Seahawk Deep Ocean Technology Inc – ‘10KSB’ for 12/31/98

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       87    367K 
 2: EX-22       Published Report Regarding Matters Submitted to a      1      3K 
                          Vote of Security Holders                               
 3: EX-27       Financial Data Schedule (Pre-XBRL)                     1      7K 

10KSB   —   Annual Report — Small Business
Document Table of Contents

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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC  20549

FORM 10-KSB 

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

 For the Fiscal Year Ended December 31, 1998

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES        
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)                                

        For the transition period from _________ to __________

 Commission File No. 0-18239

SEAHAWK DEEP OCEAN TECHNOLOGY, INC. 
--------------------------------------------  
Name of Small Business Issuer in its Charter  

Colorado                                    84-1087879  
--------------------------------              ------------------------------    
State or Other Jurisdiction                 I.R.S. Employer Identification  
of Incorporation or Organization                         Number                 

5102 South Westshore Boulevard, Tampa, Florida 33611
----------------------------------------------------------
Address of Principal Executive Offices, Including Zip Code

Registrant's telephone number, including area code:  (813) 832-4040             
Securities registered pursuant to Section 12(b) of the Act:  None               
Securities registered pursuant to Section 12(g) of the Act:  Common Stock.      

Check whether the issuer (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 [ ]     No [x]                         

The Issuer's revenues for the most recent fiscal year were $797,356.            

Check if there is no disclosure of delinquent filers pursuant to Item 405 of    
Regulation S-B contained in this form, and no disclosure will be contained, to  
the best of Registrant's knowledge, in definitive proxy or information          
statements incorporated by reference in Part III of this Form 10-KSB or any     
amendment to this Form 10-KSB. [ ]                                              

As of July 20, 2000, 28,477,614 shares of the Registrant's Common Stock were    
outstanding, and the aggregate market value of the shares held by               
non-affiliates was approximately $444,000.                                      

Documents incorporated by reference: None.                                      

Transitional Small Business Disclosure Format (Check One:)  Yes [ ]  No [X]     

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PART I                                                                          

ITEM 1.  BUSINESS.                                                              

THE COMPANY                                                                     

Seahawk Deep Ocean Technology, Inc. (the "Company") was formed under the laws   
of the State of Colorado on September 17, 1986, for the purpose of creating a   
corporate vehicle to seek and acquire a business opportunity.                   

In October of 1988, the Company completed a public offering of 1,200,000        
shares of Common Stock at an offering price of $.50 per share.  The net         
proceeds of that offering to the Company were approximately $490,000.           

On March 13, 1989, the Company issued 2,000,000 shares of its no par value      
Common Stock to the holders of 100% of the outstanding common stock of R/V      
Seahawk, Inc. ("R/V Seahawk") in an exchange transaction in which R/V Seahawk   
became a wholly owned subsidiary of the Company.  During September 1989 the     
Company's name was changed from Fox Ridge Capital, Inc. to Seahawk Deep Ocean   
Technology, Inc.  On March 2, 1992, R/V Seahawk was merged into the Company.    

On June 12, 1992, the Company effected a one for fifty reverse split of the     
shares of the Company's Common Stock outstanding.  All financial information    
and share data in this Form 10-KSB give retroactive effect to the reverse       
split.                                                                          

On September 12, 1989, the Company organized Seahawk Artifact Recovery, Inc.    
and acquired 100% interest with the purchase of 625,000 shares of its no par    
value common stock for $35,000 cash.  This subsidiary was inactive throughout   
1989 and 1990.  In January 1991, its name was changed to Seahawk Museum         
Development, Inc.  This subsidiary was developing plans for a shipwreck and     
treasure museum in St. Petersburg, Florida, however, the Company's inability    
to finance the museum forced the Company to put the museum plans on hold        
indefinitely and Seahawk Museum Development, Inc. has been inactive since       
1993.                                                                           

On February 4, 1991, the Company acquired all of the outstanding stock of       
Valley Marine, Inc. ("VMI") in exchange for 600,000 newly issued shares of the  
Company's Common Stock.  VMI owned the Seahawk Retriever, a 204-foot vessel.    
During February 1991, VMI merged into R/V Seahawk.                              

R/V Seahawk was formed on May 23, 1988, for the purpose of serving as general   
partner for one or more limited partnerships, which were to be formed to        
search for valuable shipwrecks.  R/V Seahawk was initially capitalized with     
$200,000 by five investors.  R/V Seahawk then purchased equipment to be used    
for the search operations and signed an agreement with marine archaeologist     
Robert Marx for the right to use data for a suspected shipwreck site.  R/V      
Seahawk then formed its first partnership, Seahawk I, and raised $175,000 to    
fund the search activity.  The fund raising and initial search efforts were     
carried on during the remainder of 1988 and into 1989 until April 1989, when    
the Seahawk I partnership located its first shipwreck.                          

In November 1995, the Company acquired all the outstanding stock of Seahawk,    
Inc. in exchange for 2,400,000 newly issued shares of the Company's common      
stock.  Seahawk, Inc. owned the R/V Seahawk, an 86 foot vessel.  On March 31,   
1996, Seahawk Inc. merged into the Company.                                     

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In February 1999, the Company organized RV Seahawk, Inc., a Florida             
Corporation, and acquired its entire share capital for $100. The Company then   
transferred the R/V Seahawk into RV Seahawk, Inc.                               

Unless the context otherwise requires, the term "Company" as used herein        
refers to Seahawk Deep Ocean Technology, Inc. and its wholly owned              
subsidiaries, Seahawk Museum Development, Inc. and RV Seahawk, Inc.             

The Company is an oceanographic service company that is involved in deep-       
water search, survey and recovery operations.  The Company has served as the    
general partner for limited partnerships that were formed for the purpose of    
raising money to search for and locate shipwrecks.  Until January 2000, the     
Company owned and operated a variety of sub-ocean equipment including an 83     
foot survey vessel, ROVs (Remotely Operated Vehicles), and other specialized    
search and recovery equipment which enabled the Company to locate, photograph   
and retrieve items lost on the seabed in deep water. In January 2000, the       
vessel was arrested in Gibraltar and sold at auction (see NOTE 18   SUBSEQUENT  
EVENTS, Arrest and Sale of the R/V Seahawk on page F-26). In view of the lack   
of available funding and the increasingly difficult legal ramifications and     
hostile political climate that surrounds the business of shipwreck recovery,    
the Company is seeking to enter new business areas unrelated to shipwrecks. It  
will nevertheless maintain its interests in the South American Project (see     
below) and may invest in others if they are deemed suitable by management.      

The partnerships formed by the Company and for which the Company served as the  
general partner were engaged in the business of attempting to locate,           
identify, recover and market the cargoes and artifacts associated with one or   
more shipwrecks in a specific area.  The Company, on the other hand, provided   
to the partnerships the data, manpower and equipment necessary for the          
partnerships to carry out this business purpose.  The Company has also engaged  
in the business of locating, identifying, recovering and marketing the cargoes  
and artifacts associated with shipwrecks on its own behalf and for others on a  
world wide basis.                                                               

SEAHAWK I, LTD., SEAHAWK II, LTD. AND EAGLE PARTNERS, LTD.                      

The Company has formed three limited partnerships (Seahawk I, Ltd., Seahawk     
II, Ltd. and Eagle Partners, Ltd.) for the purpose of funding the search for    
deep-water shipwrecks in pre-designated areas.                                  

SEAHAWK I, LTD. Seahawk I, Ltd. was a Florida limited partnership that was      
formed on May 23, 1988, with R/V Seahawk as the sole general partner.  The      
Partnership was initially funded with a total of $175,000 that was raised from  
private investors. During April 1989, the partnership located and photographed  
a Spanish wreck that the Company believed was one of the vessels lost during a  
storm in 1622.  The wreck was found approximately 1,500 feet deep in            
international waters south of the Florida Keys.  During June 1989 a bell was    
recovered from the site in order to perfect the admiralty claim in the United   
States District Court.                                                          

During June 1990, Seahawk I commenced its pre-disturbance survey on this wreck  
and during August 1990, Seahawk I commenced actual recovery operations. The     
recovery operations continued until October 1991. The Company decided that the  
Partnership had reached a point of diminishing returns and will not return to   
the wreck site.                                                                 

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A total of 16,480 artifacts were recovered from the site.  These included       
twenty-seven gold finger bars, fourteen gold fragments, over eleven hundred     
silver coins, a gold emerald ring, three mariner's astrolabes (a navigational   
device used during the early 1600's), over 6,000 pearls, seventy six clay       
olive jars and other miscellaneous items including musket balls, wood, pottery  
and pottery shards. Seahawk I incurred expenses in locating, recovering,        
conserving and storing these artifacts of approximately $3,391,000 since        
inception, of which $625,275 was capitalized into the historical costs of       
artifacts on Seahawk I's books at December 31, 1997.  The Company has           
contributed $1,190,900 since inception to the capital of Seahawk I.  Seahawk I  
engaged the Company to provide certain services, and the Company provided       
vessel operations and conservation and administrative services in the amount    
of $646,081 that were billed to Seahawk I but had not been paid by December     
31, 1997. These were carried in the Company's books at that date as accounts    
receivable - affiliate. In March 1998, this account receivable was settled by   
payment of $491,381 in cash and restricted securities in an unrelated publicly  
quoted corporation valued at $81,112.                                           

The salvage operations for this shipwreck required the Partnership to raise     
additional funding.  The Company was to split with the limited partners on a    
50/50 basis the proceeds from the sale of all the valuable objects or           
artifacts after payment of the partnership expenses and a return of all         
capital contributions to both the limited partners and the Company.  The        
expenses of the Partnership include the payment of ten percent (10%) of all     
items salvaged to Tanit Corp., a company owned by Robert Marx, the marine       
archaeologist who provided research and data relevant to this particular        
project.  Seahawk I raised an additional one million dollars ($1,000,000)       
during 1990 to finance the initial salvage operations.  In order to do this,    
Seahawk I created a new class of limited partner which is entitled to twenty    
percent (20%) of the partnership's net distributable income in return for an    
investment of $500,000.  The Company also invested an additional $500,000 to    
maintain its right, as General Partner, to receive 50% of the partnership's     
net distributable income.                                                       

During March, 1991, Seahawk I created a new class of limited partners and       
raised a total of $691,800 to finance the recovery and conservation of          
artifacts of the Partnership.  The Company also invested an additional          
$690,800 to maintain its right to receive 50% of the net distributable income.  
As of December 31, 1997, in addition to the account receivable from Seahawk I,  
Ltd. of $646,081 and a note receivable from Seahawk I, Ltd. of $300,000, less   
a provision for losses in excess of investment of $742,301. In March 1998, the  
Partnership's artifacts were sold and the proceeds used to repay the accounts   
receivable and note receivable by the Company. On September 30, 1998 the        
Partnership was terminated after a first and final distribution to the Limited  
Partners.                                                                       

SEAHAWK II, LTD.  During May 1989, R/V Seahawk formed Seahawk II, Ltd., a       
Florida limited partnership ("Seahawk II"), and agreed to serve as the sole     
general partner.  Seahawk II is structured very similar to Seahawk I except     
that the expenses of the Partnership include a payment of 5% of all items       
salvaged to a fund for the crew.  Seahawk II sold 50 Units at a price of        
$30,000 per Unit.  During 1989, Seahawk II commenced its proposed business of   
attempting to locate deep water shipwrecks in a specific area off the east      
coast of Florida, and found what management believed to be a colonial era       
shipwreck.  This belief was based on, among other things, the opinions of Dave  
Moore described below relating to the age of the silver coins and cannons       
found on the wreck.  A cooking pot and piece of rigging were recovered from     

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the site in order to perfect the admiralty claim.  During October 1990,         
Seahawk II conducted a pre-disturbance survey of this wreck site (referred to   
as the "St. Augustine" site) utilizing Harbor Branch Oceanographic              
Institution's Johnson SeaLink manned submersible.  During this survey,          
approximately 90 artifacts were recovered including two cannons, numerous       
cannon balls, and a dozen copper cooking pots.  Dave Moore, an archaeologist    
who used to be employed by the Company, estimated the cannon is from the        
1700's.  Dave Moore holds a Masters Degree in Maritime History and Underwater   
Research and he has over 10 years' experience in archaeology.                   

During April 1991, the Johnson SeaLink returned to the site to continue work    
on the shipwreck for 6 days.  A good portion of the area surrounding the        
ballast pile was uncovered and some timbers and ribs of the ship were exposed   
which, according to archaeologist Robert Marx, indicated that the ship was      
small in size most likely in the 50 to 75 ton range.  During this trip, a       
number of artifacts were recovered, including 6 Spanish silver coins, three     
four foot cannons, more copper cooking pots, scores of lead musket and pistol   
balls, pulley blocks and sheaves and other miscellaneous items.  According to   
Mr. Moore, the coins date between 1712 and 1714.  Mr. Marx has reported to the  
Company that he believes that the ship was a small Spanish vessel known as an   
"Adviso" or advice boat sometimes called a "Patache."  One or more of these     
ships was usually employed in each treasure fleet with their main purposes      
being to carry mail and official communications between the king and            
government officials. According to Mr. Moore, this class of vessel was never    
authorized to carry treasure, but contraband treasure was sometimes carried on  
these ships.  He has also stated that he could say whether or not this          
shipwreck contains substantial amounts of treasure.                             

The Company made repeated attempts to sell the Partnership's artifacts without  
success. In September 1999, the Company was in urgent need of cash to pay rent  
and arranged a loan of $3,200 secured by the Partnership's artifacts. In        
January, 2000, the Company acquired the artifacts by cancellation of the debt   
due by the Partnership to the Company in the amount of $48,575. In February,    
2000, the Company was unable to repay the loan secured by the artifacts and     
the Lender foreclosed and acquired the artifacts in settlement of the loan.     

The Seahawk II Partnership currently has no cash, and the Partnership has no    
plans. In December 1994 and November 1995 the Company asked the Partners to     
vote on terminating the Partnership.  The result of both votes was              
inconclusive and the Company intends to ask the Partners to vote again on       
termination.                                                                    

The Company carried an account receivable from Seahawk II, Ltd. of $40,875 as   
of December 31, 1998, less a provision for doubtful debts of $55 and losses in  
excess of investment of $40,820.                                                

EAGLE PARTNERS, LTD. AND EAGLE MINERS, LTD.  During November, 1991, the         
Company formed Eagle Partners, Ltd., a Florida limited partnership ("Eagle      
Partners"), with the Company serving as the general partner.  Eagle Partners    
sold 3 Units for a total of $150,000.  The partnership is operating under a     
joint venture agreement with a nonaffiliated researcher who has provided the    
research and data for a 19th Century shipwreck off the east coast of the        
United States.  The joint venture agreement was entered into between the        
Company and the researcher, and the Company assigned its rights and             
responsibilities in the joint venture to Eagle Partners.  According to the      
researcher and newspaper accounts of the sinking, the vessel was believed to    
have a valuable cargo of specie on board at the time of the sinking, although   

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there is no assurance that the researcher is correct or that the shipwreck      
will be located.  The researcher holds a Bachelor's Degree in                   
Interdisciplinary Studies with a concentration in Marine Archaeology, and he    
has been involved in underwater archaeology and searching for shipwrecks for    
over 25 years.  He has written over 10 books and a number of articles on the    
history of shipwrecks.                                                          

Pursuant to the terms of the joint venture agreement, the researcher was to     
receive twenty percent (20%) of any items recovered from the ship in return     
for his research and data.  The partnership is responsible for conducting and   
paying expenses of the search and recovery of the shipwreck and if successful,  
for marketing any cargo which is recovered.                                     

The joint venture agreement required the partnership to dedicate the vessel     
R/V Seahawk (or a similar vessel with similar equipment) to work on this        
project at least 120 days during 1992, and each year thereafter, beginning not  
later than May 30 of each year.  The joint venture agreement was amended in     
June 1994.  The amended agreement required the partnership to work on the       
project for at least 60 days during 1994.  The partnership did not meet this    
schedule and was in default on the agreement.  In such an event, the agreement  
provided that all rights to conduct search and/or salvage efforts relative to   
this wreck would revert to the researcher.  The Company negotiated an           
extension to the joint venture agreement under which the researcher's share of  
any successful recovery was reduced to ten percent (10%) and the requirement    
for the partnership to work on the project for a minimum number of days each    
year was removed.  In return the Company agreed to issue the researcher 60,000  
shares of its Common Stock.  The Company will attempt to raise additional       
financing for this project but there is no assurance that it will be able to    
do so.                                                                          

The partnership's eighty percent interest in the joint venture was to be        
allocated among the Company and the limited partners as follows: after the      
return of all contributed capital each $50,000 unit was to receive 5% of the    
first $1 million distributed, 4% of the second $1 million distributed, 3% of    
the third $1 million distributed, 2% of the fourth $1 million distributed and   
1% of anything over $4 million distributed.  The Company, as the general        
partner, was to receive the balance of any distribution.  In early 1995, the    
Company became aware of another company ("Sea Miners, Inc.") that was           
searching for the same shipwreck (code-named "Golden Eagle"). In order to pool  
research and resources and to remove all-or-nothing competition, Eagle          
Partners and Sea Miners formed an equal joint venture to search for the         
vessel.  The joint venture is operated via a Florida Limited Partnership        
called Eagle Miners Limited.  Eagle Partners and Sea Miners are equal and       
joint General Partners of Eagle Miners.  As a result of the joint venture,      
each of the limited partners of Eagle Partners agreed to reduce their           
entitlement of any distribution to one-half of the original amount. Eagle       
Miners has contracted to use the Company for all of its offshore services.      
$100,000 was raised by the joint venture to finance the initial inspection of   
certain sites that Sea Miners has revealed as possible shipwrecks in its        
search area.                                                                    

After reviewing the research, Eagle Partners established a primary search area  
of 100 square miles and a larger search area of 600 square miles.  During       
1992, Eagle Partners searched approximately 500 square miles and located six    
shipwrecks.  During May 1993, using newly acquired research data; Eagle         
Partners searched approximately 140 square miles and located five shipwrecks.   
During 1994, Eagle Partners searched approximately 140 square miles.            

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During 1995 Eagle Partners inspected a number of seabed anomalies that might    
have been sunken ships in the combined search areas of Eagle Partners and Sea   
Miners.  One such site was estimated to have similar general dimensions to the  
Golden Eagle, and to protect its title to the wreck it was arrested in the      
Untied States District Court Middle District of Tampa Division.  The wreck was  
not positively identified as the Golden Eagle. Further visual investigations    
of the site took place during 1996 but bad visibility prevented a positive      
identification. Yet further visual investigations of the site took place        
during 1997 which established that the wreck was not the Golden Eagle.          

The terms of the original Partnership Agreement provided for the termination    
of the Partnership on December 31, 1996. However, the partners agreed to        
extend the termination date to December 31, 1999, on which date the             
Partnership was terminated.                                                     

As of December 31, 1998, the Company carried an account receivable from Eagle   
Partners of $1,071,444, a note receivable from Eagle Partners of $50,000,       
accrued interest of $14,932 and a provision for losses in excess of investment  
of $1,164,806.As of December 31, 1998, the Company carried an account           
receivable from the Eagle Miners Joint Venture of $53,023 less a provision for  
doubtful debt of $24,593.                                                       

In accordance with the December 31, 1998, Eagle Partners Ltd. plan of           
liquidation, the financial statements for that partnership, as of December 31,  
1998, were stated on a liquidation basis with an estimated liquidation value    
of zero. Accordingly, the Company wrote off its investment and related          
receivable accounts from Eagle Partners, Ltd. and Eagle Miners Ltd. at          
December 31, 1998.                                                              

MANAGEMENT OF PARTNERSHIPS                                                      

The following table sets forth information concerning the authority of the      
general partner in the three partnerships referred to above for which the       
Company serves as general partner.  The purpose of this table is to disclose    
generally the types of actions that the general partner can take without        
needing approval of the limited partners and the types of actions where         
approval of the limited partners is required.                                   

                                                        [Enlarge/Download Table]

            ACTION                          APPROVAL OF LIMITED PARTNERS REQUIRED     
                                                                                      

1.  Enter into contracts and agreements     1.  No.                                   
    which the general partner ("G.P.")                                                
    deems necessary or advisable for the                                              
    conduct of the partnership's business.                                            

2.  Enter into partnerships or joint        2.  No.                                   
    ventures.                                                                         

3.  Employ advisers or agents.              3.  No.                                   

4.  Borrow money on secured or              4.  No.                                   
    unsecured basis.                                                                  

5.  Amend limited partnership agreement.    5.  Yes (by the holders of a majority     
                                                of the limited partnership units)     

6.  Admit additional G.P.'s.                6.  Yes (by the holders of a majority     
                                                of the limited partnership units).    

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7.  Admit additional limited partners.      7.  No.                                   

8.  Sell additional units in the            8.  No unless it requires amendment       
    partnership                                 to partnership agreement              

9.  Remove G.P.                             9.  Yes* (by the holders of 75% of        
                                                the limited partnership units         

10. Dissolve partnership.                  10. Yes (by the holders of a majority      
                                               of the limited partnership units).     

*In Seahawk II and Eagle Miners Limited, the limited partners do not have the right to
remove the general partner.                                                           

BACKGROUND                                                                      

During the past few years, the number and seriousness of approaches by various  
groups interested in ocean salvage have increased significantly, principally    
because the development and application of new technology have improved         
working capability in the deep sea. The Company operated the research vessel    
Seahawk (the "Seahawk") from 1989 through 1999. In addition, it acquired        
highly specialized search, survey and recovery equipment.  The Company has      
worked closely with both consultants and employees considered to be some of     
the leading experts at deep ocean search and recovery. However, In view of the  
lack of available funding and the increasingly difficult legal ramifications    
and hostile political climate that surrounds the business of shipwreck          
recovery, the Company is seeking to enter new business areas unrelated to       
shipwrecks. It will nevertheless maintain its interests in the South American   
Project (see below) and may invest in others if they are deemed suitable by     
management. The Company would adopt the following Plan of Operation for any     
such shipwreck project.                                                         

PLAN OF OPERATION                                                               

The Company expects that, at least initially, any deep ocean shipwreck search   
and recovery activities that it engages in will be funded by entities similar   
to Seahawk I, Seahawk II and Eagle Partners thereby transferring most of the    
economic risk of finding shipwrecks to the investors in these partnerships.     
As soon as the Company believed that it had sufficient capital of its own to    
finance such activities, it would do so in order to avoid diluting the          
Company's interest in the wrecks.  Management's only experience in forming and  
marketing partnerships for the purpose of funding shipwrecks is Seahawk I,      
Seahawk II, Eagle Partners and Eagle Miners.                                    

The Company and its partnerships expect to follow the following seven steps in  
their deep-water expeditions.                                                   

1.  DETERMINE TARGET SEARCH AREAS THROUGH RESEARCH.  The first step in a deep   
water search operation is to develop data on proposed sites through a           
combination of research conducted by the Company or research purchased by the   
Company from others.  For example, the wreck located by Seahawk I, Ltd. was     
based on research conducted by an archaeologist who was paid with a 10%         
interest in the wreck.  The Company has received research on numerous wrecks    
throughout the world, and is continually, as time permits, reviewing this       
research for possible recovery projects.                                        

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2.  SEARCH FOR ANOMALIES IN THE TARGET AREAS. Once the target area search       
sequence has been determined, the search will then be undertaken to locate      
promising anomalies utilizing suitable equipment.                               

If an anomaly is found, its precise location will be noted and mapped using a   
navigational system which utilizes digital output from sensing devices and      
logs it into the onboard computer's target navigational database.               

After completing the search of a grid, a preliminary analysis will be made and  
the position of promising targets will be noted.  This will indicate those      
sites and anomalies, which will be revisited for visual verification and        
inspection with ROVs.                                                           

3. SURVEY AND VERIFICATION OF THE ANOMALY SITE.  The initial verification       
phase will serve to provide visual confirmation of the nature and composition   
of the anomaly.  In most cases, a look at the subject sites will quickly        
determine whether they are natural bottom structures, manmade objects that      
hold little interest (steel drums, cable, modern anchors, fishing equipment,    
etc.) or potentially valuable sites. If the site looks promising, small         
artifacts will be recovered in an attempt to date and identify the vessel.      
This entire phase will be accomplished using ROVs, incorporating onboard        
lights, cameras, sonar and tracking navigation systems.                         

