Global Gold Corporation - International Gold Mining, Development and Exploration in Armenia and Chile

Second Quarter Report 10QSB

WARNING

This filing is best viewed using a larger screen resolution (greater than 580px). Viewing this page at a lower resolution will be difficult.
 
                     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 June 30, 1996

[_]  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 July 31, 1996 there were 22,980,742 shares of the registrant's Common
Stock outstanding.

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



                                        1

                                                                      Page 2



                                TABLE OF CONTENTS

PART I. Financial Information

Item 1. Financial Statement:
        Accountants' Compilation Report                                        4

        Balance Sheet - June 30, 1996 and December 31, 1995 ...............    5

        Statements of Income and (Loss)
        April 1, 1996 through June 30, 1996
        January 1, 1996 through June 30, 1996
        January 1, 1995 through June 30, 1996 (development stage) .........    6

        Statement of Changes in Stockholders' Equity ......................    7
        January 1, 1995 -  June 30, 1996

        Statement of Cash Flow for the six months
        ended June 30, 1996 and the period January 1, 1995
        through June 30, 1996 (development stage) .........................    8

        Notes to Financial Statements .....................................    9

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


                                        

                                                                      Page 3


                                   GLOBAL GOLD CORPORATION
                                (A DEVELOPMENT STAGE COMPANY)

                              CONSOLIDATED FINANCIAL STATEMENTS

                                      TABLE OF CONTENTS

                                        JUNE 30, 1996


                                                                                  PAGE
                                                                         -----------------------

                      Accountants' Compilation Report                              1
     EXHIBIT
- -------------------

        A             Balance Sheets - June 30, 1996 and December
                       31, 1995                                                    2

        B             Statements of Income and (Loss) - For the period
                       April 1, 1996 through June 30, 1996,
                       January 1, 1996 through June 30, 1996 and for
                       the development stage period January 1, 1995
                       through June 30, 1996                                       3

        C             Statements of Changes in Stockholders' Equity -
                       For the period January 1, 1996 through
                       June 30, 1996 and for the year January 1, 1995
                       through December 31, 1995                                   4

        D             Statements of Cash Flows - For the period
                       January 1, 1996 through June 30, 1996 and for
                       the year January 1, 1995 through December 31,
                       1995                                                        5

                      Notes to Financial Statements                               6-22

                                                                      Page 4

                               ACCOUNTANTS' COMPILATION REPORT

To the Board of Directors and Stockholders
of Global Gold Corporation

We have compiled the accompanying balance sheet of Global Gold Corporation (a
development stage company) as of June 30, 1996, and the related statements of
operations, stockholders' equity, and cash flows for the quarter then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.

The interim financial statements for the prior fiscal year were not prepared as
if the corporation was a development stage enterprise. Accordingly, such prior
year interim statements are not included herein. For comparative purposes, the
Company is including in these financial statements, its December 31, 1995
Balance Sheet and, its Statement of Changes in Stockholders' Equity and its
Statement of Cash Flows, for the full year then ended. A development stage
entity reports profit and loss information cumulatively, from the inception of
development stage activities, which is January 1, 1995 herein. We audited the
1995 statements and a going concern opinion was rendered.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Notes 4, 8 and 9 to
the financial statements, management must continue to raise significant amounts
of capital in accordance with its contemplated requirements as a joint venture
partner. Management is currently vigorously seeking to raise investment capital.
This matter raises 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.


                                             /s/ Marks Shron and Company

                                                                    Page 5
                                                                 Exhibit A

                                   GLOBAL GOLD CORPORATION
                                (A DEVELOPMENT STAGE COMPANY)

                              CONSOLIDATED FINANCIAL STATEMENTS

                                        BALANCE SHEETS

                                            ASSETS
                                                              JUNE 30, 1996   DECEMBER 31, 1995
                                                                (UNAUDITED)         (AUDITED)
                                                             --------------     -----------
CURRENT ASSETS
  Cash                                                       $          606     $    63,299
                                                             --------------     -----------

NONCURRENT ASSET
  Notes receivable, net of allowance for bad
   debts of $120,000 - Note 11                                     205,000          205,000
                                                              ------------       ----------

OTHER ASSETS
  Organization costs                                                 9,601            3,200
  Investment in certain mining interests - Notes 6, 8 and        1,150,000        1,150,000
10
  Deferred costs - Note 14                                         465,621          260,701
                                                               -----------      -----------
                                                                 1,625,222        1,413,901

TOTAL ASSETS                                                    $1,830,828       $1,682,200
                                                                ==========       ==========

                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Officers' compensation payable - Note 12                      $  200,000      $   100,000
  Accounts payable and accrued expenses - Note 13                  423,704          195,614
  Notes payable - seller - Note 15                                 146,506          146,506
  Notes payable - officer - Note 15                                 42,500                   -
                                                                ----------    ----------------
                                                                   812,710          442,120
                                                                ----------      -----------

STOCKHOLDERS' EQUITY - Exhibit C
  Common stock $.001 par, 100,000,000 shares authorized
   22,980,742 shares issued and outstanding - Note 9                20,981           20,981
  Paid-in capital - Dormant period                               3,228,519        3,228,519
  Paid-in capital - Development stage                            1,259,573        1,259,573
  Retained earnings - Dormant period                            (2,907,648)      (2,907,648)
  Retained earnings - Development stage                           (583,307)        (361,345)
                                                              -------------     ------------
                                                                 1,018,118        1,240,080

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $1,830,828       $1,682,200
                                                                ==========       ==========
See the accompanying notes and Accountants' Compilation Report.


