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
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   (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) 

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. 

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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 

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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 

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 

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 

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 

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 

$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 

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 

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 

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 

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 

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 

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

(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 

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 

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 

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 

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 

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 

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 

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 

(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 

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 

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 

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 

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 

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 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Financial Statements 

December 31, 1997 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Financial Statements 

December 31, 1997 

Exhibit                                                                                              Page
-------                                                                                              -----
                  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

	

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 2 

Exhibit A 

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

CURRENT ASSETS
     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.
                                                                                           ==========

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

Page 3 

Exhibit B 

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

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

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)
                                                                      =============              =============

	

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

Page 4a 

Exhibit C 

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

                                                             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
                                  ------------------------------------------------------------------------------------------------
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.
                                -----------     ----------  -----------  -------------  -------------      -----------  ----------
                                -----------     ----------  -----------  -------------  -------------      -----------  ----------

	

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

Page 4b 

Exhibit C 

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

                                                           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
                          --------------------------------------------------------------------------------------------------------
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.
                           ---------        --------        ----------    ----------      -----------    -----------     ----------
                           ---------        --------        ----------    ----------      -----------    -----------     ----------

	

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 5 
Exhibit D 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 
Statement of Cash Flow 

                                                          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:

     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.
                                                           ===========                ==========               ==========

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 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 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 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: 

Cash                                 $ 153,494
Note payable                           100,000
Note payable                            46,506
                                     ---------
                                     $ 300,000
                                     ---------
                                     ---------

	

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 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 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 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 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: 

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

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

	

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 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 

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 

Drury J. Gallagher                         $ 54,982.
Robert A. Garrison                            5,752.
                                              ------

                                           $ 60,734.
                                           =========

(see Note 15) 

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 

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

	

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 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: 

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

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

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

	

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 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 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 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 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 

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.
                             ------------
                             ------------

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. 

                                  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 

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

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 

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 

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 

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 

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 

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 

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, 

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 

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 

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. 

Exhibit 46 

DEFINITIVE AGREEMENT 

THIS AGREEMENT made as of the 13th day of May, 1997. 

AMONG: 

FIRST DYNASTY MINES LTD., a corporation continued under the laws of the Yukon and having its head office at No. 1 Temasek Avenue, 37th Floor, Millenia Tower, Singapore 039192 

("FDM") 

AND: 

GLOBAL GOLD CORPORATION, a corporation incorporated under the laws of Delaware and having an office at 438 West 37th Street, Suite 5G, New York, New York 10018 

("Global Gold") 

AND: 

GLOBAL GOLD ARMENIA LIMITED, a corporation incorporated under the laws of the Cayman Islands and having an address c/o W.S. Walker & Company, Caledonian House, P.O. Box 265 George Town, Grand Cayman 

("Global Armenia") 

WHEREAS: 

(A) capitalized terms used in these recitals without definition have the meanings assigned to them in Section 1.1 hereof; and 

(B) on January 27, 1996, the parties hereto entered into the Term Sheet Agreement, pursuant to which the parties agreed to enter into this Agreement to replace the Term Sheet Agreement. 

-2- 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and the respective covenants and agreements herein contained, the parties hereto covenant and agree as follows: 

PART 1 

DEFINITIONS AND INTERPRETATION 

DEFINITIONS 

1.1 In this Agreement and the recitals hereto, unless the context otherwise requires, the following terms shall have the meanings hereinafter set forth: 

"AGRC ARARAT" means Armenian Gold Recovery Ararat Company, a joint venture limited liability company to be formed under the laws of the Republic of Armenia pursuant to the Second Joint Venture Agreement and to be owned as agreed by the Armenian Parties and Global Armenia; 

"AGRC EXPLORATION" means Armenian Gold Recovery Exploration Company, a joint venture limited liability company to be formed under the laws of the Republic of Armenia pursuant to the Second Joint Venture Agreement and to be owned, as to 50%, by the Armenian Parties and, as to 50%, by Global Armenia; 

"AGRC MEGHRADZOR" means Armenian Gold Recovery Meghradzor Company, a joint venture limited liability company to be formed under the laws of the Republic of Armenia pursuant to the Second Joint Venture Agreement and to be owned, as to 50%, by the Armenian Parties and, as to 50%, by Global Armenia; 

"AGRC REFINERY" means Armenian Gold Recovery Refinery Company, a joint venture limited liability company to be formed under the laws of the Republic of Armenia pursuant to the Second Joint Venture Agreement and to be owned, as agreed by the Armenian Parties and Global Armenia; 

"AGRC TAILINGS" means Armenian Gold Recovery Tailings Company, a joint venture limited liability company formed under the laws of the Republic of Armenia pursuant to the First Joint Venture Agreement and owned, as to 50%, by the Armenian Parties and, as to 50%, by Global Armenia; 

"AGRC ZOD" means Armenian Gold Recovery Zod Company, a joint venture limited liability company to be formed under the laws of the Republic of Armenia pursuant to the 

-3- 

Second Joint Venture Agreement and to be owned, as to 50%, by the Armenian Parties and, as to 50%, by Global Armenia; 

"ARMENIAN AUTHORITIES" means all relevant Governmental Authorities in the Republic of Armenia including, without limitation, the Ministry of Industry of the Republic of Armenia; 

"ARMENIAN PARTIES" means the Ministry of Industry of the Republic of Armenia and Armgold, a state enterprise of the Republic of Armenia, each in their respective capacities as parties to the Joint Venture Agreements; 

"BUSINESS DAY" means a day, other than a Saturday, a Sunday or a holiday, on which banks in New York, Singapore, Vancouver and Yerevan are generally open for the transaction of banking business; 

"CONDITIONS" means the conditions precedent to FDM's obligations under this Agreement as more particularly described in Part 7; 

"CONSTATING DOCUMENTS" means the charter, the memorandum, the articles, the articles of incorporation, the articles of continuance or the articles of amalgamation pursuant to which a corporation is incorporated, continued or amalgamated, as the case may be, together with any amendments thereto, and the by-laws of such corporation and any shareholders' agreement which has been executed by such corporation and/or which governs in whole or in part such corporation's affairs; 

"DEBENTURE" means a debenture of Global Armenia guaranteed by Global Gold in favour of FDM dated January 3, 1997 in the principal amount of $5,480,000, and secured by all of the issued and outstanding Global Armenia Shares; 

"EARN-IN RIGHT" has the meaning assigned to it in Section 4.1; 

"ENCUMBRANCE" means any mortgage, charge, pledge, hypothecation, security interest, lien, easement, right-of-way, encroachment, covenant, condition, right of re-entry, lease, license, assignment, option or claim or any other encumbrance, charge or any title defect of whatever kind or nature, regardless of form, whether or not registered or registrable and whether or not consensual or arising by law (statutory or otherwise); 

"EPCM CONTRACT" means the Contract for Engineering Procurement and Construction Management Services dated January 31, 1997 between AGRC Tailings and Kilborn Inc.; 

"ENVIRONMENT" means the air immediately around, the water in and under, and the land comprising, the areas subject to the Projects; 

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"FDM" means, as the context requires, either or both of First Dynasty Mines Ltd. and FDM Subco; 

"FDM SHARES" means common shares without par value in the capital stock of FDM as presently constituted; 

"FDM SPECIAL WARRANTS" has the meaning assigned to it in Section 4.6; 

"FDM SUBCO" has the meaning assigned to it in Section 2.5; 

"FIRST INSTALMENT SHARES" has the meaning assigned to it in Section 4.1(a); 

"FIRST JOINT VENTURE AGREEMENT" means the joint venture agreement dated May 1, 1996 between the Armenian Parties and Global Armenia, as assignee of Global Gold, respecting the formation of AGRC Tailings and the development and operation of the Tailings Project as a joint venture and providing for additional joint venture arrangements in respect of the Meghradzor Project and the Zod Project; 

"FOURTH INSTALMENT SHARES" has the meaning assigned to it in Section 4.1(d); 

"GAAP" means generally accepted accounting principles applicable in the United States of America applied on a basis consistent with prior periods unless otherwise specifically stated; 

"GARRISON CONSULTING AGREEMENT" means the agreement in the form attached hereto as Schedule "B"; 

"GLOBAL" means Global Armenia and Global Gold, jointly and severally; 

"GLOBAL ACCOUNTS PAYABLE" means the liabilities recorded and accrued as of March 31, 1997 described in Schedule "E"; 

"GLOBAL ARMENIA FINANCIAL STATEMENTS" means the financial statements of Global Armenia as at December 31, 1996 attached hereto as Schedule "D"; 

"GLOBAL ARMENIA SHARES" means ordinary shares having a par value of $0.01 per share in the capital stock of Global Armenia; 

"GOVERNMENTAL AUTHORITY" means any national, central, federal, provincial, state, municipal, county or regional governmental or quasi-governmental authority, domestic or foreign, and includes any ministry, department, commission, bureau, board, administrative or other agency or regulatory body or instrumentality thereof; 

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"HAZARDOUS SUBSTANCES" means any hazardous product, contaminant, pollutant, toxic substance, deleterious substance, special waste, dangerous good or reportable substance that is identified or described in or defined by any Environmental Law and any other substance the storage, manufacture, disposal, treatment, generation, use, transportation, remediation, release into or concentration in the Environment of which is prohibited, controlled, regulated or licensed by any Governmental Authority in the Republic of Armenia; 

"INVESTMENTS" means monies advanced by FDM to Global Armenia or Global Gold pursuant to the Debenture and converted into Global Armenia Shares in accordance with the terms of this Agreement; 

"ISSUED EARN-IN SHARES" means the Fourth Instalment Shares; 

"JOINT VENTURE AGREEMENTS" means the First Joint Venture Agreement and, upon execution and delivery thereof, the Second Joint Venture Agreement; 

"JOINT VENTURE COMPANIES" means AGRC Ararat, AGRC Exploration, AGRC Meghradzor, AGRC Refinery, AGRC Tailings, AGRC Zod and any other joint venture companies formed pursuant to the Joint Venture Agreements; 

"LOANS" means loans advanced by FDM pursuant to the Debenture; 

"MATERIAL CONTRACT" means any oral or written contract, agreement, lease, license permit, commitment, covenant, undertaking, instrument, judgment, order, decree or award to which a party to this Agreement or any of the Joint Venture Companies is a party or is otherwise bound which is currently in effect and which, 

(i) involves an obligation of such person to pay $100,000 or more, 

(ii) relates, directly or indirectly, to the acquisition or to the disposition, exploration, development, maintenance or rehabilitation of a natural resource property, or to any interest in a natural resource property, 

(iii) cannot be terminated on 30 days' advance notice or less, 

(iv) relates to the purchase, sale, issuance, redemption, conversion, exchange or voting of any securities of such person or the management, control or composition of the board of directors of such person, or 

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(v) relates to the employment of an employee of such person or any remuneration payable by such person or affiliate or to any director, officer or shareholder of such person or affiliate for acting in any capacity, 

and includes this Agreement, the Debenture and the Joint Venture Agreements; 

"MATERIAL INDEBTEDNESS" means 

(i) any outstanding and unpaid indebtedness, obligation or liability, for borrowed money, amounts unpaid for real or personal property or services, taxes, fines, judgments, wages or employment benefits in excess of $100,000, 

(ii) any liability contingent or otherwise under any instrument of guarantee or indemnity in favour of a third party in excess of $100,000, or 

(iii) any other indebtedness, liability or obligation involving the payment of money in excess of $100,000, which, in accordance with GAAP would be disclosed as a liability on the debtor's or obligor's balance sheet, 

and, in respect of Global Gold and Global Armenia, includes the Global Accounts Payable and amounts advanced by FDM under the Debenture; 

"MEGHRADZOR PROJECT" means the activities undertaken or to be undertaken by AGRC Meghradzor, directly or indirectly for, 

(i) owning and assessing the feasibility of developing the assets comprising the Meghradzor gold mine, and 

(ii) developing, financing, constructing and operating the assets comprising the Meghradzor gold mine for the production of gold, 

all as more particularly described in the Joint Venture Agreements; 

"MINEABLE RESERVES" means 

(i) proven reserves, and 

(ii) probable reserves, 

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based upon estimates prepared by independent professional geologists acceptable to FDM and Global Gold, acting reasonably, in compliance with generally accepted mining reserve reporting standards in North America; 

"PROJECTS" means the Meghradzor Project, the Tailings Project, the Zod Project, the project to be undertaken by AGRC Ararat pursuant to the Second Joint Venture Agreement and any other projects undertaken pursuant to the Joint Venture Agreements; 

"PROSPECTUS" has the meaning assigned to it in Section 4.6; 

"SECOND INSTALMENT SHARES" has the meaning assigned to it in Section 4.1(b); 

"SECOND JOINT VENTURE AGREEMENT" means the joint venture agreement to be entered into between the Armenian Parties and Global Armenia, respecting, among other things, the formation of AGRC Ararat, AGRC Exploration, AGRC Meghradzor, AGRC Refinery and AGRC Zod and the development and operation of the Meghradzor Project and the Zod Project; 

"SHAREHOLDERS' AGREEMENT" means the agreement in the form attached hereto as Schedule "A"; 

"TAILINGS CONTRACT" means the Tailings Dam Construction Contract dated January 31, 1997 between AGRC Tailings and Construction of Civil and Industry Objects, Daughter Enterprise, ArmGidroEnergoStroy; 

"TAILINGS PROJECT" means the activities undertaken or to be undertaken by AGRC Tailings, directly or indirectly for, 

(i) owning and assessing the feasibility of developing the assets comprising the Ararat gold tailings pile site, and 

(ii) developing, financing, constructing and operating the assets comprising the Ararat gold tailings pile site for the production of gold, 

all as more particularly described in the Joint Venture Agreements; 

"TERM SHEET AGREEMENT" means the letter agreement dated January 27, 1997 among Global Gold, Global Armenia and FDM pursuant to which the parties hereto have entered into this Agreement; 

"THIRD INSTALMENT SHARES" has the meaning assigned to it in Section 4.1(c); 

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"TREASURY EARN-IN SHARES" means the First Instalment Shares, the Second Instalment Shares and the Third Instalment Shares; 

"ZOD PROJECT" means the activities undertaken or to be undertaken by AGRC Zod, directly or indirectly, for, 

(i) owning and assessing the feasibility of developing the assets comprising the Zod gold mine, and 

(ii) developing, financing, constructing and operating the assets comprising the Zod gold mine for the production of gold, 

all as more particularly described in the Joint Venture Agreements. 

INTERPRETATION 

1.2 For the purposes of this Agreement, except as otherwise expressly provided: 

(a) "this Agreement" means this Agreement, including the schedules hereto, and not any particular part, section or other portion hereof, and includes any agreement, document or instrument entered into, made or delivered pursuant to the terms hereof, as the same may, from time to time, be supplemented or amended and in effect; 

(b) all references in this Agreement to a designated "part", "section", "subsection" or other subdivision or to a schedule are references to the designated part, section, subsection or other subdivision of, or schedule to, this Agreement; 

(c) the words "hereof", "herein", "hereto" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular part, section, subsection or other subdivision or schedule unless the context or subject matter otherwise requires; 

(d) the division of this Agreement into parts, sections and other portions and the insertion of headings are for convenience of reference only and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof; 

(e) unless otherwise provided herein, all references to currency in this Agreement are to lawful money of the United States of America and all amounts to be 

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calculated or paid pursuant to this Agreement are to be calculated in lawful money of the United States of America; 

(f) a reference to a statute in this Agreement includes all regulations made thereunder, all amendments to the statute or regulations in force from time to time, and any statute or regulation that supplements or supersedes such statute or regulations; 

(g) the singular of any term includes the plural, and vice versa, and the use of any term is generally applicable to any gender and, where applicable, a body corporate, firm or other entity, and the word "or" is not exclusive and the word "including" is not limiting whether or not non-limiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto; 

(h) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; 

(i) in the event that any date on which any action is required to be taken hereunder by any of the parties hereto is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day; and 

(j) all references to "approval", "authorization" or "consent" in this Agreement means written approval, authorization or consent. 

SCHEDULES 

1.3 Attached to and forming part of this Agreement are the following Schedules: 

Schedule "A"   -    Form of Shareholders' Agreement
Schedule "B"   -    Form of Consulting Agreement
Schedule "C"   -    Material Contracts
Schedule "D"   -    Global Armenia Financial Statements
Schedule "E"   -    Global Accounts Payable

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PART 2 

BACKGROUND AND PURPOSES 

PURPOSES 

2.1 The parties hereto acknowledge and agree that they are entering into this Agreement to evidence their mutual agreements and understandings respecting: 

(a) FDM's indirect participation in the Projects through its Investments in Global Armenia on the terms more particularly described in Parts 3 and 4 hereof; and 

(b) the corporate governance of Global Armenia and the Joint Venture Companies as more particularly described in Part 5 hereof. 

EXISTING ARRANGEMENTS 

2.2 The parties hereto represent, acknowledge and agree that, pursuant to the Term Sheet Agreement, the following transactions have been completed as of the date of this Agreement: 

(a) FDM has made, or agreed to make, Investments in Global Armenia, initially by way of Loans, in the aggregate amount of $6,490,000 (the "Term Sheet Commitments") consisting of, 

(i) $1,350,000 for repayment of Global Accounts Payable, 

(ii) $640,000 for payments required under the Tailings Contract, 

(iii) $4,500,000 for payments required under the EPCM Contract; 

(b) The Toronto Stock Exchange has approved Investments by FDM in Global Armenia in the aggregate amount of $10,000,000, including the Term Sheet Commitments; 

(c) Global Armenia has issued to FDM the Debenture in the principal amount of $5,480,000; 

(d) Global Armenia has issued to Global Gold an additional 99,999 Global Armenia Shares which, together with the one Global Armenia Share already 

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owned by Global Gold, constitute all of the issued and outstanding Global Armenia Shares; 

(e) Global Gold has guaranteed to FDM the performance by Global Armenia of its obligations under the Debenture and, as security therefor, has pledged to FDM all of the issued and outstanding Global Armenia Shares; 

(f) AGRC Tailings has entered into the Tailings Contract and the EPCM Contract; 

(g) FDM and Global Armenia have received confirmation from the Armenian Authorities that, 

(i) Global Armenia has satisfied the $5 million investment commitment and bond requirements stipulated in Decree No. 80 dated June 29, 1996 by the relevant Armenian Authorities, 

(ii) AGRC Tailings has title to and owns the Tailings Project, and 

(iii) the Armenian Parties have consented to FDM's proposed Investments in Global Armenia as evidenced by the minutes of a meeting of the board of directors of AGRC Tailings held on January 29, 1997. 

DEFINITIVE AGREEMENT 

2.3 This Agreement constitutes the definitive agreement referred to in paragraph 7 of the Term Sheet Agreement and is intended to supersede and entirely replace the Term Sheet Agreement. Notwithstanding the foregoing, nothing in this Agreement will be construed as a release, discharge or extinguishment of any obligation of Global Gold or Global Armenia respecting: 

(a) Investments made by way of Loans advanced prior to the date of this Agreement; 

(b) security granted in respect of Loans advanced prior to the date of this Agreement; or 

(c) the truth and accuracy of the representations and warranties in the Term Sheet Agreement, except as modified by this Agreement. 

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FDM SUBSIDIARY 

2.4 FDM will make its Investments through a subsidiary company ("FDM Subco") incorporated in the United States of America and, as soon as feasible and in any event within 30 days of the date of this Agreement, FDM will assign its rights under this Agreement to FDM Subco provided that FDM will remain liable for all of FDM's obligations under this Agreement. 

INVESTMENTS AS LOANS 

2.5 Pending each exercise by FDM of the Earn-in Right, Investments will be made as Loans advanced pursuant to the Debenture and the Debenture will be amended as soon as practicable after the execution of this Agreement to provide that: 

(a) FDM Subco is the lender under the Debenture in substitution for FDM; 

(b) Loan advances made from time to time under the Debenture will be evidenced by proper notations on a grid attached to the Debenture; 

(c) the principal amount of the Debenture, from time to time, will be the aggregate of those unconverted Loan advances evidenced, from time to time, by the grid, up to a maximum of $15,000,000; 

(d) Loan advances under the Debenture will be converted into Global Armenia Shares pursuant to the Earn-in Right in accordance with 
Part 4 of this Agreement; 

(e) upon conversion of Loans into the Third Instalment Shares, the obligations of Global Armenia under the Debenture will cease to be guaranteed by Global Gold and all security therefor will be released. 

EXCLUSIVITY 

2.6 The rights of FDM hereunder to make Investments in Global Armenia, to thereby acquire Global Armenia Shares and to otherwise invest in the Projects as contemplated in this Agreement are exclusive to FDM and will remain exclusive to FDM for so long as FDM continues to fulfil its obligations under this Agreement and Global Armenia continues to fulfil its obligations under the Joint Venture Agreements provided that FDM's rights hereunder will cease to be exclusive if: 

(a) Global Gold notifies FDM in writing that FDM is in default of its obligations 

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under this Agreement or that Global Armenia is in default of its obligations under the Joint Venture Agreements (which notice will contain particulars of the alleged default); and 

(b) FDM fails to cure such default within 45 days but, in any event prior to the expiration of any cure period or grace period to which Global Armenia is subject if FDM's default results in a default by Global Armenia under the Joint Venture Agreements. 

OTHER BUSINESS OPPORTUNITIES 

2.7 Neither this Agreement nor any activity on behalf of any party hereto shall prevent any other party from engaging in any other activities or businesses or from making any mining or other investments outside of the Republic of Armenia. In no event shall any of the parties hereto be obligated to account to any other party hereto for any profits or other benefits derived from such permitted activities, businesses or investments or be under any obligation to offer to any other party hereto an interest in any such permitted activity business or investment, and any income realized may therefrom be retained by such party for its own account. 

