SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 000-27667
Metalline Mining Company
(Exact name of registrant as specified in its charter)
Nevada 91-1766677
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
1330 E. Margaret Ave.
Coeur d'Alene, ID 83815
(Address of principal executive offices)
Registrant's telephone number, including area code: (208)665-2002
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock The OTC-Bulletin Board
Title of each class Name of each exchange
on which registered
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period as 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or other information statements incorporated by reference in
Part III of this Form 10-K or any amendments to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant at January 3, 1999 was $12,202,639.
The number of shares of common stock outstanding at such date was
8,215,095 shares. An additional 1,500,000 were deemed outstanding at
such date pursuant to presently exercisable options.
METALLINE MINING COMPANY ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR
ENDED OCTOBER 31, 1999
TABLE OF CONTENTS Page
SAFE HARBOR STATEMENT (ii)
PART I
Item 1: Description of Business 1
Item 2: Risk Factors 7
Item 3: Description of Properties 11
Item 4: Legal Proceedings 12
Item 5: Indemnification of Directors and Officers 12
Item 6: Submission of Matters to a Vote of
Security Holders 12
PART II
Item 7: Market for Registrant's Common Equity and
Related Stockholder Matters 13
Item 8: Recent Sale of Unregistered Securities 13
Item 9: Selected Financial Data 16
Item 10: Description of Securities 17
Item 11: Management's Discussion and Analysis of
Financial Condition and Plan of Operations 18
Item 12: Financial Statements and Supplementary Data 20
Item 13: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 21
PART III
Item 14: Directors and Executive Officers
of the Registrant 21
Item 15: Executive Compensation 22
Item 16: Security Ownership of Certain Beneficial Owners
and Management 25
Item 17: Certain Relationships and Related Transactions 25
PART IV
Item 18: Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 28
Index to Financials 29
Signatures F/S - 20
(i)
SAFE HARBOR STATEMENT
This report contains both historical and prospective statements
concerning the Company and its operations. Historical statements are
based on events that have already happened; examples include the
reported financial and operating results, descriptions of pending and
completed transactions, and management and compensation matters.
Prospective statements, on the other hand, are based on events that
are reasonably expected to happen in the future; examples include the
timing of projected operations, the likely effect or resolution of
known contingencies or other foreseeable events, and projected
operating results.
Prospective statements (which are known as "forward-looking
statements" under the Private Securities Litigation Reform Act of
1995) may or may not prove true with the passage of time because of
future risks and uncertainties. The Company cannot predict what
factors might cause actual results to differ materially from those
indicated by prospective statements. The risks and uncertainties
associated with prospective statements contained in this report
include, among others, the following:
[The balance of this page has been intentionally left blank.]
(ii)
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Background
Metalline Mining Company (the "Company") is a development stage
enterprise formed under the laws of the State of Nevada, on August
20, 1993, to engage in the business of mining.
Current Operations
The Company is engaged in the business of mining. The Company
currently owns one mining property located in Mexico known as the
Sierra Mojada Property. The Company conducts its operations in
Mexico through its wholly owned subsidiary corporation, Minera
Metalin S.A. de C.V. ("Minera Metalin").
The Sierra Mojada Property
The Mexican government owns the mineral rights. The exclusive
right to explore and exploit the mineral rights is granted by
issuance of a concession to a company or individual that denounces
the area desired for exploration or exploitation. After the
concession has been issued an annual fee is paid to the government
and annual Proof of Labor must be filed to maintain the title to the
concession. The annual fee is determined on the basis of the area
of the concession and the type of activity on the concession. The
concession can be held for 6 years under the exploration fee, after
6 years the exploitation fee is paid.
The Sierra Mojada Property is comprised of eight concessions
totaling 7,060 hectares (17,446 acres). The concessions were
acquired by purchase agreements from the titled owners. The Company
controls 100% of the concessions. Minera Metalin has purchased
title to the Sierra Mojada, Mojada 3 and Esmeralda concessions. A
summary of the concessions is as follows:
<TABLE>
<CAPTION>
Concession Title No. Hectares
<S> <C> <C>
Sierra Mojada 198513 4767.3154
Mojada 3 199246 1689.2173
Esmeralda 188765 117.5025
Esmeralda 1 187776 97.6839
Unification Mineros Nortenos 169343 336.7905
La Blanca 188326 33.5044
Fortuna 160461 13.9582
Vulcano 83507 4.4904
---------
Total 7060.4626
=========
</TABLE>
The Company is obligated to make payments to the
sellers of the Esmeralda I, Fortuna, U.M. Nortenos
and La Blanca concessions as follows:
<TABLE>
<CAPTION>
Purchase Schedule
Esmeralda I Fortuna Esmeralda U.M.Nortenos La Blanca Total
Annual
Date Amount Date Amount Date Amount Date Amount Date Amount Payments
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
960823 47,692
960823 17,692 961129 10,000 961129 20,000 970902 27,500 970902 10,000 115,192
970529 20,000 980302 27,500 980302 5,000
970823 17,692 971129 10,000 971129 30,000 980902 82,500 980902 5,000 251,538
980529 30,000 990302 82,500 990302 10,000
980823 26,538 981129 25,000 981129 50,000 990902 110,000 990902 10,000 369,038
990529 100,000 000302 10,000
990823 26,538 991129 30,000 000830 3,270,000 000902 10,000 3,325,384
000823 35,384 010302 10,000
010823 53,076 010902 50,000 113,076
TOTAL 176,920 75,000 250,000 3,600,000 120,000 4,221,921
- --------------
All amounts are U.S. Dollars.
The Company is current on its annual payments.
</TABLE>
Location and Access
The Sierra Mojada Mining District is located in the west central
part of the state of Coahuila, Mexico, near the Coahuila-Chihuahua
state border some 200 kilometers south of the Big Bend of the Rio
Grande River. The principal mining area extends for some 5
kilometers in an east-west direction along the base of the
precipitous, 1,000 meter high, Sierra Mojada Range.
Vehicle access from Torreon is by 200 kilometers on paved road
to the Penoles chemical plant at Laguna del Rey and then another 50
kilometers of gravel road to Sierra Mojada. There is a well
maintained, 1200 meter, gravel airstrip. The District has high
voltage electric power and is served by a rail line, which was
constructed from Escalon to the district in 1891 and later connected
to Monclova.
This part of Mexico is remote, arid and sparsely populated; the
region is known as the "zone of silence".
History
The initial discovery of silver ore in the Sierra Mojada
Property was made in 1879. Over the next 12 years numerous small
mines developed along an oxidized silver lead ore body known as the
"lead manto" (a bed, layer or strata). The lead manto was mined
continuously for 3 kilometers and discontinuously for another 2
kilometers. Ore was selectively mined and hauled by wagon to
Escalon on the railroad main line from El Paso to Mexico City; from
there it went to smelters in Mexico and the United States.
In September of 1891 the Mexican Northern Railroad completed its
spur line from Escalon to the district. Rail access stimulated
development and the period from 1891 to the late 1920's was the peak
of productivity of the district. The main lead manto was nearly
mined out by 1905, the same year that the discovery of the first
silver-copper ore body was made. Additional discoveries of silver,
silver-copper, and silver-copper-zinc-lead ores provided production
through the 1930's. Between 1922 and 1931 additional lead manto
silver-lead ore was discovered and mined to the southwest for some
1,400 meters under the Sierra Mojada range, this manto was
eventually mined for more than 2 kilometers.
By the mid 1920's many of the mines were under control of
Penoles Corporation ("Penoles") and ASARCO Corporation ("ASARCO").
ASARCO ceased mining in the district in the late 1930's. Both
companies still owned properties during the 1940's and Penoles mined
until the late 1950's when the Mineros Nortenos Cooperative acquired
the Penoles properties. The Mineros Nortenos Cooperative ("Mineros
Nortenos") has operated the San Salvador, Encantada and Fronteriza
mines since 1957 and direct shipped high-grade oxide zinc and lead-
silver ore to smelters in Mexico.
The lead manto produced 3 to 3.5 million tonnes prior to 1905
with another 1.5 million tonnes of similar ore coming from other ore
bodies to the west and to the southwest.
Mineros Nortenos has mined about 600,000 tonnes of predominantly
oxide zinc ore with grades of 20 to 50% zinc. Some of this ore was
oxide silver-lead and silver, copper, zinc and lead sulfide at
grades of 1 to 4 kilogram silver per tonne, 1 to 5% copper, 10 to
30% zinc and 30 to 70% lead. Production records from 1978 to 1981
for the San Salvador mine average 33.5% zinc.
The Sierra Mojada Property has produced in excess of 10 million
tonnes of high-grade ore that graded in excess of 30% lead, 20%
zinc, 1% copper and 1 kg (31 ounces) silver per tonne that was
shipped directly to the smelter. The district has never had a mill
to concentrate ore. All of the mining was done selectively for ore
of sufficient grade to direct ship; mill grade ore was left unmined.
More than 50 kilometers of underground workings are spread through
the 5 kilometer by 2 kilometer area from which more than 45 mines
have produced ore. The deepest workings have ore grade
mineralization and provide some of the best targets for reserve
development. In spite of the amount of historic work, when a map of
all of the historic workings is viewed there is much more unexplored
area in the 5 by 2 kilometer area than has been explored and the
vertical extent greater than 100 meters is totally unexplored.
The sediments are predominantly carbonate with some sandstone
and shale and the attitudes are near horizontal. The mines are dry
and the rocks are competent, there is very little unstable ground
and the ore thickness is amenable to high volume mechanized mining
methods. Sierra Mojada has ideal mining conditions and grades for
low cost production.
Based upon the foregoing, the Company is of the opinion that the
magnitude of the Sierra Mojada mineral system and its exploration
potential is capable of providing new reserves for many more years
of mining. Because, however, the reserves are located below the
surface of the earth, there is no assurance as to the quantity or
quality of the undeveloped reserves.
Geology
The Sierra Mojada District is located on the southern margin of
the Sabinas Basin, a large rift basin in northeastern Mexico, which
formed during Late Jurassic and Cretaceous tectonic extension.
Beginning in Latest Jurassic the Sabinas basin began to form
with the basin being dropped down to the north relative to the
Coahuila Peninsula that was being uplifted to the south. The Sierra
Mojada fault is, possibly, one of the faults that contributed to the
rift basin forming process, which occurred over a time span in
excess of 80 million years. During basin formation the Sierra
Mojada fault, if present, would have been a normal fault due to
crustal extension. The most recent motion on the Sierra Mojada
fault is post mineral and reverse. The reverse motion most likely
occurred as a result of Late Cretaceous Laramide tectonic
compression.
