SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                FORM 10-QSB/A #2
                      FOR THE QUARTER ENDED SEPTEMBER 30, 2002


                         Commission file number: 0-30651

                               CIK No. 0001035422

                            INDUSTRIAL MINERALS, INC.
                        --------------------------------
             (Exact name of registrant as specified in this charter)

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



      One Dundas Street West, Suite 2500, Toronto, Ontario, Canada M5G 1Z3
           ----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)


       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (416) 979-4621

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 September 30, 2002, there were 36,031,621 shares of $0.0001 par value
common stock outstanding.

<PAGE>

<TABLE>
<CAPTION>

                            INDUSTRIAL MINERALS, INC.
                         (An Exploration Stage Company)

                           Consolidated Balance Sheets

                    September 30, 2002 and December 31, 2001

                                                                                                      (As restated)
                                                                                          Sept.30,     December 31,
                                                                                            2002          2001
                           Assets                                                      (Unaudited)      (Audited)
                           ------                                                      -----------      ---------
<S>                                                                                 <C>            <C>

Cash                                                                                $         809                21
Receivables                                                                                12,404             -
Building and equipment, at cost                                                           389,208             -
  Less accumulated depreciation                                                            28,790             -
                                                                                         --------  ----------------

Net equipment                                                                             360,418             -
                                                                                          -------  ----------------
Prepaid Expenses                                                                            6,400             -
Deposits                                                                                    7,596           -
                                                                                        ---------  --------------
                           Total assets                                             $     387,627                21
                                                                                          =======    ==============

                         Liabilities and Stockholders' Equity

Liabilities:
     Accounts payable:
        Non-related parties                                                                72,517            17,629
        Related parties                                                                   210,725             -
                                                                                          -------  ----------------

                           Total accounts payable                                         283,242            17,629

     Accrued interest payable                                                               5,913             -
     Loans payable                                                                        457,462             -
     Mortgage payable                                                                      17,000             -
                                                                                       ----------   ----------------

                           Total liabilities                                              763,617            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;
         36,031,621 shares issued and outstanding for 2002 and
         1,000,863 shares issued and outstanding for 2001                                   3,600               100
     Additional paid-in capital                                                            14,142         1,754,535
     Deficit accumulated during exploration stage                                        (393,732)       (1,772,243)
                                                                                          -------         ---------

                           Total stockholders' equity (deficit)                          (375,990)          (17,608)
                                                                                          -------       -----------

                           Total liabilities and stockholders' equity               $     387,627                21
                                                                                          =======    ==============
</TABLE>

See accompanying notes to financial statements.

                                      F-1

<PAGE>

<TABLE>
<CAPTION>

                                            INDUSTRIAL MINERALS, INC.
                                         (An Exploration Stage Company)

                                Consolidated Statements of Operations (Unaudited)

                            Three and nine month periods ended September 30, 2002 and
                      2001 and for the period from November 6, 1996 (Date of Inception) to
                                               September 30, 2002


                                                               (As restated)                (As restated)          (As restated)
                                                            Three months ended            Nine months ended        November 6, 1996
                                                               September 30,                 September 30,         (inception) to
                                                           2002            2001           2002            2001    September 30, 2002
                                                           ----            ----           ----            ----    ------------------
<S>                                                  <C>                <C>              <C>          <C>           <C>
Revenue                                                $     -                -              -             -            15,537
                                                     --------------     ------------     ---------    -----------   -----------

Expenses:
     Cost of revenues                                        -                -              -             -            76,201
     Professional fees                                      20,661           60,000         79,520        60,000     1,013,049
     Royalty fees                                            8,775            -             17,550         -            17,550
     Depreciation and amortization                          21,898            -             28,790         -            37,082
     Impairment of long-lived assets                         -                -             -              -           582,176
     Other general and administrative                      133,020            -            149,836         2,688       274,543
     Property costs                                          -                -             42,778         -           108,971
                                                     --------------     ------------     ---------    -----------   -----------