                                                                        Page 6
                                                                     Exhibit B

                                   GLOBAL GOLD CORPORATION
                                (A DEVELOPMENT STAGE COMPANY)

                              CONSOLIDATED FINANCIAL STATEMENTS

                               STATEMENTS OF INCOME AND (LOSS)


                                                                                           JANUARY 1, 1996
                                                    APRIL 1, 1996      JANUARY 1, 1996      (DEVELOPMENT
                                                       THROUGH             THROUGH             STAGE)
                                                    JUNE 30, 1996       JUNE 30, 1996          THROUGH
                                                      (UNAUDITED)         (UNAUDITED)       JUNE 30, 1996
                                                 ---------------      --------------      ---------------

REVENUE                                          $             -      $            -      $
                                                 ---------------      --------------      ---------------

EXPENSES
  Officers compensation - Note 18                         50,000             100,000             200,000
  Administrative fees                                      3,015               5,415              16,358
  Legal                                                   33,017              47,221              88,233
  Accounting and auditing                                  3,750              15,173              44,775
  Transfer agent and securities fees                          23               2,360              10,891
  Proxy costs                                                 80                 191              26,746
  Office expense                                           2,517               2,727               5,432
  Travel                                                   9,168              20,762              39,848
  Rent - Note 1                                            9,000              18,000              18,000
  Business promotions                                      1,589               1,589               1,589
                                                  --------------       -------------        ------------
                                                         112,159             213,438             451,872
                                                  --------------       -------------        ------------

OPERATING (LOSS)                                        (112,159)           (213,438)           (451,872)
                                                  --------------       -------------        ------------

OTHER INCOME (EXPENSES)
  Interest and royalty income                                  -                   4                 484
  Organization costs                                           -              (3,200)             (4,800)
  Interest expense                                        (2,862)             (5,152)             (5,915)
  Provision for bad debts - Note 11                            -                   -            (120,000)
                                                 ---------------      ---------------       -------------
                                                          (2,862)             (8,348)           (130,231)
                                                 ---------------      ---------------       -------------

(LOSS) BEFORE INCOME TAXES                              (115,021)           (221,786)           (582,103)

  Income taxes                                                 -                (176)            (1,204)
                                                 ---------------      ---------------     ---------------

NET (LOSS)                                       $      (115,021)        $  (221,962)        $  (583,307)
                                                 ================        ============        ============

NET (LOSS) PER SHARE (Note 20)                   $        (.0055)      $     (.0106)       $     (.0428)
                                                 ================      =============       =============

See the accompanying notes and Accountants' Compilation Report.

                                                                         Page 7
                                                                      Exhibit C

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                                         Paid-in Capital   Retained Earnings   Retained Earnings  
                             Shares        Common Stock  (Dormant Period)  (Dormant Period)  (Development Stage)  
                             ------       -------------- ----------------  ---------------   -------------------  
Stockholders' equity                                                                                             
  December 31, 1994        8,980,742     $    89,807      $   3,147,693     $ (2,907,648)   $           -         
                                                                                                                 
Net Loss Jan. 1 - Dec.  31                         -                  -                          (361,345)        
                                                                                                                 
                                                                                                                 
Adjustment re: restatement   (80,826)         80,826                  -                -                -         
  of par value - Note 1                                                                                          
                                                                                                                 
Eyre acquisition -        10,000,000          10,000                                                              
Note 6                                                                                                           
                                                                                                                 
Proceeds through private                                                                                         
offering - Note 16         2,000,000           2,000                 -                -                -          
                                                                                                                 
Stockholders' equity                                                                                             
  December 31, 1995       20,980,742     $    20,981      $   3,228,519     $ (2,907,648)   $      (361,345)      
                         ===========     ===========      =============     ============    ================      
                                                                                                                 
Net Loss - January 1, -                                                                                          
  June 30, (Exhibit B)             -               -               -                 -             (221,962)      
                                                                                                                 
Stockholders' Equity -                                                                                           
  June 30, 1996           20,980,742     $    20,981      $   3,228,519     $ (2,907,648)   $      (583,307)      
                         ===========     ===========      =============     ============    ================      



                          Paid-in Capital
                          (Development Stage)     Total
                          ------------------   ----------
Stockholders' equity      
  December 31, 1994       $            -      $   329,852
                          
Net Loss Jan. 1 - Dec.  31                       (361,345)
                          
                          
Adjustment re: restatement             -
  of par value - Note 1   
                          
Eyre acquisition -               840,000          850,000
Note 6                    
                          
Proceeds through private  
offering - Note 16               419,573          421,573
                          
Stockholders' equity      
  December 31, 1995       $    1,259,573      $ 1,240,080
                          ==============      ===========
                          
Net Loss - January 1, -   
  June 30, (Exhibit B)                 -         (221,962)
                          
Stockholders' Equity -    
  June 30, 1996           $    1,259,573      $ 1,018,118
                          ==============      ===========

See the accompanying notes and Accountants' Compilation Report.


