" within the meaning
of the Exchange Act. For the fiscal year ended May 31, 1996, and May 31, 1997,
there were 834 and 1,140 shareholders, respectively. As of August 31, 1997,
there were 808 shareholders of record.

The Company has applied for listing with the American Stock Exchange
("AMEX") by requesting a preliminary listing eligibility opinion. The Company
has also applied for listing with the Philadelphia Stock Exchange.

The high and low interdealer prices for the calendar quarters since trading
began on the Electronic Bulletin Board (without retail markup, markdown or
commission) are as follows:

47
<PAGE> 53

<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
--------------------------------------------------- ------- -------
<S> <C> <C>
December 31, 1995.................................. $ 1.25 $ 1.25
March 31, 1996..................................... $ 2.44 $ 1.35
June 30, 1996...................................... $ 3.75 $ 1.812
September 30, 1996................................. $ 4.25 $ 2.125
December 31, 1996.................................. $10.375 $ 2.875
March 31, 1997..................................... $ 14.50 $ 6.00
June 30, 1997...................................... $ 9.75 $3.0625
</TABLE>

LEGAL MATTERS AND AUDITORS

COUNSEL

Lloyd S. Pantell, APLC has acted as Special Counsel. As such, Special
Counsel has assisted the Company in the preparation of this Prospectus and the
registration statement. As required by applicable federal and state securities
laws, Special Counsel has rendered an opinion to the effect that, when issued,
the Common Stock shall be duly and validly issued in accordance with applicable
law.

AUDITORS

The Company has retained Jackson and Rhodes, P.C., Dallas, Texas, to serve
as Company's accountants for fiscal year 1997. The financial statements
accompanying this Prospectus have been audited by such firm.

DEFINITIONS

The terms noted below shall, when used in this Prospectus, have the
following meanings ascribed to them:

"Accredited Investor" shall mean any Investor who meets one or more of the
categories defined by Rule 501(a) of Regulation D and who also is excluded from
the number of purchasers for the purposes of California Corporations Code
Section 25102(f)(1).

"Affiliate" shall mean (i) any person who directly or indirectly controls
or is controlled by or under a common control with, a person or entity; (ii) a
person owning or controlling ten percent (10%) or more of the outstanding voting
securities of the entity to which said definition relates; and (iii) any officer
or director of such entity. "Brazilian Timber Properties" shall mean the three
(3) timber properties on which the Company's subsidiary, Equatorial Resources,
Ltd. holds certain licensing and/or ownership rights more particularly described
in this Prospectus.

"Company" shall mean Nevada Manhattan Mining, Inc., a Nevada corporation.

"Debentures" shall mean the 8% Senior Secured Convertible Debentures
pursuant to the terms and conditions, the Subscription Agreements dated April
14, 1997 and July 15, 1997.

"Deed of Trust" shall mean the encumbrance currently affecting the Nevada
Property and created in favor of Anthony C. Selig & Associates, Dixie
Exploration, and Anthony C. Selig by virtue of the Nevada Property Agreement.

"Indonesian Concessions" shall mean the exploration prospects located on
the Indonesian portion of the island of Borneo known as Kalimantan and on the
island of Sumatra, Indonesia and more particularly described in this Prospectus.

"Investors" shall mean such persons and/or any authorized and qualified
successors who consider an investment in the Company as described in the
Prospectus and who submit completed and executed subscription documents to the
Company.

48
<PAGE> 54

"Net Proceeds" shall mean those proceeds after deduction of Organization
and Offering Expenses which shall be applied in furtherance of the Company's
business plan in accordance with this Offering.

"Nevada Business Plan" shall mean the report prepared by William R. Wilson
dated as of July 1995 and entitled "Nevada Manhattan Mining, Inc., Manhattan
Mine Project Review and Business Plan."

"Nevada Property" shall mean the 28 patented and 65 unpatented mining
claims comprising approximately 1,800 acres and located in Nye County, Nevada
near the town of Manhattan as more particularly described in this Prospectus.

"Nevada Property Agreement" shall mean the Mining Agreement dated April 4,
1987 by and among the Company and Anthony C. Selig, Anthony C. Selig &
Associates, and Dixie Exploration as amended by subsequent agreements.

"Offering" shall mean the offer of the Common Stock pursuant to the terms
and conditions specified in the Prospectus.

"Offering Commitment Date" shall mean the date on which Subscriptions to at
least One Million Five Hundred Thousand Dollars ($1,500,000) are accepted by the
Company. The Offering Commitment Date is presently scheduled for December 31,
1997.

"Offering Termination Date" shall mean the date on which the Company shall
issue, if at all, at least $1,500,000 in shares of Common Stock pursuant to the
Offering. At present, such Date is set for December 31, 1997. In no event shall
the Offering Termination Date extend beyond March 31, 1998.

"Organization and Offering Expenses" shall mean all costs and expenses
incurred on behalf of the Company for professional fees (legal and accounting),
printing expenses, regulatory compliance, and all other costs associated with
the offer and sale of Common Stock. The amount of One Hundred Twenty Thousand
Dollars ($120,000) has been allocated for such expenses.

"Properties" shall mean the Nevada Property and the Indonesian Property.

"Prospectus" shall mean the offering materials dated , 1997
describing the terms and conditions of the Offering.

"Registration Statement" shall mean Form BD and all amendments thereto
filed with the Securities and Exchange Commission and relating to the offer and
sale of Common Stock pursuant to this Offering.

"Special Counsel" shall mean Lloyd S. Pantell, APLC, a professional law
corporation.

"Subscription" shall mean the number of shares of Common Stock which a
prospective Investor agrees to purchase in the Company or the purchase price for
such purchase of shares as the context requires.

"Transfer Agent" shall mean U.S. Stock Transfer Corporation which shall be
authorized to accept Subscriptions, deposit Subscription funds into the Bank,
instruct the Bank to invest Subscriptions prior to the Offering Termination
Date, and to issue the Common Stock, all in accordance with this Offering.

"Underwriting Agreement" shall mean the agreement entered into between the
Company and broker-dealers who are members in good standing with the National
Association of Securities Dealers, Inc. and who agree to use their "best
efforts" to effect sales of the Common Stock pursuant to this Offering.

FURTHER INFORMATION

The Company is currently a reporting company within the meaning of section
12(g) of the Securities Exchange Act of 1934.

The Company has applied for listing on the American Stock Exchange. If
approved for listing, certain reports and information not necessarily contained
in this Prospectus will be available for inspection through the American Stock
Exchange, 86 Trinity Place, New York, New York 10006-1881.

49
<PAGE> 55

The Company has applied for listing on the Philadelphia Stock Exchange. If
approved for listing, certain reports and information not necessarily contained
in this Prospectus will be available for inspection through the Philadelphia
Stock Exchange, 1900 Market Street, Philadelphia, PA 19103-3584.

The Company has and intends to continue to furnish its shareholders annual
reports containing financial statements examined by an independent accounting
firm and quarterly reports for the first three fiscal quarters of each fiscal
year containing interim unaudited financial information.

This registration statement and all the Company's subsequent filings will
be filed through the Electronic Data Gathering, Analysis and Retrieval ("EDGAR")
system and are, or will be, publicly available through the Commissions Web site
at http://www.sec.gov.

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended, with respect to the Common Stock
offered pursuant to this Offering. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules accompanying the Registration Statement. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement and the exhibits and schedules accompanying the
Registration Statement. Copies of the Registration Statement and such exhibits
and schedules may be inspected, without charge, at the public reference
facilities of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of such material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N. W.,
Washington, D. C. 20549.

Until , 1997, all dealers effecting transactions in the Common
Stock registered pursuant to the Registration Statement, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
Subscriptions.

50
<PAGE> 56

NEVADA MANHATTAN MINING INCORPORATED AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets at May 31, 1997 and 1996.................................. F-3
Consolidated Statements of Operations
For the Years Ended May 31, 1997, 1996 and 1995..................................... F-4
Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended May 31, 1997, 1996 and 1995..................................... F-5
Consolidated Statements of Cash Flows
For the Years Ended May 31, 1997, 1996 and 1995..................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 57

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Nevada Manhattan Mining Incorporated

We have audited the accompanying consolidated balance sheets of Nevada
Manhattan Mining Incorporated and subsidiaries as of May 31, 1997 and 1996, and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended May
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Nevada Manhattan Mining Incorporated and subsidiaries as of May 31, 1997 and
1996, and the results of its operations and its cash flows for each of the years
in the three-year period ended May 31, 1997, in conformity with generally
accepted accounting principles.

As discussed in Note 11, the Company has discovered, subsequent to May 31,
1996, that its mining properties have been overstated by the capitalization of a
portion of certain indirect salaries from 1992 through May 31, 1996. Subsequent
to May 31, 1997, the Company also discovered that it should have recorded a
financing expense for the excess of fair market value of certain common shares
over the amount of the debt for which the shares were issued. Accordingly, the
accompanying financial statements for the years ended May 31, 1997, 1996 and
1995 have been restated to correct the errors.

JACKSON & RHODES P.C.