Stratigraphy
Upper Jurassic and Lower Cretaceous marine carbonate, sandstone
and shale, the La Casita and Taraises Formations, are overlain by
Lower Cretaceous red beds, the San Marcos Formation, composed of
conglomerate, sandstone, siltstone, shale, tuff and mineralized
carbonate sediments. The San Marcos is overlain by a marine
carbonate sequence of Early and Middle Cretaceous age, the Cupido,
La Pena, Aurora and Georgetown Formations (refer to district cross
section).
Mineralization
Sierra Mojada has two mineral systems separated by the east west
trending Sierra Mojada Fault. North of the fault the mineralization
is chemical sedimentary disseminated to massive silver, copper, zinc
and lead sulfide deposited in the Taraises Formation. South of the
fault the mineralization is deposited in the Aurora Formation and
consists of
oxide zinc and lead mantos and solution cavern filling, karst and
interformational breccia. Surrounding and extending beyond the
solution cavern stopes there are mantos known as the red zinc
mantos. These are pervasive, red, high iron, oxide zinc beds.
These two mineral systems have been brought into proximity to
each other by post mineral reverse motion on the Sierra Mojada Fault
that faults the San Marcos and Taraises Formations against Aurora.
The San Marcos and Taraises Formations are 25 million years older
than the Aurora Formation.
The mineral systems have been mined in an east-west direction
for over 5 kilometers, in a north-south direction in excess of 2
kilometers and for a vertical extent of 100 meters.
The Sierra Mojada mineral systems are chemical sedimentary and
brine related. The ore minerals are in chemical equilibrium with
the host rocks, which are limestone, dolomite, carbonate shale and
sandstone. There is no alteration, silicification or skarn
mineralization.
Mineralization has been episodically deposited in certain beds,
resulting in a vertical repetition of mineralized beds and ore
bodies in the Taraises Formation and in the Aurora Formation. This
Intermittent or episodic deposition of mineralization has occurred
over at least the 25 million years represented by these two
formations and it is possible that this process was ongoing during
deposition of the other units above the basement rocks. The
thickness and character of the rock units below the existing
workings is unknown and will have to be determined by drilling.
With the evidence of the repetitive nature of the mineralization the
potential for additional discovery at depth is high.
Exploration and Development.
The Company has spent the last 3 years collecting historic data
on the district, geologic mapping and sampling of the surface and
the underground mines and has completed a reverse circulation
drilling program consisting of 24 holes and a total of 6630 meters
of drilling. The drill program was the first step in developing ore
reserves at Sierra Mojada. Fifteen of the holes were drilled on a
grid of about 30 meters by 60 meters on the Encantada North zone,
north of the Sierra Mojada fault, to evaluate the silver, copper,
zinc and lead mineralization of the Encantada North target. Nine
holes were drilled in the San Salvador, Encantada and Fronteriza
mines to test the oxide zinc mineral system south of the Sierra
Mojada fault. These holes were spaced at about 100 to 200 meter
intervals over a 1500 meter extent in the three mines. The results
confirm and expand the mineralization of the Encantada North and the
oxide zinc mantos. Multiple intersections of ore grade
mineralization over thick intervals were obtained, with some
intersects of exceptional grade and thickness. The results of the
drill program have been released in news releases dating from
February through September 1999 and are available from the Company.
Exploration and evaluation of the mineral systems of the
district and the Company's total land position to define the limits
of the known mineralization and for discovery of new mineralization
will continue and accelerate.
The oxide zinc system in the San Salvador, Encantada and
Fronteriza mines and the Encantada North silver, copper, zinc, lead
zone will move to development stage for drilling, sampling and
defining of an ore reserve. This will involve surface and
underground drilling and channel sampling in sufficient detail to
determine the tonnage and grade of an ore reserve and perform a
feasibility study, including metallurgical studies, to determine if
the reserves are commercially viable.
Costs of these programs at this time have not been estimated,
but will be estimated as each stage of the exploration and
development programs are planned and budgeted. All costs through
feasibility will be paid by North Limited under the Joint Venture
agreement with North. Additional financing by the Company will be
required to complete its land payment obligations and for corporate
overhead.
Joint Venture Agreement
Minera Metalin has signed a Joint Venture Letter Agreement with
Minera North S. de R.L. de C.V. a wholly owned subsidiary of North
Limited of Melbourne Australia, a major international mining
company. The letter agreement is to be followed with a formal Joint
Venture Agreement. The agreement allows North to acquire a 60%
participating interest in Sierra Mojada by exploring and completing
a feasibility study (which shall be of a standard acceptable to
international banks as enabling them to lend funds to the project)
over a "Earn In Period" of not more than 5 years. If a decision is
made to proceed with the development of any mine, North shall
arrange financing for the development on behalf of both parties.
Timetable
Definition of a 2 million tonne sulfide reserve and completion
of a feasibility study is estimated to take 1.5 to 2 years.
Construction and development of a 1000 tonne per day mine and mill
will require an additional 2 years.
Defining a 20 million tonne oxide reserve would require 2 to 3
years of drilling, an additional 1 to 2 years for completing a
feasibility study and about 5 years to develop the mine and build a
hydrometallurgical plant.
There is potential for long-term reserve expansion within the
known extent of the mineral systems. There is potential to discover
ore deposits in unexplored portions of the land position and at
depth in unexplored stratigraphy. There is however, no assurance
that the Company will have the monetary resources to continue to
explore for, develop, or retrieve any of the minerals located in the
Sierra Mojada Property.
ITEM II. RISK FACTORS
1. EXPLORATION STAGE MINING COMPANY WITH NO HISTORY OF
OPERATION. The Company is in its exploration stage, has no
operating history and is subject to all the risks inherent in a new
business enterprise. The likelihood of success of the Company must
be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with a
new business, and the competitive and regulatory environment in
which the Company will operate. See "Business."
2. NO COMMERCIALLY MINEABLE ORE BODY. No commercially mineable
ore body has been delineated on the properties, nor have any
reserves been identified. See "Business."
3. RISKS INHERENT IN THE MINING INDUSTRY. The Company is
subject to all of the risks inherent in the mining industry
including, without limitation, the following: competition from a
large number of companies, many of which are significantly larger
than the Company, in the acquisition, exploration, and development
of mining properties; the concession holder must pay fees and
perform labor on the concessions to maintain the concessions title;
exploration for minerals is highly speculative and involves
substantial risks, even when conducted on properties known to
contain significant quantities of mineralization, and most
exploration projects do not result in the discovery of commercially
mineable deposits of ore; operations are subject to a variety of
existing laws and regulations relating to exploration and
development, permitting procedures, safety precautions, property
reclamation, employee health and safety, air quality standards,
pollution and other environmental protection controls; a large
number of factors beyond the control of the Company, including
fluctuations in metal prices, inflation, and other economic
conditions, will affect the economic feasibility of mining; mining
activities are subject to substantial operating hazards some of
which are not insurable or may not be insured due to economic
considerations; and, the availability of water, which is essential
to milling operations.
4. NATURE OF THE INDUSTRY. Exploration, development and mining
of mineral properties is highly speculative and involves unique and
greater risks than are generally associated with other businesses.
The Company's operations will be subject to all the operating
hazards and risks normally incident to the exploration, development
and mining of mineral properties, including risks enumerated above
and below.
5. FLUCTUATING PRICE FOR METALS. The Company's operations will
be greatly influenced by the prices of silver, copper, lead, zinc
and other metals. These prices fluctuate widely and are affected by
numerous factors beyond the Company's control, including
expectations for inflation, the strength of the United States
dollar, global and regional demand and political and economic
conditions and production costs in major metal producing regions of
the world.
6. MINING CONCESSIONS. The Company holds mining concessions in
Mexico. Concessions require work and financial expenditures to
retain their validity. See "Business."
7. ENVIRONMENTAL CONTROLS. Compliance with statutory
environmental quality requirements may necessitate significant
capital outlays, may materially affect the earning power of the
Company, or may cause material changes in the Company's intended
activities. No assurance can be given that environmental standards
imposed by either federal or state governments will not be changed
or become more stringent, thereby possibly materially adversely
affecting the proposed activities of the Company.
8. GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONTROLS. The
Company's activities are subject to extensive Mexican laws and
regulations controlling not only the exploration for and development
of mineral properties, but also the possible effect of such
activities upon the environment. In its mining operations, the
Company will use certain equipment which will subject the Company to
Mexican safety and
health regulations. While the Company intends to act in compliance
with all such regulations, any adverse ruling under any regulations,
any imposition of a fine, or any imposition of more stringent
regulations could require the Company to make additional capital
expenditures that could impair its operations.
9. AVAILABILITY OF WATER SHORTAGES OF SUPPLIES AND MATERIALS.
Water is essential in all phases of the exploration and development
of mineral properties. It is used in such processes as exploration,
drilling, leaching, placer mining, dredging, testing, and hydraulic
mining. Any water that may be found will be subject to acquisition
pursuant to appropriate governing laws. The Company has definitely
not determined the availability of water at Sierra Mojada, except to
note that adequate water supplies are generally developed by
drilling, but has not determined the cost of acquisition. Both the
lack of available water and the cost of acquisition may make an
otherwise viable project economically impossible to complete. The
mineral industry has experienced from time to time shortages of
certain supplies and materials necessary in the exploration for and
evaluation of mineral deposits. The prices at which such supplies
and materials are available have also greatly increased. There is a
possibility that planned operations may be subject to delays due to
such shortages and that further price escalations will increase the
costs of the Company.
10. UNINSURED RISKS. The Company may not be insured against
all losses or liabilities which may arise from operations, either
because such insurance is unavailable or because the Company has
elected not to purchase such insurance due to high premium costs or
other reasons.
11. NEED FOR SUBSEQUENT FUNDING. The Company has an immediate
need for additional funds in order to finance its proposed business
operations. The Company's continued operations therefore will
depend upon the availability of cash flow, if any, from its
operations or its ability to raise additional funds through bank
borrowings or equity or debt financing. There is no assurance that
the Company will be able to obtain additional funding when needed,
or that such funding, if available, can be obtained on terms
acceptable to the Company. If the Company cannot obtain needed
funds, it may be forced to curtail or cease its activities.
