10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
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: 001-34055

 

TIMBERLINE RESOURCES CORPORATION

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	82-0291227
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
101 EAST LAKESIDE AVENUE
COEUR D’ALENE, ID	83814
(Address of Principal Executive Offices)	(Zip Code)

(208) 664-4859

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Exchange Act:  Common Stock, $0.001 par value, (Title of Class)

Trading symbols and exchanges:  TLRS, OTCQB  TBR, TSX-V

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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.   x   Yes  o  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o  No

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

Large Accelerated Filer   o	Accelerated Filer  o
Non-Accelerated Filer   x	Small Reporting Company      ☒ Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

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

Number of shares of issuer’s common stock outstanding at August 16, 2021: 139,558,522

1

INDEX 

Page 

PART I — FINANCIAL INFORMATION4 

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)4 

AND RESULTS OF OPERATIONS.15 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK23 

ITEM 4. CONTROLS AND PROCEDURES23 

PART II — OTHER INFORMATION24 

ITEM 1. LEGAL PROCEEDINGS.24 

ITEM 1A. RISK FACTORS24 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.24 

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.24 

ITEM 4.  MINE SAFETY DISCLOSURES24 

ITEM 5.  OTHER INFORMATION24 

ITEM 6. EXHIBITS.25 

SIGNATURES26 

2

COVID-19

In March 2020, COVID-19 was declared a pandemic by the World Health Organization and the Centers for Disease Control and Prevention. Its rapid spread around the world and throughout the United States prompted many countries, including the United States, to institute restrictions on travel, public gatherings and certain business operations. These restrictions did not significantly disrupt economic activity in Timberline Resource’s business.

As of June 30, 2021, the pandemic had not materially impacted the Registrants’ financial statements. However, if the severity of the COVID-19 pandemic continues, the negative financial impact due to limitations in conducting geologic field work and exploration activities could be significantly greater in future periods. In addition, the economic disruptions caused by COVID-19 could adversely impact the impairment risks for certain long-lived assets and equity method investments. Timberline Resources evaluated these impairment considerations and determined that no such impairments occurred as of June 30, 2021.

The effects of the continued outbreak of COVID-19 and related government responses could also include extended disruptions to supply chains and capital markets, reduced availability of contractors and a prolonged reduction in economic activity. These effects could have a variety of adverse impacts on the Company, including its ability to conduct exploration activities. As of June 30, 2021, there were no material adverse impacts on the Company’s operations due to COVID-19.

As of June 30, 2021, Timberline Resource’s available cash is $2,559,106. Management believes the Company has adequate liquidity to fund current obligations and commitments. To the extent that future access to the capital markets or the cost of funding is adversely affected by COVID-19, the Company may need to consider additional sources of funding for operations and working capital, which may adversely impact future results of operations, financial condition, and cash flows.

The Company has taken steps to mitigate the potential risks to suppliers and employees posed by the spread of COVID-19, including work from home policies where appropriate. The Company will continue to monitor developments affecting both its workforce and contractors, and will take additional precautions as necessary. The ultimate impact of COVID-19 depends on factors beyond management’s knowledge or control, including its duration and third-party actions to contain its spread and mitigate its public health effects. Therefore, the Company cannot estimate the potential future impact to its financial position, results of operations and cash flows, but the impacts could be material.

3

PART I — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

Contents

Page 

FINANCIAL STATEMENTS (UNAUDITED):