July 28, 1997 (except as to Notes 5, 11 and 12, which

are as of September 4, 1997)

Dallas, Texas

F-2
<PAGE> 58

NEVADA MANHATTAN MINING INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
MAY 31, 1997 AND 1996

ASSETS

<TABLE>
<CAPTION>
1997 1996
------------ ------------
(RESTATED) (RESTATED)
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 559,510 $ 233,981
Accounts receivable........................................... 58,161 --
Prepaid expenses.............................................. 622,710 --
------------ ------------
Total current assets....................................... 1,240,381 233,981
------------ ------------
Property and equipment (Note 2):
Mining properties:
Domestic................................................... 5,830,091 3,472,428
Indonesia.................................................. 2,826,782 --
Brazilian timber concession................................... 3,296,729 --
Furniture and fixtures........................................ 431,840 63,842
Less accumulated depreciation.............................. (82,998) (59,067)
------------ ------------
12,302,444 3,477,203
------------ ------------
$ 13,542,825 $ 3,711,184
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 544,738 $ 88,226
Accrued liabilities........................................... 441,535 181,162
Notes payable to stockholders................................. 712,321 136,751
Current portion of long-term debt (Note 3).................... 303,818 44,388
------------ ------------
Total current liabilities.................................. 2,002,412 450,527
Convertible debentures (Note 4)................................. 1,333,333 --
Long-term debt (Note 3)......................................... 2,669,427 115,723
------------ ------------
Total liabilities.......................................... 6,005,172 566,250
------------ ------------
Commitments and contingencies (Note 5).......................... -- --
Stockholders' equity (Note 6):
Common stock to be issued..................................... 108 --
Preferred stock, $1 par, 250,000 shares authorized, 228,319
and 132,510 issued at May 31, 1997 and 1996................ 228,319 132,510
Common stock, $.01 par; 49,750,000 shares authorized;
12,273,565 and 8,353,881 shares issued at May 31, 1997 and
1996....................................................... 122,736 83,539
Additional paid-in capital.................................... 23,699,574 15,079,460
Accumulated deficit........................................... (16,513,084) (12,150,575)
------------ ------------
Total stockholders' equity................................. 7,537,653 3,144,934
------------ ------------
$ 13,542,825 $ 3,711,184
============ ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 59

NEVADA MANHATTAN MINING INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Revenues............................................. $ 287,178 $ -- $ --
Cost of sales........................................ 261,089 -- --
----------- ----------- ---------
Gross profit....................................... 26,089 -- --
Expenses:
General and administrative......................... (4,239,098) (1,325,094) (698,103)
----------- ----------- ---------
Net loss............................................. (4,213,009) (1,325,094) (698,103)
Cumulative preferred dividends....................... (149,500) (10,600) --
----------- ----------- ---------
Net loss attributable to common shareholders......... $(4,362,509) $(1,335,694) $ (698,103)
=========== =========== =========
Net loss per common share............................ $ (0.41) $ (0.18) $ (0.14)
=========== =========== =========
Weighted average shares outstanding.................. 10,684,176 7,428,081 5,021,801
=========== =========== =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 60

NEVADA MANHATTAN MINING INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED MAY 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL
STOCK SUBSCRIPTIONS ------------------ --------------------- PAID-IN ACCUMULATED
TO BE ISSUED RECEIVABLE SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ ------------- ------- -------- ---------- -------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance May
31, 1994
(Restated)... $ -- $ -- -- $ -- 3,964,701 $ 39,647 $11,602,364 $(10,116,778) $ 1,525,233
Shares to be
issued to
officers... 495,000 -- -- -- -- -- -- -- 495,000
Common shares
issued for
cash in
private
placement
($1 per
share)..... -- (19,000) -- -- 647,213 6,472 538,541 -- 626,013
Preferred
shares
issued for
cash in
private
placement
($10 per
share)..... 131,500 (31,500) -- -- -- -- 100,000 -- 100,000
Shares issued
in
settlement
of
claims..... -- -- -- -- 32,500 325 32,175 -- 32,500
Shares issued
as
conversion
of debt.... 605,827 -- -- -- 14,067 141 32,692 -- 638,660
Net loss
(Restated)... -- -- -- -- -- -- -- (698,103) (698,103)
----------- -------- ------- -------- ---------- -------- ----------- ------------ -----------
Balance May
31, 1995... 1,232,327 (50,500) -- -- 4,658,481 46,585 12,305,772 (10,814,881) 2,719,303
Issuance of
stock -- previously
purchased... (1,232,327) -- 13,150 13,150 554,400 5,544 1,213,633 -- --
Cash received
from stock
subscriptions... -- 50,500 -- -- -- -- -- -- 50,500
Common shares
issued for
cash in
private
placement
($.25 per
share)..... -- -- 1,001,000 10,010 258,990 -- 269,000
Preferred
shares
issued for
cash in
private
placement
(principally
at $10 per
share)..... -- -- 119,360 119,360 -- -- 816,465 -- 935,825
Shares issued
for
services... -- -- -- -- 1,940,000 19,400 465,600 -- 485,000
Shares issued
in
connection
with
shareholder
loan....... -- -- -- -- 200,000 2,000 19,000 -- 21,000
Preferred
dividend... -- -- -- -- -- -- -- (10,600) (10,600)
Net loss
(Restated)... -- -- -- -- -- -- -- (1,325,094) (1,325,094)
----------- -------- ------- -------- ---------- -------- ----------- ------------ -----------
Balance, May
31, 1996... -- -- 132,510 132,510 8,353,881 83,539 15,079,460 (12,150,575) 3,144,934
Shares issued
for
property... 108 -- -- -- 689,200 6,892 3,293,000 -- 3,300,000
Shares issued
for
accounts
payable.... -- -- -- -- 100,000 1,000 249,000 -- 250,000
Common shares
issued for
cash in
private
placement
(principally
at $1 per
share)..... -- -- -- -- 1,917,351 19,174 1,129,286 -- 1,148,460
Preferred
shares
issued for
cash in
private
placement
(principally
at $10 per
share)..... -- -- 96,409 96,409 -- -- 759,191 -- 855,600
Shares issued
for
services... -- -- -- -- 120,000 1,200 238,800 -- 240,000
Shares issued
for
conversion
of debt.... -- -- -- -- 1,087,133 10,871 1,076,755 -- 1,087,626
Conversion of
preferred
stock...... -- -- (600) (600) 6,000 60 540 -- --
Discount for
conversion
of
debentures.. -- -- -- -- -- -- 666,667 -- 666,667
Warrants
issued..... -- -- -- -- -- -- 1,206,875 -- 1,206,875
Preferred
dividend... -- -- -- -- -- -- -- (149,500) (149,500)
Net loss
(Restated)... -- -- -- -- -- -- -- (4,213,009) (4,213,009)
----------- -------- ------- -------- ---------- -------- ----------- ------------ -----------
Balance, May
31, 1997... $ 108 $ -- 228,319 $228,319 12,273,565 $122,736 $23,699,574 $(16,513,084) $ 7,537,653
=========== ======== ======= ======== ========== ======== =========== ============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 61

NEVADA MANHATTAN MINING INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- ---------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(4,213,009) $(1,325,094) $(698,103)
Adjustments to reconcile net loss to net cash used
in operating activities:
Common stock issued for services................ 240,000 485,000 --
Warrants issued for services.................... 1,206,875 -- --
Common stock issued for financing expense....... 677,000 -- --
Settlement of claim with debt................... -- -- 32,500
Depreciation.................................... 23,931 6,200 9,150
Accounts receivable............................. (58,161) 1,846 (1,846)
Prepaid expenses................................ (622,710) 2,545 --
Accounts payable and accrued liabilities........ 298,074 (149,364) (44,744)
----------- ----------- ---------
Net cash used in operating activities...... (2,448,000) (978,867) (703,043)
----------- ----------- ---------
Cash flows from investing activities:
Purchase of property and equipment................. (2,102,443) (60,893) (59,466)
----------- ----------- ---------
Cash flows from financing activities:
Additions to convertible debentures................ 2,000,000 -- --
Payments on long-term debt......................... (114,284) (46,153) (42,117)
Proceeds from notes payable to stockholders........ 986,196 64,569 --
Proceeds from issuance of stock and stock to be
issued.......................................... 2,004,060 1,255,325 726,013
----------- ----------- ---------
Net cash provided by financing
activities............................... 4,875,972 1,273,741 683,896
----------- ----------- ---------
Net increase (decrease) in cash and cash
equivalents........................................ 325,529 233,981 (78,613)
Cash and cash equivalents at beginning of period..... 233,981 -- 78,613
----------- ----------- ---------
Cash and cash equivalents at end of period........... $ 559,510 $ 233,981 $ --
=========== =========== =========
Supplemental cash flow information:
Cash paid during the year for interest............. $ -- $ 9,647 $ 12,701
=========== =========== =========
</TABLE>

NON-CASH TRANSACTIONS:

During 1995, the Company issued stock for conversion of notes payable
and shares to settle claims (Note 6).

During 1996, the Company issued 200,000 shares of common stock, valued
at $21,000 in connection with a loan from a shareholder. Also, during 1996,
the Company assumed $77,067 in debt in connection with acquiring an
additional interest in the mine (Note 2).