12. NEED FOR ADDITIONAL KEY PERSONNEL. At the present, the
Company employs three full time and two part-time employees. The
success of the Company's proposed business will depend, in part,
upon the ability to attract and retain qualified employees. The
Company believes that it will be able to attract competent
employees, but no assurance can be given that the Company will be
successful in this regard. If the Company is unable to engage and
retain the necessary personnel, its business would be materially and
adversely affected.
13. RELIANCE UPON DIRECTORS AND OFFICERS. The Company is
wholly dependent, at the present, upon the personal efforts and
abilities of its Officers and Directors who will exercise control
over the day to day affairs of the Company. While the Company may
solicit business through its Officers, there can be no assurance as
to the volume of business, if any, which the Company may succeed in
obtaining, nor that
its proposed operations will prove to be profitable. As of the date
hereof, the Company does not have any commitments regarding its
proposed operations and there can be no assurance that any
commitments will be forthcoming. See "Business" and "Management."
14. ISSUANCE OF ADDITIONAL SHARES. Approximately 42,734,905
shares of Common Stock or 85.47% of the 50,000,000 authorized shares
of Common Stock of the Company will remain unissued even if all
shares offered hereby are sold. The Board of Directors has the
power to issue such shares, subject to shareholder approval, in some
instances. The Company may also issue additional shares of Common
Stock pursuant to a plan and agreement of merger with a private
corporation. Although the Company presently has no commitments,
contracts or intentions to issue any additional shares to other
persons, the Company may in the future attempt to issue shares to
acquire products, equipment or properties, or for other corporate
purposes. Any additional issuance by the Company following the
offering, from its authorized but unissued shares, would have the
effect of further diluting the interest of investors in this
offering. See "Description of Securities - Shares Eligible for
Future Sale."
15. NON-ARMS'S LENGTH TRANSACTION. The number of shares of
Common Stock issued to present shareholders of the Company for cash
was arbitrarily determined and may not be considered the product of
arm's length transactions. See "Principal Shareholders."
16. INDEMNIFICATION OF OFFICERS AND DIRECTORS FOR SECURITIES
LIABILITIES. The Bylaws of the Company provide that the Company may
indemnify any Director, Officer, agent and/or employee as to those
liabilities and on those terms and conditions as are specified in
the Nevada Business Corporation Act. Further, the Company may
purchase and maintain insurance on behalf of any such persons
whether or not the corporation would have the power to indemnify
such person against the liability insured against. The foregoing
could result in substantial expenditures by the Company and prevent
any recovery from such Officers, Directors, agents and employees for
losses incurred by the Company as a result of their actions.
Further, the Company has been advised that in the opinion of the
Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable.
17. COMPETITION. The Company believes that it will have
competitors and potential competitors, many of whom may have
considerably greater financial and other resources than the Company.
18. PUBLIC MARKET FOR SECURITIES. At present, the Company's
common stock is traded under the symbol MMGG on the OTC Bulletin
Board operated by the National Association of Securities Dealers,
Inc. This market is a thinly traded market and lacks the liquidity
of other public markets with which some investors may have more
experience.
19. CUMULATIVE VOTING, PREEMPTIVE RIGHTS AND CONTROL. There
are no preemptive rights in connection with the Company's Common
Stock. The shareholders purchasing in this offering may be further
diluted in their percentage ownership of the Company in the event
additional shares are issued by the Company in the future.
Cumulative voting in
the election of Directors is not provided for. Accordingly, the
holders of a majority of the shares of Common Stock, present in
person or by proxy, will be able to elect all of the Company's Board
of Directors. See "Description of the Securities."
20. NO DIVIDENDS ANTICIPATED. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its
Common Stock in the foreseeable future. Future dividends will
depend on earnings, if any, of the Company, its financial
requirements and other factors. Investors who anticipate the need
of an immediate income from their investment in the Company's Common
Stock should refrain from the purchase of the securities being
offered hereby. See "Dividend Policy."
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company does not own any real or personal property other
than the following eight mining concessions:
<TABLE>
<CAPTION>
Concession Title No. Hectares
<S> <C> <C>
Sierra Mojada 198513 4767.3154
Mojada 3 199246 1689.2173
Esmeralda 188765 117.5025
Esmeralda 1 187776 97.6839
Unification Mineros Nortenos 169343 336.7905
La Blanca 188326 33.5044
Fortuna 160461 13.9582
Vulcano 83507 4.4904
---------
Total 7060.4626
=========
</TABLE>
The Company's corporate offices are located at 1330 East
Margaret Avenue, Coeur d'Alene, Idaho 83815 and its telephone number
is (208) 665-2002 and FAX is (208) 665-0041. Minera Metalin has its
operations, consisting of offices, residences, shops, and warehouse
buildings, located at Calle Mina #1, La Esmeralda, Coahuila, Mexico
and its telephone and FAX number is 52 177 52100.
ITEM 4. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened
litigation and to its knowledge, no action, suit or proceedings has
been threatened against its officers and its directors.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the state of Nevada under certain circumstances
provide for indemnification of the Company's Officers, Directors and
controlling persons against liabilities, which they may incur in
such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such person
is a party, if that person's actions were in good faith, were
believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such
an action, indemnification may be awarded only after a determination
by independent decision of the Board of Directors, by legal counsel,
or by a vote of the shareholders, that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with respect
to such actions, indemnification is granted only with respect to
expenses actually incurred in connection with the defense or
settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed
to have been in the Company's best interest, and have not been
adjudged liable for negligence or misconduct.
The Company's Articles of Incorporation and Bylaws do not
contain any provisions for indemnification as described above.
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's
stockholders during the fourth quarter of 1998.
PART II
ITEM 7. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER
MATTERS.
The Company's shares are traded on the Bulletin Board operated
by the National Association of Securities Dealers, Inc. (the
"Bulletin Board") under the trading symbol "MMGG." The Company's
shares began trading November 19, 1996. Summary trading by quarter
for 1999, and 1998, and 1997 are as follows:
Fiscal Quarter High Bid[1] Low Bid[1]
1999
Fourth Quarter 4 3/8 2 3/16
Third Quarter 4 3/8 1 1/2
Second Quarter 2 1/16 3/4
First Quarter 1 3/32 7/16
1998
Fourth Quarter 1 1/8 3/8
Third Quarter 1 1/2 7/8
Second Quarter 1 9/16 1 1/8
First Quarter 2 1/8 1 1/4
1997
Fourth Quarter 2 3/8 1 3/4
Third Quarter 2 1/4 1 5/8
Second Quarter 1 7/8 5/8
First Quarter 13/16 5/8
[1] These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual
transactions.
As of October 31, 1999, the Company has 120 holders of record of
its Common Stock.
The Company has not paid any dividends since its inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
ITEM 8. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 7,265,095 shares of Common Stock issued and
outstanding as of October 18, 1999. Of the 7,265,095 shares of the
Company's Common Stock outstanding, 2,658,639 shares are freely
tradeable and 4,606,456 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act").
In general, under Rule 144 as currently in effect, a person (or
persons whose Shares are aggregated) who has beneficially owned
Shares privately acquired directly or indirectly from the Company or
from an affiliate, for at least one year, or who is an affiliate, is
entitled to sell within any three month period a number of such
Shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock or the average
weekly trading volume in the Company's Common Stock during the four
calendar weeks, immediately preceding such sale. Sales under Rule
144 are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information
about the Company. A person (or persons whose Shares are
aggregated) who is not deemed to have been an affiliate at any time
during the 90 day preceding a sale, and who has beneficially owned
Restricted Shares for at least two years, is entitled to sell all
such Shares under Rule 144 without regard to the volume limitations,
current public information requirements, manner of sale provisions
or notice requirements.
On August 24, 1993, the Company issued 960,800 of its $0.01 par
value shares to Precious Metal Mines, Inc. ("PMM"), for 16
unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group. The foregoing shares were
issued pursuant to Section 4(2) of the Securities Act of 1933 (the
"Act").
On August 31, 1994, the directors of Cadgie Co. declared a 1:5
reverse stock split of the outstanding Cadgie Co. shares, thus
reducing the number of outstanding shares from 960,800 to 192,160
shares.
On August 4, 1995, the directors of Cadgie Co. declared a 3:1
forward stock split of the outstanding Cadgie Co. shares, thus
increasing the number of outstanding shares from 192,160 to 576,480.
During November 1995, Cadgie Co. directors approved an issue of
45,000 shares of Common Stock to Mr. Ryan for services rendered at
$0.01 per share. The foregoing shares were issued pursuant to
Section 4(2) of the Act.
In June 1996, the Company completed a private placement of
common stock resulting in net proceeds of $25,000. The Company
issued 250,000 common shares in connection with this private
placement. The Company also issued 900,000 shares to Messrs.
Bingham, Gorski and Ryan who had formed a partnership to advance
development of the mining concession located in Coahuila, Mexico.
The partnership had an informal joint venture agreement with Dakota
covering the mining concessions. By acquiring the partnership
interest, the Company was able to negotiate and sign a formal joint
venture agreement with Dakota in July 1996. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
During June 1996, the Company issued 900,000 shares of Common
Stock for the assignment of mineral rights in the Sierra Mojada
Project in Coahuila, Mexico valued at $0.01. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
In October 1996, the Company completed a private placement of
common stock resulting in net proceeds of $125,500. The Company
issued 1,255,000 shares in connection with this placement. The
Company also issued 120,000 shares to Mr. Gorski in payment for his
services for the months of September and October. The Company
issued 20,000 shares of Common Stock to Mr. Ryan as payment for
services in those same months. Further, the Company issued 150,000
shares of common stock for computer equipment. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
During February 1997, the Company borrowed $30,000 from
shareholders and issued 24,900 shares of Common Stock as a loan
incentive. The foregoing shares were issued pursuant to Section
4(2) of the Act.
In March 1997, the Company completed an issuance of Common Stock
resulting in net proceeds of $17,500. The foregoing shares were
issued pursuant to Section 4(2) of the Act.
In April 1997, the Company issued to Royal Silver Mines, Inc.,
200,000 shares of Common Stock resulting in proceeds of $70,000.
The Company issued 133,800 shares of Common Stock were issued for
services and expenses. A total of 24,900 shares of Common Stock
were issued as loan incentives (interest) for $30,000 in loans from
shareholders. These shares were issued at $0.30 per share. A total
of 77,600 shares of Common Stock were issued in exchange for wages
during the months of January, February and March 1997 at $0.35 per
share. A total of 31,300 shares of Common Stock were issued to
cover expenses incurred by shareholders at $0.35 per share. The
foregoing shares were issued pursuant to Section 4(2) of the Act.
