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                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-KSB

(Mark One)

         [X]   15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] 
               For the fiscal year ended December 31, 1997

         [ ]   15, TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

     For the transition period from ________________ to _________________

                            Commission file 02-69494

                             GLOBAL GOLD CORPORATION
                             -----------------------
                 (Name of small business issuer in its charter)

               Delaware                           13-3025550
--------------------------------------------------------------------------------
   (State or other jurisdiction of             (I.R.S. Employer
    incorporation or organization)            Identification No.)


           438 West 37th Street, Suite 5-G, New York, New York 10018
           ---------------------------------------------------------
            (Address of principal executive offices)   (Zip Code)

Issuer's telephone number (212) 563-5933

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

      Title of each class           (Name of each exchange on which registered)
      -------------------           -------------------------------------------

      None
      -------------------           -------------------------------------------


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

                                     None
                  ------------------------------------------
                               (Title of Class)

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

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to be 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. [X]

      The issuer's revenues for its most recent fiscal year ending December 31,
1997 were $-0-.

      The aggregate market value of the voting stock held by non-affiliates of
the Company 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 was $123,966(1)

      As of December 31, 1997 there were 4,348,114 Shares of the registrant's
Common Stock outstanding.(2)

----------
      (1) The Company's Common Stock is not publicly traded. However, the Board
of Directors of the Company determined that fair market value of the Common
Stock was $0.10 per share.

      (2) This number is computed after taking into account the 1 for 10 reverse
split of the shares of Common Stock of the Company, effective as of December 31,
1996 (the "Reverse Split").


ITEM 1. DESCRIPTION OF BUSINESS

(A)   General Overview

      The Company is presently engaged in the development of a gold mining
project in Armenia, a member of the Commonwealth of Independent States. The
Company is currently in the pre-development stage and has not received any
revenues from mining activities as of December 31, 1997. Prior thereto, the
Company did not engage in any substantial business activities, except as
described in the section 1(D) entitled "Prior History of the Company."

(B)   Armenian Mining Project

      (a) Armenian Joint Venture Agreement

    The Company, the Ministry of Industry of Armenia and Armgold, S.E., the
Armenian state gold enterprise ("Armgold"), executed and delivered the Armenian
Joint Venture Agreement, dated as of May 1, 1996. The Company thereafter
assigned its rights and obligations thereunder to Global Gold Armenia Limited,
its wholly-owned Cayman Islands subsidiary ("GGA"). The Armenian Joint Venture
Agreement formed the Armenian Gold Recovery Joint Venture Co., LLC, a limited
liability company under Armenian law ("AGRC"), which will construct, operate and
market the gold production and provide capital and financing in a multistage
development of the Armenian gold industry. Stage 1 of the Armenian Joint Venture
Agreement involves the processing of an estimated 12 million tonnes of tailings
from the Ararat processing plant, which the Company believes average 1 gram of
gold per tonne (based on the independent metallurgical study obtained by the
Company) (the "Tailings Project") and the completion of a comprehensive
feasibility study and business plans for the development of the Zod mine. Based
on the business plans to be approved by all parties, Stage 2 calls for the
rehabilitation of the Ararat Gold Processing Plant and for mine development and
operation as well as engineering and building a gold processing plant at the Zod
mine, and Stage 3 calls for mine development and operation at the Meghradzor
mine, a feasibility study for a gold refinery, and exploration activity.


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    The Company, the Ministry of Armenia and Armgold executed and delivered the
Second Armenian Gold Recovery Company Joint Venture Agreement, dated as of
September 30, 1997, (sometimes referred to as the "Amended Armenian Joint
Venture Agreement") which, among other things, provides for the right of new
joint venture companies to mine and process gold at the Zod and Meghradzor mines
and which also eliminated certain specific exploration sites from the original
agreement, while still recognizing AGRC's right to participate in exploration
activity at a future date.  However, such amendatory agreement does not become
operative until passage of an Armenian government decree approving such
agreement.  

    The parties originally anticipated that such decree would be issued within
the next several months after September 30, 1997, but currently there is no
assurance whether such decree will be passed, or, if so, when it will be passed.
While the Company is hopeful that such impasse will be resolved, there can be no
assurance that such governmental decree will be passed. If such decree is not
passed, the joint venture companies will not have the right to mine and process
gold at the Zod and Meghradzor mines.  

      (b) Tailings Project

      The parties have begun to implement the Tailings Project. As of February
1, 1997, GGA had a definitive agreement authorized by an Armenian government
decree granting it fixed rights to process tailings from the Ararat site as well
as a license and environmental approval for construction.  

    Pursuant to the Armenian Joint Venture Agreement, AGRC completed the
construction of the Tailings Project.  AGRC entered into a Tailings Dam
Construction Contract with Armhydro for $640,000 on January 31, 1997.  AGRC also
retained a Canadian engineering firm, under a contract for Engineering,
Procurement and Construction Management Services Agreement dated January 31,
1997, under which the compensation payable to the contractor under Phase I of
the project was $4,500,000, which was later increased to up to $10,000,000
Operation of the tailings processing plant commenced in February, 1998 and the
first gold bars therefrom were poured at such time.  Production at the tailings
plant is continuing despite the impasse existing by virtue of the Armenian
Government's above-mentioned position with respect to the Amended Armenian Joint
Venture Agreement.

    In addition, an independent engineering firm had been engaged in preparing
a definitive feasibility report with respect to the reserves at the Zod and
Meghradzor mines which the Company anticipated would be completed in the Spring
of 1998. There can be no assurance that such feasibility report will be 
completed within then the next several months, although the Company is 
hopeful of such result.

    While the Company has been advised that proven reserves exist in the
Tailings Project (see (B)(d) Mining Plans) and that the mining thereof can be
done on a profitable basis, there can be no assurance of such result.

    (c)  Financing of the Armenian Mining Project  -  First Dynasty Mines Ltd.

    Throughout 1996 and into January, 1997, the Company had discussions with
many unrelated parties in connection with arranging for the financing of the
Tailings Project.  As of January 31, 1997, the Company and GGA reached an
agreement with First Dynasty Mines Ltd. ("First Dynasty"), a Canadian public
company whose shares are traded on the Toronto Stock Exchange and on NASDAQ. 
Under such preliminary agreement, First Dynasty acquired the right, subject to
certain conditions, to advance funds in stages necessary for the implementation
of the Tailings Project and the preparation of engineering and business plan
materials for the remaining Armenian mining projects.  

    The Company, GGA and First Dynasty entered into a definitive agreement 

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dated May 13, 1997 reflecting the final agreement of the parties with respect to
the above projects  (the "FDM Agreement").  The principal terms of the FDM
Agreement are set forth below:

    1.   First Dynasty agreed to advance a maximum of $24,510,000 to GGA under
the FDM Agreement, which amounts will be advanced as debt, which is convertible
into stock of GGA, at First Dynasty's option, or is automatically converted into
such stock under certain circumstances, as described below:  

         (a)  Upon First Dynasty's making advances of $6,490,000, such amount
    will then be automatically converted into 25% of the capital stock of GGA
    (which occurred in October, 1997).

         (b)  The next $3,520,000 of debt, together with the advance described
    in 1(a) above, is convertible into 51% of the capital stock of GGA, at
    First Dynasty's option.  

         (c)  For every additional $.5 million invested for expenditures
    advanced in respect of the development of the Zod and Meghradzor mines
    (excluding the $10 million Tailings Project  expenditure) as a loan to GGA,
    such debt is convertible, at First Dynasty's option, into an additional 1%
    of the capital stock of GGA, up to a maximum of 80% of the issued and
    outstanding shares of capital stock of GGA.  Thus, upon advancing a total
    of $24,510,000 in the Armenian mining projects, First Dynasty would be
    entitled to acquire 80% of the shares of GGA, if First Dynasty elects to
    convert all of its debt into equity.

    2.   (a)  Upon obtaining 80% of the capital stock of GGA or upon making
aggregate advances of $24,510,000, First Dynasty would be required to acquire
the remaining 20% of the outstanding of capital stock of GGA, within 18 months
after making such total of advances,  by issuance of 4,000,000 shares of its
common stock except that such number of shares will be increased proportionately
to the extent that the mineable reserves at the Zod and Meghradzor mines (which
are established at the end of such 18-month period) exceed 5,000,000 ounces.  

         (b)  First Dynasty further agreed to use its best efforts to issue
freely tradeable FDM shares to GGA if it is feasible to do so in connection with
a contemporaneous public offering of shares of FDM stock or, alternatively,
special warrants to acquire shares of common stock of First Dynasty without
payment therefor (each of which would be exercisable into one share of First
Dynasty common stock) in a form and substance satisfactory to all parties,
pursuant to a prospectus filed with the applicable Canadian securities
regulatory authorities.  

         (c)  In the event of a violation of First Dynasty's obligations to pay
the Company 4,000,000 shares of its Common Stock or greater amount or to arrange
for the issuance of freely tradeable shares pursuant to the mechanisms
contemplated in the FDM Agreement, the Company would be able to require First
Dynasty to specifically perform its obligations pursuant to the grant of an
injunction or other appropriate decree of specific performance by any court
having equity jurisdiction over the parties.  

    3.   (a)  First Dynasty's agreement to continue funding under the FDM
Agreement is subject to the following conditions:  

              (i)     all of the representations and warranties of GGA were
         true as of the date of the execution and the delivery of the FDM
         Agreement; 

              (ii)    neither the Company nor GGA (prior to the actual
         implementation of the appointment of First Dynasty's designees as
         three directors of GGA) will have breached in any material respects
         any of its covenants under the FDM Agreement, and 

              (iii)   with respect to any advances in excess of $10,000,000 or
         the issuance of any shares of First Dynasty stock, First Dynasty will
         have obtained the approval of The Toronto Stock Exchange. 

         (b)  First Dynasty right's under the FDM Agreement remain exclusive 

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for so long as First Dynasty continues to fulfill its obligations under the FDM
Agreement and GGA continues to fulfill its obligations under any joint venture
agreement in Armenia, except that FDM's rights will cease to be exclusive if (i)
the Company notifies First Dynasty in writing that First Dynasty is in default
under the FDM Agreement or that GGA is in default under any Armenian joint
venture agreement and (ii) First Dynasty fails to cure such default within 45
days thereafter, but, in any event, prior to the expiration of any cure period
to which GGA is subject if First Dynasty's default results in a default by GGA
under any joint venture agreement.  

    4.   (a)  First Dynasty agreed to pay the Company $400,000 for use, at its
option, to defray its expenses in participating in the negotiation of the second
Armenian joint venture agreement, of which $200,000 was paid upon the execution
and the delivery of the FDM Agreement and the balance of $200,000 will be paid
on June 30, 1998.  

         (b)  Although not reflected in the FDM Agreement, First Dynasty also
agreed to pay up to $150,000 to defray the expenses incurred by GGA during the
three-month period ending March 31, 1997. Such reimbursement in the amount of
$141,155 occurred in June, 1997.  

    5.   Upon the formation of AGRC Exploration, a limited liability company to
be formed under the laws of Armenia, and ending on December 31, 2009, the
Company will be entitled to elect to participate with GGA in any exploration
projects undertaken by AGRC Exploration up to a level of 20% of GGA's rights in
any exploration project.  GGA and the Company also agreed to enter into a
mutually acceptable participation agreement in respect of any exploration
project. 

    6.   GGA agreed to retain Robert A. Garrison as a consultant for a
three-year period commencing February 1, 1997 pursuant to the terms of the
consulting agreement entered into between such parties.  Under such agreement,
Mr. Garrison will serve as a Senior Vice President of GGA, will assist it in
furtherance of its business interests under the supervision of the board of
directors of GGA and provide ongoing management as the board of directors of GGA
reasonably requests of him from time to time.  Mr. Garrison agreed to devote 50%
of his time and attention to the performance of his services under such
agreement, in his capacity as an independent contractor.  Such agreement is
terminable by the consultant upon 90 days prior written notice to GGA (or lesser
notice if GGA agrees to such shorter period) or for cause (as defined therein)
or without cause, which, in such latter case, would require GGA to pay Mr.
Garrison the amount of his consulting fees remaining unpaid under such
agreement. 

    7.   The parties also entered into a shareholders agreement providing for,
among other things, the following: 

         (a)  From the inception of the agreement and until First Dynasty shall
    acquire 80% of the issued and outstanding common stock of GGA, First
    Dynasty's designees serve as three of the five directors of GGA, including
    Marcus Randolph, the President of First Dynasty, and Drury J. Gallagher and
    Robert A. Garrison, the Company's Chairman and Chief Executive Officer and
    the President and Chief Operating Officer, respectively, serve as the
    Company's designees.  If the size of the board is increased thereafter,
    each party will have the right to designate such number of its designees as
    members as the board of directors as shall be proportionate to the number
    of designees established under such agreement.  As a result of this
    provision, First Dynasty now controls the board of directors of GGA.  

         (b)  The board of directors of GGA will act by the vote of majority of
    its members, except that the unanimous vote of the board is required to
    take action on the following matters: 

              (i)     the sale, lease or any disposition of substantially all
         of the assets of GGA; 

              (ii)    the sale or assignment of any interest of GGA in any
         joint venture company in which GGA is a shareholder or equity
         participant or has provided financing in excess of $250,000 or 

              (iii)   the financing of any of the projects contemplated under 

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         the FDM Agreement other than when such financing is provided solely by
         FDM.  

         (c)  In the event that the FDM Agreement becomes non-exclusive
    pursuant to the provisions thereof, then First Dynasty shall have the right
    to designate only one director of GGA, the Company shall have right to
    designate one director of GGA and the party or parties who provide
    financing required under the then applicable provisions of the contemplated
    second Armenian joint venture agreement will have the right to appoint
    three designees to the board of directors of GGA, simultaneously with the
    execution and delivery of any financing agreement relating thereto or upon
    the payment of the first funding thereunder (and the Company will have the
    right to participate in the financing described in such provision).

         (d)  Each party cannot sell, transfer  or pledge its shares of
    ordinary shares of GGA, except that each party may transfer its interest to
    a corporation, partnership or limited liability company which is wholly
    owned by the transferring party.  During the period that First Dynasty
    rights under the FDM Agreement remain exclusive, neither shareholder has
    any right to sell or transfer the shares of GGA stock owned by it. 
    Furthermore, if a stockholder receives a bona fide offer to sell its GGA's
    shares, GGA and thereafter the non-selling stockholder has the right to
    purchase the stock in question at the offered price, each for successive
    30-day periods.  If such right of first refusal is exercised, the purchaser
    is required to pay the full purchase price in immediately available funds
    or by wire transfer.  Alternatively, the non-selling shareholder may
    exercise so-called tag along rights and participate on a pro rata basis in
    the sale of shares of GGA of both the recipient of the offer and the
    non-selling shareholder to the offeror.  If such right of first refusal or
    tag along right is not exercised, than the seller may sell its shares of
    GGA to the offeror on the terms described in the offer within 120 days
    after receipt of such offer and provided further that such third party
    signs an instrument in writing agreeing to be bound by all of the terms and
    conditions of the stockholders agreement.  

    The Company, GGA and FDM amended the shareholders agreement, as of May 13,
1997, to provide, among other things, that it will be governed by the New York
(instead of Cayman Islands) law.  

    8.   Each party is entitled to engage in any other activities or business
or mining or other investments outside of Armenia and will not be required to
account to any other party for any profits derived from such permitted
activities, businesses or investments.   

    Pursuant to the First Dynasty Agreement, First Dynasty carried out certain
initial commitments described below:

         a.   First Dynasty loaned $1,350,000 to GGA in two installments of
    $675,000 each to repay such amount of payables attributable to GGA and such
    amounts were disbursed according to the agreement. 

         b.   Upon the signing of the $640,000 Tailings Dams construction
    contract with Armhydro, First Dynasty funded $96,000, and, thereafter,
    First Dynasty has agreed to fund the balance.

         c.   First Dynasty agreed to guarantee or co-sign for up to $3,500,000
    of the equipment purchase contract and up to $1,000,000 of the engineering,
    procurement, construction management agreement between AGRC and a Canadian
    engineering firm.  Also, First Dynasty agreed to advance funding for
    expenditures thereunder as jointly  agreed by the Company and First Dynasty
    from time to time, subject to certain cancellation provisions agreed to by
    First Dynasty.

    As of December 31, 1997, First Dynasty had advanced at least $17,510,000 in
total project costs, of which approximately $12,800,000 related to the
construction and start-up of the tailings plant, approximately $3,700,000
related to the Zod and Meghradzor feasibility report and $1,000,000 consisted of
a loan to Armgold for operating costs, and became the owner of 66 2/3s of the 
issued and outstanding stock of GGA as of such date.

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    (d)  MINING PLANS 

    GGA, in conjunction with First Dynasty, negotiated with the Armenian
Government to obtain for AGRC the rights to mine and process gold at the Zod and
Meghradzor mines on a schedule which is faster than anticipated by the May 1,
1996 Joint Venture Agreement, which culminated in the execution and the delivery
of the Amended Armenian Joint Venture Agreement, subject to the prior approval
thereof by an Armenian parliamentary decree.  In addition,  GGA engaged an
independent engineering firm to conduct a feasibility report with respect to the
reserves at such mines, and production is continuing at the tailings plant.

    The gold mine in Zod, one of the world's larger gold mines, has been in
operation since about 1975. The mine has a structure of over 5 kilometers in
length; only 2 kilometers of the gold structure has been explored and tested,
and reserves have been established by Armenia and Russian geologists. Zod is
located in eastern Armenia within fifteen kilometers of the Soviet border
between Armenia and Azerbaijan according to various maps. The de facto border is
substantially farther away and the Armenian Government has represented that it
has good title to the mine. The Azerbaijan Government has recently stated that
it had sent notes of protest to the U.S. Embassy in Armenia questioning the
appropriateness of an American company carrying on activities so close to
occupied territories at the Zod mine. The U.S. Embassy has no record of receipt
of such protests. Engineering studies undertaken by the Government of Armenia
state that there are proven gold reserves of approximately 5,000,000 ounces of
gold. In addition, a pre-feasibility report recently undertaken on behalf of
AGRC confirmed that there are at least a total of 3,000,000 ounces of gold
(based on a specified grade per ton of ore) at the Zod and Meghradzor mines
which can be economically mined at current gold prices and mining costs
(although such prices and costs may change). However, there can be no assurance
that reserves in such amount will finally be determined to exist, or, if they
exist, can be mined on a profitable basis.

    The ore at Zod has been mined historically by open pit and underground
methods. The ore from the mine site has been shipped to the Ararat processing
plant located approximately 275 kilometers from the mine site. Mining had been
conducted at the Zod mine site at an average annual rate before 1996 of
approximately 60,000 tonnes of ore per year by both underground and open-cut
operations, but such mining operations ceased in November, 1996 due to lack of
funding. The Company believes that such average tonnage constitutes less than
the mine's capacity.

    The Meghradzor mine is situated in Central Armenia some 75 kilometers
north of Yerevan. The mine has produced approximately 300,000 tonnes of ore
since commencing production in 1987. The ore produced by the mine is hauled by
railroad approximately 100 kilometers to the Ararat treatment plant. Like Zod,
Meghradzor has the benefit of excellent regional infrastructure including sealed
road and railroad access to the site and connection to the Armenian power grid.
The mine is closed due to many similar issues which face the Zod mine including
low re-investment, poor equipment availability, lack of consumables and the high
costs associated with railing of crude ore to Ararat.

      As with Zod, underground exploration has been accomplished by extensive
underground mine development in addition to drilling, with the result that over
60 kilometers of underground workings exist.

    Engineering studies undertaken by the Government of Armenia state that
there are proven gold reserves of approximately 700,000 ounces of gold. However,
no final feasibility report has been prepared.  Accordingly, there can be no
assurance that reserves in such amount exist will finally be determined to
exist, or, if they exist, can be mined on a profitable basis.

    Based on projections furnished by independent engineering firms, the
Company believed that approximately $10,000,000 is needed in the first phase of
the project, $80,000,000 in the second phase of the project and $100,000,000 in
the third phase of the project. The funds for the first phase (which exceeded 
the original estimate) were used primarily to construct a new tailings 
processing plant. The funds for the second phase would be used to 
construct a new processing plant at the Zod mine site

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with a capacity of processing 1,000,000 metric tonnes per year and to redesign
the mine. Of the sum of $100,000,000 for the third phase, $60,000,000 would be
used to increase the capacity of the Zod processing plant to 2,500,000 metric
tonnes per year. The additional $35,000,000 in phase three is proposed to be
used to construct a processing plant at the Meghradzor mine with a capacity of
processing 200,000 metric tonnes per year. Also, an additional $5,000,000 on
phase three is proposed to be used to build a gold refinery in Armenia with a
capacity of refining 300,000 ounces of gold annually. However, since the Company
has not conducted any final feasibility study with respect to these projects,
the ultimate financing needs for these projects might vary substantially from
that set forth above.

(C) Georgia Mining Project

      (a) Current Status

         As of December 31, 1997, the Company abandoned its pursuit of any
mining project in Georgia.  The material set forth herein describes the prior
background with respect to the development of a gold and mining project in such
country.

    (b) Prior Background

         Pursuant to the Asset Purchase Agreement between Eyre Resources N.L.
("Eyre") and the Company dated as of June 30, 1995 (the "Agreement"), the
Company, through its wholly-owned subsidiary, Global Gold Georgia Limited,
succeeded by an assignment dated December 1, 1995 to all of Eyre's rights in the
Georgian Project (as defined therein, as further described in Item 12 hereof).

      Eyre signed a Foundation Agreement(3), dated April 22, 1995, together with
the charter of the

----------

      (3) The Foundation Agreement provided that:

            1. Eyre was to have a 50% interest in the GJV Co.

            2. RCPA was to contribute buildings and equipment and certain rights
under its license for development of the Madneuli deposit and pay the expenses
of formation of the GJV Co. and provide and guarantee access to ore material and
relevant information.

            3. The Company or its wholly-owned subsidiary, upon the assignment
of Eyre's interest in the Foundation Agreement, was to provide capital
investments, management, control, engineering, construction and other technical,
marketing and other services.

            4. Contributions to the Charter Fund were to be $10,000, to be made
by the Company or its wholly-owned subsidiary upon the assignment by Eyre of its
joint venture interest to it and be deemed to be a contribution of 50% by the
parties to the Foundation Agreement.