During 1997, the Company issued 589,200 shares of common stock in
connection with the Indonesian mining property acquisitions, 100,000 shares
for domestic mining services and 100,000 shares for a Brazilian timber
concession (Note 2). In addition, the Company issued 120,000 shares to
employees for services and 1,087,133 shares for conversion of $410,626 in
debt. The Company also issued warrants in connection with a debenture and
issued other warrants (see Notes 4 and 6). The Company also assumed
$375,000 in debt in connection with acquiring an additional interest in the
mine (Note 2) and assumed a $3,000,000 liability in Brazil (Note 2). The
Company also accrued $149,500 and $10,600 in preferred dividends during
1997 and 1996, respectively.

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 62

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1997 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Nevada Manhattan Mining Incorporated was organized under the Laws of the
State of Nevada on June 10, 1985, to acquire, explore, develop, finance and sell
mining and timber rights and properties. The Company has to date acquired
properties, begun exploration and development and begun sales of timber. During
the year ended May 31, 1997, the Company formed an 80%-owned subsidiary,
Equitorial Resources (Brazil) Ltda. ("Equatorial") (Note 2) and a wholly-owned
subsidiary, Kalimantan Resources (Note 2). Prior to the year ended May 31, 1997,
the Company was considered to be in the development stage.

Preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Basis of Presentation

The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company is
reporting a net loss of $4,362,509, $1,335,694 and $698,103 for the years ended
May 31, 1997, 1996 and 1995 and net cash resources were used in operating
activities for each year.

The following is a summary of managements' plan to raise capital and
generate additional operating funds. Management has reached an agreement to have
gold ore milled adjacent to its Nevada property by a third party, reducing
capital requirements of the Company. The Company has reconstructed and extended
a 1,700 foot decline underground access to enhance exploration and facilitate
the extraction of gold ore. The Company has negotiated an agreement with
Harrison Western Mining and Construction Company to begin production. The
Company has acquired and commenced the exploration and development of its
mineral holdings in Indonesia and has commenced harvesting and milling
operations on its Brazilian timber properties. The Company's Brazilian
operations represent an immediate opportunity for the Company to generate
significant cash flows for the first time and have begun to realize revenues.
The Company believes that with the anticipated increase in daily production at
its Brazilian operations, much of its continued operations in Brazil, Indonesia,
and on the Nevada Property will be funded by the cash flow generated from the
Brazilian concessions. Prior to May 31, 1997, the Company concluded a
privately-negotiated placement of $2,000,000 of 8% Senior Convertible
Debentures. Subsequent to May 31, 1997, management raised an additional $1.5
million under the same conditions.

Statement of Cash Flows

For statement of cash flow purposes, the Company considers short-term
investments with original maturities of three months or less to be cash
equivalents.

Property and Equipment

Mining properties acquisition, exploration and development costs are
capitalized as incurred and will be amortized on the units-of-production method
based on economically recoverable mineral reserves, limited to proven and
probable reserves. Indirect costs are expenses as incurred. Estimated site
restoration and closure costs in which the Company has reclamation
responsibilities are charged against operating earnings on the
units-of-production method over the expected economic life of the mines.

The Company periodically evaluates the carrying value of capitalized mining
costs to determine if these costs are equal to or in excess of their net
realizable value. If such periodic evaluation indicates an impairment

F-7
<PAGE> 63

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

has occurred, the carrying value of the property is written down to the
estimated net realizable value. In March 1995, the Financial Accounting
Standards Board issued a new statement entitled "Accounting for Long-Lived
Assets" (SFAS 121). This new standard is effective for years beginning after
December 15, 1995. There is no impact of SFAS 121 on the Company's financial
statements for the year ended May 31, 1997. The Company has performed an
assessment of the recoverability of the carrying values of its domestic
properties. The Company has estimated future cash flows without interest based
on the report of a minerals industry consultant, which contains estimates of
capital and production costs and estimated mineral deposits. The project is not
currently in production, the achievement of commercial production will take at
least one year and, assuming the commercial production is achieved, continued
operation in accordance with project specifications is subject to substantial
risks. Increases in operating and capital costs from budgeted amounts, low gold
prices and other factors including, but not limited to, short-term operating
factors such as the need for sequential development of ore bodies and the
processing of new or different ore grades, may materially and adversely affect
management's forecasted cash flow. In the event such changes occur, an
impairment of the value of the mineral property may result and a writedown of
the carrying value of the property may be necessary.

The Company has similarly estimated future cash flows from its Brazilian
timber operations, based on projected timber production and current timber sales
prices and estimated costs of its sawmill operations.

The Company's operations in Indonesia are preliminary in nature, including
confirming title and conducting field reconnaissance work. Because of the
preliminary nature of this work, any cash flow analysis related to the
Indonesian concessions is premature. The Company will periodically evaluate the
carrying cost of these properties as the exploration and development process
proceeds. In the event the Company determines that an impairment in value is
evident, a writedown may be necessary.

Other property and equipment are carried at cost. Depreciation of other
property and equipment is provided using the straight-line method over the seven
year estimated useful lives of the related assets. Maintenance and repairs are
charged to operations as incurred and expenditures for major improvements are
capitalized. Gains and losses from retirement or replacement of property and
equipment are included in operations.

Income Taxes

The Company accounts for income taxes pursuant to Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) which
requires the use of the asset and liability method of computing deferred income
taxes. The objective of the asset and liability method is to establish deferred
tax assets and liabilities for the temporary differences between the financial
reporting basis and the tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled.

Net Loss Per Common Share

Per share amounts have been computed on the weighted average number of
common shares outstanding for each period. All share and per share amounts have
been restated to retroactively reflect the reverse stock split explained in Note
6. Convertible preferred shares are considered antidilutive since conversion
would decrease loss per share.

F-8
<PAGE> 64

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its majority-owned subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation.

Prepaid Expenses

Prepaid expenses at May 31, 1997 represents advances made to log extraction
companies in Brazil to induce timber production. These advances will be expensed
when the timber is delivered.

Translation of Foreign Currencies

Because Brazil has been considered a highly inflationary economy under SFAS
52, the U.S. dollar is the functional currency for the Company's Brazilian
subsidiary. Therefore, both translation adjustments and gains and losses on
foreign currency transactions are included in income in the accompanying
statement of operations.

2. PROPERTIES AND EQUIPMENT

Brazil

The Company has acquired various rights to up to approximately 750,000
hectares (1,900,000 acres) of timber properties located in the state of Para,
Brazil. In addition, the Company has entered into an agreement to acquire and is
currently operating a sawmill facility located near the town of Sao Miguel do
Guama. As of May 31, 1997, $1,400,000 has been provided by the Company for
initial start-up of its operations in Brazil. The Company began harvesting trees
in April 1997 and has commenced sales during the year ended May 31, 1997.

The Jonasa Concessions. On November 11, 1996, the Company, through
Equatorial, entered into a letter agreement with Madeira Intex, S.A, ("Madeira")
whereby Madeira agreed to assign its rights in and to a Joint Venture Agreement
which Madeira had entered into in 1984 with Companhia Agropecuaria do Rio Jabuti
("Jonasa"). The Joint Venture Agreement required Jonasa to assign to Madeira the
exclusive rights to extract and market all lumber licensed by the appropriate
Brazilian authorities for export. All the various agreements were integrated
into an Agreement to Jointly Develop Timber Properties. Under this agreement,
Jonasa has granted to Equatorial the properties comprising the Jonasa
Concessions. In consideration of this grant, Equatorial has agreed to pay to
Jonasa 50% of the net proceeds received on the sale of all timber and related
products produced and sold pursuant to the agreement.

Terranorte Concessions. On May 30, 1997, Equatorial entered into an
Agreement to Harvest Timber and Develop Timber Properties with Terranorte S.A.
("Terranorte"). Terranorte granted to Equatorial the exclusive right to either
harvest the timber or to purchase certain species of logs extracted by
Terranorte located on approximately 490,000 hectares of virgin timber property
located near the town of Moju, Para, Brazil. In June 1997, Equatorial began
harvesting operations employing its own crews and purchasing harvested logs from
Terranorte.

Sao Miguel Sawmill. On May 30, 1997, Equatorial and Jonasa Madeiras
Limitada ("Jonasa Madeiras") entered into an Agreement to Acquire Sawmill. Under
the terms of the agreement, Jonasa Madeiras agreed to convey all right, title,
and interest in and to the sawmill facility, all equipment relating to the
sawmill facility, and 246 hectares of adjacent real property, all of which is
located near the town of Sao Miguel do Guama, Para, Brazil. At present,
Equatorial has expended the sum of approximately $335,000 for

F-9
<PAGE> 65

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

2. PROPERTIES AND EQUIPMENT (CONTINUED)

the sawmill and anticipates that an additional $350,000 in improvements will be
made over the next several months.

In addition to the cash capital requirements for the property, the Company
has issued 100,000 shares in February 1997 to the seller and is required to pay
$3,000,000 or issue 1,000,000 shares of Common Stock to the original owner of
the timber harvesting rights in December 1998. The original owner of the timber
harvesting rights is an officer of the Company's Brazilian subsidiary. The
Company has valued the 100,000 shares at $700,000 based upon the $10 market
price of the Company's common shares at the time, discounted 30% for the
restricted nature of and the thin market for the shares. The non-interest
bearing $3,000,000 debt has been discounted at 10% and is included in long-term
debt.

