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, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number: 000-27667
Metalline Mining Company
(Exact name of registrant as specified in its charter)
Nevada 91-1766677
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
1330 E. Margaret Ave.
Coeur d'Alene, ID 83815
(Address of principal executive offices)
Registrant's telephone number, including area code:
(208) 665-2002
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock The OTC-Bulletin Board
Title of each class Name of each exchange on which registered.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period as the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
<page>
METALLINE MINING COMPANY QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JULY 31, 2001
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 5
Item 3: Defaults upon Senior Securities 5
Item 4: Submission of Matters to a Vote of
Security Holders 5
Item 5: Other Information 5
Item 6: Exhibits and Reports on Form 8-K 5
Index to Financials 6
Signatures F/S-13
[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,
2001 are not necessarily indicative of the results that may be
expected for the full year ending October 31, 2001.
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, 2000 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, 2001.
Nine months ended July 31, 2001 compared to the nine months ended
July 31, 2000:
During the nine months ended July 31, 2001, the Company realized other
income of $66,033 as the initial proceeds from the sale of zinc
carbonate ore from the Company's San Salvadore mine, in accordance
with a contract announced in May 2001 with Fireborn, Inc. of Atlanta,
Georgia. General and administrative expenses increased to $1,965,557
for the nine-month period ended July 31, 2001 as compared to $670,885
for the nine-month period ended July 31, 2000. The increase is
primarily due to the issuance of options for services and charged to
expense, and to increased expenses of maintaining the property. For
the nine months ended July 31, 2001, the Company experienced a loss of
$1,893,763, or $0.19 per share, compared to a loss of $589,072, or
$0.07 per share, during the comparable period in the previous year.
LIQUIDITY AND CAPITAL RESOURCES.
Metalline Mining Company (the "Company") is an exploration 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.
Page 1
The Company has insufficient funds to carry on operations during
the next twelve months. In order to maintain operations, the Company
will have to raise additional capital through loans or through the
sale of securities. If the Company is unable to raise additional
capital, it may have to cease operations. The Company's plan of
operation, subject to maintaining sufficient funds, calls for
continued geologic mapping of the surface and underground workings,
sampling, and drilling to explore for additional mineralization and to
develop an ore reserve and compilation of the data into a computer
data base for reserve calculation.
Due to the Company's lack of revenues, the Company's independent
certified public accountants included a paragraph in the Company's
2000 financial statements relative to a going concern uncertainty. The
Company has financed its obligations during the 1999-2000 fiscal year
by its sale of 2,525,500 shares at prices ranging between $0.86 and
$2.77 per share. During the current period, the Company has realized
$515,390 from the sale of 309,000 shares and has received a refund of
$490,500 for Mexican taxes previously paid.
The Company is engaged in the business of mining. The Company
currently owns one mining property located in Mexico known as the
Sierra Mojada Property. The Company conducts its operations in Mexico
through its wholly owned subsidiary corporation, Minera Metalin S.A.
de C.V. ("Minera Metalin").
The Sierra Mojada Property is comprised of eight concessions
totaling 7,060 hectares (17,446 acres). The concessions were acquired
by purchase agreements from the titled owners. The Company controls
100% of the concessions. The Company is current on its annual
payments.
The Sierra Mojada Mining District is located in the west central
part of the state of Coahuila, Mexico, near the Coahuila-Chihuahua
state border some 200 kilometers south of the Big Bend of the Rio
Grande River. The principal mining area extends for some 5 kilometers
in an east-west direction along the base of the precipitous, 1,000
meter high, Sierra Mojada Range.
Vehicle access from Torreon is by 200 kilometers on paved road to
the Penoles chemical plant at Laguna del Rey and then another 50
kilometers of gravel road to Sierra Mojada. There is a well
maintained, 1200 meter, gravel airstrip. The District has high voltage
electric power and is served by a rail line, which was constructed
from Escalon to the district in 1891 and later connected to Monclova.
