SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED OCTOBER 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or other information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at January 11, 2003 was $5,659,619. The number of shares of common
stock outstanding at such date was 10,368,340 shares. An additional 2,055,722
were deemed outstanding at such date pursuant to presently exercisable
options and warrants.
METALLINE MINING COMPANY ANNUAL REPORT
ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED OCTOBER 31, 2002
TABLE OF CONTENTS Page
SAFE HARBOR STATEMENT (ii)
PART I
Item 1: Description of Business . . . . . . . . . . . . 1
Item 2: Risk Factors . . . . . . . . . . . . . . . . . .5
Item 3: Description of Properties . . . . . . . . . . . 7
Item 4: Legal Proceedings . . . . . . . . . . . . . . . 8
Item 5: Indemnification of Directors and Officers . . . 8
Item 6: Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . 8
PART II
Item 7: Market for Registrant's Common Equity and
Related Stockholder Matters . . . . . . . . . . .8
Item 8: Recent Sale of Unregistered Securities . . . . .9
Item 9: Selected Financial Data . . . . . . . . . . . .11
Item 10: Description of Securities . . . . . . . . . . 11
Item 11: Management's Discussion and Analysis of
Financial Condition and Plan of Operations . . 12
Item 12: Financial Statements and Supplementary Data . 13
Item 13: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . 14
PART III
Item 14: Directors and Executive Officers
of the Registrant . . . . . . . . . . . . . . .14
Item 15: Executive Compensation . . . . . . . . . . . .17
Item 16: Security Ownership of Certain
Beneficial Owners and Management . . . . . . . 18
Item 17: Certain Relationships and
Related Transactions . . . . . . . . . . . . . 19
PART IV
Item 18: Exhibits, Financial Statement
Schedules, and Reports on Form 8-K . . . . . . 20
Index to Financials . . . . . . . . . . . . . . . . . . . 21
Signatures . . . . . . . . . . . . . . . . . . . . .F/S - 20
(i)
METALLINE MINING COMPANY ANNUAL REPORT
ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED OCTOBER 31, 2002
SAFE HARBOR STATEMENT
This report contains both historical and prospective statements
concerning the Company and its operations. Historical statements are
based on events that have already happened; examples include the
reported financial and operating results, descriptions of pending and
completed transactions, and management and compensation matters.
Prospective statements, on the other hand, are based on events that
are reasonably expected to happen in the future; examples include the
timing of projected operations, the likely effect or resolution of
known contingencies or other foreseeable events, and projected
operating results.
Prospective statements (which are known as "forward-looking
statements" under the Private Securities Litigation Reform Act of
1995) may or may not prove true with the passage of time because of
future risks and uncertainties. The Company cannot predict what
factors might cause actual results to differ materially from those
indicated by prospective statements. The risks and uncertainties
associated with prospective statements contained in this report
include, among others, the following:
[The balance of this page has been intentionally left blank.]
(ii)
METALLINE MINING COMPANY ANNUAL REPORT
ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED OCTOBER 31, 2002
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Background
Metalline Mining 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.
Current Operations
Metalline currently owns one mining property located in Mexico
known as the Sierra Mojada Property. Metalline conducts its
operations in Mexico through its wholly owned subsidiary
corporation, Minera Metalin S.A. de C.V.
The Sierra Mojada Property
The Mexican government owns the mineral rights. The exclusive
right to explore and exploit the mineral rights is granted by
issuance of a concession to a company or individual that denounces
the area desired for exploration or exploitation. After the
concession has been issued an annual fee is paid to the government
and annual Proof of Labor must be filed to maintain the title to the
concession. The annual fee is determined on the basis of the area of
the concession and the type of activity on the concession. The
concession can be held for 6 years under the exploration fee, after
6 years the exploitation fee is paid.
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 and has made all payments necessary
to acquire title to all eight concessions.
A summary of the concessions is as follows:
Concession Title No. Hectares
------ ----- -----
Sierra Mojada 198513 4767.3154
Mojada 3 199246 1689.2173
Esmeralda 188765 117.5025
Esmeralda 1 187776 97.6839
Unification Mineros Nortenos 169343 336.7905
La Blanca 188326 33.5044
Fortuna 160461 13.9582
Vulcano 83507 4.4904
------
Total 7060.4626
=======
Location and Access
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 250 kilometers of paved road to
Sierra Mojada. There is a well maintained, 1200 meter, gravel
airstrip. The District has high voltage electric power and a
railroad. The railroad from Escalon to the district was completed in
1891 and later connected to Monclova.
Page 1
Location and Access (continued)
This part of Mexico is remote, arid, and sparsely populated; the
region is known as the "zone of silence".
History
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" ("manto" is 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, silver-
copper, and silver-lead ore to smelters in Mexico.
The lead manto produced 3 to 3.5 million tonnes with another 1.5
million tonnes of similar ore coming from other ore bodies to the
west and to the southwest.
Mineros Nortenos has mined about 600,000 tonnes of predominantly
oxide zinc ore with grades of 20 to 50% zinc. Some of this ore was
oxide silver-lead, silver-copper, and silver-zinc-lead sulfide at
grades of 1 to 4 kilogram silver per tonne, 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
tonnes of high-grade ore that graded in excess of 20% lead, 20%
zinc, 1% copper and 1 kg (31 ounces) silver per tonne 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 grades for
low cost production.
Based upon the foregoing, Metalline 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.
Page 2
Geology
The Sierra Mojada District is located on the southern margin of
the Sabinas Basin, a large rift basin in northeastern Mexico, which
formed during Late Jurassic and Early Cretaceous.
Beginning in Latest Jurassic, the Sabinas basin began to form with
the basin being dropped down to the north relative to the Coahuila
Peninsula that was being uplifted to the south. The Sierra Mojada
fault is, possibly, one of the faults that contributed to the rift
basin forming process, which occurred over a time span in excess of
80 million years. During basin formation the Sierra Mojada fault, if
present, would have been a normal fault due to crustal extension.
The most recent motion on the Sierra Mojada fault is post mineral
and reverse.
Stratigraphy
Upper Jurassic and Lower Cretaceous marine carbonate, sandstone
and shale, the La Casita and Menchaca Formations, are overlain by
Lower Cretaceous red beds, the San Marcos Formation, composed of
conglomerate, sandstone, siltstone, shale, tuff and mineralized
carbonate sediments. The San Marcos is overlain by a marine
carbonate sequence of Early and Middle Cretaceous age, the Cupido,
La Pena, Aurora, and Georgetown Formations.
Mineralization
Sierra Mojada has two mineral systems separated by the east west
trending Sierra Mojada Fault. North of the fault the mineralization
is chemical sedimentary disseminated to massive silver, copper, zinc
and lead sulfide deposited in the Menchaca Formation. South of the
fault, the mineralization is deposited in the La Pena and Aurora
Formations and consists of oxide zinc and lead mantos.
These two mineral systems have been brought into proximity to each
other by post mineral reverse motion on the Sierra Mojada Fault that
faults the San Marcos and Menchaca Formations against Aurora. The
San Marcos and Menchaca Formations are 25 million years older than
the Aurora Formation.
The mineral systems have been mined in an east-west direction for
over 5 kilometers, in a north-south direction in excess of 2
kilometers and for a vertical extent of 100 meters.
The Sierra Mojada mineral systems are chemical sedimentary and
brine related. The ore minerals are in chemical equilibrium with the
limestone, dolomite, carbonate shale, and sandstone host rocks.
There is no alteration, silicification or skarn mineralization.
Mineralization has been episodically deposited in certain beds,
resulting in a vertical repetition of mineralized beds and ore
bodies in the Menchaca Formation and in the Aurora Formation. This
Intermittent or episodic deposition of mineralization has occurred
over at least 25 million years and it is possible that this process
was ongoing during deposition of the other units above the basement
rocks. The thickness and character of the rock units below the
existing workings is unknown and will have to be determined by
drilling. With the evidence of the repetitive nature of the
mineralization the potential for additional discovery at depth is
high.
Exploration and Development.
The Company has spent the last 7 years collecting historic data on
the district, geologic mapping and sampling of the surface and the
underground mines and has completed a reverse circulation drilling
program consisting of 24 holes and a total of 6630 meters of
drilling. During 2000, North Limited drilled 26 reverse circulation
holes totaling 6,618 meters.
The drilling and channel sampling are the first step in developing
ore reserves at Sierra Mojada. Metalline's drilling consisted of
fifteen holes drilled on a grid of about 30 meters by 60 meters on
the poymetallic manto, north of the Sierra Mojada fault, to evaluate
the silver, copper, zinc, and lead mineralization. Nine holes were
drilled in the San Salvador, Encantada and Fronteriza mines to test
the oxide zinc mineral system south of the Sierra Mojada fault.
These holes were spaced at about 100 to 200 meter intervals over a
1500-meter extent in the three mines.
Page 3
North Limited's holes were drilled to test the oxide zinc
mineralization in the San Salvador, Encantada and Fronteriza mines.
Three step out holes extent the mineralization 2 kilometers to the
west of the San Salvador mine. Three step-out holes to the south did
not encounter mineralization.
Metalline signed an agreement with Minas Penoles in November 2001,
which allows Penoles to earn a 60% interest in Sierra Mojada by
completing a bankable feasibility study within 5 years. Upon
completion of the feasibility study, a Joint Venture Company will be
formed to develop and mine the property that will be owned 60% by
Penoles and 40% by Metalline (Metalline news release dated December
10, 2001). Penoles has continued reserve development by drilling,
sampling, and driving raises in the ore horizon and have spent in
excess of the required $1,000,000 for the 2001-2002 program. Penoles
has elected to continue the program for 2002-2003 and has budgeted
$2,000,000 for the program and has purchased 100,000 shares of
Metalline stock (Metalline news release dated December 2, 2002).
The results confirm and expand the mineralization of the
polymeteallic and the oxide zinc mantos. Multiple intersections of
ore grade mineralization over thick intervals were obtained, with
some intersects of exceptional grade and thickness. The results have
been released in news releases dating from February 1999 through
December 2002 and are available on Metalline's Web Site:
WWW.METALIN.COM and from Metalline.
Exploration and evaluation of the mineral systems of the district
and of Metalline's total land position to define the limits of the
known mineralization and for discovery of new mineralization will
continue and accelerate.
Defining a mineable reserve in the oxide zinc systems, the Red
Zinc and White Zinc Mantos, in the San Salvador, Encantada, and
Fronteriza mines is the first priority due to the 30% cost of
production advantage of the Solvent Extraction Electrowinning (SXEW)
process for oxide zinc ore over the smelting process for zinc
sulfide ore. Presently, almost all zinc is produced from sulfide ore
by the smelting process. Reserve development will involve surface
and underground drilling and channel sampling, drifting, and raising
in sufficient detail to determine the tonnage and grade of an ore
reserve. A feasibility study, including metallurgical studies, will
then be completed to determine if the reserve is commercially
viable.
Penoles Agreement
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 L Parrena, S.A.
de C.V. The Agreement allows Minas Penoles to earn a 60% interest in
the Sierra Mojada 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 operation of the project. Minas
Penoles is committed to complete US$1,000,000 (one million US
Dollars) of Qualified Expenditures on the Propety 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 Metalline
and 3 from Minas Penoles. 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.
Page 4
Timetable
Reserve definition and a feasibility study will require about two
years. Development of the mine and construction of the SXEW plant
will require about an additional two years.
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.
Additional Events
The agreement between Metalline Mining Company and 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 has been terminated (Metalline news release
dated October 7, 2002).
