UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

                For the quarterly period ended March 31, 2009

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

          For the transition period from ____________ to ______________

                        Commission File Number 000-30651

                            INDUSTRIAL MINERALS, INC.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


         Delaware                                       11-3763974
 --------------------------                    --------------------------------
(State or other jurisdiction                  (IRS Employer of incorporation or
       organization)                                Identification No.)


              346 Waverley Street, Ottawa, Ontario, Canada K2P 0W5
                    ----------------------------------------
                    (Address of principal executive offices)


                                 (613) 288-4288
                           ---------------------------
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                                 Yes [X] No [_]


Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer |_|            Accelerated Filer |_|
Non-accelerated Filer   |_|            Smaller reporting company |X|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes [_] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [_]No [_]


State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: May 8, 2009: 160,748,416 shares




<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1 - FINANCIAL STATEMENTS

For financial information, please see the financial statements and the notes
thereto, attached hereto and incorporated by this reference.

The financial statements have been adjusted with all adjustments which, in the
opinion of management, are necessary in order to make the financial statements
not misleading.

The financial statements have been prepared by Industrial Minerals, Inc. without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnotes disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted as allowed by such rules and
regulations, and management believes that the disclosures are adequate to make
the information presented not misleading. These financial statements include all
the adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position and results of operations. All such
adjustments are of a normal and recurring nature. These financial statements
should be read in conjunction with the audited financial statements at December
31, 2008, included in the Company's Form 10-K.

<PAGE>

                            INDUSTRIAL MINERALS, INC.
                                 And Subsidiary
                         (An Exploration Stage Company)
                           CONSOLIDATED BALANCE SHEET
                      March 31, 2008 and December 31, 2008




                                                     March  31      December 31
                                                        2009           2008
                                                     -----------    -----------
CURRENT ASSETS
   Cash                                              $     3,856    $       307
   Receivables                                             1,426         15,420
   Deposits                                               11,969         12,026
                                                     -----------    -----------
      Total Current Assets                                17,251         27,753

LONG-TERM DEPOSITS                                       230,000        230,000

FIXED ASSETS
   Building and Equipment                              2,388,876      2,388,876
   Less accumulated depreciation                      (1,133,568)    (1,097,209)
                                                     -----------    -----------
                                                       1,255,308      1,291,667
                                                     -----------    -----------

                                                     $ 1,502,559    $ 1,549,420
                                                     ===========    ===========
CURRENT LIABILITIES
   Accounts payable                                  $   268,398    $   270,150
   Accrued interest payable                               72,358         65,317
   Loans payable - current                               413,192        416,274
   Due to related party                                   50,181         28,472
   Customer Deposit                                       82,576         53,105
                                                     -----------    -----------
      Total Current Liabilities                          886,705        833,319

OTHER LIABILITIES
   Asset retirement obligations                          230,000        230,000
   Loans payable                                         326,234        334,714
                                                     -----------    -----------
                                                       1,442,938      1,398,033
                                                     -----------    -----------

STOCKHOLDERS' EQUITY
   Common stock, 200,000,000 shares authorized,
      $0.0001 par value; 160,748,416 and 160,748,416
      shares issued and outstanding, respectively         16,072         16,072
   Additional paid-in capital                         10,017,019,     9,972,214
   Accumulated other comprehensive income               (105,985)      (105,985)
   Deficit accumulated during exploration stage       (9,867,486)    (9,730,913)
                                                     -----------    -----------

   TOTAL STOCKHOLDERS' EQUITY                             59,621        151,388
                                                     -----------    -----------

                                                     $ 1,502,559    $ 1,549,420
                                                     ===========    ===========

            SEE ACCOMPANYING NOTES TO UNAUDITED FINANCIAL STATEMENTS
                                       2


<PAGE>
<TABLE>
<CAPTION>
                            INDUSTRIAL MINERALS, INC.
                                 AND SUBSIDIARY
                         (An Exploration Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                                                                                            Period from
                                                                                            Nov 6, 1996
                                                         3 Months Ended   3 Months Ended    (Inception)
                                                            March 31,         March 31,     to March 31,
                                                              2009              2008           2009
                                                          -------------    -------------    -------------
REVENUE
<S>                                                       <C>              <C>              <C>
    Income earned during exploration stage                $          --    $          --    $      19,337
                                                          -------------    -------------    -------------
EXPENSES
    Cost of revenues                                                 --               --           86,901
    Professional fees                                            19,550           86,892        1,675,002
    Royalty fees                                                 10,719           13,139          158,156
    Depreciation and amortization                                36,359           50,461        1,215,840
    Impairment of long-lived assets                                  --               --          582,176
    Loss on disposal of assets                                       --               --           11,920
    Management fees and salaries                                 74,797          299,435        3,444,832
    General exploration expense                                     166           40,806          468,330
    Other general and administrative                             15,650           80,927        5,016,057
                                                          -------------    -------------    -------------

