FISHER WATT GOLD CO INC, 10KSB, 2000-06-05

FISHER WATT GOLD CO INC
10KSB, 2000-06-05
GOLD AND SILVER ORES

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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]

For the fiscal year ended January 31, 2000

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) of THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]

For the Transition period from to
------- -------

Commission file number 0-17386

FISCHER-WATT GOLD COMPANY, INC.
-------------------------------
(Name of small business issuer in its Charter)

Nevada 88-0227654
------ ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization

1621 North 3rd Street, Suite 1000
Coeur d'Alene, Idaho 83814
-------------------- -----
(Address of principal executive offices) (Zip Code)

(Issuer's telephone number, including area code) 208-664-6757

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 Par Value
------------------------------
(Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

The issuer's revenues for its most recent fiscal year were

The aggregate market value of the voting stock held by non-affiliates as of May
1, 1999 (using the average of the Bid and Asked prices) was $2,417,903

The number of Shares of Common Stock, $.001 par value, outstanding on January,
2000 was 40,298,384.

Documents Incorporated by Reference into this Report: Yes

Transitional Small Business Disclosure Format (check one) Yes [ ] No [ X ]

06/05/00 FY 1999

1
<PAGE>

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 imperial gallon = 1.2010 U.S.
gallons
----------------------------------------------------------------------

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.

PART 1

Item 1. DESCRIPTION OF BUSINESS

Introduction

Fischer-Watt Gold Company, Inc. (collectively with its subsidiaries,
"Fischer-Watt", "FWG" or the "Company"), was formed under the laws of the State
of Nevada in 1986. Fischer-Watt's primary business is mining and mineral
exploration, and to that end to own, acquire, improve, sell, lease, convey lands
or mineral claims or any right, title or interest therein; and to search,
explore, prospect or drill for and exploit ores and minerals therein or
thereupon.

2
<PAGE>

During the fiscal year ending January 31, 2000, no material acquisitions were
completed by the Company.

During fiscal year 1999, the Company's only producing metals property was the El
Limon Mine in the Oronorte district in Colombia, South America. The Company
assumed control of operations in late August 1995 after purchasing it from
Greenstone Resources of Canada. During calendar year 1999 the mine produced
4,160 ounces of gold and a like amount of silver.

The Company revenue for the year was $1,025,000 the cost of sales were
$1,296,000 and General and administrative expense's were $1,114,000. The average
selling price for gold during the year was $279 per ounce.

During the year an aggressive cost reduction program was maintained.

Throughout the year the Company was beset by labor problems at its Oronorte
Mine. This resulted in a strike in May and numerous work stoppages and slow work
situations during the rest of the year. This situation is the result of
political instability in the country and agitation of the work force by outside
interests. This is not expected to change in the near future. As a result of the
Colombian situation, and the depressed selling price of gold, the Company
decreased the value of its Colombian assets by $2.4 million.

Operations

The cash cost per ounce of gold was $211.94 in fiscal 1998 and rose to $311 in
fiscal year 1999. This change was the result of labor unrest resulting in a 75%
decline in production.

The Company sells most of its precious metal production to one customer. However
due to the nature of the precious metals market the Company is not dependent
upon this significant customer to provide a market for its products. Although
the Company could be directly affected by weakness in the precious metals
processing business, the Company monitors the financial condition of its
customer and considers the risk of credit loss to be remote.

Production from the El Limon Mine comes from a single vein with an average dip
of 42(degree) and an average width of 0.5 meter. The average grade of this vein
is 38 grams of gold per tonne. Prior to the time that the company took over the
operation the average grade of the ore being sent to the plant for processing
was only 11 grams per tonne or 30 % of the available value of the vein. It was
apparent from this data that a study program which would identify methods to
improve the grade of the ore being sent to the processing plant was necessary.
Several steps have been taken already as a result of this grade control program
and more will follow. The actions which are already underway are as follows:

The previous mining method required a minimum stoping width of 1.24 meters and
made it necessary for the miners to stand on a slippery slope of 42 degrees
while drilling the holes required to blast the ore and waste. These requirements
dictated that at a minimum the grade of the ore being sent to the processing
plant would be diluted by 70% and that the productivity of the miners would be
restricted. A new mining method has been designed and put into operation which
reduces the minimum stoping width to 1 meter metereet and enables the miners to
work down the 42 degree slope and stand on solid rock while drilling.

3
<PAGE>

The vein at the El Limon Mine is composed of a white, opaque quartz which
normally breaks into pieces two inches in diameter or smaller when blasted.
However the waste material surrounding the vein is a very dark colored
metasediment which normally breaks into much larger pieces. The difference in
breaking size between the ore material and the waste has been put to use
underground by passing all of the blasted material on a two inch grizzly
(screen), separating the oversize material and putting it back into mined out
working places (stopes) for ground support.

Analysis of the sand size particles produced by blasting in the stopes showed
that they contain significant amounts of gold and a system has been constructed
which allows sthis fine material to be washed off of the larger fragments of the
ore and waste, collected in various sumps underground and on surface and pumped
to the processing plant. This washing system in addition to recovering high
grade fines allows for visual discernment of ore and waste and manual separation
as the material proceeds from underground to the processing plant. Installation
of the, slurry pumping system which was designed to be done in phases was
completed 1998.

The results of this grade control program to date have been impressive. As
stated previously the average feed grade prior to the company taking control of
the mine was 11 grams per tonne whereas the average grade presently is 22 grams
per tonne.

The characteristics of the ore body, such as vein width and grade, have not
changed. The improved output is being accomplished by a two stage upgrading of
the mined ore where waste rock that became mixed in with the vein material
during the mining sequence is removed prior to the ore being milled. A large
percentage of this waste is now being removed while the ore is still
underground. The separation is based on the different breakage characteristics
of the ore and waste with the waste rock breaking into larger fragments than the
vein material. A second ore and waste separation is carried out on the surface.
This sorting is based on color since the waste rock is a uniform dark rock
compared to the lighter colored ore.

To reduce costs and improve efficiencies, personnel changes and realignment are
continuing to take place, a new cost control system has been introduced, an
improved metal revenue enhancement program implemented, a cyanidation treatment
plant has been commissioned , the size of the support staff was reduced and
improved purchasing procedures put in place at both the mine site and Medellin
office.

Mine Development

A change in the mining method at the El Limon Mine has increased productivity in
the stopes and development of a new level, Level 6, is underway. The capacity of
the locomotive ore cars, and mucking machines, assigned to Level 6 was increased
to improve the efficiency of development and production. Initial work to develop
Level 7 has begun.

The La Aurora is approximately six kilometers south of El Limon Mine and is
close to a publicly maintained highway. It is accessed by a 310 meter long
decline ramp which was constructed with rubber tired mining equipment. The ramp
intersects a vein structure similar to El Limon. The mine will utilize low cost,
trackless, mining methods. The mine is fully developed but was placed on standby
in October awaiting improvement in the price of gold and improved regional
security. When operational, the ore from the La Aurora will be transported to
the mill at El Limon.

4
<PAGE>

Development of this second property, the Juan Vara, has been temporarily
suspended due to the low price of gold . The Juan Vara is approximately two
kilometers from the El Limon Mine processing plant.

Exploration

Exploration at the El Limon Mine is focused primarily on confirmation and
delineation of extensions of the El Limon Mine vein. An ongoing program of
drilling from selected locations on Levels 5 and 6 has proven vein continuity
both horizontally and at depth. To the north, Level 5 development has exposed
120 meters of the vein with an average width of 0.5 meters and average grade of
over 35 grams of gold per tonne. Drilling has confirmed the continuity of the
vein on Level 7.

In December, 1996, the Company announced the acquisition of the 200 hectare El
Veinte property, located approximately 14 kilometers south of the El Limon Mine.
The El Veinte is viewed as having similar geology to the El Carmen. Drilling at
the El Veinte was planned for this year but was suspended to conserve cash .

Do to the low price of gold and the poor cash position of the Company, all of
the companies exploration properties were critically evaluated for potential. As
a result of this evaluation all of the U. S. exploration properties were dropped
except the Castle. Castle Property was assigned to a privately held Company,
Plator West Inc.. FWG retains a 1.0% Net Smelter Return (NSR) royalty interest
in the property.

Plan of Operation

The Company anticipates that it will, during fiscal 2000, continue to improve
its operations at Oronorte. This will include additional capital expenditures
for shaft rehabilitation and improved hoisting at the El Limon Mine, processing
plant improvements and expansion at the El Limon Mine. The plans are totally
dependent on improvement in the labor and political climate in Colombia. The
Company has no assurances that this improvement will take place. . The company
sells 100% of its product in Colombia.

Fischer-Watt incurred a net loss of $2,565,000 in fiscal 1999 compared to a net
loss of $1,873,000 in fiscal 1998. The Company has an accumulated deficit of
$16.4 million and continues to experience negative cash flows from operations.
The Company did report net income in fiscal 1997, however this was principally
the result of realized gains on the sale of non-producing mineral properties.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern.

The Company was adversely affected by the marked decline in the price of gold,
its primarily product. The selling price of gold declined from $359 per ounce in
January, 1997, to $279 per ounce in December, 1999. Gold reached a 20 year low
of $253 per ounce in August 1999. This $107 decline significantly reduced the
Company's revenues. The El Limon mine varied between break-even, negative and
positive cash flow depending on the price of gold and various operating costs.
To conserve cash, management has closed the Reno, Nevada, office, reduced the
staff at the Coeur d' Alene, Idaho, and Medellin, Colombia, offices. In addition
exploration activities have been eliminated.

5
<PAGE>

If the business climate improves in Colombia management believes that the El
Limon Mine gold property, held by Oronorte, will generate sufficient cash flows
to fund the Company's mining operations and exploration and development efforts.

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, improved labor and operating conditions, 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 mid part of calendar year 2000. The Company is presently
investigating all of the alternatives identified above to meet its short-term
liquidity needs. The Company believes that it can arrange a transaction or
transactions to meet its short-term liquidity needs, however there can be no
assurance that any such transactions will be concluded or that if concluded they
will be on terms favorable to the Company.

Cautionary Statements

The factors below are believed to be important factors (but not necessarily all
the important factors) that could cause actual results to differ materially from
those expressed in any forward-looking statement made by or on behalf of the
Company. Unpredictable or unknown factors not discussed herein could also have
material adverse effects on actual results of matters that are the subject of
forward-looking statements. The Company does not intend to update these
cautionary statements.

Exploration Programs and Financing

The Company intends to continue its exploration program in Colombia and other
countries. It is not known if the expenditures to be made by the Company on its
mineral properties will result in discoveries of commercial quantities of ore.
If the Company's efforts are not successful at individual properties, the
expenditures at those properties will be written off.

Regulation

Mining operations and exploration activities in Colombia are subject to various
governmental laws and regulations governing prospecting, development, mining,
production, importing and exporting of minerals; taxes; labour standards;
occupational health; waste disposal; protection of the environment; mine safety;
toxic substances; and other matters. Licences and permits are required to
conduct exploration and mining operations. There is no assurance that such
permits will be granted. Amendment to current laws and regulations governing
operations and activities of mining companies or more stringent implementation
thereof could have a material adverse impact on the Company. Under certain
circumstances, the Company may be required to close an operation until a
particular problem is remedied or to undertake other remedial actions.

6
<PAGE>

Environmental Laws

The exploration programs conducted by the Company are subject to governmental
regulations regarding environmental considerations. Most operations involving
the exploration for or the production of minerals are subject to existing laws
and regulations relating to exploration procedures, safety precautions, employee
health and safety, air quality standards, pollution of stream and fresh water
sources, odour, noise, dust, and other environmental protection controls adopted
by governmental authorities as well as the rights of adjoining property owners.
The Company may be required to prepare and present to governmental authorities
data pertaining to the effect or impact that any proposed exploration or
production of minerals may have upon the environment. The Company will be
responsible for reclamation costs. Reclamation requirements vary depending on
the location and the managing agency, but they are similar in that they aim to
minimise long-term effects of exploration and mining disturbance by requiring
the operating company to control possible deleterious effluents and to
re-establish to some degree pre-disturbance landforms and vegetation. All
requirements imposed by any such authorities may be costly, time consuming, and
may delay commencement or continuation of exploration or production operations.
Future legislation may significantly emphasise the protection of the
environment, and that, as a consequence, the activities of the Company may be
more closely regulated to further the cause of environmental protection. Such
legislation, as well as future interpretation of existing laws, may require
substantial increases in equipment and operating costs to the Company and
delays, interruptions, or a termination of operations, the extent of which
cannot be predicted.

