SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
                      FOR THE QUARTER ENDED MARCH 31, 2002

                         Commission file number: 0-30651

                               CIK No. 0001035422

                           INDUSTRIAL MINERALS, INC.
                          ---------------------------
                            (New name of registrant)


                                PNW CAPITAL, INC.
                              ---------------------
                          (Previous name of registrant)

                Delaware                              06-1474412
              -------------------------------     --------------------
              (State of other jurisdiction        (I.R.S. Employer
              of incorporation or organization)    Identification No.)



                   12925 W. Arlington Pl., Littleton, CO 80217
           ----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (303) 412-2469

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.

                         YES  X          NO
                            -----         -----

As of March 31, 2002,  there were 32,513,130  shares of $0.0001 par value common
stock outstanding


<PAGE>

<TABLE>
<CAPTION>

                                            INDUSTRIAL MINERALS, INC.
                                          (A Development Stage Company)

                                           Consolidated Balance Sheets

                                      March 31, 2002 and December 31, 2001



                                                                                        March 31,     December 31,
                                                                                            2002          2001
                           Assets                                                      (Unaudited)      (Audited)
                           ------                                                      -----------      ---------
<S>                                                                               <C>                <C>
Cash                                                                              $         3,116                21
Development costs                                                                          96,743             -
Equipment, at cost                                                                      3,500,000             -
Prepaid expenses                                                                            8,031             -
Deposits                                                                                    7,296             -
                                                                                  ---------------    --------------

                           Total assets                                           $     3,615,186                21
                                                                                        =========    ==============


                         Liabilities and Stockholders' Equity

Liabilities:
     Accounts payable:
        Non-related parties                                                                75,252            17,629
        Related parties                                                                   281,243             -
                                                                                       ----------     -------------

                           Total liabilities                                              356,495            17,629
                                                                                       ----------       -----------

Stockholders' equity:
     Preferred Stock, par value $0.01 per share; 50,000,000
         shares authorized; no shares issued and outstanding                                -                 -
     Common Stock, par value $.0001; 100,000,000 shares authorized;
         32,513,130 shares issued and outstanding for 2002 and
         1,000,863 shares issued and outstanding for 2001                                   3,250               100
     Additional paid-in capital                                                         3,309,142         1,754,535
     Deficit accumulated during the development stage                                     (53,701)       (1,772,243)
                                                                                      -----------         ---------

                           Total stockholders' equity                                   3,258,691           (17,608)
                                                                                        ---------       -----------


                           Total liabilities and stockholders' equity             $     3,615,186                21
                                                                                        =========    ==============
</TABLE>

                                      F-1


<PAGE>

<TABLE>
<CAPTION>



                                           INDUSTRIAL MINERALS, INC.
                                          (A Development Stage Company)

                                Consolidated Statements of Operations (Unaudited)

                                     Three month period ended March 31, 2002
                                    and 2001 and for the period from November
                                         6, 1996 (Date of Inception) to
                                                 March 31, 2002





                                                                              Three month
                                                                              period ended            November 6, 1996
                                                                                 March 31,             (inception) to
                                                                                 ---------
                                                                          2002            2001         March 31, 2002
                                                                          ----            ----         --------------
<S>                                                                  <C>           <C>                 <C>

Revenue                                                              $    -                -                 15,537
                                                                     -----------     ------------        ----------

Expenses
     Cost of revenues                                                     -                -                 76,201
     Professional fees                                                    31,545           -                965,074
     Royalty fees                                                          8,775           -                  8,775
     Depreciation and amortization                                        -                -                  8,292
     Impairment of long-lived assets                                      -                -                582,176
     Other general and administrative                                      4,313            2,634           195,213
                                                                    ------------     ------------        ----------

                           Total expenses                                 44,633            2,634         1,835,731
                                                                     -----------     ------------         ---------

                           Loss from operations                          (44,633)          (2,634)       (1,820,194)

Other income (expense):
     Interest income                                                      -                -                  2,724
     Other income                                                         -                   (77)              594
                                                                ----------------   --------------     -------------

                           Total other income (expense)                   -                   (77)            3,318
                                                                ----------------   --------------      ------------

                           Net loss                             $        (44,633)          (2,711)       (1,816,876)
                                                                     ===========     ============         =========

Net loss per common share                                       $        (.0015)           -
                                                                     ===========     ============

Weighted average common shares outstanding                            29,011,307       97,000,000
                                                                      ==========       ==========
</TABLE>

