Filed by sedaredgar.com - Shoshone Silver Mining Co. - Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2008

OR

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

FOR THE TRANSITION PERIOD FROM _______________ TO _______________ .

Commission File Number 000-31184

SHOSHONE SILVER MINING COMPANY
(Exact name of registrant as specified in its charter)

Idaho 82-0304993
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

403 7th Street, Ste 207, Wallace, ID 83873
(Address of principal executive offices) (Zip Code)

(208) 752-1070
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]  Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [x]
    (Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

Class Outstanding as of February 10, 2009
Common Stock ($0.10 par value) 22,063,179

SHOSHONE SILVER MINING COMPANY

FORM 10-Q
For the Quarter Ended December 31, 2008

TABLE OF CONTENTS

PART I - Financial Information
 
Item 1 Consolidated Financial Statements (Unaudited)
   
  Consolidated Balance Sheets
   
  Consolidated Statements of Operations and Comprehensive Income
   
  Consolidated Statements of Cash Flows
   
  Notes to Consolidated Financial Statements
   
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
Item 3 Quantitative and Qualitative Disclosures About Market Risk
   
Item 4 Controls and Procedures
   
PART II - Other Information
 
Item 1 Legal Proceedings
   
Item 1A Risk Factors
   
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
   
Item 3 Defaults Upon Senior Securities
   
Item 4 Submission of Matters to a Vote of Security Holders
   
Item 5 Other Information
   
Item 6 Exhibits
   
Signatures  

PART I – FINANCIAL INFORMATION


SHOSHONE SILVER MINING COMPANY
(an Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS

    December 31,     September 30,  
    2008     2008  
    (unaudited)        
ASSETS            
             
       CURRENT ASSETS            
               Cash and cash equivalents $  644,774   $  1,570,066  
               Note receivable (net of discount) - current portion   471,599     422,277  
               Receivables from related parties   63,172     9,624  
               Deposits and prepaids   20,814     4,806  
               Supplies inventory   2,513     2,821  
                         Total Current Assets   1,202,872     2,009,594  
             
       PROPERTY, PLANT AND EQUIPMENT            
               Property, plant and equipment   2,764,225     2,585,095  
               Accumulated depreciation   (1,271,827 )   (1,244,225 )
                         Total Property Plant and Equipment   1,492,398     1,340,870  
             
       MINERAL AND MINING PROPERTIES   379,690     379,690  
             
       OTHER ASSETS            
               Notes receivable from related parties   218,716     203,716  
               Notes receivable (net of discount)   1,543,983     1,572,030  
               Accrued interest receivable   16,174     10,739  
               Investments   251,445     356,823  
                         Total Other Assets   2,030,318     2,143,308  
             
                         TOTAL ASSETS $  5,105,278   $  5,873,462  
             
             

LIABILITIES AND STOCKHOLDERS' EQUITY

           
             
       CURRENT LIABILITIES            
               Accounts payable $  27,375   $  195,507  
               Accrued expenses   10,532     10,288  
               Notes payable - current portion   28,160     18,526  
                         Total Current Liabilities   66,067     224,321  
             
               Note payable - noncurrent portion   7,045     8,121  
                         Total Liabilities   73,112     232,442  
             
       COMMITMENTS AND CONTINGENCIES   -     -  
             
       STOCKHOLDERS' EQUITY            
               Common stock, 80,000,000 shares authorized, $0.10 par value;            
               22,063,179 and 22,063,179 shares issued and outstanding   2,206,318     2,206,318  
               Additional paid-in capital   3,524,385     3,522,385  
               Treasury stock   (324,353 )   (309,853 )
               Accumulated deficit in exploration stage   1,468,011     1,906,423  
               Accumulated deficit prior to exploration stage   (1,667,482 )   (1,667,482 )
               Accumulated other comprehensive income   (174,713 )   (16,771 )
                         Total Stockholders' Equity   5,032,166     5,641,020  
             
                         TOTAL LIABILITIES AND STOCKHOLDERS'            

                               EQUITY

$  5,105,278   $  5,873,462  

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


SHOSHONE SILVER MINING COMPANY
(an Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)

                Period from  
                January 1, 2000  
    Three Month Period Ended     (beginning of  
    December 31,     December 31,     development stage)  
    2008     2007     to December 31, 2008  
                   
                   
REVENUES $  6,655   $  180   $  384,293  
                   
COST OF REVENUES   74     96     230,334  
                   
GROSS PROFIT   6,581     84     153,959  
                   
OPERATING EXPENSES                  
 General and administrative   238,525     97,701     1,709,719  
 Professional fees   55,158     54,775     695,640  
 Consulting fees   -     -     135,140  
 Depreciation   27,602     12,642     360,898  
 Mining and exploration expenses   158,064     13,267     1,718,371  
 Net gain on sale of load claim   -     -     (193,907 )

     Total Operating Expenses

  479,349     178,385     4,425,861  

                 

LOSS FROM OPERATIONS

  (472,768 )   (178,301 )   (4,271,902 )

                 

OTHER INCOME (EXPENSES)

                 

 Lease income

  -     2,514     444,044  

 Net gain on sale of investments

  96     41,424     1,130,304  

 Dividend and interest income

  35,004     6,005     126,304  

 Loss on abandonment of asset

  -     -     (20,000 )

 Gain on sale of fixed asset

  -     -     12,200  

 Unrealized holding loss on marketable securities

  -     -     (380,827 )

 Gain on settlement of note receivable

  -     -     64,206  

 Gain on sale of Mexican mining concession

  -     -     4,363,353  

 Interest expense

  (744 )   (479 )   (5,652 )

