KALAN GOLD CORP, 10KSB, 1998-04-13

KALAN GOLD CORP
10KSB, 1998-04-13
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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 1997
Commission File No. 0-25658

Kalan Gold Corporation
(Exact Name of Small Business Issuer as specified in its charter)

Colorado 84-1357927
--------------- ---------------------------
(State or other (IRS Employer File Number)
jurisdiction of
incorporation)

Tower II, Suite 100,
12835 E. Arapahoe Road
Englewood, Colorado 80112
------------------------- -------
(Address of principal executive offices) (zip code)

(303) 706-1606
---------------
(Registrant's telephone number, including area code)

Securities to be Registered Pursuant to Section 12(b) of the Act: None

Securities to be Registered Pursuant to Section 12(g) of the Act:

Common Stock, $0.00001 per share par value

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes: X No:
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ ]
State issuer's revenues for its most recent fiscal year $-0-.
The aggregate market value of the voting stock of the Registrant held by
non-affiliates as of December 31, 1997 was approximately $4,000,000.
The number of shares outstanding of the Registrant's common stock, as of
the latest practicable date, March 15, 1998, was 7,090,999.

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Documents incorporated by reference are found in Item 13.

<PAGE>

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

(a) GENERAL DEVELOPMENT OF BUSINESS

Kalan Gold Corporation (the "Company" or the "Registrant"), is a Colorado
corporation. The principal business address is Tower II, Suite 100, 12835 E.
Arapahoe Road, Englewood, Colorado 80112. Its phone number is (303) 706-1606.

The Company was originally incorporated under the laws of the State of
Colorado on September 19, 1985 as a gas exploration company under the name
Knight Natural Gas, Inc. On January 1, 1993, the Company entered into the
development stage.

The Company has had no operations since 1989. On November 1, 1994, the
Company did a one-for-twenty reverse split of its common stock and began
searching for an acquisition candidate. On August 26, 1996, the Company entered
into an acquisition of certain defined assets and liabilities of Sedcore
Exploration Company Limited ("Sedcore") in exchange for 5,000,000 common shares
of the Company. On August 27, 1996, the Company entered into an additional
acquisition of certain additional defined assets of Sedcore in exchange for
8,500,000 common shares of the Company. This second acquisition was rescinded on
December 30, 1996 and the shares returned to treasury and canceled.

The Company's name was changed to "KALAN GOLD CORPORATION" in November,
1996.

As of December 31, 1997, the Company had a total of 7,090,000 common shares
issued and outstanding. The Company has not been subject to any bankruptcy,
receivership or similar proceeding.

(b) NARRATIVE DESCRIPTION OF THE BUSINESS

GENERAL

From December, 1989 until the acquisition of the Sedcore assets, the
Company has had no activities. The Company currently has no operations and is in
the development stage. Since 1989, the Company has carried no inventories or
accounts receivable. No independent market surveys have ever been conducted to
determine demand for the Company's products and services, since the Company has
never had any products or services which it has provided to anyone. During this
period, the Company has carried on no operations and generated no revenues.

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OIL AND GAS OPERATIONS

From inception to December, 1989, the Company operated briefly as an oil
and gas company. No operations remain from this period. The Company
investigated certain possibilities but drilled no oil or gas wells. This was the
entire extent of the Company's activities.

GOLD OPERATIONS

The Company has succeeded to Sedcore's interests in certain defined gold
concessions and plans to undertake to prove the commercial feasibility of the
concessions. Once these concessions have been proven to be economically
feasible, the Company plans to undertake commercial development, either itself
or with a joint venture partner, or the Company may sell its interests in these
concessions to third parties.

ORGANIZATION

The Company presently comprises one corporation with no subsidiaries or
parent entities and is in the developmental stage.

PROPOSED BUSINESS

From January 1, 1993 until August, 1996, the primary activity of the
Company had been directed towards organizational efforts. With the acquisition
of the Sedcore assets, the focus of the Company shifted.

It was initially the plan of the Company's management that the Company
focus in the gold mining business solely with respect to the two concessions
which were assigned to the Company by Sedcore. The Company's management planned
to develop operations through the use of additional capital which the Company
would plan to seek through a public or private offering, through debt financing,
or through internally generated profits. However, at this point, and for the
foreseeable future, the Company has shifted its business focus.

Sedcore had originally entered into a two year agreement with Ahanta Mining
Co. Limited ("Ahanta"), a Ghanian corporation, to undertake exploration for gold
in the Butre River area in the Western Region of Ghana. Ahanta assigned its
exclusive mineral rights under Mining Concession No. 111 to Sedcore for the
period of the agreement. Sedcore, in turn, has assigned its rights under this
agreement with Ahanta to the Company. The Company succeeded to all of Sedcore's
rights and responsibilities. This agreement with Ahanta has been terminated.
The Company plans no further activity with respect to this project.

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In addition, Sedcore had assigned to the Company its two and one-half year
agreement with Esikaman Mining Company Limited ("Esikaman") to conduct a
reconnaissance for gold in a licensed area located in the Wassa Amanfi district
of Ghana. The Company succeeded to all of Sedcore's rights and responsibilities,
including the requirement to make scheduled payments to Esikaman of a total of
$90,000 through November, 1997. The Company has negotiated an extension of this
agreement with Esikaman to end in July, 1998. The Company is currently
evaluating its plans with respect to this situation. At the present time, the
Company has made no decision with respect to this situation other than to extend
the agreement.

In March, 1997, the Company completed an agreement with Trio Gold Corp., an
Alberta private corporation (Trio), whereby Trio would earn a 50% ownership
interest in the Ahanta and Esikaman Concessions in return for the payment of
$144,000 to the Company and for the expenditure of $375,000 on geochemical
studies on both properties. Trio was to be responsible for all operations on
these properties. With the termination of the Ahanta agreement, the agreement
with Trio will only continue to apply to the Esikaman property.

On February 9, 1998, the Company entered into an exclusive agreement with
ASEAN GOLD INDUSTRIES, INC. (Asean Gold), whereby the Company will provide to
Asean Gold all technical advice regarding the building, constructing, and
operation of Asean Gold's gold milling, smelting, and refining facilities in the
Province of Lanao Del Norte, Mindanao, the Philippines. Under this agreement,
Registrant will also manage and oversee the day-to-day operations of these
facilities. It is anticipated that this activity will become the principal focus
of the Company's business for the coming fiscal year and the foreseeable future.
See "Subsequent Event" below.

In addition, the Company reserves the right to seek, investigate and, if
such investigation warrants, acquire controlling interest in business
opportunities presented to it by persons or firms who are the gold business and
wish to seek the advantages of being acquired by the Company. The Company would
restrict any acquisitions to the gold business but would not restrict the
geographical location of such business. The Company would be the surviving
entity in each case. However, it is not anticipated that the search for
acquisition candidates would be a material focus of the Company in the next
fiscal year.

The Company may seek a merger candidate in the form of firms which are
developing companies in need of expansion, are seeking to develop new
concessions or are established, mature businesses.