The initial discovery of silver ore in the Sierra Mojada Property
was made in 1879. Over the next 12 years numerous small mines
developed along an oxidized silver lead ore body known as the "lead
manto" (a bed, layer or strata). The lead manto was mined continuously
for 3 kilometers and discontinuously for another 2 kilometers. Ore was
selectively mined and hauled by wagon to Escalon on the railroad main
line from El Paso to Mexico City; from there it went to smelters in
Mexico and the United States.
In September of 1891 the Mexican Northern Railroad completed its
spur line from Escalon to the district. Rail access stimulated
development and the period from 1891 to the late 1920's was the peak
of productivity of the district. The main lead manto was nearly mined
out by 1905, the same year that the discovery of the first silver-
copper ore body was made. Additional discoveries of silver, silver-
copper, and silver-copper-zinc-lead ores provided production through
the 1930's. Between 1922 and 1931 additional lead manto silver-lead
ore was discovered and mined to the southwest for some 1,400 meters
under the Sierra Mojada range. This manto was eventually mined for
more than 2 kilometers.
Page 2
By the mid 1920's many of the mines were under control of Penoles
Corporation ("Penoles") and ASARCO Incorporated ("ASARCO"). ASARCO
ceased mining in the district in the late 1930's. Both companies still
owned properties during the 1940's and Penoles mined until the late
1950's when the Mineros Nortenos Cooperative acquired the Penoles
properties. The Mineros Nortenos Cooperative ("Mineros Nortenos") has
operated the San Salvador, Encantada and Fronteriza mines since 1957
and direct shipped high-grade oxide zinc and lead-silver ore to
smelters in Mexico.
The lead manto produced 3 to 3.5 million tons prior to 1905 with
another 1.5 million tons of similar ore coming from other ore bodies
to the west and to the southwest.
Mineros Nortenos has mined about 600,000 tons of predominantly oxide
zinc ore with grades of 20 to 50% zinc. Some of this ore was oxide
silver-lead and silver, copper, zinc and lead sulfide at grades of 1
to 4 kilogram silver per ton, 1 to 5% copper, 10 to 30% zinc and 30 to
70% lead. Production records from 1978 to 1981 for the San Salvador
mine average 33.5% zinc.
The Sierra Mojada Property has produced in excess of 10 million tons
of high-grade ore that graded in excess of 30% lead, 20% zinc, 1%
copper and 1 kg (31 ounces) silver per ton that was shipped directly
to the smelter. The district has never had a mill to concentrate ore.
All of the mining was done selectively for ore of sufficient grade to
direct ship; mill grade ore was left unmined. More than 50 kilometers
of underground workings are spread through the 5 kilometer by 2
kilometer area from which more than 45 mines have produced ore. The
deepest workings have ore grade mineralization and provide some of the
best targets for reserve development. In spite of the amount of
historic work, when a map of all of the historic workings is viewed
there is much more unexplored area in the 5 by 2 kilometer area than
has been explored and the vertical extent greater than 100 meters is
totally unexplored.
The sediments are predominantly carbonate with some sandstone and
shale and the attitudes are near horizontal. The mines are dry and the
rocks are competent, there is very little unstable ground and the ore
thickness is amenable to high volume mechanized mining methods. Sierra
Mojada has ideal mining conditions and 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.
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.
In October, 1999 Minera Metalin 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 agreement allowed North to acquire a
60% participating interest in Sierra Mojada by exploring and
completing a feasibility study over a "Earn In Period" of not more
than 5 years.
Page 3
In August, 2000 Rio Tinto Ltd. purchased North Limited for its iron
ore holding and has subsequently terminated the agreement with Minera
Metalin. Metalline has shown the project to a number of major mining
companies who are interested in a Joint Venture. Metalline is
currently in negotiations for a Joint Venture on Sierra Mojada.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 ("SFAS No. 131"),
Disclosures about Segments of an Enterprise and Related Information,
which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise, establishes standards for the new way that public
enterprises report information about operating segments in annual
financial statements and requires reporting of selected information
about operating segments in interim financial statements issued to the
public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of an enterprise about
which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. As the Company
operates within one segment, the adoption of SFAS No. 131 by the
Company in 1998, did not have a significant impact on the Company's
financial position.
