SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               FORM 10-KSB AMENDED

            [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 12/31/95                    Commission File No. 0-9416

                     FRANKLIN CONSOLIDATED MINING CO., INC.
                 (Name of small business issuer in its charter)

         DELAWARE                                               13-2878202
(State or other jurisdiction of                                (IRS 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:

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

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.    $ 1,060.00

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

            DOCUMENTS INCORPORATED BY REFERENCE IN PART III

Proxy Statement  furnished to Security holders of the Company in connection with
the 1995 Annual Meeting of Shareholders of the Company, held November 30, 1995


<PAGE>


                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)


                          INDEX TO FINANCIAL STATEMENTS
                                    (Item 7)
                                                                         PAGE
                                                                         ----

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS                                F-2/4

BALANCE SHEET
    DECEMBER 31, 1995                                                     F-5

STATEMENTS OF OPERATIONS
    YEARS ENDED DECEMBER 31, 1995 AND 1994 AND
    PERIOD FROM DECEMBER 1, 1976 (INCEPTION) TO
    DECEMBER 31, 1995                                                     F-6

STATEMENTS OF STOCKHOLDERS' EQUITY
    YEARS ENDED DECEMBER 31, 1995 AND 1994 AND
    PERIOD FROM DECEMBER 1, 1976 (INCEPTION) TO
    DECEMBER 31, 1995                                                    F-7/13

STATEMENTS OF CASH FLOWS
    YEARS ENDED DECEMBER 31, 1995 AND 1994 AND
    PERIOD FROM DECEMBER 1, 1976 (INCEPTION) TO
    DECEMBER 31, 1995                                                    F-14/15

NOTES TO FINANCIAL STATEMENTS                                            F-16/29


                                     *  *  *



                                       F-1


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders
Franklin Consolidated Mining, Co., Inc.

We have audited the accompanying  balance sheet of FRANKLIN  CONSOLIDATED MINING
CO., INC. (A  Development  Stage  Enterprise)  as of December 31, 1995,  and the
related  statements of operations,  stockholders'  equity and cash flows for the
year  ended  December  31,  1995  and for  the  period  from  December  1,  1976
(inception)  to  December  31,  1995.   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 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,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Franklin  Consolidated  Mining
Co., Inc. as of December 31, 1995,  and its results of operations and cash flows
for the year ended  December  31, 1995 and for the period from  December 1, 1976
(inception)  to  December  31,  1995,  in  conformity  with  generally  accepted
accounting principles.

As discussed  in Note 6, the Company has been  notified by agencies of the State
of Colorado that it must correct violations of certain environmental regulations
and  increase  its land  reclamation  bond from  $93,000 to $252,000 to maintain
certain  mining  permits.  As of April 10, 1996,  the Company had not posted the
required  bond. In addition,  management had not been able to determine what the
ultimate  costs  of  correcting  the  violations  will be or what  the  ultimate
effects, if any, will be on the Company's financial statements if the Company is
not  able to post the bond and  take  the  appropriate  corrective  actions.  No
provision  has  been  made  in the  accompanying  financial  statements  for any
liability or asset impairment that may result from this matter.

                                       F-2


<PAGE>


The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern.  As further 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 its
inception and a substantial  working capital deficiency as of December 31, 1995.
As a result,  it is in default  with  respect  to  payments  on its  outstanding
convertible  debentures,  delinquent  with respect to the payment of real estate
taxes,  in need of financing in  connection  with the  reclamation  bond and the
costs of eliminating the violations of  environmental  regulations  described in
the preceding paragraph and substantially dependent on its joint venture partner
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.

As  explained  in  Note  4,  the  accompanying   financial   statements  reflect
restatements of amounts reflected in the financial  statements  originally filed
by the Company with the  Securities  and  Exchange  Commission  attributable  to
changes in the prices  used by the  Company to value  shares of common  stock it
issued to settle obligations and pay for services.



                                                    J. H. COHN LLP

Roseland, New Jersey
March 23, 1996, except for the
    environmental matters described
    in Note 6 as to which the date
    is April 10, 1996


                                       F-3


<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders
Franklin Consolidated Mining Co., Inc.
New York, New York

We have audited the accompanying statement of operations,  stockholders' equity,
and cash flows of Franklin  Consolidated  Mining Co., Inc. (A Development  Stage
Enterprise) for the year ended December 31, 1994. 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 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,  the financial  statements  referred to above present fairly, in
all  material  respects,  the results of  operations  and cash flows of Franklin
Consolidated  Mining Co., Inc. (A  Development  Stage  Enterprise)  for the year
ended  December  31,  1994 in  conformity  with  generally  accepted  accounting
principles.


                                     WOLINETZ, GOTTLIEB & LAFAZAN, P.C.


Rockville Centre, New York
March 8, 1995


                                       F-4


<PAGE>


                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                                  BALANCE SHEET
                                DECEMBER 31, 1995


                                     ASSETS
Current assets - cash                                          $    118,176
Mining, milling and other property and equipment, net of
    accumulated depreciation and depletion of $1,715,194          3,848,114
Mining reclamation bonds                                             45,000
                                                               ------------
           Total                                               $  4,011,290
                                                               ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Convertible debentures                                     $    145,000
    Accounts payable and accrued expenses                           298,016
    Loans payable to joint venture partner                          313,688
                                                               ------------
           Total current liabilities                                756,704

Convertible notes                                                   200,000
Excess of equity in net losses of joint venture
    over investment                                                 120,270
                                                               ------------
          Total liabilities                                       1,076,974
                                                               ------------
Commitments and contingencies

Stockholders' equity:
    Common stock, par value $.01 per share; 100,000,000
        shares authorized; 69,135,920 shares issued and
        outstanding                                                 691,359
    Additional paid-in capital                                   13,189,102
    Deficit accumulated in the development stage                (10,946,145)
                                                               ------------
           Total stockholders' equity                             2,934,316
                                                               ------------
           Total                                               $  4,011,290
                                                               ============


See Notes to Financial Statements.


                                       F-5


<PAGE>


                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                            STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                        Cumulative
                                                                           from
                                            1995          1994          Inception  
                                       ------------    ------------    ------------
<S>                                    <C>             <C>             <C>          
Revenues:
    Sales                                                              $    876,082
    Interest income                    $      1,060    $        851         538,536
    Other income                                                             75,000
                                       ------------    ------------    ------------
           Totals                             1,060             851       1,489,618
                                       ------------    ------------    ------------
Expenses:
    Mine expenses                                                         3,360,793
    Write-down of inventories                                               223,049
    Depreciation, depletion and
        amortization                        122,143         121,855       1,910,543
    General and administrative
        expenses                            227,287         151,062       4,297,731
    Interest                                342,034          67,861         743,200
    Amortization of debt issuance
        expense                                               6,843         683,047
    Equity in net loss of joint
        venture                              15,540          34,826         120,270
    Loss on settlement of claims
        by joint venture partner            936,000                         936,000
    Loss on settlement of litigation                                        100,000
    Loss on investment in oil and
        gas wells                                                            61,130
                                       ------------    ------------    ------------
           Totals                         1,643,004         382,447      12,435,763
                                       ------------    ------------    ------------
Net loss                               $ (1,641,944)   $   (381,596)   $(10,946,145)
                                       ============    ============    ============
Weighted average shares outstand-
    ing                                  49,035,351      48,556,123
                                       ============    ============
Net loss per common share              $       (.03)   $       (.01)
                                       ============    ============
</TABLE>


See Notes to Financial Statements.