                           Total expenses                  184,354           60,000        318,474        62,688     2,109,572
                                                     --------------     ------------     ---------    -----------   -----------

                           Loss from operations           (184,354)         (60,000)      (318,474)      (62,688)   (2,094,035)
                                                     --------------     ------------     ---------    -----------   -----------


Other income:
     Interest income                                         -                -                  3         -             2,727
     Other income                                            -                -             -                120           594
                                                     --------------     ------------     ---------    -----------   -----------

                           Total other income                -                -             -                120         3,321
                                                     --------------     ------------     ---------    -----------   -----------

                           Net loss                     $ (184,354)         (60,000)      (318,471)      (62,568)   (2,090,714)
                                                     ==============     ============     =========        ======    ===========

Net loss per common share                               $     (.01)            (.00)          (.01)         (.00)
                                                     ==============     ============     =========        ======

Weighted average common shares outstanding              36,001,380       97,000,000     28,666,252    97,000,000
                                                     ==============     ============     =========        ======
</TABLE>



See accompanying notes to financial statements.

                                      F-2



<PAGE>
<TABLE>
<CAPTION>


                            INDUSTRIAL MINERALS, INC.
                         (An Exploration Stage Company)

                Consolidated Statements of Cash Flows (Unaudited)

                      Nine months ended September 30, 2002
                        and 2001 and for the period from
                     November 6, 1996 (Date of Inception) to
                               September 30, 2002



                                                                              (As restated)
                                                                               Nine months             (As restated)
                                                                                  ended               November 6, 1996
                                                                               September 30,           (inception) to
                                                                               -------------
                                                                       2002                 2001       Sept. 30, 2002
                                                                       ----                 ----       --------------
<S>                                                             <C>                    <C>               <C>

Cash flows from operating activities:
     Net loss                                                   $       (318,471)         (62,568)       (2,090,714)
     Adjustments to reconcile net loss to cash
         used in operating activities activities:
         Depreciation                                                     28,790            -                28,790
         Provision for bad debts                                           -                -                49,676
         Stock issued for services                                         -                -               414,606
         Impairment of long-lived assets                                   -                -               297,882
         Changes in:
              Receivables                                                (12,404)           -               (16,573)
              Inventory                                                    -                -                (5,527)
              Prepaid expenses                                            (6,400)           -                (6,939)
              Deposits                                                    (7,596)           -                (7,596)
              Accounts payable and accrued expenses                       30,429           50,144           (15,511)
              Accrued interest payable                                     5,913            -                 5,913
              Due to related parties                                      10,725            -               605,725
                                                                        --------       ------------        ----------

                           Cash flows from operating
                              activities                                (269,014)         (12,424)         (740,268)
                                                                         -------           ------         ----------

Cash flows from investing activities:
     Purchase of building and equipment                                 (184,208)           -              (188,368)
     Investment in Multiplex                                               -                -               (75,000)
     Acquisition of goodwill                                               -                -              (149,057)
     Loan to related party                                                 -                -               (50,000)
     Loan repayments                                                       -                -                 4,493
                                                                   -------------      -----------      ------------

                           Cash flows from investing
                              activities                                (184,208)           -              (457,932)
                                                                         -------      -----------        ----------

                                                                                                                         (Continued)
</TABLE>

See accompanying notes to financial statements.


                                      F-3

<PAGE>
<TABLE>
<CAPTION>


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



                                                                              (As restated)
                                                                               Nine months           (As restated)
                                                                                 ended               November 6, 1996
                                                                              September 30,          (inception) to
                                                                              -------------
                                                                       2002               2001        Sept.30, 2002
                                                                       ----               ----        -------------
<S>                                                               <C>                 <C>              <C>

Cash flows from financing activities:
     Net proceeds from sale of common stock                       $        -               12,500           744,859
     Net proceeds from loans payable                                     437,010            -               437,010
     Mortgage payable                                                     17,000            -                17,000
     Cash acquired in acquisition of Peanut
         Butter & Jelly, Inc.                                              -                -                   140
                                                                   -------------      -----------      ------------

