SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A

[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                                           15

Item 4            Submission of Matters to a Vote of Security Holders         19

PART II

Item 5            Market for Registrant's Common Equity and Related           21
                  Stockholder Matters

Item 6            Management's Discussion and Analysis or Plan                22
                  of Operation

Item 7            Financial Statements                                  F-1/F-29

Item 8            Changes in and Disagreements with Accountants               28
                  on Accounting and Financial Disclosure

PART  III

Item 9            Directors, Executive Officers, Promoters, and Control       28
                  Person; Compliance with Section 16(a) of the
                  Exchange Act

Item 10           Executive Compensation                                      30

Item 11           Security Ownership of Certain Beneficial Owners             30
                  and Management

Item 12           Certain Relationships and Related Transactions              31

PART IV

Item 13           Exhibits, Reports on Form 8-K                               34

                  Signatures                                                  37


                                       -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 body of
minerals. The Company completed the Franklin Mill, which is capable of crushing,
processing  and  concentrating  approximately  150 tons of minerals  per 24-hour
period, in 1983.

Operations at the Company's Mining Properties

(1) The Franklin Mining Properties

During fiscal year 1998 and 1999, no  exploration  activities  were conducted at
the Franklin Mine. However, the Company continued its rehabilitation program and
reclamation 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.

                                      -3-

<PAGE>

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  should  mining  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   reclamation  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 are
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 reclamation and remediation  plans and to begin mining
and milling operations at the Franklin Mines due to the depressed price of gold.
Therefore,  the Company 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 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. 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
reclamation  plan for  Tailings  Pond No. 5 as well as outlining  the  temporary
stabilization measures needed to comply with these requirements.

                                       -4-

<PAGE>

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 expects that its application
will be approved in the third quarter of 2000.

The Company has not conducted any 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 an economically viable
commercial  mining  operation  at the Idaho  Springs  mining  facilities  can be
conducted in the future if exploration is successful, however, given the current
economic climate,  it is unlikely that the Company will commence  exploration in
the year 2000.  The Companies will continue to work closely with the Federal and
Colorado state mining regulatory agencies as required by law.

(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 minerals  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  minerals  recovered  within the county only.  These legal changes
prohibited the Company from using the Gold Hill Mill for processing  mineralized
rock 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

                                       -5-

<PAGE>

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 the Borrowers 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. USM is engaged
in the business of holding and investing in mining  properties.  To date,  USM's
sole  business  has been  providing  the  Company  with  financial  support  and
contracting  to  acquire  50% of the  mineral  rights  originally  leased by the
Company under the Hayden/Kennec Leases. See Item 2 - Property; Item 12 - Certain
Transactions  and  Related  Parties.  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.

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  approximately  85% of the issued and outstanding  shares of the
Company on the closing date. See Proposal 1 - The Acquisition.

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

The Company had no full-time  employees.  The Company's executive officers serve
as needed on a part-time basis for no compensation. However, on or about June 1,
2000 the Company  issued 169,750  shares of Common Stock to Richard  Brannon,  a
Vice  President  of the  Company and  153,690  shares of Common  Stock to Joseph
Laura,  a  consultant  of the  Company.  The  shares  were  issued  to  Laura as
compensation  for  services  rendered  and to  Brannon  for  present  and future
services rendered in connection with the Company's mining business. These shares
were  registered  by the  Company  on Form S-8 on or about  June 6,  2000.  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

                                       -6-

<PAGE>

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.

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.

                                       -7-

<PAGE>

Massive Sulfides               High quality ore.

Microcline gneiss              A type of rock found at the Franklin Mine.

Mill                           The plant facility where the metals constituting
                               the ore are removed from mined rock.

Mine Workings                  The areas where minerals are being mined.

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

Mineralized Material           A mineralized body which has been delineated by
  or Deposit                   appropriate drilling and/or underground sampling
                               to support sufficient tonnage and average grade
                               of metals under SEC standards. Such a deposit
                               does not qualify as a reserve until a
                               comprehensive evaluation, based upon unit cost,
                               grade, recovers and other factors, concludes
                               economic feasibility.

Mineralized Rock               Rock which contains the minerals to be mined.

Mineralized Material           Rock in which metallic mineralization is present
                               but may not exist in economic concentration.

Autoclave                      A smelter devise which oxidizes sulfides at a
                               high temperature (roasting) leaving gold
                               contained amendable to Cyanidation.