                                       F-6


<PAGE>


                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                         <C>        <C>            <C>            <C>                        <C>        
Issuance of common
    stock:
    Cash                    155,000    $     1,550    $    41,550                                $    43,100
    Noncash - re-
        lated parties       925,000          9,250                                                     9,250
        in exchange
        for shares of
        Gold Devel-
        opers and
        Producers,
        Inc               1,095,000         10,950          6,484                                     17,434

Net loss                                                                $(45,584)                    (45,584)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
  31, 1977                2,175,000         21,750         48,034        (45,584)                     24,200

Issuance of com-
    mon stock:
    Pursuant to
        public offer-
        ing, net of
        underwriting
        expenses of
        $11,026             588,200          5,882        278,113                                    283,995
     Cash                   225,000          2,250        240,627                                    242,877
     Noncash                  5,000             50          4,950                                      5,000
Net loss                                                                 (66,495)                    (66,495)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1978              2,993,200         29,932        571,724      (112,079)                     489,577

Issuance of common
    stock:
    Cash                    231,850          2,318        438,932                                    441,250
    Noncash - re-
        lated parties        40,000            400         59,600                                     60,000
    Noncash - other           6,675             67         13,283                                     13,350

Net loss                                                                (128,242)                   (128,242)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1979              3,271,725         32,717      1,083,539      (240,321)                     875,935

Issuance of com-
    mon stock:
    Cash                    289,750          2,898        837,102                                    840,000
    Noncash                  59,500            595        118,405                                    119,000

Net loss                                                                (219,021)                   (219,021)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1980              3,620,975         36,210      2,039,046       (459,342)                  1,615,914
</TABLE>


                                       F-7                                   
                                                                             
                                                                             
<PAGE>                                                                       
                                                                             
                                                                             
                                                                             
                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                         <C>        <C>            <C>            <C>                        <C>        
Issuance of com-
    stock:
    Cash                    65,625    $       656    $   261,844                                 $   262,500
                        -----------    -----------    -----------    -----------                -----------
Balance, pre-
    stock split          3,686,600         36,866      2,300,890    $  (459,342)                   1,878,414

Issuance of common
    stock:
    Pursuant to a
        four-for-one
        stock split     11,059,800        110,598       (110,598)
    Cash                   578,000          5,780        552,220                                     558,000
    Noncash                104,000          1,040        102,960                                     104,000

Commission on sale
    of common stock                                      (57,300)                                    (57,300)

Net loss                                                                (288,105)                   (288,105)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1981            15,428,400        154,284      2,788,172        (747,447)                  2,195,009

Issuance of common
    stock:
    Cash                   861,006          8,610        755,516                                     764,126
    Noncash                162,000          1,620        160,380                                     162,000

Commission on
    sale of common
    stock                                                (56,075)                                    (56,075)

Net loss                                                                (287,291)                   (287,291)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1982            16,451,406        164,514      3,647,993      (1,034,738)                  2,777,769

Issuance of com-
    mon stock:
    Cash                 1,273,134         12,732      1,176,818                                   1,189,550
    Noncash                 70,834            708         70,126                                      70,834
    Exercise of
        stock op-
        tions by:
        Related par-
           ties            267,500          2,675        264,825                                     267,500
        Others               4,000             40          3,960                                       4,000

Commission on sale
    of common stock                                     (124,830)                                   (124,830)

Net loss                                                                (749,166)                   (749,166)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1983            18,066,874        180,669      5,038,892      (1,783,904)                  3,435,657
</TABLE>


                                       F-8


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                         <C>        <C>            <C>            <C>                        <C>        

Issuance of common
    stock:
    Cash                  1,201,700   $     12,017   $  1,139,683                               $  1,151,700 
    Noncash                  27,500            275         27,225                                     27,500
    Exercise of
        stock options
        by related
        parties             200,000          2,000        198,000                                    200,000

Commission on sale
    of common stock                                       (90,950)                                   (90,950)

Net loss                                                               $(301,894)                   (301,894)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1984             19,496,074        194,961      6,312,850     (2,085,798)                  4,422,013

Issuance of com-
    mon stock:
    Cash                    421,308          4,213        295,866                                    300,079
    Noncash                  10,000            100          7,400                                      7,500
    Exercise of
        stock op-
        tions by:
        Related par-
           ties             200,000          2,000        148,000                                    150,000
        Others                1,000             10            740                                        750

Commission on sale
    of common stock                                        (3,462)                                    (3,462)

Net loss                                                                (133,929)                   (133,929)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1985             20,128,382        201,284      6,761,394     (2,219,727)                  4,742,951

Issuance of common
    stock:
    Cash                    569,000          5,690        294,810                                    300,500
    Noncash - re-
        lated parties       160,000          1,600         78,400                                     80,000
    Noncash - others        135,000          1,350         52,650                                     54,000

Net loss                                                                (227,788)                   (227,788)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1986             20,992,382        209,924      7,187,254     (2,447,515)                  4,949,663
</TABLE>

                                       F-9


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                    <C>             <C>             <C>            <C>          <C>              <C>        
Issuance of common
    stock:
    Cash                  2,604,368   $     26,044   $  1,261,257                               $  1,287,301
    Noncash - re-
        lated parties       202,000          2,020         68,880                                     70,900
    Noncash - other          37,500            375         36,875                                     37,250

Commission on sale
    of common stock                                      (110,243)                                  (110,243)

Net loss                                                               $(730,116)                   (730,116)
                        -----------    -----------    -----------    -----------                -----------
Balance, December
    31, 1987             23,836,250        238,363      8,444,023     (3,177,631)                  5,504,755

Issuance of common
    stock - noncash
    - related par-
    ties                    200,000          2,000         48,000                                     50,000

Net loss                                                                (386,704)                   (386,704)

Purchase of
    50,000 shares of
    treasury stock -
    at cost                                                                           $(12,500)      (12,500)
                        -----------    -----------    -----------    -----------   ----------- ------------
Balance, December
    31, 1988             24,036,250        240,363      8,492,023     (3,564,335)      (12,500)    5,155,551

Issuance of common
    stock:
    Cash                    678,000          6,780        103,720                                    110,500
    Noncash - others        283,666          2,836         31,030                                     33,866
    Noncash - re-
        lated parties       210,000          2,100         29,400                                     31,500
    Private place-
        ment:
        Cash              2,275,000         22,750                                                    22,750
        Debt issuance
           expense                                        455,000                                    455,000
    Conversion of
        debentures        1,050,000         10,500         94,500                                    105,000
    Exercise of
        stock options       300,000          3,000         42,000                                     45,000

Commission on sale
    of common stock                                        (1,500)                                    (1,500)
</TABLE>


                                      F-10


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995



<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                     <C>           <C>             <C>            <C>                       <C>        
Compensation re-
    sulting from
    stock options
    granted                                               $39,000                                    $39,000

Net loss                                                            $ (1,279,804)                 (1,279,804)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1989             28,832,916        288,329      9,285,173     (4,844,139)  $   (12,500)    4,716,863

Sale of Under-
    writer's stock
    warrants                                                  100                                        100

Issuance of common
    stock:
    Cash                    335,000          3,350         41,875                                     45,225
    Noncash - others         39,855            399          5,579                                      5,978
    Conversion of
        debentures          160,000          1,600         30,400                                     32,000

Net loss                                                              (1,171,962)                 (1,171,962)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1990             29,367,771        293,678      9,363,127     (6,016,101)      (12,500)    3,628,204

Issuance of common
    stock:
    Cash - others         1,799,576         17,996         78,935                                     96,931
    Cash - related
        parties           1,800,000         18,000         72,000                                     90,000
    Noncash -
        others            1,183,724         11,837         47,350                                     59,187
    Conversion of
        debentures        3,731,000         37,310        588,690                                    626,000
    Exercise of
        stock options       250,000          2,500         10,000                                     12,500
    Conversion of
        notes payable       250,000          2,500         12,500                                     15,000

Net loss                                                                (764,926)                   (764,926)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1991             38,382,071        383,821     10,172,602     (6,781,027)      (12,500)    3,762,896

Issuance of common
    stock:
    Cash - others         2,021,923         20,219        149,389                                    169,608
    Cash - related
        parties             630,000          6,300         42,700                                     49,000
    Noncash -
        others            1,729,609         17,296        348,762                                    366,058
    Noncash - re-
        lated parties        12,120            121            485                                        606
</TABLE>

                                      F-11


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                     <C>           <C>             <C>            <C>                       <C>        
Noncash - exer-
    cise of op-
    tions by re-
    lated parties         2,050,000   $     20,500   $     82,000                               $    102,500
Conversion of
    debentures              540,000          5,400        156,600                                    162,000
Commission on
    sale of com-
    mon stock -
    related par-
    ties                                                   (7,123)                                    (7,123)

Net loss                                                            $ (1,343,959)                 (1,343,959)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1992             45,365,723        453,657     10,945,415     (8,124,986)  $   (12,500)    3,261,586

