-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MLDu5VoNK4LYk6IGxKAIol/Ym4CDNnVtWNJ8l6zMA/E+CYSOQyOCm3IaaXHcfR+N 2CIwHfM7XlHsnW+tZdr3Sw== 0000844788-95-000017.txt : 19951221 0000844788-95-000017.hdr.sgml : 19951221 ACCESSION NUMBER: 0000844788-95-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951220 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FISCHER WATT GOLD CO INC CENTRAL INDEX KEY: 0000844788 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880227654 STATE OF INCORPORATION: NV FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-17386 FILM NUMBER: 95603150 BUSINESS ADDRESS: STREET 1: 1410 CHERRYWOOD DRIVE CITY: COEUR DALENE STATE: ID ZIP: 83814 BUSINESS PHONE: 2086646757 MAIL ADDRESS: STREET 2: 1410 CHERRYWOOD DRIVE CITY: COEUR DALENE STATE: ID ZIP: 83814 10QSB 1 FORM 10-QSB FOR 10-31-95 U. S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended OCTOBER 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-17386 FISCHER-WATT GOLD COMPANY, INC. (Exact name of small business issuer as specified in its charter) NEVADA 88-0227654 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 1410 Cherrywood Drive, Coeur d'Alene, ID 83814 (Address of principal executive offices) (208) 664-6757 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares of Common Stock, $0.001 par value, outstanding as of December 1, 1995 was 18,411,500 Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] Part 1 - Financial Information Item 1. Financial Statements FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED BALANCE SHEETS October 31, January 31, ASSETS 1995 1995 (Unaudited) ------- ------- CURRENT ASSETS: Cash $ 494,000 $ 6,000 Marketable securities - 358,000 Inventories 460,000 - Accounts receivable 600,000 2,000 Other current assets 14,000 6,000 ------- ------- Total current assets 1,568,000 372,000 PROPERTY PLANT AND EQUIPMENT 1,873,000 437,000 Less: Accumulated depreciation, depletion and amortization (127,000) ( 36,000) ------- ------- 1,746,000 401,000 OTHER ASSETS Investments- Compania Minerales de Copan S.A. de C. V. - 91,000 Minera Montoro S.A. de C.V. 12,000 - Other assets 33,000 27,000 ------- ------- Total assets $3,359,000 $ 891,000 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 972,000 $ 226,000 Bank indebtedness 208,000 - Notes payable 300,000 500,000 Income and other taxes payable 94,000 4,000 ------- ------- Total current liabilities 1,574,000 730,000 LONG TERM LIABILITIES: Nonrecourse debt (Note 5) - 87,000 Bank debt 45,000 - --------- -------- Total liabilities 1,619,000 817,000 COMMITMENTS AND CONTINGENCIES, Notes 1,4,6,8 and 9 SHAREHOLDERS' EQUITY (DEFICIT): Common stock, $0.001 par value, 50,000,000 shares authorized; 16,145,000 shares outstanding at October 31 and 12,344,000 at January 31, 1995 16,000 12,000 Additional paid-in capital 6,278,000 5,773,000 Deficit (4,554,000) (5,711,000) --------- --------- Total shareholders' equity 1,740,000 74,000 --------- --------- Total liabilities and shareholders' equity $3,359,000 $ 891,000 ========== ========= The accompanying notes are an integral part of these balance sheets. FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended October 31, October 31, 1995 1994 1995 1994 -------- -------- -------- -------- REVENUES: Sales of precious metals $595,000 $ - $595,000 $ - Interest - - - 27,000 Gain on sale of mineral interest 887,000 760,000 1,530,000 869,000 ------- ------- -------- ------- 1,482,000 760,000 2,125,000 896,000 --------- ------- --------- -------- COSTS AND EXPENSES: Production costs 304,000 - 304,000 - Depreciation and depletion 127,000 - 127,000 - General corporate 80,000 54,000 244,000 204,000 Exploration expense - - 3,000 - Other expense - net 135,000 - 98,000 - Abandoned properties and prospects 4,000 - 183,000 197,000 Interest expense 119,000 24,000 143,000 63,000 Gain on marketable securities - 6,000 (206,000) - ------- -------- -------- -------- 769,000 72,000 896,000 464,000 ------- -------- -------- -------- Income before tax provision 713,000 688,000 1,229,000 432,000 TAX PROVISION 61,000 10,000 72,000 11,000 ------- -------- -------- -------- NET INCOME $652,000 $678,000 $1,157,000 $421,000 ======== ======== ========= ======== NET INCOME PER SHARE AND COMMON EQUIVALENT $ .04 $ .05 $ .08 $ .03 ===== ===== ===== ===== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING (000's) 15,193 12,344 14,973 12,344 The accompanying notes are an integral part of these statements. FISCHER-WATT GOLD COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended October 31, 1995 1994 -------- -------- CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net income $1,157,000 $ 421,000 Adjustments for non-cash items Change in value of marketable securities ( 206,000) - Gain on sale of mineral interest (1,530,000) (869,000) Abandoned properties and prospects 183,000 197,000 General exploration 3,000 - Depreciation and depletion 128,000 2,000 Accrued interest added to principal balance - 59,000 Gain on sale of equipment - ( 20,000) Proceeds from sale of marketable securities 580,000 - Gain on sale of marketable securities (16,000) - Other (36,000) - Change in non-cash working capital items related to operations Inventories (162,000) - Accounts receivable (111,000) - Other current assets (42,000) (2,000) Accounts payable (155,000) (117,000) Bank indebtedness ( 13,000) - Income and other taxes payable 44,000 10,000 -------- -------- Total (176,000) (319,000) -------- -------- INVESTING ACTIVITIES: Proceeds from sales of mineral interests 150,000 155,000 Proceeds of partial disposition of property - 43,000 Property acquisition and development costs (16,000) - Bonuses applied to reduce cost basis - 33,000 Investment in Honduran Corporation (22,000) (116,000) Investment in Mexican Corporation (15,000) ( 10,000) Proceeds from sale of equipment - 2,000 Equipment acquired ( 3,000) ( 3,000) -------- -------- Total 94,000 104,000 -------- -------- FINANCING ACTIVITIES: Proceeds from issuance of stock 570,000 - Proceeds from long-term debt - 116,000 -------- -------- Total 570,000 116,000 -------- -------- NET INCREASE (DECREASE) IN CASH 488,000 ( 99,000) CASH, at beginning of period 6,000 106,000 ------- -------- CASH, at end of period $494,000 $ 7,000 ======= ======= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ - $ 7,000 SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT NONCASH ACTIVITIES: Application of gain on sale of Honduran Corporation to cost of shares of Bermuda Corporation $ 887,000 - Liabilities assumed in connection with purchase of Oronorte $1,000,000 - Application of bonus on unproven property to offset accrued interest expense $ 25,000 $ 50,000 Short term debt incurred in connection with purchase of shares of GOC $ 300,000 - Cost basis of trading securities sold in connection with (gain) loss on trading securities $ 564,000 - Application of reclamation bond to offset cost basis of mineral property $ - $ 40,000 Short-term debt eliminated in connection with sale of mineral interest $ 605,000 $ 94,000 Accrued interest eliminated in connection with sale of mineral interest $ 52,000 $ - Cost basis in mineral interests sold in connection with debt eliminated $ 164,000 $ 86,000 Fair market value of vehicles and office equipment offset against wages and expenses due to former employees $ - $ 33,000 The accompanying notes are an integral part of these statements. FISCHER-WATT GOLD COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTES DISCLOSURES The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included in these financial statements. These financial statements and notes thereto should be read in conjunction with the financial statements and related notes included in Fischer-Watt Gold Company, Inc.'s ("Fischer-Watt" or the "Company") Annual Report on Form 10-K for the year ended January 31, 1995 ("Form 10-K"). Operating results for the three and nine months ended October 31, 1995 are not necessarily indicative of the results that are expected for the full year ending January 31, 1996. (2) ACCOUNTS RECEIVABLE Accounts receivable are comprised of the following at the dates indicated: October 31, January 31, 1995 1995 ---------- ---------- Trade receivables $191,000 - Note receivable 108,000 - Taxes recoverable 232,000 - Miscellaneous 69,000 $ 2,000 -------- -------- $600,000 $ 2,000 ======= ====== On August 28, 1995, the Company agreed to loan Great Basin Management Co., Inc., up to $108,447 to assist Great Basin in retaining property positions held by its subsidiary, Great Basin Exploration and Mining Co., Inc. The loan was fully funded in the quarter ended October 31, 1995. There is no requirement for Great Basin Management Co., Inc. to repay the loan unless the proposed merger between Fischer-Watt Gold Company, Inc., and Great Basin Management Co., Inc. does not take place. In the event that the