PART 3 

INVESTMENTS 

TERM SHEET COMMITMENTS 

3.1 FDM will make the following Investments in Global Armenia pursuant to the Term Sheet Commitments: 

(a) Investments in the aggregate amount of $1,350,000 to be used exclusively for payment of the Global Accounts Payable, of which, 

(i) $675,000 was advanced pursuant to the Term Sheet Agreement, and 

(ii) $675,000 will be advanced upon the execution and delivery of this Agreement; 

(b) Investments in the aggregate amount of up to $640,000 to be used exclusively for payments required under the Tailings Contract, which will be advanced in instalments corresponding to the incremental payment obligations of AGRC 

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Tailings under the Tailings Contract but, in each case, no earlier than the date for payment under the Tailings Contract; 

(c) Investments in the aggregate amount of $4,500,000 to be used exclusively for payments required under the EPCM Contract, which will be advanced in instalments corresponding to the incremental payment obligations of AGRC Tailings under the EPCM Contract but, in each case, no earlier than the date for payment under the EPCM Contract. 

PAYMENT TO GLOBAL GOLD 

3.2 FDM will pay to Global Gold the sum of $400,000 for use, at Global Gold's discretion, to defray its expenses in participating in the negotiation of the Second Joint Venture Agreement, of which: 

(a) $200,000 will be paid upon the execution and delivery of this Agreement; and 

(b) $200,000 will be paid on June 30, 1998. 

Such payments, when made will be deemed to be Investments for the purposes of this Agreement. 

CONSULTING EXPENSES 

3.3 FDM will advance to Global Armenia, from time to time as and when due, the funds necessary to enable Global Armenia to meet its payment obligations under the Garrison Consulting Agreement. 

JOINT VENTURE COMMITMENTS 

3.4 FDM will make additional Investments in Global Armenia as and when requested to do so by the board of directors of Global Armenia to enable Global Armenia to meet its equity contribution obligations under the Joint Venture Agreements as and when they fall due and will use all reasonable commercial efforts to assist Global Armenia in procuring or arranging any project financing necessary to fulfil its obligations under the Joint Venture Agreements to obtain such financing provided nothing in this Agreement will oblige FDM to advance any funds to Global Armenia pursuant to this Section 3.4 prior to the time that the relevant payment obligation of Global Armenia falls due and if, and to the extent that, any payment obligation of Global Armenia under the Joint Venture Agreements or any related Material Contract is, by its terms or by subsequent agreement between Global Armenia and the beneficiary of the obligation, extended, suspended, terminated or subject to the 

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fulfillment of conditions, FDM's obligation hereunder to advance funds in respect thereof will be deemed to be extended, suspended, terminated or conditional, as the case may be, to the same extent. 

PART 4 

GLOBAL ARMENIA EARN-IN 

EARN-IN RIGHT 

4.1 Global Armenia and Global Gold hereby grant to FDM an irrevocable right (the "Earn-in Right") to acquire, on the terms provided in this Part 4: 

(a) that number of Global Armenia Shares (the "First Instalment Shares") which, upon acquisition by FDM, represent up to twenty-five per cent (25%) of the issued and outstanding Global Armenia Shares; 

(b) that number of Global Armenia Shares (the "Second Instalment Shares") which, upon acquisition by FDM, represent, together with the First Instalment Shares, up to fifty-one per cent (51%) of the issued and outstanding Global Armenia Shares; 

(c) that number of Global Armenia Shares (the "Third Instalment Shares") which, upon acquisition by FDM, represent, together with the First Instalment Shares and the Second Instalment Shares, up to eighty per cent (80%) of the issued and outstanding Global Armenia Shares; and 

(d) that number of Global Armenia Shares (the "Fourth Instalment Shares") which, upon acquisition by FDM, represent, together with the First Instalment Shares, the Second Instalment Shares and the Third Instalment Shares, a total of one hundred per cent (100%) of the issued and outstanding Global Armenia Shares. 

The Earn-in Right will be exercisable, in whole or in part, by way of Investments by FDM as contemplated in Part 3. 

FIRST INSTALMENT SHARES 

4.2 FDM will be deemed to have exercised the Earn-in Right in respect of the First Instalment Shares upon advancing aggregate Investment funds of $6,490,000 and upon FDM making Investments in the aggregate amount of $6,490,000, Global Armenia will forthwith 

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issue to FDM the First Instalment Shares whereupon FDM will own not less than twenty-five per cent (25%) of the issued and outstanding Global Armenia Shares. 

SECOND INSTALMENT SHARES 

4.3 Provided that FDM has exercised the Earn-in Right to the extent necessary to acquire all of the First Instalment Shares, FDM will be deemed to have further exercised the Earn-in Right, to acquire: 

(a) all of the Second Instalment Shares by advancing additional Investment funds in the aggregate amount of, $3,520,000; or 

(b) a lesser number of Second Instalment Shares equal to the product obtained by multiplying the total number of Second Instalment Shares by a fraction, the numerator of which is the total amount of Investments FDM has made on account of the Second Instalment Shares and the denominator of which is $3,520,000, by making Investments in an aggregate amount equal to the numerator amount. 

FDM will be entitled to exercise the Earn-in Right in respect of the Second Instalment Shares in whole or in part and may, at any time after making Investments in any amount on account of the Second Instalment Shares elect, by notice in writing to Global Armenia, to receive all of the Second Instalment Shares to which it is then entitled whereupon Global Armenia will forthwith issue to FDM the appropriate number of Global Armenia Shares. Any partial exercise of the Earn-in Right in respect of the Second Instalment Shares will be without prejudice to FDM's right to subsequently exercise the balance of the Earn-in Right as it relates to any remaining Second Instalment Shares, in whole or in part, and, upon full exercise of the Earn-in Right in respect of the Second Instalment Shares, FDM will own not less than fifty-one per cent (51%) of the issued and outstanding Global Armenia Shares. 

THIRD INSTALMENT SHARES 

4.4 Provided that FDM has exercised the Earn-in Right to the extent necessary to acquire all of the Second Instalment Shares, FDM will be deemed to have further exercised the Earn-in Right to acquire: 

(a) all of the Third Instalment Shares by making additional Investments in the aggregate amount of, $14,500,000; or 

(b) a lesser number of Third Instalment Shares equal to the product obtained by multiplying the total number of Third Instalment Shares by a fraction, the 

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numerator of which is the amount of Investments FDM has made on account of the Third Instalment Shares and the denominator of which is $14,500,000, by making Investments in an aggregate amount equal to the numerator amount. 

FDM will be entitled to exercise the Earn-in Right in respect of the Third Instalment Shares in whole or in part and may, at any time after making Investments in any amount on account of the Third Instalment Shares elect, by notice in writing to Global Armenia, to receive all of the Third Instalment Shares to which it is then entitled whereupon Global Armenia will forthwith issue to FDM the appropriate number of Global Armenia Shares. Any partial exercise of the Earn-in Right in respect of the Third Instalment Shares will be without prejudice to FDM's right to subsequently exercise the balance of the Earn-in Right as it relates to any remaining Third Instalment Shares, in whole or in part, and, upon full exercise of the Option in respect of the Third Instalment Shares, FDM will own not less than eighty per cent (80%) of the issued and outstanding Global Armenia Shares. 

FOURTH INSTALMENT SHARES 

4.5 Provided that FDM has exercised, or is deemed to have exercised, the Earn-in Right to the extent necessary to acquire all of the Third Instalment Shares, FDM will, on or before that date (the "Final Buyout Date") which is eighteen months after the date upon which FDM acquires all of the Third Instalment Shares, exercise the balance of the Earn-in Right to acquire all, but not less than all, of the Fourth Instalment Shares by issuing to Global Gold: 

(a) 4,000,000 FDM Shares free and clear of Encumbrances; and 

(b) if, as of the Final Buyout Date, aggregate Mineable Reserves in respect of the Zod Project and the Meghradzor Project exceed 5,000,000 ounces of gold, that number of additional FDM Shares by which the product obtained by multiplying 4,000,000 by a fraction, the numerator of which is the number of ounces of gold comprising the Mineable Reserves and the denominator of which is 5,000,000, exceeds 4,000,000; 

which number of FDM Shares will be subject to appropriate adjustment in the event of any distribution, subdivision, consolidation, reorganization or arrangement in respect of FDM Shares occurring prior to the date of issuance. FDM may exercise the Earn-in Right in respect of the Fourth Instalment Shares by notice in writing to Global Gold delivered any time after the date that FDM acquires the Third Instalment Shares but, failing such exercise, prior to the Final Buyout Date. FDM will be deemed to have exercised the Earn-in Right in respect of the Fourth Instalment Shares as of the Final Buyout Date. Upon exercise and against delivery by FDM of a certificate representing the number of FDM Shares then issuable to Global Gold pursuant to FDM's exercise of the Earn-in Right, Global Gold will transfer to FDM, free and clear of 

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Encumbrances, all of the Fourth Instalment Shares whereupon FDM will own not less than one hundred per cent (100%) of the issued and outstanding Global Armenia Shares. 

TRADEABILITY 

4.6 The parties acknowledge and agree that, although FDM is under no obligation to file a prospectus in Canada or a registration statement in the United States solely for the purpose of issuing freely tradeable FDM Shares to Global Gold pursuant to Section 4.5, FDM will use its best efforts to issue freely tradeable FDM Shares to Global Gold if it is feasible to do so in connection with a contemporaneous public offering of FDM Shares or special warrants of FDM in a form and substance satisfactory to the parties, acting reasonably ("FDM Special Warrants") pursuant to a prospectus filed with applicable Canadian securities regulatory authorities (a "Prospectus"). If, during the six month period preceding the Final Buyout Date, FDM: 

(a) files a Prospectus, FDM will exercise the Earn-in Right in respect of the Fourth Instalment Shares and use its best efforts to qualify under the Prospectus, for resale on The Toronto Stock Exchange, the 4,000,000 FDM Shares issuable to Global Gold pursuant to Section 
4.5(a); or 

(b) does not file a Prospectus, FDM will fulfil its obligation to Global Gold under Section 4.5(a) by issuing to Global Gold, as of the Final Buyout Date, a total of 4,000,000 FDM Special Warrants on the following terms: 

(i) each FDM Special Warrant will be exercisable to acquire, for no consideration, one FDM Share, 

(ii) the FDM Special Warrants may be exercised by Global Gold earlier than provided in subparagraph (iii) below at any time for FDM Shares (which will be subject to resale restrictions in Canada for a period of twelve months from the date of issuance of the FDM Special Warrants), and 

(iii) the FDM Special Warrants will be automatically exercised for FDM Shares (free of any resale restrictions in Canada other than overriding restrictions applicable to controlling shareholders) upon the filing of a Prospectus or the first anniversary of issuance whichever is earlier, 

and if, during the period commencing on the Final Buyout Date and ending on the first anniversary of the Final Buyout Date, FDM files a Prospectus, FDM 

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will use its best efforts to qualify under the same Prospectus the FDM Shares issuable upon the exercise of Global Gold's FDM Special Warrants. 

Any additional FDM Shares which become issuable to Global Gold pursuant to 
Section 4.5(b) on the Final Buyout Date will be represented by FDM Special Warrants on the terms set out in subparagraph (b) above. 

The certificates representing any FDM Shares or FDM Special Warrants issued to Global Gold will bear such restrictive legends as may be required under applicable law including the following: 

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, and no sale or transfer thereof may be effected without an effective registration statement or an opinion of counsel for the holder, satisfactory to the company, that such registration is not required under the Act and any applicable state securities laws." 

SPECIFIC PERFORMANCE 

4.7 FDM hereby acknowledges that irreparable damage will be caused to Global Gold by a violation of FDM's obligations under Sections 4.5 and 4.6, and that it is impossible to measure in money the damages which will accrue to Global Gold by reason of the failure by FDM to perform such obligations, and if Global Gold shall institute any action or proceeding to enforce FDM's obligations under Sections 4.5 and 4.6, FDM hereby consents to a grant of an injunction restraining any such violation thereof or any other appropriate decree of specific performance by any court having equity jurisdiction and waives the claim or defense therein that such party has an adequate remedy at law, and FDM shall not allege in any such action or proceeding the claim or defense that such remedy at law exists. 

AGRC EXPLORATION 

4.8 During the period commencing upon the formation of AGRC Exploration and ending on December 31, 2009, Global Gold will be entitled to elect to participate with Global Armenia in any exploration projects undertaken by AGRC Exploration and, prior to the commencement of any such exploration project, Global Armenia will provide Global Gold with all information in Global Armenia's possession respecting such proposed exploration project whereupon Global Gold will have the right upon notice, exercisable for a period of 60 days from the date such notice is received, to elect to participate in the rights and obligations of Global Armenia in respect of such exploration project to a level of up to twenty per cent (20%) of such rights and obligations. Global Armenia and Global Gold will enter into a mutually acceptable participation agreement in respect of any exploration project 

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in which Global Gold elects to participate, which will provide for, among other things, mutual rights of first refusal and a dilution formula. 

PART 5 

CORPORATE GOVERNANCE 

GOVERNANCE OF GLOBAL ARMENIA 

5.1 Upon execution and delivery of this Agreement, the parties hereto will enter into the Shareholders' Agreement which will govern the corporate affairs of Global Armenia. 

GOVERNANCE OF JOINT VENTURE COMPANIES 

5.2 From and after the date of this Agreement until the date that FDM acquires all of the Global Armenia Shares, the date that this Agreement is terminated or the date that FDM's rights hereunder cease to be exclusive pursuant to Section 
2.6, whichever earliest, Global Gold will be entitled to appoint one (1) director to the board of directors of each of the Joint Venture Companies and FDM will be entitled to appoint two (2) directors to the board of directors of each of the Joint Venture Companies. Global Gold's representative on the board of directors of each Joint Venture Company will vote, in respect of any matter requiring board approval, in accordance with the instructions of Global Armenia. 

CONSULTING AGREEMENT 

5.3 Upon the execution and delivery of this Agreement, Global Armenia will execute and deliver the Garrison Consulting Agreement. 

PART 6 

REPRESENTATIONS, WARRANTIES AND COVENANTS 

REPRESENTATIONS AND WARRANTIES OF GLOBAL 

6.1 Each of Global Gold and Global Armenia hereby jointly and severally represents and warrants to and in favour of FDM as follows and acknowledges that FDM is relying upon such representations and warranties in consummating the transactions contemplated by this Agreement: 

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(a) each of Global Gold and Global Armenia is a corporation duly incorporated, organized, validly existing and current and up-to-date with respect to all filings required under the laws of its jurisdiction of incorporation and no proceedings have been taken or authorized by or, to the best knowledge of Global, by any other person, with respect to bankruptcy, insolvency, liquidation, dissolution or winding up of Global Gold or Global Armenia; 

(b) each of Global Gold and Global Armenia has all requisite corporate power and authority to carry on its business as now being carried on by it and to own or lease and operate its properties and assets and is duly licensed or otherwise qualified to carry on business in each jurisdiction in which a material amount of its business is conducted or wherein the character of the properties and assets now owned by it makes such qualification necessary; 

(c) AGRC Tailings is a legal, valid and subsisting joint venture company established in accordance with the laws of the Republic of Armenia; 

(d) as of the date hereof, the authorized capital of Global Armenia consists of $50,000 divided into 5,000,000 shares having a par value of $0.01 per share of which only the Issued Earn-in Shares are validly issued as (i) in the case of 99,999 Issued Earn-in Shares, non-paid and assessable shares, and (ii) in the case of one 
(1) Issued Earn-in Share, a fully paid and non-assessable share, in the capital of Global Armenia; 

(e) Global Gold is the beneficial owner of the Issued Earn-in Shares with good and marketable title thereto, free and clear of Encumbrances (other than Encumbrances in favour of FDM) and, other than FDM, no person has an option or similar right or right of first refusal or any other right to acquire the Issued Earn-in Shares; 

(f) except for the Loans, there are no securities outstanding which are convertible into Global Armenia Shares or into any other securities of Global Armenia and no person has any oral or written agreement, option, warrant, right, privilege or any other right capable of becoming an agreement, option, warrant, right or privilege (whether legal, equitable, contractual, or otherwise) for the purchase, subscription, issuance or acquisition of any issued or unissued shares or other securities of Global Armenia; 

(g) Global Armenia is the beneficial owner of not less than fifty percent (50%) of the outstanding equity of AGRC Tailings with good and marketable title thereto, free and clear of Encumbrances (except as provided in the Joint 

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Venture Agreements) and, other than the Armenian Parties, no other person owns any equity in AGRC Tailings or has any right to acquire any equity in AGRC Tailings; 

(h) AGRC Tailings owns all right, title and interest in and to the Tailings Project free and clear of Encumbrances; 

(i) each of Global Armenia and, to the best of Global's knowledge, AGRC Tailings holds all requires permits, licenses, consents and authorizations necessary or desirable for the conduct of its business in a timely manner and, to the best knowledge of Global, neither Global Armenia nor AGRC Tailings is in default with respect to any existing license, permit, consent or authorization necessary or desirable for the conduct of such business; 

(j) to best knowledge of Global, the business of each of Global Armenia and AGRC Tailings is being conducted in all material respects in compliance with all applicable laws, regulations and ordinances of all authorities having jurisdiction; 

(k) Schedule "C" constitutes a complete and accurate list of all Material Contracts to which Global Armenia or AGRC Tailings are parties; 

(l) each Material Contract is in full force and effect and is valid, binding and enforceable against each of the parties thereto in accordance with its terms and no material breach or default exists in respect thereof on the part of any party thereto and no event has occurred which, with the giving of notice or lapse of time or both, would constitute such a breach or default; 

(m) other than as specifically contemplated in the Term Sheet Agreement, this Agreement and any agreements and documents contemplated thereby, there are no Material Contracts to which Global Gold, Global Armenia, AGRC Tailings is a party, from which it derives benefit, to which it is bound or to which any of its assets is subject: 

(i) under which transactions contemplated in this Agreement would have the effect of imposing restrictions or obligations on Global Armenia or AGRC Tailings materially greater than those imposed thereon at the date hereof, or 

(ii) which would give a third party, as a result of the transactions contemplated in this Agreement, a right to terminate any such Material Contract or to purchase any Global Armenia Shares or any assets of Global Armenia or AGRC Tailings, or 

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(iii) which would impose material restrictions on the ability of Global Armenia or AGRC Tailings to carry on any business which it might choose to carry on within any geographical area, to acquire property or dispose of its property and assets or to change its corporate status, other than area of mutual interest clauses and similar clauses in existing agreements, or 

(iv) which would impose material restrictions on the ability of Global Armenia or AGRC Tailings to pay any dividends or make other distributions to its shareholders or to borrow money and/or to mortgage and pledge its property as security therefor; 

(n) the Global Armenia Financial Statements present fairly the financial condition and results of Global Armenia as at the dates and for the periods indicated therein and have been prepared in accordance with GAAP; 

(o) after application of the $675,000 paid by FDM pursuant to Section 
3.1(a)(ii) and other than unpaid accounts payable in the aggregate amount of $150,000 and unbilled legal fees of Patterson, Belknap Webb & Tyler, L.L.P., Global Armenia has no Material Indebtedness; 

(p) all of Global Armenia's obligations under that certain promissory note dated as of December 1, 1995 in favour of Global Gold in the principal amount of $802,740 have been extinguished without any liability whatsoever to Global Armenia; 

(q) since the end of the periods covered in the Global Armenia Financial Statements, there has been no material adverse change in the business, operations, properties, assets or condition, financial or otherwise, of Global Armenia from that shown in the Global Armenia Financial Statements; 

(r) no Taxes are owing by Global Armenia or, to the best of Global's knowledge AGRC Tailings except current taxes not yet due and each of them has paid all instalments of tax payable in respect of its current fiscal year under any applicable legislation. Each of Global Gold, Global Armenia and, to the best of Global's knowledge, AGRC Tailings has properly withheld or collected and remitted to the appropriate Governmental Authority all Taxes required to be withheld or collected and remitted under any applicable legislation. For purposes of this paragraph "Taxes" means all taxes, charges, fees, levies or other assessments, including, without limitation, all income, capital, sales, use, transfer, franchise, withholding, payroll, employment, excise, business, mining or other taxes, custom duties, surtaxes, anti-dumping, and countervail duties, fees, assessments, charges or governmental imposts of any kind whatsoever, together with any interest, penalties or additions to such Taxes, imposed by 

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any national, central federal, provincial, local, foreign or other taxing authority; 

(s) except as disclosed in Global Gold's Form 10-KSB for the year ended December 31, 1996, there are no actions, suits, or proceedings commenced, or, to the best knowledge of Global, contemplated or threatened, against Global Gold, Global Armenia or AGRC Tailings at law or in equity before or by any court, Governmental Authority or arbitrator of any kind nor, to the best knowledge of Global, are there any existing facts which may reasonably be expected to be a proper basis for any actions, suits, or proceedings which in either case would prevent or hinder the consummation of the transactions contemplated by this Agreement or which would involve the reasonable possibility of any judgment or liability which could reasonably be expected to have an adverse effect on the business, operations, properties, assets or affairs, financial or otherwise, of Global Gold, Global Armenia or AGRC Tailings; 

(t) Global Armenia has no direct or indirect obligations or liabilities whatsoever, contingent or otherwise, in favour of Eyre Resources N.L. or the Parry-Beaumont Trust and no reasonable basis exists for any such obligation or liability to arise in the future; 

(u) to the best knowledge of Global Gold and Global Armenia: 

(i) AGRC Tailings is presently in compliance with all environmental permits issued by the Armenian Authorities; and 

(ii) all Hazardous Substances disposed of, treated or stored by or on behalf of AGRC Tailings have been disposed of, treated and stored in compliance with all environmental permits issued by the Armenian Authorities; 

(v) each of Global Gold and Global Armenia has the corporate power and authority to enter into this Agreement to perform its obligations hereunder; 

(w) the execution and delivery of this Agreement and the completion of the transactions contemplated herein have been duly authorized by the boards of directors of Global Gold and Global Armenia and this Agreement constitutes a valid and binding obligation of Global Gold and Global Armenia enforceable against each of them it in accordance with its terms; 

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(x) none of the execution and delivery of this Agreement, the completion of the transactions contemplated herein or the fulfilment of, or compliance with, the terms and provisions hereof do or will, nor will they with the giving of notice or the lapse of time or both, 

(i) result in the breach or violate any term or provision of the Constating Documents of Global Gold, Global Armenia or any of the Joint Venture Companies, 

(ii) conflict with, result in the breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by, any Material Contract to which Global Gold, or Global Armenia or any of the Joint Venture Companies is a party, from which it derives benefit, by which it is bound or to which any of its assets is subject, 

(iii) result in the cancellation, suspension or alteration in the terms of any licence, permit or authority held by Global Gold, Global Armenia or any of the Joint Venture Companies, 

(iv) result in the creation of any Encumbrance upon any of the assets of Global Gold, Global Armenia or any of the Joint Venture Companies, 

(v) give to others any material interest or right, including rights of purchase, termination, cancellation or acceleration, under any such Material Contract, or 

(vi) violate any provision of law or administrative regulation or any judicial or administrative award, judgment or decree applicable to, and known to Global Gold and Global Armenia, the breach of which would have a material adverse effect on Global Gold, Global Armenia or any of the Joint Venture Companies; 

(y) no exemption, consent, approval, order or authorization of, or registration or filing with, any court, Governmental Authority or any third party that has not been obtained is required by, or with respect to, Global Gold, Global Armenia or any of the Joint Venture Companies in connection with the execution and delivery of this Agreement by Global Gold and Global Armenia or the consummation by Global Gold and Global Armenia of the transactions contemplated hereby; 

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(z) the Treasury Earn-in Shares have been reserved for issuance to FDM and will, upon issuance, be validly issued as fully paid and non-assessable shares in the capital stock of Global Armenia; 

(aa) all of Global Gold's interest in the Joint Venture Agreements and the Joint Venture Companies has been validly transferred to Global Armenia; 

(bb) Global has made full disclosure to FDM of the material assets and liabilities of Global Armenia; and 

(cc) Global is unaware of any material facts or circumstances which have not been disclosed to FDM, which should be disclosed to FDM in order to prevent the foregoing representations from being misleading. 

