<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2000
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 [ ]
<PAGE>
METALLINE MINING COMPANY ANNUAL REPORT
ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED APRIL 30, 2000
TABLE OF CONTENTS Page
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements . . . . . . . . . . . . . . . . . . . . . 1
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operation . . . . . . . . . 1
PART II - OTHER INFORMATION
Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 4
Item 2: Changes in Securities . . . . . . . . . . . . . . . . . . . . 4
Item 3: Defaults upon Senior Securities . . . . . . . . . . . . . . . 4
Item 4: Submission of Matters to a Vote of Security Holders . . . . . 4
Item 5: Other Information . . . . . . . . . . . . . . . . . . . . . . 4
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 5
Index to Financials . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-19
[The balance of this page has been intentionally left blank.]
(i)
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The reviewed financial statements of the Company for the period covered
by this report are included elsewhere in this report, beginning at page
F/S-1.
The reviewed financial statements have been prepared in accordance with
generally accepted accounting principles for the interim financial
information with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of the Company's management, all adjustments
(consisting of only normal accruals) considered necessary for a fair
presentation have been included. Operating results for the six-month period
ended April 30, 2000 are not necessarily indicative of the results that may
be expected for the full year ending October 31, 2000.
For further information refer to the financial statements and footnotes
thereto in the Company's Annual Report on Form 10-K for the year ended
October 31, 1999 incorporated by reference herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS FOR THE PERIOD ENDED APRIL 30, 2000.
Six months ended April 30, 2000 compared to the six months ended April
30, 1999:
During the six months ended April 30, 2000, the Company generated no
revenue other than interest income of $3,209. General and administrative
expenses decreased to $543,723 for the six-month period ended April 30,
2000 as compared to $747,338 for the six-month period ended April 30, 1999.
The decrease is principally attributed to reduced expenses charged to it's
Mexican properties. For the six months ended April 30, 2000, the Company
experienced a loss of $463,786, or $0.06 per share, compared to a loss of
$747,342, or $0.12 per share, during the comparable period in the previous
year.
LIQUIDITY AND CAPITAL RESOURCES.
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. The Company 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.
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, and the Company has dropped the
Kadex Property claims.
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
Page 1
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, $3,320,769 for property payments and
$220,000 for working capital and costs of future financing.
Due to the Company's lack of revenues, the Company's independent
certified public accountants included a paragraph in the Company's 1999
financial statements relative to a going concern uncertainty. The Company
has financed its obligations during the 1998-99 fiscal year by its sale of
1,068,800 shares at prices ranging between $0.90 and $1.75 per share.
During the current period, the Company realized $849,750 from the sale of
1,000,000 shares.
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 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. The Company is current on its annual payments.
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.
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.
Page 2
By the mid 1920's many of the mines were under control of Penoles
Corporation ("Penoles") and ASARCO Incorporated ("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 tons prior to 1905 with another
1.5 million tons of similar ore coming from other ore bodies to the west
and to the southwest.
Mineros Nortenos has mined about 600,000 tons 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 ton, 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 tons of
high-grade ore that graded in excess of 30% lead, 20% zinc, 1% copper and 1
kg (31 ounces) silver per ton 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. No commercially mineable ore body has been delineated on the
properties, nor have any reserves been identified.
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.
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.
Page 3
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 reviewed 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 carrying amounts. The Company does not believe any
adjustments are needed to the carrying value of its assets 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.
CASH FLOWS FOR THE SIX MONTHS ENDED APRIL 30, 2000 WERE AS FOLLOWS:
During the six-month period ended April 30, 2000, the Company's cash
position increased $366,296, to $606,958. During the six-month period, the
Company used $393,840 in operating activities, which were less than the
reported $463,786 net loss due to changes in operating assets and
liabilities. Investing activities used $89,614 for mining property
acquisitions and equipment purchases, and financing activities realized
$849,750 from the sale of 1,000,000 common shares.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES.
Neither the constituent instruments defining the rights of the
registrant's securities holders nor the rights evidenced by the
registrant's outstanding common stock have been modified, limited, or
qualified. The Company sold 950,000 shares of its common stock for $0.855
per share in November 1999 and 50,000 shares of its common stock for $0.75
per share in December 1999. In April 2000 the Company issued 36,000 shares
for services rendered.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The registrant has no outstanding senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
Page 4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS. The following exhibit is filed as part of this report:
Exhibit 27.0 Financial Data Schedule.
REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the
registrant during the period covered by this report.
[The balance of this page has been intentionally left blank.]
Page 5
METALLINE MINING COMPANY
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Accountant's Review Report . . . . . . . . . . . . . . . . . . . . F/S-1
Balance Sheets as of April 30, 2000
and October 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . F/S-2
Statements of Operations for the three and six month periods
ended April 30, 2000 and April 30, 1999, and for
the period from inception (November 8, 1993)
to April 30, 2000 . . . . . . . . . . . . . . . . . . . . . . . . F/S-3
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to April 30, 2000 . . . . . . . . . . . . . . . . . . . . . . . . F/S-5
Statements of Cash Flow for the three and six month periods
ended April 30, 2000 and April 30, 1999, and for the
period from inception (November 8, 1993) to
April 30, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . F/S-11
Notes to Financial Statements . . . . . . . . . . . . . . . . . . F/S-12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-19
[The balance of this page has been intentionally left blank.]
Page 6
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
ACCOUNTANT'S REVIEW REPORT
The Board of Directors
Metalline Mining Company
(An Exploration Stage Company)
Coeur d'Alene, ID
We have reviewed the accompanying balance sheet of Metalline Mining Company
(an exploration stage company) as of April 30, 2000, and the related
statements of operations, stockholders' equity, and cash flows for the six
months and three months ended April 30, 2000, and for the period from
November 8, 1993 (inception) through April 30, 2000. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them
to be in conformity with generally accepted accounting principles.
The financial statements for the year ended October 31, 1999 were audited
by us and we expressed an unqualified opinion on it in our report dated
January 27, 2000. We have not performed any auditing procedures since that
date.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 7, the
Company has been in the exploration stage since inception and has generated
no revenues. Realization of a major portion of the assets is dependent upon
the Company's ability to meet its future financing requirements, and the
success of future operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
regarding those matters also are described in Note 7. 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
June 6, 2000
F/S-1
METALLINE MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30, October 31,
2000 1999
(Unaudited)
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 606,958 $ 240,662
Prepaid expenses 3,761 3,127
Employee advances 5,208 5,208
---------- ---------
Total Current Assets 615,927 248,997
---------- ---------
MINERAL PROPERTIES 1,182,905 1,103,671
---------- ---------
PROPERTY AND EQUIPMENT
Office equipment 81,499 71,119
Mining equipment and vehicles 61,047 61,047
Less: Accumulated depreciation (73,993) (62,328)
---------- ---------
Total Property and Equipment 64,553 69,838
---------- ---------
TOTAL ASSETS $ 1,867,385 $ 1,422,506
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 9,304 $ 3,739
Deposits payable - 37,500
Accrued liabilities 13,877 13,027
--------- ---------
Total Current Liabilities 23,181 54,266
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value;
50,000,000 shares
authorized, 8,251,095 and
7,215,095 shares issued and
outstanding respectively. 82,512 72,152
Additional paid-in capital 4,907,100 3,977,350
Stock options and warrants 288,000 288,000
Deficit accumulated during
development stage (3,433,048) (2,969,262)
---------- ---------
Total Stockholders' Equity 1,844,204 1,368,240
---------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,867,385 $1,422,506
========== =========
See accountant's review report and accompanying notes.