                           Cash flows from financing
                              activities                                 454,010           12,500         1,199,009
                                                                   -------------      -----------      ------------

Net increase in cash and equivalents                              $          788               76               809

Cash and equivalents at beginning of period                                   21             -               -
                                                                   -------------      -----------      ------------

Cash and equivalents at end of period                             $          809               76               809
                                                                   =============      ===========      ============

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

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

     Shares issued for debt                                       $        -                 -              595,000
                                                                   =============      ===========      ============
     Shares issued for services                                   $        -                 -              414,606
                                                                   =============      ===========      ============
     Shares issued for investment                                 $        -                 -                   30
                                                                   =============      ===========      ============
     Property costs financed by
         insurance of common stock                                $        -                 -               30,000
                                                                   =============      ===========      ============
     Equipment financed by:
         Accounts payable                                                  -                 -              200,000
         Insurance of common stock                                         -                 -                5,000
                                                                   -------------      -----------      ------------

                                                                  $        -                 -              205,000
                                                                   =============      ===========      ============
</TABLE>



See accompanying notes to financial statements.

                                      F-4

<PAGE>
<TABLE>
<CAPTION>


                                           INDUSTRIAL MINERALS, INC.
                                         (An Exploration Stage Company)

                           Consolidated Statement of Stockholders' Equity (Unaudited)
                                               September 30, 2002


                                                                                       (As restated)
                                                                                          Deficit
                                                                       (As restated)    Accumulated
                                                                        Additional      During the
                                                   Common Stock            Paid-In      Exploration     (As restated)
                                          ---------------------------
                                           # 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, Inc.                        35,000,000           3,500      1,740,393      1,696,982        (39,911)
Minimum 50 shares
     post-split allocation                     30,758               -          -              -              -
Net loss                                        -                   -          -           (318,471)      (318,471)
                                      ----------------    ------------     ----------    -----------     ----------
Balance at September 30, 2002              36,031,621       $   3,600         14,142       (393,732)      (375,990)
                                      ================    ============     ==========    ===========     ==========
</TABLE>


See accompanying notes to financial statements.

                                      F-5

<PAGE>

                            INDUSTRIAL MINERALS, INC.
                         (An Exploration Stage Company)

                   Consolidated Notes to Financial Statements

                               September 30, 2002
                                   (Unaudited)


(1)  Presentation of Interim Information
----------------------------------------

     In the opinion of the management of Industrial Minerals, Inc., the
         accompanying unaudited financial statements include all normal
         adjustments considered necessary to present fairly the financial
         position as of September 30, 2002 and the results of operations and
         cash flows for the nine months ended September 30, 2002 and 2001.
         Interim results are not necessarily indicative 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.

(2)  Restatement of Previously Issued Financial Statements
----------------------------------------------------------

     In response to comments by the United States Securities and Exchange
         Commission, the Company has restated its financial statements for the
         period from its inception (November 6, 1996) to September 30, 2002.
         This restatement is the result of an accounting reclassification from
         treatment of the Company as a development stage company to treatment as
         an exploration stage company. As an exploration stage company all costs
         incurred are expensed, rather than capitalized. The net loss for the
         three months ended and the nine ended September 30, 2002 and the period
         from November 6, 1996 (date of inception) to September 30, 2002 has
         been corrected to give effect to the restatement as follows:


<TABLE>
<CAPTION>
                                                Three months ended           Nine months ended         November 6, 1996
                                                   September 30,                September 30,          (inception) to
                                              2002             2001         2002             2001      September 30, 2002
                                              ----             ----         ----             ----      ------------------
<S>                                     <C>             <C>              <C>          <C>                 <C>
Net loss, as previously stated          $  (385,732)         (60,000)    (544,309)         (62,568)       (2,316,552)

To expense development costs                  -                -          (42,778)           -               (42,778)

To correct depreciation expense             201,378            -          268,616            -               268,616
                                            -------          --------    ---------        ---------       -----------

Net loss, as restated                   $  (184,354)         (60,000)    (318,471)         (62,568)       (2,090,714)
                                            =======          ========    =========        ==-======       ===========
</TABLE>

The restatement decreased net loss per share for the nine months ended September
30, 2002 from (.02) to (.01). There was no effect on net loss per common share
issued for the other periods presented.