                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                           INDUSTRIAL MINERALS, INC.
                                          (A Development Stage Company)

                                Consolidated Statements of Cash Flows (Unaudited)

                                     Three month period ended March 31, 2002
                                    and 2001 and for the period from November
                                         6, 1996 (Date of Inception) to
                                                 March 31, 2002


                                                                              Three month
                                                                              period ended              November 6, 1996
                                                                                 March 31,              (inception) to
                                                                                ---------
                                                                       2002                    2001      March 31, 2002
                                                                       ----                    ----      --------------
<S>                                                                <C>                 <C>               <C>    <C>    <C>    <C>
Cash flows from operating activities:
     Net loss                                                      $     (44,633)           (2,711)      (1,816,876)
     Adjustments to reconcile net loss to cash
         provided (used) by development stage
         activities:
         Provision for bad debts                                           -                -                49,676
         Stock issued for services                                         -                -               414,606
         Impairment of long-lived assets                                   -                -               306,174
         Changes in:
              Accounts receivable                                          -                -                (4,169)
              Inventory                                                    -                -                (5,527)
              Prepaid expenses                                            (8,031)           -                (8,570)
              Deposits                                                    (5,346)           -                (5,346)
              Accounts payable and accrued expenses                       93,605           (9,696)          111,234
              Due to related parties                                       -                -               595,000
                                                                   -------------      -----------           -------
                           Cash flows from operating
                             activities                                   35,595          (12,407)         (363,798)
                                                                        --------           ------           -------
Cash flows from investing activities:
     Purchase of equipment                                                 -                -                (4,160)
     Investment in Multiplex                                               -                -               (75,000)
     Increase in development costs                                       (32,500)           -              (104,361)
     Acquisition of goodwill                                               -                -              (149,057)
     Loan to related party                                                 -                -               (50,000)
     Loan repayments                                                       -                -                 4,493
                                                                   -------------      -----------         ---------
                           Cash flows from investing
                             activities                                  (32,500)           -              (378,085)
                                                                       ---------      -----------           -------
Cash flows from financing activities:
     Net proceeds form sale of common stock                                -               12,500           744,859
     Cash acquired in acquisition of Peanut
         Butter & Jelly, Inc.                                              -                -                   140
                                                                   -------------      -----------        ----------

                           Cash flows from financing
                             activities                                    -               12,500           744,999
                                                                   -------------           ------           -------
</TABLE>

                                      F-3

<PAGE>
<TABLE>
<CAPTION>


                                           INDUSTRIAL MINERALS, INC.
                                          (A Development Stage Company)
                          Consolidated Statements of Cash Flows (Unaudited), Continued



                                                                              Three month
                                                                              period ended               November 6, 1996
                                                                                 March 31,              (inception) to
                                                                                 ---------
                                                                        2002                   2001      March 31, 2002
                                                                        ----                   ----      --------------
<S>                                                                  <C>              <C>              <C>
Net increase in cash and equivalents                                 $     3,095               93             3,116

Cash and equivalents:
     Beginning of period                                                      21              (17)                -
                                                                       ---------      -----------      ------------
     End of period                                                   $     3,116               76             3,116
                                                                       =========      ===========      ============

Supplemental cash flow disclosures:
     Cash paid for interest                                          $      -              -                    113
                                                                       =========      ===========      ============

     Cash paid for income taxes                                      $     -                -                 -
                                                                       =========      ===========      ============

     Non-cash investing and financing activities:
         Shares issued for debt                                      $     -                -               595,000
                                                                       =========      ===========      ============
         Shares issued for services                                  $     -                -               414,606
                                                                       =========      ===========      ============
         Shares issued for investment                                $     -                -                    30
                                                                       =========      ===========      ============

</TABLE>


                                      F-4


<PAGE>
<TABLE>
<CAPTION>


                                           INDUSTRIAL MINERALS, INC.
                                          (A Development Stage Company)
                                        Statement of Stockholders' Equity
                                                December 31, 2001




                                                                                         Deficit
                                                                                        Accumulated
                                                                        Additional      During the
                                                   Common Stock            Paid-In      Development
                                          ---------------------------
                                           # of Shares        Amount      Capital           Stage            Totals
                                           -----------        ------      -------           -----            ------
<S>                                        <C>                <C>          <C>          <C>                <C>
Inception - November 6, 1996                    -             $     -         -                -                -

