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U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
 FOR THE FISCAL YEAR ENDED October 31, 2008.
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD OF  TO.
 Commission File Number: 001-33125
 METALLINE MINING COMPANY
 (Name of registrant as specified in its charter)
 Nevada
    
    91-1766677State or other jurisdiction of incorporation or organization
    
    (I.R.S. Employer Identification No.)
 1330 E. Margaret Ave., Coeur dAlene, ID 83815
 (208) 665-2002
  Title of Each Class
    
    Name of each exchange on which registeredCommon Stock, $0.01 Par Value
    
    NYSE Alternext US LLC (formerly known as TheAmerican Stock Exchange)
 Common Stock, $0.01 Par Value
 None
 o þ
 o þ
 þ o
 o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting Company þ
 o þ




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PART I
  Item 1. BUSINESS
 Background and Corporate Structure
  General Development of the Business
 Overview
      2




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Mineral Exploration
     3




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Exploration of Silver Polymetallic Mineralization
  Exploration of the Open Pit Potential
  Feasibility Study
  Resource Model
    4




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Water Development
  Site Evaluation, Environmental, and Regulatory
  Employees
  Available Information
   5




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Item 1A. RISK FACTORS
   Exploration Stage Mining Company with No History of Operation
  Due to Our History of Operating Losses, We are Uncertain That We Will Be Able to Maintain
Sufficient Cash to Accomplish Our Business Objectives
    Capital Requirements and Liquidity; Need for Subsequent Funding
    6




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Our Independent Registered Public Accounting Firms Report on our 2008 Financial Statements
Questions our Ability to Continue as a Going Concern
   Disruptions in the Global Financial and Capital Markets May Impact Our Ability to Obtain
Financing
  No Commercially Mineable Ore Body; Resources and Reserves
    7




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Our Business Plan is Highly Speculative and its Success Depends on Mineral Development in the
Sierra Mojada Concessions
  Risks Inherent in the Mining Industry
  
    
    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;
 
    
    due to our limited financial resources the Company, the concession holder, might not be
able raise enough money to pay the fees, taxes and perform labor necessary to maintain the
concessions in good force;
 
    
    exploration for minerals is highly speculative and involves substantial risks, even when
conducted on properties known to contain significant quantities of mineralization, our
exploration projects may not result in the discovery of commercially mineable deposits of
ore;
 
    
    the probability of an individual prospect ever having reserves that meet the requirements
of Securities Act Industry Guide 7 is extremely remote, and our the properties may not
contain any reserves, and any funds spent on exploration will probably be lost;
 
    
    our 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 and the Company may not be able to comply with these
regulations and 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.
  Fluctuating Price for Metals
   8




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Mining Concessions
  Title to Our Mineral Properties May be Challenged
  Our Exploration Activities are in Mexico, which is Subject to Political and Economic Instability
  
    
    political instability and violence;
    
    war and civil disturbance;
    
    expropriation or nationalization;
    
    changing fiscal regimes;
    
    fluctuations in currency exchange rates;
    
    high rates of inflation;
    
    underdeveloped industrial and economic infrastructure; and
    
    unenforceability of contractual rights.
  9




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
    
    production restrictions;
 
    
    price controls;
 
    
    export and import controls;
 
    
    income and other taxes;
 
    
    maintenance of claims;
 
    
    environmental legislation;
 
    
    foreign ownership restrictions;
 
    
    labor;
 
    
    land use;
 
    
    land claims of local residents;
 
    
    water use; and
 
    
    mine safety.
  Environmental Controls
  Availability of Water
  Shortages of Supplies and Materials
   10




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Availability of Outside Engineers and Consultants
  Operational Hazards; Uninsured Risks
  Need for Additional Key Personnel; Reliance on Officers and Directors
   No Dividends Anticipated
  Our Stock Price Can Be Extremely Volatile
  Compliance with Section 404 of the Sarbanes-Oxley Act
   11




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Item 2. PROPERTIES.
 Sierra Mojada Mining Concessions
   Concession1
    
    Title No.
    
    
    HectaresSierra Mojada
    
    
    198513
    
    
    
    4,767.3154Mojada 3
    
    
    226756
    
    
    
    722.0000Unificacion Mineros Nortenos
    
    
    169343
    
    
    
    336.7905Esmeralda I
    
    
    211158
    
    
    
    95.4977Esmeralda
    
    
    212169
    
    
    
    117.5025La Blanca
    
    
    220569
    
    
    
    33.5044Fortuna
    
    
    160461
    
    
    
    13.9582Vulcano
    
    
    83507
    
    
    
    4.4904Mojada 2
    
    
    227585
    
    
    
    3,500.0000El Retorno
    
    
    216681
    
    
    
    817.6548Los Ramones
    
    
    223093
    
    
    
    8.6039El Retorno Fracc. 1
    
    
    223154
    
    
    
    5.5071Dormidos
    
    
    229323
    
    
    
    2,326.0953Agua Mojada
    
    
    232165
    
    
    
    2,900.0000Alote1
    
    
    
    
    
    
    3,749.0000Volcan Dolores
    
    
    224873
    
    
    
    10.4946Total
    
    
    
    
    
    
    19,408.4148
 
 1
    
    Title for this concession is pending.   12




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13




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Mexico Facility
  Corporate Office
  Glossary of Common Terms
  Concession
    
    A grant of a tract of land made by a government or other controlling
authority in return for stipulated services or a promise that the land
will be used for a specific purpose.Exploration expenditures
    
    Costs incurred in identifying areas that may warrant examination and
in examining specific areas that are considered to have prospects that
may contain mineral deposit reserves.Mineralized Material
    
    Mineral bearing material such as zinc, silver, copper and lead that
has been physically delineated by one or more of a number of methods
including drilling, underground work, surface trenching and other
types of sampling. This material has been found to contain a
sufficient amount of mineralization of an average grade of metal or
metals to have economic potential that warrants further exploration
evaluation. While this material is not currently or may never be
classified as reserves, it is reported as mineralized material only if
the potential exists for reclassification into the reserves category.
This material cannot be classified in the reserves category until
final technical, economic and legal factors have been determined.
Under the United States Securities and Exchange Commissions
standards, a mineral deposit does not qualify as a reserve unless the
recoveries from the deposit are expected to be sufficient to recover
total cash and non-cash costs for the mine and related facilities and
make a profit.Ore, Ore Reserve, or 
Mineable Ore Body
    
    The part of a mineral deposit which could be economically and legally
extracted or produced at the time of the reserve determination.
  14




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Reserves
    
    Estimated remaining quantities of mineral deposit and related
substances anticipated to be recoverable from known accumulations,
from a given date forward, based on:(a) analysis of drilling, geological, geophysical and engineering data;(b) the use of established technology; and(c) specified economic conditions, which are generally accepted as
being reasonable, and which are disclosed.Resources
    
    Those quantities of mineral deposit estimated to exist originally in
naturally occurring accumulations.Resources are, therefore, those quantities estimated on a particular
date to be remaining in known accumulations plus those quantities
already produced from known accumulations plus those quantities in
accumulations yet to be discovered.
Resources are divided into:(a) discovered resources, which are limited to known accumulations; and(b) undiscovered resources.Solvent Extraction and
Electrowinning (SXEW)
    
    A hydrometallurgical process in which metal is dissolved from the rock
by organic solvents and recovered from solution by electrolysis.Stratigraphic units
    
    A body of rock established as a distinct entity, geologically
classified, based on any of the properties or attributes or
combinations thereof that rocks possess.Tonne
    
    A metric ton which is equivalent to 2,200 pounds.Unproved property
    
    A property or part of a property to which no reserves have been
specifically attributed.
 Item 3. LEGAL PROCEEDINGS
  Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   15




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PART II
 Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 Market Information
 http://finance.google.com/finance
 Fiscal Quarter

    
    High
    
    
    LowFiscal Year End October 31, 2008
    
    4thQuarter (8/1/08  10/31/08)
    
    $
    1.25
    
    
    $
    .213rdQuarter (5/1/08  7/31/08)
    
    $
    2.34
    
    
    $
    1.122ndQuarter (2/1/08  4/30/08)
    
    $
    2.65
    
    
    $
    1.691stQuarter (11/1/07  1/31/08)
    
    $
    3.18
    
    
    $
    1.77Fiscal Year End October 31, 2007
    
    4thQuarter (8/1/07  10/31/07)
    
    $
    3.55
    
    
    $
    2.103rdQuarter (5/1/07  7/31/07)
    
    $
    4.35
    
    
    $
    2.762ndQuarter (2/1/07  4/30/07)
    
    $
    3.65
    
    
    $
    2.251stQuarter (11/1/06  1/31/07)
    
    $
    4.50
    
    
    $
    2.42
  Holders
  Dividends
  Equity Compensation Plan Information
   16




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Number of securities to beissued upon exercise of
    
    
    Weighted average exercise
    
    
    Number of securitiesoutstanding options, warrants
    
    
    price of outstanding
    
    
    remaining available forPlan Category
    
    and rights
    
    
    options, warrants and rights
    
    
    future issuanceEquity compensation
plans approved by
security holders
    
    
    4,400,004
    (1)
    
    $
    2.56
    
    
    
    938,796
    (2)Equity compensation
plans not approved
by security holders
    
    
    927,353
    (3)
    
    $
    2.64
    
    
    
    Total
    
    
    5,327,357
    
    
    $
    2.57
    
    
    
    938,796
 
 (1)
    
    Includes: (i) options to acquire 400,000 shares of Common Stock under the 2000
plan; and (ii) options to acquire 4,000,004 shares of common stock under the 2006 Plan.(2)
    
    Includes: (i) 230,000 shares of Common Stock available for issue under the 2000
Plan; and (ii) 708,796 shares of Common Stock available for issue under the 2006 Plan.(3)
    
    Includes (i) warrants to purchase 6,103 shares of Common Stock as compensation
for services to Tomlinson Programs Inc., (ii) warrants to purchase 204,000 shares of Common
Stock as compensation for services to Aegis Capital Inc., (iii) warrants to purchase 17,250
shares of Common Stock to an independent director of the Company, (iv) warrants to purchase
200,000 shares of Common Stock as compensation for financial services to O&M Partners and
(v) warrants to purchase 500,000 shares as compensation for financial services to David
Nahmias. Recent Sales of Unregistered Securities
   Item 6. SELECTED FINANCIAL DATA
  Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
 Cautionary Statement about Forward-Looking Statements
  
    
    The amount and nature of future capital, development and exploration expenditures;
 
    
    The timing of exploration activities; and
 
    
    Business strategies and development of our business plan.
  17




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Going Concern  Presentation of Financial Statements
  Plan of Operation
  Feasibility Study- Oxide Zinc Mineralization
   18




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Test Mining
   19




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Continued Improvement of the Sierra Mojada Infrastructure
  
    
    The Company purchased three additional drills and has hired and trained additional
personnel to operate this equipment. The additional diamond drilling capabilities not only
eliminated dependence on outside contractors, but also increased our ability to quickly
respond to any additional drilling requirements for the feasibility study and has allowed
for continued exploration of the Silver Polymetallic Mineralization.
 