On June 5, 1997, the Company issued 50,000 shares of Common
Stock in consideration of services rendered. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
In 1997 and 1998, the Company issued warrants to eight persons.
Each warrant entitles the holder to acquire one share of common
stock at exercise prices ranging from $0.35 to $2.13. A total of
1,046,500 warrants are outstanding. None of the warrants have been
exercised. The warrants were issued pursuant to Section 4(2) of the
Act.
Between August 14, 1998 and November 23, 1998, the Company sold
565,000 shares of common stock to eight persons/entities in
consideration of $_565,000. The foregoing shares were sold pursuant
to Section 4(2) of the Securities Act of 1933.
Between March 8, 1999 and June 11, 1999, the Company sold
662,500 shares of common stock to eight persons/entities in
consideration of $662,500. The foregoing shares were sold pursuant
to Section 4(2) of the Securities Act of 1933.
ITEM 9. SELECTED FINANCIAL DATA.
The selected financial data set forth below has been derived
from, and should be read in conjunction with the Company's financial
statements and the notes thereto, and Item 11 of this report
entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations. The selected financial data for
the three years ended October 31, 1999 have been derived from the
Company's consolidated financial statements appearing elsewhere in
this report, which have been audited by Williams & Webster P.S.,
Spokane, Washington.
The selected financial data should be read in conjunction with
and is qualified by such financial statements and the notes thereto.
<TABLE>
<CAPTION>
Selected Financial Data
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Summary of Balance Sheets:
Working capital $194,731 $282,066 $191,333
Current assets 248,997 342,631 624,481
Total assets 1,422,506 1,209,950 778,825
Current liabilities 54,266 60,565 433,148
Long-term obligation 0 0 0
Total liabilities 54,266 60,565 433,148
Stockholder's equity 1,368,240 1,149,385 345,677
Summary of Statements
of Operations:
Revenues 0 0 0
Net loss (F1) (1,423,045) (906,036) (582,919)
Net loss per share (0.22) (0.17) (0.16)
- --------
<FN>
<F1> Cumulative losses for period from inception (Nov. 8, 1993)
through October 31, 1999 were $2,576,262.
</FN>
</TABLE>
ITEM 10. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of
50,000,000 shares of $0.01 par value Common Stock. As of October
31, 1999, 7,265,095 shares are issued and outstanding of which
2,658,639 are freely tradable.
In general, under Reg.144, an affiliate of the Company
(officers, directors, and owners of more than ten percent (10%) of
the outstanding shares of Common Stock are affiliates of the
Company) may sell in ordinary market transactions through a broker
or with a market maker, within any three (3) month period a number
of shares which does not exceed the greater of one percent (1%) of
the number of outstanding shares of Common Stock or the average of
the weekly trading volume of the Common Stock during the four
calendar weeks prior to such sale. Sales under Reg.144 require the
filing of Form 144 with the Securities and Exchange Commission. If
the shares of Common Stock have been held for more than two (2)
years by a person who is not an affiliate, there is no limitation on
the manner of sale or the volume of shares that may be sold and no
Form 144 is required. Sales under Reg. 144 may have a depressive
effect on the market price of the Company's Common Stock.
All shares have equal voting rights and are not assessable.
Voting rights are not cumulative and, therefore, the holders of more
than 50% of the Common Stock could, if they chose to do so, elect
all of the directors of the Company.
Upon liquidation, dissolution, or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The
holders of the Common Stock do not have preemptive rights to
subscribe for any securities of the Company and have no right to
require the Company to redeem or purchase their shares. The shares
of Common Stock presently outstanding are fully paid and non-
assessable.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is
contemplated in the foreseeable future.
Warrants
Currently, the Company has outstanding warrants to acquire up to
1,046,500 shares of common stock at exercise prices ranging from
$0.35 to $2.13 per share. Each warrant permits the holder thereof
to acquire one share of common stock. The warrant expiration
periods range from February 28, 2001 to September 15, 2005.
Transfer Agent
The transfer agent for the Company's Common Stock is Idaho Stock
Transfer Co., 421 Coeur d'Alene Avenue, Coeur d'Alene, Idaho 83814.
ITEM 11. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company has inadequate cash to maintain operations during
the next twelve months. In order to meet its cash requirements the
Company will have to raise additional capital through the sale of
securities or loans. As of the date hereof, the Company has not
made sales of additional securities and there is no assurance that
it will be able to raise additional capital through the sale of
securities in the future. Further, the Company has not initiated
any negotiations for loans to the Company and there is no assurance
that the Company will be able to raise additional capital in the
future through loans. In the event that the Company is unable to
raise additional capital, it may have to suspend or cease
operations.
The Company does not intend to purchase a plant or significant
equipment.
The Company will hire employees on an as needed basis, however,
the Company does not expect any significant changes in the number of
employees.
Results of Operations - Inception (August 20, 1993) through October
31, 1999.
The Company is in the development stage. From inception until
May 1996, the Company was essentially dormant having as its only
asset unpatented mining claims located in the State of Montana
("Kadex Property"). Since May 1996, the focus of the Company has
been the Sierra Mojada Project in Mexico. The President and Vice
President of the Company both have extensive experience in mining,
exploration and development.
Liquidity and Capital Resources.
The Company has insufficient funds to carry on operations during
the next twelve months. In order to maintain operations, the Company
will have to raise additional capital through loans or through the
sale of securities. If the Company is unable to raise additional
capital, it may have to cease operations. The Company's plan of
operation, subject to maintaining sufficient funds, calls for
continued geologic mapping of the surface and underground workings,
sampling and drilling to explore for additional mineralization and
to develop an ore reserve and compilation of the data into a
computer data base for reserve calculation.
Currently the Company is spending approximately $20,000 per
month in general overhead. Over the next six months the Company has
budgeted $100,000 for Sierra Mojada programs, $40,000 for property
payments and $220,000 for working capital and costs of future
financing.
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.131 ("SFAS No.131"),
Disclosures about Segments of an Enterprise and Related Information,
which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise, establishes standards for the new way that
public enterprises report information about operating segments in
annual financial statements and requires reporting of selected
information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures
regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of
an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance. As the Company operates within one segment,
the adoption of SFAS No. 131 by the Company in 1998, did not have a
significant impact on the Company's financial position.
In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 132 ("SFAS
No. 132") Employer's Disclosures about Pensions and other Post-
retirement Benefits, which standardizes the disclosure requirements
for pension and other post-retirement Benefits. The adoption of SFAS
No. 132 did not materially impact the Company's current disclosures.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS No.
133"), Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 requires companies to recognize all derivative
contracts as either assets or liabilities in the balance sheet and
to measure them at fair value. If certain conditions are met, a
derivative may be specifically designated as a hedge, the objective
of which is to match the timing of gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the
fair value of the hedged asset or liability that are attributable to
the hedged risk or (ii) the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized as income in the period
of change. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. Based on its current and
planned future activities relative to derivative instruments, the
Company believes that the adoption of SFAS No. 133 on January 1,
2000 will not have a significant effect on its financial statements.
In October 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 134 ("SFAS No. 134")
Accounting for Mortgage-Backed Securities Retained After the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise, which effectively changes the way mortgage banking firms
account for certain securities and other interests they retain after
securitizing mortgage loans that were held for sale. The adoption of
SFAS No. 134 is not expected to have a material impact on the
Company's financial position.
In February 1999, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 135 ("SFAS
No. 135") Rescission of Financial Accounting Standards Board No. 75
("SFAS No. 75") and Technical Corrections. SFAS No. 135 rescinds
SFAS No. 75 and amends Statement of Financial Accounting Standards
Board No. 35. SFAS No. 135 also amends other existing authorative
literature to make various technical corrections, clarify meanings,
or describe applicability under changed conditions. SFAS No. 135 is
effective for financial statements issued for fiscal years ending
after February 15, 1999. The Company believes that the adoption of
SFAS No. 135 will not have a significant effect on its financial
statements.
ITEM 12. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Company for the years ended
October 31, 1999, 1998, and 1997 included elsewhere in this report
have been audited by Williams & Webster, P.S., Spokane, Washington.
An index to such financial statements appears at Page 17 of this
report.
ITEM 13. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures through the date of this Registration Statement.
PART III
ITEM 14. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Merlin Bingham 66 President and Chairman of the Board of
Directors
Daniel Gorski 62 Vice President of Operations and a member
of the Board of Directors
Mario Ayub Touche 50 Member of the Board of Directors
Jim Czirr 45 Member of the Board of Directors and
Consultant
Wayne Schoonmaker 62 Member of the Board of Directors and
Secretary & Treasurer
All directors hold office until the next annual meeting of
shareholders which is tentatively scheduled for February 3, 2000, or
until their successors have been elected and qualified. The
Company's officers are elected by the Board of Directors at the
annual meeting and hold office until their death, or until they
resign, or have been removed from office.
Officer and Director Biographies:
Merlin Bingham, President and Chairman of the Board of Directors
Since October 1996, Mr. Bingham has been the President and
Chairman of the Board of Directors of the Company. From 1963 to 1983
Mr. Bingham worked in exploration for mining and oil companies in
the western U.S. and Alaska, Zambia, the United Arab Emirates,
Ecuador and Mexico. Since 1983, Mr. Bingham has been a consulting
geologist. Mr. Bingham received a B.S. degree in Mineralogy from the
University of Utah in 1963.
Daniel Gorski, Vice President of Operations and a member of the
Board of Directors
Since June 1996, Mr. Gorski has been the Vice President of
Operations and a member of the Board of Directors of the Company.
Mr. Gorski has been a consulting geologist and mine manager since
1974 working in the western U.S. and Mexico. From January 1992 to
June 1996, Mr. Gorski was employed as a contract geologist, working
in Mexico, employed by USMX, Inc., an exploration and mining company
located in Denver, Colorado. Mr. Gorski received a B.S. degree in
Geology from Ross State College, Alpine Texas and a M.A. in Geology
from the University of Texas in 1970.
Mario Ayub Touche, Member of the Board of Directors
Since June 5, 1997, Mr. Touche has been a member of the Board of
Directors and a consultant to the Company. Mr. Touche has over 20
years of experience in mining and exploration and has been the
President of the National Association of Small and Medium Miners of
Mexico ("FENAMMPAC").