Issuance of common
    stock:
    Cash - others           873,400          8,734        125,230                                    133,964
    Cash - related
        parties             777,000          7,770         69,930                                     77,700
    Noncash - others        150,000          1,500         13,500                                     15,000
    Noncash - set-
        tlement of
        litigation        1,000,000         10,000         90,000                                    100,000
    Noncash - exer-
        cise of op-
        tions by re-
        lated parties       200,000          2,000          8,000                                     10,000
    Conversion of
        debentures          140,000          1,400         33,600                                     35,000
    Conversion of
        loan                100,000          1,000          9,000                                     10,000

Net loss                                                                (797,619)                   (797,619)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1993             48,606,123        486,061     11,294,675     (8,922,605)      (12,500)    2,845,631

Retirement of
    treasury stock          (50,000)          (500)       (12,000)                      12,500

Net loss                                                                (381,596)                   (381,596)
                       ------------   ------------   ------------   ------------  ------------  ------------
Balance, December
    31, 1994             48,556,123        485,561     11,282,675     (9,304,201)                  2,464,035
</TABLE>


                                      F-12


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                       Deficit
                                                                     Accumulated
                                                      Additional       in the
                                         Common        Paid-in       Development     Treasury
                          Shares          Stock        Capital          Stage         Stock        Total   
                        -----------    -----------    -----------    -----------    ----------  -----------
<S>                     <C>           <C>             <C>            <C>           <C>          <C>
Issuance of common
    stock:
    Settlement of
        claims by
        joint venture
        partner           6,000,000   $     60,000   $    876,000                                $   936,000
    Repayments of
        loan (includ-
        ing imputed
        interest) from
        joint venture
        partner           3,200,000         32,000        467,200                                    499,200
    Repayments of
        long-term debt
        and accrued
        interest - re-
        lated parties     8,679,797         86,798        590,227                                    677,025
    Exchange of
        shares for
        profit parti-
        cipation in-
        terests           2,700,000         27,000        (27,000)
    Net loss                                                        $ (1,641,944)                 (1,641,944)
                       ------------   ------------   ------------   ------------  ------------  ------------
    Balance, Decem-
        ber 31, 1995     69,135,920   $    691,359   $ 13,189,102   $(10,946,145)  $     --     $  2,934,316
                       ============   ============   ============   ============  ============  ============
</TABLE>


See Notes to Financial Statements.

                                      F-13


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                            STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995


<TABLE>
<CAPTION>
                                                                          Cumulative
                                                                             from
                                                 1995           1994       Inception
                                              -----------    -----------  ------------    
<S>                                           <C>              <C>          <C>           
Operating activities:
    Net loss                                  $(1,641,944)     $(381,596)   $(10,946,145) 
    Adjustments to reconcile net
        loss to net cash used in oper-
        ating activities:
        Depreciation and depletion                122,143        121,855       1,910,543
        Amortization of debt issuance
           expense                                                 6,843        683,047
        Value of common stock issued
           for:
           Services and interest                  249,600                      1,219,877
           Settlement of litigation                                              100,000
           Settlement of claims by
               joint venture partner              936,000                        936,000
        Compensation resulting from
           stock options granted                                                 311,900
        Value of stock options granted
           for services                                                          112,500
        Equity in net loss of joint
           venture                                 15,540         34,826         120,270
        Other                                                                     (7,123)
        Changes in operating assets
           and liabilities:
           Other current assets                        71            924
           Accounts payable and accrued
               expenses                           138,305         72,164         461,749
                                              -----------    -----------    ------------  
                  Net cash used in operat-
                    ing activities               (180,285)      (144,984)     (5,097,382)
                                              -----------    -----------    ------------  
Investing activities:
    Purchases and additions to min-
        ing, milling and other proper-
        ty and equipment                                                      (5,035,354)
    Purchases of mining reclamation
        bonds                                                    (16,000)        (45,000)
    Decrease in security deposits                                  3,667
    Deferred mine development costs
        and other expenses                       (234,435)                      (255,319)
                                              -----------    -----------    ------------  
                  Net cash used in invest-
                    ing activities               (234,435)       (12,333)     (5,335,673)
                                              -----------    -----------    ------------  
</TABLE>


                                      F-14


<PAGE>


                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                            STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1995 AND 1994
                  AND PERIOD FROM DECEMBER 1, 1976 (INCEPTION)
                              TO DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                                                            Cumulative
                                                                               from
                                                 1995           1994         Inception
                                              -----------    -----------    ------------
<S>                                           <C>              <C>          <C>         
Financing activities:
    Issuances of common stock                                                $ 8,460,657
    Issuance of Underwriter's stock
        warrants                                                                     100
    Commissions on sales of common
        stock                                                                   (381,860)
    Purchases of treasury stock                                                  (12,500)
    Payments of deferred under-
        writing costs                                                            (63,814)
    Proceeds from exercise of
        stock options                                                            306,300
    Issuance of convertible de-
        bentures and notes                      $ 200,000                      1,305,000
    Proceeds of loans from joint
        venture partner                           331,980      $ 156,581         526,288
    Payments of debt issuance
        expenses                                                                (164,233)
    Proceeds of other notes and
        loans payable                                              6,000         688,000
    Repayments of other notes and
        loans payable                                            (10,000)       (120,000)
    Proceeds of loans from affiliate                               3,475          55,954
    Repayments of loans from affili-
        ate                                                                      (48,661)
           Net cash provided by financ-
               ing activities                     531,980        156,056      10,551,231
                                              -----------    -----------    ------------

Increase (decrease) in cash                       117,260         (1,261)        118,176

Cash, beginning of period                             916          2,177          --    
                                              -----------    -----------    ------------

Cash, end of period                             $ 118,176      $     916    $    118,176
                                              ===========    ===========    ============


Supplemental disclosure of cash flow data:
    Interest paid                               $   4,441      $  19,577    $    298,868
                                              ===========    ===========    ============
</TABLE>


See Notes to Financial Statements.

                                      F-15


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS


Note 1 -  Organization and basis of presentation:

          Organization:
         

          Franklin  Consolidated  Mining Co.,  Inc. (the  "Company"),  which was
          originally  incorporated  on  December  1, 1976  under the laws of the
          State  of  Delaware,   is  principally  engaged  in  the  exploration,
          development  and mining of precious and nonferrous  metals,  including
          gold, silver,  lead, copper and zinc. The Company owns directly or has
          an indirect  interest in a number of precious  and  nonferrous  metals
          properties.

          The Company holds the exclusive  right to explore,  develop,  mine and
          extract all minerals  located in 28 patented mining claims  comprising
          approximately  322  acres,  in which  the  Company  holds  100%  lease
          interests  (the  "Hayden/Kennec  Leases") and 23  additional  owned or
          leased mining properties  (collectively,  the "Franklin Mine"), all of
          which are located near Idaho Springs in Clear Creek County,  Colorado.
          It also constructed a crushing and floatation mill which is located on
          the site of the Franklin Mine (the "Franklin Mill").

          During  February  1993,  the  Company  entered  into a  Joint  Venture
          Agreement with Island Investment Corp.  ("Island"),  which at the time
          was an unaffiliated  company,  and formed Zeus No. 1 Investments  (the
          "Joint Venture"), a California general partnership, for the purpose of
          developing  the Franklin Mine and Mill.  Among other things,  the Zeus
          Joint Venture  Agreement (i) required Island to provide both technical
          and financial support to the Joint Venture,  (ii) required the Company
          to  contribute to the Joint Venture the rights to the exclusive use of
          its assets  (including  its lease  interests)  related to the Franklin
          Mine and Mill and (iii)  originally  provided that after the return of
          any  initial  capital  contributions  and certain  priority  payments,
          Island and the Company  would  receive 50% of any  partnership  income
          until each party had received  $15,000,000;  thereafter Island and the
          Company would receive 73% and 27%,  respectively,  of any  partnership
          income. In May 1993, Island assigned its interest in the Joint Venture
          to its 91%-owned subsidiary, Gems & Minerals Corp. ("Gems").

