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 July 31, 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
of incorporation) No.)
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 JULY 31, 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 . . . . . . . . . . . . . . . 4
Index to Financials . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-12
[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 nine-month period ended July 31, 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 JULY 31, 2000.
Nine months ended July 31, 2000 compared to the nine months
ended July 31, 1999:
During the nine months ended July 31, 2000, the Company generated
no revenue other than interest income of $5,084. General and
administrative expenses decreased to $670,884 for the nine-month
period ended July 31, 2000 as compared to $948,774 for the nine-
month period ended July 31, 1999. The decrease is principally
attributed to reduced expenses charged to it's Mexican
properties. For the nine months ended July 31, 2000, the Company
experienced a loss of $589,072, or $0.07 per share, compared to a
loss of $947,014, or $0.13 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's plan of operation, subject to maintaining
sufficient funds, calls for continued geologic mapping of the
underground workings, sampling, and drilling to explore for
additional mineralization and to continue to develop an ore
reserve.
Page 1
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 has realized $1,199,485 from the sale
of 1,107,500 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.
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.
Page 2
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 high grades, to enable it to be a low-cost
producer.
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. However, 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.
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.
Page 3
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 NINE MONTHS ENDED JULY 31, 2000 WERE AS
FOLLOWS:
During the nine-month period ended July 31, 2000, the Company's
cash position increased $526,412, to $767,074. During the nine-
month period, the Company used $517,882 in operating activities,
which were less than the reported $589,072 net loss due to
changes in operating assets and liabilities. Investing activities
used $155,191 for mining property acquisitions and equipment
purchases, and financing activities realized $1,199,485 from the
sale of 1,107,500 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. In June and July 2000 the Company sold 107,500 shares
of its common stock for $3.25 per share.
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.
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.
Page 4
</page>
<PAGE>
METALLINE MINING COMPANY
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Balance Sheets as of July 31, 2000
and October 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . F/S-1
Statements of Operations for the three and nine
month periods ended July 31, 2000 and July 31,
1999, and for the period from inception
(November 8, 1993) to July 31, 2000 . . . . . . . . . . . . . . . . F/S-2
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to July 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . F/S-3
Statements of Cash Flow for the three and nine
month periods ended July 31, 2000 and July 31,
1999, and for the period from inception
(November 8, 1993) to July 31, 2000 . . . . . . . . . . . . . . . . F/S-9
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . F/S-10
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F/S-12
[The balance of this page has been intentionally left blank.]
Page 5
</page>
<PAGE>
METALLINE MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, October 31,
2000 1999
(Unaudited)
---------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 767,074 $ 240,662
Prepaid expenses 5,706 3,127
Employee advances 9,119 5,208
---------- ---------
Total Current Assets 781,899 248,997
---------- ---------
MINERAL PROPERTIES 1,248,482 1,103,671
---------- ---------
PROPERTY AND EQUIPMENT
Office equipment 81,499 71,119
Mining equipment and vehicles 61,047 61,047
Less: Accumulated depreciation (79,826) (62,328)
---------- ---------
Total Property and Equipment 62,720 69,838
---------- ---------
TOTAL ASSETS $ 2,093,101 $ 1,422,506
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 10,723 $ 3,739
Deposits payable - 37,500
Accrued liabilities 13,725 13,027
--------- ---------
Total Current Liabilities 24,448 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. 83,587 72,152
Additional paid-in capital 5,255,400 3,977,350
Stock options and warrants 288,000 288,000
Deficit accumulated during
exploration stage (3,558,334) (2,969,262)
---------- ---------
Total Stockholders' Equity 2,068,653 1,368,240
---------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,093,101 $1,422,506
========== =========
The accompanying notes are an integral part of these financial
statements.
</TABLE>
F/S-1
</page>
<PAGE>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Three Monts Ended Nine months Ended November 8, 1993
----------------- ----------------- (Inception)
July 31, July 31, July 31, July 31, through
2000 1999 2000 1999 July 31,
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ----------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
------- ------- ------- ------ -------
GENERAL AND ADMINISTRATIVE
EXPENSES
Salaries 54,000 54,000 162,000 162,000 539,778
Administrative expenses 19,741 13,155 74,144 38,354 163,162
Professional services 25,326 48,855 123,600 76,706 1,123,829
Property expenses (21,649) 33,373 83,085 515,127 1,106,699
Consulting - - 90,219 10,337 90,219
Travel 16,203 7,003 49,140 21,328 49,140
Marketing and research 27,708 38,840 71,199 108,292 150,692
Financing Costs - - - - 276,000
Depreciation 5,832 6,210 17,497 18,630 80,242
------- ------- ------- ------- --------
Total Expenses 127,161 201,436 670,884 948,774 3,633,761
------- ------- ------- ------- ---------
OPERATING LOSS (127,161) (201,436) (670,884) (948,774) (3,633,761)
------- ------- ------- ------- ---------
OTHER INCOME (EXPENSES)
Interest income 1,875 1,764 5,084 1,764 8,298
Interest expense - - - (4) (9,599)
Refund of Mexican taxes paid - - 76,728 - 76,728
------- ------- ------- ------ ---------
Total other income (expense) 1,875 1,764 81,812 1,760 75,427
------- ------- ------- ------ ---------
LOSS BEFORE
INCOME TAXES $(125,286) $(199,672) $(589,072) $(947,014)$(3,558,334)
======== ======== ======== ======= =========
NET LOSS PER COMMON SHARE $ (0.01) $ (0.03) $ (0.07) $ (0.13) $ (0.97)
======== ======== ======== ======== =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,320,262 6,844,239 8,248,595 7,073,739 3,659,941
======= ======= ======= ======= =======
---------------------
The accompanying notes are an integral part of these financial statements.
