<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(MARK ONE)

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

                   For the Fiscal Year Ended December 31, 2003

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

       For the transition period from _______________ to ________________

                        Commission File Number 000-31380

                              ATLAS MINING COMPANY
                              --------------------
                 (Name of small business issuer in its charter)

             Idaho                                       82-0096527
-----------------------------------         ------------------------------------
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)

                             630 East Mullan Avenue
                               Osburn, Idaho 83849
                               -------------------
               (Address of principal executive offices)(Zip code)

Issuer's telephone number, including area code:  (208) 556-1181

Securities registered pursuant to Section 12(b) of the Act:

Title of each class            Name of each exchange on which each is registered
-------------------            -------------------------------------------------
       None                                       None

Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, no par value
                           --------------------------
                                (Title of class)

         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 [ ]

         Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

         The issuer's revenues for the fiscal year ended December 31, 2003 were
$304,851.

         The number of shares of the registrant's common stock, no par value per
share, outstanding as of March 26, 2004 was 36,679,017. The aggregate market
value of the voting and non-voting common equity held by non-affiliates of the
registrant on March 26, 2004, based on the last sales price on the OTC Bulletin
Board as of such date, was approximately $9,169754.

                       DOCUMENTS INCORPORATED BY REFERENCE
         None.

         Transition Small Business Disclosure Format:     Yes [ ]       No [X]



<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

PART I

         ITEM 1.      DESCRIPTION OF BUSINESS..................................4
         ITEM 2.      DESCRIPTION OF PROPERTY.................................10
         ITEM 3.      LEGAL PROCEEDINGS.......................................15
         ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF
                           SECURITY HOLDERS...................................15

PART II

         ITEM 5.      MARKET FOR COMMON EQUITY AND
                            RELATED STOCKHOLDER MATTERS.......................15
         ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS....................17
         ITEM 7.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............27
         ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                            ON ACCOUNTING AND FINANCIAL DISCLOSURE............27

PART III

         ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
                            CONTROL PERSONS; COMPLIANCE WITH
                            SECTION 16(a) OF THE EXCHANGE ACT.................28
         ITEM 10.     EXECUTIVE COMPENSATION..................................29
         ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                            OWNERS AND MANAGEMENT AND RELATED
                            STOCKHOLDER MATTERS...............................30
         ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........31
         ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K........................32
         ITEM 14.     CONTROLS AND PROCEDURES.................................32

                        SIGNATURES



<PAGE>

                    NOTE REGARDING FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-KSB contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are
based on our current expectations, assumptions, estimates and projections about
our business and our industry. Words such as "believe," "anticipate," "expect,"
"intend," "plan," "will," "may," and other similar expressions identify
forward-looking statements. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. These forward-looking statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those reflected in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in the section of this Annual Report entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Factors Affecting Business, Operating Results and Financial Condition", as well
as the following:

         o        our uncertainty whether a commercially viable deposits or
                  "reserves" exist on any of our properties;

         o        our lack of capital and whether or not we will be able to
                  raise capital when we need it;

         o        risks of loss of timber revenues due to fire, disease or
                  weather;

         o        change of market prices for timber, halloysite clay or other
                  marketable deposits we may find on any of our properties;

         o        whether or not we will continue to receive the services of our
                  executive officers and directors, particularly our President,
                  William T. Jacobson;

and other factors, some of which will be outside our control. You are cautioned
not to place undue reliance on these forward-looking statements, which relate
only to events as of the date on which the statements are made. We undertake no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. You should refer to and
carefully review the information in future documents we file with the Securities
and Exchange Commission.




<PAGE>

                                    PART I

ITEM 1.  BUSINESS
HISTORY AND DEVELOPMENT OF THE COMPANY
--------------------------------------

         We are a natural resources company engaged in the acquisition and
exploration of our resource properties in the states of Idaho and Utah. We also
provide contract mining services and specialized civil construction services for
mine operators, exploration companies and the construction and natural resources
industries through our trade name "Atlas Fausett Contracting." We were
originally incorporated on March 4, 1924 in Idaho and commenced our operations
on that date.

         From 1980 to 1997, we had no activities. In 1997, we acquired the
equipment of Fausett International, Inc. for $1,416,099 and began our
contracting business. In 1998, we acquired the Sierra Silver Lead Mining
Company, an Idaho corporation for $276,157. This merger added an additional
329.18 acres of mineral rights to our current holdings. In 1999, we also
acquired the majority outstanding shares of Olympic Silver Resources, Inc., a
Nevada corporation for $228,566. The acquisition of Olympic gave us control of
an Olympic subsidiary mine in Zacatecas, Mexico. In 2001 our agreement on the
mine in Zacatecas expired and we no longer have any interest there. In 1999 we
acquired the Aulbach mining claims for $ 50,000, approximately 100 acres of
timber and mineral property in northern Idaho. In 1999 we acquired 53% interest
in the Park Copper Mining Company for $72,825, which holds 100 acres of timber
and mineral property in northern Idaho. In 2001, we entered into a lease
purchase agreement on the Dragon Mine in Juab County, Utah for $100,000. We
believe this property may contain a deposit of high quality clay, which we plan
to explore further. In 2002, we cancelled our agreement with Fausett
International, Inc., returned the equipment, and settled the remaining debt. We
were not able to utilize this equipment enough to justify the cost related to
owning it.

         In the future, we intend to be able to acquire additional properties
near our current mines and elsewhere.

            We also intend to bring the Dragon Mine into a development and
production stage.

         In addition to the mineral resources, we also have harvestable timber
resources on our properties. We contract out logging of our timber to create
revenues and cash flows for our other operations. We have also harvested timber
on approximately 320 acres of our previously owned and newly acquired
properties.

         We also intend to continue our contract mining services. These services
were originally developed and marketed to provide us with operating revenues. We
hope to increase the revenue derived from these services and to utilize our
expertise in this area to explore our owned properties.


                                       4

<PAGE>

         CONTRACT MINING
         ---------------

         Because of exploration costs and other budget constraints, mining on
our properties has remained idle since the 1980s. However, on August 10, 1997
our board met and approved a plan to revitalize Atlas Mining Company for the
purpose of increasing shareholder value and, in the long term, of making us an
operating company with producing mines.

         The first step in this process was to form a contract mining service
under the trade name of Atlas Fausett Contracting, which we refer to as AFC. We
acquired equipment and tools and hired key employees from Fausett International,
Inc., or Fausett, a privately held mining contracting firm with over 30 years
experience in the mining industry. These employees brought with them extensive
knowledge and expertise in all aspects of underground mining.

         AFC began contracting work on August 15, 1997. Among its many services,
AFC performs site evaluation, feasibility studies, trouble-shooting and
consultation prior to the undertaking of exploration and mine development. AFC's
projects include all types of underground mine development, rehabilitation and
specialized civil construction. Services are contracted for either individually
or as joint ventures depending on the requirements of a particular project or
the specific needs of an individual client. AFC also handles work under contract
from government agencies.

         AFC crews are experienced and have worked on projects in Idaho,
Montana, Oregon, Washington, Nevada, Colorado, Arizona, New Mexico, and British
Columbia. AFC has the required licenses to work in Idaho, Washington and Montana
and has the ability to license in most states in the western United States. AFC
operates under a permit from the Mine Safety and Health Administration and also
possesses a permit to handle explosives from the Bureau of Alcohol, Tobacco and
Firearms.

         AFC was the main contractor at the Mayflower Mine, a Brimstone Gold
Corp. project, outside of Whitehall, Montana, and for the Holden Mine closure, a
U.S. Government and U.R.S. Corporation project on Lake Chelan, Washington.

         AFC must also compete with other smaller companies that provide
contract services related to underground mining. However, AFC has experience in
a number of different mining techniques. Besides normal underground mining
activities, AFC has expertise in ground stabilization (such as grouting,
shotcrete, and rock bolting). AFC has provided tunnel construction expertise for
hydroelectric work. AFC also works with government agencies and other mining
companies with respect to mine closures to help with industry efforts to
alleviate potential hazards from abandoned mines.

         Since AFC mainly concentrates on underground mining activities, there
is very little surface disturbance, which is the main environmental concern
faced by mining companies whose activities are centered on surface mining.

                                       5

<PAGE>

         TIMBER
         ------

         Our entry into the timber industry was commenced primarily as a means
of generating cash flow from our exploration properties in northern Idaho. Our
intention is to remain in this industry only to the extent that it supplements
our revenue while we are conducting our exploration activities. With the amount
of timber remaining on Atlas property, we can supplement our revenue for the
next couple of years. As we harvest this timber, we will continue to seek out
additional exploration properties with harvestable timber. It takes
approximately fifteen to twenty years for a tree to mature in northern Idaho,
and our current goal is to acquire enough harvestable land to enable us to
rotate our logging activities on a yearly basis to allow previously harvested
areas the time to grow and mature marketable trees.

         When we sell or timber we contract our logging to a qualified logger,
Randy Mattson, whose experience and reputation in the industry qualifies him to
negotiate the sale of our timber to various lumber mills in the area. We do not
have a written contract with Mr. Mattson, but rather hire him on an as needed
basis. As with most commodities, timber is subject to price fluctuations and to
government regulation.

         The timber business is a cyclical business with lumber prices that
fluctuate based on a number of factors including new housing starts, imports,
and government regulations. North Idaho is predominately held by the U.S.
government, either by the Forest Service or by the Bureau of Land Management.
When these agencies decide to harvest timber the excess timber can affect the
price the mills are willing to pay. In recent years there have been less
government sales of timber due to the environmental and bureaucratic policies
related to these sales. This has created more demand for privately held timber.
We do not hold any contracts with any particular mills. We do, however, supply
timber to Louisiana Pacific, a local mill, which constitutes 80% of our annual
timber revenues generated, and maintain a good relationship with them. Another
factor that makes this aspect of our business cyclical is the weather. North
Idaho has a heavy snowfall each winter, making logging difficult during those
months. Consequently we do the majority of our logging efforts in the summer and
fall. Our property consists primarily of pine, fir and larch, which is used
predominately in the building industry.

         Our logging activities are regulated by the Idaho State Department of
Lands. They inspect our logging practices and inform us of any activities that
may cause either a safety or an environmental problem. Our logger carries
workers compensation and liability insurance, and falls under the guidelines of
Occupational Safety and Health Act.


                                       6

<PAGE>

       EXPLORATION
         -----------

         We intend to conduct our exploration activities for halloysite clay and
other minerals, and intend to acquire commercially feasible properties that can
be put into production with minimal environmental problems and with limited
financial resources. We do not intend to seek out and acquire other properties
until we have finished conducting our feasibility surveys and other exploration
work on our current properties. Although we have not yet generated income from
these properties, we are continuing our exploratory work on these properties.

         In August 2001, we acquired the Dragon Mine in Juab, Utah and began our
clay exploration. Our exploration expenses for the period ending December 31,
2002, and 2003 were $48,280 and $51,140, respectively on clay exploration.

         The halloysite clay is considered a non-toxic material and, if
commercially viable amounts are discovered on the property, we feel we can
produce a sellable product with minimal environmental consequences using proper
containment and processing techniques. The intended processing will be the
crushing, drying, and packaging of the product for shipment. In 2003 we
completed a small diamond drilling program to verify location of clay beds at
the Dragon Mine. With that information we have been able to formulate
development and mining plans. It is our intent to bring the Dragon Mine into a
development and production stage in the near future.

            We have also contacted potential customers, distributors and
suppliers in the clay businesses. Each buyer may have a different use for the
product and the price and quantity will vary as a result. The sale of product
can not be formalized until we have developed the mine and become production
ready.

         We are not aggressively looking for silver properties at this time, as
we have been concentrating on our efforts to bring the clay property from the
exploration stage to the development stage. However once the clay property is
further developed it is our intent to look for other properties that can be
acquired, developed and mined with minimal costs, and environmental problems.

         In anticipation of our clay exploration activities reaching the
development and/or production stages, we have submitted a mining and reclamation
plan to the proper state authorities, and have received acceptance of our plan.
In the future, we may pursue additional acquisitions and exploration of other
properties for metals and industrial minerals, development of which will require
submission of new mining and reclamation plans to the proper state and federal
authorities.

BUSINESS STRATEGY
-----------------

         As was noted above, the creation of AFC was done for the purpose of
creating operating revenues for us. We also intend to expand our exploration,
and our timber production.