 Other income

  -     1,407     5,981  

     Total Other Income (Expenses)

  34,356     50,871     5,739,913  
                   
INCOME (LOSS) BEFORE INCOME TAXES   (438,412 )   (127,430 )   1,468,011  
                   
INCOME TAXES   -     -     124,826  
DEFERRED TAX GAIN   -     -     (124,826 )
                   
NET INCOME (LOSS)   (438,412 )   (127,430 )   1,468,011  
                   
OTHER COMPREHENSIVE INCOME (LOSS)                  
 Unrealized holding gain (loss) on investments   (157,941 )   1,721     344,510  
                   
NET COMPREHENSIVE INCOME (LOSS) $  (596,353 ) $  (125,709 ) $  1,812,521  
                   
                   
NET INCOME (LOSS) PER COMMON SHARE, BASIC $  (0 ) $  (0.01 )      
                   
NET INCOME (LOSS) PER COMMON SHARE, DILUTED $  (0 ) $  (0.01 )      
                   
WEIGHTED AVERAGE NUMBER OF                  
 COMMON STOCK SHARES OUTSTANDING, BASIC   22,063,179     19,590,586        
                   
WEIGHTED AVERAGE NUMBER OF                  
 COMMON STOCK SHARES OUTSTANDING, DILUTED   22,063,179     19,590,586        

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


SHOSHONE SILVER MINING COMPANY
(an Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

                Period from  
                January 1, 2000  
    Three-Month Period Ended     (beginning of  
    December 31,     December 31,     development stage)  
    2008     2007     to December 31, 2008  
                   
CASH FLOWS FROM OPERATING ACTIVITIES                  
   Net income (loss) $  (438,412 ) $  (127,430 ) $  1,468,011  
   Adjustments to reconcile net income (loss) to net                  
         cash used by operations:                  
         Depreciation and amortization expense   27,602     12,642     360,898  
         Amortization of note receivable discount   (23,317 )   -     (31,090 )
         Common stock issued for services   -     -     193,686  
         Common stock issued for mining and exploration expenses   -     -     285,500  
         Common stock issued in settlement of agreement with former CEO   -     -     20,000  
         Treasury stock issued for services   -     -     20,320  
         Net gain on sale of lode claim   -     -     (193,907 )
         Net gain on sale of Mexican mining concession   -     -     (4,363,353 )
         Net loss (gain) on sale of investments   (95 )   (41,424 )   (1,130,303 )
         Available for sale securities issued in exchange for services   -     -     135,140  
         Unrealized holding loss on marketable securities   -     -     380,827  
         Gain on settlement of note receivable   -     -     (64,206 )
         Gain on sale of fixed asset   -     -     (12,200 )
         Impairment of mining expenses   -     -     413,000  
         Loss on abandonment of investment   -     -     20,000  
         Adjustment to balance of note receivable   (765 )         (765 )
   Changes in assets and liabilities:                  
         Change in receivable from related party   (53,548 )   -     (63,172 )
         Change in other current assets   -     -     (4,819 )
         Change in deposits and prepaids   (69 )   (2,640 )   10,570  
         Change in supplies inventory   308     424     10,219  
         Change in accrued interest receivable   (5,435 )   12,306     (16,174 )
         Change in accrued liabilities   244     (2,487 )   6,548  
         Change in accounts payable   (133,977 )   10,028     (27,062 )
         Change in stock to issue   -     -     230,680  
         Net cash used in operating activities   (627,464 )   (138,581 )   (2,351,652 )
                   
CASH FLOWS FROM INVESTING ACTIVITIES                  
         Purchases of investments   (52,769 )   -     (4,059,939 )
         Proceeds from sale of investments   300     91,910     4,572,518  
         Purchase of mineral and mining properties   -     -     (68,472 )
         Proceeds from sale of lode claim   -     -     13,907  
         Proceeds from sale of Mexican mining concession   -     -     2,497,990  
         Purchase of fixed assets   (205,785 )   (116,303 )   (919,743 )
         Proceeds from sale of fixed assets   -     -     12,200  
         Net cash provided by investing activities   (258,254 )   (24,393 )   2,048,461  
                   
CASH FLOWS FROM FINANCING ACTIVITIES                  
         Net proceeds from sale of common stock   -     90,000     1,242,570  
         Common shares repurchased for treasury   (20,000 )   -     (41,220 )
         Advances on notes receivable   -     -     (96,022 )
         Advances to related party   (15,000 )   -     (410,000 )
         Issuance of note receviable from related party   -     -     (243,000 )
         Payments received on notes receivable from related party   -     31,820     332,498  
         Payments received on notes receivable   2,807     -     132,845  
         Payment of common stock subscriptions   -     -     20,225  
         Payment made on long-term note payable   (7,381 )   (3,368 )   (210,680 )
         Proceeds from short-term loans   -     -     160,760  
         Net cash (used in) provided by financing activities   (39,574 )   118,452     887,976  
                   
Net increase (decrease) in cash   (925,292 )   (44,522 )   584,785  
                   
Cash, beginning of period   1,570,066     58,554     59,989  
                   
Cash, end of period $  644,774   $  14,032   $  644,774  
                   
                   
SUPPLEMENTAL CASH FLOW DISCLOSURES:                  
   Interest expense paid $  640   $  479   $  5,548  
   Income taxes paid $  -   $  -   $  -  
                   