In seeking business opportunities, the management decision of the Company
will be based upon the objective of seeking long-term appreciation in the value
of the Company. Current income will be a significant factor in such decisions,
although long-term appreciation of the operations will be the prime
consideration..

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(d) MARKETS

The Company's marketing plan for coming fiscal year and the foreseeable
future will be principally focused providing all technical advice regarding the
building, constructing, and operation of Asean Gold's gold milling, smelting,
and refining facilities in the Province of Lanao Del Norte, Mindanao, the
Philippines and the management of the day-to-day operations of these facilities.

(e) RAW MATERIALS

The use of raw materials will be a material factor in the Company's
activities on behalf of Asean Gold. The gold to be produced by Asean Gold's gold
milling, smelting, and refining facilities will become significant to the
Company's success. The availability of the gold and the ability to successfully
process it will be extremely important to the profitability of the Company. The
success of the Company will also be tied to the world price of gold, to a large
extent, since the viability of the gold milling, smelting, and refining
operations will depend for their profitability on receiving a favorable price
for gold and gold products. At the present time, the world price of gold has
been depressed. However, Asean Gold believes that it can profitably sell its
gold and gold products. While the Company will not be directly tied to this
situation, Asean Gold's profitability will also affect the Company's
profitability. Since the Asean Gold operations have not begun, it is not
possible to estimate the potential profitability of this situation for the
Company at this point.

(f) CUSTOMERS AND COMPETITION

At the present time, the primary focus of the Company will be on the
development of Asean Gold's gold milling, smelting, and refining facilities. The
Company has an exclusive agreement with Asean Gold. Once the Asean Gold
facilities have been developed and have operations, the competition to sell the
gold from the facilities at the best possible price is expected to be intense.
There are a number of established companies, many of which are larger and better
capitalized than Asian Gold and/or have greater personnel resources and
technical expertise, which could be formidable competitors. At the present time
it is difficult to determine what the scope of the competition will be, however,
given the start-up nature of the facilities, the Company must assume, for the
foreseeable future, that Asean Gold would be at a significant competitive
disadvantage compared to its competitors.

(g) BACKLOG

At December 31, 1997, the Company had no backlogs.

(h) EMPLOYEES

As of December 31, 1997, the Company had one full-time employee and one
part-time employee. The Company's Vice President, the sole full-time employee,
was paid at the rate of

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<PAGE>

$36,000 per annum. The Company's Treasurer is a part-time employee who is paid
at the rate of $1,000 per month. The Company does not plan to hire additional
employees until it has begun operations.

(i) PROPRIETARY INFORMATION

The Company has no proprietary information.

(j) GOVERNMENT REGULATION

The Company is not subject to any material governmental regulation or
approvals. The Asean Gold operations will be subject to material governmental
regulations and approvals.

(k) RESEARCH AND DEVELOPMENT

The Company has never spent any amount in research and development
activities.

(l) ENVIRONMENTAL COMPLIANCE

At the present time, the Company is not subject to any material costs for
compliance with any environmental laws. The Asean Gold operations are expected
to be subject to material environmental compliance.

(m) SUBSEQUENT EVENT

Asean Gold has an exclusive right and authority from the Province of Lanao
Del Norte, Mindanao, the Philippines, to build, construct, and operate gold
milling, smelting, and refining facilities in the Province of Lanao Del Norte,
Mindanao, the Philippines for a nine year period of time, subject to the laws of
the Philippines and the regulations of the Government of the Philippines and its
agencies.

Under its agreement with Asean Gold, the Company will receive as
compensation for services to be performed by it on behalf of Asean Gold, a total
of fifteen percent (15%) of all gross revenues to be received by Asean Gold from
all gold milling, smelting, and refining facilities under this agreement. Asean
Gold will also reimburse the Company for all out-of-pocket expenses incurred by
the Company on behalf of Asean Gold regarding production costs, supplies, staff.

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This arrangement will become the principal focus of the Company's business
for the coming fiscal year.

Item 2. DESCRIPTION OF PROPERTIES.

As of December 31, 1997, the Company's business office was located at
Tower II, Suite 100, 12835 E. Arapahoe Road, Englewood, Colorado 80112, for
which it pays approximately $1,000 per month in rent on a month-to-month lease
from the parent company of the principal shareholder of the Company. The Company
owns office furniture and equipment which it utilizes at its principal office.

Sedcore originally entered into a two year agreement with Ahanta Mining Co.
Limited ("Ahanta"), a Ghanian corporation, to undertake exploration for gold in
the Butre River area in the Western Region of Ghana. Ahanta assigned its
exclusive mineral rights under Mining Concession No. 111 to Sedcore for the
period of the agreement. Sedcore, in turn, has assigned its rights under this
agreement with Ahanta to the Company. The Company has succeeded to all of
Sedcore's rights and responsibilities. This agreement has been terminated.

Further, Sedcore assigned to the Company its two and one-half year
agreement with Esikaman Mining Company Limited ("Esikaman") to conduct a
reconnaissance for gold in a licensed area located in the Wassa Amanfi district
of Ghana. The Company has succeeded to all of Sedcore's rights and
responsibilities, including the requirement to make scheduled payments to
Esikaman of a total of $90,000 through November, 1998. The Company has
negotiated an extension of this agreement with Esikaman to end in July, 1998.
The Company is currently evaluating its plans with respect to this situation. At
the present time, the Company has made no decision with respect to this
situation other than to extend the agreement.

Otherwise, the Company has no other properties.

Item 3. LEGAL PROCEEDINGS.

No legal proceedings of a material nature to which the Company is a party
were pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.

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

The Company did not submit any matter to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.

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<PAGE>

PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a) PRINCIPAL MARKET OR MARKETS.

The Company's began trading in January, 1997. Prior to that time, the
Company's securities had never been listed for trading on any market. Market
makers and other dealers provide bid and ask quotations of the Company's Common
Stock under the symbol "KNGC." Trading is conducted in the over-the-counter
market on the NASD's "Electronic Bulletin Board,"

The table below represents the range of high and low bid quotations of the
common shares of the Company as reported during the reporting period herein. The
following bid price market quotations represent prices between dealers and do
not include retail markup, markdown, or commissions; hence, they may not
represent actual transactions.

Fiscal Year 1997 High Low
---- ---
<S> <C> <C>
First Quarter
Common Shares $5.875 $2.50

Second Quarter
Common Shares $3.375 $1.50

Third Quarter
Common Shares $3.44 $0.68

Fourth Quarter
Common Shares $5.56 $1.34

</TABLE>

(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

As of March 15, 1998, a total of 7,090,999 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was approximately 100. However, the Company
estimates that it has a significantly greater number of shareholders because a
substantial number of the Company's shares are held in nominee names by the
Company's market makers.

Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
were paid by the Company

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<PAGE>

during the periods reported herein nor does the Company anticipate paying
dividends in the foreseeable future.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Results of Operations

The Company has generated no substantial revenues from its operations and
has been a development stage company since inception. Since the Company has not
generated revenues and has never been in a profitable position, it operates with
minimal overhead. The Company's primary activity for the next fiscal year will
be to provide to Asean Gold all technical advice regarding the building,
constructing, and operation of Asean Gold's gold milling, smelting, and refining
facilities in the Province of Lanao Del Norte, Mindanao, the Philippines.