          Effective in August 1994,  the Company and Island  agreed to amend the
          Zeus Joint Venture  Agreement to provide for, among other things,  the
          waiver of priority  payments  and an  adjustment  to the  distribution
          arrangement  whereby 70% and 30% of the Joint Venture's income or loss
          (as defined) would be allocated to Gems and the Company, respectively.
          Effective in September  1995,  the Company,  Island and Gems agreed to
          further amend the Zeus Joint Venture  Agreement to provide for,  among
          other things, the allocation of 82.5% and 17.5% of the Joint Venture's
          income or loss (as defined) to Gems and the Company, respectively (see
          Note 4).

                                      F-16


<PAGE>




                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 1 -  Organization  and  basis  of  presentation  (continued):  

          Organization (concluded):
     
          During 1993,  operations at the mining properties  consisted primarily
          of the efforts by the Joint  Venture to develop  and  improve  mineral
          recovery  methodology,  which were financed primarily by Island's cash
          capital  contributions  of approximately  $430,000.  During 1994, such
          operations  consisted  primarily  of repair  and  remediation  work to
          comply  with  environmental  regulatory  requirements,   further  site
          preparation, metallurgical analysis and the planning of an exploratory
          drilling program to further prove the Company's reserves. During 1995,
          such operations  consisted  primarily of a comprehensive core drilling
          and analysis program (the "Analysis Program").

          Although  there are extensive  shafts,  tunnels and a mill in place on
          the Franklin Mine site which  management  believes would support a 150
          ton per day  operation,  the Joint  Venture  and the  Company  had not
          conducted any  significant  commercial  mining  operations and had not
          generated  any  significant  revenues  through  December 31, 1995 and,
          therefore,  the  Company  and  the  Joint  Venture  are  still  in the
          development  stage.  Although  management  of the Company  expects the
          Joint  Venture  to  commence  some   commercial   mining  and  milling
          activities at the Franklin  Mine during 1996,  it does not  anticipate
          that the Company  will derive any  significant  revenues or cash flows
          from its 17.5% interest in such start-up operations during 1996.

          Basis of presentation:

          The accompanying financial statements have been prepared assuming that
          the Company will continue as a going concern.  However, the Company is
          a  development   stage  enterprise  whose  operations  have  generated
          recurring losses and cash flow deficiencies from its inception.  As of
          December  31, 1995,  it had an  accumulated  deficit of  approximately
          $10,946,000 and a working capital deficiency of $639,000. As explained
          in Note 5, the Company was in default  with  respect to the payment of
          the  principal  of  and  the  accrued   interest  on  its  outstanding
          convertible debentures which totaled $158,000 as of December 31, 1995.
          As explained in Note 6, the Company was delinquent with respect to the
          payment of $44,000 of real estate  taxes as of  December  31, 1995 and
          was subject to a  regulatory  order to increase  its land  reclamation
          bond by $159,000 and complete the remediation of certain violations of
          environmental  regulations  as of  April  10,  1996.  The  Company  is
          substantially   dependent  on  its  Joint  Venture   partner  for  its
          short-term  financing  and  the  funding  of  the  development  of its
          principal mining and milling  properties which were not operational as
          of December 31, 1995. Such matters raise  substantial  doubt about the
          Company's ability to continue as a going concern.


                                      F-17


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS


Note 1  - Organization  and  basis  of  presentation   (concluded):   

          Basis  of presentation (concluded):

          The  Company's  ability to continue as a going  concern  will  depend,
          primarily,  on  whether  it  can  obtain  additional  debt  or  equity
          financing from its Joint Venture partner or from other sources to fund
          its existing obligations and the additional  obligations it will incur
          while  its  mining  resources  are  being  developed,   the  continued
          forbearance  of  the  holders  of  its  convertible   debentures  and,
          ultimately,  the  ability  of the Joint  Venture,  in which it holds a
          17.5% interest and to which it has committed  substantially all of its
          resources,  to conduct  profitable mining and milling  operations on a
          sustained  basis.  As also explained in Note 5, the Company did obtain
          approximately $200,000 from the private placement of convertible notes
          subsequent  to December 31, 1995.  Management  of the Company does not
          believe  that  operations  of the  Joint  Venture  will  generate  any
          significant  profits  or cash  flows  for  the  Company  during  1996.
          However,  management  believes,  but cannot assure, that the Company's
          Joint  Venture  partner will  continue to provide the remainder of the
          funds the Company  will need to operate  through  December  31,  1996.
          Accordingly,  the accompanying financial statements do not include any
          adjustments  relating  to the  recoverability  and  classification  of
          recorded  asset  amounts  or  the  amounts  and   classifications   of
          liabilities  that might be  necessary  should the Company be unable to
          continue as a going concern.


Note 2 -  Summary of significant accounting policies: 

          Use of estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect certain reported amounts and disclosures.
          Accordingly, actual results could differ from those estimates.

          Mining, milling and other property and equipment:  Mining, milling and
          other  property and equipment is recorded at cost.  Costs  incurred to
          improve and develop  mining and milling  properties  are  capitalized.
          Mine  development  expenditures  incurred  substantially in advance of
          production are capitalized.

          Depletion  of mining and  milling  improvements  and mine  development
          expenditures is computed using the units of production method based on
          probable  reserves  (there were no charges for  depletion  in 1995 and
          1994 since the Company's  principal mining and milling facilities were
          not in  operation).  Depreciation  of equipment is computed  using the
          straight-line  method over the  estimated  useful lives of the related
          assets.

                                      F-18


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS



Note 2 -  Summary of significant accounting policies (continued): 

          Joint Venture:

          The Company  accounts for its investment in the Joint Venture pursuant
          to the equity method.  As a general partner in the Joint Venture,  the
          Company would be liable to creditors and certain other parties for any
          obligations  the Joint Venture might  ultimately be unable to satisfy.
          Accordingly,  the Company  records its equity in the net losses of the
          Joint Venture even though they exceed the Company's total investment.

          Revenue recognition:

          Revenues from sales of mineral  concentrates will be recognized by the
          Company and the Joint  Venture only upon  receipt of final  settlement
          funds from the smelter.

          Environmental remediation:

          Environmental  remediation  costs are accrued  based on  estimates  of
          known environmental  remediation exposures and, generally,  charged to
          expense as incurred.

          Issuances of common stock:

          Noncash  issuances of common stock in exchange for assets and services
          are recorded at their estimated fair market values.

          Income taxes:

          The  Company  accounts  for income  taxes  pursuant  to  Statement  of
          Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
          which utilizes an asset and liability approach to financial accounting
          and reporting for income taxes.  Under this approach,  deferred income
          tax  assets  and  liabilities  are  computed  annually  for  temporary
          differences  between the  financial  statement and tax bases of assets
          and liabilities  that will result in taxable or deductible  amounts in
          the  future  based on  enacted  tax laws and rates  applicable  to the
          periods  in which the  differences  are  expected  to  affect  taxable
          income.  Valuation allowances are established when necessary to reduce
          deferred tax assets to the amount expected to be realized.  The income
          tax  provision  or credit is the tax  payable  or  refundable  for the
          period  plus or minus the change  during the  period in  deferred  tax
          assets and liabilities.


                                      F-19


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 2 -  Summary of significant accounting policies (concluded):

          Recent pronouncements affecting accounting standards: During 1995, the
          Financial  Accounting  Standards  Board issued  Statement of Financial
          Accounting  Standards  No.  121,  "Accounting  for the  Impairment  of
          Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of," and
          Statement of Financial  Accounting  Standards No. 123, "Accounting for
          Stock-Based  Compensation." Statement No. 121 prescribes the method to
          be used in the  evaluation  of  long-lived  and  certain  identifiable
          intangible  assets  for  impairment  and  the  method  to be  used  in
          accounting for any such impairment. Statement No. 123 requires certain
          disclosures  related to the estimated  fair value at the date of grant
          of certain equity instruments issued to employees. The Company has not
          determined the effects, if any, of these  pronouncements which it will
          be required to implement during 1996.

