<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
METALINE CONTACT MINES
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(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C>
Idaho 91-0779945
--------------------------------------------- ---------------------------------------
(State or other jurisdiction or incorporation (I.R.S. Employer Identification No.)
or organization)
6599 Prichard Creek Rd. Murray ID 83874
--------------------------------------------- ---------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number (208) 682-2217
Securities to be registered pursuant to Section 12(b) of the Act.
<TABLE>
<S> <C>
Title of each class Name of each exchange on which registered
---------------------------------------- -----------------------------------------
---------------------------------------- -----------------------------------------
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock - $0.05 Par Value
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(Title of Class)
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(Title of Class)
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METALINE CONTACT MINES
FINANCIAL STATEMENTS
JUNE 30, 2000
WILLIAMS & WEBSTER, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
BANK OF AMERICA FINANCIAL CENTER
601 W. RIVERSIDE, SUITE 1940
SPOKANE, WA 99201
<PAGE> 3
METALINE CONTACT MINES
TABLE OF CONTENTS
<TABLE>
<S> <C>
ACCOUNTANT'S REVIEW REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Operations 3
Statement of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
NOTES TO FINANCIAL STATEMENTS 6
</TABLE>
<PAGE> 4
The Board of Directors
Metaline Contact Mines
Murray, Idaho
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Metaline Contact Mines as of
June 30, 2000 and the related statements of operations, stockholders' equity and
cash flows for the six months and three months ended June 30, 2000 and June 30,
1999, respectively. 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 applied 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 December 31, 1999 were audited by us
and we expressed an unqualified opinion on them in our report dated March 29,
1999, but we have not performed any auditing procedures since that date.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, WA
August 8, 2000
<PAGE> 5
METALINE CONTACT MINES
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(unaudited)
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 383,297 $ 321,228
Federal tax deposit 1,500 1,500
--------- ---------
TOTAL CURRENT ASSETS 384,797 322,728
--------- ---------
OTHER ASSETS
Receivables from related parties 109,413 226,768
Investment in LLC 37,870 38,253
--------- ---------
TOTAL OTHER ASSETS 147,283 265,021
--------- ---------
TOTAL ASSETS $ 532,080 $ 587,749
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -- $ 25,876
Unrealized royalty income 3,000 --
--------- ---------
TOTAL CURRENT LIABILITIES 3,000 25,876
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.05 par value; 20,000,000 shares authorized,
14,064,300 and 13,564,300 shares issued and outstanding 703,222 678,222
Additional paid-in capital 302,165 302,165
Stock options 13,632 13,632
Accumulated deficit (489,939) (432,146)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 529,080 561,873
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 532,080 $ 587,749
========= =========
</TABLE>
See accompanying notes and accountant's review report.
2
<PAGE> 6
METALINE CONTACT MINES
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
------------------------------ ------------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Royalty income $ 3,000 $ - $ 6,000 $ 6,000
------------ ------------ ------------ ------------
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting and management fees 30,000 285 60,000 285
Accounting and legal fees 10,428 4,241 10,711 7,338
Transfer agent fees 76 20 303 243
Repairs and maintenance -- -- -- --
Rent -- -- -- --
Office 563 902 1,722 1,850
Utilities 4 -- 4 --
Travel and meals 1,513 -- 1,513 --
Taxes and licenses 59 59 59 59
Insurance -- -- -- --
------------ ------------ ------------ ------------
Total Expenses 42,643 5,507 74,312 9,775
------------ ------------ ------------- ------------
OPERATING INCOME (LOSS) (39,643) (5,507) (68,312) (3,775)
------------ ------------ ------------- ------------
OTHER INCOME
Interest income 3,523 -- 3,523 --
Dividend income 4,074 4,059 7,378 7,533
Income (Loss) from investment in LLC (382) -- (382) --
------------ ------------ ------------- ------------
Total Other Income 7,215 4,059 10,519 7,533
------------ ------------ ------------- ------------
INCOME (LOSS) BEFORE TAXES (32,428) (1,448) (57,793) 3,758
INCOME TAX EXPENSE -- -- -- --
------------ ------------ ------------- ------------
NET INCOME (LOSS) $ (32,428) $ (1,448) $ (57,793) $ 3,758
============ ============ ============= ============
NET INCOME (LOSS) PER COMMON SHARE $ nil $ nil $ nil $ nil
============ ============ ============= ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 13,378,684 12,626,800 13,378,684 12,626,800
============ ============ ============= ============
</TABLE>
See accompanying notes and accountant's review report.