merger does not occur by certain dates (as amended), the entire amount is due and payable within 30 days together with interest at 11.75% per annum. The loan is secured by a note and a security interest in all of Great Basin Management Co., Inc.'s interest in all of the outstanding shares of stock in Great Basin Exploration and Mining Co., Inc. (3) INVENTORIES Inventories are comprised of the following at October 31, 1995: Concentrate inventory $ 275,000 Materials and supplies 185,000 -------- $ 460,000 ======== (4) ACQUISITIONS (a.) Acquisition of El Limon Mine Effective August 24, 1995, the Company acquired directly and indirectly, 95.7% of the issued and outstanding common shares of Compania Minera Oronorte S.A. ("Oronorte"), a company incorporated under the laws of Colombia. Details of the consideration paid for the acquisition are comprised as follows: Interest in Minerales de Copan $1,000,000 Assumption of liabilities 1,000,000 Less: Forgiven indebtedness to Greenstone Resources Ltd. (115,000) ---------- $1,885,000 ========= Details of the net assets acquired are as follows: Value attributed to: Working capital (including cash of $185,000) $ 7,000 Property, plant and equipment 1,878,000 --------- $1,885,000 ========= Concurrent with the closing agreement dated October 20, 1995, the Company entered into an agreement with Dual Resources Ltd. ("Dual"), whereby the Company purchased 2,800,000 shares of Oronorte from Dual for cash consideration of $300,000, which amount was paid by Greenstone to Dual on behalf of the Company. Reference is made to Note 6 - Notes Payable. As part of the agreement with Dual, an obligation of 213,712,000 Colombian pesos, or $225,000 was canceled. This obligation of Oronorte arose during 1994 when Oronorte acquired a property known as El Carmen from Dual in consideration for 2,800,000 shares of Oronorte and a promissory note in the amount of 213,712,000 Colombian pesos ($225,000) net of applicable withholding taxes. the cancellation of the debt has been displayed as a reduction of the carrying value of mineral properties. (b.) (Acquisition of Great Basin Management Co., Inc. On August 28, 1995, the Company signed a letter of intent to enter into a business combination with Great Basin Management Company, Inc. ("GBM") GBM is a privately held minerals exploration company based in Reno, Nevada. GBM owns Great Basin Exploration and Mining Company, Inc. ("GBEM") which has several mineral properties in Nevada's Battle Mountain - Eureka Trend, a major gold producing district in central Nevada in addition to mineral interests in Arizona and Canada. Under the terms of the letter of intent, GBM and Fischer-Watt shall combine through the merger of GBM with and into a newly formed, wholly-owned subsidiary of Fischer-Watt Gold Company, Inc. GBM is actively negotiating with prospective joint venture partners on several of its properties and evaluating other mineral prospects. At the closing, as to be defined in a definitive agreement, Fischer-Watt will issue 4,125,660 shares of its common stock. The letter of intent is subject to each party's due diligence and obtaining any necessary approvals. Either party may terminate the letter of intent if the definitive agreement has not been executed by December 31. 1995 (as extended). (5) PROPERTY AND EQUIPMENT A summary of the cost basis of mineral properties, plant and equipment and prospects as of October 31 and January 31, 1995, is as follows: October 31 January 31 ---------- ---------- El Limon $1,705,000 $ - Oatman (United Western), Arizona 10,000 136,000 Modoc, California 72,000 72,000 Minas de Oro, Honduras - 59,000 Tuscarora, Nevada 45,000 77,000 America Mine, California 18,000 16,000 La Victoria, Honduras 23,000 - Other mineral interests (each less than $40,000) - 27,000 --------- -------- $1,873,000 $ 387,000 ========= ======== (6) NOTES PAYABLE Notes payable, as at the dates indicated, are comprised of the following: October 31, January 31 1995 1995 ---------- ----------- Greenstone Resources Ltd. $300,000 $ - Kennecott Exploration Co. - 500,000 ---------- ---------- $300,000 $500,000 ========== ========== (a) Greenstone Resources Ltd. Pursuant to an agreement among Dual, Greenstone and the Company, dated October 20, 1995, Greenstone effected a payment of $300,000 to Dual on behalf of the Company. Reference is made to Note 4 - Acquisition of El Limon Mine. The note bears interest at the rate of 10% per annum and is payable, in full, on June 20, 1996. Payment of this note has been guaranteed by a shareholder of the Company. (b) Kennecott Loan In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal and interest on this loan were repayable in monthly installments of $100,000 beginning August 1, 1992. The loan bore interest at the higher of 10% or prime plus 5% and was secured by the Company's interest in the America Mine property. The Company was in default as to payment of principal and interest on this loan from August 1,1992 until May 16, 1995 when the note and associated interest were canceled in conjunction with the sale of the Company's mineral interest in the Minas de Oro, Honduras property. (7) GREENSTONE RESOURCES TRANSACTIONS In March 1994, the Company accepted an offer from Greenstone to acquire an option to purchase all of Fischer-Watt's interests in the San Andres project in Honduras. As partial consideration for the option, Greenstone loaned the Company some funds. Greenstone exercised its option on October 31, 1994 by forgiving the loan balance paying Fischer-Watt a further $56,000 and issuing it $700,000 worth of Greenstone common stock, valued at the time of exercise. Upon exercise of the option, Greenstone was assigned Fischer-Watt's option to acquire 51% of Compania Minerales de Copan, S.A. de C.V. from Milner Consolidated Silver Mines (25.5%) and North American Palladium Resources (25.5%) as well as all of Fischer-Watt's other rights and interest in the San Andres project subject to the shares described below. Minerales de Copan owns the San Andres project which produces gold from a small open pit, heap leach operation within the project boundaries. On August 4, 1994, the Company received the first instalment of a loan from Greenstone Resources Canada Ltd. The loan was negotiated as part of the San Andres option agreement. The loan was to provide all of the funds to purchase up to nine percent of the shares of Compania Minerales de Copan S.A. de C.V. ("Copan"). The loan was nonrecourse as to both principal and interest to the Company and was to be repaid out of dividends, if any, from the Copan shares. The shares were pledged to Greenstone as collateral for the loan which was due on or before December 31, 1999. At October 31, 1995 this loan plus associated accrued interest, totaling $115,000, were eliminated in conjuntion with the sale of the Company's interest in the Copan shares. On August 28, 1995, the Company agreed to convey all of these shares and options to acquire additional shares as part of the purchase price for the shares of Greenstone of Colombia. Under the terms of the agreement which closed on October 20, 1995, the nonrecourse debt and accrued interest associated with this debt was forgiven. (8) COMMITMENTS Property Leases The Company's property interests require minimum payments to be made, or work commitments to be satisfied, to maintain ownership of the property not in production. However, all of these payments may be avoided by timely forfeiture of the related property interest. If the joint venture partner, or the Company, fails to meet these commitments, the Company could lose its rights to explore, develop or mine the property. The table below lists the various properties and the required financial commitments. PROPERTY COMMITMENTS For the year ending October 31, 1996 Lease Work J.V. Net FWG Property Payments Commit. Total Share Cost - -------- -------- -------- -------- -------- -------- America $48,000 $104,000 $152,000 $152,000 $ - La Victoria 25,000 50,000 75,000 - 75,000 Tuscarora - 2,000 2,000 2,000 - Modoc 6,000 - 6,000 6,000 - Oatman - - - - - Other 17,000 187,000 204,000 179,000 25,000 ------ -------- -------- -------- ------- Totals $96,000 $343,000 $439,000 $339,000 $100,000 ====== ======= ======= ======= ======== (9) CONTINGENCIES Future Financing and Realization While Fischer-Watt was profitable in the latest fiscal year, it had negative cash flow from operations in the latest fiscal year and suffered losses from operations and negative cash flow from operations in each of its prior years. The entire profit was attributable to sales of mineral interests. The Company has not yet established sustaining income or cash flow from operations. It is currently funding its operations from proceeds of a private placement of the Company's common stock and has previously funded its operations from the sale