</TABLE> F/S-2
</page>
<PAGE>
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 Warrant 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.
</TABLE>
The accompanying notes are an integral part of these financial statements.
F/S-3
</page>
<PAGE>
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
shares for CAD
computer equipment
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-4
</page>
<PAGE>
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 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-5
</page>
<PAGE>
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
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)$1,149,385
------------------ ------- ------- ------- ------- ------- ------- -------
Table continued on next page.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-6
</page>
<PAGE>
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
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) (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.
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S - 7
</page>
<PAGE>
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
per share 950,000 9,500 802,750 - - - 812,250
Issuance in December
1999 shares for cash
at $0.75 per share 50,000 500 37,000 - - - 37,500
Issuance in April 2000
shares for consulting
services and
receivables at
$2.51 per share 36,000 360 90,000 (360) - - 90,000
Stock subscription
received - - - 360 - - 360
Issuance in June 2000
shares for cash at
$3.25 per share 100,000 1,000 324,000 - - - 325,000
Issuance in July
2000 shares for cash
at $3.25 per share 7,500 75 24,300 - - - 24,375
Net loss for the nine
months ending July
31, 2000 (unaudited) - - - - - (589,072) (589,072)
---------- --------- ----------- ------ --------- ------ ---------
Balances at July 31,
2000 (unaudited) 8,358,595 $ 83,587 $5,255,400 $ - $ 288,000 $(3,558,334) $2,068,653
---------- -------- ----------- ----- ------- ---------- ----------
------------------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S - 8
</page>
<PAGE>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
Nine months Ended November 8, 1993
------------------- (Inception)
July 31, July 31, through
2000 1999 July 31, 2000
(Unaudited) (Unaudited) (Unaudited)
------- --------- ----------
<S> <C> <C> <C>
Cash flows from
operating activities:
Net loss $(589,072) $(947,014) $(3,558,334)
Adjustments to reconcile
net loss to cash used
by operating activities:
Depreciation 17,497 18,630 80,242
Stock given in exchange
for services 90,000 - 338,758
Stock options for
operating expenses - - 393,000
Changes in operating assets
and liabilities:
(Increase) decrease in
accounts receivable - - 2,849
(Increase) decrease in
prepaid expenses (2,579) 1,331 17,906
(Increase) decrease in
employee advances (3,911) - (35,579)
Increase (decrease) in
accounts payable (30,515) (12,198) (26,777)
Increase (decrease) in
accrued liabilities 698 (1,128) 13,726
--------- -------- --------
Net cash used by
operating activities (517,882) (940,379) (2,774,209)
--------- -------- ----------
Cash flows from
investing activities:
Purchase of equipment (10,380) - (127,543)
Acquisition of mining
properties (144,811) (192,600) (900,485)
--------- -------- --------
Net cash used by
investing activities (155,191) (192,600) (1,028,028)
-------- --------- ---------
Cash flows from
financing activities:
Stock given in exchange
for loan - - 31,530
Proceeds from sales of
common stock 1,199,485 968,000 4,341,699
Proceeds from sales
of options - - 123,000
Deposits for sale of stock - - 87,500
Payment of subscriptions
receivable - 300,000 -
Re-payments on
shareholders' loans - - (14,418)
------ ------- --------
Net cash provided by
financing activities: 1,119,485 1,268,000 4,569,311
-------- --------- ---------
Net increase (decrease) in cash 526,412 135,021 767,074
Cash beginning of period 240,662 313,322 -
-------- -------- -------
Cash at end of period $767,074 $448,343 $767,074
======== ======== ========
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 $ - $ - $300,000
Common stock options issued
for services $ - $ - $117,000
Common stock options issued
for financing fees $ - $ - $276,000
The accompanying notes are an integral part of these financial statements.
</TABLE>
F/S-9
</page>
<PAGE>
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
July 31, 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.
The costs of acquiring, exploring, and developing mineral properties
are capitalized by project area. Costs to maintain the mineral rights
and leases are expensed are 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.
NOTE 2 - 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 - 10
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 3 - FINANCIAL STATEMENTS
The financial statements of Metalline Mining Company, including
herein, have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Although
certain information normally included in financial statements
prepared in accordance with generally accepted accounting principles
has been condensed or omitted, the Company believes that the
disclosures are adequate to make the information presented not
misleading. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended
October 31, 1999.
The financial statements included herein reflect all normal recurring
adjustments that, in the opinion of management, are necessary for a
fair presentation. The results for interim periods are not
necessarily indicative of trends or of results to expected for a full
year.
[The balance of this page was intentionally left blank.]
F/S - 11
</page>
<PAGE>
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
July 31, 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: September 14, 2000
By: /s/ Wayne L. Schoonmaker
------------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: September 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: September 14, 2000 Date: September 14, 2000
By: /s/ Daniel Garski By: /s/ Wayne L. Schoonmaker
----------------- ---------------
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer, Director
Date: September 14, 2000 Date: September 14, 2000
By: /s/ Mario Ayub Touche
-----------------
Mario Ayub Touche
Director
Date: September 14, 2000
F/S - 12
</page>