</TABLE>
F/S-2
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Three Monts Ended Six Months Ended November 8, 1993
---------------- --------------- (Inception)
April 30, April 30, April 30, April 30, through
2000 1999 2000 1999 April 30,
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
------- ------- ------- ------- --------
GENERAL AND ADMINISTRATIVE
EXPENSES
Salaries 54,000 54,000 108,000 108,000 539,778
Administrative
expenses 42,738 12,493 54,403 25,199 143,421
Professional services 70,363 5,069 98,274 27,851 1,098,503
Property expenses 13,430 353,940 104,734 481,754 1,128,348
Consulting 90,219 10,377 90,219 10,337 90,219
Travel 25,020 14,325 32,937 14,325 32,937
Marketing and
research 31,089 47,312 43,491 67,452 122,984
Financing Costs - - - - 276,000
Depreciation 6,092 6,123 11,665 12,420 74,410
--------- -------- ------- ------- --------
Total Expenses 332,951 503,639 543,723 747,338 3,506,600
-------- -------- ------- ------- ------
OPERATING LOSS (332,951) (503,639) (543,723) (747,338) (3,506,600)
--------- --------- --------- --------- --------
OTHER INCOME (EXPENSES)
Interest income 1,576 - 3,209 - 6,423
Interest expense - (4) - (4) (9,599)
Refund of Mexican
taxes paid 76,728 - 76,728 - 76,728
--------- --------- -------- -------- ---------
Total other
income (expense) 78,304 (4) 79,937 (4) 73,552
--------- --------- -------- -------- --------
LOSS BEFORE
INCOME TAXES
(carried forward) $(254,647) $(503,643) $(463,786) $(747,342) $(3,433,048)
======== ======== ======== ======== =========
</TABLE>
F/S-3
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Three Monts Ended Six Months Ended November 8, 1993
----------------- --------------- (Inception)
April 30, April 30, April 30, April 30, through
2000 1999 2000 1999 April 30,
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
LOSS BEFORE
INCOME TAXES
(carried forward) $(254,647) $(503,643) $(463,786) $(747,342) $(3,433,048)
INCOME TAXES - - - - -
---------- ----------- ---------- ---------- -----------
NET LOSS $(254,647) $(503,643) $(463,786) $(747,342) $(3,433,048)
======== ======== ======== ======== =========
NET LOSS PER COMMON SHARE
BASIC AND DILUTED $ (0.03) $ (0.08) $ (0.06) $ (0.12) $ (0.71)
======== ======== ======== ======== =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING,
BASIC AND DILUTED 8,221,095 6,095,739 7,943,095 6,130,739 4,860,443
======= ======= ======= ======= =======
---------------------
See accountant's review report and accompanying notes.
</TABLE>
F/S-4
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.
See accountant's review report and accompanying notes.
</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 576,480 $ 5,765 $(5,765) $ - $ - $(16,592) $(16,592)
Issuance in November
1995 of shares for
cash at $0.01 /share 45,000 450 - - - - -
Issuance in November
1995 of shares for
cash at $1.00 /share 15,859 159 15,700 - - - 15,859
Issuance in June 1996
of shares for cash
at $0.10 /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 equipment
at $0.10 /share 150,000 1,500 13,500 - - - 15,000
Issuance in October
1996 of shares for
services at
$0.10 /share 140,000 1,400 12,600 - - - 14,000
Net loss for
the year ending
October 31, 1996 - - - - - (40,670) (40,670)
------- ------- ------- ------- -------
Balance
October 31, 1996 3,132,339 $31,324 $153,485 $ - $ - $(57,262) $127,547
------- ------- ------- ------- ------- ------- -------
--------------------------------------
Table continued on next page.
See accountant's review report and accompanying notes.
</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
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 /share 133,800 1,338 44,245 - - - -
Issuance in March and
April of shares for
cash at $0.35 /share 250,000 2,500 85,000 - - - 87,500
Issuance in May and June
1997 of shares for cash
at $0.35 /share 181,600 1,816 61,744 - - - 63,560
Issuance in May and June
1997 of shares for
services at $0.35/share 62,500 625 21,250 - - - 21,875
Issuance in August 1997
of shares for payment of
loan at $0.315 /share 100,200 1,002 30,528 - - - 31,530
Issuance in August 1997
of shares for cash at
$0.90 /share 420,000 4,200 373,800 - - - 378,000
Issuance in August 1997
of shares for services
at $1.00 /share 95,000 950 94,050 - - - 95,000
Issuance in October 1997
of shares for cash at
$1.00 /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.
See accountant's review report and accompanying notes.
</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 4,450,439 $44,505 $941,352 $ - $ - $(640,181) $345,676
Issuance in November
and December 1997 of
shares for cash at
$1.00/share 403,500 $4,035 $399,465 - - - 403,500
Issuance of options (for
1,200,000 shares at
$0.90 /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 /share 41,800 418 21,882 - - - 22,300
Issuance in February 1998
of shares for mine data
base at $1.625 /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 /share 95,000 950 94,050 - - - 95,000
Issuance in September and
October 1998 of shares
for cash and receivables
at $1.00 /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) $1,149,385
-------------------- ------- ------- ------- ------- ------- ------- -------
Table continued on next page.