Under this agreement, the Company will also manage and oversee the
day-to-day operations of these facilities. The Company believes that it will
generate substantial revenues during the coming fiscal year as a result of this
agreement with Asean Gold. Under its agreement with Asean Gold, the Company will
receive as compensation for services to be performed by it on behalf of Asean
Gold, a total of fifteen percent (15%) of all gross revenues to be received by
Asean Gold from all gold milling, smelting, and refining facilities under this
agreement. Asean Gold will also reimburse the Company for all out-of-pocket
expenses incurred by the Company on behalf of Asean Gold regarding production
costs, supplies, staff. At the present time, the Company is unable to project
the revenues which will be generated over the near term as a result of this
agreement with Asean Gold other than to say that the revenues are expected to be
substantial, and the impact on the Company will be material.

To a secondary degree, the Company will evaluate its situation with respect
to the Esikaman gold property in the Butre river area of Western Ghana and in a
licensed area located in the Wassa Amanfi district of Ghana. In March, 1997,
the Company completed an agreement with Trio Gold Corp., an Alberta private
corporation (Trio), whereby Trio will earn a 50% ownership interest in the
Ahanta and Esikaman Concessions, in return for the payment of $144,000 to the
Company and for the expenditure of $375,000 on geochemical studies on both
properties. The Company has terminated its agreement for the Ahanta Concession.
Trio would be responsible for all operations, if any, on the Esikaman
Concession. At the present time, the Company cannot predict what it will do with
the Esikaman Concession.

Liquidity and Capital Resources

As of the end of the reporting period, the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year.

The agreement with Asean Gold is expected to have a significant impact on
the Company's liquidity and capital resources. The Company will receive as
compensation for services to be

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performed by it on behalf of Asean Gold, a total of fifteen percent (15%) of all
gross revenues to be received by Asean Gold from all gold milling, smelting, and
refining facilities under this agreement. Asean Gold will also reimburse the
Company for all out-of-pocket expenses incurred by the Company on behalf of
Asean Gold regarding production costs, supplies, staff. These revenues are
expected to be substantial, although they cannot be quantified at this time.

Nevertheless, Management feels that the Company has inadequate working
capital to pursue any gold discoveries which can be commercially extracted from
its lease properties. To develop these properties, the Company must utilize
additional capital which it must acquire, either itself or with joint venture
partners or investors. The Company has entered into an agreement with Trio as a
partner but expects to require additional financing for its properties. The
Company will have negligible capital requirements prior to the decision to
develop these areas. The timing for the development of any commercially feasible
properties will be contingent upon the current price of gold rising to more
commercially reasonable levels. The Company cannot predict when this will occur.

If the revenues generated by its agreement with Asean Gold prove to be
substantial in the near term, the Company will consider the possibility of
paying dividends to its shareholders.

Item 7. FINANCIAL STATEMENTS.

The complete financial statements are included at Item 13 herein.

Item 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

The Company did not have any disagreements on accounting and financial
disclosures with its present accounting firm during the reporting period.

PART III

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

The Directors and Executive Officers of the Company, their ages and
positions held in the Company as of December 31, 1997 are as follows:

NAME AGE POSITION HELD
---------- --- ---------------
<S> <C> <C>
Sanford Altberger 62 President

Michael Raisch 47 Secretary-Treasurer and Director

Robert J. Goldman 64 Director

</TABLE>

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<TABLE>

<S> <C> <C>
Harry Ruskowsky 60 Director

Elmer Stewart 53 Director

</TABLE>

The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.

SANFORD ALTBERGER. Mr. Altberger has been the President and a Director of the
Company since August, 1997. From 1988 to the present, he has been the
President and principal owner of Orovi Corporation, a private corporation in the
minerals exploration business. He has been involved in various capacities with
the oil, gas, and mining business for approximately thirty years. He has a
degree in Mining Engineering from the University of Arizona and a degree in
Petroleum Engineering from Oklahoma University. Mr. Altberger will devote a
minimum of forty hours per week to the affairs of the Company.

ROBERT J. GOLDMAN. Mr. Goldman has been the Secretary-Treasurer and a Director
of the Company since August, 1996. From 1972 to the present, he has been
associated with Coroni Mineral Group of Denver, Colorado, where he currently
serves as a Vice President. He has a Bachelor's degree in Business
Administration from the University of Denver. Mr. Goldman will devote a minimum
of forty hours per week to the affairs of the Company.

MICHAEL RAISCH. Mr. Raisch has been a Director of the Company and the
Secretary-Treasurer since March, 1997. He was in public accounting with the
firm of Zaveral, Boosalis, Raisch from 1990 to September, 1995. At that time, he
became the Chief Financial Officers of George T. Sanders Company, a private
plumbing supply company. Mr. Raisch has a Bachelor's degree in Accounting from
the University of Colorado. He will devote a minimum of ten hours per week to
the affairs of the Company.

HARRY RUSKOWSKY Mr. Ruskowsky has been a Director of the Company since October,
1997. He has been the President and Chief Executive Officer of Trio Gold Corp.
since 1989. He has been involved in oil and gas exploration since 1963 with a
number of private companies.He is a member of a number of Canadian professional
mining and petroleum organizations. Mr. Ruskowsky will devote as much time as
may be required to carry out his responsibilities as an outside Director of the
Company.

ELMER STEWART Mr. Stewart has been a Director of the Company since October,
1997. From 1997 to the present, he has been the President and Chief Executive
Officer of Eurasia Gold Corp., a private corporation in the mining business.
From 1993 to 1997, he was associated in

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various capacities with Capilano International, Inc., which eventually became
Kelman Technologies, Inc. He was its Presdient and Chief Executive Officer from
1996 to 1997. He has been associated with mineral companies in various
capacities since 1974. Mr. Stewart has a Master of Science Degree in Economic
Geology from Acadia University, Nova Scotia. He will devote as much time as may
be required to carry out his responsibilities as an outside Director of the
Company.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.

Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires the Company's officers and directors and persons owning more than ten
percent of the Company's Common Stock to file initial reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC").
Additionally, Item 405 of Regulation S-B under the 34 Act requires the Company
to identify in its Form 10-KSB and proxy statement those individuals for whom
one of the above referenced reports was not filed on a timely basis during the
most recent fiscal year or prior fiscal years. Given these requirements, the
Company has the following report to make under this section. All of the
Company's officers or directors, and all persons owning more than ten percent of
its shares have filed the subject reports, if required, on a timely basis during
the past fiscal year.

Item 10. EXECUTIVE COMPENSATION.

