10QSB 1 fischer10qsb.txt QUARTERLY REPORT FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-17386 FISCHER-WATT GOLD COMPANY, INC. (Exact name of registrant as specified in its charter) Nevada 88-0227654 --------- ------------ (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1410 Cherrywood Dr, Coeur d'Alene, ID 83814 (Address of principal executive office) (208)-664-6757 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ The number of shares outstanding of each of Issuer's classes of common equity as of April 30, 2001. Common Stock, par value $.001 44,398,384 ----------------------------- ----------- Title of Class Number of Shares Transitional Small Business Disclosure Format yes [ ] No [X] 1 Index Part 1 - Financial Statements..................................................1 1.1 Consolidated Balance Sheet..............................................2 1.2 Consolidated Statements of Operations...................................3 1.3 Consolidated Statements of Cash Flows...................................4 1.4 Basis Of Presentation...................................................4 1.5 Loss per share..........................................................4 1.6 Stockholders' Equity....................................................5 Part 2 - Management's Discussion and Analysis or Plan of Operations............5 2.1 Organization And Business...............................................5 2.2 Liquidity and Capital Resources.........................................5 2.2.1 Short Term Liquidity...............................................5 2.2.2 Long Term Liquidity................................................5 2.3 Results of Operations...................................................6 2.4 Revenues................................................................6 2.5 Costs and Expenses......................................................6 2.6 Commitments and Contingencies...........................................6 2.7 Foreign Currency Exchange...............................................6 2.8 Going Concern Consideration.............................................6 2.9 Subsequent Events.......................................................7 2.10 Cautionary Note Regarding Forward-Looking Statements...................7 Part 3 - Other Information.....................................................7 3.1 Legal Proceedings.......................................................7 3.2 Changes in Securities...................................................7 3.4 Submission of Matters to a Vote of Security Holders.....................7 3.5 Other information.......................................................7 3.6 Exhibits and Reports on Form 8-K........................................7 2 EXCHANGE RATES Except as otherwise indicated, all dollar amounts described in this Form 10(k) Annual Report are expressed in United States (US) dollars. CONVERSION TABLE For ease of reference, the following conversion factors are provided: 1 mile = 1.6093 kilometers 1 metric tonne = 2,204.6 pounds 1 foot = 0.305 meters 1 ounce (troy) = 31.1035 grams 1 acre = 0.4047 hectare 1 imperial gallon = 4.5546 liters 1 long ton = 2,240 pounds 1 liter = 1.057 U.S. quarts FORWARD LOOKING STATEMENTS The Company desires to take advantage of the "safe harbor" provisions contained in Section 27A of the Securities Act of 1933, as amended (the "1933 Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is including this statement herein in order to do so: From time to time, the Company's management or persons acting on the Company's behalf may wish to make, either orally or in writing, forward-looking statements (which may come within the meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act), to inform existing and potential security holders regarding various matters including, without limitation, projections regarding financial matters, timing regarding transfer of licenses and receipts of government approvals, effects of regulation and completion of work programs. Such forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believes," "expect," "anticipate," "goal" or other words that convey the uncertainty of future events or outcomes. Forward-looking statements by their nature are subject to certain risks, uncertainties and assumptions and will be influenced by various factors. Should one or more of these forecasts or underlying assumptions prove incorrect, actual results could vary materially. FISCHER-WATT GOLD COMPANY, INC. AND SUBSIDIARIES Part 1 - Financial Statements 3 Consolidated Balance Sheet April 30, 2001 (Unaudited)
ASSETS Current assets: Cash $ 1 6,998 ---------------- Property and equipment, net 5,462 Other assets 33,889 ---------------- 39,351 $ 56,349 LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities: Accounts payable $ 95,140 Notes payable - shareholders 110,500 Accounts payable and accrued expenses - shareholders 708,363 ---------------- Total current liabilities 914,003 ---------------- Stockholders' (Deficit): Preferred stock, non-voting, convertible, $2 par value, 250,000 shares authorized, none outstanding -- Common stock, $.001 par value, 50,000,000 shares authorized, 44,398,384 shares issued and outstanding 44,398 Additional paid-in capital 14,566,171 Accumulated deficit (15,468,223) ---------------- (857,654) $ 56,349
See the accompanying notes to the consolidated financial statements. 4 Three Months Ended April 30, 2001 and 2000 (Unaudited)
