FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] NINE MONTHS REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Nine months period ended October 31, 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
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(State or other jurisdiction (I.R.S.
of incorporation or organization) Employer Identification No.)
1621 North 3rd Street, Suite 1000, Coeur d'Alene,ID 83814
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(Address of principal executive office)
(208)-664-6757
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(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 October 31, 2001.
Common Stock, par value $.001 44,398,384
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Title of Class Number of Shares
Transitional Small Business Disclosure Format Yes [ ] No [X]
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Index
Exchange Rates...............................................................1
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Conversion Table.............................................................1
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Forward Looking Statements...................................................1
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Part 1 - Financial Statements................................................1
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1.1 Consolidated Balance Sheet.......................................2
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1.4 Basis Of Presentation.................................................5
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1.6 Stockholders' Equity..................................................5
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Part 2 - Management's Discussion and Analysis or Plan of Operations..........5
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2.1 Organization and Business.............................................5
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2.2 Liquidity and Capital Resources.......................................5
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2.2.1 Short Term Liquidity.............................................5
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2.2.2 Long Term Liquidity..............................................6
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2.3 Results of Operations.................................................6
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2.4 Revenues..............................................................6
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2.5 Costs and Expenses....................................................6
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2.6 Commitments and Contingencies.........................................7
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2.7 Foreign Currency Exchange.............................................7
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2.8 Going Concern Consideration...........................................7
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2.9 Other.................................................................7
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2.10 Cautionary Note Regarding Forward-Looking Statements.................9
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Part 3 - Other Information...................................................9
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3.1 Legal Proceedings.....................................................9
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3.2 Changes in Securities.................................................9
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3.4 Submission of Matters to a Vote of Security Holders...................9
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3.5 Other information.....................................................9
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3.6 Exhibits and Reports on Form 8-K.....................................10
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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:
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1 mile = 1.6093 kilometers 1 metric tonne = 2,204.6 pounds
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1 foot = 0.305 meters 1 ounce (troy) = 31.1035 grams
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1 acre = 0.4047 hectare 1 imperial gallon = 4.5546 liters
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1 long ton = 2,240 pounds 1 liter = 1.057 U.S. quarts
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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.
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FISCHER-WATT GOLD COMPANY, INC. AND SUBSIDIARIES
Part 1 - Financial Statements
1.1 Consolidated Balance Sheet
Consolidated Balance Sheet
October 31, 2001
(Unaudited)
ASSETS
Current assets:
Cash $ 4,417
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Property and equipment, net 2,261
Other assets 34,889
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37,150
$ 41,567
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable $ 87,802
Notes payable - shareholders 110,500
Accounts payable and accrued expenses - shareholders 828,363
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Total current liabilities 1,026,665
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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 14,643,734
Accumulated deficit (15,673,230)
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(985,098)
$ 41,567
See the accompanying notes to the consolidated financial statements.
2
Consolidated Statements of Operations
Three Months and Nine Months Ended October 31, 2001 and 2000
(Unaudited)
Three Months Nine Months
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenue $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
Costs and expenses:
Exploration 42,351 -- 75,156 --
General and administrative 82,888 99,225 244,959 270,703
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125,239 99,225 320,115 270,703
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(Loss) from operations (125,239) (99,225) (320,115) (270,703)
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Other income and (expense): -- -- -- --
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Other income (expense), net -- -- -- --
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(Loss) from continuing operations (125,239) (99,225) (320,115) (270,703)
Discontinued operations:
(Loss) from the operations of Oronorte -- (427,314) -- (529,576)
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Net (loss) $ (125,239) $ (526,539) $ (320,115) $ (800,279)
============ ============ ============ ============
Per share information - basic and fully diluted
Discontinued operations $ -- $ (0.01) $ -- $ (0.01)
Continuing operations (0.00) (0.00) (0.01) (0.01)
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et (loss) per share $ (0.00) $ (0.01) $ (0.01) $ (0.02)
============ ============ ============ ============
Weighted average shares outstanding 44,398,384 41,665,050 44,398,384 40,753,940
============ ============ ============ ============
See the accompanying notes to the consolidated financial statements
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Fischer-Watt Gold Company, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Nine Months Ended October 31, 2001 and 2000
(Unaudited)
2001 2000
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Cash flows from operating activities:
Net cash (used in) operating activities $(141,533) $(146,576)
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Cash flows from investing activities:
Net cash provided by (used in) investing activities -- --
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Cash flows from financing activities:
Net cash provided by financing activities 125,563 159,500
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Increase (decrease) in cash and cash equivalents (15,970) 12,924
Cash and cash equivalents, beginning of period 20,387 6,185
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Cash and cash equivalents, end of period $ 4,417 $ 19,109
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See the accompanying notes to the consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 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
1.6 Stockholders' Equity
During the period ended October 31, 2001 a shareholder of the Company
contributed $125,563 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 nine months and three months ended October 31, 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 and base metals. The
Company presently has mineral interests in North Central Colombia and Central
Mexico. The Company's 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
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As of October 31, 2001, the Company had $4,417 in cash and accounts payable and
accrued expenses of $1.0 million.
On October 31, 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. To help eliminate this problem the Company
sold its Colombian operation during calendar year 2000 and is concentrating its
efforts in Mexico.
After taxes, Fischer-Watt incurred net loss of $320,000 for the first Nine
months of 2001 and a net loss of $801,000 for the period ended October 31, 2000.