Using video records and items recovered from the wreck site, the Company and    
its partners will attempt to identify the wreck(s) with the help of maritime    
historians and marine archaeologists.  Identifying ancient shipwrecks is        
extremely difficult, however, and the Company was unable to definitely define   
the shipwrecks discovered by Seahawk I and Seahawk II.  Once the wreck has      
been identified, a determination of the cargo carried and historical and        
archaeological significance of the wreck can be made.                           

4. ESTABLISHING LEGAL CLAIM TO THE SITE.  If the site appears valuable, the     
Company will take the necessary steps to legally claim title to the shipwreck.  
This will usually involve a filing in the U.S. Admiralty Court.  See "Legal     
Aspects of International Salvage."                                              

5. PLANNING AND EXECUTION OF RECOVERY.  Planning the actual recovery will       
depend on a large number of factors such as condition of shipwreck, depth,      
bottom conditions, current and tidal conditions.  In the anticipated operating  
depths, several pieces of equipment will play vital roles in the recovery       
operation.  First, a safe, stable ship must be used as the recovery platform.   
The vessel must also be large enough from which to deploy the submersibles      
that will be used as the actual salvage and recovery tools.  These recovery     
tools will include ROVs, some of which will be significantly larger and         
capable of greater working ability than the ROVs used for initial visual        
investigations.                                                                 

6. CONSERVATION OF ARTIFACTS.  Complete conservation of artifacts recovered     
from shipwreck sites is an integral part of the Company's business plan.        
These conservation efforts begin as soon as the ROV reaches the ocean floor.    
The Company takes the utmost care in removing each artifact from the seabed,    
using specialized tools that are built on site and carried to the sea floor by  
the ROV.  Examples of such tools are specially built baskets and platforms      
that are constructed to accommodate artifacts once they have been identified.   
The ROV uses these tools, built to interface with its computer controlled       
manipulators, to recover each artifact from the ocean floor as gently as        
possible. The artifacts are then placed in a larger recovery platform, which    

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is designed to separate and protect the artifacts from damaging each other      
during the trip to the surface.  On deck, the artifacts are then catalogued,    
photographed and secured in specially constructed storage containers.  The      
recovery process is supervised by the project's archaeologist who assists with  
the recovery, coordinates data management, ensures proper artifact handling,    
and initiates interpretation and analysis.                                      

7.  MARKETING OF ARTIFACTS.  The Company intends to realize revenue from        
artifacts as follows:                                                           

   (a)  By Direct Sales - Artifacts which have been properly categorized and
recorded and which are not deemed to be a necessary part of an archaeological   
collection may be sold.                                                         

  (b)  By Sale of Replicas - Replicas of certain artifacts may be produced
and sold as such.                                                               

(c)  Display - Artifacts may be displayed in museum attractions that  
would generate revenue from entrance charges and merchandise sales.             

In November 1996, the Company signed an agreement with the Collier County       
Museum, Naples Florida, to exhibit certain of the artifacts recovered from the  
Seahawk I site. Under the agreement the Company provided the artifacts and      
display materials for 6 months in return for a $20,000 fee. The exhibit opened  
in February 1997 and attracted record numbers of visitors to the museum.        

In October 1997, the Company signed an agreement with Michael's International   
Treasure Jewelry, Inc., Key West Florida, to exhibit certain artifacts for a    
minimum period of 12 months, at a rental of $57,500 per quarter in advance.     
The artifacts included the entire inventory of Seahawk I, Ltd. The agreement    
also provided for Michael's to have an option to purchase the artifacts for     
$2,500,000 ($750,000 cash and $1,750,000 in common stock of Vanderbilt Square,  
Inc., a publicly quoted affiliate of Michael's) at any time during the term of  
the lease. Any revenue from the agreement was to be divided between the         
Company and Seahawk I, Ltd. in the ratio of the respective book values of the   
assets involved. On February 10, 1998, Vanderbilt changed its name to Treasure  
and Exhibits International, Inc.("TEI"). Prior to the agreement, the Company    
signed an agreement with Odyssey Marine Exploration, Inc. to pay Odyssey 10%    
of any proceeds from the lease or subsequent sale pursuant to the introduction  
by Odyssey of Michaels and Vanderbilt to the Company.                           

On March 19, 1998, TEI entered an agreement with the Company and Seahawk I,     
Ltd. To purchase all of Seahawk I, Ltd.'s artifacts, their related              
documentation and all of the Company's artifacts. The consideration was         
$822,056 in cash and 9,500,000 newly issued shares of TEI's common stock,       
which were valued at the time of the agreement at $0.17 per share or            
$1,615,000. Immediately thereafter Seahawk I, Ltd. repaid all its debt to the   
Company in cash and TEI stock, repaid other loans to two of the limited         
partners and made a pro rata distribution to the limited partners of the        
remaining TEI stock based on the limited partners' total investment in Seahawk  
I, Ltd.                                                                         

On July 20,1998, the Company agreed to sell its remaining holding of 5,302,084  
shares in TEI to First Consolidated Financial Corp., a Florida corporation,     
for a total consideration of $450,677 ($0.085 per share). The agreement         
provided for the cash to be paid in five installments, $180,270 on the date of  
the agreement and at least $50,000 during each of September, October and        
November 1998 with the balance in by December 31, 1998. In the event, after     

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paying the first installment, no further payment was made until November 10,    
1998, when the Company accepted a discount of $10,407 in return for the whole   
of the balance being paid on that date.                                         

SOUTH AMERICAN PROJECT                                                          

The South American Project is a project attempting to locate, identify,         
recover, conserve and market the cargo of an early 18th century shipwreck that  
sunk while carrying a large cargo of gold.                                      

On June 1, 1994, the Company signed an Agreement for Consulting Services with   
Odyssey Marine Exploration, Inc.,(formerly Remarc International, Inc.). The     
Agreement provided that Odyssey will, at its own expense, seek to obtain for    
the Company a permit from the appropriate government to search for and salvage  
the particular shipwreck involved in the South American Project.  If such a     
permit were obtained for the Company by Odyssey, then the Company agreed to     
grant Odyssey between 6% and 9-1/2% of the gross proceeds of any successful     
recovery from the project.  The actual percentage granted to Odyssey was to     
depend on the size of portion of the recovery that would be taken by the South  
American government in return for the permit.                                   

In furtherance of the negotiations for the permit, it became prudent to join    
forces with a South American competitor, Salvanav, to form a bidding            
Consortium.  The Consortium rendered the original South American Consultancy    
Agreement with Odyssey inappropriate, and under a Joint Venture Agreement       
dated August 1995 with the Company, Odyssey agreed to forego its entitlement    
to the percentage of the gross recovery of the project and instead become       
equal partners with the Company in a South American company known as Pesqamar,  
that owned half of a consortium, known as Conpas. The Company and Odyssey each  
owned 24.5% of Pesqamar, with the remaining 51% being owned by Brazilians. By   
May 1998, Pesqamar had incurred over $300,000 of expenses, half of which was    
payable by the Company. Under an agreement dated June 1, 1998, the Company's    
portion of the expenditure was satisfied by the transfer of 1 million shares    
of common stock of Treasure & Exhibits international, Inc. to Odyssey on the    
basis that (a) the Company also transferred 165.5 shares of Preferred           
Non-Voting shares in Pesqamar to Odyssey and (b) Odyssey be responsible for     
all future expenditure of Pesqamar. Following the completion of the agreement,  
the Company owns 428.75 of the 1,750 shares of Common Voting Stock and 1,459.5  
of the 3,250 shares of Preferred Non-Voting stock in Pesqamar. In October       
1996, Conpas completed a search of almost 400 square miles of its search area   
and revealed 25 anomalies with characteristics indicative of possible sites of  
shipwrecks. Conpas visually inspected some of these anomalies with an ROV       
during 1997 and 1998. On April 27, 1999 the members of the Consortium of        
Conpas signed an agreement to terminate Conpas and apply for two new permits    
in the names of Pesqamar and Salvanav. The permits will be for separate areas   
of approximately 50% each of the previously permitted search area. The          
Pesqamar area includes the prime anomalies previously revealed in the search    
of October 1996. Under the terms of the Agreement, the previous members of the  
Consortium of Conpas will operate independently, including the provision of     
project finance and offshore operations. In the event either party recovers     
the particular shipwreck involved in the Project, it must share with the other  
party 4% of the gross proceeds of the shipwreck after the South American        
Government has been paid. On April 31, 1999 the applications for the new        
permits were submitted to the South American Government and Pesqamar received   
its new permit in July 1999. The Company plans for Pesqamar to visually         
inspect the balance of the 25 anomalies before the end of 2000.                 

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LEGAL ASPECTS OF INTERNATIONAL SALVAGE                                          

The question of legal ramifications with regard to the recovery of shipwrecks   
raises a number of issues.  Salvors, historical interests and individuals       
claiming ownership based on the payment of insurance claims all have potential  
claims on goods brought up from the sea floor.                                  

The seas are divided into four basic zones: the territorial sea, the            
contiguous zone, the continental shelf and the high seas.  The Company expects  
that most of its activities will be conducted in what is considered the high    
seas. No international agreement prevents the salvage of a shipwreck from the   
high seas.  Some countries, however, may claim a 200-mile territorial limit     
and may assert claims to all shipwrecks located within that distance from       
their coast. Generally, there are two doctrines of maritime law that govern     
legal claims to salvageable shipwrecks in the high seas.  These are the law of  
finds and the law of salvage.  Both are well documented and accepted in United  
States common law, and are also generally accepted as international law in      
practice.  This discussion centers on application of these laws in              
jurisdiction of U.S. courts.  The entity responsible for salvage is entitled    
to sue in rem. against the ship in federal admiralty court to establish its     
claim to the shipwreck and cargo against all other claimants, known and         
unknown.  The court employs a fiction of convenience that a ship is a person    
against whom suits can be filed and judgments entered, allowing actions to be   
brought against the vessel when the owner is unknown or unreachable.            

Legally, the claim may be decided according to the two competing maritime law   
doctrines.  If title to the wrecked ship or cargo is disputed, the salvaging    
entity will seek to assert ownership under the law of finds.  If the original   
owner or owners are known, then the salvor will be entitled to a salvage award  
under the law of salvage.                                                       

The first step in making claim is to establish control, or possession-in-fact,  
over the shipwreck. To do so, the salvor must actually reduce objects from the  
shipwreck to possession.  Discovery of the shipwreck, or the mere intent to     
raise the shipwreck or to recover objects from it, does not establish control.  

Under the maritime law of finds, where a vessel has been abandoned, the finder  
in possession becomes the owner of the vessel.  Proof of abandonment includes   
two factors:  (1) the intent of the original owners to abandon the ship and     
its cargo, and (2) the external act of abandonment, which may be either         
express or constructive.                                                        

United States courts may interpret liberally constructive abandonment in        
shipwreck cases where the ship has remained sunken for many years,              
particularly if no serious previous salvage efforts have been made.             

An entity responsible for the salvage of a sunken vessel and its cargo may      
expect to defend its claim to title against the original owners or their        
successors-in-interest, against rival Salvors, and against governments          
asserting a historic interest in the shipwreck or cargo.                        

Potential claimants might include the insurers of the shipwreck as in the case  
of "Columbus America Discovery Group v. The Unidentified Wrecked and Abandoned  
Sailing Vessel" (Civil Action 87-0363N). Unless the insurers expressly          
disclaimed title after payment of a claim, and depending on the length of time  
the ship has remained sunken, the insurers might have a valid claim of title    
to recovered objects.  The Courts in the Columbus America case held that the    
insurers were entitled to up to 10% of the recovered objects that they can      
demonstrate they provided coverage for.                                         

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EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS         

To the extent that the Company engages in shipwreck search and recovery         
activities in the territorial, contiguous or exclusive economic zones of        
countries, the Company must comply with applicable regulations and treaties.    
In addition, there is currently an initiative being considered in the United    
Nations Educational, Scientific & Cultural Organization ("UNESCO") known as     
the Convention on the Protection of Underwater Cultural Heritage.  If adopted,  
it would restrict access to historical shipwrecks throughout the world to the   
extent that it would require compliance with guidelines set forth by the        
International Council of Monuments and Sites (ICOMOS).  These guidelines        
require adherence to strict archeological practices, and the Company intends    
to follow these guidelines in all projects to which they are applicable.  The   
article in the ICOMOS guideline, which may be problematic to the Company, is    
the requirement that items of cultural significance not be traded.  The         
Company believes that the primary value of the cargoes it sells is trade goods  
(such as coins, bullion, and gems), and therefore the Company does not believe  
that these items constitute articles of cultural significance.  Nevertheless,   
The Company believes that the proposed convention, if adopted, would increase   
regulation of shipwreck recovery operations and result in higher costs.         

RISK FACTORS                                                                    

Shareholders or investors in shares of the Company's common or preferred stock  
should consider the following risk factors, in addition to other information    
in this report:                                                                 

1.    HISTORY OF OPERATING LOSSES.  The Company has incurred substantial        
operating losses since its inception.  During the fiscal year ended December    
31, 1998, the Company had a net loss of $1,114,032 and had an accumulated       
deficit of $15,444,791. In the Company's financial statements for the year      
ended December 31, 1998, Giunta, Ferlita & Walsh, P.A., the Company's           
independent certified public accountants, included an opinion which expressed   
substantial doubt as to the Company's ability to continue as a going concern.   
A similar qualification is likely to be expressed in the 1999 audit report.     
There can be no assurance that the Company will be able to continue in          
business or that it will ever be able to achieve profitable operations. (See    
"FINANCIAL STATEMENTS.")                                                        

2.   NEED FOR ADDITIONAL FINANCING.   The Company needs additional financing    
in order to finance the search for additional ship wrecks, the continued        
excavation of wreck sites and to pay the continuing overhead expenses of the    
Company. The Company currently has no clear source for any material revenues    
or financing. The Company's future revenues or financing will depend upon the   
sale of artifacts, the formation of new partnerships to pay for search and      
recovery, the leasing of equipment to others, the issue of new shares or the    
exercise of outstanding warrants. See also "NEED FOR REORGANIZATION."           

3.  SPECULATIVE NATURE OF SHIPWRECK SEARCH AND RECOVERY. The search for         
possible shipwrecks and the recovery of objects therefrom, particularly in      
deep water, is an extremely speculative, high risk venture.  Even though the    
Company's first two partnerships, Seahawk I, Ltd. and Seahawk II, Ltd., have    
each located shipwreck sites, there is no assurance that any objects located    
will be of any significant actual value. In addition, the retrieval and         

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identification of such objects will be costly and time consuming. If a          
shipwreck is determined by the Company to be worthy of salvage, because of the  
costs and inherent risks of deep-water salvage, there can be no assurance that  
sufficient additional funds or salvage contracts with others can be obtained    
for such salvage. Even if funds are obtained, there can be no assurance that    
such salvage will prove successful.                                             

4.  SEC INVESTIGATION.  On July 30, 1992, the SEC issued an order directing     
the staff of the Division of Enforcement (the "Division") to conduct an         
examination pursuant to Section 8(e) of the Securities Act of 1933 (the "Act")  
to determine whether a stop order should be issued relating to a registration   
statement which the Company had filed during March 1992 and which had become    
effective by the passage of time on August 1, 1992.  Under Section 8(d) of the  
Act, a stop order proceeding was instituted against the Company by order of     
the SEC dated January 12, 1993.  A hearing was held before an SEC               
Administrative Law Judge during late January and early February 1993.           

On May 26, 1993, the Administrative Law Judge issued his Initial Decision.      
The Judge concluded that the registration statement filed by the Company was    
materially false and misleading and that the Company failed to cooperate with   
the examination conducted by the Division's staff.   A stop order was issued    
suspending the effectiveness of the Company's registration statement.           

The primary focus of the proceeding was the value of shipwreck artifacts owned  
by the Company and an affiliated partnership, Seahawk I, Ltd.  The Judge found  
that the Company had overstated the value of the artifacts on its balance       
sheet and in other financial information provided in its registration           
statement.  The Judge concluded that the total net realizable value of all the  
artifacts owned by the Company and Seahawk I was $1,356,361 of which amount     
$285,413 was attributed to the Company artifacts and $1,070,948 was attributed  
to the Seahawk I artifacts.  As a result of this decision, the Company and      
Seahawk I, Ltd. restated its December 31, 1990 and 1991 financial statements.   

The SEC authorized the staff of the Division to file a civil action against     
the Company and three former officers and directors of the Company seeking      
injunctive relief against the Company and injunctive and monetary relief        
against the former officers and directors.  The SEC did not seek any financial  
penalties or other monetary relief against the Company.                         

The Complaint filed by the SEC alleged that the Company violated Section 17(a)  
of the Securities Act of 1933 and Sections 10(b), 13(a) and 13(b) of the        
Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13 and      
13b2-1 promulgated thereunder.  The SEC alleged that between April, 1989, and   
July, 1991, the Company and three former directors and officers disseminated    
to the public, in the form of television broadcasts, videotapes and press       
releases, false and misleading material information and failed to disclose      
certain material information concerning the Dry Tortugas shipwreck discovered   
and excavated by the Company.  The SEC also alleged, as it did in the stop      
order proceeding, that the Company materially overstated the value of           
artifacts on its balance sheet and in other financial information provided in   
the registration statement of the Company and two amendments thereto filed in   
1992 with the SEC and in certain periodic reports of the Company filed in 1992  
with the SEC.                                                                   

The Company and the staff have negotiated a settlement of the matter that has   
been approved by the SEC.  The Company has agreed to consent to the entry of a  
final judgment of permanent injunction, without admitting or denying any of     

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the allegations in the complaint to be filed by the SEC, enjoining the Company  
from violations of certain provisions of the federal securities law referenced  
in the preceding paragraph.  In addition, the Company agreed that it will not   
employ the former officers and directors as officers and directors of the       
Company or any subsidiaries of the Company, use corporate funds to pay for or   
reimburse any costs incurred by them for the defense of any civil or            
administrative action instituted against them by the SEC, or redeem or          
purchase any stock they own until after the termination of any such action.     
Finally, the Company agreed to withdraw its pending appeal to the SEC of the    
Initial Decision issued in the stop order proceeding.                           

5.  DIFFICULTY IN OBTAINING FINANCING FOR SEARCH AND SALVAGE.  The Company's    
survival and potential for profitability depends on the projects in which it    
is engaged being properly financed. There is no assurance that the Company or   
a partnership set up for the purpose, as the case may be, will be able to       
successfully raise such funds. Once a shipwreck is found, additional financing  
will generally be necessary to finance the salvage activities.  There can be    
no assurance that the Company, or the Partnership, as the case may be, will be  
able to successfully raise additional funds at an acceptable cost, if at all.   

6.  SUCCESS DEPENDENT ON MANAGEMENT.  Success of the Company depends on the     
active participation of John T. Lawrence.  The Company has no "key-man" life    
insurance on, or employment agreement with, Mr. Lawrence.  The loss of the      
services of Mr. Lawrence would adversely affect the Company's business and its  
likelihood of continuing operations.                                            

7.  NATURAL HAZARDS.  Underwater salvage and recovery operations are            
inherently difficult and dangerous and may be delayed or suspended by weather,  
sea conditions and other natural hazards. Further, such operations may be       
undertaken more safely during certain months of the year than during others.    
There can be no assurances that the Company and or entities it is affiliated    
with will be able to conduct their search and or recovery operations only       
during such favorable periods.  In addition, even though sea conditions in the  
search location are somewhat predictable, the possibility exists that           
unexpected conditions in the search area may occur and that such unexpected     
conditions might adversely affect the Company's operations.  Further, it is     
possible that natural hazards may prevent or significantly delay search and or  
recovery operations and therefore any distributions.                            

8.  TITLE TO OBJECTS LOCATED.  Persons and entities other than the Company      
(both private and governmental) may claim title to shipwrecks or objects        
located by the Company. Even if the Company is successful in locating and       
salvaging one or more shipwrecks, there is no assurance that the Company will   
be able to establish its right to property recovered as against governmental    
entities claiming an interest therein, prior owners, insurance claims or other  
attempted salvors.                                                              

9.  UNCERTAIN MARKET FOR AND VALUE OF RECOVERED OBJECTS.  Even if valuable      
items can be located and salvaged by the Company, it is difficult to predict    
the price that might be realized for these items.  The value of many recovered  
items will fluctuate with a precious metals market that has been highly         
volatile in recent years.  Additionally, sale for historical or numismatic      
value may require the assistance of experts, which assistance might not be      
readily available and could be prohibitively expensive.  Moreover, the          
entrance on the market of a large supply of antique items from shipwrecks       
located and salvaged by the Company or others could itself depress the market   
for these items.                                                                

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10.  DELAY IN DISTRIBUTION OR SALE OF RECOVERED ITEMS.  The methods and         
channels to be used in the disposition of the salvaged items are uncertain at   
present.  Ready access to buyers for disposition of any artifacts or other      
valuable salvaged items recovered by the Company, cannot be assured and delays  
in the disposition of such salvaged items are very possible.  In fact, the      
Company may decide to not sell all or a portion of the salvaged items for a     
certain period of time in an attempt to enhance their value.  The storage and   
security of salvaged items pending sale will most likely be expensive.          

11. COMPETITION.  There are currently a number of entities competing in the     
business segments the Company is engaged in, and other companies are likely to  
enter these areas of business in the future.  In such cases, the competitors    
may have greater financial resources than those of the Company.                 

12.  OUTSTANDING WARRANTS.    At the date of this report the Company has        
outstanding 8,944,632 Common Stock Purchase Warrants that may be exercised at   
prices per share ranging from $0.05 to $5.00. The Company does not have enough  
authorized and unissued Common Stock to issue to the Warrant Holders if they    
all exercise their warrants. Consequently it is inevitable that the Company     
will take steps to increase its authorized Common Stock as soon as it is able   
to fund the necessary Shareholders' Meeting. The exercise of such Warrants      
could have an adverse effect on the market price for the Company's Stock.       

13.   DIVIDENDS.  No dividend has been paid on the Common Stock since           
inception and none is contemplated at any time in the foreseeable future.       

14.   PREFERRED STOCK.  The Company is authorized to issue 60,000,000 shares    
of Preferred Stock, no par value.  The Preferred Stock may be issued in series  
from time to time with such designation, rights, preference and limitations as  
the Board of Directors of the Company may determine by resolution.  The         
potential exists, therefore, that preferred stock might be issued which would   
grant dividends preferences and liquidation preferences to preferred            
shareholders over common shareholders.  Unless the nature of a particular       
transaction and applicable statutes require such approval, the Board of         
Directors has the authority to issue these shares without shareholder           
approval.  The issuance of Preferred Stock may have the effect of changing the  
control of the Company without any further action by shareholders.              

15.   PUBLIC MARKET FOR COMPANY'S COMMON STOCK.  Presently there is a limited   
market for the Company's Common Stock on the "Pink Sheets". The stock was       
quoted on the NASD OTC Bulletin Board, but under a new rule announced in        
January 1999, after a phasing in period, the NASD eliminated from the OTC       
Bulletin Board any company that was not up to date with filing its financial    
reports with the SEC. The Company was unable to pay independent accountants to  
audit its financial reports and so was unable to keep its filings up to date.   
Consequently, the Company's stock was removed from the OTC Bulletin Board in    
March 2000. The investment community could show little or no interest in the    
Company in future. As a result, purchasers of the Company's securities may      
have difficulty in selling such securities should they desire to.               

16.   DIFFICULTY IN TRADING "PENNY STOCKS". The Company's securities may be     
subject to a rule that imposes additional sales practice requirements on        
broker-dealers who sell such securities to persons other than established       
customers (as defined in the rule) and accredited investors (generally,         
institutions and, for individuals, an investor with assets in excess of         
$1,000,000 or annual income exceeding $200,000 or $300,000 together with such   
investor's spouse). For transactions covered by this rule, the broker-dealer    

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must make a special suitability determination for the purchaser and must have   
received the purchaser's written consent to the transaction prior to the        
purchase. Consequently, many brokers may be unwilling to engage in              
transactions in the Company's securities because of the added disclosure        
requirements, thereby making it more difficult for shareholders to resell       
common stock in the secondary market.                                           

17.   CONFLICTS OF INTEREST.  The Company has formed in the past, and may in    
the future, form partnerships to pay for the search and recovery of shipwrecks  
where the Company serves as the general partner of the partnership. Potential   
conflicts of interest may exist between the Company and the partnerships.       