NON-CASH INVESTING AND FINANCING ACTIVITIES:                  
   Treasury stock issued in exchange for fixed asset $  7,500   $  -   $  7,500  
   Deposit utilized to purchase fixed asset $  -   $  -   $  5,000  
   Note payable issued in exchange for prepaid asset $  15,939   $  15,626   $  31,565  
   Accounts payable issued in exchange for partial payment on office building $  -   $  -   $  50,000  
   Common stock issued for accounts payable $  -   $  -   $  227,500  
   Stock received in exchange for lode claim $  -   $  -   $  60,000  
   Note receivable in connection with sale of lode claim $  -   $  -   $  120,000  
   Note receivable (net of discount) in connection with sale of lode claim $  -   $  -   $  1,865,363  
   Note issued in exchanged for vehicle $  -   $  15,377   $  53,658  
   Treasury stock acquired through sale of investment $  -   $  -   $  296,296  
   Common stock issued for purchase of equipment $  -   $  -   $  95,340  
   Common stock issued for purchase of mining properties $  -   $  -   $  45,000  
   Common stock issued for mining and exploration expenses $  -   $  -   $  222,500  
   Common Stock issued for services $  -   $  -   $  88,333  
   Common stock issued for finders' fee $  -   $  -   $  1,000  
   Marketable securities received in lieu of note receivable $  -   $  -   $  104,273  

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


Shoshone Silver Mining Company (an Exploration Stage Company)
Condensed Notes to the Interim Financial Statements
December 31, 2008

NOTE 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Shoshone Silver Mining Company (an Exploration Stage Company) (“the Company” or “Shoshone”) was incorporated under the laws of the State of Idaho on August 4, 1969, under the name of Sunrise Mining Company and is engaged in the business of mining. On January 22, 1970, the Company's name was changed to Shoshone Silver Mining Company. During 2003, the Company’s focus was broadened to include resource management and sales of mineral and timber interests.

Beginning in fiscal 2000, the Company entered an exploration stage. The Company has acquired several mining properties since entering the exploration stage. During 2008, the Company completed the refurbishment of the mill at its Lakeview property. During 2009, the Company plans to conduct geologic assessments of its Lakeview Property. The Company began the milling of previously stockpiled material in the fall of 2007 and it plans to continue this into 2009. After that, the Company anticipates conducting surface mining at the Weber property and the milling of ores obtained from those efforts at the Lakeview Mill.

In 2004, the Company incorporated a wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, for the purposes of facilitating its Mexico property explorations and future operations. On August 11, 2008, the Company sold 100% of the common stock of its wholly owned subsidiary to Xtierra Resources, Ltd. See Note 7.

The Company’s year end is September 30th.

Basis of Presentation

The foregoing unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim consolidated financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2008, included in the Company’s Annual Report on Form 10-K which was filed with the SEC on January 13, 2009.

In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented. Operating results for the three-month period ended December 31, 2008, are not necessarily indicative of the results that may be expected for the year ending September 30, 2009.

NOTE 2: LIMITED SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. The financial statements and notes rely on the integrity and objectivity of the

Company’s management. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Concentration of Credit Risk

The Company maintains its cash in several commercial accounts at major financial institutions and brokerage houses. The brokerage accounts contain cash and securities. Balances are insured up to $500,000 (with a limit of $100,000 for cash) by the Securities Investor Protection Corporation (SIPC). Although the financial institutions are considered creditworthy and have not experienced any losses on their deposits, at December 31, 2008 and September 30, 2008, the Company’s cash balance exceeded Federal Deposit Insurance Corporation (FDIC) and SIPC limits by $570,786 and $1,296,921, respectively.

Fair Value Measurements

Effective January 1, 2008, the Company adopted SFAS No. 157 (“SFAS 157”), “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, SFAS 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

Level 1 inputs — Unadjusted quoted process in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2 inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 inputs — Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Securities classified as available for sale are reported at fair value utilizing Level 1 inputs. For these securities, the Company obtains fair value from active markets.

The Company’s Note Receivable (net of discount) is reported at fair value utilizing Level 2 inputs. The discounting of this note receivable utilized interest rates. See Note 7.

The following table presents information about the Company’s assets measured at fair value on a recurring basis as of December 31, 2008, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value.

      Fair Value Measurements  
      At December 31, 2008, Using  
            Quoted Prices              
            In Active     Other     Significant  
            Markets for     Observable     Unobservable  
      Fair Value     Identical Assets     Inputs     Inputs  
Description     Dec. 31, 2008     (Level 1)   (Level 2)   (Level 3)
Available-for- Sale Securities   $  251,445   $  251,445   $  -   $  -  
Note Receivable - Mexican Concessions (net of discount)     1,896,452     -     1,896,452      
Total Assets Measured at Fair Value   $  2,147,897   $  251,445   $  1,896,452   $  -  

Fiscal Periods

References to a fiscal year refer to the calendar year in which such fiscal year ends. Historically, the Company’s fiscal year ended on December 31st. However, on September 29, 2008, the Company’s board of directors approved a change in the Company’s fiscal year end from December 31st to September 30th, effective on September 30, 2008.

Notes Receivable

The Company’s policy for notes receivable is to continue accruing interest income until it becomes likely that the note is uncollectible. At that time, an allowance for bad debt would be established and interest would stop accruing.

Subsequent to December 31, 2008, the Company determined that a note receivable with an unpaid principal and accrued interest balance of $130,024 may no longer be collectible. Accordingly, interest income will not continue to accrue. See Note 7 and Note 14.

Principles of Consolidation

Historically, the Company’s consolidated financial statements have included the accounts of the Company and its wholly owned subsidiary, Shoshone Mexico, S.A. de C.V. The inter-company accounts and transactions were eliminated upon consolidation. However, on September 2, 2008, the Company sold all of the common stock of its wholly owned subsidiary to Xtierra Resources, Ltd. See Note 7.