Market Factors and Volatility

The marketability of natural resources which may be acquired or discovered by
the Company will be affected by numerous factors beyond the control of the
Company. These factors include market fluctuations in the prices of minerals,
the capacity of processing equipment, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting of minerals and environmental protection. Future prices
of gold and silver cannot be accurately predicted.

Competition

Numerous companies are engaged in the exploration and development of mineral
properties and have substantially greater technical and financial resources than
the Company.

Title of Properties

The companies principle asset, The El Limon Mine, is held as a Fee Simple Title.
This gives the Company complete control of the surface and minerals located
within the property. Other properties are held under mining concessions granted
by the appropriate authorities. In most cases the concession does not include
surface rights. The surface access is subject to successful negotiations with
the owners, subject to the appropriate laws and regulations.

Foreign Operations

The Company's present activities are in Colombia and Mexico. As with all types
of international business operations, currency fluctuations, exchange controls,
restrictions on foreign investment, changes to tax regimes, political action and
political instability could impair the value of the Company's investments.

7
<PAGE>

The country of Colombia is subject to long standing anti-government activities
(guerrilla warfare). This results in political unrest, periodic road and river
access blockages, and various terrorist activities. The outcome of this
situation is unknown.

Conflicts of Interest

Some of the directors of the Company are also directors of other mining
companies which are also engaged in mineral exploration and the acquisition of
mineral properties. Situations may arise in connection with potential
acquisitions and investments where the interests of these individuals as
directors of other companies may conflict with their interest as directors of
the Company. These individuals will deal with such matters according to prudent
business judgement and the relative financial abilities and needs of the various
companies with which they are associated. They have been advised of their
fiduciary duties to the Company. Notwithstanding, conflicts of interest among
these companies could arise in which the individuals' obligations to or interest
in other companies could detract from their efforts on behalf of the Company.

Exploration and Development Risks

Gold and Silver exploration and mining operations are subject to all the hazards
and risks typically inherent to the mining industry, any of which could result
in damage to life or property, environmental damage and possible legal liability
for any or all damage. Personnel are exposed to numerous risks associated with
mining, such as unstable geological conditions, and processing of large volumes
of materials using mechanised equipment. In addition, there is no certainty that
the expenditures to be made by the Company will result in discoveries of
commercial quantities of precious metals. Risk of loss by theft by employees is
relatively high and a high degree of security is required to mitigate such loss.
The Company may become subject to liability for pollution, cave-ins or other
hazards against which it cannot insure or against which it may elect not to
insure. As the Company does not carry liability insurance, the payment of such
liabilities, were they to be incurred, could have a material adverse effect on
the Company's financial position.

Calculation of Reserves and Mineral Recovery

There is a degree of uncertainty attributable to the calculation of reserves,
resources and corresponding grades being mined or dedicated to future
production. Until reserves or resources are actually mined and processed, the
quantity of reserves or resources and grades must be considered as estimates
only. Whether a mineral deposit will be commercially viable depends on a number
of factors, some of which are the particular attributes of the deposit, such as
the deposit's size, quality, proximity to infrastructure, financing cost and
government regulations. Any material change in the quantity of reserves,
resource grade, stripping ratio or selling prices may render reserves
uneconomic, require a restatement of ore reserves and affect the economic
viability of the Company's properties. Short term factors relating to the ore
reserves, such as the need for orderly development of ore bodies or the
processing of variable ore grades, or other operational problems, may impair the
profitability of a mine.

8
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Currency Fluctuations and Foreign Exchange

The Company uses the United States (US) dollar as its currency of display and
measurement. The majority of its transactions are denominated in US dollars. The
value of the Colombian and Mexican Paso, as reflected in the exchange rate
against the US dollar, has continued to fluctuate significantly. In addition to
the risks associated with the Paso/US dollar exchange rate not keeping pace with
inflation.

Taxation Risks

The tax risks of investing in Colombia and other Latin American countries are
substantial. Tax legislation is evolving and is subject to varying
interpretations, frequent changes and inconsistent enforcement at the federal,
regional and local levels. Taxes payable by Colombian companies to federal,
regional and local budgets are high and include corporate profits tax, VAT,
payments for subsoil use, assets tax, excise tax, road fund taxes, transport
taxes and payroll taxes. Changes to taxation rates may have a material adverse
impact on the Company.

Item 2. DESCRIPTION OF PROPERTY

SUMMARY
-------

The following is a description of the Company's mineral properties. The Company
holds interests in mineral properties located in Colombia, the United States and
Mexico. The Company's interest in the properties varies on a property by
property basis. The nature and amount of the Company's interest in properties is
discussed in this item.

COLOMBIAN PROPERTIES
--------------------

Oronorte, Department of Antioquia, Colombia
-------------------------------------------
Oronorte is a mining company licensed to operate in Colombia. It is 99.95% owned
by Fischer-Watt and Fischer-Watt's wholly-owned subsidiaries. All of Oronorte's
mining licenses and permits were transferred to it from Greenstone in 1995. At
this time, Oronorte holds a total of 29 mining concessions in the Oronorte
district comprising an area of 5,735 hectares. The following properties are
included in the Oronorte district.

1. El Limon Mine.
2. Juan Vara prospect.
3. La Aurora Mine.
4. El Carmen property.
5. El Veinte property.

All of the properties are located in north central Colombia in the Department
(State) of Antioquia. All of the properties, except El Carman, are within 6
kilometers of each other and have a common geological environment. The El Carmen
property is approximately 20 kilometers northeast of the El Limon Mine and has a
different geological environment.

At the present time, the El Limon Mine is in production and the La Aurora and El
Carman Mines are on standby due to gold prices.

9
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Access to the El Limon Mine is by road from Medellin, approximately 160
kilometers to the southwest. The mine is on the main road leading from Bogota to
the port of Barranquilla on the Atlantic Ocean. It is a one day drive from the
mine to the port of Buenaventura on the Pacific coast. The mine is about 5
kilometers south of the village of Zaragoza. Zaragoza is located on the Nechi
river and is about 24 river kilometers south of El Bagre. Travel between
Zaragoza and El Bagre can be by either road or river. The closest airport is at
El Bagre which has four scheduled flights per day to Medellin.

The El Limon Mine facilities are connected to the government power grid. Since
the government rations power, the mine has installed two diesel powered
generators with outputs of 260 and 240 kWh. There are periods of time when there
is insufficient power to operate all of the plant and mining equipment
simultaneously. During these periods, management has elected to run the mill,
one compressor, hoists and lighting. This means there is insufficient compressed
air and ventilation in the mine and work is impeded. A third generator was
purchased which makes the mine self-sufficient for electrical power.

The mine is connected to the national telephone network through the town of
Zaragoza. During the current year, a new telephone was installed on the
property. The mine also has a satellite phone which is used for emergencies.

History
-------
The El Limon Mine was discovered by prospecting in 1939 and was operated on a
small scale until 1946 when lack of capital forced suspension of operations. In
1947, G. Leland and H. Von Stauffen examined the property for the Timmins Group
of Montreal. The company deemed the mine to be too small at that time to mount
an efficient operation. Leland and Von Stauffen considered the project to be
economic and formed a partnership to exploit the mine by improving the milling
facilities. Proven reserves at the time were about 12,000 tonnes at 35 grams
gold per tonne.

Choco - Pacifico leased the property in 1958 and drilled six holes, three of
which intersected a high grade section of the vein. Reserves were calculated at
25,000 tonnes of 35 grams gold per tonne. Choco - Pacifico returned the property
to Von Stauffen in 1962 when the parent decided to invest further in the Segovia
Mines and the Nechi Placers.

Von Stauffen continued to operate the mine from 1962 to his death in 1975, when
his widow sold the mine to other investors who fought amongst themselves. Grupo
Minero Ltd. of Medellin and Oronorte S.O.M. resolved the legal problems and
received clearance from the Mine Department to begin exploiting the deposit.
These companies lacked capital and know-how and were approached by Greenstone
with a proposal to purchase and operate the mine. The deposit was acquired by
Greenstone Resources in 1986 and placed into production in November 1990.

Following the acquisition by Greenstone, metallurgical testing, plant re-design
and additional exploration was undertaken.

Underground mine development was started in 1990. Since that time the work has
consisted of developing the main levels, deepening one shaft and installing a
production hoist, sinking a winze and installing a hoist, driving the stope
raises and mining the rooms. Some pillar recovery has been carried out.

10
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El Limon Mine Historical Production
-----------------------------------

-------------------------------------------------------------------------------------------------------------
Calendar Year Tonnes Milled Recovered Average Recovered Oz Head Grade
Ounces Recovery % Per Tonne g/Tonne
-------------------------------------------------------------------------------------------------------------

* Two months operation

As shown in the table above, the head grade increased by 64% from 1995 to 1999.
This increase was the result of improved grade control, improvements in the
mining methods, and the purchase of additional mining equipment.

The mineable reserves at the Oronorte properties are shown below. The reserves
were calculated by Ing. Alejandro Pineda M, and Ing Alexis Zapata G, independent
geological consultants.

The tonnes shown are fully diluted, mineable tonnes. They have been diluted to
include a mining height of 1.35 meters perpendicular to the dip of the vein.
Specific gravity of the vein is 2.65 and specific gravity of the waste is 2.80.
The minimum cut-off grade used is 7.49 grams of gold per tonne and the erratic
high values, higher than 100 grams of gold per tonne are cut to 100 grams of
gold per tonne while calculating the grades of these reserves. The value of
recovered gold is assumed to be $300 per ounce. Initial reserve estimates made
in 1989, prior to the commencement of production, calculated the reserves at
41,000 tonnes at 14.3 grams of gold per tonne. Since then, in addition to the
total current reserves, in excess of 140,000 tonnes have been mined over the
life of the mine. It is difficult and not cost effective to develop large
reserves at thinly vained underground mines such as El Limon.

Oronorte Reserves - January, 2000 (FY 1999)
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------
El Limon La Aurora Juan Vara Total
--------------------------------------------------------------------------------------------------------
Category Tonne g/T Tonne g/T Tonne g/T Tonne g/T Oz/Au
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Proven 62,128 19 23,673 2 85,801 14 39,474
Probable 33,135 19 18,413 2 20,072 6 71,620 11 25,297
-------------------------------------------------------------------------------------------
Sub Total 95,263 19 42,086 2 20,072 6 157,421 13 64,771

Possible 171,010 17 61,530 4 232,540 14 101,381
-------------------------------------------------------------------------------------------
Total 266,273 18 103,616 3 20,072 6 389,961 13 166,151

Oz/Au 151,660 10,619 3,872 166,151

--------------------------------------------------------------------------------------------------------
</TABLE>

11
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The calendar year 2000 mining plan calls for the mining and processing of
approximately 34,000 tonnes of ore and the recovery of approximately 16,000
ounces of gold (500,000 grams). It is anticipated that the development and
exploration work to be carried out at El Limon Mine during 2000 will more than
replace the reserves to be mined during 1999.

El Limon Mine
-------------
A description of the mining and processing operations at El Limon Mine is
presented below.

Access to the mine is from an adit on Level 0 (Elev. 135 meters). Three inclined
winzes provide access to the lower levels. One of the winzes is being enlarged
and deepened to provide more rapid access to all levels.

The mining method being used is inclined room and pillar with no filling. The
vein strikes north-south, dips 42(degree) west and has an average thickness of
0.45 m. With such a low dip, all broken ore is mechanically (or manually) mucked
to ore chutes.

Material from underground is transported to the surface, where, it is crushed
and sized, then fed to a ball mill.

