##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period from 4-01-05 to 6-30-05
 o
    
    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.)
  
   
  13,783,189
 o þ




---



TABLE OF CONTENTS
 PAGEPART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    F-1Item 2. Managements Discussion and Analysis
    
    
    3Item 3. Controls and Procedures
    
    
    4PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    4Item 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
    
    
    5SIGNATURES
    
    
    5EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  -2-




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 The Company has prepared the unaudited financial statements presented below in accordance
with accounting principles generally accepted in the United States for interim financial
information, as well as the instructions to Form 10-QSB. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting principles for
complete financial statements. However, the financial statements have been reviewed by the
Companys independent auditors, Williams & Webster, P.S., using professional standards and
procedures for conducting such reviews established by generally accepted auditing standards,
and we include herewith their report. It is the opinion of the Companys management that
all adjustments considered necessary for the fair presentation of the interim financial
statements have been included. Operating results for the three-month period ended June 30,
2005 are not necessarily indicative of the results that may be expected for the full year
ending December 31, 2005.For further information refer to the financial statements and footnotes thereto in the
Companys Annual Report on Form 10-KSB for the year ended December 31, 2004.
 F-1




---



##### Table of Contents



METALINE CONTACT MINES
 BALANCE SHEETS
 
 June 30,
    
    December 31,2005
    
    2004(unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    80,794
    
    
    $
    90,652Prepaid expenses
    
    
    4,000
    
    
    
    Total Current Assets
    
    
    84,794
    
    
    
    90,652OTHER ASSETSRelated party receivable
    
    
    109,413
    
    
    
    109,413Accrued interest  related party receivable
    
    
    34,466
    
    
    
    30,637Investments
    
    
    25,600
    
    
    
    5,100Website, net of amortization
    
    
    750
    
    
    
    917Other asset
    
    
    350
    
    
    
    350Total Other Assets
    
    
    170,579
    
    
    
    146,417TOTAL ASSETS
    
    $
    255,373
    
    
    $
    237,069LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESUnearned royalty income
    
    $
    3,880
    
    
    $
    3,880Total Current Liabilities
    
    
    3,880
    
    
    
    3,880COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, $0.05 par value; 20,000,000 shares authorized,
14,531,254 issued and 13,783,189 outstanding
    
    
    726,570
    
    
    
    726,570Additional paid-in capital
    
    
    283,040
    
    
    
    283,040Stock options
    
    
    47,907
    
    
    
    47,907Accumulated deficit
    
    
    (806,024
    )
    
    
    (824,328
    )Total Stockholders Equity
    
    
    251,493
    
    
    
    233,189TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    255,373
    
    
    $
    237,069
  F-2




---



##### Table of Contents



METALINE CONTACT MINES
 STATEMENTS OF OPERATIONS
 
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)REVENUESRoyalty income
    
    $
    5,204
    
    
    $
    8,680
    
    
    $
    50,084
    
    
    $
    12,560GENERAL AND ADMINISTRATIVE EXPENSESProperty expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,765Administrative expenses
    
    
    12,403
    
    
    
    14,672
    
    
    
    36,343
    
    
    
    15,773TOTAL EXPENSES
    
    
    12,403
    
    
    
    14,672
    
    
    
    36,343
    
    
    
    53,538OPERATING INCOME (LOSS)
    
    
    (7,199
    )
    
    
    (5,992
    )
    
    
    13,741
    
    
    
    (40,978
    )OTHER INCOME (EXPENSE)Dividend income
    
    
    427
    
    
    
    59
    
    
    
    734
    
    
    
    113Interest income
    
    
    1,914
    
    
    
    1,914
    
    
    
    3,829
    
    
    
    3,829Loss from investment in LLC
    
    
    
    
    
    
    (148
    )
    
    
    
    
    
    
    (248
    )TOTAL OTHER INCOME
    
    
    2,341
    
    
    
    1,825
    
    
    
    4,563
    
    
    
    3,694INCOME (LOSS) BEFORE TAXES
    
    
    (4,858
    )
    
    
    (4,167
    )
    
    
    18,304
    
    
    
    (37,284
    )INCOME TAX EXPENSE
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET INCOME (LOSS)
    
    $
    (4,858
    )
    
    $
    (4,167
    )
    
    $
    18,304
    
    
    $
    (37,284
    )NET INCOME (LOSS) PER COMMON SHARE,
BASIC AND DILUTED
    
    $
    nil
    
    
    $
    nil
    
    
    $
    nil
    
    
    $
    nilWEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
BASIC
    
    
    13,783,189
    
    
    
    14,453,428
    
    
    
    13,783,189
    
    
    
    14,453,428WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
DILUTED
    
    
    13,783,189
    
    
    
    14,453,428
    
    
    