Reclassifications

Certain previously reported amounts have been reclassified to conform to the current presentation

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of Shoshone’s financial position and results of operations.

NOTE 3: RELATED PARTY ACCOUNTS RECIEVABLE

On November 4, 2008, the Company purchased 3,771 ounces of silver coins and bars as well as various dies for making coins from a related party. The cost to the Company of the silver and the dies was $56,452. However, the Company paid $110,000 and has recorded a receivable from the related party of $53,548. The Company’s Chairman is also a member of the board of directors of this related party.

NOTE 4: DEPOSITS AND PREPAID EXPENSES

In December 2007, the Company purchased for $21,335 a one-year liability insurance policy covering its Lakeview mill (the “Policy”). The Policy was purchased with a cash payment of $5,709 with the balance of $15,626 settled with a promissory note. The Company recorded prepaid insurance of $21,335 and a related entry to record a $15,626 note payable. During the three-month period ended December 31, 2008, $3,556 of the prepaid insurance was amortized into General & Administrative Expenses.

In December 2008, the Company purchased for $21,752 a one-year liability insurance policy covering its Lakeview mill (the “Policy”). The Policy was purchased with a cash payment of $5,813 with the balance of $15,939 settled with a promissory note. The Company recorded prepaid insurance of $21,335 and a related entry to record a $15,939 note payable. During the three-month period ended December 31, 2008, $1,813 of the prepaid insurance was amortized into General & Administrative Expenses. See Note 10.

On August 27, 2008, the Company amended a lease agreement with Chester Mining Company originally entered into on March 25, 2004 (the “Amended Lease”). The Amended Lease includes a provision that requires the Company to pay a royalty of $125 per month until “net smelter returns” (as defined in the Amended Lease) are payable. The Company paid Chester Mining Company $1,500 as an advance royalty payment. At December 31, 2008, the unamortized balance of this advance royalty payment was $875.

NOTE 5: PROPERTY, PLANT & EQUIPMENT

Property and equipment are stated at cost. Depreciation begins on the date an asset is placed in service using the straight-line method over the asset’s estimated useful life.

The useful lives of property, plant and equipment for purposes of computing depreciation are three to thirty-one and one-half years. The following is a summary of property, equipment, and accumulated depreciation at December 31, 2008 and September 30, 2008:

    December 31, 2007     September 30, 2008  
Equipment $  1,025,981   $  882,638  
Construction in Progress   -     -  
Refurbished Lakeview Mill   499,681     499,681  
Office Building   150,000     150,000  
Property & Mill   1,088,563     1,052,776  
    2,764,225     2,585,095  
Less accumulated depreciation   (1,271,827 )   (1,244,225 )
Property, Plant & Equipment, net $  1,492,398   $  1,340,870  

Depreciation expense was $27,602 for the three-month period ended December 31, 2008 and $12,642 for the comparable period last year.

During the three-month period ended December 31, 2008, the Company acquired equipment valued at $12,500 in exchange for $5,000 in cash and treasury stock valued at $7,500.

The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts.

Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.

NOTE 6: NOTES RECEIVABLE FROM RELATED PARTIES

Silver Valley Capital
On September 1, 2006, the Company loaned Silver Valley Capital, LLC $168,000 in exchange for a promissory note. The Company’s President and its Secretary are both members of Silver Valley Capital, LLC. Both these individuals abstained from voting on the respective companies’ Board of Directors’ Resolutions approving this loan. The note bore interest at 10.0% per annum and stipulated that monthly payments of $822 were to be made until February 1, 2007. On February 1, 2007, the remaining principal plus accrued interest was to become due and payable.

On July 26, 2007, the Company entered into a new loan agreement with Silver Valley Capital, LLC. The note bears interest at 10.0% per annum and stipulates that monthly payments of $822 are to be made until the due date. The due date was changed to February 1, 2008 from February 1, 2007. The Company is currently working with Silver Valley Capital, LLC to renegotiate a revised due date. During the first three-month period ended December 31, 2008, no payments were received on this note. Interest income of $94 was accrued the three-month period ended December 31, 2008. The balance of this note was $3,716 at December 31, 2008.

Kimberly Gold Mines
On August 29, 2008, the Company entered into a letter-of-intent with Kimberly Gold Mines, Inc. (“Kimberly). The letter-of-intent concerns the acquisition by the Company of 100% of Kimberly’s issued and outstanding common shares. Under the terms of this letter-of-intent, the Company has offered one share of its common stock for every two shares of Kimberly’s common stock.

In connection with this letter-of-intent, the Company advanced Kimberly $200,000 on August 28, 2008, and an additional $15,000 on December 4, 2008, in exchange for a promissory note. Kimberly intends to use these funds to reduce their outstanding obligations. The notes bear interest at 6.0% per annum and are payable on demand at any time. Further, until the principal and accrued interests are paid, the notes are secured by sufficient shares of Kimberly common stock at an agreed value of $0.06 per share. Interest income of $3,105 was accrued during the three-month period ended December 31, 2008. The balance of this note was $215,000 at December 31, 2008.

NOTE 7: NOTES RECEIVABLE

Sale of Lode Claim
During the first quarter of fiscal 2006, the Company accepted cash of $30,000 and a promissory note for $120,000 from an unrelated party related to the sale of a lode claim for $150,000. The promissory note bears interest at 7.0% per annum and stipulates that payments of $5,089 are to be paid semi-annually until January 23, 2011. On January 11, 2011, the remaining principal plus accrued interest becomes due and payable in full.

During the three-month period ended December 31, 2008, the Company received no payments on this note receivable and interest income of $2,249 was accrued. Subsequent to December 31, 2008, the Company determined that this note receivable may no longer be collectible. Accordingly, it may be necessary to commence foreclosure proceedings on the underlying property. The balance on this note receivable was $119,130 at December 31, 2008. See Note 14.