of stock received as part of the sale price of a mineral interest. The ability of the Company to continue as a going concern is dependent upon establishing successful mining operations or additional financing, or disposition of some of the Company's assets. While the Company has been successful in raising cash from these sources in the past, there can be no assurance that its cash raising efforts will succeed. On October 20, 1995, the Company acquired the El Limon Mine in northern Colombia, effective August 24, 1995. Reference is made to Notes 4 and 6. Part of the consideration paid for the acquisition is the assumption of $1,000,000 in liabilities, settlement of an obligation to Dual aggregating 213,712,000 Colombian pesos ($225,000) and assumption of certain lease obligations. The undiscounted value of unpaid and future lease payments as at August 24, 1995 was approximately $400,000. Colombian law regulates the movement of foreign currency into and out of Colombia. Prior to the Company's assumption of day-to-day management of the affairs of its newly acquired Colombian operation, Greenstone had invested approximately $2,300,000 in excess of the funds legally registered in Colombia as an investment. The ability to repatriate this amount may be impaired and the amount subject to certain penalties and interest. The Company has undertaken to approach the appropriate regulatory authorities to resolve this issue. The amount of such penalties, if any, have not been determined. The payment of $300,000 to Dual was made to acquire the shares of Oronorte and the debt of Oronorte to Dual Resources Ltd. of Colombia. As a consequence of Greenstone making the payment in United States dollars to Dual, the parent company, in Canada, rather than in Colombia in pesos, the debt is not considered settled for purposes of Colombian law. The Company has not determined the penalties and interest or income tax effect, if any, as a consequence of the method of payment. As at October 31, 1995, Greenstone Resources Ltd of Colombia ("GOC"), owed approximately $120,000 on account of unpaid 1993 income and other taxes. Further, the branch has a refund of $140,000 due in respect of unsettled 1994 income and resource taxes. The Colombian tax authorities do not allow the right to offset the liability against the taxes recoverable amount. By paying the 1993 tax liability, the Company would obtain a refund of 1994 taxes and cause recision of approximately $210,000 of penalties and interest accrued in respect of unpaid taxes. The Company has not determined the effect, if any, of paying these taxes to obtain recision of penalties and interest on behalf of Greenstone. Subject to final assessment of liabilities and Greenstone's right to offset certain assets against liabilities, the Company has determined the excess of liabilities, as defined by the Closing Agreement dated October 20, 1995, to be $411,000. This amount may be reduced by the amount of tax penalties and interest rescinded or increased by assessed penalties and interest for perceived violations of Colombian foreign currency regulations. Management is unable to comment on Greenstone' ability or willingness to fund its share of excess liabilities in accordance with the terms of the Closing Agreement dated October 20, 1995. (10) SUBSEQUENT EVENTS (a) Bank Debt Subsequent to October 31, 1995, the Company settled $140,000 of its Colombian unit's bank debt by selling its office building in Medellin to a creditor bank. (b) Leases Further, the Company has entered into agreements to deliver two leased drill rigs to a third party and settle the outstanding lease obligations in respect of the two other drills. This will reduce the future aggregate lease payments by approximately $83,000. (c) Financing Further, the Company completed a private placement that was started in October 1995. Approximately $300,000 was received for the sale of 2,266,700 units. The securities sold in the private placement were units, priced at $.30 per unit, each consisting of two shares of common stock and a warrant to purchase one share of common stock at an exercise price of $.30 through August 31, 1997. These securities were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations On October 31, 1994 Greenstone Resources Ltd. (Greenstone) exercised its option to purchase the company's rights and interests in the San Andres gold project located in Honduras. Under the terms of this agreement, Greenstone paid $105,000 in cash for this option and forgave 95% of the funds loaned to the Company during merger negotiations which were terminated in February 1994. In exercising their option, Greenstone paid consideration consisting of forgiveness of the remaining 5% of the merger loan, $55,000 in cash and 427,300 shares of Greenstone. At the time of issue, these shares had a value of $700,000. Pursuant to certain terms contained in the agreement, Greenstone agreed to advance the Company the funds required to acquire approximately 9% of the issued and outstanding shares of the San Andres project which was held numerous shareholders. As a result of the San Andres transaction, for the first time in several years, the Company had enough cash on hand to schedule repayment of creditors and begin searching for mineral operations opportunities. In order to conserve the limited cash, the Reno office was closed in December of 1994 and all administrative operations were consolidated in Coeur d'Alene, Idaho. In May 1995, the Company closed the sale of its 20% interest in the Minas de Oro gold project in Honduras to Cerenex Financial A. V., is a subsidiary of Tombstone Explorations Co. Ltd. of Vancouver, B. C. Under the terms of this sale, the Company received consideration consisting of $150,000 in cash and cancellation of its $500,000 note plus accrued interest to Kennecott Exploration Company. In a separate transaction, Kennecott also sold its 80% interest in the Minas de Oro property. With the receipt of this cash and cancellation of the debt, the Company dramatically improved its financial condition. Acquisition of Colombian Unit In August 1995, the Company entered into an agreement with Greenstone Resources Ltd. to acquire the El Limon Mine which is an underground gold mine in northern Colombia, and the rights to several exploration concessions. This mine produced gold for the past six years. The consideration paid to acquire the direct and indirect ownership of the El Limon Mine consisted of: 1. The Company's approximate 9% interest in the San Andres project in Honduras, 2. Assumption of a maximum of $1,000,000 in debt and accounts payable owed by GOC and Oronorte, and 3. Assumption of $375,000 in equipment lease payments. In addition to the interest in the El Limon received from Greenstone, Greenstone also canceled the remaining $115,000 debt owed to them by the Company. The Company assumed operational control of Oronorte on August 24, 1995 and immediately took the following steps: 1. Entered into negotiations with all creditors and suppliers to schedule payments of overdue debt. 2. Settled certain lease obligations subsequent to the period end, with the consequence that future cash payments for equipment not in use have been substantially reduced. The leased equipment which, at August 24, 1995, required payments up to $375,000 consisted of: a. Three Longyear Model 44 surface diamond drills, b. One Longyear Model 38 surface diamond drill, c. One cyanide leaching plant designed to leach flotation concentrates and produce gold dore on site. The drills, with the exception of one Model 44 were put up for sale and as of December 15, 1995, two of them have been sold. The funds received have been applied against future payment obligations to the leasing company. A study of the cyanide leaching plant feasibility had been made by Greenstone and indicated that its operation was not advantageous. This plant has been put up for sale and as of December 15th, the Company is negotiating with a prospective buyer. 3. Began efforts to close the books of GOC and Oronorte as at August 24, 1995. This work has been substantially completed and Greenstone has been notified that the bank debt and accounts payable amount will exceed the Company's obligation to pay certain defined liabilities by $411,000. Greenstone was also notified of the existence of certain contingent liabilities. Reference is made to Note 9 to Financial Statements. 