18.  NEED FOR REORGANIZATION. The Company is in a serious financial condition   
and is in imminent threat of bankruptcy. Under these circumstances it is        
inevitable that the management will have to reorganize the capital of the       
Company and this will almost certainly mean that existing shareholders will be  
substantially diluted. As of the date of this report an acquisition Agreement   
has been signed that provides for the acquisition of another corporation        
which, if agreed at a Special Meeting of Shareholders, will require a one       
hundred for one reverse split of the Company's common stock, and a new issue    
of approximately 8 million shares of the Company's post reverse split common    
stock. Furthermore, for the acquisition to proceed it is anticipated that a     
further approximately 2 million shares of the post reverse split common stock   
will be issued to clear up current debt. This transaction will dilute existing  
shareholdings of the Company's stock.                                           

EQUIPMENT                                                                       

Following are descriptions of the vessel R/V Seahawk, which was operated by     
the Company from 1989 through 1999, and the other primary equipment that is     
operated by the Company and normally available for search, survey and recovery  
operations.                                                                     

RESEARCH VESSEL SEAHAWK.  The Vessel R/V Seahawk (the "Seahawk") is an 83 foot  
vessel owned by Seahawk, Inc., a 100% subsidiary of the Company.  Until it was  
sold to the Company in November 1995, Seahawk, Inc. was an affiliate of the     
Company.  (See "TRANSACTIONS WITH MANAGEMENT AND OTHERS.")  The Seahawk was     
built in 1977 and extensively renovated in 1982.  Its former owner, the         
University of North Carolina, used the Seahawk for oceanographic research       
projects. The Seahawk has accommodations for 11 persons for periods of up to    
30 continuous days at sea. The Seahawk is equipped with midrange diving         
equipment (including a decompression chamber) and an array of navigational and  
positioning equipment.                                                          

From March 1989 to November 1995, the Company rented the R/V Seahawk from       
Seahawk, Inc. During November 1995, the Company acquired 100% of the            
outstanding common stock of Seahawk, Inc. in a transaction where the Company    
issued 2,400,000 shares of its Common Stock to the shareholders of Seahawk,     
Inc.  On March 31, 1996, Seahawk Inc. was merged into the Company. In January   
2000, the vessel was arrested by the courts in Gibraltar pursuant to an action  
brought against the Company for the past due wages of the crew, and the vessel  
was sold at auction for $207,000.                                               

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ROVS.  The Company currently owns or one Phantom ROV. This remotely controlled  
underwater vehicle provides a cost-effective method of inspecting wrecks and    
bottom structure down to 1500 feet.  Designed by Deep Ocean Engineering, the    
Phantoms are capable of transmitting real time video of the bottom directly     
back to the ship.  The ROV design consists of syntactic foam molded to          
anodized aluminum tubes.  An assortment of machined parts, electronics and      
motors are then added to complete the subsea package.  The vehicle is then      
fitted into a stainless steel crash frame.  Several connectors are attached to  
an umbilical that leads up to the surface controller.                           

ROV LEASING ACTIVITIES.  The Company has from time to time leased some or all   
of its equipment to outside contractors.                                        

YEAR 2000 COMPLIANCE                                                            

The Company reviewed the effect that the year 2000 would have on its essential  
computer systems, especially those related to its ongoing operations and its    
internal control systems, including the preparation of financial information.   

The Company's computer systems are used primarily for basic accounting, word    
processing, spreadsheet applications and access to the internet and world wide  
web.                                                                            

The Company employs three PC computers with year 2000 compliant hardware. The   
Company does not depend on any specialized computer hardware that may become    
non-functional due to year 2000 problems.                                       

The Company utilizes commonly used software packages, the vendors of which      
have all addressed the issue of year 2000 compliance, and the Company did not   
experience any year 2000 related software problems.                             

COMPETITION                                                                     

There are several companies operating on a worldwide basis that have the        
technological capability necessary to compete with Seahawk.  In the event       
these companies decided to enter the shipwreck business, they may have greater  
experience, technology and financial resources.  In addition, there are a       
number of investor groups, or other entities, which have been formed for the    
purpose of searching for shipwrecks.  As different technologies which can be    
utilized in the search and recovery of shipwrecks are developed or improved     
the likelihood of competitors may increase.                                     

EMPLOYEES                                                                       

The Company has 1 employee, John Lawrence, an executive officer of the          
Company.                                                                        

ITEM 2.  DESCRIPTION OF PROPERTY.                                               

The Company and its subsidiaries maintain their offices at 5102 South           
Westshore Boulevard, Tampa, Florida.  The space was leased on a month-to-month  
basis from RFK Investments, a nonaffiliated partnership, pursuant to a lease    
that expired March 1, 1996.  The lease ran on a month-to-month basis while      
disputes with the landlord over past due rent and building repairs were being   
solved. Pursuant to the expired lease, the Company leased the first floor       
(approximately 5,200 square feet) for $5,500 per month, and the second floor    
(approximately 5,000 square feet) for $1,000 per month.                         

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On July 1999, the Company and RFK signed an interim lease agreement by which    
all past disputes were resolved and the basis of a future long term lease were  
defined. Until a new lease was signed, it was agreed that the Company should    
pay on a monthly basis for the space that it occupied. From August 1999, the    
Company Occupied approximately 50% of the building, at a monthly rent of        
$3,359 and from February through April 2000, the Company occupied               
approximately 2,000 square feet at a monthly rent of $1,875. On May 1, 2000,    
the Company signed a new 1 year lease for approximately 1,117 square feet at a  
monthly rent of $894.30.                                                        

The leased space provides the Company with corporate offices and storage        
facilities.                                                                     

ITEM 3.  LEGAL PROCEEDINGS.                                                     

There are no current legal proceedings, and the Company is not aware of any     
threatened legal proceedings to which the Company is a party except the         
following:                                                                      

CLAIM AGAINST INTERNATIONAL DIVING AND CONSULTING SERVICES, INC.                

On June 5, 1996, the Company filed a claim and a motion for payment in the      
Bankruptcy Court against International Diving and Consulting Service, Inc.      
("International Diving"), a Lafayette, Louisiana based underwater services      
company, and against one of the principals of International Diving as           
guarantor for the company, in the sum of $1,486,374. The claim was for damages  
and other amounts payable by International Diving for breach of an Agreement    
to charter the M/V Seahawk Retriever, then owned by the Company, for the five   
year period commencing September 1, 1994.  The claim reflected credit for sums  
received as a result of the sale of the vessel to a third party following the   
breach by the debtor. Management believes it unlikely that the Company will     
recover any of the sum claimed and in accordance with Company policy, the       
claim has not been recorded in the financial statements, and will not be        
unless and until any proceeds are received.                                     

LAWSUIT BY FORMER OFFICERS AND DIRECTORS                                        

In March, 1998, the Company received a demand for indemnity from Greg Stemm,    
John Morris and Dan Bagley, all former directors and officers of the Company,   
for payment of the sum of expenses they incurred in defending an action         
brought against them by the Securities and Exchange Commission. The             
indemnification claim was made under Colorado corporate law. The Company has    
received itemization of the purported legal fees and costs incurred in the      
defense of the former directors and officers in the amount of approximately     
$700,000. In addition the former directors and officers claim that they are     
due consequential damages for lost wages of approximately $425,000. The         
Company resisted the claim and in December, 1998, the former directors and      
officers filed a lawsuit pursuant to their claim.                               

The Company's directors have investigated the merits of the claim including     
the fact that the Company formerly agreed with the Securities and Exchange      
Commission that it would not pay the legal expenses of the former officers and  
directors in their defense of the action in question.                           

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The Company is of the opinion that the agreement with the Securities and        
Exchange Commission takes priority over state law and in January, 1999, the     
Company filed in the state court a Motion to Dismiss Complaint, a Motion for    
More Definite Statement and Motion to Strike. At the same time the Company      
filed a Motion for Preliminary and Permanent Injunction in the federal court.   
On June 23, 1999, the federal court denied the Company's Motion for             
Preliminary and Permanent Injunction. The Company filed a Motion for            
Reconsideration in the federal court but that was also denied.                  

On July 19, 1999, the state court dismissed the complaint against the Company,  
without prejudice, for failure to state cause of action. On July 20, 1999, an   
amended complaint was served. On November 9, 1999 the plaintiffs filed for      
partial summary judgment and on the Company filed for summary judgment. On      
March 3, 2000, the court granted final summary judgment in respect of Mr.       
Bagley's claim in the sum of $179,429 with interest at the statutory rate,      
reserving jurisdiction to determine entitlement to pre-judgment interest and    
attorneys' fees. On May 11, 2000, the Company's Motion for Summary Judgment     
was denied.                                                                     

On May 31, 2000, the Company agreed a combined settlement of the lawsuit with   
all three plaintiffs. Bagley's claim was settled by (i) the assignment of an    
account receivable from Odyssey Marine Exploration, Inc. in the sum of          
$37,000, (ii) the Company's complete dossier, including all survey information  
for the Golden Eagle project, and (iii)a 3 year Note for $143,000 with          
interest at 10% per annum payable quarterly, secured on 97.15% of the           
Company's Shares in Pesqamar, repayable as to principal at $13,000 on August    
1, 2000, and $25,000 on the first and second anniversaries of the Note with     
the balance on the third anniversary. Morris's claim was settled by a 2 year    
Note for $275,000 at 10% per annum interest convertible into the Company's      
Series 5 Preferred Stock at 1 share for $1.00 of debt. Stemm's claim was        
settled by a 2 year Note for $225,000 at 10% per annum interest convertible     
into the Company's Series 5 Preferred Stock at 1 share for $1.00 of debt. Both  
Morris's and Stemm's notes were secured by a secondary position on the 97.15%   
of the Company's Pesqamar shares. A provision of $700,000 was made in the       
financial statements for the year ended December 31, 1998, for the combined     
settlement.                                                                     

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

The Company did not submit any matters to a vote of shareholders during the     
fourth quarter of the fiscal year ended December 31, 1998.                      

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PART II                                                                         

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

   (a) PRINCIPAL MARKET OR MARKETS.  The Company's common stock is traded on
the over-the-counter market. The Company's common stock has been traded on the  
NASDAQ system under the symbol "SDOT" since January 24, 1990, but on February   
10, 1994, was delisted from the NASDAQ Small Caps Stock Exchange for            
noncompliance with the rule that requires companies with net equity lower than  
$2,000,000 to maintain a minimum bid stock price of $1.00.  The stock was then  
quoted on the OTC Bulletin Board until March 2000, when it was removed because  
of the Company's failure to maintain its SEC filings up to date. The stock is   
currently quoted on the "Pink Sheets". In February the Company's symbol was     
changed to SHWK when the original symbol was taken by NASD and allocated to a   
company on a more senior market. The following table sets forth the range for   
high and low bid quotations for the Company's securities as reported by the     
OTC Bulletin Board.  These prices are believed to be representative             
inter-dealer quotations, without retail markup, markdown or commissions, and    
may not represent actual transactions.                                          

                           Bid
Quarter Ended                      High                Low          
-------------                      ----                ---          
March 31, 1996                   $0.15625            $0.12500       
June 30, 1996                    $0.12500            $0.10938       
September 30, 1996               $0.12500            $0.12500       
December 31, 1996                $0.18750            $0.14063       

March 31, 1997                   $0.12500            $0.12500       
June 30, 1997                    $0.12500            $0.10938       
September 30, 1997               $0.18750            $0.14063       
December 31, 1997                $0.15625            $0.12500       

March 31, 1998                   $0.15600            $0.15600       
June 30, 1998                    $0.11000            $0.09000       
September 30, 1998               $0.08000            $0.06000       
December 31, 1998                $0.00500            $0.03000       

(b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK.  The number of     
beneficial holders of the Company's no par value Common Stock at December 31,   
1998, was approximately 6,000                                                   

(c) DIVIDENDS.  Holders of Common Stock are entitled to receive such  
dividends as may be declared by the Company's Board of Directors.  The Company  
has not paid any dividends on its Common Stock and the Board of Directors of    
the Company presently intends to pursue a policy of retaining earnings, if      
any, for use in the Company's operations and to finance expansion of its        
business.  The declaration and payment of dividends in the future, of which     
there can be no assurance, will be determined by the Board of Directors in      
light of conditions then existing, including the Company's earnings, financial  
condition, capital requirements and other factors.                              

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

GENERAL                                                                         

The Company was formed on September 17, 1986 for the purpose of creating a      
corporate vehicle to seek and acquire a business opportunity.  The Company      
completed a public offering during October, 1988 and received net proceeds of   
approximately $490,000.  On March 13, 1989 the Company acquired 100% of the     
outstanding stock of R/V Seahawk, Inc. ("R/V Seahawk") in exchange for          
100,000,000 shares of the Company's Common Stock.  The Company had no           
significant operations prior to the March 1989, acquisition of R/V Seahawk.     
On March 2, 1992, R/V Seahawk was merged into the Company.                      

RESULTS OF OPERATIONS                                                           

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997           

The net loss for the year ended December 31, 1998 was $1,119,032, this          
compared to a loss of $697,937 in the corresponding period of 1997.             

Total revenues in the year ended  December 31 1998 were $797,356, an increase   
of $620,247 over the 1997 equivalent period due to a $459,356 gain on sale of   
artifacts and revenues of $313,000 from the supply of survey services. In the   
year to December 31, 1997 the Company gained $1,392 from the sale of artifacts  
and $135,717 from survey services. As a result of the higher activity, total    
expenditure in the year ended December 31, 1998, at $1,242,582, was $340,571    
more than the $902,011 expended in the 1997 and an operating loss of $445,226   
was suffered in the 1998 compared to a loss of $724,902 in 1997.                

The vessel R/V Seahawk was fully operational and working in the Caribbean and   
the Mediterranean in 1998 whereas she was laid up without work for the first    
nine months of 1997. Consequently the cost of vessel operations, including      
$235,458 for subcontracted crew and equipment costs in the year ended           
December 31, 1998 were $347,707 higher at $424,747 than the $77,040 incurred    
during the 1997 period. As well as the subcontracted crew and equipment costs,  
the 1988 vessel operations absorbed $10,965 in travel expenses, $25,974 for     
repairs and renewals, 56,972 for consumables and $24,471 for fuel while there   
such costs in the period to  December 31, 1997 were considerably lower.         

During the year ended December 31, 1998 the Company's share of administrative   
expenditure of a South American joint venture amounted to $22,387. In the 1997  
period, such costs amounted to 36,305. No further costs of that nature were     
incurred after June 1998 because a settlement agreement made in that month      
with the Company's partner in the joint venture provided that all future        
administrative costs will be borne by that partner.                             

Conservation and archaeology expenses were $3,000 for the year ended December   
31, 1998 compared to $36,305 for the equivalent period during 1997. This was a  
result of reduced activity in the conservation laboratory following the sale    
of the Company's artifacts.                                                     

Depreciation was $137,781 for the year ending December 31, 1998, and $139,424   
for the 1997 period indicating a negligible change in the depreciating assets   
from the earlier year to the next.                                              

Rent was $64,838 for the year ending December 31, 1998 compared to $33,413 for  
the equivalent period during 1997. In 1998 there was a one-time reduction in    
rent resulting from negotiations over past due rent with the landlord.          

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Administrative costs increased by $29,211 to $589,829 for the year ending       
December 31, 1998 from $560,618 during 1997. Most categories of administrative  
expenditure saw small differences in the 1998 period compared to the 1997       
period but there were significant increases in executive pay (271,100 from      
247,000) and legal and professional fees ($80,917 from $63,239).                

Interest expense increased to $248,042 for the year ended December 31, 1998     
compared to $123,718 in 1997. The increase was due to a charge for interest on  
past due salaries being commenced in 1998 and to the effect of default          
interest on overdue notes.                                                      

Interest income was down to $23,638 for 1998 from $59,930 in 1997 because the   
$300,000 interest bearing note receivable from Seahawk I, Ltd. was repaid at    
the end of March 1998.                                                          

Assets with a net book value of $12,750 were retired during the year ended      
December 31, 1998, causing a loss on disposal of assets of that amount.         

During 1998 one of the Company's affiliates paid off its note and account       
payable to the Company, releasing a provision for non payment of $742,301.      

The $7,120 loss on investment in affiliates represented the company's share of  
losses of Seahawk II, Ltd., a partnership in which the company is the general   
partner. In the equivalent period of 1997, the loss on investment in the        
affiliates was $82,530. That loss represented the company's share of losses of  
Seahawk I, Ltd., Seahawk II, Ltd., and Eagle Partners, Ltd., partnerships in    
which the company is the general partner.                                       

During 1998, the Company acquired shares in the common stock of a non           
affiliated company, partly as payment for the sale of artifacts and partly as   
payment of amounts due from Seahawk I, Ltd. The securities were valued at       
$0.17 per share at the time of the sale of artifacts and the same price was     
used when Seahawk, I, Ltd. repaid part of its debt to the Company with the      
securities. The Company used certain of the securities, again at $0.17 per      
share, to pay debt to unrelated parties, but the remaining investment was       
disposed of at $0.085 per share for cash, creating a one-time loss on disposal  
of the marketable securities of $486,833.                                       

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996           

The net loss for the year ending December 31, 1997 was $697,937 compared to a   
loss of $1,200,846 for the year ending December 31, 1996, a decrease in losses  
of about 43%.                                                                   

The increase in revenues to $179,265 in 1997 from $69,386 in 1996 resulted      
from an increase in offshore operations to $154,411 in 1997 from $930 in 1996,  
a decrease in revenue from sales of artifacts to $3,548 from $19,363.  Revenue  
from affiliated partnerships was negligible in 1997 and 1996 due to the         
absence of project finance in the affiliates.                                   

Operating expenses were reduced to $343,549 in 1997 from $714,140 in 1996, a    
54% reduction due largely to the curtailment of offshore activity and lower     
project costs in Brazil. There was a decrease in expense associated with        
vessel operations to $77,041 in 1997 from $278,433 in 1996.  This resulted      
primarily from decreases in the costs of personnel (to $2,190 from $106,686),   
the costs of subcontracted services (to $6,427 from $61,493) and repairs and    

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maintenance (to $8,902 from $23,208). The costs of personnel and subcontract    
services were down due to the reduced crewing requirements. A one-time cost of  
$33,177 was incurred in 1996 as a result of an abortive sale and lease back     
arrangement on the vessel.                                                      

Depreciation expense decreased to $141,744 in 1997 from $179,867 in 1996 the    
difference being due to depreciation charged in 1996 on the M/V Seahawk         
Retriever, which was still owned by the Company until its sale in early 1996.   

The costs of renting the Company's premises was reduced in 1997 to $33,413      
from $83,070 in 1996 because of a reduction in rent negotiated with the         
lessor.                                                                         

A $102,570 increase in general and administrative expense to $560,619 in 1997   
from $458,049 in 1996, resulted primarily from the increase in the provision    
for bad debt expense (to $23,267 from $2,730) and increased payroll charges     
(to $278,556 in 1997 from $205,694 in 1996). The payroll increases reflect an   
increase in salary for the two executive directors.                             

Interest expense was up by $43,894 to $129,089 in 1997 due to additional loans  
and default levels of interest incurred on overdue notes. Interest income at    
$58,930 in 1997 compared to $35,151 in 1996 reflected the higher default rate   
of interest charged by the Company to Seahawk I, Ltd. on an overdue note. An    
increase in losses resulting from partnership operations to $56,613 in 1997     
from $44,356 in 1996 was due to increased administrative costs in each of the   
partnerships.                                                                   

In 1997 the Company decided to write back provisions made for accounts payable  
relating to expenditure prior to 1993 no longer considered payable by           
management. The total gain on this one time write back was $169,242.            

LIQUIDITY AND CAPITAL RESOURCES                                                 

During the year ended December 31, 1998, the Company's working capital deficit  
increased by $225,261 to a negative $(2,273,020).  At December 31, 1997 the     
Company had a working capital deficit of $(2,047,760).                          

The deficit increased due to a net loss before depreciation during the year of  
$981,251, the effect of which was mitigated somewhat because of cash generated  
by the sale the Company's artifacts and the recovery of the account receivable  
from Seahawk I, Ltd. The cash so generated was used to repay expensive short    
term and overdue debt.                                                          

Despite these profitable liquidations, the Company continues to have very       
restricted cash flow. This situation results principally through the lack of    
revenue from operations. The Company has sought to produce operational revenue  
through the following:                                                          

 1.  Sales of subsea services to entities involved in shipwreck recovery
projects, which are originated by the Company.                

2.  Sales of subsea services to other entities.                       

3.  Lease of ships and subsea equipment.                              

4.  Sale of artifacts and artifact related merchandise.               

5.  Acquisition of revenue earning businesses for stock.              

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Sales to affiliated project entities such as Limited Partnerships, depends on   
those partnerships being properly funded.  The existing Limited Partnership,    
Seahawk II, Ltd., is out of cash and the partners have decided they are not     
willing to invest additional funds to continue further excavation of the wreck  
site.  The General Partner is unable to identify additional working capital to  
work on the Partnership's wreck off St. Augustine, and has asked the partners   
on two occasions to vote on terminating the Partnership.  The results of those  
votes were inconclusive. In 2000, the General Partner will again seek to close  
down Seahawk II, Ltd., to eliminate the expenses of administration of the       
Partnership.                                                                    

The Company is reviewing other potential shipwreck projects and it is           
anticipated that if the Company were to proceed with any of these projects, it  
may help to form limited partnerships or similar entities for the purpose of    
funding the projects.  There is no assurance that any of the partnerships       
would be successful in raising the necessary amount of funding.                 

During 1999 the Company generated over $114,900 selling its services to         
shipwreck related customers. In 1998 $313,000 was generated by that means.      
Since the R/V Seahawk has been disposed of it is unlikely that the Company      
will be able to generate such revenue in the future unless it acquires another  
vessel. The R/V Seahawk was sold for $207,000 by the Supreme Court of           
Gibraltar and the proceeds were used by the court to pay costs, past due        
remuneration of the crew and some of the loan that was secured on the vessel.   

On March 19, 1998, Treasure & Exhibits International, Inc. entered an           
agreement with the Company and Seahawk I, Ltd. to purchase all of Seahawk I,    
Ltd.'s artifacts, their related documentation and all of the Company's          
artifacts. The consideration was  $822,056 in cash and 9,500,000 newly issued   
shares of TEI's common stock, which were valued at the time of the agreement    
at $0.17 per share or $1,615,000. Immediately thereafter, Seahawk I, Ltd.       
repaid all its debt to the Company in cash and TEI stock, repaid other loans    
to two of the limited partners and made a pro rata distribution to the limited  
partners of the remaining TEI stock based on the limited partners' total        
investment in Seahawk I, Ltd.                                                   

On July 20,1998, the Company agreed to sell its remaining holding of 5,302,084  
shares in TEI to First Consolidated Financial Corp., a Florida corporation,     
for a total consideration of $450,677 ($0.085 per share). The agreement         
provided for the cash to be paid in five installments, $180,270 on the date of  
the agreement and at least $50,000 during each of September, October and        
November 1998 with the balance in by December 31, 1998. In the event, after     
paying the first installment, no further payment was made until November 10,    
1998, when the Company accepted a discount of $10,407 in return for the whole   
of the balance being paid on that date. Since all the Company's artifacts have  
been sold it is unlikely that it will be able to generate revenue of that       
nature in the future.                                                           

Apart from seeking to raise revenue from assets the Company has also sought to  
raise cash from issues of stock and conserve cash by the conversion of debt     
into equity.                                                                    

In March, 1999 the Company entered an agreement with Drexel Aqua Technologies,  
Inc., a Delaware corporation, under which Drexel was to purchase 36,000,000     
shares of the Company's Series 2 Preferred Stock for $500,000. The              
consideration was to be paid at the rate of $50,000 or more each month and the  
stock was to be issued on a pro   rata basis. On payment of the first $50,000   

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Drexel were entitled to appoint two directors to the board of the Company and   
on payment of the second $50,000 Drexel were entitled to appoint a third        
director. On full payment of the consideration Drexel were entitled to appoint  
a total of four directors. The proceeds of the sale were to be used             
specifically for current payroll, taxes, rent, administrative expenditures,     
legal fees and the costs of shareholder meetings. At the same time the Company  
and Drexel signed an agreement subject to due diligence, for the Company to     
acquire the entire share capital of Drexel's wholly owned subsidiary, Sindia    
Expedition, Inc.("SEI") for shares of Common Stock in the Company. The number   
of shares to be issued for the acquisition of SEI was to depend on the          
valuation of that corporation. SEI is the sole owner of all the rights to a     
shipwreck in Ocean City, New Jersey known as the Sindia.                        

