UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 17, 2004

WITS BASIN PRECIOUS MINERALS INC.

(Exact Name of Registrant as Specified in Charter)

Minnesota (State or Other Jurisdiction of Incorporation) 1-12401 (Commission File Number) 84-1236619 (IRS Employer Identification No.)

520 Marquette Avenue, Suite 900 Minneapolis, Minnesota (Address of Principal Executive Offices)   55402 (Zip Code)

612.349.5277

(Registrant’s telephone number, including area code)

800 Nicollet Mall, Suite 2690

Minneapolis, Minnesota 55402

(Former Name or Former Address, if Changed Since Last Report)

1 

Item 5. Other Events

The Registrant's balance sheets as of December 31, 2003 and 2002 and its related statements of operations and cash flows for the three years ended December 31, 2003, 2002 and 2001, have been audited by Virchow, Krause and Company, LLP, independent auditors. The Registrant has a registration statement on Form S-2 (File No. 333-110831) pending with the Securities and Exchange Commission (“SEC”). The Registrant concurs with certain recommendations of the SEC Staff, made in connection with their review of the registration statement, relating to the issues surrounding the March 2003 sale of the Registrant’s then only continuing operations (i.e., Hosted Solutions Business) and subsequent transaction in which it changed its business model (that of a precious minerals exploration company), thereby effectively becoming an exploratory stage company by essence of its new business model.

Accordingly, the Registrant's has agreed to restate its financial statements for the year ended December 31, 2003. The restated financial statements are included under Item 7 of this Current Report. The financial statements included under Item 7 reflect the restatement of certain stock issuances related to its transaction with Hawk Precious Minerals USA, Inc. In particular, the Registrant has expensed those issuances rather than capitalizing them as intangibles. The Registrant has also adjusted amortization expense to conform to the value of its exploration intangibles.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

       (a)  Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

Consolidated Balance Sheets as of December 31, 2003 and 2002	F-1
Consolidated Statements of Operations for the Years Ended December 31, 2003, 2002 and 2001	F-2
Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001	F-3

2 

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	December 31,
	Restated
		2003			2002
Assets
Current assets
Cash and cash equivalents	$	363,990		$	13,211
Accounts receivable, net		—			—
Prepaid expenses		612,777			—
Total current assets		976,767			13,211
Property and equipment, net		—			—
Prepaid royalties, net		—			—
Prepaid exploration costs		1,300,000			—
Exploration intangibles, net		1,644,679			—
Net Assets of Operations of Discontinued Hosted Solutions Business		—			669,000
	$	3,921,446		$	682,211
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	59,226		$	—
Net liabilities of operations of discontinued  hosted solutions business		34,734			—
Net liabilities of operations of discontinued accounting software business		—			93,078
Accrued expenses		12,775			—
Total current liabilities		106,735			93,078
Accrued guarantee fee		30,000			—
Commitments and Contingencies
Shareholders’ Equity
Common stock, $.01 par value, 150,000,000 shares authorized;
30,297,181 and 13,264,681 shares issued and outstanding at December 31, 2003 and 2002		302,972			132,647
Additional paid-in capital		27,423,258			22,616,833
Stock subscription receivable		—			(2,000,000	)
Deferred compensation		—			(182,213	)
Warrants		4,146,438			2,602,860
Accumulated deficit		(22,932,460	)		(22,580,994	)
Deficit accumulated during the exploration stage, subsequent to April 30, 2003		(5,155,497	)		—
Total shareholders’ equity		3,784,711			589,133
	$	3,921,446		$	682,211

F-1 

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	Restated									May 1, 2003 (inception) to Dec. 31,
	2003			2002			2001			2003
Revenues	$	—		$	—		$	—		$	—
Operating expenses:
Costs of goods sold		—			—			—			—
Selling, general and administrative		1,355,360			—			—			1,355,360
Depreciation and amortization		557,109			—			—			557,109
Exploration expenses		500,000			—			—			500,000
Stock issued for consideration of
exploration rights		3,137,500			—			—			3,137,500
Product development		—			—			—			—
Loss on disposal of assets		1,633			—			—			1,633
Loss on impairment of goodwill		—			—			—			—
Loss on sale of prepaid royalties		—			—			—			—
Total operating expenses		5,551,602			—			—			5,551,602
Loss from operations		(5,551,602	)		—			—			(5,551,602	)
Other income (expense):
Interest and dividend income		25,769			15,244			159,101			2,185
Other income		—			—			—			—
Interest expense		—			(119,206	)		(7,138	)		—
Total other income (expense)		25,769			(103,962	)		151,963			2,185
Income (loss) from operations before income tax refund, minority interest and discontinued operations		(5,525,833	)		(103,962	)		151,963			(5,549,417	)
Benefit from income taxes		243,920			—			—			243,920
Minority interest in loss of consolidated subsidiary		150,000			—			—			150,000
Income (loss) from continuing operations		(5,131,913	)		(103,962	)		151,963			(5,155,497	)
Discontinued operations
Loss from discontinued operations		(375,050	)		(9,554,793	)		(9,598,771	)		—
Net Loss	$	(5,506,963	)	$	(9,658,755	)	$	(9,446,808	)	$	(5,155,497	)
Basic and diluted net loss per common share:
Continuing operations	$	(0.33	)	$	(0.01	)	$	0.02		$	(0.32	)
Discontinued operations		(0.03	)		(0.76	)		(1.17	)		0.00
Net Loss	$	(0.36	)	$	(0.77	)	$	(1.15	)	$	(0.32	)
Basic and diluted weighted average common shares outstanding		15,361,315			12,532,354			8,210,326			16,231,340