Note 3 -  Mining, milling and other property and equipment:

          Mining,  milling and other  property  and  equipment  consisted of the
          following at December 31, 1995:

            Machinery and equipment                           $1,219,220
            Mine and mill improvements                         4,248,278
            Furniture and fixtures                                11,714
            Automotive equipment                                  84,096
                                                              ----------
                                                               5,563,308
            Less accumulated depreciation and depletion        1,715,194
                                                              ----------

                  Total                                       $3,848,114
                                                              ==========

Note 4 -  Status of the Zeus Joint Venture Agreement:

          The Zeus Joint  Venture  Agreement,  as amended  effective  August 31,
          1994,  required  (i) Gems to  provide  both  technical  and  financial
          support to the Joint  Venture;  (ii) the Company to  contribute to the
          Joint Venture the rights to the  exclusive use of its lease  interests
          and other  assets  related to the  mining  properties  in Clear  Creek
          County, Colorado; (iii) the potential transfer of the Company's assets
          to the Joint  Venture;  (iv) the issuance to Gems of 6,000,000  common
          shares  of  the  Company,   subject  to  the   authorization   by  the
          stockholders of the Company of a sufficient  number of shares for such
          issuance and certain other  conditions;  and (v) the allocation of 70%
          and 30% of the Joint Venture's income or loss (as defined) to Gems and
          the Company, respectively.

          During the latter part of 1994,  the  management  of Gems informed the
          Board of Directors of the Company that prior to allocating substantial
          additional  resources  to the mining  facilities  owned by the Company
          (which  the Joint  Venture  is  responsible  for  developing)  and the
          commencement of commercial  mining  operations,  it wished to (i) more
          clearly define the relationships between the parties to the Zeus Joint
          Venture Agreement, as amended effective August 31, 1993,

                                      F-20


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 4 -  Status of the Zeus Joint Venture Agreement (continued):

          and (ii)  conduct  the  Analysis  Program to  ascertain  the scope and
          extent  of  proven  and  probable  reserves  of  mine  ore  containing
          economically   recoverable  minerals  not  previously   identified  or
          reported.

          Effective in December 1994, the Company,  Island and Gems entered into
          a Binding Exchange Letter Agreement. Pursuant to such Binding Exchange
          Letter  Agreement,  Gems agreed  that,  upon  consummation  of a final
          agreement,  it would transfer, in a tax free exchange,  certain of its
          assets for approximately 270,000,000 newly issued common shares of the
          Company,  together  with  certain  demand and  piggyback  registration
          rights and anti-dilution  rights. The assets that were to be exchanged
          by Gems included (i) Gems' 70% interest in the Joint Venture; (ii) the
          exclusive   rights  to  the  use  of  Gems'   proprietary   processes,
          technologies  and  techniques;  and (iii) property  rights acquired by
          Gems pursuant to a November 1994 agreement in principle related to the
          Hayden lease (see Note 6).

          The Binding  Exchange  Letter  Agreement  further  provided  that if a
          definitive  Exchange Agreement was not consummated and approval of the
          Company's  stockholders was not obtained in a timely fashion, then the
          Company  would be obligated to issue  6,000,000  shares to Gems or, if
          that were not  possible,  pay Gems at least  $1,500,000  as a priority
          payment.

          The Company was unable to obtain the approval of its stockholders in a
          timely fashion and Gems made certain claims for compensation under the
          Exchange  Agreement.  As a result,  in  September  1995,  the Company,
          Island and Gems entered into an agreement (the "Settlement Agreement")
          whereby the parties  acknowledged that the Exchange  Agreement was not
          timely  consummated  due to the  failure of the  Company to obtain the
          approval of its stockholders for an increase in its authorized capital
          stock in a timely manner. In settlement of the parties' claims against
          the Company for such failure to perform,  the Company  agreed to issue
          6,000,000  shares of its common stock to Gems or, in the  alternative,
          to pay $1,500,000 as upset compensation to Gems (the "Upset Fee"). The
          Company   further  agreed  to  use  its  best  efforts  to  cause  its
          stockholders  to approve an increase in its  authorized  capital stock
          from  50,000,000  to  100,000,000  shares of common stock at an annual
          meeting of  stockholders  in  November  1995 to enable the  Company to
          issue the shares to Gems.  In the event that the Company,  after using
          its best efforts,  was unable to obtain the requisite  approval of its
          stockholders, Gems agreed to reduce the Upset Fee to $600,000.

                                      F-21


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 4 -  Status of the Zeus Joint Venture Agreement (continued):

          The parties  further  agreed to convert  $249,600 of the total  amount
          previously advanced to the Company by Gems to cover operating expenses
          into 3,200,000  additional shares of its common stock,  subject to the
          approval  of  the  Company's  stockholders  of  the  increase  in  its
          authorized  capital  stock  referred  to above.  Finally,  as  further
          consideration  for the  settlement of their claims,  Gems' interest in
          the Joint Venture was  increased to 82.5% and the  Company's  interest
          was reduced to 17.5%. Gems was also given certain demand and piggyback
          registration  rights  with  respect  to shares to be issued  under the
          Settlement Agreement.

          On November 30, 1995,  the  stockholders  of the Company  approved the
          proposed increase in the authorized  capital stock of the Company and,
          as required by the Settlement Agreement, in December 1995, the Company
          issued  to  Gems  3,200,000  shares  of its  common  stock  to  reduce
          outstanding  advances by $249,600 and  6,000,000  shares of its common
          stock as  additional  consideration  for the  settlement  of claims by
          Gems.

          Based on the quoted  market  value of $.15625 per share at the time of
          issuance,  the 3,200,000  shares issued to Gems in connection with the
          conversion of the outstanding advances and the 6,000,000 shares issued
          to Gems in connection  with the  settlement of claims had an aggregate
          fair value of $499,200 and $936,000,  respectively.  Accordingly,  the
          accompanying financial statements, as restated, reflect charges to (i)
          interest  expense of $249,000,  which  represents the excess of market
          value of the shares over the principal amount converted, and (ii) loss
          on settlement of claims by joint venture partner of $936,000.

          At the time the Company initially issued its financial  statements for
          the year ended December 31, 1995,  management believed that the market
          value of the shares issued to Gems in connection  with the  conversion
          of  the  outstanding   advances  and  the  settlement  of  claims  was
          substantially  in excess of their fair value because the shares issued
          were  restricted and the trading  volume for the Company's  shares was
          limited.  However, the Company did not have the resources to engage an
          investment  banker to appraise the per share value at the date of each
          issuance;  instead, management estimated the fair value by discounting
          the quoted  market  value by 50%.  Accordingly,  the  Company  did not
          record any interest  expense in connection  with the conversion of the
          outstanding advances and it recorded a loss on settlement of claims by
          joint venture  partner of only $468,000.  After  discussions  with the
          Staff of the Securities and Exchange  Commission (the "SEC") as to the
          basis of the  valuation of the shares issued to Gems,  management  has
          determined  that it  would  still  not be  cost  effective  to  obtain
          appraisals of the fair value of the shares and that, instead,

                                      F-22


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 4 -  Status of the Zeus Joint Venture Agreement (concluded):

          the  quoted  market  price at the time of  issuance  would be the most
          reliable  measure of fair value for these  transactions.  As a result,
          the  accompanying   financial  statements  reflect  increases  in  the
          Company's net loss and additional paid-in capital of $717,600 from the
          corresponding   amounts  in  the  financial   statements  the  Company
          initially issued and filed with the SEC.

          Based on  information  developed  through  the  Analysis  Program  and
          previously  available  geological data and reports,  the management of
          the Joint  Venture  believes  that the  application  of the  Company's
          proprietary  technologies  and processes should result in economically
          viable commercial mining operations at the Franklin Mine.

          Pursuant to the terms of the Zeus Joint  Venture  Agreement,  Gems has
          provided  advances to the Company of $563,288  since the  inception of
          the  agreement,  including  $331,980  and  $156,581  in 1995 and 1994,
          respectively.  As a result of the noncash transaction  described above
          whereby the Company  issued  3,200,000  shares of its common  stock to
          Gems in December 1995 to reduce outstanding advances by $249,600,  the
          balance of the loans  payable to the Company's  Joint Venture  partner
          totaled  $313,688 at December  31, 1995.  Such balance is  noninterest
          bearing  and  without a  specific  due  date.  In  addition,  Gems has
          guaranteed  the  payment  of  the  Company's  outstanding  convertible
          promissory notes (see Note 5). The Joint Venture is also a development
          stage  company.  The  Company's  investment in the Joint Venture as of
          December 31, 1995, and the Joint  Venture's  results of operations for
          the year then  ended in  relation  to those of the  Company,  were not
          material.

