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 January 31, 2002
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 [ ]
METALLINE MINING COMPANY QUARTERLY REPORT
ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED JANUARY 31, 2002
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 . . . . . . . . . . . . . . . 5
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-9
[The balance of this page has been intentionally left blank.]
(i)
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 three-month period
ended January 31, 2002 are not necessarily indicative of the
results that may be expected for the full year ending October 31,
2002.
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, 2001 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 JANUARY 31, 2002.
Three months ended January 31, 2002 compared to the nine months
ended January 31, 2001:
During the three months ended January 31, 2002, the Company
realized other income of $17,500 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. Costs associated with the Sale of the ore totaled $104,848
for the three-month period ended January 31, 2002. There were no
ore sales or associated costs in the three-month period ended
January 31, 2001. General and administrative expenses increased to
$196,581 for the three-month period ended January 31, 2002 as
compared to $285,477 for the three-month period ended January 31,
2001. The decrease is primarily due to a reduction in expenses of
maintaining the property. For the three months ended January 31,
2002, the Company experienced a loss of $281,796, or $0.03 per
share, compared to a loss of $283,313, or $0.03 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.
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
Page 1
of securities. If the Company is unable to raise additional
capital, it may have to cease operations. The Company's plan of
operation, subject to maintaining sufficient funds, calls for
continued geologic mapping of the surface and underground workings,
sampling, and drilling to explore for additional mineralization and
to develop an ore reserve and compilation of the data into a
computer data base for reserve calculation.
Due to the Company's lack of revenues, the Company's
independent certified public accountants included a paragraph in
the Company's 2001 financial statements relative to a going concern
uncertainty. The Company financed its obligations during the 2000-
2001 fiscal year by its sale of 270,000 shares at prices ranging
between $0.75 and $2.00 per share. During the current period, the
Company has realized $100,000 from the sale of 50,000 shares.
The Company is engaged in the business of mining. The Company
currently owns one mining property located in Mexico known as the
Sierra Mojada Property. The Company conducts its operations in
Mexico through its wholly owned subsidiary corporation, Minera
Metalin S.A. de C.V. ("Minera Metalin").
The Sierra Mojada Property is comprised of eight concessions
totaling 7,060 hectares (17,446 acres). The concessions were
acquired by purchase agreements from the titled owners. The Company
controls 100% of the concessions. The Company is current on its
annual payments.
The Sierra Mojada Mining District is located in the west
central part of the state of Coahuila, Mexico, near the Coahuila-
Chihuahua state border some 200 kilometers south of the Big Bend of
the Rio Grande River. The principal mining area extends for some 5
kilometers in an east-west direction along the base of the
precipitous, 1,000 meter high, Sierra Mojada Range.
Vehicle access from Torreon is by 200 kilometers on paved road
to the Penoles chemical plant at Laguna del Rey and then another 50
kilometers of gravel road to Sierra Mojada. There is a well
maintained, 1200 meter, gravel airstrip. The District has high
voltage electric power and is served by a rail line, which was
constructed from Escalon to the district in 1891 and later
connected to Monclova.
The initial discovery of silver ore in the Sierra Mojada
Property was made in 1879. Over the next 12 years numerous small
mines developed along an oxidized silver lead ore body known as the
"lead manto" (a bed, layer or strata). The lead manto was mined
continuously for 3 kilometers and discontinuously for another 2
kilometers. Ore was selectively mined and hauled by wagon to
Escalon on the railroad main line from El Paso to Mexico City; from
there it went to smelters in Mexico and the United States.
In September of 1891 the Mexican Northern Railroad completed
its spur line from Escalon to the district. Rail access stimulated
development and the period from 1891 to the late 1920's was the
peak of productivity of the district. The main lead manto was
nearly mined out by 1905, the same year that the discovery of the
first silver-copper ore body was made. Additional discoveries of
silver, silver-copper, and silver-copper-zinc-lead ores provided
production through the 1930's. Between 1922 and 1931 additional
lead manto silver-lead ore was discovered and mined to the
southwest for some 1,400 meters under the Sierra Mojada range. This
manto was eventually mined for more than 2 kilometers.
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.
Page 2
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.