REPRESENTATIONS AND WARRANTIES OF FDM 

6.2 FDM represents and warrants to and in favour of Global Gold and Global Armenia as follows and acknowledges that Global Gold and Global Armenia are relying upon such representations and warranties in consummating the transactions contemplated by this Agreement: 

(a) FDM is a corporation duly incorporated, organized and validly existing and current and up-to-date with respect to all filings required under the laws of its jurisdiction of incorporation and no proceedings have been taken or authorized by FDM or, to the best of the knowledge of FDM, by any other person, with respect to the bankruptcy, insolvency, liquidation, dissolution or winding up of FDM; 

(b) FDM has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder; 

(c) FDM has all requisite corporate power and authority to carry on its business as now being carried on by it and to own or lease and operate its properties and assets and is duly licensed or otherwise qualified to carry on its business in each jurisdiction in which a material amount of its business is conducted or wherein the character of the properties and assets now owned by it makes such qualification necessary; 

(d) no exemption, consent, approval, order or authorization of, or registration or filing with, any court, Governmental Authority or any third party is required by, or with respect to FDM in connection with the execution and delivery of 

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this Agreement by FDM or the consummation by FDM of the transactions contemplated hereby except for: 

(i) the filing of notice by FDM and the acceptance of such notice by The Toronto Stock Exchange with respect to: 

(A) the issuance of any FDM Shares that FDM may become obliged to issue under the terms of this Agreement, and 

(B) Investments by FDM exceeding $10 million; and 

(ii) any continuous disclosure filings that FDM is obliged, under applicable corporate and securities laws, to make respecting this Agreement; and 

(e) the execution and delivery of this Agreement and the completion of the transactions contemplated herein have been duly authorized by the board of directors of FDM and this Agreement constitutes a valid and binding obligation of FDM enforceable against it in accordance with its terms; 

(f) the financial statements of FDM for the year ended December 31, 1996 present fairly the financial condition and results of FDM as at the dates and for the periods indicated therein and have been prepared in accordance with GAAP; 

(g) there are no actions, suits, or proceedings commenced, or, to the best knowledge of FDM, contemplated or threatened, against FDM at law or in equity before or by any court, Governmental Authority or arbitrator of any kind nor, to the best knowledge of FDM, are there are existing facts which may reasonably be expected to be a proper basis for any actions, suits, or proceedings which in either case would prevent or hinder the consummation of the transactions contemplated by this Agreement or which would involve the reasonable possibility of any judgment or liability which could reasonably be expected to have an adverse effect on the business, operations, properties, assets or affairs, financial or otherwise, of FDM; 

(h) none of the execution and delivery of this Agreement, the completion of the transactions contemplated herein or the fulfilment of, or compliance with, the terms and provisions hereof do or will, nor will they with the giving of notice or the lapse of time or both, 

(i) result in the breach or violate any term or provision of the Constating Documents of FDM, 

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(ii) conflict with, result in the breach of, constitute a default under, or accelerate or permit the acceleration of the performance required by, any Material Contract to which FDM is a party, from which it derives benefit, by which it is bound or to which any of its assets is subject, 

(iii) result in the cancellation, suspension or alteration in the terms of any licence, permit or authority held by FDM, 

(iv) result in the creation of any Encumbrance upon any of the assets of FDM, 

(v) give to others any material interest or right, including rights of purchase, termination, cancellation or acceleration, under any such Material Contract, or 

(vi) violate any provision of law or administrative regulation or any judicial or administrative award, judgment or decree applicable to, and known to FDM, the breach of which would have a material adverse effect on FDM; 

(i) FDM has made full disclosure to Global of the material assets and liabilities of FDM; 

(j) FDM is unaware of any material facts or circumstances which have not been disclosed to Global, which should be disclosed to Global in order to prevent the foregoing representations from being misleading. 

AFFIRMATIVE COVENANTS OF GLOBAL 

6.3 Global Gold and Global Armenia hereby jointly and severally covenant and agree that each of them will perform the following affirmative covenants: 

(a) to promptly and duly execute and deliver to FDM such documents and instruments (including, without limitation, consents and approvals of third parties to this Agreement) and take such further actions as FDM may, from time to time, reasonably request in order to carry out more effectively the intent and purpose of this Agreement and to establish and protect the rights created or intended to be created hereunder in favour of FDM; 

(b) to promptly discuss with FDM and keep FDM informed upon becoming aware of: 

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(i) any significant developments in the business of Global Gold, Global Armenia and the Joint Venture Companies, 

(ii) any proposal for Global Armenia or any of the Joint Venture Companies to enter into a new Material Contract, or 

(iii) any breach or non-performance of any obligation pursuant to an existing Material Contract to which Global Gold, Global Armenia or any of the Joint Venture Companies is a party or the occurrence of any event which would, upon lapse of time or with the giving of notice, constitute such breach or non-performance; and 

(c) to afford to FDM and its accountants, counsel and other representatives full access during normal business hours to the management, properties, books, contracts, commitments and records of Global Armenia and each of the Joint Venture Companies in its possession or to which it has access; 

NEGATIVE COVENANTS OF GLOBAL 

6.4 Global Gold and Global Armenia hereby jointly and severally covenant and agree that each of them will observe the following negative covenants: 

(a) Global Gold and Global Armenia will not perform, any act or enter into any transaction or negotiation which interferes or is inconsistent with the transactions contemplated hereby. Without limiting the generality of the foregoing, Global Armenia will not, without the prior express written approval of FDM: 

(i) issue any shares or other securities convertible into or exchangeable for shares above the numbers of such shares and securities issued and outstanding as at the date hereof, 

(ii) increase or decrease its paid-up capital or purchase or redeem any of its shares, 

(iii) enter into any commitment or agreement to issue any shares or other securities convertible into or exchangeable for shares or grant options, warrants or rights to purchase shares not in existence on the date hereof, 

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(iv) alter or amend its Constating Documents as the same exist at the date of this Agreement, or 

(v) amend any Material Contract to which Global Armenia or any of the Joint Venture Companies is a party; and 

(b) in recognition and consideration of the fact that FDM has invested substantial time and effort in the investigation of Global Armenia and the Projects and the preparation and negotiation of this Agreement and will be investing substantial time, money and effort in consummating the transactions contemplated by this Agreement, and as a result will forego or delay the conduct of other activities, neither Global Gold nor Global Armenia will, while FDM's rights under this Agreement remain exclusive, (i) sell to, offer to sell to, or solicit offers to purchase any interest in the Projects (other than as specifically contemplated by this Agreement) from or (ii) sell, offer to sell or exchange or solicit offers to purchase or exchange any Global Armenia Shares from, any party (other than FDM) or enter into any merger, consolidation, share exchange, liquidation or other similar transaction involving Global Armenia with any party (other than FDM), and neither Global Gold nor Global Armenia nor any officer, director, employee, agent, advisor or other representative of Global Gold or Global Armenia will negotiate with or provide financial, technical, or other information to any person (other than FDM) in connection with any such proposed purchase or transaction except as required by applicable law. 

COVENANTS OF FDM 

6.5 FDM covenants and agrees to use all reasonable commercial efforts to obtain, in a timely manner, the approval of The Toronto Stock Exchange for all of FDM's obligations under this Agreement for which such approval has not already been obtained. 

PART 7 

CONDITIONS 

CONDITIONS 

7.1 FDM's obligations under this Agreement are subject to the continuing satisfaction of each of the following Conditions: 

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(a) all of the representations and warranties of Global Gold and Global Armenia in this Agreement will have been true in all material respects as of the date of this Agreement; 

(b) neither Global Gold nor (prior to the actual implementation of 
Section 1.1(a) of the Shareholders' Agreement) Global Armenia will have breached in any material respects any of its covenants under this Agreement; and 

(c) with respect to, 

(i) Investments in excess of $10 million; or 

(ii) the issuance of any FDM Shares; 

FDM will have obtained the approval of The Toronto Stock Exchange. 

PART 8 

INDEMNITIES 

INDEMNITIES BY GLOBAL 

8.1 Each of Global Gold and Global Armenia covenants and agrees forthwith on demand to indemnify and save harmless FDM from and against all claims, demands, actions, causes of action, liabilities, obligations, losses, damages, costs and expenses in excess of $250,000 suffered or incurred by FDM, directly or indirectly, by reason of, arising out of, or in connection with: 

(a) any representation or warranty of Global set forth in this Agreement being untrue or incorrect; or 

(b) a breach of any agreement, term or covenant on the part of Global made or to be observed or performed pursuant to this Agreement. 

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INDEMNITIES BY FDM 

8.2 FDM covenants and agrees forthwith on demand to indemnify and save harmless Global from and against all claims, demands, actions, causes of action, liabilities, obligations, losses, damages, costs and expenses in excess of $250,000 suffered or incurred by Global, directly or indirectly, by reason of, arising out of, or in connection with: 

(a) any representation or warranty of FDM set forth in this Agreement being untrue or incorrect; or 

(b) a breach of any agreement, term or covenant on the part of FDM made or to be observed or performed pursuant to this Agreement. 
CLAIMS UNDER GLOBAL'S INDEMNITIES 

8.3 If any claim is made by any person against FDM in respect of which FDM may incur or suffer damages, losses, costs or expenses that might reasonably be considered to be subject to the indemnity obligation of Global as provided in 
Section 8.1, FDM will notify Global as soon as reasonably practicable of the nature of such claim and Global shall be entitled (but not required) to assume the defence of any suit brought to enforce such claim. The defence of any such claim (whether assumed by Global or not) shall be through legal counsel and shall be conducted in a manner acceptable to FDM and Global, acting reasonably, and no settlement may be made by Global or FDM without the prior written consent of the other. If Global assumes the defence of any claim, then FDM and FDM's counsel shall cooperate with Global and its counsel in the course of the defence, such cooperation to include using reasonable best efforts to provide or make available to Global and its counsel documents and information and witnesses for attendance at examinations for discovery and trials. The reasonable legal fees and disbursements and other costs of such defence shall, from and after such assumption, be borne by Global. If Global assumes the defence of any claim and FDM retains additional counsel to act on its behalf, Global and its counsel shall cooperate with FDM and its counsel, such cooperation to include using reasonable best efforts to provide or make available to FDM and its counsel documents and information and witnesses for attendance at examinations for discovery and trials. All fees and disbursements of such additional counsel shall be paid by FDM. If Global and FDM are or become parties to the same action, and the representation of all parties by the same counsel would be inappropriate due to a conflict of interest, then FDM and Global shall be represented by separate counsel and, subject to the indemnity obligations of Global as set out in Section 8.1, the costs associated with the action shall be borne by the parties incurring such costs. 

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CLAIMS UNDER FDM'S INDEMNITIES 

8.4 If any claim is made by any person against Global in respect of which Global may incur or suffer damages, losses, costs or expenses that might reasonably be considered to be subject to the indemnity obligation of FDM as provided in Section 8.2, Global will notify FDM as soon as reasonably practicable of the nature of such claim and FDM shall be entitled (but not required) to assume the defence of any suit brought to enforce such claim. The defence of any such claim (whether assumed by FDM or not) shall be through legal counsel and shall be conducted in a manner acceptable to Global and FDM, acting reasonably, and no settlement may be made by FDM or Global without the prior written consent of the other. If FDM assumes the defence of any claim, then Global and Global's counsel shall cooperate with FDM and its counsel in the course of the defence, such cooperation to include using reasonable best efforts to provide or make available to FDM and its counsel documents and information and witnesses for attendance at examinations for discovery and trials. The reasonable legal fees and disbursements and other costs of such defence shall, from and after such assumption, be borne by FDM. If FDM assumes the defence of any claim and Global retains additional counsel to act on its behalf, FDM and its counsel shall cooperate with Global and its counsel, such cooperation to include using reasonable best efforts to provide or make available to Global and its counsel documents and information and witnesses for attendance at examinations for discovery and trials. All fees and disbursements of such additional counsel shall be paid by Global. If FDM and Global are or become parties to the same action, and the representation of all parties by the same counsel would be inappropriate due to a conflict of interest, then Global and FDM shall be represented by separate counsel and, subject to the indemnity obligations of FDM as set out in Section 8.2, the costs associated with the action shall be borne by the parties incurring such costs. 

CLARIFICATION OF INDEMNITIES 

8.5 With respect to the indemnities provided in Sections 8.1 and 8.2, each of Global and FDM (in either case the "Indemnitor") hereby: 

(a) waives notice of demand for payment, performance or satisfaction of all or any part of its obligations to the indemnified party (the "Indemnified Party") under the indemnity given in Section 8.1 or 
8.2, as the case may be, (the "Indemnity"), protest, notice of protest and notice of default, any right to require that an action be brought against the Indemnitor, or any other person and any and all other notices and legal and equitable defences to which it may be entitled; 

(b) agrees to honour the obligations under the Indemnity forthwith upon demand and acknowledges that such liability is not contingent or conditional upon the 

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pursuit of any remedies against the Indemnitor or any other person and that such liability shall not be diminished, relieved or otherwise affected by any extension of time, credit or any other indulgence which the Indemnified Party may from time to time grant to the Indemnitor or to any other person, including the acceptance of any partial payment, performance or satisfaction, or the compromise or release of any claims or the Indemnitor being under no obligation to pay the indebtedness under the Indemnity, or any part thereof, or by the indebtedness under the Indemnity becoming irrecoverable or unenforceable in whole or in part from or against the Indemnitor by operation of law or otherwise, none of which shall in any way modify or amend any of the Indemnitor's obligations under the Indemnity, which shall be continuing, irrevocable and binding on the Indemnitor as principal obligant notwithstanding any investigations made by the Indemnified Party; 

(c) agrees that nothing but payment, satisfaction and performance in full of the obligations to the Indemnified Party under the Indemnity shall release the Indemnitor from its obligations hereunder; 

(d) agrees that no document, proof or other action, other than as herein set forth, is necessary as a condition of the Indemnitor honouring its obligations hereunder; 

(e) agrees that in the event of the bankruptcy, winding-up or distribution of the assets of the Indemnitor, the rights of the Indemnified Party shall not be affected or impaired by its omission to prove its claim, or to prove its full claim, and it may prove such claim as it sees fit and may refrain from proving any claim; 

(f) agrees that no term, condition or provision hereof or any right hereunder or in respect thereof shall be, or shall be deemed to have been, waived by the Indemnified Party except by express written waiver signed by the Indemnified Party, all such waivers to extend only to the particular circumstances therein specified and neither forbearance nor indulgence by the Indemnified Party shall constitute a waiver of any term, condition or provision to be performed or observed by the Indemnitor, or want of any performance or observance thereof; and 

(g) agrees that no action or omission on the part of the Indemnified Party in exercising or failing to exercise its rights hereunder or in connection with or arising from any of the Indemnitor's obligations under the Indemnity or any 

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part thereof shall make the Indemnified Party liable to the Indemnitor for any loss occasioned to the Indemnitor. 

PART 9 

GENERAL 

9.1 All notices which may or are required to be given pursuant to any provisions of this Agreement shall be given in writing and shall be delivered personally or by telecopy, and in the case of FDM addressed to: 

No. 1 Temasek Avenue 
37th Floor, Millenia Tower 
Singapore 
039192 

Fax No: 011-65-337-0616 
Attention: President 

with a copy to: 

Goodman Phillips & Vineberg 
1900 - 355 Burrard Street 
Vancouver, British Columbia 
V6C 2G8 

Fax No: (604) 682-7131 
Attention: Steven G. Robertson 

in the case of Global Gold or Global Armenia addressed to: 

438 West 37th Street, Suite 5G New York, New York 
10018 

Fax No: (212) 967-3018 
Attention: President 

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with a copy to: 

Patterson, Belknap, Webb & Tyler 1133 Avenue of the Americas 
New York, New York 
10036-6710 

Fax No: (212) 336-2222 
Attention: Van Krikorian 

and to: 

Law Offices of Stephen R. Field 620 Fifth Avenue, Third Floor New York, New York 

Fax No: (212) 332-6055 

or such other address or telecopier number of which a party may, from time to time, advise the other parties hereto by notice in writing given in accordance with the foregoing. Date of receipt of any such notice shall be deemed to be the date of delivery thereof, if delivered, and on the day of telecopying, if telecopied, provided such day is a Business Day and, if not, on the first Business Day thereafter. 

BINDING EFFECT 

9.2 This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. 

WAIVER 

9.3 Any waiver or release of any of the provisions of this Agreement, to be effective, must be in writing executed by the party granting the same. 

TIME OF ESSENCE 

9.4 Time is of the essence of this Agreement. 

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SURVIVAL OF REPRESENTATIONS AND WARRANTIES 

9.5 The representations and warranties of the parties to this Agreement shall survive the execution hereof, and shall not merge with any deed, conveyance or other transfer instrument or other agreement giving effect hereto and shall survive for a period of two years. 

ASSIGNMENT 

9.6 Except as otherwise expressly provided in this Agreement, no party may assign its rights or obligations under this Agreement without the prior written consent of the other parties, such consent, in any case, not to be unreasonably withheld or delayed. 

FURTHER ASSURANCES 

9.7 Each of the parties, upon the request of any other party, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances and assurances as may be reasonably necessary or desirable to effect complete consummation of the transactions contemplated by this Agreement. 

COUNTERPARTS 

9.8 This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 

ENTIRE AGREEMENT 

9.9 This Agreement, together with the schedules herein referred to, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes the Term Sheet Agreement and any other prior agreements, understandings, negotiations and discussions, whether oral or written, between the parties with respect to the subject matter hereof. 

SEVERABILITY 

9.10 If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

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GOVERNING LAW 

9.11 This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of New York, determined without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a New York state court or federal court in the City of New York, State of New York in the United States of America, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York, or any court of the State of New York, in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written. 

FIRST DYNASTY MINES LTD.                GLOBAL GOLD CORPORATION

Per: /s/ Marcus Randolph                Per: /s/ Robert A. Garrison
    ------------------------------          ------------------------------
       Authorized Signatory                     Authorized Signatory

	

GLOBAL GOLD ARMENIA LIMITED 

Per: /s/ Drury J. Gallagher
    ------------------------------
        Authorized Signatory

	

SCHEDULE A 

SHAREHOLDERS AGREEMENT 

OF 

GLOBAL GOLD ARMENIA LIMITED 

Agreement made as of this ______ day of May, 1997, by and among First Dynasty Mines Ltd., a corporation organized under the laws of the Yukon, Canada and having its head office at No. 1 Temasek Avenue, 37th Floor, Millenia Tower, Singapore 39192 ("FDM"), Global Gold Corporation, a Delaware corporation with offices at 438 West 37th Street, Suite 5G, New York, New York 10018 ("Gold") (each such person or entity, together with such other persons or entities subsequently becoming parties to this Agreement, hereinafter shall be referred to individually as a "Shareholder" and collectively as the "Shareholders") and Global Gold Armenia Limited, a Cayman Islands corporation with an address c/o W.S. Walker & Company, Caledonian House, P.O. Box 265, George Town, Grand Cayman (the "Corporation"). 

WHEREAS, upon the execution and the delivery of the Definitive Agreement by and among the Corporation and the Shareholders dated as of the date hereof (the "Definitive Agreement"), the Corporation and the Shareholders desire to impose certain limitations and restrictions upon the sale, transfer, gift, pledge, assignment or other disposition (each of such acts being hereinafter referred to as a 

"Transfer") of the shares of the common stock of the Corporation (shares of such common stock, together with shares of common subsequently acquired by the parties, being referred to as the "Shares" and collectively as the "Stock") or any interest therein now or hereafter owned by the Shareholders, and to grant each other certain rights as described herein; 

WHEREAS, the Corporation and the Shareholders desire to facilitate the continuity of responsible ownership of the Corporation; and 

WHEREAS, the Corporation and the Shareholders desire to provide for certain rights of first refusal and obligations with respect to the Stock upon the proposed Transfer of Stock to a third party; 

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, each of the parties hereby agrees as follows: 

NOW, THEREFORE, it is agreed as follows: 

1. VOTING OF STOCK; DIRECTORS. 

1.1 (a) The Shareholders hereby agree with one another that they will, at all times, vote their respective Shares, commencing on the date hereof and continuing until FDM shall own 80% of the issued and outstanding ordinary shares of the Corporation or Gold owns no Stock, so as to effectuate the election of solely the following persons as directors of the Corporation: 

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(i) Drury J. Gallagher, 

(ii) Robert A. Garrison, 

(iii) Marcus Randolph, 

(iv) John Lewins, and 

(v) Barry Aitken. 