From the ball mill, the material feeds to a pulsating jig. The jig concentrate
is processed in a furnace at the mine and poured into dore bars. Jig overflow is
fed through cyclones, then sent to flotation cells produce a concentrate which
is fed to the on-site cyanidation processing plant. The cyanidation plant
recovers the gold using a Merill Crowe recovery circuit. The dore and
cyanidation plant product are sold to a well established Colombian customer with
payment normally received within two business days

The mill recoveries average 92 percent, which is typical for the type of
metallurgical process used at the El Limon Mine.

The current hourly paid labor force are residents of the town of Zaragoza and
surrounding area. They are all members of a cooperative called "A Precooperativa
de Trabajo Asociado de Zaragoza - Precoomizar Ltd." This particular cooperative
is one of the first being used in the Colombian mining industry. The mine was
subject to a strike in May and a series of work slow downs throughout the year.
The labor contract was modified and the work force reduced. Labor unrest will
probably continue to be a problem during the next year. The Cooperative has
proven to be a very unreliable source of man power.

The total number of persons employed by the Company, both directly and
indirectly, is shown below. This is a reduction of 31% (53 people) from the
previous year:

Mine Site

Company Employees 22
Precoomizar Employees 95
Contractors (average) 0
----
Subtotal 117
Medellin Office 3
-----
Grand Total 120

12
<PAGE>

Regional Geology
----------------
The gold prospects and mines which make up the Oronorte properties lie in a
thick sequence of Paleozoic age metasediments within the Central Colombian
Cordillera of the Andes. The main group of properties, which include the El
Limon Mine and the La Aurora and Juan Vara prospects, occur along 15 kilometers
of strike on the west side of the Otu fault. This major regional structure has a
total strike extent of approximately 120 kilometers at a bearing of 160(degree)
. A number of gold bearing quartz veins also occur on the east side of the Otu
Fault, including the Company's El Carmen prospect. The gold bearing quartz veins
of the Oronorte area were formed from hydrothermal solutions produced by
Cretaceous age intrusions and their location is strongly influenced by the Otu
Fault.

The El Carmen prospect is the most northerly of a number of gold bearing
quartz-sulfide vein systems that occur in a quartz diorite batholith of Jurassic
age that intrudes the Paleozoic basement. Approximately 60 kilometers south, in
an identical geological setting, lies the Segovia district which currently
produces approximately 45,000-50,000 ounces of gold a year from underground
operations. This district has produced 4.3 million ounces of gold from
quartz-sulfide vein systems. One of the largest of these, the El Silencio Mine,
has worked a vein which extends at least 2 kilometers along strike and 1.3
kilometers down dip.

The geology of the Oronorte mines and deposits is described below.

El Limon Mine
-------------
The El Limon Mine deposit is a typical epithermal gold bearing quartz vein of
late Cretaceous age. Its strike direction is N5 degrees W and S5 degrees E and
the amount of dip varies from 35 degrees to 45 degrees towards the west. The
vein is continuous for more than 300 meters along strike between sections 4800N
and 5150N, extending from surface to Level 6 - 250 meters vertically below the
surface. The deposit is open at depth and along its strike direction.

Well defined mining contacts occur to the north and south on Levels 0, 1 and 3.
On these levels, quartz vein grades decrease to less than 5 grams of gold per
tonne within a few meters along strike. This results in a decrease of mining
grade, over a 1.2 meter width, to less than 2-3 grams of gold per tonne from
10-20 grams of gold per tonne. However, surface quartz vein exposures and
underground drilling north and south of the mine indicate a continuation of the
gold mineralization regionally.

The vein is structurally continuous except for a series of reverse faults with
displacement ranging from 0.5 to 40 meters. There are two main fault planes
(Lionel & El Limon Mine) which have displaced the vein by 35 - 40 meters each in
a sinistral sense. Because of this displacement, level 2 has been structurally
eliminated from El Limon Mine.

Gold mineralization is related to sulfide content, predominantly pyrite, with
minor amounts of galena and sphalerite. Sulfide content ranges between 5 and 12%
and is a reliable visual indicator of grade. The gold to silver ratio is 1:1.
Generally, the sulfides occur as distinct bands 2-5 mm in thickness in the upper
half of the vein. The bands are relatively continuous over several meters.
Occasionally, the banded structure is replaced by a more irregular, patchy
sulfide distribution. There is no direct relation between internal structure and
grade. The presence of galena indicates improved gold values, even in zones with
a sulfide content well below the 5-12% range. Drilling and development to date
indicate an increase in galena content with depth.

13
<PAGE>

The grade in the north end has increased significantly. Over the past several
months the undiluted stope grade of the vein on Level 5 and 6 have averages
51.16 grams of gold per tonne over an average width of 0.35 meters. The average
stope width during this same time period has been 1.2 meters thereby producing a
mining grade of 15.63 grams of gold per tonne. This mining grade has been
improved by 17% through grade control procedures resulting in a grade fed to the
mill of 21 grams of gold per tonne.

Juan Vara Vein
--------------
The Juan Vara vein is the strike extension of the El Limon Mine vein and is
located approximately 2 kilometers south. This vein has been trenched and a
short adit was driven in the vein. True width of the vein varies from 0.2 meters
to 0.4 meters and the gold grades are 33 grams of gold per tonne and 8 grams of
gold per tonne respectively. A ramp from the surface is underway for the
development of this vein to a depth of 60 meters. Work has been temporarily
halted due to the low price of gold.

Aurora Vein
-----------
The Aurora vein is located 6 kilometers due south of the El Limon Mine. It has
the same strike as El Limon Mine but is structurally located approximately
300-400 meters in the footwall of the El Limon Mine. Its geological environment
is similar to the El Limon Mine vein.

The Aurora vein is a massive milky quartz vein dipping 45 degrees to the west
and cutting metasedimentary host rocks. The main sulfides are pyrite,
pyrrhotite, chalcopyrite, sphalerite and minor amounts of galena.

The sulfides constitute 3-5% of the total vein material and most of the sulfides
were concentrated towards the north end of the drift. The grade of the vein is
16 grams of gold per tonne over a width of 40 centimeters for a strike length of
40 meters from the north face. The grades from the south end of the drift range
from trace to 5 grams of gold per tonne over the vein width. The concentration
of sulfides in the south end is less than 1%.

This mine has been fully developed but has been placed on standby due to the low
price of gold.

El Carmen
---------
The original recorded exploration work at El Carmen was completed by Dual
Resources, a Canadian company, with assistance from Greenstone. Dual Resources
acquired the property in 1987 and conducted a two phase program of trenching and
diamond drilling which established indicated reserves of 146,288 tonnes at a
recoverable grade of 11.0 grams of gold per tonne. These geological reserves
were reviewed in the field and accepted by Behre Dolbear and Company, Inc., an
independent industry consultant.

The El Carmen property is located approximately 20 kilometers northeast of El
Limon Mine. An 80 meter long adit was driven to intersect the vein. Two short
cross cuts, one east and one west, were driven on the vein. This confirmed the
presence of the vein widths of 0.7 to 1.5 meters. The results of sampling have
returned values between 17 and 42 grams of gold per tonne. A 105 meter long,
inclined diamond drill hole was recently completed which intersected the vein at
the anticipated location. The vein intersection was 0.7 meters with a grade of
490 grams of gold per tonne. This grade has been confirmed by Jacobs laboratory,
an independent laboratory, in the United States. Work has been temporarily
halted due to the low price of gold.

14
<PAGE>

El Veinte
---------
The El Veinte property is located 14 kilometers south of the El Limon Mine. It
is viewed as having similar geology to the El Carmen. This property has had
little exploration done at this time do to a shortage of funds.

MEXICAN PROPERTY
----------------

Minera Montoro Properties, Baja California, Mexico
--------------------------------------------------

During 1989, Fischer-Watt acquired a 49% interest in Minera Montoro S.A. de C.
V. ("Montoro"), a corporation duly incorporated in and authorized to conduct
business in Mexico. During the fiscal year ended January 31, 1996, that was
increased to 50%. Effective July 1996, the Company' 's interest was increased to
65%. Montoro holds a claim on two mineral interests in Mexico. In March 1994,
the Company, through Minera Montoro, formalized an agreement with Gatro South
America Holdings Limited (Gatro) that was initiated in April 1993 to conduct a
generative exploration program in Baja California. Four properties were acquired
under the generative exploration program (El Arenoso, Alborada, Julio Cesar and
Sierra de Cobre). Under the terms of the agreement, Montoro would have received
a 2.5% net smelter return plus a $5,000,000 payment, per property, upon
commencement of commercial production. All of the Gatro related properties have
been dropped or transferred to others. The Garto agreement is no longer in
force.

Montoro is currently undertaking a continuous review of meritorious Mexican
mineral properties and hopes to acquire worthy properties in the near future;
however, there can be no assurance that any properties will be acquired.

Domestic Properties
-------------------
Annual filing fees of $100 per claim are required to continue the ownership of
an federal unpatented lode mining claim in the United States. An unpatented lode
mining claim gives the owner the right to mine the ore and to use its surface
for mining related activities. A patented mining claim conveys fee title to the
claimant (all surface and mineral rights). The Company has no filing fee
obligations.

Serem Gatro Canada, Inc. ("Serem Gatro") sold Great Basic Exploration and Mining
(GBEM) to Great Basin Mining (GBM) in May 1995. As a condition of that sale, a
Participation Agreement between Serem Gatro and GBEM (the Serem Gatro Agreement)
gives Serem Gatro the right to participate in any of the core properties. All of
the core properties have been dropped and the Serem Gatro agreement is negated.

Management Evaluation
---------------------
Fischer-Watt greatly eliminated its exploration efforts in Nevada. In addition
to closing the Reno, Nevada, exploration office, all of the company properties
were critically evaluated as to; potential, holding costs, and likelihood of
attracting joint venture partners. Based on this evaluation properties were
either dropped or assigned to others. The Red Canyon, Eureka County, Nevada and
Tempo, Lander County, Nevada properties were returned to their underlying
owners.

15
<PAGE>

Castle, Esmeralda County, Nevada
--------------------------------
The Castle property is located approximately 22 miles west of Tonopah, Nevada
along the southern edge of the Monte Cristo Range. Access is by US Highways 6 &
95, which passes just north of the property.

Definition drilling is required to determine a more accurate estimate of the
actual resource, and to determine whether or not the property contains a minable
resource. Additional exploration drilling is required to test favorable
exploration trends and to further test existing mineralized drill holes that
were outside of the geological resource. The Castle property was optioned to
Zephyr Mining in the fall of 1997. Zephyr is the exploration and mining
subsidiary of J. D. Welsh, a privately held, Reno, Nevada, based construction
company. In August, 1999, Zephyr defaulted on the option agreement and returned
the property to FWG. FWG management determined that legal action against Zephyr
would not be cost effective.

On September 27, 1999, FWG entered into an agreement with Platoro West
Incorporated (PWI), a private Corporation headquartered in Durango, Colorado.
Under the terms of this agreement PWI assumes all financial and reporting
responsibilities relative to The Castle Property. FWG retains a 1.0% NSR on all
claims contained in the Castle property and 0.7% NSR on specific adjacent claims
held by PWI.

FINANCIAL COMMITMENTS
---------------------

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 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.

All of the Oronorte (Colombia) property group is held by licenses and mining
permits. No annual payments are required and work commitments are minimal, but
they are subject to a four percent production royalty tax to the government.

PROPERTY COMMITMENTS
For the year ending January 31, 2000

=============================================================================
Lease Work Partner . Net
Property Payments Commitments Total Share FWG Cost
-----------------------------------------------------------------------------
Castle 5,400 5,400 (5,400) 0

-----------------------------------------------------------------------------
Total 5,400 5,400 (5,400) 0
-----------------------------------------------------------------------------

=============================================================================
16
<PAGE>

Item 3. LEGAL PROCEEDINGS

Oronorte is currently the defendant in several claims relating to labor
Contracts and employee termination's. The Company has also the defendant in
legal actions related to various vendors. The Oronorte accounts payable totals
approximately $1.7 million.