Note 5 -  Convertible debt:

          The Company's  convertible  debt at December 31, 1995 consisted of the
          following:

          12.25% convertible debentures (a)                       $145,000
          15% convertible promissory notes (b)                     200,000
                                                                  --------
             Total                                                $345,000
                                                                  ========

          (a)  As of December 31, 1995,  the Company was in default with respect
               to  the  payment  of  the  $145,000   principal  balance  of  the
               debentures  and  $13,321  of  accrued  interest  payable  for the
               quarters  subsequent to March 31, 1995.  The Company sent notices
               to its debentureholders in December 1995 asking for their consent
               by February  15, 1996 to the further  extension  of the  maturity
               date  to  December  31,  1996.  It  was  also  contemplated  that
               conversion  rights would also be extended at the previous rate of
               $.50 per share.  The  Company  also agreed that it would make all
               interest  payments due to such holders through December 31, 1995,
               prepay  interest  which  will  become due at the end of the first


                                      F-23


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 5 -  Convertible debt (concluded):

               quarter of 1996 and set up a fund with the  Trustee to secure the
               timely  payment of the  principal  balance of the  debentures  on
               December 31, 1996. Only one holder of a $1,000 debenture rejected
               the Company's request.

               While it is the intention of management and the Company to comply
               with the terms of the agreements with the  debentureholders,  the
               Company  has been  unable to comply as a result of the  liquidity
               and cash flow  problems  described  in Note 1. As a result of its
               default and its  continued  failure to comply  with the  December
               1995 agreements,  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 penalties.  Management cannot assure that there
               will be funds  available  for the  required  payments or what the
               effects  of  any   actions   brought  by  or  on  behalf  of  the
               debentureholders will be.

          (b)  In December 1995, the Company  commenced an offering  exempt from
               registration  pursuant  to Rule  505 of  Regulation  D of the 15%
               secured  convertible  promissory notes in the aggregate principal
               amount of  $1,500,000.  The Company  terminated  the  offering on
               February 5, 1996 after selling convertible notes in the aggregate
               principal  amount of $400,000,  of which $200,000 was outstanding
               at December 31, 1995 as shown above.  Each  convertible note will
               mature 18 months from the date of its issuance. The notes will be
               convertible into shares of the Company's common stock after April
               1, 1996 at a conversion  price based on 75% of the average market
               price of the Company's  common stock (as defined) for a specified
               period prior to conversion.  Noteholders have unlimited piggyback
               registration  rights and,  commencing one year after issuance and
               subject  to certain  conditions,  will have  demand  registration
               rights  with   respect  to  the  common  stock   underlying   the
               convertible  notes. The convertible  notes are guaranteed by Gems
               and secured by Gems' profit interest in the Joint Venture.

Note 6 -  Commitments and contingencies:


          Lease commitments:

          The  Joint  Venture  was  primarily   formed  to  develop  the  mining
          properties  pursuant to the Company's  rights under the  Hayden/Kennec
          Leases,  and the future  success of its operations is dependent on its
          ability to utilize and extend those lease  rights  and/or to otherwise
          acquire the rights to the use of such properties and the extraction of
          the related resources.


                                      F-24


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 6 -  Commitments and contingencies (continued):

          Lease commitments (continued):

          The Company entered into the Hayden/Kennec  Leases with the fee owners
          of 28 patented  mining  claims in Clear Creek  County on November  12,
          1976. Under the provisions of these leases, Franklin has the exclusive
          right to explore  for,  develop and mine and to extract  any  minerals
          found in the  mines,  lodes,  veins  and  dumps  located  thereon.  In
          addition, Franklin has certain water and mill operating rights.

          The  initial  terms of the  Hayden/Kennec  Leases were for 20 years at
          aggregate  monthly  rentals  equal to the  greater  of $2,000 or 5% of
          realized  proceeds  from the sale of minerals  derived from the leased
          property.  In  addition,  the  Company is  required to pay all related
          property taxes and insurance.  Rentals amounted to $24,000 in 1995 and
          were paid by the Joint Venture.

          The  Hayden/Kennec  Leases grant the Company the right to purchase the
          mineral  rights to the leased  property upon the payment of $1,250,000
          less any previous rental payments.

          In the  event  that  the  Hayden/Kennec  Leases  are  terminated,  any
          leasehold or other improvements on the mining properties made by Gems,
          the Joint  Venture or the Company  become the  property of the lessors
          without  compensation  to Gems, the Joint Venture or the Company.  The
          Company has the right to assignment under the lease.

          As of  December  31,  1995,  the  Company  was  delinquent  in  paying
          approximately  $44,000 of the required taxes due (including interest).
          Clear Creek County has filed liens on those taxes in arrears.  Certain
          of these liens were sold under  auction  during  October  1994 and the
          Company has three years from the date of sale to redeem them.

          To further secure the ability of the Joint Venture partners to exploit
          the  Clear  Creek  County  mining  properties,  Gems  entered  into an
          agreement  on December 21, 1995 to purchase all of the right title and
          interest of Audry  Hayden in and to all mining  claims and  properties
          located on the property which is subject to the Hayden/Kennec Lease as
          well as Hayden's interest under the Hayden Lease with the Company (the
          "Hayden Interests") for a purchase price of $75,000. In addition, Gems
          agreed  to pay  Hayden  $5,000  representing  payment  in full of back
          payments  due and owing to Hayden by the  Company on the Hayden  Lease
          and further  agreed to pay to Hayden  $1,000 per month for a period of
          12 months  commencing  on the date of the Purchase  Agreement.  On the
          date upon which the final $1,000  installment  is due to Hayden,  Gems
          will pay the remaining  principal  balance of the purchase price which
          will  consist of $75,000 less the initial  payment of $5,000  advanced
          for back payments on the Hayden Lease. The management of Gems

                                      F-25


          <PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 6 -  Commitments and contingencies (continued):

          Lease commitments (concluded):

          has  informed  the Company  that it  believes  that as a result of the
          acquisition  of the Hayden  Interests,  the  interest  in the  surface
          rights held by the Hayden Lease and the provisions of the Kennec Lease
          that permit the  exploration and development of such properties by any
          method of mining,  the Joint Venture will have adequate  access to the
          minerals during the term of the Kennec Lease and on a continuing basis
          even if the  Kennec  Lease  should  expire  and not be  renewed by the
          Company.

          Legal proceedings:

          The  Company is a party to  various  legal  proceedings  in the normal
          course of business. It is the opinion of management that these actions
          are routine in nature and their disposition will not have any material
          adverse  effects on the  Company's  financial  position  or results of
          operations.

          Environmental matters:

          During  November  1993,  the  Company  was  notified  by the  State of
          Colorado  Division of Minerals  and Geology (the "DMG") that the Joint
          Venture had failed to file a plan in the form of a Technical  Revision
          to address erosion,  sedimentation and run-off matters at the Franklin
          Mine in connection  with  continuation  of the Company's  state mining
          permit. As a result, the Company had to take certain remedial actions,
          increase its reclamation bond from $29,000 to $45,000 and pay a $5,000
          fine during 1994.

          In August 1994, the Company  received an informal  notice from the DMG
          of an  additional  violation  at the  Franklin  Mine  related to water
          run-off matters. The Company attempted to rectify the violations cited
          by the DMG but was  unable to do so in a timely  manner  because  such
          corrections required performance of work outside the boundaries of its
          then current permit. The Company agreed that it would refrain from any
          mining or milling  operations  at the Franklin  Mine until the DMG (i)
          amended  the  Company's  permit to enable it to perform  the  required
          technical and  remediation  work and (ii) determined that all required
          work was completed.

          In February 1996,  the DMG permitted the Company to commence  crushing
          activity at the Franklin Mine pursuant to another  prospecting permit.
          In March 1996,  the Company was notified  that it would be required to
          increase  its  land  reclamation  bond  by an  amount  that  would  be
          determined subsequently. In an effort to comply, the Company increased
          its  reclamation  bond from $45,000 to $93,000.  On or about March 28,
          1996,  the  Company  received  a  temporary  cease  and  desist  order
          prohibiting it from  conducting  mining and milling  operations at the
          Franklin  Mine until such time as all of the  violations  cited by the
          DMG


                                      F-26


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS

Note 6 -  Commitments and contingencies (concluded):

          Environmental matters (concluded):

          are corrected.  However, management believes that the cease and desist
          order  will  have  minimal  effects  on the  prospecting  and  testing
          activities  that are in  process at the  Franklin  Mill since they are
          being  conducted  pursuant to a permit that is  specifically  excluded
          from such order.  In addition,  the Mined Land  Reclamation  Bureau of
          Colorado  determined  that the  Company's  reclamation  bond should be
          further increased to approximately $252,000 by April 5, 1996.

