SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED] OR

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

For the fiscal year ended 12/31/99                    Commission File No. 0-9416

                                WCM CAPITAL, INC.
                 (Name of small business issuer in its charter)

          Delaware                                              13-2878202
(State or other jurisdiction of                               (I.R.S. Employer
Incorporation or organization)                               Identification No.)

                   76 Beaver Street, New York, New York 10005
                    (Address of principal executive offices)

Issuers telephone number:                                           212-344-2828

Securities Registered under Section 12(b) of the Exchange Act:              None

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


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 such  shorter
period that the  registrant  was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [_]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  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. [_]

State issuer's revenues for its most recent fiscal year.   $    -0-
                                                           -------------

State the  aggregate  market value of the voting and  non-voting  common  equity
stock held by  non-affiliates  computed by  reference  to the price at which the
common equity was sold, or the average bid and asked price of such common equity
as of a specified date within the past 60 days

                                   $ 7,912,602

State the  number  of shares  outstanding  of each of  issuers'  class of common
equity, as of the latest practical date.

                         1,318,767 as of March 15, 2000

DOCUMENTS INCORPORATED BY REFERENCE IN PART III - SIX

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





<PAGE>





PART I                         TABLE OF CONTENTS                        PAGE


Item 1     Description of Business                                       03
Item 2     Properties                                                    07
Item 3     Legal Proceedings                                             17

Item 4     Submission of Matters to a Vote of Security Holders           22

PART II

Item 5     Market for Registrant's Common Equity and Related             24
           Stockholder Matters

Item 6     Management's Discussion and Analysis or Plan                  25
           of Operation

Item 7     Financial Statements                                       F-1/F-28

Item 8     Changes in and Disagreements with Accountants                 31
           on Accounting and Financial Disclosure


PART  III

Item 9     Directors, Executive Officers, Promoters, and Control         32
           Person; Compliance with Section 16(a) of the
           Exchange Act

Item 10    Executive Compensation                                        34

Item 11    Security Ownership of Certain Beneficial Owners               34
           and Management

Item 12    Certain Relationships and Related Transactions                35

PART IV

Item 13    Exhibits, Reports on Form 8-K                                 38

           Signatures                                                    41


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -2-
<PAGE>


                                     PART I



Item 1. Description of Business

General

The  Company  incorporated  on  December  1, 1976 under the laws of the State of
Delaware, is engaged in the exploration,  development and mining of precious and
nonferrous metals,  including gold,  silver,  lead, copper and zinc. The Company
owns or has an interest in a number of precious and nonferrous metal properties.
The Company's  principal  mining  property is the Franklin  Mines,  located near
Idaho Springs in Clear Creek County,  Colorado,  for which the Company  acquired
the exclusive right to explore,  develop,  mine and extract all minerals located
in approximately  51 owned and/or patented mining claims (the "Franklin  Mines")
and a crushing and  flotation  mill which is located on the site of the Franklin
Mines (the "Franklin  Mill").  While none of its properties were  operational in
fiscal year 1999, the Company  continues its  rehabilitation  of the property in
anticipation of the commencement of operations in the future.

History and Development of the Company

The claims that  comprise  the  Franklin  Mines are located on a site upon which
placer gold was discovered above the ground at Idaho Springs,  Colorado in 1859.
The  Franklin  Mines vein  system was  discovered  in 1865.  Thereafter,  mining
commenced  on the site in 1865 and  continued on an almost  uninterrupted  basis
through  1915 until the  outbreak  of World War I caused  curtailment  of mining
operations in the area. The principal minerals extracted during this period were
gold, silver,  lead, copper, and zinc. The Franklin Mines have not operated on a
continuous or consistent commercial basis since 1915.

On December  26,  1976,  the Company  acquired  Gold  Developers  and  Producers
Incorporated,  a Colorado corporation that leased 28-patented mining claims from
Audrey and David Hayden and Dorothy Kennec pursuant to a mining lease and option
to purchase,  dated November 12, 1976 (hereinafter  collectively  referred to as
the  "Hayden/Kennec  Leases").  In 1981, the Company  commenced a rehabilitation
program  to extend  and  rehabilitate  the  shafts  and  tunnels in place at the
Franklin  Mines,  install  the  Franklin  Mill and  search for and  delineate  a
commercial ore body. The Company  completed the Franklin Mill,  which is capable
of crushing,  processing  and  concentrating  approximately  150 tons of ore per
24-hour period, in 1983.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -3-
<PAGE>

Operations at the Company's Mining Properties

     (1)  The Franklin Mining Properties

During fiscal year 1998 and 1999, no mining or milling activities were conducted
at the Franklin Mine. However, the Company continued its rehabilitation  program
and reclaimation program in anticipation of commencing operations. Specifically,
the  Company  continued  with its water  monitoring  programs  and  commissioned
additional reports and research into claims located on the mining property.  The
Company has through  fiscal year 1999,  and will  continue,  through fiscal year
2000, to take steps toward bringing the Franklin Mine and Mill into operation.

Since its inception,  the Company has spent significant monies  constructing the
Franklin  Mill,  rehabilitating  the Franklin and  Freighters  Friend shafts and
underground workings and constructing surface support facilities of the Franklin
Mines.  In recent  years,  the Company has (a)  instituted a plan for  quarterly
ground water  monitoring  which includes surface water and ground water sampling
plans, (b) taken steps to correct run-off problems  associated with the Tailings
Pond disposal areas currently  located on the property,  (c) reclaimed the lined
tailings ponds located adjacent to the Franklin Mill, (d) set forth  preliminary
plans for the installation of a paste backfill system for tailings  disposal and
(e)  applied  to the  Colorado  Division  of  Minerals  and  Geology,  the state
governing  authority  for mining and milling  (the "DMG") for  expansion  of the
permitted area at the Franklin Mines and Franklin Mill to allow for  performance
of certain of the  remediation  work outlined above.  The Company  believes that
upon the institution of a paste backfill system,  it will have adequate capacity
for tailings  disposal once  operations  commence.  However,  should  additional
tailings disposal areas be required, the Company may make application to the DMG
to reopen the lined tailings ponds recently reclaimed.  In addition, the Company
has instituted an environmental  protection plan containing  emergency  response
plans for designated  chemicals used on site and appropriate measures consistent
with  local  government  agencies  to  prevent  damage  to  area  wildlife  form
chemicals,  toxic or acid  forming  materials  and/or  acid mine  drainage.  The
Company's plan has been approved by the DMG.

Throughout  1999,  inspections of the Franklin Mining  properties  revealed that
certain   reclaimation  issues  still  remained  outstanding  at  the  property.
Specifically,  certain drainage problems and substandard linings at the tailings
disposal areas created  potential  hazards and required  protection  measures be
addressed. Tailings Pond No. 5 was of specific concern to the DMG. After several
extensions  had been  granted,  the Company  was unable to  complete  all of the
preventive  work required by the DMG. Due to lack of funds,  the Company has not
been able to  institute  its paste  backfill  program,  which it believes  would
alleviate the problems currently existing at its tailings disposal area.

On January 5, 2000,  the Company  submitted a letter to the DMG to clarify  why,
among other  things,  it has not  completed  all of the  recommended  preventive
measures at the site,  specifically  with  respect to its  tailings  ponds,  and
commenced  operations.  The Company explained its difficulty in obtaining needed
financing to continue its reclaimation and remediation plans and to begin mining
and milling operations at the Franklin Mines due to the depressed price of gold.
Therefore, the Company


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -4-
<PAGE>


concluded that it is economically  unfeasible to mine and mill at the properties
at this time.  The  Company  further  stated,  however,  that it did not wish to
abandon its business plan or reclaim the property but rather intends to maintain
the mine and mill  site and to comply  with all DMG  regulations  with  hopes of
restarting the mine and mill as soon as the price of gold makes it profitable to
do so.

On February 7, 2000,  the DMG responded to the Company's  correspondence  with a
recommendation   that  the  Company's  mining  permit  be  placed  in  Temporary
Cessation.  Temporary  Cessation is a limited  period of  non-production,  which
results when an operator plans to temporarily  cease production for at least 180
days upon the  filing  of  notice  thereof  with the DMG.  In the  event  that a
Temporary  Cessation  is granted,  no further  reclaimation  work or mining work
would be required  for the  duration of the  Temporary  Cessation,  beyond basic
maintenance   and   reclaimation   required  to  keep  the  site  from   further
deterioration. The DMG further indicated that should the Company choose to apply
for Temporary Cessation,  certain of the tailings pond area would be required to
be stabilized and the  groundwater  and the stability of the tailings ponds must
be protected  from further  deterioration.  The DMG required  that any notice of
Temporary Cessation  submitted must specifically  address an alternative interim
reclaimation  plan for Tailings  Pond No. 5 as well as outlining  the  temporary
stabilization measures needed to comply with these requirements.

As recommended  by the DMG, the Company  requested for a change of status of its
permit  to   Temporary   Cessation.   Following   a  meeting   of  the  DMG  and
representatives  of the Company held on February 10, 2000, the DMG set forth the
measures in a letter, dated March 9, 2000, which must be taken by the Company to
bring the site into compliance with groundwater regulations and to stabilize the
tailings  pond and site  during the  Temporary  Cessation.  The Company has been
given until April 6, 2000 to submit a written  commitment to complete all of the
required  actions  by May 30,  2000 for its  Temporary  Cessation  request to be
granted. In addition, before coming out of Temporary Cessation, the Company must
commit to determining  whether the current  conditions of its tailings  disposal
areas is  adequate  for  further  tailings  disposal  and in no  event  will the
Franklin  Mill be  permitted  to  operate  without  prior  approval  by DMG of a
comprehensive tailings disposal plan.

The Company has not conducted any significant  commercial mining operations and,
as a result,  had not generated any significant  revenues  through  December 31,
1999 from operations at the Franklin Mine. Therefore, the Company remains in the
exploration  stage. The Company,  however,  is hopeful that economically  viable
commercial  mining  operations at the Idaho  Springs  mining  facilities  can be
conducted in the future,  however,  given the current  economic  climate,  it is
unlikely that the Company will  commence  operations in the year 2000. It is the
Company's  intention,  however, to prepare for full-scale  operations should the
price of gold reach $350 per ounce or greater.  The  Companies  will continue to
work closely with Colorado state mining  regulatory  agencies in preparation and
anticipation of full-scale operations at the Franklin Mines and Franklin Mill.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -5-
<PAGE>


(2)  Newmineco and the Mogul Mine

On September  26, 1996,  the Company  acquired a 20% interest in Newmineco  from
Gems & Minerals  Corp., a former joint venture  partner of the Company  ("Gems")
for a purchase  price of $600,000  evidenced  by an interest  only note  bearing
interest at 9.5% per annum (the "Newmineco Note").  Newmineco was formed for the
purpose of exploiting  certain  rights to a mining  property  known as the Mogul
Mine  evidenced  by a Lease dated March 18, 1996,  entered  into between  Island
lessor/optionor  as to the Muscat Lode claim  only) as lessor  (the  "Rugg/Mogul
Lease").  The  Rugg/Mogul  Lease  was  contributed  to  Newmineco  prior  to the
acquisition by the Company of 20% of the LLC. The Company  continues to maintain
its interest in Newmineco  but has been  informed that the LLC has abandoned its
plan to participate in the exploration of the Mogul Mine and no longer possesses
the leasehold interest evidenced by the Rugg/Mogul Lease.

(3)  The Gold Hill Mill

In 1996,  the Company  acquired  the Gold Hill Mill in hopes of  increasing  its
milling  capacity to mill ore extracted from the Franklin Mines and other mining
properties in the region.  However, in 1997, it became clear that the regulatory
climate  made it  economically  unfeasible  to bring  the Gold  Hill  Mill  into
operation.  Recent changes in the laws  governing  milling and mining in Boulder
County  restrict  the use of milling  facilities  located  in Boulder  County to
processing ore recovered within the county only. These legal changes  prohibited
the Company from using the Gold Hill Mill for  processing  ore from the Franklin
Mines.

Therefore,  on or about June 5,  1998,  the  Company  sold the Gold Hill Mill to
Denver East Machinery Company ("Denver East") for an aggregate purchase price of
$1,075,000.  Payment  of the  purchase  price was made by  transferring  certain
property  and  equipment  owned by Denver  East  having a fair  market  value of
$725,000 a demand note in the aggregate  principal  amount of $350,000 which was
payable to Denver East by Com,  Inc.,  an  affiliate  of Gems (the  "Denver East
Note").  The Denver East Note is payable  and accrues  interest at a rate of 14%
per annum.  As of the date  hereof,  the Company has not made demand for payment
under the terms of the  Denver  East  Note nor does the  Company  expect to ever
collect on such note due to Com, Inc.'s lack of funds.

Other Ventures

On or about January 11, 1999, US Mining, Inc. ("USM"), a Company wholly owned by
Mr. William C. Martucci,  a director of the Company  executed a letter of intent
with agents for the Alamosa Mining and Leasing  Company,  Inc. and the Renegade,
LLC to  enter  into a joint  venture  arrangement  for the  exploitation  of the
Shafter Mining Property located in Clear Creek County,  Colorado.  The letter of
intent was assigned to the Company on January 11, 1999.

After  consultation  with USM and completion of  preliminary  due diligence with
respect to the feasibility of commencing mining operations at the Shafter Mining
Property,  the  Company  determined  that it was not  feasible  to  pursue  this
arrangement and notified the parties of its intent in April 1999.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -6-
<PAGE>


On January 18, 2000, the Company,  Mr.  William C.  Martucci,  a director of the
Company and USM entered into an agreement  whereby the Company would acquire USM
in exchange for 7,473,013 shares of the Company. For more information  regarding
this  transaction and the relationship of the Company with Mr. Martucci and USM,
see Item 12. Certain  Relationships and Related  Transactions in Part II of this
Report.

Water, Utilities and Refining Contracts

The Company has  historically  purchased  power from Public  Service  Company of
Colorado at its published rates.  Moreover,  the Company's  management  believes
that sufficient water for present and future operations may be obtained from the
City of Idaho  Springs  at its  normal  rates or from  other  nearby  sources at
reasonable rates. The Company's management does not anticipate any difficulty in
obtaining  sufficient  water and power sources for its future mining and milling
operations.

In the  past,  the  Company  has  entered  into  refining  agreements  with Zinc
Corporation  of America  and ASARCO  Incorporated  for the sale and  refining of
lead, zinc and copper concentrates  produced from the Franklin Mine in Colorado.
The  Company's  management  expects that at such time as it  recommences  active
mining  and  milling  operations,  the  Company  will not have  difficulties  in
renewing or  renegotiating  contracts with either ASARCO or Zinc  Corporation of
America or entering into new contracts with their competitors.

Employees and Technical Consultants

As of December 31, 1999, the Company had no full-time  employees.  The Company's
executive  officers  serve as needed on a part-time  basis for no  compensation.
With respect to operations at the Franklin  Mines and Franklin  Mill,  technical
personnel and other qualified consultants and experts are retained on a contract
or  consulting  basis as needed.  Management  anticipates  that as the Company's
business develops,  additional  technical  administrative  staff may be hired as
well as qualified geological and technical consultants on an as needed basis.

Item 2.  Properties

Glossary of Terms

Assay                                   A chemical  evaluation  of metal content
                                        conducted after mining ore.

Backfill                                Mine   waste   which  is   disposed   of
                                        underground in a formerly mined area.

Chalcopyrite                            A mineral  containing  copper,  iron and
                                        sulphur.

Cyanidation  and Pulp  Recovery         The  process by which gold is  extracted
                                        in the milling  process  through the use
                                        of cyanide.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -7-
<PAGE>

Exploration stage                       Company   Companies   engaged   in   the
                                        preparation     of    an     Established
                                        commercially mineable deposit or reserve
                                        for  its  extract  which  are not in the
                                        production stage.

Dip                                     An angle  measured  in degrees  from the
                                        horizon.

Fault                                   A fracture  in the earth  through  which
                                        mineralizing solutions may rise and form
                                        a vein.

Fault System                            A large regional fracture.

Footwall                                That   portion  of  the  vein  which  is
                                        located below.

Galena                                  A  mineral   containing  both  lead  and
                                        sulphur.

Gravity Concentration                   Minerals  concentrated by application of
                                        devices employing the force of gravity.

Hanging wall                            That   portion  of  the  vein  which  is
                                        overhead.

J.L. Emerson Fault                      A large  fracture  in the earth' s crust
                                        located in the Franklin Mine area.

Laramide Period                         A  period   in   history   dating   back
                                        approximately  70  to 90  million  years
                                        ago.

Main Trunk                              A highly mineralized portion of the J.L.
                                        Emerson fault located on the  properties
                                        constituting the Franklin Mines.

Massive Sulfides                        High quality ore.

Microcline gneiss
Mill                                    A type of  rock  found  at the  Franklin
                                        Mine.   The  plant  facility  where  the
                                        metals  constituting the ore are removed
                                        from mined rock.


Mine Workings                           The areas where ore is being mined.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -8-
<PAGE>





Mineral Concentrate                     A mill product where the rock  particles
                                        have  been  removed  from  the  metallic
                                        minerals.

Mineralized Rock                        Rock which  contains  the minerals to be
                                        mined.

Monzonite                               Intrusive  rock types  containing  large
                                        amounts   of   quartz   and   often  the
                                        progenitor  of  metallic,   mineralizing
                                        solutions.

Ore                                     A metallic or non-metallic  mineral that
                                        can be mined  from the earth and sold at
                                        a profit.

Ore Conduit                             An opening  through  which  mineralizing
                                        solutions can rise.

Ore Reserves                            Minerals  located  in the  ground  whose
                                        existence is governed by varying degrees
                                        of probability.

Ore Shoot                               A body of ore.

Orogeny                                 An event  causing  a major  upheaval  or
                                        reshapement of the earth's  crust,  such
                                        as volcanism,  mountain  building or ore
                                        formation.

Paste Backfill                          Procedure  in which  backfill is treated
                                        with  certain  chemicals to solidify the
                                        same to prevent seepage

Pegatites                               A type of  rock  found  in the  Franklin
                                        Mine.

Pillars                                 Unmined sections of ore in a stope.

Pre-Cambrian age                        A time  period in  history  dating  back
                                        approximately 600 million years ago.

Probable (Indicated) Reserves           Reserves  for which  quantity  and grade
                                        and/or   quality   are   computed   from
                                        information  similar  to that  used  for
                                        proven   reserves,   but  the  site  for
                                        inspection, sampling and measurement are
                                        farther  apart  or  are  otherwise  less
                                        adequately   spaced.   The   degree   of
                                        assurance,  although lower than that for
                                        proven  reserves,   is  high  enough  to
                                        assume   continuity   between  point  of
                                        observation.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -9-
<PAGE>



Production Shaft                        The device  through which ore is hoisted
                                        from the mine and the area through which
                                        materials  are lowered into the mine and
                                        miners enter and exit the mine.