         To date our activities have been financed primarily through debt and
the sale of equity securities and the issuance of equity for the acquisition of
mining property. See "Management's Discussion and Analysis - Results of
Operations."

         We will need to obtain additional funding to pursue our business
strategy. At the present time, we anticipate seeking additional funding through
additional private placements, joint venture agreements, production financing,
and/or pre-sale loans, although we have not entered into negotiations for any of
these sources at this time. Our inability to raise additional capital to fund
operations through the remainder of this year and through the next fiscal year
would have a detrimental effect on our viability and ability to pursue our
business plan.

                                       7

<PAGE>

COMPETITION
-----------

         CONTRACT MINING
         ---------------

         A review of Dun and Bradstreet shows that the main competitors of AFC
in the contract mining business are: American Mine Services, Inc.; Dynatec
Mining Corporation; Tyson; J.S. Redpath and Small Mines Development. Each of
these companies are larger than AFC or part of larger companies which gives them
the depth to take on larger projects that require large capital investments.

         Similarly, AFC must compete with other companies that provide contract
services related to underground mining. AFC has had the opportunity to compete
outside of this area on occasion in that it has used its underground mining
expertise in different ways. Such related use of this expertise has been in such
things as rock bolting, shotcrete, and grouting for ground support. AFC has
provided tunnel construction expertise for hydroelectric work. AFC has also
acquired and completed mine closure projects under the jurisdiction of the
Forest Service and State and Federal Environmental Agencies.

         The amount of underground contracts for which AFC could bid fluctuates
greatly depending on the economic climate of the industry. However on average
the total contracts offered are generally between $100 and $120 million per
year. Over the past year AFC has not pursued any of the larger projects which
accounts for 80% to 90% of all projects available, and has only looked at
smaller projects in the three state area of Idaho, Montana and Washington. In
the future the company intends to use some of it existing AFC personnel to
pursue any activities on its other properties.

         However, we believe we are in a unique position due to our manpower and
mining knowledge and experience. AFC has the ability to compete on larger
projects because of its expertise. However, the issue of whether to compete on
larger projects depends on our willingness to devote the necessary capital,
bonding, and other resources to larger projects when these resources might be
better used in the exploration of our own properties. The goal of our management
at this time is to show continued growth and profitability in AFC in order to
support the total corporate structure, and to utilize the talents and resources
of the AFC for our own exploration projects when those resources are available.

         Up until this past year we have noticed less activity in the mining
industry in the United States. The price of metals and increased costs due to
regulations imposed on the industry have driven mining costs upward making
mining less profitable. Consequently, the ability to generate a sustainable
revenues source from AFC has been hampered, and management has decided to find
mineable resources on its own properties to utilize the manpower and equipment
available to the company. As the trend in metals prices improves, the
possibility of more contracting activity should also improve.

         TIMBER
         ------

         We face large numbers of competitors in this industry, and our
competitors include individuals who may own property in northern Idaho and wish
to sell their lumber at market prices to local mills. We are affected by market
prices, and as prices fall and competing suppliers increase, our revenues from
this business may fall significantly. Logging activities in northern Idaho are
seasonal due to the large amount of snow that accumulates during the winter. We
do most of our logging activity in the summer and fall.

         EXPLORATION
         -----------

         We face a large number of competitors with respect to our exploration
activities. Although we may have some advantage with respect to companies
smaller than ours, we also face the common disadvantage against larger companies
with more available capital. Consequently we have limited our exploration
activities to the clay property (Dragon Mine).


                                       8

<PAGE>

GOVERNMENTAL REGULATION
-----------------------

         CONTRACT MINING
         ---------------

         We are subject to a variety of state and federal regulations with
respect to this aspect of our business. Most states require a contractors'
license before conducting business in their state. Each state has a different
procedure for licensing. We estimate the annual cost to maintain our state
contractors licenses to be approximately $500 per year. We obtain and pay
workers compensation insurance, unemployment, and state withholding in all
states in which we work. We handle these functions as a part of our normal
clerical process.

         Several states that we operate in require a permit to handle
explosives, and we maintain such a license under the U.S. Bureau of Alcohol
Tobacco and Firearms (ATF, USC18, Chapter 40). This license must be renewed
every three years. If we hire new employees that will handle our explosives, we
are required to submit information to the ATF. Over the past year, the ATF has
asked that we keep in contact with them regarding any projects that require the
use of explosives.

         Property owners must also obtain permits prior to mining. We have
always required that the mine owner permit his project with the proper
regulatory authority prior to beginning work, which relieves us of any cost or
liability.

         We are licensed under the Mine Safety and Health Act of 1997 (MSHA)
(License number: VL-2). We are required to submit quarterly reports of our
activities MSHA and to conduct annual refresher courses for our employees. The
annual cost of these functions varies based on the amount of activity.

         We estimate that compliance with the described state and federal
regulations costs us approximately $7000 per year.

         TIMBER
         ------

         Our timber business is regulated by the Idaho state Department of Lands
under the Idaho Forestry Act Title 38, Chapter 1. Under this regulation, a
logger must apply for and obtain a Notification of Forest Practices prior to
starting a logging project. This permit requires the logger to maintain proper
logging practices, including erosion abatement, and fire prevention. The State
of Idaho retains $4 per thousand board feet from all logs hauled to the mill,
and once the project is completed, along with a State inspection verifying that
the project was completed according to Idaho Forest Practices Act, the logger
applies for a release of these funds. Although we contract out our logging, we
may be liable, as the landowner, for problems created by the logger. However, we
take measures to ensure that our contracted loggers are reputable and incidents
do not occur. We do not currently have any direct costs related to this
regulation.

         EXPLORATION
         -----------

         Should we decide to conduct exploration activities in Idaho, we must
notify the Idaho State Bureau of Mines as required under Title 47, Chapter 1,
the Department of Lands, and the federal Mine Safety and Health Administration
of our intent. If we produce any ground disturbance, we will then need to notify
the State Department of Environmental Quality to ensure that we are working
within their guidelines. However, we do not intend to conduct any exploration in
Idaho at this time.

         We do intend to conduct some exploration at the Dragon Mine in Juab
County, Utah. The Utah Department of Natural Resources sets the guidelines for
exploration based on provisions of the Mined Land Reclamation Act, Title 40-8,
Utah Code Annotated 1953, as amended, and the General Rules and Rules of
Practice and Procedures, R647-1 through R647-5. We have applied for and received
the proper permit from them. Before we start any long-term work at the Dragon
Mine, we will also apply for authority from the Utah Department of Commerce to
conduct business as a foreign corporation in the state as required by Utah Code,
Title 16-10A-1501. Compliance with these regulations is expected to cost us
approximately $200 per year. We do not plan to hire any additional people for
this process at this time, but will utilize existing employees already covered
by Idaho State employment regulations.

                                       9

<PAGE>

EMPLOYEES
---------

         As of December 31, 2003, Atlas Mining and its subsidiaries have ten
employees. We have also outsourced some of our logging work to a logging
contractor who employs approximately six people. In addition, we periodically
utilize the services of various individuals on a consulting basis. In 2002 and
2003, we hired a geologist, Richard Tschauder, and an industrial minerals
consultant, Phlogiston Company, for their consulting services. We do not have
employment agreements with any of our employees. None of our employees are
covered by a collective bargaining agreement, we have never experienced a work
stoppage, and we consider our labor relations to be excellent.


ITEM 2.  DESCRIPTION OF PROPERTY

PRINCIPAL OFFICE
----------------

         We rent office space from the Mcgillvray Environmental in Osburn,
Shoshone County, Idaho. The address of the property is 630 East Mullan Avenue,
Osburn, Idaho 83849. The property is a two-room office, containing approximately
800 square feet, in a business complex in the downtown area of Osburn, Idaho.
The rent is $300 per month and there is no rental agreement.

MINING PROPERTIES
-----------------

         We have assets of real property, mineral leases and options. The
following section describes our right, title, or claim to our properties and
each property's location. This section also discusses our present plans for
exploration of the properties, and an estimate of mineralized material located
on each property. Please refer to our Glossary at the end of this section for
definitions of technical terms used in our discussion.

SHOSHONE COUNTY, IDAHO
----------------------

         Exploration
         -----------

         We own approximately 800 acres of fee simple property and patented
mining claims, and 260 acres of mineral rights and unpatented claims, located in
the Coeur d'Alene mining district in Shoshone County, Idaho, commonly referred
to as the Silver Valley of North Idaho. Atlas was originally incorporated to
pursue mining activities on the Atlas mine property near Mullan, Idaho. This
property had some past production of silver, lead, zinc and copper in the early
1900's. However, the existence of minerals on this property cannot be determined
without extensive exploration. Any revenues we may eventually generate may be
used to further explore mines within the Shoshone County area or to acquire and
explore new properties wholly unrelated to our Shoshone County properties. We
have no plans for exploration of the Shoshone County mines at this time.

         Our properties in Shoshone County are divided into five separate
tracts. These sections are named for the mines located in that specific section.
The section location and estimated acreage are as follows:

          Section Of The Coeur D'Alene Mining District Estimated Acres
          ------------------------------------------------------------

Atlas Mine                                 540 acres fee simple and patented,
                                             180 unpatented
Sierra Trapper Creek                       80 acres patented
Aulbach, Section 6 & 7                     100 acres patented
Sierra Silver, Woodland Pk & 9 Mi          60 acres patented, 80 acres mineral
                                             rights
Sierra Hardscrabble                        20 acres patented

         The largest section is the Atlas Mine. The underground Atlas Mine, idle
since the early 1980's due to exploration budget restraints, is located on the
east end of the Coeur d'Alene Mining District in Shoshone County. The property
is accessible by interstate freeway and a county maintained road. Geologically,
the property lies just south of the Osburn Fault in the Wallace and St. Regis
formations. The Mine has over 7,000 feet of tunnels with a rail system and a
2,000-foot internal shaft which can be accessed for future exploration.

                                       10

<PAGE>

         The other properties in Shoshone County have no accessible workings.
All the properties are accessible either by state highway, county road or forest
service roads.

         The Atlas property currently carries a first mortgage to CLS Mortgage,
and a second mortgage to American Mortgage. We owe CLS Mortgage $119,236, on
which we pay $1,614 per month. We owe American Mortgage $552,308. However,
American Mortgage has been closed down by state regulators and has filed
bankruptcy. We are in the process of negotiating a settlement of this debt.

         Timber
         ------

         We estimate that our properties in Shoshone County contain
approximately 2 million board feet of harvestable timber. We contract with
independent loggers to harvest the timber and deliver it to mills. We contract
our logging activities to Randy Mattson, who has over 20 years of experience in
the industry. The current return to Atlas is approximately $150 per thousand
board feet. A board foot of lumber is one foot by one foot by one inch. We
implement reforestation techniques to replenish its timber supply.

         We acquired our Sierra properties through the acquisition of Sierra
Silver Lead Mining Company. Through this purchase the Company acquired
approximately 329 acres of mineral rights that include approximately 250 acres
of surface land and timber. Although there was a small amount of zinc mined on
the Sierra Silver property, there has been no mining activity for over forty
years. Subsequent to the purchase we sold approximately 100 acres. The majority
of the Sierra property lies south of the Osburn Fault in the Wallace formation,
and has no reserves. The property does have approximately 500,000 board feet of
timber, which we value at approximately $75,000.

         We acquired our Aulbach claims in March 1999 from Trail Gulch Gold
Mining Company. Through this purchase, we acquired approximately 100 acres of
surface land and mineral rights, including timber rights. To date, we have
logged approximately 650,000 board feet of timber on the property with an
approximate net value of $105,000.

ZACATECAS, MEXICO
-----------------

         San Acacio Mine
         ---------------

         We previously controlled the mining assets of the San Acacio Mine in
the Zacatecas District of Mexico until our agreement on the property expired in
July 2001. We no longer have any interest in the San Acacio Mine.