3
<PAGE> 7
METALINE CONTACT MINES
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Number of
Common Common Paid-in
Stock Shares Stock Capital
------------ ----------- ----------
<S> <C> <C> <C>
BALANCE, AT DECEMBER 31, 1997 12,564,300 $ 628,222 $ 302,165
Issuance of stock at September 30,
1998 in payment of consulting fees at 250,000 12,500 --
$0.05 per share
Net income for the year ended
December 31, 1998 -- -- --
---------- ----------- ----------
BALANCE, AT DECEMBER 31, 1998 12,814,300 640,722 302,165
Issuances of stock for consulting
fees at $0.05 per share 750,000 37,500 --
Stock options granted
November 16, 1999 -- -- --
Net loss for the year ended -- -- --
December 31, 1999
---------- ----------- ----------
BALANCE AT DECEMBER 31, 1999 13,564,300 678,222 302,165
Issuances of stock for accounts
payable at $0.05 per share 500,000 25,000 --
Net loss for the period ended -- -- --
June 30, 2000
---------- ----------- ----------
BALANCE AT JUNE 30, 2000 (unaudited) 14,064,300 $ 703,222 $ 302,165
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Total
Accumulated Stock Stockholders'
Deficit Options Equity
----------- ----------- -------------
<S> <C> <C> <C>
BALANCE, AT DECEMBER 31, 1997 $ (790,638) $ -- $ 139,749
Issuance of stock at September 30,
1998 in payment of consulting fees at 0 -- 12,500
$0.05 per share
Net income for the year ended
December 31, 1998 429,951 -- 429,951
----------- ----------- -------------
BALANCE, AT DECEMBER 31, 1998 (360,687) -- 582,200
Issuances of stock for consulting
fees at $0.05 per share 0 -- 37,500
Stock options granted
November 16, 1999 0 13,632 13,632
Net loss for the year ended (71,459) -- (71,459)
December 31, 1999
----------- ----------- -------------
BALANCE AT DECEMBER 31, 1999 (432,146) 13,632 561,873
Issuances of stock for accounts
payable at $0.05 per share 0 -- 25,000
Net loss for the period ended (57,793) -- (57,793)
June 30, 2000
----------- ----------- -------------
BALANCE AT JUNE 30, 2000 (unaudited) $ (489,939) $ 13,632 $ 529,080
=========== =========== =============
</TABLE>
See accompanying notes and accountant's review report.
4
<PAGE> 8
METALINE CONTACT MINES
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the Six Months Ended
-------------------------
June 30, June 30,
2000 1999
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (57,793) $ 3,758
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Changes in assets and liabilities:
(Increase) decrease in account receivable 117,356 --
(Increase) decrease in investment in LLC 382 (2)
Increase (decrease) in accounts payable (25,876) --
Increase (decrease) in unrealized royalty income 3,000
Decrease (increase) in other assets -- (706)
Payment of expenses from issuance of stock 25,000 --
--------- ---------
Net cash provided (used) by operating activities 62,069 3,050
--------- ---------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES -- --
--------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES -- --
--------- ---------
Net increase (decrease) in cash and cash equivalents 62,069 3,050
Cash and cash equivalents beginning of period 321,228 407,347
--------- ---------
Cash and cash equivalents for end of period $ 383,297 $ 410,397
========= =========
Supplemental cash flow disclosures:
Income taxes paid $ -- $ --
Interest paid $ -- $ --
NON-CASH TRANSACTIONS
Stock issued in payment of consulting and other expenses $ 25,000 $ --
</TABLE>
See accompanying notes and accountant's review report.
5
<PAGE> 9
METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Metaline Contact Mines (hereinafter "Metaline") was incorporated in November of
1928 under the laws of the State of Washington for the purpose of engaging in
mining and the buying and selling of ores, metals, and minerals. The Company's
fiscal year end is December 31.
The Company was reorganized and recapitalized in 1960 and its articles of
incorporation were amended to expand its business purposes to include various
additional business activities. Metaline has continued its operations since its
formation and has historically acquired land, mineral rights, patented lode
mining claims, and timber.
In the last quarter of 1996, Metaline transferred substantially all of its
assets to a limited liability company. See Note 3 and Note 8.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to
assist in understanding the 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.
Use of Estimates
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This standard establishes accounting and
reporting standards for derivative
6
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METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derivative Instruments (continued)
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 June 30, 2000, the Company has not engaged in any transactions that would be
considered derivative instruments or hedging activities.