2001 2000 ---------------- ---------------- Revenue $ -- $ -- ---------------- ---------------- Costs and expenses: Exploration 27,805 -- General and administrative 87,303 151,889 ---------------- ---------------- 115,108 151,889 ---------------- ---------------- (Loss) from operations (115,108) (151,889) ---------------- ---------------- Other income and (expense): Other income (expense), net -- 20,791 ---------------- ---------------- -- 20,791 ---------------- ---------------- (Loss) from continuing operations (115,108) (131,098) Discontinued operations: (Loss) from the operations of Oronorte -- (145,990) ---------------- ---------------- Net (loss) $ (115,108) $ (277,088) ================ ================ Per share information - basic and fully diluted Continuing operations $ (0.00) $ (0.00) Discontinued operations (0.00) (0.01) ---------------- ---------------- Net (loss) per share $ (0.00) $ (0.01) ================ ================ Weighted average shares outstanding 44,398,384 40,298,384 ================ ================
See the accompanying notes to the consolidated financial statements. 5 Three Months Ended April 30, 2001 and 2000 (Unaudited)
2001 2000 ---------------- ---------------- Cash flows from operating activities: Net cash (used in) operating activities $ (51,389) $ (29,847) ---------------- ---------------- Cash flows from investing activities: Net cash provided by (used in) investing activities -- -- ---------------- ---------------- Cash flows from financing activities: Proceeds from sale of common shares -- 10,000 Proceeds from note payable -- 20,000 Equity contributions by shareholder 48,000 -- ---------------- ---------------- Net cash provided by financing activities 48,000 30,000 ---------------- ---------------- Increase (decrease) in cash and cash equivalents (3,389) 153 Cash and cash equivalents, beginning of period 20,387 6,185 ---------------- ---------------- Cash and cash equivalents, end of period $ 16,998 $ 6,338 ================ ================
See the accompanying notes to the consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APRIL 30, 2001 (UNAUDITED) 1.4 Basis Of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and Item 310(b) of Regulation SB. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements of the Company as of January 31, 2001 and for the two years then ended, including notes thereto included in the Company's Form 10-KSB. The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. 1.5 Loss per share Basic loss per common share was computed using the weighted average number of common shares outstanding for the periods presented. Diluted information is not presented as the effect of common stock equivalents would be anti-dilutive 6 1.6 Stockholders' Equity During the period ended April 30, 2001 a shareholder of the Company contributed $48,000 to the capital of the Company. Part 2 - Management's Discussion and Analysis or Plan of Operations. The following discussion and analysis covers material changes in financial condition since January 31, 2001 and material changes in the results of operations for the three months ended April 30, 2001, as compared to the same period in 2000. This discussion and analysis should be read in conjunction with "Management's Discussion and Analysis and Results of Operations" included in the Company's Form 10-KSB for the year ended January 31, 2001. 2.1 Organization And Business Fischer-Watt Gold Company, Inc. ("Fischer-Watt" or the "Company"), its subsidiaries, and joint ventures are engaged in the business of mining and mineral exploration. Operating activities of the Company include locating, acquiring, exploring, developing, improving, selling, leasing and operating mineral interests, principally those involving precious metals. The Company presently has mineral interests near Lazaro Cardenas, Michoacan, in West Central Mexico. The Company, together with its consolidated subsidiaries, currently operates in one business segment, mining. 2.2 Liquidity and Capital Resources 2.2.1 Short Term Liquidity As of April 30, 2001, the Company had $17,000 in cash and total liabilities of $914,000. On April 30, 2001, the Company's current ratio of current assets to current liabilities was less than 1:1 A current ratio of less than 1:1 indicates that the Company does not have sufficient cash and other current assets to pay its bills and other liabilities incurred at the end of its fiscal year and due and payable within the next fiscal year. During calendar year 2000 the company sold its Colombian operations and concentrated its efforts in Mexico. Fischer-Watt incurred a loss from operations of $115,000 for the first three months of 2001 compared to a net loss from operations of $151,000 for the period ended April 30, 2000. The loss was due to the lack of revenue producing operations. On April 30, 2001 the accumulated deficit was $15.5 million. During calendar year 2000 the company acquired the La Balsa mining concessions which are located approximately 15 km East of Lazaro Cadenzas, Michoacan, Mexico. The property contains a mineable reserve of 3.6 million tonne of mostly oxide copper with an average copper grade of 1.42%. Previous owners had drilled 77 holes in the property. K D Engineering of Tucson, Arizona has completed a preliminary feasibility study. The company plans to complete 10 additional conformation drill holes in the property, do additional metallurgical testing and complete a feasibility study suitable for obtaining financing. 