                                      F-6


<PAGE>



                            INDUSTRIAL MINERALS, INC.
                         (An Exploration Stage Company)

              Consolidated Notes to Financial Statements, Continued






(2) Restatement of Previously Issued Financial Statements, Continued
--------------------------------------------------------------------

     Additionally, the Company restated the cost of equipment purchased from a
         related party to reflect the actual cash paid, plus the par value of
         common stock issued. A summary of the adjustment recorded is as
         follows:

                                              As
                                          previously                   Restated
                                            stated       Adjustment     amount

         Equipment                     $    3,684,208    (3,295,000)   389,208
                                            =========     =========    =======

         Additional paid-in capital    $    3,309,142    (3,295,000)    14,142
                                            =========     =========   ========




                                      F-7

<PAGE>



ITEM 2.

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


Plan of Operation

Subsequent to fiscal year ending December 31, 2001 the company has completed
work on its Bissett Creek Graphite Property as follows:

o    Access roads on the property have been upgraded along with 800 feet of new
     road built to the mill site area.
o    Site preparation for the crushing facility, including a concrete pad, has
     been completed.
o    Stripping of the overburden at pit #4 is complete.  This is the area where
     the mining will begin.
o    All equipment required for the crushing facility has been procured and
     delivered to the site.
o    The primary crusher has been assembled.
o    Screening equipment and a secondary crusher have been put in place.
o    A bulk sample (approximately 200 tons of material) has been crushed through
     the primary crusher.
o    The ground for two buildings has been prepared.
o    As per the mining lease the mine closure plan is being developed.
o    Various metallurgical tests have been performed on the Bissett Creek
     Graphite.


As of the date of this filing the following work is required in order to
complete the plant:

o    Construction of two buildings, one 2500 square feet and one 10,200 square
     feet.
o    Conveyor belts.
o    Completing the mine closure plan.
o    Concrete pads.
o    Construction of bins.
o    Dust collection.
o    Steel structures and collection pans.
o    Electrical installations


As discussed above, the following items along with the estimated cost are
required to complete the plant on the Bissett Creek Graphite Property.

o    Two buildings total 12,700 square feet                   $  65,000.00
o    Conveyor belts                                           $  49,000.00
o    Completion of mine closure plan.                         $  25,000.00
o    Concrete work.                                           $  62,000.00
o    Dust collection equipment and bins.                      $  31,600.00
o    Steel work.                                              $  13,455.00
o    Electrical installations                                 $ 225,000.00
o    Payment to Contractors to complete work.                 $ 142,300.00


The company has been able to obtain debt financing in the amount of: $775,373.
The interest rate on this debt is 7% calculated yearly and is currently accru-
ing. The principal and accrued interest is due and payable on July 31, 2003.

<PAGE>


In addition to this financing the company secured a first mortgage in the amount
of $17,000 on a house and separate building. The payments on this mortgage are
$250.00 monthly at an interest rate of 7% per annum, calculated semi-annually
not in advance. This mortgage matures August 29, 2007.

The company also owes to a related party $180,000.00 as of December 31, 2002.
Subsequent to December 31, 2002 the company has paid $40,000.00 to this related
party.

Subsequent to December 31, 2002 the company secured debt financing in the amount
of $181,200.00 at an interest rate of 7% calculated annually. The principal and
accrued interest is due and payable on July 31, 2003. These funds were advanced
by a non-affiliated shareholder.