JUAB COUNTY, UTAH
-----------------

         Dragon Mine
         -----------

         The Dragon Mine property, located in Juab County, Utah near the City of
Eureka (Tintic Mining District) has been principally exploited for halloysite
clay, a rare and high unit value clay mineral. The property consists of 38
patented mining claims, approximately 230 acres, located in the following
sections: T10S, R2W, sections 29, 30, 31, and T10S, R3W, Section 36, all
relative to the Salt Lake Meridian. Since July 10, 2001, Atlas Mining Company
has leased the property from Conjecture Silver Mines, Inc., whose address is
P.O.B. 14006, Spokane, Washington 99214. We initially paid 400,000 shares of our
common stock, valued at $100,000, for a one-year lease. Under the terms of the
lease agreement, we have the right to renew the lease annually in exchange for
100,000 additional shares of our common stock, or we may buy the property for
$500,000 if we have $1,000,000 in sales from the mine in a 12-month period. On
June 20, 2003, we notified Conjecture Silver Mines of our intent to renew our
lease for an additional year. On July 14, 2003, we issued an additional 100,000
shares of common stock to Conjecture Silver Mines, Inc. for rights to the
property for another year. Should we mine the property, if warranted, before we
have completed purchase of the property, we are liable to pay a 3% cash royalty
on the gross sales of product from the property.


                                       11

<PAGE>

         Conjecture Mines acquired the claims through a Quit Claim deed and
share exchange with Grand Central Silver Mines, Inc. From 1950 to 1977, the
Dragon Mine was owned by Anaconda and operated by Filtrol Corporation. The
property has been idle since 1977. Examination of the mine maps, the open pit
and surviving correspondence, coupled with informal interviews of former
employees, all lead us to the conclusion that the mining techniques were likely
inefficient which combined with developments of synthetic catalysts (the
halloysite was mined for petroleum cracking) led the mine to price itself out of
business.

         Previous owners' records indicate that over 1.1 million tons were mined
at the property from 1950 until it closed. Those records also indicate
approximately 300,000 tons of mineralized material remain on the property. The
previous owners also conducted some exploration core drilling and some reverse
circulation drilling, but the records of the results are incomplete. The figures
in this paragraph depend on the assumption that the old records and maps are
accurate. Our analysis of the surviving maps and record lead us to believe that
their estimates of 300,000 tons of mineralized material are still valid. The
previous owners' geologists determined the area of influence was no more than 80
feet along strike and 100 feet along dip. There were no chemically quantifiable
cutoffs to the mineralized material. It appeared that the most distinguishable
factors were visual indicators. The specific gravity they used was a density of
17 cubic feet per ton. In 2003 we conducted a small exploration drilling
program, have been able to confirm this information.

         The property is located in the arid mountains approximately 2 miles
west of Eureka, Utah and can be accessed via state highway and county road. The
property has been mined in the past, however the only evidence of mining is an
open pit area and an abandoned head frame. The Union Pacific Railroad has a spur
approximately 2 miles from the property. Power is approximately 1.5 miles from
the site, and there is no available water on the property at this time.

         We believe the halloysite material formed through the alteration of a
shale bed lying between a limestone bed and igneous rocks. The base of the
limestone was selectively replaced by iron oxide material with abundant
manganese. The shale was altered to halloysite. This unit is evident in the open
pit. Following the alteration event, halloysite was squeezed into
northeast-striking faults upward through the limestone to the top of the bedrock
in places. Our geologists see added potential to the northeast along these
faults and in the replaced beds to the east and northeast. This potential has
not yet been quantified.

         Samples taken from surface exposures of the halloysite material have
been made available to parties interested in conducting suitability tests.
Samples have been taken from seven areas within the open pit. On the surface,
the halloysite material is chalky white, often stained by iron leaking downward
from the iron cap, but a few inches beneath the surface, the halloysite material
turns to soft, wet-looking and soapy feeling, often with a bluish tinge.
However, this material loses its water content and turns chalky within a few
days of exposure to air.

                        DESCRIPTION OF PROPERTY GLOSSARY
                        --------------------------------

Alteration:       Changes in chemical or mineralogical composition of a rock
                  generally produced by weathering or hydrothermal solutions.

Clay:             A size term regarding particles, regardless of mineral
                  composition, with a diameter of less than four microns, or a
                  group of hydrous alumino-silicate minerals related to the
                  micas.

Development:      The preparation of an established commercially mineable
                  deposit (reserves) for its extraction which are not in the
                  production stage.

Exploration:      The search for mineral deposits (reserves) which are not in
                  either the development or production stage.

Fault:            A fracture or fracture zone along which there has been
                  displacement of the sides relative to one another parallel to
                  the fracture.

Formation:        The primary unit of formal mapping or description.

Grout:            A form of ground stabilization where in cement is pumped into
                  the rock formation.

                                       12

<PAGE>

Halloysite:       A clay mineral related to kaolin with essentially the same
                  chemical composition, but has crystals which are slender
                  hollow tubes.

Mineral:          A naturally formed chemical element or compound having a
                  definite range in chemical composition and usually a
                  characteristic crystal form.

Mining Claim:     That portion of mineral lands that a miner takes and holds in
                  accordance with mining laws.

Open Pit:         A hole in the ground left by the extraction of material.

Reserve:          That part of an identified resource from which a useable
                  commodity can be economically and legally extracted at the
                  time of determination.

Resource:         A concentration of naturally occurring materials in such form
                  that economic extraction is currently or potentially feasible.

Shaft:            An excavation of limited area compared to its depth.

Shotcrete:        A form of ground stabilization where concrete is sprayed on
                  the rock to give it strength.

ITEM 3.  LEGAL PROCEEDINGS

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is quoted on the National Association of Securities
Dealers, Inc. Electronic Bulletin Board (the "OTC Bulletin Board"), and is
traded under the symbol "ALMI". Our common stock began trading on the OTC
Bulleting Board on July 19, 2002; prior to that date our stock traded on the
Over-The-Counter Pink Sheets under the symbol "ALMI". These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.

                                  2003                2002
                             High      Low       High       Low
                             ----      ---       ----       ---
         First Quarter      $0.15     $0.08      $0.15     $0.08
         Second Quarter     $0.12     $0.055     $0.13     $0.09
         Third Quarter      $0.16     $0.05      $0.16     $0.17
         Fourth Quarter     $0.19     $0.08      $0.18     $0.06

         As of March 25, 2004, there were approximately 1,678 holders of record
of our common stock. This number does not include an indeterminate number of
shareholders whose shares are held by brokers in street name. Since we have
become a reporting company, we have never declared or paid any cash dividend on
our common stock. We expect to continue to retain all earnings generated by our
operations for the development and growth of our business, and do not anticipate
paying any cash dividends to our shareholders in the foreseeable future. The
payment of future dividends on our common stock and the rate of such dividends,
if any, will be determined by our board of directors in light of our earnings,
financial condition, capital requirements and other factors.

         Our Board of Directors has adopted two equity compensation plans, the
Stock Option Plan of Atlas Mining Company, and the Incentive Stock Option Plan
of Atlas Mining Company. Both plans were adopted in 1998. Options under the
Stock Option Plan of Atlas Mining Company will expire 5 years from the date of
grant, and the price per share for each option granted will be set by the
Administrative Committee. As of December 31, 2003, no options have been granted
under the Stock Option Plan of Atlas Mining Company. Options issued under the
Incentive Stock Option Plan of Atlas Mining Company will have a price per share
at least equal to the fair market value of the Company's common stock on the
date of the grant. As of December 31, 2003, no options have been granted under
the Incentive Stock Option Plan of Atlas Mining Company.

                                       13

<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

         On January 27, 2003, the Company issued 1,000,000 shares of its common
stock to an officer and director of the Company in payment of $100,000 debt to
that party. This issuance was exempt from registration pursuant to Section 4(2)
and Rule 506 of the Securities Act of 1933 because this issuance was not a
public offering.

         On March 31, 2003, the Company issued 2,500,000 shares of its common
stock to an accredited investor for payment of $250,000 in cash. The issuance of
the shares was exempt from registration pursuant to Section 4(2) and Rule 506 of
the Securities Act of 1933 because this issuance was not a public offering.

            On May 31, 2003, the Company issued 1,000 shares of its common stock
to an accredited investor for payment of $100 in cash. The issuance of the
shares was exempt from registration pursuant to Section 4(2) and Rule 506 of the
Securities Act of 1933 because this issuance was not a public offering.

            On July 14, 2003 the Company issued 100,000 shares of its common
stock valued at $10,000 to Conjecture Mines, Inc for payment its annual lease
payment on the Dragon Mine. This issuance was exempt from registration pursuant
to Section 4(2) and Rule 506 of the Securities Act of 1933 because this issuance
was not a public offering.

            On October 2, 2003 the Company issued 20,000 shares of its common
stock valued at $1,400 to an individual for services. This issuance was exempt
from registration pursuant to Section 4(2) and Rule 506 of the Securities Act of
1933 because this issuance was not a public offering.

            On October 30,2003 the Company issued 10,000 shares of its common
stock valued at $700 to an individual for services. This issuance was exempt
from registration pursuant to Section 4(2) and Rule 506 of the Securities Act of
1933 because this issuance was not a public offering.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         Our discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. On an on-going basis, we evaluate our estimates based on historical
experience and various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

         We are a natural resources company engaged in the acquisition and
exploration of our resource properties in the states of Idaho and Utah. We also
provide contract mining services and specialized civil construction services for
mine operators, exploration companies and the construction and natural resource
industries through our trade name "Atlas Fausett Contracting."

         Currently, our primary source of revenue is generated by our Atlas
Fausett Contracting operations. However, we also have exploration targets and
timber.

CONTRACT MINING

         Our contract mining normally generates 80% of our revenues. This may
decrease as we are able to increase operations on our owned properties, and we
will adjust our resources accordingly. At this time, we anticipate that our
contracting will generate no less than approximately 50% of our revenues.

PROPERTY EXPLORATION

         We are currently considered an exploration company. Our efforts in
exploration are dependent upon the available funds we can raise to pursue our
exploration efforts. During 2003 we had exploration expenses amounting to
$51,140. We have no assurances that our exploration will result in proving any
commercially viable deposits. We realize that additional steps will need to be
taken to move from an exploration stage to a development or productions stage.

                                       14

<PAGE>

         The majority of our exploration has been at the Dragon Mine in Juab
County, Utah. We have furnished samples of the halloysite clay extracted from
this property to potential buyers and distributors. The preliminary results of
these samples have been favorable, although we have not yet received any firm
commitments; we have received non binding letters of intent from potential
buyers. It is our intent to move into the development and productions stage of
this property.

TIMBER

         We will continue to harvest timber on our property. Timber harvesting
will be dependent upon lumber prices and weather.

FISCAL YEAR ENDED DECEMBER 31, 2003 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2002.

         Our operations for the period ended December 31, 2003, and the period
ended December 31, 2002 consisted mostly of our contracting work, logging income
and some exploration activities.

REVENUES

         Our total revenues for the period ending December 31, 2003 were
$304,851, compared to $403,586 for the period ending December 31, 2002,
resulting in a 24% decrease from the same period the previous fiscal year. The
reason for this is due to fewer revenues received in 2003 from logging
activities. Our contract mining revenue for the period ending December 31, 2003
was $298,707 compared to $284,196 for the period ended December 31, 2002, or an
increase of 5%. Our timber revenue for the period ending December 31, 2003 was
$3,955, compared to $116,048 for the same period ended December 31, 2002, which
is a 97% decrease from 2002 to 2003. We logged less in 2003 because the lumber
mills were paying less for logs during part of the year, and the high fire
danger limited our activities in the forest.

GROSS PROFIT

         Our Gross profit for the year ended December 31, 2003 was $(30,253)
compared to $103,356 for the year ended December 31, 2002. This is a 129%
decrease from the previous year. The main reason for this was the lack of timber
revenues ($112,093 less) in 2003, compared to 2002, and some higher direct
expenses in 2003 compared to 2002.

GENERAL AND ADMINISTRATIVE EXPENDITURES

         Our general and administrative expenditures for the period ending
December 31, 2003 were $1,255,182, which is A 63% increase from the same period
the previous fiscal year. The reason for this is attributable to additional
costs in 2003 not incurred in 2002 of $466,737 in professional and fees, and
$156,681 in advertising expenses. In 2003 we finalized our payments to the SEC
attorneys for the completed registration statements.

CAPITAL EXPENDITURES

         We had no capital expenditures for the period ending December 31, 2003
and December 31, 2002.

INTEREST PAYMENTS

         Our interest payments for the period ending December 31, 2003 were
$91,337, which is a 55% decrease from the same period the previous fiscal year.
The reason for this is due to regulatory closure and subsequent bankruptcy of
American Mortgage, our major creditor, resulting in our suspension of payments
pending settlement of the debts.

EXPLORATION EXPENDITURES

         Our exploration expenses for the period ending December 31, 2003 was
$51,140 compared to $48,280 for the previous fiscal year, which is a 6% increase
from the same period the previous fiscal year. These expenses were incurred at
the Dragon Mine, in Juab County, Utah, where we completed a small diamond
drilling program in 2003.

