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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required] for the fiscal year ended
December 31, 1998, or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period
from to
METALINE MINING & LEASING COMPANY
(Exact name of registrant as specified in its charter)
State of Washington 91-06843860
______________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 West Main Avenue, Suite 714
Spokane, Washington 99201-0677
__________________________________________ _______________
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 509-455-9077
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange
on which registered
None None
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes (X) No ( )
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. (X)
State issuer's revenues for its most recent fiscal year. ($15,962)
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within 60 days. (See definition of
affiliate in Rule 12b-2 of the Exchange Act.) [Amended in release
No. 33-7419 (85,938), effective June 13, 1997, 62 F.R. 26387.] $0.00
DOCUMENT PAGE: 1 OF 21
<PAGE>
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate
market value of the common equity held by non-affiliates on the basis of
reasonable assumptions, if the assumptions are stated.
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ( ) No ( )
Not Applicable
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 14,555,668
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.)
into which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3) any
prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of
1933 ("Securities Act"). The list documents should be clearly described
for identification purposes (e.g., annual report to security holders for
fiscal year ended December 24, 1990). None
Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
********************************************************************************
(This space left blank intentionally)
DOCUMENT PAGE: 2 OF 21
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) BUSINESS DEVELOPMENT
The Registrant was incorporated in the State of Washington in 1927.
Historically, the Registrant was engaged in the mineral exploration business.
The Company does not currently hold an interest in any mineral exploration
properties and has no active business operations.
The Registrant is currently seeking to acquire an interest in a business
opportunity. Due to the Registrant's limited assets and its inability to raise
additional financing due to the lack of a market for its Common Stock, it is
anticipated that any such acquisition would be a "reverse take-over"
accomplished through a merger or share exchange. In such event, the
Registrant's existing shareholders would likely become minority shareholders in
the surviving entity. The Registrant is not currently evaluating any specific
acquisition opportunity.
(B) BUSINESS OF ISSUER
The Registrant has no active business operations. The Registrant is currently
seeking to acquire an interest in a business opportunity.
The Registrant currently has no employees.
(C) REPORTS TO SECURITY HOLDERS
You may read and copy any materials filed with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1 (800) SEC-0330. The SEC maintains an Internet site (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding the Company that is filed electronically with the SEC.
ITEM 2. DESCRIPTION OF PROPERTY
The Company has no offices or facilities. The Company's activities are carried
out from the office of one of its officers and directors.
The Company disposed of the last of its interests in mineral properties in 1990.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Registrant is a
party or of which any of its property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders, through the solicitation of proxies
or otherwise.
DOCUMENT PAGE: 3 OF 21
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(A) MARKET INFORMATION
There is no established public trading market for the Registrant's common
equity. There has been no market nor reported quote for the Registrant's common
equity since at least 1991.
(B) HOLDERS
There are approximately 1,273 holders of the Registrant's common equity at the
date hereof.
(C) DIVIDENDS
To the management's knowledge, the Registrant has never paid a dividend. There
is no plan to pay dividends for the foreseeable future.
(D) UNREGISTERED SALES
During 1997, each of the four directors of the Company were granted 80,000
shares of stock at a deemed price of $.005 per share representing a compensation
equivalent of $400.00 per person as directors' fees for 1997. Additionally, the
following shares which had been authorized in previous years for issuance as
directors' fees were actually issued in 1997:
<TABLE>
Year Number Of Directors Shares Per Director Total Number Of Shares
- ---- ------------------- ------------------- ----------------------
<S> <C> <C> <C>
1993 four 36,000 144,000
1995 four 130,000 520,000
1996 four 150,000 600,000
</TABLE>
In December, 1997, two Directors, William Green and Greg Lipsker, each exercised
options to acquire 500,000 shares of the Company's common stock at a price of
$.005 per share. The options were granted in 1994, in consideration of services
performed by the individuals on behalf of the Registrant. Each of optionees paid
the $2,500 option price with a 12-month non-recourse 8% promissory note. The
shares purchased were held by the Registrant as collateral for the promissory
notes. The promissory notes were paid in full during 1998.
In November 1998, the Registrant sold 7,277,834 shares of its common stock for
an aggregate amount of $521,799. The shares were purchased by one individual
investor. No fees or commissions were paid in connection with the sale of the
shares. The shares were issued pursuant to a Section 4(2) exemption from
registration under the Securities Act of 1933.