      TOTAL EXPENSES                                            157,241          571,660       12,659,214
                                                          -------------    -------------    -------------

LOSS FROM OPERATIONS                                           (157,241)        (571,660)     (12,639,877)
                                                          -------------    -------------    -------------

OTHER INCOME (EXPENSE)
    Interest income                                                  --               --            3,172
    Gain from extinguishment of debt                                 --               --        1,047,634
    Foreign currency gain (loss)                                 20,669           47,313          (36,926)
    Other income                                                     --              594
                                                          -------------    -------------    -------------

      TOTAL OTHER INCOME                                         20,669           47,313        1,014,474
                                                          -------------    -------------    -------------

LOSS FROM OPERATIONS                                           (136,572)        (524,347)     (11,625,403)
                                                          -------------    -------------    -------------

INCOME TAXES                                                         --

NET LOSS                                                  $    (136,572)        (524,347)     (11,625,403)
                                                          =============    =============    =============

    NET LOSS PER SHARE, BASIC AND DILUTED                 $       (0.00)           (0.00)
                                                          =============    =============

WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED:     160,748,416      138,145,668
                                                          =============    =============
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       3
<PAGE>
<TABLE>
<CAPTION>

                            INDUSTRIAL MINERALS, INC.
                         (An Exploration Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                                         Period from
                                                                                      November 6, 1996
                                                                                        (Inception of
                                                               Three Months Ended     Exploration Stage)
                                                                   March 31                   To
                                                             2009            2008       March 31, 2009
                                                         ------------    ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                      <C>             <C>             <C>
   Net loss                                              $   (136,572)   $   (524,347)   $(11,564,466)
   Adjustments to reconcile net loss
     to net cash used by operating activities:
       Depreciation                                            36,359          50,461       1,207,548
       Provision for bad debts                                     --              --          49,676
       Stock issued for services                               44,805          94,403       2,172,008
       Impairment of long-lived assets                             --              --         297,882
       Loss on disposal of assets                                  --              --          66,170
       Gain on extinguishment of debt                              --              --      (1,047,634)
       Changes in:
         Receivables                                           13,994          11,452          (5,595)
         Inventory                                                 --              --          (5,527)
         Prepaid expenses                                          --              --            (540)
         Deposits                                                  57              97         (11,969)
         Accounts payable and accrued expenses                 (1,752)        199,794          87,371
         Accrued interest payable                               7,041           3,783         340,639
         Due to related parties                                21,709              --         686,135
                                                         ------------    ------------    ------------
   Net cash used in operating activities                      (14,359)       (164,357)     (7,728,302)
                                                         ------------    ------------    ------------
   Cash flows from investing activities:
     Purchase of building and equipment                            --              --      (2,116,266)
     Advance received for sale of Equipment                    29,471              --          82,576
     Investment inMultiplex                                        --              --         (75,000)
     Acquisition of goodwill                                       --              --        (149,057)
     Loan to related party                                         --              --         (50,000)
     Long-term deposits                                            --              --        (159,600)
                                                         ------------    ------------    ------------
   Net cash used in investing activites                        29,471              --      (2,467,347)
                                                         ------------    ------------    ------------

   CASH FLOWS FROM FINANCING ACTIVITIES:

     Net proceeds from sale of common stock                        --         185,200       4,747,267
     Net proceeds from loans payable                               --              --       7,272,185
     Loan repayments                                               --          (5,839)     (1,786,020)
     Proceeds from mortgage                                        --              --          17,000
     Principal payments on mortgage                                --              --         (17,000)
     Stock issued in settlement of debt                            --              --              --
     Cash acquired in acquisition of Peanut Butter &
     Jelly, Inc.                                                   --              --             140
                                                         ------------    ------------    ------------
   Net cash provided by financing activities                       --         179,361      10,233,572
                                                         ------------    ------------    ------------
   Effect of Exchange Rate on Changes in Cash                 (11,562)        (47,313)        (29,066)

NET INCREASE (DECREASE) IN CASH                                 3,549         (32,310)          3,549


Cash, beginning of period                                         307         104,236             307
                                                         ------------    ------------    ------------

Cash, end of period                                      $      3,856    $     71,927    $      3,856
                                                         ============    ============    ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