Domestic

The Company previously owned a 24.5% undivided interest in a mining
property in the Manhattan Mining District, Nye County, Nevada. The property
consists of 28 patented (fee) and 65 unpatented mine claims which include the
Whitecaps Mine, Union Mine, Consolidated Mine, Earl Mine, Bath Mine and other
assorted mines and claims which cover approximately 1,800 acres. Under
contractual understandings reached during October 1995, the Company effectively
increased its interest to 50% and assumed an additional $77,067 in debt (Note 3)
in connection therewith. Because the related joint venture never really
operated, the Company has not used joint venture accounting for its mining
operation in Nevada. Instead, the Company has simply paid all the costs of the
mine and recorded its proportionate share of the debt to the property owner.

In March 1997, the Company entered into a Sale and Purchase Agreement with
the former owners of the Mine. Under the terms of this latest agreement, the
former owners agreed to sell to the Company 100% of their interests in the
Nevada Note, the Deed of Trust, and the Nevada Property for $375,000, payable as
follows: $100,000 in March 1997 and the balance plus all accrued and unpaid
interest (calculated at the rate of 5.25%) on or before February 6, 1999. The
Company paid the first installment of $100,000 in March 1997 and paid the
balance in June 1997. See Note 5 for a discussion of a contingency regarding the
ownership of the property. The agreement also acknowledges that the Company is
the only person or entity legally entitled to conduct mineral operations on the
Nevada Property. The Company is also required to pay all U.S. Bureau of Land
Management annual maintenance fees associated with the claims comprising the
Nevada Property.

Management of the Company is active in the supervision of work taking
place, plus future planning of all aspects of operations. The operating permits
for the Manhattan Gold Mine were issued to the Company by the State of Nevada
during April 1996. The Company has negotiated an agreement with Harrison Western
Mining and Construction Company for the beginning of production in July 1996.
The work was begun in July 1996 and included placement of mine shops and support
facilities; mining in the existing workings of the mine and extension of the
existing decline from its end location of 1,200 linear feet from the surface to
the White Caps Level. Underground flooding and caving of the existing decline
required an alternate access way and a new decline was driven for approximately
500 feet on the existing decline. The Company is presently reviewing its
business plan to determine future work to be done at the mine.

Indonesia

The Company has made certain acquisitions in Indonesia during the year
ended May 31, 1997:

On August 19, 1996, the Company entered into an agreement to acquire a 51%
interest in a metals/minerals mining property in Kalimantan, Indonesia (Sopang
Gold Concession). Consideration for the purchase consisted of 400,000 shares of
common stock due upon the signing of the agreement (of which 10,800 are unissued
as of May 31, 1997) and an additional 4,000,000 shares to be released only if an

F-10
<PAGE> 66

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

2. PROPERTIES AND EQUIPMENT (CONTINUED)

independent valuation of the property exceeds $12,000,000. The Company expects
the independent valuation to be completed by September 1998. The Company issued
unrestricted shares and has valued the 400,000 shares at $1,200,000 based upon
the $3 market price of the Company"s common shares at the time.

The Sopang Gold Concession ("Sopang") consists of 16,480 hectares and is
held under Indonesian title as a KP, a form of Indonesian citizen ownership with
a joint venture agreement. The concession is located in southeast Kalimantan.
Because of the lack of major infrastructure in the area, initial work will be
limited to surface trenching and geochemical sampling. Field work at Sopang was
initiated in the first quarter of calendar 1997 with more extensive exploration
including airborne geophysical surveys and drilling to be initiated later in
1997.

The Silobat Gold Project ("Silobat") is 75 kilometers south of the Sarawak
region of Malaysia and contains 62 hectares with the intent to expand to at
least 2,000 hectares. The Silobat Project is held under a KPPE title, a form of
Indonesian citizen ownership in joint venture with the Company. Access to the
property is by road and motorized canoe for initial field work and helicopter
support for advanced exploration activities. Infrastructure is limited but the
proximity to the west coast of Kalimantan and low relief terrain indicates no
unusual development problems will be encountered. Following a survey and
additional ground sampling, key core drill targets were identified and drilling
will start during the latter part of calendar 1997. Further property acquisition
is an integral part of the development program at Silobat. Exploration has
commenced in the first quarter of 1997.

The Cepa Coal Project ("Cepa") in East Kalimantan covers an area of
approximately 286,000 hectares and is held in three concessions as Contracts of
Work ("COW's"). Initial work on the property will include reasonable expansion
of ownership to include promising additional property containing similar coal.
Surface sampling, shallow drilling for coal characterization and general market
surveys began in the first quarter of 1997. The Silobat and Cepa projects,
collectively, were acquired in January 997 for 200,000 common shares issued upon
signing of the agreement and an additional 3,800,000 shares to be released only
if an independent valuation of the property exceeds $40,000,000. The Company has
valued the 200,000 shares at $1,400,000 based upon the $10 market price of the
Company's common shares at the time, discounted 30% for the restricted nature of
and the thin market for the shares.

The Company owns the interests it acquired with the 600,000 shares issued
as explained above. The Company has contractually acquired the rights to obtain
controlling interests in five additional gold concessions in Indonesia. The
Company is currently reviewing these properties to determine an applicable
acquisition structure.

The Company has retained the firm of Behre Dolbear & Co. to provide review
and third party validation with respect to its Indonesian operations.

The Company has not identified any reserves at the Indonesia properties
defined as proven or probable.

Shares issued for property of 689,200 in the accompanying statement of
changes in stockholders' equity represents the following:

<TABLE>
<S> <C>
Sopang Concession.......................................... 400,000
Cepa and Silobat Concessions............................... 200,000
Brazil..................................................... 100,000
Less shares to be issued................................... (10,800)
-------
689,200
-------
</TABLE>

The shares to be issued were issued July 15, 1997.

F-11
<PAGE> 67

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

3. LONG-TERM DEBT AND NOTES PAYABLE

Notes payable to stockholders accrue interest at rates from 9 percent to 12
percent, are due on demand and are guaranteed by certain Company officers.

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
MAY 31,
-----------------------
1997 1996
---------- --------
<S> <C> <C>
Obligation to a stockholder as a result of a
Lawsuit settlement, interest imputed at 9%,
Payable $1,000 per month until April 2001........ $ 48,110 $ 50,770
Note payable to an individual at $2,000 per month,
including interest at 9%......................... 53,406 --
$3,000,000 non-interest bearing payable to an
officer of the Company's Brazilian subsidiary,
discounted at 10%, payable in December 1998,
secured by 1,000,000 shares of the Company's
Common Stock..................................... 2,596,729 --
10% note payable to an individual under terms of a
joint venture agreement, paid in June 1977. See
Note 2........................................... 275,000 109,341
---------- --------
2,973,245 160,111
Current portion.................................... 303,818 44,388
---------- --------
Long-term debt..................................... $2,669,427 $115,723
========== ========
</TABLE>

Maturities of long-term debt principal are as follows for the years ending
May 31 (not reduced by $403,271 discount on the $3,000,000 note above):

The Company has capitalized $54,332, $26,693, and $34,242 of interest into
the mining properties during the years ended May 31, 1997, 1996 and 1995,
respectively.

The obligation to a stockholder resulted from a lawsuit in 1991. The suit
alleged that the Company failed to deliver free-trading stock, thereby resulting
in alleged liability. The lawsuit was finally settled in 1994 for $89,050,
payable, without interest, at $1,000 per month.

4. CONVERTIBLE DEBENTURES

On April 14, 1997, and July 7, 1997, the Company entered into Subscription
Agreements related to two negotiated private placements. These transactions were
made in reliance upon the exemption from registration afforded by Section 4(2)
of the Securities Act of 1933. As a result, the Company issued an aggregate of
$3,500,000 of 8% Senior Secured Convertible Debentures due March 31, 2000 and
July 1, 2000 for the April 14 ($2,000,000) and July 7 ($1,500,000) offerings,
respectively (the "Debentures") and granted to the purchasers warrants to
purchase 62,500 shares of the Company's Common Stock (the "Warrants").

The Debentures may be converted into shares of Common Stock at any time
commencing June 2, 1997 at a price equal to the lesser of seventy-five percent
(75%) of the closing bid price of the Common Stock on the closing date (i.e. 75%
X $8.00, or $6.00 per share); seventy-five percent (75%) of the closing bid
price of the Common Stock on the day prior to the funding of any subsequent
funding ("tranche"); or seventy-five percent (75%) of the average closing bid
price for the five trading days immediately preceding the actual date

F-12
<PAGE> 68

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

4. CONVERTIBLE DEBENTURES (CONTINUED)

of conversion of the Debentures. With respect to the April 1997 funding, if
conversion is made after August 16, 1997, the discount will be seventy-two and
one-half percent (72.5%) of the above-referenced valuation standards. The
Company has recorded financing charges for the differences between the
conversion price and the fair market value of the stock at the date of each
funding ($666,667 for the year ended May 31, 1997 and $500,000 for the second
tranche at July 7, 1997). The discount will be amortized over the life of the
debentures.