                                                                          Page 8
                                                                       Exhibit D

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                            STATEMENTS OF CASH FLOWS


                                                                  JANUARY 1, 1996    JANUARY 1, 1995
                                                                    THROUGH            THROUGH
                                                               DECEMBER 31, 1995  JUNE 30, 1996
                                                                  (AUDITED)         (UNAUDITED)
                                                                  ---------         -----------
CASH FLOWS FROM DEVELOPMENT STAGE ACTIVITIES:
  Net loss                                                        $  (221,962)   $   (361,345)
  Adjustments to reconcile net loss to net
   cash provided by operating activities:
     (Increase) decrease in:
      Provision for bad debt included in net loss                           -         120,000
      Organization costs                                               (6,401)         (3,200)
     Increase (decrease) in:
      Accounts payable and accrued expenses                           328,090         289,114
                                                                  -----------     -----------

        Net Cash Provided by Development Stage Activities              99,727          44,569
                                                                  -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in certain mining interests - net of financing                 -        (153,494)
  Deferred costs - mining interests                                  (204,920)       (260,701)
                                                                  ------------    ------------

      Net Cash (Used) by Investing Activities                        (204,920)       (414,195)
                                                                  ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Net proceeds from private placement offering                              -         421,573
  Note payable - officer                                               42,500               -
                                                                 ------------    ----------------

      Net Cash Provided by Financing Activities                        42,500         421,573
                                                                 ------------      ----------

NET INCREASE (DECREASE) IN CASH                                       (62,693)         51,947

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

CASH - end                                                       $        606      $   63,299
                                                                 ============      ==========

SUPPLEMENTAL CASH FLOW INFORMATION
  Income taxes paid                                              $        990    $        324
                                                                 ============    ============
See the accompanying notes and Accountants' Compilation Report.


                                                                          Page 9

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



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
          since its inception until January 1, 1995. Accordingly, the Company
          has been dormant until 1995. 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. These Republics, which
          recently won their independence, may be prone to political and
          economic turmoil which may result in various adverse ramifications.

          The Company changed its name during 1995 from Triad Energy Corp. to
          Global Gold Corporation, and 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.

          The Company has offices in New York City in premises operated by the
          Company's President, Mr. Drury Gallagher and is charging rent in the
          amount of $3,000 per month to the corporation 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) have been earning salaries.

          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.

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

          As a result of ownership changes, the Company will not be able to
          benefit from all of its net operating loss carryforwards. (Other
          income tax matters - Note 19).

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





                                                                      Page 10
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



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 McNell in
          July, 1981. The case has long since gone through the judicial system
          and the McNells are no longer, officers, directors, employees 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 year 1994 and 1995,
          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. 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.






                                                                      Page 11
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 4:   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, with the
          exception of a negligible amount of royalty income from oil leases 
          and interest income derived from the funds recovered and 
          subsequently invested by the 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 is 
          securing, significant additional investor and/or lender financing, 
          political risk insurance, fully executed joint venture agreements 
          with the Republic(s), 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 and copper, if any.  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:   ORIGINAL CONTEMPLATED TRANSACTION WITH EYRE AND AFFILIATE

          The Company originally entered into a definitive asset purchase
          agreement with Eyre concerning Armenian, Georgian and Australian
          mining projects dated as of June 30, 1995. Under the contemplated
          Agreement, the Company agreed to cause the delivery to Eyre of (i)
          20,000,000 shares of its Common Stock, (ii) warrants (the 
          "Acquisition Warrants") to purchase 10,000,000 shares of Common 
          Stock up to three years after the closing and (iii) $300,000, 
          payable in cash and notes, and (iv) assume and discharge all 
          liabilities of Eyre (other than certain items). The Company agreed 
          to issue options to Autosport (Asia) Pte, LTD (an affiliate of Eyre) 
          to acquire 2,000,000 shares of common stock.

          In exchange, Eyre agreed to sell to the Company (or its designated
          subsidiary or subsidiaries) (i) an undivided 20% interest in Eyre's
          interest in two Australian exploration licenses in a lead/zinc mining
          prospect known as Ediacara; (ii) all of Eyre's potential interest in
          the Armenian gold mining project described herein and (iii) all of
          Eyre's potential interest in the Georgian gold and copper mining
          project, described herein.




                                                                      Page 12


                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996


NOTE 6:   RESTRUCTURING AGREEMENT WITH EYRE (DATED DECEMBER 1, 1995)

          The contemplated Agreement (Note 5) closed effective as of 
          December 1, 1995, and pursuant to a Restructuring Agreement 
          also effective as of December 1, 1995, the acquisition of an 
          undivided 20% interest in Eyre's interest in two Australian 
          exploration licenses concerning an Australian lead/zinc mining 
          prospect known as Ediacara were eliminated.

          Pursuant to the December 1, 1995 Restructuring Agreement, the 
          Company paid Eyre for the Armenian and Georgian interests as follows:

           Cash                                $   153,494
           Note payable (Note 14)                  100,000
           Note payable (Note 14)                   46,506
                                              ------------

                                               $   300,000

          The Agreement also provided for the Company to cause the delivery to
          Eyre of ten million shares of stock, with an estimated value of
          $850,000, and warrants to acquire an additional four million shares
          (Note 17). The Autosport options were canceled. The Agreement also
          leaves Eyre with two out of five seats on the Board of Directors.

          The Company expects the restructured ownership will qualify it to
          acquire political risk insurance (covering currency inconvertibility,
          expropriation and political violence) as well as obtain potential
          financing from the Overseas Private Investment Corporation (OPIC).
          OPIC is a U.S. government agency whose purpose is to encourage
          American private business investment in developing countries, newly
          emerging democracies, and fledgling free market economics.



                                                                         Page 13
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996


NOTE 6:   RESTRUCTURING AGREEMENT WITH EYRE (DATED DECEMBER 1, 1995)
          (continued)

          The Restructuring Agreement provides as additional consideration to
          Eyre a 2% overriding production royalty subject to adjustment in the
          event the ownership of the Company were to become 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 to 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 tailings
          project (Note 8) is excluded from the royalty arrangement. In the
          event Global 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%. Pursuant to
          Article V of the Restructuring Agreement, Global shall pay to Eyre
          $8,333 per month to be applied against the royalty arrangement. The
          Agreement shall commence with the closing of the funding of the
          tailings project of the Armenian Agreement.

          The Agreement provides 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.