   Interest paid                                         $         --    $         --    $         --
                                                         ============    ============    ============
   Income taxes paid                                     $         --    $         --    $         --
                                                         ============    ============    ============

   Non-cash investing and financing activities:
     Shares issued for related party debt                          --              --          61,200
     Shares issued for debt                                        --              --      11,437,279
                                                         ============    ============    ============

     Shares issued for services                                    --              --         642,617
                                                         ============    ============    ============

     Shares issued for investment                                  --              --         200,030
                                                         ============    ============    ============

     Shares issued for accrued interest                            --              --         651,702
                                                         ============    ============    ============
     Long term deposits financed by accounts payable               --              --          70,400
                                                         ============    ============    ============

   Property costs financed by issuance of common stock             --              --          30,000
                                                         ============    ============    ============
   Equipment financed by:
     Accounts payable                                              --              --         200,000
     Issuance of common stock                                      --              --              --
                                                         ------------    ------------    ------------

                                                                   --              --         205,000
                                                         ============    ============    ============

</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       4
<PAGE>
                            INDUSTRIAL MINERALS, INC.
                                 AND SUBSIDIARY
                         (An Exploration Stage Company)
          Notes to Consolidated Financial Statements Three month period
                          ended March 31, 2009 and 2008

NOTE 1 - BASIS OF PRESENTATION

The financial statements have been prepared in accordance with generally
accepted accounting principles for the interim financial information with the
instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of the Company's management, all adjustments (consisting of only normal
accruals) considered necessary for a fair presentation have been included.

We translate all assets and liabilities using period-end exchange rates. We
translate statements of operations items using average exchange rates for the
period. We record the resulting translation adjustment within accumulated other
comprehensive loss, a separate component of stockholders' equity. We recognize
foreign currency transaction gains and losses in our consolidated statements of
operations, including unrealized gains and losses on short-term inter-company
obligations using period-end exchange rates. We recognize unrealized gains and
losses on long-term inter-company obligations within accumulate other
comprehensive loss, a separate component of stockholders' equity.

We recognize exchange gains and losses primarily as a result of fluctuations in
currency rates between the U.S. dollar (the functional reporting currency) and
the Canadian dollar (currencies of our subsidiaries), as well as their effect on
the dollar denominated inter-company obligations between us and our foreign
subsidiaries. All inter-company balances are revolving in nature and we do not
deem them to be long-term balances. For the three months ended March 31, 2009
and 2008, we recognized foreign currency gain of $20,669 and $47,313,
respectively.

For further information, refer to the financial statements and notes thereto
included in the Company's Annual Report on Form 10K for the year ended December
31, 2008.

The Company's fiscal year-end is December 31.

NOTE 2 - ACCOUNTING POLICIES

This summary of significant accounting policies of Industrial Minerals, Inc. is
presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management,
which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the
financial statements.


                                       5
<PAGE>
Recently Issued Accounting Standards
------------------------------------
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS) NO.157, "Fair Value
Measurements". SFAS 157 defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.

SFAS 157 is effective as of the beginning of the first fiscal year that begins
after November 15, 2007. As such, the Company was required to adopt these
provisions at the beginning of the fiscal year ended December 31, 2008. Adoption
of SFAS 157 did not have a material effect on the Company's financial
statements.

In February 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities, including an amendment of
FASB Statement NO. 115. SFAS 159 permits entities to choose to measure many
financial instruments and certain other items at fair value at specified
election dates. This Statement applies to all entities, including not-for-profit
organizations. SFAS 159 is effective as of the beginning of an entity's first
fiscal year that begins after November 14, 2007. As such, the Company was
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2008. Adoption of SFAS 159 did not have a material effect on the
Company's financial statements.

Basic and Diluted Loss Per Share
--------------------------------
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time that they were outstanding. Basic and diluted loss
per share are the same, as inclusion of common stock equivalents would be
anti-dilutive.

Going Concern
-------------
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has suffered material
recurring losses from operations since inception. At March 31, 2009, the Company
had a negative working capital of $ 869,453, recurring losses, and an
accumulated deficit of $ 9,867,486 and negative cash flow from operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern.

Continuation of the Company is dependent on achieving sufficiently profitable
operations and possibly obtaining additional financing. Management has and is
continuing to raise additional capital from various sources. The Company's
website contains all news releases in the past year as well as detailed
descriptions and analysis of the Company's mineral property. There can be no
assurance that the Company will be successful in raising additional capital as
and when it is required.

The financial statements do not include any adjustment relating to the
recoverability and classification of assets and liabilities that might be
necessary should the Company be unable to continue as a going concern.