The following table sets forth the Summary Compensation Table for the
Chief Executive Officer and other executive officer who were serving as
executive officers at the end of the last completed fiscal year. No other
compensation not covered in the following table was paid or distributed by
the Company to such persons during the period covered. Employee Directors
receive no additional compensation for service on the Board of Directors of
the Company. Outside Directors received no compensation from the Company as
such during this period except as indicated below. The Company has granted
stock options to certain Directors and former Directors. Mr. Altberger, the
current President and Director, has an option for 250,000 common shares at
$1.00 per share until December 31, 2002. Mr. Raisch, the current
Secretary-Treasurer and a Director, has an option for 75,000 common shares at
$.02 per share until November 14, 2001. Mr. Ruskowsky, a Director, has an
option for 50,000 common shares at $1.00 per share until December 31, 2002.
Mr. Stewart, a Director, has an option for 50,000 common shares at $1.00 per
share until December 31, 2002. Mr. Goldman, the Company's Vice President and
a Director, has an option for 75,000 common shares at $.02 per share until
November 14, 2001. Mr. Barksdale, the Company's former Vice President and a
Director, has an option for 37,500 common shares at $.02 per share until
November 14, 2001. As of the date hereof, none of these options have been
exercised. Mr. Baum, the Company's former President and a Director, had an
option for 125,000 common shares at $.02 per share until November 14, 2001.
He completely exercised this option in 1998. The Company has no retirement,
pension, profit sharing, stock option, insurance or other similar programs.

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SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation
------------------- ----------------------

Awards Payouts
------ -------
Other Restricted All
Annual Stock LTIP Other
Salary Bonus(2)Compen- Award(s) Options/Payouts
Compensation sation(3)
Name Year ($) ($) ($) SARs(#) ($)
- ---- ---- ----- ----- ----- ------- -----
<S> <C> <C>
Sanford 1997 $-0-
Altberger 1996 $-0-
Chairman 1995 $-0-

Robert J. 1997 $26,423
Goldman 1996 $-0-
Vice President 1995 $-0-

Michael 1997 $ 8,308
Raisch 1996 $-0-
Treasurer 1995 $-0-

</TABLE>

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

The following sets forth the number of shares of the Registrant's $0.00001
par value common stock beneficially owned by (i) each person who, as of December
31, 1997, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) the individual Directors of the Registrant and
(iii) the Officers and Directors of the Registrant as a group. As of December
31, 1997, there were 7,090,000 common shares issued and outstanding.
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership(1)(2) Class
- -------------------------------------------------------------------------------------

<S> <C> <C>
Orovi Corporation 2,981,611(3) 42.1%
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

Sanford Altberger -0-(3)(4) -0-
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

</TABLE>

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<TABLE>
<S> <C> <C>
Michael Raisch 50,000(4) .7%
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

Robert J. Goldman -0-(4) -0-
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

Harry Ruskowsky -0-(4) -0-
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

Elmer Stewart -0-(4) -0-
Suite 100
12385 E. Arapahoe Road,
Englewood, CO 80112

All Officers and Directors as a Group 2,981,611(4) 42.8%
(five persons)

</TABLE>

(1) All ownership is beneficial and on record, unless indicated otherwise.

(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.

(3) Mr. Altberger is the control shareholder of Orovi Corporation, which is the
principal shareholder of Sedcore Exploration Company Limited.

(4) The directors of the Company have received stock options. None of the
options have been exercised as of the date hereof.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Orovi Corporation, a private company controlled by Mr. Altberger, and one
of the owners of Sedcore advanced loans to the Company from time to time for
operational purposes. A total of approximately $90,971 in loans were advanced
to the Company through December 31, 1997.

Sanford Altberger, the Company's President, controls Orovi Corporation,
which is also a major shareholder of Asean Gold.

14
<PAGE>

PART IV

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

(a) The following financial information is filed as part of this
report:
(1) FINANCIAL STATEMENTS
(2) SCHEDULES
(3) EXHIBITS. The following exhibits required by Item 601
to be filed herewith are incorporated by reference to
previously filed documents:

<TABLE>
<CAPTION>
Exhibit number to
Item 601 Registration Statement
Exhibit No. Description on Form 10-SB
- ----------- ----------- ----------------------
<S> <C>
* 3A Articles of Incorporation
* 3B Articles of Amendment
* 3C Bylaws
* 3D Articles of Amendment to change name to KALAN GOLD CORPORATION.
* 10A August 26, 1996 Purchase Agreement for defined assets and
liabilities of SEDCORE EXPLORATION COMPANY LIMITED
10B Agreement between the Company and Asean Gold Industries, Inc.

</TABLE>

*Previously Filed

(b) REPORTS ON FORM 8-K. The Company filed two reports on Form
8-K during the fourth quarter of the fiscal year ended December 31, 1997.
One report was dated October 14, 1997. The other report was dated October
20, 1997.

15
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

Kalan Gold Corporation

Dated: 4/10/98 By: /s/ Sanford Altberger
----------- -----------------------------
Sanford Altberger
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

CHIEF FINANCIAL AND ACCOUNTING OFFICER

Dated:4/10/98 By: /s/ Michael Raisch
----------- -----------------------------
Michael Raisch
Treasurer

Dated:4/10/98 By: /s/ Robert J. Goldman
----------- -----------------------------
Robert J. Goldman
Director

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

Page
----

<S> <C>
Independent auditors' report . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2

Balance sheet, December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . .F-3

Statements of operations, years ended December 31, 1997 and 1996,
and from January 1, 1993 (inception) through December 31,
1997 (unaudited). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-4

Statements of cash flows, years ended December 31, 1997 and 1996,
and January 1, 1993 (inception) through December 31, 1997
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-5

Statement of shareholders' equity (deficit), January 1, 1993
(inception) through December 31, 1997 (unaudited) . . . . . . . . . . . . . .F-7

Summary of significant accounting policies . . . . . . . . . . . . . . . . . . . .F-8

Notes to financial statements. . . . . . . . . . . . . . . . . . . . . . . . . . F-10
</TABLE>

F-1
<PAGE>

To the Board of Directors
Kalan Gold Corporation

INDEPENDENT AUDITORS' REPORT

We have audited the balance sheet of Kalan Gold Corporation (a development stage
company) as of December 31, 1997 and the related statements of operations,
shareholders' equity and cash flows for the years ended December 31, 1997 and
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kalan Gold Corporation, as of
December 31, 1997 and the results of its operations and cash flows for the years
ended December 31, 1997 and 1996, in conformity with generally accepted
accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note H, the Company's net
losses since inception and a working capital deficiency raise substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Cordovano and Harvey, P.C.
Denver, Colorado
March 21, 1998

F-2
<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

Balance Sheet

December 31, 1997

ASSETS
<TABLE>
<CAPTION>

<S> <C>
CASH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 968
FURNITURE AND EQUIPMENT, NET (Note C). . . . . . . . . . . . . . 4,022
---------
TOTAL ASSETS $ 4,990
---------
---------

LIABILITIES AND SHAREHOLDERS' DEFICIT

LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . . . . $ 12,966
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 11,930
Advance from affiliate (Note B) . . . . . . . . . . . . . . 84,926
Due to affiliate (Note B) . . . . . . . . . . . . . . . . . 4,000
Deferred gain (Note I) . . . . . . . . . . . . . . . . . . 4,517
---------
TOTAL LIABILITIES 118,338
---------