          A trust for the benefit of Kevin Parry and members of his family
          purportedly own approximately 35% of Eyre, which has not applied for a
          listing on the Australian Stock Exchange. In 1994, Mr. Parry was
          criminally convicted of breaching his fiduciary duties under
          Australian securities law while serving as a director of two
          corporations. In 1995, Mr. Parry was tried in a criminal action in the
          Australian courts for allegedly misappropriating property from an
          entity, and found innocent. However, management first learned of this
          latter action in February, 1996, and had previously failed to disclose
          the action in the Company's proxy materials seeking approval of the
          Eyre Purchase Agreement.




                                                                         Page 14

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 7:   PATTERSON, BELKNAP, WEBB & TYLER

          Global has retained the New York City law firm of Patterson, Belknap,
          Webb & Tyler (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. Krickorian (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 $100,000,000 (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%. Management is accruing the base
          quarterly fee of $25,000 for financial reporting purposes herein,
          which is included in deferred costs.

          PBWT will 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 $600,000 for the period July 1, 1995 to July 1, 1999, and the
          minimum quarterly payment is $10,000. Through the balance sheet date,
          PBWT has only billed the Company $40,000, which is included in
          deferred costs. The overall fee is subject to adjustment pursuant to
          the retainer agreement. PBWT has advised that it has received
          information that the subject Georgian property is actively being
          offered for investment purposes to other investors. PBWT has requested
          from the Republic of Georgia copies of all agreements filed with
          regard to the entire "Madneuli" complex. Thereafter, the Company will
          pursue a more formal legal arrangement (Note 10).



                                                                         Page 15
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 8:   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 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. Besides its full consent, the decree
          provided that the operation could start only after a guarantee of
          $250,000 was made to 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 (see
          Note 9).

          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 (see Note 9).

          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 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
          dollars for the purpose of purchasing tailings processing equipment
          and providing working capital to the project.


                                                                         Page 16
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996





NOTE 8:   THE ARMENIAN JOINT VENTURE AGREEMENT (CONTINUED)

          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 (see Note 9).

          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
          out 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 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 adapted 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, Global'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 engineer has preliminary 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.





                                                                         Page 17
                            GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996


NOTE 9:   GUARANTEES- LONDON AND INTERNATIONAL MERCANTILE LTD. (L.I.M.)
          - SUBSEQUENT EVENT

          In order to further 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 for
          $250,000 and each guarantee is collateralized by 1,000,000 shares of
          the company's stock and accompanied by warrants to purchase an equal
          number of common shares, 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

          Accordingly, L.I.M. holds 2,000,000 common shares and 4,000,000
          warrants 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, the company granted each of them options to purchase
          250,000 shares of the company's common stock at $1/share, until July
          18, 1999.


                                                                         Page 18

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996


NOTE 9:   GUARANTEES- LONDON AND INTERNATIONAL MERCANTILE, LTD.
          (L.I.M.) - SUBSEQUENT EVENT (CONTINUED)

          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. During such period of time, the
          company would not be eligible to purchase political risk insurance
          from OPIC (Note 6). However, the company intends to sell additional
          common stock to U.S. persons and management has stated that it is in
          negotiation with a number of potential U.S. investors. Alternatively,
          political risk insurance may also be acquired from agencies of the
          World Bank, or the company may seek out private sources.

          The company is also planning to list the company's stock on a Nasdaq
          (U.S.) exchange, although no date for such has been set.

          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 (Note 8).
          At the time of issuance of this report, VZK (Note 7) has indicated
          that Armenia has accepted the L.I.M. guarantee, and that written
          acceptance of such from Armenia should be forthcoming shortly. The
          company in turn has 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 the
          firm of Kilborn SNC/Lavalin Inc. of Toronto, Canada to do a
          feasibility study of these matters. Kilborn 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.




                                                                         Page 19
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996





NOTE 10:  THE GEORGIAN AGREEMENT (NOT FILED)

          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 filed, and it has no definitive agreement granting it fixed
          rights to mining production or processing in Georgia. The Company
          intends to commence discussions with the Government concerning the
          above, but has not yet done so.

          The current Agreement calls for each partner to advance capital in a
          50/50 ratio (Georgia apparently is not contemplating transferring
          title of mining rights to the venture). 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%

          *After recovery of capital costs, these percentages are to increase to
          2.5%.

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

          The Joint Venture shall not be required to pay Georgian income tax on
          the profits obtained within 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 Venture may apply
          to the Ministry of Finance for additional taxation privileges.
          Reinvested capital will be exempt from taxation.

          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 could materially and adversely affect the Company.




                                                                         Page 20
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996





NOTE 11:     NOTES RECEIVABLE

          The Company holds notes receivable (purchased in prior years), as
          follows:

      AMOUNT                INTEREST RATE                 DEBTOR
      ------                -------------     ---------------------------------
      300,000                Prime + 2%       Jet-Line Environmental Services, 
                                              Inc. (Jet-Line)
       25,000                   (1)           Envirotherm, Heating and Cooling 
                                              Systems, Inc. (Envirotherm)
     (120,000)*
     --------
     $205,000
     ========

          The Jet-Line note as more fully described in the documents, is
          convertible into 15% of Jet Line's common stock, or 20% of Jet-Line's
          common stock if the Company agrees to waive all accrued interest owing
          it on the note. The note is now due December 31, 1996, as Jet-Line has
          informed the Company that it was unable to make payment as of April
          21, 1996, as required. Other terms and conditions of the note were
          also modified. The note is secured by U.C.C.'s on certain equipment.
          Jet-Line has recently suffered recurring operating losses and is in
          default of a small business administration loan. Accordingly,
          management has not accrued interest on the Note. Jet-Line does own
          certain valuable assets.