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.

                                       -8-

<PAGE>

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 and 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.

Production Shaft               The device through which mineralized material 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                       A reserve is that part of a mineral deposit which
                               could be economically and legally extracted or
                               produced at the time of the reserve
                               determination.

                                                     -9-

<PAGE>

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.

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

                                      -10-


<PAGE>

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.

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.

In late 1997, the Company had been in discussions  with Martucci to effectuate a
business  combination  with  certain  of his  entities.  See  Item 12 -  Certain
Relationships and Certain  Transaction.  During these  discussions,  the Company
explained to Martucci the situation  regarding the Hayden/Kennec  leases and the
importance of  maintaining  an interest in the mineral  rights as they represent
over 50% of the mineral  claims  available  to the Company for  exploration  and
development.  It was then agreed that USM would  negotiate  with Mrs.  Hayden to
acquire her interest.

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  of $1,000 per month  required  thereunder  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  December 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. Since November 1997, USM has paid royalty payments to Mrs. Hayden of
approximately $25,000 through December 31, 1999.

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

                                      -11-

<PAGE>

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,  Gems had received an opinion of
counsel from Freeborn & Peters,  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 the  Company  has
continued to acquire  USM, 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.

Ore Deposition in the Area

Most of the minerals  deposition  in the area where the Franklin Mine is located
has been credited to the period of the Laramide Orogeny. Minerals 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  minerals  deposits  are of four types:  (i)  pyritic  gold  minerals;  (ii)
galena-sphalerite minerals; (iii) composite  (pyrite-galena-sphalerite) minerals
and (iv) telluride  minerals.  Pyritic gold minerals are chiefly associated with
pyrite,  chalcopyrite,  and tennentite. The "composite minerals" 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  minerals
are present mostly in the Northeast  corner of the district,  but some telluride
minerals have been noted elsewhere.

The Idaho Springs and Central City 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.

                                      -12-

<PAGE>

There  are at least  four  other  mining  properties  being  sought in the Idaho
Springs,  Central City mining district that may be available for purchase, joint
venture or lease.  The Company has been advised that two of these properties are
located within three miles of the Franklin Mining properties.

Currently,  however,  there is only one active  mine in this area.  The  Company
believes there is development potential in the Idaho Springs Central City mining
district  that may,  if  exploration  is  successful  be a source of ore for the
Franklin  Mill.  The Company is hopeful that nearby  properties  can be obtained
and, combined with the Franklin Mines and, if exploration of these properties is
successful and ore proven to exist,  such  mineralized  material be processed at
the Franklin Mill.

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(0) to 79(0).

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 Reserves of Mineralized Material

Mineralization  of the Franklin Mine and associated  Gem, the Freighter mines is
that 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(0) to 79(0) 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 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  Parallel  mineralized fault fractures,  the so-called  "footwall" and
"hanging wall" veins.  Each of the principal veins has historically  contributed
to  production  in the Gem vein. A second set of true  fissure  veins of a later
date and striking

                                      -13-


<PAGE>

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 mineralized zones therein.

There is no  assurance  that  reserves  exist in the  Franklin  Mine  system.  A
core-drilling  program and a comprehensive  economic evaluation will be required
to determine economic feasibility.

Operations

During  the  years  1998  and  1999,  the  Company  continued   reclamation  and
rehabilitation  of its properties in Idaho Springs in the  anticipation  of more
detailed evaluations of its resource.  The Company also continued to seek custom
milling business from small operators in the general area. The Company's initial
plan is to core drill an area  located on the 5 level of the  Freighters  Friend
Shaft where mineralized material is believed to exist.  Management believes that
an initial capital requirement for core drilling is approximately  $500,000.  To
bring the mill into operating condition is believed to require $750,000.

USM has verbally  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 reclamation 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 methods;  selective  flotation  and,  gravity by table and jig. Both systems
have been operated in a continuous circuit.  After a series of upgrades in 1982,
the Franklin Mill has a processing  capacity (operating for a 24 hour period) of
approximately 150 tons. In the past, the Franklin Mill operated on an eight-hour
schedule  and  processed  approximately  30 tons of  minerals  during  that time
interval.

The Franklin minerals are refractory and therefore difficult to separate. Pyrite
(iron  sulfide)  constitutes  approximately  23% of the weight of the  minerals.
Approximately  35% of the gold  content of the  minerals  remains  locked in the
pyrite as refractory gold and is not recoverable by ordinary means.