SHAREHOLDERS' EQUITY (DEFICIT) (Notes D & E)
Preferred stock, $.10 par value, 1,000,000 shares
authorized, -0- shares issued and outstanding. . . . . . . . -
Common stock, $.00001 par value, 100,000,000 shares
authorized, 7,090,000 shares issued and outstanding. . . . . 71
Outstanding common stock options . . . . . . . . . . . . . . . 129,500
Additional paid-in capital . . . . . . . . . . . . . . . . . . 26,385
Deficit accumulated during development stage . . . . . . . . . (269,304)
---------
TOTAL SHAREHOLDERS' DEFICIT (113,348)
---------
$ 4,990
---------
---------
</TABLE>

See accompanying summary of significant accounting policies and
notes to the financial statements
F-3

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

Statements of Operations

January 1, 1993
(inception)
December 31, Through
---------------------------- December 31,
1997 1996 1997
------------ ------------ ----------------
(unaudited)
<S> <C> <C> <C>
COSTS AND EXPENSES
Salaries and payroll taxes. . . . . . . . . $ 91,933 $ 26,103 $ 118,036
Compensation (Note E) . . . . . . . . . . . 129,500 - 129,500
Professional. . . . . . . . . . . . . . . . 33,272 16,429 53,551
General and administrative. . . . . . . . . 43,414 13,430 56,971
Depreciation. . . . . . . . . . . . . . . . 1,160 263 1,423
--------- --------- --------------
OPERATING LOSS (299,279) (56,225) (359,481)

NON-OPERATING INCOME (EXPENSE)
Interest expense. . . . . . . . . . . . . . (10,030) (2,417) (12,447)
Gain on sale of property (Note B) . . . . . 86,041 - 86,041
Gain on agreement termination (Note I). . . 12,606 - 12,606
--------- --------- --------------
TOTAL NON-OPERATING
INCOME (EXPENSE) 88,617 (2,417) 86,200
--------- --------- --------------

INCOME TAX BENEFIT (EXPENSE) (Note G)
Current . . . . . . . . . . . . . . . . . . 65,408 9,661 75,069
Deferred. . . . . . . . . . . . . . . . . . (65,408) (9,661) (75,069)
--------- --------- --------------

NET LOSS $(210,662) $ (58,642) $ (273,281)
--------- --------- --------------
--------- --------- --------------

BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING 7,074,375 3,719,167 2,840,208
--------- --------- --------------
--------- --------- --------------

BASIC (LOSS) PER SHARE $ (.03) $ (.02) $ (.10)
--------- --------- --------------
--------- --------- --------------

DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 7,293,125 3,758,229 2,917,813
--------- --------- --------------
--------- --------- --------------

DILUTED (LOSS) PER SHARE $ * $ * $ (.09)
--------- --------- --------------
--------- --------- --------------
* Less than $(.01) per share
</TABLE>

See accompanying summary of significant accounting policies and
notes to the financial statements
F-4

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

Statements of Cash Flows

January 1, 1993
(inception)
December 31, Through
---------------------------- December 31,
1997 1996 1997
------------ ------------ ----------------
(unaudited)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss accumulated during the
development stage. . . . . . . . . . . . $ (210,662) $ (58,642) $ (273,281)
Transactions not requiring cash:
Depreciation . . . . . . . . . . . . . . 1,160 263 1,423
Amortization of notes payable .. . . . . 4,836 2,417 7,253
Contributed services ... . . . . . . . . - 5,027 5,027
Stock issued for other than cash . . . . - - 15
Gain on agreement termination (Note E) . (12,606) - (12,606)
Gain on sale of properties (Note B) . . . . (86,041) - (86,041)
Compensation related to stock options . . . 129,500 - 129,500
Changes in current assets:
Accounts payable and accrued Expenses. . 26,905 1,991 28,271
---------- ---------- -------------
NET CASH (USED IN)
OPERATING ACTIVITIES (146,908) (48,944) (200,439)
---------- ---------- -------------

INVESTING ACTIVITIES
Purchase of equipment . . . . . . . . . . . - (5,446) (5,446)
Proceeds from sale of property (Note B). . . 145,945 - 145,945
---------- ---------- -------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITES 145,945 (5,446) 140,499
---------- ---------- -------------

FINANCING ACTIVITIES
Proceeds from issuance of stock . . . . . . 750 - 750
Proceeds from advances from affiliate . . . 101,400 90,971 192,371
Repayments to affiliate . . . . . . . . . . (107,447) - (107,447)
Principal payments on long-term debt- . . - (30,000) (30,000)
Capital contribution . . . . . . . . . . . - - 3,700
---------- ---------- -------------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (5,297) 60,971 59,374
---------- ---------- -------------
NET INCREASE (DECREASE) IN CASH. . . . . . . . (6,260) 6,581 (566)
Cash, beginning of year. . . . . . . . . . . . 7,228 647 1,534
---------- ---- ----- ----- -------
CASH, END OF YEAR. . . . . . . . . . . . . . . $ 968 $ 7,228 $ 968
---------- ---------- -------------
---------- ---------- -------------
</TABLE>

See accompanying summary of significant accounting policies and
notes to the financial statements
F-5

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

Statements of Cash Flows, Continued

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

There was no cash paid for interest or income taxes.

Noncash investing and financing activities:

During 1997, the Company terminated its agreement with Ahanta. This transaction
resulted in the elimination of $17,046 included in property acquisition costs
and the related note payable to Ahanta of $28,220. After the write off of the
remaining discount on the note payable, the Company recorded a net gain of
$12,606.

At December 31, 1997, the Company was in default of its payments related to the
Esikiman mining concession. Management has the option to extend the due date
of the note, and as of December 31, 1997 is evaluating the option. Therefore,
the Company has recorded a net deferred gain associated with the probable
termination of the Esikiman mining concession agreement in 1998. The property
acquisition costs and outstanding balance on the note payable to Esikiman are
$42,858 and $45,647, respectively. After giving effect to the unamortized
discount on the note, the net deferred gain at December 31, 1997 is $4,517.

During 1996, the Company acquired $119,808 of property acquisition costs and
related non-interest bearing notes payable in the amount of $99,776 in exchange
for 5,000,000 shares of $.00001 par value common stock. $19,982 was recorded as
capital paid in excess of par. At December 31, 1997, the remaining costs
associated with the acquisition of the properties was written off.

Amortized discount on notes payable for the years ended December 31, 1997 and
1996 were $4,836 and $2,417, respectively.