DOCUMENT PAGE: 4 OF 21
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
PLAN OF OPERATION
Historically, the Company has been engaged in mineral exploration activities.
Exploration for commercially minable ore deposits is highly speculative and
involves risks greater than those involved in the discovery of mineralization.
Mining companies use the evaluation work of professional geologists,
geophysicists, and engineers in determining whether to acquire an interest in a
specific property, or whether or not to commence exploration or development
work. These professionals are not always scientifically exact, and in some
instances result in the expenditure of substantial amounts of money on a
property before it is possible to make a final determination as to whether or
not the property contains economically minable ore bodies. The economic
viability of a property cannot be finally determined until extensive exploration
and development work, plus a detailed economic feasibility study, has been
performed. Also, the market prices for mineralization produced are subject to
fluctuation and uncertainty, which may negatively affect the economic viability
of properties on which expenditures have been made.
Given the foregoing risks and the Registrant's extremely limited resources,
Management has decided not to attempt to again become actively engaged in
mineral exploration.
During 1998 the Company sold its ownership of an 11% interest in an inactive
non-reporting public company, Metaline Contact Mines ("MCM")> The Company
realized net proceeds of $711,377 from the sale
The Registrant is currently seeking to acquire an interest in an as yet
unidentified business opportunity. Due to the Registrant's limited assets, it
is anticipated that any such acquisition would be a "reverse take-over"
accomplished through a merger or share exchange. In such event, the
Registrant's existing shareholders would likely become minority shareholders in
the surviving entity. The Company is not currently evaluating any specific
business opportunity.
ITEM 7. FINANCIAL STATEMENTS
Financial Statements of the Company for the fiscal year ended December 31, 1998
audited by LeMaster & Daniels PLLC and for the fiscal year ended December 31,
1997, audited by Robert Moe & Associates, P.S., are included elsewhere in this
Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Registrant was informed that Independent Auditor, Robert Moe & Associates,
P.S. would not be able to perform the audit for the fiscal year ended December
31, 1998. The Auditor's Report on the financial statements for either of the
past two years has contained no adverse opinion or disclaimer of opinion, nor
was modified as to uncertainty, audit scope, or accounting principles.
There were no disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the former accountants
satisfaction, would have caused it to make reference to the subject matter of
the disagreement(s) in connection with its report.
The Registrant has engaged LeMaster & Daniels PLLC as Independent Auditor for
the year ended December 31, 1998
DOCUMENT PAGE: 5 OF 21
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
(A) IDENTIFICATION OF DIRECTORS
Set forth below is the name, age and length of service of the Company's present
directors:
<TABLE>
NAME (AGE) POSITION LENGTH OF SERVICE
- ----------- -------- -------------------
<S> <C> <C>
Albert Zlotnick (75) Director, Chairman Since 1998(1)
William R. Green (60) Director Since 1993
Gregory B. Lipsker (48) Director Since 1993
Eunice R. Campbell (53) Director 1992 and since 1994
</TABLE>
(1) Mr. Zlotnick was appointed to the board to fill the vacancy left by who
passed away during 1998.
The directors are elected for a one-year term until their successors have been
elected and qualified. There are no arrangements or understandings between any
of the directors and other persons pursuant to which such person was selected as
a director .
(B) IDENTIFICATION OF EXECUTIVE OFFICERS
Set forth below is the name, age and length of service of the Company's present
Executive Officers:
<TABLE>
NAME (AGE) POSITION LENGTH OF SERVICE
- ----------- -------- -------------------
<C> <S> <S>
Gregory B. Lipsker (48) President Since 1994
William R. Green (60) Vice President/Asst.
Secretary Since 1994
Eunice R. Campbell (53) Secretary/Treasurer Since 1992
</TABLE>
Executive Officers are appointed to serve until the meeting of the Board of
Directors following the next annual meeting of shareholders and until their
successors have been elected and qualified. There are no arrangements or
understandings between any of the directors, officers, and other persons
pursuant to which such person was selected as an Executive Officer.
Set forth below is certain biographical information regarding each Director and
Executive Officer of the Company.
DOCUMENT PAGE: 6 OF 21
<PAGE>
Albert M. Zlotnick - Mr. Zlotnick is and has been for the past 40 years an
investor in private and public companies. Mr. Zlotnick is currently an owner or
principal investor in 3 private corporations and one partnership and the
principal investor in more than 10 public corporations.