Proven (Measured) Reserves              Reserves   for  which  (a)  quantity  is
                                        computed  from  dimensions  revealed  in
                                        outcrops,  trenches,  workings  or drill
                                        holes;  grade  quality are computed from
                                        the results of detailed sampling and (b)
                                        the sites for  inspection,  sampling and
                                        measurement  are spaced so  closely  and
                                        the   geologic   character  is  so  well
                                        defined  that  size,  shape,  depth  and
                                        mineral  content  of  reserves  are well
                                        established.


Pyrite                                  A  mineral   containing  both  zinc  and
                                        sulphur.

Raise                                   A tunnel driven upward from a level.

Refractory                              A difficulty in separating  value metals
                                        or minerals from the host rock.

Reserves                                That  part of a  mineral  deposit  which
                                        could  be   economically   and   legally
                                        extracted or produced at the time of the
                                        reserve determination.

Schist, granite gneiss                  A type of  rock  found  in the  Franklin
                                        Mine.

Selective Flotation                     Minerals   concentrated  in  a  selected
                                        mineral group in the mill.

Shaft                                   A  vertical  tube-like  opening  whereby
                                        miners enter the mine.

Slurry                                  A mixture of ground  rock or minerals in
                                        water.

Slimes                                  Exceedingly  fine  particles  mixed with
                                        water.

Sphalerite                              A  mineral   containing  both  zinc  and
                                        sulphur.

Strike                                  In a horizontal direction.

Stope                                   The  area  of  the  mine  where   miners
                                        extract mineral deposits from the mine.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -10-
<PAGE>



Tailings                                Waste which is produced by the Mill.

Tailings Pond                           The  location   where  mill  wastes  are
                                        deposited.

Telluride                               A  mineral  containing  tellurium  often
                                        found  with  quantities  of gold  and/or
                                        silver and sulphur.

Tennentite                              A  complex  mineral  containing  copper,
                                        antimony  or arsenic,  often  containing
                                        large amounts of silver.

Tertiary Period                         A time  period in  history  dating  back
                                        approximately  40  to 70  million  years
                                        ago.

Vein                                    A fracture  in the  earth's  crust where
                                        minerals have been deposited.

Winze                                   A tunnel driven downward from a level.

Colorado Mining Properties

The property  which  constitutes  the Franklin  Mines  consists of (i) leasehold
interests in the mineral rights to 28 claims comprising  approximately 322 acres
evidenced by the  Hayden/Kennec  Leases and (ii) an  additional 23 claims leased
and/or  purchased by the Company  covering less than 100% of the mineral  rights
comprising  approximately 20 additional acres, for a total of 51 claims over 340
acres.  The Franklin  properties  include all  improvements  made by the Company
thereon,  including  the Franklin Mill capable of supporting up to a 150 ton per
day operation in its present  state.  The Company was also required to pay taxes
and certain  other  expenses  relating  to the  properties  leased.  Except with
respect to the property leased under the Hayden /Kennec Leases, the Company does
not intend to exploit  any claims for which it holds less than a 100%  interest.
Management  believes that it currently  maintains  adequate insurance for all of
its mining properties.

Hayden/Kennec Leases

Under the original terms of the  Hayden/Kennec  Leases which expired in November
1996, the Company was required to pay an aggregate  minimum  royalty  payment of
$2000 or 5% of the net smelter royalties  realized by the Company to Mrs. Hayden
and Mrs.  Kennec.  The Company was also  required to pay all other  amounts with
respect to the property including any tax liabilities.  The Hayden/Kennec Leases
also  contained an option to purchase the leased  mineral  rights for a purchase
price of $1,250,000 less all royalty payments made during the term of the lease.
As of the  expiration  date,  the Company had paid $480,000 in royalties,  which
would have set the option price at $770,000.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -11-
<PAGE>


In  November  1996,  the  Company  was  granted  a  one-year  extension  of  the
Hayden/Kennec Leases under the same terms and conditions.  On November 13, 1997,
just prior to the expiration of the  Hayden/Kennec  leases,  USM entered into an
agreement with Mrs. Hayden to purchase her 50% interest (the "Hayden  Interest")
in the mineral rights (the  "Purchase  Agreement").  Mrs.  Hayden had previously
contracted to sell her interest to Gems & Minerals Corp., the Company:  a former
joint venture  partner,  however,  Gems was unable to consummate the purchase in
accordance with the terms of their agreement.

Pursuant to the Purchase Agreement, Mrs. Hayden agreed to sell to USM the Hayden
Interest for $75,000, which would be evidenced by a note issued to Hayden by USM
at the  consummation  of the sale.  The  Purchase  Agreement  also  contained  a
provision  which  extended the  Hayden/Kennec  Leases with respect to the Hayden
Interest  until  March 13,  1998 and which  required  USM to continue to pay the
royalty payments required there under until the sale was consummated.  As of the
date  hereof,  USM has not  consummated  the  purchase of the Hayden  Interests;
however,  the terms of the Purchase  Agreement  remain in effect and Mrs. Hayden
has agreed to further extend the Hayden/Kennec Leases with respect to the Hayden
Interest  through July 31,  2000.  The Company has also been advised by USM that
all royalty  payments have been paid and will continue to be paid until the sale
is consummated or the Purchase Agreement is terminated.

With respect to the 50%  interest  currently  owned by Mrs.  Kennec (the "Kennec
Interest"), upon the expiration of the Hayden/Kennec Leases, the Company entered
into an extension agreement with Mrs. Kennec to extend the Hayden/Kennec  Leases
as they  pertain  to the  Kennec  Interest  until  March 12,  1998.  No  further
extensions have been granted and there can be no assurance that the Company will
reach any further  agreement  with Mrs.  Kennec  regarding the Kennec  Interest.
While there can be no guarantee that the Company's  failure to come to agreement
with Mrs.  Kennec  regarding her interest will not have an adverse impact on the
Company's  ability to exploit the mineral rights evidenced by the  Hayden/Kennec
Leases,  the Company has previously  been advised that Colorado Law would permit
the  exploitation of the mineral rights so long as the  non-participating  owner
(Mrs.  Kennec) is paid whatever net profits are owed to her upon commencement of
operations.  Since USM is in a position to purchase  the Hayden  Interest and is
controlled by Mr. Martucci, the Company is hopeful that its inability to come to
an  agreement  with Mrs.  Kennec with  respect to the Kennec  Interest  will not
preclude the Company from commencing mining operations.

Location and Access

The Franklin Mines and Franklin Mill are located in Clear Creek County, Colorado
approximately 2.7 miles north of the town of Idaho Springs,  which is accessible
from Interstate 70 approximately 33 miles west of Denver.  From Idaho Springs, a
county  maintained  gravel road  connecting  Idaho  Springs with Central City in
Gilpin County passes  within 1/4 of a mile of the Franklin Mine  facilities  and
offices.  A minor roadway,  also maintained by the County,  allows access to the
Franklin Mine within 1/8 of a mile. The mine location is accessible  year round,
except in the case of a major snowstorm in winter months.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -12-
<PAGE>


Ore Deposition in the Area

Most of the ore  deposition  in the area where the Franklin  Mine is located has
been  credited to the period of the Laramide  Orogeny.  Ore  extracted  from the
region  included gold,  silver,  copper,  lead,  zinc,  and uranium.  By far the
largest  single metal values were in gold,  with silver being a distant  second.
Though many of the  smaller  veins  located in the area  pinched out at moderate
depth, some have shown strong mineralization at greater depths.

The  ore   deposits   are  of  four   types:   (i)  pyritic   gold  ores;   (ii)
galena-sphalerite ores; (iii) composite (pyrite-galena-sphalerite) ores and (iv)
telluride  ores.   Pyritic  gold  ores  are  chiefly   associated  with  pyrite,
chalcopyrite, and tennentite. The "composite ores" are believed to be the result
of two or more  periods  of  mineralization,  with  pyritic  minerals  first and
galena-sphalerite  second;  mineral  content  varies  widely  with the  relative
percentage of the  different  types of ore present.  Telluride  ores are present
mostly in the Northeast  corner of the district,  but some  telluride  ores have
been noted elsewhere.

The Idaho Springs and Central Mining District

Both the Idaho Springs and Central Mining Districts were discovered  around 1860
and by 1900 were old mining  districts.  It has been  estimated that these areas
combined  to produce in excess of five  million  ounces of gold and  substantial
amounts of silver,  copper,  lead and zinc during this period.  Mining ceased in
both  districts  around  1920.  However,  the United  States  Geological  Survey
indicates  that the base of the  mineralization  has not been found in either of
these mining  districts.  This means that the  mineralization in the veins found
throughout  this  region may  continue  to great  depth and with  modern  mining
techniques,  stainless  steel water pumps and better  mining  engineering  it is
possible  that may of the mines that helped  produce the five million  ounces of
gold in the last  century  can  economically  be opened and ore mined to greater
depths.

There are at least four other mining projects being pursued in the Idaho Springs
and Central City mining  districts  that may be available  for  purchase,  joint
venture or lease.  The Company has been advised  that two of these  projects are
located  within  three  miles  of the  Franklin  Mining  properties.  Currently,
however,  there is only one active  mining  project in this  area.  The  Company
believes  there is  tremendous  development  potential in the Idaho  Springs and
Central  City mining  districts  and the key to  successful  development  is the
Franklin  Mill.  The Company is hopeful that nearby  mining  projects can be put
into  production  and,  together  with ore mined at the Franklin  Mines,  can be
processed at the Franklin Mill.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -13-
<PAGE>


Geology of the Franklin Mines

The rocks most commonly seen in the Franklin Mines are  Pre-Cambrian age granite
and microcline gneiss. Tertiary Period,  monzonite,  the most common of which is
quartz  monzonite,  can be seen on the ninth level and are  reported  from lower
levels in the Gem vein or Gem workings of the Franklin Mines. The general strike
of the system is N75 degrees W with dips varying from 45 degrees to 79 degrees.

The structure of the mines is  controlled by the J.L.  Emerson Fault system that
runs in a  west-northwest  direction  across  the  whole  property  and  beyond.
Secondary to the J.L.  Emerson Fault are  multitudes of small fissure veins that
are parasitic to the main break.  Some of these veins contribute to considerable
mineralization  where they  intersect the J.L.  Emerson Fault  structure.  These
mineral bodies are  observable in several  locations in the Franklin 73 mine and
the Gem mine,  one  measuring  22 feet wide and 60 feet in  length.  It has been
reliably  reported  that some of the  large  stopes  mined in the Gems  workings
measured up to 105 feet in width.

Estimated Ore Reserves

The mineral  lodes of the Franklin  Mines consist of these  associated  with the
Gem,  the  Freighter  and  the  Franklin  mines  and  those  minerals  generally
associated  with the "Main  Trunk" of the J.L.  Emerson  Fault.  No reference is
being made regarding the mineral  potential of structures  situated adjacent to,
or off the "Main Trunk".

Sampling by the channel  sample method was  conducted  during the period of 1975
through 1993 with assaying  provided by the Franklin and other  accredited assay
laboratories.  Assays were also  obtained from the old Gem Mining Co. mine assay
map, dated 1921 (the "Gems Assay Map").  The sampling process was carried out at
right  angles to the strike of the veins.  Blocks were  sampled on three or four
sides  and at  times  within  by  raise  or  winze.  Those  blocks,  which  were
extensively  mined,  were entered where  possible  through open stopes with both
pillars and "backfill" being sampled.

The Franklin  mineral  structure  is generally a tabular  structure in shape and
consisting of several  parallel to  sub-parallel  veins,  striking in a westerly
direction and dipping at 45 degrees to 79 degrees north. Its depth is unknown.

The J.L. Emerson Fault is a large regional structure,  striking east to west and
having an  irregular  plain that dips to the north at 45 degrees to 79  degrees.
The J.L.  Emerson  Fault is associated  throughout  with a series of parallel to
sub-parallel  sigmoidal  shaped  fractures  that may  focus  east or west on the
principal  fault plain.  These fracture  patterns are found on nearly all levels
and represent important


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -14-
<PAGE>


Parallel  mineralized  fault  fractures,  the so-called  "footwall" and "hanging
wall" veins.  Each of the principal  veins has  historically  contributed to ore
production  in the Gem vein. A second set of true fissure  veins of a later date
and striking northeast and southwest interdict the J.L. Emerson Fault at several
points, but does not cross. These veins are of unknown economic potential.

The  mineral  structures  in the  Franklin  Mines are often  large,  but  poorly
defined. It was suggested that a core-drilling program be conducted at promising
locations to determine  potential mineral reserves  therein.  It was believed by
management  and Gems,  its joint venture  partner that much  unexplored  mineral
potential exists in the Franklin Mine.

There is no  assurance  that  additional  reserves  exist  in other  mineralized
structures  in the  Franklin  Mines  until a  systematic  core-drilling  program
extends the mineralized  zone(s) and a comprehensive  economic  evaluation based
upon that work concludes economic feasibility.

The  mineral  valuation  of the  Franklin  Mining  property is taken from a 1993
Summary of Reserves Report by Gifford A. Dieterle,  Geologist, dated December 7,
and that year, the report states the proven and probable reserves as of 1987 are
as follows  using a margin of error of plus or minus 15% assuming  metallurgical
recovery of 90%.

     In place                                  173,486.60 Tons
     Broken ore (in stopes or on surface)        4,700.00 Tons
     Ore Mined or Milled since 1987              8,100.00 Tons
                                               ---------------
                                               186,286.60 Tons

     Average Grade of Gold:                    0.315 ounces per ton
     Average Grade of Silver:                  6.740 ounces per ton

The metallurgical  recovery of gold from ore is estimated at 90%, distributed as
follows:

                             56% in lead concentrate
                             31% in pyrite concentrate
                              3% in zinc concentrate

The metallurgical  recovery of silver from ore is estimated at 90%,  distributed
as follows:

                             70% in lead concentrate
                             15% in zinc concentrate
                              5% in pyrite concentrate

Using the approximate value of gold in mid 1999 ($292/oz) and silver ($5/oz) the
proven  and  probable   reserves  in  Mr.   Dieterle's  report  would  represent
approximately  58,680  ounces of gold and  1,255,572  ounces of silver  having a
gross value of  approximately $ 23,412,418.  It should be noted,  however,  that
this valuation  only  recognizes the gold and silver values that can actually be
sampled


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -15-
<PAGE>


additional gold and silver that may be discovered by extending the Franklin mine
workings either laterally or downward.  It should also be noted that the current
proven and  probable  gold and silver ore of the  Franklin  Mines that have been
taken from the 1993 report filed by Mr.  Dieterle  and that it is possible  that
these reserves and any additional  reserves  discovered in the future may not be
sufficient to produce significant profitable mining given the work and equipment
necessary  to extract and process the ore and the same and the current  price of
gold and silver.

As of the date hereof,  the Company has not received any information  that would
require modification of the above table.

Operations

During the years 1998 and 1999, the Company continued its  rehabilitation of the
properties in  anticipation  of the  commencement  of operations.  Further,  the
Company is continuing to seek strategic  partners in this area to mill are mined
at other properties in the region. The Company's plan is to commence  operations
by  initially  bringing to the surface  8000 tons of ore existing at the 5 level
tunnel via the  Freighters  Friend  Shaft.  Management  believes that an initial
capital requirement of approximately $750,000 will be required to bring the mill
into  operations  and possibly  reach  through to the  discovery  program of the
multiple levels of the Franklin Mine.

USM and its  affiliates  have  pledged to continue to provide  financing  to the
Company on an as needed basis through  December 31, 2000:  this  financing is in
addition to the USM Advances made in 1998 and 1999. Other  alternatives  such as
private  placements,  loans,  or public  offerings may be considered  for future
operating capital.

It is important to be aware that mining is a regulated  business and  compliance
with regulatory  requirements of the various agencies having  jurisdiction  over
the  Company's  activities  can cause delays in the schedules set by the Company
for the  installation of its facilities and performance of its  reclaimation and
remediation work. Moreover,  regulatory requirements may require capital outlays
in excess of those anticipated; thus adversely affecting the scope and timing of
planned operations.

Mill/Metallurgy

The Franklin Mill, was designed to recover and concentrate  metallic minerals by
two historic  methods;  selective  flotation  and gravity by table and jig. Both
systems  were  operated in a continuous  circuit.  After a series of upgrades in
1982, the Franklin Mill currently has a daily processing capacity (operating for
a 24 hour period) of  approximately  150 tons of ore. In the past,  the Franklin
Mill operated on an eight-hour  schedule and processed  approximately 30 tons of
ore during that time interval.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -16-
<PAGE>


The Franklin ore is refractory and therefore difficult to separate. Pyrite (iron
sulfide) constitutes  approximately 23% of the weight of the ore.  Approximately
35% of the gold  content of the ore remains  locked in the pyrite as  refractory
gold and is not  recoverable  by ordinary  means.  In 1993, a new  metallurgical
process was introduced to attempt to extract gold from the pyrite  concentrates.
This  process  attempted  to break down the pyrite  minerals  by  oxidation  and
thereby free the contained  refractory  gold. The procedure  involved the use of
standard  banks  of  flotation  cells  (48"),  pyrite  slurry  (30%),  air,  and
agitation.  At a later  stage  pre-processing  of the pyrite by further  milling
occurred. Processed pyrite was subjected to Cyanidation and carbon-pulp recovery
of gold.  The process was initially  reported to be successful by the then joint
venture operator with recovery of 85% of gold. However,  later testing indicated
that little or no gold could be recovered through this process.

Standard  milling  procedures  are intended  for newly mined ore with  selective
flotation of; a) lead, silver, gold and b) zinc and c) gravity  concentration of
gold bearing pyrite.  Gold bearing pyrite concentrates will be taken off site to
a copper  smelter where gold and silver will be extracted.  Average  recovery of
gold in lead concentrate is estimated at approximately  60%; pyrite  concentrate
35%; slimes 5% (lost).

In the past, the Franklin Mill operated on a limited schedule while  exploration
and development was taking place.  While the Franklin Mill has not operated with
respect to ore milling, limited crushing activities took place in early 1996 for
the  purpose of  crushing  bulk test ore  samples  prior to assay.  Thus,  prior
milling and the crushing recently done at the Franklin Mill can be characterized
as "exploratory" in nature.

Offices of the Company

The Company  maintains its executive  offices,  consisting of approximately  500
square feet, at 76 Beaver  Street,  Suite 500, New York,  New York.  The Company
pays a monthly  rental  of $3,500  (on a month to month  basis)  for the  office
space,  secretarial  and other services  provided to the Company  pursuant to an
oral  agreement  with a  non-affiliate.  The Company also maintains an office on
site at the Franklin mine in Idaho Springs.

The Company's management anticipates this space will service the Company's needs
for the  foreseeable  future and that,  in the event such  space  should  become
unavailable  in the  future,  the Company  will be able to lease other  suitable
facilities on a reasonable basis.

Item 3. Legal Proceedings

Convertible Debentures

On June 1, 1994, the Company advised the Transfer Agent/Trustee that the Company
was  not  in  compliance  with  certain  of the  terms  of  the  indenture  (the
"Indenture")  relating to the  Company's  12 1/4%  Convertible  Debentures  (the
"Debentures") in that it had not maintained current filings with the


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -17-
<PAGE>


Securities and Exchange Commission (the "Commission") as required.  Accordingly,
the Transfer  Agent/Trustee  was instructed not to convert any of the Debentures
into Common  Stock of the Company  until such time as the Company  notified  the
Transfer  Agent.  The Company  failed to make required  sinking fund payments in
1994 and was  unable  to pay the  principal  balance  of the  Debentures  due on
December 31, 1994 resulting in default under the terms of the Indenture.

