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 APRIL 30, 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 registrant 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) (Zip Code)
(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 of Common Stock, $0.001 par value,
outstanding as of May 22, 1995 was 12,344,000
Transition Small Business Disclosure Format (check one):
Yes [ ] No [X]
Part 1 - Financial Information
Item 1. Financial Statements
FISCHER-WATT GOLD COMPANY, INC.
BALANCE SHEETS
April 30, January 31,
ASSETS 1995 1995
(Unaudited)
CURRENT ASSETS:
Cash $ 10,000 $ 6,000
Trading securities 278,000 358,000
Accounts receivable 13,000 2,000
Other current assets 4,000 6,000
------- -------
Total current assets 305,000 372,000
MINERAL INTERESTS 360,000 387,000
MINING AND OTHER EQUIPMENT 51,000 50,000
LESS DEPRECIATION, DEPLETION
AND AMORTIZATION ( 35,000) ( 36,000)
------- -------
376,000 401,000
INVESTMENT IN HONDURAN CORPORATION 100,000 91,000
OTHER ASSETS 27,000 27,000
------- -------
Total assets $ 808,000 $ 891,000
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 95,000 $ 89,000
Notes payable 500,000 500,000
Accrued payroll and benefits 43,000 59,000
Accrued interest expense 45,000 51,000
Other accrued liabilities 32,000 31,000
------- -------
Total current liabilities 715,000 730,000
LONG TERM LIABILITIES:
Nonrecourse debt (Note 5) 96,000 87,000
Total liabilities 811,000 817,000
COMMITMENTS AND CONTINGENCIES,
Notes 1,3, 6
SHAREHOLDERS' (DEFICIT) EQUITY:
Common stock, $0.001 par value,
50,000,000 shares authorized;
12,344,000 shares outstanding
at April and January 1995 12,000 12,000
Additional paid-in capital 5,773,000 5,773,000
Deficit (5,788,000) (5,711,000)
-------- --------
Total shareholders' (deficit) equity (3,000) 74,000
-------- --------
Total liabilities and
shareholders' equity $ 808,000 $ 891,000
-------- --------
The accompanying notes are an integral part of these balance
sheets.
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended April 30,
1995 1994
------ ------
REVENUES:
Gain on sale of mineral interest $ - $ 109,000
COSTS AND EXPENSES:
Abandoned properties and prospects 22,000 -
Generative exploration expense 3,000 -
Operating and administrative 48,000 72,000
Public company costs 21,000 21,000
------ ------
94,000 93,000
------ ------
OTHER INCOME (EXPENSE):
Interest expense ( 22,000) ( 19,000)
Unrealized gain on trading securities 50,000 -
Other (expense) income ( 11,000) 20,000
------ ------
17,000 1,000
------ ------
Net (loss) income before income taxes ( 76,000) 17,000
TAX PROVISION ( 1,000) ( 1,000)
------ -------
NET (LOSS) INCOME $ ( 77,000) $ 16,000
------ -------
(LOSS) INCOME PER SHARE AND
COMMON EQUIVALENT $( .01 ) $ .00
------ ------
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 12,344,000 12,344,000
---------- ----------
The accompanying notes are an integral part of these statements.