In August, 2000 Rio Tinto Ltd. purchased North Limited for its
iron ore holding and has subsequently terminated the agreement with
Minera Metalin.
On the 15th of November, 2001 Metalline Mining Company and its
Mexican Subsidiary Minera Metalin, S.A. de C.V. signed an Agreement
with Minas Penoles, S.A. de C.V. and Compania Minera La Parrena,
S.A. de C.V. The Agreement allows Minas Penoles to earn a 60%
interest in the Sierra Majada project by exploring and completing a
feasibility study over an "Earn in Period" of not more than 5
years. The study is to be of sufficient detail and quality to be
used to secure debt financing for the development and operation of
the project. Minas Penoles is committed to complete US $1,000,000
(one million US Dollars) of Qualified Expenditures on the Property
as may be recommended by the Technical Committee during the first
year as of the date of signing the Agreement. Minas Penoles is to
be the Operator; operations are under the control of the Technical
Committee that will be composed of 2 representatives from Metalin
and 3 from Minas Penoles.
Page 3
In addition, Minas Penoles will purchase Metalline Mining Company
shares at a fixed price of US $2.00 per share in the following
schedule and manner:
(i).- 50,000 shares upon signing the Agreement, purchased by Minas
Penoles, S.A. de C.V. by means of a capital contribution to
Metalline. Subsequently, and always following this same mechanism
(i.e.- capital contribution to Mealline), if Penoles should elect
to continue exploration after twelve months time as of the
Effective Date, then (ii).- Minas Penoles, S.A. de C.V. shall
purchase 100,000 additional Metalline shares at US $2.00 per share;
(iii).- if Penoles should continue exploration after twenty-four
months, Minas Penoles, S.A. de C.V. shall purchase an additional
100,000 Metalline shares at US $2.00 per share.
It is the parties' intent and understanding that, in order to
carry out to completion the Project once the Earn-In has been
achieved or at whatever other time the Parties shall agree to in
writing, the parties shall form a joint venture vehicle (the
"Joint Venture Company") subject to the terms of the Agreement.
The terms and conditions of the Joint Venture will be established
in separate document(s) as the parties may deem necessary, in which
Joint Venture, Minas Penoles, S.A. de C.V. shall have a 60%
participation, and Metalin a 40% participation, subject to the
terms of the Agreement.
In December 2001 Metalline Mining Company signed an agreement
with the B.O.W. Corporation of El Paso, Texas for an exclusive
lease on 41 patented and 81 unpatented mining claims in the Silver
Hills District at Orogrande, New Mexico. The property contains
high-grade garnet deposits that will be developed for the
industrial abrasive market. The agreement allows Metalline to mine,
process and market any metallic, non-metallic, or other mineral
mined and sold from the property by establishing the quality and
marketability of the garnet and by furnishing B.O.W. a business
plan and feasibility study within six months. The agreement also
provides that within 12 months of completing the feasibility study,
if warranted, Metalline will construct and place into production a
mining and marketing operation with a minimum capacity of 25,000
tons per year of industrial garnet. As consideration for the
exclusive lease, B.O.W. will receive up to 50% of net profits from
the operation.
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS.
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 January 31, 2002, the Company has not engaged in
any transactions that would be considered derivative instruments or
hedging activities.
In September 2000, the FASB issued SFAS No.140 "Accounting
for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities." This statement provides accounting and reporting
standards for transfers and servicing of financial assets and
extinguishment of liabilities and also provides consistent
standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. SFAS No.140 is
effective for recognition and reclassification of collateral and
for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000, and is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The
Company believes that the adoption of this standard will not have a
material effect on the Company's results of operations or financial
position.
In June 2001, the FASB issued SFAS No.141, "Business
Combinations" and SFAS No.142, "Goodwill and Other Intangible
Assets." SFAS No.141 provides for the elimination of the pooling-
of-interests method of accounting for business combinations with an
acquisition date of July 1,2001 or later.
Page 4
SFAS No.142 prohibits the amortization of goodwill and other
intangible assets with indefinite lives and requires periodic
reassessment of the underlying value of such assets for impairment.
