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