In  September,  1997,  certain of the  Company's 12 1/4%  Convertible  Debenture
holders, including the Hopis Trust (the "Plaintiff Debentureholders") instituted
an action in the Supreme  Court of the State of New York against the Company for
payment on approximately $42,500 principal amount of Debentures plus accrued and
unpaid  interest  totaling  approximately  $13,000 and other costs and  expenses
related thereto.

Thereafter,  the Plaintiff  Debentureholders  moved for summary judgment against
the  Company.  The  Company did not to oppose the motion and default was entered
against  the  Company  in  the  amount  of  $42,500  plus  interest,  costs  and
disbursements  (the  "Default").  Moreover,  the  issue of  attorney's  fees was
severed from the case and all to be set down for an inquest.

In  February   1998,   USM  entered  into  an  agreement   with  the   Plaintiff
Debentureholders  agreeing to pay the Judgment plus certain  additional costs in
the event that the Company  fails to pay the  Judgment and USM  consummates  the
Transaction  with the  Company.  In the event  that USM did not  consummate  the
Transaction by July 12, 1998,  USM agreed to pay the Plaintiff  Debentureholders
$5,100 for their  agreement  not to enter the  Judgment  against  the Company or
pursue the inquest.  Plaintiff Debentureholders agreed not to enter the Judgment
against the Company  until July 12, 1998 or until USM notifies them that it will
not pursue the Transaction.

On or  about  April 6,  1998,  Martucci  terminated  his  letter  of  intent  to
consummate the Transaction with the Company. Despite such termination, Plaintiff
Debenture holders agreed to extend the terms of their agreement with USM through
December  1998.  As of date  hereof,  the  Company  is not aware of any  further
extension  nor, to its knowledge has the Judgment been entered.  If the proposed
settlement is not consummated,  there can be no assurance that the Judgment will
not be  entered  and the  Company  will be  required  to pay the  amount  of the
Judgment, including any costs, interest and penalties related thereto.

The  continued  default in the  Debentures  by the Company may result in Company
being  subject to additional  legal  proceedings  by the Transfer  Agent/Trustee
under the  Indenture  or from other  holders  seeking  immediate  payment of the
$102,500 plus related  interest and  penalties.  While the Company hopes to cure
the default or, in the alternative,  reach an acceptable settlement  arrangement
with the holders,  there can be no assurance that the funds will be available in
the future to meet all of the Company's obligations.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -18-
<PAGE>


Golder Litigation

On or about February 5, 1996, Bradley, Campbell, Carney & Madsen, P.C., Colorado
counsel  to the  Company,  Gems,  Zeus and  Newmineco  ("BCCM")  entered  into a
contract with Golder Associates,  "Mogul Tunnel  Contract").  At the time of the
Mogul Tunnel Contract,  BCCM allegedly entered into said contract as an agent of
Durango, the lessee of the Mogul Mine at that time.

On or about February 5, 1996,  BCCM entered into a second  contract with Golder,
pursuant to which  Golder  agreed to perform  certain  services at the  Franklin
Mines  and  Franklin  Mill  pertaining  to  various  environmental  issues  (the
"Franklin Mines Contract").

At the time of the Franklin Mines  Contract,  BCCM  allegedly  entered into said
contract as an agent of the Zeus Joint Venture.

On or about August 23,  1996,  Gems  executed a note to Golder in the  aggregate
principal  amount of $268,683.75  and a note to BCCM in the aggregate  principal
amount of $109,785.35  to secure legal and  engineering  fees  outstanding as of
such date.  Each note was due and payable on or before December 23, 1996 and was
secured by a pledge of approximately  144,000 as adjusted shares of Common Stock
of the Company owned by Gems.  Gems failed to make the required  payments on the
note by December 23, 1996.

On or about January 28, 1997, Golder commenced an action against BCCM, Zeus, the
Company,  Gems,  Island,  and Durango in the United States District Court of the
District  of  Colorado  to recover  sums due and owing from the  Defendants  for
breach of contract,  breach of implied  warranty,  misrepresentation,  negligent
misrepresentation,  default  under the Golder note and quantum merit arising out
of each of the Mogul Tunnel Contract and the Franklin Mine Contract. The Company
is a named  defendant to this litigation by virtue of its  participation  in the
Zeus joint  venture,  it being joint and severally  liable with Gems and Nuco as
general partners in the Joint Venture.

The aggregate  amount of the Golder claims are  approximately  $281,670.99  plus
prejudgment and post judgment interest, costs and expenses (including attorney's
fees) and any additional relief granted by the court, $124,159.87,  exclusive of
interest and other costs and  expenses,  of which is  attributable  to the Mogul
Tunnel  Contract  and  $157,511.12,  exclusive  of interest  and other costs and
expenses, of which is attributable to the Franklin Mines Contract.

The  parties  settled  this  matter in  September  1999 and the  litigation  was
discontinued, at no cost to the Company.

Environmental Matters

As of the date  hereof,  the  Company has no formal  violations  against it with
respect to the Franklin Mines and Franklin Mill.  While there are no outstanding
violations  against the Company at this time, there can be no assurance that the
Company will be able to adequately  comply with the  conditions set forth in its
permit  approval  or that  future  violations  will  not  arise  and  that  such
violations will not lead to interruptions in operations at the Franklin Mines or
Franklin Mill.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -19-
<PAGE>


NASDAQ Delisting

In 1996, the Commission  approved  certain  amendments to the  requirements  for
continued  listing on the NASDAQ  Small-Cap  Market.  On February 27, 1998,  the
Company  received a notification  letter from NASDAQ  informing the Company that
the Company's  Common Stock was not in compliance with the new minimum bid price
requirement of $1.00, which became effective on February 23, 1998.

The Company was given  until May 28,  1998 to come into  compliance  or it would
face delisting proceedings.  On or about May 21, 1998, the Company effectuated a
25 for 1 reverse stock split which, when  consummated,  caused it stock price to
rise  above the $1.00  threshold.  Therefore,  the  Company  was not  subject to
delisting proceedings and remained in compliance until November 1998.

On or about November 10, 1998,  the Company  received  notification  from NASDAQ
that it was not in  compliance  with the minimum bid price  requirement  and had
until  February 10, 1999 to come into  compliance.  During the month of January,
the Company's stock price  maintained a bid price above $1.00 for 10 consecutive
days, thereby bringing it into compliance with NASDAQ rules.

On or about June 9, 1999, the Company received  notification from NASDAQ that it
was not in  compliance  with the  minimum  bid price  requirement  and had until
September 9, 1999 to come into compliance.

During the middle and latter part of June, the Company's stock price  maintained
a bid price above $1.00 for ten consecutive days but subsequently  dropped below
$1.00.  On September  17, 1999 NASDAQ  notified the Company that it would delist
the  Company's  Common Stock from the NASDAQ  SmallCap  Market on September  24,
1999. The Company appealed this decision before a NASDAQ Listing  Qualifications
Panel whereby the panel required the Company to effectuate a reverse stock split
of three-for-one as a condition for continued listing. The Company complied with
the condition on or about December 17, 1999. On January 11, 2000 NASDAQ informed
the Company that the Company's stock was now in compliance with the requirements
for continued listing and that the stock would continue to be listed.

While  the  Company  is  currently  in  compliance  with the  minimum  bid price
requirement,  there can be no assurance that in the future the company's  common
stock will, in the future be able to maintain such compliance. In the event that
the Company cannot maintain  compliance  with the maximum bid price  requirement
the Company,  may, in the future,  be subject to delisting causing the Company's
common  stock to no longer be listed for trading on the NASDAQ Small Cap Market.
However in such event,  Management  is hopeful that the  Company's  Common Stock
will qualify for trading on the  Over-The-Counter/Bulletin  Board ("OTC") market
and the Company will make every effort to include its Common Stock on the OTC in
the event of a delisting by NASDAQ.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -20-
<PAGE>


In the event that the Company's Common Stock is traded on the OTC, it may become
subject to the "penny stock" trading rules. The penny stock trading rules impose
additional  duties  and a  responsibility  upon  broker-dealers  recommends  the
purchase of a penny stock (by a purchaser that is not an accredited  investor as
defined by Rule 501(a)  promulgated by the Commission  under the Securities Act)
or the sale of a penny  stock.  Among  such  duties and  responsibilities,  with
respect to a purchaser who has not previously  had an  established  account with
the  broker-dealer,  the  broker-dealer  is required  to (i) obtain  information
concerning the  purchaser's  financial  situation,  investment  experience,  and
investment objectives, (ii) make a reasonable determination that transactions in
the  penny  stock are  suitable  for the  purchaser  and the  purchaser  (or his
independent   adviser  in  such  transactions)  has  sufficient   knowledge  and
experience in financial matters and may be reasonably  capable of evaluating the
risks of such  transactions,  followed by receipt of a manually  signed  written
statement  which sets forth the basis for such  determination  and which informs
the purchaser  that it's unlawful to effectuate a transaction in the penny stock
without first  obtaining a written  agreement to the  transaction.  Furthermore,
until the purchaser becomes an established customer (i.e., having had an account
with the dealer for at least one year or, the dealer had effected three sales or
more of penny stocks on three or more  different  days  involving  three or more
different  issuers),  the broker-dealer must obtain from the purchaser a written
agreement  to purchase  the penny stock which sets forth the identity and number
of shares of units of the security to be purchased  prior to confirmation of the
purchase.  A dealer is obligated to provide certain  information  disclosures to
the purchaser of penny stock,  including (i) a generic risk disclosure  document
which  is  required  to  be  delivered  to  the  purchaser  before  the  initial
transaction in a penny stock,  (ii) a  transaction-related  disclosure  prior to
effecting  a  transaction  in  the  penny  stock  (i.e.,   confirmation  of  the
transaction) containing bid and asked information related to the penny stock and
the dealer's  and  salesperson's  compensation  (i.e.,  commissions,  commission
equivalents,  markups and markdowns) connection with the transaction,  and (iii)
the  purchaser-customer  must be furnished  account  statements,  generally on a
monthly basis, which include prescribed information relating to market and price
information  concerning  the penny stocks held in the  customer's  account.  The
penny  stock  trading  rules do not  apply to those  transactions  in which  the
broker-dealer or salesperson  does not make any purchase or sale  recommendation
to the purchaser or seller of the penny stock.

Required compliance with the penny stock trading rules affect or will affect the
ability  to resell  the  Common  Stock by a holder  principally  because  of the
additional  duties and  responsibilities  imposed  upon the  broker-dealers  and
salespersons  recommending and effecting sale and purchase  transactions in such
securities.  In addition,  many  broker-dealers  will not effect transactions in
penny stocks,  except on an unsolicited basis, in order to avoid compliance with
the penny stock trading rules.  The penny stock trading rules  consequently  may
materially  limit or restrict  the  liquidity  typically  associated  with other
publicly  traded equity  securities.  In this  connection,  the holder of Common
Stock may be unable to obtain on resale the quoted bid price because a dealer or
group of dealers may control  the market in such  securities  and may set prices
that are not based on competitive forces.  Furthermore,  at times there may be a
lack of bid quotes which may mean that the market  among  dealers is not active,
in which  case a holder of Common  Stock may be unable to sell such  securities.
Because market quotations in the over-the-counter  market are often subjected to
negotiation among dealers and often differ from the price at which  transactions
in securities are effected, the bid and asked quotations of the Common Stock may
not be reliable.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -21-
<PAGE>

Redstone Litigation

On or about May 14, 1998,  Redstone  Securities Inc.  ("Redstone")  commenced an
action against the Company in the Supreme Court of the State of New York, County
of  Nassau,  Index  No.  98-013668,  claiming,  among  other  things,  breach of
contract,  fraudulent  inducement,  and unjust  enrichment in connection with an
Investment  Banking  Agreement dated August 28, 1996,  between  Redstone and the
Company.  The complaint requests relief in the amounts of not less than $600,000
plus punitive damages,  costs, interest and other expenses. On or about July 31,
1998,  the Company  answered the complaint and filed a cross  complaint  against
Redstone  alleging,  among  other  things,  abuse of process,  fraud,  breach of
fiduciary duty, breach of contract and interference  with prospective  financial
advantage.  In September 1999, the matter was settled whereby the Company agreed
to lift the stop transfer order on the shares held by Redstone to allow Redstone
the ability to sell those shares to an unaffiliated third party.

Item 4. Submission of Matters to a Vote of Security Holders

On May 21, 1998, the Company held a special  meeting of stockholders to consider
a proposal to amend the Company's  Certificate of Incorporation to reverse split
the Company's outstanding shares of common stock on a twenty-five for one basis.
Of the  3,955,173  shares  entitled to vote at the  meeting,  and before  giving
effect to the  three-for-one  reverse  split in December  1999,  2,458,623  were
presented  either in person or by proxy  constituting  a quorum for  purposes of
conducting  the  business  that was  brought  before the  meeting.  The  Amended
Certificate of Incorporation we filed with the Secretary of State of Delaware on
October 16, 1998.

On October 12, 1998, the Company held its annual meeting of  shareholders in New
Jersey at which time the  shareholders  (i) re-elected Mr. Waligunda and elected
William  C.  Martucci,  Ronald  Ginsberg  and  Robert W.  Singer to the Board of
Directors  of the Company  (ii)  approved an  amendment  to the  Certificate  of
Incorporation to change the name of the Company to "WCM Capital, Inc." and (iii)
confirmed Lazar, Levine & Felix as independent auditors of the Company.

Of the 3,955,169 shares entitled to vote at the meeting,  2,458,623 were present
either in person or by proxy  constituting  a quorum for purposes of  conducting
the business that was brought before the meeting. The following table sets forth
the  matters  brought  before  the  shareholders,  the number of votes cast for,
against or withheld,  as well as the number of abstentions and broker non-votes,
if any, for each matter.


Matter                                             For         Against   Abstain

Election of William C.  Martucci As a Director   2,411,706      46,917      --

Election of Robert Waligunda as Director         2,443,750      14,873      --

Election of Ronald Ginsberg as a Director        2,411,718      46,905      --

Election of Robert W. Singer as a Director       2,411,714      16,476      --


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -22-
<PAGE>





Amendment to Certificate
Of Incorporation for
Name change                                      2,434,302      16,476   7,845

Confirmation of
Independent Auditors                             2,427,679      21,743   9,201

The  Amended  and  Restated  Certificate  of  Incorporation  was filed  with the
Secretary of State of the State of Delaware on October 16, 1998.

On November 15, 1999,  the Company held its annual  meeting of  shareholders  in
Springfield,  New Jersey at which time the shareholders  (i) re-elected  Messrs.
Waligunda and Martucci,  and elected William H. Wishinsky,  Casey Myhre and John
Bruno to the Board of Directors of the Company and (ii) confirmed Lazar,  Levine
& Felix as independent auditors of the Company.

Of the 3,991,107 shares entitled to vote at the meeting,  3,016,123 were present
either in person or by proxy  constituting  a quorum for purposes of  conducting
the business that was brought before the meeting. The following table sets forth
the  matters  brought  before  the  shareholders,  the number of votes cast for,
against or withheld,  as well as the number of abstentions and broker non-votes,
if any, for each matter.

Matter                                        For          Against      Abstain

Election of William C. Martucci             2,969,910      46,213          --
As a Director

Election of Robert Waligunda as Director    2,969,910      46,213          --

Election of William                         2,968,370      47,753          --
Wishinsky as a Director

Election of Casey                           2,968,370      47,753          --
Myhre as a Director

Election of John                            2,968,342      47,781          --
Bruno as a Director

Confirmation of
Independent Auditors                        2,962,757      42,205      11,161

On December 13,  1999,  the Company held a special  meeting of  stockholders  to
consider a proposal  to amend the  Company's  Certificate  of  Incorporation  to
reverse   split  the  Company's   outstanding   shares  of  common  stock  on  a
three-for-one basis and to reduce the authorized capital of the Company


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -23-
<PAGE>


from 100,000,000 to 40,000,000.  Of the 3,991,107 shares entitled to vote at the
meeting,  3,016,123 were presented  either in person or by proxy  constituting a
quorum for  purposes of  conducting  the  business  that was brought  before the
meeting.  The amended  Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on December 17, 1999.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The principal  U.S.  market on which shares of the Company  Common Stock (all of
which are of one  class,  $.01 per  share) are traded on the small cap market on
the National Association of Securities Dealers,  Inc. Automated Quotation System
(Symbol "WCMC").  For Information  regarding possible delisting of the Company's
Common Stock. See Item 3. Litigation NASDAQ Delisting.

The  following  table  sets  forth the  range of high and low bid  quotes of the
Company's  Common Stock per quarter  since the  beginning of fiscal year 1997 as
reported by the National  Quotation Bureau (which reflects  inter-dealer  prices
without  retail  mark-up,  mark-down  or  commission  and  may  not  necessarily
represent actual transactions). The following stock prices have been adjusted to
reflect a one for  twenty-five  reverse  stock split  which  occurred on May 26,
1998; but has not been adjusted to reflect a  one-for-three  reverse stock split
effected on December 13, 1999 except as noted.

                                          High               Low
Quarter Ended                             Bid Price          Bid Price

March 31, 1997                               $5.50              $4.00
June 30, 1997                                $4.75              $4.00
September 30, 1997                           $5.50              $4.00
December 31, 1997                         $2.34375            $1.5625

March 31, 1998                             $1.5625            $1.5625
June 30, 1998                                $2.25            $1.5625
September 30, 1998                           $1.50              $1.00
December 31, 1998                           $0.875            $0.4375

March 31, 1999                              $1.125              $1.06
June 30, 1999                                $1.50            $0.4375
September 30, 1999                           $1.00            $0.9375
December 31, 1999                            $2.50              $1.00*

----------
* Takes into account one for three reverse split effective December 20, 1999


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -24-
<PAGE>


As of  December  31,  1999,  the  approximate  number  of  recordholders  of the
Company's  Common  Stock is 2,749  inclusive  of those  brokerage  firms  and/or
clearinghouses  holding  the  Company's  Common  Shares in street name for their
clientele (with each such brokerage house and/or clearing house being considered
as one  holder).  The  aggregate  number of shares of Common  Stock  issued  and
outstanding  is 1,318,767 as of March 15,  2000.  No dividends on Common  Shares
have ever been paid by the  Company  due to the lack of excess  capital  and the
Company  does not  anticipate  that  dividends  will be paid in the  foreseeable
future. In addition,  pursuant to the terms of the Company's 12-1/4% Convertible
Debentures,  the Company, the Company is prohibited from paying dividends on its
Common Stock unless and until it is no longer in default under the debentures.