In addition to the financing currently in place the company requires additional
financing in the amount of $623,355.00 to complete the construction of the mine
facility. The company has also budgeted for a monthly administration cost of
$30,000.00. The company will also require $200,000.00 to start processing
graphite to build an inventory of approximately 1000 tons of graphite; these
funds are required for the operation of the mine. The company requires
additional financing in the amount of $962,155.00($1,143,355 minus financing
that was obtained subsequent to December 31, 2002 in amount of $181,200.00).
This will enable the company to finish building the plant ($623,355), pay the
account payable to a related party ($140,000) and provide for monthly administra
-tion costs of $30,000.00 each for the months of January through and including
June of 2003 and have $200,000.00 to operate the mine to build an inventory of
approximately 1000 tons of graphite.

It should also be noted that virtually 100% of the companies' debt is due and
payable on July 31, 2003. Management of the company has entered into discussions
to renegotiate the terms of the company's debt. These negotiations are on going
and no agreement has been reached as of this date.

Of course, there is no assurance that the Company will be able to achieve loans
or private placements to carry out operations, nor is there any assurance that
the Company will ever achieve any product sales.

The Company has the following loans due on dates in next year:

Loans Due

$775,373 outstanding balance as of December 31, 2002 plus accrued interest at
the rate of 7% per annum payable in United States dollars due July 31, 2003.

$181,200 advanced to the company subsequent to December 31, 2002 plus accrued
interest at the rate of 7% per annum payable in United States dollars due July
31, 2003.


<PAGE>

The Company has the following capital commitments for leases and equipment:

Capital Commitments

Equipment: NONE

Office premises Jan., Feb., March and April $455.00 (USD) monthly for rent. The
premises will then be occupied on a month-to-month basis at the rental rate of
$455.00 (USD) monthly  The Company expects to continue occupying these premises
for the remainder of its 2003 fiscal year. These payments are due on the first
of every month.

Mortgage Payable

The Company has committed to a payment of $250.000 (USD) monthly throughout 2003
for its house in Bissett Creek. These payments are due on the 29th of each
month.

Investors and potential investors should be aware that even though the company
has been able to raise funds to date in the amount of $973,673.00 there can be
no guarantee that the company will be successful in obtaining satisfactory
financing in the amount of $962,055.00 which the company requires. There are no
financing commitments currently in place for the required funds in the amount of
$962,055.00. The company intends to continue to seek debt financing to complete
this project from non-affiliates, and possibly officers, directors and
shareholders. No commitments of any type have been made by any person or entity
to provide financing. Management has no plan to overcome the uncertainties
surrounding the Company's ability to continue as a going concern for a
reasonable period of time, except to attempt to borrow money or make private
placements of stock. Management will deal with issues as they arise but as
a "start up" company in a graphite mining attempt, the Company can neither
predict nor solve, in anticipation, the uncertainties of mining, capital
raising, marketing or operations. All risks and uncertainties inherent in any
start up company exist in the chosen business of the Company. The Company does
not have any other plan in place to provide capital or financing for its opera-
tions.

Should the company obtain the necessary financing to complete the mine and begin
production investors should be further cautioned that there might not be a
market for the company's graphite. The company is currently seeking customers
for its graphite. Discussions are on going with potential customers for graphite
but there are no contracts concluded at this time. There can be no guarantee
that the company will be successful in obtaining a contract for its graphite.


<PAGE>

As of March 13, 2003, the Company owed a total of $939,947.25.  The interest
associated with this debt is 7% per annum.  To March 13, 2003, interest in the
amount of $11,512 has accrued.  The principal and accrued interest is due and
payable on July 31, 2003.  Three non-affiliated shareholders have advanced these
funds.


Three-months ending September 30, 2002 and September 30, 2001
-------------------------------------------------------------

During the three-month period ending September 30, 2002 the company had no
revenues. The company had no revenue during the same three-month period ending
September 30, 2001.

The company incurred expenses for professional fees in the amount of $20,661
during the three-month period ending Sept 30, 2002 compared to $60,000 during
the three-month period ending September 30, 2001. This is a decrease of $39,339.