Consolidated balance sheets5 

Consolidated statements of operations6 

Consolidated statements of changes in stockholders’ equity7 

Consolidated statements of cash flows8 

Notes to consolidated financial statements9 - 14 

4

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		June 30, 2021		September 30, 2020
ASSETS
CURRENT ASSETS:
Cash	$	2,559,106	$	2,520,726
Prepaid expenses and other current assets		45,032		14,144
Subscriptions receivable		2,492,493		-
TOTAL CURRENT ASSETS		5,096,631		2,534,870
Property, mineral rights, and equipment, net		13,793,084		13,807,655
OTHER ASSETS:
Reclamation bonds		538,696		538,696
Deposits and other assets		5,700		5,700
TOTAL OTHER ASSETS		544,396		544,396
TOTAL ASSETS	$	19,434,111	$	16,886,921
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	116,339	$	173,981
Accrued expenses		13,780		39,440
Accrued expenses – related party		3,536		-
Accrued interest – related party		205,776		142,492
Accrued payroll, benefits and taxes		37,204		23,557
Senior unsecured note payable – related party		300,000		-
TOTAL CURRENT LIABILITIES		676,635		379,470
LONG-TERM LIABILITIES:
Asset retirement obligation		116,839		112,615
Senior unsecured note payable – related party		-		300,000
TOTAL LONG-TERM LIABILITIES		116,839		412,615
TOTAL LIABILITIES		793,474		792,085
COMMITMENTS AND CONTINGENCIES (Note 8)		-		-
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued and outstanding		-		-
Common stock, $0.001 par value; 500,000,000 shares authorized, 125,429,390 and 112,075,224 shares issued and outstanding, respectively		125,429		112,075
Subscribed shares		333,333		-
Shares to be issued		2,492,493		-
Additional paid-in capital		82,652,745		79,613,593
Accumulated deficit		(66,963,363)		(63,630,832)
TOTAL STOCKHOLDERS' EQUITY		18,640,637		16,094,836
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	19,434,111	$	16,886,921

See accompanying notes to consolidated financial statements.

5

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		Three months ended				Nine months ended
		June 30,				June 30,
		2021		2020		2021		2020
OPERATING EXPENSES:
Mineral exploration	$	427,908	$	30,221	$	1,827,980	$	189,452
Salaries and benefits		74,584		49,931		230,502		242,545
Professional fees		39,384		10,224		160,257		129,689
Insurance expense		38,766		21,607		102,367		73,785
Other general and administrative		638,053		50,087		936,809		300,409
Impairment loss on claims – Elder Creek		-		1,218,715		-		1,218,715
TOTAL OPERATING EXPENSES		1,218,695		1,380,785		3,257,915		2,154,595
LOSS FROM OPERATIONS		(1,218,695)		(1,380,785)		(3,257,915)		(2,154,595)
OTHER INCOME (EXPENSE):
Foreign exchange gain (loss)		(22,165)		(691)		(10,037)		(297)
Loss on debt modification – related party		-		-		-		(195,611)
Interest expense		-		(3,230)		-		(22,761)
Interest expense – related party		(22,424)		(47,075)		(64,658)		(138,187)
Miscellaneous other income		25		3		79		28
TOTAL OTHER INCOME (EXPENSE)		(44,564)		(50,993)		(74,616)		(356,828)
LOSS BEFORE INCOME TAXES		(1,263,259)		(1,431,778)		(3,332,531)		(2,511,423)
INCOME TAX PROVISION (BENEFIT)		-		-		-		-
NET LOSS	$	(1,263,259)	$	(1,431,778)	$	(3,332,531)	$	(2,511,423)
NET LOSS PER SHARE BASIC AND DILUTED	$	(0.01)	$	(0.02)		(0.03)	$	(0.03)
					$
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		118,906,357		74,895,260		115,200,298		74,265,698

See accompanying notes to consolidated financial statements.

6

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
	Common Stock				Subscribed Shares & Shares To Be Issued		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares		Amount
Balance, September 30, 2020	112,075,224	$	112,075	$	-	$	79,613,593	$	(63,630,832)	$	16,094,836
Common stock issued for exercise of warrants	950,000		950		-		132,050		-		133,000
Stock based compensation	-		-		-		127,022		-		127,022
Net loss	-		-		-		-		(1,584,113)		(1,584,113)
Balance December 31, 2020	113,025,224	$	113,025	$	-	$	79,872,665	$	(65,214,945)	$	14,770,745
Common stock issued for exercise of warrants	1,312,500		1,312		-		182,438		-		183,750
Net loss	-		-		-		-		(485,159)		(485,159)
Balance, March 31, 2021	114,337,724	$	114,337	$	-	$	80,055,103	$	(65,700,104)	$	14,469,336
Common stock issued for exercise of warrants	2,150,000		2,150		-		298,850		-		301,000
Common stock and warrants issued for cash	8,941,666		8,942		-		1,779,392		-		1,788,334
Common stock to be issued for cash	-		-		333,333		-		-		333,333
Subscribed shares	-		-		2,492,493		-		-		2,492,493
Stock based compensation	-		-		-		519,400		-		519,400
Net loss	-		-		-		-		(1,263,259)		(1,263,259)
Balance, June 30, 2021	125,429,390	$	125,429	$	2,825,826	$	82,652,745	$	(66,963,363)	$	18,640,637
Balance, September 30, 2019	67,395,260	$	67,395	$	-	$	74,568,258	$	(60,253,741)	$	14,381,912
Common stock and warrants issued for cash	7,500,000		7,500		-		592,500		-		600,000
Stock based compensation	-		-		-		161,100		-		161,100
Warrants issued for extinguishment of debt – related party	-		-		-		170,500		-		170,500
Net loss	-		-		-		-		(764,619)		(764,619)
Balance, December 31, 2019	74,895,260		74,895	$	-		75,492,358		(61,018,360)		14,548,893
Net loss	-		-				-		(315,026)		(315,026)
Balance, March 31, 2020	74,895,260	$	74,895	$	-	$	75,492,358	$	(61,333,386)	$	14,233,867
Net loss	-		-				-		(1,431,778)		(1,431,778)
Balance, June 30, 2020	74,895,260	$	74,895	$	-	$	75,492,358	$	(62,765,164)	$	12,802,089