            5. The Foundation Agreement provided for management of the GJV Co.
pursuant to a Board of Directors of four individuals, two of which were to be
designated by each party, with the Chairman to be appointed by the majority
shareholder.

            6. Prior to recovery of capital by the non-Georgian party, net
profits of the GJV Co. after expenses were to be distributed as follows:

                  (i)   RCPA - 9.75%

                  (ii)  The Company - 9.75%

                  (iii) Panquest - .25%

                  (iv)  Sinking Fund - .25%, and

                  (v)   Capital Repayments - 80%.

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            7. After recovery of capital, the net profits were to be distributed
as follows:

                  (i) RCPA - according to shareholdings (i.e. share of the
Foundation Fund, which shares could be changed only by unanimous vote of the
participants), less 2.5% to the Sinking Fund, and

                  (ii) The Company (or its wholly-owned subsidiary) - according
to shareholdings less 2.5% to Panquest.

            8. The GJV Co. was to be entitled to certain tax concessions
provided to certain foreign investments.  The limited liability company to be
formed (the "Foundation Agreement"), with Research-Cum-Production Amalgamation
"Madneuli" ("RCPA"), a legal entity formed under Georgian legislation, pursuant
to which the parties agreed to the formation of a joint venture limited
liability company called "Madneuli Copper Gold J.V." (the "GJV Co.") under
Georgian law to carry out the mining of the Madneuli deposits(4) and apply
modern mining techniques in Georgia, including carrying out prospecting
activities, together with certain unrelated activities that the Company
currently has no plans to implement.

            9. Disputes arising under the Foundation Agreement were to be
subject to arbitration at the Arbitration Court in Stockholm, Sweden.

      Legislation enacted by the Government of Georgia in 1995 required that the
license under which certain rights will be granted to the GJV Co. pursuant to
the Foundation Agreement to be re-registered with a newly-created licensing
bureau of the Ministry of Environmental Protection. The bureau in question
reviews the prior license and determines whether it was legally issued. If the
license holder fails to re-register, the license will be suspended until
re-registration occurs, which may result in the permanent suspension of the
license. However, no application for the re-registration of the license in
question was filed by Eyre. The director of RCPA who signed the Foundation
Agreement was removed from his position. Moreover, under newly enacted law, in
connection with re-registration of licenses, concessions may have to be obtained
from the Government of Georgia. Such concessions would be the subject of a
concessional contract requiring certain terms required under the new law.

      As of the date hereof, neither the Company or Global Gold Georgia Limited
has any rights to the Madneuli mining project. The Company learned in early 1997
that the Georgian Government planned to privatize the development of the
Madneuli mine through a public bidding process which was slated to end on April
15, 1997. Since the structure of the Madneuli mining project under the public
tender differs markedly from that contemplated under the Asset Purchase
Agreement between the Company and Eyre dated as of June 30, 1995, the Company
decided not to submit a bid for the development of the Madneuli mining project. 

    As a result of these and other unfavorable developments, the Company
abandoned the Georgian mining project as of December 31, 1997.

(D) Recent Activities

      (a) Investment in Jet-Line Environmental Services, Inc.; Restructuring of
Investment

    Jet-Line Environmental Services, Inc. ("Jet-Line") is a privately-held
Delaware corporation organized in 1970, and is engaged in providing various
environmental clean-up services for a variety of customers, including fuel
service, laboratory services, disposable services, transportation and safety and
compliance services.  A copy of Jet-Line's compiled and unaudited financial
statement for the calendar year ended December 31, 1996 showed a loss of
approximately $377,000 for such year.  The Company further believes that
Jet-Line incurred an operating loss for the year ended December 31, 1997 but has
not received a financial statement to such effect. 
_________________

(4) The Madneuli deposit has been in operation since about 1975, and is
located approximately 75 kilometers to the southwest of Tiblisi, the capital of
Georgia. The ore body at Madneuli was discovered in 1952 and exploration
continued until production commenced in 1975.

                                        9
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    On April 21, 1993, the Company loaned $300,000 to Jet-Line, which is
evidenced by Jet-Line's promissory note that is convertible into 20% of
Jet-Line's common stock, and 25% of its common stock upon the payment (upon
conversion) to Jet-Line of $37,500, at the option of the Company, and 30% of its
common stock upon the payment (upon conversion) to Jet-Line of $100,000, at the
Company's option, as provided therein (the "Jet-Line Note").  The Jet-Line Note,
which matured on April 21, 1996 and which was restructured on May 13, 1996, had
initially been secured by a pledge of transportation equipment and machinery and
equipment used in Jet-Line's business and a purported Jet-Line owned warehouse
and office laboratory building totaling 22,500 square feet located on one acre
of land.  The total appraisal value of the assets when made in part in December,
1992 and in part in early 1993 was in excess of a total of $1,500,000, but the
Company believes that the fair market value of such collateral at present is
negligible. Prior to such transaction, Jet-Line had no affiliation of any kind
with the Company or its stockholders.

    Since Jet-Line experienced operating losses, and lacked adequate liquid
resources, Jet-Line defaulted under the May 13, 1996 loan extension agreement
between the parties.  In addition, Jet-Line advised the Company in early March,
1997 that it received a notice of the revocation of its license to operate its
business in Massachusetts, and of a $100,000 fine, from the Massachusetts
environmental authorities, and Jet-Line contested such revocation and fine in
the Massachusetts state courts unsuccessfully.  Jet-Line then attempted to sell
its facility in Massachusetts but could not do so.  As a result, the
Massachusetts environmental authorities ordered the waste treatment facility in
Stoughton, Massachusetts to be closed and assumed the environmental clean-up
responsibility at the plant. 

    In addition, the Business Loan Center, another creditor of Jet Line, is now
attempting to sell certain trailer and other automotive assets of Jet-Line in
which it holds a security interest, and anticipates realizing between $30,000
and $40,000 from such sale.  Such creditor advised the Company that it believes
that such creditor has senior rights to the assets being sold.  The Business
Loan Center made a U.S. Small Business Administration guaranteed loan of
approximately $550,000 to Jet-Line in 1994 and obtained a first lien on certain
enumerated assets of Jet-Line, and the Company at such time subordinated its
lien thereto, except with respect to certain machinery and equipment assets as
to which the Company retained its first security interest.  The Company is
currently disputing the Business Loan Center's position that such creditor has a
senior security interest in the assets being sold, but there can be no assurance
as to the outcome thereof.  Moreover, the Company believes that the value of the
assets held by it as collateral is negligible.

    Thus, there can be no assurance that the Company will ultimately be paid
any amount of principal, or accrued interest on, the Jet-Line Note.
Consequently, the Company treated such loan as worthless as of December 31,
1997.

      (b) Offering of Convertible Notes of the Company

      Pursuant to the Confidential Private Offering Memorandum dated May 17,
1995, as amended, the Company sold the maximum of $500,000 principal amount of
its 10% Convertible Notes, which had a maturity date of September 30, 1996 (the
"Offering"). The Offering of Convertible Notes, Warrants and Common Stock was
offered pursuant to the Memorandum solely to persons who are "accredited
investors" as defined in Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act"), in a transaction exempt from
registration thereunder. The final date of the closing of the Offering was
December 31, 1995.

      The Company undertook the Offering in order to raise additional funds for
the Company to enable it to engage in the development and commercial
exploitation of the Armenian and Georgian mining projects, in an attempt to
generate a potential and substantial asset base and potential future
profitability for the Company as part of the Company's long-term strategy to
develop profitable mining operations abroad.

      All of the $500,000 principal amount of Convertible Notes was
automatically converted pursuant to their terms into an aggregate of 2,000,000
shares of Common Stock (prior to the Reverse Split) and warrants to purchase

                                       10
<PAGE>

4,000,000 shares of the Company's Common Stock (prior to the Reverse Split), at
an exercise price of $0.50 per share (the "Warrants").  As of December 31, 1997,
there were Warrants to purchase 400,000 shares of the Company's Common Stock
issued and outstanding.  As to the Warrants, each Warrant now has an exercise
price of $.125 per share and expires on December 31, 1998 pursuant to several
amendments made thereto, including the one made on December 1, 1997 extending
the expiration date as shown above and reducing the exercise price thereof to
$.125 per share.  

    Since all of the automatic conversion conditions were satisfied in 1995,
there were no Convertible Notes of the Company outstanding as of December 31,
1995 or thereafter.

      (c) Reverse Split

      Various prospective investment banking firms and potential investors who
expressed an interest in providing funding for the Company's projects in 1996
requested that the Company undertake a reverse split of its Common Stock to
decrease the number of shares outstanding and thereby facilitate possible future
financings. Accordingly, the Company effected a 1 for 10 reverse split of its
common stock effective as of December 31, 1996. Such step was taken by the
written consent of the holders of a majority of the Company's issued and
outstanding shares of Common Stock. By virtue of the Reverse Split, each
stockholder's number of shares of Common Stock became 1/10th of the number
previously held. The Company filed its Certificate of Amendment to the
Certificate of Corporation with respect to the reverse split with the Delaware
Secretary of State on December 31, 1996.

      (d) Employees.

      As of December 31, 1997, the Company had two employees, one employee 
who is in charge of the overall business of the Company on a part-time basis,
and one consultant who is principally involved in overseeing the Company's 
proposed mining activities on a part-time basis, and one employee who
provide administrative and clerical services on a part-time basis.

(E) Special Considerations

      The following risk factors should be considered in connection with an
evaluation of the business of the Company:

No Prior Operating History; Failure to File Reports with the SEC

      The Company was incorporated on February 21, 1980, and closed a public
offering of the Common Stock in January, 1981. Several months after the closing
of such offering, the Company withdrew the listing of the Common Stock for
trading on NASDAQ because of the theft of substantially all of the cash funds of
the Company derived from the proceeds of the public offering by its then
president, Samuel McNell in July, 1981. After the consummation of the public
offering, the Company failed to file any further annual or periodic reports
required under the Exchange Act. While the Company filed its Form 10-KSB for the
calendar years 1994 and 1995 and its Form 10-QSB commencing with the quarter
ended March 31, 1995 and each quarter thereafter through and including
September 30, 1997 and filed audited financial statements with the Form 10-KSB
for calendar year 1994 covering calendar years 1987, 1988, 1989, 1990, 1992,
1993 and 1994, and covering calendar years 1995 and 1996 with the Form 10-KSB
filed for each such year, there can be no assurance that the SEC might not
assert claims against the Company and its present and former directors and
officers, which actions might adversely affect the future conduct of the
Company's business or prevent the future trading of the Company's stock on
public markets. Furthermore, the Company's past failure to file reports with the
SEC may have an adverse impact on the Company's ability to have the shares of
Common Stock listed for trading on NASDAQ in the event that the Company is
otherwise able to meet the NASDAQ Stock Market listing standards in the future.

Development Stage Company

      Since the Company never engaged in the active of conduct of a trade or
business, it has not generated any revenues to date, with the exception of
interest income on the funds recovered by the Company it in the lawsuits

                                       11
<PAGE>

prosecuted by it as a result of the theft of the Company's funds. The Company
may encounter problems, delays, expenses and difficulties typically encountered
in the development stage, many of which may be outside of the Company's control.
These include, without limitation, unanticipated problems and additional cost
relating to the development, production, marketing, and competition. The Company
expects to incur operating losses for the near term future and, in any event,
until such time as it derives substantial revenues from the sale of concentrates
containing gold, if any. There can be no assurance that the Company
will develop successful operations.

      Although the Company, GGA and First Dynasty have a definitive agreement
covering the development of the contemplated Armenian mining projects, there can
be no assurance that such parties will be able to obtain the requisite full
financing needed for the projects, or, if so, on terms acceptable to them.

Need for Additional Cash

      The Company needs substantial additional funds to develop the mining
projects in Armenia and to fund the operations thereof. If the Company raises no
additional financing either through First Dynasty or otherwise, the Company
still may be able to exploit certain opportunities to develop gold projects in
Armenia through the sale thereof. Although the Company believes that such an
opportunity is a valuable asset, there can be no assurance of such result. If
the Amended Armenian Joint Venture Agreement is not implemented by the Armenian
Government, the Company and First Dynasty may be forced to sell its interest in
such project in Armenia to other potentially interested parties. Moreover, there
can be no assurance that any financing for the Armenian projects will be
available for such purposes or that such financing, if available, would be on
terms favorable or acceptable to the Company.

Lack of Definitive Nature of the Company's Contracts for the Armenian Mining
Projects and Cessation of Pursuit of any Georgian Mining Project

      At present, the Company and GGA, in conjunction with First Dynasty, 
negotiated for AGRC to develop the Zod and Meghradzor mines and concluded the
Amended Armenian Joint Venture Agreement, subject to the passage of a
parliamentary decree approving it. However, the Armenian government has not
passed any such parliamentary decree. Moreover, there can be no assurance that 
any Armenian parliamentary decree approving the Amended Armenian Joint Venture
Agreement will be passed, or, if so, when such decree will be passed.  While the
Company is hopeful of achieving such result, there can be no assurance of such
result.

    As of December 31, 1997, the Company ceased pursuing the development of any
Georgian mining project.

Lack of Adequate Insurance Protection of the Company's Potential
Investments in Armenia

      The Company plans to obtain insurance from Multilateral Investment
Guarantee Agency ("MIGA") or other like organization to insure any ownership it
may have in the Armenian mining projects against three risks: expropriation,
inconvertibility of currency and acts of war, unrest or riots in the country.
MIGA typically issues insurance commitments equal to the amount representing the
original investment, debt on the project and retained earnings with respect
thereto. If obtained, such insurance will not provide complete and adequate
protection for any investment the Company may make in such countries.  Moreover,
there can be no assurance that such insurance will be available, or, if so, will
be available on terms and conditions satisfactory to the Company. 

Prices of Materials

      Since the Company's future projected revenues will be derived almost
entirely from the sale of concentrates containing gold, the Company's future
earnings, if any, will be directly related to market prices for gold. The prices
for such commodity has historically fluctuated widely and are affected by
numerous factors beyond the Company's control. There can be no assurance that

                                       12
<PAGE>

the Company can enter into any price protection program adequate to prevent any
potential loss from such fluctuation.

Reserves

      While the Company believes that, based on geology reports and mine
engineering data made available by Armenian state enterprises, there are
substantial proved reserves in the Armenian mining projects, it should be noted
that any such quantities may not actually be realized by the Company. Moreover,
except in the case of the provable reserves verified in the case of the Tailings
Project, any reserves pertaining to the other contemplated Armenian mining
projects have only been independently verified by the Company through a
pre-feasibility report, although an engineering firm had been engaged to prepare
a definitive feasibility report with respect to the Zod and Meghradzor mines.
The deposits from which such reserves are presently being or are expected to be
produced or developed may not conform to geological or other expectations, with
the result that the volume and grade of reserves recovered and the rates of
production may be more or less than anticipated.
Further, market price fluctuations in gold and changes in operating and capital
costs may render certain ore reserves uneconomical to develop. No assurance can
be given that any reserves proved or estimated will actually be produced.

Location and Industry Risks

      The Company's proposed mining operations will be subject to a variety of
potential engineering, seismic and other risks, some of which can not be
predicted. Such factors may cause personal injury to personnel at the projects
or critical property damage or significant interruptions to production, and may
not be covered by insurance. The mines may also be subject to the usual risks
encountered in the mining industry, including unexpected geological conditions
resulting in cave-ins, flooding and rock-bursts and unexpected changes in rock
stability conditions. While it is contemplated that customary insurance will be
obtained, there can be no assurance that such insurance will provide adequate
protection against any or all of the risks in question. Also, the Company's
proposed mining operations may encounter problems in transporting any
concentrates to potential markets (including obtaining requisite governmental
approvals and licenses) and conducting mining activities as a result of lack of
fuel, electricity, water, equipment, spare parts or other necessary items.

Environmental Matters

      While the Company intends to conduct its foreign mining operations in
compliance with all relevant environmental laws, rules and regulations of the
host countries, there can be no assurance that such laws, rules and regulations
will not be violated. Moreover, such operations are subject to the risk of any
future environmental laws, rules and regulations that the foreign countries or
subdivisions therein might impose, which could involve potentially onerous
restrictions on mining operations and significant increased operating and
engineering costs. The impact of any such possible changes cannot be predicted.

Holding Company Structure

      The Company is a holding company which will conduct its business through
subsidiaries. As a result, the Company's cash flow and consequent ability to
make dividend payments and meet its debt obligations are primarily dependent
upon the earnings of its subsidiaries and on dividends and other payments
therefrom. Any right of the Company to participate in any distribution of the
assets of its subsidiaries upon the liquidation, reorganization or insolvency of
such subsidiaries would, with certain exceptions, be subject to the claims of
the creditors (including trade creditors) and preferred stockholders, if any, of
such subsidiaries, or may otherwise be restricted by virtue of a stockholder
agreement with respect thereto.

Competition

      There is intense competition in the mining industry. If the Company does
engage in its proposed mining activities, it will be competing with larger
mining companies, many of which have substantially greater financial strength,
capital, marketing and personnel resources than those possessed by the Company.

                                       13
<PAGE>

Need for Key Personnel

      The Company presently only has one officer intimately familiar with the
operation of mining projects or the development of such projects. While the
Company originally intended to rely on the management services to be provided by
a newly-formed mining management corporation, which had no history of 
operations, Autosport (Asia) Pte. Ltd., a Singapore corporation controlled by 
Eyre Resources, N.L.("Eyre") to supervise the mining development services on 
behalf of the Company pursuant to a mining supervision contract signed at the 
Eyre Closing, such agreement was canceled pursuant to the terms of the Initial
Restructuring Agreement. Accordingly, the Company planned to rely on the
services of independent mining enterprises which will have a future interest in
the development of any mining project, and, through the FDM Agreement, is
relying on First Dynasty for such purpose.  However, there can be no assurance
that First Dynasty or any other any mining management corporation will have
adequate resources or personnel to perform such function. Although the Company
believes that such management services which may be provided by such independent
mining company will be adequate to protect the Company's interest in, and
oversee the day-to-day operation of, the mining projects, there can be no
assurance of such result. While the Company does not believe the loss of its
president or any other director or officer of the Company will materially and
adversely affect its long-term business prospects, the loss of any of the
Company's senior personnel might potentially adversely affect the Company until
a suitable replacement could be found. While the Company has an employment
agreement with one of its officers, Drury J. Gallagher, such agreement is only 
for a three-year term which expires on June 30, 2000.  There can be no 
assurance that such agreements will be renewed or, if renewed, will be on 
terms mutually acceptable to all parties.

Failure to Satisfy Nasdaq Listing Rules

      Effective in August, 1991, the SEC approved the adoption by the NASDAQ
Stock Market of new maintenance standards for companies whose securities are
traded on NASDAQ. Under these new standards, among other things, a corporation
must have $4 million in total assets and $2 million in capital and surplus and a
minimum bid price of $3.00 per share in order to be eligible for a Nasdaq
listing. At December 31, 1997, the Company had total assets of approximately
$266,345 and stockholders' equity of $105,856. Without increases in assets and
capital surplus, the Company may not be able to be eligible to have its
securities traded on NASDAQ. Moreover, recent regulations issued by NASDAQ have
increased the thresholds that have to be met in order for a security to be
traded initially on the NASDAQ Small Cap and National Markets, which may
adversely the Company's ability to have its common stock traded on the NASDAQ
Small Cap or National Markets. Furthermore, the Company could experience
difficulties in commencing the trading of its securities on NASDAQ. If the
Company is unable to have its securities traded on NASDAQ, its securities will
continue to be eligible for trading on the NASDAQ bulletin board, although the
market for shares of the Company's Common Stock may be reduced and, hence, the
liquidity of the shares of Common Stock and/or the Warrants may be reduced.

Restrictions on Transfer

      Pursuant to the Stockholders Agreement, the then current five principal
holders of the Company's Common Stock, Messrs. Gallagher, Hayman, Hayman, and
Ryan and the Seitz Family Limited Partnership agreed not to sell the shares of
Common Stock owned by them for a period of 24 months following the date of the
final closing of the Offering (i.e., until December 31, 1997), except they each
have the right to pledge a portion of their shares and to make transfers within
their family or to certain family-controlled entities. In addition, Eyre and the
Parry-Beaumont Trust also agreed not to sell, pursuant to the Stockholders
Agreements, the 600,000 and 400,000 shares of the Company's Common Stock owned
by them (after implementation of the Initial Restructuring Agreement) for a
period of 24 months from the date of the final closing of the Offering (i.e.,
until December 31, 1997), except that they each have the right to sell 150,000
shares to non-United States persons (as defined under the Act) (all of which
numbers have been computed after the Reverse Split). Moreover, each purchaser of
Convertible Notes pursuant to the Offering also agreed not to sell the Common
Stock issuable upon the conversion of the Convertible Notes or upon the exercise
of the Warrants issued pursuant to such conversion for a period of 24 months
from the date of the final closing of the Offering (i.e., until December 31, 

                                       14
<PAGE>

1997). Upon the expiration of such restrictions, which occurred, up to 367,048
shares of Common Stock held by the five major existing shareholders, 600,000
shares of Common Stock held by the purchasers of the Convertible Notes (assuming
all the Warrants issued upon the prior automatic conversion thereof are
exercised in full) and 1,000,000 shares issued to Eyre and the Parry-Beaumont
Trust or a total of 1,967,048 (all computed after the Reverse Split), may
potentially be available for sale under Rule 144, subject in some cases to a
certain volume limitation. No prediction can be made as to the effect, if any,
that future sales of Common Stock or the availability of such shares for sale
will have on the market price of the Common Stock or the Warrants prevailing
from time to time. Sales of substantial shares of the Common Stock or the
Warrants, or the perception that such sales might occur, could adversely affect
the prevailing market price of the Common Stock or the Warrants.

No Dividends

      The Company currently anticipates that it will retain all of its future
earnings, if any, for use in the expansion and operation of its proposed mining
business, and does not anticipate paying any cash dividends for the near term
future. There can be no assurance that the Company will pay cash dividends at
any time, or that the failure to pay dividends for period of time will not
adversely affect the market price for the Company's Common Stock.