    
    An onsite sample laboratory was completed at Sierra Mojada and is being used to get
immediate feedback on drilling results and reduce outside sampling and assaying costs. All
samples that will be incorporated in mineral resource models will be assayed in duplicate
by the outside laboratory.
 
    
    A water pipeline was completed to provide water for increased drilling activities,
accommodate test mining and reduce our water costs.
 Exploration of Silver Polymetallic Mineralization
   Cautionary Note
  Results of Operation
   20




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Exploration and property holding costs
  General and Administrative Costs
       21




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Other Income (Expense)
   Liquidity and Capital Resources
 Cash Flows
  Capital Resources
  Capital Requirements and Liquidity; Need for Subsequent Funding
    22




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Off Balance Sheet Arrangements
  Recent Accounting Pronouncements
  Fair Value Measurements Effective Dates
of FASB Statement no. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
   23




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Critical Accounting Policies
   Property Concessions
   Deferred tax assets and liabilities
  Estimates
  Foreign Currency Translation
 Foreign Currency
Translation
  24




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Accounting for Stock Options and Warrants Granted to Employees and Non-employees
 Share-Based Payment,
   Impairment of Long-Lived Assets
  Environmental Matters
   25




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Item 7A. QUANTITATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Foreign Currency Exchange Risk
 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
   26




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Item 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
      Item 9A(T). Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures.
    27




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(b) Managements Report on Internal Control over Financial Reporting
   
    
    pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
 
    
    provide reasonable assurance that transactions are recorded as necessary to permit the
preparation of financial statements in accordance with U.S. generally accepted accounting
principles and that our receipts and expenditures are being made only in accordance with
authorization of our management and directors; and
 
    
    provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
   (c) Changes in Internal Controls over Financial Reporting
  Item 9B. Other Information
    28




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PART III
 Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
 MANAGEMENT
   Officer orName of Director or Officer
    
    Directorand Position in the Company
    
    Since
    
    Age
    
    Office(s) Held and Other Business ExperienceMerlin Bingham
President and Chairman of the Board of Directors
    
    
    1996
    
    
    
    75
    
    
    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. From 1983 to
1996, Mr. Bingham has been a consulting
geologist. Mr. Bingham received a B.S.
degree in Mineralogy from the University of
Utah in 1963.Roger Kolvoord,
Executive Vice
President and
Director
    
    Director since
2002; Officer since
2003
    
    
    69
    
    
    Dr. Kolvoord has been a director of the
Company since August 2002 and was appointed
Vice President, Business in April 2003. 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. Mr. Kolvoord
is an active member of the American
Association of Petroleum Geologists, the
Society of Mining Engineers, and the
Geological Society of America. He resides
in the Puget Sound region of Washington.Wesley Pomeroy, 
Director
    
    
    2005
    
    
    
    53
    
    
    Mr. Pomeroy was appointed to the Board of
Directors in September 2005. Mr. Pomeroy
was President of The Joe Dandy Mining
Company from 1995 to 2006. The Joe Dandy
Mining Company has had gold properties in
Cripple Creek, Colorado since 1887. He is a
member of the Front Range Oil and Gas LLC
and the POMOCO LLC (Pomeroy Oil Company).
He is also currently a consulting geologist
with Vortex Petroleum Inc. and has been
associated since 1977 with various
exploration and oil and gas companies. Also
since 1977 Mr. Pomeroy has been a member in
good standing of the American Association
of Petroleum Geologists and the Rocky
Mountain Association of Geologists. Mr.
Pomeroy received a Bachelor of Science
degree in geology from Colorado State
University in 1977 and an MBA from the
University of Colorado in 1990. Mr. Pomeroy
is a registered Professional Geologist for
the State of Wyoming. He resides in the
Denver, Colorado area.
  29




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Officer orName of Director or Officer
    
    Directorand Position in the Company
    
    Since
    
    Age
    
    Office(s) Held and Other Business ExperienceRobert Kramer, 
Director
    
    
    2006
    
    
    
    62
    
    
    Robert Kramer, C.A., was elected to the
Board of Directors in July 2006. Mr.
Kramer is the co-founder and Chief
Executive Officer of Current Technology
Corporation (OTCBB:CRTCF). The company was
formed in 1987 to research, develop and
commercialize electrotherapeutic products
for the treatment of hair loss. An
entrepreneur by nature, with a particular
interest in the financial sector, he has
been a founder/principal of a number of
private companies offering commercial
mortgages, venture capital and tax driven
investments. Prior to co-founding Current
Technology, he was a joint venture partner
in an enterprise that raised funding for
approximately 20 public mining companies
conducting exploration activities in
Western Canada. A graduate of the
University of California, Berkeley with a
degree in economics, Mr. Kramer has been a
member of the Canadian Institute of
Chartered Accountants and the Institute of
Chartered Accountants of British Columbia
for over 30 years. Mr. Kramer is a
Registered Certified Public Accountant in
the State of Illinois. In 2005 he was
admitted as a Fellow to The Institute of
Chartered Securities and Administrators.Gregory Hahn, 
Director
    
    
    2007
    
    
    
    57
    
    
    Mr. Hahn was appointed to the Board of
Directors in October 2007. Mr. Hahn is a
Certified Professional Geologist and a
geological engineer with more than 25 years
experience in exploration, mine development
and operation, and particular expertise in
base and precious metals, ore reserve
calculations, slope stability, open pit
operations, project evaluations and
investment analysis. He is a board member
of Marathon PGM Corp. (TSX: MAR), and a
principal of Greg Hahn Consulting, LLC, a
mining and geological consulting firm.
From 1995 to 2007, Mr. Hahn was President,
Chief Executive Officer and Director of
Constellation Copper Corporation (TSX: CCU), where he was instrumental in bringing
the Lisbon Valley copper mine into
production, and involved with the
subsequent construction and development of
the mine. Prior to Mr. Hahns position with
Constellation Copper Corp., he was Vice
President for St. Mary Minerals Inc. for
four years and Chief Geological Engineer
for CoCa Mines Inc. for five years. He
also spent ten years with Noranda Inc.
where he was pre-development manager of the
Lik massive sulfide project in Alaska and
chief mine geologist at the Blackbird
cobalt-copper project in Idaho. Mr. Hahn
received a B.A. in Earth Sciences from
Dartmouth College and an M.S. in Geology
and Geological Engineering from Michigan
Tech.
  30




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Officer orName of Director or Officer
    
    Directorand Position in the Company
    
    Since
    
    Age
    
    Office(s) Held and Other Business ExperienceRobert Devers 
Chief Financial
Officer
    
    
    2007
    
    
    
    46
    
    
    Mr. Devers was appointed Chief Financial
Officer in June 2007. Mr. Devers has over
20 years of experience in corporate
finance, business operations, and financial
reporting and controls. Prior to joining
Metalline, he was Senior Director 
Financial Analysis and Internal Audit of
The Broe Companies Inc., a privately held
international company with investments in
commercial and residential real estate and
operations in oil and gas exploration and
coal mining. He has also served as a
corporate officer and financial executive
for privately-held and publicly traded
companies. Mr. Devers earned a Bachelor of
Arts degree in Accounting from Western
State College in 1985 and is a Certified
Public Accountant in the state of Colorado.Terry Brown, 
Vice
President-Operations
    
    
    2005
    
    
    
    49
    
    
    Mr. Brown was appointed Vice
President-Operations in September 2005. Mr.
Brown has 22 years experience in the mining
industry in the United States, Mexico and
Chile and has most recently been active as
a consulting geologist in Mexico. His
background is in exploration and project
management, mine development and
feasibility studies, and mining operations.
Mr. Brown is a Certified Professional
Geologist and is a member of the American
Institute of Professional Geologists and
the Society of Economic Geologists. He
received a Bachelor of Science degree in
geology from the New Mexico Institute of
Mining & Technology in 1983. Mr. Brown
resides in Chihuahua, Mexico.
 Audit Committee
  Section 16(a) Beneficial Ownership Reporting Compliance
   Code of Ethics
   31




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Nominating Committee
  Item 11. EXECUTIVE COMPENSATION
 Compensation and other Benefits of Executive Officers
  SUMMARY COMPENSATION TABLE
 OptionName and
    
    Fiscal
    
    
    Salary
    
    
    Awards
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)Merlin Bingham,
    
    
    2008
    
    
    $
    240,166
    
    
    $
    178,132
    (2)
    
    $
    418,298President
    
    
    2007
    
    
    $
    206,000
    
    
    $
    
    
    
    $
    206,000Roger Kolvoord,
    
    
    2008
    
    
    $
    217,833
    
    
    $
    118,755
    (3)
    