Jim Czirr - Director and Financial Consultant
Since June 1998, Mr. Czirr has been a member of the Board of
Directors and a financial consultant to the company since December
1997. Mr. Czirr has over 20 years experience as a financial and
public relations consultant in the areas of business strategies,
marketing, incentive programs, finance and capital formation and has
extensive experience in the brokerage business and in oil and gas
limited partnerships.
Wayne Schoonmaker - Director and Secretary & Treasurer
Since August 1998, Mr. Schoonmaker has been a member of the
Board of Director of the Company. From 1981 to 1993, Mr.
Schoonmaker was Financial Manager of the Northwest Mining Department
of ASARCO and from 1978 to 1981, he was Chief Accountant at ASARCO's
Troy Unit in Montana, where he was responsible for the installation
and implementation of the accounting system for the start-up of the
Troy Mine. From July 1978 to December 1978, Mr. Schoonmaker was
Assistant Treasurer of the Bunker Hill Mining Company, and from 1964
to 1978, he was Assistant Corporation Secretary of Hecla Mining
Company. Mr. Schoonmaker received a Bachelor of Science degree in
Accounting from the University of Montana in 1962 and an MBA from
the University of Idaho in 1987. Mr. Schoonmaker is a Certified
Public Accountant in the states of Idaho and Montana.
ITEM 15. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1996 through December 31, 1998, for each
officer and director of the Company. This information includes the
dollar value of base salaries, bonus awards and number of stock
options granted, and certain other compensation, if any.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Names Other Under Restricted Other
Executive Annual Options/ Shares or Annual
Officer and Compen- SARs Restricted LTIP Compen-
Principal Year Salary Bonus sation Granted Share Payouts sation
Position Ended (US$) (US$) (US$) (#) Units(US$) (US$) (US$)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merlin 1999 72,000 0 0 0 0 0 0
Bingham 1998 72,000 0 0 0 0 0 0
President 1997 33,000 0 0 0 0 0 0
1996 21,000 0 0 0 0 0 0
Daniel 1999 72,000 0 0 0 0 0 0
Gorski 1998 78,000 0 0 0 0 0 0
Vice 1997 54,000 0 0 0 0 0 0
President 1996 42,000 0 0 0 0 0 0
Mario 1999 0 0 0 0 0 0 0
Ayub 1998 0 0 0 0 0 0 0
Touche 1997 0 0 0 0 50,000 0 0
Director 1996 0 0 0 0 0 0 0
Jim 1999 0 0 36,000 0 0 0 0
Czirr 1998 0 0 36,000 100,000 0 0 0
Director 1997 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0
Wayne 1999 18,000 0 0 0 0 0 0
Schoonmaker 1998 7,500 0 0 0 0 0 0
Secretary/ 1997 0 0 0 0 0 0 0
Treasurer 1996 0 0 0 0 0 0 0
</TABLE>
There are no other stock option plans, retirement, pension, or
profit sharing plans for the benefit of the Company's officers and
directors.
Option/SAR Grants.
The following grants of stock options, whether or not in tandem
with stock appreciation rights ("SARs") and freestanding SARs have
been made to officers and/or directors:
Number of
Securities
Number of Underlying
Securities Options/SARs
Underlying Granted Exercise Number of
Options During Last or Base Options Expiration
Name SARs Granted 12 Months[1] Price($/Sh) Exercised Date
- ------ ------------ ------------ ----------- --------- --------
James
Czirr 300,000 0 $0.10 -0- 12/31/05
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance.
Compensation of Directors.
In general, the Directors do not receive any compensation for
serving as members of the Board of Directors. The Board has not
implemented a plan to award options to any Directors. There are no
contractual arrangements with any member of the Board of Directors
other than with James Czirr. Mr. Czirr has entered into a
consulting agreement with the Company whereby Mr. Czirr supplies
financial and business consulting services and is compensated in
stock and options. See "Certain Relationships and Related
Transaction."
ITEM 16. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of
each person known by the Company to be the beneficial owner of five
percent or more of the Company's Common Stock each director
individually and all officers and directors of the Company as a
group. Each person has sole voting and investment power with
respect to the shares of Common Stock shown, unless otherwise noted,
and all ownership is of record and beneficial.
Name Number of Number of
of owner Shares Position Shares
- -------- --------- -------------------- --------
Merlin Bingham 935,000 President, CEO and Chairman 12.87%
of the Board of Directors
Daniel Gorski 766,600 Vice President of Operations 10.55%
and member of the
Board of Directors
Mario Ayub Touche 50,000 Member of the Board of 0.69%
Directors
Jim Czirr 490,100 Member of the Board of 6.75%
Directors
Wayne Schoonmaker 0 Secretary & Treasurer 0.00%
All officers and 2,241,700 30.86%
directors as a
group (5 persons)
Britannia Holdings 550,000 7.57%
King's House
The Grange
St. Peter Port
Guernsey
Channel Islands
ITEM 17. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was formed on November 8, 1993, by Mr. Carman
Ridland of Las Vegas, Nevada as a spin-off from its predecessor
Precious Metal Mines, Inc. ("PMM").
The Company issued 960,800 of its $0.01 par value shares to PMM,
for 16 unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group.
PMM distributed the 960,800 shares of Cadgie Co. to its
shareholders, one share of Cadgie Co. for each share of PMM held by
holders of record as of August 31, 1993.
On August 31, 1994, the directors of Cadgie Co. declared a 1:5
reverse stock split of the outstanding Cadgie Co. shares, thus
reducing the number of outstanding shares from 960,800 to 192,160
shares.
On August 4, 1995, the directors of Cadgie Co. declared a 3:1
forward stock split of the outstanding Cadgie Co. shares, thus
increasing the number of outstanding shares from 192,160 to 576,480.
During November 1995, Metalline Mining Company's directors
approved an issue of 45,000 shares of Common Stock to Mr. Ryan for
services rendered at $0.01 per share.
In January 1996, Carman Ridland in a private sale, sold a
controlling interest in the corporation to Howard Crosby. On
January 12, 1996, Mr. Ridland transferred control of Cadgie Co. to
Mr. Howard Crosby and Mr. Robert Jorgensen.
In May 1996, Messrs. Crosby and Jorgensen were made aware of
certain potentially valuable mining properties and concessions
located at Sierra Mojada, Coahuila, Mexico. Messrs. Crosby and
Jorgensen transferred control of Cadgie Co. to Messrs. Bingham,
Gorski and Ryan so that Cadgie Co. could focus on the opportunity
presented at Sierra Mojada.
In June 1996, the Company completed a private placement of
common stock resulting in net proceeds of $25,000. The Company
issued 250,000 common shares in connection with this private
placement. The Company also issued 900,000 shares to Messrs.
Bingham, Gorski and Ryan who had formed a partnership to advance
development of the mining concession located in Coahuila, Mexico.
The partnership had an informal joint venture agreement with Dakota
covering the mining concessions. By acquiring the partnership
interest, the Company was able to negotiate and sign a formal joint
venture agreement with Dakota in July 1996.
During June 1996, the Company issued 900,000 shares of Common
Stock for the assignment of mineral rights in the Sierra Mojada
Project in Coahuila, Mexico valued at $0.01.
In August 1996, the Company changed its name to Metalline Mining
Company and increased the authorized capital to 50,000,000 shares.
In October 1996, the Company completed a private placement of
common stock resulting in net proceeds of $125,500. The Company
issued 1,255,000 shares in connection with this placement. The
Company also issued 120,000 shares to Mr. Gorski in payment for his
services for the months of September and October. The Company
issued 20,000 shares of Common Stock to Mr. Ryan as payment for
services in those same months. Further, the Company issued 150,000
shares of common stock for computer equipment.
During February 1997, the Company borrowed $30,000 from
shareholders and issued 24,900 shares of Common Stock as a loan
incentive.
In March 1997, the Company completed an issuance of Common Stock
resulting in net proceeds of $17,500.
In April 1997, the Company issued to Royal Silver Mines, Inc.,
200,000 shares of Common Stock resulting in proceeds of $70,000.
The Company issued 133,800 shares of Common Stock were issued for
services and expenses. A total of 24,900 shares of Common Stock
were issued as loan incentives (interest) for $30,000 in loans from
shareholders. These shares were issued at $0.30 per share. A total
of 77,600 shares of Common Stock were issued in exchange for wages
during the months of
January, February and March 1997 at $0.35 per share. A total of
31,300 shares of Common Stock were issued to cover expenses incurred
by shareholders at $0.35 per share.
On June 5, 1997, the Company issued 50,000 shares of Common
Stock to Mario Ayub Touche in consideration of services rendered.
In December 1997, the Company entered into a consulting
agreement with James Czirr, a member of the Board of Directors.
Pursuant to the consulting agreement, Mr. Czirr supplies financial
and business consulting services and is compensated in stock and
options.
PART IV
ITEM 18. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS. The following exhibits are filed as part of this report.
Exhibits previously filed are incorporated by reference, as noted.
EXHIBIT NO. EXHIBIT
27.1 Articles of Incorporation of the registrant. Filed as
an exhibit to the registrant's registration statement
on Form 10-SB (Commission File No.000-27667) and
incorporated by reference herein.
27.2 Bylaws of registrant. Filed as an exhibit to the
registrant's registration statement on Form 10-SB and
incorporated by reference herein.
27.3 Articles of Amendment to the Articles of Incorporation.
Filed as an exhibit to the registrant's registration
statement on Form 10-SB and incorporated by reference
herein.
27.1 Speciman stock certificate of the registrant. Filed as
an exhibit to the registrant's registration statement
on Form 10-SB and incorporated by reference herein.
27.1 Master agreement between the registrant and USMX, Inc.
relating to development and exploration of certain
mineral properties. Filed as an exhibit to the
registrant's registration statement on Form 10-SB and
incorporated by reference herein.
27.2 Royal Silver letter regarding Joint Venture Agreement
between Royal Silver, Minera Metalin S.A. de C.V. and
its registrant. Filed as an exhibit to the registrant's
registration statement on Form 10-SB and incorporated
by reference herein.
27.3 Consulting Agreement dated December 1, 1997 between the
registrant and James Czirr. Filed as Exhibit 99.1 on
the registrant's Form 10-SB and incorporated by
reference herein.
27.4 Consulting addendum dated August 24, 1998 between the
registrant and James Czirr. Filed as Exhibit 99.2 on
the registrant's Form 10-SB and incorporated by
reference herein.