Standard milling  procedures are considered for any possible future  operations:
selective  flotation  of a)  lead,  silver,  gold  and b)  zinc  and c)  gravity
concentration  of gold bearing  pyrite.  Gold bearing pyrite  (refractory  gold)
concentrates  would be shipped to a copper  smelter or to an autoclave  Lead and
silver and free gold would go to lead smelter, zinc to a zinc smelter.

                                      -14-


<PAGE>

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 the milling of minerals,  limited-crushing  activities  took place in
early 1996 for the purpose of preparing bulk mineral samples for assay.

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

The Company,  from time to time,  may become  involved in various  legal actions
associated with the normal conduct of its business operations.  No such actions,
other  than  those  set  forth  below,  involve  known  material  gain  or  loss
contingencies not reflected in the Company's financial statements.

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 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


                                      -15-

<PAGE>

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.

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.


                                      -16-


<PAGE>

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.

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.


                                      -17-

<PAGE>

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.

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.

                                      -18-


<PAGE>

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.

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 Mr. Joseph  Martelli 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.

<TABLE>
<CAPTION>
Matter                                                     For                Against            Abstain
------                                                     ---                -------            -------
<S>                                                     <C>                    <C>              <C>
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           ----------
</TABLE>

                                      -19-


<PAGE>

<TABLE>
<S>                                                     <C>                    <C>              <C>
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
</TABLE>

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.

<TABLE>
<CAPTION>
Matter                                                     For                Against           Abstain
------                                                     ---                -------           -------

<S>                                                     <C>                    <C>              <C>
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
</TABLE>

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  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.

                                      -20-


<PAGE>

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

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.

                                      -21-


<PAGE>

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  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

                                      -22-

<PAGE>

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 potential  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 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  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  expenses.  USM has continued to fund the
Company  directly or indirectly  since 1997. USM has 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 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 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.

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,

                                      -23-


<PAGE>

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; 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 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.

Management believes that it has obtained all of the necessary  environmental and
regulatory Permits recently applied for.

The Company has conducted no exploration  activities during the first quarter of
2000;  however,  the  Company  continued  its  efforts  to bring  the site  into
compliance with groundwater regulations and stabilization of tailings ponds.

During  the  first  quarter  2000 the DMG  requested  that the  Franklin  Mining
operation  be  placed  on  temporary  suspension  due to its  lengthy  period of
dormancy (a 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 filing of a notice of such intent with the DMG). The Company responded
immediately and filed the necessary  application for Temporary Secession.  (As a
condition to granting the Company's  request,  the DMG required that the Company
address certain issues with respect to groundwater and tailings  disposal ponds.
Thus, the Company's  efforts have been focused on addressing these issues).  The
department  has been in contact  with the  Company  and a  temporary  suspension
status is expected to be granted shortly.  This status will allow the Company to
retain all its permits.  However, given the current economic climate and lack of
reserves,  it is unlikely that the Company will  commence any  operations in the
year 2000.

Management  estimates  that the Company will incur general,  administrative  and
other costs and expenditures, exclusive of any costs and expenditures related to
its Idaho Springs Mining  properties and interest,  at the rate of approximately
$20,000 per month for the remainder of 2000.

U.S. Mining Co. has verbally  pledged to provide  financing to the Company on an
as needed basis until on or about  December 31, 2000. The Company cannot assure,
however,  that USM will fulfill its commitment to fund the Company's  operations
through  year-end  2000.  The funds  received  from USM will cover the  general,
administrative  and other costs approximated at $20,000 per month plus interest.
Additional  monies  will be needed  for  exploration  of the  Franklin  Mine and
mineral properties.

There can be no assurance that the Company will have adequate funds available to
repay the funds advanced by USM or that USM will fulfill its obligations to fund
the Company through December 31, 2000. In the event that the Company defaults on
its  obligations,  USM may foreclose on the assets secured by the USM note. Such
foreclosure  actions by USM would have a material  adverse  effect on the future
operations  of the Company  and the  Company's  ability to explore the  Franklin
Mines.

                                      -24-

<PAGE>

Plan of Operations

The Company has completed  most of the actions  required by the DMG and, 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.  Should the Company be unable to complete all of the
actions  required by the DMG, or if  additional  work is required but not timely
performed,  the Company may face several violations by the DMG which can lead to
a cease and desist order or, result in the loss of our mining permit.