Gregory B. Lipsker - Mr. Lipsker is a practicing attorney in Spokane,
Washington. Mr. Lipsker's practice emphasizes corporate and securities matters.
Mr. Lipsker is an Executive Officer and Director of Cimarron-Grandview Group,
Inc., a publicly-held, inactive mining exploration company.
Dr. William R. Green - William R. Green is a mining engineer and geologist, and
was a professor of mining engineering at the University of Idaho from 1965 to
1983. He has been actively involved in the mining business since 1962 and is a
former officer and director of Yamana Resources and currently an officer and
director of Canadian public companies: Maya Gold Limited and Petromin Resources
Ltd., and US companies Mines Management, Inc. and Cimarron Grandview Group, Inc
Eunice R. Campbell - Mrs. Campbell is a retired businesswoman. Prior to her
retirement in 1987, Mrs. Campbell was the owner of Spokane Guaranty Company, a
stock transfer agency. Mrs. Campbell is an Executive Officer and Director of
Cimarron-Grandview Group, Inc., a publicly-held, inactive mining exploration
company.
(C) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
The Registrant has no employees.
(D) FAMILY RELATIONSHIPS
There is no family relationship between any Director, Executive Officer, or
person nominated or chosen by the Registrant to become a Director or Executive
Officer
(E) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No Director, or person nominated to become a Director or Executive Officer, has
been involved in any of the enumerated events during the past five years.
(F) PROMOTERS AND CONTROL PERSONS
Not Applicable
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant pursuant to Section 240.16a-3 during its most recent fiscal year
and Form 5 and amendments thereto furnished to the Registrant with respect to
the most recent fiscal year, two directors filed untimely reports on
transactions in the Company's common stock as follows: Gregory B. Lipsker and
Albert Zlotnick each one report regarding one transaction.
ITEM 10. EXECUTIVE COMPENSATION
(A) EXECUTIVE OFFICERS
The following table sets forth the compensation paid by the Company to its Chief
Executive Officer and executive officers whose total annual salary and bonus
exceeded $100,000 during the past three calendar years ("Executive Officers").
Except as set forth below, no officer or Executive Officer of the Company
received compensation in excess of $100,000 during the past three calendar
years. This information includes the dollar value of base salaries, bonus awards
and number of stock options granted, and certain other compensation, if any.
DOCUMENT PAGE: 7 OF 21
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------
Long-Term Compensation
Annual Compensation Awards Payouts
- ------------------------------------------- ---------------------- ------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Year Salary Bonus Comp. Awards(1) Options/ Payouts Comp.
Position ($) ($) ($) ($) SARs(#) ($) ($)
- -------------- ---- ------ ----- ------ ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gregory B.
Lipsker 1996 $0 $0 $0 $0 -0- $0 $0
Secretary
('96-'97) 1997 $0 $0 $0 $0 -0- $0 $0
President
('98) 1998 $0 $0 $0 $0 -0- $0 $0
</TABLE>
(B) DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
<TABLE>
<CAPTION>
Cash Compensation Security Grants
Number of
Annual Meeting Consulting Number of Securities
Retainer Fees ($) Fees/Other Shares (#) Underlying
Name Fees ($) Fees ($) Options/SARs(#)
(a) (b) (c) (d) (e) (f)
- ------------------ --------- ------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Gregory Lipsker $100 -0- -0- 0 0
William R. Green $100 -0- -0- 0 0
Eunice Campbell $100 -0- -0- 0 0
</TABLE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets out as of the date hereof, the names and shareholdings
of beneficial owners known to the Company to own more than five percent (5%) of
the common stock of the Company, each director and executive officer of the
Company, and the shareholdings of all directors and executive officers as a
group. At such date, the number of issued and outstanding shares of common stock
of the Company was 14,555,668.