Sales of Restricted Securities

In  consideration  of the  extension of the Kennec  portion of the Hayden Kennec
Leases, the Company issued to Dorothy Kennec,  1,387 (as adjusted) shares of the
Company  Common Stock in April 1997. The stock was valued at $9.375 per share as
adjusted  having an aggregate  value at the time of the  extension  agreement of
$13,000.  The  common  stock  issued  to  Mrs.  Kennec  was  issued  as  further
consideration  for the extension of the terms of the  Hayden/Kennec  Lease.  The
Company  issued the common  stock in reliance  upon the  exemption  contained in
Section  4(2) of the Act.  Mrs.  Kennec is the 50% owner of the  certain  of the
properties comprising the Franklin Mines that the Company has leased for over 20
years. No offering of common stock was made to any persons other to Mrs. Kennec.
As a result of her  relationship  to the Company,  Mrs. Kennec had access to all
information  regarding the Company,  including all  documents,  public  records,
books,  and accounts of the Company and was able to ask questions of and receive
answers from  representatives  of the Company  regarding the same.  Mrs.  Kennec
understood the risk inherent in an investment in the Company,  was acquiring the
stock  for  her  own  account,  not  with a view of  distribution  thereof,  and
thoroughly understood and was willing to bear all the risks related to ownership
of the Company's securities.

On September  26, 1996,  the Company  acquired a 20% interest in Newmineco  from
Gems for a purchase price of $600,000 evidenced by an interest only note bearing
interest at 9.5% per annum.  On February 10, 1997, the Company made its election
to convert  the amounts  owing on the  Newmineco  Note into Common  Stock of the
Company  at a  conversion  price of $5.85  per  share  (after  giving  effect to
adjustment  to the price of the stock  subsequently  made as a result of reverse
stock  split).  The Company  issued to such  holders an aggregate of 102,564 (as
adjusted)  shares of Common  Stock of the  Company in full  satisfaction  of the
Company's  obligations  under the  Newmineco  Note.  The shares  were  issued in
accordance  with an exemption from  registration  afforded by Section 4(2) under
the Act.

Item 6. Management's Discussion and Analysis or Plan of Operation

CAUTIONARY STATEMENT ON FORWARD LOOKING STATEMENTS

Except for the historical information contained herein, Management believes that
certain  of the  matters  discussed  in this  Annual  Report  for the year ended
December 31, 1999 are "forward looking



WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -25-
<PAGE>


risks and  uncertainties  which cause actual results to differ  materially  from
those discussed herein  including,  but not limited,  risks relating to changing
economic  conditions,  change in price of disclosed in this Annual  Report.  The
Company cautions readers that any such forward-looking statements are based upon
management's  current  expectations and beliefs but are not guaranties of future
performance.  Actual  results could differ  materially  from those  expressed or
implied in forward-looking statements.

The Company is engaged in the business of  investing  and  participating  in the
development  of  commercial  mining and milling  operations  primarily at leased
properties in or near Idaho Springs, Colorado.

During  1998 and 1999,  remediation  work was  performed  and  completed  at the
Franklin  Mines and the Franklin Mill in  preparation  for the  commencement  of
mining operations at the Franklin Mines.

The Company has not commenced  commercial  operations at the Franklin Mine since
its inception.  Therefore,  the Company remains in the exploration stage and has
not generated significant revenues on a sustained basis since its inception. The
Company did not realize any revenues based on sales in 1999 and 1998.  Since the
abandonment  of its  participation  in  Newmineco,  the  Company  will no longer
recognize income or losses based on its  proportionate  equity interest in these
entities.  The Company is entitled to receive 100% of the income  generated from
the Franklin  Mines,  if any,  once  production  is  commenced  less any royalty
payments due to Mrs. Kennec with respect to the mineral rights owned by her.

Liquidity and Capital Resources

Since its inception, the Company has financed its operations principally through
equity and debt and monies provided  through its  relationship  with USM and its
affiliates  during  1998 and 1999.  The  Company  has derived no income from its
mining and milling  investments,  which, as of December 31, 1999, were comprised
of  investments in the assets and rights related to the Franklin Mines and Mill.
As of December 31, 1999, the Company had borrowed $1,470,295 from USM.

The Company had total current liabilities as of December 31, 1999 of $2,553,200,
including  $1,470,295  constituting  the  principal  balance  of the  USM  Note,
convertible  debentures  with a  principal  amount of  $145,000  and other notes
payable with a principal balance of $218,965.  In addition to the payment of its
current  liabilities,  the Company incurred  general,  administrative  and other
costs and expenditures related to any mining and milling operations, at the rate
of  approximately  $25,000  per  month in 1999 and  expect  to incur  additional
administrative  expenses of  approximately  $20,000  per month plus  interest in
2000.

During 1999 and 1998, USM and its affiliates advanced approximately $278,000 and
$237,000,  respectively,  on behalf of the  Company.  These monies were used to,
among other things,  pay for legal and accounting fees in connection with public
filings and necessary general and administrative


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -26-
<PAGE>


expenses.  USM has continued to fund the Company  directly or  indirectly  since
1997. USM and its affiliates have verbally  pledged to provide  financing to the
Company on an as needed basis through  December 31, 2000.  The Company  believes
based on prior performance and the acquisition agreement entered into in January
2000 that USM will fulfill its commitment to fund until December 31, 2000. It is
anticipated  that the funds received from USM and its affiliates  will cover the
general,  administrative  and other costs,  which  Management  estimates will be
approximately  $20,000  per month for the year 2000.  Management  cannot  assure
however,  that USM will provide $750,000 of funding which  Management  estimates
will be  needed  to ready  the  Franklin  Mine and  Milling  properties  for the
commencement  of extraction  and milling.  Additional  funding will be needed to
ready the properties for  operations and to support  operations  once mining and
milling  commence  to  finance  operations  as well as  upgrade  the  processing
facilities to allow for an increase in ore processing capacity.

The Hayden/Kennec Leases cover mineral rights to 28 mining claims over 322 acres
of the Franklin  Mining  properties.  Currently,  the  Hayden/Kennec  Leases are
expired;  however,  the terms of the Purchase  Agreement  between USM and Hayden
extend  the  terms of the  Hayden/Kennec  Leases as they  relate  to the  Hayden
interests  upon the same  terms  and  conditions  of the  Hayden/Kennec  Leases.
Therefore,  USM has  advanced,  and is  continuing  to advance,  $1,000  royalty
payment  to Mrs.  Hayden on a monthly  basis as  required  by the  Hayden/Kennec
Leases.  As of the date hereof,  the Company has not reached any agreement  with
Mrs.  Kennec  concerning her portion of the leasehold.  For further  information
regarding the Hayden/Kennec Leases, See Item 2. Properties-Hayden/Kennec Leases.

Under  the  terms of the  Hayden/Kennec  Leases,  the  Company  would  have been
required to pay $777,000 to Mrs. Hayden and Mrs. Kennec in order to exercise the
purchase options set forth therein as of November,  1997 when the lease expired.
Presently,  the  Company  is  unable  to  make  such  payment;  notwithstanding,
Management is optimistic  that it will maintain its access to the leased mineral
rights  represented  by the  Hayden/Kennec  Leases given the Purchase  Agreement
between Mrs. Hayden and USM. USM has advised the Company that it is current with
its payments to Mrs.  Hayden and the Company,  based upon the prior  commitments
and past payment  history of USM,  believes  that USM will  continue to make the
necessary  royalty  payments to Mrs. Hayden until the purchase of Mrs.  Hayden's
leasehold interest is consummated.

In the absence of liquid  resources,  cash flows from  operations  and any other
commitments for debt or equity financing,  Management  believes that the ability
of the  Company to  continue  to  maintain  its permit  and  properties  will be
dependent upon the provision of financing by USM and its affiliates; however, it
cannot  assure that USM will  continue to finance the Company  through  December
2000.  Management believes that the Company will remain dependent on USM and its
affiliates  as its primary  source of financing  for its  operations  until such
time, if any, as the Company can secure additional  funding and can receive cash
flows from operations.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -27-
<PAGE>


Management believes that it has obtained all of the necessary  environmental and
regulatory  recently applied for a Temporary  Cessation of its permit until such
time as economically  viable  operations can be commenced at the Franklin Mining
properties  and the Company can obtain  commitments  to  adequately  finance its
operations.

Management  believes that mining will be economically  feasible if and when gold
prices should rise to $350 per ounce.  There can be no assurance  that the price
of gold will rise to this  price  level in the near  future.  Additionally,  the
Company  will need at least  $750,000  in  capital  to  adequately  prepare  the
property for operations and to hire the necessary personnel.

Plan of Operations

For the  remainder  of  fiscal  2000,  the  Company  plans to (i)  continue  its
rehabilitation  and remediation  work to maintain its properties and permit (ii)
seek possible  joint  ventures with  neighboring  mines and (iii) work to secure
additional funding for its operations.

In the event that the Company should acquire  additional  working capital,  then
the Company will  initiate a  reconfiguration  program at the  Franklin  Mill to
expand mill  capacity to  processing  300 tons of ore per day and initiate  core
drilling programs to substantiate additional proven ore reserves; however, there
can be no  assurance  that  additional  funding will be available or adequate to
take such action.

Results of Operations 1999 vs. 1998.

The Company had no active mining or milling operations during 1999.

The  Company  had a net loss of  $501,926  for 1999 as compared to a net loss of
$1,531,317 during 1998. The decrease of $1,029,391 was attributable to:

(a)  A decline in mine  expenses and  remediation  costs from $62,560  (1998) to
     $34,812 (1999) resulted from a decrease in mine site activities.

(b)  Loss on sales and  impairment  losses on property and  equipment in 1998 of
     $465,000 which declined to $130,000 in 1999, a reduction of $335,000.

(c)  Depreciation expense declining from $146,355 in 1998 to $60,746 in 1999 due
     to a reduction in property and equipment from the recognition of impairment
     losses and property disposals.

(d)  General and  administrative  expenses  decreasing  from $642,592 in 1998 to
     $233,829  in 1999,  a cost  savings of  $408,763.  This  decrease  resulted
     principally  from a decline in two costs,  bad debt expense and legal fees.
     During 1998, a bad debt expense of $350,000 was recognized  attributable to
     the note receivable from the sale of the Gold Hill Mill Properties.  During
     1999, no bad debt expense was incurred. In addition, legal fees declined to
     approximately   $91,000  (1999)  from  approximately   $149,000  (1998),  a
     reduction of approximately $58,000.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -28-
<PAGE>

(e)  Other expenses of $100,000  (1998) were  attributable to an accrual for the
     settlement  of certain  litigation.  Such accrual was reversed in 1999 when
     the litigation was settled.

Results of Operations 1998 vs. 1997

The Company had no active mining or milling operations during 1998.

The Company had a net loss of  $1,531,317  for 1998 as compared to a net loss of
$1,908,475  during 1997. The decrease of $577,158 was primarily  attributable to
an increase in general and administrative  expense in 1998 of $274,230 offset by
the  effects  of a loss on  sale/write  down of  mining  and  milling  and other
property and equipment  ($465,000 in 1998 and  $1,200,000 in 1997).  General and
administrative  expenses were $642,592 for 1998 as compared with $368,353 during
1997 due  primarily to increases in  professional  fees and costs of  investment
banking  services.  Interest  expense  was  $123,127  during 1998 as compared to
$33,334 during 1997 due to increased  interest  incurred in connection  with the
Company's notes payable.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99

                                      -29-
<PAGE>

Item 7. Financial Statements and Supplementary Data

The index to Financial Statements appears on page F-1.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -30-
<PAGE>

                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)







                                    - INDEX -






<TABLE>
<CAPTION>
                                                                                          Page(s)
                                                                                          -------

<S>                                                                                       <C>
Report of Independent Auditors                                                            F - 2

Financial Statements:

      Balance Sheets, December 31, 1999 and 1998                                          F - 3

      Statements of Operations, Years Ended December 31, 1999 and 1998 and
      Cumulative Period From December 1, 1977 (inception) to December 31, 1999            F - 4

      Statements of Stockholders' Equity, Years Ended December 31, 1999 and 1998 and
      Cumulative Period From December 1, 1977 (inception) to December 31, 1999            F - 5

      Statements of Cash Flows, Years Ended December 31, 1999 and 1998 and
      Cumulative Period From December 1, 1977 (inception) to December 31, 1999            F - 6


Notes to Financial Statements
</TABLE>


                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders
WCM Capital, Inc.
New York, New York


We have  audited the  balance  sheet of WCM  Capital,  Inc.  (formerly  Franklin
Consolidated  Mining  Co.,  Inc.)  as of  December  31,  1999,  and the  related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audit.  We did not  audit  the  accumulated
amounts from inception  through December 31, 1998, which includes an accumulated
deficit as of December 31, 1998 of ($15,700,041).  Those amounts were audited by
other auditors whose report has been furnished to us and our opinion  insofar as
it relates  to those  accumulated  amounts is based  solely on the report of the
other auditors. The financial statements of WCM Capital, Inc. as of December 31,
1998 were audited by other  auditors  whose report dated April 13, 1999 on those
statements  included an  explanatory  paragraph that described the going concern
uncertainty discussed in Note 1 to the financial statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion.

In our  opinion,  based on our  audit and the  reports  of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of WCM Capital,  Inc. as of December 31, 1999,  and the
results  of its  operations  and its cash  flows  for the year  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 1 to the
financial  statements,  the company is an  exploration  stage  enterprise  whose
operations  have  generated  recurring  losses and cash flow  deficiencies  from
inception  and, as of December  31,  1999,  has a  substantial  working  capital
deficiency.  As a result,  it was in default with respect to payments on several
notes and on convertible  debentures and wholly  dependent on outside funding to
finance  current  operations.  Such matters  raise  substantial  doubt about the
Company's ability to continue as a going concern.  Management's plans concerning
these  matters are also  described in Note 1. The  financial  statements  do not
include  any   adjustments   that  might   result  from  the  outcome  of  these
uncertainties.



EHRENKRANTZ STERLING & CO., LLC
Certified Public Accountants
Livingston, New Jersey
March 28, 2000


                                      F-2
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                   - ASSETS -
                                                                                       DECEMBER 31
                                                                               ----------------------------
                                                                                   1999            1998
                                                                               ------------    ------------
<S>                                                                            <C>             <C>
CURRENT ASSETS:
       Cash                                                                    $       --      $       --
                                                                               ------------    ------------

TOTAL CURRENT ASSETS                                                                   --              --
                                                                               ------------    ------------

OTHER ASSETS:
       Mining, milling and other property and equipment, net of accumulated
           depreciation and depletion of $2,166,261 and $2,105,515                4,617,834       4,808,580

       Mining reclamation bonds                                                     137,016         134,602
                                                                               ------------    ------------

                                                                               $  4,754,850    $  4,943,182
                                                                               ============    ============

                    - LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
       Accounts payable and accrued expenses                                   $    689,049    $    654,164
       Payroll and other taxes payable                                               29,960          29,960
       Convertible debentures                                                       145,000         145,000
       Notes payable - related companies and others                                 218,965         218,965
       Note payable - U.S. Mining, Inc.                                           1,470,295       1,191,586
                                                                               ------------    ------------

TOTAL CURRENT LIABILITIES                                                         2,553,269       2,239,675
                                                                               ------------    ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
       Common stock, par value $.01 per share; 40,000,000 shares authorized;
           1,318,767 shares issued and outstanding                                   13,188         329,598
       Additional paid-in capital                                                18,390,360      18,073,950
       Deficit accumulated during the exploration stage                         (16,201,967)    (15,700,041)
                                                                               ------------    ------------
                                                                                  2,201,581       2,703,507
                                                                               ------------    ------------

                                                                               $  4,754,850    $  4,943,182
                                                                               ============    ============
</TABLE>

            See auditors' report and notes to financial statements.


                                      F-3
<PAGE>




                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                            STATEMENTS OF OPERATIONS





<TABLE>
<CAPTION>
                                                                                        Years Ended              Cumulative
                                                                                        December 31           December 1, 1977
                                                                               ----------------------------   (inception) through
                                                                                   1999           1998        December 31, 1999
                                                                               ------------    ------------   ------------------
<S>                                                                            <C>             <C>             <C>
REVENUES:
       Sales                                                                   $       --      $       --      $    876,082
       Interest income                                                                2,414           3,920         551,109
       Other income                                                                    --             4,397          79,397
                                                                               ------------    ------------    ------------
                                                                                      2,414           8,317       1,506,588
                                                                               ------------    ------------    ------------

EXPENSES:
       Mine expenses and environmental remediation costs                             34,812          62,560       3,621,110
       Loss on sale/write-down of mining and milling and other property
           and equipment                                                            130,000         465,000       1,795,000
       Depreciation and depletion                                                    60,746         146,355       2,361,610
       General and administrative expenses                                          233,829         642,592       6,482,206
       Interest expense                                                             144,953         123,127       1,286,432
       Amortization of debt issuance expense                                           --              --           683,047
       Equity in net (income) loss and settlement of claims of Joint Venture           --              --         1,059,971
       Other                                                                       (100,000)        100,000         419,179
                                                                               ------------    ------------    ------------
                                                                                    504,340       1,539,634      17,708,555
                                                                               ------------    ------------    ------------

NET LOSS                                                                       $   (501,926)   $ (1,531,317)   $(16,201,967)
                                                                               ============    ============    ============


BASIC LOSS PER COMMON SHARE                                                    $       (.38)   $      (1.16)
                                                                               ============    ============


WEIGHTED AVERAGE SHARES OUTSTANDING                                               1,318,767       1,318,390
                                                                               ============    ============
</TABLE>


            See auditors' report and notes to financial statements.


                                      F-4
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                       STATEMENTS OF STOCKHOLDERS' EQUITY            Page 1 of 5


<TABLE>
<CAPTION>
                                                                                          Deficit
                                                                                        Accumulated
                                                                          Additional    During the
                                                               Common      Paid-in      Exploration     Treasury
                                                   Shares      Stock       Capital         Stage          Stock          Total
                                                  --------   ---------   -----------    -----------    -----------    -----------
<S>                                                <C>       <C>         <C>            <C>            <C>            <C>
Issuance of common stock:
         Cash                                        8,268   $      83   $    43,017    $      --      $      --      $    43,100
         Non-cash:
              Related parties                       49,332         493         8,757           --             --            9,250
              In exchange for shares of Gold
                  Developers and Producers, Inc.    58,400         584        16,850           --             --           17,434
                  Net loss                            --          --            --          (45,584)          --          (45,584)
                                                  --------   ---------   -----------    -----------    -----------    -----------
Balance, December 31, 1977                         116,000       1,160        68,624        (45,584)          --           24,200

Issuance of common stock:
         Pursuant to public offering, net of
              underwriting expenses of $11,026      31,368         314       283,681           --             --          283,995
         Cash                                       12,000         120       242,757           --             --          242,877
         Non-cash                                      268           2         4,998           --             --            5,000
Net loss                                              --          --            --          (66,495)       (66,495)
                                                  --------   ---------   -----------    -----------    -----------    -----------
Balance, December 31, 1978                         159,636       1,596       600,060       (112,079)          --          489,577

Issuance of common stock:
         Cash                                       12,368         124       441,126           --             --          441,250
         Non-cash - related parties                  2,132          21        59,979           --             --           60,000
         Non-cash - other                              356           4        13,346           --             --           13,350
Net loss                                              --          --            --         (128,242)          --         (128,242)
                                                  --------   ---------   -----------    -----------    -----------    -----------
Balance, December 31, 1979                         174,492       1,745     1,114,511       (240,321)          --          875,935

Issuance of common stock:
         Cash                                       15,452         154       839,846           --             --          840,000
         Non-cash                                    3,176          32       118,968           --             --          119,000
Net loss                                              --          --            --         (219,021)          --         (219,021)
                                                  --------   ---------   -----------    -----------    -----------    -----------
Balance, December 31, 1980                         193,120       1,931     2,073,325       (459,342)          --        1,615,914

Issuance of common stock:
         Cash                                        3,500          35       262,465           --             --          262,500

Issuance of common stock:
         Cash                                        7,706          77       557,923           --             --          558,000
         Non-cash                                    1,387          14       103,986           --             --          104,000
         Commission on sale of common stock           --          --         (57,300)          --             --          (57,300)
Net loss                                              --          --            --         (288,105)          --         (288,105)
                                                  --------   ---------   -----------    -----------    -----------    -----------
Balance, December 31, 1981                         205,713       2,057     2,940,399       (747,447)          --        2,195,009
</TABLE>


            See auditors' report and notes to financial statements.