On October 18, 1996, Fischer-Watt Gold Company, Inc. commenced a legal
proceeding against Greenstone Resources Canada Ltd. and Greenstone Resources
Ltd. in Ontario Court (General Division) seeking payment of the sum of
$1,508,544 (U.S.) pursuant to Article 8.4 of an Agreement dated October 20, 1995
between the plaintiff and the defendants. Pursuant to Article 8.4 of the
Agreement dated October 20, 1995, liabilities of GRC and its subsidiaries,
including contingent liabilities, that exceeded $1,000,000 (U.S.) shall be
reimbursed by the defendants. The payment sought includes liquidated liabilities
in the amount of $308,544 (U.S.), and contingent unliquidated liabilities in the
amount of $1,200,000 (U.S.). The likelihood of success of this action is remote.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fiscal year no matters were submitted to a vote of security holders,
through the solicitation of proxies or otherwise.

PART II

Item 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information
------------------

The Company's common stock trades on the OTC Bulletin Board. The high and low
bid quotations were obtained from the National Association of Securities
Dealers, Inc. Trading and Market Services report. The quotations below reflect
inter-dealer prices without retail markup, markdown or commissions and may not
necessarily represent actual trades.

HIGH BID LOW BID

Year Ended January 31, 2000
First Quarter $ .21 $ .08
Second Quarter .18 .10
Third Quarter .17 .06
Fourth Quarter .12 .04

Holders:
As of April 1, 2000, the Company had 644 shareholders of record of its common
stock

Cash Dividends:

Since inception, the Company has not declared nor paid any cash dividends. It
retains all earning from operations for use in expanding and developing it
business. Payment of dividends in the future will be at the discretion of the
Company's Board of Directors.

17
<PAGE>

On March, 1999, Kennecott Exploration Company sold its 2,048,000 shares to Jim
Seed, an existing FWG stockholder, in a private transaction. This transaction
eliminated Kennecott's position in FWG. At the same time Kennecott accepted
$100,000 as total payment of the promissory note they held. The note had a face
value of $700,000 plus accred interest. This resulted in a non-reoccurring
extraordinary gain of $490,00, net on taxes. The Company has no indebtedness to
Kennecott.

Changes in Securities
---------------------

During the year common shares were issued for various reasons. The issuance's
are discussed in the attached auditors report.

At the close of the fiscal year there were 644 beneficial holders of common
shares. Approximately 23% of the outstanding stock is controlled, through
various trusts, by Jim Seed, Chairman of the Board.

Item 6. SELECTED FINANCIAL DATA

See the attached financial statements.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS.

Statements which are not historical facts contained herein are forward looking
statements that involve risks and uncertainties that could cause actual results
to differ from projected results. Such forward-looking statements include
statements regarding expected commencement dates of mining or mineral production
operations, projected quantities of future mining or mineral production, and
anticipated production rates, costs and expenditures, as well as projected
demand or supply for the products that FWG and/or FWG Subsidiaries produce,
which will affect both sales levels and prices realized by such parties. Factors
that could cause actual results to differ materially include, among others,
risks and uncertainties relating to general domestic and international economic
and political risks associated with foreign operations, unanticipated ground and
water conditions, unanticipated grade and geological problems, metallurgical and
other processing problems, availability of materials and equipment, the timing
of receipt of necessary governmental permits, the occurrence of unusual weather
or operating conditions, force majeure events, lower than expected ore grades
and higher than expected stripping ratios, the failure of equipment or processes
to operate in accordance with specifications and expectations, labor relations,
accidents, delays in anticipated start-up dates, environmental costs and risks,
the results of financing efforts and financial market conditions, and other
factors described herein and in FWG's quarterly reports on Form 10-QSB. Many of
such factors are beyond the Company's ability to control or predict. Actual
results may differ materially from those projected. Readers are cautioned not to
put undue reliance on forward-looking statements. The Company disclaims any
intent or obligation to update publicly these forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by applicable laws.

Summary

18
<PAGE>

The Company experienced significant labor unrest and frequent strikes and work
slow downs at its primary production operation in Colombia. These problems were
the result of continued political instability in the country and resulting
agitation of the work force. The likelihood of normalization of relationships in
Colombia is unknown. This has resulted in a 75% drop in production and resulting
decline in revenues. The Company has begun discussions with various companies,
primarily Colombian, about the possibility of selling the Oronorte assets.

The Company reported net loss of $2,565,000for the year ended January 31, 2000.
This loss also included $723,000 in exploration expenses, $1,114,000 on General
and Administrative and a negative adjustment in the value of the Colombian
assets of $2,397,000. Exploration expenses will be significantly reduced in
subsequent years. The Company has an accumulated deficit of $16.4 million and
continues to experience negative cash flow from operations and incur losses from
its mining operations. Management believes normalization of labor relations,
further developed and production levels increase, sufficient cash flows will
exist to fund the Company's continuing mining operation, exploration and
development efforts in other areas. Management anticipates achieving levels of
production sufficient to fund the Company's operating needs by the end of fiscal
2000. 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 and the ability to achieve future operating efficiencies anticipated
with increased production levels. Management's plans may require additional
financing or disposition of some of the Company's non-producing assets. While
the Company has been successful in raising cash in the past, there can be no
assurance that its future cash raising efforts and anticipated operating
improvements will be successful.

Short-term Liquidity

As of January 31, 2 the Company had $6,000 in cash.

On January 31, 2000, 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. The management intends to correct this
situation by planned improvements in the Colombian operations. Management
anticipates achieving levels of production sufficient to fund the Company's
operating needs by the end of fiscal 1998 and, in the interim, anticipates that
it will fund operations with the cash raised in the March offering. In addition
the exploration activities have been reduced to contractual obligations, less
than $10,000 per year, and significant staff reductions have taken place in both
the U. S. and Colombia. A new labor contract is being negotiated and a mine
employee reduction of at least 110 people is anticipated.

Pursuant to agreements among Greenstone, Dual Resources Ltd., and the Company,
Greenstone made a payment of $300,000 to Dual to acquire 2,800,000 shares of
Oronorte common stock for the benefit of the Company. The Company's obligation
to repay Greenstone this $300,000 is evidenced by a note payable which bears
interest at the rate of 10% per annum. This note became payable, in full, on
June 20, 1996 at which time the Company withheld payment while negotiating the
settlement of amounts owed to the Company by Greenstone.

19
<PAGE>

Prior to its acquisition by the Company, GBEM, borrowed funds from Serem Gatro
Canada Inc. This loan was evidenced by a note. The note payable is for moneys
lent and advanced to GBEM by SGC during the period April 1, 1995, to May 31,
1995, as provided under the share purchase agreement among Serem Gatro, GBEM and
GBM made as of May 31, 1995.

The note was to be repaid not later than September 30, 1995. and bears interest
at 8%. Repayment of this note payable and related interest is currently being
negotiated with SGC.

Management believes that the Company has adequately reserved its reclamation
commitments.

Long-term Liquidity:

Cash flows from operations during fiscal 2000 are expected to be sufficient to
fund operating and administrative expenses and exploration expenses. The Company
does not anticipate needing additional funding from equity or borrowings unless
a major expansion at its Oronorte property is necessary and cost justified or an
acquisition opportunity arises.

FISCAL 1999 COMPARED TO FISCAL 1998

The Company had revenues of $3,251,000 in fiscal 1998 compared to $1,025,000 for
fiscal 1999. The most significant reason for this change is the drop in
production at the El Limon Mine. The selling price of gold fluctuated from a
high of $301 per ounce in 1998 to a low of $252 per ounce in 1999. The selling
price of gold is dictated by world wide factors and conditions, none of which
are in the control of the Company. The future price of gold is unknown. In
fiscal 1999 the Company wrote down a significant portion of the Oronorte
properties in Colombia thus incurred a non-reoccurring charge of $2,397,000
(comparable fiscal 1998 charges were $2,247,000).

REVENUES

Forward Sales of Precious Metals

The Company does not presently employ forward sales contracts or engage in any
hedging activities. All of the production is sold on the spot market which is
generally the afternoon closing price for gold and silver on the London Metal
Exchange (LME) on the day of delivery.

Sales of Mineral Properties

No material income was received from the sale of mineral properties during the
year.

COSTS AND EXPENSES

Abandoned and Impaired Assets

In fiscal 1999 the Company wrote down a significant portion of the Oronorte
properties in Colombia thus incurred a non-reoccurring charge of $2,397,000.
This write down was the result of the political instability in the country which
results in serious doubt about the ability to profitable operate in the country.

20
<PAGE>

Selling, General and Administrative:

Selling, general and administrative costs decreased from $1,295,000 in fiscal
1998 to $1,114,000 in fiscal 1999 The decrease was the result of closer fiscal
control. Further reductions are planned in fiscal 2000

Foreign Exchange Gain

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. The Company recognized a currency exchange gain of $430,000 in the year
ended January 31, 2000.

Other Income and Expenses

Net interest expense increased-from $189,000 in fiscal 1998 to $191,000 in
fiscal 1999.

Commitments and Contingencies

Foreign companies operating in Colombia, South America, may be subject to
discretionary audit by the Colombian Government in respect of their monetary
exchange declarations. Any such audit by the Colombian Government must be
initiated within two years of filing an exchange declaration. The two years
elapsed and the Company has received no notice.

In connection with the purchase of GRC, Greenstone agreed to reimburse the
Company for certain liabilities, including contingent liabilities, existing at
the date of purchase in excess of $1,000,000. At the present time, the Company
has paid or identified as current payables approximately $309,000 in excess of
the $1,000,000. Management is seeking to recover these excess liabilities from
Greenstone in accordance with the terms of the purchase agreement.

The Company's property interests require minimum payments to be made, or work
commitments to be satisfied, to maintain ownership of the property not in
production. 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.

Y2K Problems

The Company experienced no Y2K problems.

Item 8. FINANCIAL STATEMENTS.

21
<PAGE>
Fischer-Watt Gold Company, Inc.
and Subsidiaries

Contents

Report of Independent Certified Public Accountants F-2

Financial Statements:
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statement of Shareholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7

<PAGE>

Report of Independent Certified Public Accountants

Board of Directors and Shareholders
Fischer-Watt Gold Company, Inc.