SFAS No.142 is effective for fiscal years beginning after December
15, 2001. An early adoption provision exists for companies with
fiscal years beginning after March 15, 2001. On October 31, 2001,
the Company adopted SFAS No.142. Application of the nonamortization
provision of SFAS No.142 is expected to result in no change in net
income in fiscal 2002. The Company is currently evaluating the
impact of the transitional provisions of the statement.
CASH FLOWS FOR THE THREE MONTHS ENDED JANUARY 31,
2002 WERE AS FOLLOWS:
During the three-month period ended January 31, 2002, the Company's
cash position increased by $89,550, to $120,582. In addition,
short-term investments readily convertible to cash decreased by
$277,888 to $206,560. During the three-month period, the Company
used $261,338 in operating activities, not including the
liquidation and transfer to cash of $277,888 in short-term
investments. In addition, the Company realized $100,000 from the
sale of Company stock. The only use of cash other than for
operating activities was the purchase of property for $27,000.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES.
Neither the constituent instruments defining the rights of the
registrant's securities holders nor the rights evidenced by the
registrant's outstanding common stock have been modified, limited,
or qualified. The Company sold 50,000 shares of its common stock at
a price of $2.00 per share in the three month period ended January
31, 2002.
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. There have been no matters submitted to a vote of
security holders since March 1, 2001.
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:
None.
REPORTS ON FORM 8-K. No reports on Form 8-K were filed by the
registrant during the period covered by
this report.
Page 5
METALLINE MINING COMPANY
INDEX TO FINANCIAL STATEMENTS
Financial Statements: PAGE
Balance Sheets as of January 31, 2002
and October 31, 2001 . . . . . . . . . . . . . . . . . F/S-1
Statements of Operations for the three-month period
ended January 31, 2002 and January 31, 2001, and for
the period from inception (November 8, 1993)
to January 31, 2002 . . . . . . . . . . . . . . .. . . F/S-2
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to January 31, 2002 . . . . . . . . . . . . . . . . . .F/S-3
Statements of Cash Flow for the three-month
Periods ended January 31, 2002 and January 31,
2001, and for the period from inception
(November 8, 1993) to January 31, 2002 . . . . . . . . F/S-7
Notes to Financial Statements . . . . . . . . . . . . .F/S-8
Signatures . . . . . . . . . . . . . . . . . . . . . . F/S-9
[The balance of this page has been intentionally left blank.]
Page 6
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
<Table>
<Caption>
January 31, October 31,
2002 2001
(Unaudited)
----------- -----------
<s> <c> <c>
ASSETS
CURRENT ASSETS
Cash $ 120,582 $ 31,032
Investments 206,560 484,447
Foreign Tax Refund Receivable 59,288 59,288
Prepaid expenses 829 3,849
Employee advances 11,146 11,146
------ ------
Total Current Assets 398,405 589,762
------ ------
MINERAL PROPERT 4,334,767 4,334,767
------ ------
PROPERTY AND EQUIPMENT
Office and mining equipment 201,129 174,129
Less: Accumulated depreciation (122,894) (116,655)
------- ------
Total Property and Equipment 78,235 57,474
------- ------
TOTAL ASSETS $4,811,407 $4,982,003
======= ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $15,955 $ 5,275
Accrued liabilities 14,591 14,098
------ ------
Total Current Liabilities 30,546 19,373
------ ------
COMMITMENTS AND CONTINGENCIES - -
------ ------
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value;
50,000,000 shares authorized,
10,117,595 and 10,067,595 shares
issued and outstanding
respectively. 101,177 100,407
Additional paid-in capital 9,948,966 9,849,466
Stock options and warrants 1,422,327 1,422,327
Deficit accumulated during
exploration stage (6,691,609) (6,409,840)
------ ------
Total Stockholders' Equity 4,780,861 4,962,630
------ ------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,811,407 $4,982,003
====== ======
See accompanying notes to these financial statements.