                                       6
<PAGE>
NOTE 3 - ORGANIZATION

The Company was incorporated on November 6, 1996, as Winchester Mining
Corporation in the State of Delaware. On May 13, 2000, in connection with its
merger with Hi-Plains Energy Corp. the Company changed its name from Winchester
Mining Corporation to PNW Capital, Inc. On January 31, 2002, the Company
acquired 91% of the outstanding shares of Industrial Minerals, Inc. On May 2,
2002, the Company merged the remaining 9% of Industrial Minerals, Inc. into PNW
Capital, Inc. and changed its name to Industrial Minerals, Inc.

NOTE 4 - PRESENTATION OF INTERIM INFORMATION

The accompanying interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and, in the opinion of management, include all normal adjustments considered
necessary to present fairly the financial position as of March 31, 2009 and the
results of operations and cash flows for the three month period ended March 31,
2009 and 2008. Interim results are not necessarily indicative for results for a
full year.

The financial statements and notes are presented as permitted by Form 10-Q, and
do not include information included in the Company's audited financial
statements and notes for the year ended December 31, 2007.

NOTE 5 - COMMON STOCK OPTIONS AND WARRANTS

The Company adopted SFAS 123, "Accounting for Stock-Based Compensation",
effective April 1, 2007. Compensation cost for the Company's stock option plans
had been determined in accordance with the fair value based method prescribed is
SFAS 123. The fair value of option grants is estimated on the date of grant
utilizing the Black-Scholes option pricing model.

                                       7
<PAGE>
The fair value of each option grant is estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for option granted during the nine months ended September 30,
2008: expected volatility of 88%; risk-free interest rate ranging from 4.93% to
5.18%; and an expected term of up to 6 years.


The following table summarizes stock option activity for the three months ended
March 31, 2009:
<TABLE>
<CAPTION>


                               Number of securities to be    Weighted-average     Weighted
Equity compensation plans                issued               exercise price       Average
 not approved by security           upon exercise of          of outstanding        Fair
         holders                   outstanding options           options            Value
---------------------------    ----------------------------  -----------------    --------
<S>                             <C>                                  <C>           <C>
Outstanding Dec 31, 2008                7,799,999              $  0.106           $0.09
Granted                                         0
Exercised                                       0              $  0.00            $0.00
Cancelled or expired
                               ----------------------------     --------
Total                                    7,799,999
                               ============================
Exercisable at March 31, 2009            6,799,999

The difference of 1,000,000 has not yet vested.
</TABLE>


                                       8
<PAGE>
Using the Black-Scholes option pricing model, the Company had stock compensation
expense for the three months ending March 31, 2009 of $44,805. There remains a
balance of $179,081 to be expensed over the vesting period of the options.

Note 6 - ASSET RETIREMENT OBLIGATION

SFAS No. 143 "Accounting for Asset Retirement Obligations" (ARO) addresses
financial accounting and reporting obligations associated with the retirement of
tangible long-lived assets and the associated asset retirement costs. SFAS No
143 requires that the fair value of a liability for an ARO be recognized in the
period in which it is incurred and the corresponding cost capitalized by
increasing the carrying amount of the long-lived asset.

In March 2005, the FASB issued interpretation 47, "Accounting for Conditional
Assets Retirement Obligations (FIN 47). This interpretation clarifies the term
conditional asset retirement obligation as used in SFAS No 143. Conditional
asset retirement obligation refers to a legal obligation to perform as asset
retirement activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the control of the
entity. Accordingly, an entity is required to recognize a liability for the fair
value of a conditional asset retirement obligation if the fair value of the
liability can be reasonably estimated. In conjunction with FIN 47, an ARO
liability of $230,000 has been recorded and the capitalized costs are included
in "Property and Equipment".


NOTE 7 - COMMITMENTS AND CONTINGENCIES

Operating Lease
---------------

The Company relocated its head office to 346 Waverley Street, Ottawa Ontario,
Canada, K2P 0W5 effective September 30, 2008. There is no lease arrangement at
the present time and the premises are occupied on a month to month basis.


                                       9
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview
--------

     Industrial Minerals, Inc. ("the Company"), a Delaware Corporation, was
incorporated on November 6, 1996 under the name Winchester Mining Corp. The name
of the Company was subsequently changed to PNW Capital, Inc. on May 16, 2000.