(b) In the event that FDM shall acquire 80% of the issued and outstanding ordinary shares of the Corporation, then, upon the occurrence of such event, the Shareholders hereby agree with one another that they will, at all times, vote their respective Shares, commencing on the occurrence of such event and continuing until all of the Shareholders own no Stock or Gold owns no Stock, so as to effectuate the election of solely the following persons as directors of the Corporation: 

(i) Robert A. Garrison, 

(ii) Marcus Randolph, 

(iii) John Lewins, 

(iv) Barry Aitken, and 

(v) an individual designated by FDM by notice in writing to the Corporation. 

1.2 (a) In the event the size of the Board of Directors is increased from time to time or such designees shall not be serving as directors, Drury J. 

3 

Gallagher and Robert A. Garrison acting on behalf of Gold, on the one hand, and FDM, on the other hand, shall each have the right to designate additional persons to serve as members of the Board of Directors, so that, in all events, each party shall have such number of its designees as members of the Board of Directors of the Corporation as shall be proportionate to the number of designees established pursuant to Section 1.1(a) or Section 1.1(b), as the case may be, computed as of the date of such increase in size. 

(b) In the event of the death of any of a party's designees, such party's remaining designees shall have the right to appoint a director to replace the deceased director pursuant to Section 1.2(a) hereof. In any event, each party will have the right to replace its own designees at any time upon notice in writing to the other party. 

2. NON-EXCLUSIVITY OF DEFINITIVE AGREEMENT 

2.1 Notwithstanding anything contained in this Agreement to the contrary, in the event that the Definitive Agreement becomes non-exclusive pursuant to the provisions of Section 2.6 thereof, then (a) FDM shall have the right to designate only one director, (b) Gold shall have the right to designate one director, and (c) the party or parties who provide the financing required under the then applicable provisions of the Second Joint Venture Agreement shall have the right to appoint three 

4 

designees to the Board of Directors of the Corporation, which appointment shall be made simultaneously with the execution and delivery of the financing agreement relating thereto or upon the payment of the first funding thereunder, whichever is applicable, and provided that each party hereto receives a copy of the definitive agreement relating to such financing or financings and Gold shall have the right to participate in the financing described in this Section 2.1(c). 

3. VOTING. 

3.1 The Shareholders shall vote at all corporate meetings so as to effectuate the terms and provisions of this Agreement. 

3.2 The Shareholders agree to take appropriate action to amend the By-Laws of the Corporation to provide that the vote of a majority of the members of the Board of Directors of the Corporation shall be required to take any action on behalf of the Board of Directors of the Corporation. Notwithstanding anything contained in this Agreement to the contrary, the unanimous vote of the Board of Directors shall be required in order to take any action on the following matters: 

(a) The sale, lease or any other disposition of all or substantially all of the assets of the Corporation; 

(b) the sale or assignment of any interest of the Corporation in any joint venture company in which the Corporation is a shareholder or equity 

5 

participant or to which the Corporation has provided financing of any kind in excess of the sum of $250,000; 

(c) the financing of any of the Projects (as defined in the Definitive Agreement) other than when such financing is provided solely by FDM, except that the parties acknowledge and agree that FDM will not be in default of its obligations under the Definitive Agreement to assist the Corporation in the procurement of Project financing as a result of a Project financing proposal made in good faith not being unanimously approved pursuant to Section 3.2(c) above. 

4. OTHER ACTIVITIES . 

4.1 Neither this Agreement nor any activity on behalf of the Corporation shall prevent the Shareholders from engaging in any other activities or businesses or from making any other investments. In no event shall any of the Shareholders be obligated to account to the other Shareholders of the Corporation for any profits or other benefits derived from such permitted activities, businesses or investments or be under any obligation to offer to the other Shareholders of the Corporation an interest in any such permitted activity business or investment, and any income realized may therefrom be retained by such Shareholder for his or her own account. 

4.2 The fact that a Shareholder is directly or indirectly interested in any 

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person, firm or corporation employed or retained by the Corporation to render or perform a service, or to or from whom the Corporation may purchase, sell, license or lease property, shall not prohibit the Corporation from employing or retaining such person or firm or Corporation or from otherwise dealing with him or it, provided, however, that the same is approved by the Board of Directors of the Corporation. 

5. LOCK-UP RESTRICTIONS 

5.1 (a) Subject to the provisions of this Agreement, each of the Shareholders agrees not to Transfer any Stock except in accordance with and subject to the terms of this Agreement. Any attempted or purported Transfer of any Shareholder's Stock in violation of the terms of this Agreement shall be null and void and the Corporation shall reject and refuse to record on its books any attempted or purported Transfer in violation of the provisions of this Agreement, and it shall not recognize any such transferee holding such Stock as a shareholder of the Corporation, nor shall any such person acquire any rights as a shareholder of the Corporation. 

(b) Notwithstanding anything contained in this Agreement to the contrary, any Shareholder may sell, assign, or transfer any of its Shares to any corporation, partnership or limited liability company, which is owned solely by the transferring Shareholder, provided that any such transfer is expressly permitted under the Definitive Agreement, each such transferor provides written notice of such transfer 

7 

to all the other parties hereto and each such transferee under this Section 
5.1(b) shall have signed and delivered to the Corporation an instrument in writing pursuant to which such transferee agrees to be bound by all the terms and provisions of this Agreement. 

6. OTHER RESTRICTIONS ON DISPOSITION 

6.1 (a) If a Shareholder ("Transferor") shall receive from an unaffiliated person ("Third Party Transferee") a written bona fide offer to purchase for cash (the "Bona Fide Offer") (other than pursuant to public offering of the Corporation's securities) any or all of the Transferor's Shares (the "Offered Shares"), which Bona Fide Offer the Transferor desires to accept, such Transferor shall give the Corporation and the other Shareholder (the "Non-Transferring Shareholder") written notice (the "First Notice") of such desire. Such notice shall also contain the identity of the Third Party Transferee, the price and other terms of the Bona Fide Offer. The First Notice shall be accompanied by a copy of the Bona Fide Offer. The Corporation shall have, for a period of 30 business days following the delivery of the First Notice, an option to purchase any or all Offered Shares, and if the Corporation (by vote of its Board of Directors) shall elect to exercise such option, in whole or in part, the Corporation shall within such 30-day period give an Election Notice (as defined below) of exercise to the Transferor and to the Non-Transferring Shareholder. In the event that the Corporation fails to exercise said option with respect to all or part of the 

8 

Offered Shares (the shares of the Stock not purchased by the Corporation pursuant to an option granted to it in this Agreement shall hereinafter be referred to as the "Remaining Shares"), the Non-Transferring Shareholder shall have an option to elect to purchase all or part of the Remaining Shares, which option must be exercised by giving an Election Notice to the Corporation and to the Transferor within 30 business days after the expiration of the Corporation's option period. An "Election Notice" as used in this Agreement shall mean a written notice from the Corporation or a Shareholder, as the case may be, stating its or his, as the case may be, desire to purchase all or a specified portion of the shares of Stock offered pursuant to an option granted in this Agreement to it or him, as the case may be. 

(b) The purchase price per share of Stock payable for the purchase of any Stock sold to the Corporation and/or the Non-Transferring Shareholder pursuant to the provisions of this Section 6.1 shall be the amount as stated in the First Notice. The payment terms of such purchase shall be governed by 
Section 7. 

(c) The closing of any purchase and sale of the Offered Shares pursuant to Section 6.1(a) shall take place at the principal office of the Corporation on a mutually agreed date after 10 business days, but not more than 15 business days, from the date on which either (i) the Corporation elects to exercise its option with respect to all of the Offered Shares or (ii) if the Corporation does not elect to purchase 

9 

all of the Transferor's Stock, the second option granted to the Non-Transferring Shareholder in Section 6.1(a) expires. 

(d) In the event that the Corporation and the Non-Transferring Shareholder shall fail to exercise in the aggregate their right to purchase under Section 6.1(a) all (but not less than all) of the Offered Shares within the periods therein specified, the Transferor may, subject to Section 6.2, thereafter Transfer all of the Offered Shares to the Third-Party Transferee on the terms and at the price described in the Bona Fide Offer, provided such Transfer is consummated within 120 days after the delivery of the First Notice and, subject to Section 6.2, such Third Party Transferee shall have signed and delivered to the Corporation an instrument in writing pursuant to which such Third Party Transferee agrees to be bound by all of the terms and conditions of this Agreement. If such Transfer is not consummated as provided in this Section 
6.1(d), then the Shares owned by the Transferor shall again be subject to all of the terms and conditions of this Agreement. 

6.2 The Non-Transferring Shareholder may, instead of exercising its right of purchase under Section 6.1(a), elect to participate with the Transferor in the Bona Fide Offer by notifying the Transferor in writing prior to the expiry of the Non-Transferring Shareholder's right of purchase. If the Non-Transferring Shareholder exercises its right of sale as hereinbefore described, the Transferor shall not transfer 

10 

the Offered Shares to the Third Party Transferee unless the Third Party Transferee enters into a binding agreement with the Non-Transferring Shareholder to purchase that number of Shares from the Non-Transferring Shareholder on the same terms and conditions as the Bona Fide Offer, as is equal to: 

(a) if the Bona Fide Offer relates to all of the Transferor's Shares, all of the Non-Transferring Shareholder's Shares; or 

(b) if the Bona Fide Offer relates to less than all of the Transferor's Shares, the product obtained by multiplying the total number of Shares held by the Non-Transferring Shareholder by a fraction, the numerator of which is the number of Shares of the Transferor to which the Bona Fide Offer relates and the denominator of which is the total number of Shares held by the Transferor. 

6.3 Notwithstanding anything contained in this Agreement to the contrary, the parties acknowledge and agree that: 

(a) No Shareholder shall have the right to sell or otherwise Transfer any of its Shares to any Third Party Transferee while FDM's rights under the Definitive Agreement remain exclusive under Section 2.6 of the Definitive Agreement; and 

(b) no Shareholder has the right to sell or Transfer any of its Shares to any Third Party Transferee if such sale or Transfer would constitute a breach of the 

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Joint Venture Agreements (as defined in the Definitive Agreement). 

7. DELIVERY OF STOCK CERTIFICATE(S); PAYMENT OF PURCHASE PRICE 

7.1 The stock certificate or certificates representing the shares of Stock transferred hereunder shall be delivered at the closing, duly endorsed for transfer, or accompanied by duly executed stock powers, signatures guaranteed, with the necessary documentary and transfer stamps, if any, paid for and affixed by the seller of the Stock. Appropriate assurance of the authority of any attorney, executor, administrator, trustee, or guardian to sign shall also be provided at such time. 

7.2 The full purchase price of the Stock being purchased by the Corporation or Shareholder pursuant to an exercise of the rights of first refusal described in Section 6.1 hereof shall be paid, in immediately available funds by certified or official bank check or wire transfer at the closing of such purchase and sale. 

8. RESTRICTIVE COVENANTS; INJUNCTIVE RELIEF 

8.1 Each Shareholder agrees that it will not divulge to any person, officer or corporation, other than to agents or representatives of the Corporation, any knowledge or information of any type whatsoever of a confidential nature relating to the business of the Corporation or any of its subsidiaries or affiliates, including, without limitation, all types of trade secrets (unless readily ascertainable from public 

12 

or published information or trade sources). Each Shareholder further agrees not to disclose, publish or make use of any such knowledge or information of a confidential nature without the prior written consent of the Corporation. 

8.2 The parties hereto agree that, in the event that a Shareholder commits a breach, or threatens to commit a breach, of any of the foregoing restrictions the Corporation shall have the following rights and remedies: 

(a) each Shareholder hereby consents to a grant of an injunction restraining any violation or threatened violation of the provisions of this 
Section 8 or any other appropriate decree of specific performance by any court having equity jurisdiction, it being acknowledged and agreed by the Shareholders that the Stock has a special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Corporation and that money damages will not provide an adequate remedy to the Corporation; and 

(b) to require the Shareholder to account for and pay over to the Corporation all compensation, profits, monies, accruals, increments or other benefits (collectively "Benefits") derived or received by the Shareholder as the result of any transactions constituting a breach of any of the provisions of this Section 8, and the Shareholder hereby agrees to account for and pay over such Benefits to the Corporation. 

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Each of the rights and remedies enumerated in this Section 8.2 shall be independent of the other, and shall be severally enforceable, and such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Corporation under law or equity. 

9. MISCELLANEOUS COVENANTS. 

9.1 Unless otherwise agreed by all Shareholders in writing to the contrary, the Corporation shall declare a quarterly dividend payable to each Shareholder, commencing on September 30, 1998 and on the end of each quarter thereafter to and including the quarter ending December 31, 1999, which, in the case of each payment, shall be payable in U.S. dollars on the 30th day after the close of each such quarter in an amount equal to the sum of (a) the current or accumulated profits of the Corporation for such year computed as of the date of the declaration of such dividend in accordance with generally accepted accounting principles, multiplied by (b) the percentage of the Stock of the Corporation owned by such Shareholder as of the date 15 days prior to the declaration of such dividend. 

10. MISCELLANEOUS. 

10.1 NOTICES. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized 

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overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to Gold or the Corporation, at 438 West 37th Street, Suite 5G, New York, New York 10018, facsimile number (212) 967-3018, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R. Field, Esq., facsimile number (212) 332-6055, and to Patterson, Belknap, Webb & Tyler LLP, 1133 Avenue of the Americas, New York, New York 10036, Attn: Van Krikorian, Esq., facsimile number (212) 336-2222 and if to FDM, at the address shown above, facsimile number 011-65-337-0616, with a copy to Goodman Phillips & Vineberg, 1900-355 Burrard Street, Vancouver, British Columbia V6C 2G8, Attn: Steven G. Robertson, Esq., facsimile number (604) 682-7131. Any party may change its address by giving notice to the other party stating its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 

10.2 GOVERNING LAW. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the Cayman Islands, determined without regard to conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this 

15 

Agreement shall be instituted only in a New York state court or federal court in the City of New York, State of New York in the United States of America, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York, or any court of the State of New York, in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. 

10.3 ENTIRE AGREEMENT; WAIVER OF BREACH. This Agreement, together with the Definitive Agreement, constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. 

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10.4 BINDING EFFECT; ASSIGNABILITY. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties and their respective successors and permitted assigns. This Agreement and the rights of the parties hereunder shall not be assigned except in conjunction with the relevant Shares in accordance with this Agreement. 

10.5 SPECIFIC PERFORMANCE. The parties hereby acknowledge that irreparable damage will be caused by a violation or threatened violation of this Agreement and that it is impossible to measure in money the damages which will accrue to a party hereto by reason of a failure to perform any of the obligations under this Agreement. Therefore, if any party hereto shall institute any action or proceeding to enforce any of the provisions hereof, any person (including the Corporation) against whom such action or proceeding is brought hereby consents to a grant of an injunction restraining any such violation or threatened violation of this Agreement or any other appropriate decree of specific performance by any court having equity jurisdiction and waives the claim or defense therein that such party has an adequate remedy at law, and such person shall not allege in any such action or proceeding the claim or defense that such remedy at law exists. 

10.6 RESTRICTIVE LEGEND. During the term of this Agreement, each certificate representing shares of Stock shall bear the following legend in addition to 

17 

such other restrictive legends as may be required by law, by the Corporation or its counsel or pursuant to any other agreement: 

"The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), or any state securities laws, and no sale or transfer thereof may be effected without an effective registration statement or an opinion of counsel for the holder, satisfactory to the company, that such registration is not required under the Act and any applicable state securities laws. 

Also, the shares represented by this certificate are subject to the limitations and restrictions upon their transfer, sale, gift, pledge, assignment or other disposition that are set forth in the Shareholders Agreement, dated as of May __, 1997, a copy of which is on file at the principal office of the Corporation." 

10.7 INSUFFICIENT SURPLUS. If the Corporation has insufficient surplus to permit it lawfully to purchase any Stock as provided herein, the Shareholders will promptly cause the Corporation to take all such action as is legally permissible and necessary and appropriate to enable the Corporation lawfully to purchase the Stock, including, without limitation, by reducing the Corporation's capital or revaluing the Corporation's assets, provided that nothing in this Section 10.7 will oblige any Shareholder to provide the Corporation with any funds for that purpose. 

10.8 CAPTIONS. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 

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10.9 NUMBER AND GENDER. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. 

10.10 SEVERABILITY. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

10.11 AMENDMENTS. This Agreement may not be amended except in a writing signed by all of the parties hereto. 

10.12 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature pages shall be read as though one, and they shall have 

19 

the same force and effect as though all of the signers had signed a single signature page. 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 

FIRST DYNASTY MINES LTD. 

By: /s/ Marcus Randolph
   ----------------------------------
     Marcus Randolph, President

	

GLOBAL GOLD CORPORATION 

By: /s/ Robert A. Garrison
   ----------------------------------
     Robert A. Garrison, President and
          Chief Operating Officer

	

GLOBAL GOLD ARMENIA LIMITED 

By: /s/ Drury J. Gallagher
   ----------------------------------
     Drury J. Gallagher, President

	

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SCHEDULE "B" 

CONSULTING AGREEMENT 

THIS AGREEMENT made as of the 13th day of May, 1997 

BETWEEN: 

GLOBAL GOLD ARMENIA LIMITED, a corporation incorporated under the laws of the Cayman Islands with an address c/o W.S. Walker & Company, Caledonian House, P.O. Box 265, George Town, Grand Cayman 

AND: 

ROBERT A. GARRISON, of 44 Lords Highway East Weston, Connecticut 06883 

(the "Consultant") 

WHEREAS: 

(A) the Company wishes to retain the Consultant to perform certain services for, and on behalf of, the Company; 

(B) the Consultant and the Company wish to enter into this Agreement in order to set the terms and conditions respecting the Consultant's engagement as a consultant to the Company. 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements hereinafter set out, the parties hereto agree as follows: 

1. DUTIES OF CONSULTANT 

The services to be provided to the Company by the Consultant (the "Consulting Services") will consist of, 

(a) acting as a senior vice-president of the Company; 

(b) assisting the Company in the furtherance of its business interests in the Republic of Armenia under the supervision of the board of directors of the Company; 

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(c) performing such other activities as are, in the opinion of the board of directors of the Company, designed to maximize the value of the Company and its business, assets and undertaking; and 

(d) such duties relating to the ongoing corporate management of the Company as the board of directors of the Company may reasonably request from time to time. 

The Consultant agrees to devote fifty per cent (50%) of his time and attention to the faithful, diligent and proper performance of the Consulting Services. The Consultant shall generally render his consulting services within the metropolitan New York City area, and the Consultant shall not be required to unduly travel outside of the United States and outside of the metropolitan New York City and not in excess of ten (10) business days duration each trip during each 12 month term of this Agreement, provided that Consultant shall be given reasonable notice of each such scheduled travel, and any such travel shall be subject to his availability, acting reasonably. 

2. COMPENSATION 

In consideration for the Consulting Services, the Company will pay to the Consultant a cash fee of U.S.$150,000 per annum in equal monthly instalments. The Consultant is authorized to incur reasonable expenses in connection with the conduct of his consulting duties on behalf of the Company including, without limitation, expenses for the Consultant's travel, lodging and business entertainment. The Company will promptly reimburse the Consultant for such expenses within 30 days after the submission by the Consultant to the Company of an itemized account of such expenditures, together with vouchers or receipts in substantiation thereof. The Consultant shall not be permitted to incur any expenses in excess of $2,500 without the prior written consent of the Company, which shall not be unreasonably withheld of delayed. 

3. CONSULTING TERM 

The term of this Agreement will commence as of February 1, 1997 (the "Commencement Date") and will expire on the third anniversary of the Commencement Date, subject to earlier termination: 

(a) by the Consultant upon the giving of 90 days prior written notice to the Company or such lesser notice as the Company agrees to accept; or 

-3- 

(b) by the Company, 

(i) for cause, immediately and without compensation to the Consultant other than accrued and unpaid consulting fees, upon written notice to the Consultant, or 

(ii) without cause, at any time upon written notice to the Consultant and payment to the Consultant of an amount equal to the aggregate consulting fee that would have been payable during the period commencing on the date of termination and ending on the date of expiry of this Agreement, together with any consulting fees accrued and unpaid in respect of the period preceding the date of termination. 

For the purposes of this Agreement, "cause" means: (i) the conviction of the Consultant of a felony or misdemeanor against the Company or its property; 
(ii) the commission of a willful act or acts on the part of the Consultant which cause material damage to the Company in excess of $250,000; or (iii) the continued refusal by the Consultant for at least 90 days after the receipt of written notice from the Company with respect thereto, to perform his consulting duties, as may reasonably be requested of him under this Agreement by the board of directors of the Company. 

4. INDEPENDENT CONTRACTOR 

In performing the Consulting Services, the Consultant will act as an independent contractor and will be responsible for the payment of all taxes, business license fees or similar outlays arising therefrom. 

5. CONFIDENTIALITY 

Any information received by the Consultant while performing Consulting Services concerning the Company and its business, assets and undertaking will be deemed to be confidential information, will be treated by the Consultant in full confidence and will not be revealed to any other person except as otherwise authorized by the Company. 

6. NOTICE 

Any notice required or permitted to be given hereunder shall be given by personal delivery or by telecopier to the party for whom it is intended, addressed as follows: 

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To the Company at: 

c/o W.S. Walker & Company 
Caledonian House 
P.O. Box 265 
George Town, Grand Cayman 

Fax No: (345) 949-7886 
Attention: Board of Directors 

with a copy to: 

Patterson, Belknap, Webb & Tyler 1133 Avenue of the Americas 
New York, New York 
10036-6710 

Fax No: (212) 336-2222 
Attention: Van Krikorian 

and to: 

Law Offices of Stephen R. Field 620 Fifth Avenue, Third Floor 
New York, New York 

Fax No: (212) 332-6055 

and to: 

First Dynasty Mines Ltd. 
No. 1 Temasek Avenue 
#37-02 Millenia Tower 
Singapore 
039192 

Fax No: 011-65-337-0616 
Attention: President 

To the Consultant at: 

-5- 

44 Lords Highway East Weston, Connecticut 
06883 

Fax: (203) 222-9037 
Attention: Robert A. Garrison 

with a copy to: 

Patterson, Belknap, Webb & Tyler 1133 Avenue of the Americas 
New York, New York 
10036-6710 

Fax No: (212) 336-2222 
Attention: Van Krikorian 

and to: 

Law Offices of Stephen R. Field 620 Fifth Avenue, Third Floor 
New York, New York 

Fax No: (212) 332-6055 

Any notice given as aforesaid shall be deemed to have been given to the parties hereto if delivered, when delivered, or if telecopied, on the date of receipt of such telecopy. Any party may from time to time by notice in writing change its address for the purpose of this subsection. 