The receipts from the Drexel private placement enabled the Company to pay its   
day to day expenses while the installments were received. However, after the    
first three installments the payments were always later and less than provided  
for by the contract. As of May 15, 2000 the Company had received only $257,374  
of the $500,000 due under the Drexel arrangement and the agreement was          
canceled. In order for the Company to remain in business it is necessary for    
the Company to generate new sources of revenue or to raise additional           
financing. The Company's current and future efforts to obtain additional        
financing will concentrate on offering additional equity to investors until     
such time as the Company's operational cash flow is self-supporting. On June    
25, 2000, the Company signed an agreement with Consolidated Holdings            
Investment & Philanthropic Group, Inc.,(CHIP)a privately held Pennsylvania      
corporation, which has options to invest in companies involved in engineering,  
manufacturing and real estate, to acquire the entire share capital of CHIP for  
newly issued shares of the Company's no par common stock. The Agreement is      
subject to due diligence being performed by and appropriate warranties being    
given by both parties and subject to approval at a Special Meeting of the       
Company's stockholders. Immediately prior to the acquisition, the Company       
plans to effect a one for one hundred reverse split of its common stock and     
issue CHIP's shareholders with approximately 8 million shares of Common stock   
in exchange for CHIP's share capital. Immediately after the acquisition,        
CHIP's shareholders will own approximately 75 % of the Company's issued common  
shares. If the acquisition is completed the Company believes that the           
reorganized company's operational cash flow will be sufficient to enable        
controlled growth by further acquisitions using stock and cash.                 

ITEM 7.  FINANCIAL STATEMENTS.                                                  

Please see pages F-1 through F-52.                                              

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND        
FINANCIAL DISCLOSURE.                                                           

There have been no disagreements between the Company and its independent        
certified public accountants on any matter of accounting principles or          
practices or financial statement disclosure since the Company's inception.      

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PART III                                                                        

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

The Directors and Officers of the Company are as follows:                       

Name               Age             Positions and Offices Held       

John T. Lawrence         52         Chief Executive Officer, President,         
                             Director of the Company, and Chairman
    of the Board

John B. Balch            52         Secretary, Chief Operating Officer and      
               Director of the Company

J. Robert Shaw           46         Director of the Company                     

Dennis Parisi            54         Director                                    

There is no family relationship between any Director or executive officer of    
the Company. All Directors and Officers will hold office until the next Annual  
Meeting of Shareholders.                                                        

The following sets forth biographical information as to the business            
experience of each Officer and Director of the Company for at least the past    
five years.                                                                     

JOHN T. LAWRENCE has served as one of the Company's Directors since September   
1991, as President of the Company since June 1993, as Chief Executive Officer   
since January 1994, and as Chairman of the Board since February 1995.  Mr.      
Lawrence has served as Chairman of OSEL GROUP since November 1988.  OSEL        
GROUP, located in the United Kingdom, is engaged in the business of designing   
and manufacturing subsea vehicles and sensors.  The main trading company in     
OSEL was placed into receivership in 1992, and its business and assets were     
sold.  From 1984 until 1988, Mr. Lawrence served as the Managing Director of    
OSEL GROUP and from 1979 until 1984, he served as the Financial Director of     
OSEL GROUP.  From 1975 until 1979, he served as financial director of an oil    
business subsidiary of the John Mowlem Group.  In 1968, Mr. Lawrence joined     
the London office of KPMG Peat Marwick where he qualified as a Chartered        
Accountant in 1971 and he continued with KPMG until 1975.  Mr. Lawrence gained  
an honors degree in Chemistry from University College of London in 1968.  Mr.   
Lawrence is Treasurer and a founding Board Member of the Professional           
Shipwreck Explorers Association (ProSEA). ProSEA is a non-profit trade          
association which provides a forum through which deep sea salvors,              
archaeologists and government entities work together to promote a high          
standard of ethics and principles in dealing with deep sea shipwreck            
resources.                                                                      

JOHN P. BALCH has served as a Director of the Company and as Chief Operating    
Officer from May 1994 to December 1999.  Mr. Balch has also served as Managing  
Director of OSEL GROUP (see above) since November 1988.  Mr. Balch served as    
General Manager and Director of OSEL GROUP from 1983 until 1988.  From 1975     
until 1979, he served as Operations Manager for DHB, a subsidiary of            
Oceaneering International, Inc., which manufactured Atmospheric Diving          
Systems.  From 1979 until 1983, Mr. Balch served as Managing Director of DHB    
and Worldwide Program Manager for Oceaneering ADS.  From 1969 until 1975, he    
progressed from toolmaker to development engineer then product manager in       

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three precision engineering companies.  Mr. Balch received a City and Guilds    
HNC in Mechanical Engineering from Highbury College, Portsmouth, England in     
1969.                                                                           

JAMES ROBERT SHAW Joined the Board of Directors of the Company in July 1997.    
Mr. Shaw has also served, since 1994, as President and CEO of Classic           
Restaurants International, Inc., a publicly traded company engaged in the       
entertainment business. Prior to that appointment he was an investment banker   
for several years and owned a franchise of a Broker-Dealership at Schneider     
Securities. Mr. Shaw received a BA from Carson Newman College in 1979 and an    
MA from the Southern Baptist Theological Seminary in 1983.                      

DENNIS PARISI Joined the Board of Directors on June 23, 1999 pursuant to a      
stock purchase agreement entered into between Drexel Aqua Technologies, inc.    
and the Company. For the past five years Mr. Parisi has been President and      
principal shareholder of Drexel Aqua Technologies, inc., a New Jersey based     
corporation specializing in the financing of, and investment in, shipwreck      
projects.                                                                       

COMPLIANCE WITH SECTION 12(A) OF THE SECURITIES EXCHANGE ACT OF 1934            

ITEM.10 EXECUTIVE COMPENSATION                                                  

The following table summarizes the compensation for the years ended December    
31, 1996, 1997 and 1998, of the Company's Chief Executive Officer and Chief     
Operating Officer:                                                              

                                                        [Enlarge/Download Table]

                          SUMMARY COMPENSATION TABLE                                  

                                                            LONG-TERM COMPENSATION    
                                                     ---------------------------------
                           ANNUAL COMPENSATION            AWARDS           PAYOUTS    
                     ------------------------------  ----------------- ---------------
                                                             SECURI-                  
                                                             TIES                     
                                                             UNDERLY-                 
                                          OTHER    RE-       ING               ALL    
                                          ANNUAL   STRICTED  OPTIONS/          OTHER  
NAME AND PRINCIPAL                        COMPEN-  STOCK     SARs     LTIP    COMPEN- 
POSITION            YEAR SALARY   BONUS   SATION   AWARD(S)  (NUMBER) PAYOUTS SATION  
------------------  ---- ------   -----   ------   --------  -------- ------- ------- 
                                                                                      
John T. Lawrence,   1998 $132,000  -0-     -0-       -0-        -0-     -0-     -0-   
 Chief Executive    1997 $132,000  -0-     -0-       -0-        -0-     -0-     -0-   
 Officer            1996 $120,000  -0-     -0-       -0-        -0-     -0-     -0-   

John P. Balch,      1998 $132,000  -0-     -0-       -0-        -0-     -0-     -0-   
 Chief Operating    1997 $132,000  -0-     -0-       -0-        -0-     -0-     -0-   
 Officer            1996 $120,000  -0-     -0-       -0-        -0-     -0-     -0-   


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OSEL Group Ltd., a UK corporation that supplied the services of Mr. Lawrence    
and Mr. Balch was paid only $16,800 of their $200,000 remuneration in 1995.     
The balance was accrued in the financial statements as of December 31, 1995.    
In 1996, OSEL Group was paid a total of $105,176 in cash and 304,366 shares of  
the Company's common stock as payment for the accrued 1995 remuneration. The    
number of shares was calculated monthly based on the average closing bid        
prices of the Company's Common Stock during each month.                         

In 1996, Mr. Lawrence and Mr. Balch were each paid $37,600 of their $120,000    
salary and the balance of $82,400 was accrued for each of them as at December   
31, 1996.                                                                       

In 1997, Mr. Lawrence and Mr. Balch were each paid $0 of their $132,000 salary  
and the balance of $132,000 was accrued for each of them as at December 31,     
1997.                                                                           

In 1998, Mr. Lawrence and Mr. Balch were each paid $44,856 of their $132,000    
salary and the balance of $87,144 was accrued for each of them as at December   
31, 1998.                                                                       

The unpaid salary accrues interest at the rate of 12% per annum.                

The following table sets forth certain information relating to option grants    
pursuant to the Company's Employee Stock Option Plan in the year ended          
December 31, 1998, to the individual named in the Summary Compensation Table    
above.                                                                          

     PERCENTAGE OF
      TOTAL OPTIONS/
NAME AND PRINCIPAL    OPTIONS/      SARs GRANTED      EXERCISE                  
POSITION            SARs        TO EMPLOYEES      OF BASE     EXPIRATION
-------------------   --------      --------------    --------    ----------    
John T. Lawrence         -0-             -0-            -0-           -0-       
John P. Balch            -0-             -0-            -0-           -0-       

EMPLOYEE STOCK OPTION PLAN                                                      

During April 1990, the Board of Directors adopted the Employee Stock Option     
Plan (the "Plan") which was approved by the Company's shareholders on December  
14, 1990. The Plan terminated in April, 2000. The Plan authorized the issuance  
of options to purchase up to 400,000 shares of the Company's Common Stock.      

The Plan allowed the Board to grant stock options from time to time to          
employees, officers and directors of the Company.  The Board has the power to   
determine at the time the option is granted whether the option will be an       
Incentive Stock Option (an option which qualifies under Section 422 of the      
Internal Revenue Code of 1986) or an option which is not an Incentive Stock     
Option.  Vesting provisions were determined by the Board at the time options    
were granted.  The option price for any option was to be no less than the fair  
market value of the Common Stock on the date the option was granted.            

In January 1999, the Company issued to Mr. Lawrence and Mr. Balch options to    
purchase 100,000 shares each at a price of $0.03 per share, pursuant to the     
renewal of their employment contracts.                                          

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OTHER STOCK OPTIONS AND WARRANTS                                                

In January 1997, the Company issued to Mr. Lawrence and Mr. Balch warrants to   
purchase 50,000 shares each at a price of $0.13 per share and 500,000 shares    
each at $0.13 per share pursuant to the renewal of their employment contracts.  

In July 1997, Mr. Shaw was granted 200,000 warrants to purchase shares at a     
price of $0.11 per share as compensation for joining the Board of Directors.    

In January 1999, the Company issued to Mr. Lawrence and Mr. Balch options to    
purchase 100,000 shares each at a price of $0.03 per share and issued to Mr.    
Shaw options to purchase 50,000 shares at $0.03 per share pursuant to the       
renewal of their terms of office as directors.                                  

ITEM 11.  SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS           

The following table sets forth, as of July 20, 2000, the stock ownership of     
each person known by the Company to be the beneficial owner of five percent or  
more of the Company's common Stock, all Directors individually and all          
Directors and Officers of the Company as a group.  Except as noted, each        
person has sole voting and investment power with respect to the shares shown.   

       AMOUNT OF
NAME AND ADDRESS                       BENEFICIAL          PERCENTAGE           
OF BENEFICIAL OWNER                    OWNERSHIP            OF CLASS            
-------------------                    ----------          ----------           

Carl Anderson                           8,411,612 (1)         18.4%             
19235 Highway 41 North                                                          
Lutz, FL  33549                                                                 

Dennis Parisi                           4,354,183 (2)          9.5%             
99 E. Main Street                                                               
E. Islip, NY 11730                                                              

John T. Lawrence                        2,436,116 (3)          5.3%             
5102 South Westshore Boulevard                                                  
Tampa, FL  33611                                                                

John P. Balch                           2,332,183 (4)          5.1%             
5102 South Westshore Boulevard                                                  
Tampa, FL  33611                                                                

J. Robert Shaw                            320,000 (5)           .6%             
5102 South Westshore Boulevard                                                  
Tampa, FL 33611                                                                 

All Officers and                        4,188,295 (2)(3)      20.5%             
Directors as a Group                              (4)(5)                        
(4 Persons)                                                                     
_________________                                                               

(1) Includes 5,046,250 shares underlying currently exercisable warrants held    
by Mr. Anderson and 400,000 shares that Mr. Anderson's Series 4 Preferred       
Stock is currently convertible into.                                            

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(2) Comprises of 4,354,183 shares that Drexel Aqua Technology, Inc., a          
corporation controlled by Mr. Parisi, can currently convert its Series 2        
Preferred Stock into.                                                           

(3) Includes 1,600,000 shares underlying currently exercisable options and      
50,000 shares underlying currently exercisable warrants held by Mr. Lawrence,   
and 400,000 shares that Mr. Lawrence's Series 4 Preferred Stock is currently    
convertible into.                                                               

(4) Includes 1,600,000 shares underlying currently exercisable options and      
50,000 shares underlying currently exercisable warrants held by Mr. Balch, and  
400,000 shares that Mr. Balch's Series 4 Preferred Stock is currently           
convertible into.                                                               

(5)  Includes 300,000 shares underlying currently exercisable options.          

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                       

During 1997, Carl Anderson loaned to the Company a total of $322,650 interest   
free. In September 1997, Anderson expressed his intention to convert $278,200   
of the loans into 2,140,000 shares of common stock of the Company by            
exercising his AH1 warrants and the Company issued a 1 year note for the        
balance of $45,000 repayable on October 31, 1998 with 12% annual interest. The  
note was repaid in December 1998 but the Company was unable to comply with the  
request to convert the $278,200 because it had insufficient authorized common   
stock available. In May 1999 the Company entered into an Agreement with Mr.     
Anderson under which the remaining $278,000 was incorporated into a             
convertible note with interest accruing on an annual basis at 18% from          
September 1997. The note provided that the loan and accrued interest would be   
repaid in cash or, at Anderson's option, in the Company's common stock at the   
conversion rate of $0.035 per share on December 31, 1999 (the "First Due        
Date"). The Agreement also provided that in the event that the Company does     
not repay the loan on that date, the Note will be extended on the same terms    
for one year to December 31, 2000, at which time the principal and accrued      
interest must be repaid in cash or, at the at Anderson's option, in the         
Company's common stock at the conversion rate of $0.025 per share. As an        
incentive to enter this agreement the Company extended the expiration date of   
Mr. Anderson's T1 and AH2 warrants to December 31, 2000, and reduced the        
exercise price to $0.05 per share. In June 2000, Mr. Anderson agreed to         
convert the Loan and accrued interest, together with $10,000 owed to him for    
leasing a car to the company into 414,000 shares of the Company's Series 5      
Preferred Stock.                                                                

In May 1998, Anderson loaned the Company $73,500 for one month at an annual     
interest of 18% and secured with 3,500,000 shares of common stock in            
Vanderbilt Square Corporation. As part of the consideration for making the      
loan the Company agreed to extend the validity of certain warrants belonging    
to Anderson. The loan was repaid on the due date.                               

In July 1997, J. Robert Shaw was appointed a director of the Company and        
issued 200,000 options to purchase the Company's common stock at $0.11 per      
share.                                                                          

In January 1999, the Company issued 100,000 stock options to purchase the       
Company's common stock at $0.03 per share to each of the two executive          
directors and 50,000 stock options to purchase the Company's common stock at    
$0.03 per share to Mr. Shaw. At the same time the Company issued 100,000 stock  

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options to purchase the Company's common stock at $0.03 per share to each of    
the two executive directors pursuant to their renewing their contracts of       
employment.                                                                     

In February 1999, the company issued 20,000 shares of its common stock to Mr.   
Shaw as compensation for acting as sole officer and director of its subsidiary  
RV Seahawk, Inc.                                                                

In February 1999, the two executive directors each donated 50,000 of their      
unrestricted common stock in the Company to a lender as an incentive to lend    
the Company $154,000. In compensation the Company agreed to pay each executive  
director $3,500 in cash and 100,000 shares of its common stock.                 

In March, 1999 the Company entered an agreement with Drexel Aqua Technologies,  
Inc., a Delaware corporation controlled by Mr. Parisi, under which Drexel was   
to purchase 36,000,000 shares of the Company's Series 2 Preferred Stock for     
$500,000. The consideration was to be paid at the rate of $50,000 or more each  
month and the stock was to be issued on a pro   rata basis. On payment of the   
first $50,000 Drexel were entitled to appoint two directors to the board of     
the Company and on payment of the second $50,000 Drexel were entitled to        
appoint a third director. On full payment of the consideration Drexel were      
entitled to appoint a total of four directors.                                  

The proceeds of the sale were to be used specifically for current payroll,      
taxes, rent, administrative expenditures, legal fees and the costs of           
shareholder meetings. At the same time the Company and Drexel signed an         
agreement subject to due diligence, for the Company to acquire the entire       
share capital of Drexel's wholly owned subsidiary, Sindia Expedition,           
Inc.("SEI") for shares of Common Stock in the Company. The number of shares to  
be issued for the acquisition of SEI was to depend on the valuation of that     
corporation. SEI is the sole owner of all the rights to a shipwreck in Ocean    
City, New Jersey known as the Sindia.                                           

The receipts from the Drexel private placement enabled the Company to pay its   
day to day expenses while the installments were received. However, after the    
first three installments the payments were always later and less than provided  
for by the contract. As of May 15, 2000 the Company had received only $257,374  
of the $500,000 due under the Drexel arrangement and the agreement was          
canceled.                                                                       

As of December 31, 1998, John Balch and John Lawrence were each owed $287,450   
in past due salaries and 67,447 in interest thereon calculated at 12% per       
year. In April 1999, the Company settled all past due payroll commitments by    
issuing a 2 year 12% per annum Note to four individuals, secured by the         
Company's interest in Pesqamar. At that date John Balch and John Lawrence were  
owed an aggregate of $800,000 for past due salaries and accrued interest. That  
sum was incorporated into a 2 year 12% per annum Note in the name of United     
Commodities International, Ltd.(UCIL), a corporation controlled by Mr. Balch    
and Mr. Lawrence. In June 2000, UCIL agreed to convert the Note and accrued     
interest into 1,000,000 shares of the company's Series 5 Preferred Stock.       

Since October 1996, Mr. Anderson has leased an automobile to the Company at     
the rate of $5,000 per year.                                                    

In June 2000, Carl Anderson was awarded 500,000 warrants to purchase the        
Company's common stock at $2.00 per share, in recognition of services he and    
his employees had performed on behalf of the Company.                           

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As of June, 2000, Mr. Shaw was owed $22,000 by the Company for unpaid           
director's fees. At that date Mr. Shaw agreed to convert that debt into 22,000  
shares of the Company's Series 5 Preferred Stock.                               

The Board of Directors was of the opinion that the terms of the above           
transactions were at least as favorable as those which could be obtained from   
independent third parties.                                                      

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PART IV                                                                         

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8K.                                      

(a)     EXHIBITS.                                                     

                                                                [Download Table]


EXHIBIT                                                                         
NUMBER   DESCRIPTION                              LOCATION                      
                                                                                
3        Articles of Incorporation and Bylaws     Incorporated by reference to  
                                                  Exhibit No. 3 to the          
                                                  Registrant's Registration     
                                                  Statement (No. 33-22037)      

10.1     Agreement and Plan of Reorganization     Incorporated by reference to  
         between Fox Ridge Capital, Inc. and      Exhibit No. 10.2 to the       
         R.V. Seahawk, Inc.                       Registrant's Registration     
                                                  Statement (No. 33-22037)      

10.2     Agreement Among Fox Ridge Capital,       Incorporated by reference to  
         Inc., Timothy J. Brasel, Janelle K.      Exhibit No. 10.3 to the       
         Johnson and Susan A. Brasel dated        Registrant's Registration     
         April 24, 1989                           Statement (No. 33-22037)      

10.3     Charter Agreement between Seahawk,       Incorporated by reference to  
         Inc. and R/V Seahawk, Inc.               Exhibit No. 10.4 to the       
                                                  Registrant's Registration     
                                                  Statement (No. 33-22037)      

10.4     Contract for the Purchase of 2000        Incorporated by reference to  
         Series ROV between R/V Seahawk, Inc.,    Form 8-K dated December 7,    
         AOSC and Commercial Union Capital Ltd.   1989                          

10.5     Master Lease Purchase Agreement be-      Incorporated by reference to  
         tween Commercial Union Capital Lim-      Form 8-K dated December 7,    
         ited and R/V Seahawk, Inc.               1989                          

10.6     Letter of Guarantee from Seahawk Deep    Incorporated by reference to  
         Ocean Technology, Inc. to Commercial     Form 8-K dated December 7,    
         Union Capital Limited                    1989                          

10.7     Option and Agreement by and among        Incorporated by reference to  
         Valley Resources, Ltd., Valley Marine,   Form 10-K for the fiscal year 
         Inc. and Seahawk Deep Ocean Tech-        ended December 31, 1989       
         nology, Inc.                                                           

10.8     Bareboat Charter Party between Valley    Incorporated by reference to  
         Marine, Inc. and Seahawk Deep Ocean      Form 10-K for the fiscal year 
         Technology, Inc.                         ended December 31, 1989       

10.9     Common Stock Option for John C.          Incorporated by reference to  
         Morris                                   Form 10-K for the fiscal year 
                                                  ended December 31, 1989       

10.10    Common Stock Option for Gregory P.       Incorporated by reference to  
         Stemm                                    Form 10-K for the fiscal year 
                                                  ended December 31, 1989       

10.11    Lease with RFK Partnership for build-    Incorporated by reference to  
         ing at 5102 South Westshore Boulevard    Form 10-K for the fiscal year 
                                                  ended December 31, 1989       

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10.12    Statement of Intent with Harbor Branch   Incorporated by reference to  
         Oceanographic Institution, Inc.          Form 10-K for the fiscal year 
                                                  ended December 31, 1989       

10.17    Termination of Lease Agreement and       Incorporated by reference to  
         Release of Liability dated               Registrant's Registration     
         February 7, 1992                         Statement on Form S-1 (filed  
                                                  March 18, 1992)               

10.18    Trust Indenture with R/V Seahawk,        Incorporated by reference to  
         Inc. dated August 16, 1991, as           Registrant's Registration     
         supplemented                             Statement on Form S-1 (filed  
                                                  March 18, 1992)               

10.19    Exchange Agreement with R/V Seahawk      Incorporated by reference to  
         dated August 16, 1991                    Registrant's Registration     
                                                  Statement on Form S1 (filed   
                                                  March 18, 1992)               

10.20    Option Agreement dated January 24,       Incorporated by reference to  
         1992 with Carl Anderson                  Registrant's Registration     
                                                  Statement on Form S-1 (filed  
                                                  March 18, 1992)               

10.21    Loan Agreement dated January 6, 1992     Incorporated by reference to  
         with Carl Anderson                       Registrant's Registration     
                                                  Statement on Form S-1 (filed  
                                                  March 18, 1992)               

10.22    Private Placement Agreement dated        Incorporated by reference to  
         January 24, 1992 with Carl Anderson      Registrant's Registration     
                                                  Statement on Form S1 (filed   
                                                  March 18, 1992)               

10.23    Agreement to Modify Warrant Exercise     Incorporated by reference to  
         Price and Shares Subject to Option       Registrant's Form 10K for the 
                                                  fiscal year ended December 31,
                                                  1992                          

10.24    Lease Termination Agreement dated        Incorporated by reference to  
         October 1, 1992 with Seahawk, Inc.       Registrant's Form 10K for the 
                                                  fiscal year ended December 31,
                                                  1992                          

22       Subsidiaries of the Registrant           Attached                      


During the quarter ended December 31, 1997, there were no Form 8K's filed.      

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   (a) 1. The following Financial Statements are filed as part of this
Form KSB.                                                                       

 SEAHAWK DEEP OCEAN TECHNOLOGY, INC.
                                                            Page

Report of Independent Certified Public Accountants ...............  F-3         

Consolidated Balance Sheet as of December 31, 1998 ...............  F-4         

Consolidated Statements of Operations for the Years                             
Ended December 31, 1998 and 1997..................................  F-5         

Consolidated Statement of Stockholders' Equity for                              
the Years Ended December 31, 1998 and 1997........................  F-6         

Consolidated Statements of Cash Flows for the Years                             
Ended December 31, 1998 and 1997..................................  F-7-8       

Notes to Consolidated Financial Statements .......................  F-9-28      

SEAHAWK I, LTD.   

Report of Independent Certified Public Accountants ...............  F-29        

Statement of Liquidating Activities For the nine                                
months ended September 30, 1998 ..................................  F-30        

Notes to the Financial Statements ................................  F-31-33     

SEAHAWK II, LTD.  