4. Began efforts to raise initial funds to support operations at El Limon while studies were made to determine changes and additions which should be made in the overall operations of Oronorte. This resulted in the Company raising a net amount of approximately $820,000 through completion of a private placement. The securities sold were units priced at $.30 per unit, each unit consisting of two shares of common stock and a warrant to purchase one additional share at an exercise price of $.30 through August 31, 1997. Operations Production from the El Limon Mine comes from a single vein which on average dips at 42 degrees and has an average width of 1.6 feet. The average grade of this vein is 1.2 ounces of gold per ton. This is high grade ore; however, the geometry of the vein makes it necessary to mine to a width of 4.0 feet which dilutes the grade of the ore by 60%. An initial step has been taken to alleviate this dilution by setting up a program of hand sorting the combination of ore and waste after it is blasted and before it is hoisted to the surface. The waste removed in the hand sorting is put back into mined out areas underground. The vein is a white, opaque quartz which normally breaks into pieces under two inches in diameter when blasted and the waste rock which is a dark-colored granite or gneiss breaks into much larger pieces. At the present time, the blasted ore and waste is very dirty and the visual separation based on the color differential is not possible. Hand separation must be made on fragmentation size alone. Despite this limitation, however, a fifteen percent increase in the ore grade being hoisted and sent to the processing plant has been recorded in October. The next step in this grade control program will be to wash the blasted ore and waste so that a separation by color can be made. However, washing will send a large volume of very fine material containing a large percentage of gold to the bottom of the mine shaft. At the present time, the mine does not have the ability to recover this material and bring it to the surface. A preliminary engineering study indicates that a slurry pumping system can accomplish this task at an estimated cost of $70,000. The processing plant at El Limon is capable of treating 100 tons per day. As the efficiency of the grade control program is increased, less waste will be fed to the plant, thus making room for more ore to be processed on a daily basis. This additional ore can be obtained from expansion of operations at El Limon and/or development of other properties within reasonable ore delivery range of the present processing plant. Mine Development Expansion of the El Limon will be difficult because it is serviced through a small interior shaft, which in the past has only been advanced one level at a time as reserves were depleted on the previous level. At the present time, the majority of production is coming from Level 5, approximately 600 feet below the surface. Sinking the shaft below each working level is a slow process as the waste from the shaft advance competes for hoisting time with the ore production. Skip capacity in this shaft is only one ton. Development of two other properties, under control of Oronorte, has begun in order to augment production from the El Limon. The first of these, the La Aurora is approximately six kilometers from the El Limon processing facility. At this property, an interior shaft has been extended 130 feet down on a vein and work is in progress drifting horizontally along this strong structure to develop ore reserves. To date approximately 200 feet of the vein has been exposed. Some ore grade material has been encountered but no ore reserves have been developed. While these results are disappointing, it is the nature of the veins in this district to run in and out of ore as they are mined. The second property, the Juan Vara is approximately two kilometers from the El Limon processing plant. A report on this property has been written by a professor of geology of the College of Mines in Medellin, Colombia. In this report a discussion of previous production describes a vein similar in grade and structure to the El Limon. During a recent visit to the Juan Vara by the geologic staff of El Limon, old collapsed workings were found and samples taken from the vein exposed in a stream bed assayed 0.21 ounces of gold per ton. A diamond drill is being moved on to the property now and several holes will be drilled to indicate the attitude of the vein below the old workings. The geometry of both the La Aurora and the Juan Vara vein in relation to the surface topography will make it very easy to develop them (if warranted) with rubber tired mining equipment and a rehabilitated one cubic yard LHD (Load Haul Dump) has been purchased in the United States and will be shipped along with spare parts on the 28th of December. Arrangements have also been made to send a mechanic/operator to the El Limon to train employees in the operation and maintenance of this equipment. As noted earlier, Fischer-Watt assumed operating control of the El Limon Mine on August 24, 1995 and began to make modifications to operational practices. In October, the mine produced 1,032 ounces of gold compared to an average monthly production rate of 611 ounces for the previous nine months. Since August 24, 1995, the mine has produced a total of 1,783 ounces of gold to the account of the Company. In November, 1,025 ounces of gold were produced. An equipment breakdown in the processing plant in early December along with the Christmas holiday will probably hold December production to approximately 900 ounces of gold. The improvement in gold production for October and November was in part due to the improved grade of ore in some working areas of the mine and the first phase of the grade control program which has been put into play. It is anticipated that the improved grade from existing working areas will continue through March of 1996. During that time, new development along the vein will continue on level 5 of the mine. In addition to this work, the shaft has been extended approximately 150 feet below Level 5 and development of Level 6 will begin during January 1996. In order to proceed with this development, additional track mounted equipment must be purchased. In order to save money, this equipment will be rehabilitated, used equipment which is not available in Colombia. A search has begun in the United States through reputable used equipment dealers. It is estimated that $300,000 will be required to purchase this equipment. Several weeks after negotiating the purchase of the El Limon Mine with Greenstone, Fischer-Watt finalized the purchase of another property in the area with the assistance of Greenstone. In 1994 Greenstone attempted to sell 40% of Oronorte on both the Bogota and Medellin stock exchanges in order to raise money for expanding Oronorte production from 10,000 ounces of gold to 30,000 ounces. The Carmen was the property which was to be used for this expansion. Behre Dolbear & Company, Inc., performed an evaluation study for Greenstone on this plan and pronounced it economically feasible. Behre Dolbear study carries reserves on the Carmen at 194,073 ounces. Fischer-Watt finalized the purchase of this property for $300,000 with a note payable June 20, 1996. Payment of this note has been guaranteed by a shareholder of the Company. Reference is made to Note 6 to Financial Statements. A large Colombian gold dredging company, Mineros de Antioquia has asked the Company if it would be interested in a joint venture on the Carmen property. Management has written them a proposal whereby Mineros may earn a forty percent working interest in the property by spending exploration funds sufficient to bring it to the bankable feasibility stage. At that point, both companies would make proportionate contributions to continue the development of the property. Initial reaction to this proposal has been positive and two of the Company's management team will travel to Medellin on January 10, 1996 to continue negotiations. Merger The Company has signed a letter of intent in principle to acquire Great Basin Management Co., Inc. and its wholly-owned, privately-held subsidiary Great Basin Exploration and Mining Co., Inc., of Reno, Nevada. Great Basin and its wholly-owned subsidiary will merge into a newly-formed, wholly-owned subsidiary of the Company. The Company will issue approximately 4,126,000 shares of its common stock as consideration for the transaction. Great Basin has several key properties in Nevada's Battle Mountain-Eureka Trend and has recently farmed out one of these properties to Digger Resources, a Canadian company, and another property to Cominco Ltd., a large Canadian mining company. In both instances, Great Basin retains a 20% carried interest in the property until feasibility. Financial Condition and Results of Operations The following is a discussion of the Company's current financial condition as well as its operations for the three months and nine months ended October 31, 1995 (fiscal 1996) and October 31, 1994 (fiscal 1995). This discussion should be read in conjunction with the Financial Statements in Item 1 of this report as well as the Financial Statements in Form 10-K for the fiscal year ended