          The Company had not posted the required  bond as of April 10, 1996. In
          addition,  management cannot determine what the ultimate costs will be
          of  rectifying  the  violations  cited by the DMG and  complying  with
          environmental regulations. In addition,  management cannot assure that
          the  Company  will be able  to  obtain  the  funds  necessary  for the
          required   increase  in  the  reclamation   bond  and  the  additional
          expenditures  for  the  required  corrective  actions,  and it  cannot
          determine what the effects, if any, will be on the Company's financial
          statements  if such  financing  is not  obtained  and  the  corrective
          actions are not taken.

Note 7 -  Income taxes:

          As  of  December  31,  1995,   the  Company  had  net  operating  loss
          carryforwards of approximately  $9,512,000  available to reduce future
          Federal  taxable  income  which,  if not used,  will expire at various
          dates  through  December 31, 2010.  Due to changes in the ownership of
          the  Company,  the  utilization  of these  loss  carryforwards  may be
          subject to substantial annual limitations.

          The  Company  has  offset  the  deferred   tax  asset  of   $3,234,000
          attributable  to the potential  benefits from such net operating  loss
          carryforwards  as of  December  31,  1995 by an  equivalent  valuation
          allowance due to the uncertainties related to the extent and timing of
          its future  taxable  income.  There were no other  material  temporary
          differences as of that date.

          The  expected  Federal  income  tax  benefit,  computed  based  on the
          Company's  pre-tax  losses in 1995 and 1994 and the statutory  Federal
          income tax rate, is reconciled to the actual tax benefit  reflected in
          the accompanying financial statements as follows:


                                                          1995           1994  
                                                        --------       --------
          Expected tax benefit at statutory
              rates                                     $558,000       $130,000
          Decrease resulting from valuation
              allowance for benefits from net
              operating loss carryforwards              (558,000)      (130,000)
                                                        --------       --------

                 Totals                                 $   --         $   --  
                                                        ========       ========


                                      F-27


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS



Note 8 -  Stockholders' equity:

          Issuance of common stock to convert debt and other equity interests:

          In May  1992,  the  Company  issued a series  of  promissory  notes to
          related  parties  and  others  in the  aggregate  principal  amount of
          $504,000  that bore  interest at 3% above a specified  prime rate.  In
          addition,  the  holders of notes in the  principal  amount of $450,000
          were  entitled,  under  certain  conditions,  to a 1%  interest in the
          profits (as  defined) of the  Company  for each  $50,000 of  principal
          amount  held  and,   accordingly,   held  total  profit  participation
          interests  of 9%.  In  July  1993,  Gems  was  assigned  notes  in the
          principal  amount of $200,000 and the related 4% profit  participation
          interests.

          During 1995, the Company entered into agreements for the conversion of
          all  of the  notes,  the  accrued  interest  thereon  and  the  profit
          participation  interests  whereby (i) the entire principal balance and
          the accrued  interest  payable at the  respective  dates of conversion
          which totaled $677,025 was converted at $.078 per share (the estimated
          fair  market  value  of  the  unregistered  shares)  into a  total  of
          8,679,797   shares  of  common  stock  and  (ii)  all  of  the  profit
          participation  interests  were converted at the rate of 300,000 shares
          for  each 1%  profit  participation  interest  held  into a  total  of
          2,700,000  shares of common  stock.  These  conversions  were  noncash
          transactions  and,   accordingly,   they  are  not  reflected  in  the
          accompanying 1995 statement of cash flows.

          Common stock  reserved for issuance:  During 1995,  the Company issued
          warrants  for the  purchase  of 500,000  shares of common  stock at an
          exercise  price of $.01 per  share  as part of the  consideration  for
          services  provided to the Company.  In the opinion of management,  the
          fair value of the  warrants  was not  material and the Company did not
          recognize any expense related to such issuance.

          At  December  31,  1995,  shares of common  stock  were  reserved  for
          issuance upon exercise of outstanding  debentures,  notes and warrants
          as follows:

          Convertible debentures                              290,000
          Convertible promissory notes (a)                  1,066,667
          Warrants                                            500,000
                                                            ---------
             Total                                          1,856,667
                                                            =========

          (a)  Computed  based on the fair market value of the Company's  common
               stock as of December 31, 1995 (see Note 5).


                                      F-28


<PAGE>



                     FRANKLIN CONSOLIDATED MINING CO., INC.
                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS



Note 9 -  Fair value of financial instruments:

          The Company's material financial  instruments at December 31, 1995 for
          which  disclosures  of  estimated  fair values are required by certain
          accounting  standards  consisted  of  cash,  convertible   debentures,
          convertible notes and loans payable to the Joint Venture partner.  The
          fair  value of cash is  equal to its  carrying  value  because  of the
          liquidity and short-term maturity of such a financial instrument.  The
          fair  value  of the  fixed  rate  convertible  notes  is  equal to the
          carrying  value  because  such  obligations  were issued just prior to
          December  31,  1995  at  a  market  interest  rate.   Because  of  the
          relationship of the Company and its Joint Venture partner, there is no
          practical  method that can be used to determine  the fair value of the
          loans payable by the Company.  Because of the Company's  defaults with
          respect  to  the  payment  of  the  convertible   debentures  and  the
          uncertainties  related  to the  ability  of the  Company to obtain the
          funds for their  repayment,  there is no practical  method that can be
          used to determine  the fair value of the loans  payable by the Company
          to the holders of the debentures.



                                      * * *


                                      F-29

<PAGE>

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

The Company is engaged in the business of seeking to develop a commercial mining
operation at leased properties located in Idaho Springs,  Colorado.  The Company
is in the development  stage and has generated nominal revenues since inception.
Significant operating revenues are not expected to be generated unless and until
commercial  mining and milling  operations  recommence at the  Company's  mining
property.

1995 Results compared with 1994

During the year ended  December 31, 1995,  operations at the Company's  property
consisted of a core drilling analysis program which further substantiated proven
and probable reserves, remedial work and technical revisions addressing erosion,
sedimentation  and  run-off  matters  as well as  other  matters  which  the DMG
required to be performed in connection with the Company's permits.  Expenditures
with respect to the core drilling analysis program were  approximately $ 234,430
which was advanced on behalf of the Company by Gems and subsequently  reimbursed
by the Company out of the proceeds of the  Company's  Note  Offering.  All other
costs and expenditures associated with the remedial and technical revisions were
advanced by Gems in accordance with the joint venture agreement.

The Company had revenues of $1,060 during 1995 and less than $1,000 in 1994. The
continued  failure  of the  Company to  commence  commercial  operations  at the
Franklin  Mine and  Franklin  Mill  contributed  to the  Company's  inability to
generate increased revenues.

It  remains  the  Company's  policy to  recognize  income  from sales of mineral
concentrates  only upon receipt of final settlement funds from the smelter.  The
Company did not ship any mineral  concentrates to the smelter in 1995;  however,
the  Company  has  begun  the  shipping  of  mineral   concentrates   to  ASARCO
Incorporated in connection with the transactions  involving the LLC in the early
part of 1996.  Management  is hopeful  that the Company  will be  successful  in
clearing its permitting issues in fiscal year 1996 such to enable the Company to
increase  its   production  at  the  Franklin  Mill  as   contemplated   by  the
Process/Profit   Interest   Contract   allowing  for  the  shipping  of  mineral
concentrates  to smelters  which, in turn, will result in an increase in revenue
to the Company either  directly or indirectly  through its 17.5% interest in the
Joint Venture.

Expenditures  at the Franklin  Mine and Franklin Mill were borne by Gems in 1995
as they were in 1994.  General and  administrative  expenses were  approximately
$227,287 in 1995 as compared with $151,000 in 1994, such increase being a result
of an increase in professional fees. Depreciation of equipment was approximately
$123,000 during 1995 and 1994. Mine and Mill  improvements were not amortized in
1995 and 1994.  Interest expense was approximately  $342,000 in 1995 compared to
$68,000 in 1994.  Substantially,  as a result of  additional  interest  incurred
related to common stock issued in 1995.

