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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  x
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period from 1-01-06 to 3-31-06o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT.For the transition period from _______________________ to ____________________________Commission file number
000-31025
 METALINE CONTACT MINES
 
  Washington
    
    91-0779945(State or jurisdiction of
incorporation or organization)
    
    (IRS Employer Identification No.)
  
   
  þ o
 o þ
 14,783,189
 o x




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##### 



PAGEPART I  FINANCIAL INFORMATIONItem 1.  Financial Statements
    
    
    F-1Item 2.  Managements Discussion and Analysis
    
    
    3Item 3.  Controls and Procedures
    
    
    5PART II - OTHER INFORMATIONItem 1.  Legal Proceedings
    
    
    5Item 2.  Changes in Securities
    
    
    5Item 3.  Defaults Upon Senior Securities
    
    
    5Item 4.  Submission of Matters to a Vote of Security Holders
    
    
    5Item 5.  Other Information
    
    
    5Item 6.  Exhibits and Reports on Form 8-K
    
    
    6SIGNATURES
    
    
    6EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  F-1




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METALINE CONTACT MINES  BALANCE SHEETS
 
 March 31,2006
    
    December 31,(unaudited)
    
    2005ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    78,308
    
    
    $
    82,772Prepaid expenses
    
    
    5,000
    
    
    
    2,000Total Current Assets
    
    
    83,308
    
    
    
    84,772OTHER ASSETSRelated party receivable
    
    
    109,413
    
    
    
    109,413Accrued interest  related party receivable
    
    
    40,211
    
    
    
    38,296Investments
    
    
    25,600
    
    
    
    25,600Website, net of amortization
    
    
    500
    
    
    
    583Other assets
    
    
    250
    
    
    
    250Mineral lease, net of depletion
    
    
    249,968
    
    
    
    249,977Total Other Assets
    
    
    425,942
    
    
    
    424,119TOTAL ASSETS
    
    $
    509,250
    
    
    $
    508,891LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    138
    
    
    $
    Unearned royalty income
    
    
    3,880
    
    
    
    3,880Total Current Liabilities
    
    
    4,018
    
    
    
    3,880COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.05 par value;
20,000,000 shares authorized, 14,783,189 Shares
issued and outstanding, respectively
    
    
    776,570
    
    
    
    776,570Additional paid-in capital
    
    
    483,040
    
    
    
    483,040Stock options
    
    
    47,907
    
    
    
    47,907Accumulated deficit
    
    
    (802,285
    )
    
    
    (802,506
    )Total Stockholders Equity
    
    
    505,232
    
    
    
    505,011TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    509,250
    
    
    $
    508,891
  F-2




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METALINE CONTACT MINES  STATEMENTS OF OPERATIONS
 
 Three Months EndedMarch 31,
    
    March 31,2006
    
    2005(unaudited)
    
    (unaudited)REVENUESRoyalty income
    
    $
    8,169
    
    
    $
    44,880GENERAL AND ADMINISTRATIVE EXPENSESAdministrative expenses
    
    
    10,462
    
    
    
    23,940Directors fees
    
    
    
    
    
    
    Property expense
    
    
    
    
    
    
    Professional fees
    
    
    
    
    
    
    TOTAL EXPENSES
    
    
    10,462
    
    
    
    23,940OPERATING INCOME (LOSS)
    
    
    (2,293
    )
    
    
    20,940OTHER INCOME (EXPENSE)Dividend income
    
    
    599
    
    
    
    307Interest income
    
    
    1,915
    
    
    
    1,915TOTAL OTHER INCOME
    
    
    2,514
    
    
    
    2,222INCOME BEFORE TAXES
    
    
    221
    
    
    
    23,162INCOME TAX EXPENSE
    
    
    
    
    
    
    NET INCOME
    
    $
    221
    
    
    $
    23,162NET INCOME PER COMMON SHARE,
BASIC AND DILUTED
    
    $
    nil
    
    
    $
    nilWEIGHTED
AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,BASIC
    
    
    14,783,189
    
    
    
    13,783,189
  F-3




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METALINE CONTACT MINES  STATEMENTS OF CASH FLOWS
 
 Three Months EndedMarch 31,
    
    March 31,2006
    
    2005(unaudited)
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    221
    
    
    $
    23,162Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:Amortization and depletion expense
    
    
    92
    
    
    
    Royalty expense paid with NJMC stock
    
    
    
    
    
    
    20,500Royalty income received in NJMC stock
    
    
    
    
    
    
    (41,000
    )Changes in assets and liabilities:Increase in accrued interest receivable
    
    
    (1,915
    )
    
    
    (1,915
    )Increase in prepaid expenses and other assets
    
    
    (3,000
    )
    