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132 ("FAS No. 132"),
Employer's Disclosures about Pensions and other Post-retirement
Benefits, which standardizes the disclosure requirements for pension
and other post-retirement benefits. The adoption of SFAS No. 132 did
not materially impact the Company's current disclosures.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in
the balance sheet and measure those instruments at fair value. At
April 30, 2001, the Company has not engaged in any transactions that
would be considered derivative instruments or hedging activities.
CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2001 WERE AS FOLLOWS:
During the nine-month period ended July 31, 2001, the Company's cash
position increased by $183,793, to $734,350. During the nine-month
period, the Company used $313,514 in operating activities, which was
less than the reported $1,715,425 net loss, due primarily to the
issuance of stock and options for $886,060 in services and charged to
expense, and the receipt of a refund of Mexican taxes paid of
$490,500. In addition, the Company realized $515,390 from the sale of
Company stock. The only use of cash other than for operating
activities was the purchase of property for $18,083.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
Page 4
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 268,000 shares of its common stock for an
average price of $1.87 per share in the three month period ended July
31, 2001, and issued 6,000 shares for consulting services received for
which the Company recognized an expense of $14,700.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
The registrant has no outstanding senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In February 2001 a notice of annual meeting and proxy statement were
mailed to shareholders of record January 5, 2001 regarding matters to
be considered at the annual shareholders meeting scheduled for March
1, 2001. Matters considered were (1) election of directors, (2)
consideration and approval of the Company's 2001 Stock Option Plan,
(3) consideration and approval of a proposed amendment to the
Company's Articles of Incorporation to authorize a class of Preferred
Shares, (4) election of outside auditors.
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.
[The balance of this page has been intentionally left blank.]
Page 5
<page>
METALLINE MINING COMPANY
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Balance Sheets as of July 31, 2001
and October 31, 2000 F/S-1
Statements of Operations for the three and nine
month periods ended July 31, 2001 and July 31,
2000, and for the period from inception
(November 8, 1993)to July 31, 2001 F/S-2
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to July 31, 2001 F/S-4
Statements of Cash Flow for the nine month periods
ended July 31, 2001 and July 31, 2000, and for the
period from inception (November 8, 1993) to
July 31, 2001 F/S-10
Notes to Financial Statements F/S-11
Signatures F/S-12
[The balance of this page has been intentionally left blank.]
Page 6
METALLINE MINING COMPANY
(An Exploration Stage Company)
BALANCE SHEETS
<Table>
<caption>
July 31, 2001 October 31, 2000
(Unaudited)
----------- ----------
<s> <c> <c>
ASSETS
CURRENT ASSETS
Cash $ 734,350 $ 550,557
Accounts Receivable 59,288 547,237
Prepaid expenses 5,437 3,228
Employee advances 11,146 10,864
---------- ---------
Total Current Assets 810,221 1,111,886
---------- ---------
MINERAL PROPERTIES 4,360,285 4,348,785
PROPERTY AND EQUIPMENT ---------- ---------
Office equipment 88,082 81,499
Mining equipment and vehicles 86,047 86,047
Less: Accumulated depreciation (109,531) (88,158)
---------- ---------
Total Property and Equipment 64,598 79,388
---------- ---------
TOTAL ASSETS $ 5,235,104 $ 5,540,059
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $13,539 $ 5,625
Accrued liabilities 14,098 16,167
--------- ---------
Total Current Liabilities 27,637 21,792
--------- ---------
COMMITMENTS AND CONTINGENCIES - -
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value;
50,000,000 shares authorized,
10,055,595 and 9,740,595 shares
issued and outstanding at7/31/01
and 10/31/00 respectively. 100,557 97,407
Additional paid-in capital 9,831,586 9,217,330
Stock options and warrants 1,509,534 543,980