Dr. Roger Kolvoord was appointed to the Board of Directors of
Metalline Mining Company on August 6, 2002 (Metalline news release
dated September 9, 2002). Dr. Kolvoord brings a wealth of knowledge
and experience in Geology, Geophysics, Mining, Computer Technology,
Remote Sensing, and Geospatial Information Applications, and an
extensive background in Business Management and Business Development
to the Metalline Board.
ITEM 2. RISK FACTORS
1. EXPLORATION STAGE MINING COMPANY WITH NO HISTORY OF OPERATION.
The Company is in its exploration stage, 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,
complication, and delays frequently encountered in connection with a
new business, and the competitive and regulatory environment in
which the Company will operate. See "Business".
2. NO COMMERCIALLY MINEABLE ORE BODY. No commercially mineable ore
body has been delineated on the properties, nor have any reserves
been identified. See "Business".
3. RISKS INHERENT IN THE MINING INDUSTRY. The Company is subject
to all of the risks inherent in the mining industry including,
without limitation, the following: competition from a large number
of companies, many of which are significantly larger than the
Company, in the acquisition, exploration, and development of mining
properties; the concession holder must pay fees and perform labor on
the concessions to maintain the concessions title; exploration for
minerals is highly speculative and involves substantial risks, even
when conducted on properties known to contain significant quantities
of mineralization, and most exploration projects do not result in
the discovery of commercially mineable deposits of ore; operations
are subject to a variety of existing laws and regulations relating
to exploration and development, permitting procedures, safety
precautions, property reclamation, employee health and safety, air
quality standards, pollution and other environmental protection
controls; a large number of factors beyond the control of the
Company, including fluctuations in metal prices, inflation, and
other economic conditions, will affect the economic feasibility of
mining; mining activities are subject to substantial operating
hazards some of which are not insurable or may not be insured due to
economic considerations; and, the availability of water, which is
essential to milling operations.
4. NATURE OF THE INDUSTRY. Exploration, development, and mining of
mineral properties is highly speculative and involves unique and
greater risks than are generally associated with other businesses.
The Company's operations will be subject to all the operating
hazards and risks normally incident to the exploration, development,
and mining of mineral properties, including risks enumerated above
and below.
5. FLUCTUATING PRICE FOR METALS. The Company's operations will be
greatly influenced by the prices of silver, copper, lead, zinc, and
other metals. These prices fluctuate widely and are affected by
numerous factors beyond the Company's control, including
expectations for inflation, the strength of the United States
dollar, global and regional demand and political and economic
conditions and production costs in major metal producing regions of
the world.
Page 5
6. MINING CONCESSIONS. The Company holds mining concessions in
Mexico. Concessions require work and financial expenditures to
retain their validity. See "Business".
7. ENVIRONMENTAL CONTROLS. Compliance with statutory environmental
quality requirements may necessitate significant capital outlays,
may materially affect the earning power of the Company, or may cause
material changes in the Company's intended activities. No assurance
can be given that environmental standards imposed by either federal
or state governments will not be changed or become more stringent,
thereby possibly materially adversely affecting the proposed
activities of the Company.
8. GOVERNMENTAL REGULATION AND ENVIRONMENTAL CONTROLS. The
Company's activities are subject to extensive Mexican laws and
regulations controlling not only the exploration for and development
of mineral properties, but also the possible effect of such
activities upon the environment. In its mining operations, the
Company will use certain equipment, which will subject the Company
to Mexican safety and health regulations. While the Company intends
to act in compliance with all such regulations, any adverse ruling
under any regulations, any imposition of a fine, or any imposition
of more stringent regulations could require the Company to make
additional capital expenditures that could impair its operations.
9. Availability of water shortages of supplies and materials.
Water is essential in all phases of the exploration and development
of mineral properties. It is used in such processes as exploration,
drilling, leaching, placer mining, dredging, testing, and hydraulic
mining. Any water that may be found will be subject to acquisition
pursuant to appropriate governing laws. The Company has definitely
not determined the availability of water at Sierra Mojada, except to
note that adequate water supplies are generally developed by
drilling, but has not determined the cost of acquisition. Both the
lack of available water and the cost of acquisition may make an
otherwise viable project economically impossible to complete. The
mineral industry has experienced from time to time shortages of
certain supplies and materials necessary in the exploration for and
evaluation of mineral deposits. The prices at which such supplies
and materials are available have also greatly increased. There is a
possibility that planned operations may be subject to delays due to
such shortages and that further price escalations will increase the
costs of the Company.
10. UNINSURED RISKS. The Company may not be insured against all
losses or liabilities, which may arise from operations, either
because such insurance is unavailable or because the Company has
elected not to purchase such insurance due to high premium costs or
other reasons.
11. NEED FOR SUBSEQUENT FUNDING. The Company has an immediate need
for additional funds in order to finance its proposed business
operations. The Company's continued operations therefore will depend
upon the availability of cash flow, if any, from its operations or
its ability to raise additional funds through bank borrowings or
equity or debt financing. There is no assurance that the Company
will be able to obtain additional funding when needed, or that such
funding, if available, can be obtained on terms acceptable to the
Company. If the Company cannot obtain needed funds, it may be forced
to curtail or cease its activities.
12. NEED FOR ADDITIONAL KEY PERSONNEL. At the present, the Company
employs three full-time and one part-time employee. The success of
the Company's proposed business will depend, in part, upon the
ability to attract and retain qualified employees. The Company
believes that it will be able to attract competent employees, but no
assurance can be given that the Company will be successful in this
regard. If the Company is unable to engage and retain the necessary
personnel, its business would be materially and adversely affected.
13. RELIANCE UPON DIRECTORS AND OFFICERS. The Company is wholly
dependent, at the present, upon the personal efforts and abilities
of its Officers and Directors who will exercise control over the
day-to-day affairs of the Company. While the Company may solicit
business through its Officers, there can be no assurance as to the
volume of business, if any, which the Company may succeed in
obtaining, nor that its proposed operations will prove to be
profitable. As of the date hereof, the Company does not have any
commitments regarding its proposed operations and there can be no
assurance that any commitments will be forthcoming. See "Business"
and "Management".
Page 6
14. NON-ARMS' LENGTH TRANSACTION. The number of shares of Common
Stock issued to present shareholders of the Company for cash was
arbitrarily determined and may not be considered the product of
arm's length transactions. See "Principal Shareholders".
15. INDEMNIFICATION OF OFFICERS AND DIRECTORS FOR SECURITIES
LIABILITIES. The Bylaws of the Company provide that the Company may
indemnify any Director, Officer, agent, and/or employee as to those
liabilities and on those terms and conditions as are specified in
the Nevada Business Corporation Act. Further, the Company may
purchase and maintain insurance on behalf of any such persons
whether or not the corporation would have the power to indemnify
such person against the liability insured against. The foregoing
could result in substantial expenditures by the Company and prevent
any recovery from such Officers, Directors, agents, and employees
for losses incurred by the Company as a result of their actions.
Further, the Company has been advised that in the opinion of the
Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable.
16. COMPETITION. The Company believes that it will have
competitors and potential competitors, many of whom may have
considerably greater financial and other resources than the Company.
17. PUBLIC MARKET FOR SECURITIES. At present, the Company's common
stock is traded under the symbol MMGG on the OTC Bulletin Board
operated by the National Association of Securities Dealers, Inc.
This market is a thinly traded market and lacks the liquidity of
other public markets with which some investors may have more
experience.
18. CUMULATIVE VOTING, PREEMPTIVE RIGHTS AND CONTROL. There are no
preemptive rights in connection with the Company's Common Stock. The
shareholders purchasing in this offering may be further diluted in
their percentage ownership of the Company in the event additional
shares are issued by the Company in the future. Cumulative voting in
the election of Directors is not provided for. Accordingly, the
holders of a majority of the shares of Common Stock, present in
person or by proxy, will be able to elect all of the Company's Board
of Directors. See "Description of the Securities".
19. NO DIVIDENDS ANTICIPATED. At the present time the Company does
not anticipate paying dividends, cash or otherwise, on its Common
Stock in the foreseeable future. Future dividends will depend on
earnings, if any, of the Company, its financial requirements and
other factors. Investors who anticipate the need of an immediate
income from their investment in the Company's Common Stock should
refrain from the purchase of the securities being offered hereby.
See "Dividend Policy".
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company owns the following eight mining concessions, including
the buildings and equipment located thereon:
Concession Title No. Hectares
------ ----- -----
Sierra Mojada 198513 4767.3154
Mojada 3 199246 1689.2173
Esmeralda 188765 117.5025
Esmeralda 1 187776 97.6839
Unification Mineros Nortenos 169343 336.7905
La Blanca 188326 33.5044
Fortuna 160461 13.9582
Vulcano 83507 4.4904
-----
Total 7060.4626
=======
The Company's corporate offices are located at 1330 East Margaret
Avenue, Coeur d'Alene, Idaho 83815, and its telephone number is
(208) 665-2002 and FAX is (208) 665-0041. Minera Metalin has its
operations, consisting of mining equipment, offices, residences,
shops, and warehouse buildings, located at Calle Mina #1, La
Esmeralda, Coahuila, Mexico and its telephone and FAX number is 52
871 775 2100.
Page 7
ITEM 4. LEGAL PROCEEDINGS.
Minera Metalin, the Company's Mexican subsidiary, has been named as
a co-defendant in a lawsuit filed in Mexico regarding the Company's
purchase of two mining concessions. Any potential liability
resulting from the lawsuit would be directed against the other named
defendant, and according to the Company's legal counsel, the chance
of an adverse judgment for Metalin is negligible.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the state of Nevada under certain circumstances
provide for indemnification of the Company's Officers, Directors and
controlling persons against liabilities, which they may incur in
such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such person
is a party, if that person's actions were in good faith, were
believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in such
an action, indemnification may be awarded only after a determination
by independent decision of the Board of Directors, by legal counsel,
or by a vote of the shareholders, that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with respect
to such actions, indemnification is granted only with respect to
expenses actually incurred in connection with the defense or
settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed
to have been in the Company's best interest, and have not been
adjudged liable for negligence or misconduct.
The Company's Articles of Incorporation and Bylaws do not contain
any provisions for indemnification as described above.
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of the shareholders of Metalline Mining Company
was held on March 1, 2001. The following items were presented for a
vote of the shareholders, all of which were approved:
1. Election of three directors.
2. Authorization of a Qualified Stock Option Plan.
3. Amendment of the Company's Articles of Incorporation to authorize
one
million shares of Preferred Stock, $0.01 par value per share.
4. Ratification of the appointment of Williams & Webster, Certified
Public
Accountants, to audit the financial statements of the Company.
PART II
ITEM 7. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER
MATTERS.
The Company's shares are traded on the Bulletin Board operated by
the National Association of Securities Dealers, Inc. (the "Bulletin
Board") under the trading symbol "MMGG". The Company's shares began
trading November 19, 1996. Summary trading by quarter for 2002,
2001, and 2000 are as follows:
Fiscal Quarter High Bid Low Bid
--------- --------- --------
2002
Fourth Quarter 1.60 0.90
Third Quarter 2.10 1.15
Second Quarter 1.94 0.75
First Quarter 2.75 0.80
Page 8
Fiscal Quarter High Bid Low Bid
------- -------- -------
2001
Fourth Quarter 2.34 1.20
Third Quarter 2.50 1.63
Second Quarter 2.75 1.63
First Quarter 2.75 2.00
2000
Fourth Quarter 4.25 1.75
Third Quarter 4.38 3.25
Second Quarter 4.00 2.13
First Quarter 3.13 2.00
These quotations reflect inter-dealer prices, without retail
mark-up, markdown, or commissions, and may not represent actual
transactions.
As of October 31, 2002, the Company has 120 holders of record of
its Common Stock.