FISCHER-WATT GOLD COMPANY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
April 30,
1995 1994
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income $ ( 77,000) $16,000
Adjustments to reconcile net (loss
income to net cash used in
operating activities-
Unrealized gain on trading securities ( 50,000) -
Gain on sale of mineral interest - (109,000)
Abandoned properties and prospects 22,000 -
Generative exploration expensed 2,000 -
Depreciation and amortization - 1,000
Accrued interest added to
principal balance 20,000 21,000
(Increase) decrease in receivables and
other current assets (9,000) -
Gain on sale of equipment - ( 20,000)
Proceeds from sale of trading securities 117,000 -
Loss on sale of trading securities 13,000 -
(Decrease) increase in accounts payable
and accrued liabilities ( 12,000) ( 55,000)
-------- --------
Net cash provided by (used in)
operating activities 26,000 ( 46,000)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of
mineral interest - 105,000
Property acquisition and development costs(17,000) (13,000)
Investment in Honduran Corporation ( 9,000) -
Investment in Mexican Corporation - ( 1,000)
Equipment acquired ( 2,000) ( 3,000)
-------- --------
Net cash (used in) provided by
investing activities ( 28,000) 88,000
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 6,000 -
-------- --------
Net cash provided by (used in)
financing activities 6,000 -
-------- --------
NET INCREASE (DECREASE) IN CASH 4,000 (58,000)
CASH, at beginning of period 6,000 106,000
CASH, at end of period $ 10,000 $ 48,000
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $2,000 $ 1,000
SUPPLEMENTAL DISCLOSURE OF SIGNIFICANT
NONCASH ACTIVITIES:
Application of bonus on unproven
property to offset accrued
interest expense $ 25,000 $ 25,000
Cost basis of trading securities
sold in connection with loss on
trading securities $130,000 -
Short-term debt eliminated in
connection with sale of
mineral interest $ - $ 90,000
Cost basis in mineral interest
sold in connection with short-
term debt eliminated $ - $ 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 FINANCIAL STATEMENTS
(UNAUDITED)
(1) FINANCIAL STATEMENT ADJUSTMENTS AND FOOTNOTES DISCLOSURES
The accompanying financial statements are unaudited; however, in
the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation
have been made. 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").
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 a sale of a mineral interest. Since the
Company has no sustaining income or cash flow from operations,
it is currently funding its operations from proceeds of property
sales and 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 future
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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Gain on Sale of Mineral Interest--Gain on sale of mineral
interests represents the excess of the proceeds realized from the
sale of a mineral interest over the Company's cost basis in that
property. In March 1994, Fischer-Watt optioned its interest in
the San Andres mineral property in Honduras to Greenstone
Resources Ltd. ("Greenstone"). In October 1994, the option was
exercised. Fischer-Watt's gross proceeds from the sale of this
property were $955,000 ($161,000 in cash, $700,000 worth of
Greenstone's restricted common stock plus elimination of its
$94,000 debt to Greenstone). Fischer-Watt's cost basis in the
property was $86,000 resulting in a realized gain of $869,000
from the sale and exercise of the option. (See Note 5)
Bonuses--As an incentive to enter into a joint exploration and
development agreement, Fischer-Watt may receive bonus payments.
The bonus payments are recognized as revenue if the agreement
entered into relates to a proven property. For unproven
properties, bonus payments are first applied as a reduction of
the cost basis of the property with any excess being recognized
as revenue.
Trading Securities
Shares of Greenstone Resources Ltd.--The Company received 427,300
restricted shares of Greenstone Resources Ltd. ("Greenstone"),
common stock upon exercise of the San Andres option (Note 5).
These shares were valued at $700,000 which was the average of the
daily closing price on the Toronto Stock Exchange for the five
trading days preceding the exercise date of the option, adjusted
to United States dollars.
In the quarter ended April 30, 1995, the Company sold 119,000
shares and received net proceeds of $117,000 which resulted in a
loss on the sale of trading securities of $13,000 which is shown
on the statement of operations.
The Company has adopted Statement of Financial Accounting
Standards ("SFAS ") No. 115 which applies to certain investments
in equity securities. At April 30, 1995, the Company held
208,300 shares of Greenstone stock. Since the shares are listed
on both NASDAQ and the Toronto Stock Exchange, the average
closing price (converted to United States dollars) of the two
exchanges was used to determine the fair value. The fair value
was determined to be $278,000 which resulted in an unrealized
gain on trading securities of $50,000. The gain is included in
the statements of operations.