See accountant's review report and accompanying notes.
</TABLE>
F/S-8
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) $1,149,385
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 /share 776,000 7,760 768,240 - - - 776,000
Issuance in August 1999
of shares for drilling
fees at $0.90 /share 55,556 556 49,444 - - - 50,000
Issuance in August 1999
Shares for cash at
$1.75 /share 42,800 428 74,472 - - - 74,900
Net loss for year ending
October 31, 1999 - - - - - (1,423,045) (1,423,045)
------- ------- ------- ------- ------- ------- -------
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.
See accountant's review report and accompanying notes.
</TABLE>
F/S - 9
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 7,215,095 $72,152 $3,977,350 $ - $288,000 $(2,969,262) $1,368,240
------- ------- ------- ------- ------- ------- -------
Issuance in November
1999 shares for
cash at $0.855/share 950,000 9,500 802,750 - - - 812,250
Issuance in December
1999 shares for
cash at $0.75 /share 50,000 500 37,000 - - - 37,500
Issuance in April 2000
for consulting services
and receivables at
$2.51 /share 36,000 360 90,000 (360) - - 90,000
Net loss for the six
months ending April
30, 2000 (unaudited) - - - - - (463,786) (463,786)
---------- ------- ------- ------ --------- --------- --------
8,215,095 $ 82,152 $4,817,100 $ - $ 288,000 $(3,178,401) $2,008,851
--------- ------- -------- ----- ------- -------- -------
-------------------------------
See accountant's review report and accompanying notes.
</TABLE>
F/S - 10
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
Six Months Ended November 8, 1993
------------------------ (Inception)
April 30, April 30, through
2000 1999 April 30, 2000
(Unaudited) (Unaudited) (Unaudited)
----------- ----------- --------------
<S> <C> <C> <C>
Cash flows from
operating activities:
Net loss $(463,786) $(747,342) $(3,433,048)
Adjustments to reconcile
net loss to cash used
by operating activities:
Depreciation 11,665 12,420 74,410
Stock given in exchange
for services 90,000 - 338,758
Stock options for
operating expenses - - 393,000
Changes in operating
assets and liabilities:
Prepaid expenses (634) 2,049 (3,761)
Employee advances - - (5,208)
Accounts payable 5,565 (37,816) 9,304
Deposits payable (37,500) - -
Accrued liabilities 850 600 13,877
---------- ---------- ----------
Net cash used by
operating activities (393,840) (770,089) (2,612,668)
----------- ----------- ------------
Curchase of property and
equipment (10,380) - (127,545)
Acquisition of mineral
properties (79,234) (100) (834,905)
---------- -------- ------------
Net cash used by investing
activities (89,614) (100) (962,450)
----------- -------- ------------
Cash flows from financing
activities:
Stock given in exchange
for loan - - 31,530
Proceeds from sales of
common stock 849,750 780,000 3,991,964
Proceeds from sales of
options - - 123,000
Deposits for sale of stock - - 50,000
Re-payments on
shareholders' loans - - (14,418)
---------- --------- ------------
Net cash provided by
financing activities: 849,750 780,000 4,182,076
---------- --------- -----------
Net increase in cash 366,296 9,811 606,958
Cash beginning of period 240,662 313,322 -
---------- ---------- ----------
Cash at end of period $606,958 $323,133 $606,958
======= ======= =======
Supplemental cash flow
disclosures:
Income taxes paid in cash $ - $ 4 $ 9,599
Interest paid in cash $ - $ - $ -
Non-cash financing activities:
Common stock issued for
services $ 90,000 $ - $338,758
Common stock issued for
mineral properties $ - $ - $348,000
Common stock issued for
equipment $ - $ - $ 15,000
Common stock issued for
payment of debt $ - $ - $ 80,000
Common stock issued for
subscription receivable $ - $ - $ 30,000
Common stock options
issued for services $ - $ - $117,000
Common stock options
issued for financing fees $ - $ - $276,000
See accountant's review report and accompanying notes.
</TABLE>
F/S-11
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
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 Company's fiscal year-end is
October 31.