    $
    336,588Executive Vice President
    
    
    2007
    
    
    $
    187,000
    
    
    $
    
    
    
    $
    187,000Robert Devers,
    
    
    2008
    
    
    $
    162,500
    
    
    $
    507,999
    (5)
    
    $
    670,499Chief Financial Officer(4)
    
    
    2007
    
    
    $
    55,769
    
    
    $
    306,705
    (6)
    
    $
    362,474Terry Brown,
    
    
    2008
    
    
    $
    145,833
    
    
    $
    59,377
    (7)
    
    $
    205,210Vice President, Operations
    
    
    2007
    
    
    $
    125,000
    
    
    $
    
    
    
    $
    125,000
 
 (1)
    
    This column represents the dollar amount recognized for financial statement
reporting purposes with respect to the fair value of stock options granted to the named
executive officers, in accordance with SFAS 123R. See note 8 to the consolidated financial
statements for discussion regarding the assumptions used to calculate fair value under the
Black-Scholes-Merton valuation model.(2)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 150,000 shares in accordance with SFAS
123(R). The options vested 50,000 at January 18, 2008; 50,000 on January 1, 2009; and
50,000 vest on January 1, 2010.(3)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 100,000 shares in accordance with SFAS
123(R). The options vested 33,333 at January 18, 2008; 33,333 on January 1, 2009; and
33,334 vest on January 1, 2010.(4)
    
    Mr. Devers was appointed Chief Financial Officer on June 18. 2007.(5)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 100,000 shares granted on January 18, 2008
and 250,000 shares on June 18, 2007 in accordance with SFAS 123(R). The option to acquire
100,000 shares granted in 2008 vested 33,333 at January 18, 2008; 33,333 on January 1,
2009; and 33,334 vest on January 1, 2010. The options to acquire
250,000 shares granted in 2007 vested 50,000 on October 31, 2007; 100,000 on October 31,
2008; and 100,000 vest on October 31, 2009. (6)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 250,000 shares on June 18, 2007 in accordance
with SFAS 123(R). The options to acquire 250,000 shares granted in 2007 vested 50,000 on
October 31, 2007; 100,000 on October 31, 2008; and 100,000 vest on October 31, 2009.(7)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 50,000 shares in accordance with SFAS 123(R).
The options vested 16,666 at January 18, 2008; 16,667 on January 1, 2009; and 16,667 vest
on January 1, 2010.  32




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##### Table of Contents



Compensation Discussion and Analysis
   Cash Compensation Payable to our Named Executive Officers
   
    
    the executives leadership and operational performance and potential to enhance
long-term value to the Companys shareholders;
 
    
    performance compared to the financial, operational and strategic goals established for
the Company;
 
    
    the nature, scope and level of the executives responsibilities;
 
    
    competitive market compensation paid by other companies for similar positions,
experience and performance levels; and
 
    
    the executives current salary, the appropriate balance between incentives for long-term
and short-term performance.
 Option Grants to our Named Executive Officers
  2-3 years.
  33




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##### Table of Contents



Employment Agreements with our Named Executive Officers
  Employment Contracts and Termination of Employment and Change-in-Control Arrangements
 Merlin Bingham
     Roger Kolvoord
     34




---



##### Table of Contents



Terry Brown
    Robert Devers
   Stock Option, Stock Awards and Equity Incentive Plans
  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 Option
Awards
 Number of SecuritiesUnderlying Unexercised
    
    
    Option
    
    
    OptionOptions(1)(#)
    
    
    Exercise
    
    
    ExpirationName and Principal Position
    
    Exercisable
    
    
    Unexercisable
    
    
    Price ($)
    
    
    DateMerlin Bingham,
    
    
    1,000,000
    
    
    
    
    
    
    $
    2.59
    
    
    
    5/1/2016President
    
    
    100,000
    
    
    
    
    
    
    $
    2.15
    
    
    
    3/1/201050,000
    (2)
    
    
    100,000
    
    
    $
    2.18
    
    
    
    1/18/2018Roger Kolvoord,
    
    
    750,000
    
    
    
    
    
    
    $
    2.59
    
    
    
    5/1/2016Executive Vice President
    
    
    100,000
    
    
    
    
    
    
    $
    1.25
    
    
    
    8/6/200933,333
    (3)
    
    
    66,667
    
    
    $
    2.18
    
    
    
    1/18/2018Robert Devers,
    
    
    150,000
    (4)
    
    
    100,000
    
    
    $
    4.30
    
    
    
    6/18/2017Chief Financial Officer
    
    
    33,333
    (5)
    
    
    66,667
    
    
    $
    2.18
    
    
    
    1/18/2018Terry Brown,
    
    
    250,000
    
    
    
    
    
    
    $
    2.59
    
    
    
    5/1/2016Vice President, Operations
    
    
    10,000
    
    
    
    
    
    
    $
    2.00
    
    
    
    10/1/201216,666
    (6)
    
    
    33,334
    
    
    $
    2.18
    
    
    
    1/18/2018
  35




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##### Table of Contents



(1)
    
    Includes options granted under 2000 Equity Incentive Plan and 2006 Stock Option
Plan.(2)
    
    On January 18, 2008, Mr. Bingham was granted options to purchase 150,000 shares
of common stock; 50,000 of the options vested on January 18, 2008 and 50,000 vests on
January 1, 2009 and 50,000 vests on January 1, 2010.(3)
    
    On January 18, 2008, Mr. Kolvoord was granted options to purchase 100,000 shares
of common stock; 33,333 of the options vested on January 18, 2008 and 33,333 vests on
January 1, 2009 and 33,333 vests on January 1, 2010.(4)
    
    On June 18, 2007, Mr. Devers was granted options to purchase 250,000 shares of
common stock; 50,000 of the options vested on October 1, 2007 and 100,000 vests on October
31, 2008 and 100,000 vests on October 31, 2009.(5)
    
    On January 18, 2008, Mr. Devers was granted options to purchase 100,000 shares of
common stock; 33,333 of the options vested on January 18, 2008 and 33,333 vests on January
1, 2009 and 33,333 vests on January 1, 2010.(6)
    
    On January 18, 2008, Mr. Brown was granted options to purchase 50,000 shares of
common stock; 16,666 of the options vested on January 18, 2008 and 16,666 vests on January
1, 2009 and 16,667 vests on January 1, 2010. Compensation of Directors
    36




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##### Table of Contents



DIRECTOR COMPENSATION
 Fees earned or paid
    
    
    
    
    
    
    
    
    All otherin cash
    
    
    Stock awards
    
    
    Option awards
    
    
    compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)
    
    
    ($)Wesley Pomeroy(2)
    
    $
    34,500
    
    
    $
    58,824
    
    
    $
    
    
    
    $
    
    
    
    $
    93,324Robert Kramer(3)
    
    $
    34,500
    
    
    $
    58,824
    
    
    $
    
    
    
    $
    
    
    
    $
    93,324Gregory Hahn(4)
    
    $
    34,500
    
    
    $
    58,824
    
    
    $
    304,116
    (5)
    
    $
    
    
    
    $
    397,440
 (1)
    
    This column represents the dollar amount recognized for financial statement
reporting purposes with respect to the fair value of stock options granted to the named
executive officers, in accordance with SFAS 123R. See note 8 to the consolidated financial
statements for discussion regarding the assumptions used to calculate fair value under the
Black-Scholes-Merton valuation model.(2)
    
    Mr. Pomeroy holds options to purchase 250,000 shares of the Companys common
stock. These options are fully vested. During the fiscal year ended October 31, 2008, Mr.
Pomeroy was issued an aggregate of 41,400 shares of common stock pursuant to the 2006 Stock
Option Plan for director compensation.(3)
    
    Mr. Kramer holds options to purchase 500,000 shares of the Companys common
stock. These options are fully vested. During the fiscal year ended October 31, 2008, Mr.
Kramer was issued an aggregate of 41,400 shares of common stock pursuant to the 2006 Stock
Option Plan for director compensation.(4)
    
    Mr. Hahn holds options to purchase 250,000 shares of the Companys common stock.
These options vest as follows: (i) 50,000 shares vested immediately upon grant; (ii)
100,000 shares vested on October 1, 2008, and (iii) 100,000 shares vest on October 1, 2009;
or 100% of the options vest upon a Change in Control, as defined in Mr. Hahns stock
option agreement. During the fiscal year ended October 31, 2008, Mr. Hahn was issued an
aggregate of 41,400 shares of common stock pursuant to the 2006 Stock Option Plan for
director compensation.(5)
    
    Amount represents the dollar amount recognized for financial statement reporting
purposes for fair value of options to acquire 250,000 shares on October 1, 2007 in
accordance with SFAS 123(R). These options vest 50,000 on October 31, 2007; 100,000 on
October 1, 2008 and 100,000 on October 1, 2009. Repricing of Options
  37




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##### Table of Contents



Item 12. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 Security Ownership of Certain Beneficial Owners
  Amount and Nature ofName and Address of
    
    Metalline
    
    
    Percent of MetallineBeneficial Owner
    
    Beneficial Ownership
    
    
    Common stockJohn C. Barrett
    
    
    3,376,800
    (2)
    
    
    8.2
    %2436 N. Fed. Hwy #366
Lighthouse Point, FL 33064Lazarus Investment Partners LLP
    
    
    3,000,000
    
    
    
    7.6
    %c/o Lazarus Management Company LLC
2401 E. 2nd Avenue, #600
Denver, CO 80206Duncan Hsia
    
    
    2,647,328
    (1)
    
    
    6.4
    %3909 harvest Knoll Drive
Richardson, TX 75082Steven Carlitz
    
    
    2,520,931
    (3)
    
    
    6.2
    %1411 Aster Lane
Cupertino, CA 95014
 
 (1)
    
    Includes: (i) warrants to acquire 832,950 shares of the Companys common stock
held by Duncan Hsia Roth IRA and Duncan Hsia Revocable Living Trust; (ii) warrants to
acquire 480,000 shares of common stock held by Mr. Hsias spouse; (iii) warrants to acquire
143,250 shares of common stock held by Mr. Hsias children.(2)
    
    Includes warrants to acquire 1,465,000 shares of common stock held by John C.
Barrett and John C. Barrett Revocable Trust.(3)
    
    Includes warrants to acquire 967,000 shares of common stock.  38




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##### Table of Contents



Security Ownership of Management
 
 Name and Address of
    
    
    
    
    
    Amount and Nature of Metalline
    
    
    Percent of MetallineBeneficial Owner
    
    Position
    
    
    Beneficial Ownership
    
    
    Common stockMerlin Bingham
    
    President and
    
    
    2,580,639
    (1)
    
    
    6.3
    %1330 E. Margaret Ave.
    