Mexican Concessions
On August 11, 2008, the Company sold 100% of the common stock of its wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, to Xtierra Resources, Ltd (“Xtierra”). The Company’s interest in the Bilbao concessions in Zacatecas, Mexico was included in this sale. In exchange for its interest in the Bilbao concessions the Company received net proceeds of $2,497,990 and a non-interest bearing note receivable, net of discount, for $1,865,363.

The note does not bear interest and stipulates that a payment of $500,000 is due on August 11, 2009. The remaining balance of $2,000,000 is to be paid in four consecutive equal installments to begin at the time of the commencement of construction of any mine developed on the Bilbao concessions but in any event will be due and payable no later than August 11, 2019.

Since the note does not bear interest, the Company imputed interest at a rate of 5%. Accordingly the Company recorded a note discount of $634,637. During the three-month period ended December 31, 2008, $23,317 of interest income was realized through the amortization of this note discount. The balance on this note receivable (net of discount) was $1,896,452 at December 31, 2008.

Signal Silver-Gold, Inc.
On August 27, 2008, the Company advanced Signal Silver-Gold, Inc. (“Signal”) $2,808 in exchange for a promissory note. The note bears interest at 6% per annum and is payable on demand at any time. On October 16, 2008, the Company received a payment of $2,850. Of this amount $2,808 was applied towards satisfaction of the principal amount owing and $42 was applied toward accrued interest.

The following tables set forth the components of the Notes Receivable – Mexican Concessions (net of discount and the Other Assets – Notes Receivable (net of discount) caption on the Company’s consolidated balance sheets.

    December 31,     September 30,  
    2008     2008  
Note Receivable - Mexican Concessions (net of discount)
     Current portion $  471,599   $  422,277  
     Non-current portion   1,424,853     1,450,858  
           Total $  1,896,452   $  1,873,135  
Other Assets - Notes Receivable (net of discount)            
     Mexican Concessions, non-current (net of discount) $  1,424,853   $  1,450,858  
     Sale of Lode Claim   119,130     118,364  
     Signal Silver-Gold, Inc.   -     2,808  
           Total $  1,543,983   $  1,572,030  

NOTE 8: INVESTMENTS

The Company has invested in various privately and publicly held companies. At this time, the Company holds securities classified as available for sale. Amounts are reported at fair value, with unrealized gains and losses excluded from earnings and reported separately as a component of stockholders’ equity.

Unrealized gains and losses are recorded on the income statement as other comprehensive income (loss) and also on the balance sheet as other accumulated comprehensive income.

The following summarizes the securities available for sale at December 31, 2008:

                Market  
                               Security   Quantity     Cost     Value  
Bayswater Uranium Corporation   200,000   $  60,000   $  12,000  
Chester Mining Company   2,500     12,567     125  
Gold Crest Mines   617,600     3,900     6,076  
Kimberly Gold Mines   321,500     38,035     9,238  
Lucky Friday Extension   5,000     1,100     850  
Merger Mines   929,299     216,499     139,395  
Metropolitan Mines Limited   6,000     2,008     900  
New Jersey Mining   142,875     34,290     27,146  
Sterling Mining   5,000     2,000     360  
Vindicator Mines   88,000     17,600     16,720  
Silver Coins & Bars   3,751     38,298     38,635  
                   
Balance, December 31, 2008   2,321,525   $  426,297   $  251,445  

The Company had an unrealized holding loss during the first three-month period ended December 31, 2008 of $(157,941). This is recorded on the income statement as other comprehensive income (loss) and included on the balance sheet in other accumulated comprehensive income.

The Company recognized $96 of gain previously included in accumulated other comprehensive income on the sale of investments during the three-month period ended December 31, 2008.

On September 17, 2008, the Company began acquiring shares of Merger Mines, Inc. At December 31, 2008, the Company had acquired 929,299 shares of Merger Mines common stock. This represented approximately 24% of Merger Mines, Inc.’s outstanding shares. The Company believes that, given the current economic environment, it is more likely than not that the Company will have to sell much of its investment in Merger Mines in order to fund operations. Accordingly, the Company has accounted for this investment as available-for-sale.

The following summarizes the securities available for sale at September 30, 2008:

    # of           Market  
Security   Shares     Cost     Value  
Chester Mining Company   2,500   $  12,567   $  550  
Bayswater Uranium Corporation   200,000     60,000     28,000  
Gold Crest Mines   617,600     3,900     21,516  
Kimberly Gold Mines   321,500     38,035     23,275  
Lucky Friday Extension   5,000     1,100     1,200  
Merger Mines   840,138     202,233     226,837  
Metropolitan Mines Limited   6,000     2,008     1,200  
New Jersey Mining   142,875     34,290     51,435  
Sterling Mining   5,000     2,000     1,050  
Vindicator Mines   88,000     17,600     1,760  
                   
Balance, September 30, 2008   2,228,613   $  373,733   $  356,823  

The Company had an unrealized holding loss during the fiscal year ended September 30, 2008 $(207,954). This is recorded on the income statement as other comprehensive income (loss) and included on the balance sheet in other accumulated comprehensive income.

The Company recognized $7,840 of loss previously included in accumulated other comprehensive income on the sale of investments in 2008.

On July 24, 2008, the Company entered into an agreement to acquire 200,000 shares of common stock of Bayswater Uranium Corporation, a Canadian company (“Bayswater”), in exchange for the Company’s 43 unpatented mining claims in Elko County, Nevada. This exchange was valued at $60,000 based on the market price of Bayswater’s common stock on July 24, 2008.