See accompanying summary of significant accounting policies and
notes to the financial statements
F-6

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

Statement of Shareholders' Equity (Deficit)

January 1, 1993 (inception) through December 31, 1997

Deficit
Additional Accum. During
Preferred Stock Common Stock Paid-in Outstanding Development
Shares Amount Shares Amount Capital Options Stage Total
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1993 (inception) (Note A) . . . - $ - 552,500 $ 6 $418,949 - $(417,421) $ 1,534

Net loss for the year ended December 31, 1993 - - - - - - (336) (336)
---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 - - 552,500 6 418,949 - (417,757) 1,198

Shares issued for services, at cost . . . . - - 1,500,000 15 - - - 15

Net loss for the year ended December 31, 1994 - - - - - - (289) (289)
---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 - - 2,052,500 21 418,949 - (418,046) 924

Capital contribution (Note B) . . . . . . . - - - - 3,700 - - 3,700

Net loss for the year ended December 31, 1995 - - - - - - (3,977) (3,977)
---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 - - 2,052,500 21 422,649 - (422,023) 647

Termination of S corporation (Note D). . . . - - - - (422,023) - 422,023 -

Shares issued for property acquisition (Note E) - - 5,000,000 50 19,982 - - 20,032

Capital contribution (Note B) . . . . . . . - - - - 5,027 - - 5,027

Net loss for the year ended December 31, 1996- - - - - - - (58,642) (58,642)
---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996 - - 7,052,500 $ 71 25,635 - (58,642) (32,936)

Outstanding stock options (Note E ). . . . . - - - - - 129,500 - 129,500

Shares issued upon exercise of Stock option
(Note E). . . . . . . . . . . . . . . . - - 37,500 - 750 - - 750

Net loss for the year ended December 31, 1997 - - - - - - (210,662) (210,662)
---------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 - $ - 7,090,000 $ 71 $ 26,385 $129,500 $(269,304) $(113,348)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
</TABLE>

See accompanying summary of significant accounting policies and
notes to the financial statements.
F-7

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

December 31, 1997

NATURE OF ORGANIZATION
Kalan Gold Corporation (the "Company") is in the development stage in accordance
with Statement of Financial Accounting Standards No. 7.

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

CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax reporting. The deferred
tax assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future federal income taxes.

PROPERTY
Computer equipment and office furniture is recorded at cost and depreciated on
the straight-line basis over a period of 36 months. Depreciation expense for
the period from January 1, 1993 (inception) through December 31, 1997 was
$1,423.

DEFERRED PROPERTY ACQUISITION COSTS
Costs attributable to the lease of mineral rights are deferred until it is
determined whether a project is commercially feasible.

RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current year
financial statements.

STOCK-BASED COMPENSATION
The Company accounts for its stock-based compensation plans under the principles
prescribed by the Accounting Principles Board's Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Accordingly, stock option awards are
considered to be "noncompensatory" and do not result in the recognition of
compensation expense. However, shares awarded in 1997 are considered to be
"compensatory" and the Company recognized compensation expense of $129,500.
See Note E.

F-8

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONCLUDED

December 31, 1997

NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". SFAS
128 specifies the computation, presentation, and disclosure requirements of
earnings per share and supersedes Accounting Principles Board Opinion No. 15,
"Earnings Per Share". SFAS 128 requires a dual presentation of basic and
diluted earnings per share. Basic earnings per share, which excludes the impact
of common stock equivalents, replaces primary earnings per share. Diluted
earnings per share, which utilizes the average market price per share as opposed
to the greater of the average market price per share or ending market price per
share when applying the treasury stock method in determining common stock
equivalents, replaces fully-diluted earnings per share. SFAS 128 is effective
for the Company in 1997 and the related information is included in the
accompanying statements of operations.

F-9
<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE A: NATURE OF ORGANIZATION

The Company, formed to explore for natural gas, was incorporated on September
19, 1985 as Knight Natural Gas, Inc. in the State of Colorado. In December
1989, the Company ceased operations in the oil and gas business. Effective
January 1, 1993, under new management, the Company began the search for and
evaluation of privately owned operating companies. During 1996, the Company's
board of directors changed the name of the Company to Kalan Gold Corporation.
The Company is engaged in operations associated with the gold mining business
after acquiring, on August 26, 1996, certain gold mine concessions in the
Republic of Ghana. which were assigned to the Company by Sedcore Exploration
Company Limited ("Sedcore"). During 1997, the Company terminated the agreement
to one of the concessions and is evaluating its plans with respect to the second
concession. See Note I.

On February 9, 1998 the Company entered into an agreement with an affiliated
corporation to provide technical advice regarding the building, constructing,
and operation of the affiliate's gold milling, smelting, and refining facilities
in the Philippines. See Note I.

NOTE B: RELATED PARTY TRANSACTIONS

In August 1996, the Company acquired, from Sedcore Exploration ("Sedcore"),
mining concessions in Ghana and the related notes payable to the owners of the
concessions in exchange for 5,000,000 shares of the Company's common stock.
This transaction resulted in Sedcore becoming a 71% owner of the Company's
outstanding common and voting shares. Sedcore retained the obligation to incur
exploration and related costs associated with the development of the
concessions, therefore no amounts related to those expenditures are recorded in
the financial statements of the Company. See Note F.

On February 18, 1997, the Company entered into a joint venture agreement with
Trio Gold Corp. ("Trio"), whose President is also a director of the Company.
For a 50% participating interest in the Company's mining concessions, Trio paid
the Company $145,945 and agreed to pay on behalf of Sedcore, $310,000 in
expenditures related to the geological and exploratory costs and operate the
concessions. Trio also agreed to reimburse an affiliate of the Company $74,000
for exploration costs expended prior to the closing of the agreement. The
Company recorded a gain of $86,041 on the sale of 50% of the $119,808 deferred
costs ($59,904) associated with the properties.

As of January 1, 1997, the Company owed an affiliate $90,971 for short-term cash
advances made during the prior year. The affiliate also advanced an additional
$101,400 in 1997 for working capital purposes. During the year ended December
31, 1997, the Company repaid $107,447. The remaining balance of $84,926 is
included in the accompanying financial statements as advances from affiliate.

The Company entered into a verbal agreement to rent office space from the
affiliate effective September 1, 1997. The agreement calls for monthly payments
of $1,000. As of December 31, 1997, the Company has accrued $4,000, which is
included in the accompanying financial statements as due to affiliate.

During 1995 and 1996, certain shareholders made contributions to the Company, in
the form of professional services at cost. These amounts were $3,700 and
$5,027, respectively.

F-10

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE C: FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following at December 31, 1997:

<S> <C>
Furniture....................................... $ 4,909
Equipment....................................... 537
------------
5,446
Less accumulated depreciation................... (1,424)
------------
$ 4,022
------------
------------
</TABLE>

Depreciation expense for the years ended December 31, 1997, 1996 and inception
(January 1, 1993) through December 31, 1997 totaled $1,160, $263, and $1,423
respectively.

NOTE D: SHAREHOLDERS' EQUITY

PREFERRED STOCK
The Company is authorized to issue one million shares of $.10 par value
preferred stock which may be issued in series with such designations,
preferences, stated values, rights, qualifications or limitations as determined
by the Board of Directors.