    15,533,189
    
    
    
    14,453,428
  F-3




---



##### Table of Contents



METALINE CONTACT MINES
 STATEMENTS OF CASH FLOWS
 
 Six Months EndedJune 30,
    
    June 30,2005
    
    2004(unaudited)
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    18,304
    
    
    $
    (37,284
    )Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:Amortization expense
    
    
    167
    
    
    
    Loss in LLC investment
    
    
    
    
    
    
    248Rent expense paid with NJMC stock
    
    
    20,500
    
    
    
    Royalty income received in NJMC stock
    
    
    (41,000
    )
    
    
    Common stock issued in payment of expenses
    
    
    
    
    
    
    37,765Stock options issued for directors fees
    
    
    
    
    
    
    Changes in assets and liabilities:Increase in accrued interest receivable
    
    
    (3,829
    )
    
    
    (3,829
    )Increase in prepaid expenses
    
    
    (4,000
    )
    
    
    Net cash used by operating activities
    
    
    (9,858
    )
    
    
    (3,100
    )CASH FLOWS USED BY INVESTING ACTIVITIES:
    
    
    
    
    
    
    (2,400
    )CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
    
    
    
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (9,858
    )
    
    
    (5,500
    )Cash at beginning of period
    
    
    90,652
    
    
    
    105,687Cash at end of period
    
    $
    80,794
    
    
    $
    100,187SUPPLEMENTAL CASH FLOW DISCLOSURES:Income taxes paid
    
    $
    
    
    
    $
    Interest paid
    
    $
    
    
    
    $
    NON-CASH TRANSACTIONS:Loss in LLC investment
    
    $
    
    
    
    $
    248Common stock issued in payment of expenses
    
    $
    
    
    
    $
    37,765Rent expense paid with NJMC stock
    
    $
    20,500
    
    
    $
    Royalty income received in NJMC stock
    
    $
    41,000
    
    
    $
    
  F-4




---



##### Table of Contents



METALINE
CONTACT MINES
 CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2005
 
 NOTE 1  ORGANIZATION AND DESCRIPTION OF BUSINESS
     NOTE 2  BASIS OF PRESENTATION
    F-5




---



##### Table of Contents



METALINE
CONTACT MINES
 CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2005
 
 NOTE 3  RECENT ACCOUNTING PRONOUNCEMENTS
  NOTE 4  MINERAL PROPERTIES
 Pend Oreille/Metaline Zinc Mines
 Golden Chest Mine
 nd
 F-6




---



##### Table of Contents



METALINE
CONTACT MINES
 CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2005
 
 NOTE 5  RELATED PARTY TRANSACTIONS
   NOTE 6  INCOME TAXES
   NOTE 7  STOCK OPTIONS
  Options Outstanding
    
    Options ExercisableWeightedNumber of
    
    Average
    
    
    
    
    
    Number ofShares
    
    Remaining
    
    Weighted
    
    Shares
    
    WeightedUnder
    
    Contractual
    
    Average
    
    Under
    
    AverageExercise
    
    Options
    
    Life
    
    Exercise
    
    Options
    
    ExercisePrice
    
    Outstanding
    
    (Years)
    
    Price
    
    Exercisable
    
    Price$
    0.06
    
    
    
    500,000
    
    
    
    4.37
    
    
    $
    0.06
    
    
    
    500,000
    
    
    $
    0.060.125
    
    
    
    1,000,000
    
    
    
    4.37
    
    
    
    0.125
    
    
    
    1,000,000
    
    
    
    0.1250.15
    
    
    
    250,000
    
    
    
    4.37
    
    
    
    0.15
    
    
    
    250,000
    
    
    
    0.15$
    0.06-0.15
    
    
    
    1,750,000
    
    
    
    4.37
    
    
    $
    0.11
    
    
    
    1,750,000
    
    
    $
    0.11
 F-7




---



##### Table of Contents



METALINE
CONTACT MINES
 CONDENSED NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2005
 