DOCUMENT PAGE: 8 OF 21
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
Name of Person (all direct unless
or Group (1) otherwise noted) % of Class
- -------------- ------------------------ ----------
<S> <C> <C>
Principal Shareholders:
- ------------------------
None
Directors and Executive Officers:
- ---------------------------------
Albert M. Zlotnick 7,277,834 50.00%
301 City Ave.
Bala CynWyd, PA 19004
Greg Lipsker 1,001,500 6.88%
714 Washington Mutual Financial
Center
601 W. Main Avenue
Spokane, WA 99201
William Green 896,000 6.15%
905 W. Riverside, Ste. 311
Spokane, WA 99201
Eunice R. Campbell 595,000 4.09%
301 S. Chestnut, Ste. #6
Spokane, WA 99204
All executive officers and 9,770,334 67.12%
directors as a group (4 persons)
</TABLE>
(1) The positions of those persons who are directors or executive officers
of the Registrant are set out in Item 9.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A) TRANSACTIONS WITH MANAGEMENT AND OTHERS
None
(B) CERTAIN BUSINESS RELATIONSHIPS
None
DOCUMENT PAGE: 9 OF 21
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of the report:
1. Financial Statements
Document
Page
Independent Auditors' Reports 11-12
Balance Sheet
December 31, 1998 and 1997 13
Statements of Income (Loss))
for the years ended December 31, 1998, 1997, and 1996 14
Statements of Stockholders' Equity
for the years ended December 31, 1998, 1997, and 1996 15
Statements of Cash Flows
for the years ending December 31, 1998, 1997, and 1996 16
Notes to Financial Statements 17-19
METALINE MINING & LEASING COMPANY
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORTS
DECEMBER 31, 1998 AND 1997
CONTENTS
Report
Page
INDEPENDENT AUDITORS' REPORTS 2-3
FINANCIAL STATEMENTS:
Balance sheets 4
Statements of income 5
Statements of stockholders' equity 6
Statements of cash flows 7
Notes to financial statements 8-10
DOCUMENT PAGE: 10 OF 21
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Metaline Mining & Leasing Company
Spokane, Washington
We have audited the accompanying balance sheet of Metaline Mining & Leasing
Company (a Washington Corporation) as of December 31, 1998, and the
statements of income, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the account-ing principles used and signifi-cant estimates made by
management, as well as evaluating the overall finan-cial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Metaline Mining & Leasing
Company as of December 31, 1998, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/s/ LeMaster & Daniels PLLC
Spokane, Washington
March 22, 1999
2
DOCUMENT PAGE: 11 OF 21
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Metaline Mining & Leasing Company
Spokane, Washington
We have audited the accompanying balance sheet of METALINE MINING AND
LEASING COMPANY (A Washington Corporation) as of December 31, 1997 and 1996,
and the related statements of income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of METALINE MINING & LEASING
COMPANY as of December 31, 1997 and 1996 and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
/S/ ROBERT MOE & ASSOCIATES, PS
Spokane, Washington
March 24, 1998
3
DOCUMENT PAGE: 12 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
BALANCE SHEETS
<TABLE>
December 31,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents:
Cash in bank $ 411,866 $ 8,490
Temporary cash investments 627,943 1,613
------------ ------------
Total current assets 1,039,809 10,103
INVESTMENTS 13,718 -
PARTNERSHIP PROPERTIES 3,911 4,043
------------ ------------
$ 1,057,438 $ 14,146
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 306 $ 21,932
Federal income tax payable 12,500 -
Deposit - 9,784
------------ ------------
Total current liabilities 12,806 31,716
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock--15,000,000 shares, no par value,
authorized; 14,555,668 and 7,277,834,
respectively, shares issued and outstanding 954,282 432,483
Accumulated other comprehensive income:
Unrealized loss, marketable securities (5,773) (5,773)
Retained earnings (deficit) 96,123 (444,280)
------------ ------------
Total stockholders' equity (deficit) 1,044,632 (17,570)
------------ ------------
$ 1,057,438 $ 14,146
============ ============
See accompanying notes to financial statements.
4
DOCUMENT PAGE: 13 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
STATEMENTS OF INCOME
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
INCOME:
Dividend and interest income $ 15,962 $ 124 $ 122
------------ ------------ ------------
EXPENSES:
Directors' fees 300 10,420 300
Professional fees 15,516 23,165 1,500
Office expense 336 99 98
Taxes, licenses, and fees 102 272 259
------------ ------------ ------------
16,254 33,956 2,157
------------ ------------ ------------
(LOSS) BEFORE OTHER NCOME (EXPENSE)
AND INCOME TAX (292) (33,832) (2,035)
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Income (loss) from partnership
interests (182) (119) 522
Gain (loss) on sale of investments 711,377 - (463)
------------ ------------ ------------
711,195 (119) 59
------------ ------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR
FEDERAL INCOME TAXES 710,903 (33,951) (1,976)
PROVISION FOR FEDERAL INCOME TAXES 170,500 - -
------------ ------------ ------------
NET INCOME (LOSS) $ 540,403 $ (33,951) $ (1,976)
============ ============ ============
BASIC EARNINGS PER SHARE
(based on upon weighted average
shares outstanding) $ .07 $ (0.01) $ NIL
============ ============ ============
See accompanying notes to financial statements.