NOTE 9: ACCOUNTS PAYABLE

Settlement Agreement with Former Chief Executive Officer
On June 12, 2008, the Company entered into a settlement agreement with its former Chief Executive Officer, Conrad Houser. The terms of the agreement required the Company to pay Mr. Houser $10,000 on June 12, 2008, the date of the agreement. The agreement also required the Company to pay an additional $48,500 on or before December 31, 2008.

The $48,500 was included under the caption “Accounts Payable” on the Company’s Consolidated Balance Sheets as of September 30, 2008. Further, the agreement required the Company to issue 100,000 shares of common stock to Mr. Houser by July 12, 2008. These shares were issued to Mr. Houser on July 3, 2008.

On December 28, 2008, the Company paid $48,500 in satisfaction of its contractual agreement, and on December 28, 2008, the Company re-purchased for $20,000 the 100,000 common shares from Mr. Houser at a price of $0.20 per share. This obligation was exercisable at Mr. Houser’s sole discretion. See Note 12.

Commercial Office Building
On September 10, 2008, the Company acquired for $150,000 a 50% interest in a commercial office building in Coeur d’Alene, Idaho. The Company paid $100,000 at the signing of the purchase agreement and agreed to pay the remaining $50,000 in October 2008. At September 30, 2008, the $50,000 was included under the caption “Accounts Payable” on the Company’s Consolidated Balance Sheets. On October 3, 2008, the Company made the final payment of $50,000 towards its purchase of this 50% interest.

NOTE 10: NOTES PAYABLE

During 2006, the Company acquired a vehicle for $19,782 by paying $9,000 cash and signing a note for the remaining $10,781. The note had a term of 30 months, bore interest at 8.99% annually and stipulated that payments of $499 be made monthly. This note payable was fully paid as of December 31, 2008.

During the third quarter of 2007, the Company acquired equipment for $55,000 by paying $27,500 cash and signing a note for the remaining $27,500. The note has a term of 24 months, bears interest at 8.50% annually and stipulates that payments of $1,250 be made monthly. The outstanding balance on this note payable was $9,688 at December 31, 2008 and is payable within twelve months.

In December 2007, the Company purchased equipment for $15,377 in exchange for a note. The note has a term of 43 months, bears interest at 3.90% annually and stipulates that payments of $384 be made monthly. The lender has the right to increase the interest rate to 19.8% in the event of a violation of the terms of the loan agreement. The outstanding balance on this note payable was $11,293 at December 31, 2008. Of this amount $4,248 is payable within twelve months.

In December 2008, the Company purchased for $21,752 a one-year liability insurance policy covering its Lakeview mill (the “Policy”). The Policy was purchased with a cash payment of $5,813 with the balance of $15,939 settled with a promissory note. The Company recorded prepaid insurance of $21,752 and a related entry to record a $15,939 note payable. The note has a term of nine months, bears interest at 9.15% annually and stipulates that payments of $1,839 be made monthly. The outstanding balance on this note payable was $14,221 at December 31, 2008, all of which is payable within twelve months. See Note 4.

NOTE 11: COMMON STOCK

The Company is authorized to issue 80,000,000 shares of $0.10 par value common stock. All shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.

During the three-month period ended December 31, 2008, the Company issued no shares of common stock.

NOTE 12: TREASURY STOCK

The Company held 1,234,986 and 1,058,986 shares of treasury stock at December 31, 2008 and September 30, 2008, respectively.

During the three-month period ended December 30, 2008, the Company repurchased for treasury 100,000 common shares at a price of $0.20 per share for a total cost of $100,000. These common shares were repurchased in connection with a settlement agreement with its former Chief Executive Officer, Conrad Houser. See Note 9.

During the three-month period ended December 30, 2008, the Company issued 50,000 treasury shares in exchange for equipment. The treasury shares had a cost of $0.11 per share.

NOTE 12: COMMITMENTS AND CONTINGENCIES

Environmental Issues
Shoshone is engaged in mineral mining and may become subject to certain liabilities as they relate to environmental cleanup of mining sites or other environmental restoration.

Although the mineral exploration and mining industries are inherently speculative and subject to complex environmental regulations, Shoshone is unaware of any pending litigation or of any specific past or prospective matters which could impair the value of its mining claims.

Civil Action Filed
On November 17, 2008, the United States Environmental Protection Agency (“EPA”) filed a civil action against the Company in the United States District Court for the District of Idaho. The civil action seeks recovery of funds paid by the EPA in response to alleged releases of hazardous substances at the Company’s Idaho Lakeview mine and mill site in Bonner County, Idaho. The Company believes that the claim is without merit and intends to vigorously defend its position. The ultimate outcome of this litigation cannot presently be determined. However, in management’s opinion, the likelihood of a material adverse outcome is not probable. Accordingly, adjustments, if any, that might result from the resolution of this matter have not been reflected in the financial statements. Also, an estimate of the amount or range of loss, or possible loss, cannot be made.

NOTE 13: SUBSEQUENT EVENTS

Subsequent to December 31, 2008, the Company determined that a note receivable with an unpaid principal and accrued interest balance of $130,024 may no longer be collectible. Accordingly, interest income will not continue to accrue and the foreclosure proceedings may commence. See Note 7.

Item 2 - Management’s Discussion and Analysis or Plan of Operation

This report contains forward-looking statements

From time to time, Shoshone and its senior managers have made and will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are contained in this report and may be contained in other documents that Shoshone files with the Securities and Exchange Commission. Such statements may also be made by Shoshone and its senior managers in oral or written presentations to analysts, investors, the media and others. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Also, forward-looking statements can generally be identified by words such as “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “seek,” “expect,” “intend,” “plan” and similar expressions.