The Company has not paid any dividends since its inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
ITEM 8. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 10,368,340 shares of Common Stock issued and
outstanding as of October 31, 2002. Of the total shares of the
Company's Common Stock outstanding, 4,483,545 shares are freely
tradable and 5,884,795 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act").
In general, under Rule 144 as currently in effect, a person (or
persons whose Shares are aggregated) who has beneficially owned
Shares privately acquired directly or indirectly from the Company or
from an affiliate, for at least one year, or who is an affiliate, is
entitled to sell within any three month period a number of such
Shares that does not exceed the greater of 1% of the then
outstanding shares of the Company's Common Stock or the average
weekly trading volume in the Company's Common Stock during the four
calendar weeks, immediately preceding such sale. Sales under Rule
144 are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information
about the Company. A person (or persons whose Shares are aggregated)
who is not deemed to have been an affiliate at any time during the
90 day preceding a sale, and who has beneficially owned Restricted
Shares for at least two years, is entitled to sell all such Shares
under Rule 144 without regard to the volume limitations, current
public information requirements, manner of sale provisions or notice
requirements.
On August 24, 1993, the Company issued 960,800 of its $0.01 par
value shares to Precious Metal Mines, Inc. ("PMM"), for 16
unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group. The foregoing shares were
issued pursuant to Section 4(2) of the Securities Act of 1933 (the
"Act").
On August 31, 1994, the directors of Cadgie Co. declared a 1:5
reverse stock split of the outstanding Cadgie Co. shares, thus
reducing the number of outstanding shares from 960,800 to 192,160
shares.
On August 4, 1995, the directors of Cadgie Co. declared a 3:1
forward stock split of the outstanding Cadgie Co. shares, thus
increasing the number of outstanding shares from 192,160 to 576,480.
During November 1995, Cadgie Co. directors approved an issue of
45,000 shares of Common Stock to Mr. Ryan for services rendered at
$0.01 per share. The foregoing shares were issued pursuant to
Section 4(2) of the Act.
In June 1996, the Company completed a private placement of common
stock resulting in net proceeds of $25,000. The Company issued
250,000 common shares in connection with this private placement. The
Company also issued 900,000 shares to Messrs. Bingham, Gorski and
Ryan who had formed a partnership to advance
Page 9
development of the mining concession located in Coahuila, Mexico.
The partnership had an informal joint venture agreement with Dakota
covering the mining concessions. By acquiring the partnership
interest, the Company was able to negotiate and sign a formal joint
venture agreement with Dakota in July 1996. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
During June 1996, the Company issued 900,000 shares of Common
Stock for the assignment of mineral rights in the Sierra Mojada
Project in Coahuila, Mexico valued at $0.01. The foregoing shares
were issued pursuant to Section 4(2) of the Act.
In October 1996, the Company completed a private placement of
common stock resulting in net proceeds of $125,500. The Company
issued 1,255,000 shares in connection with this placement. The
Company also issued 120,000 shares to Mr. Gorski in payment for his
services for the months of September and October. The Company issued
20,000 shares of Common Stock to Mr. Ryan as payment for services in
those same months. Further, the Company issued 150,000 shares of
common stock for computer equipment. The foregoing shares were
issued pursuant to Section 4(2) of the Act.
During February 1997, the Company borrowed $30,000 from
shareholders and issued 24,900 shares of Common Stock as a loan
incentive. The foregoing shares were issued pursuant to Section 4(2)
of the Act.
In March 1997, the Company completed an issuance of Common Stock
resulting in net proceeds of $17,500. The foregoing shares were
issued pursuant to Section 4(2) of the Act.
In April 1997, the Company issued to Royal Silver Mines, Inc.,
200,000 shares of Common Stock resulting in proceeds of $70,000. The
Company issued 133,800 shares of Common Stock for services and
expenses. A total of 24,900 shares of Common Stock were issued as
loan incentives (interest) for $30,000 in loans from shareholders.
These shares were issued at $0.30 per share.
A total of 77,600 shares of Common Stock were issued in exchange
for wages during the months of January, February, and March 1997 at
$0.35 per share. A total of 31,300 shares of Common Stock were
issued to cover expenses incurred by shareholders at $0.35 per
share. The foregoing shares were issued pursuant to Section 4(2) of
the Act.
On June 5, 1997, the Company issued 50,000 shares of Common Stock
in consideration of services rendered. The foregoing shares were
issued pursuant to Section 4(2) of the Act.
In 1997 and 1998, the Company issued warrants to eight persons.
Each warrant entitles the holder to acquire one share of common
stock at exercise prices ranging from $0.35 to $2.25. A total of
1,046,500 warrants were issued and 996,500 are currently
outstanding; 50,000 of the warrants have been exercised. The
warrants were issued pursuant to Section 4(2) of the Act.
Between August 14, 1998 and November 23, 1998, the Company sold
565,000 shares of common stock to eight persons/entities in
consideration of $565,000. The foregoing shares were sold pursuant
to Section 4(2) of the Securities Act of 1933.
Between March 8, 1999 and June 11, 1999, the Company sold 662,500
shares of common stock to eight persons/entities in consideration of
$662,500. The foregoing shares were sold pursuant to Section 4(2) of
the Securities Act of 1933.
In July and November 1999, options for 1,200,000 shares of common
stock were exercised as a price of $0.90 per share, pursuant to
Section 4(2) of the Act.
In August 2000, the Company sold 1,440,500 shares for common stock
at a price of $2.77 per share. The foregoing shares were sold
pursuant to Section 4(2) of the Securities Act of 1933.
During the year ended October 31, 2000, the company issued 120,000
shares for services rendered and 15,000 shares for equipment. The
foregoing shares were issued pursuant to Section 4(2) of the
Securities Act of 1933.
Page 10
During the year ended October 31, 2001, the Company issued 20,000
shares of common stock for the exercise of warrants valued at
$10,760 and cash of $15,000. Additionally, 57,000 shares of common
stock were issued for services valued at $112,420 and cash of $570
and 250,000 shares of common stock with 125,000 warrants attached
were issued for $500,000 in cash. The foregoing shares were issued
pursuant to Section 4(2) of the Securities Act of 1933.
On May 20, 2002, the Company authorized the offering of 1,000,000
common stock units, with each unit consisting of one share of common
stock and one warrant equal to 1/3 of a share of common stock.
During the year ended October 31, 2002, the Company issued 162,667
common stock units for a cash value of $229,360 for common stock,
and $14,640 for warrants. The Company also issued 50,000 shares of
common stock under the Penoles agreement for cash, at $2.00 a share.
Additionally, 86,078 shares of common stock were issued as
compensation to officers for a value of $104,875.
ITEM 9. SELECTED FINANCIAL DATA.
The selected financial data set forth below has been derived from,
and should be read in conjunction with the Company's financial
statements and the notes thereto, and Item 11 of this report
entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations". The selected financial data
for the two years ended October 31, 2002 have been derived from the
Company's consolidated financial statements appearing elsewhere in
this report, which have been audited by Williams & Webster P.S.,
Spokane, Washington.
The selected financial data should be read in conjunction with and
is qualified by such financial statements and the notes thereto.
Selected Financial Data
2002 2001
---- ----
Summary of Balance Sheets:
Working capital $48,963 $570,389
Current assets 353,492 589,762
Total assets 5,011,289 4,982,003
Current liabilities 304,529 19,373
Long-term obligation 0 0
Total liabilities 304,529 19,373
Stockholder's equity 4,706,760 4,962,630
Summary of Statements of Operations:
Revenues 0 0
Net loss (765,765) (2,069,390)
Net loss per share (0.08) (0.21)
----
Cumulative losses for period from inception (Nov. 8, 1993)
through October 31, 2002 were $7,175,605.
ITEM 10. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of 50,000,000
shares of $0.01 par value Common Stock. As of October 31, 2002,
10,368,340 shares are issued and outstanding of which 4,483,545 are
freely tradable.
In general, under Reg.144, an affiliate of the Company (officers,
directors, and owners of more than ten percent (10%) of the
outstanding shares of Common Stock are affiliates of the Company)
may sell in ordinary market transactions through a broker or with a
market maker, within any three (3) month period a number of shares
Page 11
which does not exceed the greater of one percent (1%) of the number
of outstanding shares of Common Stock or the average of the weekly
trading volume of the Common Stock during the four calendar weeks
prior to such sale. Sales under Reg.144 require the filing of Form
144 with the Securities and Exchange Commission. If the shares of
Common Stock have been held for more than two (2) years by a person
who is not an affiliate, there is no limitation on the manner of
sale or the volume of shares that may be sold and no Form 144 is
required. Sales under Reg. 144 may have a depressive effect on the
market price of the Company's Common Stock.
All shares have equal voting rights and are not assessable. Voting
rights are not cumulative and, therefore, the holders of more than
50% of the Common Stock could, if they chose to do so, elect all of
the directors of the Company.
Upon liquidation, dissolution, or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for
any securities of the Company and have no right to require the
Company to redeem or purchase their shares. The shares of Common
Stock presently outstanding are fully paid and non-assessable.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is
contemplated in the foreseeable future.
Options and Warrants
Currently, the Company has outstanding stock options and warrants
to acquire up to 2,055,722 shares of common stock at exercise prices
ranging from $0.75 to $5.00 per share. Each option or warrant
permits the holder thereof to acquire one share of common stock. The
options and warrant expiration periods range from November 1, 2002
to March 1, 2010.
Transfer Agent
The transfer agent for the Company's Common Stock is Columbia
Stock Transfer Co., 421 Coeur d'Alene Avenue, Coeur d'Alene, Idaho
83814.
ITEM 11. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Results of Operations - Inception (August 20, 1993) through October
31, 2002.
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 is
currently involved in exploration and evaluation of its Mexican
property under agreement with Minas Penoles.
The Company does not intend to purchase a plant or significant
equipment.
The Company will hire employees on an as needed basis, however,
the Company does not expect any significant changes in the number of
employees.
Page 12
Liquidity and Capital Resources.
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
2002 financial statements relative to a going concern uncertainty.
The Company has financed its obligations during the 2001 / 2002
fiscal year by its sale of 212,667 shares at an average price of
$1.62 per share.
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").
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS.
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. 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 non-amortization 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.
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.143, "Accounting for
Asset Retirement Obligations" (SFAS No.143). SFAS No.143 establishes
guidelines related to the retirement of tangible long-lived assets
of the Company and the associated retirement costs. This statement
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of
the long-lived assets. This statement is effective for financial
statements issued for the fiscal years beginning after June 15,
2002. The Company adopted SFAS No.143, which will not impact the
financial statements of the Company at October 31, 2002.
ITEM 12. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements of the Company for the years ended
October 31, 2002, and 2001 included elsewhere in this report have
been audited by Williams & Webster, P.S., Spokane, Washington. An
index to such financial statements appears at Page 21 of this
report.
Page 13
ITEM 13. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures through the date of this 10-KSB.
PART III
ITEM 14. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Merlin Bingham 69 President and Chairman of the
Board of
Directors
Daniel Gorski 65 Vice President of Operations and
a member
of the Board of Directors
Roger Kolvoord 62 Member of the Board of Directors
Wayne Schoonmaker 65 Secretary & Treasurer
All directors hold office until the next annual meeting of
shareholders or until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting and hold office until their death,
or until they resign, or have been removed from office.
Officer and Director Biographies:
Merlin Bingham, President, and Chairman of the Board of Directors
Since October 1996, Mr. Bingham has been the President and
Chairman of the Board of Directors of the Company. From 1963 to 1983
Mr. Bingham worked in exploration for mining and oil companies in
the western U.S. and Alaska, Zambia, the United Arab Emirates,
Ecuador and Mexico. Since 1983, Mr. Bingham has been a consulting
geologist. Mr. Bingham received a B.S. degree in Mineralogy from the
University of Utah in 1963.