Abandonment of Mineral Interests
Mineral Interests in unproven properties are evaluated on a
quarterly basis for possible impairment. Management evaluation
considers all the facts and circumstances known about each
property including: the results of drilling and other
exploration activities to date; the desirability and likelihood
that additional future exploration activities will be undertaken
by the Company or by others; the land holding costs including
work commitments, rental and royalty payments and other lease and
claim maintenance commitments; the expiration date of the lease
including any earlier dates by which notice of intent to
terminate the lease must be given in order to avoid work
commitments; the accessibility of the property; the ability and
likelihood to joint venture the property with others; and, if
producing, the cost and revenue of operation.
Unproven properties are considered fully or partially impaired,
and are fully or partially abandoned, at the earliest of the time
that: geologic mapping, surface sample assays or drilling results
fail to confirm the geologic concepts involved at the time the
property was acquired; a decision is made not to perform the work
commitments or to make the lease payments required to retain the
property; the Company discontinues its efforts to find a joint
venture partner to fund future exploration activities and has
decided not to fund those costs itself; or, the time the property
interest terminates by contract or by operation of law.
Reclamation Liabilities
Reclamation liabilities are recorded as liabilities (and as a
cost of the related property) in the period in which the drilling
or mining activity which generates the reclamation requirement
occurs.
Generative Exploration Expense
The costs of generative exploration activities that do not result
in the acquisition of mineral interests are expensed.
Income Taxes
Because of the Company's exploration activities and net operating
loss carryovers, the tax rate for the year ended January 31, 1995
was zero. Accordingly, no provision for Federal Income taxes was
mad in the statement of operations for the quarter ended April
30, 1995.
Earnings Per Share
Net (loss) income per common share has been computed on the basis
of the weighted average number of common shares outstanding
during each period. Shares issuable upon exercise of outstanding
stock options have been excluded from the computation as their
effect would be anti-dilutive.
(3) PROPERTY AND EQUIPMENT
A summary of the cost basis of mineral properties and prospects
as of April 30 and January 31, 1995, is:
April 30 January 31
-------- --------
Oatman (United Western), Arizona $ 136,000 $ 136,000
Modoc, California 72,000 72,000
Minas de Oro, Honduras * 41,000 59,000
Tuscarora, Nevada 77,000 77,000
America Mine, California 17,000 16,000
Other mineral interests
(each less than $20,000) 17,000 27,000
-------- --------
$ 360,000 $ 387,000
* In February 1995, an agreement was made to sell all of
Fischer-Watt's interest in Minas de Oro to Tombstone Explorations
Company Ltd. The transaction closed on May 16, 1995. (See Item 2
"Subsequent Event" and Note 4.)
The Company's property interests require minimum payments to be
made, or work commitments to be satisfied, to maintain ownership
of the property. 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 April 30, 1996
Lease Work J.V. Net FWG
Property Payments Commit. Total Share Cost
- - -------- -------- -------- -------- -------- --------
America $48,000 $106,000 $154,000 $154,000 $ -
Minas de Oro* 45,000 157,000 202,000 202,000 -
Tuscarora - 2,000 2,000 2,000 -
Modoc 20,000 - 20,000 20,000 -
Oatman - - - - -
Other 48,000 193,000 241,000 191,000 50,000
------ -------- -------- -------- -------
Totals $161,000 $458,000 $619,000 $569,000 $50,000
* In February 1995, an agreement was made to sell all of
Fischer-Watt's interest in Minas de Oro to Tombstone Explorations
Company Ltd. The transaction closed on May 16, 1995. (See Item 2
"Subsequent Event" and Note 4.)
(4) NOTES PAYABLE
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 bears interest at
the higher of 10% or prime plus 5% and is secured by the
Company's interest in the America Mine property.