                                       15

<PAGE>

NET PROFIT (LOSS)

         Our net losses for the period ending December 31, 2003, ($1,382,038),
is a 94% increase over the same period the previous fiscal year. The reason for
this is attributed to less revenue in 2003 than in 2002 ($98,735 less), and
additional general and administrative expenses in 2003 ($483,349 more).

LIQUIDITY AND CAPITAL RESOURCES

         To date our activities have been financed primarily through the sale of
equity securities, borrowings, and revenues from Atlas Fausett Contracting and
logging operations. We intend to continue pursuing contracting work and to log
our timber properties to help pay for our operations. In 2003 and 2002 the
contracting work accounted for about 98% and 70% of the total revenues
respectively. We have also borrowed from various sources to finance our
activities. Our current debt structure is explained below.

         We have a note payable to William Jacobson, an officer and director,
which is payable on demand and bearing no interest. The proceeds of this
obligation were used for general working capital. The current amount due as of
December 31, 2003 is $70,829. We have an unsecured line of credit with Textron
Financial at an interest rate of prime plus 6%. The balance of the line of
credit at December 31, 2003 and 2002 was $23,094 and $28,024, respectively. The
funds were used for general working capital. Accounts payable due as of December
31, 2003 were $214,855 and are the result of daily operations and taxes owed.

         We have a note payable to Moss Adams, LLP, an accounting firm, for
$53,250 due in monthly payments of $1,000 with a balloon payment due at
maturity. The note matured on August 16, 2002. We have negotiated the terms of
repayment, and can pay this debt for approximately 50% of the value. The note
was for accounting services provided to us in 1999 and 2000. As of December 31,
2003 our current balance, including interest is $70,734. We have notes in the
amount $552,300 payable to American National Mortgage due in monthly
installments for interest and fees of $18,743.79, maturing on May 31, 2003, and
secured by property in northern Idaho. American Mortgage has filed bankruptcy,
and we are negotiating a settlement on this debt. We also have a note payable to
CLS Mortgage Company, due in monthly installments of $1,614, including interest
at 16%. The note has a current balance of $119,236, and is due in August 2005,
secured by the proceeds of our logging activities and collateralized by land and
a building on our property in northern Idaho.

         Our principal sources of cash flow are from our timber properties,
which averaged $330 per month in fiscal year 2003 and $9,600 per month in 2002,
and our contract mining, which averaged $24,892 per month in fiscal year 2003
and $23,680 in 2002. In addition, we also rely on our credit facilities and any
public or private equity issuances we may conduct in the future.

         Cash flow from financing activities for the fiscal year ended December
31, 2003 was $593,498 compared to $593,992 for the same period in 2002, a
difference of $494.

         The Company realized a use of funds of ($45,431) from investing
activities for the fiscal year ended December 31, 2003, compared to ($31,307)
for the same period in 2002, a difference of $14,124. The main difference
attributed to the sale of investments during 2003 of $10,503 compared to $1.538
for the same period ended December 31, 2002.

         Cash flow from operating activities for the fiscal year ended December
31, 2003, was ($546,589) compared to ($557,439) for the same period in 2002, a
difference of $10,850. The Company had greater operating losses in 2003 because
of the lack of revenues and accumulated more costs in the company's efforts to
complete SEC filings.

         As of April 1, 2003, we rent office space at 630 E. Mullan Avenue in
Osburn, Idaho for $300 per month, on a month-to-month basis from the Mcgillvray
Environmental.

         If we do not reduce any of this debt from proceeds of our offering, if
we do not renegotiate any of this debt or if repayment is demanded, we would be
obligated to pay an average of $80,256 per month or $963,080 for the next fiscal
year.

                                       16

<PAGE>

         In anticipation of the cash needs for the upcoming year, we have
completed an SB-2 filing with the Securities and Exchange Commission. This
filing was first approved in July 2002, revised and approved again in February
2003. Under the revised application, the company was able to sell up to
10,000,000 shares of common stock at a price of $0.10 per share. These shares
have been sold and the company carries a subscription receivable as of December
31, 2003 for uncollected proceeds of $524,700.

         During 2003 the company entered into an agreement with a group to
acquire $2 million in financing through a restricted common stock sale and a
convertible note. The group has funded $250,000, however, it did not complete
its commitment. The company issued 2.5 million shares of restricted stock on
March 31, 2003.

         We will need to obtain additional funding to pursue our business
strategy during the next fiscal year. At the present time, we anticipate seeking
additional funding through additional private placements, joint venture
agreements, production financing, and/or pre-sale loans, although we have no
plans to conduct any of these activities at this time. Our inability to raise
additional capital to fund operations through the remainder of this year and
through the next fiscal year could have a detrimental effect on our ability to
pursue our business plan, and possibly our ability to continue as a going
concern.

         In anticipation of the above funding sources, we have attempted to
satisfy our debts through a negotiated settlement, and/or ask for extended terms
until we can become more profitable. We cannot assure you that any of these
events will occur or, if they do occur, when they will occur.

         Following is summary financial information reflecting our operations
for the periods indicated.

                                                      Year Ended December 31,
                                                        2003           2002
                                                    -------------  -------------

         Net revenues                               $    304,851   $    403,586
         Cost of revenues                           $    335,104   $    300,230
         Gross profit                               $    (30,253)  $    103,356
         Selling, general and administrative        $  1,255,182   $    771,833
         Gain (Loss) from operations                $ (1,336,575)  $   (716,757)
         Net gain (loss)                            $ (1,382,038)  $   (711,901)

FACTORS AFFECTING BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

         AN INVESTMENT IN OUR SECURITIES IS VERY SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, ALONG
WITH THE OTHER MATTERS REFERRED TO IN THIS ANNUAL REPORT, BEFORE YOU DECIDE TO
BUY OUR SECURITIES. IF YOU DECIDE TO BUY OUR SECURITIES, YOU SHOULD BE ABLE TO
AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.

         WE ARE CURRENTLY IN DEFAULT ON ONE OR MORE OF OUR LOANS.

         We have a note payable to Moss Adams, LLP for accounting services
provided to us in 1999 and 2000. The principal of the note is $53,250, with an
interest rate of 9% per annum, due in monthly payments of $1,000. The note
matured on August 16, 2001. As of December 31, 2003 the current balance,
including interest is $70,734. We have renegotiated terms of repayment, and can
pay this debt for approximately 50% of the amount otherwise due. We have notes
in the amount $552,300 payable to American National Mortgage due in monthly
installments for interest and fees of $18,743.79, maturing on May 31, 2003, and
secured by property in northern Idaho. American Mortgage has filed bankruptcy,
and we are negotiating a settlement on this debt. If we are unable to pay these
debts, it would have a material adverse impact on our ability to conduct
business, and our financial position.

         WE HAVE EXPERIENCED ANNUAL OPERATING LOSSES SINCE SEPTEMBER 1997 AND
OUR AUDITORS HAVE INDICATED UNCERTAINTY CONCERNING OUR ABILITY TO CONTINUE
OPERATIONS AS A GOING CONCERN.

         We have experienced annual operating losses since our reactivation in
September 1997. As of December 31, 2003, we had an accumulated deficit of
$(4,914,966). We will need to raise additional capital to continue as a going
concern. Our auditors have indicated uncertainty concerning our ability to
continue as a going concern. We can not assure you that that our proposed
projects and services, if fully developed, can be successfully marketed or that
we will ever achieve significant revenues or profitable margins.

                                       17

<PAGE>

         WE ARE AN EXPLORATION STAGE COMPANY, AND THERE IS NO ASSURANCE THAT A
COMMERCIALLY VIABLE DEPOSIT OR "RESERVE" EXISTS IN ANY OF OUR PROPERTIES.

         We are an exploration stage company and cannot assure you that a
commercially viable deposit, or "reserve," exists in any of our exploration
properties. Therefore, determination of the existence of a reserve will depend
on appropriate and sufficient exploration work and the evaluation of legal,
economic, and environmental factors. If we fail to find a commercially viable
deposit on any of our properties, or if we fail to bring one of our properties
into a profitable operating mode, our financial condition and results of
operations will be materially adversely affected.

         WE HAVE NOT RECORDED INCOME FOR OUR EXPLORATION ACTIVITIES, AND MAY NOT
DO SO IN THE FUTURE.

         To date, none of our exploration properties have produced any income
from activities. Additionally, although our timber harvesting activities have
generated revenue, we as a company have not yet generated any profit. We may not
be able to develop these activities to commercially viable enterprises or to
obtain additional properties that are commercially viable. The commodities
extracted from our properties may never generate significant revenues or achieve
profitability, which will adversely impact our financial condition.

         WE WILL NEED ADDITIONAL FINANCING TO FULLY IMPLEMENT OUR BUSINESS PLAN,
AND IF WE FAIL TO OBTAIN ADDITIONAL FUNDING WE MAY NOT BE ABLE TO CONTINUE OUR
OPERATIONS.

         Since September 1997, we have focused our efforts on developing our
business in underground mine contracting primarily to companies in the mining
and civil industries, and other resource development and property acquisitions.
We will need to raise additional capital to implement fully our business plan
and establish adequate operations. We cannot assure you that we will be able to
recover additional public or private financing, including debt or equity
financing, as needed, or, if available, on terms favorable to us. Furthermore,
debt financing, if available, will require payment of interest and may involve
restrictive covenants that could impose limitations on our operating
flexibility. Our failure to successfully obtain additional future funding may
jeopardize our ability to continue our business and operations.

         WE REQUIRE SUBSTANTIAL FUNDS MERELY TO DETERMINE WHETHER COMMERCIAL
MINERAL DEPOSITS EXIST ON OUR PROPERTIES.

         Any potential development and production of our exploration properties
depends upon the results of exploration programs and/or feasibility studies and
the recommendations of duly qualified engineers and geologists. Such programs
require substantial additional funds. Any decision to further expand our
operations on these exploration properties will involve consideration and
evaluation of several significant factors including, but not limited to:

         o        Costs of bringing each property into production, including
                  exploration work, preparation of production feasibility
                  studies, and construction of production facilities;
         o        Availability and costs of financing;
         o        Ongoing costs of production;
         o        Market prices for the minerals to be produced;
         o        Environmental compliance regulations and restraints; and
         o        Political climate and/or governmental regulation and control.

         WE DO NOT CARRY INSURANCE ON OUR TIMBER ASSETS AND A SIGNIFICANT LOSS
OF STOCK DUE TO FIRE, DISEASE OR OTHER CATASTROPHE MAY MATERIALLY REDUCE THE
VALUE OF OUR TIMBER ASSETS.

         We do not carry insurance for fire or disease on its timber reserves
due to the prohibitive cost and our limited financial resources. As a result,
any catastrophic event may significantly reduce the value of our reserves, and
consequently reduce our financial position. The timber industry is affected by
lumber price movements and adjustments, downturns in the housing industry, and
interest rate movements. These factors can reduce the price of timber and lumber
on the open market. A significant decrease in the price of timber may reduce
income and therefore reduce the value of our stock.


                                       18

<PAGE>

         OUR SUCCESS DEPENDS A LARGE PART ON OUR ABILITY TO ATTRACT AND RETAIN
OR HIRE KEY PERSONNEL, WHICH WE MAY OR MAY NOT BE ABLE TO DO.

         To operate successfully and manage our potential future growth, we must
attract and retain highly qualified key engineering, managerial and financial
personnel. We face intense competition for qualified personnel in these areas,
and we cannot assure you that we will be able to attract and retain qualified
personnel. If we lose our key personnel, which includes our president, William
T. Jacobson, or are unable to hire and retain additional qualified personnel in
the future, our business, financial condition and operating results could be
adversely affected. We do not have any employment agreements with any of our
officers, directors or employees.

         WE MAY NOT BE ABLE TO IMPLEMENT OR MAINTAIN FINANCIAL AND MANAGEMENT
SYSTEMS WHICH COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

         If we fail to implement and maintain financial and management
information systems, controls and procedures, add internal capacity, facilities
and third-party sourcing arrangements or attract, train, retain, motivate and
manage effectively our employees, it could have a material adverse effect on our
business, financial condition and results of operations.

         THE VALUE OF TIMBER ASSETS MAY FLUCTUATE DUE TO CHANGING TIMBER PRICES,
WHICH MAY ADVERSELY IMPACT OUR REVENUES AND OUR FINANCIAL POSITION.