Reports of Independent Certified Public Accountants ..............  F-34        

Balance Sheet as of December 31, 1998 ............................  F-35        

Statements of Operations for the Years Ended December 31,                       
1998 and 1997 ....................................................  F-36        

Statements of Partners' Capital for the Years Ended                             
December 31, 1998 and 1997 .......................................  F-37        

Statements of Cash Flows for the Years Ended December 31,                       
1998 and 1997 ....................................................  F-38        

Notes to Financial Statements ....................................  F-39-42     

EAGLE PARTNERS, LTD.        

Reports of Independent Certified Public Accountants ..............  F-43        

Statement of Net Assets (Liabilities) in Liquidation                            
as of December 31, 1998 ..........................................  F-44        

Statements of Changes in Net Assets (Liabilities) in                            
Liquidation on December 31, 1998 .................................  F-45        

F-1     

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Statement of Operations for the Years Ended                                     
December 31, 1998 and 1997  -  Historical Basis ..................  F-46        

Statements of Partners' Capital for the Years Ended                             
December 31, 1998 and 1997 - Historical Basis ....................  F-47        

Statements of Cash Flows for the Years Ended                                    
December 31, 1998 and 1997 .......................................  F-48        

Notes to Financial Statements ....................................  F-49-52     

F-2 

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS  

To the Board of Directors                                                       
and Stockholders of                                                             
Seahawk Deep Ocean Technology, Inc.                                             
Tampa, Florida                                                                  

We have audited the accompanying consolidated balance sheet of Seahawk Deep     
Ocean Technology, Inc.  as of December 31, 1998 and the related consolidated    
statements of operations, stockholders' equity and cash flows for the years     
ended December 31, 1998 and 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 misstatements.  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 Seahawk Deep Ocean             
Technology, Inc. as of December 31, 1998 and the results of its operations,     
changes in stockholders' equity and its cash flows for the years ended          
December 31, 1998 and 1997 in conformity with generally accepted accounting     
principles.                                                                     

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern.  As shown in the financial            
statements, the Company incurred a net loss of $1,119,032 for 1998 and has      
incurred substantial net losses for each of the past several years resulting    
in an accumulated deficit of $15,449,791. At December 31, 1998, the Company     
has negative working capital as indicated by current liabilities exceeding      
current assets by $2,273,020.  These factors, in addition to other factors as   
discussed in Note 13, raise substantial doubt about the Company's ability to    
continue as a going concern.  The financial statements do not include any       
adjustments relating to the recoverability and classification of recorded       
assets, or the amounts and classification of liabilities that might be          
necessary in the event the Company cannot continue in operation.                

                 /s/ Giunta, Ferlita & Walsh, P.A.

             Giunta, Ferlita & Walsh, P.A.
Tampa, Florida  
July 1, 2000    

F-3   

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SEAHAWK DEEP OCEAN TECHNOLOGY, INC.         
CONSOLIDATED BALANCE SHEET          

DECEMBER 31, 1998           

CURRENT ASSETS                                                                  
Cash and cash equivalents                        $    16,510                  
Accounts receivable - other                            6,200                  
Prepaid expenses                                      11,115                  
                               -----------
Total current assets                                33,825                
                               -----------

PROPERTY AND EQUIPMENT, Net                           526,523                   

OTHER ASSETS                                                                    
Accounts and notes receivable - affiliate,                                    
less losses in excess of investment in                                      
affiliate of $40,820                                      -                 
Deposits and advances                                 14,025                  
Purchased shipwreck research, net of $25,000                                  
amortization                                              -                 
                               -----------
Total other assets                                  14,025                

TOTAL ASSETS                                      $   574,373                   
                               ===========

CURRENT LIABILITIES                                                             
Accounts payable                                 $   264,663                  
Accrued expenses                                                              
Salaries                                             45,284                 
Interest due related parties                        198,415                 
Interest due others                                  29,131                 
Other                                                23,905                 
Provision for lawsuit                               700,000                 
Due to related parties                               293,800                  
Accrued officers' salaries                           574,900                  
Notes payable - others                               176,747                  
                               -----------
Total current liabilities                        2,306,845                

STOCKHOLDERS' EQUITY                                                            
Preferred stock - no par value,                                               
60,000,000 shares authorized, 552,460                                       
shares issued and outstanding                       116,500                 
Common stock - no par value, 30,000,000                                       
shares authorized, 28,181,991 shares                                        
issued and outstanding                           13,595,628                 
Paid in capital-stock options                          5,191                  
Accumulated (deficit)                            (15,449,791)                 
                               -----------
                                 (1,727,472)
                               -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $   574,373                   
                               ===========

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

F-4 

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SEAHAWK DEEP OCEAN TECHNOLOGY, INC.     
CONSOLIDATED STATEMENTS OF OPERATIONS     
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997    

                                 1998           1997
                                -----------    -----------
REVENUES                                                                        
Income - affiliates                       $    25,000    $    40,000          
Rental income - others                        313,000        135,717          
Gain on sales of artifacts                    459,356          1,392          
                                -----------    -----------
Total revenues                              797,356        177,109        

OPERATING EXPENSES                                                              
Vessel - operations                           424,747         77,041          
South American Project                         22,387         36,305          
Conservation                                    3,000         53,210          
Depreciation and amortization                 137,781        141,424          
Rent                                           64,838         33,413          
                                -----------    -----------
Total operating expenses                    652,753        341,393        

GENERAL AND ADMINISTRATIVE EXPENSES            589,829        560,618           
                                -----------    -----------
Total expenses                            1,242,582        902,011        

(LOSS) FROM OPERATIONS                        (445,226)      (724,902)          
                                -----------    -----------

OTHER INCOME (EXPENSE)                                                          
Interest income - affiliate                    23,638         58,930          
Interest expense                             (248,042)      (123,718)         
Other income (expense)                              -          1,624          
Gain (Loss) on sale of marketable                                             
securities                                  (486,833)             -         
Gain (Loss) on sale of equipment              (12,750)         3,295          
Reduction of accounts payable provision             -        169,364          
Provision for lawsuit                        (700,000)             -          
Release of provision for receivables                                          
from Seahawk I, Ltd.                         757,301              -         
Gain (Loss) on investment in less                                             
than 50 % owned entities                      (7,120)       (82,530)        
                                -----------    -----------
Total other income (expense)               (673,806)        26,965        
                                -----------    -----------
NET (LOSS)                                 $(1,119,032)   $  (697,937)          
                                ===========    ===========

NET (LOSS) PER SHARE                       $     (0.04)   $     (0.02)          
                                ===========    ===========

WEIGHTED AVERAGE NUMBER OF COMMON                                               
SHARES AND COMMON SHARES EQUIVALENTS                                          
OUTSTANDING                                27,871,766     26,653,790          
                                ===========    ===========

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

F-5 

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SEAHAWK DEEP OCEAN TECHNOLOGY, INC.       
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY      
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997      

                                                                [Download Table]


                                                            PAID IN                 
                 PREFERRED STOCK          COMMON STOCK      CAPITAL     ACCUMULATED 
                 SHARES    AMOUNT    SHARES        AMOUNT    STOCK        DEFICIT   
                             $                        $        $             $      
                 -------  -------   ----------   ----------  -------    ----------- 
                                                                                    

Balance,                                                                            
 December 31,                                                                       
 1996            200,000   50,000   26,134,366   13,281,498   5,191     (13,632,822)
Common Stock                                                                        
 Issued:                                                                            
  For cash                             270,185       36,050                         
  For services                         280,000       35,000                         
  For debt                             784,444      127,580                         
  Issued to                                                                         
   officers for                                                                     
   accrued                                                                          
   remuneration                        100,000       12,500                         
  For extending                                                                     
   a loan                               25,000        4,500                         
  As penalty on                                                                     
   contract                            100,000       12,500                         
Net (loss)                                                                 (697,937)
                 -------   ------   ----------   ----------   -----    ------------ 
Balance,                                                                            
 December 31,                                                                       
 1997            200,000   50,000   27,693,991   13,509,628   5,191     (14,330,759)

Stock                                                                               
 Converted      (200,000) (50,000)     200,000       50,000                         
 Issued:                                                                            
  For cash         2,460   61,500                                                   
  For services   550,000   55,000                                                   
  For debt                             288,000       36,000                         

Net (loss)                                                              ( 1,119,032)
                 -------   ------   ----------   ----------   -----     ----------- 
Balance,                                                                            
 December 31,                                                                       
 1998            552,460   116,500   28,181,991   13,595,628   5,191    (15,449,791)
                 =======   =======   ==========   ==========   ======   ============


The accompanying notes are an integral part of these financial statements       

F-6 

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SEAHAWK DEEP OCEAN TECHNOLOGY, INC.         
CONSOLIDATED STATEMENTS OF CASH FLOWS         
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997        

                                          1998            1997
                                          -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES                                            
Net (loss)                                     $(1,119,032)   $  (697,937)    
Adjustments to reconcile net loss to net                                      
cash (used)provided by operating activities:                                
Depreciation and amortization                    137,781        139,424   
Provision for bad debt                            10,109         15,000   
(Gain)Loss on sale of equipment                   12,750         (3,295)  
(Gain)Loss on sale of artifact inventory        (459,356)             -   
Loss on marketable securities                    486,833              -   
Stock issued for services                         55,000         92,500   
(Gain)Loss on investment in less than                                     
50% owned entities                                7,120         82,510  
Release of provision for Seahawk I receivables  (757,301)             -   
(Increase) decrease in:                                                   
Other receivables                                (3,238)        10,889  
Inventory                                             -          3,687  
Prepaid expenses                                 (5,817)        36,515  
Accounts receivable affiliates                1,031,328        (60,435) 
Deposits                                            750         (3,089) 
Increase (decrease) in:                                                   
Accounts payable                               (139,842)      (208,867) 
Accrued expenses                                936,111        324,818  
                                          -----------    -----------
Net cash (used) provided by operating                                 
 activities                                    193,196       (268,279)
                                          -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES                                            
Proceeds from sale of property and equipment             -          5,295     
Proceeds from sale of marketable securities        414,522              -     
Marketable securities acquired from artifact                                  
sale and repayment of Seahawk I debt             (901,354)             -    
Proceeds from sale of artifact inventory           762,429              -     
Purchases of property and equipment                 (4,340)       (76,529)    
                                          -----------    -----------
Net cash (used)provided by investing                                  
activities                                    271,257         71,234
                                          -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:                                           
Issuances of notes payable - related                78,100        218,200     
Issuances of notes payable - other                 220,924        208,655     
Repayment of notes payable - related              (126,186)             -     
Repayment of notes payable - other                (681,410)      (124,799)    
Proceeds from issuance of stock                     61,500         36,050     
                                          -----------    -----------
Net cash (used)provided by financing                                  
activities                                   (447,072)       338,106
                                          -----------    -----------
NET INCREASE (DECREASE) IN CASH AND                                   
 CASH EQUIVALENTS                               17,381         (1,407)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR         (871)           536      
                                          -----------    -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR   $    16,510    $      (871)
                                          -----------    -----------
SUPPLEMENTAL DISCLOSURES:                                                       
Interest paid                                 $   186,018    $    33,626    
                                          ===========    ===========
Taxes paid                                    $         -    $         -    
                                          ===========    ===========

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

   F-7

SUMMARY OF SIGNIFICANT NON-CASH TRANSACTIONS                                    

During 1997:                                                                    

1.  Several debt holders converted their debt to stock.  A summary of the debt  
converted to stock is as follows:                                               

        Common Stock
       Amount     Shares
       --------   --------

Accounts payable                  $ 31,500    195,107                           
Accrued salary                      12,500    100,000                           
Notes payable-other                 96,080    589,333                           
       --------    -------
       $140,080    884,440
       ========    =======

2.  The Company issued 130,000 shares of its Common Stock to each of two        
directors of Pesqamar, the Company's Brazilian joint venture company, as        
payment for past services rendered to Pesqamar.                                 

3.  The Company issued 4,000 shares of its Common Stock to each of five         
persons who served in an advisory group to the Company's Board.                 

4.  The Company issued 25,000 shares of its Common Stock to a person as an      
inducement to extend a loan for a further period of 12 months.                  

During 1998:                                                                    

1.  The Company issued 288,000 shares of its Common Stock to a person in        
payment of a note for $36,000.                                                  

2.  The Company issued 200,000 shares of its Common stock to a corporation to   
redeem 200,000 shares of its Series 1 Preferred stock with a redemption value   
of $50,000.                                                                     

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

F-8     

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SEAHAWK DEEP OCEAN TECHNOLOGY, INC.   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    

NOTE 1 - ORGANIZATION  AND BUSINESS                                             

Organization                                                                    

Seahawk Deep Ocean Technology, Inc. (the "Company") was organized as a          
Colorado corporation on September 17, 1986 for the purpose of acquiring a       
business opportunity.  On October 14, 1988 the Company completed its initial    
public offering of 1,200,000 shares of common stock at an offering price of     
$.50 per share.  On March 13, 1989, the Company issued 2,000,000 shares of its  
no par value common stock to the holders of 100% of the outstanding common      
stock of R/V Seahawk, Inc. (a Florida corporation organized on May 23, 1988)    
in an exchange transaction in which R/V Seahawk, Inc. became a wholly owned     
subsidiary of the Company.  On March 2, 1992, R/V Seahawk Inc. was merged into  
the Company.  On September 12, 1989 the Company organized Seahawk Museum        
Development, Inc. and acquired 100% interest with the purchase of 625,000       
shares of its common stock.On November 3, 1995, the Company issued 2,400,000    
shares of its no par value common stock to the holders of 100% of the           
outstanding common stock of Seahawk, Inc. (an Alabama corporation organized on  
March 6, 1987 for the purpose of chartering a research vessel) in an exchange   
transaction in which Seahawk, Inc. became a wholly owned subsidiary of the      
Company.  On March 31, 1996, Seahawk, Inc. was merged into the Company.         

In February, 1999, the Company organized RV Seahawk, Inc., a Florida            
Corporation, and acquired its entire share capital for $100. The Company then   
transferred the R/V Seahawk into RV Seahawk, Inc.                               

Nature of Business                                                              

The Company is an oceanographic service company that is involved in deep water  
search, survey and recovery operations.  The Company has also served as the     
general partner for limited partnerships that were formed for the purpose of    
raising money to search for and locate shipwrecks.  The Company owned and       
operated a variety of sub-ocean equipment including an 83 foot research         
vessel, ROVs (Remote Operated Vehicles), and other specialized search and       
recovery equipment which enabled it to locate, photograph and retrieve items    
lost in deep water. In January 2000, the research vessel was sold. (see Note    
18). Under the terms of a Letter of Intent dated June 20, 2000, with            
Consolidated Holdings Investment & Philanthropic Group, Inc.(CHIP), a private   
Pennsylvanian corporation, it is proposed that the Company acquires several     
separate businesses that include industrial engineering, real estate            
investment, and asset chartering. If the acquisition is completed, the nature   
of the Company's business will be predominantly that of an industrial holding   
company, although the Company intends to continue certain of its oceanographic  
activities.                                                                     

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

This summary of significant accounting policies of the Company is presented to  
assist in understanding the Company's financial statements.  The financial      
statements and notes are representations of the Company's management who is     
responsible for their integrity and objectivity and have prepared them in       
accordance with the Company's customary accounting practices.                   

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Basis of Presentation                                                           

The accompanying financial statements were prepared using the accrual basis of  
accounting in accordance with generally accepted accounting principles.         

Principles of Consolidation                                                     

The consolidated financial statements include the accounts of Seahawk Deep      
Ocean Technology, Inc. and its wholly owned subsidiary, Seahawk Museum          
Development, Inc. All significant intercompany accounts and transactions have   
been eliminated.Use of EstimatesManagement uses estimates and assumptions in    
preparing financial statements.  Those estimates and assumptions affect the     
reported amounts of assets and liabilities, the disclosure of contingent        
assets and liabilities, and the reported revenues and expenses. Actual results  
could differ from those estimates.Revenue RecognitionThe Company derives its    
revenue primarily from rental of search and recovery vessels, deep ocean        
survey and search equipment, remote operating vehicles, and other electronic    
equipment to related and unrelated parties, as well as from its distributive    
share of limited partnerships' net income.Accounts Receivable and Credit        
ConcentrationTrade accounts receivable includes the following:                  

Charter payments due                             $ 173,620            
Less provision for uncollectible                                      
accounts since debtor has filed for                                 
protection under the Federal Bankruptcy Act      (173,620)          
Due from unrelated party considered to be                             
100% collectible                                    6,200           
                                     ---------
                                     $   6,200
                                     =========

Accounts and Notes Receivable - Affiliate                                       

The Company uses the allowance method to account for uncollectible affiliate    
accounts.  The Company has provided an allowance for uncollectible accounts     
since management considers the losses in excess of its investments in           
affiliates as a provision for uncollectible accounts.  (See Note 3).            

Depreciation                                                                    

Property and equipment is stated at historical cost.  Depreciation is provided  
using the straight-line method for financial reporting purposes at rates based  
on the assets' estimated useful lives.  The major components of assets and      
their estimated useful lives are as follows:                                    

                         December 31,1998          Years
                         ----------------          -----
Vessel "Seahawk"                      $   675,378               10              
Equipment on vessel and other             731,889              5 - 10           
       -----------
         1,407,267
Less - accumulated depreciation          (880,744)                              
       -----------
       $   526,523
       ===========

For income tax purposes, depreciation is computed using accelerated methods     
over statutory periods.                                                         

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Investment in Affiliates                                                        

The Company's investment in Seahawk I, Ltd., Seahawk II, Ltd. and Eagle         
Partners, Ltd. (less than 50% owned entities) was recorded on the equity        
method. Under this method, the basis of such investments, including loans,      
advances, and receivables are increased or decreased by the Company's           
distributive share of the Partnerships' income or loss.  The partnerships were  
formed for the purpose of funding the search for deep-water shipwrecks in       
pre-designated areas. In March 1998, Seahawk I, Ltd. sold its entire            
collection of artifacts and used most of the proceeds to repay the Note         
receivable, accrued interest and accounts receivable to the Company, although   
there was no repayment of the original investment. Seahawk I, Ltd. was closed   
on September 30, 1998.                                                          

In accordance with the December 31, 1998 Eagle Partners Ltd. plan of            
liquidation, the financial statements for that partnership, as of December 31,  
1998, were stated on a liquidation basis with an estimated liquidation value    
of zero. Accordingly, the Company wrote off its investment and related          
receivable accounts from Eagle Partners, Ltd. at December 31, 1998, which       
resulted in a net loss of $0  because the investment and related receivable     
accounts had already been provided for.                                         

Purchased Shipwreck Research                                                    

The Company's cost of purchased shipwreck research is capitalized and           
amortized over 3 years.                                                         

Loss Per Share                                                                  

Net loss per share is computed using the weighted average number of common      
shares outstanding during the period.  Common stock warrants and options are    
not considered into the computation because they are antidilutive in the        
aggregate.                                                                      

Statement of Cash Flows                                                         

Short-term investments that have an original maturity of ninety days or less    
are considered cash equivalents.                                                

Income Taxes                                                                    

The Company provides for deferred income taxes resulting from the timing        
differences in reporting income and expenses for financial statement purposes   
compared to the method of reporting for income tax purposes.  No deferred       
income taxes are reflected in the accompanying financial statements due to the  
Company's losses from operations.                                               

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NOTE 3 - ACCOUNTS AND NOTES RECEIVABLE FROM AND INVESTMENTS IN AFFILIATES       

The Company is a general partner and a less than 50% interest owner in Eagle    
Partners, Ltd.  and Seahawk II, Ltd. (Florida limited partnerships). The        
partnerships are accounted for on the equity method.  The report of             
independent certified public accountants on the 1998 financial statements of    
Seahawk II, Ltd., includes an explanatory paragraph raising substantial doubt   
about the partnership's ability to continue as a going concern.  Pursuant to    
the partnership agreements, net losses of the Partnerships will be allocated    
as follows:                                                                     

For Seahawk II, Ltd. and Eagle Partners, Ltd. 99% to the Limited Partners and   
1% to the General Partner until the Limited Partners' capital accounts have     
been reduced to zero.                                                           

Net income is first allocated to the Limited Partners based on their            
proportionate ownership interests to the extent of the net loss previously      
allocated to them. Net income is then allocated to the General Partner to the   
extent of the net loss previously allocated to it. Thereafter, net income will  
be allocated as follows:                                                        

For Seahawk II, Ltd., the remaining net income is allocated 1% per unit of the  
limited partnership interest (not to exceed 50%), and the balance to the        
General Partner.                                                                

For Eagle Partners, Ltd., the remaining net income is allocated on a per unit   
basis with each $50,000 unit receiving 2.5% of the first $1 million of income   
allocated, 2% of the second $1 million of income allocated, 1.5% of the third   
$1 million of income allocated, 1% of the fourth $1 million of income           
allocated and 0.5% of income over $4 million allocated. The Company, as the     
general partner, will receive the balance of any net income to be allocated.    

In accordance with the use of the equity method of accounting for its           
investment in partnerships, the Company has reduced its investment in those     
partnerships by its allocated portion of the partnership's losses.              

The accounts and notes receivable from affiliate, less losses in excess of      
investment in affiliate at December 31, 1998 is detailed as follows:            

        SEAHAWK II
        LTD.

Accounts receivable         $ 48,575                    
Less losses in excess of                                
investment in affiliates    (48,575)                  
        --------
        $      0
        ========

The Company has recorded losses in excess of its investments due to             
management's commitment to provide additional financial support.  In 1998, the  
Company recorded its share of losses from affiliates primarily as a result of   
invoices billed to the affiliates for services provided.  Therefore, the        
Company considers the negative investment account as a provision for            
uncollectible accounts.                                                         

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Release of Provisions for Uncollectible Accounts from Seahawk I                 

In March 1998, Seahawk I, Ltd. sold its entire collection of artifacts for      
$541,982 cash and 6,263,350 shares in the common stock of the purchaser,        
Treasure Exhibits International, Inc., a total consideration of $1,606,752. In  
accordance with the Partnership Agreement the partnership used most of the      
proceeds to repay the note receivable, accrued interest and accounts            
receivable to the Company. Consequently, the Company released the losses in     
excess of investment that it had recorded as a provision for uncollectible      
accounts from Seahawk I, Ltd. in the sum of $757,301. (See Note 17 SALE OF      
ARTIFACTS)                                                                      

NOTE 4 - INVESTMENT IN AFFILIATES                                               

Summarized financial statement information is shown below:                      

SEAHAWK II, LTD.                                                                
----------------                                                                

BALANCE SHEET                                                                   
December 31, 1998                                                               
ASSETS:                                                                         
CURRENT ASSETS                        $       52                            
          ----------
TOTAL ASSETS                            $       52                              
          ==========
LIABILITIES AND                                                                 
PARTNERS' CAPITAL:                                                            
CURRENT LIABILITIES                   $   41,775                            
PARTNERS CAPITAL:                                                           
Capital contributions                 1,371,250                           
Accumulated deficit                  (1,412,973)                          
          ----------
TOTAL PARTNERS'CAPITAL (deficit)           (41,723)                             
          ----------
TOTAL LIABILITIES AND PARTNERS'                                             
CAPITAL (deficit)                    $       52                           
          ==========

STATEMENT OF OPERATIONS                                                         
For the year ended December 31                                                  
SEAHAWK II, LTD.                                                                
----------------                                                                
                      1998          1997
                      --------      --------
REVENUES                                $      -      $      -                  
COST OF REVENUES                               -             -                  
GROSS PROFIT                                   -             -                  
OPERATING GENERAL                                                               
AND ADMINISTRATIVE EXPENSES              10,000        11,000                 
                      --------      --------
LOSS FROM OPERATIONS                     (10,000)      (11,000)                 
OTHER EXPENSES                                 -             -                  
                      --------      --------
NET LOSS                                $(10,000)     $(11,000)                 
                      ========      ========

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In accordance with the December 31, 1998 Eagle Partners, Ltd. plan of           
liquidation, the financial statements for that partnership, as of December 31,  
1998, were stated on a liquidation basis with an estimated liquidation value    
of zero. Accordingly, the Company wrote off its investment and related          
receivable accounts from Eagle Partners, Ltd. at December 31, 1998, which       
resulted in a net loss of $0  because the investment and related receivable     
accounts had already been provided for.                                         

NOTE 5   DEPOSITS AND ADVANCES                                                  

Deposits and advances at December 31, 1998 consist of the following:            

Deposit on rented real estate              $ 1,500    
Utility deposits                             4,870    
Other deposits                                 205    
Advance for use of automobile                7,450    
                                       -------
                                       $14,025
                                       =======
NOTE 6 - DUE TO RELATED PARTIES                                                 

Amounts due to related parties at December 31, 1998 comprises:                  
                      Interest                    Amount
         Due on       Rate      Secured on       Due
           ---------   --------    ----------     --------

Accrued director's                                                              
fees                 demand        none         none        $ 15,000          
Loan pending stock                                                              
issue                none           18%         none         278,200          
Unsecured Note        demand        none         none             600           
                                                  --------
                                                  $293,800
                                                  ========

In May 1999 the Company entered into an Agreement with Mr. Anderson under       
which the $278,000 was incorporated into a convertible note with interest       
accruing on an annual basis at 18% from September 1997. The note provided that  
the loan and accrued interest would be repaid in cash or, at Anderson's         
option, in the Company's common stock at the conversion rate of $0.035 per      
share on December 31, 1999 (the "First Due Date"). The Agreement also provided  
that in the event that the Company does not repay the loan on that date, the    
note will be extended on the same terms for one year to December 31, 2000, at   
which time the principal and accrued interest must be repaid in cash or, at     
Anderson's option, in the Company's common stock at the conversion rate of      
$0.025 per share. As an incentive to enter this agreement the Company extended  
the expiration date of Mr. Anderson's T1 and AH2 warrants to December 31,       
2000, and reduced the exercise price to $0.05 per share. In June 2000, Mr.      
Anderson agreed to convert the Loan and accrued interest, together with         
$10,000 owed to him for leasing a car to the company into 414,000 shares of     
the Company's Series 5 Preferred Stock.                                         

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NOTE 7 - NOTES PAYABLE - OTHERS                                                 

Notes payable - others, at December 31, 1998 comprises:                         

                    Interest               Book Value     Amount
         Due on      Rate    Secured on   of Security      Due
--------------    ------    --------  ----------   -----------   --------       
Unsecured note    demand       8%                  $    -        $ 83,129       
repayable at                                                                    
$1,000 monthly                                                                  

Secured Loan                  15%     Equipment    $  26,337       24,142       
repayable at                                                                    
$438.95 monthly                                                                 

Other             demand     none                                  69,476       
                                                          --------
                                                          $176,747
                                                          ========

NOTE 8 - COMMON AND PREFERRED STOCK                                             

Common Stock                                                                    

On June 12, 1992, the Company effected a one for fifty reverse split on the     
shares of the Company's common stock outstanding.  The per share amounts and    
number of shares in the financial statements have been retroactively adjusted   
for the effect of this reverse stock split.  Concurrently, the Company's        
stockholders approved an amendment to the Articles of Incorporation decreasing  
the authorized common stock to 30,000,000 shares of no par value common stock.  