The Company is required to use its "best efforts" to cause the Registration
Statement with the Securities and Exchange Commission to become effective. If
the Registration Statement does not become effective within 120 days of each
respective funding, the Company is required to pay liquidated damages equal to
two percent (2%) of the Debentures for the first thirty days and three percent
(3%) per month thereafter until the Registration Statement becomes effective.

With regard to the April 1997 funding, until at least seventy-five percent
(75%) of the Debentures are converted, a deed of trust on the Nevada Property
and a pledge of 1,000,000 shares of Common Stock will secure the Debentures. No
such security is given on the Debentures issued in July 1997.

The Company has issued warrants to the Subscribers of the April 14 and July
7 offerings. Regarding the Subscribers of the April 14 offering, the Company has
granted 62,500 warrants with an exercise price of $8 per share and an expiration
date of April 16, 2002. Regarding Subscribers of the July 17, 1997 offering, the
Company has granted 75,250 warrants with an exercise price of $6.75 per share
and an expiration date of July 16, 2002. The exercise price is subject to
adjustment to account for payments of dividends, stock splits, reverse stock
splits, and similar events.

5. COMMITMENTS AND CONTINGENCIES

Lease

The Company leases office space under terms of an operating lease expiring
on February 28, 1998. Future minimum lease payments for the years ending May 31,
1998 are $33,525. Rent expense amounted to $27,181, $20,726 and $20,394 for the
years ended May 31, 1997, 1996 and 1995.

Securities and Exchange Commission

During May 1989, the Company received notice that the Securities and
Exchange Commission ("Commission") had commenced an investigation into the
Company's business activities. In 1993, the Board of Directors of the Company
determined that the entry of a proposed consent judgment and the termination of
the investigation was in the best interest of the Company and received
confirmation that the investigation had been completed.

On March 19, 1994, the Company received the following "Stipulation
Regarding Resolution of Outstanding Issues" from the Commission closing out the
investigation and all related issues:

"Whereas the disposition of funds analysis conducted pursuant to the
Judgment of Permanent Injunction and Other Relief against Defendant
Nevada Manhattan Mining Incorporated entered on August 3, 1993 has
revealed no ill-gotten gains received by any defendant, the undersigned
parties hereby stipulate that all outstanding issues in this action have
been resolved, including disgorgement, and that the judgment entered
against the defendants are final."

F-13
<PAGE> 69

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)

While the Company believes that it was in the best interests of the Company
and its stockholders to enter the consent judgment, the entry of the judgment
may impose certain burdens on the Company with respect to its future activities.
The more significant of such burdens are as follows:

(i) The Company may not be able to utilize the exemptions from
registration available under Regulation A and Rule 701 under the 1933 Act.

(ii) The Company may not be able to rely on the private placement
exemptions provided in various state securities laws in connection with the
offer and sale of securities in a transaction which qualifies as an exempt
sale of securities under the 1933 Securities Act.

In such case, the Company would be required to qualify the transaction
under the state securities laws, which may not be available. This qualification
would increase the cost of, and extend the time for completing, such private
placement of securities.

Other Contingencies

In January 1995, a group of stockholders and creditors asserted a claim in
regards to a January 1988 settlement agreement. The Company has not been
formally served or any legal process initiated by the stockholders and creditors
in asserting this claim. Management does not believe the ultimate outcome of
this contingency will have a material effect on financial position or results of
operations.

During May 1997, the Company agreed to pay two shareholders an aggregate of
3% of the "net profits" of the Company's timber-related activities.

During November 1997 the Company filed a lawsuit in Nevada against its
former joint venturer partners in the Nevada mine ("the Harvey Entities"). The
complaint originally alleged, among other things, that the Harvey Entities
breached their obligations under various agreements. The action as amended seeks
damages of approximately $4,000,000 resulting from the actions and inactions of
the defendants. In a counterclaim, the defendants are seeking an injunction
preventing the Company from conducting activities related to the mine and
punitive damages and other financial relief based on breach of contract and
other causes of action. The Company subsequently amended its complaint, seeking
a judicial determination that the Joint Venture Agreement was null and void and
a determination that the Harvey Entities have forfeited all interest in the
Nevada property. After a two-hour hearing on September 4, 1997, the court
refused to issue an injunction against the Company. Pursuant to stipulation, the
parties have agreed not to interfere with one another's operations on the Nevada
Property. Additionally, the Company has agreed not to further encumber the
Nevada property pending trial. A trial date has been set for April 30, 1998. If
the Company is successful in obtaining the declaratory relief requested in the
action, it will effectively continue to own or control an undivided 100%
interest in the Nevada property. The Company believes that it will obtain the
declaratory relief requested in the action.

Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
Disclosures about Fair Value of Financial Instruments. The estimated fair value
amounts have been determined by the Company, using available market information
and appropriate valuation methodologies.

The fair value of financial instruments classified as current assets or
liabilities including cash and cash equivalents and notes and accounts payable
approximate carrying value due to the short-term maturity of the instruments.

F-14
<PAGE> 70

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

5. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Significant Concentrations of Credit Risk

At certain times, the Company's cash deposits are in excess of the
federally insured limit on bank accounts. The Company has not experienced losses
related to its cash.

6. STOCKHOLDERS' EQUITY

Reverse Split

In February 1995, the Company's stockholders approved a one-for-ten reverse
split of the Company's common stock. The stated par value per share was not
changed. All share and per share amounts herein have been retroactively restated
to reflect the reverse split.

Other Stock Transactions

The Company sold 647,213 shares of common stock and 13,150 shares of Series
A Preferred Stock in separate private placements during the year ended May 31,
1995. The preferred stock had not been formally issued as of May 31, 1995, but
was issued during the year ended May 31, 1996. The Company raised $776,513 in
the private placements of which $50,500 was still receivable at May 31, 1995 and
has been reflected as an offsetting amount in stockholders' equity at that date.

During the year ended May 31, 1995, the Company agreed to issue 59,400
hares of common stock in exchange for conversion of $638,660 of notes payable to
certain individuals. This amount was included in stock to be issued at May 31,
1995. These 59,400 common shares were issued in November 1995.

During the year ended May 31, 1995, the Company also agreed to issue 32,500
shares of common stock to certain individuals to settle certain claims made by
the individuals. The $32,500 value of the shares was charged to general and
administrative expense. The shares were valued at $1 per share, the price at
which the Company was issuing its shares in a private placement at the time.

During 1988, two Company officers loaned 495,000 (post-reverse split)
common shares to the Company as treasury stock in return for the Company's
promise to return the shares when common shares became available as a result of
a reverse split or an increase in authorized shares. The shares were reissued to
the officers in November 1995. The Company has accounted for the shares, valued
at the market price of the shares when they were loaned to the Company, as a
long-term obligation in the financial statements until the year ended May 31,
1995, when the reverse split occurred and the shares became available for
issuance. At that time, the obligation was considered as common stock to be
issued and included in stockholders' equity. The shares were valued at $1 per
share, the price at which the Company was issuing its shares in a private
placement at the time.

During the year ended May 31, 1996, the Company issued 140,000 common
shares to certain employees for services rendered. The shares were valued at
$.25 per share ($35,000), the price at which the Company was issuing its shares
in a private placement at the time.

In connection with their employment contracts, the Company also granted two
officers the right to purchase 900,000 common shares each at an average price of
$1.50 per share. The officers exercised these options during the year ended May
31, 1996 and the Company's board of Directors then agreed to give the officers
the shares for services rendered. These shares have been valued at $.25 per
share ($450,000) in the accompanying financial statements, the price at which
the Company was issuing its shares in a private placement at the time.

F-15
<PAGE> 71

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

6. STOCKHOLDERS' EQUITY (CONTINUED)
During the year ended May 31, 1997, the Company issued 120,000 common
shares to certain employees for services rendered. The Company has valued the
shares at $240,000 based upon the $2 market price of the Company's common shares
at the time.

During the year ended May 31, 1997, the Company issued 100,000 common
shares to its mining contractor in Nevada to settle a mining contract payable of
$250,000. The shares were valued at the amount of the payable settled. The fair
value of the shares at the time was approximately $2.50 per share.

During the year ended May 31, 1997, the Company issued 1,087,133 common
shares to certain shareholder creditors for the conversion of $410,626 in debt.
The Company recorded a financing expense of $677,000 (included in general and
administrative expenses) for the excess of the fair market value of the shares
over the amount of the debt. The fair market value was determined as the $1 per
share price at which the Company was issuing its shares in a private placement
at the time.

Warrants

As of July 28, 1997, the Company had warrants outstanding for the purchase
of an aggregate of 937,750 shares at a weighted average exercise price of $4.15.
During the year ended May 31, 1997, warrants were issued to third parties for an
aggregate of 412,500 shares. In accordance with SFAS 123, the Company expensed
$1,206,875 in connection with these warrants.

Preferred Stock

The preferred stock has a $1 par value, a $10 liquidation preference and an
8 percent cumulative dividend payable in cash or kind. Each share is convertible
to ten common shares for a period of thirty months.

7. INCOME TAXES

The Company has recorded no income tax benefit, nor has deferred taxes in
any year due to a net operating loss carryforward amounting to approximately
$14,000,000 at May 31, 1997, which will expire, if not utilized, from 2002 to
2011.

There are no significant temporary differences between the Company's tax
and financial bases.