Forward-looking statements provide our expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. As such, our actual future results, performance or achievements may differ materially from the results expressed in, or implied by, our forward-looking statements. Please refer to descriptions of these risks set forth in our “Risk Factors” in our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

Our forward-looking statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and Notes presented elsewhere in this report.

Fiscal Year End Change

References to a fiscal year refer to the calendar year in which such fiscal year ends. Historically, our fiscal year ended on December 31st. However, on September 29, 2008, our board of directors approved a change in our fiscal year end from December 31st to September 30th, effective on September 30, 2008.

Plan of Operation

On August 11, 2008, we sold 100% of the common stock of our wholly owned subsidiary in Mexico, Shoshone Mexico, S.A. de C.V, to Xtierra Resources, Ltd (“Xtierra”). Our interest in the Bilbao concessions in Zacatecas, Mexico was included in this sale. In exchange for our interest in the Bilbao concessions we received net proceeds of 2,498,490 and a note receivable for $2,500,000.

The note does not bear interest and stipulates that a payment of $500,000 is due on August 11, 2009. The remaining balance of $2,000,000 is to be paid in four consecutive equal installments to begin at the time of the commencement of construction of any mine developed on the Bilbao concessions but in any event will be due and payable no later than August 11, 2019. Since the note does not bear interest, we imputed interest at a rate of 5%. Accordingly we recorded a note discount of $634,637 during fiscal 2008. During the first three-month period ended December 31, 2008, $23,317 of interest income was recognized through the amortization of this note discount.

Effective September 30, 2008, we completed the refurbishment of the mill at our Lakeview property. The total capitalized cost of this refurbishment was $499,681 which began depreciating on October 1, 2008. During 2009, we plan to conduct geologic assessments of our Lakeview Property. We began the milling of previously stockpiled material in the fall of 2007 and we plan to continue this into 2009. After that, we anticipate conducting surface mining at the Weber property and the milling of ores obtained from those

efforts at the Lakeview Mill. We intend to use the proceeds from the sale of our Bilbao concessions to finance these plans.

Comparison of the Three-Month Periods Ended December 31, 2008 and 2007:

Results of Operations

The following tables set forth certain information regarding the components of our Consolidated Statements of Operations for the three-month period ended December 31, 2008, compared with the same period in the prior year. This table is provided to assist in assessing differences in our overall performance:

    Three-month period ended              
    Dec. 31, 2008     Dec. 31, 2007   $ Change     % Change  
                         
                         
REVENUES $  6,655   $  180   $  6,475     3597.2%  
COST OF REVENUES   74     96     (22 )   -22.9%  
GROSS PROFIT   6,581     84     6,497     7734.5%  
     General and                        
     administrative   238,525     97,701     140,824     144.1%  
     Professional fees   55,158     54,775     383     0.7%  
     Depreciation   27,602     12,642     14,960     118.3%  
     Mining and exploration                        
     expenses   158,064     13,267     144,797     1091.4%  
           Total Operating                        
           Expenses   479,349     178,385     300,964     168.7%  
LOSS FROM                        
OPERATIONS   (472,768 )   (178,301 )   (294,467 )   165.2%  
     Lease income   -     2,514     (2,514 )   0.0%  
     Net gain on sale of                        
     securities   96     41,424     (41,328 )   0.0%  
     Dividend and interest                        
     income   35,004     6,005     28,999     482.9%  
     Interest expense   (744 )   (479 )   (265 )   55.3%  
     Other income   -     1,407     (1,407 )   0.0%  
           Total Other Income                        
           (Expenses)   34,356     50,871     (16,515 )   -32.5%  
NET (LOSS) $  (438,412 ) $  (127,430 ) $  (310,982 )   244.0%  

Overview of Operating Results

The increase in the net loss incurred during the three-month period ended December 31, 2008, compared with the same period last year is primarily attributable to an increase of $144,797 in mining and exploration expenses and a $140,824 increase in general and administrative expenses.

Operating Expenses

The increase in operating expenses during the three-month period ended December 31, 2008, compared with the same period last year was primarily due to exploration activities at our Lakeview mine site. During the most recent three-month period, exploration expenses increased $138,285 compared with the comparable period last year.

Also contributing to the increase in operating expenses was an increase in salaries and related expenses of $82,851. This was primarily due to an increase in the number of employees to eleven during the three-month period ended December 31, 2008, compared with six during the same period last year

Other Income (Expenses)

Other income (expenses) decreased primarily due to a net gain on the sale of available-for-sale securities of $41,424 realized in the three-month period ended December 31, 2007, compared with $96 realized during the comparable period ended this year. Partially offsetting this impact was the recognition of imputed interest income of $23,317 during the most recent three-month period compared with last year.

Overview of Financial Position

At December 31, 2008, we had cash of $644,774 and total liabilities of $73,112.

Investments

Our investment portfolio at December 31, 2008 was $251,445, a decrease of $105,378 from the September 30, 2008, balance of $356,823, primarily as a result of decreased per share values. See “Note 7. Investments” to our consolidated financial statements for further details.

Property, Plant and Equipment

At December 31, 2008, property, plant and equipment before accumulated depreciation totaled $2,764,225, an increase of $179,130 from $2,585,095 at September 30, 2008. Most of the increase related to equipment purchases at its Lakeview property. See “Note 5. Property, Plant and Equipment” to our consolidated financial statements for further details.

Mineral and Mining Properties

At December 31, 2008, mineral and mining properties were unchanged from the balance of $379,690 at September 30, 2008.