Balance at December 31, 1998                  252,500              25       505,143       (750,830)         (245,662)
Issuance of stock for cash                     30,000               3       146,618             -            146,621
Issuance of stock for services                 55,000               6       274,994             -            275,000
Net loss                                        -                   -          -          (259,404)         (259,404)
                                             --------        ---------    ---------     ----------        ----------

Balance at December 31, 1999                  337,500              34       926,755     (1,010,234)          (83,445)

Issuance of stock for cash                     84,900               8       413,062             -            413,070
Issuance of stock for services                 70,000               7       349,993             -            350,000
Issuance of stock for Multiplex
     Stock                                      3,000               1            29             -                 30
Issuance of stock for acquisition             475,463              47         4,699             -              4,746
Net loss                                         -                  -          -         (694,758)          (694,758)
                                             --------        ---------     ---------     ----------        ----------

Balance at December 31, 2000                  970,863              97     1,694,538    (1,704,992)           (10,357)

Issuance of stock for
     compensation                              30,000               3        59,997             -             60,000
Net loss                                            -               -          -          (67,251)           (67,251)
                                             --------        ---------    ---------     ----------          ----------

Balance at December 31, 2001                1,000,863             100     1,754,535    (1,772,243)           (17,608)

Issuance of stock in connection
     with acquisition of Industrial
     Minerals Incorporated                 31,512,267           3,150     1,554,607     1,763,175          3,320,932
Net loss                                        -                   -             -       (44,633)           (44,633)
                                             --------        ---------    ---------     ----------        ----------

Balance at March 31, 2002                  32,513,130       $   3,250     3,309,142       (53,701)         3,258,691
                                           ==========        =========    =========     ==========        ==========

</TABLE>


                                      F-5

<PAGE>

                            INDUSTRIAL MINERALS, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                 March 31, 2002
                                   (Unaudited)




1.       Presentation of Interim Information

     In  the  opinion  of  the  management  of  Industrial  Mineral,  Inc.,  the
accompanying  unaudited  financial  statements  include  all normal  adjustments
considered  necessary to present  fairly the financial  position as of March 31,
2002,  and the results of  operations  and cash flows for the three months ended
March 31, 2002 and 2001.  Interim  results  are not  necessarily  indicative  of
results for a full year.

     The  financial  statements  and notes are  presented  as  permitted by Form
10-QSB, and do not contain certain information included in the Company's audited
financial statements and notes for the fiscal year ended December 31, 2001.




                                      F-6


<PAGE>


ITEM 2.

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 AND 2001:

The  Company  had no revenues  during the three  months  ended March 31, 2002 or
2001, as it was essentially dormant while seeking additional capital.

The Company had no revenues in the quarter in 2002 or 2001. In the quarter,  the
Company incurred $2,634 in expenses in 2001 compared to ($44,633) in 2002.

The net  loss  from  operations  decreased  to  ($2,711)  in 2001,  compared  to
($44,633) in 2002,  primarily as a result of low business operations due to lack
of  operating  capital.  There was no  provision  or credit for income  taxes in
either period.  During the quarter ended March 31, 2002, the Company's operating
expenses  consisted  primarily  of  professional  fees  incurred  to  facilitate
required filings with SEC. The loss per share was nominal in the quarter in 2001
and 2002.

The Company expects  continued losses as it remains in the development stage and
while it completes development of its business plans.


LIQUIDITY AND CAPITAL RESOURCES

The  Company's  had virtually no cash at March 31, 2002, as was also the case at
December 31, 2001.

The Company is currently seeking additional sources of capital,  but there is no
assurance such efforts will be successful.


<PAGE>


                                     PART II

                                OTHER INFORMATION


Item 1.           Legal Proceedings - None.

Item 2.           Changes in securities - None.

Item 3.           Defaults upon senior securities - None.

Item 4.           Submission of matters to a vote of security holders - None.

Item 5.           Other information - None.

Item 6.           Exhibits and reports on Form 8-K

                         (a) Reports on Form 8-K filed  during the three  months
                    ended March 31, 2002. (incorporated by reference)

                                8-K - 3/14/02
                                8-K - 3/6/02
                                8-K/A - 3/6/02
                                8-K - 2/27/02
                                8-K - 2/22/02
                                8-K - 2/13/02


<PAGE>

                                   Signatures

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf of the
undersigned thereunto duly authorized.

Dated: May 20, 2002

                                       INDUSTRIAL MINERALS, INC.



                                       By: /s/ John Melnyk
                                           -------------------------------------
                                           John Melnyk, CFO, Secretary/Treasurer