Control of the Company

      Drury J. Gallagher, the Chairman and Chief Executive Officer, and Robert
A. Garrison, the President and Chief Operating Officer, currently own 1,108,451
and 1,000,000 shares, respectively, or a total of 2,108,451 shares of the
Company's Common Stock issued and outstanding as of December 31, 1997.  In
addition, Eyre and the Parry-Beaumont Trust own 600,000 and 400,000 shares of
Common Stock, respectively, as of such date. If Messrs. Gallagher and Garrison
act in concert they only control 49% of the issued and outstanding Common Stock
of the Company.  However, if they act in concert together with the owner or
owners holding slightly more than 1% in total of the Company's Common Stock
issued and outstanding, they will be able to effectively determine the vote on
any matter being voted on by the Company's stockholders, including the election
of directors and any merger, sale of assets or other change in control of the
Company.  In such case, such group would own more than 2,174,057 of the
4,348,114 shares of Common Stock outstanding as of December 31, 1997, or more
than 50% of the issued and outstanding shares of the Company's Common Stock. The
same result wold follow if Messrs. Gallagher and Garrison acted in concert with
Eyre and the Parry-Beaumont Trust.


Disagreement Among Significant Shareholders - Litigation

      In February, March and April, 1997, Eyre and the Parry-Beaumont Trust
questioned the validity of the issuance by the Company of 1,000,000 shares of
its Common Stock to each of Messrs. Drury J. Gallagher and Robert A. Garrison.
In addition, in February, March and April, 1997, Eyre and the Parry-Beaumont
Trust questioned the validity of the Second Restructuring Agreement (as defined
in Item 12(B)), including, without limitation, the waiver of their Acquisition
Warrants to purchase 400,000 shares of the Company's Common Stock (computed
after the Reverse Split). For a further description of the Second Restructuring
Agreement and such transfers, see Item 12(B) hereof.

    In January, 1998, the Company brought an action against Eyre, the
Parry-Beaumont Trust and Kevin Parry, individually, in the United States
District Court for the Southern District of New York, bearing Docket No. 98 Civ.
0009, seeking damages in excess of $81,000,000 arising out of the alleged fraud
committed by the defendants.  

    The defendants denied such claims and asserted counterclaims against the
Company seeking damages in an underdetermined amount against the Company and
seeking a declaratory judgment voiding the Second Restructuring Agreement (as
defined herein in Section 12(A)).  In addition, Eyre and the Parry-Beaumont
Trust brought a third-party complaint against Drury J. Gallagher and Robert A.,
Garrison, individually, seeking, among other things,  damages in excess of 

                                       15
<PAGE>

$75,000 and directing Mr. and Mrs. Garrison to return the 2,000,000 shares of
the Company's Common Stock issued to them by the Company in January, 1997.

      The Company believes that the Company properly issued the shares
of its Common Stock to Messrs. Gallagher and Garrison in exchange for valuable
consideration and that the claim of invalidity of such action has no merit.
Furthermore, the Company believes that the Second Restructuring Agreement is
valid, that Eyre and the Parry-Beaumont Trust waived their rights covered
thereby and that any claim of invalidity with respect thereto has no merit.  The
Company intends to prosecute such litigation to completion.  However, there can
be no assurance as to the outcome of the above litigation between the parties.

Political, Economic and Other Factors

      (a) General.

      The value of the Company's assets may be adversely affected by political,
economic, social factors and changes in law or regulations of Armenia or other
nearby countries and the status of foreign relations of those countries.
Developments in the respective regions of operations may also affect the value
of the Company's assets. Despite privatization programs that have been
implemented in Armenia, the Government of Armenia has exercised and continues to
exercise significant influence over many aspects of the local economy, and the
number of public sector enterprises in that country is substantial.
Governments and their economic policies may have an unpredictable impact on the
economies of these countries and the mining projects proposed to be undertaken
there. Future actions by the Government of Armenia could have a significant
effect on the market conditions, the mining projects proposed to be undertaken
by the Company and the local economies.

      The economy of Armenia was tightly controlled by a Communist government
and composed almost exclusively of state-owned enterprises until 1991. Since
then, the Government of Armenia implemented economic structural reform programs
with the objective of liberalizing their exchange and trade policies,
privatizing state-owned companies, controlling inflation, promoting sound
monetary and fiscal policy, reforming the financial sector, and placing greater
reliance on market mechanisms to direct economic activity. A significant
component of the program is the promotion of foreign investment in key areas of
the economy and the further development of the private sector. There can be no
assurance that the economic reforms will persist, and any reversal thereof by
the current or any future Government of Armenia could adversely affect the
Company's proposed mining projects there.

      Adverse developments in one major sector of the economy of Armenia could
adversely affect the economy as a whole. In addition, the Armenian economy
generally is dependent upon international trade and have been and may continue
to be adversely affected by trade barriers and other protectionist measures,
exchange controls and relative currency values. These economies may also be
adversely affected by economic or political developments in or controversies
with neighboring countries and major trading partners. The economy of Armenia is
heavily dependent on Russia and other neighboring members of the Commonwealth of
Independent States. Political or economic difficulties in these states continue
to result in difficulties in Armenia, which adversely affect the economic
stability of that country and, consequently, the Company's proposed mining
projects there.

      (b) Political Instability, Civil Unrest, Expropriation and
          Inconvertibility of Currency

      At present, Armenia and Georgia are experiencing civil unrest in regions,
which could adversely affect the mining projects proposed to be undertaken by
the Company in Armenia. The continuing armed conflicts in the regions
may hinder, delay or make commercially impractical or impossible the development
and production of mining in those countries. Conflicts in the region exist,
particularly over the disputed territory of Nagorno-Karabakh for more than eight
years, over Abkhazia in Georgia more than three years, and over Chechnya more
than two years, and have occasionally resulted in attacks on and damage to
transportation corridors and gas and oil pipelines. Due to the significant risks
surrounding the volatile political situation and the shipment of goods to both
countries, investors bear the risk of project delays, including the commencement

                                       16
<PAGE>

of the further development of potential commercial operations.

      In addition, there can be no assurance that Armenia will not adopt
policies adversely affecting the Company's proposed mining projects.
Lastly, there can be no assurance that the Company's proposed investments would
not be expropriated, nationalized or otherwise confiscated or that the
currency of Armenia would not become inconvertible or that unanticipated taxes
or other export duties would not be imposed, such as those investors experienced
by foreign-owned oil and gas projects in Russia.

      (c) Exchange Controls; Export Restrictions

      The ability of the Company to repatriate investment income, capital and
proceeds of sales realized from gold concentrates or from its investments in
Armenia is subject to regulation by government authorities of that country.
There can be no assurance that the Armenian Government will not, whether for
purposes of managing their respective balance of payments or for other reasons,
impose additional restrictions in the future on foreign capital remittances
abroad or otherwise modify the exchange control regime applicable to foreign
investors in such a way that may adversely affect the ability of the Company to
repatriate its income and capital or to sell and/or refine the mined materials
outside of that country. The Company could be adversely affected by delays in
obtaining or the failure to obtain any required government or central bank
approval for repatriation of capital, or proceeds from the sale of concentrates,
as well as by the application to the Company of any restrictions on investments.

      (d) Financial Information and Standards; Regulatory Matters

            Disclosure and regulatory standards in Armenia are substantially
less stringent than United States standards. Issuers there are subject to
accounting, auditing and financial standards and requirements that differ
significantly from those applicable to United States issuers. Moreover, by
virtue of significant differences between the accounting practice in those
countries and those in the United States, the assets and profits appearing on a
company's financial statements in such countries may not reflect their financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with United States generally
accepted accounting principles. Accordingly, the Company may experience delay
and significant costs in having financial statements prepared covering its
proposed operations in these countries.

      (e) Governmental Concessions, Licenses and Permits Not Yet Received

      While the Government of Armenia has granted various approvals and
licenses, and issued a decree, with respect to the Tailings Project, such
Government has not yet taken such action with respect to the Zod, Meghradzor and
exploration projects contemplated to be undertaken by the Company. Moreover, the
Armenian Government, the Company and First Dynasty have reached an impasse with
respect to the implementation of the Amended Armenian Joint Venture Agreement,
and there can be no assurance that such impasse will be resolved, or, if so, on
terms acceptable to First Dynasty and the Company.  The Company cannot assure
that the Government of Armenia will grant various approvals, licenses, permits
or concessions on a timely basis, and failure of the Government of Armenia to do
so could materially and adversely affect the Company's investments. Moreover,
the operations in such country may encounter other regulatory problems that
could materially and adversely affect the Company's operations there.

Withholding and Other Taxes

      The Company's proposed mining operations in Armenia are subject to the
income taxes of those countries. Upon the repatriation of earnings from such
operations, if any, such income is subject to United States income tax. In
addition, dividends distributions of earnings from those countries may also be
subject to withholding taxes. The imposition of such taxes and the rates imposed
are subject to change. The income tax treaty with Russia may potentially reduce
the possible risks of double taxation in each of those countries and the United
States. Armenia is currently negotiating a separate income tax treaty with the
United States. While foreign income taxes paid or incurred by the Company may be
eligible for credit or deduction against the Company's United States income tax,
such benefits are subject to certain limitations and restrictions. Although the 

                                       17
<PAGE>

Company expects that such foreign income taxes will be available for credit for
United States income tax purposes, there can be no assurance of such result.

United States Income Tax Consequences Arising Out of the Agreement

      The Company neither received a tax opinion nor sought a private letter
ruling from the Internal Revenue Service (the "Service") regarding the United
States income tax consequences arising out of the closing under the Asset
Purchase Agreement between the Company and Eyre on December 1, 1995 (see Item
12(B)). It is possible that the Service may contend that the Company and/or its
subsidiaries recognized substantial gain in such transaction, and there can be
no assurance of the outcome of such challenge. If the Service successfully
asserted such result, the amount due could have a material adverse impact on the
Company's business, assets and financial position.

      While the Company had a net operating loss carry forward as of December
31, 1994 of approximately $2,500,000 expiring in 1996, the closing of the
transaction under the Agreement and the Offering eliminated almost the entire
amount thereof as of December 31, 1995. Thus, if a substantial amount of gain
arose upon the closing under the Agreement, the Company's net operating loss
carry forward would not be available, in all likelihood, to offset such gain in
a material way.


ITEM 2. DESCRIPTION OF PROPERTIES

      The Company occupies office space of approximately 1,000 square feet, on a
month-to-month at-will tenancy basis, without the payment of any rent, on
premises owned by Penn-Med Consultants, Inc., whose sole stockholders are the
three largest stockholders of the Company, other than Eyre, the Parry-Beaumont
Trust and Robert A. Garrison. The Company has accrued rental payments of $3,000
a month, commencing as of January 1, 1996, for lease of space at the premises
and the provision of various administrative services, including telephone, fax
and xerox. There is no written agreement covering such arrangement.

ITEM 3. LEGAL PROCEEDINGS

    In January, 1998, the Company brought an action against Eyre, the
Parry-Beaumont Trust and Kevin Parry, individually, in the United States
District Court for the Southern District of New York, bearing Docket No. 98 Civ.
0009, seeking damages in excess of $81,000,000 arising out of the alleged fraud
committed by the defendants.  

    The defendants denied such claims and asserted counterclaims against the
Company seeking damages in an underdetermined amount against the Company and
seeking a declaratory judgment voiding the Second Restructuring Agreement (as
defined herein in Section 12(A)).  In addition, Eyre and the Parry-Beaumont
Trust brought a third-party complaint against Drury J. Gallagher and Robert A.,
Garrison, individually, seeking, among other things,  damages in excess of
$75,000 and directing Mr. and Mrs. Garrison to return the 2,000,000 shares of
the Company's Common Stock issued to them by the Company in January, 1997.

    The respective parties have served notices to take the deposition of the
other parties in the action and made requests for the production of documents. 
A meeting is scheduled with the District Court on April 21, 1998 to discuss a
scheduling order. 

    The Company intends to prosecute the litigation to completion and believes
that the defendants' claims asserted against the Company and Messrs. Gallagher
and Garrison are without merit, although there can be no assurance as to the
outcome thereof. 

      The Company has also received requests from Panquest Lte. and from Eyre
relating to amounts alleged to be due to Panquest Lte. relating to the Company's
acquisition of rights from Eyre relating to the Armenian and Georgian projects.
No evidence has yet been supplied to the Company in this regard.

                                       18
<PAGE>

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

    The holders of a majority of the issued and outstanding Common Stock of the
Company approved the Company's entry into the financing agreement with First 
Dynasty in January, 1997. 

                                    PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER

      (a) The Company's Common Stock is not publicly traded on any market.

      (b) As of December 31, 1997, there were approximately 1,100 holders of
record of the Company's Common Stock.

      (c) The Company did not pay or declare any cash dividends on its Common
Stock during its last two fiscal years ended December 31, 1996 and December 31,
1997.

      (d) As of December 31, 1997, the Company was not prohibited from paying
any dividends on its Common Stock.

      (e) The Company's transfer agent is American Registrar and Transfer
Company, with offices at 10 Exchange Place, Salt Lake City, Utah 84111.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      As at December 31, 1997, the Company's had net assets of $266,345, of
which $66,344 consisted of cash or cash equivalents, and had current liabilities
of $160,489.  Thus, the Company's current liabilities exceeded its current
liabilities as of such date.

      The Company's plan of operation for calendar year 1998 is:

            (a) To continue the mining of gold pursuant to the Tailings Project;

            (b) To conclude the transfer of the right to mine production and
process gold at the Zod and Meghradzor mines in Armenia in accordance with the
terms of the Amended Armenian Joint Venture Agreement; and

            (c) To attempt to collect payments of accrued interest and principal
the $300,000 convertible note issued by Jet-Line to the Company.

      As of December 31, 1997, the Company had liquid assets consisting of cash
of approximately $66,344. With respect to the Company's mining projects in
Armenia, the Company initially contemplated that First Dynasty would provide or
arrange for all of the financing needed in connection with the continued
operation of the Tailings Project and such additional financing as is needed in
connection with the development of the Zod and Meghradzor mines.  However, there
can be no assurance that First Dynasty will carry out such financial support by
virtue of the Armenian Government's failure to abide by the terms of the Amended
Armenian Joint Venture Agreement and to pass a parliamentary degree approving
the transfer of the rights to the Zod and Meghradzor mines to the joint venture
companies.  If First Dynasty does not finance such operations, there can be no
assurance that the Company will be able to find alternative financing for such
operation and development, or, if available, on terms and conditions acceptable
to the Company.

         In addition, the Company needs financing to meet its anticipated
monthly administrative expenses of $5,000 (exclusive of accrued officers'
compensation), plus additional amounts for legal and accounting costs.  Prior to
the commencement of the litigation described in Item 3 hereof, the Company
anticipated that it might additional financing in 1998 from several sources to
cover the latter types of costs (and for general corporate purposes) and its
contemplated financing sources were and are as follows:

                  (i) Pursuant to the Offering of $500,000 principal amount of
      the Convertible Notes of the Company, the Company issued Warrants to

                                       19
<PAGE>

    purchase 4,000,000 shares of its Common Stock at an exercise price of $0.50
    per share. By virtue of the Reverse Split, the Warrants were converted into
    Warrants to purchase 400,000 shares of the Company's Common Stock at an
    exercise price of $5 per share. On January 23, 1997, the Company amended
    the Warrants to reduce the exercise price to $1 per share and to extend the
    expiration date until December 31, 1997. Again, on December 1, 1997, the
    Company again amended the Warrants to reduce the exercise price to $0.125
    per share and to extend the expiration date until December 31, 1998.  If
    the Warrants were exercised in full, the Company would receive $50,000 in
    gross proceeds. However, the Company does not believe that the Warrants
    will be exercised under existing circumstances, and thus does not
    anticipate that any amount thereof will be exercised, although there can be
    no assurance of such result.

              (ii) The Company had anticipated receiving some payments of the
    principal or on the Jet-Line Note, but the Company now believes it will not
    receive any recovery from Jet-Line based on the existing circumstances
    described in Item 1(D) above, or merely a negligible amount, if any.  

    Except as described below, in the event that no contemplated financing is
consummated from the above sources, the Company does not have sufficient
financial resources to meet its obligations as of April 30, 1998.

    Accordingly, based on the Company's needs for additional financing of its
operations, Messrs. Gallagher and Garrison agreed to continue to advance funds
to the Company for such purpose through July 31, 1998 if they were paid in full
by such date or earlier out of the $200,000 amount receivable from First Dynasty
due on June 30, 1998 and provided that the Company also agreed not to encumber
such receivable in any way, which the Company agreed to do.

      The Company does not intend to engage in any project research and
development during 1998 and does not expect to purchase or sell any plant or
significant equipment, except as contemplated in connection with the Tailings
Project and as additionally provided in the Amended Armenian Joint Venture
Agreement.

      The Company does not expect to hire any additional full-time employees in
1998.

ITEM 7. FINANCIAL STATEMENTS

      The audited financial statements, notes thereto and reports of independent
certified public accountants thereon for the fiscal years of the Company ended
December 31, 1997 and December 31, 1996 (by Marks Shron & Company, LLP) are
attached hereto as part of, and at the end of, this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNT AND FINANCIAL
        DISCLOSURE

      Not applicable.

                                    PART III.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

      The directors and executive officers of the Company are as follows:

   Name                          Age         Officer
   ----                          ---         -------

   Drury J. Gallagher            59          Chairman, Chief Executive Officer,
                                             Treasurer and Director

   Robert A. Garrison            57          President, Chief Operating Officer,
                                             Secretary and Director

      Each Director is elected for a period of one year at the Company's annual
meeting of stockholders and serves until his successor is duly elected and

                                       20
<PAGE>

qualified. Each director who is not a full time employee of the Company receives
no remuneration for his services as a director. Officers are appointed by the
Board of Directors.

      The Board of Directors has not appointed any audit, compensation or any
other committee. Instead, the Board acts as a whole in all matters.

      Mr. Gallagher has served as a director since 1981 and as Chairman,
President and Treasurer of the Company from 1982 until February 1, 1997 and as
Chairman, Chief Executive Officer and Treasurer since that date. Mr. Gallagher
is the general partner, owner and operator of 20 nursing homes in Pennsylvania,
and has served as Executive Vice President and Treasurer of Penn-Med
Consultants, Inc., which is engaged in the business of providing long-term
health care management, since 1992. From 1986 to 1991, he served as Vice
President of Pennsylvania Health and Nursing Care Corporation. He also served as
a member of the Board of Directors of Power Spectra, Inc., a public company
specializing in commercial and defense electronics from April, 1990 through
July, 1996.

      Mr. Garrison has served as a director and Vice President of the Company
from June 26, 1995 until February 1, 1997, and became the President and Chief
Operating Officer on February 1, 1997 and was appointed its Secretary on
February 1, 1996. Mr. Garrison is co-founder, owner and President of INFISCO,
Inc., a financial advisory corporation that structures financings, including
project financing principally in foreign countries, since 1992. He was also the
President of AEGIS Commodities Corporation, a packager of commodity export
supported financing programs, serving as such from 1990 to 1992. He also served
as a Director and President and Chief Executive Officer of Sogam Holdings Inc.,
one of the world's largest mining corporations, and a business of Societe
General de Belgique, since 1985. Prior thereto, Mr. Garrison was the Vice
President and Treasurer of Pechiney Trading International Division of Pechiney
Engine Khulman, in Paris, France, and had been employed by AMAX, Inc., a major
mining enterprise, in various financial capacities. Mr. Garrison has also
written articles on financing in the mining industry and has structured foreign
asset-based financings.

ITEM 10. EXECUTIVE COMPENSATION

      (a) The summary compensation table below indicates the cash or accrued
compensation by the Company as well as other compensation paid or accrued to the
Chairman and Chief Executive Officer (the Company's chief executive officer) and
the next highest compensated executive officer at December 31, 1997 for services
rendered in all capacities during calendar years 1997, 1996 and 1995:

                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
         Annual Compensation                                      Long Term Compensation Awards
----------------------------------------------------- -----------------------------------------------------------------
Name and                                              Other Annual  Restricted      Underlying       LTIP    All Other
Principal Position        Year     Salary      Bonus  Compensation  Stock Awards  Options/SARs(#)   Payout Compensation
------------------        ----     ------      -----  ------------  ------------  --------------    ------- -----------
<S>                       <C>    <C>            <C>      <C>            <C>      <C>                <C>        <C>
Drury J. Gallagher,      1997   $125,000(1)    -0-      -0-(2)         -0-             -0-           -0-       -0-
Chairman, Chief          1996   $100,000(1)    -0-      -0-(2)         -0-        250,000 shares     -0-       -0-
Executive Officer        1995   $ 50,000(1)    -0-      -0-(2)         -0-      1,500,000/500,000
and Treasurer                                                                    shares    units
(the Company's Chief
Executive Officer)

Robert A. Garrison,      1997   $ 13,333(1)    -0-      -0-(2)         -0-             -0-           -0-       -0-
President, Chief         1996   $100,000(1)    -0-      -0-(2)         -0-        250,000 shares     -0-       -0-
Operating Officer        1995   $ 50,000(1)    -0-      -0-(2)         -0-        500,000/500,000    -0-
and Secretary                                                                    shares    units
</TABLE>
 

----------

      (1) Under the Company's employment agreements with Mr. Gallagher dated
as of July 1, 1995, and with Mr. Garrison dated as of July 1, 1995 (as
amended as of April 12, 1996), such officers were to be paid an annual salary
of $100,000, in equal monthly installments, commencing as of July 1, 1995. 
However, since the Company was unable to pay any of such salaries in 1995 and
1996, all such amounts 

                                         21
<PAGE>

accrued, which totalled $150,000 per person, or an aggregate of $300,000 as of
December 31, 1996. Initially, the Company and the officers orally agreed in
July, 1995 to postpone the payment of such accrued salaries and any additional
amounts due under the employment agreements until the Company received
additional funding of at least $2,000,000. As reflected in Item 12(A) hereof,
the Company cancelled $100,000 of such accrued compensation and all of the stock
options and stock appreciation rights of each officer as of January 3, 1997, in
exchange for 1,000,000 shares of the Company's Common Stock which were
transferred to each of them. In addition, Mr. Gallagher's compensation for 1997,
totalling $125,000, accrued in full, as was Mr. Garrison's compensation of
$13,333. All compensation numbers reflect the compensation payable for the
period from July 1, 1995 to December 31, 1997.  

      Mr. Gallagher entered into a three-year employment agreement with the
Company as of July 1, 1995. Under such agreement, Mr. Gallagher agreed to spend
up to one-half of his business time as President and be in charge of the
Company's day-to-day operations at an annual salary of $100,000. The agreement
also provided for the reimbursement of expenses incurred by him in the
performance of his duties.  Such agreement was amended and restated as of July
1, 1997 to increase Mr. Gallagher's base compensation to $150,000 as of such
date and to extend the term thereof until June 30, 2000. 