Deficit accumulated during
exploration stage (6,234,210) (4,340,450)
---------- ---------
Total Stockholders' Equity 5,207,467 5,518,267
TOTAL LIABILITIES AND ---------- ---------
STOCKHOLDERS' EQUITY $5,235,104 $5,540,059
========== =========
See accompanying notes to these financial statements. F/S-1
</table>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<table>
<caption>
Period from
Three Months Ended Nine months Ended November 8, 1993
------------------- ----------------- (Inception) through
July 31,01 July 31,00 July 31,01 July 31,00 July 31, 2001
(Unaudited) (Unaudited) (Unaudited)(Unaudited)(Unaudited)
---------- -------- --------- ---------- --------
<s> <c> <c> <c> <c>
REVENUES $ - $ - $ - $ - $ -
--------- -------- ------- ------- ----- ----
GENERAL AND ADMINISTRATIVE
EXPENSES
Salaries 54,000 54,000 162,000 162,000 818,394
Office and
administrative 26,936 24,296 95,586 70,586 275,554
Taxes and fees 8,989 11,650 45,397 52,700 95,882
Professional services 290,112 25,325 1,308,545 213,818 3,198,232
Property expenses 62,183 (21,649) 272,805 83,085 1,345,634
Marketing and research 19,495 27,708 59,851 71,199 189,093
Financing Costs - - - - 276,000
Depreciation 7,124 5,832 21,373 17,497 109,561
-------- ------- -------- -------- -----
Total Expenses 468,839 127,162 1,965,557 670,885 6,308,353
-------- ------- --------- -------- ----
-----
OPERATING LOSS (468,839) (127,162)(1,965,557) (670,885)(6,308,353)
-------- -------- --------- ------- -----
OTHER INCOME (EXPENSES)
Interest income 1,508 1,876 5,761 5,085 17,686
Interest expense - - - - (9,599)
Miscellaneous income 48,823 - 66,033 76,728 66,053
-------- -------- ------- ------ ------
Total other
income (expense) 50,331 1,876 71,794 81,813 74,140
------- -------- ------- ------ ----------
LOSS BEFORE
INCOME TAXES $(418,508) $(125,286)$(1,893,763)$(589,072) $(6,234,213)
======== ======== ======== ======== =========
See accompanying notes to these financial statements. F/S-2
</table>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
<table>
<caption>
Period from
Three Months Ended Nine Months Ended November 8, 1993
--------------- -------------- (Inception)
July 31, July 31, July 31, July 31, through
2001 2000 2001 2000 July 31, 2001
(Unaudited) (Unaudited) (Unaudited)(Unaudited)(Unaudited)
---------- ---------- --------- --------- ----------
<c>
LOSS BEFORE INCOME TAXES
(carried forward) $(418,508) $(125,286) $(1,893,763) $(589,072)$(6,234,210)
INCOME TAXES - - - - -
--------- --------- ---------- -------- ---------
NET LOSS $(418,508) $(125,286) $(1,893,763) $(589,072)$(6,234,210)
======== ======== ======== ======== ==========
NET LOSS PER COMMON SHARE
BASIC AND DILUTED $ (0.04) $ (0.01) $ (0.19) $ (0.07) $ (1.40)
======== ======== ======== ======== =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING
BASIC AND DILUTED 9,854,595 8,320,262 9,773,387 8,248,595 4,448,312
======== ======== ========= ========= ==========
---------------------
See accompanying notes to these financial statements.
</Table> F/S-3
<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 Warrants Stage Total
-------- ------ ------- ---------- -------- -------- -----
<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)
------- ------- ------- ------- ------- ------- -------
- -------------------------------------
Schedule continued on next page.
See accompanying notes to these financial statements. F/S-4
</Table>
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
-------- ------ ------- ---------- -------- -------- -----
<c> <c> <c> <c> <c> <c> <c>
Balance brought forward576,480 $5,765 $(5,765) $ - $ $(16,592) $(16,592)
Issuance in November
1995 of shares for cash
at $0.01 per share 45,000 450 - - - - -
Issuance in November 1995
of shares for cash at
$1.00 per share 15,859 159 15,700 - - - 15,859
Issuance in June 1996 of
shares for cash at
$0.10 per share 1,305,000 13,050 117,450 - - - 130,500
Issuance in June 1996 of
shares at $0.01 per share
in exchange for assignment
of mineral property rights
valued at $9,000 900,000 9,000 - - - - 9,000
Issuance in October 1996
of shares for CAD computer
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
------- ------- ------- ------- ------- ------- -------
- --------------------------------------
Schedule continued on next page.