 NOTE 8  SUBSEQUENT EVENT
  F-8




---



##### Table of Contents



Item 2. Managements Discussion and Analysis and Results of Operations
 RESULTS OF OPERATIONSThe Company had gross operating revenues from its 2 mineral projects of $5,204 during the
second quarter of 2005, versus $8,680 in 2004, broken down as follows:Golden Chest MineThe Companys Golden Chest Mine generated revenues from operations of $1,324 in the second
quarter of 2005, versus $4,800 in the second quarter of 2004. The decrease of $3,476 was
the difference between the fair market value of the stock payment received during the
second quarter of 2004 from New Jersey Mining Company (hereinafter New Jersey) during the
exploration agreement on the mine, and actual cash NSR royalty payments received in the
second quarter of 2005 from the development ore mined during the 2004 ramp project.Pend Oreille/Metaline Zinc MinesThe amount of the advanced royalties received from Teck Cominco American Incorporated
(hereinafter Teck Cominco) under the New Cominco Lease remained constant at $3,880 in the
second quarters of 2005 and 2004.Operating LossThe Company experienced an overall operating loss of $7,199 in the second quarter of 2005,
versus $5,992 in the second quarter of 2004. The increased loss was mainly due the
decrease in revenues received from the Golden Chest Mine project discussed above.There was a $2,269 decrease in administrative expenses in the second quarter of 2005 to
$12,403, versus $14,672 in the second quarter of 2004. The decrease is attributable to: a
decrease of $490 in accounting fees; $608 in financial printing expenses; $1,738 in rent
expense; and $1,760 in transfer agent fees. These decreases were, however, offset by
increases of $1,345 in promotional fees, and other office expense-type items. Promotional
expenses have been increasing due to managements efforts to introduce the Company and its
projects to the investment community.Other IncomeDuring the second quarter of 2005, the Companys other income increased by $516, to $2,341,
from $1,825 in 2004, due to an increase in dividend income of $368, and the Company having
no loss on its 7% membership interest in Metaline Contact Mines LLC. Interest income
remained constant at $1,915 for the second quarters of 2005 and 2004.FINANCIAL CONDITIONIt is managements opinion that the Company can continue as an on-going business at its
current level of operations for approximately 2 years without the infusion of additional
capital. Additional capital could be obtained from: increased revenues from operations;
the sale of shares of the Companys authorized, but unissued, common stock; and/or the sale
of certain of the Companys assets.
 -3-




---



##### Table of Contents



On the subject of increasing revenues from operations, production decisions on the
Companys mineral projects are under the sole control of third parties; namely, Teck
Cominco and New Jersey. However, during the second quarter of 2005, New Jersey commenced
commercial mining operations at the Companys Golden Chest Mine. Anticipated production is
50 metric ton per day from which the Company will receive NSR production royalties. At
this time, however, the Company is unable to project the impact these NSR royalty revenues
will have on the Companys future earnings due to the newness of the mining operation.LIQUIDITY AND CAPITAL RESOURCESTraditionally, the Company has funded its capital requirements from revenues from
operations, dividends earned on its cash accounts, and other income. As of June 30, 2005,
the Companys cash position was $84,794, compared to $90,652 on June 30, 2004. The Company
has no debt, and does not expect to incur any debt in the immediate future. The Companys
most significant cash requirements are professional fees and expenses associated with its
Securities and Exchange Commission reporting requirements.The Company has a related party receivable from Nor-Pac Limited Company in the amount of
$109,413, with accrued interest of $34,466, as of June 30, 2005. The Company believes it
has the ability to collect this receivable in the event of a shortfall of cash. In
addition, the Company owns 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.Subsequent EventOn July 28, 2005, the Company received NSR production royalties from New Jersey, as
follows: $777.00 from the sale of sulfide concentrates generated from commercial mining
operations at the Golden Chest Mine during a portion of the second quarter of 2005; and
$75.31 from the sale of the balance of the higher-grade material recovered from the
cleanout of New Jerseys ball mill from development ore mined during the 2004 ramp project.
 
 Item 3. Controls and Procedures
 The Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO) performed
an evaluation of the effectiveness of the design and operation of the Companys disclosure
controls and procedures. On that evaluation, the CEO and CFO concluded that the Companys
current disclosure controls and procedures were effective as of March 31, 2005 in ensuring
that all material information required in this quarterly report has been made known to them
in a timely fashion.
 There have been no changes in the Companys internal controls over financial reporting
during the quarter ended March 31, 2005 that has materially affected, or is reasonably
likely to materially affect, its internal controls over financial reporting.For further information refer to the Controls and Procedures section in the Companys
Annual Report on Form 10-KSB for the year ended December 31, 2004, incorporated herein by
reference.
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
 The Company is not a party to any legal proceedings, and management is not aware of any
threatened litigation, claims or assessments.
 -4-




---



##### Table of Contents



Item 2. Changes in Securities
 There has been no change in securities for the quarter ending June 30, 2005.Subsequent EventOn July 22, 2005, the Company issued 1,000,000 of its authorized, but unissued, common
stock to Paymaster Resources Incorporated (Paymaster) pursuant to its agreement with
Paymaster to acquire the lease on the Golden Chest Mine.
 
 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)
    
    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)
    
    No Form 8-Ks were filed during the 2nd quarter of 2005.
 
 SIGNATURES
  DATED this the 12th day of August, 2005
    
    METALINE CONTACT MINESBy:
    
    /s/ John W. BeasleyJohn W. BeasleySecretary/Treasurer/CFO
 -5-