7. FURTHER ASSURANCES 

The parties hereto undertake to do, sign, execute and deliver such other things, deeds or documents accessory or useful for the purpose of giving full effect to this Agreement. 

8. GOVERNING LAW 

This Agreement and the rights of the parties hereunder will be governed by and construed in accordance with the laws of the State of New York, determined without regard 

-6- 

to its conflicts of law principles. The parties hereto (i) agree that any legal suit, action or proceeding arising of or relating to this Agreement shall be instituted only in a New York state court of federal court in the City of New York, State of New York in the United States of America, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the exclusive jurisdiction of the United States District Court of the Southern District of New York, or any court of the State of New York in any suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal thereof. 

9. ENUREMENT 

This Agreement shall enure to the benefit of and be binding upon the heirs, executors, administrators and legal personal representatives of the Consultant and the successors and assigns of the Company. 

10. ENTIRE AGREEMENT 

This Agreement constitutes the entire agreement between the parties hereto relating to the subject matter hereof and supersedes all prior discussions, commitments and other agreements. 

11. ILLEGALITY 

Should any provision or provisions of this Agreement be illegal or not enforceable, it or they shall be considered separate and severable from this Agreement and its remaining provisions shall remain in force and be binding upon the parties hereto as though the provision or provisions had never been included. 

12. TIME OF THE ESSENCE 

Time is of the essence of this Agreement. 

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13. COUNTERPART 

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the day and year first above written. 

GLOBAL GOLD ARMENIA LIMITED 

Per: /s/ Marcus Randolph                     /s/ Robert Garrison
     -------------------------------         -------------------------------
          Authorized Signatory               Robert Garrison

	

Schedule "C" 

1. Tailings Dam Construction Contract, by and between Armenian Gold Recovery Company Tailing LLC, a Joint Venture Company organized and operating in the Republic of Armenia, and Construction of Civil and Industry Objects, Daughter Enterprise "ArmGidroEnergoStroy" with offices located at the city of Yerevan, Armenia. 

2. Contract for engineering, procurement and construction management services between Armenian Gold Recovery Company LLC and Kilborn Inc. for the Gold Recovery from Tailing System at the Ararat Mine, Yerevan, Republic of Armenia. 

3. Debenture, dated February 3, 1997, made between Global Gold Armenia Limited and First Dynasty Mines Ltd., the Lender. 

4. Charge Over Shares Agreement, by Deed dated February 3, 1997, by and between Global Gold Corporation (the "Chargor") in favor of First Dynasty Mines Ltd. 

5. Any and all contracts executed pursuant to the contract for engineering, procurement and construction management services between Armenian Gold Recovery Company LLC and Kilborn Inc. for the Gold Recovery from Tailing System at the Ararat Mine, Yerevan, Republic of Armenia. 

SCHEDULE "D" 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Balance Sheet 

ASSETS 

December 31, 1996 
(Unaudited) 

CURRENT ASSETS 

  Cash                                                            $        50
                                                                  -----------
OTHER ASSETS
  Organization costs                                                    3,200
  Investment in certain mining interests                              977,500
  Deferred costs                                                    1,164,641
                                                                  -----------

                                                                  $ 2,145,341
                                                                  -----------

TOTAL ASSETS                                                      $ 2,145,391
                                                                  -----------
                                                                  -----------

LIABILITIES AND STOCKHOLDERS' EQUITY 

CURRENT LIABILITIES 

  Accounts payable and accrued expenses                           $ 1,350,000
                                                                  -----------

  Note Payable to Shareholder                                     $   802,740
                                                                  -----------

                                                                  $ 2,152,740
                                                                  -----------
                                                                  -----------
STOCKHOLDERS' EQUITY -
  Ordinary shares $.01 par, 5,000,000 shares
   authorized, 1 share issued and outstanding - Note 9            $         1
  Paid-in capital - Development stage                                   5,000
  Retained earnings - Development stage                               (12,349)
                                                                  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 2,145,391
                                                                  -----------
                                                                  -----------
See the accompanying notes.

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

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

The Company was incorporated in the Cayman Islands on November 29, 1995 as a development stage company. An Australian corporation, Eyre Resources N.L. and an affiliate (hereafter Eyre) presented to management of the Company's parent, Global Gold Corporation ("Global") an opportunity to develop certain gold and copper mining rights in the former Soviet Republics of Armenia and Georgia. These Republics, which recently won their independence, may be prone to political and economic turmoil which may result in various adverse ramifications. 

The Company was formed as part of Global's plan to acquire the mining interests and raise venture capital, and the Company acquired the Armenian mining interests in December 1995 shortly after its formation. 

The books and records are maintained on the accrual basis of accounting. 

Management has made any necessary interim period accounting adjustments in order for the statements not to be misleading. 

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. 

2 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 3: DEVELOPMENT STAGE COMPANY 

The Company never engaged in the active conduct of a trade or business, and it has not generated any revenues to date. 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, political risk insurance, fully executed joint venture agreements with the Republic, and obtaining the services of an actual mining operator, which the Company is not. 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. Pursuant to the documents as hereafter summarized, differing 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. 

NOTE 4: PATTERSON, BELKNAP, WEBB & TYLER LLP 

Global has retained the New York City law firm of Patterson, Belknap, Webb & Tyler LLP (PBWT) to represent the Company in its dealings with the Armenian Republic. PBWT has an international law practice involving commercial, non-profit and humanitarian issues and has offices in Moscow. Mr. Van Z. Krikorian (VZK), of counsel to PBWT, has been designated to conduct the negotiations with the Republic. 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, PBWT 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 $100,000,000 and is subject to adjustment if it falls short or exceeds that goal. In the event the contemplated financing is not consummated, PBWT will reduce its 

3 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 4: PATTERSON, BELKNAP, WEBB & TYLER LLP (CONTINUED) 

hourly charges by 50%. Management is accruing the base quarterly fee of $25,000 for financial reporting purposes herein, which is included in deferred costs. 

NOTE 5: THE ARMENIAN JOINT VENTURE AGREEMENT 

On February 2, 1996, Global 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 Agreement was executed and delivered by the parties May 1, 1996. On June 29, 1996, the Republic of Armenia issued a decree authorizing Armgold's joint venture with the Company. Besides its full consent, the decree provided that the operation could start only after a guarantee of $250,000 was made to the Armenian Government from a "first rate" bank, with a condition that the Company invest five million dollars into the projects within eight months after the decree's coming into power. 

Management has obtained "unofficial" estimates through Eyre and engineers of tonnage, ore grade, and ore recovery rates. Management believes that a significant amount of gold has not been mined by the Armenian Government because of inadequate capital and technologies at their disposal. After engineering assessments are officially completed, and if they prove successful, the Company, as a joint venture partner, will be required to provide the capital and technologies in accordance with the Agreement. 

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 their share of the joint venture's profits. 

The Venture is divided into three stages (projects). The Agreement contemplates that successive stages of the project will be commenced in earnest after prior stages are running successfully. At each site, the Agreement calls for the 

4 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 5: THE ARMENIAN JOINT VENTURE AGREEMENT (CONTINUED) 

Armenian Government to transfer to the Venture free and clear title in the mining rights. The Company will be required to provide administration, training, management, feasibility studies, technology and business plans, as appropriate. 

The initial stage calls for processing of tailings at Ararat. After completion of feasibility studies and Government approval, the Company will within one year be required to provide at least $9.5 million for the purpose of purchasing tailings processing equipment and providing working capital to the project. 

Thereafter, feasibility studies for a gold mining and tailing operations at the Zod site will commence. Management believes capacities at Zod will be significant. Mining at a third site, Meghradzor, will commence once Zod is operational. Pursuant to the Joint Venture Agreement, preliminary feasibility studies and planning are scheduled to commence at the Zod and Megharadzar sites, one month and six months respectively, after the Armenian Government issues its decree of approval of the Joint Venture. 

The Company itself is not a mining operator. Accordingly, it will seek to employ the services of a professional mining operator. The Company may issue stock to the mining company. In addition, Global will seek adequate financing and political risk insurance. 

The Agreement does not specify exactly how profits are to be calculated. Presently, it is not contemplated that the Armenian Government will be assigned a value for its contribution of the mine properties and rights to the venture. VZK has advised that profit computations are still to be resolved. International or other accounting standards have not been adopted in the Joint Venture 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 Ton is 70% or more. Based upon a sliding scale, the Company's profit share will increase to 66.67% if the recovery rate declines to 50% or less. Pursuant to the work carried out on a number of tailings samples by a research laboratory, on April 23, 1996 a consulting 

5 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 5: THE ARMENIAN JOINT VENTURE AGREEMENT (CONTINUED) 

engineer has preliminarily suggested a separation process that he believes will economically yield a 50% recovery rate. The Company has reviewed the Armenian's production records, and believes that 12 million tons are a fair approximation of the tailings piles. Management intends to have the piles surveyed shortly. The preliminary recommendations are being reviewed by the Joint Venture. 

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. 

NOTE 6: GUARANTEES- LONDON AND INTERNATIONAL MERCANTILE LTD. (L.I.M.) - SUBSEQUENT EVENT 

In order to further Global's and the Company's endeavors, HCL Communication Ltd. (a non U.S. corporation) arranged two guarantees on behalf of the Company with L.I.M. (also a non-U.S. corporation). Each guarantee is collateralized by 1,000,000 shares of Global's stock, and accompanied by warrants to purchase an equal number of common shares of Global, as follows: 

   Number of                                   Latest Possible
   Warrants          Price/Share               Expiration Date
--------------      -------------            -------------------
    666,667              $3                       06/15/97
    666,667              $3                       12/15/97
    666,666              $3                       06/15/98
  ---------
  2,000,000

Pursuant to the Agreements, all of the L.I.M. warrants may expire on the sooner date of 60 days after the receipt by the Company of the feasibility study from Kilborn, reflecting that the gold mine in Zod, Armenia has proven reserves in excess of $1,000,000,000. 

6 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 6: GUARANTEES - LONDON AND INTERNATIONAL MERCANTILE, LTD. (L.I.M.) - SUBSEQUENT EVENT (CONTINUED) 

Accordingly, L.I.M. originally held 2,000,000 common shares and 4,000,000 warrants of Global as collateral. The Agreements do not provide for any partial release of the collateral if L.I.M. must make a partial payment on account of the obligation it took on, but such would be governed by English law. Global paid L.I.M. $11,875 for each guarantee. and as consideration for its services, HCL received an option to acquire the above stock (accompanied by the unexercised warrants) from L.I.M. at $1.50 per share. Management believes it can cause L.I.M. to release to the Company any monies it receives from the exercise of the options, which are in excess of any outstanding guarantees. HCL's options have a term of 61 days, commencing July 18, 1996, which is the date the Agreements herein were executed. Drury Gallagher and Robert Garrison have jointly and severally pledged to indemnify L.I.M. to the extent of L.I.M.'s net out-of-pocket cost after paying the guarantees and selling off its collateral stock and warrants. In consideration of the personal pledges, Global granted each of them options to purchase 250,000 shares of Global's common stock at $1/share, until July 18, 1999. 

L.I.M.'s guarantee to the engineering firm expired in error on October 27, 1996. Pursuant to Global's request, L.I.M. returned the 1,000,000 shares of Global Common Stock and warrants to purchase 2,000,000 shares of such Common Stock held as collateral security for cancellation by Global, which cancellation occurred. In addition, H.C.L.'s options described above expired without being exercised. In addition, Global modified the exercise price of the options granted to Messrs. Gallagher and Garrison to $.50 a share. 

In the event L.I.M. and/or HCL acquire a certain number of shares pursuant to the arrangement, the Company may be temporarily owned by more than 50% non-U.S. interests. 

The first guarantee requires L.I.M. to remit $250,000 to the Republic of Armenia in the event the Company fails to invest five million dollars within eight months of the decree coming into power. At the time of issuance of this report, VZK had 

7 

GLOBAL GOLD ARMENIA LIMITED 
(A Development Stage Company) 

Notes to Balance Sheet 

December 31, 1996 

NOTE 6: GUARANTEES - LONDON AND INTERNATIONAL MERCANTILE, LTD. 
(L.I.M.) - SUBSEQUENT EVENT (CONTINUED) 

indicated that Armenia had accepted the L.I.M. guarantee, and that written acceptance of such from Armenia should be forthcoming shortly. Subsequently, the Armenian Ministry of Finance raised objections to the L.I.M. guarantee which the Company and Global are attempting to resolve. Global had, in turn, committed to L.I.M. that it will cause five million dollars in tailings processing equipment to be delivered to Armenia by December 31, 1996, and further that it will be in operation six months after crossing the Armenian border. L.I.M. has the first right to arrange a lease-purchase of such equipment at competitive market rates. The guarantee is payable for a period of up to twelve months. The Agreement contains certain default provisions. 

In order for the Company to properly estimate the amount of gold and silver reserves, determine optimal mining and processing methods, and properly identify equipment, environmental, and infrastructural concerns at the various Armenian locations, the Company has hired an engineering firm headquartered in Canada to do certain studies of these matters. Such firm estimates it will take three months to do the study and remit a report. Accordingly, a second guarantee for $250,000 was undertaken in order to guarantee the engineers payment for their services. The guarantee lasts for 120 days or under certain circumstances up to six months. 

NOTE 7: NON-UNITED STATES WHOLLY OWNED SUBSIDIARIES/INCOME TAX MATTERS 

On November 29, 1995, Global 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. 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 off shore companies were formed in part, as a result of the concerns of Eyre, the previous Australian owner of the mining rights, that it not be exposed to two layers of corporate taxation, United States and Australia. 

8 

NOTE 8: SUBSEQUENT EVENT 

Global contributed to the capital of the Company the promissory note in the principal amount of $802,740 payable to Global as of April 30, 1997, as an inducement for First Dynasty Mines Ltd. to enter into a definitive agreement with the Company and Global with respect to certain mining projects in Armenia. 

9 

Schedule "E" 

Global Gold Corporation and 
Global Gold Armenia Limited 
Accounts Payable and Accrued Expenses 

                                                                                               Balance
                                                12/31/96        Payments      New Charges     03/31/97
                                                --------        --------      -----------     --------
American Registrar & Transfer Co.                    0.00           0.00         962.27         962.27
Caledonian Bank & Trust                              0.00           0.00         416.96         416.96
Cusip Services                                       0.00           0.00         100.00         100.00
Drury J. Gallagher (loan)                      192,000.00           0.00           0.00     192,000.00
Drury J. Gallagher (out of pocket)              18,998.92      18,998.92       2,240.78       2,240.78
Drury J. Gallagher (accrued salary)            150,000.00   100,000.00 a      36,667.00      86,667.00
Robert A. Garrison (out of pocket)              28,481.48      28,481.48      13,642.16      13,642.16
Robert A. Garrison (accrued salary)            150,000.00   100,000.00 a      36,667.00      86,667.00
Infisco Inc.                                    25,000.00           0.00           0.00      25,000.00
Katz, Schneeberg & Co., P.C.                     1,065.48       1,065.48           0.00           0.00
Kehoe, White, Savage & Company                   1,589.12       1,589.12           0.00           0.00
Kilboru, Inc.                                  172,257.00     172,257.00           0.00           0.00
Lakefield Research                              15,774.16    15,655.50 d           0.00           0.00
Levon Travel Bureau, Inc.                        9,478.35     9,478.35 b           0.00           0.00
Marks Shron & Company, LLP                      34,918.00      15,032.00      15,060.00      34,946.00
Matrix International Logistics, Inc.            10,040.00      10,040.00           0.00           0.00
Merrill Corporation                              3,801.00       3,801.00       1,545.93       1,545.93
Night Rider                                      1,241.48       1,241.48           0.00           0.00
Patterson, Belknap, Webb & Tyler - Billed      394,267.17     300,000.00     164,939.49     259,206.66
Patterson, Belknap, Webb & Tyler - Unbilled
  and Uncollected Fees and Recorded Costs            0.00           0.00     479,645.67     479,645.67
Penn Med Consultants, Inc.                      36,000.00           0.00      30,000.00      66,000.00
Sloan Tech                                       5,675.00       5,675.00           0.00           0.00
Stephen R. Field, Esq.                         118,892.53      60,000.00      32,896.29      91,788.82
NYC Corporation tax                                300.00         300.00           0.00           0.00
NYS & MTA Corporation tax                          404.00       388.00 d           0.00           0.00
Delaware Franchise Tax                             325.00         325.00           0.00           0.00
Interest payable - Eyre                            763.00       763.00 c           0.00           0.00
Interest payable - Officer                       6,968.00     6,968.00 c           0.00           0.00
                                            $1,378,239.69    $852,059.33    $814,783.55  $1,340,829.25
                                            -------------    -----------    -----------  -------------
                                            -------------    -----------    -----------  -------------
a   Exchanged for Common Shares
b   Billed to Patterson Belknap
c   Interest forgiven
d   Billing adjustment

	

AMENDMENT TO THE SHAREHOLDERS AGREEMENT OF 

GLOBAL GOLD ARMENIA LIMITED 

This Amendment to the Shareholders Agreement, dated as of May 13, 1997, by and among First Dynasty Mines Limited, a corporation organized under the laws of the Yukon, Canada ("FDM"), Global Gold Corporation, a Delaware corporation ("Gold") and Global Gold Armenia Limited, a Cayman Islands company (the "Company"). 
WITNESSETH THAT 

WHEREAS each of FDM, Gold and the Company are parties to the Shareholders Agreement of Global Gold Armenia Limited, dated as of May 13, 1997 (the "Agreement") and wish to amend the Agreement in accordance herewith; 

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, each of the parties agrees as follows: 

1) The first paragraph of the Agreement is hereby amended as follows: 

(a) the word "corporation" following the phrase "Cayman Islands" is changed to "company;" 

(b) the phrases "W.S. Walker and Company," and "P.O. Box 265," are hereby deleted; 

(c) the word "Corporation" is changed to the word "Company." 

2) The defined term "Corporation" is changed to "Company" throughout the remainder of the Agreement. 

3) The second paragraph of the Agreement is hereby amended as follows: 

(a) the phrase "common stock" in the sixth line is deleted and the word "capital" is substituted; 

(b) the parenthetical definition is hereby deleted and the following is substituted therefor: 

"(such shares, together with shares subsequently acquired by the parties, being referred to as the "Shares") 

4) The defined term "Stock" is hereby changed to "Shares" throughout the remainder of the Agreement. 

5) Section 3.2 of the Agreement is hereby amended by the deletion of the word "By-Laws" and substitution of the phrase "Articles of Association." 

6) Section 10.2 of the Agreement is hereby amended by deletion of the phrase "Cayman Islands" and substitution thereof of the phrase "State of New York." 

7) Gold, by execution of this Amendment to the Shareholders Agreement, hereby confirms that the same, together with the Agreement, has been executed by Drury J. Gallagher, both in his capacity as president of Gold and as a director and member of the Board of Directors of Gold. 

8) The parties agree that, except as expressly provided herein, the Agreement is ratified and confirmed in all respects. 

2 

IN WITNESS WHEREOF, the undersigned have executed this Amendment to the Shareholders Agreement as of the date first above written. 

FIRST DYNASTY MINES LTD. 

By:  /s/ Marcus Randolph
     ------------------------------------------
     Marcus Randolph, President

	

GLOBAL GOLD CORPORATION 

By:  /s/ Robert A. Garrison
     ------------------------------------------
     Robert A. Garrison, President and
     Chief Operation Officer

	

GLOBAL GOLD ARMENIA LIMITED 

By:  /s/ Drury J. Gallagher
     ------------------------------------------
     Drury J. Gallagher, Director and President

	

3 

Exhibit 48 

EMPLOYMENT AGREEMENT 

AGREEMENT dated as of the 1st day of July, 1997 between Global Gold Corporation, a Delaware corporation (the "Corporation"), and Drury J. Gallagher (the "Employee") (the "Agreement"). 

W I T N E S S E T H : 

WHEREAS, the Corporation and Employee entered into a three-year employment agreement effective as of July 1, 1995; 

WHEREAS, the Corporation and the Employee desire to amend and restate such employment agreement and extend it through June 30, 2000 on the terms and conditions hereinafter set forth; and 

NOW, THEREFORE, the parties hereto agree as follows: 

1. DUTIES. 

(a) The Corporation hereby employs the Employee, and the Employee hereby accepts and agrees to such employment, as Chairman and Chief Executive Officer and, in such capacity, to be responsible for the day-to-day activities of the Corporation activities. The Employee shall, subject to the supervision and control of the Board of Directors of the Corporation, perform such executive duties and exercise such supervisory powers over and with regard to the business of the Corporation and its present and future subsidiaries, consistent with such position, and such additional duties as specified in the Corporation's By-Laws or as may be assigned to him from time to time by the Board of Directors of the Corporation. 

(b) The Employee agrees to devote 50% of his available business time to the performance of his duties hereunder. The Employee may provide services to other organizations, on a compensation or pro bono basis, provided that such services do not constitute more than 50% of his available business time. 

2. TERM. The term of this Agreement shall be for a period of three years commencing on the date hereof and ending on the third anniversary date hereof, and shall be automatically renewed for consecutive one-year periods thereafter unless (a) terminated by the Employee on 120 days written notice prior to the expiration of the initial term hereof, (b) terminated by either party on 120 days written notice prior to the expiration of the fourth year hereof or any year thereafter or (c) sooner terminated as otherwise provided herein. 