Daniel Gorski, Vice President of Operations, and a member of the
Board of Directors
Since June 1996, Mr. Gorski has been the Vice President of
Operations and a member of the Board of Directors of the Company.
Mr. Gorski has been a consulting geologist and mine manager since
1974 working in the western U.S. and Mexico. From January 1992 to
June 1996, Mr. Gorski was employed as a contract geologist, working
in Mexico, employed by USMX, Inc., an exploration and mining company
located in Denver, Colorado. Mr. Gorski received a B.S. degree in
Geology from Ross State College, Alpine Texas, and a M.A. in Geology
from the University of Texas in 1970.
Roger Kolvoord - Director
Dr. Kolvoord has been a director of the Company since August 2002.
Dr. Kolvoord has a B.S. degree in geology from the University of
Michigan, a M.S. in Mineralogy form the University of Utah, and a
Ph.D. in geochemistry from the University of Texas at Austin. He
worked in exploration and exploration research for Kennecott Copper
Company, Ranchers Exploration and Development Corporation, and ARCO,
and operated a services company providing field services to oil and
gas and mining companies. He has extensive mining and energy
exploration experience. He was a manager with the Boeing Company for
14 years, working mainly in program management and new business
development capacities in information systems and in remote sensing
and geospatial information (mapping) ventures. An Associate
Technical Fellow of the Boeing Company, he returned to private
consulting practice in 2000. An active member of the American
Association of Petroleum Geologists, he served two terms as the
Pacific Section Councilor of the Energy Minerals Division and is
currently Chair of the Geospatial Information Committee. He resides
in the Puget Sound region of Washington.
Page 14
Wayne Schoonmaker Secretary & Treasurer
From 1981 to 1993, Mr. Schoonmaker was Financial Manager of the
Northwest Mining Department of ASARCO and from 1978 to 1981, he was
Chief Accountant at ASARCO's Troy Unit in Montana, where he was
responsible for the installation and implementation of the
accounting system for the start-up of the Troy Mine. From July 1978
to December 1978, Mr. Schoonmaker was Assistant Treasurer of the
Bunker Hill Mining Company, and from 1964 to 1978, he was Assistant
Corporation Secretary of Hecla Mining Company. Mr. Schoonmaker
currently serves as Secretary and Treasurer of Sterling Mining
Company, which position he has held since July 1999. Mr. Schoonmaker
received a Bachelor of Science degree in Accounting from the
University of Montana in 1962 and an MBA from the University of
Idaho in 1987. Mr. Schoonmaker is a Certified Public Accountant in
the states of Idaho and Montana.
CONTROLS AND PROCEDURES
ANNUAL EVALUATION OF THE COMPANY'S DISCLOSURE CONTROLS AND INTERNAL
CONTROLS.
Within the 90 days prior to the date of this Annual Report on Form
10-KSB, the Company evaluated the effectiveness of the design and
operation of its "disclosure controls and procedures" (Disclosure
Controls), and its "internal controls and procedures for financial
reporting" (Internal Controls). This evaluation (the Controls
Evaluation) was done under the supervision and with the
participation of management, including our Chief Executive Officer
(CEO) and Chief Financial Officer (CFO). Rules adopted by the SEC
require that in this section of the Annual Report we present the
conclusions of the CEO and the CFO about the effectiveness of our
Disclosure Controls and Internal Controls based on and as of the
date of the Controls Evaluation.
CEO AND CFO CERTIFICATIONS.
Appearing immediately following the Signatures section of this
Annual Report there are two separate forms of "Certifications" of
the CEO and the CFO. The second form of Certifications is required
in accord with Section 302 of the Sarbanes-Oxley Act of 2002 (the
Section 302 Certification). This section of the Annual, which you
are currently reading is the information concerning the Controls
Evaluation referred to in the Section 302 Certifications and this
information should be read in conjunction with the Section 302
Certifications for a more complete understanding of the topics
presented.
DISCLOSURE CONTROLS AND INTERNAL CONTROLS.
Disclosure Controls are procedures that are designed with the
objective of ensuring that information required to be disclosed in
our reports filed under the Securities Exchange Act of 1934
(Exchange Act), such as this Annual Report, is recorded, processed,
summarized, and reported within the time periods specified in the
Securities and Exchange Commission's (SEC) rules and forms.
Disclosure Controls are also designed with the objective of ensuring
that such information is accumulated and communicated to our
management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure. Internal Controls
are procedures which are designed with the objective of providing
reasonable assurance that (1) our transactions are properly
authorized; (2) our assets are safeguarded against unauthorized or
improper use; and (3) our transactions are properly recorded and
reported, all to permit the preparation of our financial statements
in conformity with generally accepted accounting principles.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS.
The Company's management, including the CEO and CFO, does not expect
that our Disclosure Controls or our Internal Controls will prevent
all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making
can be faulty,
Page 15
and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls also
is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future
conditions; over time, control may become inadequate because of
changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations
in a cost-effective control system, misstatements due to error or
fraud may occur and not be detected.
SCOPE OF THE CONTROLS EVALUATION.
The CEO/CFO evaluation of our Disclosure Controls and our Internal
Controls included a review of the controls' objectives and design,
the control's implementation by the Company and the effect of the
controls on the information generated for use in this Annual Report.
In the course of the Controls Evaluation, we sought to identify data
errors, controls problems or acts of fraud and to confirm that
appropriate corrective action, including process improvements, were
being undertaken. This type of evaluation will be done on a
quarterly basis so that the conclusions concerning controls
effectiveness can be reported in our Quarterly Reports on Form 10-
QSB and Annual Report on Form 10-KSB. Our Internal Controls are also
evaluated on an ongoing basis by our independent auditors in
connection with their audit and review activities. The overall goals
of these various evaluation activities are to monitor our Disclosure
Controls and our Internal Controls and to make modifications as
necessary; our intent in this regard is that the Disclosure Controls
and the Internal Controls will be maintained as dynamic systems that
change (including with improvements and corrections) as conditions
warrant.
Among other matter, we sought in our evaluation to determine whether
there where any "significant deficiencies" or "material weaknesses"
in the Company's Internal Controls, or whether the Company had
identified any acts of fraud involving personnel who have a
significant role in the Company's Internal Controls. This
information was important both for the Controls Evaluation generally
and because items 5 and 6 in the Section 302 Certifications of the
CEO and CFO require that the CEO and CFO disclose that information
to our Board's Audit Committee and to our independent auditors and
to report on related matters in this section of the Annual Report.
In the professional auditing literature, "significant deficiencies"
are referred to as "reportable conditions"; these are control issues
that could have a significant adverse effect on the ability to
record, process, summarize, and report financial data in the
financial statements. A "material weakness" is defined in the
auditing literature as a particularly serious reportable condition
where the internal control does not reduce to a relatively low level
the risk that misstatements caused by error or fraud may occur in
amounts that would be material in relation to the financial
statements and not be detected within a timely period by employees
in the normal course of performing their assigned functions. We also
sought to deal with other controls matters in the Controls
Evaluation, and in each case if a problem was identified, we
considered what revision, improvement and/or correction to make in
accord with our on-going procedures.
In accord with SEC requirements, the CEO and CFO note that, since
the date of the Controls Evaluation to the date of this Annual
Report, there have been no significant changes in Internal Controls
or in other factors that could significantly affect Internal
Controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
CONCLUSIONS.
Based upon the Controls Evaluation, our CEO and CFO have concluded
that, subject to the limitations noted above, our Disclosure
Controls are effective to ensure that material information relating
to Metalline Mining Company and its subsidiary is made known to
management, including the CEO and CFO, particularly during the
period when our periodic reports are being prepared, and that our
Internal Controls are effective to provide reasonable assurance that
our financial statements are fairly presented in conformity with
generally accepted accounting principles.
[The balance of this page has been intentionally left blank.]
Page 16
ITEM 15. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1998 through December 31, 2002, for each
officer and director of the Company. This information includes the
dollar value of base salaries, bonus awards and number of stock
options granted, and certain other compensation, if any.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Securities
Names Other Under
Restricted
Executive Annual Options/ Shares
or
Officer and Compen- SARs
Restricted LTIP
Principal Year Salary Bonus sation Granted Share
Payouts
Position Ended (US$) (US$) (US$) (#)
Units(US$) (US$)
Merlin 2002 48,000 0 40,625 0 0
0
Bingham 2001 72,000 0 0 100,000 0
0
President 2000 72,000 0 0 0 0
0
1999 72,000 0 0 0 0
0
1998 72,000 0 0 0 0
0
Daniel 2002 48,000 0 40,625 0 0
0
Gorski 2001 72,000 0 0 100,000 0
0
Vice 2000 72,000 0 0 0 0
0
President 1999 72,000 0 0 0 0
0
1998 78,000 0 0 0 0
0
Roger 2002 0 0 0 100,000 0
0
Kolvoord 2001 0 0 0 0 0
0
Director 2000 0 0 0 0 0
0
1999 0 0 0 0 0
0
1998 0 0 0 0 0
0
Wayne 2002 12,000 0 10,125 0 0
0
Schoonmaker 2001 18,000 0 0 50,000 0
0
Secretary/ 2000 18,000 0 0 0 0
0
Treasurer 1999 18,000 0 0 0 0
0
1998 7,500 0 0 0 0
0
There are no other stock option plans, retirement, pension, or
profit sharing plans for the benefit of the Company's officers and
directors.
Option/SAR Grants.
The following grants of stock options, whether or not in tandem
with stock appreciation rights ("SARs") and freestanding SARs have
been made to officers and/or directors:
[The balance of this page has been intentionally left blank.]
Page 17
Number of
Securities
Number of Underlying
Securities Options/SARs
Underlying Granted Exercise Number of
Options During Last or Base Options
Expiration
Name SARs Granted 12 Months Price($/Sh) Exercised
Date
---- ------- ------ ----- ----- -
----
Merlin D.
Bingham 100,000 0 2.15 0
03/01/10
Daniel E.
Gorski 100,000 0 2.15 0
03/01/10
Roger
Kolvoord 100,000 100,000 1.25 0
08/06/09
Wayne L.
Schoonmaker 50,000 0 1.32 0
10/04/06
Long-Term Incentive Plan Awards.
The Company's shareholders approved a Qualified Stock Option Plan
at the annual meeting of shareholders held March 1, 2001. During the
year ended October 31, 2001 and October 31, 2002, options for
350,000 shares and 100,000 shares, respectively, were granted to
officers and directors of the Company.
Compensation of Directors.
In general, the Directors do not receive any compensation for
serving as members of the Board of Directors. There are no
contractual arrangements with any member of the Board of Directors.
During the year ended October 31, 2002, an option for 100,000
shares, was granted to a director.
ITEM 16. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of each
person known by the Company to be the beneficial owner of five
percent or more of the Company's Common Stock, each director
individually, and all officers and directors of the Company as a
group. Each person has sole voting and investment power with respect
to the shares of Common Stock shown, unless otherwise noted, and all
ownership is of record and beneficial.
Name Number of % of
Outstanding
of owner Shares Position
Shares
---- ---- --------
--------
Merlin Bingham 979,424 President, CEO and Chairman
9.45%
of the Board of Directors
Daniel Gorski 799,944 Vice President of Operations
7.72%
and member of the Board
of Directors
Roger Kolvoord 49 Member of the Board of
0.00%
Directors
Wayne Schoonmaker 8,310 Secretary & Treasurer
0.08%
All officers and
directors as a 1,787,727
17.24%
group (4 persons)
Britannia Holdings 3,190,500
30.77%
King's House
The Grange St. Peter Port Guernsey
Channel Islands
Page 18
ITEM 17. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was formed on November 8, 1993, by Mr. Carman Ridland
of Las Vegas, Nevada as a spin-off from its predecessor Precious
Metal Mines, Inc. ("PMM").