We have audited the accompanying consolidated balance sheet of Fischer-Watt Gold
Company, Inc. and subsidiaries as of January 31, 2000 and the related
consolidated statements of operations, stockholders' (deficit), and cash flows
for each of the two years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Fischer-Watt Gold Company, Inc. and subsidiaries as of January 31, 2000, and the
consolidated results of their operations and their cash flows for each of the
two years then ended in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company incurred net losses of $1,872,927 and
$3,937,667 in fiscal 1999 and 1998, has an accumulated deficit of $13,868,101
and a net working capital deficiency of $2,727,321, and continues to experience
negative cash flows from operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

/s/Stark Tinter & Associates, LLC
---------------------------------
Stark Tenter & Associates, LLC

Denver, Colorado
May 26, 2000

F-2

<PAGE>

Fischer-Watt Gold Company, Inc. and Subsidiaries
Consolidated Balance Sheet
January 31, 2000
<TABLE>
<CAPTION>

ASSETS
------
<S> <C>
Current assets:
Cash $ 6,185
Accounts receivable 167,879
Inventory 313,649
Other current assets 37,156
------------
Total current assets 524,869
------------

Mineral interests, net 291,430
Property and equipment, net 286,546
------------
577,976

$ 1,102,845
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
---------------------------------------

Current liabilities:
Accounts payable and accrued expenses $ 2,141,801
Accrued expenses - shareholders 423,630
------------
Total current liabilities 2,565,431
------------

Note payable - shareholder 100,000

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, 40,298,384 shares
issued and outstanding 40,300
Additional paid-in capital 14,186,020
Capital stock subscribed 68,750
Accumulated deficit (16,433,233)
Accumulated other comprehensive income:
Currency translation adjustment 575,577
------------
(1,562,586)
$ 1,102,845
============
</TABLE>

See the accompanying notes to the consolidated financial statements

F-3

<PAGE>

Fischer-Watt Gold Company, Inc. and Subsidiaries
Consolidated Statements of Operations
Years Ended January 31, 1999 and 2000
<TABLE>
<CAPTION>

1999 2000
------------ ------------
<S> <C> <C>
Sales of precious metals $ 3,250,887 $ 1,025,092
Costs applicable to sales 2,246,046 1,295,669
------------ ------------
Income (loss) from mining operations 1,004,841 (270,577)

Costs and expenses:
Abandoned and impaired assets -- 2,397,365
Exploration 1,140,067 723,138
General and administrative 1,294,491 1,113,928
------------ ------------
2,434,558 4,234,431
(Loss) from operations (1,429,717) (4,505,008)

Other income and (expense):
Interest expense (188,701) (190,827)
Currency exchange (loss) (254,330) (86,594)
Other income 70,834 1,460,374
------------ ------------
(372,197) 1,182,953

(Loss) before extraordinary item: (1,801,914) (3,322,055)

Extraordinary item: Gain on the settlement of debt
net of applicable income taxes of $326,000 -- 490,035
------------ ------------
Net loss before income taxes (1,801,914) (2,832,020)

Income taxes (benefit) 71,013 (266,888)
------------ ------------

Net (loss) (1,872,927) (2,565,132)

Other comprehensive income:
Foreign currency translation adjustment (494,394) 430,041
------------ ------------
Comprehensive (loss) $ (2,367,321) $ (2,135,091)
============ ============

Per share information - basic and fully diluted
Continuing operations $ (0.05) $ (0.08)

Extraordinary item -- 0.02
------------ ------------
(loss) per share $ (0.05) $ (0.06)
============ ============
Weighted average shares outstanding 36,814,567 39,895,884
============ ============
</TABLE>

See the accompanying notes to the consolidated financial statements.

F-4
<PAGE>

Fischer-Watt Gold Company, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders' Equity
Years Ended January 31, 1999 and 2000
<TABLE>
<CAPTION>

Common Stock Additional Capital Stock
Shares Amount Paid in Capital Subscribed
=========== ========= ============ =========
<S> <C> <C> <C> <C>
Balance, January 31, 1998 35,159,784 $ 35,161 $ 13,252,857 $ 720,800

Issuance of shares pursuant o warrant exercise 3,028,600 3,029 176,973 -
Effect of currency fluctuations on net assets
of foreign subsidiary - - - -
Net loss for the year - - - -
----------- --------- ------------ ---------

Balance, January 31, 1999 38,188,384 38,190 13,429,830 720,800

Issuance of shares for services 750,000 750 36,750 -
Conversion of units to capital 1,360,000 1,360 719,440 (720,800)
Common shares subscribed for - - - 68,750
Effect of currency fluctuations on net assets
of foreign subsidiary - - - -
Net loss for the year - - - -
----------- --------- ------------ ---------

Balance, January 31, 2000 40,298,384 $ 40,300 $ 14,186,020 $ 68,750
=========== ========= ============ =========
</TABLE>

Currency
Accumulated Translation
Deficit Adjustment Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 31, 1998 $(11,995,174) $ 639,930 $ 2,653,574

Issuance of shares pursuant o warrant exercise -- 0 180,002
Effect of currency fluctuations on net assets
of foreign subsidiary -- (494,394) (494,394)
Net loss for the year (1,872,927) -- (1,872,927)
------------ ------------ ------------

Balance, January 31, 1999 (13,868,101) 145,536 466,255

Issuance of shares for services -- -- 37,500
Conversion of units to capital -- -- --
Common shares subscribed for -- -- 68,750
Effect of currency fluctuations on net assets
of foreign subsidiary -- 430,041 430,041
Net loss for the year (2,565,132) -- (2,565,132)
------------ ------------ ------------

Balance, January 31, 2000 $(16,433,233) $ 575,577 $ (1,562,586)
============ ============ ============
</TABLE>

See the accompanying notes to the consolidated financial statements.

F-5

<PAGE>

Fischer-Watt Gold Company, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended January 31, 1999 and 2000
<TABLE>
<CAPTION>

1999 2000
----------- -----------
<S> <C> <C>
Net income (loss) $(1,872,927) $(2,565,132)
Adjustments to reconcile net (loss) to net
cash provided by (used in) operating activities:
Depreciation, amortization and depletion 578,920 234,000
Impairment loss on long-lived assets -- 2,397,365
Loss on the sale of property and equipment -- 12,572
Common stock issued for services -- 37,500
Currency rate fluctuations (494,394) 430,041
Gain on the settlement of debt -- (816,035)
Minority interest in subsidiaries (21,446) --
Changes in assets and liabilities:
Accounts receivable 544,665 171,833
Inventory 528,504 (250,803)
Other assets 68,461 8,766
Accounts payable 577,407 (37,663)
Accrued expenses - shareholders 41,000 382,630
----------- -----------
Total adjustments 1,823,117 2,570,206
----------- -----------
Net cash provided by (used in) operating activities (49,810) 5,074
----------- -----------

Cash flows from investing activities:
Investment in mineral interests (151,251) (26,987)
Disposition of property and equipment 90,998 --
Acquisition of property and equipment (1,430) (11,092)
----------- -----------
Net cash (used in) investing activities (61,683) (38,079)
----------- -----------

Cash flows from financing activities:
Proceeds from sale of common shares 180,003 68,750
Proceeds from note payable -- 100,000
Repayment of notes payable (216,656) (148,296)
----------- -----------
Net cash provided by (used in) financing activities (36,653) 20,454
----------- -----------
Increase (decrease) in cash and cash equivalents (148,146) (12,551)

Cash and cash equivalents, beginning of period 166,882 18,736
----------- -----------
Cash and cash equivalents, end of period $ 18,736 $ 6,185
=========== ===========
Supplemental cash flow information:
Cash paid for interest $ 140,479 $ 122,827
Cash paid for income taxes $ 96,038 $ 59,112

Non-cash investing and financing activities:
Certificate of deposit surrendered to repay debt $ -- $ 500,000
</TABLE>

See the accompanying notes to the consolidated financial statements.
F-6

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Note 1. Accounting policies

Business Activities

Fischer-Watt Gold Company, Inc. ("Fischer-Watt" or the "Company"), and its
subsidiaries 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 in North Central Colombia. The Company's current operational focus is
its Oronorte properties, a producing gold mine near Zaragosa, Colombia.

Principles of Consolidation

The consolidated financial statements include the accounts of Fischer-Watt, and
its majority owned subsidiaries. Ownership interests in corporations where the
Company maintains significant influence over but not control of the entity are
accounted for under the equity method. Joint ventures involving non-producing
properties are accounted for at cost.

Cash and Cash Equivalents

For purposes of balance sheet classification and the statements of cash flows,
the Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

Inventories

Inventories consist of gold and silver produced by the Company's Colombian
mining operations, work in process, raw materials used in the production process
and operating supplies. Gold and silver ore concentrate inventories are stated
at their selling prices reduced by the estimated cost of disposal. Gold and
silver broken ore inventory are valued at the lower of average production cost
or net realizable value. Materials and operating supplies used in the production
process are stated at the lower of average cost or replacement value. Production
expenses are included in work in process inventories using an average cost of
production method and work in process inventories are stated at their lower of
cost or net realizable value.

Mineral Interests

The Company records its interest in mineral properties and areas of geological
interest at cost, less expenses recovered and receipts from exploration
agreements. Exploration development costs are deferred until the related project
is placed in production or abandoned. Deferred costs are amortized over the
economic life of the related project following commencement of production, by
reference to the ratio of units produced to total estimated production
(estimated proven and probable reserves), or written off if the mineral
properties or projects are sold or abandoned.

F-7

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Costs associated with pre-exploration, exploration, and acquisition generally
are deferred until a determination is made as to the existence of economically
recoverable mineral reserves. If these costs are incurred by the Company during
a period covered under a generative exploration program agreement with a third
party, they are expensed until such time as the third party decides to either
reject a property identified during the exploration period or proceed with
further exploration of the property. If an election to proceed occurs, future
costs are capitalized as incurred. Costs associated with abandoned projects are
expensed at the time of abandonment.

Non-producing mineral interests are initially recorded at acquisition cost. The
cost basis of mineral interests includes acquisition cost, bonus payments made
to attract a joint venture partner, and the cost of exploration and development,
less bonus payments received on unproven properties and advance royalty payments
received.

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 of joint venturing the property with
others; and, if producing, the cost and revenue of continued operations.

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
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.

Property, Plant & Equipment

Property, plant, and equipment are stated at cost. Depreciation on mining assets
is provided by the units of production method by reference to the ratio of units
produced to total estimated production (proven and probable reserves).
Depreciation on non-mining assets is provided by the straight-line method over
the estimated service lives of the respective assets, ranging from 2 to 20
years.

F-8

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Stock-based Compensation

The Company accounts for stock based compensation in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation." The provisions of SFAS No. 123
allow companies to either expense the estimated fair value of stock options or
to continue to follow the intrinsic value method set forth in APB Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma
effects on net income (loss) had the fair value of the options been expensed.
The Company has elected to continue to apply APB 25 in accounting for its stock
option incentive plans.

Revenue Recognition

Sales revenue is recognized upon the production of precious metals having a
fixed monetary value. Precious metal inventories are recorded at estimated net
realizable value, except in cases where there is no immediate marketability at a
quoted market price, in which case they are recorded at the lower of cost or net
realizable value.

Gains on the sale of mineral interests includes the excess of the net proceeds
from sales over the Company's net book value in that property. In situations
where a non-producing mineral interest is exchanged for a producing mineral
interest, the gain or loss is the difference between the net book value of the
exchanged property and the fair market value of the exchanged property or the
property received, whichever fair market value is more clearly determinable.

Generative exploration program fees, received as part of an agreement whereby a
third party agrees to fund a generative exploration program in connection with
mineral deposits in areas not previously recognized as containing mineralization
in exchange for the right to enter into a joint venture in the future to further
explore or develop specifically identified prospects, are recognized as revenue
in the period earned.

Bonus payments on proven properties, received as an incentive to enter into a
joint exploration and development agreement, are recognized as revenue when
received. For unproven properties, bonus payments received are first applied as
a reduction of the cost basis of the property with any excess being recognized
as revenue.

Foreign Currency Translation

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
Company's foreign subsidiary 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, which the foreign
subsidiary was owned. The related translation adjustments are reflected in the
accumulated translation adjustment section of shareholders' equity.

Environmental and Reclamation Costs

The Company currently has no active reclamation projects, but expenditures
relating to ongoing environmental and reclamation programs would either be
expensed as incurred or capitalized and depreciated depending on the status of
the related mineral property and their future economic benefits. The recording
of provisions generally commences when a reasonably definitive estimate of cost
and remaining project life can be determined.

F-9

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Income Taxes

The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred income taxes
to provide for temporary differences between the financial reporting and tax
basis of assets and liabilities. Deferred taxes are measured using enacted tax
rates in effect in the years in which the temporary differences are expected to
reverse.

Concentration of Credit Risk

The Company sells most of its precious metal production to one customer.
However, due to the nature of the precious metals market, the Company is not
dependent upon this significant customer to provide a market for its products.
Although the Company could be directly affected by weakness in the precious
metals processing business, the Company monitors the financial condition of its
significant customer and considers the risk of loss to be remote.

Substantially all of the Company's assets and operations are located in
Columbia.

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amount reported in the balance sheets for cash and cash
equivalents, accounts receivables, accounts payable and accrued expenses and
notes payable approximate fair value because of the immediate or short-term
maturity of these financial instruments. The fair value of long-term debt
approximates its carrying value as the stated interest rates of the debt reflect
market current market conditions.

Impairment of long lived assets

Long-lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or circumstances
indicate the carrying amount of an asset may not be recoverable or is impaired.