TERMINATION OF "S" CORPORATION STATUS
At December 31, 1995, the Company had elected to be taxed as a subchapter "S"
corporation, meaning that the tax expense and/or benefits accrued to the
shareholders. During the year ended December 31, 1996, the number of
shareholders increased to approximately 100, terminating the "S" election.
Beginning in 1996, the income tax expense and/or benefit accrued to the Company.
Accordingly, the retained deficit of $417,421 related to the oil and gas
operations, and the accumulated deficit during development of $4,602 were
reclassified to additional paid-in capital in 1996.

NOTE E: STOCK OPTIONS

1996
On November 14, 1996, the Company granted non-compensatory options for 312,500
shares of its common stock to officers of the Company. The options which are
vested and exercisable as of the grant date, allow the officers of the Company
to purchase 37,500; 75,000; 75,000; and 125,000 shares of common stock at $.02
per share. The Company's common stock did not begin trading in the public
market until January 1997, therefore the exercise price of $.02 per share on
the date of grant approximated management's estimate of the fair value of the
Company's common stock. The options expire on November 14, 2001. During 1997,
37,500 options were exercised and at December 31, 1997, 275,000 are outstanding.

1997
On December 24, 1997 the Company granted compensatory options for 350,000
shares, exercisable for $1.00 per share of its common stock to officers and
directors of the Company. The options are fully vested and exercisable. Each
option expires on December 31, 2002 or upon termination of employment, whichever
occurs earlier.

F-11

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE E: STOCK OPTIONS CONTINUED

As of December 24, 1997 the fair market value of the Company's common stock as
determined by a national quotation system, was $ 1.37. In accordance with APB
25, the Company recognized $129,500 of compensation expense related to the fully
vested stock options exercisable at $1.00, granted December 24, 1997.

SUMMARY
A summary of the status of the Company's stock option awards as of December 31,
1997, and the changes during the period ended December 31, 1997 and 1996 is
presented below:

Fixed Options Number of Shares
----------------------------------- ----------------
<S> <C>
Inception, January 1, 1993. . . . . -
Granted 1996. . . . . . . . . . . . 312,500
Granted 1997. . . . . . . . . . . . 350,000
1996 options exercised during 1997. (37,500)
----------------
Outstanding, December 31, 1997. . . 625,000
----------------
----------------
</TABLE>

SFAS 123
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (SFAS 123), "Accounting form Stock-Based
Compensation". SFAS 123 encourages the use of a fair value based method of
accounting for compensation expense associated with stock option awards and
similar plans. However, SFAS 123 permits the continued use of the intrinsic
value based method prescribed by APB 25, but requires additional disclosures,
including pro forma calculations of net earnings and earnings per share as if
the fair value method of accounting prescribed by SFAS 123 had been applied in
1997. SFAS 123 is not applicable to the non-compensatory awards granted in 1996.

Based on the use of the Black-Scholes option pricing model, the fair value of
the stock options granted during 1997 was $ .897. The Black-Scholes option
valuation model was developed for use in estimating the fair value of traded
options which have no vesting restrictions and are fully transferable. Option
valuation models also require the input of highly subjective assumptions such as
expected option life and expected stock price volatility. Because the Company's
stock-based awards have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, the Company believes that the
existing option valuation models do not necessarily provide a reliable single
measure of the fair value of its stock-based awards.

F-12
<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE E: STOCK OPTIONS CONCLUDED

The required pro forma and additional information is presented below:

1997
-----------------------------
As Reported Pro Forma
--------------- -----------
<S> <C> <C>
Net loss $ (210,662) $(395,112)
Basic loss per share $ (.03) $ (.06)
Diluted loss per share Less than $(.01) $ (.01)

Black-Scholes option price model assumptions:
- ---------------------------------------------
Risk-free interest rate 5.3750%
Expected life (years) 5
Volatitlity 63.73%
Dividend yield None
Fair value of $1.00 options $.897
</TABLE>

NOTE F: DEFERRED PROPERTY ACQUISITION COSTS

On August 26, 1996, the Company entered into an acquisition of certain defined
assets and liabilities of Sedcore in exchange for 5,000,000 common shares of the
Company. Substantially all of the assets and liabilities acquired were related
to two gold mine concessions in the Republic of Ghana.

AHANTA GOLD FIELD PROPERTY
The Company received, as part of the aforementioned transaction, the rights to
undertake exploration for gold in the Butre area in the Western Region of Ghana.
The Company recorded $35,519 as deferred property acquisition costs in
conjunction with the acquisition. The rights were part of an agreement between
Ahanta Mining Co. Limited ("Ahanta") and Sedcore, in which the Company had
succeeded to all of Sedcore's rights and responsibilities as of August 26, 1996.
Ahanta holds exclusive mineral rights to Mining Concession No. 111 granted by
the Ghana government. Under the terms of the agreement, Sedcore was committed to
pay all costs to ascertain the feasibility and economic viability of alluvial
and lode gold mineral productions from deposits found in the Concession area.
The agreement required the Company to make scheduled payments totaling $39,000
to Ahanta through March 23, 1998. $9,000 had been paid as of December 31, 1996.
No payments were made during 1997 (see Note I).

ESIKIMAN PROPERTY ACQUISITION COST
The two and one-half year agreement with Esikiman Mining Company Limited
("Esikiman"), dated May 30, 1996, provided for the Company to conduct a
reconnaissance in a licensed area located in the Wassa Amanfi district of the
Republic of Ghana. The Company recorded $84,289 as deferred property acquisition
costs in conjunction with the acquisition. Esikiman holds the applicable
reconnaissance license granted by the Ghana government. Under the terms of the
agreement, the Company's major shareholder, Sedcore, was committed to pay all
costs of an exploration program in the licensed area. The agreement required
the Company to make scheduled payments totaling $90,000 to Esikiman through
November 30, 1998, as consideration for the concession. $40,000 of this amount
was paid as of December 31, 1996. No payments were made during 1997. See Note
I.

F-13
<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE G: INCOME TAXES

A reconciliation of the U.S. statutory federal income tax rate to the effective
tax rate follows for the years ended December 31, 1997 and 1996:

December 31,
---------------------------
1997 1996
------- -------
<S> <C> <C>
U.S. statutory federal rate................. 34.0% 34.0%
State income tax rate....................... 5.0% 5.0%
Net operating loss for which no tax benefit
Is currently available................... (39.0%) (39.0%)
------- -------
-% -%
------- -------
------- -------
</TABLE>

At December 31, 1997 and 1996, deferred taxes consisted of the following:

December 31,
-------------------------------
1997 1996
--------- -----------
<S> <C> <C>
Deferred tax assets,
Net operating loss carryforward ...... $ 65,408 $ 9,661
Valuation allowance ..................... (65,408) (9,661)
---------- -----------
Net deferred taxes ................ $ - $ -
---------- -----------
---------- -----------
</TABLE>

The valuation allowance offsets the net deferred tax asset for which there is no
assurance of recovery. The change in the valuation allowance for the years
ended December 31, 1997 and 1996 totaled $55,747 and $9,661, respectively. The
net operating loss carryforward expires through the year 2012.

The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the deferred tax asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax assets is no longer
impaired and the allowance is no longer required.