See accompanying notes to consolidated financial statements.

7

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
		Nine months Ended June 30,
		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,332,531)	$	(2,511,423)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock-based compensation		646,422		161,100
Accretion of asset retirement obligation		4,224		22,298
Amortization of discount on senior unsecured notes payable – related party		-		47,320
Loss on extinguishment of debt – related party		-		195,611
Impairment loss on claims – Elder Creek		-		1,218,715
Changes in assets and liabilities:
Prepaid expenses and other current assets		(30,888)		(22,760)
Accounts receivable		-		118,525
Accounts payable		(57,642)		(71,412)
Accrued expenses		(25,660)		(82,529)
Accrued interest		-		(5,125)
Accrued expenses – related party		3,536		-
Accrued interest – related party		63,284		90,868
Accrued payroll, benefits and taxes		13,647		37,020
Net cash used by operating activities		(2,715,608)		(801,792)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mineral rights		(64,000)		-
Proceeds from lease of mineral rights		78,571		84,313
Proceed from LM LLC – bond advance		-		205,194
Refund of reclamation bond		-		12,500
Net cash provided by investing activities		14,571		302,007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and warrants, net		1,788,334		600,000
Proceeds from subscribed shares		333,333		-
Payments on payment obligation		-		(28,294)
Proceeds from exercise of warrants		617,750		-
Net cash provided by financing activities		2,739,417		571,706
Net increase in cash and cash equivalents		38,380		71,921
CASH AT BEGINNING OF PERIOD		2,520,726		30,757
CASH AT END OF PERIOD	$	2,559,106	$	102,678
Non-cash financing and investing activities:
Shares of common stock to be issued under subscription	$	2,492,493	$	-

See accompanying notes to consolidated financial statements.

8

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS:

Timberline Resources Corporation (“Timberline” or “the Company) was incorporated in August of 1968 under the laws of the State of Idaho as Silver Crystal Mines, Inc., for the purpose of exploring for precious metal deposits and advancing them to production. In 2008, the Company reincorporated into the State of Delaware, pursuant to a merger agreement approved by its shareholders.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a.Basis of Presentation and Going Concern – The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. 

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020.

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception. The Company has sufficient cash to fund normal operations and meet all of its obligations for the next 12 months without raising additional funds. However, we are an exploration company with exploration programs that require significant cash expenditures. A significant drilling program, such as that we have planned, can result in depletion of cash and return us to a position of insufficient cash to support normal operations for 12 months. The Company currently has no historical recurring source of revenue, and its ability to continue as a going concern is dependent on its ability to raise capital to fund future exploration and working capital requirements, or the Company’s ability to profitably execute its business plan. The Company’s plans for the long-term continuation as a going concern include financing its future operations through sales of common stock and/or debt and the eventual profitable exploitation of its mining properties. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

b.New Accounting Pronouncements - In August 2020, the FASB issued ASU No. 2020-06 Debt - Debt With Conversion And Other Options (Subtopic 470-20) And Derivatives And Hedging - Contracts In Entity’s Own Equity (Subtopic 815-40): Accounting For Convertible Instruments And Contracts In An Entity’s Own Equity.  The update simplifies the accounting for and disclosures related to company debt that is convertible or can be settled in a company’s own equity securities. The update is effective for fiscal years beginning after December 15, 2021. Management is evaluating the impact of this update on the Company’s financial statements. 