5
DOCUMENT PAGE: 14 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1998, 1997,
1996, AND 1995
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Number of Other Retained
Shares Common Comprehensive Earnings
Outstanding Stock Income (Deficit) Total
----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31, 1995 4,693,834 $ 419,563 $ (5,285) $ (408,353) $ (5,925)
ADD (DEDUCT):
COMPREHENSIVE INCOME:
Unrealized loss in
marketable securities - - 385 - 385
Net loss - - - (1,976) (1,976)
-----------
COMPREHENSIVE
INCOME (LOSS) - - - - (1,591)
----------- ----------- ------------- ----------- -----------
BALANCE,
DECEMBER 31, 1996 4,693,834 419,563 (4,900) (410,329) 4,334
ADD (DEDUCT):
COMPREHENSIVE INCOME:
Unrealized loss in
marketable securities - - (873) - (873)
Net loss - - - (33,951) (33,951)
-----------
COMPREHENSIVE
INCOME (LOSS) (34,824)
-----------
Shares issued to
directors for services:
January 6, 1997 1,120,000 5,600 - - 5,600
August 6, 1997 144,000 720 - - 720
December 31, 1997 1,320,000 6,600 - - 6,600
----------- ----------- ------------- ----------- -----------
BALANCE,
DECEMBER 31, 1997 7,277,834 432,483 (5,773) (444,280) (17,570)
ADD (DEDUCT):
COMPREHENSIVE INCOME:
Net income - - - 540,403 540,403
Shares issued for cash 7,277,834 521,799 - - 521,799
----------- ----------- ------------- ----------- -----------
BALANCE,
DECEMBER 31, 1998 14,555,668 $ 954,282 $ (5,773) $ 96,123 $1,044,632
=========== =========== ============= =========== ===========
See accompanying notes to financial statements.
6
DOCUMENT PAGE: 15 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
STATEMENTS OF CASH FLOWS
</TABLE>
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 540,403 $ (33,951) $ 1,976)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operations:
Loss from disposition of krugerrands - - 463
Income from partnership interest 132 73 (573)
Stock issued for services - 12,920 -
Increase (decrease) in:
Federal income tax payable 12,500 - -
Accounts payable (21,626) 17,265 300
------------ ------------ ------------
Net cash provided by (used in)
operating activities 531,409 (3,693) (1,786)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposit received (9,784) 9,784 -
Purchase of Krugerrands
and silver rounds (13,718) - -
Proceeds from disposition of
Krugerrands - 2,220 -
------------ ------------ ------------
Net cash provided by investing
activities (23,502) 12,004 -
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of
common stock 521,799 - -
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,029,706 8,311 (1,786)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 10,103 1,792 3,578
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,039,809 $ 10,103 $ 1,792
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid for:
Income taxes $ 158,000 $ - $ -
Interest - - -
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Additional common stock issued
for services $ - $ 12,920 $ -
Increase (decrease) in
partnership interests (132) (73) 573
</TABLE>
See accompanying notes to financial statements.
DOCUMENT PAGE: 16 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization:
The Company was incorporated in the State of Washington in 1927. Although it
has previously been engaged in mineral exploration and continues to hold
interests in mineral exploration properties, the Company currently has no active
business operations. The Company is currently seeking to acquire an interest in
a business opportu-nity.
Summary of Significant Accounting Policies:
a. Cash and cash equivalents include short-term cash investments that have
an initial maturity of 90 days or less.
The Company's marketable securities are stated at estimated fair value at the
balance-sheet dates and unrealized losses are reported in stockholders' equity
as accumulated other comprehensive income. All such securities are considered
to be available-for-sale. Gains and losses are determined using the specific
identification method. Investments in coins (gold Krugerrands and silver
rounds) are stated at cost which approximates fair value.
c. The Company capitalizes acquisition and exploration costs on nonoperating
mining properties and mineral rights for accounting and income tax purposes.