See accompanying notes to these financial statements. F/S-5
</Table>
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
-------- ------ ------- ---------- -------- -------- -----
<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
----------------- ------- ------- ------- ------- ------- ------- -------
Schedule continued on next page.
See accompanying notes to these financial statements. F/S-6
</Table>
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
-------- ------ ------- ---------- -------- -------- -----
<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
- ----------------- ------- ------- ------- ------- ------- ------- -------
Schedule continued on next page.
See accompanying notes to these financial statements. F/S-7
</Table>
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
Prior period adjustment
for valuation of warrants
issued for services 488,980 (488,980)
--------- --------- -------- ----------- --------- ---------- ------
Balance, Oct. 31,
1998 restated 6,090,739 60,908 2,757,694 (300,000) 665,980 (2,035,197)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)(1423045)
------- ------- ------- ------- ------- ------- -------
Balance at
October 31, 1999 7,215,095 $72,152 $3,977,350 $ - $776,980 $(3,458,242)$1,368,240
------- ------- ------- ------- ------- ------- -------
Schedule continued on next page.
See accompanying notes to these financial statements. F/S-8
</Table>
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
-------- ----- ------- ---------- -------- -------- -----
<c> <c> <c> <c> <c> <c>
Balance brought
forward 7,215,095 $72,152 $3,977,350 $ - $776,980$(3,458,242)$1,368,240
------- ------------------- ------- ------- ------- -------
Exercise of options
for cash at $0.86
per share 950,000 9,500 1,090,750 - (288,000) - 812,250
Issuance of common stock
for cash at average of
$2.77 per share 1,440,500 14,405 3,972,220 3,986,625
Issuance of common
stock for services at
$1.28 per share 120,000 1,200 152,160 (360) 153,000
Stock subscription received - - - 360 - - 360
Issuance of common stock for
equipment at $1.67
per share 15,000 150 24,850 - - - 25,000
Warrants issued for services 55,000 55,000
Net loss for the year ended
October 31, 2000 - - - - - (882,208)(882.208)
---------- --------- --------- ------ --------- ------- -------
Balance at
October 31, 2000 9,740,595 $ 97,407 $9,217,330 $ - $43,980$(4,340,450)$5,518,267
---------- -------- --------- ----- ------- ----- -------
- -------------------------------
Schedule continued on next page.
See accompanying note to these financial statements. F/S - 9
</Table>
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 9,740,595 $ 97,407 $9,217,330 $ - $543,980$(4,340,450)$5,518,267
--------- ------ ---------- ------ ------ ---------- --------
Stock issued for cash
and services at
$0.01 per share 39,000 390 43,260 - - - 43,650
Exercise of warrants
for cash at $0.75
per share 20,000 200 25,560 - (10,760) - 15,000
Options granted for
consulting services 33,296 - - - 976,315 - 1,009,611
Stock issued for
Services at $2.45
per share 6,000 60 14,640 - - - 14,700
Stock issued for cash
at $2.00 per share 250,000 2,500 497,500 - - - 500,000
Loss for the nine
months ended
July 31, 2001 - - - - - (1,893,763)(1,893,763)
----- ------- ------- ------ --- ---------- -------
Balance at
July 31, 2001 10,055,595 $100,557 $9,831,586 $ - $1,509,535$(6,234,213)$5,207,465
----------- -------- --------- --- --------- -------- ---------
See accompanying notes to these financial statements.