    DirectorCoeur dAlene, ID 83815Roger Kolvoord
    
    Executive Vice
    
    
    1,286,072
    (2)
    
    
    3.2
    %1330 E. Margaret Ave.
    
    President andCoeur dAlene, ID 83815
    
    DirectorWesley Pomeroy
    
    Director
    
    
    618,400
    (3)
    
    
    1.5
    %1330 E. Margaret Ave.
Coeur dAlene, ID 83815Robert Kramer
    
    Director
    
    
    606,650
    (4)
    
    
    1.5
    %1330 E. Margaret Ave.
Coeur dAlene, ID 83815Gregory Hahn
    
    Director
    
    
    191,100
    (5)
    
    
    *1330 E. Margaret Ave.
Coeur dAlene, ID 83815Robert Devers
    
    Chief Financial
    
    
    216,666
    (6)
    
    
    *1330 E. Margaret Ave.
    
    OfficerCoeur dAlene, ID 83815Terry Brown1330 E. Margaret Ave.
Coeur dAlene, ID 83815
    
    Vice 
President-
Operations
    
    
    345,833
    (7)
    
    
    *All current
directors, executive officers and
named executive
officers as a group
(seven persons)
    
    
    
    
    
    
    5,845,360
    (8)
    
    
    13.5
    %
 
 *
    
    Indicates less than one percent.(1)
    
    Includes: (i) vested options to acquire 1,250,000 shares of common stock and (ii) vested
options held by Mr. Binghams spouse to acquire 50,000 shares of common stock. Excludes unvested
options to acquire 50,000 shares of common stock on January 1, 2010. Options vest 100% upon a
Change in Control, as defined in Mr. Binghams stock option agreement.(2)
    
    Includes vested options to acquire 916,666 shares of common stock. Excludes unvested options
to acquire 33,334 shares of common stock on January 1, 2010. Options vest 100% upon a Change in
Control, as defined in Mr. Kolvoords stock option agreement.  39




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##### Table of Contents



(3)
    
    Includes: (i) vested options to acquire 250,000 shares of common stock and (ii) warrants to
acquire 150,000 shares of common stock.(4)
    
    Includes: (i) vested options to acquire 500,000 shares of common stock and (ii) warrants to
acquire 17,250 shares of common stock.(5)
    
    Includes (i) vested options to acquire 150,000 shares of common stock. Excludes unvested
options to acquire 100,000 shares of common stock on October 1, 2009. Options vest 100% upon a
Change in Control, as defined in Mr. Hahns stock option agreement.(6)
    
    Includes vested options to acquire 216,666 shares of common stock. Excludes unvested options
to acquire (i) 100,000 shares of common stock on October 31, 2009, and (ii) 33,334 shares of common
stock on January 1, 2010. Options vest 100% upon a Change in Control, as defined in Mr. Devers
stock option agreement.(7)
    
    Includes vested options to acquire 293,333 shares of the Companys common stock. Excludes
unvested options to acquire16,667 shares of common stock on January 1, 2010. Options vest 100%
upon a Change in Control, as defined in Mr. Browns stock option agreement.(8)
    
    Includes securities
reflected in footnotes 1  7. Securities Authorized for Issuance Under Equity Plans
 Number of securities to beissued upon exercise of
    
    
    Weighted average exercise
    
    
    Number of securitiesoutstanding options, warrants
    
    
    price of outstanding
    
    
    remaining available forPlan Category
    
    and rights
    
    
    options, warrants and rights
    
    
    future issuanceEquity compensation
plans approved by
security holders
    
    
    4,400,004
    (1)
    
    $
    2.56
    
    
    
    938,796
    (2)Equity compensation
plans not approved
by security holders
    
    
    927,353
    (3)
    
    $
    2.64
    
    
    
    Total
    
    
    4,477,353
    
    
    $
    2.57
    
    
    
    938,796
 
 (1)
    
    Includes: (i) options to acquire 400,000 shares of Common Stock under the 2000
plan; and (ii) options to acquire 4,000,004 shares of common stock under the 2006 Plan.(2)
    
    Includes: (i) 230,000 shares of Common Stock available for issue under the 2000
Plan; and (ii) 708,796 shares of Common Stock available for issue under the 2006 Plan.(3)
    
    Includes (i) warrants to purchase 6,103 shares of Common Stock as compensation
for services to Tomlinson Programs Inc., (ii) warrants to purchase 204,000 shares of Common
Stock as compensation for services to Aegis Capital Inc., (iii) warrants to purchase 17,250
shares of Common Stock to an independent director of the Company, (iv) warrants to purchase
200,000 shares of Common Stock as compensation for financial services to O&M Partners and
(v) warrants to purchase 500,000 shares as compensation for financial services to David
Nahmias. Changes in Control
   40




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##### Table of Contents



Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORS INDEPENDENCE
 Related Party Transactions
   Director Independence
  Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
   41




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##### Table of Contents



Audit Committees Pre-Approval Practice
 de minimis
 
    
    Pre-approve all audit services that the auditor may provide to us or any subsidiary
(including, without limitation, providing comfort letters in connection with securities
underwritings or statutory audits) as required by §10A(i)(1)(A) of the Exchange Act (as
amended by the Sarbanes-Oxley Act of 2002).
 
    
    Pre-approve all non-audit services (other than certain de minimisservices described
in §10A(i)(1)(B) of the Exchange Act (as amended by the Sarbanes-Oxley Act of 2002))
that the auditors propose to provide to us or any of our subsidiaries.
  PART IV
 Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    Exhibits3.1
    (a)
    
    Articles of Incorporation.13.1
    (b)
    
    Certificate of Amendment to Articles of Incorporation.23.2
    
    
    Bylaws.24.1
    
    
    Rights Agreement, dated as of June 11, 2007, between the Company and OTC Stock Transfer,
as Rights Agent.710.1
    
    
    2000 Equity Incentive Plan.510.2
    
    
    2006 Stock Option Plan.510.4
    
    
    Employment Agreement with Merlin Bingham, effective January 1, 2007.510.5
    
    
    Employment Agreement with Roger Kolvoord, effective January 1, 2007.510.6
    
    
    Employment Agreement with Terry Brown, effective January 1, 2007.510.7
    
    
    Employment Agreement with Robert Devers, effective January 1, 2008.610.8
    
    
    Professional Services Contract to represent Minera Metalin S.A. of C.V. in litigation by
Sociedad Cooperativa de Explotación Minera Mineros Norteños S.C.L., filed herewith.10.9(8)
    
    
    Form of Deferral Agreement
entered into between the Company and each of its officers and
directors on February 11, 2009.14
    
    
    Code of Ethics. 521.1
    
    
    Subsidiaries of the Registrant. 5
  42




---



##### Table of Contents



23.1
    
    
    Consent of Hein & Associates LLP, filed herewith.31.1
    
    
    Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.31.2
    
    
    Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.32.1
    
    
    Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed herewith.32.2
    
    
    Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed herewith.99.1
    
    
    Sierra Mojada location map.4
 
 (1)
    
    Incorporated by reference from Form 10-SB, filed October 15, 1999.(2)
    
    Incorporated by reference from Form 10-QSB, filed September 19, 2006.(3)
    
    Incorporated by reference from Form 8-K, filed March 6, 2006.(4)
    
    Incorporated by reference from Form 10-KSB, filed January 31, 2006.(5)
    
    Incorporated by reference from Form 10-KSB, filed January 31, 2007.(6)
    
    Incorporated by reference from Form 8-K, filed January 22, 2008.(7)
    
    Incorporated by reference to Exhibit 1 to the Companys Registration Statement on Form 8-A
filed on June 11, 2007.  43




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##### Table of Contents



SIGNATURES
  METALLINE MINING COMPANYDate: February 12, 2009
    By:
    /s/ Merlin BinghamMerlin Bingham,President and Principal Executive OfficerDate: February 12, 2009
    By:
    /s/ Robert DeversRobert Devers,Chief Financial Officer and 
Principal
Accounting   Officer  Date: February 12, 2009
    
    By:
    
    /s/ Merlin Bingham

Merlin Bingham, DirectorDate: February 12, 2009
    
    By:
    
    /s/ Roger KolvoordRoger Kolvoord, DirectorDate: February 12, 2009
    
    By:
    
    /s/ Wesley PomeroyWesley Pomeroy, DirectorDate: February 12, 2009
    
    By:
    
    /s/ Robert KramerRobert Kramer, DirectorDate: February 12, 2009
    
    By:
    
    /s/ Gregory HahnGregory Hahn, Director
  44




---



##### 



METALLINE MINING COMPANY
  
 PAGE NO.Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Financial Statements:Consolidated Balance Sheets
    
    
    F-2Consolidated Statements of Operations
    
    
    F-3Consolidated Statements of Changes in Stockholders Equity
    
    
    F-4  F-8Consolidated Statements of Cash Flows
    
    
    F-9  F-10Notes to Consolidated Financial Statements
    
    
    F-11  F-29Exhibit 10.8Exhibit 10.9(8)Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
         HEIN & ASSOCIATES LLP
 
  F-1




---



##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED BALANCE SHEETS
 October 31,
    