      The Company entered into a three-year employment agreement with Mr.
Garrison dated as July 1, 1995 under which he was to receive a salary from the
Company totalling $85,000 and be entitled to the stock options and stock
appreciation rights as described in Item 12(A). Under the agreement, Mr.
Garrison agreed to spend up to one-half of his business time as Vice President
and be in charge of the Company's day-to-day mining and Project financing
operations. The agreement also provided for the reimbursement of expenses
incurred by him in connection with the performance of his duties thereunder.

      Mr. Garrison also entered into a substantially identical employment
agreement with Autosport under which he was to be paid an annual salary of
$15,000. However, since Autosport (as defined in Item 12(B)) terminated its
Mining Management Agreement with the Company pursuant to the Initial
Restructuring Agreement (as defined in Item 12(B)), Mr. Garrison's employment
with Autosport was also terminated. Thereafter, on April 12, 1996 the Board of
Directors decided to amend Mr. Garrison's employment agreement with the Company
to increase his annual salary thereunder from $85,000 to $100,000. Pursuant to
such Board action, the parties executed and delivered an amendment to Mr.
Garrison's employment agreement with the Company to such effect.

    Mr. Garrison's employment agreement with the Company, as amended,
terminated as of January 31, 1997 when he became entitled to receive consulting
fees from First Dynasty for services rendered on behalf of the Company pursuant
to the consulting agreement dated as of May 13, 1997.  

      (2) Perquisites and other personal benefits paid or accrued to each of the
above-named officers were less than 10% of the total of their respective annual
salaries in 1997, and the same was true in 1995 in the case of Mr. Gallagher.
Mr. Garrison first joined the Company as of July 1, 1995.

      (b)   Stock Options and Awards

      The Company has no options or awards outstanding under the 1995 Stock
Option Plan, and the Company made no grants or awards thereunder during the year
ended December 31, 1997.(1)

      (c) 1995 Stock Option Plan

      The description of the Stock Option Plan is set forth herein and is
qualified in its entirety by reference thereto.

            Terms of the Stock Option Plan

      A maximum of 500,000 shares of Common Stock (computed after the Reverse
Split and subject to adjustment as described below) has been reserved for
issuance by the Company pursuant to options to be granted under the Stock Option
Plan.

                                          22
<PAGE>

      The Stock Option Plan will be administered by the Company's Board of
Directors unless and until the Board of Directors shall appoint the members of
the Stock Option Committee (the "Committee") who may also be the members of the
Compensation Committee. The composition of such Committee at present does not
satisfy the requirements of Section 162(m) of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder. During the 10- year
period ending in 2005, the Committee will have authority, subject to the terms
of the Stock Option Plan, to determine when and to whom to make grants under the
plan, the number of shares to be covered by the grants, the types and terms of
options and stock appreciation rights ("SARs") to be granted and the exercise
prices of options and SARs, to interpret and implement the Plan, and to
prescribe, amend and rescind rules and regulations relating to the Stock Option
Plan. The Committee's determinations under the Stock Option Plan need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Stock Option Plan (whether or not such
persons are similarly
situated).

      The Company's Board of Directors may amend, suspend or discontinue the
Stock Option Plan at any time except that, unless an amendment is approved (at a
meeting held within 12 months before or after the date of such amendment) by the
holders of a majority of the issued and outstanding shares of Common Stock
entitled to vote, no such amendment may (i) materially increase the maximum
number of shares as to which awards may be granted under the Stock Option Plan,
except for adjustments to reflect stock dividends or other recapitalization
affecting the number or kind of outstanding shares, (ii) materially increase the
benefits accruing to Stock Option Plan participants, or (iii) materially change
the requirements as to eligibility for participation in the Stock Option Plan.

-------
    (1) As stated under Item 12(A) hereof, all stock options held by Messrs.
Gallagher and Garrison were cancelled as of January 3, 1997.


      Under the terms of the Stock Option Plan, "incentive stock options"
("ISOs") within the meaning of section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), "non-qualified stock options" ("NQSOs") and SARs may be
granted to officers, key employees, consultants, employees of consultants, and
advisors of the Company and any of its subsidiaries (as defined in the Stock
Option Plan), except that ISOs may be granted only to employees of the Company
and its subsidiaries. The Stock Option Plan limits the number of shares with
respect to which options or SARs may be granted to an individual over the term
of the Stock Option Plan to 100,000 (computed after the Reverse Split), but
permits exceptions thereto in the case of the option to be granted to Autosport
and the options and SARs granted to Messrs. Gallagher and Garrison.

      To the extent that the aggregate fair market value (as defined in the
Stock Option Plan), determined as of the date of grant of an ISO, of Common
Stock with respect to which ISOs granted under the Stock Option Plan and all
other option plans of the Company or its subsidiaries exercisable for the first
time by an individual during any calendar year exceeds $100,000, such options
shall be treated as options which are not ISOs. The foregoing limitation does
not apply to NQSOs.

      Initially, each ISO will be exercisable over a period, determined by the
Committee in its discretion, but not to exceed 10 years from the date of grant,
as required by the Code. In addition, in the case of an ISO granted to an
individual who, at the time such ISO is granted, owns shares possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or its subsidiary corporations (a "10% Stockholder"), the exercise period for an
ISO may not exceed five years from the date of grant. In the case of NQSOs, the
exercise period, not to exceed 10 years from the date of grant, shall in all
cases be determined by the Committee. Options may be exercisable during the
option period at such times, in such amounts, in accordance with such terms and
conditions, and subject to such restrictions, as are set forth in the option
agreement evidencing the grant of such options. The Committee may, in its
discretion, with the grantee's consent, cancel any award of options or SARs and
issue a new award in substitution therefor or accelerate the exercisability of
any award granted under the Stock Option Plan or extend the scheduled expiration
of an award.


                                          23
<PAGE>

      The exercise price of an ISO or an NQSO (the "Option Price') may not be
less than the fair market value of the shares of Common Stock on the date of
grant, except that, in the case of an ISO granted to a 10% Stockholder, the
Option Price may not be less than 110% of such fair market value. The Option
Price of, and the number of shares covered by, each option will not change
during the life of the option, except for adjustments to reflect stock
dividends, splits, other recapitalization or reclassifications or changes
affecting the number or kind of outstanding shares.

      The shares purchased upon the exercise of an option are to be paid for in
cash or, with the Committee's consent, in its discretion, by delivery of the
optionee's promissory note, upon such terms and conditions as the Committee may
prescribe, or, if so provided in the applicable option agreement, by delivery of
previously acquired shares of Common Stock with a fair market value equal to the
total Option Price, or in a combination of such methods.

      Options and SARs may be transferred by an optionee or grantee only by will
or by the laws of descent and distribution and may be exercised only by the
optionee or grantee during his lifetime. Except as otherwise provided in the
applicable plan agreement, all of an optionee's or a grantee's outstanding
awards shall terminate upon his termination of employment or service for any
reason.

      The Committee may grant SARs in conjunction with all or part of an option
or independently thereof. Upon the exercise of a SAR, a holder will generally be
entitled, without payment to the Company, to receive cash, shares of Common
Stock or any combination thereof, as determined by the Committee, in an amount
equal to the excess of the fair market value of one share of Common Stock on the
exercise date over the exercise price of the related option, multiplied by the
number of shares in respect of which the SAR is exercised, except in the case of
the SARs granted to Messrs. Gallagher and Garrison.

      (ii) Tax Aspects of the Stock Option Plan.

      The following are the principal Federal income tax consequences generally
applicable to awards granted under the Stock Option Plan. The grant of an option
or SAR will create no Federal income tax consequences for the recipient or the
Company or a subsidiary employing the recipient (the "employer") at the time of
grant. The holder of an ISO will have no taxable income upon exercising an ISO
(except that the holder may have income for alternative minimum tax purposes),
and the employer generally will receive no deduction when an ISO is exercised.
In general, upon exercising a stock option other than an ISO, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
stock acquired on the date of exercise over the option price, and the employer
generally will then be entitled to a deduction for the same amount. In general,
upon exercising an SAR, the amount of any cash received and the fair market
value on the exercise date of any shares or other property received are taxable
to the recipient as ordinary income and deductible by the employer. The tax
treatment to an optionee of a disposition of shares acquired through the
exercise of an option will depend on how long the shares have been held and on
whether such shares were acquired by exercising an ISO, an SAR or an option
other than an ISO. Generally, there will be no Federal income tax consequences
to the employer in connection with a disposition of shares acquired under an
option except that the employer may be entitled to a deduction in the case of a
disposition of shares acquired under an ISO if the applicable ISO two-year
holding period has not been satisfied.

      With respect to awards granted under the Stock Option Plan that are
settled either in cash or in stock or other property that is either transferable
or not subject to substantial risk of forfeiture, the participant must recognize
ordinary income equal to the excess of (a) the cash or the fair market value of
the shares received (determined as of the date of settlement) over (b) any
amount paid for such shares by the holder of the award; and the employer
generally will be entitled to a deduction at the same time and for the same
amount. With respect to awards that are settled in stock or other property that
is restricted as to transferability and subject to substantial risk of
forfeiture, the participant must recognize ordinary income equal to the excess
of (a) the fair market value of the shares or other property received determined
at the first time the shares or other property becomes transferable or not
subject to substantial risk of forfeiture, whichever occurs earlier over (b) any

                                          24
<PAGE>

amount paid for such shares or other property by the participant; and the
employer generally will be entitled to a deduction for the same amount at the
time that the employee recognizes the income. Different tax rules may apply with
respect to participants who are subject to Section 16 of the Securities Exchange
Act of 1934, as amended.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      (a) Set forth below is information as of December 31, 1997 pertaining to
ownership of the Company's Common Stock, determined in accordance with Rule
13(d)(3) under the Securities and Exchange Act of 1934, by persons known to the
Company who own more than 5% of the Company's Common Stock:


                  Name and Address of            Number of 
Title of Class    Beneficial Owner               Shares(1)     Percent of Class
                                                 Common
                                                 ------
Common Stock     Drury J. Gallagher             1,132,451(2)           26.0
                 c/o Global Gold Corporation
                 438 West 37th Street
                 New York, NY  10018

Common Stock     Robert A. Garrison             1,000,000(3)           23.0
                 44 Lords Highway East
                 Weston, Connecticut  06883     

Common Stock     Eyre Resource N.L.               600,000(4)           13.8 
                 Crest House - Suite 5
                 7 Havelock Street
                 West Perth WA 6005
                 Australia

Common Stock     Jeffrey Beaumont, Trustee
                 of the Parry-Beaumont Trust      400,000(4)            9.2
                 18, Pioneer Sector 1
                 Jurong, Singapore 2262

----------

      (1)  For purposes of this table, a person or group is deemed to have
beneficial ownership of any shares which such person has the right to acquire
within 60 days after December 31, 1997. For purposes of calculating the
percentage of outstanding shares held by each person named herein, any shares
which such person has the right to acquire within 60 days after December 31,
1997 are deemed to be outstanding, but not for the purpose of calculating the
percentage ownership of any other person.

      (2)  This amount includes 24,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Mr. Gallagher pursuant to the Offering. 
See Item 12(A) hereof for a description pertaining to the acquisition of
1,000,000 shares of the Company's Common Stock by Mr. Gallagher.  The validity
of such acquisition is being contested by Eyre and the Parry-Beaumont Trust in
the lawsuit described in Item 3 hereof.  

      Mr. Gallagher disclaims any beneficial interest in the 20,000 shares of
the Company's Common Stock and 40,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Francis L. Gallagher, Jr. (Mr. Gallagher's
brother), as trustee of the Drury J. Gallagher Trust F/B/O Children dated March
1, 1985.

    (3)  See Item 12(A) hereof for a description pertaining to the acquisition
of 1,000,000 shares of the Company's Common Stock by Mr. Garrison. The validity
of such acquisition is being contested by Eyre and the Parry-Beaumont Trust in
the lawsuit described in Item 3 hereof. 

    (4)  The shares owned by each of Eyre and the Parry-Beaumont reflects the
surrender of 6,000,000 and 4,000,000 shares of the Company's Common Stock,
respectively (prior to the 1 for 10 reverse split of such common stock effective
as of December 31, 1996), and the surrender of Acquisition

                                          25
<PAGE>

Warrants to purchase 3,600,000 (prior to the Reverse Split) and 2,400,000 (prior
to the Reverse Split) shares of Common Stock, respectively, as well as the
surrender by Autosport of its options to purchase 2,000,000 shares of the
Company's Common Stock (prior to the Reverse Split), all pursuant to the Initial
Restructuring Agreement. Under the Second Restructuring Agreement, Eyre and the
Parry-Beaumont surrendered their Acquisition Warrants to acquire 2,400,000
(prior to the Reverse Split) and 1,600,000 shares (prior to the Reverse Split)
of the Company's Common Stock, respectively.  The validity of such surrender of
Acquisition Warrants, among other things, is being contested by Eyre and the
Parry-Beaumont Trust in the lawsuit described in Item 3 hereof. 

      (b) Set forth below is information as of December 31, 1997 pertaining to
ownership of the Company's Common Stock by all directors and executive officers
of the Company:

                  Name and Address of            Number of 
Title of Class    Beneficial Owner               Shares(1)      Percent of Class

Common            Drury J. Gallagher             1,132,451(2)          26.0(2)
                  c/o Global Gold Corporation
                  438 West 37th Street
                  New York, New York  10018

Common            Robert A. Garrison             1,000,000(3)          23.0(3)
                  44 Lords Highway East
                  Weston, Connecticut  06883      ---------            ------
                                    Total        2,132,451             49.0 

      (c) As of December 31, 1996, except as described in Item 12 hereof, there
were no arrangements in effect which may result in a change of control of the
Company, after taking into account the effects of the Restructuring Agreements
discussed above.

----------
      (1) For purposes of this table, a person or group is deemed to have
beneficial ownership of any shares which such person has the right to acquire
within 60 days after December 31, 1997. For purposes of calculating the
percentage of outstanding shares held by each person named herein, any shares
which such person has the right to acquire within 60 days after December 31,
1996 are deemed to be outstanding, but not for the purpose of calculating the
percentage ownership of any other person.

      (2) This amount includes 24,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Mr. Gallagher pursuant to the Offering. 
See Item 12(A) hereof for a description pertaining to the acquisition of
1,000,000 shares of the Company's Common Stock by Mr. Gallagher.  The validity
of such acquisition is being contested by Eyre and the Parry-Beaumont Trust in
the lawsuit described in Item 3 hereof.  

      Mr. Gallagher disclaims any beneficial interest in the 20,000 shares of
the Company's Common Stock and 40,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Francis L. Gallagher, Jr. (Mr. Gallagher's
brother) as trustee of the Drury J. Gallagher Trust F/B/O Children dated March
1, 1985.

      (3) See Item 12(A) hereof for a description pertaining to the acquisition
of 1,000,000 shares of the Company's Common Stock by Mr. Garrison. The validity
of such acquisition is being contested by Eyre and the Parry-Beaumont Trust in
the lawsuit described in Item 3 hereof.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(A) Transactions with Officers

      As described in Item 1(D)4(c) hereof, the Company made a loan of $25,000
to Envirotherm Heating and Cooling Systems, Inc. on October 17, 1994. Mr.
Gallagher owned 4% of the common stock of Envirotherm, which he received for
consulting services rendered by him subsequent to and independent of the loan
transaction described above. The Company treated such loan as worthless as of
December 31, 1996.

                                          26
<PAGE>

      As described in Item 6 hereof in the Form 10-KSB filed by the Company for
the period ended January, 1998, Mr. Gallagher agreed to advance funds to
the Company to cover its administrative expenses and legal and accounting
expenses through June 30, 1997, if he was paid in full by such date or earlier
out of the proceeds of any financing received by the Company in excess of
$500,000 and provided that the Company also secured his loan with the Jet-Line
Note, which the Company agreed to do.

    Pursuant to such agreement, Mr. Gallagher loaned $192,000 to the Company,
which loan was evidenced by a new consolidated note which the Company issued to
him as of such date and cancelled the earlier consolidated note dated November
12, 1996.  The Company discharged its loan Mr. Gallagher in full on May 19, 1997
by paying him such amount plus interest thereon of $14,058.49 on such date.

      On January 3, 1997, the Board of Directors of the Company approved the
transfer of 1,000,000 shares of its Common Stock (computed after the Reverse
Split) to each of Messrs. Gallagher and Garrison in exchange for, (a) in Mr.
Gallagher's case, the cancellation of $100,000 of accrued salary, and the
cancellations of his options to acquire 175,000 shares of the Common Stock of
the Company (computed after the Reverse Split) and the cancellation of his stock
appreciation rights (the "SARs") which, under certain circumstances, could have
resulted in the issuance to him of up to 37,500 shares of the Company's Common
Stock (computed after the Reverse Split)1 and (b)

----------

     (1) The Board of Directors granted each of Messrs. Gallagher and Garrison a
SAR for 500,000 units of the Company's Common Stock, with the base price thereof
of $0.20 per share (the "Base Price") on the date of grant, July 21, 1995 (based
on the Board's determination of the fair market value of the Company's Common
Stock on that date). If the value of the units increases over the Base Price
during the period of six years after the grant, and if the market capitalization
of the Company (determined by multiplying the number of shares of Common Stock
outstanding over the mean of the publicly-traded fair market value of the Common
Stock in the over-the-counter market, Nasdaq or elsewhere) exceeds the formula
price as set forth below for a consecutive period of three months, the holder of
the SAR shall be entitled to be paid such excess by the Company in cash, or
shares of Common Stock, or a combination thereof, in one or more annual
installments over a period not in excess of three years, as the Board of
Directors determines in its sole discretion, but such payment shall cause the
holder of the SAR to forfeit options to purchase 12,500 shares of the Company's
Common Stock under the option described in (1)(iii) and (2)(ii) above.
The formula price is set forth below:

----------
                                    Percentage of Excess of Value of Award
Market Capitalization           over Base Price to which Recipient is Entitled
---------------------           ----------------------------------------------
   $100,000,000                                  50%
   $200,000,000                                  66 2/3%
   $300,000,000                                  75%

Thus, each holder became potentially entitled to receive a maximum of 375,000
shares of the Company's Common Stock payable under the SARs awarded to him
(computed prior to the Reverse Split).


in Mr. Garrison's case, the cancellation of $100,000 of accrued salary, the
cancellation of his options to buy 75,000 shares of the Company's Common Stock
and the cancellation of his SARs. The Company made such transfer to reward each
of them for their efforts to secure financing for the Company and/or the
Armenian mining project, for maintaining the Company's existence in the face of
the Company's potential insolvency, and to increase their proprietary stake as
the day-to-day management of the Company at the request of prospective
investment banking firms and potential investors with whom the Company was then
seeking to obtain funding.

      Since July, 1995, Messrs. Gallagher and Garrison had deferred the payment
of their salaries due them under their employment agreements and continued such
deferral from July 1, 1996 through December 31, 1996. Since July, 1996, they
undertook to keep the Company alive financially, by Mr. Gallagher's further
advances to the Company of $192,000, by Mr. Garrison's payment of his own travel
and travel-related expenses totally over $50,000, by their undertaking joint and
several guarantees of $500,000 to London and International Mercantile Limited, a

                                          27
<PAGE>

financial institution organized under the laws of England and Wales, and their
constant fund-raising activities including frequent trips to London, Toronto,
Vancouver and various places in the United States for such purpose. Without such
efforts, the Company's activities would have ceased in substantially all
respects. No financial assistance of this type, or any guaranty, was provided by
Eyre or its officers, directors or shareholders or by the Parry-Beaumont Trust
(except for $100), despite the Company's written requests to them for such
assistance. Furthermore, when the holders of the Warrants acquired in the
Offering were asked to exercise them at the reduced exercise price of $0.25 per
share during the 30-day period ended December 15, 1996, none of the holders 
exercised them (except for one holder, Mr. Ian Darragh, an Eyre director, who 
purchased 400 shares for a total of $100, computed prior to the Reverse Split).

      As a result of such transfers of Common Stock to Messrs. Gallagher and
Garrison, Mr. Gallagher increased his beneficial ownership of Common Stock to
26.4% and Mr. Garrison became the beneficial owner of 23.8% of the Common Stock,
at such time and, taken together as a group, they now own 49% of the issued and
outstanding shares of the Company's Common Stock (excluding the Warrants owned
by Mr. Gallagher). Consequently, if Messrs. Gallagher and Garrison act in
concert, they, together with any one or more stockholders owning in total
slightly more than 1% of the shares of the Company's Common Stock issued and
outstanding, will be able to effectively determine the vote on any matter voted
by the Company's stockholders, including the election of directors and any
merger, sale of assets or other significant corporate action.


(B) Relationship with Eyre Resources N.L. and the Parry-Beaumont Trust

      (1) Asset Purchase Agreement with Eyre Resources N.L. 

            In January, 1995 the Company entered into a letter of intent with
Eyre Resources N.L., an Australian corporation ("Eyre"), with respect to certain
foreign mining projects. Thereafter, the Company entered into a definitive Asset
Purchase Agreement with Eyre, dated as of June 30, 1995 (the "Agreement"), with
respect to the Armenian, Georgian and Australian Mining projects described
herein, and closed the transactions contemplated thereunder on December 1, 1995.

      The Agreement between the Company and Eyre provided as follows:

      1. (a) The Company caused to be delivered to Eyre (i) 12,000,000 shares of
its Common Stock, (ii) warrants (the "Acquisition Warrants") to purchase
6,000,000 shares of Common Stock, at an exercise price of $0.50 per share
(subject to adjustment as provided therein), which expire three years after the
closing of the Eyre transaction (the "Closing") and (iii) $300,000, of which
$100,000 was deemed paid at the Closing (by offsetting the $100,000 amount
loaned by the Company to Eyre prior thereto) and an additional $100,000 was
evidenced by an interest-bearing note of the Company payable in six equal
monthly installments) and an additional note of the Company for $100,000 payable
to Eyre if and when the Company consummated a future financing of at least
$2,000,000. The notes bore interest at the lowest rate to avoid the imputation
of interest at a higher rate under the Internal Revenue Code of 1986, as amended
(the "Code"). In addition, the Company agreed to assume and discharge all
liabilities of Eyre (other than Armenian, Georgian or Australian income or local
taxes or other than specified amounts currently due under certain Australian
licenses described below) existing at the Closing with respect to the assets
transferred, and to assume and perform all obligations with respect to its share
of the assets after the Closing.