</Table>
F/S-1
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Period from
Three Months Ended November 8, 1993
----------------- (Inception)
January 31, January 31, through
2002 2001 January 31, 2002
(Unaudited) (Unaudited) (Unaudited)
------ ------ ------
<s> <c> <c> <c>
REVENUES $ - $ - $ -
------ ------ ------
GENERAL AND ADMINI-
STRATIVE EXPENSES
Salaries 54,000 54,000 944,874
Office and
administrative 27,706 32,049 318,958
Taxes and fees 23,129 21,212 131,807
Professional services 84,098 44,853 3,235,159
Property expenses - 116,448 1,434,476
Marketing and research 1,410 9,789 168,984
Financing Costs - - 276,000
Depreciation 6,238 7,124 122,924
------ ------ ------
Total Expenses 196,581 285,477 6,633,182
------ ------ ------
OPERATING LOSS (196,581) (285,477) (6,633,182)
------ ------ ------
OTHER INCOME (EXPENSES)
Miscellaneous ore sales,
net of expenses (87,348) - (73,230)
Interest income 2,096 2,164 24,338
Interest expense - - (9,599)
Miscellaneous income 64 - 84
------ ------ ------
Total other income (expense) (85,188) 2,164 (58,407)
------ ------ ------
LOSS BEFORE INCOME TAXES (281,769) (283,313) (6,691,589)
====== ====== ======
INCOME TAXES - - -
------ ------ ------
NET LOSS$ (281,769) $(283,313) $(6,691,569)
====== ====== ======
NET LOSS PER COMMON SHARE
BASIC AND DILUTED $(0.03) $(0.03) $(1.40)
====== ====== ======
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING
BASIC AND DILUTED 0,087,595 9,740,595 4,789,638
- ------------------
See accompanying notes to these financial statements.
</Table> F/S-2
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
------ ----- ----- ------- -------- ------ -----
Common stock issuance prior
to inception (no value) 960,800 $ 9,608 $(9,608) $ - $ - $ - $ -
1:5 reverse common stock split (768,640) (7,686) 7,686 - - - -
Loss for the year
ended October 31, 1994 - - - - - (8,831) (8831)
----- ---- ---- ---- ---- ---- ----
Balances, October 31, 1994 192,160 1,922 (1,922) - - (8,831) (8831)
3:1, common stock split 384,320 3,843 (3,843) - - - -
Loss for the year
ended October 31, 1995 - - - - - (7,861)(7,761)
------ ---- ---- ---- ---- ---- ----
Balances, October 31, 1995 576,480 5,765 (5,765) - - (16592)(16592)
Issuance of common stock
as follows:
- - for cash at an average of
$0.11 per share 1,320,859 13,209 133,150 - - - 146,359
- - for services at an average
of $0.08 per share 185,000 1,850 12,600 - - - 162,458
- - for computer equipment at
$0.01 per share 150,000 1,500 13,500 - - - 15,000
- - for mineral property at
$0.01 per share 900,000 9,000 - - - - 9,000
Loss for the year ended
October 31, 1996 - - - - - (40670)(40670)
----- ---- ---- ---- ---- ----- -----
Balances, 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.
</Table> F/S-3
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
------ ----- ----- ------- -------- ------ -----
Balances, October 31, 1996 3,132,339 $31,324 $153,485 $ - $ - $(57262) $127547
Issuance of common stock
as follows:
- - for cash at an average of
$0.61 per share 926,600 9,266 594,794 - - - 604,060
- - for services at an average
of $0.74 per share 291,300 2,913 159,545 - - - 162,458
- - for payment of a loan at
$0.32 per share 100,200 1,002 30,528 - - - 31,530
Options issued as follows:
- - 300,000 options for cash - - 3,000 - - - 3,000
Loss for year ended
October 31, 1997 - - - - - (582,919)(582,919)
------ ------ ------ ---- ---- ------- ------
Balances, October 31, 1997 4,450,439 44,505 941,352 - - (640,181) 345,676
Issuance of common stock
as follows:
- - for cash at an average of
$1.00 per share 843,500 8,435 832,010 - - - 840,445
- - for cash and receivables
at $1.00 per share 555,000 5,550 519,450 (300,000) - - 225,000
- - for services at an average
of $0.53 per share 41,800 418 21,882 - - - 22,300
- - for mine data base at
$1.63 per share 200,000 2,000 323,000 - - - 325,000
Options issued or granted
as follows:
- - 1,200,000 options for cash - - 120,000 - - - 120,000
- - for financing fees - - - - 60,000 - 60,000
- - for consulting fees - - - - 117,000 - 117,000
Warrants issued for services - - - - 488,980 (488,980) -
Loss for the year
ended October 31, 1998 - - - - - (906,036)(906,036)
---- ---- ---- --- ----- ------- -------
Balances, October 31, 1998 6090739 $60908 $2757694$(300000)$655980 $(2035197)$1149385
---- ---- ------ ---- ----- ------- ------
Schedule continued on next page.