The Company  believes that the best way for its to achieve  profitability in the
short term  would be to seek to acquire  businesses  which are  operational  and
generating  revenues.  Since the prices of metals and other  minerals are low at
this time, the Company is open to entertaining possible business combinations or
joint ventures with  operational  businesses,  irrespective  of whether a target
business is operating in our business segment.

The Company has no immediate plans to abandon our efforts at our Colorado mining
properties or to sell a portion or all of our interests in these properties.  We
believe that by acquiring a business or businesses  that can generate  revenues,
we would be able to attract  third party  investment  and possibly  reinvest any
profits in our mining businesses.

In the event that the Company acquired  additional working capital,  the Company
would commence a core-drilling  plan to prove the existence of a commercial body
of ore, however,  there can be no assurance that funding will be available or an
adequate quantity to undertake this project

Results of Operations:

The Company had no active mining or milling operations during 2000.

The Company had a net loss of $180,147 for the three months ended March 31, 2000
as  compared  to a net loss of  $81,196  during  the same  period  in 1999.  The
increase of $98,951 was attributable to:

(a)  A decline in mine  expenses and  remediation  costs from $14,677  (1999) to
     $480 (2000) resulted from a decrease in mine site activities.

(b)  Depreciation  expense increased from $6,677 in 1999 to $13,447 in the first
     quarter of 2000 due to Management's  recording of  depreciation  expense on
     idle equipment in 2000.

(c)  General  and  administrative  expenses  increased  from  $25,642 in 1999 to
     $126,768  in  2000  an  increase  of  $101,126.   This  increase   resulted
     principally  from an  increase  in  legal,  professional  and  other  costs
     associated with the filing of a proxy statement (approximately $61,000) and
     the reversal of previously accrued costs during the quarter ended March 31,
     1999 (approximately $38,000).

(d)  Interest  expense  increased from $34,599 in 1999 to $40,137 in 2000 due to
     additional interest on the USM note.

                                      -25-


<PAGE>

Results of Operations 1999 vs. 1998.

The Company had no active mine 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 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.

     (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 mine 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 $377,158 was attributable to an increase
in general and  administrative  expense in 1998 of $274,230 and interest expense
of $87,973,  offset by the  effects of a loss on the sale  and/or  write down of
mining and  milling  and other  property  and  equipment  ($465,000  in 1998 and
$1,200,000  in 1997) and a  decrease  in 1998 mine  expenses  and  environmental
remediation costs of $100,385.

General and  administrative  expenses  were  $642,592 for 1998 as compared  with
$368,353  during 1997 due to increases in  professional  fees. In addition,  the
Company  incurred a bad debt  expense of $350,000 in 1998 in  connection  with a
note  receivable  from the sale of the Gold  Hill  Mill.  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.


                                      -26-

<PAGE>

Item 7. Financial Statements and Supplementary Data

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



                                      -27-

<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 - 10


Notes to Financial Statements                                                          F-12/F-29
</TABLE>



<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



<PAGE>

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


                                   - ASSETS -

<TABLE>
<CAPTION>
                                                                                       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


             See auditors' report and notes to financial statements.
</TABLE>

                                      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)0
                                                                                ============      ============


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


             See auditors' report and notes to financial statements.
</TABLE>

                                      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


             See auditors' report and notes to financial statements
</TABLE>

                                      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                      102,941      1,089         598,571            --            --          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                       1,318,767     13,188      18,390,360     (14,168,724)         --        4,234,824

Net loss                                              --         --              --        (1,531,317)         --       (1,531,317)
                                                 ---------    -------    ------------    ------------    ----------   ------------
BALANCE, DECEMBER 31, 1998                       1,318,767     13,188      18,390,360     (15,700,041)         --        2,703,507

Net  Loss                                             --         --              --          (501,926)         --         (501,926)

                                                 ---------    -------    ------------    ------------    ----------   ------------

BALANCE, DECEMBER 31, 1999                       1,318,767    $13,188    $ 18,390,360    $(16,201,967)   $     --     $  2,201,581
                                                 =========    =======    ============    ============    ==========   ============


             See auditors' report and notes to financial statem
</TABLE>
                                      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)
                                                                           ------------    ------------    ------------


             See auditors' report and notes to financial statements

</TABLE>

                                      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
                                                          ============    ============    ============

NON-CASH ITEMS:

</TABLE>

    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"),  has verbally 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. 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 of which 28 are  patented  (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.  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.