    
    (2,916
    )Increase in accounts payable
    
    
    138
    
    
    
    Net cash (used) by operating activities
    
    
    (4,464
    )
    
    
    (2,169
    )CASH FLOWS USED BY INVESTING ACTIVITIES:
    
    
    
    
    
    
    CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
    
    
    
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (4,464
    )
    
    
    (2,169
    )Cash at beginning of period
    
    
    82,772
    
    
    
    90,652Cash at end of period
    
    $
    78,308
    
    
    $
    88,483SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    
    
    
    $
    Interest paid
    
    $
    
    
    
    $
    NON-CASH TRANSACTIONS:Royalty expense paid with NJMC stock
    
    $
    
    
    
    $
    20,500Royalty income received in NJMC stock
    
    $
    
    
    
    $
    41,000
  F-4




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
 NOTE 1  ORGANIZATION AND DESCRIPTION OF BUSINESS
     NOTE 2  BASIS OF PRESENTATION
    F-5




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
 NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Accounting Method
 Cash and Cash Equivalents
 Concentration of Risk
 Derivative Instruments
   F-6




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
  Earning Per Share
 Fair Value of Financial Instruments
 Investments
 Recent Accounting Pronouncements
  F-7




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
   Revenue Recognition
 Use of Estimates
 NOTE 4  MINERAL PROPERTIES
 Pend Oreille/Metaline Zinc Mines
 F-8




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
  Golden Chest Mine
  NOTE 5  RELATED PARTY TRANSACTIONS
   F-9




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METALINE CONTACT MINES  CONDENSED NOTES TO THE FINANCIAL STATEMENTS  MARCH 31, 2006
 
 NOTE 6  INCOME TAXES
   NOTE 7  STOCK OPTIONS
  Options Outstanding
    
    Options ExercisableWeightedAverageRemaining
    
    Weighted
    
    
    
    
    
    WeightedContractual
    
    Average
    
    
    
    
    
    AverageExercise
    
    Number
    
    Life
    
    Exercise
    
    Number
    
    ExercisePrice
    
    Outstanding
    
    (Years)
    
    Price
    
    Exercisable
    
    Price$0.06
    
    
    500,000
    
    
    
    3.62
    
    
    $
    0.06
    
    
    
    500,000
    
    
    $
    0.060.125
    
    
    1,000,000
    
    
    
    3.62
    
    
    
    0.125
    
    
    
    1,000,000
    
    
    
    0.1250.15
    
    
    250,000
    
    
    
    3.62
    
    
    
    0.15
    
    
    
    250,000
    
    
    
    0.15$0.06-0.15
    
    
    1,750,000
    
    
    
    3.62
    
    
    $
    0.11
    
    
    
    1,750,000
    
    
    $
    0.11
 F-10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       Golden Chest Mine
  Pend Oreille/Metaline Zinc Mines
  Operating Loss
   -3-




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Other Income
  Income Before Taxes
     (a)
    
    Collection of Receivables. We have a related party receivable from Nor-Pac Limited
Company (Nor-Pac) of $109,413, with accrued interest of $40,211, as of March 31, 2006.
Nor-Pac owns approximately 81% of our outstanding shares, and has related directors.
Accordingly, we believe we have the ability to collect this receivable in the event of a
shortfall of cash.
 (b)
    
    Increase Royalty Revenues. Increasing royalty revenues from our current mining
projects is under the sole control of third parties; namely, Teck Cominco and New Jersey
Mining Company.Other factors that could impact increased royalty revenues include: changes in precious
and base metals prices; unanticipated grade, geological, metallurgical, processing or other
problems at our mining projects; changes in project parameters as plans of the operators
are refined; and other economic and market conditions.
 (c)
    
    Sale of Companys Common Stock. There are no assurances that we would be able to
sell shares of our authorized, but unissued, common stock on acceptable terms. Additionally,
any such sales of shares could be dilutive to our shareholders.
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(d)
    
    Sale of Certain Assets. We own 60,000 shares of New Jersey common stock with a
recorded value of $25,600, which shares could be sold pursuant to Rule 144 of the Securities
Act of 1933, as amended.
 
 ITEM 3. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
   
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. CHANGES IN SECURITIES
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  
 ITEM 5. OTHER INFORMATION
  -5-




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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 (a)
    
    Exhibit 31.1  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 31.2  Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Exhibit 32.1  Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Exhibit 32.2  Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(b)
    
    There were no reports filed on Form 8-K during the quarter ended March 31, 2006.
 
 SIGNATURES
  DATED this the 15th day of May, 2006
    METALINE CONTACT
MINESBy:
/s/ John W. BeasleyJohn W. Beasley
Secretary/Treasurer/CFO