3. COMPENSATION. 

(a) BASE COMPENSATION. In consideration for the services rendered by the Employee under this Agreement, the Corporation shall pay the Employee as base compensation a salary of $150,000 each year, payable in equal monthly installments. Such then base salary shall be increased each year, on the first day after the anniversary date of the date of this Agreement, (a) in an amount equal to the percentage increase, if any, in the Federal Bureau of Labor Statistics Consumer Price Index for Urban Consumers for the Northeastern Region of the United States ("CPI") during the preceding 12-month period, or (b) in an amount up to 10% in the sole discretion of the Board of Directors of the Corporation, if it determines that such action would be in the best interests of the Corporation. 

(b) BONUS COMPENSATION. In addition to the foregoing compensation, the Employee shall be entitled to receive annual bonus compensation in an amount determined in 

-2- 

accordance with any bonus plan approved by the Board of Directors, or any committee thereof duly authorized by the Board to make such determination, based upon qualitative and quantitative goals determined by the Board of Directors, or such committee thereof, in its sole discretion, as the case may be; provided that no amount paid to any employee of the Corporation shall exceed 50% of his then base compensation for such year. Any bonus payment shall be subject to all applicable tax withholdings. 

(c) In the event that the Employee voluntarily elects not to work 50% for the Corporation as contemplated hereunder, both his base compensation, and bonus compensation, if any, to which he would otherwise have been entitled, set forth in Section 3(a) and (b) shall be reduced to the amount computed by multiplying such base compensation and bonus entitlement by the ratio of the number of hours worked during such 12 month period to 1,000 hours. 

(d) CHANGE OF CONTROL. 

(i) If during the term of this Agreement, there shall occur a Change of Control of the Corporation (as defined herein), the Employee may terminate his employment hereunder at any time during the term of this Agreement in which case he shall be entitled to receive a payment equal to one times the Employee's average annual compensation paid by the Company (including bonuses, if any) during the three year period (or, if he has worked less than three years hereunder, such shorter period) immediately preceding the date of his termination of employment (the "Severance Payment"), PROVIDED, HOWEVER, that such Severance Payment shall be reduced if and only to the extent necessary to avoid the imposition 

-3- 

of an excise tax on such Severance Payment under Section 4999 of the Internal Revenue Code of 1986, as amended. The Severance Payment shall be payable to Employee as follows: 

(A) on the date of his termination of employment, an amount equal to three months base compensation at the rate prevailing on the date of termination; and 

(B) commencing with the fourth month after such termination, the balance remaining after the payment set forth in Section 
3(d)(i)(A) above shall be paid by the Corporation in nine equal installments in, at the Corporation's sole discretion, cash or in unregistered shares of its common stock, based on the fair market value of such stock at the time of each such payment. 

(ii) For purposes hereof, the term "Change of Control" shall mean an event or series of events that would be required to be described as a change in control of the Corporation in a proxy or information statement distributed by the Corporation pursuant to Section 14 of the Securities Exchange Act of 1934 in response to Item 6(e) of Schedule 14A promulgated thereunder, or any substitute provision which may hereafter be promulgated thereunder or otherwise adopted. The determination of whether and when a change in control has occurred or is about to occur shall be made by the Board of Directors in office immediately prior to the occurrence of the event or series of events constituting such change in control. 

4. WORKING FACILITIES. The Employee shall be furnished with an office, and such other facilities and services commensurate with his position as Chairman and Chief Executive Officer of the Corporation, as are reasonably necessary for the performance of his duties hereunder. 

-4- 

5. REIMBURSEMENT OF BUSINESS EXPENSES. The Employee is authorized to incur reasonable expenses in connection with the conduct of the Corporation's business, including, without limitation, expenses for the Employee's travel, lodging and business entertainment in accordance with the Corporation's customary practice and subject to the general limitations thereof set forth in the annual or more frequent budgets adopted by the Corporation from time to time. The Corporation will promptly reimburse the Employee for such expenses upon the presentation by the Employee, from time to time, of an itemized account of such expenditures together with vouchers or receipts in substantiation thereof. 

6. BENEFITS. During the term of this Agreement, any benefits made available to officers or employees of the Corporation under any pension plan, profit sharing plan, employee stock purchase plan, stock bonus plan, incentive stock option plan, stock appreciation plan, deferred compensation plan, insurance plan, health plan, welfare plan, long-term disability plan or otherwise shall be made available to the Employee, taking into account the Employee's level of compensation, past services, scope of responsibility and such other factors as are customarily used to evaluate executive performance and compensation under such plans. 

7. VACATIONS. The Employee shall be entitled each year during the term of this Agreement to a vacation period of four weeks during which period all compensation, benefits, and other rights to which the Employee is entitled hereunder shall be provided in full. Such vacation may be taken, in the Employee's discretion, at such time or times as are not inconsistent with the reasonable business needs of the Corporation. During the term of this Agreement, the vacation time provided for herein shall not be cumulative to the extent not 

-5- 

taken by the Employee during a given year. In the event that the vacation time provided hereunder has not been taken during the 12-month period prior to the termination or expiration of this Agreement for any reason other than those set forth in Section 8(a) hereof, the Corporation shall pay the Employee, in addition to any other benefits due to the Employee hereunder, an amount equal to the number of weeks (or fraction thereof) of vacation time not so taken during such period multiplied by an amount equal to the result obtained by dividing (x) the then base salary in effect on the Termination Date (as defined in Section 
8(e) hereof) by (y) 52. 

8. TERMINATION. 

(a) EARLY TERMINATION BY CORPORATION FOR CAUSE. During the term of this Agreement, the Employee's employment may be terminated by the Corporation only by the affirmative vote of 80% of all of the members of the Board of Directors of the Corporation then holding office (without counting any vote of the Employee whose services are sought to be terminated, if the Employee is then a member of the Board of Directors) on 30 days prior written notice by means of a Notice of Termination, and an opportunity for the Employee, accompanied by counsel of his choice, to address the full Board of Directors, that one of the following conditions exists or one of the following events has occurred: 

(i) Willful act or acts on the part of the Employee which caused material damage to the Corporation; 

(ii) The conviction of the Employee for a felony; 

(iii) The refusal by the Employee, continued for at least 90 days, to perform such employment duties as may reasonably be delegated or assigned to him under this Agreement, consistent with his executive position, by the Board of Directors of the Corporation; 

-6- 

(iv) Willful and unexcused neglect by the Employee of his employment duties under this Agreement, continued for at least 90 days; or 

(v) Any other material breach by the Employee of the provisions of this Agreement. 

Subject only to a final determination by an arbitrator made pursuant to the provisions of Section 11 of this Agreement, the Board of Directors' determination, in good faith, in writing that cause exists for termination of the Employee's employment shall be binding and conclusive for all purposes under this Agreement. Upon such determination by the Board of Directors, the Employee's compensation pursuant to Section 3 hereof and all other benefits provided hereunder shall terminate on the Termination Date, except that the Employee shall be entitled to be paid severance pay equal to his then base compensation for a period of three months thereafter. In the event that the Employee desires to take any matter with respect to such determination to arbitration, he must commence an arbitration proceeding within 30 days after receipt of written notice of the Board of Directors' determination. If the Employee fails to take such action within such period, he will be deemed conclusively to have waived his right to arbitration of the termination of his employment hereunder. 

(b) TERMINATION BY EMPLOYEE. In the event that the Corporation shall default in the performance of any of its obligations under this Agreement in any material respect (other than by reason of its financial inability to make payments as determined by the Board of Directors of the Corporation in writing), and shall not cure such default within 10 

-7- 

days of receipt by the Corporation of written notice of such default from the Employee, the Employee may terminate this Agreement by delivery of a Notice of Termination. Upon any termination pursuant to the provisions of this Section 
8(b), the Employee shall be entitled to receive, as liquidated damages and not as a penalty, one year's payments which would have been made to the Employee on account of his base salary in effect at the date of the delivery of a Notice of Termination. Upon fulfillment of the conditions set forth in Section 8(b) hereof and subject to Section 8(f) hereof, all rights and obligations of the parties under this Agreement shall thereupon be terminated. The Employee shall have no obligation to mitigate damages, and amounts payable pursuant to the provisions of this Section 8(b) shall not be reduced on account of any income earned by the Employee from other employment or other sources. 

(c) TERMINATION BY REASON OF DISABILITY. In the event that Employee shall be prevented from rendering all of the services or performing all of his duties hereunder by reason of illness, injury or incapacity (whether physical or mental) for a period of six consecutive months, determined by an independent physician selected by the Board of Directors of the Corporation, the Corporation shall have the right to terminate this Agreement, by giving 10 days prior written notice to the Employee, provided that the Corporation shall continue to pay his then base compensation for a period of 12 months thereafter. Until terminated in the manner set forth in this Section 8(c), the Employee shall be entitled to receive his full compensation and benefits provided hereunder through the Termination Date. Any payments to the Employee under any disability insurance or plan maintained by the Corporation shall be applied against and shall reduce the amount of the base compensation payable by the Corporation under this Section 8(c). 

-8- 

(d) TERMINATION BY REASON OF DEATH. In the event that the Employee shall die during the term of this Agreement, this Agreement shall terminate upon such death. The sole death benefit payable to the Employee shall be the life insurance benefits provided to the Employee, if any. 

(e) CERTAIN DEFINITIONS. 

(i) Any termination of the Employee's employment by the Corporation or by the Employee shall be communicated by a Notice of Termination to the other party hereto. For purposes hereof, a "Notice of Termination" shall mean a notice which shall state the specific reasons, and shall set forth in reasonable detail the facts and circumstances, for such termination. 

(ii) "Termination Date" shall mean the date specified in the Notice of Termination as the last day of Employee's employment by the Corporation. 

(f) CONTINUED MAINTENANCE OF BENEFIT PLANS IN CERTAIN CASES. Notwithstanding anything contained in this Agreement to the contrary, if the Employee's employment is terminated pursuant to Sections 8(b) or 8(c) hereof, the Corporation shall maintain in full force and effect, for the continued benefit of the Employee for the number of years (including partial years) remaining in the term of employment hereunder, all employee benefit plans and programs in which the Employee was entitled to participate immediately prior to the Termination Date, provided that the Employee's continued participation is possible under the general terms and provisions of such plans and programs. In the event that the Employee's participation in any such plan or program is barred, the Corporation shall have no obligation to provide any substitute benefits for the Employee. 

-9- 

9. CONFIDENTIALITY. 

(a) During the term of this Agreement, and for a period of two years thereafter, the Employee shall not, without the prior written consent of the Board of Directors of the Corporation, disclose to any person, other than an employee of the Corporation or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Employee of his duties hereunder, any of the Corporation's confidential information obtained by the Employee during the term of this Agreement, including, without limitation, trade secrets, products, designs, customers or methods of distribution. 

(b) The obligations of confidentiality contained in this Section shall not extend to any matter which is in or becomes part of the public domain otherwise than by reason of a breach by the Employee of his obligations of confidentiality hereunder or which is disclosed by the Employee pursuant to an order of a governmental body or court of competent jurisdiction or as required pursuant to a legal proceeding in which the Employee or the Corporation is a party. 

10. CERTAIN REMEDIES IN EVENT OF BREACH. In the event that the Employee commits a breach, or threatens to commit a breach, of any of the restrictions on confidentiality contained in Section 9 of this Agreement, the Corporation shall have the following rights and remedies: 

(a) to obtain an injunction restraining any violation or threatened violation of the provisions of Section 9 or any other appropriate decree of specific performance by any court having equity jurisdiction, it being acknowledged and agreed by the Employee that the services rendered, and to be rendered to the Corporation by him as an Employee, are of a 

-10- 

special, unique and extraordinary character and that any such breach or threatened breach will cause irreparable injury to the Corporation and that money damages will not provide an adequate remedy to the Corporation; and 

(b) to require the Employee to account for and pay over to the Corporation all compensation, profits, monies, accruals, increments or other benefits (collectively the "Benefits") derived or received by the Employee as the result of any transactions constituting a breach of any of the provisions of 
Section 9, and the Employee hereby agrees to account for and pay over the Benefits to the Corporation. 

Each of the rights and remedies enumerated in this Section 10 shall be independent of the other, and shall be severally enforceable, and such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Corporation at law or in equity. 

11. ARBITRATION. 

(a) SELECTION OF ARBITRATORS. In the event of any disagreement or controversy arising out of or relating to this Agreement, such controversy or disagreement shall be settled by three arbitrators in the City of New York in accordance with the rules of the American Arbitration Association (the "AAA") in arbitrations administered by it (other than the AAA rules relating to the appointment of arbitrators), and any award granted in such arbitration shall finally determine such controversy or disagreement. The arbitrators for any of the arbitral proceedings referred to in the preceding sentence shall be chosen as follows: (x) one shall be chosen by the Employee, (y) one shall be chosen by the Board of Directors of the Corporation, and (z) one shall be chosen by the two arbitrators selected under Section 11(a)(x) 

-11- 

and (y) hereof. The arbitrators to be chosen by the parties shall be chosen within 30 days after the service of a demand for arbitration on any party hereto. If the two arbitrators appointed above shall not agree to the appointment of the third arbitrator to be appointed as provided in Section 
11(a)(z), such arbitrator shall be chosen by the then President of the Association of the Bar of the City of New York, subject to challenge by any party only by reason of a conflict of interest. 

(b) JURISDICTION. Any judicial proceeding brought against any of the parties to this Agreement in connection with compelling or staying arbitration or enforcing any arbitral decision shall be brought in the courts of the State of New York or in the United States District Court for the Southern District of New York, and by the execution and delivery of this Agreement, each of the parties to this Agreement accepts for himself or itself the exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. The parties agree that service of process will be deemed sufficient if made upon each party hereto at the address set forth herein. 

12. MISCELLANEOUS. 

(a) NOTICES. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to 

-12- 

receive the same, if to the Corporation, Global Gold Corporation, 38 West 37th Street, Suite 5H, New York, New York 10017, facsimile number (212) 967-3018, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R. Field, Esq., facsimile number (212) 332-6050; and if to the Employee, Mr. Drury J. Gallagher, 107 Eakins Road, Manhasset, New York 11030, facsimile number (516) 627-5067. Any party may change his or its address by giving notice to the other party stating his or its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 

(b) GOVERNING LAW. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of New York. 

(c) ENTIRE AGREEMENT; WAIVER OF BREACH. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. 

(d) BINDING EFFECT; ASSIGNABILITY. This Agreement and all the terms and provision hereof shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns. This Agreement and the rights of the 

-13- 

parties hereunder shall not be assigned except with the written consent of all parties hereto, which consent shall not be unreasonably withheld. 

(e) CAPTIONS. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 

(f) NUMBER AND GENDER. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. 

(g) SEVERABILITY. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 

(h) AMENDMENTS. This Agreement may not be amended except in a writing signed by all of the parties hereto. 

(i) COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature 

-14- 

pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. 

Global Gold Corporation 

By: /s/ Robert A. Garrison
   -------------------------------------
     Robert A. Garrison, President

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

	

-15- 

Exhibit 49 

THIS AMENDED AND RESTATED DEBENTURE is made the 3rd day of October, 1997 to have effect as of and from the 15th day of May, 1997 

BETWEEN: 

(1) GLOBAL GOLD ARMENIA LIMITED, a company incorporated and existing under the laws of the Cayman Islands (the "Company") which expression shall include the permitted successors in title transferees and assigns of the Company 

OF THE ONE PART 

AND: 

(2) FIRST DYNASTY MINES (USA) LLC, a Delaware limited liability company having its registered office at 1209 Orange Street, Wilmington, Delaware (the "Lender") which expression shall include the successors in title transferees and assigns of the Lender 

OF THE OTHER PART 

W H E R E A S: 

(A) the Company executed and delivered to First Dynasty Mines Ltd. ("FDM") a debenture dated January 3, 1997 in the principal sum of U.S.$5,480,000 (the "Original Debenture"); 

(B) the Company, FDM and Global Gold Corporation ("Global Gold") are parties to an agreement dated May 13, 1997 (the "Definitive Agreement") pursuant to which FDM was granted the right to earn an equity interest in the Company by making convertible loans to the Company; 

(C) pursuant to the terms of the Definitive Agreement, FDM has assigned its rights under the Definitive Agreement and the Original Debenture to the Lender, a wholly-owned subsidiary of FDM; and 

(D) the Definitive Agreement provides for amendments to be made to the terms of the Original Debenture and this Amended and Restated Debenture is being entered into to amend and replace the Original Debenture. 

NOW THIS AMENDED AND RESTATED DEBENTURE WITNESSETH as follows: 

1.   (a)  Words importing the masculine gender shall include the feminine and
          neuter genders and vice versa and words importing the singular number
          only shall include the plural number and vice versa and words
          importing persons and all reference to persons shall include
          corporations and firms;

-2- 

(b) "the Principal Sum" shall mean the aggregate sum of all advances made, from time to time, by the Lender to the Company pursuant to the Definitive Agreement (including advances made by FDM under the Original Debenture) which have not been repaid or converted into ordinary shares of the Company pursuant to Clause 3 hereof, up to an aggregate maximum of U.S.$15,000,000; and 

(c) all terms denoted with initial capital letters and not otherwise defined herein have the meanings assigned to them in the Definitive Agreement. 

2. The Principal Sum, from time to time outstanding, will bear simple interest at the rate of ten per cent (10%) per annum calculated on a 360 day year. Any part of the Principal Sum that has not been converted into ordinary shares of the Company pursuant to Clause 3 by the earlier of: 

(a) the date that the Lender's rights under the Definitive Agreement cease to be exclusive pursuant to Section 2.6 of the Definitive Agreement but not prior to March 31, 1998; or 

(b) December 31, 1999, 

will then become repayable, with interest as aforesaid, in twelve quarterly instalments, each consisting of one-twelfth of the Principal Sum plus interest. Each advance of the Principal Sum (including advances made under the Original Debenture prior to date hereof) and each conversion thereof into ordinary shares of the Company or repayment will be noted on the grid attached hereto as Schedule "A". 

3. The Principal Sum of this Amended and Restated Debenture outstanding from time to time will be converted into ordinary shares of the Company on the following basis: 

(a) as of the first date after the date of this Amended and Restated Debenture that the Principal Sum equals U.S.$6,490,000, such Principal Sum and all accrued interest will be deemed converted into that number of ordinary shares of the Company (the "First Instalment Shares") which, upon issuance, represent twenty-five per cent (25%) of the issued and outstanding ordinary shares of the Company; 

(b) as of the first date after the date of issuance of the First Instalment Shares that the Principal Sum equals U.S.$3,520,000, such Principal Sum and all accrued interest will be deemed converted into that number of ordinary shares of the Company (the "Second Instalment Shares") which, upon issuance, represent, together with the First Instalment Shares, fifty-one per cent (51%) of the 

-3- 

issued and outstanding ordinary shares of the Company provided that the Lender may, at any time and from time to time after the date of issuance of the First Instalment Shares until the earlier of, 

(i) the first date thereafter that the Principal Sum equals $3,520,000, or 

(ii) the date upon which the last of the Second Instalment Shares is issued 

elect, by notice in writing to the Company, to convert the Principal Sum and all accrued interest then outstanding into that number of the Second Instalment Shares which is equal to the product obtained by multiplying the total number of Second Instalment Shares by a fraction the numerator of which is the Principal Sum then outstanding and the denominator of which is $3,520,000. 

(c) as of the first date after the date of issuance of the last of the Second Instalment Shares that the Principal Sum equals U.S.$14,500,000, such Principal Sum and all accrued interest will be deemed converted into that number of ordinary shares of the Company (the "Third Instalment Shares") which, upon issuance, represent, together with the First Instalment Shares and the Second Instalment Shares, eighty per cent (80%) of the issued and outstanding ordinary shares of the Company provided that the Lender may, at any time and from time to time after the date of issuance of the last of the Second Instalment Shares until the earlier of, 

(i) the first date thereafter that the Principal Sum equals $14,500,000, or 

(ii) the date upon which the last of the Third Instalment Shares is issued 

elect, by notice in writing to the Company, to convert the Principal Sum and all accrued interest then outstanding into that number of the Third Instalment Shares which is equal to the product obtained by multiplying the total number of Third Instalment Shares by a fraction the numerator of which is the Principal Sum then outstanding and the denominator of which is $14,500,000. 

(d) The shares issued on conversion shall carry the right to participate in full in all dividends and other distributions declared after the date of conversion; in all other respects such share capital will rank pari passu and form one class with the ordinary shares of the Company in issue on the date of conversion. 

(e) If any offer or invitation to subscribe for or purchase ordinary shares is made to the shareholders of the Company, the Company shall at the same time make, or so far as it is able, procure to be made, the same offer or invitation 

-4- 

to the Lender as if immediately before the record date of such offer or invitation the Principal Sum had been converted into ordinary shares at the conversion rates provided in subparagraphs (a), (b), (c) and (d) above. 

(f) The Company hereby covenants with the Lender that at all times until the Principal Sum is converted or repaid in full it will maintain sufficient ordinary shares in its authorized but unissued share capital to allow it to immediately give effect to the conversion rights hereby conferred. 

(g) All amounts of principal and interest which are, from time to time, converted or deemed converted into shares hereunder will, upon such conversion, be deemed to be fully paid and satisfied. 