The Company issued 960,800 of its $0.01 par value shares to PMM,
for 16 unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group.
PMM distributed the 960,800 shares of Cadgie Co. to its
shareholders, one share of Cadgie Co. for each share of PMM held by
holders of record as of August 31, 1993.
On August 31, 1994, the directors of Cadgie Co. declared a 1:5
reverse stock split of the outstanding Cadgie Co. shares, thus
reducing the number of outstanding shares from 960,800 to 192,160
shares.
On August 4, 1995, the directors of Cadgie Co. declared a 3:1
forward stock split of the outstanding Cadgie Co. shares, thus
increasing the number of outstanding shares from 192,160 to 576,480.
During November 1995, Metalline Mining Company's directors
approved an issue of 45,000 shares of Common Stock to Mr. Ryan for
services rendered at $0.01 per share.
In January 1996, Carman Ridland in a private sale, sold a
controlling interest in the corporation to Howard Crosby. On January
12, 1996, Mr. Ridland transferred control of Cadgie Co. to Mr.
Howard Crosby and Mr. Robert Jorgensen.
In May 1996, Messrs. Crosby and Jorgensen were made aware of
certain potentially valuable mining properties and concessions
located at Sierra Mojada, Coahuila, Mexico. Messrs. Crosby and
Jorgensen transferred control of Cadgie Co. to Messrs. Bingham,
Gorski and Ryan so that Cadgie Co. could focus on the opportunity
presented at Sierra Mojada.
In June 1996, the Company completed a private placement of common
stock resulting in net proceeds of $25,000. The Company issued
250,000 common shares in connection with this private placement. The
Company also issued 900,000 shares to Messrs. Bingham, Gorski and
Ryan who had formed a partnership to advance development of the
mining concession located in Coahuila, Mexico. The partnership had
an informal joint venture agreement with Dakota covering the mining
concessions. By acquiring the partnership interest, the Company was
able to negotiate and sign a formal joint venture agreement with
Dakota in July 1996.
During June 1996, the Company issued 900,000 shares of Common
Stock for the assignment of mineral rights in the Sierra Mojada
Project in Coahuila, Mexico valued at $0.01.
In August 1996, the Company changed its name to Metalline Mining
Company and increased the authorized capital to 50,000,000 shares.
In October 1996, the Company completed a private placement of
common stock resulting in net proceeds of $125,500. The Company
issued 1,255,000 shares in connection with this placement. The
Company also issued 120,000 shares to Mr. Gorski in payment for his
services for the months of September and October. The Company issued
20,000 shares of Common Stock to Mr. Ryan as payment for services in
those same months. Further, the Company issued 150,000 shares of
common stock for computer equipment.
During February 1997, the Company borrowed $30,000 from
shareholders and issued 24,900 shares of Common Stock as a loan
incentive.
In March 1997, the Company completed an issuance of Common Stock
resulting in net proceeds of $17,500.
In April 1997, the Company issued to Royal Silver Mines, Inc.,
200,000 shares of Common Stock resulting in proceeds of $70,000. The
Company issued 133,800 shares of Common Stock were issued for
services and
Page 19
expenses. A total of 24,900 shares of Common Stock were issued as
loan incentives (interest) for $30,000 in loans from shareholders.
These shares were issued at $0.30 per share. A total of 77,600
shares of Common Stock were issued in exchange for wages during the
months of January, February and March 1997 at $0.35 per share. A
total of 31,300 shares of Common Stock were issued to cover expenses
incurred by shareholders at $0.35 per share.
On June 5, 1997, the Company issued 50,000 shares of Common Stock
to Mario Ayub Touche in consideration of services rendered.
In August 2002, Roger Kolvoord was appointed to the Board of
Directors. Mr. Kolvoord replaces James Czirr, who previously
resigned from the Board.
In August, September, and October 2002, the Company issued 86,078
shares to officers of the Company for services rendered.
PART IV
ITEM 18. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBITS. The following exhibits are filed as part of this report.
Exhibits previously filed are incorporated by reference,
as
noted.
EXHIBIT NO. EXHIBIT
3.1 Articles of Incorporation of the registrant. Filed as an
exhibit to the registrant's registration statement on Form 10-SB
(Commission File No.000-27667) and incorporated by reference herein.
3.2 Bylaws of registrant. Filed as an exhibit to the registrant's
registration statement on Form 10-SB and incorporated by reference
herein.
3.3 Articles of Amendment to the Articles of Incorporation. Filed
as an exhibit to the registrant's registration statement on Form 10-
SB and incorporated by reference herein.
4.1 Specimen stock certificate of the registrant. Filed as an
exhibit to the registrant's registration statement on Form 10-SB and
incorporated by reference herein.
10.1 Master agreement between the registrant and USMX, Inc.
relating to development and exploration of certain mineral
properties. Filed as an exhibit to the registrant's registration
statement on Form 10-SB and incorporated by reference herein.
10.2 Royal Silver letter regarding Joint Venture Agreement between
Royal Silver, Minera Metalin S.A. de C.V. and its registrant. Filed
as an exhibit to the registrant's registration statement on Form 10-
SB and incorporated by reference herein.
10.3 Consulting Agreement dated December 1, 1997 between the
registrant and James Czirr. Filed as Exhibit 99.1 on the
registrant's Form 10-SB and incorporated by reference herein.
10.4 Consulting addendum dated August 24, 1998 between the
registrant and James Czirr. Filed as Exhibit 99.2 on the
registrant's Form 10-SB and incorporated by reference herein.
REPORTS ON FORM 8-K. NONE.
Page 20
METALLINE MINING COMPANY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Report of Independent Certified
Public Accountanats . . . . . . . . . . . . . . . . . . . F/S-1
Financial Statements:
Balance Sheets as of October 31, 2002
and October 31, 2001 . . . . . . . . . . . . . . . . . F/S-2
Statements of Operations for the Years Ended
October 31, 2002 and 2001, and for
the period from inception (November 8, 1993)
to October 31, 2002 . . . . . . . . . . . . . . . . . . F/S-3
Statements of Changes in Stockholder's Equity
for the period from inception (November 8, 1993)
to October 31, 2002 . . . . . . . . . . . . . . . . . . F/S-4
Statements of Cash Flow for the Years Ended
October 31, 2002 and 2001, and for the
period from inception (November 8, 1993) to
October 31, 2002 . . . . . . . . . . . . . . . . . . . F/S-8
Notes to Financial Statements . . . . . . . . . . . . . . F/S-9
Summary of Accounting Policies . . . . . . . . . . . . . F/S-9
Signatures . . . . . . . . . . . . . . . . . . . . . . . F/S-20
[The balance of this page has been intentionally left blank.]
Page 21
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Metalline Mining Company
Coeur d'Alene, Idaho
INDEPENDENT AUDITOR'S REPORT
------------------------
We have audited the accompanying consolidated balance sheets of
Metalline Mining Company (an exploration stage company) and
subsidiary as of October 31, 2002 and 2001, and the related
consolidated statements of operations, shareholders' equity, and
cash flows for the years then ended, and for the period from
November 8, 1993 (inception) through October 31, 2002. These
consolidated 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 audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audits 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Metalline Mining Company and subsidiary as of October
31, 2002 and 2001, and the results of its operations and cash flows
for the years then ended and for the period from November 8, 1993
(inception) to October 31, 2002 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company's significant
operating losses raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those
matters also are described in Note 2. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Williams & Webster, P.S.
CERTIFIED PUBLIC ACCOUNTANTS
Spokane, Washington
January 10, 2003
F/S 1
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
October 31, 2002 October 31, 2001
------- -------
ASSETS
CURRENT ASSETS
Cash $ 216,363 $ 31,032
Investments - 484,447
Accounts receivable 62,501 -
Foreign tax refund receivable 59,287 59,287
Prepaid expenses 1,920 3,849
Employee advances 13,421 11,146
------ ------
Total Current Assets 353,492 589,762
-------- -------
MINERAL PROPERTIES 4,334,767 4,334,767
--------- ---------
PROPERTY AND EQUIPMENT
Office and mining equipment,
net of accumulated depreciation 323,030 57,474
-------- ------
Total Property and Equipment 323,030 57,474
------- -------
TOTAL ASSETS $ 5,011,289 $ 4,982,003
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 111,223 $ 5,275
Accrued liabilities 193,306 14,098
------- -------
Total Current Liabilities 304,529 19,373
------- ------
COMMITMENTS AND CONTINGENCIES - -
------- ------
STOCKHOLDERS' EQUITY
Prefered stock, $0.01 par value;
1,000,000 shares authorized,
no shares outstanding - -
Common stock, $0.01 par value;
50,000,000 shares authorized,
10,368,340 shares issued and
10,069,595 shares issued and
outstanding, respectively 103,685 100,677
Additional paid-in capital 10,280,713 9,849,466
Stock options and warrants 1,497,967 1,422,327
Deficit accumulated
during exploration stage (7,175,605) (6,409,840)
--------- ----------
Total Stockholders' Equity 4,706,760 4,962,630
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,011,289 $ 4,982,003
======== =======
The accompanying notes are an integral part of these consolidated financial
statements. F/S 2
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended Period from
---------------- November 8, 1993
October 31, October 31, (Inception) to
2002 2001 October 31,2002
-------- -------- ------------
REVENUES $ - $ - $ -
------ ------ -------
GENERAL AND
ADMINISTRATIVE EXPENSES
Salaries 340,708 234,480 1,231,582
Office 64,388 111,279 355,640
Taxes and fees 35,657 58,193 144,335
Professional services 118,163 1,261,376 3,269,224
Property expenses 23,921 361,647 1,458,397
Depreciation 35,829 28,498 152,515
Exploration and research 50,986 38,332 218,600
------- ------- --------
Total General and
Administrative Expenses 669,652 2,093,805 6,830,293
------- ------- -------
LOSS FROM OPERATIONS (669,652) (2,093,805) (6,830,293)
======= ======== ========
OTHER INCOME (EXPENSES)
Miscellaneous ore sales,
net of expenses (99,252) 14,098 (85,134)
Interest income 3,139 10,317 25,381
Interest expense - - (285,559)
------ ----- -------
Total Other Income (96,113) 24,415 (345,312)
======= ====== =======
LOSS BEFORE INCOME TAXES (765,765) (2,069,390) (7,175,605)
INCOME TAXES - - -
----- ---- -----
NET LOSS $(765,765) $(2,069,390) $(7,175,605)
======= ======== ========
BASIC AND DILUTED LOSS
PER COMMON SHARE $ (0.08) $ (0.21) $ (1.41)
===== ===== =====
BASIC AND DILUTED WEIGHTED
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 10,172,964 9,912,262 5,096,398
====== ===== =====
The accompanying notes are an integral part of these consolidated financial statements.
F/S 3
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
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 - - - -
Net loss for the year ended
October 31, 1994 - - - - - (8,831) (8,831)
Balances, October 31, 1994 192,160 1,922 (1,922) - - (8,831) (8,831)
----- ---- ---- --- --- ---- ----
3:1 common stock split 384,320 3,843 (3,843) - - - -
Net loss for the year ended
October 31, 1995 - - - - - (7,761) (7,761)
----- --- --- --- --- ---- ----
Balance, October 31, 1995 576,480 $ 5,765 $(5,765) $ - $ - $(16,592) $(16,592)
----- ---- ---- --- --- ----- -----
Issuance of common stock as follows:
- for par value at transfer
of ownership 2,000 20 - - - - 20
- 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 - - - 14,450
- 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
Net loss for the year ended
October 31, 1996 - - - - - (40,670) (40,670)
----- ---- ---- --- --- ---- ----
Balances, October 31, 1996 3,134,339 $31,344 $153,485 $ - $ - $(57,262) $127,567
-------
Table continued on next page.