F-2 

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	Restated									May 1, 2003 (inception) to Dec. 31,
	2003			2002			2001			2003
OPERATING ACTIVITIES:
Net loss	$	(5,506,963	)	$	(9,658,755	)	$	(9,446,808	)	$	(5,155,497	)
Adjustments to reconcile net loss to cash
flows from operating activities:
Depreciation and amortization		557,109			1,824,372			3,161,492			538,327
Deferred compensation expense		41,464			129,488			678,281			16,764
Loss on disposal of assets		884			114,037			55,356			1,633
Loss on discontinued accounting software business		—			1,650,000			—			—
Loss on impairment of goodwill		—			2,548,664			—			—
Loss on disposal of discontinued operations		99,085			—			—			—
Loss on sale of prepaid royalties		434,895			—			—			—
Amortization of prepaid exploration costs		500,000			—			—			500,000
Issue of common stock for exploration rights		3,137,500			—			—			3,137,500
Issuance of warrants, options and common stock for services		—			189,469			1,436,393			—
Amortization of original issue discount		45,366			79,145			66,273			—
Amortization of acquired software developed		53,884			441,237			187,253			—
Amortization of prepaid consulting fees related to issuance of warrants and common stock		664,083			—			—			664,083
Exchange of assets for services		2,644			—			—			—
Employee compensation expense related to stock options-variable plan		96,800			—			—			96,800
Contributed services by an executive		24,500			—			—			24,500
Minority interest in loss of consolidated subsidiary		(150,000	)		—			—			(150,000	)
Re-pricing of common stock warrants		—			343,390			—			—
Interest expense related to common stock issued in excess of note payable		—			80,000			—			—
Forgiveness of note payable		—			—			(63,677	)		—
Changes in operating assets and liabilities:
Accounts receivable, net		154,980			72,974			(164,287	)		12,200
Inventories		7,983			13,683			40,184			—
Prepaid expenses		(212,684	)		(39,844	)		26,154			(251,135	)
Other assets		(2,890	)		63,670			175,084			—
Accounts payable		(195,280	)		(45,121	)		53,218			6,084
Deferred revenue		(130,498	)		292,741			(303,840	)		—
Accrued expenses		(28,224	)		(157,433	)		254,970			(172,964	)
Net cash used in operating activities		(405,362	)		(2,058,283	)		(3,843,954	)		(731,705	)
INVESTING ACTIVITIES:
Payments on note receivable		—			500,000			—			—
Proceeds from sale of property and equipment		109,895			52,145			—			—
Proceeds from sale of Epoxy Network (goodwill)		—			400,000			—			—
Proceeds from sale of prepaid royalties		540,105			—			—			—
Proceeds from sale of assets		752,426			—			—			—
Acquisition of Edge Technologies Incorporated		—			—			(750,711	)		—
Acquisition of Accounting Software Business subsidiaries		—			—			(1,422,511	)		—
Investment in exploration intangibles		(27,889	)		—			—			(27,889	)
Investment in prepaid exploration costs		(1,800,000	)		—			—			(1,800,000	)
Purchases of property and equipment		(3,880	)		(59,506	)		(134,026	)		—
Net cash provided by (used in) investing activities		(429,343	)		892,639			(2,307,248	)		(1,827,889	)
FINANCING ACTIVITIES:
Payments on bank line of credit		—			—			(277,381	)		—
Payments on capital lease obligations		—			—			(46,216	)		—
Payments on long-term debt		(837,158	)		(1,727,570	)		(534,672	)		—
Common stock repurchased		—			(63,035	)		(410,321	)		—
Cash proceeds from issuance of common stock		2,251,603			1,246,514			6,205,273			2,251,603
Cash proceeds from exercise of options		17,500			34,500			1,629,955			17,500
Cash proceeds from long-term debt		—			450,000			—			—
Net cash provided by (used in) financing activities		1,431,945			(59,591	)		6,566,638			2,269,103
CHANGE IN CASH AND CASH EQUIVALENTS OF
DISCONTINUED ACCOUNTING SOFTWARE BUSINESS		(246,461	)		(138,869	)		(387,578	)		(42,559	)
INCREASE (DECREASE) IN CASH EQUIVALENTS		350,779			(1,364,104	)		27,858			(333,050	)
CASH AND EQUIVALENTS, beginning of period		13,211			1,377,315			1,349,457			697,040
CASH AND EQUIVALENTS, end of period	$	363,990		$	13,211		$	1,377,315			363,990

F-3 

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Wits Basin Precious Minerals Inc.
Date:  May 17, 2004	By:	/s/ Mark D. Dacko
		Mark D. Dacko
		Chief Financial Officer