    
    October 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    2,228,778
    
    
    $
    1,434,487Marketable securities
    
    
    
    
    
    
    7,900,000Value-added tax receivable
    
    
    
    
    
    
    401,341Other receivables
    
    
    31,741
    
    
    
    23,993Prepaid expenses
    
    
    23,025
    
    
    
    17,827Total Current Assets
    
    
    2,283,544
    
    
    
    9,777,648PROPERTY CONCESSIONSSierra Mojada District (Note 3)
    
    
    3,771,029
    
    
    
    4,536,111EQUIPMENTOffice and mining equipment, net of accumulated depreciation
of $492,647 and $407,457, respectively (Note 4)
    
    
    1,219,726
    
    
    
    919,420OTHER ASSETSValue-added tax receivable, net of allowance for uncollectible taxes
of $220,416 for 2008 (Note 2)
    
    
    543,554
    
    
    
    TOTAL ASSETS
    
    $
    7,817,853
    
    
    $
    15,233,179LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    133,318
    
    
    $
    84,634Accounts payable  related parties (Note 7)
    
    
    
    
    
    
    68,460Income tax payable
    
    
    17,653
    
    
    
    55,331Accrued liabilities and expenses
    
    
    189,663
    
    
    
    92,133Other liabilities
    
    
    37,500
    
    
    
    100,766Total Current Liabilities
    
    
    378,134
    
    
    
    401,324COMMITMENTS
AND CONTINGENCIES (Notes 1, 6 and 10)
    
    
    
    
    
    
    STOCKHOLDERS EQUITY (Notes 7, 8 and 9)Common stock, $0.01 par value; 160,000,000 shares authorized,
39,709,427 and 39,144,977 shares issued and outstanding, respectively
    
    
    397,094
    
    
    
    391,450Additional paid-in capital
    
    
    51,753,400
    
    
    
    49,273,440Deficit accumulated during exploration stage
    
    
    (47,066,815
    )
    
    
    (34,746,393
    )Other comprehensive income (loss)
    
    
    2,356,040
    
    
    
    (86,642
    )Total Stockholders Equity
    
    
    7,439,719
    
    
    
    14,831,855TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    7,817,853
    
    
    $
    15,233,179
   F-2




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 November 8,1993(Inception)Years Ended October 31,
    
    
    To October 31,2008
    
    
    2007
    
    
    2008REVENUES
    
    $
    
    
    
    $
    
    
    
    $
    EXPLORATION AND PROPERTY HOLDING COSTSExploration and property holding costs
    
    
    3,016,858
    
    
    
    2,647,666
    
    
    
    15,718,321Depreciation and asset write-off
    
    
    217,646
    
    
    
    188,280
    
    
    
    700,969TOTAL EXPLORATION AND PROPERTY HOLDING
COSTS
    
    
    3,234,504
    
    
    
    2,835,946
    
    
    
    16,419,290GENERAL AND ADMINISTRATIVE EXPENSESSalaries and payroll expenses
    
    
    2,062,000
    
    
    
    1,030,119
    
    
    
    11,888,482Office and administrative expenses
    
    
    468,059
    
    
    
    450,067
    
    
    
    2,459,291Professional services
    
    
    2,149,164
    
    
    
    2,618,651
    
    
    
    10,098,616Directors fees
    
    
    584,088
    
    
    
    439,166
    
    
    
    2,859,419Provision for uncollectible value-added taxes
    
    
    220,416
    
    
    
    
    
    
    
    220,416Depreciation
    
    
    24,395
    
    
    
    39,184
    
    
    
    199,781TOTAL GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    5,508,122
    
    
    
    4,577,187
    
    
    
    27,726,005LOSS FROM OPERATIONS
    
    
    (8,742,626
    )
    
    
    (7,413,133
    )
    
    
    (44,145,295
    )OTHER INCOME (EXPENSES)Interest and investment income
    
    
    150,903
    
    
    
    434,793
    
    
    
    835,867Foreign currency transaction (loss) gain
    
    
    (3,686,063
    )
    
    
    98,008
    
    
    
    (3,588,055
    )Miscellaneous ore sales, net of expenses
    
    
    
    
    
    
    
    
    
    
    134,242Miscellaneous income (expense)
    
    
    17
    
    
    
    2,818
    
    
    
    82,351Interest and financing expense
    
    
    
    
    
    
    
    
    
    
    (289,230
    )TOTAL OTHER (EXPENSE) INCOME
    
    
    (3,535,143
    )
    
    
    535,619
    
    
    
    (2,824,825
    )LOSS BEFORE INCOME TAXES
    
    
    (12,277,769
    )
    
    
    (6,877,514
    )
    
    
    (46,970,120
    )INCOME TAXES (Note 11)
    
    
    42,653
    
    
    
    54,043
    
    
    
    96,695NET LOSS
    
    $
    (12,320,422
    )
    
    $
    (6,931,557
    )
    
    $
    (47,066,815
    )OTHER COMPREHENSIVE INCOME (LOSS)  Foreign
Currency Translation adjustments
    
    
    2,442,682
    
    
    
    (86,642
    )
    
    
    2,356,040COMPREHENSIVE LOSS
    
    $
    (9,877,740
    )
    
    $
    (7,018,199
    )
    
    $
    (44,710,775
    )BASIC AND DILUTED NET LOSS PER COMMON SHARE
    
    $
    (0.31
    )
    
    $
    (0.20
    )BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
    
    
    39,582,962
    
    
    
    35,253,047
   F-3




---



##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 DeficitAccumulatedCommon Stock
    
    
    Additional
    
    
    Stock
    
    
    During
    
    
    OtherNumber
    
    
    
    
    
    
    Paid-in
    
    
    Subscriptions
    
    
    Exploration
    
    
    Comprehensiveof Shares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Stage
    
    
    Income (Loss)
    
    
    TotalCommon stock issuance prior to inception (no
value)
    
    
    576,480
    
    
    $
    5,765
    
    
    $
    (5,765
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss for the year ended October 31, 1994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,831
    )
    
    
    
    
    
    
    (8,831
    )Balances, October 31, 1994
    
    
    576,480
    
    
    
    5,765
    
    
    
    (5,765
    )
    
    
    
    
    
    
    (8,831
    )
    
    
    
    
    
    
    (8,831
    )Net loss for the year ended October 31, 1995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,761
    )
    
    
    
    
    
    
    (7,761
    )Balances, October 31, 1995
    
    
    576,480
    
    
    
    5,765
    
    
    
    (5,765
    )
    
    
    
    
    
    
    (16,592
    )
    
    
    
    
    
    
    (16,592
    )Issuances 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000Net 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
    )
    
    
    
    
    
    
    127,567Issuances 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,530Options issued as follows:- 300,000 options
for cash
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,000Net loss for the year ended October 31, 1997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (582,919
    )
    
    
    
    
    
    
    (582,919
    )Balances, October 31, 1997
    
    
    4,452,439
    
    
    
    44,525
    
    
    
    941,352
    
    
    
    
    
    
    
    (640,181
    )
    
    
    
    
    
    
    345,696Issuances 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    325,000Options 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117,000Warrants issued for services
    
    
    
    
    
    
    
    
    
    
    488,980
    
    
    
    
    
    
    
    (488,980
    )
    
    
    
    
    
    
    Net loss for the year ended October 31, 1998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (906,036
    )
    
    
    
    
    
    
    (906,036
    )Balance, October 31, 1998
    
    
    6,092,739
    
    
    $
    60,928
    
    
    $
    3,423,674
    
    
    $
    (300,000
    )
    
    $
    (2,035,197
    )
    
    $
    
    
    
    $
    1,149,405
   F-4




---



##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (CONTINUED)
 DeficitAccumulatedCommon Stock
    
    
    Additional
    
    
    Stock
    
    
    During
    
    
    OtherNumber of
    
    
    
    
    
    
    Paid-in
    
    
    Subscriptions
    
    
    Exploration
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Stage
    
    
    Income (Loss)
    
    
    TotalBalance, October 31, 1998
    
    
    6,092,739
    
    
    $
    60,928
    
    
    $
    3,423,674
    
    
    $
    (300,000
    )
    
    $
    (2,035,197
    )
    
    $
    
    
    
    $
    1,149,405Issuances 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Stock option and warrant activity as follows:- exercise of options at $0.90 per share
    
    
    250,000
    
    
    
    2,500
    
    
    
    222,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,000- issuance of options for financing fees
    
    
    
    
    
    
    
    
    
    
    216,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    216,000Stock subscription received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    
    
    
    
    300,000Net loss for the year ended October 31, 1999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,423,045
    )
    
    
    
    
    
    
    (1,423,045
    )Balance, October 31, 1999
    
    
    7,217,095
    
    
    
    72,172
    
    
    
    4,754,330
    
    
    
    
    
    
    
    (3,458,242
    )
    
    
    
    
    
    
    1,368,260Stock option and warrant activity as follows:- Exercise of options at $0.86 per share
    
    
    950,000
    
    
    
    9,500
    
    
    
    802,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    812,250- Warrants issued for services
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000Issuances of common stock as follows:- for cash at an average of $2.77 per share
    
    
    1,440,500
    
    
    
    14,405
    
    
    
    3,972,220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,986,625- for services at $1.28 per share
    
    
    120,000
    
    
    
    1,200
    
    
    
    152,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,360- for equipment at $1.67 per share
    
    
    15,000
    
    
    
    150
    
    
    
    24,850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Net loss for the year ended October 31, 2000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (882,208
    )
    
    
    
    
    
    
    (882,208
    )Balances, October 31, 2000
    
    
    9,742,595
    
    
    
    97,427
    
    
    
    9,761,310
    
    
    
    
    
    
    
    (4,340,450
    )
    
    
    
    
    
    
    5,518,287Stock option and warrant activity as follows:- Warrants exercised at $0.75 per share
    
    
    20,000
    
    
    
    200
    
    
    
    14,800
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000- Options issued for consulting fees
    