                                      F-5
<PAGE>



                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                       STATEMENTS OF STOCKHOLDERS' EQUITY            Page 2 of 5


<TABLE>
<CAPTION>
                                                                                                Deficit
                                                                                              Accumulated
                                                                                Additional    During the
                                                                     Common       Paid-in      Exploration   Treasury
                                                          Shares      Stock       Capital         Stage        Stock       Total
                                                        ---------   ---------   -----------    -----------    -------   -----------
<S>                                                      <C>        <C>         <C>            <C>            <C>       <C>
Issuance of common stock:
         Cash                                              11,480   $     115   $   764,011    $      --      $  --     $   764,126
         Non-cash                                           2,160          22       161,978           --         --         162,000
         Commission on sale of common stock                  --          --         (56,075)          --         --         (56,075)
Net loss                                                     --          --            --         (287,291)      --        (287,291)
                                                        ---------   ---------   -----------    -----------    -------   -----------
Balance, December 31, 1982                                219,353       2,194     3,810,313     (1,034,738)      --       2,777,769

Issuance of common stock:
         Cash                                              16,975         170     1,189,380           --         --       1,189,550
         Non-cash                                             944           9        70,825           --         --          70,834
         Exercise of stock options by:
              Related parties                               3,567          35       267,465           --         --         267,500
              Others                                           52           1         3,999           --         --           4,000
         Commission on sale of common stock                  --          --        (124,830)          --         --        (124,830)
Net loss                                                     --          --            --         (749,166)      --        (749,166)
                                                        ---------   ---------   -----------    -----------    -------   -----------
Balance, December 31, 1983                                240,891       2,409     5,217,152     (1,783,904)      --       3,435,657

Issuance of common stock:
         Cash                                              16,023         160     1,151,540           --         --       1,151,700
         Non-cash                                             367           3        27,497           --         --          27,500
         Exercise of stock options by related parties       2,667          27       199,973           --         --         200,000
         Commission on sale of common stock                  --          --         (90,950)          --         --         (90,950)
Net loss                                                     --          --            --         (301,894)      --        (301,894)
                                                        ---------   ---------   -----------    -----------    -------   -----------
Balance, December 31, 1984                                259,948       2,599     6,505,212     (2,085,798)      --       4,422,013

Issuance of common stock:
         Cash                                               5,618          56       300,023           --         --         300,079
         Non-cash                                             133           2         7,498           --         --           7,500
         Exercise of stock options by:
              Related parties                               2,667          27       149,973           --         --         150,000
              Others                                           12           0           750           --         --             750
         Commission on sale of common stock                  --          --          (3,462)          --         --          (3,462)
Net loss                                                     --          --            --         (133,929)      --        (133,929)
                                                        ---------   ---------   -----------    -----------    -------   -----------
Balance, December 31, 1985                                268,378       2,684     6,959,994     (2,219,727)      --       4,742,951
</TABLE>

            See auditors' report and notes to financial statements.


                                      F-6
<PAGE>





                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          STATEMENTS OF STOCKHOLDERS'         EQUITY Page 3 of 5





<TABLE>
<CAPTION>
                                                                                            Deficit
                                                                                           Accumulated
                                                                             Additional    During the
                                                                  Common      Paid-in      Exploration     Treasury
                                                       Shares     Stock       Capital         Stage         Stock         Total
                                                     ---------   --------   -----------    -----------    ---------    -----------
<S>                                                    <C>       <C>        <C>            <C>            <C>          <C>
Issuance of common stock:
         Cash                                            7,587   $     76   $   300,424    $      --      $    --      $   300,500
         Non-cash - related parties                      2,133         21        79,979           --           --           80,000
         Non-cash - others                               1,800         18        53,982           --           --           54,000
Net loss                                                  --         --            --         (227,788)        --         (227,788)
                                                     ---------   --------   -----------    -----------    ---------    -----------
Balance, December 31, 1986                             279,898      2,799     7,394,379     (2,447,515)        --        4,949,663

Issuance of common stock:
         Cash                                           34,725        347     1,286,954           --           --        1,287,301
         Non-cash - related parties                      2,695         27        70,873           --           --           70,900
         Non-cash - other                                  500          5        37,245           --           --           37,250
         Commission on sale of common stock               --         --        (110,243)          --           --         (110,243)
Net loss                                                  --         --            --         (730,116)        --         (730,116)
                                                     ---------   --------   -----------    -----------    ---------    -----------
Balance, December 31, 1987                             317,818      3,178     8,679,208     (3,177,631)        --        5,504,755

Issuance of common stock - non-cash - related
         parties                                         2,666         27        49,973           --           --           50,000
Net loss                                                  --         --            --         (386,704)        --         (386,704)
Purchase of 666 shares of treasury stock -
         at cost                                          --         --            --             --        (12,500)       (12,500)
                                                     ---------   --------   -----------    -----------    ---------    -----------
Balance, at December 31, 1988                          320,484      3,205     8,729,181     (3,564,335)     (12,500)     5,155,551

Issuance of common stock:
         Cash                                            9,040         90       110,410           --           --          110,500
         Non-cash - others                               3,782         38        33,828           --           --           33,866
         Non-cash -related parties                       2,800         28        31,472           --           --           31,500
         Private placement:
              Cash                                      30,333        303         22447           --           --           22,750
              Debt issuance expense                       --         --         455,000           --           --          455,000
              Conversion of debentures                  14,000        140       104,860           --           --          105,000
              Exercise of stock options                  4,000         40        44,960           --           --           45,000
         Commission on sale of common stock               --         --          (1,500)          --           --           (1,500)
         Compensation resulting from stock options
              granted                                     --         --          39,000           --           --           39,000
Net loss                                                  --         --            --       (1,279,804)        --       (1,279,804)
                                                     ---------   --------   -----------    -----------    ---------    -----------
Balance, December 31, 1989                             384,439      3,844     9,569,658     (4,844,139)     (12,500)     4,716,863
</TABLE>


            See auditors' report and notes to financial statements.


                                      F-7
<PAGE>





                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                       STATEMENTS OF STOCKHOLDERS' EQUITY            Page 4 of 5


<TABLE>
<CAPTION>
                                                                                            Deficit
                                                                                          Accumulated
                                                                           Additional     During the
                                                                 Common     Paid-in       Exploration     Treasury
                                                      Shares     Stock      Capital          Stage         Stock         Total
                                                     --------   -------   ------------    ------------    --------    ------------
<S>                                                   <C>       <C>       <C>             <C>             <C>         <C>
Sale of underwriter's stock warrants                     --     $  --     $        100    $       --      $   --      $        100
Issuance of common stock:
         Cash                                           4,467        45         45,180            --          --            45,225
         Non-cash - others                                531         5          5,973            --          --             5,978
         Conversion of debentures                       2,133        22         31,978            --          --            32,000
Net loss                                                 --        --             --        (1,171,962)       --        (1,171,962)
                                                     --------   -------   ------------    ------------    --------    ------------
Balance, December 31, 1990                            391,570     3,916      9,652,889      (6,016,101)    (12,500)      3,628,204

Issuance of common stock:
         Cash - others                                 23,995       240         96,691            --          --            96,931
         Cash - related parties                        24,000       240         89,760            --          --            90,000
         Non-cash - others                             15,783       158         59,029            --          --            59,187
         Conversion of debentures                      49,747       498        625,502            --          --           626,000
         Exercise of stock options                      3,333        33         12,467            --          --            12,500
         Conversion of notes payable                    3,333        33         14,967            --          --            15,000
Net loss                                                 --        --             --          (764,926)       --          (764,926)
                                                     --------   -------   ------------    ------------    --------    ------------
Balance, December 31, 1991                            511,761     5,118     10,551,305      (6,781,027)    (12,500)      3,762,896

Issuance of common stock:
         Cash - others                                 26,959       269        169,339            --          --           169,608
         Cash - related parties                         8,400        84         48,916            --          --            49,000
         Non-cash - others                             23,062       231        365,827            --          --           366,058
         Non-cash - related parties                       161         2            604            --          --               606
         Non-cash - exercise of options by related
              parties                                  27,333       273        102,227            --          --           102,500
         Conversion of debentures                       7,200        72        161,928            --          --           162,000
         Commission on sale of common stock -
              related parties                            --        --           (7,123)           --          --            (7,123)
Net loss                                                 --        --             --        (1,343,959)       --        (1,343,959)
                                                     --------   -------   ------------    ------------    --------    ------------
Balance, December 31, 1992                            604,876     6,049     11,393,023      (8,124,986)    (12,500)      3,261,586

Issuance of common stock:
         Cash - others                                 11,645       116        133,848            --          --           133,964
         Cash - related parties                        10,360       104         77,596            --          --            77,700
         Non-cash - others                              2,000        20         14,980            --          --            15,000
         Non-cash - settlement of litigation           13,333       133         99,867            --          --           100,000
         Non-cash - exercise of options by related
              parties                                   2,667        27          9,973            --          --            10,000
         Conversion of debentures                       1,867        19         34,981            --          --            35,000
         Conversion of loan                             1,333        13          9,987            --          --            10,000
Net loss                                                 --        --             --          (797,619)       --          (797,619)
                                                     --------   -------   ------------    ------------    --------    ------------
Balance, December 31, 1993                            648,081     6,481     11,774,255      (8,922,605)    (12,500)      2,845,631
</TABLE>


            See auditors' report and notes to financial statements.

                                      F-8
<PAGE>



                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                       STATEMENTS OF STOCKHOLDERS' EQUITY            Page 5 of 5


<TABLE>
<CAPTION>
                                                                                              Deficit
                                                                                            Accumulated
                                                                              Additional    During the
                                                                  Common       Paid-in      Exploration     Treasury
                                                      Shares       Stock       Capital         Stage         Stock         Total
                                                     ---------    -------    -----------    ------------    --------   ------------
<S>                                                  <C>          <C>        <C>            <C>             <C>        <C>
Retirement of treasury stock                              (666)   $    (7)   $   (12,493)   $       --      $ 12,500   $       --
Net loss                                                  --         --             --          (381,596)       --         (381,596)
                                                     ---------    -------    -----------    ------------    --------   ------------
Balance, December 31, 1994                             647,415      6,474     11,761,762      (9,304,201)       --        2,464,035

Issuance of common stock:
     Settlement of claims by joint venture partner      80,000        800        935,200            --          --          936,000
     Repayments of loan from joint venture partner      42,667        427        498,773            --          --          499,200
     Repayments of long-term loans from related
         parties and accrued interest                  115,730      1,157        675,868            --          --          677,025
     Exchange of shares for profit participation
         interests                                      36,000        360           (360)           --          --             --
Net loss                                                  --         --             --        (1,641,944)       --       (1,641,944)
                                                     ---------    -------    -----------    ------------    --------   ------------
Balance, December 31, 1995                             921,812      9,218     13,871,243     (10,946,145)       --        2,934,316

Issuance of common stock for:
Cash                                                    23,379        234        297,366            --          --          297,600
     Services and interest                              49,547        495        561,942            --          --          562,437
     Conversion of convertible notes                    57,263        573        557,747            --          --          558,320
     Repayments of loan from joint venture partner      30,880        309        361,566            --          --          361,875
     Repayments of long-term loans from related
  party                                                124,892      1,249      1,462,332            --          --        1,463,581
Net loss                                                  --         --             --        (1,314,104)       --       (1,314,104)
                                                     ---------    -------    -----------    ------------    --------   ------------
Balance, December 31, 1996                           1,207,773     12,078     17,112,196     (12,260,249)       --        4,864,025

Issuance of common stock for:
     Extension of lease rights                           1,386         14         12,986            --          --           13,000
     Conversion of note payable                        102,564      1,025        598,975            --          --          600,000
     Conversion of debt                                  6,667         67         50,433            --          --           50,500
     Acquisition of joint venture                         --         --          615,774            --          --          615,774
Net loss                                                  --         --             --        (1,908,475)       --       (1,908,475)
                                                     ---------    -------    -----------    ------------    --------   ------------
Balance, December 31, 1997                           1,318,390     13,184     18,390,364     (14,168,724)       --        4,234,824

Net loss                                                  --         --             --        (1,531,317)       --       (1,531,317)
                                                     ---------    -------    -----------    ------------    --------   ------------
BALANCE, DECEMBER 31, 1998                           1,318,390     13,184     18,390,364     (15,700,041)       --        2,703,507
Rounding of shares due to reverse split                    377          4             (4)           --          --

Net  Loss                                                 --         --             --          (501,926)       --         (501,926)
                                                     ---------    -------    -----------    ------------    --------   ------------
BALANCE, DECEMBER 31, 1999                           1,318,767    $13,188    $18,390,360    $(16,201,967)   $   --     $  2,201,581
                                                     =========    =======    ===========    ============    ========   ============
</TABLE>

            See auditors' report and notes to financial statements.


                                      F-9
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                            STATEMENTS OF CASH FLOWS                 Page 1 of 2


<TABLE>
<CAPTION>
                                                                                                                      Cumulative
                                                                                                                    December 1, 1977
                                                                                             Years Ended              (inception)
                                                                                             December 31                Through
                                                                                       1999              1998      December 31, 1999
                                                                                   ------------      ------------  -----------------
<S>                                                                                <C>               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net loss                                                                    $   (501,926)     $ (1,531,317)   $(16,201,967)
       Adjustments to reconcile net loss to net cash used in operating
           activities:
                Depreciation and depletion                                               60,746           146,355       2,361,610
                Provision for bad debt                                                     --             350,000         350,000
                Write-down of mining and milling and other property and
                    Equipment                                                           130,000           200,000       1,530,000
                Amortization of debt issuance expense                                      --                --           683,047
                Loss on sale of equipment                                                  --             265,000         265,000
       Value of common stock issued for:
           Services and interest                                                           --                --         1,934,894
           Settlement of litigation                                                        --                --           100,000
           Settlement of claims by joint venture partner                                   --                --           936,000
           Compensation resulting from stock options granted                               --                --           311,900
           Value of stock options granted for services                                     --                --           112,500
           Equity in net (income) loss of joint venture                                    --                --           123,971
           Other                                                                           --                --            (7,123)
       Changes in operating assets and liabilities:
           Prepaid expenses                                                                --                --              --
           Interest accrued on mining reclamation bonds                                  (2,414)           (3,921)        (12,016)
           Accounts payable and accrued expenses                                         34,885           285,010       1,151,265
                                                                                   ------------      ------------    ------------
                Net cash used in operating activities                                  (278,709)         (288,873)     (6,560,919)
                                                                                   ------------      ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases and additions to mining, milling and other property and
           equipment                                                                       --                --        (5,120,354)
       Purchases of mining reclamation bonds, net                                          --                --          (125,000)
       Deferred mine development costs and other expenses                                  --                --          (255,319)
                                                                                   ------------      ------------    ------------
                Net cash used in investing activities                                      --                --        (5,500,673)
                                                                                   ------------      ------------    ------------
</TABLE>


            See auditors' report and notes to financial statements.


                                      F-10
<PAGE>



                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                            STATEMENTS OF CASH FLOWS                 Page 2 of 2


<TABLE>
<CAPTION>
                                                                                                                     Cumulative
                                                                                                                  December 1, 1977
                                                                                        Years Ended                 (inception)
                                                                                        December 31                   Through
                                                                                 1999                1998        December 31, 1999
                                                                              ------------        ------------   -----------------
<S>                                                                           <C>                 <C>              <C>
      CASH FLOWS FROM FINANCING ACTIVITIES:
       Issuances of common stock                                                      --                  --          8,758,257
       Issuance of underwriter's stock warrants                                       --                  --                100
       Commissions on sales of common stock                                           --                  --           (381,860)
       Purchases of treasury stock                                                    --                  --            (12,500)
       Payments of deferred underwriting costs                                        --                  --            (63,814)
       Proceeds from exercise of stock options                                        --                  --            306,300
       Issuance of convertible debentures and notes                                   --                  --          1,505,000
       Proceeds of advances from joint venture partner                                --                  --            526,288
       Advances to joint venture partner                                              --                  --           (181,017)
       Payments of debt issuance expenses                                             --                  --           (164,233)
       Proceeds of other notes and loans payable                                   278,709             287,795        1,881,778
       Repayments of other notes and loans payable                                    --                  --           (120,000)
       Proceeds of loans from affiliate                                               --                  --             55,954
       Repayments of loans from affiliate                                             --                  --            (48,661)
                                                                              ------------        ------------     ------------
                Net cash provided by financing activities                          278,709             287,795       12,061,592
                                                                              ------------        ------------     ------------

INCREASE (DECREASE) IN CASH                                                           --                (1,078)            --

CASH, BEGINNING OF PERIOD                                                             --                 1,078             --
                                                                              ------------        ------------     ------------

CASH, END OF PERIOD                                                           $       --          $       --       $       --
                                                                              ============        ============     ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA:
       Interest paid                                                          $       --          $       --       $    299,868
                                                                              ============        ============     ============
</TABLE>

NON-CASH ITEMS:

     During 1998: The Company sold its Gold Hill Properties with a book value of
     $1,340,000  for property  having a fair market value of $725,000 and a note
     receivable  of  $350,000.   A  loss  of  $265,000  was  recognized  on  the
     transaction.


            See auditors' report and notes to financial statements.


                                      F-11
<PAGE>



                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998




NOTE 1 - BASIS OF PRESENTATION/GOING CONCERN UNCERTAINTY:

     The  accompanying  financial  statements  have been  prepared  assuming the
     Company  will  continue as a going  concern.  However,  the Company has had
     recurring losses and cash flow deficiencies since inception. As at December
     31, 1999 and 1998,  the Company  has a cash  balance of $0, an  accumulated
     deficit of $16,201,967 and $15,700,041,  respectively,  current liabilities
     of  $2,553,269  and  $2,239,675,   respectively,   and  a  working  capital
     deficiency of $2,553,269 and $2,239,675,  respectively.  The Company was in
     default on the payment of the  principal  balance  and accrued  interest on
     certain  notes and  debentures  (see Notes 5, 6 and 7). In  addition to the
     payment of its current  liabilities,  management estimates that the Company
     will  incur  general,  administrative,  and other  costs and  expenditures,
     exclusive of any costs and  expenditures  related to any mining and milling
     operations  or  environmental  matters  (see  Note  8B),  at  the  rate  of
     approximately  $20,000 per month plus  interest  during 2000.  Such matters
     raise  substantial doubt about the Company's ability to continue as a going
     concern.