The company incurred royalty expenses in the amount of $8775 during the
three-month period ending September 30, 2002. These expenses are the result of
the company obtaining the Bissett Creek Graphite property. The company is
required to pay a minimum yearly royalty of $17,550 whether graphite is produced
or not. There were no royalty payments paid during the three-month period ending
September 30, 2001, as the company did not have an interest in the Bissett Creek
Graphite property.

Depreciation and amortization expense for the three-month period ending
September 30, 2002 totaled $21,898. There was no depreciation and amortization
expense during the three-month period ending September 30, 2001. This represents
a 100% increase in the three-month period ending September 30, 2002 over the
same period ending September 30, 2001. This increase is due to an increase in
activity surrounding the operations of the company during the three-month period
ending September 30, 2002 compared to the same three-month period ending
September 30, 2001.

Other general and administrative expenses for the three-month period ending
September 30, 2002 totaled $133,020. This represents a 100% increase in the
three-month period ending September 30, 2002 over the same period ending
September 30, 2001. This increase is due to an increase in activity surrounding
the operations of the company during the three-month period ending September 30,
2002 compared to the same three-month period ending September 30, 2001.

<PAGE>

The company has had a net loss of ($184,354) for the three-month period ending
September 30, 2002 as compared to a net loss of ($60,000) for the three-month
period ending September 30, 2001. This represents an increase of $124,354 for
the three-month period ending September 30, 2002 compared to the same
three-month period ending September 30, 2001. This increase is due to an
increase in activity surrounding the operations of the company during the
three-month period ending September 30, 2002 compared to the same three-month
period ending September 30, 2001.

Nine month period ending September 30, 2002 and September 30, 2001
------------------------------------------------------------------

During the nine-month period ending September 30, 2002 the company had no
revenues. The company had no revenue during the same nine-month period ending
September 30, 2001.

The company incurred expenses for professional fees in the amount of $79,520
during the nine-month period ending Sept 30, 2002 compared to $60,000 during the
nine-month period ending September 30, 2001. This is an increase of $19,520.
This increase is due to an increase in activity surrounding the operations of
the company during the nine-month period ending September 30, 2002 compared to
the same nine-month period ending September 30, 2001.

The company incurred royalty expenses in the amount of $17,550 during the
nine-month period ending September 30, 2002. These expenses are the result of
the company obtaining the Bissett Creek Graphite property. The company is
required to pay a minimum yearly royalty of $17,550 whether graphite is produced
or not. There were no royalty payments paid during the nine-month period ending
September 30, 2001, as the company did not have an interest in the Bissett Creek
Graphite property.

Depreciation and amortization expense for the nine-month period ending September
30, 2002 totaled $28,790. There was no depreciation and amortization expense
during the nine-month period ending September 30, 2001. This represents a 100%
increase in the nine-month period ending September 30, 2002 over the same period
ending September 30, 2001. This increase is due to an increase in activity
surrounding the operations of the company during the three-month period ending
September 30, 2002 compared to the same three-month period ending September 30,
2001.

The net loss per share was ($.01) in the quarter in 2002 compared to a nominal
loss in 2001.

<PAGE>

Other general and administrative expenses for the nine-month period ending
September 30, 2002 totaled $149,836. This represents a $147,148 increase in the
nine-month period ending September 30, 2002 over the same period ending
September 30, 2001. This increase is due to an increase in activity surrounding
the operations of the company during the nine-month period ending September 30,
2002 compared to the same nine-month period ending September 30, 2001.

The company has had a net loss of ($318,474) for the nine-month period ending
September 30, 2002 as compared to a net loss of ($62,688) for the nine-month
period ending September 30, 2001. This represents an increase of $255,786 for
the nine-month period ending September 30, 2002. This increase is due to an
increase in activity surrounding the operations of the company during the
nine-month period ending September 30, 2002 compared to the same nine-month
period ending September 30, 2001. The net loss per share in the period was
($.01) in 2002 compared to a nominal loss in 2001.

