-----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, JQPYw87rthpNe8UNte7zWZh4qmveRPzkdeQ8oIPFQaUgcDILEPkgSusEovUfGlkk LqP0Xt64rlD1vagAGpCkbA== 0001014909-07-000101.txt : 20071213 0001014909-07-000101.hdr.sgml : 20071213 20071213165233 ACCESSION NUMBER: 0001014909-07-000101 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20071031 FILED AS OF DATE: 20071213 DATE AS OF CHANGE: 20071213 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: 071305024 BUSINESS ADDRESS: STREET 1: 2582 TAFT COURT CITY: LAKEWOOD STATE: CO ZIP: 80215 BUSINESS PHONE: 3032320292 MAIL ADDRESS: STREET 1: 2582 TAFT COURT CITY: LAKEWOOD STATE: CO ZIP: 80215 FORMER COMPANY: FORMER CONFORMED NAME: FISCHER WATT GOLD CO INC DATE OF NAME CHANGE: 19991025 FORMER COMPANY: FORMER CONFORMED NAME: FISCHER WATT GOLD CO INC DATE OF NAME CHANGE: 19920703 10QSB 1 f10q_31oct2007fwg.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2007 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 (IRS Employer of incorporation or organization) Identification No.) 2582 Taft Court, Lakewood, CO 80215 ---------------------------------------- (Address of principal executive offices) (303) 232-0292 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 --- --- State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: December 10, 2007. Common Stock, par value $.001 71,866,819 - ----------------------------- ---------------- Title of Class Number of Shares Transitional Small Business Disclosure Format Yes [ ] No [X] Exchange Rates Except as otherwise indicated, all dollar amounts described in this 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. -2- PART I - FINANCIAL INFORMATION Item 1 - FINANCIAL STATEMENTS
Fischer-Watt Gold Company, Inc. (An Exploration Stage Company) Consolidated Balance Sheets October 31, 2007 January 31, 2007 ---------------- ---------------- (Unaudited) ASSETS Current Assets: Cash $ 316,096 $ 466,370 Prepaid and other current assets 5,338 - ------------ ------------ Total current assets $ 321,434 $ 466,370 ============ ============ LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current Liabilities: Accounts payable and accrued expenses $ 38,417 $ 93,886 Income taxes payable - 178,450 Note payable - shareholders 30,000 781,045 Accounts payable and accrued expenses - shareholders 772,437 962,898 ------------ ------------ Total current liabilities 840,854 2,016,279 ------------ ------------ Stockholders' (Deficit): Preferred stock, non-voting, convertible, $2 par value, 250,000 shares authorized, none outstanding - - Common stock, $.001 par value, 200,000,000 shares authorized,71,616,819 and 70,516,819 shares issued and outstanding, respectively 71,866 70,516 Additional paid-in capital 16,055,341 15,894,191 Common stock subscriptions 12,750 12,750 Accumulated (deficit) prior to exploration stage (15,353,115) (15,353,115) Accumulated (deficit) during the exploration stage (1,306,262) (2,174,251) ------------ ------------ (519,420) (1,549,909) ------------ ------------ $ 321,434 $ 466,370 ============ ============ See the accompanying notes to the consolidated financial statements
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Fischer - Watt Company, Inc. (An Exploration Stage Company) Consolidated Statement of Operations (Unaudited) February 1, 2001 Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended (Inception of October 31 October 31 October 31 October 31 Exploration Stage) 2007 2006 2007 2006 to October 31, 2007 ------------------ ------------------ ----------------- ---------------- ------------------- Revenue $ - $ - $ - $ - $ 44,240 ------------ ------------ ------------ ------------ ------------ Costs and expenses: Cost of sales - - - - 50,000 Exploration 48,604 18,433 94,434 42,061 758,430 Writedown of inventory to market value - - - - 125,000 Stock compensation - - - - 110,100 Stock option expense - - 88,000 106,000 194,000 General and administrative 78,113 38,443 139,173 150,032 2,049,878 ------------ ------------ ------------ ------------ ------------ 126,717 56,876 321,607 298,093 3,287,408 ------------ ------------ ------------ ------------ ------------ (Loss) from operations (126,717) (56,876) (321,607) (298,093) (3,243,168) ------------ ------------ ------------ ------------ ------------ Other income (expense): Interest expense (375) (2,563) (8,008) (7,688) (57,644) Relief of payables and other indebtedness - - - - 141,935 Interest income 4,544 1,234 15,722 3,930 20,299 Other income - - 1,565,000 50,000 2,389,184 ------------ ------------ ------------ ------------ ------------ 4,169 (1,329) 1,572,714 46,242 2,493,774 ------------ ------------ ------------ ------------ ------------ Income (loss) before income taxes (122,548) (58,205) 1,251,107 (251,851) (749,394) Income taxes 882 - (383,118) - (556,868) ------------ ------------ ------------ ------------ ------------ Net income (loss) $ (121,666) $ (58,205) $ 867,989 $ (251,851) $ (1,306,262) ============ ============ ============ ============ ============ Per share information - basic and fully dilluted Net income (loss) per share Basic $ (0.00) $ (0.00) $ 0.01 $ (0.00) $ (0.02) ============ ============ ============ ============ ============ Fully-diluted $ (0.00) $ (0.00) $ 0.01 $ (0.00) $ (0.02) ============ ============ ============ ============ ============ Weighted average shares outstanding Basic $ 71,866,819 $ 70,355,949 $ 71,347,588 $ 69,706,563 $ 54,423,250 ============ ============ ============ ============ ============ Fully-diluted $ 71,866,819 $ 70,355,949 $ 71,647,588 $ 69,706,563 $ 54,423,250 ============ ============ ============ ============ ============ See the accompanying notes to the consolidated financial statements
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Fischer-Watt Gold Company, Inc. (An Exploration Stage Company) Consolidated Statements of Cash Flows (Unaudited) February 1, 2001 (Inception of Nine Months Ended Nine Months Ended Exploration Stage) October 31, 2007 October 31, 2006 to October 31, 2007 ----------------- ----------------- ------------------- Cash flows from operating activities: Net cash provided by (used in) operating activities $ 713,271 $ (95,685) $ 102,223 ----------- ----------- ----------- Cash flows from financing activities: Proceeds from issuance of common shares and stock subscriptions - - 580,486 Proceeds from exercise of options - - 35,000 Proceeds from notes payable - shareholders - - 40,500 Repayment of note payable and loans - shareholders (863,545) - (1,151,568) Capital contribution of shareholder - - 689,068 ----------- ----------- ----------- Net cash provided by (used in) financing activities (863,545) - 193,486 ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents (150,274) (95,685) 295,709 Cash and cash equivalents, beginning of period 466,370 177,146 20,387 ----------- ----------- ----------- Cash and cash equivalents, end of period $ 316,096 $ 81,461 $ 316,096 =========== =========== =========== Supplemental cash flow information: Cash paid for interest $ - $ - $ - =========== =========== =========== Cash paid for income taxes $ 383,118 $ - $ 383,118 =========== =========== =========== See the accompanying notes to the consolidated financial statements
-5- FISCHER-WATT GOLD COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS October 31, 2007 (UNAUDITED) (1) Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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 and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended January 31, 2007. The accompanying consolidated financial statements include the accounts of the Company and its subsidiary. Intercompany transactions and balances have been eliminated in consolidation. (2) Mineral Properties Since 1996, the Company has held a 65% interest in Minera Montoro S.A.de C.V. ("Montoro") which in turn has a 100% interest in mining concessions located in the state of Michoacan, Mexico, designated as the La Balsa property. Mr. Jorge E. Ordonez and his associates ("Ordonez") own the remaining 35% of Montoro. During the fiscal year ended January 31, 2006, the Company executed a binding letter of agreement to sell its 65% interest in Montoro to Nexvu Capital Corp for a total consideration of $2,235,000. An initial deposit of $50,000 was received during the year ended January 31, 2006. During the fiscal year ended January 31, 2007, the original closing date was extended because of certain accounting and legal issues that were not resolved until late 2006. The first installment of $695,000 was received January 30, 2007 and the second installment of $745,000 was received on March 29, 2007. The final payment of $745,000 was received July 9, 2007 and as a result, the Company no longer holds any interests in Mexico. All applicable taxes owed to the Government of Mexico have been paid. In order to complete the sale to Nexvu Capital Corp, the Company repurchased a 21.6% interest in La Balsa project held by The Astra Ventures Inc. a holding company controlled by a former Chairman of the Company and a Director. The Company agreed to repay capital contributions made by The Astra Ventures Inc. to Fischer-Watt Gold in the sum of $864,068, to be repaid in conjunction with the receipt of proceeds from Nexvu Capital Corp. As of October 31, 2007, the debt to The Astra Ventures Inc. has been entirely repaid. As consideration to The Astra Ventures Inc. for the lost business opportunity, the Company agreed to grant an option to them for 10,000,000 shares of common stock. The option granted is for 4,000,000 shares of common stock at $0.30 per -6- FISCHER-WATT GOLD COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS October 31, 2007 (UNAUDITED) share, for 5 years, 4,000,000 shares of common stock at $0.40 per share for 7 years, and 2,000,000 shares of common stock at $0.60 per share for 10 years. These options were authorized in 2005. (3) Earnings Per Share The Company calculates net income (loss) per share as required by SFAS No. 128, "Earnings per Share." Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. (4) Going Concern Consideration The Company has incurred substantial operating losses of $16,659,377 since inception and had a stockholders' deficit of $519,420 at October 31, 2007. The Company has negative working capital of $519,420 at October 31, 2007 and no revenue producing operations. These conditions raise substantial 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 metals, 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, and currently has cash on hand of $316,096, there can be no assurance that its future efforts and anticipated operating improvements will be successful. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. (5) Stock-Based Compensation Effective February 1, 2006, the Company adopted SFAS 123 (R), "Accounting for Stock-Based Compensation". Compensation cost for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in SFAS 123 (R). (6) Stockholders' (Deficit) Common Stock On May 17, 2007, the Company issued 250,000 shares of common stock to its chief executive officer for services valued at $17,500 and 100,000 shares of common stock to a non-affiliated party for services valued at $7,000. -7- FISCHER-WATT GOLD COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS October 31, 2007 (UNAUDITED) On May 17, 2007, the Board of Directors authorized the issuance of stock options to each of the five directors at 300,000 shares each at a strike price of $0.10 per share, for a total of 1,500,000 options. Additional options totaling 500,000 shares were issued to three consultants at the same strike price of $0.10 per share. All options are for a 5 year period. The fair value of the option grants is estimated on the date of grant utilizing the Black-Scholes option pricing model with the following weighted average assumptions for grants during the three months ended July 31, 2007: expected life of options of 4.75 years, expected volatility of 0.8738, risk-free interest rate of 4% and no dividend yield. The weighted average fair value at the date of grant for options granted during the quarter ended July 31, 2007 approximated $.044 per option, or $88,000. In addition, the Board extended the expiration date of 1,000,000 options which were due to expire on June 30, 2007. These options now expire June 30, 2009. On June 30, 2007, two directors exercised stock options for a total of 1,000,000 shares of common stock at $0.05 per share in exchange for debt of $50,000. On February 13, 2005, the Company completed a series of private placements totaling $540,000. Included in this financing was the right to purchase one additional share of Company stock at a price of $0.10 per share until January 15, 2008. -8- Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Overview - -------- Fischer-Watt Gold Company, Inc. (collectively with its subsidiaries, "Fischer-Watt", "FWG" or the "Company"), was formed under the laws of the State of Nevada in 1986. Fischer-Watt's primary business is mining and mineral exploration, and to that end to own, acquire, improve, sell, lease, convey lands or mineral claims or any right, title or interest therein; and to search, explore, prospect or drill for and exploit ores and minerals therein or thereupon. During the fiscal year ended January 31, 2006 the Company agreed to sell its 65% interest in Minera Montoro S.A. de C.V. ("Montoro") to Nexvu Capital Corp ("Nexvu") for a total consideration of $2,235,000. During the fiscal year ended January 31, 2007, Nexvu, assigned its interests to Rogue River Inc. and the proposed closing was delayed because of administrative, accounting, and legal issues. These issues have been resolved and the Company completed the closing of all three tranches on July 9, 2007. As the sale of the interest in Montoro is now complete, the Company no longer holds any interest, other than a future royalty, in Mexico. Montoro owns 100% of the La Balsa project. On December 5, 2005, the Company and The Astra Ventures, Inc. ("Astra"), a company controlled by a director of Fischer-Watt, agreed to relinquish its 21.6% interest in the La Balsa project back to Fischer-Watt, thus returning Fischer- Watt's interest to 65%. Under terms of the agreement, the Company agreed to repay Astra the loans it had advanced to date of $864,028, in three equal installments. Each installment of $288,023 came from payments made to the Company by Rogue River Inc. as part of their acquisition commitment to the Company as outlined above. All debt owing to Astra has been retired with a final cash payment of $250,522 and by exercise of options for 750,000 common shares at $0.05 per share in lieu of cash of $37,500. All applicable Mexican taxes related to the Rogue River Inc. sale have now been paid. As further consideration, Astra has also received stock options in the