Preferred Stock                                                                 

The Company is authorized to issue 60,000,000 shares of Preferred Stock, no     
par value. The Preferred Stock may be issued in series from time to time with   
such designation, rights, preferences and limitations as the Board of           
Directors of the Company may determine by resolution. The Company designated    
200,000 shares of its Preferred Stock as Series 1 Convertible Preferred Stock.  
All the Series 1 Convertible Preferred Stock was converted into 200,000 shares  
of Common Stock in August 1998. In January 1997, the Company designated         
30,000,000 shares of its Preferred Stock as Series 2 Preferred Stock. In        
February 1998, the Company designated 550,000 shares of its Preferred stock as  
Series 3 Preferred Stock. In February 1999, the Company designated 4,000 of     
its Preferred stock as Series 4 Preferred Stock. 2,700 shares of the Series 4   
were outstanding as of May 31, 2000. In March 1999, the Company designated an   
additional 6,000,000 of its Preferred stock as Series 2 Preferred Stock.        
Approximately 18,530,917 shares of the Series 2 were outstanding as of May 31,  
2000. In August 1999, the Company designated an additional 1,000,000 shares of  
its Preferred Stock as Series 3 Preferred Stock. 1,550,000 shares of the        
Series 3 were outstanding as of May 31, 2000.                                   

The Series 1 Convertible Preferred Stock had the following rights and           
preferences:                                                                    

Each share may be converted into one share of the Company's Common Stock at     
the option of the holder.                                                       

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In the event that there is an effective registration statement covering the     
shares of Common Stock into which the Series 1 shares may be converted and the  
average closing bid price for the Company's Common Stock is at least $3.00 per  
share, the Series 1 Stock will be automatically converted on a one for one      
basis. The Company may redeem shares of the Series 1 Stock at any time, at its  
option on giving 7 days notice, at a price equal to the higher of $0.25 or the  
average closing bid and asked prices for its Common Stock for the 10 days       
prior to the date of the redemption notice.  The Company is required to redeem  
the Series 1 shares at the price set forth in the paragraph above, on the       
earliest of the following:                                                      

(i)  December 1, 1999;                                                    

(ii)  The date that Buckeye Communications, Inc. ("Buckeye") provides the   
Company with or arranges for the Company to be provided with, a cash infusion   
of $500,000 or more;                                                            

(iii)  The date the Company receives a cash infusion of $1,500,000 or more in 
a single transaction or a series of four or less transactions in any one year.  

If the Company receives proceeds from the sale of certain pearls that were      
previously used as collateral for a loan from Buckeye, in excess of $50,000,    
one half of the excess shall be applied to redeem shares of the Series 1 Stock  
at the price set forth above.                                                   

Each share of the Series 1 Stock is entitled to one vote and votes with         
holders of the Common Stock as a single class.                                  

The Series 2 Convertible Preferred Stock has the following rights and           
preferences:                                                                    

Each share may be converted into one fifth of one share of the Company's        
Common Stock at the option of the holder at any time after February 1, 2000.    
In the event that there is an effective registration statement covering the     
shares of Common Stock into which the Series 2 shares may be converted and the  
average closing bid price for the Company's Common Stock is at least $3.00 per  
share, the Series 2 Stock will be automatically converted on a one for one      
fifth basis.                                                                    

The Company may redeem shares of the Series 2 Stock at any time, at its         
option, on giving 7 days notice, at a price equal to the higher of $0.0134 per  
share or the average closing bid and asked prices for its Common Stock for the  
10 days prior to the date of the redemption notice.  The Company is required    
to redeem the Series 2 shares at the price set forth in the paragraph above on  
or before February 1, 2007.                                                     

Each share of the Series 2 Stock is entitled to one vote and votes with         
holders of the Common Stock as a single class.                                  

The Series 3 Convertible Preferred Stock has the following rights and           
preferences:                                                                    

Each share may be converted into one share of the Company's Common Stock at     
the option of the holder at any time after January 31, 2000. In the event that  
the average closing bid price for the Company's Common Stock is at least $1.00  
per share for 10 consecutive trading days, all the outstanding Series 3 Stock   
will be automatically converted on a one for one basis.                         

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The Company may redeem shares of the Series 3 Stock at any time, at its option  
on giving 7 days notice, at a price of $0.10 per share.  The Company is         
required to redeem the Series 3 shares at the aforementioned price on or        
before July 1, 2003.                                                            

Each share of the Series 3 Stock is entitled to one vote and votes with         
holders of the Common Stock as a single class.                                  

The Series 4 Convertible Preferred Stock has the following rights and           
preferences:                                                                    

Each share may be converted into one thousand shares of the Company's Common    
Stock at the option of the holder at any time after July 1, 1999. In the event  
that the average closing bid price for the Company's Common Stock is at least   
$1.00 per share for 10 consecutive trading days, all the outstanding Series 4   
Stock will be automatically converted on a one thousand for one basis.          

The Company may redeem shares of the Series 4 Stock at any time, at its option  
on giving 7 days notice, at a price of $25.00 per share.  The Company is        
required to redeem the Series 4 shares at the aforementioned price on or        
before July 1, 2003.                                                            

Each share of the Series 4 Stock is entitled to one vote and votes with         
holders of the Common Stock as a single class.                                  

NOTE 9 - COMMON STOCK OPTIONS AND WARRANTS                                      

On April 18, 1990, the Company's Board of Directors approved a Stock Option     
Plan (the "Plan").  Under the Plan, stock options, which qualify as "incentive  
stock options" under Section 422A of the Internal Revenue Code of 1954, as      
amended (the "Code"), can be issued to employees of the Company.                
Additionally, options can also be issued to the directors who render valuable   
contributions to the Company. Pursuant to the Plan, options to purchase up to   
400,000 shares of the Company's common stock may be granted to employees        
and/or Directors of the Company. The Plan is administered by the Board of       
Directors, which is empowered to determine the terms and conditions of each     
option, subject to the limitation that the exercise price cannot be less than   
the market value of the Common Stock on the date of the grant (110% of the      
market value in the case of option granted to an employee who owns 10% or more  
of the Company's outstanding Common Stock) and no options can have a term in    
excess of 10 years (5 years in the case of options granted to employees who     
own 10% or more of the Company's Common Stock). The Plan was approved by the    
shareholders of the Company on December 14, 1990 and it terminated in April     
2000. Option activity during 1997 and 1998 is summarized as follows:            

                    Number of Shares   Price per Share
                    ----------------   ---------------
Balance December 31, 1996            273,000         $0.13 -  0.83              
Granted    1997                            -         $ -                        
Terminated 1997                     (112,500)        $0.20                      
Exercised  1997                            -         $ -                        
                      --------         -------------
Balance December 31, 1997            160,500         $0.13 -  0.83              
Granted    1998                            -         $ -                        
Terminated 1998                      160,500         $ -                        
Exercised  1998                            -         $ -                        
                      --------         -------------
Balance December 31, 1998                  -         $ -                        
                      --------         -------------
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The executive options as at December 31, 1998, are described as follows:        

                Exercise    Expiration
Date        Number of Shares     Price         Date                   
----        ----------------    --------    ----------                
5/12/95          500,000          $0.30         Note A                  
6/25/96          500,000          $0.12         Note A                  
1/15/97        1,100,000          $0.13         Note A                  
7/16/97          200,000          $0.11         7/16/02                 
---------                                 
2,300,000                                 
=========                                 

Note A:  180 Days after Termination of Employment Contract.                     

In January 1997, the Company issued two officers  warrants to purchase 50,000   
shares each at a price of $0.13 per share and 500,000 shares each at $0.13 per  
share pursuant to the renewal of their employment contracts.                    

In July 1997, a director was granted 200,000 warrants to purchase shares at a   
price of $0.11 per share as compensation for joining the Board of Directors.    

Warrant activity is summarized as follows:                                      

                    Number of Shares   Price per Share
                    ----------------   ---------------
Balance December 31, 1996           10,745,525       $0.130 - 5.00              
Granted   1997                       1,178,185       $0.110 - 0.25              
Exercised 1997                        (256,000)      $0.180                     
Expired   1997                      (2,813,750)      $0.250 - 5.00              
                      ----------       -------------
Balance December 31, 1997            8,853,960       $0.110 - 5.00              
Granted   1998                               -                                  
Exercised 1998                        (288,000)      $0.110                     
Expired   1998                        (597,143)      $0.250 - 4.00              
                      ----------       -------------
Balance December 31, 1998            7,968,817       $0.125 - 5.00              

The following warrants were outstanding on December 31, 1998:                   

Date         No. of Shares   Exercise Price   Expiration Date               
----         -------------   --------------   ----------------              
01/21/92            23,000        Note A        Note A                          
01/21/92            32,191        $2.00         Note B                          
01/21/92            32,191        $5.00         Note A                          
01/21/92           119,000        Note C        Note A                          
04/06/94           142,000        Note C        Note A                          
04/01/94           400,000        $0.25         12/31/99                        
07/31/94           606,250        $0.05         12/31/00 Note G,I               
11/10/94         1,800,000        $0.32         Note A                          
09/24/96         2,140,000        $0.13         09/02/99 Note G,H               
09/24/96         2,140,000        $0.05         12/31/00 Note G,I               
09/26/97            85,000        $0.13         09/26/99                        
10/31/97            24,000        $0.15         10/31/99                        
10/08/97           185,185        $0.135        10/08/99                        
10/20/97           240,000        $0.15         10/20/99                        
---------                                     
7,968,817                                     
=========                                     
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Note A - 3 months after effective date of Registration Statement                
Note B - 18 months after effective date of Registration Statement               
Note C - 110% of lowest closing bid 180 days prior to exercise                  
Note G - Expiration date extended as part of loan agreement                     
Note H - Warrants had expired by the date of this report                        
Note I - Exercise price reduced as part of loan agreement                       

The Company does not have enough authorized and unissued Common Stock to issue  
to the Warrant/Option Holders if they all exercise their warrants/options.      
Consequently it is inevitable that the Company will take steps to increase its  
authorized Common Stock as soon as it is able to fund the necessary             
Shareholders' Meeting.                                                          

The Company has adopted the disclosure only provisions of Statement of          
Financial Accounting Standards No. 123 "Accounting for Stock-Based              
Compensation". Accordingly, no compensation has been recognized for the stock   
options awarded during the year ended December 31, 1997. However, using the     
Black-Scholes method of option valuation, the options granted during 1997 are   
determined to have had no current value on the date of the grant and would      
have had no effect on the Company's net earnings per share had compensation     
costs been recorded for such options. No options were issued for the year       
ended December 31, 1998.                                                        

NOTE 10 - RELATED PARTY TRANSACTIONS                                            

The Company has earned some of its revenues from the rental of a vessel and     
deep ocean search and survey equipment and the sale of services to Seahawk I,   
Ltd., Seahawk II, Ltd., Eagle Partners, Ltd. and Eagle Miners Ltd. For the      
years ended December 31, 1998 and 1997, the Company recorded $25,000 and $930   
respectively for such revenues.  At December 31, 1998 accounts                  
receivable-affiliates includes $41,775 from these revenues. See Note 3 for      
discussion of allowances for doubtful accounts and losses in excess of          
investments in affiliates and its relationship to accounts                      
receivable-affiliates.                                                          

From October 1995, Carl Anderson rented a motor car to the Company for $5,000   
per annum.  At December 31, 1998, the accrued rental due to Anderson was        
$5,000.                                                                         

In January, 1997, two officers were each granted 500,000 stock options as an    
inducement to renew their contract of employment and three directors were each  
granted 50,000 stock options, all with an exercise price of $0.13 per share.    

In July 1997, J. Robert Shaw was appointed a director of the Company and        
issued 200,000 options to purchase the Company's common stock at $0.11 per      
share.                                                                          

During 1997, Carl Anderson loaned to the Company a total of $322,650 interest   
free. In November 1997, Anderson expressed his intention to convert $278,200    
of the loans into 2,140,000 shares of common stock of the Company by            
exercising his AH1 warrants. The Company issued a 1 year note for the           
remaining balance of $45,000 repayable on October 31, 1998 with 12% annual      
interest. The Company was unable to issue the shares to Anderson because it     
had insufficient authorized common stock available. In May 1999 the Company     
entered into an Agreement with Mr. Anderson under which the remaining $278,000  
was incorporated into a convertible note with interest accruing on an annual    
basis at 18% from September 1997. The note provided that the loan and accrued   
interest would be repaid in cash or, at Anderson's option, in the Company's     

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common stock at the conversion rate of $0.035 per share on December 31, (the    
"First Due Date"). The Agreement also provided that in the event that the       
Company does not repay the loan on that date, the Note will be extended on the  
same terms for one year to December 31, 2000, at which time the principal and   
accrued interest must be repaid in cash or, at the at Anderson's option, in     
the Company's common stock at the conversion rate of $0.025 per share. As an    
incentive to enter this agreement the Company extended the expiration date of   
Mr. Anderson's T1 and AH2 warrants to December 31, 2000, and reduced the        
exercise price to $0.05 per share. In June 2000, Mr. Anderson agreed to         
convert the Loan and accrued interest, together with $10,000 owed to him for    
leasing a car to the company into 414,000 shares of the Company's Series 5      
Preferred Stock.                                                                

As of December 31, 1998, John Balch and John Lawrence were each owed $287,450   
in past due salaries and 67,447 in interest thereon calculated at 12% per       
year. In April 1999, the Company settled all past due payroll commitments by    
issuing a 2 year 12% per annum Note to four individuals, secured by the         
Company's interest in Pesqamar. At that date John Balch and John Lawrence were  
owed an aggregate of $800,000 for past due salaries and accrued interest. That  
sum was incorporated into a 2 year 12% per annum Note in the name of United     
Commodities International, Ltd.(UCIL), a corporation controlled by Mr. Balch    
and Mr. Lawrence. In June 2000, UCIL agreed to convert the Note and accrued     
interest into 1,000,000 shares of the company's Series 5 Preferred Stock.       

NOTE 11 - INCOME TAXES                                                          

Effective January 1, 1993, the Company changed its method of accounting for     
income taxes from the deferred method to the liability method required by FASB  
Statement No. 109, "Accounting for Income Taxes".  There is no effect on prior  
operations as a result of the change.  This new statement changes the criteria  
for the recognition and measurement of deferred tax assets or liabilities,      
including net operating loss carry forwards.                                    

As of December 31, 1998, the Company had a net operating loss carry forward of  
approximately $15,000,000, which is available to offset future taxable income.  
The carry forward will begin to expire in the year 2004.  The Company has not   
recorded a deferred tax asset since a 100% valuation allowance has been         
provided for.                                                                   

NOTE 12 - COMMITMENTS AND CONTINGENCIES                                         

Legal Aspects of International Salvage                                          

Legal ramifications with regard to the recovery of shipwrecks raise a number    
of issues. Salvors, historical interests and individuals claiming ownership     
based on the payment of insurance claims all have potential claims on goods     
recovered.                                                                      

An entity responsible for the salvage of a sunken vessel and its cargo may      
expect to defend its claim to title against the original owners or their        
successors-in-interest, against rival salvors, and against governments          
asserting a historic interest in the shipwreck or cargo.                        

Potential claimants might include the insurers of the shipwreck as in the SS    
Central America case (Civil Action 87-363-N).  Unless the insurers expressly    
disclaimed title after payment of a claim, and depending on the length of time  
the ship has remained sunken, the insurers might have a valid claim of title    
to recovered objects.                                                           
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Common Stock Commitments Exceeding Authorized Shares                            

The Company does not have enough authorized and unissued Common Stock to issue  
to the Warrant/Option Holders if they all exercise their warrants/options.      
Consequently it is inevitable that the Company will take steps to increase its  
authorized Common Stock as soon as it is able to fund the necessary             
Shareholders' Meeting.                                                          

NOTE 13 - GOING CONCERN As shown in the accompanying financial statements, the  
Company incurred a net loss of $1,114,032 for 1998 and has incurred             
substantial net losses for each of the past several years resulting in an       
accumulated deficit of $15,444,791.  At December 31, 1998, the Company has      
negative working capital as indicated by current liabilities exceeding current  
assets by $2,273,020. These factors raise substantial doubt about the           
Company's ability to continue as a going concern. Management plans to seek      
acquisitions of revenue earning companies and assets, not necessarily in the    
same business as the Company, in return for its stock. Such a transaction is    
discussed under SUBSEQUENT EVENTS. Management feels that such acquisitions      
will contribute toward achieving profitability. The financial statements do     
not include any adjustments that might be necessary if the Company is unable    
to continue as a going concern.                                                 

NOTE 14 - REDUCTION OF ACCOUNTS PAYABLE PROVISION                               

During 1997, management reduced the portion of a provision set up in 1993 for   
accounts payable, which, on the basis of experience gained since that time,     
management considers no longer necessary. The amount of the reduction was       
$169,364.                                                                       

NOTE 15 - PESQAMAR AND ODYSSEY AGREEMENTS                                       

On June 1, 1994, the Company signed an Agreement for Consulting Services with   
Odyssey Marine Exploration, Inc.(formerly Remarc International, Inc.). The      
Agreement provided that Odyssey would, at its own expense, seek to obtain for   
the Company a permit from the appropriate government to search for and salvage  
a particular shipwreck known as the "Santa Rosa" in Brazilian waters.  If such  
a permit were obtained for the Company by Odyssey, then the Company agreed to   
grant Odyssey between 6% and 9-1/2% of the gross proceeds of any successful     
recovery from the project.  The actual percentage granted to Odyssey was to     
depend on the size of portion of the recovery that would be taken by the        
Brazilian government in return for the permit.In furtherance of the             
negotiations for the permit, it became prudent to join forces with a Brazilian  
competitor to form a bidding Consortium. The Consortium rendered the            
consultancy Agreement with Odyssey inappropriate, and under a Joint Venture     
Agreement dated August 1995 with the Company, Odyssey agreed to forego its      
entitlement to the percentage of the gross recovery of the project and instead  
become equal partners with the Company in a Brazilian domiciled company,        
Pesqamar Pesquisas Arqueologicas Maritimas Ltda. (Pesqamar), that owns half of  
the Consortium.  The Company and Odyssey each owned 24.5% of the voting common  
stock of Pesqamar with the remaining 51% being owned by Brazilians. The         
Company and Odyssey also each own 50% of the non-voting preferred stock of      
Pesqamar. Under the new arrangement Odyssey funded Pesqamar's costs and the     
Company was to refund 50% of any costs to Odyssey when external project         
funding for the Santa Rosa project is in place. By May 1998, Pesqamar had       
incurred over $300,000 of expenses, half of which were payable by the Company.  
Under an agreement dated June 1, 1998, the Company's portion of the             

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expenditure was satisfied by the transfer of 1 million shares of common stock   
of Treasure & Exhibits International, Inc. to Odyssey on the basis that (a)     
the Company also transferred 165.5 shares of Preferred Non-Voting shares in     
Pesqamar to Odyssey and (b) Odyssey to be responsible for all future            
expenditure of Pesqamar. Following the completion of the agreement, the         
Company owns 428.75 of the 1,750 shares of common voting stock and 1,459.5 of   
the 3,250 shares of Preferred Non-Voting stock in Pesqamar.                     

NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED)                                  

                      First        Second        Third      Fourth
                      Quarter       Quarter      Quarter     Quarter
                      -------       -------      -------     -------

1997                                                                            
Revenues                  $   15,698    $  19,904    $  25,465    $ 118,198     
Net Income (loss)         $ (177,568)   $(220,880)   $(181,190)   $(118,299)    
Income (loss) per share   $    (0.01)   $   (0.01)   $   (0.01)   $      (-)    
Weighted average number                                                         
of common shares and                                                          
common shares equiva-                                                         
lent outstanding         26,273,699   26,514,336   26,515,032   26,653,790    

1998                                                                            
Revenues                  $  207,606    $  55,000    $ 124,035  $   410,715     
Net Income (loss)         $  351,294    $(244,449)   $(222,314) $(1,003,563)    
Income (loss) per share   $     0.01    $   (0.01)   $   (0.01) $     (0.04)    
Weighted average number                                                         
of common shares and                                                          
common shares equiva-                                                         
lent outstanding         27,693,991   27,693,991   27,767,222   27,871,766    

During the 1998 fourth quarter a provision of $700,000 was made to account for  
a settlement of a lawsuit reached in May 2000. (See NOTE 18   SUBSEQUENT        
EVENTS)                                                                         

NOTE 17 - SALE OF ARTIFACTS                                                     

In October 1997, the Company signed an agreement with Michael's International   
Treasure Jewelry, Inc., Key West Florida, to exhibit certain artifacts for a    
minimum period of 12 months, at a rental of $57,500 per quarter in advance.     
The artifacts included the entire inventory of Seahawk I, Ltd. The agreement    
also provided for Michael's to have an option to purchase the artifacts for     
$2,500,000 ($750,000 cash and $1,750,000 in common stock of Vanderbilt Square,  
Inc., a publicly quoted affiliate of Michael's) at any time during the term of  
the lease. Any revenue from the agreement was to be divided between the         
Company and Seahawk I, Ltd. in the ratio of the respective book values of the   
assets involved. On February 10, 1998, Vanderbilt changed its name to Treasure  
and Exhibits International, Inc.("TEI"). Prior to the agreement, the Company    
signed an agreement with Odyssey Marine Exploration, Inc. to pay Odyssey 10%    
of any proceeds from the lease or sale pursuant to the introduction by Odyssey  
of Michaels and Vanderbilt to the Company.                                      

On March 19, 1998, TEI entered an agreement with the Company and Seahawk I,     
Ltd. to purchase all of Seahawk I, Ltd.'s  artifacts, their related             
documentation and all of the Company's artifacts. The consideration was         
$822,056 in cash and 9,500,000 newly issued shares of TEI's common stock which  
were valued at the time of the agreement at $0.17 per share or $1,615,000.      