Liquidity and Capital Resources
-------------------------------

The company has cash and accounts receivable on hand as at September 30, 2002 of
$13,213. The accounts receivable portion of $12,404 was incurred as a result of
tax input credits owed to the company by the Government of Canada. The company
expects to collect these funds before the end of the current fiscal year.

The company has prepaid expenses of $6400. This represents the unused portion of
an insurance policy that the company carries for its building and equipment.
This policy expires September 6, 2003.

The company has a total of $7596 in deposits, with its landlord $796 which
represents one-month rent and common costs associated with its premises located
at Suite 2500, One Dundas Street West, Toronto, On M5G 1Z3. The balance of $6800
is a deposit on a piece of mining equipment.

The company had no revenue during the first nine-month period ending September
30, 2002 and expects to have no revenue in each of the next three-quarters
ending December 31, 2002, March 31, 2003 and June 30, 2003. The company is
currently seeking customers for its graphite. Discussions are on going with
potential customers for graphite but there are no contracts concluded at this
time. There can be no guarantee that the company will be successful in obtaining
a contract for graphite if it is able to achieve mine production of such.

The company has total accounts payable of $292,155. Related parties are owed
$210,725 and non-related parties are owed $72,517. The company requires
additional financing in order to pay these accounts payable in an orderly
fashion. If the company does not receive additional financing the company will
not be able to continue as a going concern.

<PAGE>

The company has secured a first mortgage in the amount of $17,000 which requires
a payment of $250 monthly for five years and the balance is then due and payable
at the end of five years. This mortgage carries an interest rate of 7% annually.
The company requires additional financing in order to pay these mortgage
payments. If the company does not receive additional financing the company will
not be able to continue as a going concern.

During the three-month period ending September 30, 2002 the company has been
able to secure debt financing in the amount of $132,000 from non-affiliated
share holders and companies. This debt now totals $457,462 for the period ending
September 30, 2002. Interest has accrued on this debt in the amount of $5913.
The interest rate associated with this debt will be 7% yearly. This debt is due
and payable together with principal and accrued interest on July 31, 2003.
Subsequent to September 30, 2002 the company has arranged an additional $166,650
in loans at a rate of 7% from non-affiliated shareholders. These loans along
with the accrued interest are due and payable on July 31, 2003.

Industrial Minerals has a number of future commitments for which it presently
does not have the cash to satisfy. These commitments include the payment of the
short-term liabilities to affiliated and non-affiliated parties described in the
preceding paragraphs. While Industrial Minerals has been seeking financing
sources for the Bissett Creek Graphite Property the company must also seek
financing sources for its general and administrative operations. Although
Industrial Minerals has been successful in obtaining funds to date, there can be
no assurance that it will be able to continue to be successful in doing so.
Industrial Mineral's ability to finance its operations will, in the end, be
dependent on its ability to generate cash flow from operations, of which there
can be no assurance.

Evaluation of Internal and Disclosure Controls
----------------------------------------------

The management of the company has evaluated the effectiveness of the issuer's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of the report (evaluation date) and have concluded that the
disclosure controls and procedures are adequate and effective based upon their
evaluation as of the evaluation date.

There were no significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of the most
recent evaluation of such, including any corrective actions with regard to
significant deficiencies and material weaknesses.


<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) The following are filed as Exhibits to this
                    Quarterly Report. The numbers refer to the Exhibit Table of
                    Item 601 of Regulation S-K:

                                      None.

                         (b) Reports on Form 8-K filed  during the nine months
                    ended September 30, 2002 (incorporated by reference)

                             8-K filed 7-3-02
                             8-K filed 7-9-02
                             8K12g3 filed 8-9-02
                             8-K filed 8-12-02
                             8-K filed 9-12-02

<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: April 9, 2003


                                          INDUSTRIAL MINERALS, INC.



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