            (b) In exchange therefor, Eyre sold (i) an undivided 20% interest in
Eyre's interest in two Australian exploration licenses in an Australian
lead/zinc mining prospect known as Ediacara described herein to Global Gold
Australia Limited, the Company's wholly-owned Cayman Islands subsidiary; (ii)
all of Eyre's potential interest in the Armenian gold mining project described
herein to Global Gold Armenia Limited, the Company's wholly-owned Cayman Islands
subsidiary; and (iii) all of Eyre's potential interest in the Georgian gold and
copper mining project described herein to Global Gold Georgia Limited, the
Company's wholly-owned Cayman Islands subsidiary (individually, a "Project" and
collectively, the "Projects").

                                          28
<PAGE>

            (c) The Company caused to be delivered to the Parry-Beaumont Trust
8,000,000 shares of its Common Stock and Acquisition Warrants to acquire
4,000,000 shares of Common Stock for consulting services rendered by the
Parry-Beaumont Trust in connection with the Projects and for arranging for the
sale of the above-mentioned assets in question to the Company's subsidiaries.

----------

      1 All of the share numbers reflected in Item 12(B) do not reflect the
Reverse Split.

            (d) The Company issued to Autosport (Asia) Pte. Ltd. options under
the Company's 1995 Stock Option Plan to acquire 2,000,000 shares of Common
Stock, at an exercise price of $0.20 per share.

            (e) The loan made by the Company to Eyre of $100,000 (described in
"Loan Transaction" below) was applied at the Closing against the $200,000 amount
due to Eyre at the Closing under the Agreement.

      2. Pursuant to the Agreement, the Company designated, prior to the
Closing, that each of its newly-formed subsidiaries would be a direct transferee
of the interests in the Projects so that each Project was owned initially and
directly by a separate subsidiary of the Company. However, by virtue thereof and
pursuant to the Agreement, the Company agreed to guarantee the full performance
of all of the obligations undertaken by any such subsidiary designated for such
purposes by the Company. Under such guaranty, Eyre is first required to give
notice to the subsidiary in question of any default and the opportunity to cure
such default within a 10 day period. In the event that such subsidiary does not
cure such default within such period, then Eyre may proceed directly against the
Company for any violation thereof.

      3. Autosport (Asia) Pte. Ltd., a Singapore corporation controlled by Eyre
("Autosport"), entered into a mining supervision contract with the Company at
the Closing under which it was to provide mining supervisory services for all of
the Projects (the "Mining Supervision Contract") and consult regularly with the
Company thereunder. Under the Mining Supervision Contract, Autosport was
entitled to be paid, solely out of Project revenues or financings relating
thereto, (a) all of its direct and indirect costs in providing services in
connection with the Projects plus 10% thereof, and (b) all of the costs of
acquiring equipment in connection with the Projects plus 10% thereof. The
Company agreed to indemnify Autosport against certain claims arising out of its
performances of services, but the Company's liability thereunder was limited
solely to Project revenues and financings related to the Projects. Autosport had
the right to assign its rights under the Agreement, with the Company's prior
written consent, which was not to be unreasonably withheld or delayed. The
Company had the right to approve the construction and operating budgets for each
Project.

      4. Pursuant to the Agreement, Eyre, the Parry-Beaumont Trust and the then
current five principal stockholders of the Company (Messrs. Gallagher, John J.
Hayman, Francis A. Hayman, Jr., George L. Ryan and the Seitz Family Limited
Partnership) entered into a stockholders agreement (the "Stockholders
Agreement") at the Closing providing for, among other things, the following:

            (a) Eyre had the right to designate three of the five directors of
the Company, including Stephen Parry (one of Mr. Kevin Parry's sons), Jaap Poll
and one other person, and the parties agreed to elect Messrs. Gallagher and
Garrison as directors. If the size of the Board was changed thereafter, Eyre had
the right to designate such additional persons as comprise 60% of the members of
the Board of Directors, and Messrs. Gallagher and Garrison (or their successors)
had the right to designate such additional persons as comprise 40% thereof. As a
result of this provision, Eyre controlled the Board of Directors of the Company
after the Closing.

            (b) The parties agreed to use their best efforts to vote to cause
the election of Mr. Gallagher as President, Mr. Garrison as Vice President, and
Stephen Parry as Vice President.

            (c) (i) Each party cannot sell, transfer or pledge his shares of
Common Stock, except to family members, or a trust or estate for their benefit,

                                          29
<PAGE>

or a charitable organization qualified under Section 501(c)(3) of the Code, or a
corporation, partnership or limited liability company, controlled by the
stockholder or members of his family and except as provided in (ii) below.
Furthermore, if a stockholder receives a bona fide offer to buy his or its
shares of Common Stock (other than pursuant to a public offering), the Company,
and thereafter the non-selling stockholders (on a pro-rata basis), have the
right to purchase the stock in question at the offered price. If such right of
first refusal is exercised, the purchaser is required to pay (A) the lesser of
(i) the full purchase price or (ii) the greater of 20% of the purchase price or
$100,000 and (B) the balance in 24 equal consecutive monthly installments after
the closing thereof (including interest at the lowest rate to avoid the
imputation of interest at a higher rate under the Code). If such right of first
refusal is not exercised, then the seller may sell his or its shares of Common
Stock to the offeror on the terms described in the offer, but such offeror must
then become a party to the Stockholders Agreement.

                  (ii) All of the seven stockholders, including Eyre and the
Parry-Beaumont Trust, agreed not to sell any of the shares of the Company's
Common Stock owned by them for a period of 24 months from the date of the final
closing of the Offering (as defined herein) (i.e., two years from December 31,
1995), except that (A) each of Eyre and the Parry-Beaumont Trust has the right
to transfer 2,000,000 shares of Common Stock to one or more any persons or
persons who is not a United States person within the meaning of the Securities
Act, or to any other person in the United States and (B) the other five
shareholders (other than Eyre and the Parry-Beaumont Trust) each has the right
to pledge up to 60% of the shares of the Company's Common Stock owned by them to
one pledgee only each, subject to applicable restrictions under the Act.

            (d) In the event that the Company's undertakes an offering of its
securities (exclusive of any registrations on Form S-8 for shares issuable under
the 1995 Stock Option Plan), the stockholders who are parties to the
Stockholders Agreement will have piggyback registration rights which would
enable them to sell a portion of their shares of Common Stock, together with
those offered by the Company, subject to the approval thereof by the underwriter
undertaking the offering in question. Commencing on or after the date which is
18 months after the final closing date of the Offering (which closing date was
December 31, 1995), Eyre, the Parry-Beaumont Trust or any other three of the
other stockholders acting jointly, who desire to sell their shares of Common
Stock, but at least 1,000,000 shares of Common Stock collectively, can cause the
Company, two times only, to file a registration statement which shall be
effective on and after the expiration of the 24-month lock-up period specified
above.

      5. At the Closing, there were a number of items that required future
action. The assignment made by Eyre to Global Gold Australia Limited of its
undivided 20% interest in the Ediacara project required the written consent of
the Ministry of Mines of South Australia. Although such documents were submitted
for approval shortly after the closing, no such consent was ever obtained, since
the Company, prior thereto, caused Global Gold Australia Limited to surrender
its interest in the Australian Project under the Initial Restructuring 
Agreement. Moreover, Global did not receive certain legal opinions from Eyre's 
Australian and New York counsel which were required to be delivered at the 
closing under the Agreement, although such opinions were ultimately delivered.

      (2) Restructuring Agreements

            (a) Initial Restructuring Agreement

            After the closing of the transaction under the Agreement, the
Company, Eyre and the Parry-Beaumont Trust decided to restructure the
transaction pursuant to the Restructuring Agreement by and among such parties
dated as of December 1, 1995 (the "Initial Restructuring Agreement"). Such a
step was undertaken in order to facilitate the Company's proposed financing of
the contemplated gold mining projects in Armenia and Georgia by enabling the
Company to qualify for political risk insurance from the Overseas Private
Investment Corporation ("OPIC") as a credit enhancement by and possible
financing from OPIC. Under the rules applicable to such insurance, OPIC provides
insurance for U.S. entities which are at least 50% beneficially owned by United
States persons, determined on a fully diluted basis. By virtue of the stock
ownership of the Company arising under the Agreement, the Company would not


                                          30
<PAGE>

qualify for such insurance. Moreover, such restructuring was undertaken at the
recommendation of a major United States accounting firm (which has not been
retained by the Company).

      The Initial Restructuring Agreement provided as follows:

            1. (a) Eyre and the Parry-Beaumont Trust agreed to surrender to the
Company 6,000,000 and 4,000,000 shares of Common Stock, respectively, and to
surrender Acquisition Warrants to purchase 3,600,000 and 2,400,000 shares of
Common Stock, respectively. Thus, after the Restructuring Agreement, Eyre and
the Parry-Beaumont Trust continued to own 6,000,000 and 4,000,000 shares of
Common Stock, respectively, and Acquisition Warrants to purchase 2,400,000
shares of Common Stock and 1,600,000 shares of Common Stock, respectively. 

            (b) Autosport agreed to surrender the option to purchase 2,000,000
shares of the Common Stock of the Company.

            2. In consideration for the above surrender of securities, the
Company

            (a) caused Global Gold Australia Limited to surrender its undivided
20% interest in the Australian Project,

            (b) released to Eyre any rights with respect to the agreement
between the Company and the Armenian Ministry of Environment and Natural
Resources dated December 1, 1995 ( which was not executed), provided that such
agreement does not provide for any rights in Eyre inconsistent with, or in
contravention of, the Company's rights in the Armenian Project, and

            (c) granted Eyre a 2% overriding production royalty (subject to
adjustment) from the Company's or its subsidiary's interest in the joint venture
or ventures to be created pursuant to the Armenian Project (excluding the
Tailings Project as defined herein) and the Georgian Project and a 1% overriding
production royalty (subject to adjustment) in the Company's or its subsidiary's
interest in each joint venture for other projects undertaken in Armenia and
Georgia by the Company or its subsidiaries.

            3. In addition, the parties agreed to cancel the Operating Agreement
between Eyre and the Company dated as of December 1, 1995 and the Mining
Supervision Agreement, between the Company and Autosport dated as of December 1,
1995.

            4. (a) The Acquisition Warrants were amended to provide that they
could not be exercised unless, concurrently with the exercise thereof, the
Company issued a number of shares of Common Stock to persons or entities other
than Eyre, the Parry-Beaumont Trust or their affiliates equal to the number of
shares of Common Stock issued upon the exercise of the Acquisition Warrants.

            (b) Furthermore, in the event that the Company sells or otherwise
transfers additional shares of its Common Stock or securities convertible into
shares of its Common Stock to entities or persons not deemed United States
persons under the applicable rules of OPIC, the Company is required to give Eyre
and the Parry-Beaumont Trust at least 15 days notice prior to the closing of
such sale or transfer. During such period, Eyre and the Parry-Beaumont Trust
shall have the right to sell the Acquisition Warrants in a transaction exempt
under the applicable securities laws of the United States or other applicable
jurisdictions. However, if Eyre and the Parry-Beaumont Trust do not sell such
number of Acquisition Warrants as aforesaid, then Eyre and the Parry-Beaumont
Trust are required to surrender to the Company a number of Acquisition Warrants
equal to the number of shares of Common Stock to be sold or transferred or
issuable upon such conversion by the Company, at the time of the closing of such
sale or transfer by the Company.

            (c) In the event that Eyre and the Parry-Beaumont Trust are required
to surrender a portion of their Acquisition Warrants as described immediately
above, then the 2% and 1% overriding production royalties specified above shall
be adjusted upward, but not in excess of 1 percentage point, by multiplying 1%
times a fraction the numerator of which is the number of Acquisition Warrants
surrendered and the denominator of which is 4,000,000.

                                          31
<PAGE>

            5. (a) The Stockholders Agreement was changed to eliminate the
control thereof by Eyre and the Parry-Beaumont Trust. As a result, the Company
five-person Board of Directors was to consist of (a) Drury J. Gallagher, (b)
Robert A. Garrison, (c) Jaap Poll, (d) Stephen Parry and (e) a fifth member
selected by Mr. Gallagher. The amendment to the Stockholders Agreement further
provided that (i) in the event of the death of Robert A. Garrison, Drury J.
Gallagher would designate his designee or (ii) in the case of an enlargement of
the Board, Mr. Gallagher would have the right to designate additional persons to
constitute 60% of the members of the Board, provided that such designee has
demonstrable experience and expertise in the extractive or financial industry or
in a region in which the Company or a subsidiary intends to operate or is
operating.

            (b) Furthermore, the Stockholders Agreement was changed to reduce
the amount of shares of Common Stock that Eyre and the Parry-Beaumont Trust
could transfer to non-United States persons in transactions not subject to the
Act from 2,000,000 each to 1,500,000 each.

            6. In addition, Eyre, the Parry-Beaumont Trust, Autosport and Kevin
Parry agreed to restrictions, for the purpose of obtaining independent
accountants as auditors for the Company, which prevent Eyre, the Parry-Beaumont
Trust and their affiliates from holding or controlling 50% or more of total
stockholder votes or 50% or more of the votes of the members of the Board of
Directors of the Company and precluding Kevin Parry's direct role with the
Company. The Company agreed to review the above mentioned restrictions on or
after January 1, 2001 and to consider, without obligation, eliminating them.

            7. In connection with the Agreement and the Initial Restructuring
Agreement, Global Gold Armenia Limited and Global Gold Georgia Limited issued
promissory notes dated as of December 1, 1995 to the Company in the amounts of
$802,740(1) and $47,260, respectively, which bear interest at the rate of 6.36%
per annum and mature on November 30, 1998, for the purchase of the Company's
Common Stock issued to Eyre and the Parry-Beaumont Trust pursuant to such
Agreements.

            (b) Second Restructuring Agreement

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

(1) In connection with the FDM Agreement, the Company contributed this note to
the capital of Global Gold Armenia Limited. 

      Various prospective investment banking firms and potential investors who
expressed an interest in providing funding for the Company's projects in the
Fall of 1996 requested that the Company undertake a reverse split of its Common
Stock to decrease the number of shares outstanding and to reduce the equity
stake of certain shareholders who received shares pursuant to the Agreement
essentially in their capacity as finders in order to facilitate possible future
financings. In response thereto, by letter dated December 4, 1996, Eyre and the
Parry-Beaumont Trust (i) surrendered their Acquisition Warrants to purchase
2,400,000 and 1,600,000 shares of the Company's Common Stock (a total of
4,000,000 shares) (prior to the Reverse Split), (ii) surrendered their right to
designate two members of the Board of Directors of the Company and, in addition,
Eyre agreed, (iii) to waive its overriding royalties in the Armenian mining
projects and (iv) to waive the approximately $146,000 due it under the
promissory notes received at the Closing (the "Second Restructuring Agreement").
While Eyre had 2% overriding royalty on the Armenian mining projects (other than
the Tailings Project), the Second Restructuring Agreement referred to the waiver
of a overriding royalty of 1.5% on the Armenian mining projects in reliance on
Eyre's earlier agreement to reduce such royalty to 1.5% by virtue of its failure
to secure financing from a designated mining company in November, 1996.
Accordingly, the Company believes that all overriding royalties on the Armenian
mining projects have been validly waived.

            (c) Effect of the Agreement and the Restructuring Agreements

      As a result of the Agreement, Eyre, together with the Parry-Beaumont
Trust, became the controlling stockholders of the Company and, as such, they
were able to determine effectively the vote on any matter being voted on by the

                                          32
<PAGE>

Company's stockholders, including the election of directors, and any merger,
sale of assets or other change or control of the Company.  Furthermore, pursuant
to the Stockholders Agreement, Eyre had the right to designate 60% of the
members of the Board of Directors, thereby gaining control thereof.

      However, by virtue of the Initial Restructuring Agreement, Eyre and the
Parry-Beaumont Trust reduced their ownership to only 47.66% of the Company's
issued and outstanding shares of Common Stock as of December 31 1995, and agreed
not to control the votes of 50% or more of the stock of the Company or 50% or
more of the members of the Board of Directors of the Company.

      Moreover, under the Initial Restructuring Agreement, the Company retained
its rights with respect to both the Armenian Project and the Georgian Project,
but relinquished all of its interest in the Australian Project.

      Also, by virtue of the Second Restructuring Agreement, Eyre and the
Parry-Beaumont Trust surrendered Acquisition Warrants to acquire 4,000,000
shares of the Company's Common Stock (computed prior to the Reverse Split),
thereby eliminating any Acquisition Warrants held by them, and their right to
designate two members of the Board of Directors of the Company. Such action,
together with the transfer of 2,000,000 shares of the Common Stock (after the
Reverse Split) to Messrs. Gallagher and Garrison, described in detail above,
diminished substantially the combined equity position formerly held by Eyre and
the Parry-Beaumont Trust.

      (3) Eyre

            Eyre, which was organized in 1993, is an Australian public company
registered with the Australian Securities Commission in Canberra, Australia.
Eyre has not applied for listing on the Australian Stock Exchange.

            Eyre is engaged in the development of mining projects in Australia
with a view toward the commercial exploitation thereof. Eyre currently owns a
100% interest in the lead/zinc mining prospect licenses in Ediacara, real estate
and several additional assets.

            Eyre had 21 holders of all of its common stock as of May 1, 1995.
Jeffrey Beaumont owns approximately 17.5% thereof, separate trusts for two other
officers own about 11.75% thereof each; a trust for the benefit of Kevin Parry
and the members of his family owns about 35% thereof, and the balance is owned
by 17 other stockholders.

            Eyre's operating office is its own office building, Crest House,
located at 7 Havelock Street, West Perth 6005, Western Australia. Its telephone
number is 011619322-3988.

            The Australian Securities Commission brought a court action against
Mr. Kevin Parry for the alleged criminal violation of Australian securities law
arising out of his alleged breach of fiduciary duties while serving as a
director of two corporations. Mr. Parry was found guilty of such violation in
late 1994, paid a fine of $15,000 and was barred from serving as a director of a
corporation for five years. In addition, the Company learned for the first time
in February, 1996 that a criminal action had been initiated against Mr. Parry in
late 1994 for the alleged misappropriation of property from an entity, but such
action was subsequently dismissed by the court in question.

      (4) Parry-Beaumont Trust

            The Parry-Beaumont Trust is a trust primarily for the benefit of
Kevin Parry and the members of his respective family, and Cameron Parry, one of
Mr. Parry's sons, and Jeffrey Beaumont are the co-trustees thereof. The Trust's
office is c/o Jeffrey Beaumont, Polymer Composites (Asia) Pte. Ltd., 18, Pioneer
Sector 1, Jurong, Singapore 2262. Mr. Beaumont's telephone number is 01165862-
4824, and Mr. Parry's telephone number is the same as that of Eyre.

      (5) Loan Transaction between the Company and Eyre

            Prior to the signing of the definitive agreement between the Company
and Eyre, but before the closing thereof, the Company loaned Eyre the sum of
$100,000 on an unsecured basis, which amount was offset against the $200,000

                                          33
<PAGE>

purchase price owed to Eyre under the Agreement. Pursuant to the Second
Restructuring Agreement, the balance of approximately $146,000 owed by the
Company to Eyre under its promissory notes delivered at the Closing was
cancelled.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

      1. The following documents are filed as part of this report: Financial
Statements of the Company, including reports of independent certified public
accountants, Balance Sheets, Statements of Income, Statements of Stockholders
Equity, Statements of Cash Flow and Notes to Financial Statements: as at and for
the periods ended December 31, 1997 and December 31, 1996.

      2. The Exhibits which are listed on the Exhibit Index attached hereto.

      3. No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this report.

                                       SIGNATURES

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


                                       GLOBAL GOLD CORPORATION
                                       (Registrant)


                                       By: /s/ Drury J. Gallagher
                                           ----------------------------------
                                           Drury J. Gallagher, Chairman, Chief
                                           Executive Officer and Treasurer


Dated: April 13, 1998

      Pursuant to the requirements of the Securities 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.

        Name                             Title                       Date
        ----                             -----                       ----


   /s/ Drury J. Gallagher   Chairman, Chief Executive Officer,    April 13, 1998
   ----------------------   Treasurer and Director (Principal
       Drury J. Gallagher   Executive and Financial Officer)


   /s/ Robert A. Garrison    President, Chief Operating
   ----------------------   Officer, Secretary and Director       April 13, 1998
       Robert A. Garrison


                                          34


<PAGE>


                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)

                              Financial Statements

                                December 31, 1997


<PAGE>




                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)

                              Financial Statements

                                December 31, 1997
<TABLE>
<CAPTION>

Exhibit                                                                                              Page
-------                                                                                              -----
              <S>                                                                                                   <C>
                  Independent Auditors' Report                                                          1

     A            Balance Sheet - as of December 31, 1997                                               2


     B            Statement of Income and (Loss) - for the years                                        3
                  ended December 31, 1997 and 1996, and the
                  development stage period January 1, 1995
                  through December 31, 1997


     C            Statement of Changes in Stockholders' Equity - for the                             4a/4b 
                  years ended December 31, 1997 and 1996, and the development
                  stage period January 1, 1995 through December 31, 1997

     D            Statement of Cash Flow - for the years ended                                          5
                  December 31, 1997 and 1996, and the
                  development stage period January 1, 1995
                  through December 31, 1997


                  Notes to Financial Statements                                                      6-19

</TABLE>

<PAGE>

Marks Shron
& Company, L.L.P.
Certified Public Accountants


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of Global Gold Corporation:

We have audited the accompanying balance sheet of Global Gold Corporation (a
development stage company) as of December 31, 1997, and the related statements
of income and (loss), stockholders' equity, and cash flow for the two years
ended December 31, 1997, and the development stage period January 1, 1995
through December 31, 1997. 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 audits. We did not audit the 1997 financial
statements of the Armenian Gold Recovery Company, the investment in which is
reflected in the accompanying financial statements using the equity method of
accounting. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to the amounts
included in Note 19 to the financial statements for the Armenian Gold Recovery
Company is based solely on the report of other auditors.

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

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Global Gold Corporation as of December 31, 1997, and
the results of its operations and its cash flow for the two years ended December
31, 1997 and the development stage period January 1, 1995 through December 31,
1997, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, management must secure significant additional investor
and/or lender financing and ultimately must commence profitable operations.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.