January 31, 1995 on file with the Securities and Exchange Commission, as the discussion set forth below is qualified in its entirety by reference thereto. LIQUIDITY AND FINANCIAL POSITION As of October 31, 1995, the Company had $494,000 in cash and a consolidated working capital deficiency of $6,000. During October and November the Company completed a private placement which raised approximately $820,000 to finance the expansion and operation of Fischer-Watt's El Limon Mine in Colombia. The securities sold in the private placement were units, priced at $.30 per unit, each consisting of two shares of common stock and a warrant to purchase one share of common stock at an exercise price of $.30 through August 31, 1997. These securities were not registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. On August 28, 1995, the Company signed an agreement to purchase 100% of Greenstone Resources Ltd.'s wholly-owned Colombian branch, Greenstone of Colombia ("GOC"). Greenstone of Colombia owns 94.9% of Compania Minera Oronorte S. A. ("Oronorte"). Under the terms of the agreement which closed on October 20, 1995, Fischer-Watt conveyed all rights and interests it held in Compania Minerales de Copan S.A. de C.V. ("Copan") to Greenstone Resources Ltd. In return, Fischer-Watt acquired all ownership rights of GOC which include GOC's interest in Oronorte which owns an operating gold mine and related cash and receivables and saleable gold in inventory of not less than $450,000, subject to certain liabilities not exceeding $1,000,000 and equipment lease obligations not exceeding $375,000. Fischer-Watt has taken operating control of GOC and its subsidiaries and their respective operations. The El Limon is an underground mine in the Department of Antioquia in northern Colombia. It produces gold concentrates that are exported to Japan for smelting. The Company assumed operation of the mine on August 24, 1995 and has produced 1,783 ounces of gold and 1,697 ounces of silver through October 31, 1995. During this initial operating period, the Company has been conducting engineering studies to explore the feasibility of expanding production, improving operating efficiency and reducing costs. The Company is searching for funds to subsidize operations until planned changes in operations can take effect. At December 1, 1995, the Company had enough cash to fund the next three months of operations. On August 28, 1995, the Company signed a letter of intent to enter into a business combination with Great Basin Management Company, Inc. ("GBM") GBM is a privately held minerals exploration company based in Reno, Nevada. GBM owns Great Basin Exploration and Mining Company, Inc. ("GBEM") which has several mineral properties in Nevada's Battle Mountain - Eureka Trend, a major gold producing district in central Nevada in addition to mineral interests in Arizona and Canada. Under the terms of the letter of intent, GBM and Fischer-Watt shall combine through the merger of GBM with and into a newly formed, wholly-owned subsidiary of Fischer-Watt Gold Company, Inc. GBM is actively negotiating with prospective joint venture partners on several of its properties and evaluating other mineral prospects. At the closing, as to be defined in a definitive agreement, Fischer-Watt will issue 4,125,660 shares of its common stock. The letter of intent is subject to each party's due diligence and obtaining any necessary approvals. Either party may terminate the letter of intent if the definitive agreement has not been executed by December 31. 1995 (as extended). On August 28, 1995, the Company agreed to loan GBM up to $108,000 for specified purposes in connection with maintaining certain mineral property positions. There are no plans to loan GBM any additional funds. As of December 1, 1995, all of the loan had been funded. The loan is secured by all of GBM's interest to all of the outstanding shares of GBEM. There is no requirement to repay the loan or any interest thereon unless the proposed merger between the Company and GBM has not occurred by December 31, 1995, in which event the entire amount of the loan and accrued interest shall be due and payable on February 1, 1996 (as extended). In March 1992, Kennecott loaned Fischer-Watt $500,000. Principal and interest on this loan were repayable in monthly installments of $100,000 beginning August 1, 1992. The loan bore interest at the higher of 10% or prime plus 5% and was secured by the Company's interest in the America Mine property. The Company was in default as to payment of principal and interest on this loan from August 1, 1992 until May 16, 1995 when the note and associated interest were canceled in conjunction with the sale of the Company's mineral interest in the Minas de Oro, Honduras property. Reference is made to Note 6 to Financial Statements.) Short-Term Liquidity While Fischer-Watt was profitable in the latest fiscal year, it had negative cash flow from operations in the latest fiscal year and suffered losses from operations and negative cash flow from operations in each of its prior years. The most of the profit recorded in the current nine months is attributable to sales of mineral interests. The Company has not yet established sustaining income or cash flow from its Colombian operation. It is currently funding its operations from proceeds of a private placement of the Company's common stock and has previously funded its operations from the sale of saleable securities received as consideration for the sale price of a mineral interest. The ability of the Company to continue as a going concern is dependent upon establishing successful mining operations or additional financing, or disposition of some of the Company's assets. While the Company has been successful in raising cash from these sources in the past, there can be no assurance that its cash raising efforts will succeed. Net cash utilized in operating activities during the first nine months of fiscal 1996 was $176,000 compared to $319,000 used during the first nine months of the prior year. The increase in cash is derived from three principal sources during the current period. These sources are proceeds from the sale of Greenstone common shares, disposal of mineral interests and the issuance of 3,800,800 shares in the capital of the company. For the period August 24, 1995 through October 31, 1995, the Company injected $498,000 into the Colombian unit to reduce payables, bank debt and to ensure adequate operating supplies at the mine. Subsequent to October 31, 1995, the Company sold its Medellin office building to settle certain bank debt aggregating approximately $140,000. In addition the Company has settled certain lease obligations with the consequence that future cash payments for equipment not in use have been substantially reduced. The leased equipment which required payments up to $375,000 consisted of four surface diamond drill rigs and a cyanide leaching plant. The drills, with the exception of one were put up for sale and as of December 15, 1995, two of them have been sold. The funds received have been applied against future payment obligations to the leasing company. A study of the cyanide leaching plant feasibility had been made by Greenstone and indicated that its operation was not advantageous. This plant has been put up for sale and as of December 15,1995 the Company is negotiating with a prospective buyer. Long-Term Liquidity The Company plans to continue its search for long-term debt or equity capital to fund its operating and exploration activities until these activities can be funded from production of mineral resources. Reference should also be made to comments under the heading short-term liquidity. RESULTS OF OPERATIONS Three Months Ended October 31, 1995 Compared with Three Months Ended October 31, 1994 El Limon Mine The El Limon Mine is a small underground deposit with an expected life of approximately five years. Development and mining operations were begun in November 1990. During the three months ended October 31, 1995, 1367 ounces of gold were sold at an average price of $383 per ounce. The cost per ounce of gold produced was $242 per ounce. The Company's income from operation of the El Limon Mine was $164,000. These results are not indicative of what might be expected for a full year as the Company may increase or decrease the amount of exploration and development expense to ensure more work areas in the mine that would expand production. Results for the current period and comparable period ended October 31, 1994 includes gains on the disposal of mineral interests and sales of shares of Greenstone acquired during the prior year. At October 31, 1995, all of the Greenstone shares had been sold and the Company presently has no plans to sell other mineral prospects. General corporate costs will continue to increase as the activity level of the Company expands in response to increased legal, accounting and travel costs associated with administration of an active, growing public company. Copan Share Purchase and Sale On August 4, 1994, the Company received the first instalment of a loan from Greenstone Resources Canada Ltd. The loan was negotiated for in the San Andres option agreement. The loan is to provide all of the funds to purchase up to nine percent of the shares of Compania Minerales de Copan S.A. de C.V.