The  Company  had a net loss of  approximately  $1,642,000  for the  year  ended
December 31, 1995 compared with a net loss of $ 382,000 for 1994.  The increased
loss was substantially due to a fee of $936,000 which was a non-

                                                                               2

<PAGE>

cash charge paid through the issuance of stock to the  Company's  joint  venture
partner,  Gems.  This  fee,  which was paid in the form of  6,000,000  shares of
common  stock,  was paid  pursuant  to the  terms of a Binding  Exchange  Letter
Agreement, between the partners, which was not timely consummated.

The Company's ability to continue  operations  through 1996 is predicated on the
terms of the joint venture agreement with Gems pursuant to which Gems has agreed
to provide  technical  and financial  support to  recommence  mining and milling
operations at the Company's  properties.  Additionally,  the Company is and will
remain  dependent  upon Gems for all of its funding needs until such time as the
Franklin  Mine and Franklin  Mill shall become  operational.  Once the Company's
properties  begin commercial  operations,  the Company will realize 17.5% of all
net profits  generated from the operations  thereof.  Additionally,  the Company
will  receive  17.5%  of all  income  to the  Joint  Venture  derived  from  the
Process/Profit Interest Contract. Management is hopeful that such monies will be
sufficient  to fund its future  operations;  however,  there can be no assurance
that  the  Company  will  realize  income  from  commercial  operations  of  its
properties  in 1996 or that the limited  income  which it will  receive from the
Process/Profit  Interest  Contract will be sufficient to fund its operations and
other  obligations  independent  from  Gems.  Therefore,  until such time as the
Company's  income will be sufficient to operate  independent  from Gems, it will
remain dependent on its joint venture partner to finance its operations.

Liquidity and Capital Resources

Since  inception,  the Company has financed its operations  principally  through
equity and debt financing and its relationships with its joint venture partners.
The Company has derived no income from mining operations.  At December 31, 1995,
the Company's  liquidity and capital resources  position had been increased from
$1,000 in cash or cash  equivalents at December 31, 1994 to $118,000 at December
31,  1995.  Continued  funding  from  Gems in  1995,  including  loans  totaling
$332,100,  enabled the Company to repay certain  debts,  to purchase and install
equipment and to cover operating expenses,  including general administrative and
research and development expenses.  Additionally, the Company was able to reduce
the balance owed to Gems by $249,000 through the issuance of Common Stock. Until
it can generate significant operating revenues, the Company is dependent on Gems
for the bulk of its operating capital.  The Company's ability to continue active
mining operations is currently  predicated on the continued infusions of capital
from Gems. Excluding the mining and milling expenses borne by Gems in accordance
with the Company's  joint venture  agreement,  the Company  anticipates its cash
requirements for general and administrative  expenses for 1996,  including legal
and accounting fees, to be approximately $350,000, which amount does not include
the payment of (a) $145,000 in principal plus accrued and unpaid interest on the
Company's  Debentures  currently  in default  as of  December  31,  1995 and (b)
approximately  $ 313,688 in advances  payable to Gems as of December  31,  1995.
Upon the  approval of the increase in the  capitalization  of the Company by its
shareholders on November 30, 1995, the Company was able to eliminate  certain of
its liabilities by converting  certain debt into common stock. In May, 1992, the
Company entered into a Loan Agreement with Mr. Anderson, an officer and director
of the Company, Mr. Anderson's brothers, Anderson Chemical Company and Mr. Carlo
Sgrizzi,  an  unaffiliated  individual and Mr.  Anthony  DiMatteo (the "Anderson
Loans") pursuant to


                                                                               3

<PAGE>

which the Company  borrowed an aggregate  of $504,000 at an interest  rate of 3%
above the prime  rate of  interest.  Additionally,  $450,000  of such loans were
entitled,  under certain conditions,  to a 1% interest in profits (as defined in
the Loan  Agreement) of the Company,  for each $50,000 of principal  amount held
and, accordingly,  the lenders held a total profit participation interest of 9%.
Such Loan  Agreements were further amended in July,  1993,  whereby  replacement
notes were issued which  permitted  the  conversion  of the Anderson  Loans into
shares of common  stock of the Company at a  conversion  ratio of $.10 per share
and granted certain demand an piggyback  registration rights. The Anderson Loans
were convertible into a total of approximately  4,500,000 shares of common stock
at each lenders option,  including,  all profit interests which were convertible
into 300,000 shares for each 1% profit participation  interest.  In August 1995,
Gems, as an assignee of Mr.  DiMatteo,  converted its 4% net profit  interest in
the  Company  to  which it has  rights  to  receive  under  the  terms of a Loan
Agreement,  into 300,000 shares per percentage  point or 1,200,000 shares of the
Company.  Such  shares  were  issued to Gems on or about  August  18,  1995.  In
September,  1995, certain of the holders of the Anderson Loans, other than Gems,
agreed to convert  their notes and accrued  interest  thereon at a rate of $.078
per share  which  represents  50% of the NASDAQ  quote d price of the  Company's
shares for the last 3 months,  the total amount of principal  and interest to be
converted to be determined at the time of  conversion.  Thereafter,  on or about
Dec ember 27, 1995,  Gems was invited to convert its notes on the same terms and
conditions as the other holders,  thereby  satisfying the Company's  obligations
under the Anderson  Loans.  In December 1995, the Company  commenced an offering
pursuant to Rule 505 of Regulation D of $1,500,000  principal  amount of its 15%
Secured  Notes (the  "Notes")  Convertible  into  Shares of Common  Stock of the
Company.  Such Notes have a maturity  date of  eighteen  months from the date of
each Note so issued (the  "Maturity  Date").  Interest on the Notes accrues at a
rate of fifteen percent (15%) per annum,  compounded annually on the outstanding
unpaid principal of each Note, and is payable quarterly,  with the first payment
due and  payable  on the last day of March,  1996,  and on the last day of June,
September and December  thereafter,  with any accrued but unpaid  interest on be
paid on a quarterly basis or in full together with the final  principal  payment
on the Note.  There are no scheduled  payments of principal until the earlier of
either  the  Maturity  Date or the date on which  all  unpaid  principal  of and
interest on the Note becomes  immediately  due and payable to the holder thereof
in the e vent of a default under the terms of the Note.  The Company may, at any
time,  prepay  the Notes in whole or in part  without  penalty  or  premium.  In
addition,  purchasers of the Notes have  unlimited  piggyback  rights and, on or
after the one year anniversary of the offering,  one demand  registration right.
The offering was made to accredited  investors only and such  purchasers may not
convert the Notes into  shares of Common  Stock until on or after April 1, 1996.
The Company  terminated  this  offering  on  February  5, 1996 after  selling an
aggregate of $400,000 of the Notes. In February,  1996, the Company commenced an
offering  pursuant to Rule 505 of Regulation D of its Common Stock to accredited
and  unaccredited  investors in an effort to raise the remaining amount of funds
which it  anticipated  it would be able to realize  through the  offering of the
Notes.  Subscribers  of the  offering  purchased  the Common Stock at a purchase
price 15% below the  market  price of the stock as quoted on NASDAQ at the close
of business the prior date. Although the offering is presently  continuing,  the
Company has raised approximately $200,000 as of March 29, 1996.

                                                                               4
<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.
                                (FORMALLY FRANKLIN CONSOLIDATED MINING CO., INC.

March 29, 1999                              By:      /s/ Robert Walligunda 
                                                     --------------------------
                                                     President

     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             Director/Secretary             March 29, 1999
    Robert Waligunda

/s/ Richard Brannon              Vice President-West Coast      March 29, 1999
--------------------------       Operations
    Richard Brannon                     

/s/ George Otten                 Vice President                 March 29, 1999
--------------------------
    George Otten

/s/ William C. Martucci          Director                       March 29, 1999
--------------------------
    William C. Martucci

/s/ Ronald Ginsberg              Director                       March 29, 1999
--------------------------
    Ronald Ginsberg

/s/ Robert W. Singer             Director                       March 29, 1999
--------------------------
    Robert W. Singer