The accompanying notes are an integral part of these consolidated financial statements.
F/S 4
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(continued)
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
---- ---- ---- ----- ---- ----- ---
Balance brought Forward 3,134,339 $31,344 $153,485 $ - $ - $(57,262) $127,567
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
Net loss for year ended
October 31, 1997 - - - - - (582,919) (582,919)
----- --- ---- --- --- ----- -----
Balances at October 31, 1997 4,452,439 $44,525 $941,352 $ - $ - $(640,181) $345,696
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) -
Net loss for year
ended October 31, 1998 - - - - - (906,036) (906,036)
----- ---- ----- ---- ---- ------ ------
Balance, October 31, 1998 6,092,739 $60,928 $2,757,694 $(300,000) $665,980 $(2,035,197)$(1,149,405)
------ ---- ------ ----- ----- ------- ------
---------
Table continued on next page.
The accompanying notes are an integral part of these consolidated financial statements.
F/S 5
METALLINE MINING COMPANY
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(continued)
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
---- ---- ---- ----- ---- ----- ---
Balance brought Forward 6,092,739 $60,928 $2,757,694 $(300,000) $665,980 $(2,035,197) $(1,149,405)
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 warrant 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
Net loss for year
ended October 31, 1999 - - - - - (1,423,045) (1,423,045)
------ ----- ------ ---- ----- ------- ------
Balance, October 31, 1999 7,215,095 $72,152 $3,977,350 $ - $776,980 $(3,458,242) $1,368,240
Stock option and warrant activity
as follows:
Exercise of options at
$0.86 per share 950,000 9,500 1,090,750 - (288,000) - 812,250
Warrants issued for services - - - - 55,000 - 55,000
Issuance of common stock as follows:
- for cash at an average of $2.77
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
- for equipment at $1.67 per share 15,000 150 24,850 - - - 25,000
Net loss for year
ended October 31, 2000 - - - - - (882,208) (882,208)
------ ---- ------ ---- ----- ------- ------
Balance, October 31, 2000 9,742,595 $ 97,427 $9,217,330 $ - $543,980 $(4,340,450) $5,518,287
------ ----- ------ ---- ----- ----- ------
-------
Table continued on next page.
The accompanying notes are an integral part of these consolidated financial statements.
F/S 6
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(continued)
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
---- ---- ---- ----- ---- ----- ---
Balance brought Forward 9,742,595 $97,427 $9,217,330 $ - $543,980 $(4,340,450) $5,518,287
Stock option and warrant activity
as follows:
-Warrants exercised
at $0.75 per share 20,000 200 25,560 - (10,760) - 15,000
-Options issued for consulting fees - - - - 740,892 - 740,892
-Warrants issued for consulting fees - - - - 144,791 - 144,791
Issuance of common stock as follows:
- for cash at $2.00 per share 250,000 2,500 494,076 - 3,424 - 500,000
- for cash of $210 and services at
$2.07 per share 21,000 210 43,260 - - - 43,470
- for cash of $180 and services at
$2.05 per share 18,000 180 36,720 - - - 36,900
- for services at $2.45 per share 6,000 60 14,640 - - - 14,700
- for services at $1.50 per share 12,000 120 17,880 - - - 18,000
Net loss for year
ended October 31,2001 - - - - - (2,069,390) (2,069,390)
------ ----- ------- ---- ------ ------- -------
Balance, October 31, 2001 10,069,595 100,697 9,849,466 - 1,422,327 (6,409,840) 4,962,650
Issuance of common stock as follows:
- for cash at $2.00 per share 50,000 500 99,500 - - - 100,000
- for cash and warrants
at $1.50 per share 96,000 960 134,400 - 8,640 - 144,000
- for cash and warrants
at $1.50 per share 66,667 667 93,333 - 6,000 - 100,000
- for compensation at an average
of $1.23 per share 86,078 861 104,014 - - - 104,875
Stock option activity as follows:
- for compensation at $0.61 per share - - - - 61,000 - 61,000
Net loss for year ended October 31, 2002 - - - - - (765,765) (765,765)
----- ----- ------ ----- ----- ---- ------
Balance, October 31, 2002 10,368,340 $103,685 $10,280,713 $ - $1,497,967 $(7,175,605) $4,706,760
===== ==== ===== === ===== ===== =====
The accompanying notes are an integral part of these consolidated financial statements.
F/S 7
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended Period from
------------------- November 8, 1993
October 31, October 31, (Inception) to
2002 2001 October 31, 2002
----- ----- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(765,765) $(2,069,390) $(7,175,605)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 35,829 28,498 152,485
Noncash expenses - 126,864 126,864
Payment of services from issuance of stock 104,875 112,680 691,090
Payment of services from issuance of options 61,000 740,892 801,892
Payment of financing fees from the issuance
of stock options - - 276,000
Payment of expenses with issuance of stock - - 326,527
Warrants issued for services - 144,791 688,771
(Increases) decreases in:
Foreign property tax refund receivable - 487,949 (59,287)
Accounts receivable (62,501) - (62,501)
Prepaid expenses 1,929 (621) (1,920)
Employee advances (2,275) (282) (13,421)
Increases (decreases) in:
Accounts payable 105,948 (350) 111,223
Accrued liabilities 179,208 (2,069) 193,306
----- ----- -----
Net cash used by operating activities 142,695 (915,485) (3,944,586)
---- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Investments - (484,447) (484,447)
Proceeds from Investments 484,447 - 484,447
Equipment purchases (301,364) (6,584) (435,492)
Mining property acquisitions - (112,846) (4,452,631)
----- ------ ------
Net cash used by investing activities 183,083 (603,877) (4,888,123)
----- ----- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 329,360 515,390 7,981,672
Proceeds from sales of options and warrants 14,640 - 949,890
Deposits for sale of stock - - 87,500
Proceeds from shareholder loans - - 30,000
----- ----- -------
Net cash provided by financing activities: 344,000 515,390 9,049,062
----- ----- ------
Net increase (decrease)
in cash and cash equivalents 185,331 (519,525) 216,363
Cash beginning of period 31,032 550,557 -
------ ----- ------
Cash at end of period $216,363 $31,032 $216,363
===== ==== ====
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid $ - $ - $ -
Interest paid $ - $ - $ -
NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $104,875 $112,680 $691,090
Common stock issued for payment of expenses $ - $ - $326,527
Common stock issued for equipment $ - $ - $25,000
Common stock options
issued for financing fees $ - $ - $276,000
Options issued for services $61,000 $740,892 $801,892
Warrants issued for services $ - $144,791 $688,771
The accompanying notes are an integral part of these consolidated financial statements.
F/S 8
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 1 ORGANIZATION AND DESCRIPTION OF BUSINESS
Metalline Mining Company ("the Company") was incorporated in the State
of Nevada on November 8, 1993 as the Cadgie Company for the purpose of
acquiring and developing mineral properties. The Cadgie Company was a
spin-off from its predecessor, Precious Metal Mines, Inc. The articles
of incorporation of Cadgie Company were executed on August 20, 1993. On
June 28, 1996, at a special directors meeting, the Company's name was
changed to Metalline Mining Company. The Company's fiscal year-end is
October 31.
The Company's efforts have been concentrated in expenditures related to
exploration properties, principally in the Sierra Mojada project
located in Coahuila, Mexico. The Company has not determined whether the
exploration properties contain ore reserves that are economically
recoverable. The ultimate realization of the Company's investment in
exploration properties is dependent upon the success of future property
sales, the existence of economically recoverable reserves, the ability
of the Company to obtain financing or make other arrangements for
development, and upon future profitable production. The ultimate
realization of the Company's investment in exploration properties
cannot be determined at this time, and accordingly, no provision for
any asset impairment that may result, in the event the Company is not
successful in developing or selling these properties, has been made in
the accompanying financial statements.
The Company is actively seeking additional capital and management
believes its properties can ultimately be sold or developed to enable
the Company to continue its operations. However, there are inherent
uncertainties in mining operations and management cannot provide
assurances that it will be successful in this endeavor. Furthermore,
the Company is in the exploration stage, as it has not realized any
revenues from its planned operations.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the financial statements. The financial statements and
notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the
U.S. and have been consistently applied in the preparation of the
financial statements.
Accounting Method
-------
The Company's financial statements are prepared using the accrual
method of accounting.
Accounting Receivable
-------
The Company carries its accounts receivable at cost. As the receivable
results from a recently contracted obligation, the Company believes an
allowance for doubtful accounts is not necessary. On a periodic basis,
the Company will evaluate its accounts receivable and determine if an
allowance for doubtful accounts becomes necessary, based on a history
of past write-offs and collections and current credit conditions.
The Company has not yet established a policy regarding accruing
interest on trade receivables. Accounts will be written off as un-
collectible when it is determined that collection will be unlikely.
Estimates
-----
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure 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.
F/S 9
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Reclassifications
--------
Certain amounts from prior periods have been reclassified to conform to
the current period presentation. This reclassification has resulted in
no changes to the Company's accumulated deficit or net losses
presented.
Exploration Stage Activities
-------
The Company has been in the exploration stage since November 8, 1993
and has no revenues from operations. The Company is primarily engaged
in the acquisition and exploration of mineral properties. Should the
Company locate a commercial minable reserve, the Company would expect
to actively prepare the site for extraction.
Foreign Operations
-------
The accompanying balance sheet contains Company assets in Mexico,
including: $4,334,767 of the Company's mineral properties; $359,044
(before accumulated depreciation) of mining equipment; $69,932 of cash;
and a $59,288 tax refund receivable. Although this country is
considered economically stable, it is always possible that
unanticipated events in foreign countries could disrupt the Company's
operations.
The Mexican government does not require foreign entities to maintain
cash reserves in Mexico.
Foreign Currency Translation
-------
Assets and liabilities of the Company's foreign operations are
translated into U.S. dollars at the year-end exchange rates, and
revenue and expenses are translated at the average exchange rates
during the period. Exchange differences arising on translation are
disclosed as a separate component of shareholders' equity. Realized
gains and losses from foreign currency transactions are reflected in
the results of operations.
Fair Value of Financial Instruments
-----------
The Company's financial instruments, as defined by SFAS No. 107
"Disclosures about Fair Value of Financial Instruments," include cash,
advances to employee, foreign tax return receivable, investments,
accounts payable and accrued expenses. All instruments are accounted
for on a historical cost basis, which, due to the short maturity of
these financial instruments, approximates fair value at October 31,
2002.
Cash and Cash Equivalents
---------
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Investment in Securities
-------
Pursuant to Statement of Financial Accounting Standards (SFAS) No. 115,
the Company's investments in securities are classified as either
trading, held to maturity, or available-for-sale. At October 31, 2001,
the Company did own securities classified as available-for-sale, which
consists of debt and equity securities. At October 31, 2002, the
Company did not own any securities.
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate component
of other comprehensive income. At October 31, 2002, the Company did not
have any unrealized holding gains or losses.
Gains and losses on the sale of securities available-for-sale are
determined using the specific identification method and are included in
earnings.
Going Concern
------
As shown in the accompanying financial statements, the Company has no
revenues, has incurred a net loss of $765,765 for the year ended
October 31, 2002, and has an accumulated deficit of $7,175,605. These
factors indicate that the Company may be unable to continue in
existence. The financial statements do not include
F/S 10
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
any adjustments related to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that
might be necessary in the event the Company cannot continue in
existence. The Company's management believes that significant and
imminent private placements of stock and continuing contracted
agreements will generate sufficient cash for the Company to continue to
operate based on current expense projections.