         Although we attempt to harvest timber only when the lumber prices merit
it, timber is subject to fluctuation in price. To help offset a change in
prices, we try to obtain a price agreement with the lumber mills prior to going
into any logging program. We do not currently have any agreements with mills.
Although we attempt to offset this by obtaining agreements with our purchasing
mills prior to beginning our logging, we may not be able to account entirely for
price variations, which may result in lower revenues than anticipated.

         OUR MARKET VALUE MAY DECREASE IN THE FUTURE.

         Our stock is listed on the over-the-counter market. There has been
significant fluctuation in our market price, and the market price of our common
stock may decrease at any time as a result of poor operating results, sales of
our shares, and other factors.

         THERE IS COMPREHENSIVE FEDERAL, STATE AND LOCAL REGULATION OF THE
EXPLORATION INDUSTRY THAT COULD HAVE A NEGATIVE IMPACT OUR MINING OPERATIONS.

         Exploration operations are subject to federal, state and local laws
relating to the protection of the environment, including laws regulating removal
of natural resources from the ground and the discharge of materials into the
environment. Exploration operations are also subject to federal, state and local
laws and regulations which seek to maintain health and safety standards by
regulating the design and use of exploration methods and equipment. We require
various permits from government bodies for exploration operations to be
conducted. We cannot assure you that such permits will be received. No assurance
can be given that environmental standards imposed by federal, state or local
authorities will not be changed or that any such changes would not have material
adverse effects on our activities. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages that we may elect not to
insure against due to prohibitive premium costs and other reasons. Management is
aware of the necessity of obtaining proper permits prior to conducting any
exploration activity. However, at this point we are not close enough to the
production stage to start the permitting process.

         APPLICABILITY OF "PENNY STOCK RULES" TO BROKER-DEALER SALES OF OUR
COMMON STOCK COULD HAVE A NEGATIVE EFFECT ON THE LIQUIDITY AND MARKET PRICE OF
OUR COMMON STOCK.


                                       19

<PAGE>

         Our common stock is listed on the Over-the-Counter Bulletin Board. It
is not quoted on any exchange or on NASDAQ, and no other exemptions currently
apply. Therefore, the SEC "penny stock" rules govern the trading in our common
stock. These rules require, among other things, that any broker engaging in a
transaction in our securities provide its customers with the following:

         o        a risk disclosure document,
         o        disclosure of market quotations, if any,
         o        disclosure of the compensation of the broker and its
         o        salespersons in the transaction, and
         o        monthly account statements showing the market values of our
         o        securities held in the customer's accounts.

         The broker must provide the bid and offer quotations and compensation
information before effecting the transaction. This information must be contained
on the customer's confirmation. Generally, brokers subject to the "penny stock"
rules when effecting transactions in our securities may be less willing to do
so. This may make it more difficult for investors to dispose of our common
stock. In addition, the broker prepares the information provided to the broker's
customer. Because we do not prepare the information, we cannot assure you that
such information is accurate, complete or current.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements, together with the independent auditors'
report thereon of Chisolm, Bierwolf & Nilson, LLC, appear beginning on page F-1
of this report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         We have experienced no recent change in or disagreement with our
accountant. Our present auditor, Chisolm, Bierwolf & Nilson, LLC, Box 540216,
No. Salt Lake, UT 84054, has been the Company's auditor since 1999. Management
of the Company intends to keep Chisolm, Bierwolf & Nilson, LLC as its auditor
for the foreseeable future.

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth certain information regarding our
directors and executive officers.

Name                      Age     Position
------------------------- ------- ----------------------------------------------

William T. Jacobson       57      Chairman of the Board, Chief Executive Officer
------------------------- ------- ----------------------------------------------
Jack Harvey               82      Vice President, Director
------------------------- ------- ----------------------------------------------
Kurt Hoffman              38      Treasurer, Director
------------------------- ------- ----------------------------------------------
Thomas E. Groce           83      Director
------------------------- ------- ----------------------------------------------
Marqueta Martinez         54      Secretary
------------------------- ------- ----------------------------------------------

         There are no family relationships among any of the directors or
officers of the Company.


BUSINESS EXPERIENCE

         WILLIAM T. JACOBSON, CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER.
Mr. Jacobson has been Chairman of the Board and Chief Executive Officer of Atlas
Mining Company since August 1997. From 1994 to 1997, Mr. Jacobson served as
Secretary of Atlas and Treasurer of Fausett International, Inc. He has had a
fifteen year career in the mining industry and spent fifteen years in the
banking industry. Prior to joining the Company, Mr. Jacobson was a president and
director of the Silver Trend Mining Company, located in Kellogg, Idaho. Mr.
Jacobson holds a business degree from the University of Idaho. Mr. Jacobson does
not hold a board seat in any other public company.

                                       20

<PAGE>

         JOHN "JACK" HARVEY, VICE PRESIDENT, DIRECTOR. Mr. Harvey has been Vice
President of Atlas Mining Company for 18 years. He received his mining
engineering degree from Montana Tech. He worked in Butte, Montana with Anaconda
and Arco until he retired about 15 years ago, after a 41 year career. Mr. Harvey
does not hold a board seat in any other public company.

         KURT HOFFMAN, TREASURER, DIRECTOR. Mr. Hoffman is the treasurer of
Atlas Mining Company and has been the president of Trend Mining Company since
1998 which is a publicly traded company traded on the over the counter bulletin
board under the symbol "TRDM." Mr. Hoffman also owns and has operated Hoffman
Mining and Land Services since 1995. Other than TRDM, Mr. Hoffman does not hold
a board seat in any other public company.

         THOMAS E. GROCE, DIRECTOR. Mr. Groce has been a director of Atlas
Mining Company for 33 years. He retired 17 years ago after a 30-year career at
Kaiser Aluminum. Mr. Groce held the position of secretary treasurer for 16
years. Mr. Groce does not hold a board seat in any other public company. Mr.
Groce received a metallurgical engineering degree from Montana Tech.

         MARQUETA MARTINEZ. SECRETARY. Ms. Martinez is the secretary for the
corporation, and works as a full time employee for the Company. She has worked
in the mining industry since 1991. Ms. Martinez does not hold a board seat in
Atlas Mining or any other public company. Ms. Martinez is also the treasurer for
the Shoshone County Habitat for Humanity.

         All directors hold office until the next annual meeting of shareholders
and the election and qualification of their successors. Officers are elected
annually by, and serve at the discretion of, the Board of Directors. Members of
the Board of Directors are not compensated for serving as directors of Atlas
Mining, however expenses may be reimbursed.

         None of the foregoing Directors or Executive Officers has, during the
past five years:

         (a) Had any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;

         (b) Been convicted in a criminal proceeding or subject to a pending
criminal proceeding;

         (c) Been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and

         (d) Been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended, or vacated.

         No individual on our Board of Directors possesses all of the attributes
of an audit committee financial expert and no one on our Board of Directors is
deemed to be an audit committee financial expert. In forming our Board of
Directors, we sought out individuals who would be able to guide our operations
based on their business experience, both past and present, or their education.
Our business model is not complex and our accounting issues are straightforward.
Responsibility for our operations is centralized within management. We rely on
the assistance of others, such as our accountant, to help us with the
preparation of our financial information. We recognize that having a person who
possesses all of the attributes of an audit committee financial expert would be
a valuable addition to our Board of Directors, however, we are not, at this
time, able to compensate such a person therefore, we may find it difficult to
attract such a candidate.

         Atlas Mining Company has not yet adopted a Code of Ethics for
management, although it intends to do so.


                                       21

<PAGE>

COMPLIANCE WITH SECTION 16(a) OF EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons who own more than 10% of our Common Stock to file
reports of ownership and changes in ownership of our common stock with the
Securities and Exchange Commission. Directors, executive officers and persons
who own more than 10% of our common stock are required by Securities and
Exchange Commission regulations to furnish to us copies of all Section 16(a)
forms they file.

         To our knowledge, based solely upon review of the copies of such
reports received or written representations from the reporting persons, we
believe that during our 2003 fiscal year our directors, executive officers and
persons who own more than 10% of our common stock complied with all Section
16(a) filing requirements with the exception of the following: Form 3s for
William T. Jacobson, John Harvey, Kurt Hoffman, Thomas E. Groce and Marqueta
Martinez were filed in March 2003 rather than in July 2002.

ITEM 10. EXECUTIVE COMPENSATION

         During the 2003 fiscal year, no officer received compensation in excess
of $100,000 per year. The following table sets forth information as to the
compensation paid or accrued to William T. Jacobson, our Chairman and Chief
Executive Officer, for the three years ended December 31, 2003, December 31,
2002 and December 31, 2001:
<TABLE>
<CAPTION>
                                                     SUMMARY COMPENSATION TABLE
                                                       LONG TERM COMPENSATION
                                                       ----------------------
                                 ANNUAL COMPENSATION                    AWARDS                            PAYOUTS
                                 ----------------------------------------------------------------------------------
                                                             OTHER    RESTRICTED SECURITIES
                                                             ANNUAL     STOCK     UNDERLYING    LTIP      ALL OTHER
  NAME AND PRINCIPAL                 SALARY        BONUS  COMPENSATION  AWARDS      OPTIONS/   PAYOUT   COMPENSATION
       POSITION           YEAR         ($)          ($)       ($)        ($)        SARS      ($) (1)       ($)
  ------------------     -------     ------        -----  ------------  ------      --------   ------   ------------
<S>                       <C>        <C>
William T. Jacobson,      2003       $78,000        ---       ---        ---         ---        ---         ---
Chairman and Chief        2002       $78,000        ---       ---        ---         ---        ---         ---
Executive Officer         2001       $78,000        ---       ---        ---         ---        ---         ---

-------------
</TABLE>

(1) Mr. Jacobson owns 1,643,660 shares of restricted stock worth approximately
$164,366.

EMPLOYMENT AGREEMENTS

         We do not have any written employment/consultant agreements with our
executive officers and directors.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth, as of March 30 2004, information
regarding the beneficial ownership of our common stock with respect to each of
our executive officers, each of our directors, each person known by us to own
beneficially more than 5% of the common stock, and all of our directors and
executive officers as a group. The term "executive officer" is defined as the
Chief Executive Officer, Secretary, Treasurer and the Vice-President. Each
individual or entity named has sole investment and voting power with respect to
shares of common stock indicated as beneficially owned by them, subject to
community property laws, where applicable, except where otherwise noted. The
percentage of common stock beneficially owned is based on 36,679,017 shares of
common stock outstanding as of March 30, 2004.


                                       22

<PAGE>

<TABLE>
<CAPTION>
                                                          Number of
                                                          Shares of       Percentage of
                                                         Common Stock     Common Stock
                                                         Beneficially     Beneficially
                Name and Address (1)                      Owned (2)           Owned
------------------------------------------------------ ----------------- ----------------
<S>                                                       <C>                  <C>
William T. Jacobson (3)(4)                                1,643,660            4.5%
John Harvey (3)(4)                                           60,767             *
Kurt Hoffman (3)(4)                                           2,500             *
Thomas E. Groce (4)                                         121,340             *
Marqueta Martinez (3)                                        33,871             *
IGI Capital Management, LLC (6)                           2,500,000            6.8%
All Officers and Directors as a Group (5 persons)         1,862,138            5.1%
------------------------------------------------------ ----------------- ----------------
</TABLE>

*        Less than 1%.
(1)      Unless otherwise indicated, the address of the persons named in this
         column is c/o Atlas Mining Company, 630 East Mullan Avenue, Osburn,
         Idaho 83849.
(2)      Included in this calculation are shares deemed beneficially owned by
         virtue of the individual's right to acquire them within 60 days of the
         date of this report that would be required to be reported pursuant to
         Rule 13d-3 of the Securities Exchange Act of 1934.
(3)      Executive Officer.
(4)      Director.
(5)      5% Shareholder.
(6)      IGI Capital Management, LLC is located at #1 Stamford Plaza, 263
         Tresser Blvd., 9th Floor, Stamford, CT 06901. Dmitri Hotimski may be
         deemed a control person of the shares owned by IGI Capital Management,
         LLC.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         We engage in a number of transactions with interested parties. We make
every effort to ensure that these transactions are conducted as arm length
transactions. However, at this time we do not have a formal conflicts of
interest policy.