Following is a reconciliation between income tax provision (credit) and the
amount that would result from applying the U. S. statutory rate to pretax income
(loss):

<TABLE>
<CAPTION>
MAY 31,
---------------------------------------
1997 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Income tax credit at statutory rate.... $(1,430,000) $(450,000) $(237,000)
Lack of taxable income in carry-back
period............................... 1,430,000 450,000 237,000
----------- --------- ---------
Income tax provision (credit).......... $ -- $ -- $ --
=========== ========= =========
</TABLE>

Following are the components of the Company's deferred tax asset resulting
from the Company's net operating loss carryforward at each period:

<TABLE>
<CAPTION>
MAY 31,
-------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Deferred tax asset.................. $ 4,760,000 $ 3,388,000 $ 2,937,000
Valuation allowance................. (4,760,000) (3,388,000) (2,937,000)
----------- ----------- -----------
Net deferred tax asset.............. $ -- $ -- $ --
=========== =========== ===========
</TABLE>

F-16
<PAGE> 72

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

8. GEOGRAPHIC AND SEGMENT INFORMATION

Geographic Information

The Company's operations during the two years ended May 31, 1996 were
entirely gold mining operations in the United States. Beginning in the year
ended May 31, 1997, the Company began operating in Indonesia (mining) and Brazil
(timber). Financial data by segments and geographic area as of and for the year
ended May 31, 1997 were as follows:

<TABLE>
<CAPTION>
OPERATING IDENTIFIABLE
SALES LOSS ASSETS
---------- ----------- ------------
<S> <C> <C> <C>
United States........................ $ -- $(3,900,388) $ 6,555,563
Indonesia............................ -- (91,383) 2,826,782
Brazil............................... 287,178 (221,238) 4,160,480
---------- ----------- -----------
Total.............................. $ 287,178 $(4,213,009) $ 13,542,825
========== =========== ===========
</TABLE>

Segment Information

<TABLE>
<CAPTION>
TIMBER MINING TOTAL
---------- ----------- -----------
<S> <C> <C> <C>
Sales................................ $ 287,178 -- $ 287,178
========== =========== ===========
Operating loss....................... (221,238) (202,604) $ (423,842)
General corporate expenses........... -- -- (3,789,167)
---------- ----------- -----------
Net loss............................. $ (221,238) $ (202,604) $(4,213,009)
========== =========== ===========
Identifiable assets.................. $4,160,480 $ 8,950,656 $13,111,136
Corporate assets..................... -- -- 431,689
---------- ----------- -----------
Total assets......................... $4,160,480 $ 8,950,656 $13,542,825
========== =========== ===========
Capital expenditures................. $ 313,055 $ 1,789,388 $ 2,102,443
========== =========== ===========
Depreciation......................... $ 5,500 $ 18,431 $ 23,931
========== =========== ===========
</TABLE>

Operating loss represents sales less operating expenses for each segment
and excludes income and expenses of a general corporate nature. Identifiable
assets by segment are those assets that are used in the Company's operations
within that industry but exclude investments in other industry segments. General
corporate assets consist principally of corporate cash. General corporate
expenses consisted of the following:

<TABLE>
<S> <C>
Salaries and benefits.................................... $ 642,410
Warrants expense......................................... 1,200,000
Discount on options...................................... 150,000
----------
Financing expense -- debt conversion..................... 677,000
----------
Travel expenses.......................................... 175,077
Legal and accounting..................................... 214,671
Consulting fees.......................................... 124,018
Other.................................................... 605,991
----------
$3,789,167
==========
</TABLE>

One customer accounted for approximately 20% of the Company's sales for the
year ended May 31, 1997.

F-17
<PAGE> 73

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

9. STOCK OPTIONS

The Company has granted stock options to all members of the Board of
Directors in the amount of 10,000 shares per full year of service as an active
member of the Board of Directors. The exercise price of options granted is $1.00
per share of common stock. Options may not be exercised after expiration of ten
(10) years from the date of grant and are non-transferable other than by will or
inheritance. These options are the only compensation received for service as
Director.

The following table sets forth information regarding options for the
periods ended:

<TABLE>
<CAPTION>
MAY 31,
-------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Outstanding at beginning of period............ 240,000 190,000 160,000
Granted....................................... 50,000 50,000 30,000
------- ------- -------
Outstanding at end of period.................. 290,000 240,000 190,000
======= ======= =======
</TABLE>

During 1997, the Company also granted its chief legal counsel an option to
acquire 100,000 common shares at $4 per share.

SFAS 123

In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS 123, "Accounting for Stock-Based Compensation." SFAS 123 defines a fair
value based method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. Under the fair value based
method, compensation cost is measured at the grant date based on the value of
the award. However, SFAS 123 also allows an entity to continue to measure
compensation cost for those plans using the intrinsic value based method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees." Under the intrinsic value based method, compensation cost is the
excess, if any, of the quoted market price of the stock at grant date or other
measurement date over the amount an employee must pay to acquire the stock.
Entities electing to remain with the accounting in Opinion 25 must make pro
forma disclosures of net income and earnings per share as if the fair value
based method of accounting had been applied. The pro forma disclosure
requirements are effective for financial statements for fiscal years beginning
after December 15, 1995. The Company has elected to measure compensation cost,
including options issued, under Opinion 25. The Company charged $150,000 to
expense for the year ended May 31, 1997 under Opinion 25. No compensation cost
was considered under either Opinion 25 or SFAS 123 for the year ended May 31,
1996, since the option price for the restricted shares approximated the value of
the restricted stock and the options were considered to have a nominal fair
value.

Pro forma disclosures as required by SFAS 123 for the fiscal year ended May
31, 1997 are as follows:

<TABLE>
<S> <C>
Pro forma net loss...................................... $(4,261,859)
-----------
Pro forma net loss per share............................ $ (0.40)
-----------
Pro forma net loss attributable to common
shareholders.......................................... $(4,411,359)
-----------
Pro forma net loss per share............................ $ (0.41)
-----------
</TABLE>

The fair value of the awards was estimated at the grant date using a
Black-Scholes option pricing model with the following weighted average
assumptions for 1997: risk-free interest rate of 6.63%; volatility factor of
44%; and an expected life of the awards of one year. The weighted average fair
value of stock options for the year ended May 31, 1997 was $2.16.

F-18
<PAGE> 74

NEVADA MANHATTAN MINING INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
MAY 31, 1997 AND 1996

10. ACCOUNTING DEVELOPMENTS

SFAS 128

In February 1997, FASB issued SFAS 128, "Earnings per Share." SFAS 128
requires all companies to present "basic" earnings per share ("EPS") and, for
companies with a complex capital structure, "diluted" EPS. Basic EPS is computed
by dividing net income available for common shareholders by the weighted-average
number of common shares outstanding during the period. Diluted EPS is computed
by dividing income (adjusted for preferred stock dividends and any potential
income or loss from convertible securities) by the weighted-average number of
common shares outstanding during the period plus the number of additional common
shares that would have been outstanding if any dilutive potential common stock
had been issued. Certain disclosures regarding the computation are also required
by the statement. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997. The statement is not allowed to be
applied early; however, pro forma EPS amounts computed under SFAS 128 prior to
its adoption may be presented in notes to the financial statements. After
adopting SFAS 128, companies must restate all prior-period EPS information
presented. Pro forma basic net loss per share each year is equal to the net loss
per share reported in the accompanying statement of operations. Diluted net loss
per share is not applicable since the Company has losses in each year and
increasing the shares outstanding would decrease loss per share.

11. RESTATEMENTS

Subsequent to May 31, 1996, the Company discovered that its mining
properties have been overstated by the capitalization of a portion of certain
indirect salaries since 1992. Accordingly, the accompanying financial statements
have been restated to correct the error. The effect of the correction was to
decrease domestic mining properties and increase accumulated deficit at May 31,
1996, by $488,619 and increase net loss by $126,588 and $87,030 for the years
ended May 31, 1996 and 1995, respectively.

Subsequent to May 31, 1997, the Company discovered that it should have
recorded a financing expense for the excess of fair market value of certain
common shares over the amount of the debt for which the shares were issued.
Accordingly, the accompanying financial statements for the year ended May 31,
1997 have been restated to correct the error. The effect of the correction was
to increase expenses, net loss, additional paid-in capital and accumulated
deficit by $677,000.

12. SUBSEQUENT EVENTS

In June 1997, the Company agreed to issue 65,000 common shares to retire
$325,000 of accounts payable to the Company's mining subcontractor at the
Manhattan Mine.

In June 1997 the Company issued an additional $1,500,000 in convertible
debentures as explained in Note 4.

In June 1997 the Company issued warrants to purchase 350,000 shares at
$4.06 per share (the market price at the time) to a consultant.

Subsequent to May 31, 1997, the Company has realized approximately $40,000
in gold sales from the Nevada Mine.

In June 1997, the Company's convertible debenture holder converted $200,000
of the debentures into 42,444 shares of common stock.