Concentration of Risk
-------
The Company maintains its domestic cash in primarily one commercial
bank in Coeur d'Alene, Idaho. Accounts are guaranteed by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000. At October 31,
2002, the Company exceeded the insured amount by $45,974. The Company
also maintains cash in banks in Mexico. These accounts, which had U.S.
dollar balances of $69,932 at October 31, 2002, are denominated in
pesos and are considered uninsured. The Company also has recorded a
refund receivable at October 31, 2002 from the overpayment of Mexican
property taxes. This receivable, originating from the payment of
assessed taxes on the Company's Mexican property concessions, is
considered fully collectible by the Company although it is over twelve
months old.
Derivative Instruments
-------
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No.133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS No.137,
"Accounting for Derivative Instruments and Hedging Activities
Deferral of the Effective Date of FASB No.133", and SFAS No.138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities", which is effective for the Company as of January 1, 2001.
This standard 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.
If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of
gain or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk or (ii) the earnings effect of
the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the
period of change.
Historically, the Company has not entered into derivatives contracts to
hedge existing risks or for speculative purposes.
In the years ended October 31, 2002 and 2001, the Company has not
engaged in any transactions that would be considered derivative
instruments or hedging activities.
Accounting Pronouncements
--------
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.
F/S 11
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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. 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 non-amortization provision of
SFAS No.142 is expected to result in no change in net income in fiscal
2002.
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.143, "Accounting for
Asset Retirement Obligations" (SFAS No.143). SFAS No.143 establishes
guidelines related to the retirement of tangible long-lived assets of
the Company and the associated retirement costs. This statement
requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the
long-lived assets. This statement is effective for financial statements
issued for the fiscal years beginning after June 15, 2002. The Company
adopted SFAS No.143, which will not impact the financial statements of
the Company at October 31, 2002.
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" (SFAS No.144). SFAS No.144
replaces SFAS No.121, "Accounting for the Impairment of Lon-Lived
Assets to Be Disposed Of". This new standard establishes a single
accounting model for long-lived assets to be disposed of by sale,
including discontinued operations. Statement No.144 requires that these
long-lived assets be measured at the lower of carrying amount or fair
value less cost to sell, whether reported in continuing operations or
discontinued operations. This statement is effective beginning for
fiscal years after December 15, 2001. The Company adopted SFAS No.144,
which will not impact the financial statements of the Company at
October 31, 2002.
In April 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No.145, "Rescission of SFAS
Statement No.44, 4, and 64, Amendment of SFAS Statement No.13, and
Technical Corrections", which updates, clarifies, and simplifies
existing accounting pronouncements. SFAS No.4, which required all gains
and losses from the extinguishments of debt to be aggregated and, if
material, classified as an extraordinary item, net of related tax
effect was rescinded. As a result, SFAS No.64, which amended SFAS NO.4,
was rescinded, as it was no longer necessary. SFAS No.44, Accounting
for intangible Assets of Motor Carriers, established the accounting
requirements for the effects of transition to the provision of the
Motor Carrier Act of 1980. Since the transition has been completed,
SFAS No.44 is no longer necessary and has been rescinded. SFAS No.145
amended SFAS No.13 to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting
for certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. The Company adopted SFAS No.145
and does not believe that the adoption will have a material effect on
the financial statements of the Company at October 31, 2002.
In June 2002, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No.146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS No.146). SFAS No.146
addresses significant issues regarding the recognition, measurement,
and reporting of costs associated with exit and disposal activities,
including restructuring activities. SFAS No.146 also addresses
recognition of certain costs related to terminating a contract that is
not a capital lease, costs to consolidate facilities or relocate
employees, and termination benefits provided to employees that are
involuntarily terminated under
F/S 12
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
the terms of a one-time benefit arrangement that is not an ongoing
benefit arrangement or an individual deferred-compensation contract.
SFAS No.146 was issued in June 2002, effective December 31, 2002 with
early adoption encouraged. The impact on the Company's financial
position or results of operations from adopting SFAS No.146 has not yet
been determined.
Property and Equipment
--------
Property and equipment are recorded at cost. Major additions and
improvements are capitalized. Minor replacements, maintenance, and
repairs that do not increase the useful life of the assets are expensed
as incurred. Depreciation of property and equipment is determined using
the straight-line and accelerated methods over the expected useful
lives of the assets.
Mineral Properties
-------
Costs of acquiring mineral properties are capitalized by project area
upon purchase or staking of the associated claims. Costs to maintain
the mineral rights and leases are expensed as incurred. When a property
reaches the production stage, the related capitalized costs will be
amortized, using the units of production method on the basis of
periodic estimates of ore reserves.
Mineral properties are periodically assessed for impairment of value
and any diminution in value is charged to operations at the time of
impairment. Should a property be abandoned, its capitalized costs are
charged to operations. The Company charges to operations the allocable
portion of capitalized costs attributable to properties sold.
Capitalized costs are allocated to properties abandoned or sold based
on the proportion of claims abandoned or sold to the claims remaining
within the project area.
Revenue Recognition Policy
-------
Revenues from sales of product will be recognized when the product is
shipped.
Exploration Costs
-------
In accordance with accounting principles generally accepted in the
United States of America, the Company expenses exploration costs as
incurred. Exploration costs expensed during the year ended October 31,
2002 were $50,986. The exploration costs expensed during the Company's
exploration stage are $218,600.
Stock-Based Compensation
--------
In October 1995, the Financial Accounting Standards Board issued SFAS
No.123 titled "Accounting for Stock-Based Compensation". This statement
encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options, and other equity
instruments to employees based on fair value. Transactions in equity
instruments with non-employees for goods or services must be accounted
for on the fair value method. The Company has adopted the fair value
accounting prescribed by SFAS No.123.
Compensated Absences
-------
The Company's policy is to recognize the cost of compensated absences
when actually paid to employee. If the amount were estimateable, it
would not be currently recognized, as the amount would be deemed
immaterial
Provision for Taxes
-------
At October 31, 2002, the Company had net deferred tax assets of
approximately $1,290,000, principally arising from net operating loss
carry-forward for income tax purposes. As management of the Company
cannot determine that it is more likely than not, that the Company will
realize the benefit of the net deferred tax asset, a valuation
allowance equal to the net deferred tax asset has been established at
October 31, 2002.
F/S 13
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
At October 31, 2002, the Company has net operating loss carry-forward
of approximately $5,300,000, which expires in the years 2009 through
2022. The Company recognized approximately $1,483,000 of losses from
the issuance of stock options for services, which were not deductible
for tax purposes. The Company has immaterial temporary differences
resulting from differences in tax depreciation of equipment.
Earnings Per Share
-------
The Company has adopted SFAS No. 128, which provides for calculation of
"Basic" and "Diluted" earnings per share. Basic earnings per share
includes no dilution and is computed by dividing net income available
to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings of an
entity similar to fully diluted earnings per share. Although there were
common stock equivalents outstanding October 31, 2002, they were not
included in the calculation of earnings per share because they would
have been considered anti-dilutive. Common stock equivalents
outstanding at October 31, 2002 and 2001 were 874,000 and 925,000
respectively.
NOTE 3 INVESTMENTS
The Company's investments are classified as available for sale
securities, which are recorded at fair value in investments on the
balance sheet; because of the short holding period, there was no change
in fair value during the period. The Company has no securities, which
are classified as trading securities. At October 31, 2002, the Company
had no security investments
At October 31, 2001, the market values of investments were as follows:
Boulder Total Return Fund $ 200,000
Eaton Vance Senior Income Trust 200,000
Pilgrim Prime Rate Trust 75,000
Money Market Funds 9,447
-------
$ 484,447
NOTE 4 PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided
using the straight-line or accelerated methods over the estimated
useful lives of the assets. The useful lives of property, plant, and
equipment for purposes of computing depreciation are five to seven
years for equipment, and 39 years for buildings. The following is a
summary of property, equipment, and accumulated depreciation:
October 31, 2002 October 31, 2001
----------- ---------
Mining equipment $ 202,144 $ 62,429
Buildings and structures 141,061 -
Vehicles 23,618 23,618
Computer equipment 80,485 78,948
Office Equipment 4,183 3,951
Furniture fixtures 8,186 5,184
Non mineral property 15,838 -
---- ----
Total assets 475,515 174,130
Less accumulated depreciation (152,485) (116,656)
----- -----
$ 323,030 $ 57,474
===== =====
F/S 14
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 4 PROPERTY AND EQUIPMENT (continued)
On June 21, 2002, the Company authorized the purchase of property and
equipment from the Mineros Nortenos Cooperativa, located at the
Company's Sierra Mojada Project at La Esmeralda, Coahuila, Mexico.
Total purchase price, after conversion to U.S. dollars, amounted to
$276,616, of which $149,616 remained to be paid under the Property and
Equipment Purchase Agreement. Subsequent to year-end, in December 2002,
the Company paid the remaining amount due under the agreement.
Depreciation expense for the years ended October 31, 2002 and 2001 was
$35,829 and $28,498, respectively. The Company evaluates the
recoverability of property and equipment when events and circumstances
indicate that such assets might be impaired. The Company determines
impairment by comparing the undiscounted future cash flows estimated to
be generated by these assets to their respective carrying amounts.
Maintenance and repairs are expensed as incurred. Replacements and
betterments are capitalized. The cost and related reserves of assets
sold or retired are removed from the accounts, and any resulting gain
or loss is reflected in results of operations.
NOTE 5 MINERAL PROPERTIES
Sierra Mojada Mining Concessions
---------
In June of 1996, USMX (now named Dakota) and the Company entered into a
joint venture agreement, whereby the Company could acquire a 65%
interest in a mining concession named the Sierra Mojada Project,
located in Coahuila, Mexico. Under the terms of the agreement, the
Company was to contribute two million dollars ($2,000,000) in work
commitments over the following seven years.
After the execution of the USMX agreement, Dakota's interest (35%) in
the joint venture was sold to an entity, which subsequently defaulted
on its joint venture obligations. This action in 1998 triggered the
elimination of the joint venture and resulted in the Company assuming
100% control of the Sierra Mojada concession without the need to spend
$2,000,000 to vest its interest.
During the period August 23, 1996 to September 2, 1997, the Company
executed five separate agreements for the acquisition of exploration
concessions in the same mining region as the Sierra Mojada Project in
Mexico. Each agreement enables the Company to explore the underlying
property by paying stipulated annual payments, which shall be applied
in full toward the contracted purchase price of the related concession.
During August 2000, the Company made the final payment for the first
year and acquired title to the Unificacion Mineros Mortenos Concession
in the Sierra Mojada Project. With this transaction, the Company has
acquired title to all of its concessions at Sierra Mojada.
Under the terms of the agreements, the Company was obligated to pay and
in fact did pay $103,076 during the year ended October 31, 2001.
NOTE 6 RELATED PARTY TRANSACTIONS
The Company receives rent-free office space in Coeur d'Alene, Idaho
from its president. The value of the space is not considered materially
significant for financial reporting purposes. The Company also has
given $13,421 in cash advances for travel to two of its officers at
October 31, 2002.
NOTE 7 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 1,000,000 shares of $0.01 par value preferred
stock. The specific features of the preferred stock are to be
determined by the Company's board of directors.
F/S 15
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 8 COMMON STOCK
On May 20, 2002, the Company authorized the offering of 1,000,000
common stock units, with each unit consisting of one share of common
stock and one warrant equal to 1/3 of a share of common stock.