         William Jacobson has loaned Atlas Mining sums of money over the past
several years. In January 2003, Mr. Jacobson accepted 1,000,000 shares of our
common stock, valued at $0.10 per share, for a $100,000 reduction in the note
balance. The outstanding balance as of March 30, 2004 is $70,829.

         Further discussions of these transactions are described in
"Management's Discussion and Analysis of Plan of Operation - Liquidity and
Capital Resources."


                                       23

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         Exhibit
         Number                     Description of Exhibit
         ------                     ----------------------

         3.1      Articles of Incorporation, as amended.(1)
         3.2      Bylaws, as amended.(1)
         10.1     Atlas Mining Company Common Stock Subscription Agreement.(1)
         10.2     Dragon Mine Lease Purchase Agreement.(1)
         10.3     Article of Merger of Sierra Silver-Lead Mining Company and
                  Atlas Mining Company.(1)
         10.4     Stock Option Plan of Atlas Mining Company.(1)
         10.5     Incentive Stock Option Plan of Atlas Mining Company.(1)
         10.6     Investment Marketing Agreement.(1)
         10.7     Moss Adams, LLP Promissory Note.(1)
         10.8     CLS Mortgage Company Promissory Note.(1)
         10.9     Attorney-Client Fee Agreement.(2)
         10.10    Professional Adjusters Inc. Appraisal and Clyde James Resume.
                  (2)
         21.1     Subsidiaries of the Registrant.(1)
         31.1     Certification pursuant to Rule 13a-14 of the Securities
                  Exchange Act, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002, of the Chief Executive Officer and
                  Principal Financial Officer
         32.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of
                  the Chief Executive Officer and Principal Financial Officer
_____________

         (1)      Incorporated by reference to the similarly described exhibit
                  included in the Registrant's Amendment No. 4 to its SB-2,
                  Commission File No. 333-72830, filed with the Commission on
                  June 11, 2002
         (2)      Incorporated by reference to the similarly described exhibit
                  included in the Registrant's Amendment No. 5 to its SB-2,
                  Commission File No. 333-72830, filed with the Commission on
                  July 1, 2002.


(b) Reports on Form 8-K

None.

ITEM 14. CONTROLS AND PROCEDURES

         As of December 31, 2003, an evaluation was performed under the
supervision and with the participation of the Company's management, including
the Chief Executive Officer, who is our principal executive officer and
principal financial officer, of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on that evaluation, our
management, including the Chief Executive Officer, concluded that our disclosure
controls and procedures were effective as of that date. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to that date.

                                       24

<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on this 30th day of March 2004.

                                        ATLAS MINING COMPANY



                                        By:      /s/ William T. Jacobson
                                                 --------------------------
                                                 William T. Jacobson
                                                 Chairman of the Board and Chief
                                                 Executive Officer


         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

    Signature                              Title                       Date
    ---------                              -----                       ----


/s/ William T. Jacobson           Chairman of the Board and       March 30, 2004
---------------------------       Chief Executive Officer
William T. Jacobson


/s/ John Harvey                   Vice-President, Director        March 30, 2004
---------------------------
John Harvey


/s/ Kurt Hoffman                  Treasurer, Director             March 30, 2004
---------------------------
Kurt Hoffman


/s/ Thomas E. Groce               Director                        March 30, 2004
---------------------------
Thomas E. Groce


/s/ Marqueta Martinez             Secretary                       March 30, 2004
---------------------------
Marqueta Martinez


                                       25

<PAGE>


                              ATLAS MINING COMPANY

                        Consolidated Financial Statements

                           December 31, 2003 and 2002




<PAGE>


                                 C O N T E N T S


Independent Auditor's Report...................................................3

Consolidated Balance Sheets....................................................4

Consolidated Statements of Operations..........................................6

Consolidated Statements of Stockholders' Equity................................7

Consolidated Statements of Cash Flows.........................................10

Notes to the Consolidated Financial Statements................................12




                                       2

<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders
of Atlas Mining Company

We have audited the accompanying consolidated balance sheets of Atlas Mining
Company as of December 31, 2003 and 2002 and the related consolidated statements
of operations, stockholders' equity and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well a evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Atlas Mining Company
as of December 31, 2003 and 2002 and the results of its operations and cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has suffered recurring
losses from operations which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



/s/ Chisholm, Bierwolf & Nilson, LLC
Bountiful, Utah
January 21, 2004

                                       3

<PAGE>



                              ATLAS MINING COMPANY
                           Consolidated Balance Sheets


                                      ASSETS
                                                               December 31,
                                                           2003          2002
                                                        ----------    ----------

Current Assets
  Cash                                                  $   6,814     $   5,246
  Accounts receivable (net of allowance of $0)             32,253            --
  Investments - available for sale                         12,796        13,051
  Advances                                                  7,696        11,696
  Deposits and prepaids                                        --        25,835
  Advances - related party                                 74,693        18,849
                                                        ----------    ----------

    Total Current Assets                                  134,252        74,677
                                                        ----------    ----------

Property and Equipment
  Land and tunnels                                        345,159       345,159
  Buildings and equipment                                  77,680        77,680
  Mining equipment                                         26,000        26,000
  Office equipment                                          1,300         1,300
  Vehicles                                                 27,995        27,995
  Less:  Accumulated depreciation                        (121,914)     (114,839)
                                                        ----------    ----------

    Total Property and Equipment                          356,220       363,295
                                                        ----------    ----------

Other Assets
  Mining supplies                                           9,000         9,000
                                                        ----------    ----------

    Total Other Assets                                      9,000         9,000
                                                        ----------    ----------


    Total Assets                                        $ 499,472     $ 446,972
                                                        ==========    ==========



   The accompanying notes are an integral part of these financial statements.

                                        4
<PAGE>
<TABLE>

                                         ATLAS MINING COMPANY
                                      Consolidated Balance Sheets
<CAPTION>

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------
                                                                                   December 31,
                                                                               2003           2002
                                                                           ------------   ------------
<S>                                                                        <C>            <C>
Current Liabilities
  Accounts payable and accrued liabilities                                 $   214,855    $   276,379
  Line of credit                                                                23,094         28,024
  Current portion of long-term debt                                            725,131        875,767
                                                                           ------------   ------------

    Total Current Liabilities                                                  963,080      1,180,170
                                                                           ------------   ------------

Long-Term Liabilities
  Notes payable                                                                729,795        790,189
  Notes payable - related party                                                 70,829        161,071
  Less: current portion of long-term debt                                     (725,131)      (875,767)
                                                                           ------------   ------------

    Total Long-Term Liabilities                                                 75,493         75,493
                                                                           ------------   ------------

Minority Interest                                                               52,652         69,126
                                                                           ------------   ------------

Stockholders' Equity
  Preferred stock, $1.00 par value, 10,000,000 shares authorized,
    noncumulative, nonvoting, nonconvertible, none issued or outstanding            --             --
  Common stock, no par value, 60,000,000 shares authorized,
    34,725,151 and 9,949,945 shares issued and outstanding, respectively     4,994,977      2,689,545
  Cost of treasury stock, 1,313,022 and 18,106 shares, respectively           (131,221)        (1,738)
  Retained earnings (deficit)                                               (4,914,966)    (3,532,928)
  Accumulated comprehensive income (loss)                                      (10,843)       (27,696)
  Prepaid expenses                                                              (5,000)        (5,000)
  Subscription receivable                                                     (524,700)            --
                                                                           ------------   ------------

Total Stockholders' Equity                                                    (591,753)      (877,817)
                                                                           ------------   ------------

    Total Liabilities and Stockholders' Equity                             $   499,472    $   446,972
                                                                           ============   ============



              The accompanying notes are an integral part of these financial statements.

                                                   5
</TABLE>

<PAGE>
<TABLE>

                                  ATLAS MINING COMPANY
                         Consolidated Statements of Operations
<CAPTION>

                                                              For the Year Ended
                                                                 December 31,
                                                          -----------------------------
                                                              2003            2002
                                                          -------------   -------------
<S>                                                       <C>             <C>
Revenues                                                  $    304,851    $    403,586

Cost of Sales                                                  335,104         300,230
                                                          -------------   -------------

Gross Profit (Loss)                                            (30,253)        103,356
                                                          -------------   -------------

Operating Expenses
  Exploration & development costs                               51,140          48,280
  General & administrative                                   1,255,182         771,833
                                                          -------------   -------------

    Total Operating Expenses                                 1,306,322         820,113
                                                          -------------   -------------

Net Operating Income (Loss)                                 (1,336,575)       (716,757)
                                                          -------------   -------------

Other Income(Expense)
  Interest income                                                    8              14
  Interest expense                                            (106,659)       (269,373)
  Miscellaneous income                                           4,013          10,122
  Minority interest                                             16,474           9,609
  Gain (loss) on sale of investments available for sale         (6,606)           (748)
  Gain (loss) on settlement of debt                             47,307         255,232
                                                          -------------   -------------

    Total Other Income(Expense)                                (45,463)          4,856
                                                          -------------   -------------

Income (Loss) Before Income Taxes                           (1,382,038)       (711,901)

Provision (Benefit) for Income Taxes                                --              --
                                                          -------------   -------------

Net Income (Loss)                                         $ (1,382,038)   $   (711,901)
                                                          =============   =============

Net Income (Loss) Per Share                               $      (0.06)   $      (0.09)
                                                          =============   =============

Weighted Average Shares Outstanding                         21,363,537       7,938,251
                                                          =============   =============


       The accompanying notes are an integral part of these financial statements.

                                           6
</TABLE>

<PAGE>

<TABLE>
                                                      ATLAS MINING COMPANY
                                        Consolidated Statements of Stockholders' Equity
                                         For the Years Ended December 31, 2003 and 2002

<CAPTION>
                                                                                         Accumulated
                                  Common Stock          Retained       Treasury Stock      Compre-
                           -------------------------    Earnings    --------------------   hensive   Prepaid    Subscription
                              Shares       Amount       (Deficit)    Shares     Amount     Income    Expenses    Receivable
                           -----------  ------------  ------------  ---------  ---------  ---------  ---------  ------------

<S>                        <C>          <C>           <C>           <C>        <C>        <C>        <C>        <C>
Balance, December 31,
  2001                      6,997,283   $ 2,387,445   $(2,821,027)        --   $     --   $(30,569)  $(50,000)  $        --

3/8/02 - Stock issued
  for services at
  $0.10 per share             300,000        30,000            --         --         --         --         --            --

7/10/02 - Stock issued
  for lease at
  $0.10 per share             100,000        10,000            --         --         --         --    (10,000)           --

7/17/02 - Stock issued
  for services at
  $0.07 per share               8,571           600            --         --         --         --         --            --

7/17/02 - Stock issued
  for services at
  $0.10 per share             150,000        15,000            --         --         --         --         --            --

7/19/02 - Stock issued
  for cash at $0.11 per
  share                         9,091         1,000            --         --         --         --         --            --

8/21/02 - Stock issued
  for cash at $0.10 per
  share                        50,000         5,000            --         --         --         --         --            --

9/4/02 - Stock issued
  for services at
  $0.10 per share             125,000        12,500            --         --         --         --         --            --

9/5/02 - Stock issued
  for services at
  $0.25 per share             100,000        25,000            --         --         --         --         --            --

9/11/02 - Stock issued
  for services at
  $0.10 per share             275,000        27,500            --         --         --         --         --            --

10/02/02 - Stock issued
  for services at
  $0.10 per share             100,000        10,000            --         --         --         --         --            --

10/08/02 - Stock issued
  for services at
  $0.10 per share             380,000        38,000            --         --         --         --         --            --

10/30/02 - Stock issued
  for services at
  $0.10 per share              20,000         2,000            --         --         --         --         --            --

11/13/02 - Stock issued
  for services at
  $0.10 per share             475,000        47,500            --         --         --         --         --            --

11/20/02 - Stock issued
  for services at
  $0.10 per share              55,000         5,500            --         --         --         --         --            --

12/01/02 - Purchase of
  treasury stock                   --            --            --    (18,106)    (1,738)        --         --            --

12/13/02 - Stock issued
  for services at
  $0.10 per share             645,000        64,500            --         --         --         --         --            --

12/30/02 - Stock issued
  for services at
  $0.05 per share             160,000         8,000            --         --         --         --         --            --

Amortization of prepaid
  expenses                         --            --            --         --         --         --     55,000            --

Net change in
  unrealized gains
  (losses) on available
  for sale securities              --            --            --         --         --      2,873         --            --

Net income (loss) for
  the year ended
  December 31, 2002                --            --      (711,901)        --         --         --         --            --
                           -----------  ------------  ------------  ---------  ---------  ---------  ---------  ------------
Balance, December 31,
  2002                      9,949,945   $ 2,689,545   $(3,532,928)   (18,106)  $ (1,738)  $(27,696)  $ (5,000)  $        --


                           The accompanying notes are an integral part of these financial statements.