(Copan). The loan was non-recourse as to both principal and interest to the Company and was to be repaid out of dividends, if any, from the Copan shares. The shares were pledged to Greenstone as collateral for the loan which was due on or before December 31, 1999. On August 28, 1995, the Company signed an agreement to convey all of the stock and options to acquire stock to Greenstone. Under the terms of the agreement, which was closed on October 20, 1995, the nonrecourse debt and accrued interest associated with this debt was Reference is made to Note to Financial Statements. Other items Abandonments in the quarter ended October 31, 1995 were $6,000 compared with none in the second quarter of fiscal 1995. The El Cerrito, a Minera Montoro property in Mexico was abandoned after Montoro's joint venture partner's exploratory drilling program did not produce encouraging results, and consequently, the property was returned to Montoro. Interest expense increased to $119,000 in the third quarter of fiscal 1996 from $24,000 in the third quarter of fiscal 1995. This increase is due primarily to the inclusion of results of the Colombian unit which experiences high interest rates on outstanding debts and unpaid taxes. Interest expense in future periods will be substantially less as the Company completes the reduction in debt. Interest expense for the third quarter ended October 31, 1995 includes interest and penalties, in respect of unpaid taxes, aggregating approximately $60,000. There is a resolution before the Colombian Congress that would have the effect, if enacted, of rescinding penalties and interest aggregating approximately $210,000 accrued on the Colombian unit's books at October 31, 1995. Nine Months Ended October 31, 1995 Compared with Nine Months ended October 31, 1994 Sale of Minas de Oro mineral interest On February 28, 1995, Tombstone Explorations Co. Ltd. ("Tombstone"), a Vancouver-based mining and exploration company entered into a letter agreement with Fischer-Watt to purchase Fischer-Watt's interest in the Minas de Oro property in Honduras. Minas de Oro was joint ventured with Kennecott Exploration Company ("Kennecott") who had an 80 percent working interest. Tombstone agreed to buy the Kennecott interest and to acquire Fischer-Watt's $500,000 promissory note to Kennecott, as well as Fischer-Watt's interest in the property. Tombstone paid Fischer-Watt $150,000 in cash and delivered for cancellation, Fischer-Watt's $500,000 promissory note to Kennecott plus all accrued interest. The transaction closed on May 16, 1995 with the sale of the Minas de Oro interests to Cerenex Financial A. V. V., a subsidiary of Tombstone. The sale resulted in a gain of $641,000. Reference is made to Note 6 to Financial Statements. Sale of Option on San Andres In the nine months ended October 31, 1994, a gain of $109,000 was realized from the sale of an option to purchase Fischer-Watt's interest in the San Andres property. Other items Abandonments decreased from $197,000 in the first nine months of fiscal 1995 to $183,000 in the first nine months of fiscal 1996. The Oatman property in Arizona was partially abandoned after an independent evaluation indicated that it was unlikely that its cost would be fully recovered based on the current mineral lease on the property. The $125,000 writedown reduced its net cost basis to $10,000. The Tuscarora mineral interest in Nevada was partially abandoned in the amount of $32,000 based on the results of the same independent evaluation leaving the remaining basis at $45,000. The Rio Tinto property in Honduras was abandoned when an exploration program conducted at the end of fiscal 1995 and the beginning of fiscal 1996 could not confirm mineral values discovered under earlier exploration programs. Rio Tinto had a cost basis of $22,000. In the nine months ended October 31, 1994, Sukut, Costa Rica, having a cost basis of $197,000 was the only property abandoned. Part II - Other Information Item 3. Defaults Upon Senior Securities In March 1992, Kennecott Exploration Company loaned Fischer-Watt $500,000. Principle and interest on this loan was repayable in monthly installments of $100,000 beginning August 1, 1992. The loan bore interest at the higher of 10% or prime plus 5% and was secured by the Company's interest in the America Mine property. On May 16, 1995 the note and associated interest were canceled in conjunction with the sale of the Company's mineral interest in the Minas de Oro, Honduras property thus curing the default. (See above and Note 4 to Financial Statements.) Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit Item 601 No. Category Exhibit 1 2 Letter of Intent dated August 28, 1995 whereby Fischer- Watt Gold Company, Inc., and Great Basin Management Company, Inc., agree to form a business combination. 2 2 August 28, 1995 agreement between Fischer-Watt Gold Company, Inc., and Greenstone Resources Ltd., whereby Fischer-Watt agrees to purchase 100% of Greenstone Resources Ltd.'s wholly-owned Colombian branch, Greenstone of Colombia ("GOC"). 3 10 Letter Agreement between BMR Gold Corporation and Fischer-Watt Gold Company, Inc., regarding the America Mine Property effective September 20, 1989, and filed as Exhibit 19.1 to Form 10-Q filed November 20, 1989 and incorporated herein by reference. 4 10 Fischer-Watt Gold Company, Inc., non-qualified stock option plan of May 1987 and filed as Exhibit 36.10 to Form 10-K filed April 23, 1991 and incorporated herein by reference. 5 10 Employment Agreement effective September 1, 1993 between Fischer-Watt Gold Company, Inc., and George Beattie whereby Fischer-Watt agrees to employ Mr. Beattie for a two-year period as Chief Executive Officer and filed as Exhibit 20.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 6 10 Loan Agreement dated November 12, 1993 between Fischer- Watt Gold Company, Inc., and Greenstone Resources Ltd., whereby Greenstone agreed to lend Fischer-Watt working capital during the prospective merger's due diligence period and filed as Exhibit 21.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 7 10 Letter from Greenstone Resources Ltd., dated February 1,1994 to Fischer-Watt Gold Company, Inc., whereby Greenstone advised that the merger agreement dated November 2, 1993 between Greenstone and Fischer-Watt Gold is terminated as of that date and filed as Exhibit 22.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 8 10 Option Agreement between Greenstone Resources Ltd., and Fischer-Watt Gold Company, Inc., dated March 24, 1994, whereby Greenstone has the right to purchase all of Fischer-Watt's interest in the San Andres property in Honduras and filed as Exhibit 23.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 9 10 Exploration Agreement between Fischer-Watt Gold Company, Inc.'s 50% owned Mexican company, Minera Montoro S.A. de C.V., and Gatro South America Holdings Limited (GSA) dated March 25, 1994, whereby GSA funds a Generative Exploration program in Baja California, Mexico and filed as Exhibit 24.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 10 10 Compromise Wage and Expense Settlement Agreement dated March 22, 1994 between Fischer-Watt Gold Company, Inc., and W. Perry Durning, a former employee, whereby terms for payment of unpaid wages and expenses were accepted by the parties and filed as Exhibit 25.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 11 10 Compromise Wage and Expense Settlement Agreement dated March 22, 1994 between Fischer-Watt Gold Company, Inc., and Joel Heath, a former employee, whereby terms for payment of unpaid wages and expenses were accepted by the parties and filed as Exhibit 26.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 12 10 Compromise Wage and Expense Settlement Agreement dated March 22, 1994 between Fischer-Watt Gold Company, Inc., and Robert Gordon, a former employee, whereby terms for payment of unpaid wages and expenses were accepted by the parties and filed as Exhibit 27.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 13 10 Compromise Wage and Expense Settlement Agreement dated March 22, 1994 between Fischer-Watt Gold Company, Inc., and Frank L. Hillemeyer, a former employee, whereby terms for payment of unpaid wages and expenses were accepted by the parties and filed as Exhibit 28.10 to Form 10-K filed May 11, 1994 and incorporated herein by reference. 