          Envirotherm is engaged in manufacturing and selling geothermal heating
          and cooling units, and other products. The Company began shipment of
          the products in July, 1995, and is currently experiencing operating
          losses. Mr. Gallagher, President of the Company, owns 4% of the common
          stock of Envirotherm. The note is in default and the parties are
          attempting to renegotiate the terms.

          (1) No interest rate is stated. The Note increases incrementally if it
          is not paid timely.

          *Allowance for Doubtful Accounts (general reserve)


NOTE 12:  OFFICERS' COMPENSATION PAYABLE

          Officers' compensation payable consists of the following:

                 Drury Gallagher, President                         $  100,000
                 Robert Garrison, Vice President                       100,000
                                                                   -----------
                                                                     $ 200,000
                                                                   ===========


                                                                         Page 21
                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996




NOTE 13:  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

          Accounts payable and accrued expenses include the following:

                 Legal - General Counsel                             $  70,784
                 Legal - Patterson, Belknap, Webb & Tyler              266,317
                 Other Miscellaneous                                    86,603
                                                                    ----------
                                                                      $423,704
                                                                    ==========


NOTE 14:  DEFERRED COSTS

               Deferred costs include the following:

                 Legal - Patterson, Belknap, Webb & Tyler             $335,423
                 (Note 7)
                 Legal - General Counsel                                79,287
                 Engineering                                            24,684
                 Research and Analysis                                  16,227
                 Overseas travel                                        10,000
                                                                    ----------
                                                                      $465,621
                                                                    ==========



NOTE 15:  NOTES PAYABLE

          On December 1, 1995, the Company closed the Eyre agreement to purchase
          certain mining rights (Note 6). Pursuant to the agreement, the Company
          issued two $100,000 promissory notes.

          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.




                                                                         Page 22

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 15:  NOTES PAYABLE (CONTINUED)

          The second, with interest at 5.65% per annum, is payable in full no
          later than September 30, 1996. An extension on this note had been
          granted with the proviso that the Company will promptly prepay the
          note if funds become available. As of the balance sheet date, the
          Company reduced the outstanding principal to $46,506.

          Drury Gallagher is lending the company additional funds at 10% per
          annum simple interest, on an unsecured basis. The notes evidencing the
          loan are due on or before December 31, 1996, or earlier, out of the
          proceeds of any financing obtained by the Company of $2,000,000 or
          more. At the balance sheet date, such loans totaled $42,500.

          The stated value of the notes is their fair value.


NOTE 16:  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 September 30, 1996. Expenses in connection with the offering were
          $78,427.

          Each $1,000 convertible note entitled the holder to 4000 shares of
          common stock, and warrants to purchase 8000 shares of common stock at
          an exercise price of $.50 per share at any time before September 30,
          1996. The expiration date was subsequently extended to September 30,
          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 Eyre closing, the entire $500,000 of
          convertible notes were exchanged for 2,000,000 shares of common stock.

                                                                         Page 23

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 17:  WARRANTS OUTSTANDING

          The Company had warrants outstanding as follows:

                             # Shares Right    Price/Share     Expiration
       Warrant Holder(s)     to Purchase (2)  Exercisable at       Date
       -----------------     ---------------  --------------       ----

     Eyre and affiliate (1)     4,000,000          .50          11/30/98
     Stockholders through
       Note Conversion          4,000,000          .50          09/30/97
     Other                         40,000          .50          11/30/98
                              -----------
                                8,040,000

     (1)  Eyre and affiliate are restricted from exercising warrants to the
          extent that they will gain voting control of the Company. Also see
          Note 6.

     (2)  Also see Note 9.


NOTE 18:  OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK
          APPRECIATION RIGHTS

          Management presently consists of Mr. Drury Gallagher and Mr. Robert
          Garrison. Mr. Gallagher has been President of the Company and a
          stockholder since 1981. Mr. Garrison was hired to oversee mining and
          related financing activities.

          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. In the case of Mr. Garrison, such amount was increased to
          $100,000 from $85,000 under an amendment to such an agreement dated
          April 12, 1996. The Agreements call for automatic annual increases as
          defined. The Board may award bonuses up to 50% of base compensation.

          The compensation package also provides for the following in accordance
          with the Company's 1995 Option Plan;




                                                                         Page 24

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996

                             INCENTIVE STOCK OPTIONS

                                  Option                  Exercise       Exercisable     Expiration
                                     #       Shares    Price Per Share    On or After        Date

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

   Drury Gallagher                  1       450,000          .22           7/21/95        7/20/00
                                    1       550,000          .22           1/21/96        7/20/00
                                    2        81,250          .22           1/21/96        7/20/00
                                    2        81,250          .22           7/21/96        7/20/00
                                    2        81,250          .22           1/21/97        7/20/00
                                    2        81,250          .22           7/21/97        7/20/00
                                    2        81,250          .22           1/21/98        7/20/00
                                    2        81,250          .22           7/21/98        7/20/00
                                    3        12,500          .22           Various        7/20/00
                                          ---------
                                          1,500,000
                                          =========
                                    4       250,000         1.00           7/17/96        7/18/99*
                                          =========


   Robert Garrison                  1      195,000           .20           7/21/95        7/20/05
                                    1       48,750           .20           1/21/96        7/20/05
                                    1       48,750           .20           7/21/96        7/20/05
                                    1       48,750           .20           1/21/97        7/20/05
                                    1       48,750           .20           7/21/97        7/20/05
                                    1       48,750           .20           1/21/98        7/20/05
                                    1       48,750           .20           7/21/98        7/20/05
                                    2       12,500           .20           Various        7/20/01
                                         ---------
                                           500,000
                                         =========
                                    4      250,000          1.00           7/19/96        7/18/99*
                                         =========