F-10

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", the Company recorded an impairment loss on its mineral
interests and property and equipment at its Oronorte mine. The trends at the
mine indicated that the undiscounted future cash flows would be less than the
carrying value of the long-lived assets related to the operation. According the
Company recognized an impairment loss at January 31, 2000 of $2,397,365 ($.06
per share). This loss is the difference between the carrying value of the assets
and the fair value of those assets based on estimated future cash flows.

Loss per share

The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented common stock
equivalents were not considered as their effect would be anti dilutive.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
year's presentation.

Segment Information

The Company follows SFAS No. 131, Disclosures about Segments of an Enterprise
and Related Information." Certain information is disclosed, per SFAS No. 131,
based on the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates in a single
business segment and will evaluate additional segment disclosure requirements as
it expands its operations.

Recent Pronouncements

The FASB recently issued Statement No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". The Statement defers for one year the effective date of FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities". The
rule now will apply to all fiscal quarters of all fiscal years beginning after
June 15, 2000. In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is required to be adopted
in years beginning after June 15, 1999. The Statement permits early adoption as
of the beginning of any fiscal quarter after its issuance. The Statement will
require the Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the

F-11

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company has not
yet determined if it will early-adopt and what the effect of SFAS No. 133 will
be on the earnings and financial position of the Company.

Note 2. Financial Condition, Liquidity, and Going Concern

Fischer-Watt incurred a net losses of $1,872,927 and $2,565,132 in fiscal 1999
and 2000, has an accumulated deficit of $16,433,233 and has a net working
capital deficiency of $2,140,562, and continues to experience negative cash
flows from operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.

The Company is attempting to acquire mineral properties in Mexico as Mexico is
supportive of the mining industry and NAFTA has made doing business there
attractive. In addition, the Company is has entered into preliminary discussions
regarding the sale of Oronorte with various entities.

Note 3. Accounts Receivable

Accounts receivable consist of:

Trade $ 30,014
Tax refunds 61,575
Other 88,564
-------
180,153

Less: allowance for bad debts (12,274)
-------
$ 167,879
=========

Note 4. Inventories

Inventories consist of:

Finished products and products in process $ 23,390
In transit inventory 71,335
Supplies, materials and spare parts 293,662
--------
388,387

Less allowance (74,738)
--------
$ 313,649
==========

F-12

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Note 5. Mineral Interests

Capitalized costs for mineral interests consist of:

Capitalized exploration and development costs $ 2,488,941
Less: accumulated depletion 994,034
---------
1,494,907

Less: reserve for impairment 1,203,477
---------
$ 291,430
===========

During fiscal 2000 the Company charged $1,203,477 to operations for impaired
property and mineral rights (see Note 1).

Note 6. Property and equipment

Property and equipment consist of the following:

Land and buildings $ 507,266
Machinery and equipment 1,774,184
Furniture and fixtures 151,230
---------
2,432,680

Less: accumulated depreciation (952,246)
---------
1,480,434

Less: reserve for impairment 1,193,888
---------
$ 286,546
==========

Depreciation expense charged to operations was $278,920 and $85,753 in fiscal
1999 and 2000.

During fiscal 2000 the Company charged $1,193,888 to operations for impaired
property and mineral rights (see Note 1).

Note 7. Notes Payable

Banks and other

The Company had a $500,000 line of credit with a bank. Advances under this line
accrued interest at a rate of Libor plus 3.75%. The line was collateralized by a
$500,000 certificate of deposit. During fiscal 2000 the Company redeemed the
certificate of deposit to repay the outstanding balance on the line of credit.

The Company delivered to Kennecott Exploration Company (Kennecott), a
shareholder of the Company, a promissory note in the amount of $700,000, which
bears interest at an annual interest rate equal to the prime or base rate, or
legal rate, if less. The note was issued in connection with the acquisition of
mineral interests. Principal and interest are due on demand or, at the option of
the Company, by issuance of 1,000,000 shares of the Company's common stock. The
balance of the note plus accrued interest aggregated $916,035 at December 1,
1999. During December 1999 the Company settled this obligation for a cash
payment of $100,000 (see below). The resulting gain of $816,035 has been
recorded as an extraordinary item in the accompanying financial statements.

F-13
<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Shareholders

During December 1999 a shareholder of the Company advanced $100,000 to the
Company to be used to settle the Company's obligation to Kennecott. The note
evidencing the loan bears interest at prime plus 2% and is payable on December
31, 2002.

Note 8. Pension Benefits

The Company participates in an employee 401(k) plan, which was set up for the
benefit of substantially all domestic employees. To be eligible, an employee
must be at least 21 years old. Participants may elect to defer 1% to 15% of
eligible compensation of a pre-tax basis. The Company can also elect to make
contributions to the plan, the amount being completely at the discretion of the
Company. No contributions were made in 1999 or 2000.

Note 9. Shareholders' Equity

During March 1996 the Company completed a $5 million foreign offering of common
stock pursuant to Regulation "S". This offering consisted of the sale of
4,980,000 units at $1.06 per unit. Each unit was composed of two shares of
Fischer-Watt common stock and one share purchase warrant. Each of these warrants
entitles the holder to purchase one additional share of Fischer-Watt common
stock at an exercise price of $.75 through February 28, 1998. These securities
were not registered under the Securities Act of 1933 and may not be offered or
sold in the United States absent registration or an applicable exemption from
registration requirements. The funds raised were used to finance capital
equipment and working capital needs for further development and expansion of
Fischer-Watt's gold mining operation in Colombia and its exploration and
development activities in Colombia and Nevada. As part of this offering, 680,000
units were sold under a subscription agreement and the collected proceeds of
$720,800 had been classified as capital stock subscribed within the Company
shareholders' equity accounts. During May 1999 the 1,360,000 shares of common
stock were issued.

During fiscal 1999 the Company issued 3,028,600 shares of common stock pursuant
to the exercise of warrants at exercise prices ranging from $.05 to $.07 per
share for cash aggregating $180,002.

During February 1999 the Company issued 750,000 shares of common stock for
services valued at $37,500. The value ascribed to the services corresponds to
the fair market value of the common stock on the date the services were
performed.

During fiscal 2000 the Company accepted subscriptions for 1,375,000 shares of
common stock for cash aggregating $68,750.

F-14
<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Note 10. Common Stock Options and Warrants

In May 1987, the board of directors approved a nonqualified stock option plan.
Two officers, four employees and one independent contractor were granted options
to purchase a total of 710,000 shares of common stock at $1.50 per share (fair
market value at date of grant). These options vest at rates ranging from 2,000
to 5,000 shares per month per individual and become exercisable six months after
vesting. These options expire 10 years after they become exercisable. At January
31, 2000, options on 417,500 shares had vested and were exercisable and options
on 201,500 shares expired.

In October 1991, three officers and three employees were granted options to
purchase a total of 504,000 shares of common stock at $1.15 per share (fair
market value at the date of grant). Options on 74,000 shares vested immediately
and the remainder vest at rates ranging from 2,000 to 4,000 shares per month,
and become exercisable six months after vesting. These options expire 10 years
after they become exercisable. At January 31, 2000, options on 382,000 shares
had vested and were exercisable.

In July 1993, two officers and four employees were granted options to purchase a
total of 600,000 shares of common stock at $.50 per share (fair market value at
the date of grant). These options vest at the rate of 2,000 shares per month per
employee and become exercisable six months after vesting. These options expire
10 years after they become exercisable. Options granted on 450,000 of the
600,000 shares were later canceled pursuant to employee settlement agreements.
At January 31, 2000, options on 136,000 shares had vested and were exercisable.

In conjunction with an employment contract effective September 1, 1993, with an
officer and director, options were granted on 500,000 shares of common stock at
$.20 per share (fair market value at date of grant). These options vest at the
rate of 20,000 shares per month and become exercisable six months after vesting.
These options expire 10 years after they become exercisable. At January 31,
2000, options on 500,000 shares had vested and were exercisable.

In October 1993, two officers and four employees were granted options to
purchase a total of 450,000 shares of common stock at $.17 per share (fair
market value at date of grant). These options vested immediately and became
exercisable six months after vesting. The options expire in April 2004. At
January 31, 2000, options on 450,000 shares had vested and were exercisable.

In April and July 1994, two directors were each granted options to purchase
100,000 shares of common stock at $.08 and $.05 per share (fair market value at
time of grant), respectively in an agreement separate from the Company's
nonqualified stock option plan. These options vest after approximately one year
of service as a director and become exercisable upon vesting. These options
expire five years after they become exercisable. At January 31, 2000, options on
all 200,000 shares had vested or were exercisable.

On June 1, 1995, two directors and two consultants were each granted options to
purchase a total of 525,000 shares of common stock at $.0625 per share (fair
market value at time of grant) in an agreement separate from the Company's
nonqualified stock option plan. These options became exercisable on June 1, 1998
and expire five years after they become exercisable. At January 31, 2000,
options on all 525,000 shares had been vested or were exercisable.

F-15

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

Pursuant to the November 1995 private placement, the Company issued warrants to
purchase 3,033,750 shares of common stock at $.30 per share on or before August
1997. Pursuant to a resolution of the Board of Directors, the expiration date
was extended to February 28, 1999, and the exercise price ranges from $.22-$.75
and is to be determined based upon the date of exercise which can fall into four
ranges from August 8, 1997 to February 28, 1999.

On February 20, 1996, two consultants were each granted options to purchase a
total of 200,000 shares of common stock at $.37 per share (fair market value at
the time of grant) in an agreement separate from the Company's nonqualified
stock option plan. These options become exercisable on February 20, 1997 and
expire five years after they become exercisable. At January 31, 2000, options on
200,000 shares had vested and were exercisable.

On June 1, 1996, two directors were granted options to purchase a total of
200,000 shares of common stock at $.72 per share (fair market value at the time
of grant) in an agreement separate from the Company's nonqualified stock option
plan. These options become exercisable on June 1, 1997 and expire five years
after they become exercisable. At January 31, 2000, options on 200,000 shares
had vested and were exercisable.

On November 1, 1996, a former employee and an officer were granted options to
purchase 50,000 and 100,000 shares, respectively, of common stock at $.56 per
share (fair market value at the time of grant) in an agreement separate from the
Company's nonqualified stock option plan. These options become exercisable on
November 1, 1997 and expire on November 1, 2002. At January 31, 2000, options on
150,000 shares had vested and were exercisable.

On February 1, 1997, an officer was granted options to purchase 100,000 shares
of common stock at $.53 per share (fair market value at the time of grant).
These options become exercisable on March 1, 1998 and expire five years after
they become exercisable. At January 31, 2000, options on 100,000 shares had
vested and were exercisable.

On September 1, 1997, two consultants were granted options to purchase 200,000
shares of common stock at $.22 per share (fair market value at the time of
grant). These options vested immediately and became exercisable one year after
vesting. At January 31, 2000, options on 200,000 shares had vested and were
exercisable.

On October 27, 1997, a director was granted options to purchase 250,000 shares
of common stock at $.165 per share (fair value at the time of grant). These
options vested immediately and became exercisable one year after vesting. At
January 31, 2000, options on 250,000 shares had vested and were exercisable.

F-16
<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

On December 16, 1997, four directors were granted options to purchase 400,000
shares of common stock at $.1125 per share (fair value at the time of grant).
These options vested immediately and became exercisable one year after vesting.
At January 31, 2000, options on 400,000 shares had vested and were exercisable.

The Company has reserved 550,000 common shares for issuance upon exercise of
twelve Warrants issued in January 1996, 1997 and 1998 in consideration for
investment banking and promotional services as follows: 100,000 common shares
are reserved for issuance upon exercise of warrant's issued on January 10, 1996
exercisable at $.28 per share (fair market value at time of grant) prior to
January 10, 2000. 100,000 shares are reserved for issuance upon exercise of
warrants issued on January 10, 1996, exercisable at $.31 per share at any time
prior to January 10, 2001. 100,000 shares are reserved for issuance upon
exercise of warrants issued on January 14, 1997, exercisable at $.41 per share
at any time prior to January 14, 2001. The remaining 250,000 shares are reserved
for issuance upon exercise of warrants issued on February 28, 1998, exercisable
at $.22-$.75 per share, depending upon when exercised any time prior to February
28, 1999.