F-19
<PAGE> 75

======================================================

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Summary of the Offering................ 1
Risk Factors........................... 3
Terms of the Offering.................. 12
Plan of Distribution................... 13
Description of Company's Business and
Property............................. 14
Legal Proceedings...................... 27
Use of Proceeds........................ 30
Management............................. 32
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 39
Principal and Selling Shareholders..... 41
Certain Relationships and Related
Transactions......................... 43
Description of Securities Being
Offered.............................. 43
Markets for Securities and Related
Stockholder Matters.................. 47
Legal Matters and Auditors............. 48
Definitions............................ 48
Further Information.................... 49
Index to Consolidated Financial
Statements........................... F-1
</TABLE>

======================================================
======================================================

LOGO

NEVADA MANHATTAN MINING, INC.
MINING DEVELOPMENT EXPLORATION
COMMON STOCK

---------------------------
PROSPECTUS
---------------------------

, 1997

======================================================
<PAGE> 76

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the Securities Act
of 1933 (the " '33 Act"). Sections 78.751 et seq. of the Nevada Revised Statutes
allow a company to indemnify its officers, directors, employees, and agents from
any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has been made
that the officer, director, employee, or agent acted in good faith and in a
manner which such person believed to be in the best interests of the company. A
determination made be made by the shareholders; by a majority of the directors
who were not parties to the action, suit, or proceeding confirmed by opinion of
independent legal counsel; or by opinion of independent legal counsel in the
event a quorum of directors who were not a party to such action, suit, or
proceeding does not exist. Provided the terms and conditions of these provisions
under Nevada law are met, officers, directors, employees, and agents of the
Company may be indemnified against any cost, loss, or expense arising out of any
liability under the '33 Act. Insofar as indemnification for liabilities arising
under the '33 Act may be permitted to directors, officers and controlling
persons of the Company, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification for violations of the
'33 Act is against public policy and is, therefore, unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses payable by the
Company in connection with the sale of Common Stock being registered. All
amounts are estimates except the registration fee and the Amex fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
Registration fee.................................................. $ 8,888
Amex fee.......................................................... $ 50,000
Philadelphia Stock Exchange fee................................... $ 7,500
Printing and engraving............................................ $ 60,000
Translation Services.............................................. $ 3,000
Legal fees and expenses........................................... $ 70,000
Accounting fees and expenses...................................... $ 50,000
Blue sky fees and expenses........................................ $ 10,000
Transfer agent fees............................................... $ 2,500
Miscellaneous..................................................... $ 5,000
-------
Total................................................... $ 266,888
=======
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

From the period June 1, 1994, through May 31, 1997, the Company offered and
sold 4,119,964 shares of its Common Stock and 228,319 shares of Preferred Stock.
From the period June 1, 1994 through May 31, 1995, the Company offered and sold
647,213 shares of its Common Stock (after adjustment for the reverse split which
occurred in February 1995) at $1.00 per share in a private placement in reliance
upon Section 4(2). The Company believes that it met all of the requirements
contained in Section 4(2).

Sales of shares were made only to the class of persons meeting the
suitability requirements contained within the Offering. The Company reviewed
subscription documents which it required all prospective purchasers to complete.

From the period June 1, 1995 through May 31, 1996, the Company offered and
sold 119,360 shares of Preferred Stock for $1,193,600 and 1,555,400 shares of
its Common Stock for $1,555,400. The Company

II-1
<PAGE> 77

believed that it met all of the requirements contained in Section 4(2). Sales of
shares were made only to the class of persons meeting the suitability
requirements contained within the Offering. The Company reviewed subscription
documents which it required all prospective purchasers to complete.

From the period from June 1, 1996 through May 31, 1997, the Company offered
and sold 1,917,351 shares of Common Stock for $1,917,351 and 108,959 shares of
Preferred Stock for $1,089,590. Sales of shares were made only to the class of
persons meeting the suitability requirements contained within the Offering. The
Company reviewed subscription documents which it required all prospective
purchasers to complete.

Sales of both the Common Stock and the Preferred Stock were effected
through the executive officers of the Company to existing shareholders. No
underwriters were employed in connection with the offer and sale of the
aforementioned securities. Thus no underwriting discounts or commissions were
paid.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------------ ----------------------------------------------------------------------
<S> <C>
3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10,
1985*
3.(ii) Certificate of Amendment to Articles of Incorporation of Epic
Enterprises, Ltd., Filed September 11, 1987*
3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed October 26, 1987*
3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed August 31, 1995*
3.(v) Certificate of Determination of Preferences of Series A Preferred
Stock of Nevada Manhattan Mining Incorporated Filed October 25, 1995*
3.(vi) Bylaws of Epic Enterprises, Ltd.*
3.(vii) Memorandum and Articles of Association of Equatorial Resources, Ltd.+
3.(viii) Memorandum and Articles of Association of Kalimantan Resources, Ltd.+
4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd.*
4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of
Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed
October 25, 1995*
4.(iii) Stock Options Issued to Directors+
4.(iv) Subscription Agreement dated April 14, 1997 with Silenus Limited**
4.(v) Warrant to Purchase Common Stock**
4.(vi) Deed of Trust in favor of Silenus Limited**
4.(vii) Form of Debenture**
4.(viii) Subscription Agreements dated July 15, 1997++
4.(ix) Warrants to Purchase Common Stock++
4.(x) Form of Debenture++
5 Opinion on Legality, as revised
10.(i) Mining Agreement Dated April 4, 1987*
10.(ii) Amendment to Mining Agreement Dated December 9, 1987*
10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989*
10.(iv) Corporation Quitclaim Deed Filed March 9, 1989*
10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989*
10.(vi) Joint Venture Agreement Dated June 1993*
10.(vii) Letter Agreement Dated August 10, 1995*
10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995*
10.(ix) Contract Between Nevada Manhattan Mining, Inc, and Harrison Western
Construction Corp.*
10.(x) Principles of Agreement Dated August 19, 1996, as amended***
10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D.
Michaels*
10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer*
10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1,
1995*
</TABLE>

II-2
<PAGE> 78

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------------ ----------------------------------------------------------------------
<S> <C>
10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear
& Company, Inc.*
10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D.*
10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D.*
10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten*
10.(xviii) Letter Agreement dated April 23, 1997 with British Far East Holdings
Ltd.**
10.(xix) Addendum Agreement to Principles of Agreement+
10.(xx) Acquisition Agreement by and between Sinkamas Agunbg Ltd. and
Kalimantan Resources, Ltd. dated January 26, 1997+
10.(xxi) Acquisition Agreement for Gold and Coal Concessions by and between
Kalimas Jaya Ltd. and Kalimantan Resources, Ltd.+
10.(xxii) November 11, 1996 letter Agreement with Maderia Intex, S.A.
International Exports+
10.(xxiii) Proposal for Sale and Purchase and Authorization for Exploration of
Timber+
10.(xxiv) Eco-Rating Standard Agreement dated December 17, 1996+
10.(xxv) Sale and Purchase Agreement dated February 6, 1997+
10.(xxvi) Agreement to Jointly Develop Timber Properties dated May 30, 1997++
10.(xxvii) Agreement to Acquire Sawmill dated May 30, 1997++
10.(xxviii) Agreement to Harvest Timber and Develop Harvest Properties++
10.(xxix) Addendum to Contract for Extraction of Timber and Development of
Timber Properties++
21 Subsidiaries of Small Business Issuer+
23.(i) Consent of Jackson & Rhodes P.C.
23.(ii) Consent of William R. Wilson**
23.(iii) Consent of Behre Dolbear & Company, Inc.**
27 Financial Data Schedule++
99(i) Business Plan Dated July 1995*
99(ii) Business Plan Dated January 1997+
</TABLE>

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

* Filed with Registration Statement on Form SB-2 on December 6, 1996
(Registration No. 333-17423).

** Filed with Registration Statement on Form SB-2 on May 28, 1997
(Registration Number 333-27923)

*** Principles of Agreement in original form filed with Registration Statement
on Form SB-2 on December 6, 1996. Amendment to this document was filed July
31, 1997 in connection with Amendment No. 1 to Form SB-2.

+ Incorporated by reference to the Company's Registration Statement on Form
10 filed April 3, 1997 (Registration No. 001-12867).

++ Incorporated by reference to the Company's Amendment No. 1 to Form SB-2
filed with the Commission on July 31, 1997 (Registration Number 333-27923).

(B) FINANCIAL STATEMENT SCHEDULES.

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

ITEM 28. UNDERTAKINGS.

The Company hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.

(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered

II-3
<PAGE> 79

(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the effective Registration
Statement.

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;

provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Company pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described in the Prospectus or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

The Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed a part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act of 1933 shall be deemed to be part of
this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 80

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this amendment to the
registration statement to be signed on its behalf by the undersigned, in the
City of Calabasas, State of California on September 12, 1997.

NEVADA MANHATTAN MINING
INCORPORATED

By /s/ CHRISTOPHER D. MICHAELS
------------------------------------
Christopher D. Michaels
President

In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<S> <C> <C>

/s/ CHRISTOPHER D. MICHAELS President, Director and September 12, 1997
- --------------------------------------------- Chief Executive Officer
Christopher D. Michaels

/s/ JEFFREY S. KRAMER Senior Vice President September 12, 1997
- --------------------------------------------- Chief Financial Officer
Jeffrey S. Kramer

/s/ NEIL SHARDA Controller September 12, 1997
- ---------------------------------------------
Neil Sharda

/s/ STANLEY J. MOHR Director September 12, 1997
- ---------------------------------------------
Stanley J. Mohr

/s/ JOSEPH RUDE III, M.D. Director September 12, 1997
- ---------------------------------------------
Joseph Rude III, M.D.