Accrued Expenses and Other Liabilities

Our accounts payable were $27,375 at December 31, 2008. Our accounts payable were $195,507 at September 30, 2008, which included $48,500 in compensation expense associated with a settlement agreement entered into by the Company with its former Chief Executive Officer, and included $50,000 associated with our acquisition of a 50% interest in a commercial office building in Coeur d’Alene, Idaho.

Notes Payable

During 2006, we acquired a vehicle for $19,782 by paying $9,000 cash and signing a note for the remaining $10,781. The note had a term of 30 months, bore interest at 8.99% annually and stipulated that payments of $499 be made monthly. This note payable was fully paid as of December 31, 2008.

During the third quarter of 2007, we acquired equipment for $55,000 by paying $27,500 cash and signing a note for the remaining $27,500. The note has a term of 24 months, bears interest at 8.50% annually and

stipulates that payments of $1,250 be made monthly. The outstanding balance on this note payable was $9,688 at December 31, 2008 and is payable within twelve months.

In December 2007, we purchased equipment for $15,377 in exchange for a note. The note has a term of 43 months, bears interest at 3.90% annually and stipulates that payments of $384 be made monthly. The lender has the right to increase the interest rate to 19.8% in the event of a violation of the terms of the loan agreement. The outstanding balance on this note payable was $11,293 at December 31, 2008. Of this amount $4,248 is payable within twelve months.

In December 2008, we purchased for $21,752 a one-year liability insurance policy covering its Lakeview mill (the “Policy”). The Policy was purchased with a cash payment of $5,813 with the balance of $15,939 settled with a promissory note. We recorded prepaid insurance of $21,752 and a related entry to record a $15,939 note payable. The note has a term of nine months, bears interest at 9.15% annually and stipulates that payments of $1,839 be made monthly. The outstanding balance on this note payable was $14,221 at December 31, 2008, all of which is payable within twelve months. See “Note 10: Notes Payable” to our consolidated financial statements for further details.

Stockholders’ Equity

Our total stockholders’ equity was $5,032,166 at December 31, 2008, a decrease of $608,854 from $5,641,020 at September 30, 2008. The decrease in total stockholders’ equity was primarily due to a net loss of $438,412 incurred during the three-month period ended December 31, 2008. Also, contributing to the decrease in total stockholders’ equity was a decrease of $157,942 in accumulated other comprehensive income. Fluctuations in prevailing market values continue to cause volatility in the Company’s accumulated comprehensive income or loss in stockholders’ equity and may continue to do so in future periods. See “Note 7: Investments” to our consolidated financial statements for further details.

Liquidity and Capital Resources

Operating Activities
During the three-month period ended December 31, 2008, our operating activities used $627,464 and used $138,581 during the comparable period last year. This reduction was primarily the result of the realization of a net loss of $438,412 during the recent three-month period compared to a net loss of $127,430 realized last year.

Investing Activities
During the three-month period ended December 31, 2008, our investing activities used $258,254 and used $24,393 during the same period last year. This was primarily the result of $91,910 in proceeds from the sale of investments received during the three-month period ended December 31, 2007 compared with $300 during the three-month period ended December 31, 2008.

Financing Activities
During the three-month period ended December 31, 2008, our financing activities contributed $39,574 and contributed $118,452 during the same period last year. This was primarily due to net proceeds of $90,000 received from the issuance of 450,000 shares of common stock during the three-month period ended December 31, 2007, compared with none during the three-month period ended December 31, 2008.

Off-Balance Sheet Arrangements

The Company is not currently a party to any off-balance sheet arrangements as they are defined in the regulations promulgated by the Securities and Exchange Commission.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4 – Controls and Procedures

We previously reported under Item 9A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2008, (the “Annual Report”) a material weakness in our internal control over financial reporting and that our internal control over financial reporting was not effective as of September 30, 2008, due a lack of rigor in application of accounting principles to material, unusual transactions. During the quarter ended December 31, 2008, we remedied deficiencies in our internal control over financial reporting by instituting additional review procedures over the financial reporting function.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by the Company’s management, with the participation of the Principal Executive Officer and the Pricipal Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of December 31, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

As of the end of the period covered by this report, except for the measures taken to address the material weakness as described above, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended December 31, 2008, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 - Legal Proceedings

We are, from time to time, involved in various legal proceedings incidental to the conduct of business. In the opinion of management, our gross liability, if any, and without any consideration given to the availability of insurance or other indemnification, under any pending litigation or administrative proceedings, including that discussed below, would not materially affect our consolidated financial position, results of operations or cash flows.

On November 17, 2008, the United States Environmental Protection Agency (“EPA”) filed a civil action against us in the United States District Court for the District of Idaho. The civil action seeks recovery of funds paid by the EPA in response to alleged releases of hazardous substances at our Idaho Lakeview mine

and mill site in Bonner County, Idaho. Currently, we do not believe that the resolution of this civil action will materially affect our consolidated financial position, results of operations or cash flows. Further, at this time, the Company is unable to make an estimate of a possible loss.

Item 1A – Risk Factors

Not applicable.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

Item 5 - Other Information

None.

Item 6 - Exhibits

(a) Exhibit    
  No.                                                                                          Description of Document
       
31.1 Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
31.2 Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
       
32.1 Certification of Principal Executive Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
       
32.2 Certification of Principal Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SHOSHONE SILVER MINING COMPANY
    (Registrant)
       
February 17, 2009   By: /s/ Lex Smith
Date     Lex Smith
      President and Principal Executive Officer
       
       
       
February 17, 2009   By: /s/ Melanie Farrand
Date     Melanie Farrand
      Treasurer
      and Principal Financial Officer