4. Notwithstanding any other provisions of this Amended and Restated Debenture any sums owing hereunder shall become payable immediately and all unpaid interest and any other monies owing hereunder shall become immediately owing and payable as follows: 

(a) If the Company shall default in the payment of any monies due and owing hereunder; or 

(b) If any representation or warranty made in or in connection with this Amended and Restated Debenture or the execution and delivery thereof or in any document or certificate furnished pursuant hereto shall prove at any time to have been incorrect in any material respect; or 

(c) If the Company shall default in the performance or observance of any agreement covenant stipulation or obligation contained or implied in this Amended and Restated Debenture whether negative or otherwise (other than obligations in respect of the payment of any monies hereunder); or 

(d) If by or under the authority of any Government the management of the Company or its authority to conduct its business is curtailed to the point of making it effectively inoperative by any seizure or intervention or proceedings of any nature; or 

(e) If a distress or execution shall be levied or enforced upon or against any of the chattels or property of the Company and shall not be satisfied within seven (7) days of the levy or enforcement of such distress or execution or within any grace period to which the Company is entitled in respect of such distress or execution whichever is later; or 

-5- 

(f) If the Company makes or attempts to make any alteration to the provisions of its Memorandum or Articles of Association which might in the opinion of the Lender affect its interests hereunder or shall fail or neglect to comply with any or all of the provisions of the Companies Law Cap. 22 or any statutory modification or re-enactment thereof or any other of the laws of the Cayman Islands in so far as the same way relate to it; or 

(g) If an order is made or an effective resolution is passed for the winding up of the Company except for the purpose of a reconstruction or amalgamation the terms of which have been previously approved in writing by the Lender; or 

(h) If an encumbrancer takes possession or a receiver is appointed of any part of the assets of the Company; or 

(i) If the Company ceases or threatens to cease to carry on its business or substantially the whole of its business; or 

(j) If the Company shall have sold or agreed to sell the whole of its undertaking or any substantial part thereof otherwise than with the previous written consent of the Lender; or 

(k) If the Company is unable to pay its debts within the meaning of 
Section 92 of the Companies Law Cap. 22 or any statutory modification or re-enactment thereof; or 

5. The Company hereby represents and warrants to the Lender that it is a corporation duly organized, validly existing and in good standing under the Laws of the Cayman Islands and that it is duly qualified to do business wherever necessary to carry on its present operations and that the making and performance of this Amended and Restated Debenture is within its powers having been duly authorized by all necessary governmental and corporate approvals and does not contravene any law or any contractual restriction binding on the Company and that this Amended and Restated Debenture is a legal valid and binding obligation of the Company enforceable against the Company in accordance with its terms and that there are no pending or threatened actions or proceedings before any court or administrative agency which may materially adversely affect the Company or its financial conditions and operations. 

6. The Company hereby further covenants with the Lender at all times during the continuance of this Amended and Restated Debenture as follows: 

-6- 

(a) At all times during the continuance of this Amended and Restated Debenture to keep up and maintain and preserve all the property of the Company in good and merchantable order and condition; 

(b) To pay to the Lender on demand all costs, charges and expenses incurred or to be incurred by the Lender in relation to these presents or any default hereunder or the protection or enforcement of any of the rights of the Lender hereunder together with the stamp duty and recording fees hereon; 

(c) To carry on its business in a proper and efficient manner; and 

(d) To observe and perform all the covenants, agreements and provisions contained in or implied hereby. 

7. It shall be lawful for but not obligatory on the Lender to advance and pay all sums of money necessary for the purpose of remedying any breach or breaches of covenants or obligations whether imposed on the Company under the provisions of this Amended and Restated Debenture or implied by law and all monies so paid and shall bear interest at the applicable interest rate computed from the time or respective times of paying or advancing the same. 

8. No neglect omission or forbearance on the part of the Lender to take advantage of or enforce any right or remedy arising out of any breach or non-observance of any covenant or condition herein contained or implied shall be deemed to be or operate as a general waiver of such covenant or condition or the right to enforce or take advantage of the same in respect of any breach or non-observance thereof either original or recurring. 

9. All notices which may or are required to be given pursuant to any provisions of this Amended and Restated Debenture shall be in writing and shall be delivered personally or by telecopy, and in the case of the Lender addressed to: 

No. 1 Temasek Avenue 
37th Floor, Millenia Tower 
Singapore 
039192 

Fax No: 011-65-337-0616 
Attention: Manager 

-7- 

with a copy to: 

Goodman Phillips & Vineberg 
1900 - 355 Burrard Street 
Vancouver, British Columbia 
V6C 2G8 

Fax No: (604) 682-7131 
Attention: Steven G. Robertson 

in the case of the Company addressed to: 

438 West 37th Street, Suite 5G New York, New York 
10018 

Fax No: (212) 967-3018 
Attention: President 

with a copy to: 

Patterson, Belknap, Webb & Tyler 1133 Avenue of the Americas 
New York, New York 
10036-6710 

Fax No: (212) 336-2222 
Attention: Van Krikorian 

or such other address or telecopier number of which a party may, from time to time, advise the other parties hereto by notice in writing given in accordance with the foregoing. Date of receipt of any such notice shall be deemed to be the date of delivery thereof, if delivered, and on the day of telecopying, if telecopied, provided such day is a Business Day and, if not, on the first Business Day thereafter. 

10. Concurrent with the execution and delivery of this Amended and Restated Debenture, the Original Debenture and the Guarantee, dated February 3, 1997 by Global Gold Corporation have been marked "cancelled" and delivered to the Company as fully satisfied by way of the substitution therefor of this Amended and Restated Debenture and the Guarantee, dated as of the date hereof, by Global Gold Corporation. 

-8- 

11. Each of the Company and the Lender acknowledge and agree to the amendments to the Charge over Shares described in the Guarantee of Global Gold Corporation appended to this Amended and Restated Debenture. 

12. This Amended and Restated Debenture shall be governed and construed solely according to the Laws of the Cayman Islands. 

IN WITNESS WHEREOF each of the Company and the Lender has executed this Amended and Restated Debenture as a Deed by its duly authorized persons the day and year first above written. 

Signed for and on behalf of   )
GLOBAL GOLD ARMENIA LIMITED   )
by: /s/ Robert A. Garrison    )
                              )
          , Director          )         Per:__________________________
                              )              Director
in the presence of:           )
                              )
                              )
                              )

	

----------------------------- ) 
witness, and thereby executed ) 
by GLOBAL GOLD ARMENIA LIMITED 
as its Deed ) 

Signed for and on behalf of ) 
FIRST DYNASTY MINES (USA) LLC ) 

by: /s/ Marcus Randolph       )
                              )
          , Manager           )         Per:___________________________
                              )              Manager
in the presence of:           )
                              )
                              )
----------------------------- )
witness, and thereby executed
by FIRST DYNASTY MINES (USA) LLC
as its Deed

	

-9- 

GUARANTEE 

Payment by, and performance of the obligations of the Company, a wholly-owned subsidiary of Global Gold Corporation ("Global Gold") under the foregoing Amended and Restated Debenture is hereby unconditionally and irrevocably guaranteed by Global Gold in favour of the Lender. Global Gold acknowledges and agrees to the assignment by FDM to the Lender of all of FDM's rights under the Original Debenture, as amended by the Amended and Restated Debenture, and the Deed of Charge over Shares dated February 3, 1997 and made by Global Gold in favour of FDM (the "Charge over Shares"). Global Gold further agrees that the covenants of Global Gold made in the Charge over Shares are made by Global Gold in favour of the Lender and that references in the Charge over Shares to the "Debenture" will be construed as references to the Amended and Restated Debenture. This guarantee and the Charge over Shares will be released as of the date that the Lender has acquired not less than eighty per cent (80%) of the ordinary shares of the Company pursuant to the conversion from time to time of the Principal Sum in accordance with paragraph 3. 

IN WITNESS WHEREOF Global Gold Corporation has executed this Guarantee as a Deed on the 13th day of May, 1997. 

Signed for and on behalf of             )
GLOBAL GOLD CORPORATION                 )
by: /s/ Drury J. Gallagher              )
                                        )
          , Director                    )    Per:________________________
                                        )         Director
in the presence of:                     )
                                        )
                                        )
-----------------------------------     )
witness, and thereby executed
by GLOBAL GOLD CORPORATION
as its Deed

	

SCHEDULE "A" 

LOANS ADVANCED BY FIRST DYNASTY MINES (USA) LLC TO 
GLOBAL GOLD ARMENIA LIMITED 

NOTE: ALL AMOUNTS ARE STATED IN UNITED STATES DOLLARS 

                              AMOUNT OF
               AMOUNT OF      PRINCIPAL      UNPAID
DATE           LOAN           CONVERTED OR   PRINCIPAL      NOTATION
(D/M/Y)        ADVANCED       REPAID         BALANCE        MADE BY

31/12/97       $17,510,000    $0             $17,510,000
-------------- -------------- -------------- -------------- --------------
31/12/97       $0             $17,510,000    $0
-------------- -------------- -------------- -------------- --------------
               $              $              $
-------------- -------------- -------------- -------------- --------------
               $              $              $
-------------- -------------- -------------- -------------- --------------
               $              $              $
-------------- -------------- -------------- -------------- --------------
               $              $              $
-------------- -------------- -------------- -------------- --------------
               $              $              $
-------------- -------------- -------------- -------------- --------------

Exhibit 99.50 

TO: Holders of Warrants (individually a "Warrant" and collectively the "Warrants") issued pursuant to the Confidential Private Placement Memorandum of Global Gold Corporation (formerly known as Triad Energy Corp.) dated May 17, 1995, as amended (each a "Holder" and collectively the "Holders"). 

Dear Holder: 

We enclose for your information a copy of the excerpt concerning the Armenian mining project as reflected in the Form 10-QSBA filed by Global Gold Corporation (the "Corporation") for the quarter ended September 30, 1997 which is attached hereto as Exhibit A. 

As the Form 10-QSBA excerpt reflects, the implementation of the Armenian gold mining project has taken longer than initially anticipated. The contribution to the Armenian joint venture company, in which the Corporation has an interest, of the rights to mine and process gold at the Zod and Meghradzor mines is subject to the approval of an Armenian governmental decree. While the Corporation anticipates that such decree will be issued within the next several months, there can be no assurance of such result. In addition, we do not anticipate commencing the public trading of the Corporation's stock in the near future. 

As a result thereof, the Board of Directors of the Corporation believes that the current exercise price of the Warrants of $1.00 per share of common stock is, in its opinion, substantially in excess of the fair market value of such stock and that the Holders need additional time to consider making a potential additional investment in the Corporation through the exercise of the Warrants. 

Accordingly, the Board of Directors has decided (a) to reduce the exercise price of each Warrant to purchase a share from $1.00 to $0.125 and (b) to extend the expiration date of the Warrants from December 31, 1997 (the current expiration date) to December 31, 1998. Attached hereto as Exhibit B is the formal amendment to the first full paragraph of the Warrants. 

Any Holder having any questions or desiring information should contact: 

Drury J. Gallagher, Chairman & Chief Executive Officer Global Gold Corporation 438 West 37th Street, Suite 5G New York, NY 10018 Tel: (212) 563-5933 

GLOBAL GOLD CORPORATION 

By: /s/ Drury J. Gallagher
    -----------------------------------------------
    Drury J. Gallagher, Chairman & CEO

	

Dated: December 1, 1997 

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

FORM 10-QSB 

(MARK ONE) 
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE 
SECURITIES EXCHANGE ACT OF 1934 
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF 
THE EXCHANGE ACT 

FOR THE TRANSITION PERIOD FROM TO 

COMMISSION FILE NUMBER 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 

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 whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes No . Not Applicable 

As of September 30, 1997, there were 4,348,114 shares of the registrant's Common Stock outstanding. 

Transitional Small Business Disclosure Format (check one): Yes No X . 

1 

                                  TABLE OF CONTENTS

PART I.  Financial Information

Item 1.  Financial Statement:
         Balance Sheet - September 30, 1997 ...................................3

         Statement of Income and (Loss) - for the period July 1, 1997
         through September 30, 1997, July 1, 1996 through September 30, 1996...4

         Statement of Income and (Loss) - for the period January 1, 1997
         through September 30, 1997, January 1, 1996 through September
         30, 1996 and for the development stage period January 1, 1995
         through September 30, 1997 ...........................................5

         Statement of Changes in Stockholders Equity - for the period
         January 1, 1995 through September 30, 1997 and for the year
         January 1, 1997 through December 31, 1997 ............................6

         Statement of Cash Flow - for the period January 1, 1997
         through September 30, 1997 and for the year January 1, 1996
         through September 30, 1996 and for the development stage period
         January 1, 1995 through September 30, 1997............................8

         Notes to Financial Statement (unaudited) .............................9

Item 2.  Management's Discussion and Analysis
         of Financial Condition and Results
         of Operation.........................................................26

2 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

CONSOLIDATED FINANCIAL STATEMENTS 

BALANCE SHEET 

ASSETS 

                                                            September 30,     December 31
                                                                1997              1996
                                                            (Unaudited)        (Audited)
                                                            -----------       -----------
CURRENT ASSETS
  Cash                                                    $    27,830         $       369
  MoneyMarket Investment                                      150,000                  --
                                                            ---------           ---------
Noncurrent Asset
  Notes receivable - net of allowance for
    bad debts of $150,000 Note 9                              150,000             150,000
                                                            ---------           ---------

OTHER ASSETS
  Organization Costs                                            8,881               9,601
   Investment in certain mining interests
     - Notes 6 and 8                                        1,003,494           1,003,494
   Deferred costs - Note 12                                 9,662,313             878,858
                                                            ---------           ---------
                                                          $10,674,688         $ 1,891,953
                                                          -----------         -----------
                                                          -----------         -----------

TOTAL ASSETS                                              $11,002,518         $ 2,042,322
                                                          -----------         -----------
                                                          -----------         -----------

CURRENT LIABILITIES
  Note Payable - First Dynasty Mines, Ltd. - Note 20      $10,257,124         $        --
  Note Payable - Officer                                           --             191,000
  Officer's compensation payable - Notes 10 and 16            120,834             300,000
  Accounts payable and accrued expenses - Note 11             136,883             979,719
                                                          -----------         -----------
                                                           10,514,841           1,470,719
                                                          -----------         -----------
STOCKHOLDERS EQUITY - EXHIBIT C
  Common Stock $.001 par 100,000,000 shares
    authorized 4,348,114 shares issued and outstanding         23,231              20,981

  Paid-in capital - Dormant period                          3,228,519           3,228,519
  Paid-in capital - Development stage                       1,482,423           1,259,673
  Retained earnings - Dormant period                       (2,907,648)         (2,907,648)
  Retained earnings - Development stage                    (1,338,848)         (1,029,922)
                                                          -----------         -----------
                                                              487,677             571,603
                                                          -----------         -----------

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                 $11,002,518         $ 2,042,322
                                                          -----------         -----------
                                                          -----------         -----------

See the accompanying notes 

3 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

CONSOLIDATED FINANCIAL STATEMENTS 

                                                            January 1,              January 1,
                                  July 1, 1997                1997                     1995
                                    through                  through               Development
                               September 30, 1997       September 30, 1997            Stage
                               ------------------       ------------------           through
                                  (UNAUDITED)              (UNAUDITED)          September 30, 1997
                               ------------------       ------------------      ------------------

Revenue                           $     --                 $     --              $       --

Expenses
  Officers Compensation              37,500                   95,834                  395,834
  Administrative Fees                 2,436                   12,839                   33,997
  Legal                              16,080                  113,665                  436,994
  Accounting & Auditing               5,200                   30,100                  100,948
  Transfer Agent                         71                    1,534                   12,446
  Proxy Costs                            --                      --                    26,555
  Office Expense                     10,998                   19,653                   29,106
  Travel                                171                      171                   43,120
  Rent - Note 7                       9,000                   27,000                   63,000
                                   --------                 --------               ----------

OPERATING LOSS                      (81,456)                (300,796)              (1,142,000)
                                   --------                 --------               ----------
                                   --------                 --------               ----------

(OTHER INCOME (EXPENSES))
  Interest and royalty income           208                      208                    1,077
  Organization costs                   (240)                    (720)                  (5,520)
    Interest expense                     --                   (7,090)                 (14,821)
    Provision for bad debts
      - Note 9                           --                      --                  (175,000)
                                   --------                 --------               ----------
                                        (36)                  (7,602)                (194,264)
                                   --------                 --------               ----------

(Loss) Before Income Taxes          (81,488)                (308,398)              (1,336,264)

  Income Taxes                         (176)                    (528)                  (2,584)
                                   --------                 --------               ----------
  Net (Loss)                     $  (81,664)              $  308,926             $ (1,338,848)
                                 ----------               ----------             ------------
                                 ----------               ----------             ------------
  NET (LOSS) PER SHARE
    (Note 18)                    $   (.0188)              $   (.0710)            $     (.3079)
                                 ----------               ----------             ------------
                                 ----------               ----------             ------------

4 

Exhibit C 

GLOBAL GOLD CORPORATION 

(A Development Stage Company) 
Consolidated Financial Statements 
Statements of Changes in Stockholders' Equity - Note 19 
(Unaudited) 

                                                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
                                  ---------     -------    ----------    -----------    ---------      ----------        ----------
Stockholders' Equity
  January 1, 1995                  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-Note 1                --        (80,826)      80,826           --            --             --                --

Eyre acquisition-
  Note 5                          1,000,000     10,000         --             --            --           840,000           850,000

Proceeds through
  private offering-Note 14         200,000       2,000         --             --            --           419,573           421,573

                                  ---------     -------    ----------    -----------    ---------      ----------        ----------
Stockholders' equity
  December 31, 1995               2,098,074     $20,981    $3,228,519    $(2,907,648)   $(361,345)     $1,259,573        $1,240,080
                                  =========     =======    ==========    ===========    =========      ==========        ==========

See the accompanying notes and Accountants' Compilation Report. 

5 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 
Consolidated Financial Statements 
Statements of Changes in Stockholders' Equity - Note 19 
(Unaudited) 

                                              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
                                 ------        -----       -------       -------        ------           ------             -----
Stockholders' Equity
  December 31, 1995             2,098,074     $20,981    $3,228,519   $(2,907,648)    $(361,345)       $1,259,573        $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     $20,981    $3,228,519   $(2,907,648)   $(1,029,922)      $1,259,573          571,603

Net Loss-January 1-September
  30, 1997                                                              (308,926)                       (308,926)

Issuance of Common
  Stock-Note 16                 2,000,000      2,000                                    198,000          200,000

Note 20                          250,000        250                                                      24,750            25,000

Shareholders' Equity
  September 30, 1997            4,318,114     $23,231    $3,228,519   $(2,907,648)   $(1,338,848)      $1,482,423         $487,677

In 1996, 200,000 shares were issued to collateralize two guarantees by London International Merchantile Ltd. The guarantees were rescinded and, therefore, such shares were returned to the Company in 1997 and have not been reflected on this statement. 

See the accompanying notes 

6 

(GLOBAL GOLD CORPORATION 
(A DEVELOPMENT STAGE COMPANY) 
CONSOLIDATED FINANCIAL STATEMENTS 
STATEMENTS OF CASH FLOWS (UNAUDITED) 

                                                       JANUARY 1,              JANUARY 1,
                                                          1997                    1996
                                                        THROUGH                 THROUGH
                                                   SEPTEMBER 30, 1997       DECEMBER 31, 1996
                                                      (UNAUDITED)               (AUDITED)
                                                   ------------------       -----------------
CASH FLOWS FROM DEVELOPMENT STAGE ACTIVITIES

     NET LOSS - EXHIBIT B                             $  (308,926)             $(668,577)

     ADJUSTMENTS TO RECONCILE NET
       LOSS TO NET CASH PROVIDED
       BY OPERATING ACTIVITIES:

     NON-CASH ITEMS INCLUDED IN LOSS
       AMORTIZATION                                            --                     --
       PROVISION FOR BAD DEBT                                  --                 55,000

     CHANGE IN ASSETS AND LIABILITIES:
        ORGANIZATION COSTS                                    720                 (6,401)
        ACCOUNTS PAYABLE AND ACCRUED EXPENSES          (1,022,002)               984,105
                                                       -----------              --------
     NET CASH PROVIDED (USED) BY DEVELOPMENT
         STAGE ACTIVITIES                              (1,330,208)               364,127

     CASH FLOWS FROM INVESTMENT ACTIVITIES
        INVESTMENT IN SHORT TERM SECURITIES              (150,000)                    --
        INVESTMENT IN CERTAIN MINING INTERESTS                 --                     --
        DEFERRED COSTS - MINING INTERESTS              (8,758,455)              (618,157)
                                                       -----------              ---------
     NET CASH (USED) BY INVESTING ACTIVITIES           (8,908,455)               618,157

     CASH FLOWS FROM FINANCING ACTIVITIES
        PROCEEDS FROM FIRST DYNASTY MINES LTD.         10,257,124                     --
        NET PROCEEDS FROM PRIVATE PLACEMENT               200,000                     --
        NOTES PAYABLE OFFICER                            (191,000)               191,000
        WARRANTS EXERCISED                                     --                    100
                                                       -----------              --------
     NET CASH PROVIDED BY FINANCING ACTIVITIES         10,266,124                191,100

     NET INCREASE (DECREASE) IN CASH                       27,461                 62,930

     CASH - BEGINNING                                         369                 63,299

     CASH - END                                            27,830                    369

     SUPPLEMENTAL CASH FLOW INFORMATION
        INCOME TAXES PAID                             $       528              $     324

                                       7

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 
Notes to Financial Statements 

September 30, 1997 

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

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 Corp. 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 not paid any employees for services, except Mr. Gallagher and Mr. Garrison, as hereafter discussed. 

During 1995, the Company formed certain-wholly owned foreign subsidiaries. Any reference in these statements to Global (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 -- Note 17) 

Management has made any necessary interim period accounting adjustments in order for the statements not to be misleading. 

8 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

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. 

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, Samuel McNeil in July, 1981. The case has long since gone through the judicial system and Mr. McNeil 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, 1993, 1994, 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. 

9 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

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 copper. 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. 

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 

Cash                                        $ 153,494
Note payable (Note 13)                        100,000
Note payable (Note 13)                         46,506
                                            ---------
                                            $ 300,000
                                            =========

The Agreement also provided for the Company to cause the delivery to Eyre of one million shares of stock, with an estimated value of $850,000, and warrants to acquire an additional four hundred thousand shares (Note 15) . The Agreement left Eyre with two out of five seats on the Board of Directors. 

10 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 
Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

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

As of December 1, 1995, the Company and Eyre entered into a Restructuring Agreement pursuant to which Eyre surrendered 1,000,000 shares of common stock and acquisition warrants to purchase 600,000 shares of common stock and acquired a 2% overriding production royalty subject to adjustment in the event the ownership of the Company were to become owned by less than 50% 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 totaling another 1%. The initial Armenian tailings project (Note 7) is excluded from the royalty arrangement. In the event the Company undertakes any additional mineral extraction projects in the Republics of Armenia or Georgia, Eyre will receive 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 shall pay 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, 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. 

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 (see Note 19) 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 of the Company's Common Stock (a total of 400,000 shares), surrendered their right to designate two members of the Board of Directors of the Company and 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 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 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. 