   *See Note 9 to the financial statements


                            STOCK APPRECIATION RIGHTS

     Mr. Gallagher and Mr. Garrison each hold rights for 500,000 units of Common
     Stock which were granted at .20 per share and are each entitled to shares
     based upon increased appreciation of such units at the formula price under
     certain circumstances:

                                              Percentage of units
            If the company's market         which are utilizable to
            capitalization is between           acquire shares
            -------------------------           --------------

             $100,000,000 to 199,999,999           50.00%
                

             $200,000,000 to 299,999,999           66.67%
                
             $300,000,000 or more                  75.00%

     Mr. Gallagher and Mr. Garrison may each potentially acquire up to 375,000
     shares of the Company's common stock if they have not already exercised
     their rights while the market capitalization was below $300,000,000.



                                                                         Page 25

                             GLOBAL GOLD CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1996



NOTE 19:  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 6). 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,
          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 to the extent they would serve as a remedy, if necessary.



NOTE 20:  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.


                                                                         Page 26


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


General

     The Company is presently engaged in the development of a gold mining
project in Armenia, and 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.

     On May 1, 1996, the Company, the Ministry of Industry of Armenia and
Armgold, the Armenian state gold enterprise, executed and delivered the Armenian
Joint Venture Agreement. The Armenian Joint Venture Agreement provides for the
formation of the Armenian Gold Recovery Company which will construct, operate
and market the gold production and provide capital and financing in a multistage
development of the Armenian gold industry. The development will begin with Stage
1 which will involve the processing of an estimated 12 million tonnes of
tailings from the Ararat processing plant averaging 1 gram of gold per tonne
(based on the Company's preliminary analysis of such tailings, although no
independent feasibility study has yet been completed) (the "Tailings Project")
and the completion of a comprehensive feasibility study and business plans for
the development of the Zod mine. Based on business plans to be approved by all
parties, Stage 2 will consist of engineering and building a gold processing
plant at the Zod mine. Stage 3 will consist of engineering and building a gold
processing plant at the Meghradzor mine.

     Since the Government of Armenia is not a party to the Armenian Joint
Venture Agreement, the Company requested that the Government issue an executive
decree confirming the right of the joint venture to export gold and the power of
the Ministry of Industry of Armenia and Armgold to make the undertakings set
forth in the Armenian Joint Venture Agreement, including, without limitation,
that such Armenian parties have good title and unencumbered ownership of all
property to be transferred to such joint venture and the power to enter into the
Armenian Agreement. The Armenian Government issued such decree in late June,
1996 requiring the Company to post a $250,000 bond insuring that it orders at 
least $5,000,000 of equipment related to Stage 1 of the project. The Company in 
fact delivered such bond. Pursuant to such Agreement, the Ministry of Industry 
and Armgold are responsible for obtaining all further permits or decrees needed 
in connection with the project.

     On May 13, 1996, the Company and Jet-Line executed and delivered an
agreement (the "Loan Extension Agreement") with respect to the convertible
promissory note in the principal amount of $300,000 issued by Jet-Line
Environmental Services, Inc. to the Company (the "Jet-Line Note") under which

          (a) the parties extended the maturity of the Jet-Line Note until
December 31, 1996, including all unpaid accrued interest, except for the interim
interest payments described in (b) below;



                                                                         Page 27



          (b) Jet-Line agreed to pay $2,000 a month in interest commencing with
June, 1996 through December, 1996 and, in addition, make an additional interest
payment equal to 5% of its earnings before income taxes and without regard to
depreciation and amortization, up to a ceiling amount of $7,500 per month, each
month during the above seven-month period;

          (c) the parties recognized that the Jet-Line Note is convertible in
whole or in part at any time, unconditionally into 20% of common stock of
Jet-Line issued and outstanding after such conversion;

          (d) Global would have the right to convert the Jet-Line Note into an
additional five percent of the issued and outstanding common stock of Jet-Line
outstanding after its conversion (thereby bringing its interest to 25% of such
stock) upon the payment of $37,500 (instead of $75,000) at the time of such
exercise; and

          (e) Global also obtained the right to convert the Jet-Line Note into
an additional five percent of the Jet-Line common stock issued and outstanding
after such conversion (thereby potentially bringing its interest to 30% of such
stock) upon the payment of an additional $100,000 in cash at the time of such
exercise.

     However, in June, 1996, Jet Line advised the Company that the Business Loan
Center, which issued a U.S. Small Business Administration guaranteed loan to
Jet-Line, objected to the implementation of any payments required to be made
under the Loan Extension Agreement on the ground that Jet-Line was in default
under its loan. As of June 30, 1996 and as of the date hereof, the parties had
not resolved such issue, and, accordingly, Jet-Line has not made any of the
monthly payments required under the Loan Extension Agreement.

Three months ended June 30, 1996 compared to three months ended June 30, 1995

     Revenues: During the three months ended June 30, 1996, the Company's
interest and royalty income was zero, which represented a decrease from the
interest and royalty income of $178 for the same period last year, since more
of the Company's assets were invested on a non-currently interest-paying basis.

     Administrative Expenses: The Company's administrative expenses for the
three months ended June 30, 1996 were $115,021, which represented an increase
from the amount of $63,640 paid in same period last year. Such increase was
attributable to the Company's payment of legal and accounting fees and expenses
in connection with its retention of counsel to regularize the Company's
corporate affairs, to implement the Company's transaction with Eyre Resources
N.L. pursuant to the Asset Purchase Agreement between such parties dated as of
June 30, 1995 and to file the Company's 10-QSB for the period ended March 31,
1996.