AT APRIL 30, 1995, THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF
PRINCIPAL AND INTEREST ON THIS LOAN. Principal and interest of
$542,000 were due and payable. Kennecott has not agreed with the
amount of unpaid interest due to a difference in interpretation
of the timing of the initial starting date of semi-annual,
recoupable, advance royalty payments due Fischer-Watt on the
Minas de Oro property in Honduras. The differing amounts with
accrued interest total approximately $33,000. However, upon
closing of the Tombstone Explorations Company Ltd.'s
("Tombstone") purchase of the Minas de Oro property, the entire
loan amount, plus accrued interest, regardless of the amount, was
canceled. When the Tombstone transaction closed, the Company had
a recognized gain of approximately $650,000, of which $150,000
was cash. (See Item 2 "Subsequent Event".)
(5) GREENSTONE RESOURCES TRANSACTIONS
On November 2, 1993, the Company signed a letter of intent to be
acquired by Greenstone Resources Ltd. During the due diligence
period, Greenstone advanced funds to the Company for current
operations. The proposed merger was terminated by Greenstone in
February 1994. Greenstone advanced $94,000 during that period.
In March 1994, Fischer-Watt 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 consideration for the
option, Greenstone paid Fischer-Watt $105,000 and forgave $90,000
of a $94,000 loan provided to Fischer-Watt pursuant to the
terminated merger transaction. At April 30, 1994, the Company
recognized a gain of $109,000 on this transaction.
Greenstone exercised its option on October 31, 1994 by forgiving
the remaining loan balance of $4,000, 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 and is currently producing 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
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 Company believes that the total loan amount may eventually
exceed $250,000. The loan is nonrecourse as to both principal
and interest to the Company and is to be repaid out of dividends,
if any, from the Copan shares. The shares are pledged to
Greenstone as collateral for the loan which is due on or before
December 31, 1999. At April 30,1995, this loan plus associated
accrued interest totaled $96,000. At May 22, 1995, the Company
owned, or had options to purchase, seven percent of the
outstanding shares of Copan.
(6) 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. However, all of these payments may be avoided
by timely forfeiture of the related property interest. (See Note
3).
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following is a discussion of Fischer-Watt Gold Company,
Inc.'s ("Fischer-Watt" or the "Company") current financial
condition as well as its operations for the three months ended
April 30, 1995 (fiscal 1996) and April 30, 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
Short-Term Liquidity
As of May 22, 1995, the Company had $164,000 in cash and accounts
payable of $64,000. The Company also has 198,300 shares of
Greenstone common stock that had an approximate market value of
$310,000 that could be sold to provide funds for operations.
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. AT APRIL 30,
1995, THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF PRINCIPAL OF
$500,000 AND ACCRUED INTEREST OF $42,000 ON THIS LOAN.
Fischer-Watt and Kennecott disagreed upon the amount of unpaid
interest due to a difference in interpretation of the timing of
the initial starting date of semi-annual, recoupable, advance
royalty payments due Fischer-Watt on the Minas de Oro property in
Honduras. The differing amounts with accrued interest total
approximately $33,000.
Subsequent Event
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. Under the terms of the
agreement, Tombstone agreed to pay Fischer-Watt $150,000 in cash
and deliver 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 provided $150,000 in cash and eliminated the
$500,000 debt and accrued interest to Kennecott Exploration
Company. (See Note 4 to Financial Statements)
The Company's net cash provided by operating activities during
the first quarter of fiscal 1996 was $26,000 compared to $46,000
used during the first quarter of the prior year. This increase
in cash provided of $72,000 is due primarily to the Company's
proceeds from the sale of trading securities as reduced by a net
loss, as adjusted to eliminate noncash items (unrealized gain on
trading securities and abandonments of properties and prospects).
This compares with net income of $16,000 in the prior year which
was primarily the result of gains on the sale of a mineral
interest and on the sale of equipment, reduced by a reduction in
accounts payable. In the April 30, 1994 period, the accounts
payable decreased $55,000 during that quarter as the Company had
some funds available to pay a portion of its overdue bills. The
$12,000 reduction in accounts payable in the April 30, 1995 is
more reflective of normal operations and demonstrated the ability
of the Company to continue its program of repaying its old bills
in a consistent and timely manner.