MARKS SHRON & COMPANY, LLP
Great Neck, New York
March 26, 1998


<PAGE>

Page 2

Exhibit A

                                                GLOBAL GOLD CORPORATION
                                             (A Development Stage Company)
                                                     Balance Sheet
                                                   December 31, 1997

<TABLE>

CURRENT ASSETS 
<S>                                                                                         <C>      
     Cash                                                                                   $ 13,067.
     Money Market Investment                                                                  53,277.
                                                                                              -------

                                                                                              66,344.
                                                                                              -------

OTHER ASSETS

     Notes receivable - First Dynasty Mines                                                  200,000.
     Investment in Global Gold Armenia Limited                                                     1.
                                                                                              -------
                                                                                             200,001.
                                                                                              -------
TOTAL ASSETS                                                                               $ 266,345.
                                                                                           ==========

CURRENT LIABILITIES

     Officers' compensation payable                                                       $   60,734.
     Accounts payable and accrued expenses                                                    99,755.
                                                                                              -------
                                                                                             160,489.
                                                                                             --------
STOCKHOLDERS' EQUITY - Exhibit C

     Common stock $0.001 par, 100,000,000 shares authorized
         4,348,114 shares issued and outstanding 4,348. 
     Paid-in capital - dormant period                                                       3,236,602. 
     Paid-in capital - development stage                                                    1,493,223.
     Retained earnings - dormant period                                                    (2,907,648.) 
     Retained earnings - development stage                                                 (1,720,669.)
                                                                                            ----------
                                                                                             105,856.
                                                                                             --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $ 266,345.
                                                                                           ==========
</TABLE>

See Independent Auditors' Report and Notes to the Financial Statements.

<PAGE>

Page 3

Exhibit B

                                                    GLOBAL GOLD CORPORATION
                                                   (A Development Stage Company)
                                                Statement of Income and (Loss)

<TABLE>
<CAPTION>

                                                          For the               For the          January 1, 1995
                                                          Year Ended            Year Ended       (development stage
                                                          December 31,          December 31,     through
                                                          1997                  1996             December 31, 1997)

<S>                                                          <C>                  <C>                   <C>     

REVENUE                                                   $  - - - -           $  - - - -             $  - - - -
                                                             --------             --------              --------
EXPENSES

     Officers' compensation                                  138,334.             200,000.              438,334.
     Legal                                                   145,020.             282,316.              468,349.
     Accounting and auditing                                  30,100.              41,246.              100,948.
     Transfer agent and securities fees                        1,534.               2,381.               12,446.
     Proxy costs                                            - - - -              - - - -                 26,555.

     Rent                                                     36,000.              36,000.               72,000.
     Office expense                                           62,621.              16,963.               93,232.
     Travel                                                      193.              23,864.               43,142.
                                                             --------             --------              --------
OPERATING (LOSS)                                            (413,802.)           (602,770.)          (1,255,006.)

OTHER INCOME (EXPENSES)

     Interest and royalty income                               3,693.                 389.                4,562.
     Organization costs                                      - - - -               (3,200.)              (4,800.)
     Interest expense                                         (7,090.)             (6,968.)             (14,821.)
     Provision for bad debts                                (150,000.)            (55,000.)            (325,000.)
     Write-off investment in Georgia mining interests       (135,723.)             - - - -             (135,723.)
     Gain on sale of interest in Global Gold Armenia          12,875.              - - - -                12,875.
                                                             --------             --------              --------

(LOSS) BEFORE INCOME TAXES                                  (690,047.)           (667,549.)          (1,717,913.)

     Income taxes                                               (700.)             (1,028.)              (2,756.)
                                                             --------             --------              --------
NET (LOSS)                                                 $(690,747.)          $(668,577.)         $(1,720,669.)
                                                           ==========           ==========          ============ 


NET (LOSS) PER SHARE                                                  $(     .1589)              $(     .1538)
                                                                      =============              =============

</TABLE>

See Independent Auditors' Report and Notes to the Financial statements.


<PAGE>

Page 4a

Exhibit C

                                             GLOBAL GOLD CORPORATION
                                          (A Development Stage Company)
                                 Statements of Changes in Stockholders' Equity
  
<TABLE>
<CAPTION>

                                                             Paid-in     Retained       Retained         Paid-in
                                   Issued and                Capital     Earnings       Earnings         Capital
                                   Outstanding   Common      (Dormant    (Dormant       (Development     (Development
                                   Shares        Stock       Period)     Period)        Stage)           Stage)           Total
                                  ------------------------------------------------------------------------------------------------
<S>                                <C>           <C>        <C>          <C>            <C>              <C>              <C>     
Stockholders' equity
    December 31, 1994              898,074.      $ 89,807.  $3,147,693.  $(2,907,648.)  $   -  -  -  -   $  -  -  -  -  $ 329,852.

Net Loss January 1 -
    December 31, 1995                                      -  -  -  -      -  -  -  -      (361,345.)                    (361,345.)

Adjustment re: restatement of
    par value                                     (88,909.)     88,909.    -  -  -  -       -  -  -  -     -  -  -  -   -  -  -  -

Eyre acquisition                 1,000,000.         1,000.                                                   849,000.     850,000.

Proceeds through private
    offering                       200,000.           200.  -  -  -  -     -  -  -  -       -  -  -  -       421,373.     421,573.

Stockholders' equity
    December 31, 1995            2,098,074.         2,098.   3,236,602.   (2,907,648.)     (361,345.)      1,270,373.   1,240,080.

Net Loss January 1 -
    December 31, 1996           -  -  -  -       - -  -  -    -  -  -  -    -  -  -  -     (668,577.)       -  -  -  -   (668,577.)

Warrants exercised                   40.         - -  -  -    -  -  -  -    -  -  -  -      -  -  -  -           100.         100.
                                -----------     ----------  -----------  -------------  -------------      -----------  ----------

Stockholders' Equity
    December 31, 1996            2,098,114.     $   2,098.  $3,236,602.  $(2,907,648.)  $(1,029,922.)      $1,270,473.  $ 571,603.
                                -----------     ----------  -----------  -------------  -------------      -----------  ----------
                                -----------     ----------  -----------  -------------  -------------      -----------  ----------

</TABLE>


See Independent Auditors' Report and Notes to the Financial Statements.

<PAGE>

Page 4b

Exhibit C

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                  Statements of Changes in Stockholders' Equity

<TABLE>
<CAPTION>

                                                           Paid-in      Retained         Retained        Paid-in
                          Issued and                       Capital      Earnings         Earnings        Capital
                          Oustanding        Common         (Dormant     (Dormant         (Development    (Development
                          Shares            Stock          Period)      Period)          Stage)          Stage)          Total
                          --------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>            <C>          <C>              <C>            <C>                 <C>   
Stockholders' equity
    December 31, 1996     2,098,114.        $ 2,098.       $3,236,602.  $(2,907,648.)    $(1,029,922.)  $1,270,473.      571,603.

Net Loss January 1 -
    December 31, 1997     -  -  -  -        -  -  -  -      -  -  -  -    -  -  -  -        (690,747.)    -  -  -  -      (690,747.)

Issuance of Common Stock   2,250,000          2,250.        -  -  -  -    -  -  -  -                      -222,750.        225,000.
                           ---------        --------        ----------    ----------      -----------    -----------     ----------

Shareholders' Equity
    December 31, 1997     4,348,114.        $ 4,348.       $3,236,602.  $(2,907,648.)    $(1,720,669.)  $1,493,223.        $105,856.
                           ---------        --------        ----------    ----------      -----------    -----------     ----------
                           ---------        --------        ----------    ----------      -----------    -----------     ----------

</TABLE>



In 1997 the Company issued 2,000,000 common shares in exchange for $200,000 in
accrued salaries. Also, 250,000 common shares were issued as a Finders Fee in
connection with the First Dynasty financing.


See Independent Auditors' Report and Notes to the Financial Statements.


<PAGE>

Page 5
Exhibit D

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                             Statement of Cash Flow
<TABLE>
<CAPTION>
                                                          For the  For the
                                                          Year Ended                Year Ended              January 1, 1995
                                                          December 31,              December 31,            Through
                                                          1997                      1996                    December 31, 1997
                                                          ------------------        -------------           -----------------
CASH FLOW FROM DEVELOPMENT
STAGE ACTIVITIES:

<S>                                                        <C>                       <C>                     <C>          
     Net loss                                              $ (690,747.)              $ (668,577.)            $(1,720,669.)
     Adjustments to reconcile net loss to net
     cash provided by operating activities:
         Increase (decrease) in:

         Provision for bad debt                               150,000.                   55,000.                 325,000.
         Write-off of mining investment in Georgia            135,723.               -  -  -  -                  135,723.
         Organization costs                                 -  -  -  -                  (6,401.)                 (9,601.)
         Gain on sale of Armenia mining interests             (12,875.)              -  -  -  -                 (12,875.)
         Accounts payable, accrued expenses
                and miscellaneous                          (1,016,281.)                 984,105.                 256,938.
                                                           -----------                  --------                 --------
Net cash provided (used) by

      Development Stage Activities                         (1,434,180.)                 364,127.              (1,025,484.)
                                                           -----------                  --------              ----------- 

CASH FLOW FROM INVESTING ACTIVITIES:
     Proceeds from sale of Armenia mining
         interests (net of Note Receivable)                  1,691,155.              -  -  -  -                 1,691,155.
     Investment in certain mining interests
         - net of financing                                 -  -  -  -               -  -  -  -                 (153,494.)
     Deferred costs - mining interests                      -  -  -  -                 (618,157.)               (878,858.)
                                                                                       ---------                --------- 

Net cash (used) by Investing Activities                     1,691,155.                 (618,157.)                658,803.
                                                            ----------                 ---------                 --------

CASH FLOW FROM FINANCING ACTIVITIES

     Net proceeds from private placement offering            -  -  -  -               -  -  -  -                 421,573.
     Note payable - officer (net)                            (191,000.)                 191,000.               -  -  -  -
     Warrants exercised                                      -  -  -  -                     100.                     100.

Net cash (used) provided by Financing Activities             (191,000.)                 191,100.                 421,673.
                                                           -----------                 ---------                ---------
NET INCREASE (DECREASE) IN CASH                                65,975.                  (62,930.)                 54,992.

CASH - beginning                                                  369.                   63,299.                  11,352.
                                                           -----------                 ---------                ---------

CASH - end                                                   $ 66,344.                $     369.                $ 66,344.
                                                           ===========                ==========               ==========

SUPPLEMENTAL CASH FLOW INFORMATION

     Income taxes paid                                     $      700.                $     324.               $   1,348.
                                                           ===========                ==========               ==========


     Interest paid                                           $ 14,058.                 -  -  -  -               $ 14,821.
                                                           ===========                ==========               ==========     
</TABLE>


NON-CASH INVESTING AND FINANCING ACTIVITIES

In 1995 the Company issued one million shares of common stock for certain mining
interests, with an estimated value of $850,000 (Note 5). In 1997 the Company
issued 2,000,000 common shares in exchange for $200,000 in accrued salaries.
Also, 250,000 common shares were issued as a Finders Fee in connection with the
First Dynasty financing.

See Independent Auditors' Report and Notes to the Financial Statements.


<PAGE>


Page 6

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                         Notes to Financial Statements
                                December 31, 1997

NOTE 1:    ORGANIZATION (AS A DEVELOPMENT STAGE COMPANY) AND ACCOUNTING POLICIES

                Global Gold Corporation (the "Company") was incorporated in the
                State of Delaware and, as further described hereafter, had no
                operating or development stage history from its inception until
                January 1, 1995. Accordingly, the Company has been dormant until
                1995. During 1995 the Company changed its name from Triad Energy
                Corporation to Global Gold Corporation. An Australian
                corporation, Eyre Resources N.L. and an affiliate (hereafter
                "Eyre"), presented to management an opportunity to develop
                certain gold and copper mining rights in the former Soviet
                Republics of Armenia and Georgia. As part of the plan to acquire
                the mining interests and raise venture capital, the Company
                increased the number of shares authorized to be issued from ten
                million to one hundred million. These Republics, which recently
                won their independence, may be prone to political and economic
                turmoil which may result in various adverse ramifications.

                The Company has offices in New York City which it leases from
                Penn-Med Consultants, Inc., which is charging rent in the amount
                of $3,000 per month to the Company for use of the premises,
                office equipment, facilities, etc., commencing January 1, 1996.
                The Company has three employees.

                During 1995 the Company formed certain wholly-owned foreign
                subsidiaries. Any reference in these statements to the Company
                may also include one, some or all of the subsidiaries. All
                intercompany transactions were eliminated.

                As a result of ownership changes, the Company will not be able
                to benefit from all of its net operating loss carryforwards.
                (Income Tax Matters - see Note 16.)

NOTE 2:    USE OF ESTIMATES

                The preparation of financial statements in conformity with
                generally accepted accounting principles requires management to
                make estimates and assumptions that affect the reported amounts
                of assets and liabilities and disclosure of 

                contingent assets and liabilities at the balance sheet date,
                and also the reported amounts of revenues and expenses during
                the reporting period. Actual results could differ from those
                estimates.

<PAGE>

Page 7

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 3:    COMPANY HISTORY AND REPORTS WITH THE SECURITIES AND EXCHANGE 
           COMMISSION

                The Company was incorporated on February 21, 1980, and closed a
                Public Offering of the common stock in January 1981. Several
                months after the closing of such Offering, the Company withdrew
                the listing of the common stock for trading on NASDAQ because of
                the theft of substantially all of the cash funds of the Company
                derived from the proceeds of a Public Offering by its then
                president, Samual McNell, in July 1981. The case has long since
                gone through the judicial system and Mr. McNell is no longer an
                officer, director, employee or in any other fashion doing
                business with the Company. After the consummation of the Public
                Offering, the Company failed to file any further annual or
                periodic reports required under the Exchange Act. The Company
                filed its Form 10-KSB for the calendar years 1994, 1995 and
                1996, its Form 10-Q for all quarters in 1995 and thereafter, and
                also filed audited financial statements covering the calendar
                years 1987, 1988, 1989, 1990, 1992-1995 and 1996. There can be
                no assurance that the SEC might not assert claims against the
                Company and its present and former directors and officers, which
                actions might adversely affect the future conduct of the
                Company's business or be detrimental to future trading of the
                Company's stock in the public markets.

NOTE 4:    DEVELOPMENT STAGE COMPANY

                The Company may encounter problems, delays, expenses and
                difficulties typically encountered in the development stage,
                many of which may be outside of the Company's control. These
                include, without limitation, unanticipated problems and
                additional costs relating to development, production, marketing
                and competition. Management must also be successful in securing
                significant additional investor and/or lender financing and
                political risk insurance. The Company expects to incur operating
                losses for the near term and, in any event, until such time as
                it derives substantial revenues from the sale of concentrates
                containing gold and silver. Pursuant to the documents as
                hereafter summarized, different mining, processing, purifying,
                reprocessing and exploration endeavors are contemplated. Where
                appropriate, an endeavor will commence only after successful
                results of a feasibility study are rendered.


<PAGE>

Page 8

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 5: ACQUISITION OF ARMENIAN MINING INTEREST FROM EYRE

                Pursuant to the Asset Purchase Agreement dated June 1995 (the
                "Agreement"), the Company acquired from Eyre, an Australian
                corporation, all of its potential interest in its Armenian gold
                mining project and all of Eyre's potential interest in its
                Georgia gold and copper mining project (Note 8). The Agreement
                closed April 1996.

                The Company paid Eyre for the Armenian and Georgian interests as
                follows:
<TABLE>
<S>                                                  <C>      
                Cash                                 $ 153,494
                Note payable                           100,000
                Note payable                            46,506
                                                     ---------
                                                     $ 300,000
                                                     ---------
                                                     ---------
                                                     
</TABLE>

                The Agreement also provided for the Company to cause the
                delivery to Eyre and the Parry Beaumont Trust, a Singapore
                Trust, two million shares of stock, with an estimated value of
                $850,000, and warrants to acquire an additional one million
                shares. The Agreement left Eyre and the Parry Beaumont Trust
                with two out of five seats on the Board of Directors.

                As of December 1, 1995, the Company and Eyre and the Parry
                Beaumont Trust entered into a Restructuring Agreement pursuant
                to which Eyre surrendered 600,000 shares of common stock and
                acquisition warrants to purchase 360,000 shares of common stock,
                the Parry Beaumont Trust surrendered 400,000 shares of common
                stock and warrants to purchase 240,000 shares of common stock,
                and Eyre acquired a 2% overriding production royalty subject to
                adjustment in the event the ownership of the Company were to
                become less than 50% owned by United States residents. If such
                were about to occur, Eyre would have the right to sell warrants
                to purchase the Company's common stock by U.S. residents and, if
                that did not occur as prescribed, Eyre would surrender certain
                of their warrants in return for an increased royalty potentially
                totalling another 1%. The initial Armenian tailing project (Note
                7) is excluded from the royalty arrangement. In the event the
                Company did undertake any additional mineral extraction projects
                in the Republics of Armenia or Georgia, Eyre would have received
                a 1% overriding production royalty from the Company's revenues,
                also subject to a similar adjustment which may total up to
                another 1/2%. The Company was to have paid to Eyre $8,333 per
                month to be applied against the royalty arrangement commencing
                with the closing of the funding of the Tailings Project at
                Ararat in the Republic of Armenia (Note 7).

                The Restructuring Agreement provided that Eyre may submit to the
                Company additional projects, and that the Company shall in good
                faith consider acquiring such projects by issuing additional
                shares of common stock; provided in no event shall Eyre own or
                control 50% or more of the outstanding common stock of the
                Company.

<PAGE>

Page 9

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997


NOTE 5:    ACQUISITION OF ARMENIAN MINING INTEREST FROM EYRE (continued)

                Various prospective investment banking firms and potential
                investors who expressed an interest in providing funding for the
                Company's projects in the Fall of 1996, requested that the
                Company undertake a reverse split of its common stock (Note 18)
                to decrease the number of shares outstanding and to reduce the
                equity stake of certain shareholders who received shares
                pursuant to the Agreement essentially in their capacity as
                finders in order to facilitate possible future financings. In
                response thereto, by letter dated December 4, 1996, Eyre and the
                Parry-Beaumont Trust surrendered their Acquisition Warrants to
                purchase 240,000 and 160,000 shares, respectively, of the
                Company's common stock (a total of 400,000 shares), and
                surrendered their right to designate two members of the Board of
                Directors of the Company. In addition, Eyre agreed to waive its
                overriding royalties in the Armenian projects and to waive the
                approximately $146,000 due it under the promissory notes
                received at the closing (the "Second Restructuring Agreement").
                While Eyre had a 2% overriding royalty on the Armenian mining
                projects (other than the Tailings Project), the Second
                Restructuring Agreement referred to the waiver of an overriding
                royalty of 1.5% on the Armenian projects in reliance on Eyre's
                earlier agreement to reduce such royalty to 1.5% by virtue of
                its failure to secure financing from a designated mining company
                in November 1996. Accordingly, the Company believes that all
                overriding royalties on the Armenian mining projects have been
                validly waived.

NOTE 6:    PATTERSON, BELKNAP, WEBB & TYLER, L.L.P.

                The Company retained the law firm of Patterson, Belknap, Webb &
                Tyler, L.L.P. (PBW&T) to represent the Company in its dealings
                with the Armenian and Georgian Republics. PBW&T has an
                international law practice involving commerical, nonprofit and
                humanitarian issues, and has offices in Moscow. Mr. Van Z.
                Krikorian (VZK), of counsel to PBW&T, has been designated to
                conduct the negotiations with the Republics. VZK was formerly
                Armenia's Deputy Permanent Representative to the United Nations.

                In connection with preparation and negotiation of the Armenian
                Joint Venture Agreement and associated documents, as well as
                corporate, tax, strategic, regulatory, financing, political risk
                insurance and other miscellaneous matters, PBW&T shall be
                compensated $930,000 plus expenses ratably over the period May
                1, 1995 through May 1, 1999, with minimum quarterly payments of
                $25,000. The retainer arrangement is predicated on the total
                value of the deal reaching $93 million (1%), and is subject to
                adjustment if it falls short or exceeds that goal. In the event
                the contemplated financing is not consummated, PBW&T will reduce
                its hourly charges by 50%. The PBW&T arrangement was terminated
                on March 1, 1998 when Mr. Krikorian left to join the law firm of
                Vedder, Price, Kaufman & Kammholz.


<PAGE>


Page 10

                            GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 6:    PATTERSON, BELKNAP, WEBB & TYLER (continued)

                PBW&T also represented the Company in preparation and
                negotiation with the Georgian government of a revised Joint
                Venture Agreement and associated documents, and other related
                matters similar to the aforementioned Armenian retainer
                agreement. The contemplated Georgian fee was $180,000 for the
                period July 1, 1995 to July 1, 1999, and the minimum quarterly
                payment was $10,000. The quarterly billing was discontinued as
                of June 30, 1997, and the accumulated investment written-off as
                of December 1997.

                As of December 31, 1997, unbilled contingent project charges in
                excess of the minimum $25,000 per quarter were assumed by First
                Dynasty Mines Ltd., payable upon receipt of an executed
                agreement assigning the rights to the Zod Mine to the Armenian
                Gold Recovery Company ("AGRC"). Global Gold reversed fees
                accrued of $76,000 as of that date. Unbilled fees and expenses
                through December 31, 1997 total approximately $300,000, which
                will be finalized with First Dynasty Mines Ltd.

                In addition, PBW&T performs additional legal service for the
                Company as requested. Current payables and accruals are
                approximately $29,000.




NOTE 7:    THE ARMENIAN JOINT VENTURE AGREEMENT

                On February 2, 1996, the Company and Armgold, a division of the
                Ministry of Industry of the Government of the Republic of
                Armenia, initialed a Joint Venture Agreement entitled the
                Armenian Gold Recovery Company (the "Venture"). The Agreement
                was modified May 1, 1996. On June 29, 1996, the Republic of
                Armenia issued a decree authorizing Armgold's joint venture with
                the Company.

                The Venture may at times be required to obtain various
                approvals, licenses, permits, etc., on a timely basis. Failure
                to obtain such from the Government may materially and adversely
                affect the Company. Pursuant to the May 1, 1996 Agreement,
                Armenia, in general, has agreed to have the cost of the approval
                process be borne against its share of joint venture profits.