Company as follows: Series #1 - being an option to acquire 4,000,000 common shares at $0.30 per share. This option will be exercisable for a period of five (5) years. Series #2 - being an option to acquire an additional 4,000,000 common shares at $0.40 per share. This option will be exercisable for a period of seven (7) years. Series #3 - being an option to acquire an additional 2,000,000 common shares at $0.60 per share. This option will be exercisable for a period of ten (10) years. The Company currently holds interests in two mineral properties, being the Cruce Gold Project in Pinal County, Arizona, and the Cambridge Mine Project in Lyon County, Nevada. Cruce Gold Project On July 26, 2006, the Company acquired a 100% interest in the mineral lease in Pinal County, Arizona for $15,000 and the issuance of 100,000 restricted common shares of its stock. The vendors will retain a 2% net smelter return royalty and received an advance royalty of $20,000 on the first anniversary of the agreement and will receive $25,000 on subsequent anniversaries. These advance royalties will be deductible from future production royalty payments. -9- The original property is situated on a 60 acre State lease. The Company has now staked additional claims on surrounding BLM ground covering an area of approximately 760 acres. Gold mineralization on the property is hosted within faulted blocks in well-altered sections of the pre-Cambrian age Oracle granite. Adits, shallow shafts and pits of unknown historic age are in evidence on the property. Early work by Spanish prospectors in the 1600's was centered on the Hot Boy inclined shaft. This shaft was deepened to a depth of 165 feet by a Mr. Cruce who made several shipments of ore before abandoning the property. Between 1988 and 1990, Freeport McMoRan Gold Company carried out geological mapping, a four line Induced Polarization and Resistivity geophysical survey and a wide-spaced 14 hole reverse circulation drilling program totaling 5,805 feet. Hole CR-4 from surface to a depth of 60 feet returned an average grade of 0.032 oz. Au/t. Gold mineralization on the Cruce Gold property therefore defines a favorable structural setting that could be amenable to open-pit mining. Fischer-Watt has commenced an active field season with a close spaced soil and rock chip geochemical sampling program to be followed by a close spaced limited drilling program. The project currently has no reserves and there is no assurance that the project will advance from its present exploration stage. During the quarter ended July 31, 2007, the Company completed a geochemical survey and reported such in a press release dated July 31, 2007. The Company also paid an advance royalty of $20,000 and completed its registration to conduct business in Arizona. The Company is now commencing its first drill program on the Cruce Gold property in Pinal County, Arizona. It plans to use an Air-track drill rig to drill a close spaced grid of shallow holes to test four target zones on this 1,200 acre property. The four targets identified to date are surface geochemical anomalies with three of them being areas anomalous in gold and one being anomalous in copper. The Company plans to drill along a series of east-west oriented lines that are spaced 30 to 60 meters apart with holes along each line being 10 or 20 meters apart. The holes are planned to be about 80 feet in depth with up to 15,000 feet of drilling anticipated. There are four target areas involved, being the East, West, South and Copper Oxide anomalies. Surface geochemical sampling has now extended the East Anomaly up to 450 meters along a south-southeast trend from the Hot Boy shaft. The zone ranges in widths from 30 to 70 meters with the core of this anomaly being identified by 5 samples exceeding 1 part per million (ppm) gold, with the highest being 1.678 ppm. The drilling will aim to follow the mineralization to the east as the host rock unit extends under a Tertiary age volcanic rock cover. At the West Anomaly soil geochemistry has encountered gold levels exceeding 0.5 ppm over widths of 50 to 100 meters for a distance of 200 meters. The zone remains open at both its north and south ends and recent sampling indicates that there may be an extension of the zone lying approximately 100 meters to the north. A total of up to 80 holes along 10 lines are planned to test the area. The South Zone has been identified based on the silicification and gossanous textures along contact boundaries of a 2 meter wide aplite dike for a 200 meter length. Continuing north for a further 300 meters is a 75 to 100 meter wide exposure of sheared and brecciated rocks with a lot of old surface workings and prospect pits. Rock samples assaying up to 0.5 ounces of gold per ton have been collected on the surface. This area is an immediate drill target. -10- The fourth area, referred to as the Copper Oxide Zone, is a recently identified area where a series