7 2.2.2 Long Term Liquidity It is likely that the Company will need to supplement anticipated cash from operations with future debt or equity financing and dispositions of or joint ventures with respect to mineral properties to fully fund its future business plan that includes exploration projects and property development. While the Company has been successful in capital raising endeavors in the past, there can be no assurance that its future efforts will be successful. There can be no assurance that the Company will be able to conclude transactions with respect to its mineral properties or additional debt or equity financing or that such capital raising opportunities will be available on terms acceptable to the Company, or at all. 2.3 Results of Operations The Company had net loss of $115,000 ($nil per share) compared to net loss of $277,000 ($.01 per share) in the quarter's ended April 30, 2001 and 2000, respectively. 2.4 Revenues The Company had no sales during the period. 2.5 Costs and Expenses Selling, general and administrative costs were $87,000 in quarter ended April 30, 2001 compared to $151,000 in the quarter ending April 30, 2000. This decrease was the result moving the corporate office to less expensive space and reducing other operating expenses. Exploration expense increased to $28,000 in the first quarter of fiscal 2001 from $0 in the first quarter of fiscal 2000. This increase is all related to activities at the La Balsa project. 2.6 Commitments and Contingencies The company is currently a defendant in a suit related to a property it formally held in Nevada. The outcome of this suit will have no material effect on the company. 2.7 Foreign Currency Exchange The Company accounts for foreign currency translation in accordance with the provisions of Statement of Financial Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS No.52"). The assets and liabilities of the Colombian unit are translated at the rate of exchange in effect at the balance sheet date. Income and expenses are translated using the weighted average rates of exchange prevailing during the period. The related translation adjustments are reflected in the accumulated translation adjustment section of shareholders' equity. 2.8 Going Concern Consideration As the independent certified public accountants have indicated in their report on the financial statements for the year ended January 31, 2001, and as shown in the financial statements, the Company has experienced significant operating losses that have resulted in accumulated deficits of $15.5 million. These conditions raise doubt about the Company's ability to continue as a going concern. The ability of the Company to achieve its operating goals and thus positive cash flows from operations is dependent upon the future market price of gold, future capital raising efforts, and the ability to achieve future operating efficiencies anticipated with increased production levels. Management's plans will require additional financing, reduced exploration activity, or disposition of or joint ventures with respect to mineral properties. While the Company has been successful in these capital-raising endeavors in the past, there can be no assurance that its future efforts, and anticipated operating improvements will be successful. The Company does not currently have adequate capital to continue its contemplated business plan beyond the early part of fiscal 2001. The Company is presently investigating all of the alternatives identified above to meet its short-term liquidity needs. The Company believes that it can arrange a transaction or transactions to meet its short-term liquidity needs, however there can be no assurance that any such transactions will be concluded or that if concluded they will be on terms favorable to the Company. 8 2.9 Subsequent Events None. 2.10 Cautionary Note Regarding Forward-Looking Statements In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby providing cautionary statements identifying important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of the Company herein or orally, whether in presentations, in response to questions or otherwise. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will result", "are expected to", "will continue", "is anticipated", "estimated", "projection" and "outlook") are not historical facts and may be forward-looking and, accordingly, such statements involve estimates, assumptions, and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. Such uncertainties include, among other, the following: (i) the Company's ability to obtain additional financing to implement its business strategy; (ii) adverse weather conditions and other conditions beyond the control of the Company; (iii) imposition of new regulatory requirements affecting the Company; (iv) a downturn in general or local economic conditions where the Company operates; (v) effect of uninsured loss and (vi) other factors which are described in further detail in the Company's filings with the Securities and Exchange Commission. The Company cautions that actual results or outcomes could differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of such factors. Further, management cannot assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Part 3 - Other Information 3.1 Legal Proceedings See Section 2.6 Contingencies. 3.2 Changes in Securities None. 3.4 Submission of Matters to a Vote of Security Holders None 3.5 Other information None 3.6 Exhibits and Reports on Form 8-K A. Exhibits 27.1 Financial Data Schedule (For SEC purposes only) B. Reports on Form 8-K None. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FISCHER-WATT GOLD COMPANY, INC. Date: May 9, 1999 By: /s/ George Beattie --------------------- George Beattie, President, Chief Executive Officer (Principal Executive Officer) 10