Upon commencement of operations, the capitalized costs will be amortized based
on proven or probable reserves by the unit of production method so that each
unit produced is assigned a prorata portion of the unamortized acquisition
costs.
d. Capitalized costs are charged to operations as impairment losses when
title to the property has expired or when management believes the properties are
not economically feasible to develop or hold for future development.
5. Income tax is provided for the tax effects of transactions reported in
the financial statements. Deferred income tax assets are recognized for the
estimated future tax benefits of tax-basis operating losses being carried
forward. A valuation allowance for deferred tax assets is also recognized when
appropriate and reversed as such loss carryovers are utilized on the Company's
income tax returns.
f. In 1998 the Company adopted SFAS No. 130, Reporting Comprehensive Income,
which establishes rules for the reporting of comprehensive income and its
components. Comprehensive income consists of net income (loss) and changes in
unrealized losses on securities available-for-sale. The adoption of SFAS 130
had no impact on total stockholders' equity. Prior year financial statements
have been reclassified to conform to the SFAS 130 requirements.
7. Basic earnings (loss) per share is computed using the weighted average
number of shares outstanding during the years (8,187,000 in 1998, 5,873,000 in
1997, and 4,694,000 in 1996). Diluted income (loss) per share was the same as
basic earnings (loss) per share for the years presented.
h. 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
disclosures 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.
DOCUMENT PAGE: 17 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - INVESTMENTS:
The Company had the following investments at the balance-sheet dates:
<TABLE>
1998 1997
------------- ------------
<S> <C> <C>
Coins:
Cost and fair value $ 13,718 $ -
------------- ------------
Marketable securities:
Cost 5,773 5,773
Gross unrealized holding loss (5,773) (5,773)
------------- ------------
Fair value - -
Totals $ 13,718 $ -
============= ============
</TABLE>
Coins consisted of the following:
44 1-ounce Krugerrands
150 1-ounce silver rounds
Marketable securities consisted of the following investments:
25,000 shares of Capitol Silver Mines, Inc., a development stage company
31,151 shares of Carson Industries Corporation, which is currently involved
in oil and gas exploration
1,477,239 shares of Metaline Contact Mines (see below)
The Company's $100,410 original investment in Metaline Contact Mines had been
fully written off as worthless in previous years. In 1998, the shares were sold
for net proceeds of $711,377, resulting in a gain of $711,377.
NOTE 3 - MINING PROPERTIES:
Investments in mining properties, net of impairment losses recognized, consisted
of the following:
<TABLE>
December 31,
---------------------------
1998 1997
------------- ------------
<S> <C> <C>
Partnership interest in two units of Pondera
Partners, Ltd., a drilling project located in
Teton County, Montana (at cost less equity in
partnership losses) $ 3,911 $ 4,043
Twenty-seven mining claims in the Coeur d'Alene
Mining district (abandoned in 1990) - -
Ten unpatented mining claims in Valley County,
Idaho (abandoned in 1990) - -
------------- ------------
Totals $ 3,911 $ 4,043
============= =============
</TABLE>
9
DOCUMENT PAGE: 18 OF 21
<PAGE>
METALINE MINING & LEASING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - COMMON STOCK:
The Company's Articles of Incorporation were amended December 31, 1983, to
reclassify shares and reduce capital to $299,000, comprising 15,000,000 shares
of no par value common nonassessable stock. Previously reported paid-in capital
has been combined with the balance of no-par common stock in these financial
statements. This reclassification had no effect on total stockholders' equity
or net income (loss).
During 1995 and 1996, 600,000 and 520,000 shares, respectively, were authorized
by the Board of Directors, to be issued in the future, to compensate directors
for services performed. The shares authorized by the Board of Directors to
compensate Directors for 1995 and 1996 were issued during 1997. During 1997,
1,464,000 shares were issued to Directors for 1997 services. The issue of stock
for services is valued using the stock quotation price on the date of issue less
50 percent due to the fact that it is restricted stock.