NOTE H: GOING CONCERN

As of December 31, 1997, the Company had net losses since inception, negative
cash flows from operating activities and a working capital deficiency which
raises substantial doubt about its ability to continue as a going concern. The
Company has entered into a new agreement to provide services related to the gold
mining, smelting and refining businesses, which is expected to provide positive
cash flow from operations. In addition, from time to time certain officers
infuse cash for working capital purposes on an as-needed basis. There is no
assurance that the Company will achieve profitable operations. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

F-14

<PAGE>

KALAN GOLD CORPORATION
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

NOTE I: SUBSEQUENT EVENTS

On February 9, 1998, the Company completed an agreement with Asean Gold
Industries, Inc. ("Asean"), a Nevada corporation, whereby the Company will
provide consulting services and technical advise to Asean on gold milling,
smelting, and refining operations. In return, the Company will receive fifteen
percent of all gross revenues of Asean from all gold mining, smelting, and
refining facilities. Asean will also reimburse the Company for all
out-of-pocket expenses incurred by the Company on behalf of Asean regarding
production costs, supplies and staff.

On March 18, 1998, the Company terminated its agreement with Ahanta. The
accompanying financial statements have been prepared in consideration of this
transaction. As a result, the Company wrote-off property acquisition costs of
$17,046 and the note payable to Ahanta totaling $30,000 (including $348
unamortized discount). The remaining $12,606 is included in the accompanying
financial statements as gain on agreement termination.

In April 1998, the Company was given an option to extend its agreement with
Esikiman. Management is presently evaluating the merits of the option, and the
outcome is uncertain as to whether the Company will pursue the concession.
Therefore, the Company has recorded a deferred gain at December 31, 1997 in
anticipation of terminating the agreement. The property acquisition costs and
outstanding balance on the note payable to Esikiman are $42,858 and $45,647,
respectively. After giving effect to the unamortized discount on the note, the
net deferred gain at December 31, 1997 is $4,517.

F-15

<PAGE>

INDEX TO EXHIBITS

Exhibit Page or
Number Description Cross Reference
- ---------- --------------- ---------------

<S> <C>
* 3A Articles of Incorporation

* 3B Articles of Amendment

* 3C Bylaws

* 3D Articles of Amendment to change name to KALAN GOLD CORPORATION.

* 10A August 26, 1996 Purchase Agreement for defined assets and
liabilities of SEDCORE EXPLORATION COMPANY LIMITED

10B Agreement between the Company and Asean Gold Industries, Inc.

</TABLE>

*Previously Filed

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

EXHIBITS
TO
Kalan Gold Corporation

<PAGE>

10B

Agreement between the Company and Asean Gold Industries, Inc.

<PAGE>

AGREEMENT

THIS AGREEMENT is entered into as of the date below by and between ASIAN
GOLD INDUSTRIES, INC., a Nevada corporation ("Asian Gold"), and KALAN GOLD
CORPORATION, a Colorado corporation ("Kalan"), regarding the proposed
arrangement described below.

WHEREAS, Asian Gold has an exclusive right and authority from the
Province of Lanao Del Norte, Mindanao, the Philippines, to build, construct, and
operate gold milling, smelting, and refining facilities in the Province of Lanao
Del Norte, Mindanao, the Philippines for a defined period of time, subject to
the laws of the Philippines and the regulations of the Government of the
Philippines and its agencies; and

WHEREAS, the parties wish to enter into an arrangement whereby Kalan will
perform or oversee the performance of certain activities on behalf of Asian
Gold; and

WHEREAS, Mr. Sanford Altberger, who is affiliated with the Kalan, is also
an affiliate of Asian Gold, which arrangement both parties hereto acknowledge
and approve; and

WHEREAS, Asian Gold believes that there are certain benefits to be
derived from employing the services of Kalan; and

WHEREAS, the parties wish to reduce the nature and scope of their
relationship to the terms of this Agreement and to be bound by the terms
thereby.

NOW THEREFORE, in consideration of the mutual promises and agreements
between the parties, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
(1) Kalan shall perform certain defined services for Asian Gold. These
services include:

<PAGE>

(a) Consulting advice on the continuing development of Asian
Gold's business plan;

(b) Technical advice regarding the building, constructing, and
operation of the said gold milling, smelting, and refining facilities;

(c) Technical advice regarding the creation of a plan for the
conversion of such gold as may be produced by Asian Gold into gold jewelry and
the retail sale thereof; and

(d) Consultation in the identification and selection of key
management for Asian Gold's gold milling, smelting, and refining facilities and
retail gold sales facilities; and

(e) The actual day-to-day management of all gold milling,
smelting, and refining facilities under this Agreement.

(2) Asian Gold shall pay to Kalan, as compensation for services to be
performed by Kalan on behalf of Asian Gold, a total of fifteen percent (15%) of
all gross revenues of Asian Gold from all gold milling, smelting, and refining
facilities under this Agreement during the period in which Asian Gold owns such
rights. Asian Gold shall also reimburse Kalan for all out-of-pocket expenses
incurred by Kalan on behalf of Asian Gold regarding production costs, supplies,
staff. All payments will be hereunder shall be made on a monthly basis. Kalan
shall have the right, at its own expense, at any time, upon reasonable request,
to audit the books and records of Asian Gold to determine compliance with the
terms of this Agreement.

(3) At any time, and from time to time, after the date of this
Agreement, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or otherwise
to carry out the intent and purposes of this Agreement.

<PAGE>

(4) Any failure on the part of any party hereto to comply with any of
its obligations, agreements or conditions hereunder may be waived in writing by
the party to whom such compliance is owed.

(5) Neither party has employed any brokers or finders with regard to
this Agreement unless otherwise described in writing to all parties hereto.

(6) All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered in person or sent by prepaid
first class registered or certified mail, return receipt requested to the last
known address of any party hereto.

(7) This Agreement may be executed simultaneously or in two or more
counterparts or by facsimile, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

(8) This Agreement was negotiated and is being contracted for in the
State of Nevada, and shall be governed by the laws of the State of Nevada.

(9) This Agreement shall be binding upon the parties hereto and inure
to the benefit of the parties, their respective heirs, administrators,
executors, successors and assigns.

(10) This Agreement is the entire agreement of the parties covering
everything agreed upon or understood in the transaction. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind of condition or inducements to the execution hereof.

(11) If any part of this Agreement is deemed to be unenforceable the
balance of the Agreement shall remain in full force and effect.

<PAGE>

(12) In the event that any dispute where to arise in connection with
this Agreement, all parties agree, prior to seeking any other relief at law or
equity, to submit the matter to binding arbitration in accordance with the rules
of the American Arbitration Association at a place to be designated by mutual
agreement of the parties, or failing agreement, at a place to be designated by
the American Arbitration Association.

IN WITNESS WHEREOF, the parties have executed this Agreement the 9th
day of February , 1998.

KALAN GOLD CORPORATION

By: ///Signed///
-----------------
Authorized Officer

ASIAN GOLD INDUSTRIES, INC.

By: ///Signed///
-----------------
Authorized Officer

<PAGE>
<ARTICLE> 5

</TABLE>