     The Company is a successor registrant pursuant to Section 12(g)3 of the
Securities Exchange Act of 1934, by virtue of a statutory merger of the Parent,
Winchester Mining Corp., a Delaware corporation, and its wholly owned
subsidiary, Hi-Plains Energy Corp., a Wyoming corporation, with Winchester
Mining Corporation being the survivor. There was no change to the issued and
outstanding shares of Winchester Mining Corporation, and all shares of Hi-Plains
Energy Corp. were retired by virtue of the merger.

     On May 15, 2000, Winchester Mining Corp. completed a Share Purchase
Agreement with shareholders of Hi-Plains Energy Corp. in which Winchester Mining
Corp., a Delaware Corporation, acquired all 780,000 shares outstanding of the
Registrant for the purposes of accomplishing a Merger of Hi-Plains Energy Corp.
and Winchester Mining Corp. The Merger was completed on May 15, 2000.

     In fall of 2000 the Company acquired 100% of the issued and outstanding
stock of PB&J Inc., a newly formed Colorado Corporation upon issuance of
47,460,000 shares of common stock to the principals of PB&J, who became the
management and Directors of PNWC.

     On December 14, 2001, the shareholders adopted a reverse split of the then
issued and outstanding shares on a 100 for one basis, except that no shareholder
shall be reduced to less than 50 shares. The effective date of the reverse split
was January 7, 2002.

                                       10
<PAGE>
     On January 31, 2002, PNW Capital, Inc. ("PNW" or the "Company"), entered
into a definitive acquisition agreement to acquire Industrial Minerals
Incorporated ("IMI"), a private Nevada Corporation, owner of certain mineral
leases located in the Townships of Head, Clara and Maria in the County of
Renfrew and the Province of Ontario, Canada. The Agreement for Share Exchange
was executed January 31, 2002 and approved by the Board of Directors on January
31, 2002. Under the terms of the acquisition agreement, PNW exchanged a total of
31,511,700 shares of its common stock for 91% of the issued and outstanding
shares of IMI. As a result of the transaction, IMI became a wholly owned
subsidiary of PNW and changed its company name to Industrial Minerals, Inc.

     On June 13, 2003, the directors approved a resolution to forward split the
common shares of the Company on a two shares for one basis, and a majority of
the shareholders consented in writing to the forward split. This resulted in the
issuance of an additional 36,031,948 shares of common stock.

     The Ministry of Environment of the Province of Ontario has requested a
storm water management plan from the Company. The Company has retained Knight
Piesold to author this plan and that this plan will be submitted to the Ministry
of Environment when completed.

     In August 2004, the Company through its wholly owned subsidiary, Industrial
Minerals Canada, Inc. received notice from the Ministry of Northern Development
and Mines for the Province of Ontario that the Bissett Creek Graphite Project
Certified Closure Plan as per Subsection 141(3)(a) of the Mining Act for the
Province of Ontario is now considered filed.

     In March, 2007, a significant management change occurred when three of the
existing board members resigned and two new directors were appointed. Mr.
William Thomson was appointed a director and Chairman of the Board, and Mr.
William Booth was appointed a director. They joined Mr. Robert Dinning C.A. who
continued as CFO, secretary, and a director of the Company.

     On April 3, 2007, Mr. Dick van Wyck was appointed interim President and
CEO. Mr. van Wyck is a practicing lawyer with over 20 years of business and
commercial law, mergers and acquisitions, and intellectual property matters, and
was formerly in-house counsel with the Department of Justice, as well as with
two large Corporations. Mr. van Wyck resigned July 9, 2007 and provides legal
opinions from time to time when requested.

     On July 9, 2007, Mr. David Wodar was appointed President and CEO. Mr. Wodar
is a private business consultant and an Economics graduate from University of
Western Ontario. Mr. Wodar operated his own Consulting business, Vantage Point
Capital for the past 11 years, specializing in Marketing and Communications for
private and public entities. Mr. Wodar resigned his position with the Company on
June 12, 2008.

     In June 2007, Mr. Paul Hynek was appointed to the Advisory Board. Mr.Hynek
has an extensive background in large scale mining projects and was formerly with
Inco. Mr. Hynek was joined on the advisory board by David Michaud, as Senior
Metallurgical Advisor.

     Mr. Michaud, who holds a degree in Mining Engineering, has more than 15
years of experience in mine and mill design, including operations in Canada and
South America. Mr. Michaud resigned from the advisory board on February 18,2008.


                                       11
<PAGE>
     The former Chairman and Director, Mr. William Thomson resigned as Chairman
and a Director of the Company, effective June 20, 2008.

     On June 23, 2008, Mr. Chris Crupi C.A. and Mr. Gregory Bowes, MBA joined
the Board of Directors. Mr. Robert Dinning C.A. continued as a director and was
reappointed CFO of the Company and also appointed President and CEO effective
June 23, 2008.