/s/ EDNA POLLOCK Director September 12, 1997
- ---------------------------------------------
Edna Pollock
</TABLE>

II-5
<PAGE> 81

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
<S> <C> <C>
3.(i) Articles of Incorporation of Epic Enterprises, Ltd., Filed June 10,
1985*.................................................................
3.(ii) Certificate of Amendment to Articles of Incorporation of Epic
Enterprises, Ltd., Filed September 11, 1987*..........................
3.(iii) Certificate of Amendment to Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed October 26, 1987*.................
3.(iv) Certificate of Amendment of Articles of Incorporation of Nevada
Manhattan Mining Incorporated Filed August 31, 1995*..................
3.(v) Certificate of Determination of Preferences of Series A Preferred
Stock of Nevada Manhattan Mining Incorporated Filed October 25,
1995*.................................................................
3.(vi) Bylaws of Epic Enterprises, Ltd.*.....................................
3.(vii) Memorandum and Articles of Association of Equatorial Resources,
Ltd.+.................................................................
3.(viii) Memorandum and Articles of Association of Kalimantan Resources,
Ltd.+.................................................................
4.(i) Pages 1, 3, 4, and 5 of the Bylaws of Epic Enterprises, Ltd.*.........
4.(ii) Pages 1 through 9 of Certificate of Determination of Preferences of
Series A Preferred Stock of Nevada Manhattan Mining Incorporated Filed
October 25, 1995*.....................................................
4.(iii) Stock Options Issued to Directors+....................................
4.(iv) Subscription Agreement dated April 14, 1997 with Silenus Limited**....
4.(v) Warrant to Purchase Common Stock**....................................
4.(vi) Deed of Trust in favor of Silenus Limited**...........................
4.(vii) Form of Debenture**...................................................
4.(viii) Subscription Agreement dated July 15, 1997++..........................
4.(ix) Warrants to Purchase Common Stock++...................................
4.(x) Form of Debenture++...................................................
5 Opinion on Legality, as revised.......................................
10.(i) Mining Agreement Dated April 4, 1987*.................................
10.(ii) Amendment to Mining Agreement Dated December 9, 1987*.................
10.(iii) Manhattan Mining Property Agreement Dated March 2, 1989*..............
10.(iv) Corporation Quitclaim Deed Filed March 9, 1989*.......................
10.(v) Deed of Trust and Assignment of Rents Recorded March 9, 1989*.........
10.(vi) Joint Venture Agreement Dated June 1993*..............................
10.(vii) Letter Agreement Dated August 10, 1995*...............................
10.(viii) Amendment to Joint Venture Agreement Dated October 20, 1995*..........
10.(ix) Contract Between Nevada Manhattan Mining, Inc. and Harrison Western
Construction Corp.*...................................................
10.(x) Principles of Agreement Dated August 19, 1996, as amended***..........
10.(xi) Employment Agreement Dated January 1, 1995 with Christopher D.
Michaels*.............................................................
10.(xii) Employment Agreement Dated January 1, 1995 with Jeffrey Kramer*.......
10.(xiii) Consulting Agreement with Gold King Mines Corporation Dated April 1,
1995*.................................................................
10.(xiv) Consulting Services Agreement Dated October 7, 1996 with Behre Dolbear
& Company, Inc. *.....................................................
10.(xv) Letter Agreement Dated March 25, 1996 with David Weissberg, M.D.*.....
10.(xvi) Letter Agreement Dated May 13, 1996 with David Weissberg, M.D. *......
10.(xvii) Letter Agreement Dated September 25, 1996 with Mr. John Holsten*......
10.(xviii) Letter Agreement dated April 23, 1997 with British Far East Holding
Ltd.**................................................................
10.(xix) Addendum Agreement to Principles of Agreement+........................
</TABLE>

<PAGE> 82

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------------ ---------------------------------------------------------------------- ------------
<S> <C> <C>
10.(xx) Acquisition Agreement by and between Singkamas Agung Ltd. and
Kalimantan Resources, Ltd. dated January 26, 1997+....................
10.(xxi) Acquisition Agreement for Gold and Coal Concessions by and between
Kalimas Jaya Ltd. and Kalimantan Resources, Ltd.+.....................
10.(xxii) November 11, 1996 letter Agreement with Maderia Intex, S.A.
International Exports+................................................
10.(xxiii) Proposal for Sale and Purchase and Authorization for Exploration of
Timber+...............................................................
10.(xxiv) Eco-Rating Standard Agreement dated December 17, 1996+................
10.(xxv) Sale and Purchase Agreement dated February 6, 1997+...................
10.(xxvi) Agreement to Jointly Develop Timber Properties dated May 30, 1997++...
10.(xxvii) Agreement to Acquire Sawmill dated May 30, 1997++.....................
10.(xxviii) Agreement to Harvest Timber and Develop Harvest Properties++..........
10.(xxix) Addendum to Contract for Extraction of Timber and Development of
Timber Properties++...................................................
21 Subsidiaries of Small Business Issuer+................................
23.(i) Consent of Jackson & Rhodes P.C. .....................................
23.(ii) Consent of William R. Wilson**........................................
23.(iii) Consent of Behre Dolbear & Company, Inc.**............................
27 Financial Data Schedule++.............................................
99(i) Business Plan Dated July 1995*........................................
99(ii) Business Plan Dated January 1997+.....................................
</TABLE>

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

* Filed with Registration Statement on Form SB-2 on December 6, 1996
(Registration No. 333-17423).

** Filed with Registration Statement on Form SB-2 on May 28, 1997
(Registration Number 333-27923).

*** Principles of Agreement in original form filed with Registration Statement
on Form SB-2 on December 6, 1996. Amendment to this document is filed July
31, 1997 in connection with Amendment No. 1 to Form SB 2.

+ Incorporated by reference to the Company's Registration Statement on Form
10 filed April 3, 1997 (Registration No. 001-12867).

++ Incorporated by reference to the Company's Amendment No. 1 to Form SB-2
filed with the Commission on July 31, 1997 (Registration Number 333-27923).

<PAGE> 1
EXHIBIT 5

May 28, 1997

NEVADA MANHATTAN MINING INCORPORATED
5038 North Parkway Calabasas
Suite 100
Calabasas, California 91302

Re: Proposed sale of Common Stock in Nevada Manhattan Mining Incorporated

Gentlemen:

We have acted as Special Counsel to Nevada Manhattan Mining Incorporate (the
"Company") in connection with the Company's proposed offer and sale of Common
Stock to be registered pursuant to Form SB-2 dated May 28, 1997 and the exhibits
thereto attached. Capitalized terms not otherwise defined herein have the same
meaning as set forth in the Prospectus which is appended to Form SB-2.

In rendering the opinion hereinafter expressed, we have examined such documents,
instruments, and matters of law as we have deemed appropriate, including the
following documents (collectively referred to herein as the "Related
Documents"):

1. Form SB-2;

2. The Prospectus;

3. The exhibits accompanying Form SB-2; and

4. Such other documents including the Company's articles of incorporation,
bylaws, minutes of directors meetings and other documents pertinent to
the opinion herein expressed.

In conducting our examination, we have assumed: (i) the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies; (ii)
the accuracy of the representations and warranties of factual matters made by
the Company in any certificates delivered to us for our examination in the
Related Documents; and (iii) other than the Related Documents, there are no
documents between the Company and other parties which would limit, expand, or
otherwise modify the respective rights and obligations of the Company other than
those set forth in the Related Documents or which would have an effect on the
opinion herein rendered.

<PAGE> 2
As to questions of fact material to certain matters set forth in this opinion
except as otherwise provided herein, we have relied solely upon a certificate of
the Company duly executed by a person authorized to execute such certificates.

Based on and subject to the foregoing and the limitations set forth herein and
based on our examination of such questions of law as we have deemed appropriate
under the circumstances, we are of the opinion that the Common Stock when sold
pursuant to the terms and conditions outlined in the Prospectus will be legally
issued, fully paid, and non-assessable.

We are qualified to practice law in the state of California and we do not
purport to express any opinion herein concerning any law other than the laws of
the states of California and Nevada and the federal law of the United States of
America. On matters relating to Nevada laws, we have relied upon the advice of
counsel licensed to practice law in that jurisdiction. This opinion is limited
to the matters expressly set forth herein and no opinion is implied or may be
inferred beyond the matters expressly stated herein.

This opinion is as of the date shown above. We have not undertaken and hereby
disclaim any obligation to advise you of any change in any matter after the date
hereof which is otherwise stated in this opinion

Very Truly Yours,

Lloyd S. Pantell, APLC

By Lloyd S. Pantell, Esq.

<PAGE> 1

EXHIBIT 23.(i)

The Board of Directors
Nevada Manhattan Mining Incorporated

We consent to the use of our report included herein and to the reference to our
firm under the heading "Auditors" in the Prospectus and the Registration
Statement on Form SB-2.

Jackson & Rhodes P.C.

Dallas, Texas
September 11, 1997