                                                               7

<PAGE>

                                                      ATLAS MINING COMPANY
                                        Consolidated Statements of Stockholders' Equity
                                   For the Years Ended December 31, 2003 and 2002 (Continued

                                                                                         Accumulated
                                  Common Stock         Retained        Treasury Stock      Compre-
                           -------------------------   Earnings     --------------------   hensive   Prepaid    Subscription
                              Shares       Amount      (Deficit)     Shares     Amount     Income    Expenses    Receivable
                           -----------  ------------  ------------  ---------  ---------  ---------  ---------  ------------

1/6/03 - Stock issued
  for services at
  $0.10 per share             250,000        25,000            --         --         --         --         --            --

1/27/03 - Stock issued
  for note payable at
  $0.10 per share           1,000,000       100,000            --         --         --         --         --            --

2/12/03 - Stock issued
  for services at
  $0.10 per share              68,000         6,800            --         --         --         --         --            --

3/13/03 - Stock issued
  for services at
  $0.10 per share             100,000        10,000            --         --         --         --         --            --

3/27/03 - Stock issued
  to subsidiary for
  cash at $0.10 per
  share                       500,000        50,000            --   (500,000)   (50,000)        --         --            --

3/27/03 - Stock issued
  for services at
  $0.10 per share             600,000        60,000            --         --         --         --         --            --

3/28/03 - Stock issued
  for services at
  $0.10 per share             200,000        20,000            --         --         --         --         --            --

3/28/03 - Stock issued
  for services at
  $0.10 per share             150,000        15,000            --         --         --         --         --            --

3/31/03 - Stock issued
  for cash at
  $0.10 per share           2,500,000       250,000            --         --         --         --         --            --

4/4/03 - Stock issued
  for services at
  $0.10 per share           1,250,000       125,000            --         --         --         --         --            --

4/25/03 - Stock issued
  for services at
  $0.10 per share              45,000         4,500            --         --         --         --         --            --

5/03/03 - Cash received
  from sale of
  treasury stock                   --          (252)           --     10,084      1,000         --         --            --

5/9/03 - Stock issued
  for services at
  $0.10 per share               1,000           100            --         --         --         --         --            --

5/28/03 - Stock issued
  for services at
  $0.10 per share             250,000        25,000            --         --         --         --         --            --

7/1/03 - Shares issued
  for services at
  $.09 per share              250,000        22,500            --         --         --         --         --            --

7/13/03 - Purchased
  treasury stock                   --            --            --     (5,000)      (483)        --         --            --

7/14/03 - Stock issued
  for lease at
  $.10 per share              100,000        10,000            --         --         --         --    (10,000)           --

7/28/03 - Stock issued
  for accounts payable
  at $.08 per share           875,000        70,000            --         --         --         --         --            --

7/28/03 - Stock issued
  for services at
  $.08 per share            1,100,000        88,000            --         --         --         --         --            --

7/29/03 - Exchanged
  treasury stock for
  services                         --        (2,000)           --    200,000     20,000         --         --            --

8/8/03 - Stock issued
  for cash at $.10 per
  share                     7,650,000       765,000            --         --         --         --         --      (765,000)
                           -----------  ------------  ------------  ---------  ---------  ---------  ---------  ------------

                           The accompanying notes are an integral part of these financial statements.

                                                               8

</TABLE>
<PAGE>

<TABLE>
                                                      ATLAS MINING COMPANY
                                        Consolidated Statements of Stockholders' Equity
                                   For the Years Ended December 31, 2003 and 2002 (Continued)

<CAPTION>
                                 Common Stock          Retained        Treasury Stock        Accumulated
                           -------------------------   Earnings   ------------------------- Comprehensive   Prepaid     Subscription
                              Shares       Amount      (Deficit)     Shares       Amount       Income       Expenses     Receivable
                           ------------ ------------ ------------ ------------ ------------ ------------  ------------  ------------
<S>                         <C>         <C>          <C>           <C>         <C>          <C>           <C>           <C>

8/8/03 - Stock issued
  for cash to
  subsidiary at $.10
  per share                  1,750,000      175,000           --   (1,750,000)    (175,000)          --            --            --

8/26/03 - Stock issued
  for services at
  $.08 per share               125,000       10,000           --           --           --           --            --            --

9/03/03 - Stock issued
  for services at
  $.07 per share               400,000       28,000           --           --           --           --            --            --

9/04/03 - Cash received
  from subscription
  receivable                        --           --           --           --           --           --            --        40,000

9/22/03 - Cash received
  from subscription
  receivable                        --           --           --           --           --           --            --        30,000

9/23/03 - Stock issued
  for services at
  $.07 per share             3,020,000      211,400           --           --           --           --            --            --

9/30/03 - Cash received
  from sale of treasury
  stock                             --       55,000           --      750,000       75,000           --            --            --

10/02/03 - Stock issued
  for services at $.07
  per share                     20,000        1,400           --           --           --           --            --            --

10/14/03 - Stock issued
  for services at
  $.07 per share               600,000       42,000           --           --           --           --            --            --

10/20/03 - Stock issued
  for services at
  $.07 per share               908,857       63,620           --           --           --           --            --            --

10/30/03 - Stock issued
  for services at
  $.07 per share                10,000          700           --           --           --           --            --            --

12/5/03 - Stock issued
  to located shareholder
  from Sierra Silver
  Mine at $0.07 per
  share                          6,649          465           --           --           --           --            --            --

12/09/03 - Stock issued
  for services at
  $.07 per share             1,045,000       73,150           --           --           --           --            --            --

12/09/03 - Stock issued
  for services at
  $.07 per share                   700           49           --           --           --           --            --            --

12/31/03 - Cash received
  from subscription
  receivable                        --           --           --           --           --           --            --       170,300

Amortization of prepaid
  expenses                          --           --           --           --           --           --        10,000            --

Net change in unrealized
  gains (losses) on
  available for sale
  securities                        --           --           --           --           --       16,853            --            --

Net income (loss) for
  the year ended
  December 31, 2003                 --           --   (1,382,038)          --           --           --            --            --
                           ------------ ------------ ------------ ------------ ------------ ------------  ------------  ------------

Balance, December 31,
  2003                      34,725,151  $ 4,994,977  $(4,914,966)  (1,313,022) $  (131,221) $   (10,843)  $    (5,000)  $  (524,700)
                           ============ ============ ============ ============ ============ ============  ============  ============


                           The accompanying notes are an integral part of these financial statements.

                                                               9
</TABLE>
<PAGE>

<TABLE>
                                  ATLAS MINING COMPANY
                         Consolidated Statements of Cash Flows

<CAPTION>
                                                                  For the Year Ended
                                                                     December 31,
                                                             ---------------------------
                                                                 2003           2002
                                                             ------------   ------------
<S>                                                          <C>            <C>
Cash Flows from Operating Activities:
  Net Income (Loss)                                          $(1,382,038)   $  (711,901)
  Adjustments to Reconcile Net Loss to Net Cash
    Provided by Operations:
     Depreciation                                                  7,075         22,834
     (Gain) loss on sale of investments available for sale         6,606            748
     Stock issued for services                                   850,684        286,100
     Amortization of prepaid expenes (equity)                     10,000         55,000
     Minority interest                                           (16,474)        (9,609)
     (Gain) loss on settlement of debt                           (28,500)      (255,232)
     Bad debt expense                                              4,000             --
  Change in Operating Assets and Liabilities:
     (Increase) Decrease in:
     Accounts receivable                                         (32,253)        29,667
     Deposits and prepaids                                        25,835            688
     Other current receivables                                        --          1,136
     Increase (Decrease) in:
     Accounts payable and accrued expenses                         8,476         23,130
                                                             ------------   ------------

  Net Cash Provided(Used) by Operating Activities               (546,589)      (557,439)

Cash Flows from Investing Activities:
  Purchases of equipment                                              --         (1,300)
  Proceeds from advances                                         465,543         55,574
  Proceeds from sale of investments available for sale            10,503          1,538
  Purchase of investments                                             --         (1,000)
  Payments for advances                                         (521,387)       (86,119)
                                                             ------------   ------------

  Net Cash Provided (Used) by Investing Activities               (45,341)       (31,307)

Cash Flows from Financing Activities:
  Proceeds from notes payable                                     10,766        602,735
  Payments for notes payable                                     (32,903)        (8,872)
  Payments for line of credit                                     (4,930)        (4,133)
  Proceeds from issuance of common stock                         490,300          6,000
  Proceeds from sale of treasury stock                           130,748             --
  Purchase of treasury stock                                        (483)        (1,738)
                                                             ------------   ------------

  Net Cash Provided (Used) by Financing Activities               593,498        593,992
                                                             ------------   ------------

Increase (Decrease) in Cash                                        1,568          5,246

Cash and Cash Equivalents at Beginning of Period                   5,246             --
                                                             ------------   ------------

Cash and Cash Equivalents at End of Period                   $     6,814    $     5,246
                                                             ============   ============


      The accompanying notes are an integral part of these financial statements.

                                           10
</TABLE>
<PAGE>

                                  ATLAS MINING COMPANY
                   Consolidated Statements of Cash Flows (Continued)

                                                         For the Year Ended
                                                            December 31,
                                                    -------------------------
                                                       2003            2002
                                                    ----------      ---------

Cash Paid For:
  Interest                                          $  91,337       $205,000
                                                    ==========      =========
  Income Taxes                                      $      --       $     --
                                                    ==========      =========

Supplemental Disclosure of Non-Cash Investing
  and Financing Activities:
  Stock issued for services                         $ 850,684       $286,100
                                                    ==========      =========
  Stock issued for prepaid expenses                 $  10,000       $ 10,000
                                                    ==========      =========
  Stock issued for notes payable                    $ 100,000       $     --
                                                    ==========      =========
  Stock issued for accounts payable                 $  70,000       $     --
                                                    ==========      =========

   The accompanying notes are an integral part of these financial statements.

                                           11
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a.  Organization

         Atlas Mining Company, ("the Company") was incorporated in the state of
         Idaho on March 4, 1924. The Company was formed for the purpose of
         exploring and developing the Atlas mine, a consolidation of several
         patented mining claims located in Coeur d' Alene mining district near
         Mullan, Idaho. The Company eventually became inactive as a result of
         low silver prices.

         In September 1997, the Company became active and purchased
         substantially all of the operating equipment and mining supplies from
         Fausett International, Inc., a related party. The purchase price was
         $1,416,099 which consisted of $50,000 cash, 875,000 shares of the
         Company's common stock valued at $350,000 and a note payable of
         $1,016,094. After the purchase, the Company commenced contracting
         operations through the trade name, Atlas Fausett Contracting. Through
         Atlas Fausett Contracting, the Company provides shaft sinking,
         underground mine development and contracting primarily to companies in
         the mining and civil industries. The Company also pursues property
         acquisitions and resource development projects.

         In 1997 and 1998, the Company was to exchange 844,560 shares of its
         common stock for all of the outstanding shares of Sierra Silver Lead
         Mines, Inc. (Sierra), an Idaho corporation. As of December 31, 2003,
         384,465 shares of the Company's common stock had not been exchanged.
         The Company was unable to locate some of the shareholders of Sierra.
         Therefore, the Company agreed to transfer the stock to an Atlas Mining
         Company Trust account in trust for the unlocated shareholders of Sierra
         Silver.

         The acquisition of Sierra has been recorded as a purchase. The purchase
         price was $276,157. All of the assets and liabilities of Sierra were
         transferred to the Company and Sierra ceased to exist.

         In April 1999, the Company exchanged 741,816 shares of its common stock
         and paid cash of $15,770 for all of the outstanding shares of Olympic
         Silver Resources, Inc. (Olympic), a Nevada corporation. Olympic holds
         the rights to the San Acacio Mine in Zacatecas, Mexico. The purchase
         price was $228,566. The acquisition has been recorded as a purchase and
         all of the assets and liabilities were transferred to the Company.