Net cash provided by investing activities was $88,000 in the
first quarter of fiscal 1995 compared to $28,000 used in the
first quarter of fiscal 1996. This decrease of cash provided
of $116,000 results primarily from the proceeds of the sale of
mineral property in the April 30, 1994 quarter. There were no
property sales in the April 30, 1995 period. The $28,000 of
cash used in investing activities during the first quarter of
fiscal 1996 was not reflective of normal investments in property
acquisition and development costs. If available, significantly
more cash would have been used to explore for and acquire mineral
properties.
Proceeds from long-term debt was $6,000 in the quarter ended
April 30, 1995. There was no net cash provided by, or used
for,financing activities in the first quarter of fiscal 1995.
On April 30, 1995, Fischer-Watt's current ratio was .4:1 based on
current assets of $305,000 and current liabilities of $715,000.
On January 31, 1995, its current ratio was .5:1 based upon
current assets of $372,000 and current liabilities of $730,000.
While the current ratio was little changed, both the current
assets and current liabilities decreased in the current quarter.
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
period which are due and payable within the next 12 months.
Long-Term Liquidity
The Company plans to continue its search for long-term debt or
equity capital to fund its proposed operating and exploration
activities until these activities can be funded from production
of mineral resources.
At April 30, 1995, the Company's long-term debt consisted
entirely of a nonrecourse loan from Greenstone Resources Canada
Ltd. The loan was negotiated as part of 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 Company believes that the total loan
amount may eventually exceed $250,000. The loan is nonrecourse
as to both principal and interest to the Company and is to be
repaid out of dividends, if any, from the Copan shares. The
shares are pledged to Greenstone as collateral for the loan which
is due on or before December 31, 1999. At April 30, 1995, this
loan plus associated accrued interest totaled $96,000. At May
22, 1995, the Company owned, or had options to purchase, seven
percent of the outstanding shares of Copan. (See Note 5 to
Financial Statements.)
RESULTS OF OPERATIONS
Fischer-Watt had a net loss of $77,000, or $.01 per share, in the
quarter ended April 30, 1995 compared to net income of $16,000,
or $.00 per share in the quarter ended April 30, 1994. The loss
would have been larger except for an unrealized gain on trading
securities of $50,000 in the current quarter. (See Note 2 to
Financial Statements.)
The most significant reason for the difference in the two periods
was the gain of $109,000 realized from the sale of an option to
purchase Fischer-Watt's interest in the San Andres property
during the first quarter of fiscal 1995. In March 1994,
Fischer-Watt 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 consideration for the option,
Greenstone paid Fischer-Watt $105,000 and forgave $90,000 of a
$94,000 loan provided to Fischer-Watt pursuant to a terminated
merger transaction. Greenstone exercised its option on October
31, 1994 by forgiving the remaining loan balance of $4,000,
paying Fischer-Watt a further $56,000 and issuing it $700,000
worth of Greenstone common stock, valued at the time of exercise.
During the April 30, 1994 quarter, the Company had a $33,000 gain
on the sale of equipment,primarily as a result of vehicles and
equipment sold as a result of agreements with former employees.
No sales of mineral interests or equipment were made in the April
30, 1995 quarter.
Other items
Abandonments totaled $22,000 in the quarter ended April 30, 1995.
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
cost of $22,000. An additional $2,000 of generative exploration
expense was incurred when a prospect in Nevada was abandoned when
the Company decided not to fund the work needed to perfect its
mining claims. There were no abandonments or generative
exploration expense in the quarter ended April 30, 1994.
Operating and administrative costs decreased from $72,000 in the
first quarter of fiscal 1995 to $48,000 in the first quarter of
fiscal 1996. The $24,000 reduction in fiscal 1996 was primarily
the result of lower office occupancy costs and the elimination of
costs associated with the employee termination settlements in the
prior year.