See accompanying notes to these financial statements.
</Table> F/S -4
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
------ ----- ----- ------- -------- ------ -----
Balances, October 31, 1998 6,090,739 60,908 2757694 (300,000) 665,980 (2035197) 1149385
Issuance of common stock
as follows:
- - for cash at an average
of $1.04 per share 818,800 8,188 842,712 - - - 850,900
- - for drilling fees at
$0.90 per share 55,556 556 49,444 - - - 50,000
Stock options and warrants
activity as follows:
- - exercise of options at
$0.90 per share 250,000 2,500 267,500 - (45,000) - 225,000
- - issuance of options
for financing fees - - - - 216,000 - 216,000
- - expiration of options - - 60,000 - (60,000) - -
Stock subscription received - - - 300,000 - - 300,000
Loss for the year ended
October 31, 1999 - - - - - (1423045)(1423045)
--- --- ---- ----- --- ------- ------
Balance at October 31, 1999 7215095 $72152 $3977350 $ - $776980 $(3458242)$1368240
Exercise of options
at $0.86 per share 950,000 9,500 1,090,750 - (288,000) - 812,250
Issuance of common
stock as follows:
- - for cash at an average
of $2.77 per share 1,440,500 14,405 3,972,220 - - - 3,986,625
- - for services at $1.28
per share 120,000 1,200 152,160 - - - 153,360
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
Loss for the year
ended October 31, 2000 - - - - - (882,208) (882.208)
----- ---- ---- --- ----- ------- ------
Balances, October 31, 2000 9,740,595 $97,407 $9217330 $ - $543,980 $(4340450)$5518267
------- ------ ------- --- ----- ------ -------
- -------------------------------
Schedule continued on next page.
See accompanying note to these financial statements.
</Table> F/S - 5
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
(CONTINUED)
<Table>
<Caption>
Accumulated
Common Stock Stock Stock Deficit
--------------- Additional Sub- Options During Ex-
Number of Paid-in scriptions and ploration
Shares Amount Capital Receivable Warrants Stage Total
------ ----- ----- ------- -------- ------ -----
Balances, October 31, 2000 9,740,595 $97,407 $9,217,330 $ - $543980 $(4340450)$5518267
Warrants exercised at
$0.75 per common share 20,000 200 25,560 - (10,760) - 15,000
Issuance of stock for cash
at $2.00 per common share 250,000 2,500 494,076 - 3,424 - 500,000
Issuance of stock for cash of
$210 and services valued at
$2.05 per common share 21,000 210 43,260 - - - 43,470
Issuance of stock for cash of
$180 and services valued at
$2.05 per common share 18,000 180 36,720 - - - 36,900
Issuance of stock for services
valued at $2.45 per common share 6,000 60 14,640 - - - 14,700
Stock issued for services valued
at $1.50 per common share 12,000 120 17,880 - - - 18,000
Options issued for consulting fees - - - - 740,892 - 740,892
Warrants issued for consulting fees - - - - 144,791 - 144,791
Loss for the year ended
October 31, 2001 - - - - - (2069390)(2069390)
------ ------ ------ ----- ---- ------ -------
Balances, October 31, 2001 10,067,595 100,677 9,849,466 - 1422327 (6409840) 4962630
Issuance of stock for cash
at $2.00 per common share 50,000 500 99,500 - - - 100,000
Loss for 3 months ended
January 31, 2002 - - - - - (281,769)(281,769)
------ ---- ----- ---- ---- ------ ------
Balances, January 31, 2002 10,117,595 $101,177 $9948966 $ - $1422327 $(6691609)$4780861
======= ====== ======= ==== ======= ======= =====
See accompanying notes to these financial statements.