27.1 Financial Data Schedule. Filed herewith.
REPORTS ON FORM 8-K. NONE.
[The balance of this page has been intentionally left blank.]
METALLINE MINING COMPANY
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Certified
Public Accountanats F/S-1
Financial Statements:
Balance Sheets as of October 31, 1999
and October 31, 1998 F/S-2
Statements of Loss for the Years Ended
October 31, 1999, 1998, 1997, and for
the period from inception (November 8, 1993)
to October 31, 1999 F/S-3
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to October 31, 1999 F/S-4
Statements of Cash Flow for the Years Ended
October 31, 1999, 1998, 1997, and for the
period from inception (November 8, 1993) to
October 31, 1999 F/S-9
Notes to Financial Statements F/S-10
Summary of Accounting Policies F/S-10
Signatures F/S-20
[The balance of this page has been intentionally left blank.]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Metalline Mining Company
(An Exploration Stage Company)
Coeur d'Alene, Idaho
We have audited the accompanying balance sheets of Metalline Mining
Company (an exploration stage company) as of October 31, 1999 and
1998, and the related statements of operations, shareholders'
equity, and cash flows for the years then ended, and from inception
(November 8, 1993) through October 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Metalline Mining Company as of October 31, 1999 and 1998, and the
results of their operations and their cash flows for the years then
ended and from inception (November 8, 1993) through October 31, 1999
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 7 to the financial statements, the Company's significant
operating losses raise substantial doubt about its ability to
continue as a going concern. Also discussed in Note 7 are
management's plans for the Company's viability. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
January 27, 2000
F/S-1
METALLINE MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, October 31,
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 240,662 $ 313,322
Accounts receivable - 2,849
Prepaid expenses 3,127 26,460
Employee advances 5,208 -
---------- ---------
Total Current Assets 248,997 342,631
MINERAL PROPERTIES 1,103,671 772,642
---------- ---------
PROPERTY AND EQUIPMENT
Office equipment 71,119 71,119
Plant, property, and equipment 61,047 61,047
Less: Accumulated depreciation (62,328) (37,489)
---------- ---------
Total Property and Equipment 69,838 94,677
---------- ---------
TOTAL ASSETS $ 1,422,506 $ 1,209,950
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,739 $ 40,400
Deposits payable 37,500 -
Accrued liabilities 13,027 20,165
--------- ---------
Total Current Liabilities 54,266 60,565
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value;
50,000,000 shares authorized,
7,215,095 shares issued and
outstanding, at October 31, 1999;
6,090,739 shares issued and
outstanding at October 31, 1998 71,152 60,908
Additional paid-in capital 3,977,350 2,757,694
Stock subscriptions receivable - (300,000)
Stock options and warrants 288,000 177,000
Deficit accumulated during
development stage (2,969,262) (1,369,217)
---------- ---------
Total Stockholders' Equity 1,368,240 1,149,385
---------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,422,506 $ 1,209,950
========== =========
The accompanying notes are an integral part of these financial
statements.
</TABLE>
F/S-2
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years From Inception
Ended October 31, (November 8, 1993)
1999 1998 to October 31,1999
------- ------- ------------------
<S> <C> <C> <C>
REVENUES
Interest Income $ 3,214 $ - $ 3,214
------- ------- ----------
GENERAL AND
ADMINISTRATIVE EXPENSES
Salaries 235,048 97,753 431,778
Office 31,155 40,497 89,018
Professional services 133,094 501,751 1,000,229
Property expenses 735,326 174,608 1,023,614
Depreciation 24,839 21,798 62,745
Marketing and research 50,783 9,629 79,493
Financing Costs 216,000 60,000 276,000
--------- -------- ----------
Total Expenses 1,426,245 906,036 2,962,877
OTHER EXPENSES
Interest 14 - 9,599
--------- -------- ----------
NET LOSS $(1,423,045) $(906,036) $(2,969,262)
=========== ========== ============
BASIC AND DILUTED
LOSS PER
COMMON SHARE $ (0.22) $ (0.17) $ (0.96)
========= ========= ===========
BASIC AND DILUTED
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 6,615,203 5,442,739 3,078,304
========== ========== ============
The accompanying notes are an intregal part of these financial
statements.
</TABLE>
F/S-3
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Common Stock Stock Stock Deficit
----------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
-------- ------ ------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance in August
1993 (prior to
inception) common
stock without
value 960,800 $ 9,608 $(9,608) $ - $ - $ - $ -
Reverse stock split
of 5:1, reducing
common stock to
192,160 shares (768,640) (7,686) 7,686 - - - -
Net loss for the
year ending
October 31, 1994 - - - - - (8,831) (8,831)
------- ------- ------- ------- ------- ------- -------
Balances at
October 31, 1994 192,160 1,922 (1,922) - - (8,831) (8,831)
Stock split 3:1, in-
creasing common
stock to
576,480 shares 384,320 3,843 (3,843) - - - -
Net loss for the
year ending
October 31, 1995 - - - - - (7,861) (7,761)
------- ------- ------- ------- ------- ------- -------
Balance at
October 31, 1995 576,480 $ 5,765 $(5,765) $ - $ - $(16,592) $(16,592)
------- ------- ------- ------- ------- ------- -------
- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-4
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Accumulated
Common Stock Stock Stock Deficit
----------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
-------- ------ ------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance brought
Forward 576,480 $ 5,765 $(5,765) $ - $ - $(16,592) $(16,592)
Issuance in November
1995 of shares for
cash at $0.01 per
share 45,000 450 - - - - -
Issuance in November
1995 of shares for
cash at $1.00 per
share 15,859 159 15,700 - - - 15,859
Issuance in June
1996 of shares for
cash at $0.10
per share 1,305,000 13,050 117,450 - - - 130,500
Issuance in June
1996 of shares at
$0.01 per share in
exchange for
assignment of
mineral property
rights valued at
$9,000 900,000 9,000 - - - - 9,000
Issuance in October
1996 of shares for
CAD computer equip-
ment at $0.10 per
share 150,000 1,500 13,500 - - - 15,000
Issuance in October
1996 of shares for
services at $0.10
per share 140,000 1,400 12,600 - - - 14,000
Net loss for the
year ending
October 31, 1996 - - - - - (40,670) (40,670)
------- ------- ------- ------- ------- ------- -------
Balances at
October 31, 1996 3,132,339 $31,324 $153,485 $ - $ - $(57,262) $127,547
------- ------- ------- ------- ------- ------- -------
- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-5
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Accumulated
Common Stock Stock Stock Deficit
----------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
-------- ------ ------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance brought
Forward 3,132,339 $ 31,324 $ 153,485 $ - $ - $(57,262) $127,547
Issuance in February
1997 of shares for
services at $0.30
and $0.35 per
share 133,800 1,338 44,245 - - - -
Issuance in March
and April 1997 of
shares for cash
at $0.35 per share 250,000 2,500 85,000 - - - 87,500
Issuance in May and
June 1997 of shares
for cash at $0.35
per share 181,600 1,816 61,744 - - - 63,560
Issuance in May and
June 1997 of shares
for services at
$0.35 per share 62,500 625 21,250 - - - 21,875
Issuance in August
1997 of shares for
payment of loan at
$0.315 per share 100,200 1,002 30,528 - - - 31,530
Issuance in August
1997 of shares for
cash at $0.90
per share 420,000 4,200 373,800 - - - 378,000
Issuance in August
1997 of shares for
services at $1.00
per share 95,000 950 94,050 - - - 95,000
Issuance in October
1997 of shares for
cash at $1.00
per share 75,000 750 74,250 - - - 75,000
Issuance of option
(for 300,000 shares
at $2.25 per share)
for cash - - 3,000 - - - 3,000
Net loss for year
ending October 31,
1997 - - - - - (582,919) (582,919)
------- ------- ------- ------- ------- ------- -------
Balances at
October 31, 1997 4,450,439 $44,505 $941,352 $ - $ - $(640,181) $345,676
------- ------- ------- ------- ------- ------- -------
- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-6
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Accumulated
Common Stock Stock Stock Deficit
----------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
-------- ------ ------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance brought
forward 4,450,439 $44,505 $941,352 $ - $ - $(640,181) $345,676
Issuance in November
and December 1997
of shares for cash
at $1.00
per share 403,500 $4,035 $399,465 - - - 403,500
Issuance of options
(for 1,200,000
shares at $0.90
per share) for cash - - 120,000 - - - 120,000
Issuance of options
for financing fees - - - - 60,000 - 60,000
Issuance of warrants
for consulting fees - - - - 117,000 - 117,000
Issuance in November
and December 1997 of
shares for services
at $0.35 and $1.00
per share 41,800 418 21,882 - - - 22,300
Issuance in February
1998 of shares for
mine data base at
$1.625 per share 200,000 2,000 323,000 - - - 325,000
Issuance in February
and March 1998 of
shares for cash at
$1.00 and $0.87
per share 345,000 3,450 338,495 - - - 341,945
Issuance in June and
July 1998 of shares
for cash at $1.00
per share 95,000 950 94,050 - - - 95,000
Issuance in September
and October 1998 of
shares for cash and
receivables at $1.00
per share 555,000 5,550 519,450 (300,000) - - 225,000
Net loss for year
ending October 31,
1998 - - - - - (906,036) (906,036)
------- ------- ------- ------- ------- ------- -------
Balance at
October 31, 1998 6,090,739 $60,908 $2,757,694 $(300,000) $177,000 $(1,546,217) $(1149385)
------- ------- ------- ------- ------- ------- -------
- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-7
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(continued)
<TABLE>
<CAPTION>
Accumulated
Common Stock Stock Stock Deficit
----------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
-------- ------ ------- ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance brought
forward 6,090,739 $60,908 $2,757,694 $(300,000) $177,000 $(1,546,217) $1149385
Stock subscription
received - - - 300,000 - - 300,000
Expiration of
stock options - - 60,000 - (60,000) - -
Issuance of stock
options for
financing fees - - - - 216,000 - 216,000
Exercise of stock
warrants at $0.90
per share 250,000 2,500 267,500 - (45,000) - 225,000
Issuance in November
1998 and March -
August, 1999 shares
for cash at $1.00
per share 776,000 7,760 768,240 - - - 776,000
Issuance in August
1999 of shares for
drilling fees at
$0.90 per share 55,556 556 49,444 - - - 50,000
Issuance in August
1999 shares for
cash at $1.75
per share 42,800 428 74,472 - - - 74,900
Net loss for year
ending October 31,
1999 - - - - - (1,423,045) (1423045)
------- ------- ------- ------- ------- ------- -------
Balance at
October 31, 1999 7,215,095 $72,152 $3,977,350 $ - $288,000 $(2,969,262) $1,368,240
------- ------- ------- ------- ------- ------- -------
- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-8
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years From Inception
Ended October 31, (November 8, 1993)
1999 1998 to October 31,1999
------- ------- ------------------
<S> <C> <C> <C>
Cash flows from
operating activities:
Net loss $(1,423,045) $(906,036) $(2,969,262)
Adjustments to
reconcile net loss to
net cash used by
operating activities:
Depreciation/amortization 24,839 21,798 62,745
Stock given in exchange
for services 50,000 22,300 248,758
Stock options given for
operating expenses 216,000 177,000 393,000
Changes in assets
and liabilities:
Accounts receivable 2,849 (2,849) 2,849
Prepaid expenses 23,334 (24,992) 20,485
Employee advances (5,208) - (31,668)
Accounts payable (36,662) 13,752 3,738
Accrued liabilities (7,137) 20,165 13,028
-------- ------- -------
Net cash used by
operating activities (1,155,030) (678,862) (2,256,327)
--------- --------- ----------
Cash flows from
investing activities:
Equipment purchases - (74,127) (117,164)
Mining property
acquisitions (331,030) (335,647) (755,674)
--------- --------- ---------
Net cash used by
investing activities (331,030) (409,774) (872,837)
---------- ---------- ----------
Cash flows from
financing activities:
Stock given in exchange
for loan - - 31,530
Proceeds from sales of
common stock 1,375,900 1,015,445 3,142,214
Proceeds from sales
of options - 120,000 123,000
Deposits for sale
of stock 37,500 (356,500) 87,500
Payments on
shareholders' loans - - (14,418)
--------- ---------- ----------
Net cash provided by
financing activities: 1,413,400 778,945 3,369,826
--------- ---------- ----------
Net increase (decrease)
in cash and cash
equivalents (72,660) (309,691) 240,662
Cash beginning of period 313,322 623,013 -
--------- ---------- ---------
Cash at end of period $240,662 $313,322 $240,662
========= ========== =========
Supplemental cash
flow disclosures:
Income taxes paid $ - $ - $ -
Interest paid $ 14 $ - $9,599
Non-cash financing
activities:
Common stock issued
for services $50,000 $22,300 $248,758
Common stock issued
for mineral
properties $ - $325,000 $348,000
Common stock issued
for equipment $ - $ - $15,000
Common stock issued
for payment of debt $ - $80,000 $80,000
Common stock issued for
subscription receivable $ - $300,000 $300,000
Common stock options
issued for services $ - $117,000 $117,000
Common stock options
issued for
financing fees $216,000 $60,000 $276,000
The accompanying notes are an integral part of these financial
statements.