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Immediately thereafter Seahawk I, Ltd.  repaid all its debt to the Company in   
cash and TEI stock, repaid other loans to two of the limited partners and in    
September 1998, in accordance with the Partnership Agreements, 1,998,196        
shares of TEI stock were distributed to all the limited partners in proportion  
to their original capital contributions, which totalled $1,311,040. Each        
Limited Partner received approximately 1.52 shares for each $1 of capital they  
contributed. The General Partner received no repayment of its original capital  
contribution of $1,200,000. The Limited Partners voted to terminate the         
partnership as of September 30, 1998.                                           

On July 20,1998, the Company agreed to sell its remaining holding of 5,302,084  
shares in TEI to First Consolidated Financial Corp., a Florida corporation,     
for a total consideration of $450,677 ($0.085 per share). The agreement         
provided for the cash to be paid in five tranches, $180,270 on the date of the  
agreement and at least $50,000 during each of September, October and November   
1998 with the balance due by December 31, 1998. In the event, after paying the  
first tranche, no further payment was made until November 10, 1998, when the    
Company accepted a discount of $10,407 in return for the whole of the balance   
being paid on that date.                                                        

The transactions with TEI can be summarized as follows:                         

i) In total.                                                                    
                   Cash         Shares        Shares         Total
                   $             #             $             $
                    -------      ---------     ---------     ---------
Artifacts sold for       822,056      9,500,000     1,615,000     2,437,056     
Less commission         56,750      1,008,827       166,500       223,250   
                    -------      ---------     ---------     ---------
Net Sale proceeds        765,306      8,491,173     1,448,500     2,213,806     
Less provision for                                                              
costs of sale             5,000                                      5,000    
                    -------      ---------     ---------     ---------
Net proceeds after                                                              
provision               760,306      8,491,173     1,448,500     2,208,806    
Book value of artifacts                                                         
sold                                                               928,348    
                                                             ---------
Profit on sale of                                                               
Artifacts                                                        1,280,458    
                                                             ---------

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ii) In the books of the Company.                                                

                   Cash         Shares        Shares         Total
                   $             #             $             $
                    -------      ---------     ---------     ---------
Artifacts sold for       280,074      3,236,650       550,230       830,304     
Less commission           6,149        343,708        56,727        62,875    
                    -------      ---------     ---------     ---------
Net Sale proceeds        273,926      2,892,942       493,503       767,429     
Less provision for                                                            
costs of sale             5,000                                      5,000    
                    -------      ---------     ---------     ---------
Net proceeds after                                                              
provision               258,926      2,892,942       493,503       762,429    

Book value of artifacts                                                         
sold                                                               303,073    
                                                             ---------
Gain on sale of                                                                 
Artifacts                                                          459,356    
                                                             ---------
iii) In the books of Seahawk I, Ltd.                                            

                   Cash         Shares        Shares         Total
                   $             #             $             $
                    -------      ---------     ---------     ---------

Artifacts sold for       541,982      6,263,350     1,064,771     1,606,752     
Less commission          50,601        665,119       109,773       160,375    
                    -------      ---------     ---------     ---------
Net Sale proceeds        491,380      5,598,231       954,997     1,446,377     
Book value of artifacts                                                         
sold                                                               625,275    
                                                             ---------
Profit on sale of                                                               
Artifacts (historical                                                         
Basis)                                                             821,102    

Reduction in value of                                                           
5,598,231 shares of                                                             
TEI stock to $0.085 per                                                         
Share on liquidation                                                            
Basis                                                               479,146     
                                                             ---------
Profit on sale of                                                               
Artifacts (liquidation                                                        
Basis)                                                             341,956    
                                                             =========

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NOTE 18 - SUBSEQUENT EVENTS                                                     

Issue of Series 2 Preferred Stock                                               

In March, 1999 the Company entered an agreement with Drexel Aqua Technologies,  
Inc., a Delaware corporation, under which Drexel was to purchase 36,000,000     
shares of the Company's Series 2 Preferred Stock for $500,000. The              
consideration was to be paid at the rate of $50,000 or more each month and the  
stock was to be issued on a pro   rata basis. On payment of the first $50,000   
Drexel were entitled to appoint two directors to the board of the Company and   
on payment of the second $50,000 Drexel were entitled to appoint a third        
director. On full payment of the consideration Drexel were entitled to appoint  
a total of four directors.                                                      

The proceeds of the sale were to be used specifically for current payroll,      
taxes, rent, administrative expenditures, legal fees and the costs of           
shareholder meetings. At the same time the Company and Drexel signed an         
agreement subject to due diligence, for the Company to acquire the entire       
share capital of Drexel's wholly owned subsidiary, Sindia Expedition,           
Inc.("SEI") for shares of Common Stock in the Company. The number of shares to  
be issued for the acquisition of SEI was to depend on the valuation of that     
corporation. SEI is the sole owner of all the rights to a shipwreck in Ocean    
City, New Jersey known as the Sindia.                                           

The receipts from the Drexel private placement enabled the Company to pay its   
day to day expenses while the installments were received. However, after the    
first three installments the payments were always later and less than provided  
for by the contract. As of May 15, 2000 the Company had received only $257,374  
of the $500,000 due under the Drexel arrangement and the agreement was          
canceled.                                                                       

Extension of Loan Following Request for Conversion                              

During 1997 Carl Anderson, a principal shareholder of the Company, advanced     
the Company $278,200. In September 1997 Mr. Anderson applied to the Company to  
exercise his AH1 warrants and requested that the advances be converted into     
2,140,000 shares of the Company's common stock. The Company had insufficient    
unissued authorized stock and were unable to comply with the request.           

In May 1999 the Company entered into an Agreement with Mr. Anderson under       
which the $278,000 was incorporated into a convertible note with interest       
accruing on an annual basis at 18% from September 1997. The note provided that  
the loan and accrued interest would be repaid in cash or, at Anderson's         
option, in the Company's common stock at the conversion rate of $0.035 per      
share on December 31, 1999 (the "First Due Date"). The Agreement also provided  
that in the event that the Company does not repay the loan on that date, the    
Note will be extended on the same terms for one year to December 31, 2000, at   
which time the principal and accrued interest must be repaid in cash or, at     
the at Anderson's option, in the Company's common stock at the conversion rate  
of $0.025 per share. As an incentive to enter this agreement the Company        
extended the expiration date of Mr. Anderson's T1 and AH2 warrants to December  
31, 2000, and reduced the exercise price to $0.05 per share. In June 2000, Mr.  
Anderson agreed to convert the Loan and accrued interest, together with         
$10,000 owed to him for leasing a car to the company into 414,000 shares of     
the Company's Series 5 Preferred Stock.                                         

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Issue of Series 3 Preferred Stock                                               

In August 1999, the Company issued 1,000,000 shares of its Series 3 Preferred   
Stock to Deep Sea Discoveries, Inc. in payment for a purchase of an ROV and     
other related equipment valued at $100,000.                                     

Mortgage on the R/V Seahawk                                                     

In February 1999, the Company organized a wholly owned subsidiary, RV Seahawk,  
Inc., a Florida corporation, and transferred the vessel R/V Seahawk into the    
new subsidiary. At the same time RV Seahawk, Inc. borrowed $154,000 from First  
Capital Services Inc. The loan was for six months, was secured by a first       
preferred ships mortgage on the R/V Seahawk and carried an interest rate of     
15.88%. RV Seahawk, Inc. paid the 6 months interest of $12,230 in advance       
together with a commitment fee of $12,500 and as an incentive to agree to the   
loan Mr. John Lawrence gave 100,000 of his free trading shares of the           
Company's common stock to First Capital. The Company guaranteed the loan. The   
Note provided for the loan to be renewed on payment of 6 months interest in     
advance, a further commitment fee of $1,500 and a further transfer to First     
Capital of 100,000 free trading common shares in the Company.  In the event,    
the loan was not repaid or renewed, and on December 2, 1999, First Capital      
submitted a demand to the Company and RV Seahawk, Inc. for $164,476. Following  
the sale of the vessel by auction in January 2000 approximately $157,000 of     
the proceeds was applied to the outstanding principal and accrued interest.     

Arrest and Sale of the R/V Seahawk                                              

On December 1, 1999, certain crew members of the R/V Seahawk filed for the      
arrest of the vessel with the Supreme Court of Gibraltar against debts for      
past due wages in the sum of $37,378. In January 2000, the Court sold the       
vessel for $207,000 at public auction to First Capital Services, Inc. From the  
proceeds of the sale, the Court paid the crew members and the balance of the    
net proceeds of was applied to the principal and accrued interest due First     
Capital under its first preferred ships mortgage. As a result of the sale the   
Company suffered a loss on disposal of equipment of $193,350.                   

Settlement of Demand for Indemnity from Former Directors                        

In March, 1998, the Company received a demand for indemnity from Greg Stemm,    
John Morris and Dan Bagley, all former directors and officers of the Company,   
for payment of the sum of expenses they incurred in defending an action         
brought against them by the Securities and Exchange Commission. The             
indemnification claim was made under Colorado corporate law. The Company has    
received itemization of the purported legal fees and costs incurred in the      
defense of the former directors and officers in the amount of approximately     
$700,000. In addition the former directors and officers claim that they are     
due consequential damages for lost wages of approximately $425,000. The         
Company resisted the claim and in December, 1998, the former directors and      
officers filed a lawsuit pursuant to their claim.                               

The Company's directors have investigated the merits of the claim including     
the fact that the Company formerly agreed with the Securities and Exchange      
Commission that it would not pay the legal expenses of the former officers and  
directors in their defense of the action in question.                           

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The Company was of the opinion that the agreement with the Securities and       
Exchange Commission took priority over state law and in January, 1999, the      
Company filed in the state court a Motion to Dismiss Complaint, a Motion for    
More Definite Statement and Motion to Strike. At the same time the Company      
filed a Motion for Preliminary and Permanent Injunction in the federal court.   
On June 23, 1999, the federal court denied the Company's Motion for             
Preliminary and Permanent Injunction. The Company filed a Motion for            
Reconsideration in the federal court but that was also denied.                  

On July 19, 1999, the state court dismissed the complaint against the Company,  
without prejudice, for failure to state cause of action. On July 20, 1999, an   
amended complaint was served. In November 1999, the plaintiffs filed for        
partial summary judgment and the Company filed for summary judgment. On March   
3, 2000, the court granted final summary judgment in respect of Mr. Bagley's    
claim in the sum of $179,429 with interest at the statutory rate, reserving     
jurisdiction to determine entitlement to pre-judgment interest and attorneys'   
fees. On May 11, 2000, the Company's Motion for Summary Judgment was denied.    
On May 31, 2000, the Company agreed to a combined settlement of the lawsuit     
with all three plaintiffs. Bagley's claim was settled by (i) the assignment of  
an account receivable from Odyssey Marine Exploration, Inc. in the sum of       
$37,000, (ii) the Company's complete dossier, including all survey information  
for the Golden Eagle project, and (iii)a 3 year Note for $143,000 with          
interest at 10% per annum payable quarterly, secured on 97.15% of the           
Company's Shares in Pesqamar, repayable as to principal at $13,000 on August    
1, 2000,and $25,000 on the first and second anniversaries of the Note with the  
balance on the third anniversary. Morris's claim was settled by a 2 year Note   
for $275,000 at 10% per annum interest convertible into the Company's Series 5  
Preferred Stock at 1 share for $1.00 of debt. Stemm's claim was settled by a 2  
year Note for $225,000 at 10% per annum interest convertible into the           
Company's Series 5 Preferred Stock at 1 share for $1.00 of debt. Both Morris's  
and Stemm's notes were secured by a secondary position on 97.15% of the         
Company's Pesqamar shares. A provision of $700,000 was made in the financial    
statements for the year ended December 31, 1998, for the combined settlement.   

Acquisition of Consolidated Holdings Investment & Philanthropic Group, Inc.     

On June 25, 2000, the Company signed a letter of intent with Consolidated       
Holdings Investment & Philanthropic Group, Inc.,(CHIP)a privately held          
Pennsylvania corporation, which has options to invest in companies involved in  
engineering, manufacturing and real estate, to acquire the entire share         
capital of CHIP for newly issued shares of the Company's no par common stock.   
The Agreement is subject to due diligence being performed by and appropriate    
warranties being given by both parties and subject to approval at a Special     
Meeting of the Company's stockholders. Immediately prior to the acquisition,    
the Company plans to effect a one for one hundred reverse split of its common   
stock and issue CHIP's shareholders with approximately 8 million shares of      
Common stock in exchange for CHIP's share capital. Immediately after the        
acquisition, CHIP's shareholders will own approximately 75 % of the Company's   
issued common shares. Unaudited pro forma information related to this           
potential acquisition is not included in these financial reports due to the     
uncertainty of the acquisition proceeding to completion and the uncertainty of  
the exact mix of assets that would be acquired in the event that the            
acquisition is completed.                                                       

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NOTE 19 - YEAR 2000 COMPLIANCE (UNAUDITED)                                      

The Company reviewed the effect that the year 2000 would have on its essential  
computer systems, especially those related to its ongoing operations and its    
internal control systems, including the preparation of financial information.   

The Company's computer systems are used primarily for basic accounting, word    
processing, spreadsheet applications and access to the inter-net and world      
wide web.                                                                       

The Company employs three PC computers with year 2000 compliant hardware. The   
Company does not depend on any specialized computer hardware that may have      
become non-functional due to year 2000 problems.                                

The Company utilizes commonly used software packages, the vendors of which had  
all addressed the issue of year 2000 compliance, and the Company did not        
experience any year 2000 related software problems.                             

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Report of Independent Certified Public Accountants                              

To the Partners of                                                              
Seahawk I, Ltd.                                                                 
Tampa, Florida                                                                  

We have audited the accompanying statement of liquidating activities of         
Seahawk I, Ltd. (a Florida limited partnership) as of September 30, 1998. This  
financial statement is the responsibility of the Partnership's management.      
Our responsibility is to express an opinion on the financial statement based    
on our audit.                                                                   

We conducted our audit 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 statement is free of    
material misstatement.  An audit also includes assessing the accounting         
principles used and significant estimates made by management, as well as        
evaluating the overall financial statement presentations.  We believe that our  
audit provides a reasonable basis for our opinion.                              

As described in Note 5 to the financial statement, the General Partner of       
Seahawk I, Ltd. approved a plan of liquidation on December 31, 1997, and the    
Partnership began liquidation shortly thereafter. As a result, the Partnership  
changed its basis of accounting for the period after December 31, 1997, from    
going concern basis to the liquidation basis.                                   

In our opinion, the financial statement referred to above presents fairly, in   
all material respects, the liquidating activities of Seahawk I, Ltd. for the    
nine months ended September 30, 1998 in conformity with generally accepted      
accounted principles.                                                           

                         /s/ Giunta, Ferlita & Walsh, P.A.
                    Giunta, Ferlita & Walsh, P.A
      Tampa, Florida
    July 1, 2000

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SEAHAWK I, LTD.                                                                 
STATEMENT OF LIQUIDATING ACTIVITIES                                             
Nine Months Ended September 30, 1998                                            

                                             Per
                    Cash        Shares      Shares     Share   Total
                   $            #            $         $       $
                     -------    ---------     -------   -----  -------
SOURCE OF CASH                                                                  
AND SHARES                                                                      
Proceeds from sale                                                              
of artifacts             491,381    5,598,231     475,850   0.085   967,231   
                      -------    ---------     -------   -----   -------
USES OF CASH                                                                    
AND SHARES                                                                      
Repayment of accounts                                                         
payable                 491,381      954,257      81,112   0.085   572,493  
Repayment of Notes                  2,645,778     224,891   0.085   224,891   
Distributed to                                                                
Limited Partners                   1,998,196     169,847   0.085   169,847  
                      -------    ---------     -------  ------   -------
                      491,381    5,598,231     475,850   0.085   967,231
                      -------    ---------     -------  ------   -------
ENDING NET ASSETS                                                               
(LIABILITIES) IN                                                              
LIQUIDATION                                                               0   
                                                                 =======

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

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SEAHAWK I, LTD.                                                                 
NOTES TO FINANCIAL STATEMENTS                                                   

NOTE 1 - ORGANIZATION, BUSINESS AND PLAN OF LIQUIDATION                         

Seahawk I, Ltd. (The "Partnership") was formed May 23, 1988 as a Florida        
limited partnership.  The Partnership consisted of several Limited Partners     
and a corporate General Partner, Seahawk Deep Ocean Technology, Inc. (the       
General Partner).  The purpose of the Partnership was to engage in expeditions  
to locate, identify, and retrieve samples from shipwrecks in waters off the     
coast of Florida.  When the Partnership located a colonial age sunken vessel,   
the purpose of the Partnership was expanded to include the salvage and          
recovery of artifacts.                                                          

On March 19, 1998, The General Partner and the Partnership agreed to sell all   
of their artifacts and related documentation to Treasure & Exhibits             
International, Inc.(TEI). The total consideration before a 10% commission paid  
for the introduction of TEI to the Partnership, was  $822,056 in cash and       
9,500,000 newly issued shares of TEI's common stock which were valued at the    
time of the agreement at $0.17 per share or $1,615,000. Immediately thereafter  
the Partnership repaid all its debt to the General Partner in cash and TEI      
stock using the $0.17 per share valuation, then using the TEI stock at the      
$0.17 valuation, repaid other loans to two of the limited partners. The         
Partnership then made a pro rata distribution to the limited partners of the    
remaining TEI stock based on the limited partners' total investment in Seahawk  
I, Ltd.                                                                         

The Partnership's portion of the transaction with TEI can be summarized as      
follows:                                                                        

                                     Per
                Cash     Shares     Shares    Share    Total
               $         #           $        $        $
                -------   ---------  ---------  ------  --------
Artifacts sold for      541,982   6,263,350    532,385   0.085  1,074,367       
Less commission         50,601     665,119     56,535   0.085    107,136      
                 -------   ---------  ---------   -----  ---------
Net Sale proceeds       491,381   5,598,231    475,850   0.085    967,231       
Book value of                                                                   
artifacts sold                                                   625,275      
Profit on sale of                                               ---------       
artifacts                                                        341,956      
Use of Proceeds:                                                ---------       
Repayment of accounts                                                         
payable               491,381     954,257     81,112   0.085    572,493     
Repayment of Notes               2,645,778    224,891   0.085    224,891      
Distributed to LPs               1,998,196    169,847   0.085    169,847      
                --------   ---------   --------  ------  ---------
Total proceeds used     491,381   5,598,231    475,850   0.085    967,231       
                ========   =========   ========  ======   ========

In accordance with the Partnership Agreements, the 1,998,196 shares of TEI      
stock were distributed to the Limited Partners in proportion to their original  
capital contributions, which totalled $1,311,040. Each Limited Partner          
received approximately 1.52 shares for each $1 of capital they introduced. The  
General Partner received no repayment of its original capital contribution of   
$1,200,000.                                                                     

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The Partnership agreement extended through December 31, 1998, but following     
the sale of all the Partnership's assets in March 1998, it was terminated as    
of September 30, 1998, at the election of the General Partner with the consent  
of a Majority - In - Interest of the Limited Partners.                          

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Accounting                                                             

As provided in the Partnership Agreement, the Partnership's accounts were       
maintained on the cash basis of accounting for tax purposes, however, for       
historical financial statement purposes they were adjusted to the accrual       
basis in order to conform with generally accepted accounting principles.        

As of December 31, 1997, it was the management's intention to sell the          
artifacts to TEI and liquidate the Partnership, and from that date the          
Partnership measured its assets and liabilities at the amounts of cash and      
cash equivalents expected in liquidation and reports changes in estimates when  
they became known. The financial statements were shown on the original          
historical basis up to and including December 31, 1997, and restated at that    
date on the new liquidation basis.                                              

Distribution of Cash and Property                                               

All cash and property distributed to the Limited Partners was distributed in    
the proportion that the cumulative capital contribution of each partner bore    
to the cumulative capital contribution of all Limited Partners                  

Income Taxes                                                                    

In accordance with Section 701 of the Internal Revenue Code, the Partnership    
is not a taxable entity, therefore the results of operations flow through to    
the partners for tax purposes. The tax returns and the amounts of Partnership   
income or loss distributed to the partners are subject to examination by        
Federal and State taxing authorities.                                           

NOTE 3 - ADJUSTMENTS OF ESTIMATED VALUES                                        

Effective with the decision to liquidate, the carrying amounts of assets and    
liabilities were adjusted from their historical basis to the amounts of cash    
expected from their realization and settlement. The adjustment on December 31,  
1997 increased net assets by $630,738 from $(457,581)  to $173,157 as follows:  

                       Historical    Estimated
                           Basis     Liquidation
                                     Value
                        ----------   -----------
Cash                                   $     224     $     224              
Artifact inventory                       625,275       967,231              
Accounts payable - General Partner      (646,082)     (569,407)             
Accrued expenses - General Partner      (110,248)     ( 56,751)             
Accrued expenses - Limited Partner      ( 14,650)     (  7,510)             
Notes payable    - Limited Partners     ( 12,100)     (  6,203)             
Note payable     - General Partner      (300,000)     (154,427)             
                         ---------      --------
                         $(457,581)     $173,157
                         =========      ========

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NOTE 4 - RELATED PARTY TRANSACTIONS                                             

Through December 31, 1997, the liquidation conversion date, the General         
Partner had performed conservation and administrative services for the          
Partnership. These expenses and other amounts paid by the General Partner on    
behalf of the Partnership, were reflected in the accounts payable - general     
partner balances at and note payable   general partner NOTE 3.                  

NOTE 5 - LIQUIDATION BASIS                                                      

The accompanying financial statements have been prepared in conformity with     
generally accepted accounting principles. The historical financial statements   
contemplate continuation of the Partnership as a going concern. However the     
General Partner, acting in its capacity as general partner for the              
Partnership, sold the artifacts owned by Seahawk I, Ltd., in March 1998. The    
sale yielded enough for the General Partners to recover most of its accounts    
and notes receivable. The financial statements, beginning at December 31,       
1997, have been prepared on a liquidation basis using the known proceeds of     
the sale to revalue the artifacts and the liabilities settled with the          
proceeds.                                                                       

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Report of Independent Certified Public Accountants                              

To the Partners of                                                              
Seahawk II, Ltd.                                                                
Tampa, Florida                                                                  

We have audited the accompanying balance sheet of Seahawk II, Ltd. (a Florida   
limited partnership) as of December 31, 1998 and the related statements of      
operations, partners' capital and cash flows for the years ended December 31,   
1998 and 1997.  These financial statements are the responsibility of the        
Partnership'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 misstatements.  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 Seahawk II, Ltd. (a Florida    
limited partnership) as of December 31, 1998 and the results of its             
operations, changes in partners' capital and its cash flows for the years       
ended December 31, 1998 and 1997, in conformity with generally accepted         
accounting principles.                                                          

The accompanying financial statements have been prepared assuming that the      
Partnership will continue as a going concern.  As shown in the financial        
statements, the Partnership incurred a net loss of $10,000 for 1998 and has a   
partners' deficit of $41,723.  In addition, the Partnership has no cash flow    
from its operating activities.  These factors, in addition to other factors as  
discussed in Note 5, raise substantial doubt about its ability to continue as   
a going concern.  The financial statements do not include any adjustments       
relating to the recoverability and classification of recorded assets, or the    
amounts and classification of liabilities that might be necessary in the event  
the Partnership cannot continue in operation.                                   