During the year ended October 31, 2002, the Company sold 162,667 common
stock units with an ascribed cash value of $229,360 for common stock,
and $14,640 for warrants. The Company also issued 50,000 shares of
common stock under the Penoles agreement for cash, at $2.00 a share
(See Note 12). Additionally, 86,078 shares of common stock valued at
$104,875 were issued as compensation to officers.
During the year ended October 31, 2001, the Company issued 20,000
shares of common stock for the exercise of warrants valued at $10,760
and cash of $15,000. Additionally, 57,000 shares of common stock were
issued for services valued at $112,680 and cash of $390 and 250,000
shares of common stock with 125,000 warrants attached were issued for
$500,000 in cash.
During the year ended October 31, 2000, the Company sold 1,440,500
shares of its common stock for $3,968,625 cash, issued 120,000 shares
of common stock for services valued $153,360, issued 15,000 shares of
common stock for equipment valued at $25,000 and issued 950,000 shares
of common stock for options exercised at $0.86 per share.
During the year ended October 31, 1999, the Company sold 1,068,800
shares of common stock for $1,075,900 cash. In addition, the Company
received $37,500 as a deposit toward the purchase of 50,000 shares
(this stock was issued in December 1999) and $300,000 for payment of
subscriptions receivable. The Company also issued 55,556 shares for
payment of drilling expenses valued at $50,000.
In February 1998, 200,000 shares of common stock were issued for a mine
database. The shares were valued at $1.625 per share, resulting in a
transaction valued at $325,000. Services valued at $22,300 were paid
with 41,800 shares of common stock. An additional 1,398,500 shares of
common stock were issued for $1,065,445 cash and a subscription
receivable of $300,000, between February and October 1998.
In April 1997, 250,000 common stock shares were issued for cash of
$87,500 and 133,800 shares of common stock were issued for services
valued at $45,583. In May and June 1997, 181,600 shares of common stock
were issued for $63,560 cash and 62,500 shares of common stock were
issued for services valued at $21,875. In August and October 1997,
420,000 and 75,000 shares of common stock were issued for cash of
$378,000 and $75,000, respectively. Additionally, during August 1997,
100,200 shares of common stock were issued for debt of $31,530 and
95,000 shares of common stock for services valued at $95,000.
During November 1995, Metalline Mining Company's directors approved the
issuance of 45,000 shares of common stock for services rendered at
$0.01 per share. During June 1996, Metalline Mining Company issued
900,000 shares of common stock for the assignment of mineral rights in
the Sierra Mojada Project in Coahuila, Mexico valued at $0.01 per
share. John Ryan, Merlin Bingham, and Daniel Gorski, who had formed a
partnership to advance development of the mining concession located in
Coahuila, Mexico. The partnership had an informal joint venture
agreement with USMX, Inc. covering the mining concessions. By acquiring
the partnership interest, the Company was able to negotiate and sign a
formal joint venture agreement with USMX in July 1996 (See Note 4).
During the year ended October 31, 1996, Metalline Mining Company issued
1,320,859 shares of common stock for $146,359 in cash. During October
1996, the Company issued 150,000 shares of common stock for computer
equipment valued at $15,000. Also, during October 1996, the Company
issued 120,000 shares of common stock to Mr. Gorski and an additional
20,000 shares of common stock to Mr. Ryan for services rendered valued
at $14,000.
F/S 16
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 8 COMMON STOCK (continued)
In January 1996, Mr. Carmen Ridland, in a private sale, sold a
controlling interest in the corporation to Mr. Howard Crosby. On
January 12, 1996, Mr. Ridland transferred control of Cadgie Co. to Mr.
Crosby and Mr. Robert Jorgensen.
On August 4, 1995, the directors of Cadgie Co. declared a 3:1 forward
stock split of the outstanding Cadgie Co. shares, thus increasing the
number of outstanding shares from 192,160 to 576,480.
On August 31, 1994, the directors of Cadgie Co. declared a 1:5 reverse
stock split of the outstanding Cadgie Co. shares, thus reducing the
number of outstanding shares from 960,800 to 192,160 shares.
The Company (Cadgie Co.) was formed in August of 1993 and incorporated
in November 1993 by Mr. Carman Ridland of Las Vegas, Nevada as a spin-
off from its predecessor, Precious Metal Mines, Inc. The Company issued
960,800 of its $0.01 par value shares to Precious Metal Mines, Inc. for
16 unpatented mining claims located near Philipsburg, Montana
comprising the Kadex property group. Precious Metal Mines, Inc.
distributed the 960,800 shares of Cadgie Company to its shareholders.
One share of Cadgie Co. was exchanged for each share of Precious Metal
Mines, Inc. held by holders of record as of August 31, 1993.
NOTE 9 STOCK OPTIONS
Following is a summary of the stock options during the years ending
October 31, 2002 and 2001:
Weighted
Average
Number Exercise
Of Shares Price
------ --------
Outstanding at 11/01/00 - $ -
Granted 720,000 1.73
Exercised - -
Forfeited - -
Expired - -
----- ----
Outstanding at 10/31/01 720,000 $ 1.73
===== ===
Options exercisable at 10/31/01 720,000
====
Outstanding at 11/01/01 720,000 $ 1.73
Granted 100,000 1.25
Exercised - -
Forfeited - -
Expired - -
----- ----
Outstanding at 10/31/02 820,000 $ 1.67
===== ====
Weighted average fair value of
options granted during 2002 $ 0.61
====
Options exercisable at 10/31/02 820,000
====
In 2002, the Company granted 100,000 options with an exercise price of
$1.25 and an expiration of seven years. The fair value of these options
was determined using the Black-Scholes option pricing model using a
risk free interest rate of 3.25% and a volatility of 42.49%. The total
value was calculated at $61,000.
On March 1, 2001, the Company's shareholders approved a qualified stock
option plan. The number of shares eligible for issuance under the
qualified stock option plan is to be determined by the Company's board
of directors.
F/S 17
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002
NOTE 9 STOCK OPTIONS (continued)
The Company granted 720,000 options with exercise prices ranging from
$1.32 to $2.15 and expirations at various dates through 2010. The fair
value of each option is estimated on the issue date using the Black-
Scholes Option Price Calculation. The following assumptions were made
in estimating fair value: risk free interest 5%, volatility is 50% and
expected life is 5 to 9 years. Consulting expenses recognized for these
options were $740,892 for the year ended October 31, 2001.
NOTE 10 WARRANTS
During the year ended October 31, 2002, the Company issued 162,667
common stock units that were made up of 162,667 shares of common stock
and warrants to purchase an additional 54,222 shares of common stock.
As part of the total cash purchase, the warrants ha a value of $14,640.
During the year ended October 31, 2001, the Company issued 250,000
shares of stock with 125,000 warrants attached. These warrants were
valued at $3,424. Additionally 20,000 warrants were exercised for
$15,000 in cash and services valued at $10,760. The Company also issued
80,000 warrants for services, which were valued at $144,791.
At October 31, 2000, there were outstanding warrants to purchase
996,500 shares of the Company's common stock, at prices ranging from
$0.75 to $2.00 per share. The warrants, which became exercisable in
1999, but have not been exercised, expire at various dates through
2005. The Company has reserved 996,500 shares for the expected exercise
of these warrants. These warrants are valued at $543,980 using the
method described below.
The fair value of each warrant is estimated on the issue date using the
Black-Scholes Option Price Calculation. The following assumptions were
made in estimating fair value: risk free interest of 5%, volatility of
0.3 and 0.5 and expected life of 5 to 10 years. Consulting expenses
recognized for these warrants were $144,791 for the fiscal year ended
October 31, 2001.
NOTE 11 COMMITMENTS AND CONTINGENCIES
Compliance with Environmental Regulations
-------------
The Company's mining activities are subject to laws and regulations
controlling not only the exploration and mining of mineral properties,
but also the effect of such activities on the environment. Compliance
with such laws and regulations may necessitate additional capital
outlays, affect the economics of a project, and cause changes or delays
in the Company's activities.
NOTE 12 JOINT VENTURE AGREEMENT
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% share interest in certain mining
concessions located in the Sierra Mojada 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. As of October 31, 2002,
Penoles had purchased 50,000 shares of common stock under this
agreement (See Note 8).
During the year ended October 31, 2002, the Company received
reimbursement of $166,648 from Penoles for expenses incurred by
Metalline, which were applied toward an aggregate $229,149 of qualified
expenditures incurred by Penoles
F/S 18
METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
Notes to the Financial Statements
October 31, 2002
NOTE 12 JOINT VENTURE AGREEMENT (continued)
On October 7, 1999, the Company announced that it entered into a five-
year "earn-in" type of a joint venture agreement with North Limited.
The agreement gives North Limited the right to earn into 60% of the
Company's Sierra Mojada Project by providing all funds necessary to
complete a feasibility study delivered in no more than five years that
is acceptable to international banking institutions for lending
development capital. North Limited is a large Australian mining company
based in Melbourne, Australia and was known as North Broken Hill Peko
before a name change in 1994. In August 2000, Rio Tinto Limited
purchased North Limited for its iron ore holdings and subsequently
terminated its agreement with the Company.
NOTE 13 SUBSEQUENT EVENTS
In November 2002, the Company issued an additional 100,000 common stock
shares at $2.00 per share.
Legal Contingencies
---------
In December 2002, Minera Metalin, the Company's Mexican subsidiary, has
been named as co-defendant in a lawsuit filed in Mexico regarding the
Company's purchase of two mining concessions. Any potential liability
resulting from the lawsuit would be directed against the other named
defendant, and according to the Company's legal counsel, the chance of
an adverse judgment for Metalin is negligible.
[The balance of this page has been intentionally left blank.]
F/S 19
METALLINE MINING COMPANY
AN EXPLORATION STAGE COMPANY
OCTOBER 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: January 28, 2003
By: /s/ Wayne Schoonmaker
---------
Wayne Schoonmaker, its
Principal Accounting Officer
Date: January 28, 2003
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/ Roger Kolvoord
------- -------
Merlin Bingham Roger Kolvoord
President/Director Director
Date: January 28, 2003 Date: January 28, 2003
By: /s/ Daniel Gorski By: /s/Wayne Schoonmaker
------- ---------
Daniel Gorski Wayne Schoonmaker
Vice President/Director Secretary/Treasurer
Date: January 28, 2003 Date: January 28, 2003
F/S 20
METALLINE MINING COMPANY
AN EXPLORATION STAGE COMPANY
OCTOBER 31, 2002
CERTIFICATIONS
I, Merlin D. Bingham, certify that:
1. I have reviewed this annual report on Form 10-KSB of Metalline
Mining Company.
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I, are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize, and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 28, 2003
/s/ Merlin D. Bingham
------------
President
METALLINE MINING COMPANY
AN EXPLORATION STAGE COMPANY
OCTOBER 31, 2002
CERTIFICATIONS
I, Wayne L. Schoonmaker , certify that:
1. I have reviewed this annual report on Form 10-KSB of Metalline
Mining Company.
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations, and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officer and I, are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize, and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 28, 2003
/s/ Wayne L. Schoonmaker
------------
Principal Accounting Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Metalline Mining Company (the
"Company") on Form 10-KSB for the period ended October 31, 2002, as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Merlin D. Bingham, President of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition, and results of operations
of the Company.
/s/ Merlin D. Bingham
-----------
President
Dated: January 28, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Metalline Mining Company (the
"Company") on Form 10-KSB for the period ended October 31, 2002, as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Wayne L. Schoonmaker, Principal Accounting Officer
of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition, and results of operations
of the Company.
/s/ Wayne L. Schoonmaker
------------
Principal Accounting Officer
Dated: January 28, 2003