</TABLE>
F/S-9
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Metalline Mining Company ("the Company") was incorporated in the
state of Nevada on November 8, 1993 as the Cadgie Company for the
purpose of acquiring and developing mineral properties. The Cadgie
Company was a spin-off from its predecessor Precious Metal Mines,
Inc. The Articles of Incorporation of Cadgie Company were executed
on August 20, 1993. On June 28, 1996, at a special directors
meeting, the Company's name was changed to Metalline Mining Company.
The cost of mineral properties of $1,103,671 and $772,642,
respectively, as of October 31, 1999 and 1998 are related to
exploration properties. The Company has not determined whether the
exploration properties contain ore reserves that are economically
recoverable. The ultimate realization of the Company's investment
in exploration properties is dependent upon the success of future
property sales, the existence of economically recoverable reserves,
the ability of the Company to obtain financing or make other
arrangements for development, and upon future profitable production.
The ultimate realization of the Company's investment in exploration
properties cannot be determined at this time, and accordingly, no
provision for any asset impairment that may result, in the event the
Company is not successful in developing or selling these properties,
has been made in the accompanying financial statements.
The Company is actively seeking additional capital and management
believes its properties can ultimately be sold or developed to
enable the Company to continue its operations. However, there are
inherent uncertainties in mining operations and management cannot
provide assurances that it will be successful in this endeavor.
Furthermore, the Company is in the development stage, as it has not
realized any revenues from its planned operations.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Metalline Mining
Company is presented to assist in understanding the Company's
financial statements. The financial statements and notes are
representations of the Company's management, which is responsible
for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual
method of accounting.
LOSS PER SHARE
In December 1997, the Company adopted Statement of Financial
Accounting Standards Statement (SFAS) No.128, Earnings Per Share.
Basic earnings per share is computed using the weighted average
number of common shares outstanding. Diluted net loss per share is
the same as basic net loss per share as the inclusion of common
stock equivalents would be antidilutive. As of October 31, 1999,
common stock options of 1,250,000 were not included in computing
diluted per share because their effects were antidilutive.
F/S-10
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
EXPLORATION STAGE
The Company is in the exploration stage since its formation in 1993
and has not realized any significant revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
minable reserve, the Company will actively prepare the site for its
extraction and enter a development stage.
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 date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
MINERAL PROPERTIES
Costs of acquiring, exploring and developing mineral properties are
capitalized by project area. Costs to maintain the mineral rights
and leases are expensed as incurred. When a property reaches the
production stage, the related capitalized costs will be amortized,
using the units of production method on the basis of periodic
estimates of ore reserves. Mineral properties are periodically
assessed for impairment of value and any losses are charged to
operations at the time of impairment.
PROVISION FOR TAXES
At October 31, 1998 and 1999 the Company had net operating
accumulated losses of approximately $1,546,000 and $2,969,000
respectively. No provisions for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
CONCENTRATION OF RISK
The Company maintains its cash and cash equivalents in primarily one
commercial bank in Coeur d'Alene, Idaho. Accounts are guaranteed by
the Federal Deposit Insurance Corporation (FDIC) up to $100,000. As
of October 31, 1999, the Company exceeded the insured amount by
$20,844.
F/S-11
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts for cash, marketable securities, accounts
receivable, accounts payable, notes payable and accrued liabilities
approximate their fair value.
FINANCIAL ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-Lived Assets."
This standard became effective for years beginning after December
15, 1995. In complying with this standard, the Company has reviews
its long-lived assets quarterly to determine if any events or
changes in circumstances have transpired which indicate that the
carrying value of its assets may not be recoverable. The Company
determines impairment by comparing the undiscounted future cash
flows estimated to be generated by its assets to their respective
acrrying amounts. The Company does not believe any adjustments are
needed to the carrying value of its assets at October 31, 1999 and
1998.
In October 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Stock-Based Compensation " (FAS
123). This statement encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock options,
and other equity instruments to employees based on fair value.
Transactions in equity instruments with non-employees for goods or
services must be accounted for on the fair value method. The Company
has adopted the fair value accounting prescribed by FAS 123.
NOTE 3 - MINERAL PROPERTIES
SIERRA MOJADA MINING CONCESSION
In June of 1996, USMX (now named Dakota) and the Company entered
into a joint venture agreement, whereby the Company could acquire a
65% interest in a mining concession named the Sierra Mojada Project,
located in Coahuila, Mexico. Under the terms of the agreement, the
Company was to contribute two million dollars ($2,000,000) in work
commitments over the following seven years.
After the execution of the USMX agreement, Dakota's interest (35%)
in the joint venture was sold to an entity, which subsequently
defaulted on its joint venture obligations. This action in 1998
triggered the elimination of the joint venture and resulted in the
Company assuming 100% control of the Sierra Mojada concession
without the need to spend $2,000,000 to vest its interest.
F/S-12
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 3 - MINERAL PROPERTIES (Continued)
SIERRA MOJADA EXPLORATION CONCESSIONS
In the twelve-month period of August 23, 1996 to September 2, 1997,
the Company executed five separate agreements for the acquisition of
exploration concessions in the same mining region as the Sierra
Mojada Project in Mexico. Each agreement enables the Company to
explore the underlying property by paying stipulated annual
payments, which shall be applied in full toward the contracted
purchase price of the related concession.
Under the terms of the agreements, the Company is obligated to pay
the following amounts over the following two years:
Year 1 3,355,384
Year 2 103,076
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance and
repairs that do not increase the useful life of the assets are
expensed as incurred. Depreciation of property and equipment is
determined using the straight-line and accelerated methods over the
expected useful lives of the assets of five years.
NOTE 5 - RELATED PARTY TRANSACTIONS
In connection with the September 1999 dismissal of a lawsuit against
the company and others, Company shareholders individually paid all
of the litigation settlement from their personal assets without any
cost or continuing obligation to the Company.
The Company receives rent-free office space in Coeur d'Alene from
its president. The value of the space is not considered materially
significant for financial reporting purposes.
NOTE 6 - COMMON STOCK
The Company (Cadgie Co.) was formed in August of 1993 and
incorporated in November 1993 by Mr. Carman Ridland of Las Vegas,
Nevada as a spin-off from its predecessor firm Precious Metal Mines,
Inc.
F/S -13
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 6 - COMMON STOCK (Continued)
The Company issued 960,800 of its $0.01 par value shares to Precious
Metal Mines, Inc. for 16 unpatented mining claims located near
Philipsburg, Montana comprising the Kadex property group.
Precious Metal Mines, Inc. distributed the 960,800 shares of Cadgie
Company to its shareholders. One share of Cadgie Co. was exchanged
for each share of Precious Metal Mines, Inc. held by holders of
record as of August 31, 1993.
On August 31, 1994, the directors of Cadgie Co. declared a 1:5
reverse stock split of the outstanding Cadgie Co. shares, thus
reducing the number of outstanding shares from 960,800 to 192,160
shares.
On August 4, 1995 the directors of Cadgie Co. declared a 3:1 forward
stock split of the outstanding Cadgie Co. shares, thus increasing
the number of outstanding shares from 192,160 to 576,480.
In January 1996, Mr. Carmen Ridland, in a private sale, sold a
controlling interest in the corporation to Mr. Howard Crosby. On
January 12, 1996, Mr. Ridland transferred control of Cadgie Co. to
Mr. Crosby and Mr. Robert Jorgensen.