14 10 Compromise Wage and Expense Settlement Agreement dated March 22, 1994 between Fischer-Watt Gold Company, Inc., and Michael D. Johnson, a former employee, whereby terms for payment of unpaid wages and expenses were accepted by the parties and filed as Exhibit 29.10 to Form 10-Q filed June 14, 1994 and incorporated herein by reference. 15 10 Agreement to Assign Leases dated July 7, 1994 between Fischer-Watt Gold Company, Inc., and Kennecott Exploration Company whereby Fischer-Watt agrees to assign its interests in the Modoc property located in Imperial County, California to Kennecott, reserving a Net Smelter Return royalty. This agreement was filed as Exhibit 22.10 to Form 10-Q filed September 13, 1994 and incorporated herein by reference. 16 10 Letter agreement between Fischer-Watt Gold Company, Inc., and La Cuesta International (LCI) dated August 11, 1994 whereby LCI agrees to lease the Oatman property located in Mohave County, Arizona. This agreement was filed as Exhibit 23.10 to Form 10-Q filed September 13, 1994 and incorporated herein by reference. 17 10 Stock Pledge Agreement between Fischer-Watt Gold Company, Inc., and Greenstone Resources Canada Ltd., dated July 31, 1994 whereby Fischer-Watt grants a security interest in shares of Compania Minerales de Copan S.A. de C.V., acquired under Stock Loans, to Greenstone. This agreement was filed as Exhibit 24.10 to Form 10-Q filed September 13, 1994 and incorporated herein by reference. 18 10 Option Agreement - Lock-up Agreement between Fischer- Watt Gold Company, Inc., and Greenstone Resources Ltd., dated October 17, 1994 whereby the San Andres option agreement was amended to provide for an early advance of $50,000 as partial payment of the option in exchange for restrictions on the disposition of Greenstone shares. This agreement was filed as Exhibit 22.10 to Form 10-Q filed December 14, 1994 and incorporated herein by reference. 19 10 English translation of an Exploration Agreement between Fischer-Watt's Mexican subsidiary, Minera Montoro, S.A. de C.V. and Minera Cuicuilco, S.A. de C.V. dated October 18, 1994 whereby Minera Cuicuilco is granted the rights to explore the Cerrito property in Baja California, Mexico and was filed as Exhibit 23.10 to Form 10-Q filed December 14, 1994 and incorporated herein by reference. 20 10 Acquisition agreement dated November 10, 1994 among Greenstone Resources Canada Ltd., Greenstone Resources Ltd., and Fischer-Watt Gold Company, Inc., whereby the parties finalize the Option Agreement of March 24, 1994 to purchase the San Andres property in Honduras and modify the Lock-Up Agreement dated October 17, 1994. This agreement was filed as Exhibit 29.10 to Form 10-K filed May 15, 1995 and incorporated herein by reference. 21 10 Letter agreement dated February 28, 1995 between Tombstone Explorations Co. Ltd., and Fischer-Watt Gold Company, Inc., whereby Tombstone agrees to purchase all of Fischer-Watt's rights to the Minas de Oro property in Honduras. This agreement was filed as Exhibit 30.10 to Form 10-K filed May 15, 1995 and incorporated herein by reference. 22 10 Letter agreement dated April 13, 1995 between Begeyge Minera Limitada and Fischer-Watt Gold Company, Inc., whereby Fischer-Watt will acquire rights to the La Victoria, Honduras property. This agreement was filed as Exhibit 31.10 to Form 10-K filed May 15, 1995 and incorporated herein by reference. 23 10 Option whereby Fischer-Watt Gold Company, Inc., grants Gerald D. Helgeson an option to purchase 100,000 shares of Fischer-Watt restricted common stock. This option was filed as Exhibit 32.10 to Form 10-K filed May 15, 1995 and incorporated herein by reference. 24 10 Option whereby Fischer-Watt Gold Company, Inc., grants Larry J. Buchanan an option to purchase 100,000 shares of Fischer-Watt restricted common stock. This option was filed as Exhibit 33.10 to Form 10-K filed May 15, 1995 and incorporated herein by reference. 25 10 Amendment dated April 20, 1995 to Agreement to Assign Leases dated July 7, 1994 between Fischer-Watt Gold Company, Inc., and Kennecott Exploration Company whereby Fischer-Watt agrees to assign its interests in the Modoc property located in Imperial County, California to Kennecott and filed as Exhibit 28.10 to Form 10-QSB filed June 14, 1995 and incorporated herein by reference. 26 10 Asset Purchase Agreement dated May 16, 1995 between Fischer-Watt Gold Company, Inc., and Cerenex Financial A. V. V., whereby the February 28, 1995 sale of Minas de Oro is closed and filed as Exhibit 29.10 to Form 10-QSB filed June 14, 1995 and incorporated herein by reference. 27 10 Option effective June 1, 1995, replacing an option filed as Exhibit 26.10 to Form 10-QSB filed June 14, 1995, whereby Fischer-Watt Gold Company, Inc., grants Gerald D.Helgeson an option to purchase 200,000 shares of Fischer-Watt restricted common stock and filed as Exhibit 31.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 28 10 Option effective June 1, 1995, replacing an option filed as Exhibit 27.10 to Form 10-QSB filed June 14, 1995, whereby Fischer-Watt Gold Company, Inc., grants Larry J. Buchanan an option to purchase 100,000 shares of Fischer-Watt restricted common stock and filed as Exhibit 32.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 29 10 Option effective June 1, 1995 whereby Fischer-Watt Gold Company, Inc., grants Anthony P. Taylor an option to purchase 100,000 shares of Fischer-Watt restricted common stock and filed as Exhibit 33.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 30 10 Option effective June 1, 1995 whereby Fischer-Watt Gold Company, Inc., grants Kelly Boatright an option to purchase 25,000 shares of Fischer-Watt restricted common stock and filed as Exhibit 34.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 31 10 Option effective June 1, 1995 whereby Fischer-Watt Gold Company, Inc., grants Donald N. Lawrence III an option to purchase 100,000 shares of Fischer-Watt restricted common stock and filed as Exhibit 35.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 32 10 Loan agreement dated August 28, 1995, between Fischer- Watt Gold Company, Inc., and Great Basin Management Company, Inc., whereby Fischer-Watt agrees to loan Great Basin Management Company, Inc., up to $108,000 and filed as Exhibit 36.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 33 10 Amendment dated October 31, 1995 to Loan agreement dated August 28,1995, between Fischer-Watt Gold Company, Inc., and Great Basin Management Company, Inc., whereby Fischer-Watt changes the dates of the loan to Great Basin Management Company, Inc. 34 10 Extension of Time For Payment of Secured Promissory Note dated October 31, 1995 to the Loan agreement dated August 28, 1995, between Fischer-Watt Gold Company, Inc., and Great Basin Management Company, Inc., whereby Fischer-Watt agrees to extend the time for payment of the Secured Promissory Note. 35 10 Second Amendment dated November 30, 1995 to Loan agreement dated August 28,1995, between Fischer-Watt Gold Company, Inc., and Great Basin Management Company,Inc., whereby Fischer-Watt changes the dates of the loan to Great Basin Management Company, Inc. 36 10 Second Extension of Time For Payment of Secured Promissory Note dated October 31, 1995 to the Loan agreement dated August 28, 1995, between Fischer-Watt Gold Company, Inc., and Great Basin Management Company, Inc., whereby Fischer-Watt agrees to extend the time for payment of the Secured Promissory Note. 37 10 Promissory Note dated October 20, 1995 whereby Greenstone Resources of Colombia Ltd., a wholly owned Bermuda subsidiary of Fischer-Watt Gold Company, Inc., promises to pay $300,000 to Greenstone Resources Ltd. 38 11 Statement regarding per share earnings for the quarterly period ended July 31, 1995 and filed as Exhibit 36.10 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 39 11 Statement regarding per share earnings for the quarterly period ended October 31, 1995. 40 27 Financial Data Schedule for the quarterly period ended April 30, 1995 and filed as Exhibit 30.10 to Form 10-QSB filed June 14, 1995 and incorporated herein by reference. 41 27 Financial Data Schedule for the six month period ended July 31,1995 and filed as Exhibit 39.27 to Form 10-QSB filed September 15, 1995 and incorporated herein by reference. 42 27 Financial Data Schedule for the nine month period ended October 31, 1995. 43 99 Promissory Note from Fischer-Watt Gold Company, Inc. to Kennecott Exploration Company in the amount of $500,000 dated March 25, 1992 and filed as Exhibit 44.28 to Form 10-K filed April 22, 1993 and incorporated herein by reference. 