F/S - 10
</Table>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
<Table>
Period from
Nine Months Ended November 8, 1993
---------------------- (Inception)through
July 31,2001 July 31,2000 July 31, 2001
(Unaudited) (Unaudited) (Unaudited)
---------- ----------- -------------
<c> <c> <c>
Cash flows from operating activities:
Net loss $(1,893,763) $(589,072) $(6,234,213)
Adjustments to reconcile net loss to
cash used by operating activities:
Depreciation 21,373 17,497 109,531
Stock and options given in
exchange for services 1,067,570 90,000 2,084,726
Stock and options for
operating expenses - - 602,527
Changes in operating assets and liabilities:
(Increase) decrease in
refunds receivable 487,949 - ( 59,288)
(Increase) decrease in
prepaid expenses (2,208) (2,579) (5,433)
(Increase) decrease in
employee advances (282) (3,911) (11,146)
Increase (decrease) in
accounts payable 7,915 (30,515) 13,538
Increase (decrease) in
accrued liabilities (2,068) (698) 14,098
------ ------ ------
Net cash used by
operating activities (313,514) (517,882) (3,485,660)
Cash flows from investing activities:
Purchase of property
and equipment (6,583) (10,380) (134,127)
Acquisition of mineral properties(11,500) (144,811) (4,351,285)
------ ------- ----------
Net cash used by
investing activities (18,083) (89,614) (4,485,412)
------ ------- ---------
Table continued on next page.
</table>
METALLINE MINING COMPANY
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(continued)
<Table>
Period from
Nine Months Ended November 8, 1993
---------------------- (Inception)through
July 31,2001 July 31,2000 July 31, 2001
(Unaudited) (Unaudited) (Unaudited)
---------- ----------- -------------
<c> <c> <c>
--------- -------- ---------
Cash flows from financing activities:
Proceeds from sales
of common stock 515,390 1,199,485 7,652,672
Proceeds from sales of options - - 935,250
Deposits for sale of stock - - 87,500
Proceeds from
shareholders' loans - - 30,000
Net cash provided by ------- -------- ---------
financing activities: 515,390 1,199,485 8,705,422
------- ---------- ----------
Net increase (decrease)
in cash (183,793) 526,412 734,350
Cash beginning of period 550,557 240,662 -
------- -------- ------
Cash at end of period $734,350 $767,074 $734,350
======== ========= ========
Supplemental cash flow disclosures:
Income taxes paid in cash - - $ 9,599
Interest paid in cash - - -
Non-cash financing activities:
Common stock issued for services 14,700 $90,000 $487,875
Common stock issued for expenses - - $ 326,527
Common stock issued for equipment - - $ 40,000
Common stock issued for payment of debt - - $ 80,000
Common stock options
issued for services $828,100 - $935,500
Common stock options
issued for financing fees - - $276,000
See accompanying notes to these financial statements.
F/S-11
</Table>
<page>
METALLINE MINING COMPANY
An Exploration Stage Company
Notes to the Financial Statements
July 31, 2001
The interim financial statements of Metalline Mining Company included
herein have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange. 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 no misleading. The
accompanying interim financial statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Company's annual report on Form 10-K for the fiscal
year ended October 31, 2000.
The financial statements included herein reflect all normal recurring
adjustments that, in the opinion of management, are necessary for a
fair presentation of the results for interim periods. The results for
interim periods are not necessarily indicative of trends or of results
to be expected for a full year.
NOTE 1
PREFERRED STOCK
At its March 1, 2001 annual shareholders meeting, the Company approved
a change to its articles of incorporation whereby the Company is
authorized to issue one million shares of $0.01 par value preferred
stock. The specific features of the preferred stock will be
determined by the Company's board of directors.
STOCK OPTION PLAN
On March 1, 2001, the Company's shareholders approved a qualified
stock option plan. The number of shares eligible for issuance under
the qualified plan is to be determined by the Company's board of
directors.
[The balance of this page was intentionally left blank.]
F/S - 12
<page>
METALLINE MINING COMPANY
An Exploration Stage Company
July 31, 2001
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, 2001
By: /s/ Wayne L. Schoonmaker
-----------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: September 14, 2001
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, 2001 Date: September 14, 2001
By: /s/ Daniel Gorski By: /s/ Wayne L. Schoonmaker
----------------- ------------------
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer
Date: September 14, 2001 Date: Septemnber 14, 2001
F/S - 13