51
NOTE 5 - FEDERAL INCOME TAXES:
The provision for income taxes consisted of the following:
<TABLE>
December 31,
---------------------------
1998 1997
------------- ------------
<S> <C> <C>
Computed expected tax expense $ 241,800 $ -
Tax benefit of net operating loss
carryforward (see below) 71,300 -
------------- ------------
$ 170,500 $ -
============= =============
</TABLE>
At December 31, 1997, the Company had a deferred tax asset of $71,300, relating
to the estimated future tax benefits of current and prior year tax-basis net
operating losses carried forward. The deferred tax asset was fully reserved by
a valuation allowance. In 1998, the Company was able to recognize the full tax
benefits of its carryforward of operating losses and, accordingly, the deferred
tax asset valuation allowance was reversed.
NOTE 6 - CONCENTRATION OF CREDIT RISK:
The Company maintains its cash and cash equivalents in three financial
institutions. Balances are insured by the Federal Deposit Insurance Corporation
(FDIC) up to $100,000 per institution. Balances on deposit may occasionally
exceed FDIC insured amounts.
10
DOCUMENT PAGE: 19 OF 21
<PAGE>
3. Exhibits required by Item 601
(1) Underwriting Agreement. (1)
(2) Plan of Acquisition, reorganization, arrangement,
liquidation or succession. (1)
(3)(i) Articles of Incorporation (2)
(3)(ii) Bylaws. (2)
(4) Instruments defining the rights of security holders,
including indentures. (1)
(9) Voting trust agreements. (1)
(10) Material contracts. (1)
(11) Statement re: computation of per share earnings. (1)
(12) Statements re: computation of ratios. (1)
(13) Annual report to security holders, Form 10Q
or quarterly report to security holders. (1)
(16) Letter re: change in certifying accountant. (2)
(18) Letter re: change in accounting principles. (1)
(19) Subsidiaries of the Registrant. (1)
(22) Publisher report regarding matters submitted
to vote of security holders. (1)
(23) Consents of Experts and counsel. EX 23
(24) Power of Attorney. (1)
(27) Financial Data Schedule EX 27
(99) Additional Exhibits. (1)
(1) These items have either been omitted or are not applicable
(2) Incorporated by reference to previous filing
(b) No reports have been filed on Form 8-K during the last fiscal quarter
covered by this report.
(c) Exhibit (23), Consent of Accountants, is filed herewith
(d) Financial Statements are filed herewith
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS
Not Applicable
DOCUMENT PAGE: 20 OF 21
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act , the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
METALINE MINING & LEASING COMPANY
(Registrant)
By: /s/ Gregory B. Lipsker Date: 4/14/99
GREGORY B. LIPSKER, President
(Principal Executive Officer)
By: /s/ Eunice R. Campbell Date: 4/14/99
EUNICE R. CAMPBELL, Secretary/Treasurer
(Principal Financial Officer)
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Gregory B. Lipsker Date: 4/14/99
GREGORY B. LIPSKER,
Director
/s/ William R. Green Date: 4/14/99
WILLIAM R. GREEN,
Director
/s/ Eunice Campbell Date: 4/14/99
EUNICE CAMPBELL,
Director
<PAGE>
(Letterhead of LeMaster & Daniels PLLC)
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Metaline Mining & Leasing Company
Spokane, Washington
We hereby consent to the use of our report, dated March 27, 1999, on the
financial statements of Metaline Mining & Leasing Company as of December 31,
1998, and for the year then ended, in the Company's Form 10-K for the year ended
December 31, 1998.
/s/ LeMaster & Daniels PLLC
Spokane, Washington
March , 1999
(Letterhead of Robert Moe & Associates, P.S.)
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Metaline Mining & Leasing Company
Spokane, Washington
We hereby consent to the use of our opinion, dated March 16, 1998 on the
financial statements of Metaline Mining & Leasing Company for the year ended
December 31, 1997 in the Form 10-KSB.
/s/ Robert Moe & Associates
Robert Moe & Associates, P.S.
Spokane, Washington
April 13, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheets for Metaline Mining & Leasing Company at December 31,1998, the Statements
of Income for the year ended December 31, 1998, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,039,809
<SECURITIES> 13,718
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,053,527
<PP&E> 3,911
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,057,438
<CURRENT-LIABILITIES> 12,806
<BONDS> 0
0
0
<COMMON> 954,282
<OTHER-SE> 90,350
<TOTAL-LIABILITY-AND-EQUITY> 1,057,438
<SALES> 727,157
<TOTAL-REVENUES> 727,157
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 710,903
<INCOME-TAX> 170,500
<INCOME-CONTINUING> 540,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 540,403
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