     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, 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


<TABLE>
<CAPTION>

NOTE 3 - ACQUISITIONS OF MINING AND MILLING PROPERTIES (continued):
     <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 and can exert
     significant influence over the Company. Additional amounts were loaned to


                                      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):

     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.

     All royalty payments made under the  Hayden/Kennec  Leases were expenses as
     incurred and included in mine expenses and environmental  remediation costs
     in the accompanying Statements of Operations.


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.

     All royalty payments made under the  Hayden/Kennec  leases were expenses as
     incurred  in mine  expenses  and  environmental  remediation  costs  in the
     accompanying Statement of Operations.

     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.


                                      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):

(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.

     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:

                                                         Shares        Amount
                                                       ----------   -----------

     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
                                                       ==========   ===========


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>


                           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



                                      F-29
<PAGE>



<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. Certified Public Accountants as
its independent auditors for fiscal year 1999.

                                    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


                                      -28-

<PAGE>

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.

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.

                                      -29-


<PAGE>

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.

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


                                      -30-

<PAGE>

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.

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 began discussions  directly 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 acquisition was consummated.

                                      -31-


<PAGE>

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 13, 1997 USM entered into an agreement with Audrey Hayden to acquire
her interest in the 28 patented claims comprising the Hayden/Kennec  Leases. See
Item 2 - Property - Hayden/Kennec Leases.

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.

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

                                      -32-

<PAGE>

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. The Company sought to continue  discussions with Martucci
in hopes of preventing a foreclosure on the USM Note. The Company was successful
in convincing Martucci to continue funding the Company in hopes that the Company
could begin operations and generate revenues to repay the USM Not.

Mr.  Martucci  was elected to the Board of  Directors of the Company in October,
1998.

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.

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 which is  approximately  85% of the Company's common stock (the
"Transaction"). The terms of this agreement were negotiated between Mr. Martucci
and Mr. Waligunda and was approved by the Board of Directors of the Company. The
agreement may be terminated by unanimous consent of the parties, in the event of
a breach of the terms of

                                      -33-


<PAGE>

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.

In March  2000,  the  Company  announced  that it has  reached an  agreement  in
principal with Martucci to acquire Shoppers Online, Inc. and Freebees, Inc., two
related Internet companies 100% owned by him. Shoppers Online was in the process
of launching an on line shopping portal  (www.shoppersonline.com)  and incubator
for the development of business-to-business e-commerce. Freebees is developing a
give-away, fulfillment and refund web site to be linked to Shoppers Online which
will allow  Internet  consumers to  participate  in  promotional  and redemption
programs offered by various companies operating in both e-commerce and brick and
mortar retail businesses. To memorialize our agreement, the Company and Martucci
executed  a letter  of intent on April 17,  2000.  It was  anticipated  that the
Company and  Martucci  would amend the USM Stock  Purchase  Agreement to include
these  Internet   businesses  as  part  of  the  stock  for  stock   transaction
contemplated thereby.

After completing our  investigation  of Shoppers Online and Freebees,  it became
evident that both Shoppers  Online and Freebees  were both in the  developmental
stages and were not  generating any revenues.  Moreover,  we believed that these
companies  would require  additional  investments of capital  before  full-scale
operations  could  begin.  At  this  point,  the  Company  determined  that  the
acquisition of these companies would not add any value to our Company as neither
company could provide us with much needed revenues. Therefore, we terminated our
letter of intent and decided not to proceed with this transaction.  However,  we
remain committed to acquiring USM.


                                     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.)


                                      -34-


<PAGE>

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.)

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)


                                      -35-


<PAGE>

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.

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

                                      -36-

<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

October   20, 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          October 20, 2000
    Robert Waligunda              and Director

/s/ Richard Brannon
------------------------          Vice President/Secretary      October 20, 2000
    Richard Brannon

/s/ George Otten
------------------------          Vice President                October 20, 2000
    George Otten

/s/ William C. Martucci           Director                      October 20, 2000
------------------------
    William C. Martucci

/s/ Ronald Ginsberg               Former Director               October 20, 2000
------------------------
    Ronald Ginsberg

/s/ Robert W. Singer              Former Director               October 20, 2000
------------------------
    Robert W. Singer


                                      -37-