11 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 6: PATTERSON, BELKNAP, WEBB & TYLER LLP 

Global has retained the law firm of Patterson, Belknap, Webb & Tyler LLP (PBWT) to represent the Company in its dealings with the Armenian and Georgian Republics. PBWT has an international law practice involving commercial, non-profit and humanitarian issues and has offices in Moscow. Mr. Van Z. Krikorian (VZK), of counsel to PBWT, 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, PBWT 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, PBWT will reduce its hourly charges by 50%. 

PBWT will also represent 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 is $180,000 for the period July 1, 1995 to July 1, 1999, and the minimum quarterly payment is $10,000. The quarterly billing was discontinued as of June 30, 1997. 

As of June 30, 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 AGRC. Unbilled fees and expenses through September 30, 1997 total approximately $300,000, 

In addition PBWT performs additional legal service for the Company as requested. Current payables and accruals are $99,000. 

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. 

12 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 7: THE ARMENIAN JOINT VENTURE AGREEMENT (continued) 

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 a gold mining operations at the Zod site. Management believes capacities at Zod will be significant. Mining at a third site, Meghradzor, will commence once Zod is operational. 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 will be required to provide administration, training, management, feasibility studies, technology and business plans, as appropriate. 

Pursuant to the Joint Venture Agreement, the Company has the following obligations: 

                                               Investment
Endeavor                                       Requirement
-------------------------------                -----------
Delivery of tailings processing
Operation equipment to Ararat                  $5,000,000

Zod Complex prefeasibility study
and commencement of full
feasibility study on Zod Complex               $  500,000

Operation of Tailings processing               $2,250,000

Complete full feasibility study
and business plan on Zod Complex               $  500,000

Tailings processing operations
at Ararat                                      $2,250,000

13 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 7: THE ARMENIAN JOINT VENTURE AGREEMENT (continued) 

The parties have begun to implement the Tailings Project. 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 applicable Armenian law. The registration of the Venture occurred en 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 is 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. 

14 

GLOBAL GOLD CORPORATION 
(A Development stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 7: THE ARMENIAN JOINT VENTURE AGREEMENT (continued) 

Presently, 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. VZK has advised that profit computations are still to be resolved. 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 50 long as the Percentage of Recovery of Metals Per Gram Per Ton 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. 

Deterred Project Costs Through September 30, 1997 Total $9,592,244 

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 has been advised that the application for the license required to be filed with the Georgian government has not been tiled, and it has no definitive agreement granting it fixed rights to mining production or processing in Georgia. 

The current Agreement calls 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. Cash flow initially is to be distributed as follows: 

RCPA Madneuli                  9.75%
Eyre (now the Company)         9.75%
Panquest                        .25%       (Georgian resource broker)
Sinking Fund                    .25%       (Georgia)
Capital Repayments            80.00%

15 

GLOBAL COLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 8: THE GEORGIAN AGREEMENT (continued) 

After recovery of capital, the net profit were to be distributed as follows: 

a) 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 

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

The Agreement calls for the Board of the Joint Venture Company to annually decide upon the amount of profit distributions. 

The Joint Venture Company will not be required to pay Georgian income tax on the profits obtained within the Company for the first two years after all capital and capital costs have been repaid. In the following two years, taxation shall be at 50% of the normal rate. Thereafter, the Joint Venture Company may apply to the Ministry of Finance for additional taxation privileges. Reinvested capital will be exempt from taxation. 

The Joint Venture Company may at times be required to obtain various approvals, licenses, permits, etc., on a timely basis. Failure to obtain such from the Government could materially and adversely affect the Company. 

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. Accordingly, there can be no assurance that the Company will be successful in acquiring any rights or concluding any definitive agreements with respect to the Madneuli mining project, or, if so, on terms acceptable to it. Furthermore, if the Company does acquire any rights to the Madneuli mining project, there can be no assurance that it will be able to obtain financing for the acquisition or development thereof, or, if so, on terms acceptable to the Company. 

16 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 9: NOTES RECEIVABLE 

The Company holds a note receivable as follows: 

  Amount       Interest Rate                       Debtor
---------       ----------           ---------------------------------
$ 300,000       Prime + 2%           Jet--Line Environmental Services,
                                     Inc. (Jet-Line)

 (150,000)                           Allowance for doubtful accounts
---------
$ 150,000
=========

The Jet-Line note as more fully described in the documents, is convertible into at least 20% of Jet-Line's common stock and up to 30% under certain circumstances. Jet--Line has defaulted on prior balloon payment obligations and is in default of its current interest requirements. The note is secured by U.C.C.'s on certain equipment. Jet-Line owns certain valuable assets. The Company pledged the Jet-Line notes as collateral for loans to the Company from Drury Gallagher, which loan has now been repaid in full. 

Jet-Line advised the Company in early March, 1997 that it received a notice of the 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 demands letters on April 2, 1997, April 15, 1997 and November 11, 1997 and November 10, 1997 and is now is attempting to sell the assets in which it holds a first security interest. 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, there can be no assurance that Jet-Line will be able to consummate such sale or obtain such financing. Thus, there can be no assurance that the Company will ultimately be paid the full principal amount of, and accrued interest on, the Jet-Line note. Management has not accrued interest on the note and revised its allowance for doubtful accounts to $150,000. 

17 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 10: OFFICERS' COMPENSATION PAYABLE 

Officers' compensation payable consists of the following: 

                                   September 30, 1997
                                   ------------------

Drury Gallagher                          $ 87,500
Robert Garrison                            33,334
                                        ---------
                                        $ 120,834
                                        =========

(See Note 16) 

NOTE 11: ACCOUNTS PAYABLE AND ACCRUED EXPENSES 

Accounts payable and accrued expenses include the following: 

                                              September 30, 1997
                                              ------------------

Legal-- General Counsel                            $   2,009
Legal -- Patterson, Belkap, Webb
   & Tyler LLP (Note 6)                               99,110
Affiliates                                             9,000
Other Miscellaneous                                   26,764
                                                   ---------
                                                   $ 136,883
                                                   =========

NOTE 12: DEFERRED COSTS 

Deferred costs include the following:

                                                 September 30, 1997
                                                 ------------------
       Legal -- Patterson, Belknap, Webb
         & Tyler LLP(Note 6)                        $   709,260
       Legal-- General Counsel                           81,747
       Engineering 5,                                   130,501
       Research and Analysis                             82,042
       Overseas travel                                   73,897
       Construction                                     556,504
       Other                                          3,028,362
                                                    -----------
                                                    $ 9,662,313
                                                    ===========

NOTE 13: NOTES PAYABLE 

On December 1, 1995, the Company closed the Eyre agreement to purchase certain mining rights (Note 5). Pursuant to the agreement, the 

18 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 13: NOTES PAYABLE (continued) 

The first note bears interest at 6.36% per annum, and is payable contingent upon the Company obtaining financing of at least $2,000,000, whether from equity, debt or a combination of both. After this condition is met, the note is due within 10 business days. 

The second, with interest at 5.65% per annum, is payable in full no later than December 31, 1996. Pursuant to the Second Restructuring Agreement (Note 5) dated December 4, 1996 both promissory notes were cancelled. 

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 14: 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 exercise price of $.50 per share at any time before December 31, 1996. The expiration date was subsequently extended to December 31, 1997. 

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 Lyre closing, the entire $500,000 of convertible notes were exchanged for 200,000 shares of common stock. 

NOTE 15: WARRANTS OUTSTANDING 

The Company had warrants outstanding as follows; 

                    # Shares Right    Price/Share     Expiration
Warrant Holder(s)    to Purchase    Exercisable at        Date
-----------------    -----------    --------------    ----------

Stockholders through 
Note Conversion -- 

  Note 5                    400,000          $1.00          12/31/97
Other                         4,000          $5.00          11/30/98
                            -------
                            404,000
                            =======

19 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 16: OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK APPRECIATION RIGHTS 

Management presently consists of Mr. Drury Gallagher and Mr. Robert 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. Mr. Gallagher and Mr. 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 1,000,030 shares of its Common Stock to each of Messrs. Gallagher and Garrison in exchange for, (a) in Mr. Gallagher's case, the cancellation of $100,003 of accrued salary, and 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 371500 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, and to increase their proprietary stake of the day-to-day management of the Company. In 1997, Lyre 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. 

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 of GSA, 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 GSA 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. 

20 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 17: 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 two years ended December 31, 1996. 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 off shore 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. 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 deterrent from obtaining future financing or political risk insurance. Management will consider future structural changes, if necessary. 

21 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 18: 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 19: 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 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. 

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

NOTE 20: 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: 

22 

GLOBAL GOLD CORPORATION 
(A Development Stags Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 20: FIRST DYNASTY MINES LTD. (continued) 

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 GSA 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 GSA. 

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

C. For every additional $.5 million advanced in respect of the development of the Zod and Meghradzor mines (excluding the $10 million Tailings Project expenditure) as a loan to GSA, 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 of capital stock of GGA, within 18 months after raking such total advances, by issuance of 4,000,000 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 five million ounces. 

First Dynasty will be entitled to appoint three of the five directors of GGA until First Dynasty shall acquire 80% of the issued and outstanding common stock of GSA. 

First Dynasty carried out certain initial commitments in February, 1997. They loaned GSA $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 outstanding payables. First Dynasty made direct payments of $7,151,807 on the Tailings contact and engineering agreement and an additional $1,414,162 in legal and administrative expenses in the first nine months of 1997. 

23 

GLOBAL GOLD CORPORATION 
(A Development Stage Company) 

Consolidated Financial Statements 

Notes to Financial Statements 

September 30, 1997 

NOTE 20: FIRST DYNASTY MINES LTD. (continued) 

In addition, 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, 1996. Although not reflected in the FDM Agreement, First Dynasty also paid the Company $141,155.02 on May 15, 1997 to defray the expenses incurred by GGA during the three-month period ending March 31, 1997. 

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. 

24 

GLOBAL GOLD CORPORATION 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS 

(A) GENERAL OVERVIEW 

The Company is presently engaged in the development of a gold mining project in Armenia, and is currently considering pursuing a gold and copper mining project in Georgia (both of which countries are members of Commonwealth of Independent States). The Company is currently in the pre-development stage and has not received any revenues from mining activities. 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" reflected in the Form 10-KSB filed by the Company for the period ended December 31, 1996. 

(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. GGA is currently negotiating a new agreement with the Armenian authorities to expedite and modify stages 2 and 3. 

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, which, among other things, provides for the right of new joint venture companies to mine and process gold at 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 

25 

amendatory agreement does not become operative until passage of an Armenian government decree approving such agreement. The parties anticipate that such decree will be issued within the next several months, although there can be no assurance of such result. 

(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 is now engaged in 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 is $4,500,000, which was later increased to up to $10,000,000 Operation of the tailings processing plant is now planned for December, 1997, although construction and other contingencies exist which may delay meeting such target date. In addition, independent engineering firms are now engaged in preparing a feasibility report with respect to the reserves at the Zod and Meghradzor, mines which the Company anticipates will be completed within the next six months, although there can be no assurance of such result. 

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. 

(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 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 

26 

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 five million 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; 

27 

(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 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, which is now occurring, 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 

28 

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 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 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 

29 

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 First Dynasty 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 (or are being disbursed in the case of the second installment). 

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. 

d. First Dynasty created a credit facility of up to $1,000,000 for Armgold. 

As of September 30, 1997, First Dynasty claims it had advanced $10,257,124 in total project costs. 

30 

(d) MINING PLANS 

GGA, in conjunction with First Dynasty, negotiated with the Armenian Government to obtain for new joint venture companies 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, subject to the prior approval thereof by an Armenian parliamentary decree. In addition, GGA engaged independent engineering firms to conduct a feasibility report with respect to the reserves at such mines. 

(C) JET-LINE ENVIRONMENTAL SERVICES, INC. 

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. 

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, is secured by a pledge of transportation equipment and machinery and equipment used in Jet-Line's business and a 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 does not know the appraised value of such collateral at present since no updated appraisal of such assets has been made. Prior to such transaction, Jet-Line had no affiliation of any kind with the Company or its stockholders. 

Since Jet-Line has been experiencing operating losses, and lacks adequate liquid resources, it is highly unlikely that Jet-Line will be able to pay the full amount of the principal and accrued interest on the Jet-Line Note, and 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. 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, sent further demand letters on April 2, 1997, April 15, 1997 and November 11, 1997, had many telephonic discussions with the President of Jet-Line with respect to the payment of the Jet-Line Note, and is now attempting to sell the assets in which it holds 

31 

a first security interest. The Company has also requested Jet-Line to seek an additional financing and to use part of the proceeds therefrom to satisfy the Jet-Line Note in full. However, there can be no assurance that Jet-Line will be able to consummate such sale or obtain such financing, or that the Company will be able to realize proceeds from any sale of Jet-Line' assets sufficient for the payment of the principal and accrued interest on Jet-Line. 

In addition, the Company also learned that the Business Loan Center, another creditor of Jet Line, is also attempting to sell assets of Jet-Line in which its hold a security interest. 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 loan thereto, except with respect to certain automotive and trucks assets and other equipment as to which the Company retained its first security interest. 

Thus, there can be no assurance that the Company will ultimately be paid the full principal amount of, and accrued interest on, the Jet-Line Note. 

THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER 
30, 1996 

REVENUES: During the three month period ended September 30, 1997, the Company's interest and royalty income was $208, which was approximately the same amount for the same period last year. 

ADMINISTRATIVE AND OTHER EXPENSES: The Company's administrative and other expenses for the three-month period ended September 30, 1997 were $81,872, which represented a decree from the amount paid or accrued of $116,342 in the same period last year. Expenses were attributable to the Company's (a) accrual of officers' compensation and (b) the accrual and/or payment of legal and accounting fees and expenses in connection with its retention of counsel to implement the Company's transaction with First Dynasty pursuant to the agreement between such parties dated as of May 13, 1997 in connection with the financing of the Tailings Project and the additional projects contemplated in Armenia (subject to miscellaneous contingencies), and to file the Company's 10-QSB for the periods ended March 31, 1997 and June 30, 1997. 

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 
1996 

REVENUES: During the nine months ended September 30, 1997, the Company's interest and royalty income was $208, which represented an increase from the interest and royalty interest of $183 for the same period last year, since more of the Company's assets were invested on an interest-paying basis. 

ADMINISTRATIVE EXPENSES: The Company's administrative expenses for the nine months ended September 30, 1997 were $309,109, which represented a decrease from the amount paid of $338,308 in the same period last year. Expenses were attributable to the Company's (a) accrual of officers' compensation and (b) the accrual and/or payment of legal and accounting fees 

32 

and expenses in connection with its retention of counsel to implement the Company's transaction with First Dynasty pursuant to the agreement between such parties dated as of May 13, 1997 in connection with the financing of the Tailings Project and the additional projects contemplated in Armenia (subject to miscellaneous contingencies), and to file the Company's 10-QSB for the periods ended March 31, 1997 and June 30, 1997. 

LIQUIDITY AND CAPITAL RESOURCES 

As of September 30, 1997, the Company's total assets were $11,002,578, of which $177,830 consisted of cash or cash equivalents. 

The Company's plan of operation for calendar year 1997 is: 

(a) To oversee the implementation of its definitive agreement with First Dynasty with respect to all of the Armenian mining projects contemplated under the Armenian Joint Venture Agreement, including, without limitation, completing any financing needed for the Tailings Project. 

(b) To commence the mining of gold pursuant to the Tailings Project; 

(c) To earn the right to mine production and process gold at the Zod mine in Armenia in accordance with the terms of the Armenian Joint Venture Agreement or to negotiate obtaining such rights and, in preparation therefor, conclude an engineering feasibility study on the Zod mine; 

(d) To collect payments of accrued interest and principal on and/or restructure the $300,000 convertible note issued by Jet-Line to the Company; and 

(e) To commence the public trading of the Company's Common Stock. 

As of September 30, 1997, the Company had liquid assets consisting of cash of approximately $177,830. It is anticipated that First Dynasty will provide or arrange for all of the financing needed in connection with the Tailings Project and such initial financing as is needed in connection with the development of the Zod and Meghradzor mines, although there can be no assurance of such result. In addition, if the Company earmarks a portion of the $200,000 payment from First Dynasty under the FDM Agreement to cover administrative and professional costs, the Company should be able to meet its monthly administrative expenses during 1997 which average approximately $10,000 per month (exclusive of accrued officers' compensation), plus additional amounts for legal and accounting costs, although there can be no assurance that the Company will use all of such funds for such purpose. However, the Company may receive further additional financing in 1997 from several sources to cover the latter types of costs (and for general corporate purposes) and its contemplated financing sources are as follows: 

33 

(i) Pursuant to the Offering of $500,000 principal amount of the Convertible Notes of the Company, the Company issued Warrants to purchase 4,000,000 shares of its Common Stock at an exercise price of $0.50 per share. By virtue of the one for 10 reverse split of the Company's Common Stock effective as of December 31, 1996, 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. If the Warrants were exercised in full, the Company would receive $400,000 in gross proceeds. The Company does not know whether any of the Warrants will be exercised, and, accordingly, there can be no assurance of such result. 

(ii) The Company anticipates that it will receive some payments of principal and interest on the Jet-Line Note, although there can be no assurance of such result. 

Nevertheless, there can be no assurance that any one or more of the above financings will be provided, or, if so, on terms acceptable to the Company. In the event that no contemplated financing is consummated, the Company believes that it has sufficient financial resources to meet its obligations through April 30, 1998. 

Based on the Company's needs for additional financing of its operations, Mr. Gallagher agreed to continue to advance funds to the Company for such purpose 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. The Company discharged its loan of $192,000 from Mr. Gallagher in full on May 19, 1997 by paying him such sum plus interest thereon of $14,058.49 on such date. The Company has no existing agreement with Mr. Gallagher with respect to any financing of the Company's future operations. 

The Company does not intend to engage in any project research and development during 1997 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 Armenian Joint Venture Agreement. 

The Company does not expect to hire any additional full-time employees in 1997. 

PART II 

Item 1. LEGAL PROCEEDINGS 

Except as noted below, there is no material pending legal proceeding to which the Company is a party or to which any of its properties is subject. 

Eyre and the Parry-Beaumont Trust have questioned, in writing in February, March and 

34 

April, 1997, the validity of the Second Restructuring Agreement (as defined in Item 12(B) of the Form 10-KSB filed by the Company for the year ended December 31, 1996) and the validity of the issuance by the Company of 1,000,000 shares of its Common Stock to each of Messrs. Gallagher and Garrison. The Company believes that the Second Restructuring Agreement is valid and that Eyre and the Parry-Beaumont have waived the rights covered thereby. The Company further 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. For a further description of the Second Restructuring Agreement and such transfers, see Item 12(B) as described above. 

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. 

In addition, the United States Attorney for the Eastern District of Pennsylvania commenced an investigation of various nursing homes in Pennsylvania managed by PennMed Consultants, Inc. ("PennMed"), a corporation owned by Drury J. Gallagher, the Company's President, and John Hayman and Frank Hayman, who are also major stockholders of the Company, as to whether or not such nursing homes and their managers and affiliates engaged in potential violations of Federal health laws. In the course of the execution of a search warrant, all documents relating to PennMed were seized on August 6, 1997, as well as the books and records of other possible businesses located at such address, including all of the Company's books and records which were located at such address. In addition, the United States Attorney served a subpoena on the Company on such date to obtain additional information initially by August 29, 1997 and now on or before November 14, 1997. At this time, the Department of Justice has informed the Company that it is not a target of such investigation. 

The Company is attempting to have itself removed completely from such proceeding. In addition, management is not aware of the basis of any potential liability in such proceeding. Although the Company believes that any claim of the nature described above will not be asserted against it, or, if made, will not be asserted successfully, there can be no assurance of such result. 

Item 2. CHANGES IN SECURITIES 

Not applicable. 

Item 3. DEFAULT UPON SENIOR SECURITIES 

Not applicable. 

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

35 

Not applicable. 

Item 5. OTHER INFORMATION 

Not applicable. 

Item 6. EXHIBITS AND REPORTS ON FORM 8-K 

1. (a) The following documents are filed as part of this report: 
Financial Statement of the Company (unaudited), including Balance Sheet, Statement of Income and Loss, Statement of Changes in Stockholders Equity, Statement of Cash Flow and Notes to Financial Statement as at and for the period ended September 30, 1997. 

(b) The Exhibits which are listed on the Exhibit Index attached hereto: Not applicable. 

2. No reports on Form 8-K were filed by the registrant during the period covered by this report. 

SIGNATURES 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

GLOBAL GOLD CORPORATION 

Dated:   November 13, 1997     By:  /S/   DRURY J. GALLAGHER
                                  ----------------------------
                                  Drury J. Gallagher, Chairman
                                  and Chief Executive Officer
                                  (Principal Executive and
                                  Financial Officer)

	

EXHIBIT B 

AMENDMENT TO WARRANT NO. W-____ 

ISSUED BY 

GLOBAL GOLD CORPORATION 

Warrant No. ___ issued by Global Gold Corporation (formerly known as Triad Energy Corp.) (the "Warrant") pursuant to the Confidential Private Placement Memorandum dated May 17, 1995, as amended, is hereby amended as follows: 

1. The first paragraph of the Warrant is hereby amended to substitute the following paragraph in lieu of the paragraph appearing therein: 

"Global Gold Corporation (formerly known as Triad Energy Corp.), a Delaware corporation (the "Company"), hereby certifies that, for value received, ____________________ _________________________________, or registered permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time or from time to time before 5:30 P.M., New York time, on December 31, 1998, _______ fully paid and nonassessable shares of Common Stock, $.001 par value, of the Company, at a purchase price per share of $.125 (such purchase price per share as adjusted from time to time as herein provided is referred to herein as the "Purchase Price"). The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein." 

2. Section 17 of the Warrant is hereby amended to read as follows: 

"The right to exercise this Warrant shall expire at 5:30 p.m., New York time, on December 31, 1998." 

3. Except as otherwise set forth herein, all of the other terms and conditions of the Warrant shall remain in full force and effect. 

Dated: December 1, 1997                 GLOBAL GOLD CORPORATION

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

End of Filing