     On July 9, 2008, Mr. William Booth resigned as a director of the Company.


<PAGE>
     The Company signed a contract with Geostat International Inc on May 22,
2007 regarding the preparation of a technical report NI-43101 on the Bissett
Creek Project. The Geostat work program included a site visit and independent
certification of resources, estimation of resources and classification of
resources, certification and validation of the database, verification and
validation of the interpretation of ore zones, and an assessment of the mill and
processing procedures, the market, the Capex, and related operating costs. The
process included the drilling of an additional 6 holes for just under 300 meters
in order to assist in verification of previously obtained data. The specific
drill targets have been determined by Geostat following their review of the
original drill target data prepared by Kilborn Engineering. These samples have
been analyzed for verification and validation of the graphite ore zones. The
report was finalized and on December 27, 2007.

     As previously outlined, the Company has a 100% undivided interest in the
mineral lease. The property consists of 28 claims covering 1,400 acres (566
hectares) plus 900 acres (364 hectares) which are contiguous to its mine
property. In July, 2007, the Company completed the staking of an additional 950
acres (384 hectares), for a total area available for development of
approximately 3,250 acres (1,315 hectares). The Bissett Creek mine site is
located in Maria Township, about 180 miles (300 km) north-northeast of Toronto
Ontario and about 8 miles (14 km) south of Highway 17 in Northern Ontario
Canada.

     , The Company has continued
work at the mine site, including various meetings with Knight-Piesold
(environmental consulting firm) to review and update environmental monitoring
requirements under the Mine Closure Plan (MCP), initial meetings with the area
First Nations communities (Algonquin)including an inter-ministerial meeting to
work towards a Memorandum of understanding between the Company, Government
agencies, and First Nations leaders, general site cleaning, building repairs.

     The Company is delaying its plans to install a one (1) metric ton per hour
pilot plant at the mine site while it explores different options available,
including financial options, regarding the production of product samples for
prospective customers.

     The Company has also completed a comprehensive program of metallurgical
testing to identify the key liberation and classification characteristics of the
ore body. This review included a general review of existing dry process at
Bissett Creek and existing processes used elsewhere for the liberation and
extraction of graphite. The dry process has many shortcomings which would
require a complete re-engineering and rebuild at great risk to stakeholders
whereas the froth flotation system is used extensively elsewhere in the world
and is proven. The Company selected Process Research Ortech (Mississauga
Ontario) and Actlabs (of Ancaster Ontario) as its processing and assaying
entities. Both were approved by Geostat and they provided the necessary data for
the completion of the NI 43101 that was been prepared by Geostat. The positive
preliminary assessment was completed and filed with Sedar on December 27, 2007.

                                       12
<PAGE>
     Effective August 1, 2007, the Company moved into new corporate
headquarters, located at 2904 South Sheridan Way, Suite 100, Oakville Ontario,
Canada, L6J 7L7. It previously occupied premises in Toronto, Ontario, on a
month-to-month basis. On September 22, 2008, the Company moved its headquarters
to 346 Waverley Street, Ottawa Ontario, Canada, K2P 0W5.

     On October 27, 2008, the Company engaged RBC Capital Markets, a division of
the Royal Bank of Canada, as financial advisor with respect to strategic options
facing the company. The engagement is for a term of 12 months with success fee
based compensation for completion of a transaction.

The Company continues to explore alternate financing options which the Company
acknowledges must be finalized prior to implementation of a pilot plant program.
The Company is also exploring a work program at the site including a possible
drilling program, should it succeed in resolving its funding requirements.


RESULTS OF OPERATIONS


For the three month period ending March 31, 2009, the Company incurred a loss of
$ $136,572 compared to a loss of $524,347 for the three months ending March 31,
2008. The Company had no revenues for the three months ending March 31, 2009.
The Company continues as an Exploration Stage Company and will not have revenues
until a proposed feasibility study is completed, a determination is made as to
the method of production, and the Company acquires the necessary equipment to
commence production.

During the three month period ending March 31, 2009, the Company did not
complete any private placements. The Company did receive an additional deposit
of $29,471 regarding the sale of surplus Equipment at the mine site. This
transaction should be completed by June 30, 2009.

For the three months ending March 31, 2009, expenses amounted to $157,241
compared to $571,660 for the Three months ending March 31, 2008. Professional
fees were $19,550 compared to $86,892 for the three months ended March 31, 2008
Professional expenses in the previous year were higher
 mainly because of increased legal fees related to proposed financings, and
statutory filings related to financings.