    
    
    
    
    
    
    
    
    
    740,892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740,892- Warrants issued for consulting fees
    
    
    
    
    
    
    
    
    
    
    144,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,791Issuances of common stock as follows:- for cash at $2.00 per share
    
    
    250,000
    
    
    
    2,500
    
    
    
    497,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,000Net loss for the year ended October 31, 2001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,069,390
    )
    
    
    
    
    
    
    (2,069,390
    )Balance, October 31, 2001
    
    
    10,069,595
    
    
    
    100,697
    
    
    
    11,271,793
    
    
    
    
    
    
    
    (6,409,840
    )
    
    
    
    
    
    
    4,962,650Issuances 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
    
    
    
    143,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,000- for cash and warrants at $1.50 per share
    
    
    66,667
    
    
    
    667
    
    
    
    99,333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000- for compensation at an average of $1.23 per
share
    
    
    86,078
    
    
    
    861
    
    
    
    104,014
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,875Stock option activity as follows:- for compensation at $0.61 per share
    
    
    
    
    
    
    
    
    
    
    61,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,000Net loss for the year ended October 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (765,765
    )
    
    
    
    
    
    
    (765,765
    )Balance, October 31, 2002
    
    
    10,368,340
    
    
    $
    103,685
    
    
    $
    11,778,680
    
    
    $
    
    
    
    $
    (7,175,605
    )
    
    $
    
    
    
    $
    4,706,760
   F-5




---



##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (CONTINUED)
 DeficitAccumulatedCommon Stock
    
    
    Additional
    
    
    Stock
    
    
    During
    
    
    OtherNumber of
    
    
    
    
    
    
    Paid-in
    
    
    Subscriptions
    
    
    Exploration
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Stage
    
    
    Income (Loss)
    
    
    TotalBalance, October 31, 2002
    
    
    10,368,340
    
    
    $
    103,685
    
    
    $
    11,778,680
    
    
    $
    
    
    
    $
    (7,175,605
    )
    
    $
    
    
    
    $
    4,706,760Issuances of common stock as follows:- for cash at $2.00 per share
    
    
    100,000
    
    
    
    1,000
    
    
    
    199,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000- for cash at an average of $0.98 per share
    
    
    849,000
    
    
    
    8,489
    
    
    
    821,510
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    829,999- for cash and warrants at $1.50 per share
    
    
    7,000
    
    
    
    70
    
    
    
    10,430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,500- for compensation at an average of $1.25 per
share
    
    
    391,332
    
    
    
    3,913
    
    
    
    487,275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    491,188- for services at an average of $1.23 per share
    
    
    91,383
    
    
    
    914
    
    
    
    119,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,234- for subscriptions receivable at $1.00 per share
    
    
    38,000
    
    
    
    380
    
    
    
    37,620
    
    
    
    (38,000
    )
    
    
    
    
    
    
    
    
    
    
    Net loss for the year ended October 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,107,228
    )
    
    
    
    
    
    
    (1,107,228
    )Balance, October 31, 2003
    
    
    11,845,055
    
    
    
    118,451
    
    
    
    13,453,835
    
    
    
    (38,000
    )
    
    
    (8,282,833
    )
    
    
    
    
    
    
    5,251,453Issuances of common stock as follows:- for cash at $1.00 per share, less issuance
costs of $698,863
    
    
    7,580,150
    
    
    
    75,801
    
    
    
    6,805,485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,881,286- for compensation at an average of $1.26 per
share
    
    
    120,655
    
    
    
    1,207
    
    
    
    151,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152,271- for services at various prices
    
    
    141,286
    
    
    
    1,413
    
    
    
    153,801
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,214Stock subscription received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,000
    
    
    
    
    
    
    
    
    
    
    
    38,000Miscellaneous corrections and adjustments
    
    
    64,263
    
    
    
    643
    
    
    
    (643
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss for the year ended October 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,036,805
    )
    
    
    
    
    
    
    (5,036,805
    )Balance, October 31, 2004
    
    
    19,751,409
    
    
    
    197,515
    
    
    
    20,563,542
    
    
    
    
    
    
    
    (13,319,638
    )
    
    
    
    
    
    
    7,441,419Issuances of common stock as follows:- for cash at an average of $0.98 per share with
attached warrants
    
    
    476,404
    
    
    
    4,764
    
    
    
    461,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    466,729- for compensation at an average of $1.00 per
share
    
    
    176,772
    
    
    
    1,768
    
    
    
    175,005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176,773Net loss for the year ended October 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,302,161
    )
    
    
    
    
    
    
    (3,302,161
    )Balance, October 31, 2005
    
    
    20,404,585
    
    
    $
    204,047
    
    
    $
    21,200,512
    
    
    $
    
    
    
    $
    (16,621,799
    )
    
    $
    
    
    
    $
    4,782,760
   F-6




---



##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (CONTINUED)
 DeficitAccumulatedCommon Stock
    
    
    Additional
    
    
    Stock
    
    
    During
    
    
    OtherNumber of
    
    
    
    
    
    
    Paid-in
    
    
    Subscriptions
    
    
    Exploration
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Stage
    
    
    Income (Loss)
    
    
    TotalBalance, October 31, 2005
    
    
    20,404,585
    
    
    $
    204,047
    
    
    $
    21,200,512
    
    
    $
    
    
    
    $
    (16,621,799
    )
    
    $
    
    
    
    $
    4,782,760Issuance of common stock as follows:- for cash at an average price of $.80 per
share with attached warrants
    
    
    13,374,833
    
    
    
    133,748
    
    
    
    11,077,879
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,211,627- for services at an average price of $.80
per share with attached warrants
    
    
    73,650
    
    
    
    736
    
    
    
    58,213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,949- for compensation at an average price of
$.80 per share
    
    
    248,593
    
    
    
    2,486
    
    
    
    154,389
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    156,875- for adjustment of private placement
selling price
    
    
    81,251
    
    
    
    812
    
    
    
    (812
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock option and warrant activity as follows:- stock based compensation for options
issued to officers and independent directors
at an average fair value of $2.18 per share
    
    
    
    
    
    
    
    
    
    
    4,360,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,360,000- options & warrants for directors fees at
an average fair value of $2.17 per share
    
    
    
    
    
    
    
    
    
    
    1,665,705
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,665,705- modification of options
    
    
    
    
    
    
    
    
    
    
    48,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,000- exercise of warrants at an average price
of $1.25 per share
    
    
    25,000
    
    
    
    250
    
    
    
    31,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,250Net loss for the year ended October 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,193,037
    )
    
    
    
    
    
    
    (11,193,037
    )Balance, October 31, 2006
    
    
    34,207,912
    
    
    $
    342,079
    
    
    $
    38,594,886
    
    
    $
    
    
    
    $
    (27,814,836
    )
    
    $
    
    
    
    $
    11,122,129Issuance of common stock as follows:- for cash at an average price of $2.35 per
share with attached warrants
    
    
    2,413,571
    
    
    
    24,136
    
    
    
    5,647,757
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,671,893- for services at an average price of $4.31
per share
    
    
    49,120
    
    
    
    491
    
    
    
    211,069
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211,560- for directors fees at an average price of
$2.71 per share
    
    
    108,000
    
    
    
    1,080
    
    
    
    305,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306,180Stock option and warrant activity as follows:- exercise of warrants at an average price
of $1.30 per share
    
    
    2,240,374
    
    
    
    22,404
    
    
    
    2,917,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,940,154- warrants issued for financial services at
an average fair value of $1.82 per share
    
    
    
    
    
    
    
    
    
    
    1,094,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,094,950- stock based compensation for options
issued to officer and independent director
    
    
    
    
    
    
    
    
    
    
    434,189
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434,189- for cashless exercise of options
    
    
    126,000
    
    
    
    1,260
    
    
    
    (1,260
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    - Extension of warrant for services
    
    
    
    
    
    
    
    
    
    
    68,999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,999Other Comprehensive Income  Foreign
Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86,642
    )
    
    
    (86,642
    )Net loss for the year ended October 31, 2008.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,931,557
    )
    
    
    
    
    
    
    (6,931,557
    )Balance, October 31, 2007
    
    
    39,144,977
    
    
    $
    391,450
    
    
    $
    49,273,440
    
    
    $
    
    
    
    $
    (34,746,393
    )
    
    $
    (86,642
    )
    
    $
    14,831,855
   F-7




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (CONTINUED)
 DeficitAccumulatedCommon Stock
    
    
    Additional
    
    
    Stock
    
    
    During
    
    
    OtherNumber of
    
    
    
    
    
    
    Paid-in
    
    
    Subscriptions
    
    
    Exploration
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Receivable
    
    
    Stage
    
    
    Income (Loss)
    
    
    TotalBalance, October 31, 2007
    
    
    39,144,977
    
    
    $
    391,450
    
    
    $
    49,273,440
    
    
    $
    
    
    
    $
    (34,746,393
    )
    
    $
    (86,642
    )
    
    $
    14,831,855Issuance of common stock as follows:- for directors fees at an average price of
$1.69 per share
    
    
    145,200
    
    
    
    1,452
    
    
    
    243,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    244,932- for services at an average price of $2.18
per share
    
    
    38,000
    
    
    
    380
    
    
    
    82,460
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,840Stock option and warrant activity as follows:- exercise of warrants at an average price
of $1.25 per share
    
    
    381,250
    
    
    
    3,812
    
    
    
    472,751
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476,563- warrants issued for financial services at
an average fair value of $.82 per share
    
    
    
    
    
    
    
    
    
    
    81,838
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,838- stock based compensation for options
issued to officer and independent directors
during prior periods
    
    
    
    
    
    
    
    
    
    
    693,362
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    693,362- stock based compensation for options
issued to officers
    
    
    
    
    
    
    
    
    
    
    475,018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    475,018- stock based compensation for options
issued to employees
    
    
    
    
    
    
    
    
    