                The initial stage calls for processing tailings at the Ararat
                site and for various studies for gold mining operations at the
                Zod and Meghradzor sites. Management believes capacities at Zod
                will be significant. At each site, the Agreement calls for the
                Armenian Government to transfer to the Venture free and clear
                title in the mining rights. The Company wil be required to
                provide administration, training, management, feasibility
                studies, technology and business plans, as appropriate.

<PAGE>

Page 11

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 7:    THE ARMENIAN JOINT VENTURE AGREEMENT (continued)

                On October 7, 1996, the Armenian Government issued a license for
                a five-year period of implementation of the development plan at
                Ararat, effective after the registration of the Venture with the
                appropriate Armenian governmental authorities, in accordance
                with the applicable Armenian law. The registration of the
                Venture occurred on November 8, 1996. In addition, the mining
                engineering firm retained in connection with the Armenian
                Project obtained bulk ore samples from the tailings site for
                testing in Canada. An independent laboratory which analyzed such
                samples advised the Company in its written report in February
                1997 that the test results showed that approximately one and
                one-tenth gram of gold could be obtained from each metric tonne
                of ore, with a 50% recovery at the site covered by the Tailings
                Project, although there can be no assurance thereof.

                Pursuant to the decree issued in connection with the Armenian
                Joint Venture Agreement, GGA was required to invest $5,000,000
                in the Tailings Project on or before February 1, 1997. Such
                requirement was deemed satisfied by the parties.

                Pursuant to the Armenian Joint Venture Agreement, the Venture
                now engaged in the final engineering and initial construction
                for the Tailings Project. The Venture entered into a Tailings
                Dam Construction Contract with Armhydro for $640,000 on January
                31, 1997. AGRC also retained a Canadian engineering firm under a
                contract for Engineering, Procurement and Construction
                Management Services dated January 31, 1997, under which the
                compensation payable to the contractor under Phase I of the
                project is $4,500,000.

                While the Company has been advised that proven reserves exist in
                the Tailings Project, and that the mining thereof can be done on
                a profitable basis, there can be no assurance of such result.

                It is not contemplated that the Armenian Government will be
                assigned a value for their contribution of the mine properties
                and rights to the Venture. International or other accounting
                standards have not been adopted in the Agreement. For the Ararat
                Tailings Project, once profits are determined they shall be
                split 50/50 so long as the percentage of recovery of metals per
                gram per tonne is 70% or more. Based upon a sliding scale,
                Global's profit share will increase to 66.67% if the recovery
                rate declines to 50% or less.

                Armenia has permitted a tax holiday for the contemplated Venture
                as follows: for the first two years there shall be a complete
                exemption from profits tax. For the third through the tenth
                year, only 50% of the taxable income shall be taxable.

                The Tailings Project began operations at an official dedication
                ceremony on February 25, 1998.



<PAGE>

Page 12

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 8:    THE GEORGIAN AGREEMENT

                The Company also acquired from Eyre rights under a Foundation
                Agreement dated April 22, 1995 (including a Charter for a Joint
                Venture Company) with R.C.P.A. Madneuli, a Georgian state
                enterprise, in connection with carrying out certain mining of
                the Madneuli deposit. The Company was subsequently advised that
                the application for the license required to be filed with the
                Georgian government has not been filed, and it has no definitive
                agreement granting it fixed rights to mining production or
                processing in Georgia.

                The original Agreement called for each partner to advance
                capital in a 50/50 ratio. Neither international nor any other
                body of accounting standards have been adapted in the joint
                venture agreement. 

                The Company recently learned that the Georgian Government is
                planning to privatize the development of the Madneuli mine
                through a public bidding process which was slated to end on
                April 15, 1997. Since the structure of the Madneuli mining
                project under the public tender differs markedly from that
                contemplated under the Asset Purchase Agreement between the
                Company and Eyre dated as of June 30, 1995, the Company has
                decided not to submit a bid for the development of the Madneuli
                mining project. As of December 31, 1997, the Company wrote-off
                its investment in the Georgian mining property resulting in a
                loss of $135,723.

NOTE 9:    NOTES RECEIVABLE

                The Company holds a Note receivable as follows:
<TABLE>
<CAPTION>

                     Amount        Interest Rate        Debtor
                  -----------      -------------        -------

                  <S>              <C>                  <C>                                            
                   $ 300,000       Prime + 2%           Jet-Line Environmental Services, Inc. (Jet-Line)
                   ( 300,000)                           Allowance for doubtful accounts
                  ----------
                       - 0 -
                  ----------
                  ----------

</TABLE>

                The Jet-Line Note, as more fully described in the documents, is
                convertible into at least 20% of Jet-Line's common stock.
                Jet-Line has defaulted on prior balloon payment obligations and
                is in default of its current interest requirements. The Note was
                understood to be secured by U.C.C.'s on certain equipment,
                however, there were no filings located. Jet-Line owns certain
                valuable assets.

<PAGE>

Page 13

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 9:    NOTES RECEIVABLE (continued)

                Jet-Line advised the Company in early March 1997 that it
                received a notice of the 

<PAGE>

                revocation of its license to do business in Massachusetts and a
                fine of $100,000 from the Massachusetts environmental
                authorities. Jet-Line contested such revocation and fine in the
                Massachusetts state courts unsuccessfully. As a result, Jet-Line
                has been requested by such authorities to sell its facility in
                Massachusetts, and Jet-Line is now engaged in negotiations with
                a potential buyer with respect to such sale. The Company sent
                Jet-Line a written notice of default and demand for payment on
                March 14, 1997, and further demand letters on April 2, 1997 and
                November 10, 1997. The Company believes that the value of the
                assets held as collateral is negligible. The Company has also
                requested Jet-Line to seek additional financing and to use part
                of the proceeds therefrom to satisfy the Jet-Line Note in full.
                However, the Company has been notified by the Business Loan
                Center who made a U.S. Small Business Administration Guaranteed
                Loan of $550,000 in 1994, that it would liquidate the Jet-Line
                assets.

                Thus, there can be no assurance that the Company will ultimately
                be paid any of the full principal amount and accrued interest on
                the Jet-Line Note. Management has not accrued interest on the
                Note and has revised its allowance for doubtful accounts to
                $300,000.

NOTE 10:   OFFICERS' COMPENSATION PAYABLE

           Officers' compensation payable consists of the following:

                               December 31, 1997
                               -----------------
<TABLE>
<CAPTION>

<S>             <C>                                        <C>      
                Drury J. Gallagher                         $ 54,982.
                Robert A. Garrison                            5,752.
                                                              ------

                                                           $ 60,734.
                                                           =========
</TABLE>

                (see Note 15)

<PAGE>

Page 14

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997


NOTE 11:   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

           Accounts payable and accrued expenses include the following:

                              December 31, 1997
<TABLE>
<CAPTION>

<S>        <C>                                        <C>      
           Legal - General Counsel                    $ 26,403.
           Legal - PBW&T (see Note 6)                   29,110.
           Rent                                         18,000.
           Other Miscellaneous                          26,242.
                                                      ---------
                                                      $ 99,755.
                                                      =========

</TABLE>

NOTE 12:   NOTES PAYABLE

                Drury Gallagher loaned the Company $192,000. The Note evidencing
                the loan bears interest at 10% per annum and was due on or
                before June 30, 1997, together with accrued and unpaid interest.
                The Note was repaid in full together with interest thereon.

NOTE 13:   CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

                Pursuant to a Private Placement Offering dated May 17, 1995, as
                amended, the Company issued $500,000 of 10% Convertible Senior
                Notes due December 31, 1996. Expenses in connection with the
                Offering were $78,427.

                Each $1,000 Convertible Note entitled the holder to 400 shares
                of common stock and warrants to purchase 800 shares of common
                stock at an adjusted exercise price of $.50 per share at any
                time before December 31, 1998. The exercise price was
                subsequently reduced to $.125 per share to reflect the current
                market valuation as determined by management.

                In accordance with the Offering, interest was not payable on the
                Notes so long as they were converted to equity within a
                specified time frame. After the December 1, 1995 Eyre closing,
                the entire $500,000 of Convertible Notes were exchanged for
                200,000 shares of common stock.


<PAGE>

Page 15

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 14:   WARRANTS OUTSTANDING

                The Company had warrants outstanding as follows:
<TABLE>
<CAPTION>

                                               # Shares Right          Price/Share          Expiration
           Warrant Holder(s)                   to Purchase             Exercisable at       Date
<S>                                            <C>                     <C>                  <C>
           Stockholders through Note

           Conversion (Note 5)                   400,000                   $  .125          12/31/98

           Other                                   4,000                     $5.00          11/30/98
                                               ---------
                                                 404,000
                                               ---------
                                               ---------

</TABLE>

NOTE 15:   OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK 
           APPRECIATION RIGHTS

                Management presently consists of Mr. Drury J. Gallagher and Mr.
                Robert A. Garrison. Mr. Gallagher had been President of the
                Company and a stockholder since 1981; he is currently Chairman
                of the Company. Mr. Garrison was subsequently hired to oversee
                mining and related financing activities, and is currently
                President. Messrs. Gallagher and Garrison entered into
                employment agreements with the Company effective July 1, 1995.
                Each is entitled to receive a base salary of $100,000 per year
                for 50% of their time for a three-year term. The agreements call
                for automatic annual increases as defined. The Board may award
                bonuses up to 50% of base compensation.

                On January 3, 1997, the Board of Directors of the Company
                approved the issuance of 1,000,000 shares of its common stock to
                each of Messrs. Gallagher and Garrison in exchange for (a)in Mr.
                Gallagher's case, the cancellation of $100,000 of accrued
                salary, the cancellations of his options to acquire 175,000
                shares of the common stock of the Company and the cancellation
                of his stock appreciation rights (the "SARs") which, under
                certain circumstances, could have resulted in the issuance to
                him of up to 37,500 shares of the Company's common stock; and
                (b)in Mr. Garrison's case, the cancellation of $100,000 of
                accrued salary, the cancellation of his options to buy 75,000
                shares of the Company's common stock and the cancellation of his
                SARs. The Company made such transfer to reward each of them for
                their efforts to secure financing for the Company and/or the
                Armenian mining project, for maintaining the Company's existence
                in the face of the Company's potential insolvency through
                personal guarantees up to $500,000, and to increase their
                proprietary stake in the day-to-day management of the Company.
                In 1997, Eyre questioned the validity of the issuance by the
                Company of 1,000,000 shares of its common stock to each of
                Messrs. Gallagher and Garrison.


<PAGE>

Page 16

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 15:   OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK 
           APPRECIATION RIGHTS (continued)

                Global Gold Armenia Limited ("GGA") agreed to retain Robert A.
                Garrison as a consultant for a three-year period commencing
                February 1, 1997 for $150,000 per annum pursuant to the terms of
                the consulting agreement entered into between such parties.
                Under such agreement, Mr. Garrison will serve as a Senior Vice
                President and Director of GGA, will assist it in furtherance of
                its business interests under the supervision of the Board of
                Directors of GGA and provide ongoing management as the Board of
                Directors of GGA reasonably requests of him from time to time.
                Mr. Garrison agreed to devote 50% of his time and attention to
                the performance of his services under such agreement in his
                capacity as an independent contractor. Such agreement is
                terminable by the consultant upon 90 days prior written notice
                to GGA (or lesser notice if GGA agrees to such shorter period),
                or for cause (as defined therein) or without cause which, in
                such latter case, would require GGA to pay Mr. Garrison the
                amount of his consulting fees remaining unpaid under such
                agreement. Such agreement is in lieu of the above-mentioned
                salary.

NOTE 16:   NON-UNITED STATES WHOLLY-OWNED SUBSIDIARIES / INCOME TAX
           MATTERS

                On November 29, 1995, the Company formed Global Gold Armenia
                Limited and Global Gold Georgia Limited, which were respectively
                assigned the Armenian and Georgian mining rights from Eyre at
                the closing on December 1, 1995 (Note 5). The two subsidiaries
                are Cayman Island entities which were granted a twenty- year tax
                exemption from any law of that jurisdiction which hereafter
                imposes any tax to be levied on profits, income, gains or
                appreciation, commencing December 19, 1995.

                The Company experienced net operating losses for each of the
                years ended December 31, 1996 and 1997. The Company has elected
                to carryforward such losses for federal income tax purposes and
                offset future taxable earnings. However, since the Company is a
                development stage company and its ability to obtain future
                earnings is uncertain, no deferred tax asset has been recorded.

                The offshore companies were formed in part as a result of the
                concerns of Eyre, the previous Australian owner of the mining
                rights and presently a substantial non-controlling stockholder
                group of the Company, that they not be exposed to two layers of
                corporate taxation: United States and Australia. The Company
                will obtain a tax opinion on the transaction, which will also
                seek to give greater comfort to current and future U.S. and
                non-U.S. shareholders, that the structure will in fact satisfy
                realistic income tax goals of all concerned parties.

<PAGE>

Page 17

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 16:   NON-UNITED STATES WHOLLY-OWNED SUBSIDIARIES / INCOME TAX MATTERS 
           (continued)

                Inasmuch as management valued the shares of stock distributed to
                Eyre in exchange for acquiring the aforementioned mining
                interests at $.085 per share (such interests, described herein,
                were not substantially perfected at the time of the
                transaction), it is management's position that even if the
                Internal Revenue Service deemed the transaction to be a taxable
                event, there would nevertheless be insignificant income tax
                consequences. However, there can be no such assurance
                Furthermore, the Company will determine that the structure
                will not in any way be a deterrant from obtaining future
                financing or political risk insurance. Management will
                consider future structural changes, if necessary.

NOTE 17:   NET LOSS PER SHARE

                Net loss per share is computed using the weighted average number
                of shares outstanding during the period. Common stock
                equivalents have not been included since the effect would be
                antidilutive.

NOTE 18:   REVERSE STOCK SPLIT

                Various prospective investment banking firms and potential
                investors who expressed an interest in providing funding for the
                Company's projects in 1996 requested that the Company undertake
                a reverse split of its common stock to decrease the number of
                shares outstanding and thereby facilitate possible future
                financings. Accordingly, the Company effected a 1 for 10 reverse
                split of its common stock effective as of December 31, 1996.
                Such step was taken by the written consent of the holders of a
                majority of the Company's issued and outstanding shares of
                common stock. By virtue of the reverse split, each stockholder's
                number of shares of common stock became one-tenth of the number
                previously held. The Company filed its Certificate of Amendment
                to the Certificate of Incorporation with respect to the reverse
                split with the Delaware Secretary of State on December 31, 1996.

                All share and per share data in this report have been restated
                to reflect the reverse stock split, unless otherwise noted.


<PAGE>

Page 18

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 19:   FIRST DYNASTY MINES LTD.

                The Company, GGA and First Dynasty Mines Ltd. ("First Dynasty"),
                a Canadian public company, entered into a preliminary agreement
                dated January 27, 1997, whereby First Dynasty agreed to advance
                funds in stages necessary for the development of the Armenian
                mining projects.

                The Company and First Dynasty entered into a definitive
                agreement dated May 13, 1997, reflecting the final agreement of
                the parties with respect to the Armenian mining projects (the
                "FDM Agreement"). The principal terms of the FDM Agreement are
                outlined as follows:

                First Dynasty agreed to advance a maximum of $24,510,000 under
                the FDM Agreement. All funds advanced by First Dynasty will be
                advanced to GGA as debt, which is convertible into stock of GGA
                at First Dynasty's option, or is automatically converted into
                such stock under certain circumstances, as follows:

               a.   The first $6,490,000 of debt is convertible into 25% of the
                    capital stock of GGA.

               b.   The next $3,520,000 of debt together with the advance
                    described above is convertible into 51% of the capital stock
                    of GGA.

               c.   For every additional $.5 million advanced in respect of the
                    development of the Zod and Meghradzor mines (excluding the
                    $10,010,000 Tailings Project expenditure) as a loan to GGA,
                    such debt is convertible into an additional 1% of the
                    capital stock of GGA, up to a maximum of 80% of the issued
                    and outstanding shares of capital stock of GGA.

                Upon obtaining 80% of the capital stock of GGA, or upon making
                aggregate advances of $24,510,000, First Dynasty would be
                entitled to acquire the remaining 20% of the outstanding capital
                stock of GGA within 18 months after making such total advances,
                by issuance of 4,000,000 shares of its common stock, except that
                such number of shares would be increased proportionately to the
                extent that the mineable reserves at the Zod and Meghradzor
                mines (which are established at the end of such 18 month period)
                exceed five million ounces.

                First Dynasty carried out certain initial commitments in
                February 1997. They loaned GGA $675,000 to pay outstanding
                payables, agreed to fund the $640,000 Tailings Dam Construction
                Contract and agreed to guarantee or co-sign up to $3,500,000 of
                the equipment purchase contract and up to $1,000,000 of the
                engineering, procurement, construction management agreement
                between the Venture and a Canadian engineering firm. First
                Dynasty further agreed to loan the Company an additional
                $675,000 to cover the balance of the oustanding payables.

<PAGE>

Page 19

                             GLOBAL GOLD CORPORATION
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 1997

NOTE 19:   FIRST DYNASTY MINES LTD. (continued)

                In addition, First Dynasty agreed to pay the Company $400,000 to
                defray its expenses in participating in the negotiation of the
                second Armenian Joint Venture Agreement, of which $200,000 was
                paid upon the execution and the delivery of the FDM Agreement,
                and the balance of $200,000 will be paid on June 30, 1998. This
                amount is recorded as a Note Receivable as of December 31, 1997.
                Although not reflected in the FDM Agreement, First Dynasty also
                paid the Company $141,155 on May 15, 1997 to defray the expenses
                incurred by GGA during the three-month period ending March 31,
                1997. The total cash and notes received of $1,891,155 from First
                Dynasty was offset against the investment in Armenia mining
                interests of $944,465, deferred costs of January 1, 1997 as
                adjusted of $929,015 and organization costs of $4,800, resulting
                in a profit of $12,875.

                As of December 31, 1997, First Dynasty had advanced $18,270,874,
                of which $17,510,000 of the loans were converted into 66% of the
                capital per the Agreement. All such funds were paid into the
                AGRC Joint Venture (Note 7).

                Financial information for the 34% owned unconsolidated affiliate
                accounted for by the equity method is as follows:

           Balance Sheet
<TABLE>

<S>                                          <C>         
                Deferred mine costs          $16,840,758.
                Other assets                   3,265,202.
                                             ------------
                                             $20,105,960.
                                             ------------
                                             ------------

                Liabilities                 $  2,595,960.
                Equity                        17,510,000.
                                             ------------
                                             $20,105,960.
                                             ------------
                                             ------------
</TABLE>

               The Company is a development stage company and, as such, has no
               revenues or expenses.

               At present, the Company and GGA, in conjunction with First
               Dynasty, negotiated for AGRC to develop the Zod and Meghradzor 
               mines and concluded the Amended Armenian Joint Venture Agreement
               on September 30, 1997, subject to the passage of a parliamentary
               decree approving it. However, the Armenian government has not 
               passed the parliamentary decree as of this date. However, there
               can be no assurance that any Armenian parliamentary decree 
               approving the Amended Armenian Joint Venture Agreement will be 
               passed or, if so, when such decree will be passed. While the 
               Company is hopeful of achieving such result, there can be no 
               assurance of such result.

               In connection with the First Dynasty financing, the Company paid
               a Finders Fee of 125,000 shares of its common stock to each of
               Walker Investments Ltd. and Alpine Holdings Ltd. at $.10 per
               share which approximated fair market value as determined by
               management.

<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NO.               DESCRIPTION OF EXHIBIT
-----------               ----------------------

    1                     Certificate of Incorporation, as amended.(1)
    
    2                     By-laws(1)
    
    3                     Certificate of Merger between the Registrant
                          and Everest Petroleum Inc.(1)
    
    4                     Agreement of Merger between the
                          Registrant and Everest Petroleum Inc.(1)
    
    5                     Asset Purchase Agreement between the
                          Registrant and Eyre Resources N.L. dated as
                          of June 30, 1995(1)
    
    6                     Form of 1995 Stock Option Plan+(1)
    
    7                     Letter Agreement between Registrant, Eyre
                          Resources N.L. and Robert A. Garrison+(1)
    
    8                     Employment Agreement between the
                          Registrant and Drury J. Gallagher dated as of
                          July 1, 1995+(2)
    
    9                     Employment Agreement between the
                          Registrant and Robert A. Garrison dated as
                          of July 1, 1995+(2)
    
    10                    Employment Agreement between Autosport
                          (Asia) Pte. Ltd. and Robert A. Garrison
                          dated as of July 1, 1996+(2)
        
----------
*     Filed herewith.

+     Management contract or compensatory plan or arrangement.

(1)   Filed with 10-KSB for period ended December 31, 1994.

(2)   Filed with 10-KSB for period ended December 31, 1995.

(3)   Filed with 10-KSB for period ended December 31, 1996.