The $481,000 improvement was due to a one-time adjustment in 2000 for loss
related to the sale of Oronorte. For the three months ending in October 2001 and
2000 the net loss was $125,000 and $527,000 respectively. The loss was due to
the lack of income producing operations and costs related to the development of
the Mexican property. On October 31, 2001 the accumulated deficit was $15.7
million.
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 $320,000 ($0.01 per share) compared to net loss of
$801,000 ($0.02 per share) in the Nine-month's ended October 31, 2001 and 2000,
respectively. For the comparable three months the net loss was $125,000 ($nil
per share) and $527,000 ($0.01 per share).
2.4 Revenues
The Company had no sales during the period.
2.5 Costs and Expenses
The cost of abandoned mineral interests was $-0- in Nine and three months ending
October 31, 2001 and 2000, respectively.
Abandonment's are a natural result of the Company's ongoing program of
acquisition, exploration and evaluation of mineral properties. When the Company
determines that a property lacks continuing economic value, it is abandoned. It
cannot be determined at this time when or if any of the Company's current
property interests will be abandoned.
Selling, general and administrative costs decreased to $245,000 for the nine
months ending October 31, 2001 from $271,000 for the nine months ending October
31, 2000. For the comparable three-month period the costs were $830,000 and
$99,000.
Exploration expense increased from $0 in the first nine months of fiscal 2000 to
$75,000 in the first nine months of fiscal 2001. For the comparable three months
period the costs increased from $0 to $42,000. This increase is due to
development of the acquisition of the La Balsa copper property in Mexico.
The Company had no interest expenses during the period.
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Other income (expenses) was $-0- for the period.
2.6 Commitments and Contingencies
Management is currently unaware of any legal action against 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 an accumulated deficit of $15.7 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.
On November 21, 2000, the Company announced that it had signed a letter on
intent to sell the Oronorte operations to Groupo de Bullet, a Colombian Company.
This sale included the El Limon mine and its related support facilities as well
as all of companies the exploration and development properties in the country.
The sale price was US$3.7 million which will be paid as a 3% NSR. If Groupe de
Bullet vends the property to a third party within two years the full amount will
due upon sale, less a sales commission.
2.9 Other
In August 2000, the Mexican government issued the Company the rights to a series
of contagious mining concessions. The concessions cover approximately 500
hectares and are located 12 km north of Lazaro Cardenas, Michoacan. Work done by
previous concession holders includes 42 diamond drill holes, 35 percussion drill
holes and a very preliminary feasibility study.
In October 2000 the Company retained K D Engineering, Tucson, Arizona, to
perform a feasibility study on the Balsa Project. Simultaneously, Mintec, Inc.,
Tucson, Arizona, was retained to determine the ore reserves and complete a mine
design. K D Engineering subcontracted the geotechnical portion of the study to
the Tucson office of Golder Associates. A pre-feasibility study was completed on
January 4, 2001 and is summarized below.
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Class Type Tonne %Cu
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Measured Clay Oxide 556,447 0.998
Rock Oxide 2,081,640 0.878
Sulphide 6,481,094 2.677
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Sub Total 9,119,181 2.164
Indicated Clay Oxide 103,041 0.939
Rock Oxide 1,246,182 0.548
Sulphide 2,147,934 0.206
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Sub Total 3,497,157 0.349
Inferred Clay Oxide 3,221 0.728
Rock Oxide 186,425 0.442
Sulphide 11,684,788 0.154
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Sub Total 11,874,434 0.159
Total Clay Oxide 662,709 0.99
Rock Oxide 3,514,247 0.74
Sulphide 20,313,816 0.96
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Total 24,490,772 0.93
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Class Type Tonne %Cu
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Measured Clay Oxide 659,488 0.989
and Rock Oxide 3,327,822 0.754
Indicated Sulphide 8,629,028 2.062
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Sub Total 12,616,338 1.661
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Total Tonne mined 3.5 million
Average Grade of Ore Mined 1.42% Cu
Striping Ratio (Waste to Ore) 0.68:1
Ton per day of refined copper 14
Process SX-EW
Type of Copper Produced Electrolytic
Total Capital Requirement $10 million (Approximately)
Project Life 7.5 years
Cash Cost per Lb of Cu $0.54
Revenue @ $0.85 per Lb of Cu $66 million
In August 2001 Mexican authorities notified the Company that the challenges to
the title had be resolved in the companies favor. Titles were issued the same
month.
On September 28, 2001 the Company began a drilling program at the La Balsa
project. This program was initiated to conferm and expand the reserves, provide
a better understanding of the geology, and to provide material for additional
8
metallurgical testing. The drilling consisted of 435 meters of core. The work
was preformed by B.D.W. Drilling, Guadalajara, Jalisco and supervised by
Resource Geosciences de Mexico, Hermosillo, Sonora. The samples from the
drilling are currently in the Vancouver, B.C. laboratory of Bonder Clegg for
analysis. Results are expected within 30 days. Concurrent with this work,
Seegmiller and Associates, an international recognized slope stability firm
based in Salt Lake City, Utah, preformed various rock mechanic studies and slope
stability analysis. Aguayo and Associates of Hermosillo, Sonora, preformed
environmental testing for potential acid rock drainage on representative
samples.
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
None
3.2 Changes in Securities
None
3.4 Submission of Matters to a Vote of Security Holders
None
3.5 Other information
None
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3.6 Exhibits and Reports on Form 8-K
A. Exhibits
B. Reports on Form 8-K None.
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: November 29, 2001 By: /s/ George Beattie
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George Beattie, President,
Chief Executive Officer
(Principal Executive Officer)
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