Management fees and salaries were $74,797 for the three months ended March
31, 2009 compared to $299,435 for the three months ending March 31, 3008.
Current fees include a charge of $44,805 for stock compensation expense re
options previously authorized. In the three months ending March 31, 2008,
management fees of $299,435 included stock compensation expense of $94,403. As
at March 31, 2009, there is a balance of $179,081 in stock compensation expense
remaining to be written off.

Management fees have significantly been reducted as a result of a reduction in
personnel as compared to the previous year. General exploration expenses in the
three months ending March 31, 2009 were only $166 vs. $40,806 for the three
month period ending March 31, 2008

There was significant work undertaken the previous year at the site whereas no
work has been undertaken this year as the Company continues to explore its
financing options for further development work at Bissett Creek. General and
administrative expenses for the three months ending March 31, 2009 amount to
$15,650 compared to $80,927 in the three months ended March 31, 2008. Expenses
for general and administrative will continue to be tightly monitored pending
completion of additional financing and implementation of the next phase of the
development program.

At March 31, 2009, the Company had outstanding options in the amount of
 7,799,999 shares of which 6,799,999 were exercisable at March 31, 2009. The
remaining 1,000,000 are not vested yet as of March 31, 2009.

                                       13
<PAGE>
The original option plan adopted in 2007 and the Company issued 22,950,000 in
options. Subsequent resignations and terminations resulted in cancellation of
15,150,001 options for a present balance outstanding of 7,799,999. When an
employee/consultant/director resigns or is terminated, only shares vested at
time of departure remain with the individual as an option and these all have a
time period when they must be exercised.

On September 23, 2008, the Company moved its headquarters to 346 Waverley St.
Ottawa Ontario, Canada K2P 0W5.

The Company currently has no full time employees and it contracts with four
consultants for engineering, technical and administrative support and financial
services.

The Company will continue the use of outside professional consultants as it
continues its mineralogical assessment and its development of a detailed
mineralogy study.

On November 7, 2008, the Company announced the appointment of Mr. George Hawley
as Technical Advisor to the Board of Directors and to assist both the Board of
Directors and RBC Dominion Capital Markets regarding their current financial
advisory services mandate. Mr. Hawley has nearly 40 years of experience in the
processing of industrial minerals including mica, graphite, and silica, all of
which are specific to the Bissett Creek property. He has conducted projects for
government agencies, mining companies in the USA, Europe, Japan, Australia,
Africa and Canada and has published over 50 papers on technical and marketing
topics pertaining to industrial minerals products. As it is uncertain when
revenue will be generated, expenses will need to be financed by continued
outside financial support. The Company has completed several private placements
this year as indicated earlier and intends to seek additional equity financing
and/or loans from shareholders and other interested parties in order to finance
its operations. While the Company feels it can obtain the necessary financing
there is no assurance that such investments, loans, or other financial
assistance will be forthcoming.

For the three months ended March 31, 2009, the Company incurred a loss of
136,572 vs. a loss of $524,347 for the three months ended March 31, 2008. ,
 While the Company has been successful in arranging necessary private placement
financing over the years, the Company cautions that until it has completed its
feasibility study and Baseline Mineralogical Assessment, there is no assurance
that a commercially viable mineral deposit exists on the property, and that
further exploration may be required before a final evaluation as to any economic
and legal feasibility is determined. The Company received its NI 43101 report
December 27, 2007 and it was filed with regulatory authorities at that time.

                                       14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2009, the Company had cash on hand in the amount of $3,856 compared
to $307 at December 31, 2008. The Company completed several private placements
in the year ending December 31, 2009 resulting in
$475,200 being raised. In the three months ending March 31, 2009, the Company
has not completed any private placements but did receive an additional deposit
of $26,202 regarding the proposed sale of surplus equipment.



The Company has a long-term deposit of $230,000 with the Ministry of Finance for
the Province of Ontario. During the year ending December 31, 2004 a Mine
Development and Closure Plan was filed with, and accepted by, the Ministry of
Northern Development and Mines, in accordance with the MINING ACT, R.S.O. 1990,
Ontario Regulation 240/00, including the standards, procedures and requirements
of the Mining Code of Ontario. The Company's deposit in the amount of $230,000
is a financial guarantee to the Province of Ontario ensuring that there are
enough funds on hand to affect a proper closure of the Bissett Creek Graphite
property.

The Company has accounts payable of $268,398 at March 31, 2009 vs. $288,629 at
March 31, 2008 and $270,150 at December 31, 2008. Accrued interest payable of
$72,358 is outstanding at March 31, 2009 . This pertains to accruals on loans
payable of $413,192 currently due. Negotiations are continuing regarding
settlement of this debt.