Six months ended June 30, 1996 compared to six months ended June 30, 1995

     Revenues: During the six months ended June 30, 1996, the Company's interest
and




                                                                         Page 28


royalty income was $4, which represented a decrease from the interest and
royalty interest of $234 for the same period last year, since more of the
Company's assets were invested on a non-currently interest-paying basis.

     Administrative Expenses: The Company's administrative expenses for the six
months ended June 30, 1996 were $221,786, which represented an increase from the
amount of $71,789 paid in the same period last year. Such increase was
attributable to the Company's payment of legal and accounting fees and expenses
in connection with its retention of counsel to regularize the Company's
corporate affairs, to implement the Company's transaction with Eyre Resources
N.L. pursuant to the Asset Purchase Agreement between such parties dated as of
June 30, 1995 and to file the Company's 10-QSB for the period ended March 31,
1996.

Liquidity and Capital Resources

     As of June 30, 1996, the Company's had total assets of $1,830,828, of which
$606 consisted of cash or cash equivalents.

     The Company's plan of operation for calendar year 1996 is

          (a) To obtain the execution and delivery by the Ministry of Industry
of the Government of Armenia of the Armenian Joint Venture Agreement initialled
by the Company with respect to the Tailings Project;

          (b) To raise up to $12,000,000 to implement the financing of the
Tailings Project in a combination of equity and debt;

          (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 and, in preparation therefor, to complete the financing of the
Tailings Project and to commence 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 June 30, 1996, the Company had liquid assets consisting of cash of
approximately $606. The Company's cash requirement in 1996 in order to meet
its contractual obligations under the Tailings Project is $5,000,000 and its
cash requirement in 1996 to meet its obligations with respect to the Zod mining
project is between $500,000 and $1,000,000. Thus, without additional financing
as described herein, the Company would be unable to meet its obligations under
the Armenian Joint Venture Agreement or meet its monthly administrative expenses
which average approximately $10,000 per month (exclusive of accrued officers'
compensation), plus additional amounts for legal and accounting costs. However,
the Company expects to receive additional financing in 1996 from several sources
and on terms acceptable to it. The Company is




                                                                         Page 29


listing below its contemplated financing sources:

          (i) Pursuant to the Offering of $500,000 principal amount of the
Convertible Notes of the Company pursuant to the private placement transaction
which the Company closed in 1995, the Company issued Warrants to purchase
4,000,000 shares of its Common Stock at an exercise price of $0.50 per share. If
the Warrants were exercised in full, the Company would receive $2,000,000 in
gross proceeds. While the Company does not know with certainty whether the
Warrants will be exercised, it does anticipate that a substantial amount thereof
will be exercised, although there can be no assurance of such result.

          (ii) (A) The Company has had discussions with several parties
interested in investing directly or indirectly in the Tailings Project to be
undertaken by the Company. The Company intends to conduct additional discussions
with such parties and others, but there can be no assurance of the outcome
thereof, except as set forth in (ii)(B) below.

          (B) On July 18, 1996, the Company, London & International Mercantile
Limited ("LIM"), a financial institution organized under the laws of England and
Wales in 1980, and HCL Communications Ltd. ("HCL"), a newly formed corporation
organized under the laws of England and Wales in 1996, executed and delivered
two agreements with respect to the financing of the Company, which are
summarized below:

          (1) Under Agreement 1, LIM issued a guarantee in the amount of
$250,000 in favor of the Ministry of Industry of Armenia guaranteeing the
performance of the Company's obligation with respect to the ordering of
$5,000,000 of equipment with respect to the Tailings Project.

          (2) Under Agreement 2, LIM issued a guarantee in the amount of
$250,000 in favor of Kilborn SNC/Lavalin, Inc.("Kilborn") guaranteeing the 
payment by the Company of any of its obligations to Kilborn. in connection with 
its performance of services related to the Company's implementation of the 
Armenian Joint Venture Agreement.

          (3) (x) As collateral security for undertaking each such guarantee,
the Company issued to LIM the following security for each guarantee: (a)
1,000,000 shares of the Company's Common Stock and (b) three warrants to
purchase 666,667, 666,667 and 666,666 shares of the Company's Common Stock,
respectively, or a total of 2,000,000 shares, at an exercise price of $3.00 per
share. The first warrant expires on the earlier of (a) June 15, 1997, or (b) 60
days after the receipt by the Company of the feasibility study from Kilborn
reflecting that the Zod mine in Armenia has proven reserves in excess of
$1,000,000,000. The second warrant expires on the earlier of (a) December 15,
1997 or (b) 60 days after the receipt by the Company of the feasibility study
from Kilborn reflecting that the Zod mine in Armenia has proven reserves in
excess of $1,000,000,000. The third warrant expires on the earlier of (a) June
15, 1998 or (b) 60 days after the receipt by the Company of the feasibility
study from Kilborn reflecting that the Zod mine in Armenia has proven
reserves in excess of $1,000,000,000. Thus, the Company issued a total of
2,000,000 shares of its Common Stock and warrants to purchase 4,000,000 shares
of its Common Stock at an exercise price of $3 per share.




                                                                         Page 30


          (y) Under each of the two Agreements, LIM is required to return all of
the shares of Common Stock of the Company and warrants to purchase such stock
issued to it as collateral if no payment is made under the respective guarantees
or, if HCL exercises its option to purchase a portion of such shares and
warrants, the portion of such shares and warrants as to which HCL does not
exercise its option. If LIM makes any payment under it guarantees, the Company
would be liable to pay such amount, and, in the event it failed to do so, LIM
would be entitled to use the collateral security held by it to satisfy the
amount due it. In such circumstances, the number of shares of Common Stock of
the Company and warrants LIM would be entitled to retain or sell to satisfy the
Company's obligations to it would be determined in accordance with applicable
English law.