The Company's efforts have been concentrated in expenditures related to
exploration properties, principally in the Sierra Mojada Project,
located in Coahuila, Mexico. 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
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 April 30, 2000 and October 31, 1999,
common stock options of 1,250,000 were not included in computing
diluted loss per share because their effects were antidilutive.
EXPLORATION STAGE
The Company has been 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
mineable 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.
F/S - 12
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
PROVISIONS FOR TAXES
At April 30, 2000 and October 31, 1999, the Company had accumulated net
operating losses of approximately $3,433,000 and $2,969,000,
respectively. No provision 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
April 30, 2000, the Company exceeded the insured amount by $366,762.
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." In
complying with this standard, the Company 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 carrying amounts. The Company does not believe any
adjustments are needed to the carrying value of its assets at April 30,
2000 and October 31, 1999.
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.
REVENUE RECOGNITION POLICY
Revenues from sales of product are recognized when the product is
shipped.
DERIVATIVE INSTRUMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No.133, "Accounting for
Derivative Instruments and Hedging Activities." This new standard
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. At April 30,
2000, the Company has not engaged in any transaction that would be
considered derivative instruments or hedging activities.
F/S - 13
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
INTERIM FINANCIAL STATEMENTS
The interim financial statements as of and for the quarter and six
months included herein have been prepared for the Company, without
audit. They reflect all adjustments which are, in the opinion of
management, necessary to present fairly the results of operations for
these periods. All such adjustments are normal recurring adjustments.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full fiscal year.
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.
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
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.
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.
F/S-14
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)
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. 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 $516,500. 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.
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.
During November and December 1999, the Company sold 1,000,000 shares of
its common stock for $812,250.
NON-CASH STOCK TRANSACTIONS
During November 1995, Metalline Mining Company's directors approved the
issuance of 45,000 shares of common stock 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.
F/S - 15
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
NOTE 6 - COMMON STOCK (Continued)
NON-CASH STOCK TRANSACTIONS (Continued)
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 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
shares 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.
In April 2000, 36,000 shares of common stock were issued for consulting
services and subscription receivable. The shares were valued at $2.51
per share, resulting in a transaction valued at $90,360.
NOTE 7 - GOING CONCERN
As shown in the financial statements, the Company incurred a net loss
of $463,786 for the six months ended April 30, 2000 and an accumulated
deficit of $3,433,048 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
Following is a summary of the stock options during the year ending
October 31, 1999 and the six months ending April 30, 2000.
F/S - 16
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
<TABLE>
<CAPTION>
NOTE 8 - STOCK OPTIONS (Continued)
Weighted Average
Number of Shares Exercise Price
----------------- ----------------
<S> <C> <C>
Outstanding at 11/1/98 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 10/31/99 1,250,000 $ 1.14
========== =========
Options exercisable
at 10/30/99 1,250,000 $ 1.14
========== ========
Weighted average fair value of
options granted during 1999 $ 1.00
=====
Outstanding at 11/1/99 1,250,000 $ 1.14
Granted - -
Exercised - -
Forfeited - -
Expired - -
----------- ---------
Outstanding at 4/30/2000 1,250,000 $ 1.14
======= ========
Options exercisable
at 4/30/2000 1,250,000 $ 1.14
======= ========
</TABLE>
During the year ended October 31, 1999, options were exercised
amounting to 250,000 shares. During the six months ended April 30,
2000, no options have been exercised.
NOTE 9 - WARRANTS
At April 30, 2000 and October 31, 1999, 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 became exercisable
in 1999 and expire at various dates through 2005. The Company has
reserved 746,500 shares for that purpose.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
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.
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 to 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, there have been no known effects to the
Company in regards to the Year 2000 issue.
F/S - 17
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
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 was intentionally left blank.]
F/S - 18
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
April 30, 2000
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: June 14, 2000
By: /s/ Wayne L. Schoonmaker
-------------------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: June 14, 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: June 14, 2000 Date: June 14, 2000
By: /s/ Daniel Garski By: /s/ Wayne L. Schoonmaker
--------------------- -------------------------
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer, Director
Date: June 14, 2000 Date: June 14, 2000
By: /s/ Mario Ayub Touche
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Mario Ayub Touche
Director
Date: June 14, 2000
F/S - 19