                       /s/ Giunta, Ferlita & Walsh, P.A.
                   Giunta, Ferlita & Walsh, P.A.
    Tampa, Florida
  July 1, 2000

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SEAHAWK II, LTD.                                                                
BALANCE SHEET                                                                   
DECEMBER 31, 1998                                                               

ASSETS                                                                          

CURRENT ASSETS                                                                  

Cash                                                       $       52         
                                                  ==========

LIABILITIES AND PARTNERS' CAPITAL                                               

CURRENT LIABILITIES                                                             
Accounts Payable                                                              
Affiliate                                                 $   41,775        
                                                  ----------
                                                      41,775
                                                  ----------
PARTNERS'CAPITAL (DEFICIT)                                                      
Capital Contributions                                       1,371,250         
Accumulated Deficit                                        (1,412,973)        
                                                  ----------
                                                   (   41,723)
                                                  ----------

                                                  $       52
                                                  ==========

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

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SEAHAWK II, LTD                                                                 
STATEMENT OF OPERATIONS                                                         
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997                                  

                                        1998            1997
                                        --------        --------

REVENUES                                        $   -            $    -         
                                         --------         --------

GENERAL AND ADMINISTRATIVE EXPENSES                                             
Administrative Fees                              10,000           11,000      
                                         --------         --------
                                           10,000           11,000
                                         --------         --------
Total Expenses                                   10,000           11,000      
                                         --------         --------
(LOSS) FROM OPERATIONS                           (10,000)         (11,000)      
                                          --------         ---------
NET (LOSS)                                      $(10,000)        $(11,000)      
                                         ========         ========

The accompanying notes are an integral part of these financial statements       

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SEAHAWK II, LTD.                                                                
PARTNERS' CAPITAL                                                               
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997                                  

                             Subscrip-
Number      Capital        tions
                     Of        Contri-       Receive-      Accumulated
                 Units       butions       able            Deficit
                   ------      -------       ---------     -----------
BALANCE,                                                                        
December 31, 1996        50      $1,371,250     $     -        $(1,391,973)   

NET (LOSS)    1997                                     -        (    11,000)    
                     --      ----------      ---------     -----------
BALANCE,                                                                        
December 31, 1997        50      $1,371,250     $     -        $(1,402,973)   

NET (LOSS)    1998                                     -        (    10,000)    
                     --      ----------      ---------     -----------
BALANCE,                                                                        
December 31, 1998        50      $1,371,250     $     -        $(1,412,973)   
                     --      ----------      ---------     -----------

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

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SEAHAWK II, LTD.                                                                
STATEMENTS OF CASH FLOWS                                                        
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997                                  

                                            1998        1997
                                             ---------   ---------

CASH FLOWS FROM OPERATING ACTIVITIES                                            

Net (loss)                                         $(10,000)     $(11,000)      
Adjustments to reconcile net loss to                                            
net cash used by operating activities:                                        
Increase in accounts payable affiliates            10,000        11,000     
                                            --------      --------
 Total adjustments                            10,000        11,000
                                            --------      --------
Net cash (used)by operating activities               -             -        
                                            --------      --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       -             -          

CASH AND CASH EQUIVALENTS AT                                                    
BEGINNING OF PERIOD                                    52            52     
                                            --------      --------
CASH AND CASH EQUIVALENTS AT                                                    
END OF PERIOD                                    $     52      $     52     
                                            ========      ========
INTEREST PAID                                      $   -         $   -          
                                            ========      ========
TAXES PAID                                         $   -         $   -          
                                            ========      ========

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

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NOTES TO FINANCIAL STATEMENTS                                                   

NOTE 1 - ORGANIZATION AND BUSINESS                                              

Seahawk II, Ltd. (the "Partnership") was formed May 16, 1989 as a Florida       
limited partnership.  The Partnership consists of several limited partners and  
a corporate general partner, Seahawk Deep Ocean Technology, Inc.  The purpose   
of the Partnership is to engage in expeditions to locate, identify, and         
retrieve samples from ship wrecks in waters off the coast of Florida. The       
Partnership has not realized any expedition revenue and since its funds are     
depleted, no expedition revenue can be expected in the future.                  

The Partnership agreement extends through December 31, 2025, and may be         
terminated earlier at any time at the election of the General Partner with the  
consensus of a Majority-In-Interest of the Limited Partners.                    

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Accounting                                                             

As provided in the Partnership Agreement, the Partnership's accounts are        
maintained on the cash basis of accounting for tax purposes, however, for       
financial statement purposes they are adjusted to the accrual basis in order    
to conform with generally accepted accounting principles.                       

Use of Estimates                                                                

The Partnership uses estimates and assumptions in preparing financial           
statements.  Those estimates and assumptions affect the reported amounts of     
assets and liabilities, the disclosure of contingent assets and liabilities,    
and the reported revenues and expenses.                                         

Organizational Costs                                                            

Organizational costs, consisting principally of legal and professional service  
fees, which were incurred during the formation of the Partnership were          
capitalized and amortized over the initial year of operation.                   

Research Costs                                                                  

Research costs, consisting principally of fees paid to a related party for      
information that will be useful in identifying and locating colonial ship       
wrecks, were capitalized and amortized over the first two years of operations.  

Allocation of Profits and Losses                                                

Net losses of the Partnership will be allocated 99% to the Limited Partnership  
and 1% to the General Partner until the limited partners' capital accounts      
have been reduced to zero, thereafter, the net losses will be allocated to the  
general partner.  Net income is first allocated to the Limited Partners based   
on their proportionate ownership interests to the extent of net losses          
previously allocated to them.  Net income is then allocated to the General      
Partner to the extent of net losses previously allocated.  All remaining net    
income is allocated 1% per unit of limited partnership interest, and the        
balance to the General Partner.                                                 

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Distribution of Cash Flow                                                       

Cash available for distribution from Partnership operations represents cash     
generated from Partnership activities after payment of all expenses of the      
Partnership and the establishment of any reserves deemed appropriate by the     
General Partner.  Cash available for distribution will be distributed to the    
extent of the Limited and General Partners' initial cash contributions to the   
Partnership.  Then to the General Partner up to the amount of its credit        
balance if any.  Thereafter, cash available for distributions will be           
distributed 1% per unit of limited partnership interest, and the balance to     
the General Partner.                                                            

Income Taxes                                                                    

In accordance with Section 701 of the Internal Revenue Code, the Partnership    
is not a taxable entity, therefore the results of operations flow through to    
the partners for tax purposes.  The tax returns and the amounts of Partnership  
income or loss distributed to the partners are subject to examinations by       
federal and state taxing authorities.                                           

NOTE 3 - RELATED PARTY TRANSACTIONS                                             

The Partnership has entered into a license agreement with Seahawk               
Oceanographic Services, Inc. (SOS), a corporation of which its two              
shareholders were also two major shareholders of the Partnership's General      
Partner.  Under the terms of the agreement, the Partnership acquired all        
rights, title and interest in , and to certain research, data and other         
information relating to potential ancient and modern shipwreck sites in the     
waters off the east coast of Florida.  In accordance with the agreement, the    
Partnership made an initial payment of $50,000. The agreement further           
specifies that upon confirmation and certification from an independent source   
that the Partnership has discovered the site of a colonial shipwreck in the     
research area specified by the agreement, the Partnership will pay SOS a fee    
of $150,000.  One colonial shipwreck has been found and certified, and the      
Partnership has paid the corresponding fee. Additionally, if the Partnership    
discovers any additional colonial shipwrecks in the research area, which are    
also independently verified, the Partnership will pay SOS an additional fee of  
$200,000 for each additional colonial shipwreck.                                

The Partnership leased a research vessel and on-board electronic research,      
survey and salvage equipment from its General Partner to perform search,        
identification and salvage equipment activities at a rate which the General     
Partner established as reasonable from time to time.  The leasing arrangement   
was terminated at the completion of the project.  In addition, the Partnership  
pays an administrative fee and a fee for personnel services to its General      
Partner.  The total amount incurred by the Partnership during 1998 and 1997     
was $10,000 and $10,000, respectively, and cumulative charges since inception   
total $916,332.                                                                 

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NOTE 4 - CONTINGENCIES                                                          

Consulting Agreement                                                            

The Partnership is contingently liable under a consulting agreement to an       
unrelated company, for an amount equal to ten (10) percent of the total value   
of all artifacts and other valuable items recovered, if any, from the sites     
identified in an agreed research area, after subtraction of any shares taken    
by any government in whose waters the recovered materials are raised, in        
exchange for which the Partnership will secure the services of that company's   
principal employee in connection with the historical and archeological aspects  
of the Partnership operations.  No valuable artifacts or other valuable items   
have been recovered as of December 31, 1998.                                    

Legal Aspects of International Salvage                                          

The question of legal ramifications with regard to the recovery of shipwrecks   
raises a number of issues.  Salvors, historical interests and individuals       
claiming ownership based on the payment of insurance claims all have potential  
claims on goods brought up from the sea floor.                                  

An entity responsible for the salvage of a sunken vessel and its cargo may      
expect to defend its claim to title against the original owners or their        
successors-in-interest, against rival salvors, and against governments          
asserting a historic interest in the shipwreck or cargo.  Potential claimants   
might include the insurers of the shipwreck as in the SS Central America        
case(Civil Action 87-363-N).  Unless the insurers expressly disclaimed title    
after payment of a claim, and depending on the length of time the ship has      
remained sunken, the insurers might have a valid claim of title to recovered    
objects.                                                                        

NOTE 5 - GOING CONCERN                                                          

The accompanying financial statements have been prepared assuming that the      
Partnership will continue as a going concern.  As shown in the financial        
statements, the Partnership incurred a net loss for 1997 and has an             
accumulated deficit.  In addition, the Partnership has no cash flow from its    
operating activities. These factors raise substantial doubt about its ability   
to continue as a going concern.                                                 

The Partnership is virtually out of money and the partners have decided they    
are not willing to invest additional funds to continue further excavation of    
the wreck site.  The General Partner has been unable to obtain additional       
working capital to work on the Partnership's wreck off Saint Augustine, and in  
December 1994 and again in November 1995 asked the partners to vote on          
terminating the Partnership.  The results of the votes were inconclusive and    
the General Partner will ask the partners to vote again on terminating the      
Partnership.                                                                    

The financial statements of the General Partner indicate that substantial       
doubt exists as to the continuance of its future operations.                    

The financial statements do not include any adjustments relating to the         
recoverability and classification of recorded assets, or the amounts and        
classification of liabilities that might be necessary in the event the          
Partnership cannot continue in operation.                                       

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NOTE 6 - YEAR 2000 COMPLIANCE (UNAUDITED)                                       

The Partnership owns no computers. The General Partner reviewed the effect      
that the year 2000 would have on its essential computer systems, especially     
those related to its ongoing operations and its internal control systems,       
including the preparation of financial information.                             

The General Partner's computer systems are used primarily for basic             
accounting, word processing, spreadsheet applications and access to the         
inter-net and world wide web.                                                   

The General Partner employs three PC computers with year 2000 compliant         
hardware. The General Partner does not depend on any specialized computer       
hardware that might have become non-functional due to year 2000 problems.       

The General partner utilizes commonly used software packages, the vendors of    
which had all addressed the issue of year 2000 compliance, and the General      
Partner did not experience any year 2000 related software problems.             

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Report of Independent Certified Public Accounts                                 

To the Partners of                                                              
Eagle Partners, Ltd.                                                            
Tampa, Florida                                                                  

We have audited the accompanying statement of net assets (liabilities) in       
liquidation of Eagle Partners, Ltd. (a Florida limited partnership) as of       
December 31, 1998 and the related statements changes in net                     
assets(liabilities) in liquidation on December 31, 1998, and statements of      
operations, partners' capital and cash flows for the years ended December 31,   
1998 and 1997.  These financial statements are the responsibility of the        
Partnership'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 also includes assessing the accounting         
principles used and significant estimates made by management, as well as        
evaluating the overall financial statement presentations.  We believe that our  
audits provide a reasonable basis for our opinion.                              

As described in Note 5, the Partnerships's policy is to prepare its financial   
statements on a liquidation basis of accounting.                                

In our opinion, the financial statement referred to above presents fairly, in   
all material respects, the net assets (liabilities) in liquidation of Eagle     
Partners, Ltd. (a Florida limited partnership) as of December 31, 1998, the     
changes in net assets in liquidation and the results of its operations,         
changes in partners' capital and its cash flows for the years ended December    
31, 1998 and 1997, in conformity with generally accepted accounted principles.  

             /s/ Giunta, Ferlita & Walsh, P.A.
         Giunta, Ferlita & Walsh, P.A.
Tampa, Florida      
July 1, 2000        

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EAGLE PARTNERS, LTD.                                                            
STATEMENT OF NET ASSETS (LIABILITIES) IN LIQUIDATION                            
DECEMBER 31, 1998                                                               

ASSETS                                             $      -                     
                                 -----------

LIABILITIES AND PARTNERS' CAPITAL                  $      -                     
                                 -----------
                              $      -
                                 -----------
NET LIABILITIES IN LIQUIDATION                     $      -                     
                                 ===========

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

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EAGLE PARTNERS, LTD.                                                            
STATEMENT OF CHANGES IN NET ASSETS (LIABILITIES) IN LIQUIDATION                 
ON DECEMBER 31, 1998                                                            

INCREASE IN NET ASSETS (LIABILITIES) IN LIQUIDATION                             

Adjustments of Estimated Values                    $ 1,162,515                  
                                 -----------
                                 $ 1,162,515
PARTNERS' DEFICIT ON HISTORICAL BASIS                                           
PRIOR TO RESTATEMENT ON LIQUIDATION BASIS          (1,162,515)                
                                 -----------
ENDING NET LIABILITIES IN LIQUIDATION              $      -                     
                                 ===========

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

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EAGLE PARTNERS, LTD.                                                            
STATEMENT OF OPERATIONS-HISTORICAL BASIS                                        
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997                                  

                                1998            1997
                                -----------    -----------

REVENUE                                     $    -        $     -               
                                ---------     ----------

GENERAL AND ADMINISTRATIVE EXPENSES            10,000         21,817            
                                ---------     ----------

LOSS FROM OPERATIONS                          (10,000)       (21,817)           
                                ---------     ----------

OTHER EXPENSE                                                                   
Interest Expense                              (5,000)        (4,932)          
                                ---------     ----------
                                    (5,000)        (4,932)
                                ---------     ----------
NET LOSS                                    $ (15,000)    $  (26,749)           
                                =========     ==========

The accompanying notes are an integral part these financial statements.         

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EAGLE PARTNERS, LTD.                                                            
STATEMENT OF PARTNERS' CAPITAL HISTOICAL BASIS                                  
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997                                  

         Number        Capital
                        of            Contri-    Accumulated
                      Units         butions      Deficit
                        -----         -------    -----------

BALANCE, December 31, 1997           3         $150,100    $(1,297,615)         

NET (LOSS) 1998                                             (   15,000)         
                           --         --------     -----------
BALANCE, December 31, 1998           3         $150,100    $(1,312,615)         
                           ==         ========     ===========

The accompanying notes are an integral part these financial statements.         

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EAGLE PARTNERS, LTD.                                                            
STATEMENTS OF CASH FLOWS HISTORICAL BASIS                                       
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997                                  

                                          1998        1997
                                        ----------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES                                            

Net (loss)                                       $( 15,000)  $( 26,749)         
                                       ---------   ---------
Adjustments to reconcile net loss to                                            
net cash used by operating activities:                                        
Increase in  accounts payable                     15,000      26,749        
                                       ---------   ---------
Total adjustments                               15,000      26,749      
                                       ---------   ---------
Net cash (used)by operating activities                -           -             

CASH FLOWS FROM INVESTING ACTIVITIES                  -           -             
                                       =========   =========

CHANGE IN CASH AND CASH EQUIVALENTS                   -           -             
                                       =========   =========
CASH AND CASH EQUIVALENTS AT:                                                   
BEGINNING OF YEAR                                    -           -            
                                       =========   =========
END OF YEAR                                     $    -      $    -            
                                       =========   =========
INTEREST PAID                                    $    -      $    -             
                                       =========   =========
TAXES PAID                                       $    -      $    -             
                                       =========   =========

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

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EAGLE PARTNERS, LTD.                                                            
NOTES TO FINANCIAL STATEMENTS                                                   

NOTE 1 - ORGANIZATION AND BUSINESS                                              

Eagle Partners, Ltd. (the "Partnership") was formed November 12, 1991 as a      
Florida limited partnership.  The Partnership consists of three limited         
partners and a corporate general partner, Seahawk Deep Ocean Technology, Inc.   
The purpose of the Partnership was to engage in expeditions to locate,          
identify, recover and market the cargo of a shipwreck believed to have sunk     
off the east coast of the United States.                                        

In July 1995, the General Partner became aware of another company, Sea Miners,  
Inc., which was also searching for the same shipwreck. In order to pool         
research and resources and to remove all-or-nothing competition, the            
Partnership and Sea Miners, Inc. formed a joint venture.  In March 1995, the    
joint venture was formalized into a new Partnership called Eagle Miners, Ltd.   

The original Partnership agreement was valid through December 31, 1995, and     
was extended to December 31, 1999, by a unanimous vote of the partners. The     
Partnership was terminated on December 31, 1999.                                

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Accounting                                                             

As provided in the Partnership Agreement, the Partnership's accounts were       
maintained on the cash basis of accounting for tax purposes, however, for       
financial statement purposes they were adjusted to the accrual basis in order   
to conform with generally accepted accounting principles.                       

As of December 31, 1998, it was the management's intention liquidate the        
Partnership, and from that date the Partnership has measured its assets and     
liabilities at the amounts of cash and cash equivalents expected in             
liquidation and reports changes in estimates when they are known. The           
financial statements have been shown on the original historical basis up to     
and including December 31, 1998, and restated at that date on the new           
liquidation basis.                                                              

Use of Estimates                                                                

The Partnership uses estimates and assumptions in preparing financial           
statements.  Those estimates and assumptions affect the reported amounts of     
assets and liabilities, the disclosure of contingent assets and liabilities,    
and the reported revenues and expenses.                                         

Income Taxes                                                                    

In accordance with Section 701 of the Internal Revenue Code, the Partnership    
is not a taxable entity, therefore the results of operations flow through to    
the partners for tax purposes.  The tax returns and the amounts of Partnership  
income or loss distributed to the partners are subject to examinations by       
federal and state taxing authorities.                                           

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Allocation of Profits and Losses                                                

Net losses of the Partnership are allocated 99% to the Limited Partners and 1%  
to the General Partner until the limited partners' capital accounts have been   
reduced to zero.  All allocations of net losses thereafter are made solely to   
the General Partner.  Net income was to be first allocated to the Limited       
Partners based on their proportionate ownership interests to the extent of net  
losses previously allocated to them.  Net income was then to be allocated to    
the General Partner to the extent of net losses previously allocated. All       
remaining net income was to be allocated on a per unit of limited partnership   
interest as follows:                                                            

Each $50,000 unit will receive 2.5% of the first $1 million of income           
allocated, 2% of the second $1 million allocated, 1.5% of the third $1 million  
allocated, 1% of the fourth $1 million allocated, 0.5% of anything over $4      
million allocated and the balance to the General Partner.                       

Distribution of Cash Flow                                                       

Cash available for distribution from Partnership operations represents cash     
generated from Partnership activities after payment of all expenses of the      
Partnership and the establishment of any reserves deemed appropriate by the     
General Partner.  Had cash been available for distribution it would have been   
distributed to the extent of the Limited and General Partners' initial cash     
contributions to the Partnership.  Thereafter, cash available for               
distributions would have been distributed as follows:                           

Each $50,000 unit will receive 2.5% of the first $1 million distributed, 2% of  
the second $1 million distributed, 1.5% of the third $1 million distributed,    
1% of the fourth $1 million distributed and  1% of anything over $4 million     
distributed. The General Partner would have received the balance of any         
distribution.                                                                   

NOTE 3 - RELATED PARTY TRANSACTIONS                                             

The Partnership leased a research vessel and  on-board electronic research,     
survey and salvage equipment from its General Partner to perform search,        
identification and salvage activities at a rate which the General Partner       
established as reasonable from time to time. The total amount incurred by the   
Partnership in 1998, 1997 and cumulative since inception are $none, $none and   
$1,117,680 respectively, of which $1,028,570 is in accounts payable at          
December 31, 1998.                                                              

In June 1992, the General Partner received loans of $200,000 from unrelated     
parties and $50,000 from a related party.  The lenders would have received (in  
addition to other considerations) an aggregate of 6.25% of the General          
Partner's share of the net profit, if any, from the sale of any recovered       
cargo by the Partnership.                                                       

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NOTE 4 - CONTINGENCIES                                                          

Joint Venture Agreements                                                        

The Partnership operated under a joint venture agreement with a researcher who  
provided the research and data for a 19th Century shipwreck off the east coast  
of the United States.  According to the researcher, the vessel was believed to  
have a valuable cargo of gold coins on board at the time of the sinking,        
although there is no assurance that the researcher is correct or that the       
shipwreck will be located.                                                      

Pursuant to the terms of the original joint venture agreement, the researcher   
was to receive twenty percent (20%) of any items recovered from the ship        
provided that it is located in the designated search area in return for his     
research and data.  The Partnership was responsible for conducting the search   
and recovery of the shipwreck and if successful, for marketing any cargo which  
is recovered.  The partnership was to receive eighty percent (80%) of any       
recovery.                                                                       

The joint venture agreement required the partnership to dedicate the vessel     
R/V. Seahawk (or a similar vessel with similar equipment) to work on this       
project at least 120 days during 1992, and each year thereafter, beginning not  
later than May 30 of each year.  The joint venture agreement was amended in     
June 1994. The amended agreement required the partnership to work on the        
project for at least 60 days during 1994.  The partnership did not meet this    
schedule and was in default on this agreement.  In such an event, the           
agreement provided that all rights to conduct search and/or salvage efforts     
relative to this wreck would revert to the researcher.  The General Partner     
negotiated an extension to the joint venture agreement under which the          
researcher's share of any successful recovery was reduced to ten per cent       
(10%) and the requirement for the partnership to work on the project for a      
minimum period each year was removed. In return the General Partner agreed to   
issue the researcher 60,000 shares of its Common Stock.                         

Under the terms of the Partnership Agreement, after accounting for losses       
previously allocated, net income was to be allocated on a per unit of Limit     
Partnership interest as follows:                                                

Each $50,000 unit was to receive 5% of the first $1 million of income           
allocated; 4% of the second $1 million allocated; 3% of the third $1 million    
allocated; 2% of the fourth $1 million allocated; 1% of anything over $4        
million allocated and the balance to the General Partner.                       

In early 1995, the General Partner became aware of another company ("Sea        
Miners, Inc.") that was searching for the same shipwreck (code named "Golden    
Eagle") and in order to pool research and resources and to remove               
all-or-nothing competition, the Partnership and Sea Miners formed an equal      
joint venture to search for the vessel.  The joint venture was operated via a   
Florida Limited Partnership called Eagle Miners Ltd. The Partnership and Sea    
Miners were equal and joint general partners of Eagle Miners.  As a result of   
the joint venture, each of the limited partners of Eagle Partners agreed to     
reduce their entitlement of any distribution to one-half of the original        
amount in the paragraph above.  Eagle Miners contracted to use the General      
Partner for all of its offshore services.  $100,000 was raised by the joint     
venture for the initial inspection of certain sites within which Sea Miners     
had revealed possible shipwrecks in its search area. The joint venture          
intended to raise additional financing for this project but none was            
forthcoming.                                                                    

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Legal Aspects of International Salvage                                          

Legal ramifications with regard to the recovery of shipwrecks raise a number    
of issues. Salvors historical interests and individuals claiming ownership      
based on the payment of insurance claims all have potential claims on goods     
brought up from the sea floor. An entity responsible for the salvage of a       
sunken vessel and its cargo may expect to defend its claim to title against     
the original owners or their successors -in -interest, against rival salvors,   
and against governments asserting a historic interest in the shipwreck or       
cargo.                                                                          

Potential claimants might include the insurers of the shipwreck as in the SS    
Central America case (Civil Action 87-363-N).  Unless the insurers expressly    
disclaimed title after payment of a claim, and depending on the length of time  
the ship has remained sunken, the insurers might have a valid claim of title    
to recovered objects.                                                           

NOTE 5 - LIQUIDATION BASIS                                                      

The accompanying financial statements have been prepared in conformity with     
generally accepted accounting principles. The historical financial statements   
contemplate continuation of the Partnership as a going concern. However the     
Partnership was terminated at its agreed termination date of on December 31,    
1999. The financial statements at December 31, 1998 have been prepared on a     
liquidation basis.                                                              

NOTE 6 - YEAR 2000 COMPLIANCE (UNAUDITED)                                       

The Partnership owns no computers. The General Partner did not experience any   
year 2000 related hardware or software problems.                                

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SIGNATURES  

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange  
Act, the Registrant has duly caused this Amendment to be signed on its behalf   
by the undersigned thereunto duly authorized.                                   

                         SEAHAWK DEEP OCEAN TECHNOLOGY, INC.

Dated: July 25, 2000               By:/s/ John T. Lawrence                      
                             John T. Lawrence, Chief Executive
   Officer

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

Signature                   Capacity                          Date              
---------                   --------                          ----              

/s/ John T. Lawrence        Chief Executive Officer,     July 25, 2000          
John T. Lawrence            President, Chairman of the                          
  Board, Principal Financial
  and Accounting Officer and
a Director              

/s/ John P. Balch           Secretary, Chief Operating   July 25, 2000          
John P. Balch               Officer, and Director                               

/s/ J. Robert Shaw          Director                     July 25, 2000          
J. Robert Shaw                                                                  

/s/ Dennis Parisi           Director                     July 25, 2000          
Dennis Parisi                                                                   

Dates Referenced Herein   and   Documents Incorporated by Reference

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Filed on:		7/26/00							10QSB
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For Period End:		12/31/98		1		86
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