In June 1996, the Company completed a private placement of common
stock resulting in net proceeds of $25,000. The Company also issued
900,000 shares to Messrs. Ryan, Bingham, and Gorski, who had formed
a partnership to advance development of the mining concession
located in Coahuila, Mexico. The partnership had an informal joint
venture agreement with USMX, Inc. covering the mining concessions.
By acquiring the partnership interest, the Company was able to
negotiate and sign a formal joint venture agreement with USMX in
July 1996. (See Note 3)
In August 1996, the Company changed its name to Metalline Mining
Company.
In March 1997, the Company completed an issuance of common stock
resulting in net proceeds of $17,500.
In April 1997, the Company issued to Royal Silver Mines, Inc.,
200,000 shares of common stock resulting in proceeds of $70,000.
During the six months ended October 31, 1997, the Company sold
676,600 shares of common stock for cash, raising $516,560.
In November and December 1997, the Company sold 403,500 shares of
common stock for cash thereby raising $403,500.
An additional $881,945 was raised between February and October 1998
as the Company sold 915,000 more shares of its common stock.
F/S -14
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 6 - COMMON STOCK (continued)
During the year ended October 31, 1999, the Company sold 1,068,800
shares of common stock for cash, raising $1,375,900.
During October 1999, the Company received $37,500 as a deposit
toward the purchase of 50,000 shares. This stock was issued in
December 1999.
NON-CASH STOCK TRANSACTIONS
During November 1995, Metalline Mining Company's directors approved
an issue of 45,000 shares of common stock to Mr. John Ryan for
services rendered at $0.01 per share.
During June 1996, Metalline Mining Company issued 900,000 shares of
common stock for the assignment of mineral rights in the Sierra
Mojada Project in Coahuila, Mexico valued at $0.01 per share.
During October 1996, Metalline Mining Company issued 150,000 shares
of common stock for computer equipment. Also during October 1996,
Metalline Mining Company issued 120,000 shares of common stock to
Mr. Dan Gorski and an additional 20,000 shares of common stock to
Mr. John Ryan for services rendered.
During February 1997, the Company borrowed $30,000 from shareholders
and issued 24,900 shares of common stock as a loan incentive.
During April 1997, 133,800 shares of common stock were issued for
services and expenses. A total of 24,900 shares of common stock
were issued as loan incentives (interest) for $30,000 in loans from
shareholders. These shares were issued at $0.30 per share. A total
of 77,600 shares of common stock were issued in exchange for wages
during the months of January, February, and March of 1997 at $0.35
per share. A total of 31,300 shares of common stock were issued to
cover expenses incurred by shareholders at $0.35 per share.
In August 1997, 95,000 shares of common stock were issued for
services at a deemed value of $1.00 per share. Also in August 1997,
100,200 share of common stock were issued to discharge shareholder
debt.
In February 1998, 200,000 shares of common stock were issued for a
mine database. The shares were valued at $1.625 per share, resulting
in a transaction valued at $325,000.
In September 1998, 80,000 shares of common stock were issued for
payment of shareholder debt. The shares were valued at $1.00 per
share, resulting in a transaction valued at $80,000.
In August 1999, 55,556 shares of common stock were issued for
drilling services. The shares were valued at $0.90 per share,
resulting in a transaction valued at $50,000.
F/S - 15
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 7 - GOING CONCERN
As shown in the financial statements, the Company incurred a net
loss of $1,423,046 for the year ended October 31, 1999 and an
accumulated deficit of $2,969,262 since inception (November 8,
1993). These factors indicate that the Company may be unable to
continue in existence.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in
the event the Company cannot continue existence. The Company's
management believes that significant and imminent private placements
will generate sufficient cash for the Company to operate for the
next few years.
NOTE 8 - STOCK OPTIONS
In October 1997, in exchange for the receipt of $3,000 in cash, the
Company sold an option to acquire 300,000 shares of the Company's
common stock at $2.25 per share. The option is assignable and
expires in five years.
In December 1997 upon the receipt of $120,000 in cash, the Company
sold an option to acquire 1,200,000 shares of its common stock at
$0.90 per share. The option, which expired in November 1998, was
extended for two more years. The value of this extension was
estimated on the grant date of the extension using the Black-Scholes
Option Price Calculation. The following assumptions were made in
estimating fair value:
Risk-free interest rate is 5% and the expected life of the option is
two years. The fair market value of these options of $216,000 is
included in financing costs at October 31, 1999 pursuant to
Financial Accounting Standard No. 123.
In the year ending October 31, 1998, the Company issued options for
1,200,000 shares to a financing company. The option could be
exercised at any time prior to November 1998. Also in the year
ending October 31, 1998, the Company issued warrants for 665,000
shares to several consultants. The shares have varying exercise
dates, however, warrants representing 300,000 shares are currently
exercisable. The fair value of each warrant granted is estimated on
the grant date using the Black-Scholes Option Price Calculation. The
following assumptions were made in estimating fair value:
Risk-free interest rate is 5% and the expected life of the options
is five to seven years. The fair market value of these warrant of
$117,000 for consulting fees and $60,000 for financing costs are
included in the financial statements at October 31, 1999 pursuant to
Financial Accounting Standard No.123.
F/S - 16
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 8 - STOCK OPTIONS (Continued)
Following is a summary of the stock options during the years ending
October 31, 1998 and 1999.
<TABLE>
<CAPTION>
Weighted
Average
Number Exercise
Of Shares Price
--------- ---------
<S> <C> <C>
Outstanding at 11/1/1997 - -
Granted 1,500,000 $1.14
Exercised - -
Forfeited - -
---------- ------
Outstanding at 10/31/1998 1,500,000 $1.14
========= =====
Options exercisable at 10/30/1998 1,500,000 $1.14
========= =====
Weighted average fair value of
options granted during 1998 $1.00
======
Outstanding at 11/1/1998 1,500,000 $1.14
Granted 1,200,000 1.00
Exercised (250,000) 0.90
Forfeited - -
Expired (1,200,000) 1.00
----------- -----
Outstanding at 10/31/1999 1,250,000 $1.25
=========== =====
Options exercisable
at October 31, 1999 1,500,000 $1.14
=========== =====
Weighted average fair value of
options granted during 1999 $1.00
=======
During the year ended October 31, 1999 options were exercised
amounting to 250,000 shares. At October 31, 1998 no options had been
exercised.
</TABLE>
F/S - 17
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 9 - WARRANTS
At October 31, 1999 and 1998, there were outstanding warrants to
purchase 746,500 shares of the Company's common stock, at prices
ranging from $0.35 to $2.13 per share. The warrants become
exercisable in 1999 and expire at various dates through 2005. At
October 31, 1999 and 1998, 746,500 shares were reserved for that
purpose.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
The Company rents commercial office space in Coeur d'Alene, Idaho
for $325.00 per month on a month to month tenancy. A portion of
this space is sub-leased to another tenant, which pays half of the
cost of rent and utilities.
The Company also receives rent-free office space in Coeur d'Alene
from its president. The value of the space is not considered
materially significant for financial reporting purposes.
The Company is required to make land payments amounting to
$3,458,460 over the next two years. See Note 3.
During the year ended October 31, 1999 the Company settled a lawsuit
filed by some of Royal Silver Mines, Inc. shareholders for alleged
violations of securities laws. The terms of the settlement required
Metalline Mining Company distribute common stock valued at $80,000
at September 2, 1999 to their stock transfer agent for subsequent
distribution to the plaintiffs. The plaintiffs are limited in their
ability to sell the shares of stock.
NOTE 11 - YEAR 2000 ISSUES
The Company has modified its business technologies to be ready for
the year 2000. Critical data processing systems have been reviewed
and the Company does not expect a significant effect on internal
operations. However, like other companies, Metalline Mining Company
could be adversely affected if the computer systems its suppliers or
customers use do not properly process and calculate date-related
information and data for the period surrounding and including
January 1, 2000. This is commonly known as the "Year 2000" issue.
Additionally, this issue could impact non-computer systems and
devices such as production equipment, elevators, etc. At this time,
because of the complexities involved in the issue, management cannot
provide assurances that the Year 2000 issue will not have an impact
on the Company's operations. Any costs associated with the year 2000
issue will be expensed as incurred.
F/S - 18
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
NOTE 12 - JOINT VENTURE
On October 7, 1999 the Company announced the acceptance of a joint
venture with North Limited. The agreement gives North Limited the
right to earn into 60% of the Sierra Mojada by providing all funds
necessary to complete a feasibility study that is acceptable to
international banking institutions for lending development capital.
North Limited is a large Australian mining company based in
Melbourne, Australia and was known as North Broken Hill Peko before
a name change in 1994. North Limited is dedicated to natural
resource development that produces iron, uranium, base and precious
metals and forestry products.
[The balance of this page has been intentionally left blank.]
F/S - 19
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
October 31, 1999
SIGNATURES
In accordance with Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
METALLINE MINING COMPANY
BY: /s/ Merlin Bingham
Merlin Bingham,
its President
Date: January 31, 2000
By: /s/ Wayne Schoonmaker
Wayne Schoonmaker, its
Principal Accounting Officer
Date: January 31, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
By: /s/ Merlin Bingham By: /s/Jim Czirr
Merlin Bingham Jim Czirr
Director Director
Date: January 31, 2000 Date: January 31, 2000
By: /s/ Daniel Gorski By: /s/Wayne Schoonmaker
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer,Director
Date: January 31, 2000 Date: January 31, 2000
By: /s/ Mario Ayub Touche
Mario Ayub Touche
Director
Date: January 31, 2000
F/S - 20
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001031093
<NAME> METALLINE MINING COMPANY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<CASH> 240,662
<SECURITIES> 0
<RECEIVABLES> 5,208
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 248,997
<PP&E> 1,235,837<F1>
<DEPRECIATION> 62,328
<TOTAL-ASSETS> 1,422,506
<CURRENT-LIABILITIES> 54,266
<BONDS> 0
0
0
<COMMON> 72,152
<OTHER-SE> 1,296,088<F2>
<TOTAL-LIABILITY-AND-EQUITY> 1,422,506
<SALES> 0
<TOTAL-REVENUES> 3,214<F3>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,426,245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> (1,423,045)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,423,045)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,423,045)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)
<FN>
<F1>Consists of $1,103,671 in resource properties and claims, and $132,166 in
property and equipment, at cost.
<F2>Consists of $3,977,350 in additional paid-in capital, less a deficit of
$2,969,262 accumulated during exploration stage, plus $288,000 stock options
and warrants.
<F3>Consists of $3,214 in interest income.
</FN>
</TABLE>