          (z) As a condition to LIM's issuance of its two Company guarantees,
LIM required Drury J. Gallagher, the Company's President, and Robert A.
Garrison, the Company's Vice President to guarantee personally, on a joint and
several basis, the repayment of any amount paid by LIM pursuant to its
guarantees.*

          (4) As of the date hereof, the collateral security issued by the
Company with respect to the guarantee issued by LIM in favor of the Ministry of
Industry of Armenia is being held in escrow by an English attorney, subject to
the receipt of the written acceptance by the Ministry of Industry of Armenia of
the guarantee issued by LIM. The Company expects to receive such written 
acceptance of such guarantee, and, accordingly, it is anticipated that such 
escrow will terminate, and the property held in escrow will be released to LIM,
in the near future.

          (5) The Company also paid LIM fees of $23,750 for issuing such
guarantees, and owes LIM $5,657.50 for its legal fees and other expenses related
to the issuance of such guarantees.

          (6) LIM, in turn, granted HCL Communications Ltd. an option for 61 
days from July 18, 1996 to purchase the 2,000,000 shares of the Company's Common
Stock at $1.50 per share and the warrants to purchase 4,000,000 shares of the 
Company's common stock at $3 per share held as collateral security by it. Under 
the Agreements by and among the Company, LIM and HCL, any proceeds received by 
LIM upon the exercise of such option by HCL will be held by it as additional 
collateral security until the release of the guarantees without any payments 
being made by LIM thereunder. However, the management of the Company believes 
that, during the period that the LIM guarantees remain outstanding, the Company 
will be able to negotiate a release of all funds received by LIM in excess of 
$500,000, and receive such excess, although there can be no assurance of such 
result.**

          (7) The Company gave LIM the right to arrange a lease- purchase
rental, borrowing or other facility for the Company to acquire the equipment
needed for

- --------
     *   In consideration therefor, the Company on July 19, 1996 granted
non-qualified options to each of Messrs. Gallagher and Garrison to purchase
250,000 shares of the Company's Common Stock at an exercise price of $1.00 per
share, which expire on July 18, 1999, under the Company's 1995 Stock Option
Plan.

     **  In the event LIM and/or HCL Communications Ltd. acquire a certain 
number of shares of the Company's Common Stock, more than 50% of the shares of 
the Company's Common Stock may be temporarily owned by non-U.S. persons. In 
such event, the Company would not be eligible to purchase political risk 
insurance from the Overseas Private Investment Corporation. However, management 
has stated that such potential problems may be overcome in several ways. First, 
the Company is in negotiations to sell shares of its Common Stock to other U.S. 
persons. Second, political risk insurance may also be acquired from an agency of
the World Bank or from private sources.




                                                                         Page 31


the Tailings Project, and the Company undertook to accept such offer if the
terms were commercially competitive both as to the price of such equipment and
the lease terms with respect thereto.

     (8) The Company also agreed, among other things, to use its best efforts to
arrange for the commencement of the public trading of its Common Stock on the
NASDAQ electronic bulletin board within 60 days from July 18, 1996 and to seek a
NASDAQ Small Cap listing within 90 days of such date, provided that the Company
meets the NASDAQ equity requirements in the latter case.

     (iii) In addition to the above sources, the Company has had discussions
with various other financial and institutional sources with respect to the
financing of the Tailings Project and the Zod mining project. These discussions
have only been preliminary in nature.

     Nevertheless, except as set forth above in (ii)(B), there can be no
assurance that any one or more of the financings listed above will be
consummated, or, if so, on terms acceptable to the Company. In the event that no
contemplated financing is consummated, the Company does not have sufficient
financial resources, in management's opinion, to meet its obligations as of June
30, 1996. Accordingly, Mr. Gallagher, the President of the Company, agreed to
loan the Company such additional funds as are needed for the Company's continued
administrative needs, on an unsecured basis, at 10% simple interest per annum
payable on or before December 31, 1996 or earlier out of the proceeds of any
financing by the Company of $2,000,000 or more. Pursuant to such agreement, Mr.
Gallagher loaned the Company an aggregate of $30,000 between January 1, 1996 and
May 13, 1996, which was evidenced by a note for $30,000 dated May 14, 1996.
Since May 13, 1996, the Company requested Mr. Gallagher to loan additional
amounts to it, which he agreed to do, provided that he was repaid in full for
any of his loans made to the Company out of the proceeds of any financing
received by the Company of $500,000 or more occurring prior to December 31,
1996. Pursuant to such understanding, Mr. Gallagher loaned an additional
$72,500 through the date hereof, and the Company issued a new consolidated 
note for $102,500 and cancelled the earlier issued $30,000 note.


     The Company does not intend to engage in any project research and
development during 1996 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 employee in 
1996.


PART II


     Item 1. Legal Proceedings

     There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject.





                                                                         Page 32



     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

     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 Compilation Report of 
Independent Certified Public Accountants, Balance Sheet, Statement of Income and
Loss, Statement of Changes in Stockholders Equity, Statement of Cash Flows and 
Notes to Financial Statement as at and for the period ended 
June 30, 1996.

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






                                                                         Page 33


     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:   August 14, 1996           By: /s/ Drury J. Gallagher
                                       ____________________________
                                            Drury J. Gallagher, President
                                            and Treasurer (Principal Executive
                                            and Financial Officer)

Return to the Previous Page