    
    164,435
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    164,435- stock based compensation for options
issued to consultant
    
    
    
    
    
    
    
    
    
    
    266,616
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    266,616Other Comprehensive Income  Foreign
Currency Translation Adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,442,682
    
    
    
    2,442,682Net loss for the year ended October 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,320,422
    )
    
    
    
    
    
    
    (12,320,422
    )Balance, October 31, 2008
    
    
    39,709,427
    
    
    $
    397,094
    
    
    $
    51,753,400
    
    
    $
    
    
    
    $
    (47,066,815
    )
    
    $
    2,356,040
    
    
    $
    7,439,719
   F-8




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 November 8,1993(Inception)Years Ended October 31,
    
    
    To October 31,2008
    
    
    2007
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (12,320,422
    )
    
    $
    (6,931,557
    )
    
    $
    (47,066,815
    )Adjustments to reconcile net loss to net cash used by
operating activities:Depreciation and equipment write-off
    
    
    242,478
    
    
    
    229,474
    
    
    
    903,197Provision for uncollectible value-added taxes
    
    
    220,416
    
    
    
    
    
    
    
    220,416Noncash expenses
    
    
    
    
    
    
    
    
    
    
    126,864Foreign currency transaction gain (loss)
    
    
    3,869,043
    
    
    
    (98,008
    )
    
    
    3,771,036Common stock issued for services
    
    
    
    
    
    
    211,560
    
    
    
    1,237,047Common stock issued for compensation
    
    
    82,840
    
    
    
    
    
    
    
    1,059,946Options issued for compensation
    
    
    1,599,431
    
    
    
    434,189
    
    
    
    6,393,622Common stock issued for directors fees
    
    
    244,932
    
    
    
    306,180
    
    
    
    551,112Options and warrants issued for directors fees
    
    
    
    
    
    
    
    
    
    
    1,665,705Stock options issued for services
    
    
    
    
    
    
    
    
    
    
    849,892Stock options issued for financing fees
    
    
    
    
    
    
    
    
    
    
    276,000Common stock issued for payment of expenses
    
    
    
    
    
    
    
    
    
    
    326,527Stock warrants issued for services
    
    
    81,838
    
    
    
    1,163,949
    
    
    
    1,934,557(Increase) decrease in:Accounts receivable
    
    
    
    
    
    
    35,815
    
    
    
    Value added tax receivable
    
    
    (515,736
    )
    
    
    (393,235
    )
    
    
    (908,972
    )Other receivables
    
    
    (13,375
    )
    
    
    (23,553
    )
    
    
    (37,047
    )Prepaid expenses
    
    
    (6,318
    )
    
    
    (3,499
    )
    
    
    (24,106
    )Increase (decrease) in:Accounts payable
    
    
    48,779
    
    
    
    (153,696
    )
    
    
    133,282Accounts payable  related parties
    
    
    (68,460
    )
    
    
    (57,000
    )
    
    
    Income tax payable
    
    
    (33,972
    )
    
    
    54,214
    
    
    
    20,242Accrued liabilities and expenses
    
    
    130,453
    
    
    
    (24,348
    )
    
    
    222,267Other liabilities
    
    
    (55,455
    )
    
    
    88,732
    
    
    
    43,276Net cash used by operating activities
    
    
    (6,493,528
    )
    
    
    (5,160,783
    )
    
    
    (28,301,952
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of investments
    
    
    
    
    
    
    (15,200,000
    )
    
    
    (21,609,447
    )Proceeds from investments
    
    
    7,900,000
    
    
    
    13,225,000
    
    
    
    21,609,447Equipment purchases
    
    
    (781,537
    )
    
    
    (549,432
    )
    
    
    (2,318,374
    )Mining property acquisitions
    
    
    
    
    
    
    (179,406
    )
    
    
    (4,632,037
    )Net cash provided by (used by) investing activities
    
    
    7,118,463
    
    
    
    (2,703,838
    )
    
    
    (6,950,411
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from sales of common stock
    
    
    
    
    
    
    5,671,893
    
    
    
    33,379,207Proceeds from sales of options and warrants
    
    
    
    
    
    
    
    
    
    
    949,890Proceeds from exercise of warrants
    
    
    476,563
    
    
    
    2,940,154
    
    
    
    3,447,966Proceeds from shareholder loans
    
    
    
    
    
    
    
    
    
    
    30,000Payment of note payable
    
    
    
    
    
    
    
    
    
    
    (15,783
    )Net cash provided by financing activities:
    
    
    476,563
    
    
    
    8,612,047
    
    
    
    37,791,280Effect of exchange rates on cash
    
    
    (307,207
    )
    
    
    (2,933
    )
    
    
    (310,139
    )Net increase in cash and cash equivalents
    
    
    794,291
    
    
    
    744,493
    
    
    
    2,228,778Cash and cash equivalents beginning of period
    
    
    1,434,487
    
    
    
    689,994
    
    
    
    Cash and cash equivalents end of period
    
    $
    2,228,778
    
    
    $
    1,434,487
    
    
    $
    2,228,778
   F-9




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##### Table of Contents



METALLINE MINING COMPANY
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 November 8,1993(Inception)Years Ended October 31,
    
    
    To October 31,2008
    
    
    2007
    
    
    2008SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    75,411
    
    
    $
    
    
    
    $
    75,411Interest paid
    
    $
    
    
    
    $
    
    
    
    $
    286,771NON-CASH INVESTING AND FINANCING ACTIVITIES:Common stock issued for equipment
    
    $
    
    
    
    $
    
    
    
    $
    25,000Common stock options issued for financing fees
    
    $
    
    
    
    $
    
    
    
    $
    276,000
   F-10




---



##### Table of Contents



NOTE 1  ORGANIZATION, DESCRIPTION OF BUSINESS, GOING CONCERN AND MANAGEMENT PLANS
 Organization and Description of Business
    Going Concern and Management Plans
     F-11




---



##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Accounting Method
  Principles of Consolidation
  Reclassifications
  Cash and Cash Equivalents
  Concentration of Risk
  Earnings Per Share
 Earnings per
Share"
  F-12




---



##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Use of Estimates
  Exploration Costs
  Exploration Stage Activities
  Fair Value of Financial Instruments
 Disclosures about Fair Value of
Financial Instruments,
 Foreign Currency Translation
  Foreign Operations
  Value-Added Tax Receivable
   F-13




---



##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
   Marketable Securities
 Accounting for
Certain Investments in Debt and Equity Securities
  Mineral Concessions
   Property and Equipment
   F-14




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##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 Revenue Recognition Policy
  Accounting for Loss Contingencies and Legal Costs
 Accounting for Contingencies,
 Stock-Based Compensation
 Share-Based Payment, Accounting for Stock-Based Compensation.
    F-15




---



##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
  Income Taxes
 ,
Accounting for Income Taxes
 Accounting for Uncertainty in Income Taxes,
  Recent Accounting Pronouncements
 Fair Value Measurements Effective Dates
of FASB Statement no. 157
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an amendment of FASB Statement No. 115
 The Hierarchy of Generally Accepted Accounting
Principles
  F-16




---



##### Table of Contents



NOTE
3  CONCESSIONS IN THE SIERRA MOJADA DISTRICT
 Sierra Mojada Mining Concessions
    AcquisitionConcession
    
    Method
    
    
    Date
    
    
    Hectares
    
    
    Cost BasisSierra Mojada
    
    Purchased
    
    
    5/30/2000
    
    
    
    4,767.32
    
    
    $
    13,253Mojada 3
    
    Purchased
    
    
    5/30/2000
    
    
    
    722.00
    
    
    
    Unificacion Mineros Nortenos
    
    Purchased
    
    
    8/30/2000
    
    
    
    336.79
    
    
    
    3,074,500Vulcano
    
    Purchased
    
    
    8/30/2000
    
    
    
    4.49
    
    
    
    Esmeralda 1
    
    Purchased
    
    
    8/20/2001
    
    
    
    95.50
    
    
    
    151,095Esmeralda
    
    Purchased
    
    
    3/20/1997
    
    
    
    117.50
    
    
    
    213,422La Blanca
    
    Purchased
    
    
    8/20/2001
    
    
    
    33.50
    
    
    
    102,484Fortuna
    
    Claim Filed
    
    
    12/8/1999
    
    
    
    13.96
    
    
    
    64,053Mojada 2
    
    Claim Filed
    
    
    7/17/2006
    
    
    
    3,500.00
    
    
    
    El Retorno
    
    Purchased
    
    
    4/10/2006
    
    
    
    817.65
    
    
    
    12,872Los Ramones
    
    Purchased
    
    
    4/10/2006
    
    
    
    8.60
    
    
    
    233El Retorno Fracc. 1
    
    Purchased
    
    
    4/20/2006
    
    
    
    5.51
    
    
    
    78Dormidos
    
    Claim Filed
    
    
    4/9/2007
    
    
    
    2,326.10
    
    
    
    Agua Mojada
    
    Claim Filed
    
    
    1/26/2007
    
    
    
    2,900.00
    
    
    
    5,096Alote(1)
    
    Claim Filed
    
    
    5/17/2007
    
    
    
    3,749.00
    
    
    
    5,066Volcan Dolores
    
    Purchased
    
    
    9/24/2007
    
    
    
    10.49
    
    
    
    128,87719,408.41
    
    
    $
    3,771,029
 
 (1)
    
    Title for this concession is pending.  F-17




---



##### Table of Contents



NOTE 4  PROPERTY AND EQUIPMENT
  2008
    
    
    2007Mining equipment
    
    $
    1,228,133
    
    
    $
    838,635Well equipment
    
    
    31,721
    
    
    
    Communication equipment
    
    
    7,400
    
    
    
    8,902Buildings and structures
    
    
    141,835
    
    
    
    153,590Vehicles
    
    
    115,833
    
    
    
    172,449Computer equipment and software
    
    
    166,730
    
    
    
    145,167Office equipment
    
    
    10,396
    
    
    