                                          12
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         In 1998 and 1999, the Company exchanged 71,238 shares of its common
         stock for 53% of the outstanding shares of Park Copper and Gold Mining,
         Ltd. (Park Copper), an Idaho corporation. The purchase price was
         $72,825. The acquisition has been recorded as a purchase.

         b.  Revenue and Cost Recognition

         The Company recognizes income and expenses on the accrual basis of
         accounting. Revenues from unit price contracts are recognized on the
         units produced method which management considers to be the best
         available measure of progress on contracts.

         Contract costs include all direct material and labor costs and those
         indirect costs related to contract performance, such as indirect labor,
         supplies, tools, repairs, and depreciation costs. Costs associated with
         the start-up of contracts are capitalized as deferred contract costs
         and amortized to expense over the life of the contract. General and
         administrative costs are charged to expense as incurred. Provisions for
         estimated losses on uncompleted contracts are made in the period in
         which such losses are determined. Changes in job performance, job
         conditions, and estimated profitability, including those arising from
         contract penalty provisions, and final contract settlements may result
         in revisions to costs and income and are recognized in the period in
         which revisions are determined.

         Contract claims are included in revenue when realization is probable
         and can be reliably estimated.

         c.  Bad Debts

         Bad debts on receivables are charged to expense in the year the
         receivable is determined uncollectible, therefore, no allowance for
         doubtful accounts is included in the financial statements. Amounts
         determined as uncollectible are not significant to the overall
         presentation of the financial statements.

         d.  Basis of Consolidation

         The consolidated financial statements include the accounts of Park
         Copper & Gold Mining Ltd. All significant inter-company accounts and
         transactions have been eliminated in the consolidation.


                                          13
<PAGE>


                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         e.  Earnings (Loss) Per Share

         The computation of earnings per share of common stock is based on the
         weighted average number of shares outstanding at the date of the
         financial statements.
<TABLE>
<CAPTION>
                                                        Income (Loss)     Shares    Per-Share
                                                         (Numerator)   (Denominator)   Amount
                                                         -----------   -------------   ------
<S>                                                    <C>             <C>            <C>
For the year ended December 31, 2003:
    Basic EPS
      Income (loss) to common Shareholders             $ (1,382,038)   $ 21,363,537   $ (0.06)
For the year ended December 31, 2002:
    Basic EPS
      Income (loss) to common Shareholders             $   (711,901)   $  7,938,251   $ (0.09)
</TABLE>

         f.  Cash and Cash Equivalents

         The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.

         g.  Income Taxes

         Income taxes are provided for the tax effects of transactions reported
         in the financial statements and consist of taxes currently due plus
         deferred taxes. Deferred taxes are provided on a liability method
         whereby deferred tax assets are recognized for deductible temporary
         differences and operating loss, tax credit carry-forwards, and deferred
         tax liabilities are recognized for taxable temporary differences.
         Temporary differences are the differences between the reported amounts
         of assets and liabilities and their tax bases. Deferred tax assets are
         reduced by a valuation allowance when, in the opinion of management, it
         is more likely than not that some portion or all of the deferred tax
         will not be realized. Deferred tax assets and liabilities are adjusted
         for the effects of changes in tax laws and rates on the date of
         enactment.


                                          14
<PAGE>


                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

                                                            December 31,
                                                          2003          2002
                                                      ------------  ------------
  Deferred Tax Assets:
    Net Operation Loss Carry-forwards                 $   552,000   $   690,000
    Contribution Carry-forwards                               148           148
    Unrealized Loss on Available for Sale Securities       16,853            --
                                                      ------------  ------------
        Total Deferred Tax Assets                         569,001       690,148
        Valuation Allowance for Deferred Tax Assets      (562,001)     (681,448)
                                                      ------------  ------------
                                                            7,000         8,700
  Deferred Tax Liabilities:
    Tax over Book Depreciation                              7,000         8,700
       Total Deferred Tax Liabilities                       7,000         8,700
                                                      ------------  ------------
       Total Deferred Tax Assets                      $        --   $        --
                                                      ============  ============

         At December 31, 2003, the Company has net operating losses of
         approximately $3,680,000 which expire from 2004 through 2020.

         h.  Available for Sale Investments

         Management determines the appropriate classification of marketable
         equity security investments at the time of purchase and reevaluates
         such designation as of each balance sheet date. Unrestricted marketable
         equity securities have been classified as available for sale. Available
         for sale securities are carried at fair value, with the unrealized
         gains and losses, net of tax, reported as a net amount in accumulated
         comprehensive income. Realized gains and losses and declines in value
         judged to be other-than-temporary on available for sale securities are
         included in investment income. The cost of securities sold is based on
         the specific identification method. Interest and dividends on
         securities classified as available for sale are included in investment
         income.


                                          15
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         h. Available for Sale Investments (Continued)

         Following is a summary of available for sale equity securities which
         are concentrated in companies in the mining industry:

                                            Gross          Gross
                                           Unrealized    Unrealized   Estimated
                                 Cost        Gains         Losses     Fair Value
                                 ----        -----         ------     ----------
         December 31, 2003     $ 23,639    $       -     $ (10,843)  $ 12,796
         December 31, 2002       40,747            -       (27,696)    13,051

         i.  Mining Supplies

         Mining supplies, consisting primarily of bits, steel, and other mining
         related equipment, are stated at the lower of cost (first-in,
         first-out) or market. In addition, equipment repair parts and
         maintenance items are also included at cost.

         j.  Use of Estimates

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect reported amounts of assets and liabilities,
         disclosure of contingent assets and liabilities at the date of the
         financial statements and revenues and expenses during the reporting
         period. In these financial statements assets and liabilities involve
         extensive reliance on management's estimates. Actual results could
         differ from those estimates.

         k.  Property and Equipment

         Property and equipment are carried at cost. Depreciation and
         amortization is computed on the straight-line method over the estimated
         useful lives of the assets as follows:

                                                             Estimated
                                                             Useful Life
                                                             -----------
         Building                                              39 years
         Mining equipment                                     2-8 years
         Office and shop furniture and equipment              5-8 years
         Vehicles                                               5 years


                                          16
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         k. Property and Equipment (Continued)

         In accordance with Financial Accounting Standards Board Statement No.
         144, the Company records impairment of ling-lived assets to be held and
         used or to be disposed of when indicators of impairment are present and
         the undiscounted cash flows estimated to be generated by those assets
         are less than the carrying amount. At December 31, 2003 and 2002, no
         impairments were recognized. Depreciation expense for the years ended
         December 31, 2003 and 2002 was $7,075 and $22,834, respectively.

         l.  Financial Instruments

         The recorded amounts of financial instruments, including cash
         equivalents, receivables, investments, accounts payable and accrued
         expenses, and long-term debt approximate their market values as of
         December 31, 2003 and 2002. The Company has no investments in
         derivative financial instruments.

         m. Mining Exploration and Development Costs

         The company has elected to expense all mining exploration and
         development costs due to the inactivity of their mining operations. At
         such a time as mining continues in any of the Company's properties, the
         Company will capitalize costs of developing the properties, when future
         benefit of the costs can be identified.

NOTE 2 - GOING CONCERN

         The accompanying financial statements have been prepared assuming that
         the Company will continue as a going concern. The Company is dependent
         upon raising capital to continue operations. The financial statements
         do not include any adjustments that might result from the outcome of
         this uncertainty. It is management's plan to reduce the Company's debt
         through the collection of the $524,700 subscription receivable and to
         begin the operations at the Dragon Mine. The Company has negotiated a
         $500,000 equipment line of credit in order to finance the required
         equipment to begin mining operations. Management believes the mining
         operations will provide sufficient cash flows to continue as a going
         concern.


                                          17
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 3 - LONG-TERM LIABILITIES

         Long-term liabilities are detailed in the following schedules as of
         December 31, 2003 and 2002:
                                                           2003         2002
                                                        -----------  -----------
         Note payable to a company, due in monthly
         payments of $1,000 with a balloon payment
         due at maturity, including interest at 9%.
         The note matured August 16, 2001, past due.    $   53,250   $   53,250

         Note payable to a lending company, due
         in monthly installments of $578, including
         interest at 11.99%. The note matured August
         2003, secured by a vehicle, past due.               5,001       11,760

         Note payable to a mortgage company, due in
         monthly installments of $1,614, including
         interest at 16%. The note is due in August 2005,
         secured by the proceeds of a logging agreement
         and collateralized by land and a building.        119,236      119,371

         Note payable to a lending company, balloon
         payment due at maturity, bears interest at 8%
         per month. The note is secured by land owned by
         a related party and matured in March 2003,
         past due.                                         120,700      120,700

         Note payable to a mortgage company, principal
         due at maturity and bears interest at 3.5%
         per month. The note matured in October 2003,
         secured by property, past due.                     86,100       86,100

         Note payable to a lending company, principal
         due at maturity and bears interest at 5% per
         month. The note matured in May 2003, secured
         by land, past due.                                345,508      345,508

         Note payable to a company, principal due at
         maturity with interest at 7%.  The note is
         to be repaid when the proceeds are received
         from an offering of common stock.                      --       53,500
                                                        -----------  -----------
         Total Notes Payable                            $  729,795   $  790,189
                                                        ===========  ===========


                                          18
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 4 - LONG-TERM LIABILITIES (Continued)
                                                           2003         2002
                                                        -----------  -----------
         Notes payable - related party:

         Note payable to an officer, payable on demand
         and bears no interest.                         $   70,829   $  161,071

         Total Notes Payable - Related Party                70,829      161,071
                                                        -----------  -----------
         Total Long-Term Liabilities                       800,624      951,260

         Less Current Portion                             (654,302)    (714,696)
         Less Current Portion-Related Party                (70,829)    (161,071)
                                                        -----------  -----------
         Total Current Portion                             725,131     (875,767)
                                                        -----------  -----------
         Total Long-Term Liabilities                    $   75,493   $   75,493
                                                        ===========  ===========

         Future minimum principal payments on notes payable are as follows:

              2004                                           $  725,131
              2005                                               75,493
                                                             ----------
              Total                                          $  800,624
                                                             ==========

NOTE 5 - LINE OF CREDIT

         In 2003 and 2002, the Company has an unsecured line of credit for
         $50,000 at an interest rate of prime plus 6%. The balance of the line
         of credit at December 31, 2003 and 2002 is $23,094 and $28,024,
         respectively.


                                          19
<PAGE>

                              ATLAS MINING COMPANY
                 Notes to the Consolidated Financial Statements
                           December 31, 2003 and 2002

NOTE 6 - RELATED PARTY TRANSACTIONS

         During 2003 and 2002, the Company paid advances to a company with a
         common officer. The balance of the advances at December 31, 2003 and
         2002 is $74,693 and $18,949, respectively.

         During 2003 and 2002, an officer loaned the Company $10,766 and
         $50,424, respectively. During 2003, the Company paid cash of $1,009 and
         issued 1,000,000 shares of stock valued at $10,000 as partial payment
         for the note. During 2002, the Company paid $4,000 as partial payment
         for the note. The balance of the note payable at December 31, 2003 and
         2002 is $70,829 and $161,071, respectively.

NOTE 7 - STOCK OPTIONS

         In 1998, the Company adopted a non-qualified stock option plan
         authorizing the granting to officers, directors, or employees options
         to purchase common stock. Options are granted by the Administrative
         Committee, which is elected by the Board of Directors. The number of
         options granted under this plan and any other plans active may not
         exceed 10% of the currently issued and outstanding shares of the
         Company's common stock. The term of each option granted is determined
         by the Committee, but cannot be for more than five years from the date
         the option is granted. The option priced per share with each option
         granted will be fixed by the Administrative Committee on the date of
         grant. At December 31, 2003, no options have been granted under this
         plan.

         The Company adopted an incentive stock option plan in 1998. The stock
         option plan permits the Company to grant to key employees options to
         purchase shares of stock in the Company at the direction of the
         Committee. The price of shares purchased must be equal to or greater
         than fair market value of the common stock at the date. At December 31,
         2003, no options have been granted under the plan.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

         On July 10, 2001, the Company entered into an agreement to lease and
         possibly purchase a mine in Juab County, Utah. The Company has the sole
         option to renew the lease on an annual basis. The agreement requires
         the lease payments be made through the issuance of 100,000 shares of
         the Company's common stock. In July 2003, the Company issued 100,000
         shares of common stock valued at $10,000 to renew the lease. If during
         any one year period the Company sells $1,000,000 of product from the
         mine, the Company has the option to purchase the mine for $500,000.


                                          20