of east and south-east dipping faults have been recognized as potential conduits for mineralizing fluids giving rise to a surface geochemical copper anomaly. The Company plans five lines with a total of 30 holes in its drilling program. Cambridge Project On August 1, 2006, the Company entered into an option agreement with Grandcru Resources Corporation ("Grandcru") of Vancouver B.C. to acquire Grandcru's rights to 19 claims in the Cambridge Mining District located 23 miles south of Yerrington, Nevada, in Lyon County. Under the terms of the agreement Fischer-Watt can acquire a 100% interest in the property by completing the following: Cash payments to an underlying claim holder of: $10,000 on August 25, 2006 (paid) $15,000 on August 25, 2007 (paid) $20,000 on August 25, 2008 $25,000 on August 25, 2009 and cash payments to Grandcru of: $10,000 on August 30, 2007 (unpaid) $15,000 on August 30, 2008 $20,000 on August 30, 2009 $25,000 on August 30, 2010 and by satisfying annual work commitments on the property of: $50,000 in the first year of the agreement (satisfied) $75,000 in the second year of the agreement $125,000 in the third year of the agreement $150,000 in the fourth year of the agreement Upon completion of the above, Fischer-Watt will have earned a 100% interest in the property subject to a 2% Net Smelter Return royalty to the underlying claim holder and a 2% Net Smelter Return royalty to Grandcru. These two royalties may be purchased by Fischer-Watt for $2,000,000 and $1,500,000 respectively. The property is comprised of 18 lode claims and 1 placer claim located entirely on BLM ground in the historic Cambridge Mining District. It covers an area of approximately 360 acres, at a moderate elevation of approximately 5,400 feet above Sea Level, which can be accessed year round via county maintained roads. The District is in the Walker Lane geological trend of western Nevada. The Cambridge Vein is a structurally complex, shear hosted, north-south trending, quartz vein system. The veining is hosted in a weakly altered to unaltered coarse grained quartz monzonite granitoid of Cretaceous age. The veining is believed to be of a mesothermal nature and contains high-grade gold. The vein is known to extend along a strike of 1,200 meters and dips at approximately 60 degrees west. There are flexures along the strike and dip of the vein along with intersecting structures and splays. This geological complexity increases the potential of high-grade shoots occurring along the vein as well as multiple vein systems. The Company recently completed a four-hole drill program to explore the down-dip potential of the Cambridge vein in Lyon County, Nevada. A total of 1,280 feet of reverse circulation drilling tested a 300 foot length of the vein's north-east trending strike down to a depth of about 200 feet below its surface outcrop. While the Company encountered weak mineralization in the holes, the vein has low economic potential and the Company does not intend to carry out any additional work and will be relinquishing the property back to the optionor. The Company has cash on hand at October 31, 2007 of $ $316,096 and its working capital deficit position of $519,420 brings into focus the ability of the Company to continue operations without further financing. Total current liabilities at October 31, 2007 amounted to $840,854 and only $5,944 is due to trade creditors. The balance of the current liabilities, being $834,910, is due to shareholders where there are no specific terms of repayment for either of the Demand Notes, accrued expenses or interest owing. -11- The following outlines results to date in the current fiscal year and outlines our plan of operation for the foreseeable future. It also analyzes our financial condition at October 31, 2007 and compares that condition to our financial condition at year-end January 31, 2007. Finally, we comment on the results of our operations for the nine months ended October 31, 2007. This information should be read in conjunction with the other financial information and reports filed with the Securities and Exchange Commission ("SEC"), especially our Annual Report on Form 10-KSB for the year ended January 31, 2007. Plan of Operation - ----------------- The Company's plan of operation for the fiscal year ending January 31, 2008 is to continue with work on its mineral property in Arizona. While the Cambridge property in Nevada will be dropped, the Company continues to evaluate other mining properties in the western United States for possible acquisition and continues to explore various financing alternatives for the Company. Liquidity and Capital Resources - ------------------------------- As of October 31, 2007, the Company had cash on hand of $316,096 and current liabilities of $840,853, including $772,437 owed to related parties. Current accounts payable amounted to $5,943 and accrued expenses amounted to $32,473 for total accounts