     U.S.  Mining Co.  ("USM"),  a related  entity,  and USM's  affiliates  have
     pledged to provide  financing to the Company on an as needed basis  through
     December 31, 2000. The funds  received will cover  general,  administrative
     and other costs.  Additional funds will be needed to support the extraction
     and milling  processes  once underway as well as to upgrade the  processing
     facilities to allow for an increase in ore processing capacity.

     There  can be no  assurance  that the  Company  will  have  adequate  funds
     available  to repay the funds  advanced by USM and its  affiliates.  In the
     event that the Company  defaults on its  obligations,  USM may foreclose on
     the assets of the Company.  Such foreclosure  actions would have a material
     adverse effect on the future operations of the Company.

     Substantially  all of the  $4,617,834 of mineral  properties  and equipment
     included in the  accompanying  balance  sheet as of December 31,  1999,  is
     related  to  exploration  properties.   The  ultimate  realization  of  the
     Company's  investment in exploration  properties and equipment is dependent
     upon the success of future  property  sales,  the existence of economically
     recoverable  reserves,  the ability of the Company to obtain  financing  or
     make  other  arrangements  for  development,  and  upon  future  profitable
     production.


                                      F-12
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:


     (a)  Organization:

          WCM Capital,  Inc. (formerly Franklin  Consolidated  Mining Co., Inc.)
          (the "Company") originally  incorporated on December 1, 1976 under the
          laws  of the  State  of  Delaware,  is  engaged  in  the  exploration,
          development and mining of precious and non-ferrous  metals,  including
          gold,  silver,  lead,  copper  and zinc.  The  Company  owns or has an
          interest in a number of precious and non-ferrous metal properties. The
          Company's  principal  mining  properties  are (i) the Franklin  Mines,
          located near Idaho Springs in Clear Creek County,  Colorado, for which
          the Company  acquired the exclusive right to explore,  develop,  mine,
          and extract all minerals  located in  approximately  51 mining  claims
          (the  "Franklin  Mines"),  (ii) the  Franklin  Mill,  a  crushing  and
          flotation mill which is located on the site of the Franklin Mines (the
          "Franklin Mill"), and up until its sale on June 5, 1998 (iii) the Gold
          Hill Mill (see Note 2d), a fully permitted  modern facility located in
          Boulder  County,  Colorado  (the "Gold Hill Mill").  The Company is an
          exploration   stage  enterprise   because  it  did  not  generate  any
          significant revenues through December 31, 1999.

          During October 1998, the Company's  shareholders approved an amendment
          to its certificate of  incorporation  changing the name of the Company
          to WCM Capital, Inc.

     (b)  Accounting Estimates:

          The  preparation of financial  statements in accordance with generally
          accepted  accounting  principles  requires  management to make certain
          estimates and assumptions  that affect the reported  amounts of assets
          and  liabilities at the date of the financial  statements,  as well as
          the reported  amounts of revenues and  expenses  during the  reporting
          period.  While  actual  results  could  differ  from those  estimates,
          management does not expect such variances,  if any, to have a material
          effect on the financial statements.

                                      F-13
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):


     (c)  Mining, Milling and Other Property and Equipment:

          Mining, milling and other property and equipment are recorded at cost.
          Costs  incurred to acquire,  explore,  improve and develop  mining and
          milling  properties are  capitalized  and amortized in relation to the
          production  of  estimated  reserves.  Mine  development   expenditures
          incurred  substantially  in advance of  production  are deferred on an
          individual  property  basis  until  the  viability  of a  property  is
          determined.  When a property is placed in commercial production,  such
          deferred  costs are  depleted  using the  units-of-production  method.
          General exploration costs and costs to maintain the mineral rights and
          leases  are   expensed  as   incurred.   Management   of  the  Company
          periodically  reviews the  recoverability  of the capitalized  mineral
          properties and mining equipment.  Management takes into  consideration
          various  information   including,   but  not  limited  to,  historical
          production  records taken from previous  mine  operations,  results of
          exploration  activities conducted to date, estimated future prices and
          reports  and  opinions  of outside  geologists,  mine  engineers,  and
          consultants.  When it is determined that a project or property will be
          abandoned or its carrying value has been impaired, a provision is made
          for any expected loss on the project or property.

          Post-closure  reclamation  and site  restoration  costs are  estimated
          based upon environmental and regulatory  requirements and accrued over
          the life of the mine  using the  units-of-production  method.  Current
          expenditures   relating  to  ongoing   environmental  and  reclamation
          programs are expensed as incurred.

          Depletion  of mining and  milling  improvements  and mine  development
          expenditures is computed using the units of production method based on
          probable  reserves (there was no charge for depletion in 1999 and 1998
          because  the  Company's  mining  and  milling  operations  were not in
          operation  during these years).  Depreciation of equipment is computed
          using the straight-line  method over the estimated useful lives of the
          related assets.


                                      F-14
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

     (d)  Impairment of Long-Lived Assets:

          The Company has adopted the  provisions of FASB Statement of Financial
          Accounting  Standards  No.  121,  "Accounting  of  the  Impairment  of
          Long-Lived  Assets and for Long-Lived  Assets to be Disposed Of" (SFAS
          121).  Under  SFAS 121,  impairment  losses on  long-lived  assets are
          recognized when events or changes in  circumstances  indicate that the
          undiscounted  cash flows  estimated to be generated by such assets are
          less than their carrying value and,  accordingly,  all or a portion of
          such carrying value may not be recoverable. Impairment losses then are
          measured  by  comparing  the fair  value of assets  to their  carrying
          amounts.  It was  the  Company's  determination  that  due to  certain
          restrictions  associated  with milling  operations in Boulder  County,
          Colorado,  the Gold Hill  Mill  properties  would  not be placed  into
          operation.  On June 5,  1998  the  Company  sold its  Gold  Hill  Mill
          Properties  in exchange  for property  and  equipment  having a market
          value  of  $725,000  and a 14%  note  receivable  of  $350,000.  As of
          December 31, 1998,  (a) the $350,000  note was reduced to $0 and (b) a
          $200,000  impairment  loss was taken against the $725,000 of equipment
          acquired. During 1999 an additional $130,000 impairment loss was taken
          against  the  Company's   mining,   milling  and  other  property  and
          equipment.

     (e)  Revenue Recognition:

          Revenues, if any, from the possible sales of mineral concentrates will
          be  recognized  by the Company only upon  receipt of final  settlement
          funds from the smelter.

     (f)  Environmental Remediation Costs:

          Environmental  remediation  costs are accrued  based on  estimates  of
          known  environmental  remediation  exposures.   Ongoing  environmental
          compliance  costs,  including  maintenance  and  monitoring  costs are
          expensed as incurred.


                                      F-15
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

     (g)  Income Taxes:

          Deferred  income taxes are to be provided on  transactions,  which are
          reported in the  financial  statements  in different  periods than for
          income tax purposes.  The Company utilizes Financial  Accounting Board
          Statement No. 109,  "Accounting for Income Taxes," ("SFAS 109").  SFAS
          109 requires  recognition of deferred tax  liabilities  and assets for
          expected future tax  consequences of events that have been included in
          the financial statements or tax returns.  Under this method,  deferred
          tax  liabilities  and assets are  determined  based on the  difference
          between  the  financial   statements  and  tax  basis  of  assets  and
          liabilities  using  enacted  tax rates in effect for the year in which
          the  difference is expected to reverse.  Under SFAS 109, the effect on
          deferred  tax  assets  and  liabilities  of a change  in tax  rates is
          recognized in income in the period that  includes the enactment  date.
          Valuation allowances are established when necessary to reduce deferred
          tax assets to the amount expected to be realized (see Note 9).

     (h)  Loss Per Common Share:

          The Company has adopted SFAS 128  "Earnings  Per Share"  ("SFAS 128"),
          which requires the presentation of "basic" and "diluted"  earnings per
          share on the face of the income  statement.  Loss per common  share is
          computed by dividing  the net loss by the weighted  average  number of
          common shares outstanding during each period. Common stock equivalents
          have been  excluded from the  computations  since the results would be
          anti-dilutive.  Losses per share have been  restated for prior periods
          to give effect to the reverse  stock splits  during 1999 and 1998 (see
          Note 10).

     (i)  Fair Value of Financial Investments:

          The  carrying  amount of the  Company's  borrowings  approximate  fair
          value.

     (j)  Statement of Comprehensive Income:

          SFAS 130 "Reporting  Comprehensive  Income"  prescribes  standards for
          reporting  comprehensive income and its components.  Since the Company
          currently does not have any items of comprehensive income, a statement
          of comprehensive income is not required.


                                      F-16
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 3 - ACQUISITIONS OF MINING AND MILLING PROPERTIES:

     (a)  Franklin Mines and Mill

          On  December  26,  1976,  the Company  acquired  Gold  Developers  and
          Producers  Incorporated,  a Colorado  corporation  which, prior to the
          acquisition,  leased 28 patented  mining  claims from Audrey and David
          Hayden and Dorothy  Kennec  pursuant  to a mining  lease and option to
          purchase,  dated November 12, 1976 (hereinafter  collectively referred
          to as the  "Hayden/Kennec  Leases").  In 1981, the Company commenced a
          rehabilitation  program  to extend  and  rehabilitate  the  shafts and
          tunnels in place at the Franklin Mines, install the Franklin Mill, and
          search for and delineate a commercial  ore body. In 1983,  the Company
          completed the Franklin Mill.

     (b)  Joint Venture

          In February 1993, the Company entered into a joint venture arrangement
          with  Island  Investment  Corp.,  a  Nevada  corporation   ("Island"),
          pursuant  to which  the  parties  formed  Zeus No.  1  Investments,  a
          California general partnership (the "Joint Venture").  The Company had
          a 17.5%  interest in the Joint  Venture,  and Island had the remaining
          82.5%  interest.  The Joint Venture was formed to develop the Franklin
          Mines and related assets of the Company.  In May 1993, Island assigned
          its  interest  in the  Joint  Ventures  to Gems  and  Minerals  Corp.,
          ("Gems") a wholly owned  subsidiary of Island.  On July 15, 1996, Gems
          transferred  31.5% of its 82.5%  interest in the Joint Venture to Nuco
          Ventures,  Inc., a Delaware  Company,  and wholly owned  subsidiary of
          Gems ("Nuco").

          During 1997, in a step  transaction,  Gem and Nuco's  aggregate  82.5%
          interest in the Joint Venture was acquired by U.S. Mining, Inc., a New
          Jersey corporation  ("USM"). USM assigned the acquired interest to the
          Company  in  exchange  for the  assumption  by the  Company of certain
          liabilities.  Upon the  acquisition of the 82.5% interest of the Joint
          Venture by the Company,  the relationship with Gems was terminated and
          the Joint Venture was effectively dissolved.


                                      F-17
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 3 - ACQUISITIONS OF MINING AND MILLING PROPERTIES (continued):

<TABLE>
<S>                                                                                                           <C>
          In conjunction with these transactions, the Company:

          Acquired mine and mill improvements having a net book value of
          (See Note 4)                                                                                        $ 780,787

          Eliminated the Joint Venture deficit of $123,971, after giving effect
          to equity in net income of Joint Venture of $9,249 for 1997                                           123,971

          Eliminated a $458,567 liability which represented the
          remainder of a note and related accrued  interest payable to a
          subsidiary of Gems in conjunction with the acquisition of the Gold Hill Mill                          458,567

          Eliminated a $229,204 receivable from Gems                                                           (229,204)

          Assumed notes payable - other of $87,000 and related accrued
          interest on these notes of $16,858 (see Note 5)                                                      (103,858)

          Assumed a liability of $408,482 payable to POS Financial, Inc.
          (See Note 7)                                                                                         (408,482)

          Assumed a liability of $20,255 associated with the Joint
          Venture less other items of $14,248                                                                    (6,007)
                                                                                                              ---------

          The net amount of $615,774 was credited to additional paid-in capital                               $ 615,774
                                                                                                              =========
</TABLE>

     (c)  Gold Hill Mill

          On July 3,  1996,  the  Company  acquired  the Gold  Hill  Mill from a
          wholly-owned  subsidiary  of Gems, in exchange for an 8% mortgage note
          with an initial principal balance of $2,500,000. The Gold Hill Mill is
          a fully permitted milling facility located in Boulder, Colorado.

          At December 31, 1997,  the Company  reduced by $1,200,000 the carrying
          value of certain  of the Gold Hill Mill  assets to  $1,340,000,  which
          approximates  management's  estimate of fair value.  All the Gold Hill
          assets were sold during 1998 (see Note 2).

     (d)  Mogul Mines

          On  September  26,  1996,  the  Company  acquired  a 20%  interest  in
          Newmineco,  an inactive company, by issuing a 9.5% note payable with a
          principal balance of $600,000.  Newmineco represented that it held the
          exclusive  mining  rights  related to the Mogul  Mines in the  Spencer
          Mountains  of  Colorado.  Because  of  certain  permitting  and  other
          problems in the Mogul  Mines,  the  purchase  price to the Company was
          reduced to $150,000 in 1996,  and the  investment  was written down to
          zero as of December 31, 1997.


                                      F-18
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 4 - MINING, MILLING AND OTHER PROPERTY AND EQUIPMENT:

          Mining,  milling  and other  property  and  equipment,  consist of the
          following at December 31:

                                                           1999          1998
                                                        ----------    ----------

          Machinery and equipment                       $1,617,220    $1,747,220
          Mine and mill improvements (a)                 5,071,065     5,071,065
          Furniture and fixtures                            11,714        11,714
          Automotive equipment                              84,096        84,096
                                                        ----------    ----------
                                                         6,784,095     6,914,095
          Less: accumulated depreciation and depletion   2,166,261     2,105,515
                                                        ----------    ----------
                                                        $4,617,834    $4,808,580
                                                        ==========    ==========



     (a)  Includes mine and mill improvements of $780,787 in connection with the
          termination of the Joint Venture (see Note 3).

          During  the  years  ended  December  31,  1999 and 1998,  the  Company
          expended   $34,812  and   $62,560,   respectively   on   environmental
          remediation costs and mine expenses.


                                      F-19
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 5 - NOTES PAYABLE - RELATED PARTY AND OTHERS:

          Notes  payable  related  party and others  consist of the following at
          December 31, 1999 and 1998:


          12% unsecured demand notes due to the Company's
             former President and his affiliated entity          $ 71,965
          Secured promissory note (a)                              60,000
          Unsecured promissory notes (b)                           87,000
                                                                 --------
                                                                 $218,965

     (a)  The outstanding  principal  balance of the note became payable on July
          18,  1996 and the  Company is in default.  The note is  guaranteed  by
          certain officers of Gems and is collateralized  through a subordinated
          security interest in the Company's mining  reclamation bond.  Interest
          on the note is payable based on the rate of interest applicable to the
          mining reclamation bond (8% at December 31, 1999).

     (b)  This principal amount represents four unsecured  promissory notes. The
          Company assumed these obligations on November 25, 1997, as part of the
          acquisition  from USM of the  remaining  interest in the Joint Venture
          (see Note 3). These notes were in default when assumed by the Company,
          and remain in default  as of  December  31,  1999.  Interest  is being
          accrued at 8%.

          Accrued  interest  on the above  notes at  December  31, 1999 and 1998
          aggregated approximately $66,000 and $45,600 respectively.


                                      F-20
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 6 - CONVERTIBLE DEBENTURES AND OTHER CONVERTIBLE DEBT:

          The Company's  convertible debt at December 31, 1999 and 1998 consists
          of:

          12.25% convertible debenture originally due 12/31/94          $145,000

          As of  December  31, 1999 and 1998,  the  Company was in default  with
          respect  to the  payment  of the  $145,000  principal  balance  of the
          debenture and accrued interest of  approximately  $84,000 and $67,000,
          respectively.  As a result of its default,  the Company may be subject
          to legal proceedings by the Transfer Agent/Trustee under the Indenture
          Agreement  or from  debentureholders  seeking  immediate  repayment of
          principal plus interest and other costs. Management cannot assure that
          there will be funds  available  for the required  payments or what the
          effects  will  be of  any  actions  brought  by or on  behalf  of  the
          debentureholders (see Note 8c).

          In September 1996, the Company  acquired its 20% interest in Newmineco
          by  issuing a 9.5% note  payable to Gems with a  principal  balance of
          $600,000.  This  note  could  be  converted  to  common  stock  at the
          Company's  option on or after  January 1, 1997.  On February 10, 1997,
          the Company  notified the assignees that it had elected to convert the
          principal  balance  of the 9.5%  note  into  102,564  shares of common
          stock, as adjusted based on the conversion rate of $5.85, per share as
          adjusted.  As a result of problems  concerning  permitting and various
          other  issues  related  to the Mogul  Mines,  the  purchase  price was
          reduced to $150,000 on December  31, 1996 and to $-0- on December  31,
          1997 (see Note 3). The $450,000 (1996) and $150,000 (1997)  reductions
          in the purchase price were effectuated through an equivalent reduction
          in the principal balance of an 8% mortgage note that was payable to an
          affiliate of Gems by the Company.

NOTE 7 - NOTE PAYABLE - RELATED PARTY:

          The Company had outstanding an 8% promissory note balance of $955,756,
          at December 31, 1997, which represents  monies advanced to the Company
          by an affiliated  entity,  POS Financial,  Inc. ("POS"),  a New Jersey
          corporation   and   obligations   assumed  in   connection   with  the
          contributions  of Joint Venture  interests  (see Note 3). The note was
          payable on May 4, 1998,  and is  secured by all the  Company's  mining
          claims  and  mining  properties,  as  well  as  its  interests  in the
          Hayden/Kennec  Leases.  The  note  is  subject  to  successive  30-day
          extensions  throughout 1998 and 1999 upon the mutual  agreement of the
          maker and lender for no  additional  consideration.  On March 5, 1998,
          POS assigned this note to USM. Both POS and USM are considered related
          parties because they are owned by a director of WCM


                                      F-21
<PAGE>



                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998



NOTE 7 - NOTE PAYABLE - RELATED PARTIES (continued):

          and can  exert  significant  influence  over the  Company.  Additional
          amounts  were loaned to the  Company by USM during 1998 and 1999.  The
          balance due on the note at December  31,  1999  aggregated  $1,470,295
          plus  accrued  interest  of  $198,745.  The balance due on the note at
          December  31, 1998  aggregated  $1,191,586  plus  accrued  interest of
          $91,950.

NOTE 8 - COMMITMENTS AND CONTINGENCIES:

     (a)  Lease Agreements:

          The original  Hayden/Kennec Leases provided for payment by the Company
          of certain  liabilities  relating to the leased property and a minimum
          royalty payment of $2,000 per month or 5% of the Company's net smelter
          royalties  realized  from  production,  whichever  is  greater to Mrs.
          Hayden and Mrs. Kennec. The original  Hayden/Kennec  Leases expired in
          November  1996,  at which time the  Company had the option to purchase
          the  leasehold  rights for a  purchase  price of  $1,250,000  less any
          royalties  previously  paid as of the expiration  date. As of November
          1996, the Company had paid approximately $480,000 in royalties.