On October 20, 1999, five directors and an employee were granted options to
purchase 3,000,000 shares of common stock at $.05 per share (fair value at the
time of grant). These options vested immediately and became exercisable one year
after vesting. At January 31, 2000, options on 3,000,000 shares had vested and
none were exercisable.

In fiscal 2000, warrants for 800,000 shares of common stock were issued in
conjunction with subscriptions for stock and in relation to an investment
banking agreement.

Note 11. Stock-based Compensation Plans

The Company accounts for stock-based compensation plans by applying APB Opinion
#25, "Accounting for Stock Issued to Employees," and related Interpretations
("APB 25"). Under APB 25, because the exercise price of the Company's employee
stock options approximates the market price of the underlying stock at the date
of grant, no compensation cost is recognized.

The Company's plan states that the exercise price of each option will be granted
at an amount that equals the market value at the date of grant. All options vest
at a time determined at the discretion of the Company's Board of Directors. All
options, expire if not exercised within 10 years from the date of grant, unless
stated otherwise by the Board of Directors upon issuance.

Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting for
Stock-Based Compensation, requires the Company to provide pro forma information
regarding net income and earnings per share as if compensation cost for the
Company's stock option plans had been determined in accordance with the fair
value based method prescribed in SFAS 123. The fair value of the option grants
is estimated on the date of grant utilizing the Black-Scholes option pricing

F-17

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

model with the following weighted average assumptions for grants in 2000 and
1999, respectively: expected life of options of 5 years and 5 years, expected
volatility of 138% and 52%, risk-free interest rates of 5.4% and 5% and no
dividend yield. The weighted average fair value at the date of grant for options
granted during 2000 and 1999 approximated $0.04 and $0.04 per option.

Under the provisions of SFAS 123, the Company's net income (loss) and earnings
(loss) per share would have been reduced (increased) to the pro forma amounts
indicated below:

January 31, 2000 1999

Net income (loss)
As reported $(2,565,132) $(1,872,927)
Pro forma $(2,725,132) $(3,439,000)

Primary earnings (loss) per share
As reported $(0.08) $(0.05)
Pro forma $(0.07) $(0.05)

The following table summarizes the stock option activity:

Stock Weighted-average
Options Price per Share
------- ---------------

Outstanding at February 1, 1998 4,359,000 0.52
Granted 200,000 0.07
Expired (248,500) 1.50
Outstanding at January 31, 1999 4,310,500 $ 0.43
Granted 3,000,000 0.05
Expired (301,500) 1.03
Outstanding at January 31, 2000 7,009,000 $ 0.24

The following table summarizes information about fixed-price stock options :

Outstanding at January 31, 2000:

Options Outstanding Options Exercisable
------------------- -------------------

Weighted- Weighted- Weighted-
Average Average Average
Range of Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
------ ----------- ---- ----- ----------- -----

$ 0.05-$0.08 3,825,000 4.0 years $ 0.05 825,000 $0.05
$ 0.11-$0.17 1,100,000 3.2 0.15 1,100,000 0.15
$ 0.20-$0.22 700,000 4.5 0.21 700,000 0.21
$ 0.37 200,000 1.8 0.37 200,000 0.37
$ 0.50-$0.56 386,000 3.1 0.53 386,000 0.53
$ 0.72 200,000 2.3 0.72 200,000 0.72
$ 1.15 382,000 3.3 1.15 382,000 1.15
$ 1.50 216,000 0.5 1.50 216,000 1.50
$ 0.05-$1.50 7,009,000 3.7 years $ 0.24 4,009,000 $ 0.39

F-18

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

The Company accounts for transactions with individuals other than employees in
which goods or services are the consideration received for the issuance of
equity instruments in accordance with the provisions of SFAS 123, based on the
fair value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. Note 12. Income Taxes

The components of net income (loss) before taxes for the Company's domestic and
foreign operations were as follows:

January 31, 1999 2000
---- ----

Domestic $ - $ 609,380
Foreign (1,872,927) (3,174,512)
--------- ---------
Net income (loss) before taxes $ (1,872,927) $ (2,565,132)
========= =========

The consolidated tax provision is comprised of the following:

January 31, 1999 2000
---- ----

Current:
Federal $ - $ (310,000)
State - (16,000)
Foreign 71,013 59,112
------------- -------------
Tax Provision $ 71,013 $ (266,888)
============= =============

The difference between the federal statutory tax rate and the effective tax rate
on net income before taxes is as follows:

January 31, 1999 2000
---- ----

Federal statutory rate (34.0)% (34.0)%
Utilization of tax loss carry forwards - -
Increase in net deferred tax asset
valuation allowance 34.0 34.0
Alternative minimum tax - -
State income taxes - -
Other - -
---- ----
0.0% 0.0%
==== ====

The Company has federal tax loss carryforwards of approximately $7.0 million and
Colombian tax loss carryforwards of approximately $7.3 million at January 31,
2000 which expire from 2003 to 2014.

Temporary differences between taxable income reported on the Company's federal
tax return and net income reflected in the accompanying statements of operations
result primarily from the capitalization of mine exploration and development
costs for financial reporting purposes and deducting those costs for tax

F-19

<PAGE>

Fischer Watt Gold Company, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements

reporting purposes, partially offset by a lack of tax basis in properties sold,
traded or abandoned. Additional temporary differences related to depreciation,
mineral interest write-downs and non-deductible accruals exist. The tax effect
of each of these temporary differences and net operating loss carryforwards for
the years ended January 31, 1999 and 2000, are entirely offset by a valuation
allowance as management does not believe the Company has met the "more likely
than not" standard imposed by FAS 109 to allow recognition of a net deferred tax
asset.

Note 13. Transactions with Related Parties

Jorge E. Ordonez became a Director of the Company on June 5, 1998 replacing Mr.
Buchanan. Mr. Ordonez has numerous interests and is a director of Hecla Mining
Company, which is also in the business of mining precious metals. Mr. Ordonez is
a principal shareholder in Minera Montoro S.A. de C.V. ("Montoro"), a Mexican
corporation. The Company holds a 65% interest in Montoro. During the past two
fiscal years no significant or material transactions have occurred between the
Company and Montoro.

During fiscal 2000 an officer of the Company advanced $126,915 to the Company
for working capital. In addition during fiscal 1999 and 2000 certain employee
shareholders deferred salaries and expenses aggregating $41,000 and $255,715
respectively. These advances and deferrals are included in accounts payable and
accrued expenses - shareholders in the accompanying financial statements.

Note 14. Commitments and Contingencies

Oronorte is currently the defendant in several claims relating to labor
contracts and employee terminations which occurred during a labor strike. This
strike and the resulting terminations took place during the former ownership of
Oronorte. The estimated amount of the claims against Oronorte totals
approximately $200,000.

F-20

<PAGE>

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On February 1, 1999, BDO Seidman, LLP, resigned as principal independent
accountant for the Company. This resignation was without warning and was
effective in both the United States and Colombia. They had not completed the
fiscal 1998 audit at the time of resignation.

The Company subsequently engaged Grupo Consultor Colombiano (Colombian
Consulting Group) as its Colombian independent auditor. GCC is affiliated with
Moore Stephens International Limited, the London based international accounting
firm. Simultaneously the Company engaged Stark Tinter and Associated, LLC,
Englewood, Colorado, as its principle independent auditor.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT.

Directors and Executive Officers:

The following table sets forth certain information as to all directors and
executive officers of Fischer-Watt:

Positions Held Position
Name Age With the Company Held Since
---- --- ---------------- ----------
George Beattie 71 Chief Executive Officer August 27, 1993
President

Gerald D. Helgeson 65 Director March 14, 1994
Secretary

Peter Bojtos 51 Director April 24, 1996
Vice Chairman
Vice President

James M. Seed 58 Chairman of the Board June 1, 1996

Jorge E. Ordonez 59 Director June 12, 1996

R.M. (Mike) Robb 59 Vice President of February 1, 1997
Operations

All of the above directors have been elected for a term of one year or until a
successor is elected. Directors are subject to election annually by the
shareholders. Directors are elected by a simple majority of the shareholders.

The position of Chief Financial Officer has been vacant since the resignation of
Ms Michele Wood on April 13, 1998. The duties of the CFO are fulfilled by other
Company executives and outside accountants.

22
<PAGE>

There are no family relationships by blood, marriage or adoption among any of
the officers or significant employees of the Company.

GEORGE BEATTIE

George Beattie, born November 22, 1927, has an Engineer of Mines degree from the
Colorado School of Mines. He has been active in the mineral industry since 1960,
working up from front line supervisory positions to Director of Mining for
Callahan Mining Corporation and General Manager, Western Mines for United
Nuclear Corp. In 1980, Mr. Beattie formed Mineral Advisors, Inc., a consulting
firm offering expertise in the development and management of mineral projects.
He is also recognized as an expert in the application of explosives, and has
served as a consultant for Western States Energy in the Pacific Northwest. Mr.
Beattie became Chief Executive Officer of Fischer-Watt Gold Company, Inc., on
August 27, 1993. Mr. Beattie devotes all of his business time to the affairs of
the Company.

GERALD D. HELGESON

Gerald Helgeson was born in St. Cloud, Minnesota on October 3, 1933. After
graduating from the University of Minnesota in 1955, Mr. Helgeson founded Jack
Frost, Inc., which became the largest integrated poultry complex in the Upper
Midwest. In addition, Mr. Helgeson was a member of the Young President's
Organization. Mr. Helgeson is now semi-retired and resides in Fallbrook,
California and he presently belongs to the Los Angeles YPO Graduate Group. Mr.
Helgeson has been a director of the Company since March 14, 1994. Although Mr.
Helgeson was appointed Vice President of the Company in October 1995, he does
not generally function in an executive officer capacity for the Company.

JORGE E. ORDONEZ

Jorge Ordonez, born October 22, 1939 in Tulsa, Oklahoma, is a certified
professional engineer in Mexico who resides in Mexico City. He received his
degree in Geological Engineering from the Universidad Nacional Autonoma de
Mexico in Mexico City in 1962 and his Masters from Stanford University in 1965.

As President of Ordonez Profesional, S.C., Jorge Ordonez is a consultant to
World Bank, international and Mexican Mining Companies, and the Mexican
government. In addition to his affiliation with the Company, Mr. Ordonez is
presently Managing Director of Altos Hornos de Mexico, S.A. de C.V., Managing
Director of Grupo Gan, Mining Division, Managing Director of Minera Carbonifera
Rio Escondido, Vice President of Minera Montoro, S.A. and a member of the Board
of Directors of Hecla Mining Company (HL-NYSE).

The Mexican National Geology Award was awarded to Mr. Ordonez in 1989,
recognizing contributions made to the mining industry as an Academician with the
Mexican Academy of Engineering and in leading roles with the Mexican Silver
Council, the Silver Institute and the North America Society of Economic
Geologists. He has been a Director of Fischer-Watt Gold Company, Inc. Since June
5, 1996.

23
<PAGE>

PETER BOJTOS

Peter Bojtos, P. Eng., was born on March 26, 1949 and received a Bachelor of
Science Honours degree in Geology from Leicester University, England. He has an
extensive background in the mining industry, with over 23 years in exploration,
production and corporate management. From August 1993 until 1995, Mr. Bojtos was
President and Chief Executive Officer of Greenstone Resources Ltd..

From 1992 to August 1993 he was President and Chief Executive Officer of
Consolidated Nevada Goldfields Corporation. Prior to that Mr. Bojtos held
several key positions, including vice-president of Corporate Development, during
his twelve years with Kerr Addison Mines, Limited, including that of President
of RFC Resources and New Kelore Mines Ltd.

Mr. Bojtos became a Vice President and Vice Chairman of the Board of Directors
of Fischer-Watt Gold Company, Inc., in April 1996.

JAMES M. SEED

James Seed was born on April 4, 1941. He was graduated from Brown University in
1963 and received his MBA from Stanford University in 1965. He is Chairman,
President and Owner of The Astra Ventures Incorporated and The Astra Projects
Incorporated, privately owned land development companies focusing on creating
building sites in the Minneapolis suburban communities and a community
surrounding a Robert Trent Jones, II championship golf course. He has been with
these companies since 1979.