Interim Financial Statements
The interim financial statements as of and for the period ended June 30, 2000
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.
Mineral Properties
Costs of acquiring, exploring and developing mineral properties are capitalized
by project area. Costs to maintain mineral rights and leases are expensed as
incurred. When a property reaches the production state, 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.
Should a property be abandoned, its capitalized costs are charged to operations.
The Company charges to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within the
project area.
Financial Accounting Standards
The Company has adopted the fair value accounting rules to record all
transactions in equity instruments for goods or services.
Impaired Asset Policy
The Company evaluates the recoverability of long-lived assets when events and
circumstances indicate that such assets might be impaired. The Company
determines impairment by comparing the undiscounted future cash flows estimated
to be generated by these assets to their respective carrying amounts. The
Company does not believe any adjustments are needed to the carrying value of its
assets at June 30, 2000.
7
<PAGE> 11
METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Compensated Absences
Currently, the Company has no employees; therefore it is impracticable to
estimate the amount of compensation for future absences and no liability has
been recorded in the accompanying financial statements. The Company's policy is
to recognize the costs of compensated absences when actually paid to employees.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Basic and diluted loss
per share was the same, as there were no common stock equivalents outstanding.
NOTE 3 - INVESTMENTS IN LLC
On October 30, 1996, Metaline formed a Delaware limited liability company,
Metaline Contact Mines, LLC (hereinafter "The LLC"), and transferred
substantially all of its assets (primarily real property surface rights and
timber) to The LLC. In the remaining months of 1996, the majority of Metaline's
shareholders transferred their stock in Metaline to The LLC in exchange for
non-managing member interests in The LLC. The process of conveying stock in
exchange for LLC interests was part of a structured transaction which allowed
Metaline's primary owners to transfer equity out of a corporation and into
another entity, prior to the entity's eventual disposition. At the conclusion of
this share exchange, The LLC owned 93 percent of the outstanding stock of
Metaline. Both before and after the share exchange, Metaline was the managing
member of The LLC. See Note 5 and Note 9.
When Metaline formed the aforementioned LLC (as The LLC's only owner), it
transferred assets to The LLC and recorded its investment in The LLC at
$674,834, the net book value of the assets transferred. At the end of 1996, when
Metaline's former shareholders had acquired 93 percent of The LLC, Metaline
recorded a loss of $627,596 to reflect its decreased (from 100 percent to seven
percent) investment in The LLC.
In 1998, the majority of the Company's interest in The LLC was expensed in
connection with the sale of the majority of The LLC's assets. See Note 5.
In 1999, a net loss in The LLC resulted in a decreased value of the Company's
interest to $38,382.
For the six months ended June 30, 2000, an estimated loss in The LLC resulted in
a decreased value of the Company's interest to $37,870.
8
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METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 4 - MINERAL PROPERTIES
In 1996, Metaline transferred timber and real property surface rights to The LLC
(see Note 3) but retained underground mineral rights to the transferred real
property and its mining claims, located in Pend Oreille County in Washington
State. The timber and real property surface rights were deemed by management to
have a value equal to their recorded cost and this cost was transferred to The
LLC. The related mineral rights are carried at no cost on Metaline's books.
In 1997, Metaline and The LLC jointly leased certain Pend Oreille County real
estate and all of its mineral rights to a major mining company. See Note 6.
NOTE 5 - RELATED PARTIES
During 1996, $33,055 was advanced to The LLC for operating expenditures. At
December 31, 1998, the remaining balance was $24,055. These funds are recorded
on Metaline's books as part of a non-current, related party receivable.
During 1998, The LLC sold property for a net gain of $5,958,762. Metaline's
share of this gain was $507,858. The Company recorded a non-current, related
party receivable of $105,470 for the balance of the distribution which is
expected to be received in 2000.
In June 1998, Metaline executed an agreement with Nor-Pac Limited Company
wherein, for providing management and consulting services to Metaline, Nor-Pac
was entitled to receive 500,000 shares of Metaline common stock in the second
half of 1998, 250,000 shares of Metaline common stock quarterly in 1999 and
$10,000 per month thereafter commencing on January 1, 2000. In the event that
Metaline's common stock becomes publicly trading on NASDAQ or equivalent stock
exchange, Nor-Pac shall receive as additional compensation 1,000,000 shares of
common stock (if public trading commences in 1999). In September 1998, Metaline
issued 250,000 shares of common stock to Nor-Pac and also issued another 250,000
shares in January 1999.