          On November  19,  1996,  the Company  entered into an amendment to the
          Hayden/Kennec  Leases with Dorothy  Kennec (the  "Kennec  Amendment").
          Pursuant to the terms of the Kennec Amendment, Kennec agreed to extend
          the term as it relates to her portion of the leasehold  rights through
          November 12, 1997. In  consideration  for such extension,  the Company
          agreed  to  increase  the  royalty  payment  due to  Kennec  under the
          original  Hayden/Kennec  Leases from $1,000 to $2,000 per month and to
          issue to Kennec 1,387 shares of the common stock of the Company valued
          at $9.37 per share as adjusted,  having an aggregate value of $13,000.
          All of the payments made under the Kennec  Amendment plus the value of
          the shares issued  thereunder  are to be further  applied  against the
          buy-out price of the property under the original Hayden/Kennec Leases.
          The 1,387 shares of common stock were issued on April 9, 1997.

          To further secure the Company and the Joint Venture, Gems entered into
          an  agreement  on  December  21, 1995 to  purchase  Hayden's  interest
          thereto (the "Hayden Interests") for a purchase price of $75,000. Gems
          made an initial  payment of $5,000 to Hayden and the  remainder of the
          purchase  price was to be paid on or prior to the  expiration  date of
          the Hayden/Kennec Leases. Gems advised the Company that under Colorado
          law, if an owner



                                      F-22
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued):

          of 50% of mineral  rights  desired to exploit those  rights,  then the
          remaining  50% owner  could  not  object  to the  exploitation  of the
          rights,  provided the non-participating  owner received 50% of the net
          profits generated from such exploitation. Therefore, Gems informed the
          Company  that it  believed  that with the  acquisition  of the  Hayden
          interest,  together with the portion of the Hayden/Kennec Leases owned
          by Kennec,  the  Company  and the Joint  Venture  would have  adequate
          access  to the  minerals  during  the  remainder  of the  term  of the
          Hayden/Kennec Leases on a continuing basis.

          On November 12, 1997,  Gems had failed to comply with the terms of the
          Hayden/Kennec-Gems  Purchase  Agreement.  On November 13, 1997, Hayden
          entered into an  agreement  to sell the Hayden  interests to USM for a
          purchase price of $75,000 (the "Hayden-USM Purchase  Agreement").  The
          purchase  price is  evidenced  by a note,  due on  February  2,  1998.
          Payment on the note has been  extended  until USM receives a report of
          clear title.

          Upon the execution of the Hayden-USM Purchase Agreement, USM agreed to
          extend the  Hayden/Kennec  Leases  upon the same terms and  conditions
          currently in effect through March 13, 1998 (the  "Extended  Expiration
          Date"). As of December 31, 1999 USM had yet to receive clear title but
          continued to make Purchase Agreement extension payments.

          While the Company has extended the term of the  Hayden/Kennec  Leases,
          as amended  through  March 13, 1998, in the event that it shall expire
          or otherwise  terminate,  any improvements made on the property become
          the  property of the lessor  without any further  compensation  to the
          Company  and  the  lessor  would  have  to  reclaim  the  property  in
          accordance with the State of Colorado Division of Minerals and Geology
          (the "DMG")  requirements  in effect at the time of such expiration or
          termination.  Thus,  the  likelihood  that the Company  would  recover
          fixtures and other equipment on the property may be minimal.

          The  Company  pays a monthly  rental  of  $3,500  (on a month to month
          basis) for the office space,  secretarial and other services  provided
          to the Company  pursuant to an oral  agreement  with a  non-affiliate.
          Rent expense was $41,000 and $33,450 in 1999 and 1998, respectively.

     (b)  Environmental Matters:

          During 1999,  inspections of the Franklin Mining  properties  revealed
          that certain drainage problems and substandard linings at the tailings
          disposal areas created potential hazards and that protection  measures
          are required.


                                      F-23
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued):

          The Company  received a letter  dated March 9, 2000 from the  Colorado
          Division of  Minerals  and  Geology  (the "DMG")  which sets forth the
          measures  which  must be taken by the  Company  to bring the site into
          compliance with groundwater  regulations and to stabilize the tailings
          pond and site. In the event the Company  completes all of the required
          actions by May 30, 2000, a Temporary  Cessation  order will be granted
          by DMG. In the event a  Temporary  Cessation  is  granted,  no further
          reclamation  work or mining work would be required for the duration of
          the Temporary  Cessation,  beyond basic  maintenance  and  reclamation
          required to keep the site from further deterioration.

     (c)  Litigation:

          The Company is involved in various litigation as explained below:

     (i)  The  Company  and others  were  defendants  in an action  related to a
          dispute over fees for  engineering  consulting  services.  The parties
          settled  this  matter  in  September   1999  and  the  litigation  was
          discontinued.

          During 1998, $100,000 of other expenses was accrued in connection with
          this litigation. Such accrual was reversed in 1999 when the litigation
          was settled.

     (ii) In  September  1997,  certain  of  the  Company's  12.25%  Convertible
          Debenture  holders  (see  Note 6)  instituted  an action  against  the
          Company for payment of approximately  $42,500  principal amount of its
          12.25%  Convertible   Debentures  plus  accrued  and  unpaid  interest
          totaling  approximately  $13,000 and other costs and expenses  related
          thereto. The Company has answered the aforesaid  complaint.  A default
          judgment was entered against the Company in the amount of $42,500 plus
          interest,  costs  and  disbursements.  The  Company  and USM have been
          negotiating with the debenture holders but to this point no settlement
          agreement has been reached. The continued default of the Company could
          result in the Company being subject to additional  legal  proceedings.
          In  addition,  there is no  assurance  that funds will be available to
          cure the default or reach an acceptable settlement.


                                      F-24
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998



NOTE 8 - COMMITMENTS AND CONTINGENCIES (Continued):


    (iii) On or  about  May 14,  1998,  Redstone  Securities  Inc.  ("Redstone")
          commenced  an  action  against  the  Company  in  connection  with  an
          Investment  Banking Agreement dated August 28, 1996,  between Redstone
          and the Company.  On or about July 31, 1998, the Company  answered the
          complaint and filed a cross complaint against  Redstone.  In September
          1999,  the matter was settled  whereby the Company  agreed to lift the
          stop transfer  order on the shares held by Redstone to allow  Redstone
          the ability to sell those shares to an unaffiliated third party.

     (d)  NASDAQ Notification:

          During 1998 and 1999, the Company received  notification  letters from
          NASDAQ  informing  them  that the  Company's  common  stock was not in
          compliance  with the NASDAQ  small-cap  market  price  requirement  of
          $1.00, which became effective on February 23, 1998.

          In order to mitigate  the minimum  bid price  requirement  the Company
          effectuated  reverse  stock splits during 1998 and 1999 (see Note 10).
          After each reverse split the Company's  stock price remained above the
          $1.00 minimum bid price requirement for the necessary ten-day period.

          While the  Company is  currently  in  compliance  with the minimum bid
          price  requirement,  there can be no  assurance  in the future that it
          will be able to maintain such compliance.



                                      F-25
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 9 - INCOME TAXES:

          As of December 31, 1999,  the Company had federal net  operating  loss
          carryforwards of approximately  $13,500,000 available to reduce future
          federal  taxable  income,  which,  if not used, will expire at various
          dates  through  December  31,  2019.  Changes in the  ownership of the
          Company  may  subject   these  loss   carryforwards   to   substantial
          limitations.

          The  Company has offset the  deferred  tax asset  attributable  to the
          potential  benefits from such net operating loss carryforwards and the
          reduction in carrying value by an equivalent  valuation  allowance due
          to the  uncertainties  related  to the extent and timing of its future
          taxable income. There are no other material temporary differences.

<TABLE>
<CAPTION>
                                                                   Deferred Tax Valuation
                                                                      Asset      Allowance
                                                                   ----------   ----------
<S>                                                                <C>          <C>
          Balance at January 1, 1998, attributable to federal
          net operating loss carry forward                         $3,578,000   $3,578,000
          Increase in federal net operating loss, year ended
          December 31, 1998                                           861,000      861,000
          Write down of equipment received as part of
          Sale of Gold Hill                                            70,000       70,000
                                                                   ----------   ----------
          Balance at December 31, 1998                              4,509,000   4,4509,000

          Increase in Federal net operating loss,
          Year ended December 31, 1999                                210,000      210,000
                                                                   ----------   ----------
          Balance at December 31, 1999                             $4,719,000   $4,719,000
                                                                   ==========   ==========
</TABLE>

NOTE 10 - STOCKHOLDERS' EQUITY:

     (a)  Reverse Stock Splits:

          On May 26, 1998, the Company effectuated a twenty-five-for-one reverse
          stock  split.  On  December  20,  1999,  the  Company   effectuated  a
          three-for-one  reverse stock split. The  accompanying  financials give
          retroactive effect to these reverse stock splits.

     (b)  Common Stock Reserved for Issuance:

          At December 31, 1999 and 1998, there were 3,867 shares of common stock
          reserved  for  issuance  upon  the  exercise  of the  12.25%  $145,000
          convertible debentures (See Note 6).



                                      F-26
<PAGE>

                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

NOTE 10 - STOCKHOLDERS' EQUITY (Continued):

     (c)  Issuances of Common Stock

          From  December 1, 1977  (inception)  through  December 31,  1999,  the
          Company issued common stock for:

<TABLE>
<CAPTION>
                                                                            Shares         Amount
                                                                         ------------    ------------
<S>                                                                         <C>          <C>
          Cash, including net proceeds of $283,995 from
             Public offering                                                  355,648    $  8,758,256
          Exercise of stock options                                            46,298         792,250
          Commissions of sales of common stock                                   --          (451,483)
          Purchase and retirement of treasury stock                              (666)        (12,500)

          Non-cash, other than related parties:
                            Services and property                             165,582       1,673,394
                            Conversion of debentures and notes payable        246,107       2,648,820
                            Stock options and stock warrants granted             --            39,100
                            Settlement of litigation and other                 13,710         100,000

          Non-cash, related parties:
                            Services and property                              97,919         918,030
                            Settlement of claims by related parties            80,000         936,000
                       Repayment of related party loans                       314,169       3,001,681
                                                                         ------------    ------------
                                                                            1,318,767    $ 18,403,548
                                                                         ============    ============
</TABLE>

NOTE 11 - SUBSEQUENT EVENTS

               On January 18, 2000, the Company,  USM and USM's sole shareholder
               ("Martucci") entered into an agreement whereby the Company agreed
               to acquire USM in  exchange  for  7,473,013  shares of the Common
               Stock or  approximately  85% of the  Company's  then  issued  and
               outstanding common stock (the  "Transaction").  The agreement may
               be terminated by unanimous  consent of the parties,  in the event
               of a breach of the terms of the  contract by any of the  parties,
               in the event of an  injunction  preventing  the closing or if the
               closing  has not  occurred  on or  before  July  16,  2000.  As a
               condition to closing,  the Company must seek shareholder approval
               of the Transaction.  In addition, the Company has agreed to grant
               Martucci piggyback and demand registration rights with respect to
               the shares he is to


                                      F-27
<PAGE>


                                WCM CAPITAL, INC.
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


NOTE 11 - SUBSEQUENT EVENTS (Continued):


               receive  in the  Transaction.  The  Company  has  filed  a  proxy
               statement  with  respect to the  Transaction  which is  currently
               subject to a review by the staff of the  Securities  and Exchange
               Commission  ("Commission").  Upon approval of the proxy statement
               by the Commission the Company will submit the  Transaction to its
               shareholders for approval.





                                      F-28
<PAGE>


Item  8.  Changes  In and  Disagreements  With  Accountants  on  Accounting  and
          Financial Disclosure

On March 16, 2000,  the Company  notified  Lazar Levine & Felix  ("LLF") that it
would no longer serve as its independent  auditors.  The decision to dismiss LLF
was approved by the Board of Directors of the Company.

During the two most recent  fiscal years of the Company,  none of the reports of
LLF on the financial statements of the Company contained an adverse opinion or a
disclaimer  of  opinion or was  qualified  or  modified  as to audit  scope,  or
accounting principles; however, LLF has qualified or modified its reports on the
financial  statements  of the  Company as a going  concern.  During the two most
recent fiscal years and any subsequent interim period preceding the dismissal of
LLF,  there  were no  disagreements  between  the  Company  and  LLF  concerning
accounting principles or practices,  financial statement disclosure, or auditing
scope or  procedure  which  would  have  caused LLF to make a  reference  to the
subject matter thereof in its report had such  disagreement not been resolved to
the satisfaction of LLF.

The Company retained  Ehrenkrantz Sterling & Co. LLC as its independent auditors
for fiscal year 1999.


                                      -31-
<PAGE>


                                    PART III



Item 9. Directors,  Executive Officers, Promoters and Control Person; Compliance
        with Section 16(a) of the Exchange Act

Name                                Age       Position

Robert Waligunda                    53        Current President and Treasurer

Richard Brannon                     50        Vice-President-Secretary
George E. Otten                     73        Vice President

William C. Martucci                 58        Director

Robert W. Singer                    52        Former Director

Ronald Ginsberg                     62        Former Director

William Wishinsky                   36        Director

Casey Myhre                         35        Director

John R. Bruno                       74        Former Director

ROBERT L. WALIGUNDA.  Mr. Waligunda has served as President and Treasurer of the
Company  since  October  1998.  Mr.  Waligunda  has served as a director  of the
Company  from 1985 and as  Secretary  of the Company from August 1995 to October
1998. From 1965 to the present, Mr. Waligunda has served as founder,  President,
and  principal  stockholder  of Sky  Promotions,  Inc., a Pittstown,  New Jersey
marketing and management company involved in sales, advertising and marketing of
hot air  balloons  and  inflatable  products.  He is the founder and director of
International  Professional  Balloon Pilots Racing Association,  a member of the
advisory board of Aerostar  International,  Inc., the world's oldest and largest
balloon  manufacturing   company,  and  a  member  of  the  National  Aeronautic
Association,  the Experimental Aircraft Association,  and the Airplane Owner and
Pilots  Association.  Mr.  Waligunda  received a Masters  of  Science  degree in
guidance and psychological services from Springfield College in 1968.

RICHARD BRANNON Mr. Brannon has served as the Vice President since February 1996
and Secretary of the Company since  October  1998.  Mr.  Brannon is a California
licensed real estate broker and 100% owner of A Reel Mortgage,  Inc., a mortgage
and loan servicing company organized in 1991. Mr. Brannon is a founding director
of  the  California  Trustee  Mortgage  Broker  Association,   a  not-for-profit
corporation.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -32-
<PAGE>


GEORGE E. OTTEN Mr.  Otten has served as Vice  President  of the  Company  since
October 1998. Mr. Otten was the first president of the Company from 1976 through
1985 and is the  owner and  operator  of the Bates  Hunter  Mine  under the name
"Central City Consolidated  Mining Company" since 1985. Since 1997, Mr. Otten is
the  president,  director,  and General  Operating  officer of all operations of
Hunter Gold  Mining,  Inc.  Central City  Colorado.  Mr. Otten holds a degree in
Business Administration from Adams State College, Alamosa, Colorado.

WILLIAM  C.  MARTUCCI  From 1974 to the  present,  Mr.  Martucci  has  served as
president and chairman of United Grocers Clearing House,  Inc., a privately held
company he founded to serve the coupon  redemption,  fulfillment and promotional
needs of  manufacturers  and retailers.  In 1997 Mr. Martucci founded and is the
sole director,  officer and shareholder of Shoppers Online, Inc. that portal and
web  page  for  business-to-business  and  business  to  consumer  products  and
services.  Additionally,  Mr.  Martucci is the sole  shareholder;  director  and
president  of U.S.  Mining,  Inc.  ("USM") Mr.  Martucci  received a Bachelor of
Science in Philosophy from Florida International University in 1973.

RONALD GINSBERG Mr. Ginsberg was a director of the Company from October 26, 1998
to May 27,  1999  and is  President  of the  Foodtown  Supermarket  Cooperative,
headquartered in Edison,  New Jersey.  He is also Secretary and Director of Twin
County Grocers located in Edison, New Jersey and Director of the New Jersey Food
Council.  Mr.  Ginsberg  attended  Drexel  Institute  of  Technology  and Temple
University.

WILLIAM H.  WISHINSKY  Mr.  Wishinsky  has been a Director  of the Company and a
member of the Audit  Committee of the Board of Directors  since October 4, 1999.
Since 1990, Mr.  Wishinsky has been the principal of William H. Wishinsky,  CPA,
P.C.,  an  accounting  firm.  From 1988  until  1990,  he was an  accountant  at
Friedman,  Alpren & Green, CPA's in New York City. Mr. Wishinsky  graduated from
Pace University in New York and received a B.B.A. in Accounting in June 1986. He
became a certified public accountant in 1990.

CASEY  MYHRE Mr.  Myhre has been a Director  of the  Company and a member of the
Audit  Committee of the Board of Directors  since  October 4, 1999.  Since early
1999,  Mr.  Myhre  has  been  manager  of  Kimball  International,  a  furniture
manufacturing  company.  For the four  years  prior  to his  being  promoted  to
management he worked for Kimball International as a salesman. Mr. Myhre attended
Minnesota School of Business and graduated in 1987.

JOHN R. BRUNO Mr.  Bruno was a Director of the Company from  September  30, 1999
through  February 28, 2000.  Since 1996,  Mr. Bruno has been the  president  and
founder of The Bruno Group, a division of the Keyes Martin  Company,  New Jersey
public  relations,  and funding  consultant.  In October 1996,  Bruno Associates
merged  with  The  Keyes  Martin   Company,   a  New  Jersey   advertising   and
marketing/public  relations firm. The merger resulted in Keyes Martin, The Bruno
Group,  creating  one  of the  largest  multi-talented  groups  of  funding  and
marketing/public relations' specialists in the State of New Jersey. From 1967 to
1997,  John R.  Bruno  was  President  and  Chief  Executive  Officer  of  Bruno
Associates Inc. a public relations and funding company.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -33-
<PAGE>


ROBERT W. SINGER Mr. Singer served as a director of the Company from October 26,
1998 to October 4, 1999.  Mr. Singer  currently  holds the position of Assistant
Majority  Leader in the New Jersey  State  Senate.  Prior to being  elected as a
state Senator, he served three terms in the New Jersey Assembly.  In this latter
capacity,  Mr. Singer was named  Majority  Whip, by his Colleagues and served as
both Vice  Chairman of the  Commerce and  Regulated  Professions  Committee  and
Community  Development,  Agriculture and Tourism  Committee.  Senator Singer has
distinguished  himself,  among his  national  peers,  for his  ability to create
environments  where high  technology and economic  development  can coexist with
environmental  priorities.   Additionally,  the  Senator  is  Vice-President  of
Corporate Relations for Community/Kimball  Medical Centers, and affiliate of the
St. Barnabas Health Care System.