payable and accrued expenses of $38,416. The working capital deficit at October 31, 2007 was $519,420 compared to $1,549,909 at January 31, 2007. This represents an improvement in the working capital deficit of $1,030,489 for the nine months ended October 31, 2007. This improvement is a direct result of receipt of final payment from Rogue River Inc. and retirement of certain debt owing to shareholders. There is no specific term of repayment for either the Demand Notes, accrued expenses or other debt due to related parties. Management recognizes that the Company does not have sufficient funds to retire its remaining debt and to sustain its operations. The Company continues to source out other appropriate financing in either equity or debt format, and it continues to seek out other mineral properties, but there is no assurance said financing is available or that said properties can be acquired on reasonable terms and conditions. For the nine months ended October 31, 2007, the Company has significantly reduced its notes payable liability. At January 31, 2007, notes payable amounted to $781,045 and this has been reduced to $30,000 at October 31, 2007. Proceeds from the sale to Rogue River Inc. have been utilized to reduce this debt. Current liabilities at October 31, 2007 have been reduced to $840,854 from $2,016,279 at January 31, 2007. The cash position of the Company over the nine month period ended October 31, 2007 has decreased from $466,370 to $316,096 as a result of retirement of debt obligations to shareholders. Results of Operations - --------------------- For the three months ended October 31, 2007, the Company had an operating loss of $97,166 compared to a net loss for the corresponding three month period ended October 31, 2006 of $58,205. The primary reason for this is the exploration activity on the Cruce in Arizona and the Cambridge in Nevada where $48,604 was expended in the quarter compared to $18,433 for the three months ended October 31, 2006. For the nine months ended October 31, 2007, expenses amounted to $321,607 vs. $298,093 for the nine months ended October 31, 2006. Exploration expense in this period amounted to $94,434 vs. $42,061 for October 31, 2006. General and administrative expenses amounted to $139,173 for the nine months ended October 31, 2007 vs. $150,032 for the nine months ended October 31, 2006. During the nine months ended October 31, 2007, the Company received the final payments regarding the sale of its Montoro project from Rogue River Inc. Proceeds amounted to $1,565,000, including fees received for extensions of the original closing date. These receipts allowed the Company to retire loans of $751,045 to a shareholder and an additional debt outstanding of $150,000 to another shareholder. -12- Net income for the nine months ended October 31, 2007 amounted to $867,989 versus a loss of $251,851 for the nine months ended October 31, 2007. While the Company currently has cash on hand of $316,096, and current trade accounts payable of $5,944, the Company realizes that it will require additional financing, reduced exploration activity, or the disposition of its remaining 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 was not active in its exploration program in the first three months of the fiscal year, but exploration has increased during the past six months and the Company intends to continue with its drilling program on its Cruce property in Arizona where results to date have been encouraging. The Company anticipates drilling costs of approximately $50,000 over the next twelve months. Montoro - ------- The Company has owned 65% of Montoro, which in turn owns 100% of the La Balsa copper property in the state of Michoacan, Mexico. On June 1, 2005 Fischer-Watt entered into a Letter of Intent with Nexvu Capital Corp. of Vancouver ("Nexvu"), B.C., Canada, for the development of the La Balsa. Full payment has been received from Rogue River Inc. and the Company no longer holds any interests in Mexico other than a 1% NSR royalty on the porphyry portion of the La Balsa property. Rogue River Inc. will have an option to acquire 50% of the 1% NSR royalty for $1,000,000. If the property is not in production in seven (7) years, Rogue River Inc. will be obligated at the discretion of Fischer-Watt, to acquire the 50% of the 1% NSR royalty for $1,000,000. Commitments and Contingencies - ----------------------------- Management is not aware of any legal action against the Company. 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 foreign operations 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. Going Concern Consideration - --------------------------- As the independent certified public accountants have indicated in their report on the financial statements for the year ended January 31, 2007, and as shown in the financial statements, the Company has experienced significant operating losses that have resulted in an accumulated deficit of $16,659,377, at October 31, 2007. 