Throughout 1999, two additional stock issuances to Nor-Pac occurred totaling
500,000 shares in payment of consulting fees for the first and second quarter of
1999. Consulting fees for the third and fourth quarter of 1999 have been
accrued, and during January 2000, 500,000 shares of common stock were issued in
payment of the consulting fees.
On September 20, 1999, the Company's Board of Directors approved a $95,000 loan
to Nor-Pac at an annual interest rate of 8.25%. The uncollateralized, short-term
instrument was paid in full on June 20, 2000.
For additional information on related parties, see Notes 3, 6 and 9.
9
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METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 6 - MINING LEASE WITH PURCHASE OPTION
On September 1, 1997, Metaline and The LLC acting jointly as lessors, executed
an agreement with Cominco American Incorporated (hereinafter "Cominco") wherein
Cominco received the right to explore, develop, and mine Metaline's underground
mineral rights in Pend Oreille County, Washington for a period of twenty years
with an option renewal period of the same length. Under this lease agreement,
Cominco obligates itself to pay the lessors $3,000 per quarter for the first
five years of the lease with ascending quarterly increments at each successive
five year interval.
The aforementioned quarterly disbursements are characterized by the lease as
"advance royalty payments" which may be fully offset against a three-percent
production royalty retained by the lessors.
The lease agreement, while providing that Cominco must expend $125,000 in
exploration work within the first five years of the lease, also gives Cominco
the option to purchase 200 surface acres of the leased property for fair market
value during the lease term.
From the inception of the lease through June 30, 2000, Metaline has received
$33,016 in payments from Cominco.
NOTE 7 - INCOME TAXES
The Company has unused operating loss carryforwards that may be applied against
future taxable income and that expire as follows:
<TABLE>
<S> <C>
12-31-2018 $ 244,581
12-31-2019 $ 52,925
</TABLE>
No deferred tax benefit has been reported in the financial statements, as the
Company believes there is a significant chance that the net operating loss
carryforwards will expire unused. Accordingly, the potential tax benefits of the
net operating loss carryforwards are offset by a valuation allowance of the same
amount.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
All earnings from The LLC in 1997 and 1996 were attributed by The LLC's
principal owners to Metaline. Accordingly, Metaline reported these earnings as
its own taxable income (on both Metaline's and The LLC's federal income tax
returns) although Metaline retained only a 6.9861 percent interest in The LLC
from the end of 1996 to December 31, 1998. For calendar 1998 and subsequent
years, Metaline will report only its pro rata share (6.9861%) of taxable income
from The LLC, with other LLC members reporting their respective share of LLC
taxable income.
The LLC has agreed, in writing, to indemnify Metaline for any prior year income
distributions requested by other LLC members. As of June 30, 2000, no cash or
property distributions were
10
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METALINE CONTACT MINES
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 8 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
made by the LLC to its members for indemnification purposes. In view of the
ownership changes in The LLC, future distributions are expected to be made by
The LLC to its members as determined from time to time by Metaline, its managing
member. See Note 9 regarding a change in LLC ownership and see Note 5 regarding
related party commitment.
NOTE 9 - CHANGE IN LLC OWNERSHIP
On June 1, 1998, Nor-Pac Limited Company purchased control of Metaline from its
three principal owners at the time (Bunker Limited Partnership, Hecla Mining
Company, and Metaline Mining & Leasing Company) by acquiring these entities'
interests in Metaline Contact Mines LLC. See Note 1 and Note 5.
NOTE 10 - STOCK OPTIONS
Metaline adopted a stock option plan on November 16, 1999. Under the plan, the
Company may grant options for up to 2,000,000 shares of common stock at an
initial exercise price of $0.125. The options may be exercised until November
16, 2009, at which time they expire.
Following is a summary of the status of fixed options outstanding at June 30,
2000:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise
Shares Price
--------- --------
<S> <C> <C>
Outstanding, January 1, 2000 1,000,000 $0.125
Granted
Exercised -- --
Forfeited -- --
Expired -- --
--------- ------
Outstanding, June 30, 2000 1,000,000 $0.125
========= ======
Exercisable, June 30, 2000 1,000,000 $0.125
========= ======
</TABLE>
11
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PART III
ITEM 1. INDEX TO EXHIBITS.
None
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATED this the 10th day of August, 2000. "Registrant"
METALINE CONTACT MINES
By: /s/ JOHN W. BEASLEY
-------------------------------
John W. Beasley
Secretary
ITEM 2. DESCRIPTION OF EXHIBITS.
Not Applicable
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