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

c.Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, BH Minerals USA, Inc.; Lookout Mountain LLC; Wolfpack Gold (Nevada) Corp.; Staccato Gold Resources, Ltd.; and Talapoosa Development Corp., after elimination of intercompany accounts and transactions. Due to the change in ownership of Lookout Mountain LLC and the associated transfer to the Company of all management and approval responsibilities, the Company began consolidating all balance sheet and expense transactions relative to the Lookout Mountain Project into its consolidated financial statements as of July 29, 2020. 

d.Exploration Expenditures – All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, the Company determines to focus its exploration efforts elsewhere, claims fees and holding fees are not remitted, or for other  

9

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

reasons, previously capitalized costs are expensed in the period the property is abandoned. When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives. To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.

e.Property Holding Costs – Holding costs to maintain a property, excluding mineral lease payments, are expensed in the period they are incurred. These costs include security and maintenance expenses, claim fees and payments, and environmental monitoring and reporting costs. 

f.Fair Value Measurements – When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. 

At June 30, 2021 and September 30, 2020, the Company had no assets or liabilities accounted for at fair value on a recurring basis or nonrecurring basis. The carrying amounts of financial instruments, including a senior unsecured note payable-related party, approximate fair value at June 30, 2021 and September 30, 2020.

g.Cash Equivalents – For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000 for accounts at each financial institution. 

h.Reclamation Bonds – Bonds paid to assure reclamation of properties covered by exploration permits are capitalized in the period paid, reduced as refunds are received or expensed as they are applied to reclamation obligations. 

i.Estimates and Assumptions – The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments, asset retirement obligations, and stock-based compensation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations. 

j.Property and Equipment – Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from two to seven years. Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating income or expenses. 

k.Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment – The Company reviews the carrying value of property, mineral rights, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the related assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, the effects of obsolescence, demand, competition, and other economic factors.  

l.Asset Retirement Obligations – The Company accounts for asset retirement obligations by following the methodology for accounting for estimated reclamation and abandonment costs as prescribed by GAAP. This guidance provides that the fair value of a liability for an asset retirement obligation (“ARO”) will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and a contractual obligation exists. An ARO asset is capitalized as part of the carrying value of the assets to which it is associated, and depreciated over the useful life of the asset. Adjustments are made to the liability for changes resulting from passage of time and changes to either the timing or amount of the original estimate underlying the obligation. The Company has an asset retirement obligation associated with its exploration program at the Lookout Mountain Target on its Eureka Project, and its Paiute Project. 

10

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

m.Stock-based Compensation – The Company estimates the fair value of its stock-based option compensation, and warrants when issued, using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation.  

The fair value of common stock awards is determined based upon the closing price of the Company’s stock on the grant date of the award. Compensation expense for grants that vest is recognized ratably over the vesting period.

n.Net Income (Loss) per Share – Basic earnings per share (“EPS”) is computed as net income (loss) available to common shareholders divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.  

The dilutive effect of convertible and outstanding securities as of June 30, 2021 and 2020 is as follows:

	June 30, 2021	June 30, 2020
Stock options – vested	8,722,500	5,400,000
Warrants	67,628,336	45,541,908
Total potential dilution	76,350,836	50,941,908

At June 30, 2021 and 2020, the effect of the Company’s common stock equivalents would have been anti-dilutive. Accordingly, only basic EPS is presented.

NOTE 3 – PROPERTY, MINERAL RIGHTS, AND EQUIPMENT:

The following is a summary of property, mineral rights, and equipment and accumulated depreciation at June 30, 2021 and September 30, 2020, respectively:

	Expected Useful Lives (years)		June 30, 2021		September 30, 2020
Mineral rights - Eureka	-	$	13,676,607	$	13,701,178
Mineral rights – Other	-		65,000		55,000
Total mineral rights			13,741,607		13,756,178
Equipment and vehicles	2-5		53,678		53,678
Office equipment and furniture	3-7		70,150		70,150
Land	-		51,477		51,477
Total property and equipment	-		175,305		175,305
Less accumulated depreciation	-		(123,828)		(123,828)
Property, mineral rights, and equipment, net	-	$	13,793,084	$	13,807,655

For the nine months ended June 30, 2021 and 2020, the Company received mineral lease payments of $78,571 and $84,313, respectively, from a third party on two property blocks the Company leases at the Company’s Eureka property. Monthly payments in the amount of approximately $8,700 terminated subsequent to the end of the period on July 31,2021 due to the termination of the lease by the lessee. These receipts are recorded as a reduction to property, mineral rights, and equipment.