    8,134Assets under construction
    
    
    10,325
    
    
    
    1,712,373
    
    
    
    1,326,877Less: Accumulated depreciation
    
    
    (492,647
    )
    
    
    (407,457
    )$
    1,219,726
    
    
    $
    919,420
  NOTE 5  RELATED PARTY TRANSACTIONS
  NOTE
6  SHAREHOLDER RIGHTS PLAN
   NOTE 7  COMMON STOCK
 th
   F-18




---



##### Table of Contents



NOTE 7  COMMON STOCK (continued)
           F-19




---



##### Table of Contents



NOTE 7  COMMON STOCK (continued)
          NOTE 8  STOCK OPTIONS
   F-20




---



##### Table of Contents



NOTE 8  STOCK OPTIONS (continued)
  Year Ended
    
    
    Year EndedOctober 31,
    
    
    October 31,Options
    
    2008
    
    
    2007Expected volatility
    
    
    73
    %
    
    
    74%  75
    %Risk-free interest rate
    
    
    3.2%  3.7
    %
    
    
    4.1%  5.1
    %Dividend yield
    
    
    
    
    
    
    Expected term (in years)
    
    
    7.0  10.0
    
    
    
    7.0  9.5
   Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    Shares
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at November 1, 2006
    
    
    3,360,000
    
    
    $
    2.41Granted
    
    
    500,000
    
    
    
    3.58Exercised
    
    
    (126,000
    )
    
    
    1.32Forfeited or Expired
    
    
    (84,000
    )
    
    
    1.32Outstanding at October 31, 2007
    
    
    3,650,000
    
    
    $
    2.63Granted
    
    
    750,004
    
    
    
    2.19Exercised
    
    
    
    
    
    
    Forfeited or Expired
    
    
    
    
    
    
    Outstanding at October 31, 2008
    
    
    4,400,004
    
    
    $
    2.56
    
    
    
    7.11
    
    
    $
    Vested or Expected to Vest at
October 31, 2008
    
    
    3,733,333
    
    
    $
    2.55
    
    
    
    6.89
    
    
    $
    Exercisable at October 31, 2008
    
    
    3,733,333
    
    
    $
    2.55
    
    
    
    6.89
    
    
    $
    
   F-21




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NOTE 8  STOCK OPTIONS (continued)
         F-22




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##### Table of Contents



NOTE 8  STOCK OPTIONS (continued)
   Options Outstanding
    
    
    Options ExercisableWeightedAve.
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    Number
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrice
    
    Outstanding
    
    
    Life (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$1.251.32
    
    
    200,000
    
    
    
    1.35
    
    
    $
    1.29
    
    
    
    200,000
    
    
    $
    1.292.152.85
    
    
    3,950,004
    
    
    
    7.30
    
    
    
    2.51
    
    
    
    3,383,333
    
    
    
    2.544.30
    
    
    250,000
    
    
    
    8.64
    
    
    
    4.30
    
    
    
    150,000
    
    
    
    4.30$1.254.30
    
    
    4,400,004
    
    
    
    7.11
    
    
    $
    2.56
    
    
    
    3,733,333
    
    
    $
    2.55
  Weighted-Average Grant-Nonvested Shares
    
    Shares
    
    
    Date Fair ValueNonvested at October 31, 2006
    
    
    
    
    
    $
    Granted
    
    
    500,000
    
    
    
    2.76Vested
    
    
    (100,000
    )
    
    
    2.63Forfeited
    
    
    
    
    
    
    Nonvested at October 31, 2007
    
    
    400,000
    
    
    
    2.79Granted
    
    
    750,004
    
    
    
    1.62Vested
    
    
    (483,333
    )
    
    
    2.05Forfeited
    
    
    
    
    
    
    Nonvested at October 31, 2008
    
    
    666,671
    
    
    $
    2.01
  NOTE 9  WARRANTS
   F-23




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NOTE 9  WARRANTS (continued)
  Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicWarrants
    
    Shares
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding at November 1, 2006
    
    
    14,875,123
    
    
    $
    1.28Issued with private placement
    
    
    1,206,785
    
    
    
    2.42Issued for services
    
    
    600,000
    
    
    
    3.27Exercised
    
    
    (2,240,374
    )
    
    
    1.31Forfeited or expired
    
    
    (61,387
    )
    
    
    3.91Outstanding at October 31, 2007
    
    
    14,380,147
    
    
    
    1.44Issued for services
    
    
    100,000
    
    
    
    2.00Exercised
    
    
    (381,250
    )
    
    
    1.25Forfeited or expired
    
    
    (152,333
    )
    
    
    1.88Outstanding at October 31, 2008
    
    
    13,946,564
    
    
    $
    1.45
    
    
    
    2.24
    
    
    $
    
  Warrants Outstanding and ExercisableWeighted Ave.RemainingContractual Life
    
    Weighted AverageExercise Price
    
    Number Outstanding
    
    (Years)
    
    Exercise Price$1.25  $1.75
    
    11,985,169
    
    2.21
    
    $
    1.25$2.00  $2.63
    
    1,461,395
    
    2.19
    
    
    2.39$3.40  $5.00
    
    500,000
    
    3.18
    
    
    3.40$1.25  $5.00
    
    13,946,564
    
    2.24
    
    $
    1.45
     F-24




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##### Table of Contents



NOTE 9  WARRANTS (continued)
        NOTE 10  COMMITMENTS AND CONTINGENCIES
 Legal Contract  Litigation
  Compliance with Environmental Regulations
   F- 25




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##### Table of Contents



NOTE 10  COMMITMENTS AND CONTINGENCIES (continued)
 Employment Agreements
   Royalty Agreement
  Mining Concessions
  NOTE 11  INCOME TAXES
 Provision for Taxes
    F- 26




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##### Table of Contents



NOTE 11  INCOME TAXES (continued)
  For the year endedOctober 31,2008
    
    
    2007ForeignCurrent tax expense
    
    $
    42,653
    
    
    $
    69,540Deferred tax expense (benefit)
    
    
    
    
    
    
    (15,497
    )$
    42,653
    
    
    $
    54,043
  For the year endedOctober 31,2008
    
    
    2007Income tax
benefit calculated at U.S. Federal Income tax rate
    
    $
    (4,312,000
    )
    
    $
    (2,338,000
    )Differences arising from:Permanent differences
    
    
    270,000
    
    
    
    19,000State income taxes
    
    
    (88,000
    )
    
    
    Benefit from lower foreign income tax rate
    
    
    531,000
    
    
    
    151,000Adjustment for foreign flat tax
    
    
    6,000
    
    
    
    Reclassification of loss carryforward to
foreign subs
    
    
    
    
    
    
    307,000Adjustment to prior year taxes
    
    
    (31,000
    )
    
    
    (2,427,000
    )Inflation adjustment foreign net
operating loss
    
    
    (87,000
    )
    
    
    Foreign currency fluctuations
    
    
    639,000
    
    
    
    Increase in valuation allowance
    
    
    3,115,000
    
    
    
    4,249,000Other
    
    
    
    
    
    
    93,000Net income tax provision
    
    $
    43,000
    
    
    $
    54,000
  October 31,2008
    
    
    2007Deferred tax assetsNet
operating loss carryforwards  U.S.
    
    $
    6,997,000
    
    
    $
    5,906,000Net operating loss carryforwards  Mexico
    
    
    3,180,000
    
    
    
    2,120,000Stock-based
compensation  U.S.
    
    
    3,606,000
    
    
    
    2,723,000Other  Mexico
    
    
    81,000
    
    
    
    Total deferred tax assets
    
    
    13,864,000
    
    
    
    10,749,000Less: valuation allowance
    
    
    (13,864,000
    )
    
    
    (10,749,000
    )Net deferred tax asset
    
    $
    
    
    
    $
    
   F- 27




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##### Table of Contents



NOTE 11  INCOME TAXES (continued)
  FIN 48  Accounting for Uncertainty in Income Taxes
   
 2008Unrecognized Tax Benefit, November 1, 2007
    
    $
    103,000Additions based on tax positions related to current year
    
    
    Additions for tax positions in prior years
    
    
    Reductions
for tax positions of prior years
    
    
    (103,000
    )Unrecognized Tax Benefit, October 31, 2008
    
    $
    
   
    F- 28




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##### Table of Contents



NOTE 12  SEGMENT INFORMATION
   October 31,2008
    
    
    2007Identifiable assetsMexico
    
    $
    6,098,000
    
    
    $
    6,063,000United States
    
    
    1,720,000
    
    
    
    9,170,000$
    7,818,000
    
    
    $
    15,233,000
 November 8,1993(Inception)For the year ended October 31,
    
    
    To October 31,2008
    
    
    2007
    
    
    2008Net loss for the periodMexico
    
    $
    (8,345,000
    )
    
    $
    (2,571,000
    )
    
    $
    (15,963,000
    )United States
    
    
    (3,975,000
    )
    
    
    (4,361,000
    )
    
    
    (31,104,000
    )$
    (12,320,000
    )
    
    $
    (6,932,000
    )
    
    $
    (47,067,000
    )
 NOTE 12  SUBSEQUENT EVENTS
     F- 29




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##### Table of Contents



EXHIBIT INDEX
 10.8
    
    
    Professional Services Contract to represent Minera Metalin S.A. of
C.V. in litigation by Sociedad Cooperativa de Explotación Minera
Mineros Norteños S.C.L., filed herewith.10.9(8)
    
    
    Form of Deferral Agreement
entered into between the Company and each of its officers and
directors on February 11, 2009.23.1
    
    

Consent
of Hein & Associates LLP, filed herewith.31.1
    
    
    Certification of CEO Pursuant to Exchange Act Rules 13a-14 and
15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, filed herewith.31.2
    
    
    Certification of CFO Pursuant to Exchange Act Rules 13a-14 and
15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002, filed herewith.32.1
    
    
    Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.32.2
    
    
    Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
herewith.