                                          35
<PAGE>

    11                    Stock Option Agreement between the
                          Registrant and Drury J. Gallagher dated as of
                          July 1, 1995 with respect to the grant of
                          1,000,000 shares of the Company's Common
                          Stock+(2)
    
    12                    Stock Option Agreement between the
                          Registrant and Drury J. Gallagher dated as of
                          July 1, 1995 with respect to the grant of
                          487,500 shares of the Company's Common
                          Stock+(2)
    
    13                    Stock Option Agreement between the
                          Registrant and Drury J. Gallagher dated as of
                          July 1, 1995 with respect to the grant of
                          12,500 shares of the Company's Common
                          Stock+(2)
    
    14                    Stock Option Agreement between the
                          Registrant and Robert A. Garrison dated as
                          of July 1, 1995 with respect to the grant of
                          487,500 shares of the Company's Common
                          Stock+(2)
    
    15                    Stock Option Agreement between the
                          Registrant and Robert A. Garrison dated as
                          of July 1, 1995 with respect to the grant of
                          12,500 shares of  the Company's Common
                          Stock+(2)
    
    16                    Stock Appreciation Rights Agreement
                          between the Registrant and Drury J.
                          Gallagher dated July 21, 1995+(2)
    
    17                    Stock Appreciation Rights Agreement
                          between the Registrant and Robert A.
                          Garrison dated July 21, 1995+(2)
    
    18                    Assignment and Assumption Agreement
                          between Eyre Resources N.L. and Global
                          Gold Armenia Limited dated December 1,
                          1995(2)

                                          36
<PAGE>

    19                    Assignment and Assumption Agreement
                          between Eyre Resources N.L. and Global
                          Gold Georgia Limited dated December 1,
                          1995(2)
    
    20                    Assignment and Assumption Agreement
                          between Eyre Resources N.L. and Global
                          Gold Australia Limited dated December 1,
                          1995(2)
    
    21                    Promissory Note of the Registrant dated
                          December 1, 1995 in the principal amount of
                          $100,000(2)
    
    22                    Promissory Note of the Registrant dated as
                          of December 1, 1995 in the principal amount
                          of  $100,000(2)
    
    23                    Stockholders Agreement by and among the
                          Registrant, Eyre Resources N.L., the Parry-
                          Beaumont Trust, Drury J. Gallagher, Francis
                          A. Hayman, John Hayman. Howard G. Seitz
                          and George L. Ryan dated December 1,
                          1995(2)
    
    24                    Guarantee and Indemnification Agreement of
                          the Registrant dated December 1, 1995(2)
    
    25                    Warrant Agreement to purchase 20,000
                          shares of the Registrant's Common Stock
                          dated December 1, 1995 issued to David
                          Steadly(2)
    
    26                    Warrant Agreement to purchase 20,000
                          shares of the Registrant's Common Stock
                          dated December 1, 1995 issued to Karekin
                          Arzoomanian(2)
    
    27                    Form of Warrant Agreement issued to 20
                          purchasers of the Registrant's 10%
                          Convertible Notes pursuant to the
                          Confidential Private Placement Memorandum
                          dated May 17, 1995, as amended(2)


                                          37
<PAGE>

    28                    Restructuring Agreement dated as of
                          December 1, 1995 by and among the
                          Registrant, Global Gold Armenia Ltd.,
                          Global Gold Georgia Ltd., Global Gold
                          Australia Ltd., Eyre Resources N.L., and the
                          Parry-Beaumont Trust (2)
    
    29                    Promissory Note of Global Gold Armenia
                          Limited dated as of December 1, 1995 in the
                          principal amount of $802,740(2)
    
    30                    Promissory Note of Global Gold Georgia
                          Limited dated as of December 1, 1995 in the
                          principal amount of $47,260(2)
    
    31                    Amended Employment Agreement between
                          the Registrant and Robert A. Garrison dated
                          as of April 11, 1996+(2)
    
    32                    Agreement No. 1 by and between the
                          Registrant, London & International
                          Mercantile Limited and HCL
                          Communications Ltd.(3)
    
    33                    Agreement No. 2 by and between the
                          Registrant, London & International
                          Mercantile Limited and HCL
                          Communications Ltd.(3)
    
    34                    Warrant Agreements to purchase 2,000,000
                          shares of the Registrant's Common Stock
                          issued to London & International Mercantile
                          Limited and HCL Communications Ltd.
                          under Agreement No. 1 with such party. (3)
    
    35                    Warrant Agreements to purchase 2,000,000
                          shares of the Registrant's Common Stock
                          issued to London & International Mercantile
                          Limited and HCL Communications Ltd.
                          under Agreement No. 2 with such party. (3)
    
    36                    Assignment and Assumption Agreement
                          between the Registrant and Global Gold
                          Armenia Limited dated as of July 30, 1996. (3)

    37                    Stock Option Agreement between the
                          Registrant and Drury J. Gallagher dated as
                          of July 19, 1996, as amended on
                          November 4, 1996+ (3)


                                          38
<PAGE>

    38                    Stock Option Agreement between the
                          Registrant and Robert A. Garrison dated as
                          of July 19, 1996, as amended on
                          November 4, 1996+ (3)
    
    39                    Restructuring Agreement dated December
                          4, 1996 by and among the Registrant,
                          Eyre Resources N.L. and the
                          Parry-Beaumont Trust (3)
    
    40                    Certificate of Amendment to the Certificate
                          of Incorporation of the Registrant filed
                          with the Delaware Secretary of State on
                          December 31, 1996 (3)
    
    41                    Unanimous Written Consent of the Board
                          of Directors of the Registrant dated as of
                          January 3, 1997, approving the transfer of
                          1,000,000 shares of the Registrant's
                          Common Stock to each of Drury J.
                          Gallagher and Robert A. Garrison.+ (3)
    
    42                   Letter Agreement by and among the
                         Registrant, Global Gold Armenia Limited
                         and First Dynasty Mines Ltd. (3)
    
    43                   Debenture of Global Gold Armenia Limited
                         issued to First Dynasty Mines Ltd. dated
                         February 3, 1997, including Guarantee
                         thereof by the Registrant (3)
    
    44                   Global Gold Armenia Limited Charge Over
                         Shares issued to First Dynasty Mines Ltd.
                         dated February 3, 1997 (3)
    

    45             Form of Amendments No. 2, 3 and 4 to Warrant
                   Agreement issued to the purchasers of the
                   Registrant's 10% Convertible Notes pursuant to the
                   Confidential Private Placement Memorandum dated
                   May 17, 1995, as amended (3)

    46             Definitive Agreement by and among the Registrant,
                   Global Gold Armenia Limited and First Dynasty
                   Mines Ltd. dated as of May 13, 1997*

    47             First Amendment to the Definitive Agreement by and
                   among the Registrant, Global Gold Armenia Limited
                   and First Dynasty Mines Ltd. dated as of October
                   10, 1997*

    48             Restated Employment Agreement between the
                   Registrant and Drury J. Gallagher dated as of July
                   1, 1997+*

    49             Restated Debenture of Global Gold Armenia Limited
                   issued to First Dynasty Mines Ltd. dated October
                   3, 1997, including Guarantee thereof issued by the
                   Registrant*

    50             Form of Amendment No. 5 to Warrant Agreement
                   issued to the purchasers of the Registrant's 10%
                   Convertible Notes pursuant to the Confidential
                   Private Placement Memorandum dated May 17, 1995,
                   as amended*



                                          39
<PAGE>

             PRIVILEGED AND CONFIDENTIAL DRAFT TO BE CIRCULATED FOR
                           COMMENTS SOLELY AS TO FORM

Opinion of Financial Advisor to Walsh International

     Pursuant to an engagement letter dated October 15, 1997 (the "NMS 
Engagement Letter"), the Board of Directors of Walsh International Inc. (the 
"Walsh Board") retained NationsBanc Montgomery Securities LLC ("NMS") to act 
as a financial advisor in connection with its consideration of the Merger. 
NMS is an internationally recognized firm and, as part of its investment 
banking activities, is regularly engaged in the valuation of businesses and 
their securities in connection with merger transactions and other types of 
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and 
other purposes. Pursuant to the NMS Engagement Letter, the Walsh Board 
engaged NMS to act as its financial advisor in connection with a possible 
sale of the Company. Walsh has also agreed to pay NMS 1.30% of the equity 
value of the Company upon sale of the Company that includes rendering its 
opinion to the Walsh Board. Walsh has also agreed to reimburse NMS for 
reasonable out-of-pocket expenses. Pursuant to a separate letter agreement, 
the Company has agreed to indemnify NMS, its affiliates, and their directors, 
officers, agents, consultants, employees and controlling persons against 
certain liabilities, including liabilities under federal securities laws.

     In the ordinary course of business, NMS actively trades equity 
securities of Walsh for its own account and for the account of customers and 
holds a long position in such securities. NMS has also performed investment 
banking services for Walsh. In April 1993, NMS acted as a lead manager of a 
private placement for Walsh Preferred Stock. In April 1996, NMS acted as 
co-manager of an underwritten initial public offering of Walsh Common Stock.

     Walsh selected NMS as its financial advisor on the basis of its 
experience and expertise in transactions similar to the Merger, its 
reputation in the healthcare information services sector, healthcare services 
sector and investment communities and its knowledge of and familiarity with 
Walsh resulting from the investment banking services it has previously 
provided to Walsh. NMS was not retained to, nor did it, advise the Walsh 
Board with respect to alternatives to the Merger or Walsh's underlying 
decision to proceed with or effect the Merger.
 
     On March 23, 1998 NMS rendered its opinion to the Walsh Board that 
pursuant to the terms of the Merger, as set forth in the Merger Agreement, 
the Parent Exchange Ratio and the IMS Adjustment factor are fair to the 
stockholders of Walsh from a financial point of view, as of the date thereof. 
No limitations were imposed by the Walsh Board on the scope of NMS's 
investigation or the procedures to be followed by NMS in rendering its 
opinion. NMS did not determine the form of 

<PAGE>

consideration to be received by Walsh in connection with the Merger, which 
was agreed to as a result of negotiations between Walsh and Cognizant.

     The full text of NMS's written opinion to the Walsh Board is attached 
hereto as Annex B and is incorporated herein by reference. The following 
summary of NMS's opinion is qualified in its entirety by reference to the 
full text of such opinion. NMS's opinion is directed only to the fairness of 
the Parent Exchange Ratio and the IMS Adjustment Factor, from a financial 
point of view, being received by Walsh in connection with the Merger, as set 
forth in the Merger Agreement. NMS's opinion has been provided for the use of 
the Walsh Board in its evaluation of the Merger, and does not address any 
other aspect of the Merger. NMS's opinion is addressed to the Walsh Board and 
does not constitute a recommendation to any stockholder of Walsh as to how 
such stockholder should vote with respect to the Merger.

     In connection with our opinion, we have, among other things: (i) 
reviewed certain publicly available financial and other data and respect to 
Seller and Buyer, including the consolidated financial statements for recent 
years and interim periods to December 31, 1997 and certain other relevant 
financial and operating data relating to Seller and Buyer made available to 
us from published sources and from the internal records of Seller and Buyer; 
(iii) reviewed the financial terms and conditions of the Merger Agreement; 
(iv) reviewed certain publicly available information concerning the trading 
of, and the trading market for, Seller Common Stock and Buyer Common Stock; 
(v) compared Seller and Buyer from a financial point of view with certain 
other companies in the health care information services and marketing 
information systems industries which we deemed to be relevant; (vi) 
considered the financial terms, to the extent publicly available, of selected 
recent business combinations of companies in the health care services and 
software industries which we deemed to be comparable, in whole or in part, 
to the Merger; (vii) reviewed and discussed with representatives of the 
management of Seller and Buyer certain information of a business and 
financial nature regarding Seller and Buyer, including financial forecasts 
and related assumptions of Seller furnished to us by Seller and financial 
forecasts and related assumptions for Buyer prepared by us in consultation 
with management of Buyer; (viii) made inquiries regarding and discussed the 
Merger and the Merger Agreement and other matters related thereto with 
Seller's management and Seller's counsel; and (ix) performed such other 
analyses and examinations as we have deemed appropriate.

     In connection with our review, we have not assumed any obligation 
independently to verify the foregoing information and have relied on its 
being accurate and complete in all material respects. With respect to the 
financial forecast for Seller provided to us by their management and the 
financial forecast for Buyer prepared by us in consultation with management 
of Buyer, upon the advice of 


<PAGE>


management of Seller and Buyer and with your consent we have assumed for 
purposes of our opinion that the forecasts (including the assumptions 
regarding expected revenue enhancements and cost savings, the amount of 
goodwill that can be attributed to the write-down of research and development 
costs, and other merger related costs) have been reasonably prepared on bases 
reflecting the best available estimates and judgments of their respective 
managements at the time of preparation as to the future financial performance 
of Seller and Buyer and that they provide a reasonable basis upon which we 
can form our opinion. We have also assumed that there have been no material 
changes in Seller's or Buyer's assets, financial condition, results of 
operations, business or prospects since the respective dates of their last 
financial statements made available to us. In our review of the proposed Merger 
and its financial terms and conditions, we were not asked to, nor did we, make 
any assessment of the proposed structure or likelihood of the Parent 
Transaction, nor did we make any evaluation of the likely trading prices for 
the IMS Common Stock following the completion of the Parent Transaction. We 
have relied on advice of counsel and independent accountants to Seller as to 
all legal, tax and financial reporting matters with respect to Seller, the 
Merger and the Merger Agreement. We have assumed that the Merger will be 
consummated in a manner that complies in all respects with the applicable 
provisions of the Securities Act of 1933, as amended (the "Securities Act"), 
the Securities Exchange Act of 1934 and all other applicable federal and 
state statutes, rules and regulations. In addition, we have not assumed 
responsibility for making an independent evaluation, appraisal or physical 
inspection of any of the assets or liabilities (contingent or otherwise) of 
Seller or Buyer, nor have we been furnished with any such appraisals. You 
have informed us, and we have assumed, that the Merger will be recorded as a 
purchase under generally accepted accounting principles. Finally, our opinion 
is based on economic, monetary and market and other conditions as in effect 
on, and the information made available to us as of, the date hereof. 
Accordingly, although subsequent developments may affect this opinion, we 
have not assumed any obligation to update, revise or reaffirm this opinion.

   The following is a brief summary of the report presented to Walsh's Board 
by NMS on March 23, 1998, in connection with its opinion.

Comparable Public Company Analysis: NMS compared the historical financial, 
operating and stock market performances of certain publicly traded companies 
that it considered relevant in evaluating the historical financial and 
operating performance of Walsh. In particular, these companies were analyzed 
with respect to their price/earnings ("P/E") multiples (defined as most 
recent stock price divided by the 1998 expected earnings per share) and 
secular growth rates.

   NMS examined the P/E of healthcare database companies, pharmaceutical 
specific healthcare information management companies and other marketing 
information services companies. The healthcare database companies that NMS 
used


<PAGE>

for its analysis included APACHE Medical Systems, Inc., Mecon, Inc., MedQuist 
Inc., Summit Medical Systems, HCIA, Inc., HBO & Company and Cerner Corp.  As 
of March 20, 1998, the average and median P/E multiples were 38.8x and 40.5x, 
respectively.  The pharmaceutical specific healthcare information companies 
included Dendrite International, Inc., Walsh International Inc. and Cognizant 
Corporation.  As of March 20, 1998, the average and median P/E multiples of 
these companies were 27.0x and 24.8x, respectively.  The other marketing 
information services companies included Abacus Direct Corporation, Acxiom 
Corp., American Business Information Inc., May & Speh, Inc., LCS Industries 
Inc., Information Resources, Inc. and Snyder Communications, Inc.  As of 
March 20, 1998, the average and median P/E multiples of these companies were 
29.5x and 25.4x, respectively.  Based on the businesses and growth rates of 
the companies used in our analysis, NMS deemed certain companies to be more 
relevant for this analysis. The relevant companies included HBO & Company, 
Cerner Corp., Cognizant Corporation, Dendrite International, Inc., May & 
Speh, Inc. and Information Resources, Inc.  As of March 20, 1998, the average 
and median P/E multiples of the relevant companies were 30.8x and 29.6x, 
respectively.  As of March 20, 1998 the average and median of the all the 
companies used in this analysis were 31.6x and 33.0x, respectively.

     NMS also examined the implied P/E multiples based on the P/E to secular 
growth ratio of the comparable companies.  As of March 20, 1998 the implied 
P/E multiples based on the P/E to secular growth ration of the relevant 
companies were 31.1x and 31.4x, respectively, and the average and median 
implied P/E multiples based on the P/E to secular growth ratio of all the 
companies used in this analysis were 30.2x and 31.0x, respectively.

     Based on the low liquidity and trading volume of Walsh's Stock, NMS 
deemed the comparable public companies based valuation methodology to have 
limited relevance to Walsh stand-alone valuation.

Comparable Transaction Analysis:  NMS examined 75 pending and completed 
business combinations in the healthcare information services sector with a 
special emphasis on 14 healthcare database and software business 
combinations, that were deemed more relevant, with regards to the last twelve 
months ("LTM") revenue, LTM EBIT and LTM net income multiples paid in these 
transactions. The relevant transactions include (target / acquiror) Medicus 
Systems Corp. / QuadraMed Corp., National Health Enhancement Systems, Inc. / 
HBO & Company, HPR Inc. / HBO & Company, Enterprise Systems, Inc. / HBO & 
Company, GMIS Inc. / HBO & Company, Management Software Inc. / HBO & Company, 
CyCare Systems, Inc. / HBO & Company, Versyss Incorporated / Physician 
Computer Network, Inc., Clinicom Incorporated / HBO & Company, GTE Health 
Systems Incorporated / Shared Medical Systems Corporation, Serving Software, 
Inc. / HBO & Company, Health Economics Corp. / Equifax Inc., Allcare 
Medication Services Inc. / Synetic,


<PAGE>

Inc., IMS International/Dun & Bradstreet Corp. The average and median LTM 
revenue multiples paid in the relevant business combinations were 3.5x and 
3.6x, respectively. The average and median LTM EBIT multiples paid in the 
relevant business combinations were 33.5x and 34.3x. The average and median 
LTM net income multiples paid in the relevant business combinations were 
41.0x and 39.9x, respectively. The average and median LTM revenue multiples 
paid in all transactions were 3.2x and 2.6x, respectively. The average and 
median LTM EBIT multiples paid in all transactions were 22.6x and 18.8x, 
respectively. The average and median LTM net income multiples paid in all 
transactions were 31.7x and 29.1x, respectively.

     Based on the transaction structures, and the financial condition of the 
targets and acquirors at the time of theses transactions, NMS deemed the 
comparable transactions based on valuation methodology to be moderately 
relevant. 

PREMIUM PAID ANALYSIS: NMS reviewed the premiums paid in 16 transactions in 
the healthcare services industry and 25 transactions in the technology and 
software industries that are deemed to be comparable to the Merger with 
transaction values between $100 million and $250 million since 1993. In each 
of the transactions analyzed, NMS calculated the premiums of the price paid 
by acquirors over the target company's stock price one day, one week and  one 
month prior to public announcement of the transaction. These calculations 
yielded median premiums based on the target company's stock price one day, 
one week and one month prior to public announcement of the transaction of 
21.2%, 34.0% and 35.4%, respectively. NMS then applied these premiums to 
Walsh's stock price one day, one week and one month prior to public 
announcement of the transaction as of March 20, 1998. These calculations 
yielded implied value per share based on premiums paid one day, one week and 
one month prior to the announcement of this transaction of $16.51, $15.41 and 
$13.88 respectively. NMS deemed the historical premiums based valuation 
methodology to be most relevant. 

DISCOUNTED CASH FLOW ANALYSIS: NMS performed discounted cash flow analysis on 
certain projected financial statements that were provided to NMS by the 
management of Walsh. In performing this analysis, NMS calculated the 
projected stand-alone unlevered after-tax cash flow of Walsh for the calendar 
year 1998 through 2007. NMS calculated Walsh's terminal values in calendar 
year 2007 based on the aggregate value/EBIT multiples ranging from 16.0x to 
20.0x. The unlevered after-tax cash flows and the terminal values were 
discounted to the present using discount rates ranging from 13.0% to 17.0%. 
This analysis yielded an equity value range for Walsh of $11.83 and $17.53 
per fully diluted share. NMS deemed the discounted cash flow based valuation 
methodology to be relevant.

CONTRIBUTION ANALYSIS: NMS analyzed and compared the respective contributions 
of Walsh and Cognizant to the pro forma combined company's net income for 
calendar


<PAGE>


years 1997 and 1998 and to the pro forma ownership of the respective 
stockholders in the combined company upon consummation of the Merger. Based 
on the historical financials for 1997 for Walsh and Cognizant, Walsh 
contributed 1.8% of the net income in 1997. Based on management projections 
for Walsh and NMS projections for Cognizant for 1998, Walsh would contribute 
2.2% of the net income in 1998 of the pro forma combined company. Based on 
the Parent Exchange Ratio, Walsh's existing shareholders would own 
approximately 2.0% of the pro forma combined company, on a fully diluted 
basis, upon consummation of the Merger. NMS deemed the contributions 
valuation methodology to be relevant.

Pro Forma Merger Analysis: NMS analyzed the impact of the Merger on Cognizant 
stockholders on a pro forma fully diluted EPS basis for calendar year 1998 
and 1999. NMS used management estimates for calendar year 1998 for Walsh and 
used NMS estimates for 1999 for Walsh and 1998 and 1999 for Cognizant. NMS 
performed the analysis with giving effect to the synergies anticipated by the 
managements of Walsh and Cognizant to result from the Merger (excluding 
non-recurring costs resulting from the Merger) in each year. The analysis 
indicated that, for Cognizant stockholders, the Merger would be EPS neutral 
in 1998 and EPS accretive in 1999. The actual results achieved by the pro 
forma combined company may vary from projected results and the variations may 
be material.

   The summary set forth above does not purport to be a complete description 
of the presentation by NMS to the Walsh Board or the analyses performed by 
NMS. The preparation of a fairness opinion is not necessarily susceptible to 
partial analysis or summary description. NMS believes that its analyses and 
the summary set forth above must be considered as a whole and that selecting 
portions of its analyses and of the factors considered, without considering 
all the analyses and factors, would create an incomplete view of the process 
underlying the analyses set forth in its presentation to the Walsh Board. In 
addition, NMS may have given various analyses more or less weight than other 
analyses, and may have deemed various assumptions more or less probable than 
other assumptions so that the valuation figures resulting from any 
particular analysis described above should not be taken to be NMS's view of 
the actual value of Walsh. In arriving at its opinion, NMS did not ascribe a 
specific range of values to Walsh, but rather made its determination as to 
the fairness, from a financial point of view, of the Parent Exchange Ratio 
and the IMS Adjustment Factor to be received by Walsh in connection with the 
proposed Merger on the basis of the financial and comparative analyses 
described above.

   In performing its analyses, NMS made numerous assumptions with respect to 
industry performance, general business and economic conditions and other 
matters. The analyses performed by NMS are not necessarily indicative of 
actual values or actual future results, which may be significantly more or 
less favorable than suggested by such analyses. Such analyses were prepared 
solely as part of


<PAGE>

NMS's analysis of the fairness of the Parent Exchange Ratio and the IMS 
Adjustment Factor, from a financial point of view to the shareholders of 
Walsh, as set forth in the Merger Agreement and were provided to Walsh's 
Board in connection with the delivery of NMS's opinion.  The analyses do not 
purport to be appraisals or to reflect the prices at which a company might 
actually be sold or the prices at which any securities may trade at the 
present time or at any time in the future.  NMS used in its analyses various 
projections of future performance prepared by the management of Cognizant.  
The projections are based on numerous variables and assumptions which are 
inherently unpredictable and must be considered not certain of occurrence as 
projected.  Accordingly, actual results could vary significantly from those 
set forth in such projections.