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 -13- assurance that its future efforts, and anticipated operating improvements will be successful. Depending on the level of exploration activity, the Company does have adequate capital to continue its contemplated business plan through October 31, 2008, but does not have sufficient capital to carry out an extensive exploration program without additional capital. 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. Cautionary Note Regarding Forward-Looking Statements - ---------------------------------------------------- This Form 10-QSB contains or incorporates by reference "forward-looking statements," as that term is used in federal securities laws, about our financial condition, results of operations and business. These statements include, among others: - - statements concerning the benefits that we expect will result from our business activities and certain transactions that we contemplate or have completed, such as increased revenues, decreased expenses and avoided expenses and expenditures; and - - statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this document or may be incorporated by reference to other documents that we will file with the SEC. You can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions used in this report or incorporated by reference in this report. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by us in those statements. Because the statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied. We caution you not to put undue reliance on these statements, which speak only as of the date of this report. Further, the information contained in this document or incorporated herein by reference is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions. Risk Factors Impacting Forward-Looking Statements - ------------------------------------------------- The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in our other reports filed with the SEC and the following: The worldwide economic situation; o Any change in interest rates or inflation; o Foreign government changes to laws or regulations related to Company activities; o The willingness and ability of third parties to honor their contractual commitments; o Our ability to raise additional capital, as it may be affected by current conditions in the stock market and competition in the gold mining industry for risk capital; -14- o Our costs of production; Environmental and other regulations, as the same presently exist and may hereafter be amended; Our ability to identify, finance and integrate other acquisitions; and o Volatility of our stock price. We undertake no responsibility or obligation to update publicly these forward-looking statements, but may do so in the future in written or oral statements. Investors should take note of any future statements made by or on our behalf. Item 3. CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-14(c). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are effective in reaching that level of assurance. As of the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer/Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer/Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no material changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None Item 3. DEFAULTS UPON SENIOR SECURITIES None Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None -15- Item 5. OTHER INFORMATION None Item 6. EXHIBITS. Exhibit No. Document - ----------- -------- 31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Peter Bojtos. 32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Peter Bojtos. -16- SIGNATURES In accordance 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. Dated: December 13, 2007 By: /s/ Peter Bojtos ------------------------------------------- Peter Bojtos, Chairman of the Board, President, and Chief Financial Officer -17- EX-31 2 exh_31.txt Exhibit 31 CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO 18 U.S.C 1350, AS ADOPTED, AND THE REQUIREMENTS OF SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Peter Bojtos certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Fischer-Watt Gold Company, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: December 13, 2007 /s/ Peter Bojtos - -------------------------- Peter Bojtos Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer EX-32 3 exh_32.txt Exhibit 32 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. In connection with the Quarterly Report on Form 10-QSB of Fischer-Watt Gold Company, Inc. for the quarterly period ending October 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the Report), Peter Bojtos, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his/her knowledge, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Peter Bojtos - -------------------------- Chief Executive Officer December 13, 2007 -----END PRIVACY-ENHANCED MESSAGE-----