On June 25, 2021, in accordance with the terms of the leases, the lessee notified Timberline that it had elected to terminate its leases on the two property blocks effective June 30, 2021.  The monthly payments in the amount of approximately $8,700 will cease for subsequent periods due to the termination of the lease.  The claims in question had seen no exploration activity in many years, and they remain the property of BH Minerals USA, Inc., a wholly owned subsidiary of the Company. 

NOTE 4 – RELATED-PARTY TRANSACTIONS:

11

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

A senior unsecured note payable and interest accrued thereon payable to William Matlack, a shareholder and director of the Company, is disclosed in Note 5.

One corporate shareholder, which is related to a director of the Company, purchased 1,250,000 Units of the of the private placement offering which closed on June 25, 2021, which is disclosed in Note 6, on the same terms as other investors in the offering.

During the year ended September 30, 2020, two directors participated in a private placement offering of units of the Company, purchasing 909,091 units for total proceeds of $100,000. Each Unit was priced at $0.11 and consisted of one share of common stock of the Company and one common share Class L Warrant, with each warrant exercisable to acquire an additional share of common stock of the Company at a price of $0.20 per share until August 15, 2023. The participation of the directors of the Company in this private placement was on the same terms as other investors in the private placement offering. The Board of Directors approved the insiders’ participation in the private placement.

At June 30, 2021, two officers were owed a total of $3,536 for expenses recorded in accounts payable – related party on the consolidated balance sheet that were reimbursed subsequent to the end of the period.

NOTE 5 – SENIOR UNSECURED NOTE PAYABLE – RELATED PARTY:

On July 30, 2018, the Company entered into a loan agreement and promissory note with William Matlack, a significant shareholder and a director as of October 29, 2019, (the “Lender”). Under the loan agreement, the Lender loaned the Company $300,000 in the form of a senior unsecured note payable, with the principal bearing interest at an annual rate of 18%, compounded monthly. The loan is unsecured and has a maturity date of January 20, 2023. At June 30, 2021 and at September 30, 2020, the senior unsecured note payable was $300,000.

The accrued interest on the senior unsecured note payable was $205,776 and $142,492 at June 30, 2021 and September 30, 2020, respectively. Interest expense related to the senior unsecured note payable to this related party was $22,424 and $47,075 for the three months ended June 30, 2021 and June 30, 2020, respectively, and $64,658 and $138,187 for the nine months ended June 30, 2021 and June 30, 2020, respectively.

The $300,000 senior unsecured note payable is senior to any other debt obtained by the Company subsequent to June 30, 2021. The senior unsecured note payable requires that when the Company enters into any other financings, 25% of the proceeds of such financings will be paid toward reduction of the principal and interest accrued on the note. No payments have been made by the Company to the Lender; however, with the common stock private placement financing completed during June and July 2021, the 25% is payable to the holder, and the principal therefore is classified as a current liability at June 30, 2021. Management is working with the holder to pay $250,000 prior to the end of fiscal year 2021 to pay the interest payable on the note and a portion of the note principal and negotiate an amendment to the terms of the note. The Lender provided a waiver of default as of September 30, 2020 on the note that would otherwise have occurred due to such non-payment of the 25% of proceeds at the time of the financing in 2020.

12

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

NOTE 6 – STOCKHOLDERS’ EQUITY:

Common Shares - Private Placement

On June 25, 2021, the Company closed on total subscriptions for a private placement offering for 23,070,798 Units of the Company at a price of $0.20 per Unit. Each Unit consisted of one share of common stock of the Company and one-half common share purchase Series M Warrant (each whole such warrant a “Warrant”), with each Warrant exercisable to acquire an additional share of common stock of the Company at a price of $0.30 per share until the Warrant expiration date of May 31, 2023. A total of 8,941,666 shares and 5,304,166 Warrants were paid for and issued during the quarter ended June 30, 2021, for net proceeds of $1,788,334 to the Company. Another $333,333 was received for shares subscribed but not yet issued as of the end of the quarter. Additionally, 102,000 broker Warrants were issued for finders fees. No cash was paid for finders fees during the quarter ended June 30, 2021. The units subscribed but not yet paid for at June 30, 2021 were accounted for as subscriptions receivable of $2,492,493. Subsequent to the close of the quarter ended June 30, 2021, and prior to the issuance of the financial statements for that period, cash of $2,375,393, net of $117,100 finders fees, was received and 14,129,132 shares and 6,725,481 Warrants were issued to complete the private placement transactions, including 494,248 Warrants issued for finders fees.