From November 1979 to May 1989, he was the President and Owner of Buffinton Box
Company. From February 1971 to November 1979, Mr. Seed was with Fleet Financial
Group, spending his last two years there as Treasurer of the Corporation. Mr.
Seed is a Commissioner of Rhode Island Investment Commission and a Trustee of
The Galaxy Funds, an $8.4 billion family of 33 mutual funds. He was a Trustee of
the Corporation, Brown University from 1984 to 1990.

Mr. Seed became a Director of Fischer-Watt Gold Company, Inc. on June 1, 1996.
And appointed Chairman of the Board on October 20, 1999.

R.M. (MIKE) ROBB. P. E.

Mike Robb is an Idaho native born in Nampa on May 16, 1940. He has a Bachelor of
Science degree from the University of Idaho in 1963 and did graduate work at the
University's of Arizona and New Mexico. He was appointed Vice President of
Operations in February, 1997. In the two years prior to that he was Director of
Operations for Eldorado Gold Corporation and resided in Hermosillo, Sonora,
Mexico. The year prior to his assignment in Mexico he held the position of
General Manager with Atlas Mining, Eureka, Nevada. The five years prior to that
he held the position of Mine Manager with Boliden International Mining. He has
over thirty years of experience in the mining industry and in addition to
precious metals has worked in the copper, uranium, and coal. He is a Registered
Professional Engineer in five states. Throughout his years in the industry Mr.
Robb has also served in the Marine Corps Reserve, recently retiring as a
Colonel.

24
<PAGE>

Item 11. EXECUTIVE COMPENSATION.

The following table present the compensation awarded to, earned by, or paid to
Mr. George Beattie, the Chief Executive Officer, the only executive officer
whose total annual salary and bonus exceeds $100,000.

SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation
Name and
Principal Fiscal
Position Year Salary $
-------- ---- --------
George Beattie, 1999 100,000
President, CEO 1998 100,000
1997 100,000
1996 93,500
1995 80,000

The Company's chief executive officer is also a director. Directors receive no
cash compensation for their services except directors who are not employees
receive a communications allowance of $250 each six months. Over the past three
years non-employee directors have been issued stock options as compensation for
serving as a director, the exercise price of which was based on fair market
value of the stock and vest after one year's service and expire five years after
vesting. Pursuant to this program Gerald D. Helgeson has been granted options to
purchase 400,000 shares of stock. Continuance of this program is currently being
evaluated.

Do to a severe cash shortage, none of the executives or employees of the Company
were paid during the year. The moneys due is included in accounts payable.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Security ownership of certain beneficial owners, management and all owners of
more than 5% of the outstanding common stock as of April 1, 2000.

Name and Address of Amount and nature of % of
beneficial owner beneficial ownership Class
---------------- -------------------- -----

Cede & Co. 26,243,403 Shares 65.1
PO Box 222 Owned indirectly. Note 1
New York, NY 10274

Jeffrey L. Abbas 2,050,000 Shares 5.1%
80 Williams Way Owned directly
Couder Sport, PA 16915

25
<PAGE>

Name and Address of Amount and nature of % of
beneficial owner beneficial ownership Class
---------------- -------------------- -----

Peter Bojtos 1,050,000 shares
Officer and Director owned directly and
2582 Taft Court indirectly. Note 2 2.6%
Lakewood, CO 80215

James M. Seed 9,391,600 shares
Director and Chairman of the Board owned indirectly,
1 Citizens Plaza, Suite 910 Note 2, 3, 4 23.3%
Providence, RI

George Beattie 1,000 shares
Officer and Director owned directly,
1410 Cherrywood Drive Note 2 <1.0%
Coeur d' Alene, ID

Gerald D. Helgeson No shares
Officer and Director owned directly,
3770 Poppy Lane Note 2, 5 0.0%
Fallbrook, CA

Jorge E. Ordonez No shares
Director owned directly 0.0%
Ave. Paseo de las Palmas 735-205 Note 2
Mexico City, Mexico

R.M.(Mike)Robb No shares
Vice President of Operations owned directly
6004 Buffalo Grass CT, NE Note 2 0.0%
Albuquerque, NM

Directors and 10,442,600shares
Officers as a Group owned directly,
(six persons) and indirectly 25.9%

Note 1 - Cede & Company is a brokerage clearing company .

Note 2 - The options to purchase shares is shown below.

Note 3 - James M. Seed owns no shares, options or warrants directly, but through
various related trusts. Mr. Seed was appointed Chairman of the Board on Oct 20,
1999.

Note 4.- On March, 1999, Kennecott Exploration Company sold its 2,048,000 shares
to Jim Seed, an existing FWG stockholder, in a private transaction. This
transaction eliminated Kennecott's position in FWG.

Note 5 - Mr. Helgeson has assigned all of his options to his wife, Gerald D.
Helgeson.

26
<PAGE>

Options to Purchase Common Stock
===========================================================================================================
Weighted Date
-------------------------------------------------
Issued To Amount Exercise Price Granted Exercisable Expires
-----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
George Beatte 500,000 0.22 Various Current
500,000 0.05 10/27/99 10/31/99 10/31/04

Peter Bojtos 500,000 0.05 10/27/99 10/31/99 10/31/04
100,000 0.37 3/1/97 3/1/97 2/28/02
100,000 0.11 12/17/98 12/17/98 12/16/03

Jim Seed 500,000 0.05 10/27/99 10/31/99 10/31/04
300,000 0.10 12/30/97 12/31/97 12/31/02

Jorge Ordonez 500,000 0.05 10/27/99 10/31/99 10/31/04

Jerry Helgeson 500,000 0.05 10/27/99 10/31/99 10/31/04
400,000 0.24 Various Current

R. M. Robb 500,000 0.05 10/27/99 10/31/99 10/31/04
100,000 0.53 2/1/97 2/1/98 1/31/03

James Christl 50,000 0.05 11/5/99 11/6/99 11/6/04

-----------------------------------------------------------------------------------------------------------
Total 4,550,000
-----------------------------------------------------------------------------------------------------------

===========================================================================================================
</TABLE>

On January 14, 1999, the Company issue Centex Security Company, La Jolla, CA,
1,000,000 shares of stock and warrants to purchase 500,000 shares at $0.21 each
as part of a commercial banking agreement. In fiscal year 1998 to Company issued
Centx 375,000 warrants execrable at $0.50, for similar services.

Indebtedness of Directors and Officers

No Company directors or officers are indebted to the Company.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Jorge E. Ordonez became a Director of the Company on June 5, 1996 replacing Mr.
Buchanan. Mr. Ordonez has numerous interests and is a director of Hecla Mining
Company, which is also in the business of mining precious metals. Mr. Ordonez is
a principal shareholder in Minera Montoro S.A. de C.V. ("Montoro"), a Mexican
corporation. The Company holds a 65% interest in Montoro. During the past two
fiscal years no significant or material transactions have occurred between the
Company and Montoro.

27
<PAGE>

Peter Bojtos became a director of the Company on April 24, 1996. Mr. Bojtos had
been engaged on August 25, 1995 by the Company, on a non-exclusive basis as an
independent contractor to raise funds for the Company in the form of issuance of
restricted common stock and warrants to purchase additional shares. He was
compensated in cash at the rate of 10% of the amount raised and was paid $81,000
for those services. Mr. Bojtos is also a director in several other mining
companies. The majority of these companies are listed on various Canadian Stock
exchanges.

The Company owed Kennecott Exploration Company (Kennecott) $500,000 plus accrued
interest for various business transactions occurring in 1995 and 1996. On March,
1999, Kennecott forgave this obligation in return for a one time payment of
$100,000. The Company borrowed the payment from James Seed, a Director and
Chairman of the Board, under normal commercial conditions with payment due in
two years.

Item 14. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

Exhibit Item 601
No. Category Exhibit

1 2 Mining Property Purchase Agreement dated September 30, 1996,
between Fischer-Watt Gold Company, Inc. and Kennecott
Exploration Company ("KEC") whereby FWG purchased mining
claims owned by KEC in Esmeralda County, Nevada, and, upon
closing, delivered to KEC a Promissory Note in the amount of
$700,000 and filed as Exhibit 6.2 to Form 10-QSB filed
October 18, 1996 and incorporated herein by reference.

2 3 By-laws of the Corporation. Amended and restated. Filed as
Exhibit 3.3 to Form 10-QSB filed December 16,1996 and
incorporated herein by reference.

3 10 Option effective June 1, 1996, whereby Fischer-Watt Gold
Company, Inc., grants Gerald D. Helgeson an option to
purchase 100,000 shares of Fischer-Watt restricted common
stock. Filed as Exhibit 31.10 to Form 10-KSB filed September
26, 1996 and incorporated herein by reference.

4 10 Option effective June 1, 1996 whereby Fischer-Watt Gold
Company, Inc., grants Peter Bojtos an option to purchase
100,000 shares of Fischer-Watt restricted common stock.
Filed as Exhibit 33.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.

5 10 Joint venture agreement dated July 25, 1996, between Great
Basin Exploration and Mining and Digger Resources, Inc.
regarding Tempo mineral property, Lander County, Nevada.
filed as Exhibit 36.10 to Form 10-KSB filed September 26,
1996 and incorporated herein by reference.

28
<PAGE>

6 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.

7 10 Promissory note dated September 30, 1996, whereby
Fischer-Watt Gold Company, Inc., promises to pay $700,000 to
Kennecott Exploration Company, Inc. and filed as Exhibit
48.10 to Form 10-QSB filed October 18, 1996 and incorporated
herein by reference.

8 10 Option effective February 1, 1997, whereby Fischer-Watt Gold
Company, Inc., Grant R. M. Robb an option to purchase
100,000 shares of restricted common stock. Incorporated
herein by reference.

9 10 Labor Supply Agreement entered between Compania Minera
Oronorte, S.A. (a subsidiary of the Company) and
Precoperativa de Trabajo Asociado de Zaragos in which the
work cooperative agrees to supply personnel for mining labor
and the Company accepts the cooperative as the sole supplier
of such labor. Incorporated herein by reference.

10 10 Option effective October 31, 2000, whereby Fischer-Watt Gold
Company, Inc., Grant George Beattie, Peter Bojtos, Jim Seed,
Jorge Ordonez, Jerry Helgeson and R. M. Robb each an option
to purchase 100,000 shares common stock.. Incorporated
herein by reference.

10 27 Financial Data Schedule for the year ending January 31,
2000.

(b) Reports on Form 8-K

During the quarter ended January 31, 2000, no reports on Form 8-K were filed by
the registrant.

Exhibit Number 21 - Subsidiaries of Company

Name of Subsidiary Ownership Incorporated In
------------------ --------- ---------------

Compania Minera Oronorte, S. A. 100% Colombia
Minera Esperanza, S. A. 100% Colombia
Donna, S. A. 100% Bahamas
Minera Montoro, S. A. de C. V. 65% Mexico
Great Basin Mining and Exploration 100% Nevada, USA

29
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

FISCHER-WATT GOLD COMPANY, INC.

June 5, 2000 By: /s/George Beattie
------------ -----------------
George Beattie
President, Chief Executive Officer,
(Principal Executive Officer)

In accordance with the Exchange Act, this Report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

Signature and Title Date
---------------------------------------------------------------------------

/s/George Beattie June 5,2000
----------------- -----------
Acting Chief Financial Officer
Principal Financial and Accounting Officer)

/s/Gerald D. Helgeson June 5,2000
--------------------- -----------
Director, Secretary
and Vice President

/s/James M. Seed Jun 5,2000
---------------- ----------
Director
Chairman of the Board and Director

/s/George Beattie June 5,2000
----------------- -----------
President, Chief Executive Officer
(Principal Executive Officer)

/s/Peter Bojtos June 5,2000
--------------- -----------
Director and Vice President
Vice Chairman of the Board

/s/Jorge Ordonez June 5,2000
---------------- -----------
Director