44 99 Minutes of Special Meeting of Board of Directors of Fischer-Watt Gold Company, Inc., dated October 19, 1994, whereby George Beattie's employment contract dated September 1, 1993 is extended to September 1, 1997. These minutes were filed as Exhibit 28.99 to Form 10-K filed May 15, 1995 and incorporated herein by reference. (b) Reports on Form 8-K 1. The Registrant filed a Current Report on Form 8-K on November 3, 1995 reporting that on October 20, 1995, the Company had acquired from subsidiaries of Greenstone Resources Ltd. all of the outstanding shares of Greenstone Resources of Colombia Ltd., a Bermuda Corporation and 470,000 shares of Compania Minera Oronorte S. A. Greenstone Resources of Colombia Ltd., owns 61,450,000 shares of Compania Minera Oronorte S. A. Also on such date, the Company acquired 2,800,000 shares of Compania Minera Oronorte S. A., from Dual Resources. This resulted in Fischer-Watt Gold Company, Inc., owning 99.9% of Compania Minera Oronorte S. A., which owns the El Limon Mine in Colombia, South America. 2. The Registrant filed a Current Report on Form 8-K on November 17, 1995 reporting that on November 15, 1995, the Company gave notice that it has made an offering of securities not registered under the Securities Act of 1933 in the form of a news release dated November 15, 1995. SIGNATURES In accordance with the requirements of the Exchange Act the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FISCHER-WATT GOLD COMPANY, INC. December 20, 1995 By /s/ George Beattie George Beattie, President, Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer), Chairman of the Board and Director EX-10 2 AMENDED LOAN AGREEMENT AMENDMENT TO LOAN AGREEMENT This Amendment to Loan Agreement is entered into this 31st day of October, 1995, by and between Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Lender"), and Great Basin Management Co., Inc., a Nevada corporation (the "Borrower"). WHEREAS the Borrower and the Lender have entered into that certain loan agreement dated August 28, 1995 (the "Loan Agreement"), pursuant to which the Borrower has borrowed from the Lender and the Lender has lent to the Borrower, NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants, terms and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the parties hereto agree that Section 2.1 of the Loan Agreement is hereby amended to read, in its entirety, as follows: 2.1 There is no requirement to repay the Loan or any interest thereon unless the Proposed Merger has not occurred by December 1, 1995, in which event the entire amount of the Loan and accrued interest shall be due and payable on January 1, 1996 (the "Due Date"). IN WITNESS WHEREOF the parties have caused this Amendment to Loan Agreement to be executed by their respective officers duly authorized. FISCHER-WATT GOLD COMPANY, INC. By: /s/ George Beattie President GREAT BASIN MANAGEMENT CO., INC. By: /s/ Dr. Anthony Taylor President EX-10 3 EXTENSION OF TIME EXTENSION OF TIME FOR PAYMENT OF SECURED PROMISSORY NOTE Fischer-Watt Gold Company, Inc., a Nevada corporation ("FWG"), and Great Basin Management Co., Inc., a Nevada corporation (the "Corporation"), hereby agree to extend the time for payment of that certain Secured Promissory Note, dated August 28, 1995, in the face amount of $108,447, executed by the Corporation in favor of FWG (the "Note"), to January 1, 1996 and that after such extension the liabilities of the Corporation pursuant to the Note shall remain as if no extension had been had. FISCHER-WATT GOLD COMPANY, INC. By: /s/ George Beattie President GREAT BASIN MANAGEMENT CO., INC. By: /s/ Dr. Anthony Taylor President EX-10 4 SECOND AMENDMENT SECOND AMENDMENT TO LOAN AGREEMENT This Second Amendment to Loan Agreement is entered into this 30th day of November 1995, by and between Fischer-Watt Gold Company, Inc., a Nevada corporation (the "Lender"), and Great Basin Management Co., Inc., a Nevada corporation (the "Borrower"). WHEREAS the Borrower and the Lender have entered into that certain loan agreement dated August 28, 1995 (the "Loan Agreement"), as amended October 31, 1995, pursuant to which the Borrower has borrowed from the Lender and the Lender has lent to the Borrower, NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants, terms and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby expressly acknowledged, the parties hereto agree that Section 2.1 of the Loan Agreement is hereby amended to read, in its entirety, as follows: 2.1 There is no requirement to repay the Loan or any interest thereon unless the Proposed Merger has not occurred by January 1, 1995, in which event the entire amount of the Loan and accrued interest shall be due and payable on February 1, 1996 (the "Due Date"). IN WITNESS WHEREOF the parties have caused this Amendment to Loan Agreement to be executed by their respective officers duly authorized. FISCHER-WATT GOLD COMPANY, INC. By: /s/ George Beattie President GREAT BASIN MANAGEMENT CO., INC. By: /s/ Dr. Anthony Taylor President EX-10 5 SECOND EXTENSION OF TIME SECOND EXTENSION OF TIME FOR PAYMENT OF SECURED PROMISSORY NOTE Fischer-Watt Gold Company, Inc., a Nevada corporation ("FWG"), and Great Basin Management Co., Inc., a Nevada corporation (the "Corporation"), hereby agree to extend the time for payment of that certain Secured Promissory Note, dated August 28, 1995, in the face amount of $108,447, executed by the Corporation in favor of FWG (the "Note"), to February 1, 1996 and that after such extension the liabilities of the Corporation pursuant to the Note shall remain as if no extension had been had. FISCHER-WATT GOLD COMPANY, INC. By: /s/ George Beattie President GREAT BASIN MANAGEMENT CO., INC. By: /s/ Dr. Anthony Taylor President EX-10 6 PROMISSORY NOTE PROMISSORY NOTE US$300,000 October 20,1995 Toronto, Ontario, Canada FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of Greenstone Resources Ltd.,("Greenstone"), the principal sum of Three Hundred Thousand US Dollars (US$300,000) and interest thereon at the rate of ten percent (10%) per annum. The principal sum of this note and all interest shall be due and payable on June 20, 1996. All payments hereunder shall first be applied to accrued but unpaid interest and the balance, if any, to principal. If, however, Greenstone has incurred costs and expenses of collection in enforcing this note as described below, such payments shall first be applied to accrued but unpaid interest, then to such costs and expenses of collection, and the balance, if any, to principal. The undersigned waives demand, presentment for payment, protest and notice of protest, and non-payment. The undersigned agrees to pay Greenstone all costs and expenses of collection, including without limitation, reasonable attorney's fees and other legal expenses, incurred by Greenstone in enforcing this note. This note shall be governed by and construed in accordance with the law of the Province of Ontario, Canada. GREENSTONE RESOURCES OF COLOMBIA LTD., a Bermuda corporation By: /s/ George Beattie George Beattie, President GUARANTEE For value received, Fischer-Watt Gold Company, Inc., hereby unconditionally guarantees the payment of principal and interest on the foregoing promissory note when and as due in accordance with its terms. FISCHER-WATT GOLD COMPANY, INC., a Nevada Corporation By: /s/ George Beattie George Beattie, President EX-11 7 EARNINGS PER SHARE Fischer-Watt Gold Company, Inc. Computation of Earnings Per Share For the Nine Months Ended October 31, 1995 Assumptions: Three Months Nine Months Ended Ended October 31, 1995 October 31, 1995 Net income for the period $ 652,000 $1,157,000 Common shares outstanding 16,145,000 16,145,000 Options outstanding to purchase equivalent shares 5,747,000 5,747,000 20% limitation on assumed repurchase 3,229,000 3,229,000 Average exercise price per share $ .47 $ .47 Average market value per quarter per common share to be used $ .25 $ .20 Computations: Application of assumed proceeds ($ 2,692,000) Toward repurchase of outstanding common shares at applicable market value $ 807,000 $ 807,000 Reduction of debt 300,000 300,000 Purchase of U.S. Government Securities 1,585,000 1,585,000 _________ _________ $ 2,692,000 $ 2,692,000 Adjustment of net income: Actual net income $ 652,000 $ 1,157,000 Interest increase (5.0%) less 9% tax effect 16,000 48,000 _________ _________ Adjusted net income $ 668,000 $ 1,205,000 Adjustment of shares outstanding: Actual outstanding 12,675,000 12,455,000 Net additional shares issuable (5,747,000 - 3,229,000) 2,518,000 2,518,000 _________ ________ Adjusted shares outstanding 15,193,000 14,973,000 Earnings per share: Before adjustment $ .05 $ .09 After adjustment $ .04 $ .08 EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED OCTOBER 31, 1995 CONTAINED IN FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000844788 FISCHER-WATT GOLD COMPANY, INC. 1,000 U.S. DOLLARS 9-MOS JAN-31-1995 FEB-01-1995 OCT-31-1995 1 494 0 600 0 460 1568 1873 127 3359 1574 300 16 0 0 1724 3359 2289 2125 595 1123 (204) 0 143 1229 72 1157 0 0 0 1157 .09 .08
-----END PRIVACY-ENHANCED MESSAGE-----