The Company has current loans payable of $413,192 at March 31, 2009.
This includes a loan for $90,795 with interest at 7%, loan of $161,000 with
interest at 10%, a loan of $87,340 with interest at 10% and loans totaling
$74,056 with no interest and no specific terms of repayment. Discussions are
proceeding regarding ultimate settlement of these debts of $74,056 as they are
with former officers/directors of the Company who continue to assist the Company
in its efforts to obtain additional financing.


Loans due beyond one year in the amount of $326,234 are unsecured, with no
specific terms of repayment.

The Company intends to obtain additional financing either by way of private
placements, loans, or a combination of both from shareholders and other
interested parties to retire outstanding debt, and finance its operations over
the next twelve months. While the Company intends to procure these private
placements and/or loans, there is no assurance that the Company will be
successful in its attempt to obtain said funding.

It is the Company's opinion that the intrinsic value of the Bissett Creek
property deposit lies in the large 1 to 6 mm (18 mesh to 1/4") Graphite and Mica
flakes. There is not presently any data available as to the specific
size-by-size weight distribution of graphite and mica in the ore. Graphite flake
values vary widely based on its size, but due to the fundamental lack of size
and chemical data, it is not possible at this stage to assign a clear specific
value to the rock.

                                       15
<PAGE>
Going Concern Consideration
---------------------------

As the independent certified public accountants have indicated in their report
on the financial statements for the year ended December 31, 2007, and as shown
in the financial statements, the Company has experienced significant operating
losses that have resulted in an accumulated deficit of $9,473,396 at September
30, 2008. These conditions raise doubt about the Company's ability to continue
as a going concern.

The ability of the Company to achieve its operating goals and thus positive cash
flows from operations is dependent upon the future market price of graphite,
future capital raising efforts, and the ability to achieve future operating
efficiencies. Management's plans will require additional financing, and
completion of final feasibility report. While the Company has been successful in
these capital-raising endeavors in the past, there can be no assurance that its
future efforts, and anticipated operating improvements will be successful.
Depending on the level of exploration activity, the Company does not have
adequate capital to continue its contemplated business plan through December 31,
2009, The Company is presently investigating all of the alternatives identified
above to meet its short-term liquidity needs. The Company believes that it can
arrange a transaction or transactions to meet its short-term liquidity needs,
however there can be no assurance that any such transactions will be concluded
or that if concluded they will be on terms favorable to the Company.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item

Item 4.  CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer / Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

On or about September 30, 2008, the end of the period of this report, the
Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's President /
Chief Financial Officer, and a Board Member, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures. Based on the
foregoing, the Company's President and Chief Financial Officer concluded that
the Company's disclosure controls and procedures were effective.

There have been no changes in the Company's internal controls or in other
factors that could affect the internal controls subsequent to the date the
Company completed its evaluation.

                                       16
<PAGE>
PART II.  - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The Company had been named in a lawsuit filed by an individual pertaining to a
dispute with an alleged shareholder of the Company.


<PAGE>
Mr. David Wodar, former President of the Company has filed a Statement of Claim
in the Province of Ontario, Canada, claiming severance and termination benefits
in the amount of $220,000. The parties are in discussions to resolve this
matter.

A Statement of Claim has been filed by Westwynd Retail Consultants in regard to
repayment of a note payable outstanding in the amount of $89,870. Judgment has
been granted in this matter.

A Statement of Claim has been filed by McEwen Petroleum in the amount of $10,000
re account balance outstanding. The Company is n discussions regarding
settlement of this matter.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

EXHIBIT NO.         DESCRIPTION
-----------         -----------

   31.1             CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION
                    302 OF THE SARBANES-OXLEY ACT
   31.2             CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION
                    302 OF THE SARBANES-OXLEY ACT
   32.1             CERTIFICATION OF DISCLOSURE BY CHIEF EXECUTIVE PURSUANT TO
                    18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
                    OF THE SARBANES-OXLEY ACT OF 2002
   32.2             CERTIFICATION OF DISCLOSURE BY CHIEF FINANCIAL OFFICER
                    PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                    SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  May 15, 2009                    INDUSTRIAL MINERALS, INC.

                                    By: /s/ Robert G. Dinning
                                        ---------------------------------
                                        President and CEO


     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.


Dated: May 15, 2009                   INDUSTRIAL MINERALS, INC.

                                  By: /s/ Robert Dinning
                                      -----------------------------------------
                                      Robert Dinning, Chief Financial Officer



                                       17
<PAGE>