To the Company's knowledge and based solely on a review of such materials as are
required by the  Securities  and Exchange  Commission,  no officer,  director or
beneficial  holder  of  more  than  ten  percent  of the  Company's  issued  and
outstanding shares of Common Stock ("Beneficial  Owner") has filed any forms and
reports  required to be filed  pursuant to Section 16(a) of the  Securities  and
Exchange Act of 1934, as amended (the  "Exchange  Act"),  during the fiscal year
ended December 31, 1999; and no officer,  director or Beneficial  Holder has not
submitted  any  representation  letter to the Company  stating that they are not
subject to the filing  requirements  under  Section 16 of the  Exchange  Act for
fiscal year 1999.

Item 10. Executive Compensation

No  compensation  has been  awarded  to,  earned by, or paid to any of the named
executives or directors of the Company during the fiscal year ended 1999.

Item 11. Security Ownership of Certain Beneficial Owners and Management

(a)  Certain Beneficial Owners of Common Stock

     NONE

(b)  Security Ownership of Management of Common Stock

The  following  table  sets  forth  the  beneficial  ownership  of shares of the
Company's  common stock as of March 15, 2000 (giving  retroactive  effect to the
three-for-one  reverse stock split  effected on or about  December 20, 1999) for
each (a) director,  (b) executive officer, and (c) person who is known to be the
beneficial  owner of five  percent or more of the  outstanding  shares of Common
Stock and all directors and executive officers as a group.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -34-
<PAGE>


Name and                                         Amount and     Percentage
Address of                                        Nature of     of Class
Beneficial                                       Beneficial
Owner (1)                                        Ownership

Robert L. Waligunda(3)                              856(4)        .06
George E. Otten(2)                                  -0-           -0-
John R. Bruno(2)
Richard Brannon(3)                                  -0-           -0-
William C. Martucci(3)                              -0-           -0-
William H. Wishinsky(3)                             -0-           -0-
Ronald Ginsberg(2)                                  -0-           -0-
Robert W. Singer(2)                                 -0-           -0-
Casey Myhre(3)                                      -0-           -0-
                                                    ---           ---

All Directors and Executive                         856           .06%
Officers as a Group
----------
* Less than 1%

(1) Except as  otherwise  noted all shares are  beneficially  owned and the sole
voting and investment power is held by persons indicated.

(2) Former officer and/or director of the Company

(3) Executive officer and/or director of the Company

(4) Includes 400 shares pledged as collateral to a non-affiliate individual

Item 12. Certain Relationships and Related Transactions

In early 1997,  a former  officer of the Company  introduced  Gems to William C.
Martucci  ("Martucci")  at which time Gems began  negotiations  with Martucci to
effectuate a business  combination with Martucci's  businesses and Gems business
ventures.  At that time,  Gems  controlled  an 82.5%  interest in the Zeus No. 1
Investments,  a California General Partnership formed by the Company and Gems to
facilitate  the  rehabilitation,  reclaimation  and  reopening of the  Company's
mining ventures (the "Zeus Joint Venture").

However,  during mid 1997,  it had become  apparent to the Company that Gems did
not possess the technical and financial resources required to bring the Franklin
Mines into  operation as  contemplated  by the Zeus Joint  Venture.  It was also
during this time that the Company had  established a relationship  with Martucci
independent  of Gems and began  discussions  with  Martucci  with  respect  to a
possible business  combination between his entities and the Company. As a result
of these  discussions,  On September 25, 1997, the Company entered into a letter
of intent  with  Martucci to acquire  all of the  outstanding  shares of certain
entities owned by him, including US Mining,  Inc. ("USM") in exchange for 85% of
the outstanding shares of stock of the Company.  USM is a New Jersey corporation
engaged in the business of acquiring and holding mining properties and related


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -35-
<PAGE>


acquisition was consummated.  Management  believed that the financial support to
be supplied by Mr.  Martucci  pursuant to the Martucci letter of intent would be
sufficient to fund the Company prior to the consummation of the Transaction.

On November 25, 1997 USM  acquired an  aggregate  of 82.5%  interest in the Zeus
Joint  Venture in  exchange  for the  assumption  of  approximately  $100,000 in
liabilities  of Gems (the "Gems  Liabilities").  USM  thereafter  simultaneously
assigned the acquired  interest to the Company in exchange for the assumption of
the Gem's  liabilities.  The  assignment  effectively  terminated the Zeus Joint
Venture giving the Company 100% control over its mining ventures.

On April 6, 1998, Martucci terminated the Letter of intent but continued to fund
the Company  (the  "Advances").  On March 9, 1998,  the Company  executed a Loan
Agreement and Promissory  Note (the "USM Note")  evidencing the terms upon which
the  Company  would  repay the USM  Advances  and upon  which USM would  advance
additional  funds to the  Company on an "as needed"  basis.  The USM Note in the
principal  amount of $955,756 at December 31, 1997 bore interest at a rate of 8%
per annum and was due and  payable on May 4, 1998,  but could be  extended  on a
month-to-month  basis.  The USM  Note is  secured  by a first  priority  lien on
substantially  all of the assets of the Company.  As of December  31, 1999,  the
Company owed USM $1,669,040 of which $1,470,295 is attributable to principal and
$198,745 to accrued unpaid interest on the USM Note.

On or about August 3, 1998, the Company entered into agreements with each of USM
(the "USM  Agreement") and Martucci (the "POS  Agreement").  Pursuant to the USM
Agreement,  USM agreed to forgive the  indebtedness of the Company  evidenced by
the USM Note;  release the security  interests in the  collateral of the Company
securing the USM Note and assign its rights to the Hayden-USM Purchase Agreement
in exchange for 42.5% of the issued and outstanding shares of the Company. Under
the terms of the POS Agreement,  Martucci  agreed to sell to the Company 100% of
the  outstanding  shares  of  POS  and  100%  of  the  assets  in  exchange  for
approximately  42.5% of the issued and  outstanding  shares of the Company.  The
Company  intended to seek  stockholders'  approval of these  transactions at its
Annual Meeting of Stockholders held in October 1998.

In August  1998,  the  Company  filed a  preliminary  proxy  statement  with the
Securities and Exchange  Commission (the "Commission") for its annual meeting of
stockholders,  which included proposals to approve each of the USM Agreement and
the POS Agreement.  Shortly after the filing of the preliminary proxy materials,
the  Commission  informed  the  Company  that the staff of the  Commission  (the
"Staff") would be conducting a review of the proxy  materials and the proposals.
The Company  informed USM and Martucci of the Staff's inquiry and was thereafter
notified that both parties wished to terminate the agreements  under the premise
that the Company could not secure stockholder  approval of the transactions in a
timely manner.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -36-
<PAGE>


On September 21, 1998,  the Company  received a letter from USM  concerning  the
monies  loaned to the Company by USM,  which  included the monies owed to USM by
the  Company  pursuant to the terms of the USM Note and an  additional  $144,280
loaned to the Company  subsequent  to the date of the USM Note.  At a meeting of
the  Board of  Directors  of the  Company  on  October  8,  1998,  a  negotiated
settlement  agreement  was approved by the Board,  whereby USM agreed to convert
the Company's  indebtedness to USM into shares of common stock of the Company at
a  conversion  price  equal to 50% of the  closing  bid price as of the close of
business  October 7, 1998. The price of the Company's  common stock at the close
of business on October 7, 1998 was $1.98, as adjusted per share. Therefore,  the
conversion  rate  under the  settlement  agreement  would be one share of common
stock of the Company for each $1.00,  as adjusted of indebtedness of the Company
to USM.

It was  further  agreed  that the  settlement  plan  would be  implemented  in a
two-step  transaction.   Approximately  $306,160  of  loans  would  be  paid  by
converting that portion into 309,252,  as adjusted shares of common stock of the
Company  resulting  in USM  holding  approximately  19% of the total  issued and
outstanding  shares  of  common  stock of the  Company.  The  conversion  of the
remaining  indebtedness would be predicated upon either (i) stockholder approval
of the issuance of more than 20% of the Company's  common stock in the aggregate
to USM at a  discount  to market  price as  required  by the rules of  corporate
governance  promulgated by the NASDAQ Small Cap Market  ("NASDAQ"),  or (ii) the
issuance of a waiver by the NASDAQ  excepting  the Company for  compliance  with
this rule.  USM also agreed that it would  continue to provide the Company  with
financing  going  forward as further  inducement to  consummate  the  settlement
agreement set forth above.

Due to the fact that the  Company  had already  expended  significant  monies to
conduct a proxy  solicitation  for its annual  meeting  scheduled on October 12,
1998,  the  Company  made  application  to NASDAQ  for a waiver  of the  meeting
requirement described above.

On  October  19,  1998,  the  Company  made a formal  application  to  NASDAQ in
accordance with Rule  4310(C)(25)(H)(ii) of the NASDAQ Stock Market for a waiver
of the  requirement  that the  Company  call a meeting  of its  stockholders  to
approve the issuance of over 20% in the aggregate of its stock to USM at a price
below market price. The rule allows for a waiver of this requirement when, among
other  things,  a  delay  in  securing   stockholder  approval  would  seriously
jeopardize the financial viability of the Company. On or about October 24, 1998,
the NASDAQ Stock Market contacted the Company and indicated that it was inclined
to deny the Company's  application  unless additional  information was submitted
for review.  The Company  thereafter  withdrew  its  application  and  re-opened
negotiations with USM.

On or about June 21, 1999, the Company  entered into a letter of intent with USM
to purchase  substantially  all of its assets in  exchange  for shares of common
stock of the Company equal to 69% of the issued and outstanding shares of common
stock. The letter of intent further contemplated the forgiveness of the USM Note
and release of the security therefore upon the closing of the transaction. On or
about October 5, 1999 USM notified WCM Capital, Inc. that it was withdrawing its
letter of intent.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -37-
<PAGE>


On January 18,  2000,  the  Company,  Martucci and USM entered into an agreement
whereby the Company  agreed to acquire USM in exchange for  7,473,013  shares of
the  Common  Stock or  approximately  85% of the  Company's  common  stock  (the
"Transaction").  The agreement  may be  terminated  by unanimous  consent of the
parties,  in the event of a breach of the  terms of the  contract  by any of the
parties, in the event of an injunction  preventing the closing or if the closing
has not  occurred on or before July 16,  2000.  As a condition  to closing,  the
Company must seek  shareholder  approval of the  Transaction.  In addition,  the
Company has agreed to grant Martucci  piggyback and demand  registration  rights
with respect to the shares he is to receive in the Transaction.  The Company has
filed a proxy  statement  with  respect to the  Transaction  which is  currently
subject to a review by the staff.  Upon  approval of the proxy  statement by the
Commission  the Company  will submit the  Transaction  to its  shareholders  for
approval.


                                     PART IV

Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K

Exhibits

The  following  documents  are  filed as  exhibits  herewith,  unless  otherwise
specified by an asterisk, and are incorporated herein by this reference:

Exhibit
Number   Description of Exhibit

3.1            Amended and Restated  Certificate of Incorporation filed with the
               Delaware Secretary of State on December 4, 1995. (Incorporated by
               reference,  Annual  Report on Form 10KSB for year ended  December
               31, 1995)

3.2            Amended  and  Restated  By-Laws of the Company  (Incorporated  by
               reference, Annual Report on Form 10-K for Year Ended December 31,
               1994, Exhibit 3.2.)

3.3            Amendment  to the  Certificate  of  Incorporation  filed with the
               Secretary of State of Delaware on May 21, 1998.

3.4            Amendment  to the  Certificate  of  Incorporation  filed with the
               Secretary of State of Delaware on October 16, 1998.

3.5            Amendment  to the  Certificate  of  Incorporation  filed with the
               Secretary of State of Delaware on December 17, 1999.

4.1            Form  of  Indenture  dated  January  2,  1990   (Incorporated  by
               reference, Registration Statement on Form S-1, File No. 33-31418,
               Exhibit 4.1.)

10.1           Mining  Lease and Option to  Purchase,  dated  November 12, 1976,
               among  Davis I. And  Audrey I.  Hayden,  husband  and  wife,  and
               Dorothy L. Kennec,  a single woman and trustee for her  children,
               and Gold Developers and Producers  Incorporated  (Incorporated by
               reference, Registration Statement on Form S-1, File No. 33-31418,
               Exhibit 10.1.)

WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -38-
<PAGE>


10.2           Indenture,  dated August 2, 1982,  by and between the Company and
               David I. and  Dorothy  I.  Hayden.  (Incorporated  by  reference,
               Registration  Statement on Form S-1, File No.  33-31418,  Exhibit
               10.2.)

10.3           Agreement  dated  August 2, 1982,  by and between the Company and
               David  I. and  Audrey  I.  Hayden.  (Incorporated  by  reference,
               Registration  Statement on Form S-1, File. No. 33-31418,  Exhibit
               10.3)

10.5           Zeus Joint Venture Agreement, dated February 26, 1993 between the
               company and Island  Investment  Co.  (Incorporated  by reference,
               Current Report on Form 8-K dated July 19, 1993,  File No. 0-9416,
               Exhibit  (a) filed as  exhibit  to  Schedule  13D filed by Gems &
               Minerals Corp.)

10.8           Amendment to Zeus Joint Venture Agreement, dated as of August 31,
               1993,  by and between the Company and Island  Investment  Co. and
               Gems & Minerals Corp. (Incorporated by reference,  Current Report
               on Form 8-K, dated August 31,1993, File No. 0-9416, Exhibit (a)).

10.26          Promissory  Note  dated  July 6, 1996 by the  Company in favor of
               Anderson  Chemical  Co.  in the  aggregate  principal  amount  of
               $20,000. (Incorporated by reference, Annual Report on Form 10-KSB
               for year  ended  December  31,  1996,  File No.  0-9416,  Exhibit
               10.26).

10.28          First  Amendment  to the Joint  Venture  Agreement  of Zeus No. 1
               Investments,  a California general partnership,  dated August 15,
               1996.  (Incorporated  by reference,  Annual Report on Form 10-KSB
               for year ended December 31, 1996, File No. 0-9416, Exhibit 10.28)

10.32          Amendment  dated  November 19,  1996,  mining lease and Option to
               Purchase,  dated November 12, 1996,  between the Company and Mrs.
               Dorothy Kennec. (Incorporated by reference, Annual Report on Form
               10-KSB for year ended December 31, 1996, File No. 0-9416, Exhibit
               10.31).

10.34          Lease Extension Agreement dated November 21, 1997 between Dorothy
               L. Kennec,  individually  and Dorothy L. Kennec,  Trustee and the
               Company.

10.35          Assumption of Debt dated December 1, 1997 between the Company and
               Gems & Minerals Corp.

10.36          Promissory  Note dated March 5, 1998  between the Company and POS
               Financial, Inc.


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -39-
<PAGE>


10.37          Termination  Letter dated March 6, 1998 between William Martucci,
               POS Financial, Inc. and US Mining, Inc. and the Company.

10.38          Letter of intent dated  September  25,  1997,  by and between the
               Company and William C.  Martucci  (Incorporated  by  reference on
               Form 8-K dated October 20, 1997, File No. 0-9416, Exhibit A).

10.39          Letter of intent dated June 21, 1999,  by and between the Company
               and U.S.  Mining,  Inc.  (Incorporated  by  reference on Form 8-K
               dated June 24, 1999, File No. 0-9416).

10.40          Agreement  dated  January 2000, by and between the Company and US
               Mining,  Inc.  (Incorporated  by reference in  Preliminary  Proxy
               dated February 22, 2000.

13             Proxy  Statement  to  Stockholders  of the Company for the fiscal
               year ended  December 31, 1994.  Except for those portions of such
               Proxy  Statement  to  Stockholders,   expressly  incorporated  by
               reference into this Report, such Annual Report to Stockholders is
               solely  for  the  information  of  the  Securities  and  Exchange
               Commission   and  shall   not  be  deemed  a  "filed"   document.
               (Incorporated by reference, Annual Report on Form 10-KSB for Year
               Ended December 31, 1995).

24.1           Consent of Gifford A. Dieterle,  dated June 3, 1994, as an Expert
               with respect to the  geological  reports dated  December 7, 1993,
               and May 16,  1994  filed  as  supplemental  information  with the
               Company's  Annual Report on Form 10-K for the year ended December
               31, 1994. (Incorporated by reference,  Annual Report on Form 10-K
               for Year Ended December 31, 1993, File No. 0-9416, Exhibit 23.)

28.1           Maps and  Geological  Reports  prepared by consultant  Gifford A.
               Dieterle dated  December 7, 1993 and May 16, 1994.  (Incorporated
               by reference,  Annual Report on Form 10-K for Year Ended December
               31, 1993, File No. 0-9416, Exhibit 23.)

* Filed herewith

Reports on Form 8-K



WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -40-
<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                             WCM CAPITAL, INC.
                               (Formerly FRANKLIN CONSOLIDATED MINING CO., INC.)

                                           /s/ Robert Waligunda
                                           -----------------------------------

April 10, 2000
                                           Robert Waligunda, President/Treasurer

Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

/s/ Robert Waligunda
-----------------------------     President, Treasurer           April 10, 2000
    Robert Waligunda              and Director

/s/ Richard Brannon
-----------------------------     Vice President/Secretary       April 10, 2000
    Richard Brannon

/s/ George Otten
-----------------------------     Vice President                 April 10, 2000
    George Otten

/s/ William C. Martucci           Director                       April 10, 2000
-----------------------------
    William C. Martucci

/s/ Ronald Ginsberg               Former Director                April 10, 2000
-----------------------------
    Ronald Ginsberg

/s/ Robert W. Singer              Former Director                April 10, 2000
-----------------------------
    Robert W. Singer


WCM Capital, Inc.
Securities & Exchange Commission
Form 10-KSB - Year Ended 12/31/99


                                      -41-
<PAGE>


                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders
WCM Capital, Inc.


We have  audited the balance  sheets of WCM  Capital,  Inc.  (formerly  Franklin
Consolidated  Mining  Co.,  Inc.)  as of  December  31,  1998,  and the  related
statements of operations,  changes in stockholders'  equity,  and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial  statements  based on our  audit.  We did not  audit  the  accumulated
amounts from inception  through December 31, 1996, which includes an accumulated
deficit as of December 31, 1996 of $(12,260,249).  Those amounts were audited by
other auditors whose report has been furnished to us and our opinion  insofar as
it relates  to those  accumulated  amounts is based  solely on the report of the
other auditors.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit 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,  based on our  audit  and the  report  of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the financial  position of WCM Capital,  Inc., and the results of its operations
and its cash flows for the year 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 1 to the
financial  statements,  the  Company is a  development  stage  enterprise  whose
operations  have  generated  recurring  losses and cash flow  deficiencies  from
inception  and, as of December  31,  1998,  has a  substantial  working  capital
deficiency.  As a result,  it was in default with respect to payments on several
notes and on  convertible  debentures  and  substantially  dependent  on outside
funding for financing.  Such matters raise substantial doubt about the Company's
ability to continue as a going  concern.  Management's  plans  concerning  these
matters are also  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of these uncertainties.



                                          LAZAR LEVINE & FELIX LLP
New York, New York
April 13, 1999