</Table> F/S - 6
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<Table>
<Caption>
Period from
Three Months Ended November 8, 1993
------------------ (Inception)
January 31, January 31, through
2002 2001 January 31, 2002
(Unaudited) (Unaudited) (Unaudited)
--------- --------- ---------
Cash flows from operating
activities:
Net loss $(281,769) $(283,313) $(6,691,609)
Adjustments to reconcile net loss to
cash used by operating activities:
Depreciation 6,238 7,124 122,894
Stock and options given in
exchange for services - - 2,015,878
Stock and options for
operating expenses - - 729,391
Changes in operating assets and
liabilities:
(Increase) decrease in investments 277,888 - (206,559)
(Increase) decrease in refunds
receivable - - (59,287)
(Increase) decrease in prepaid expenses 3,020 2,120 (829)
(Increase) decrease in employee advances - (282) (11,146)
Increase (decrease) in accounts payable 0,680 10,026 15,955
Increase (decrease) in
accrued liabilities 493 1,550 14,591
------ ------ ------
Net cash used by operating
activities 16,550 (282,775) (4,070,721)
------ ------ ------
Cash flows from investing activities:
Purchase of property and equipment (27,000) (6,583) (161,128)
Acquisition of mineral properties - - (4,452,631)
------ ------ ------
Net cash used by
investing activities (27,000) (6,583) (4,613,759)
------ ------ ------
Cash flows from financing activities:
Proceeds from sales of common stock 100,000 - 7,752,312
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: 100,000 - 8,805,062
------ ------ ------
Net increase (decrease) in cash 89,550 (269,358) 120,582
Cash beginning of period 31,032 550,557 -
------ ------ ------
Cash at end of period $120,582 $281,199 $120,582
====== ====== ======
Supplemental cash flow disclosures:
Income taxes paid in cash - - $ 9,599
Interest paid in cash - - -
Non-cash financing activities:
Common stock issued for services - - $473,175
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 - - $107,400
Common stock options issued for financing fees - - $276,000
- -----------
See accompanying notes to these financial statements.
</Table> F/S-7
METALLINE MINING COMPANY
AN EXPLORATION STAGE COMPANY
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2002
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.
NOTE 2
On November 15, 2001, the Company entered into an agreement with
Compania Minera La Parrena S.A. de C.V. ("Penoles") whereby Penoles
may earn the right to acquire a 60% interest in certain mining
concessions located in the Sierra Majada region of Coahuila, Mexico.
The earn-in right is contingent upon the following: delivery by
Penoles within four years of a pre-feasibility study, completion by
Penoles of $1,000,000 of qualified expenditures on the aforementioned
mining concessions, and Penoles' purchase of up to 250,000 shares of
Metalline's common stock at $2.00 per share.
NOTE 3
In December 2001 Metalline Mining Company signed an agreement with
the B.O.W. Corporation of El Paso, Texas for an exclusive lease on 41
patented and 81 unpatented mining claims in the Silver Hills District
at Orogrande, New Mexico. The property contains high-grade garnet
deposits that will be developed for the industrial abrasive market.
The agreement allows Metalline to mine, process and market any
metallic, non-metallic, or other mineral mined and sold from the
property by establishing the quality and marketability of the garnet
and by furnishing B.O.W. a business plan and feasibility study within
six months. The agreement also provides that within 12 months of
completing the feasibility study, if warranted, Metalline will
construct and place into production a mining and marketing operation
with a minimum capacity of 25,000 tons per year of industrial garnet.
As consideration for the exclusive lease, B.O.W. will receive up to
50% of net profits from the operation.
F/S - 8
METALLINE MINING COMPANY
AN EXPLORATION STAGE COMPANY
JANUARY 31, 2002
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: March 11, 2002
By: /s/ Wayne L. Schoonmaker
-----------------------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: March 11, 2002
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: March 11, 2002 Date: March 11, 2002
By: /s/ Daniel Gorski By: /s/ Wayne L. Schoonmaker
--------- -----------
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer
Date: March 11, 2002 Date: March 11, 2002
F/S - 9