Public company costs were $21,000 in both first quarter of
fiscal 1996 and in the first quarter of fiscal 1995. These costs
do not reflect normal operations and consist primarily of costs
associated with accounting requirements pursuant to Securities
and Exchange rules and regulations.
Interest expense increased to $22,000 in the first quarter of
fiscal 1996 from $19,000 in the first quarter of fiscal 1995.
This increase is due primarily to accrued interest tied to the
prime rate on the note payable to Kennecott. The prime rate
increased four times from fiscal 1995 to fiscal 1996.
Other income decreased from $20,000 in the first quarter of
fiscal 1995 to a $11,000 loss in the first quarter of fiscal
1996. In the first quarter or fiscal 1996, the Company had a
loss on the sale of trading securities of $13,000. In the first
quarter of fiscal 1995 the Company had a gain on the sale of
vehicles and equipment to former employees pursuant to employee
settlement agreements. No such sales occurred in the quarter
ended April 30, 1995.
Part II - Other Information
Item 3. Defaults Upon Senior Securities
In March 1992, Kennecott Exploration Company loaned Fischer-Watt
$500,000. Principal and interest on this loan was repayable in
monthly installments of $100,000 beginning August 1, 1992. The
loan bears interest at the higher of 10% or prime plus 5% and is
secured by the Company's interest in the America Mine property.
As of April 30, 1995, no payments have been made on this loan.
THE COMPANY WAS IN DEFAULT ON THE PAYMENT OF PRINCIPAL AND
INTEREST ON THIS LOAN. As of April 30, 1995, principal and
interest of $542,000 were due and payable.
On May 16, 1995, the default was cured when the sale of the Minas
de Oro mineral interest to Tombstone closed and the note and all
accrued interest were canceled. (See Item 2"Subsequent Event"
and Note 4 to Financial Statements.)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit Item 601
No. Category Exhibit
- - ------- -------- -------
1 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.
2 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.
3 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.
4 10 First Amendment to Exploration Agreement and Mining
Venture Agreement dated March 25, 1992 between
Kennecott Exploration Company and Fischer-Watt Gold
Company, Inc., and filed as Exhibit 45.10 to Form
10-K filed April 22, 1993 and incorporated herein by
reference.
5 10 Financial Advisor Agreement dated July 1, 1993
between Donald Lawrence and Evans Investment
Management and Fischer-Watt Gold Company, Inc.,
whereby Donald Lawrence and Evans Investment
Management will provide financial and investment
advice for a three year period in exchange for shares
of Fischer-Watt's restricted common stock and filed
as Exhibit 48.10 to Form 10-Q filed September 9, 1993
and incorporated herein by reference.
6 10 Greenstone Letter Agreement dated November 2, 1993
whereby Greenstone Resources Ltd., and Fischer-Watt
Gold Company, Inc. agree to a merger of Fischer-Watt
Gold Company, Inc., with a wholly-owned subsidiary of
Greenstone and filed as Exhibit 49.10 to Form 10-Q
filed December 10, 1993 and incorporated herein by
reference.
7 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.
8 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.
9 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.
10 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.
11 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.
12 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.
13 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.
14 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.
15 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.
16 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.
17 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.
18 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.
19 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.
20 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.
21 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.
22 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.
23 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.
24 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.
25 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.
26 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.
27 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.
28 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.
29 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.
30 27 Financial Data Schedule for the quarterly period
ended April 30, 1995.
(b) Reports on Form 8-K - NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
by the undersigned thereunto duly authorized.
FISCHER-WATT GOLD COMPANY, INC.
June 2, 1995 By George Beattie
(Signature)
George Beattie, President,
Chief Executive Officer
(Principal Executive Officer),
Chief Financial Officer
(Principal Financial Officer),
Chairman of the Board and
Director