Common Shares issued for Exercise of Warrants

During the three months ended June 30, 2021, holders of Series D Warrants exercised 1,775,000 warrants for $0.14 per share to acquire 1,775,000 shares of the Company’s common stock for total cash proceeds of $248,500 to the Company. Also, holders of Series H Warrants exercised 375,000 warrants for $0.14 per share to acquire 375,000 shares of the Company’s common stock for total cash proceeds of $52,500 to the Company. During the three months ended June 30, 2021, 9,000,000 Series D warrants expired.

During the nine months ended June 30, 2021, holders of Series D Warrants exercised 3,500,000 warrants for $0.14 per share to acquire 3,500,000 shares of the Company’s common stock for total cash proceeds of $490,000 to the Company. Also, holders of Series E Warrants exercised 537,500 warrants for $0.14 per share to acquire 537,500 shares of the Company’s common stock for total cash proceeds of $75,250 to the Company. Also, holders of Series H Warrants exercised 375,000 warrants for $0.14 per share to acquire 375,000 shares of the Company’s common stock for total cash proceeds of $52,500 to the Company.  At June 30, 2021, the Company has a total of 67,628,336 warrants outstanding.

	Shares	Exercise Price ($)	Expiration Date
Warrants:
Outstanding and exercisable at September 30, 2020	75,634,670
Series M Warrants issued June 25, 2021	5,304,166	0.30	May 31, 2023
Series M Warrants issued for finders fees	102,000	0.30	May 31, 2023
Series D Warrants exercised	(3,500,000)	0.14
Series E Warrants exercised	(537,500)	0.14
Series H Warrants exercised	(375,000)	0.14
Series D Warrants expired April 30, 2021	(9,000,000)	0.14
Outstanding and exercisable at June 30, 2021	67,628,336

NOTE 7 – STOCK-BASED AWARDS:

On October 8, 2020, the Company granted a total of 1,100,000 options to purchase shares of the Company’s common stock that expire in five years with an exercise price of $0.25 in conjunction with the appointment of Patrick Highsmith as CEO (750,000 options), Mr. Steven Osterberg as VP-Exploration (250,000 options), and addition of Mr. Quinton Hennigh to the Board of Directors (100,000 options). Of Mr. Highsmith’s options, 187,500 vested immediately, with 187,500 vesting at each of the following three grant anniversary dates.  

On May 6, 2021, the Company granted a total of 2,785,000 options to employees, consultants, officers and directors to purchase shares of the Company’s common stock that expire in five years with an exercise price of $0.25. All options vested upon issuance.

The fair value of the option awards granted and vested during the three months ended June 30, 2021 and 2020 was $519,400 and nil. The fair value of the option awards granted and vested during the nine months ended June 30, 2021 and 2020 was $646,422 and $161,100, respectively. The fair value of unvested options will be recognized as compensation in the amount of $44,321 in each of the following three years covered by the vesting period. Fair values of options issued

13

TIMBERLINE RESOURCES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (Unaudited)

were measured on the date of the grant with a Black-Scholes option-pricing model using the assumptions noted in the following table:

	Options Granted at May 6, 2021	Options Granted at October 8, 2020	Options Granted at October 29, 2019
Expected volatility	167.9%	171.9%	149.5%
Stock price on date of grant	$0.20	$0.25	$ 0.07
Exercise price	$0.25	$0.25	$ 0.08
Expected dividends	-	-	-
Expected term (in years)	5	5	5
Risk-free rate	0.05%	0.09%	1.66%
Expected forfeiture rate	0%	0%	0%
Fair value at grant date	$519,400	$259,985	$161,100

The following is a summary of options issued and outstanding at June 30, 2021:

		Options		Weighted Average Exercise Price
Outstanding at September 30, 2019			3,280,000	$	0.26
Granted			2,550,000		0.08
Expired			(430,000)		(0.43)
Outstanding at September 30, 2020			5,400,000		0.16
	Granted		3,885,000		0.25
	Expired		-		-
Outstanding at June 30, 2021			9,285,000	$	0.20
Outstanding and exercisable at June 30, 2021			8,722,500	$	0.20
Weighted average remaining contractual term (years)					3.22

The aggregate of options exercisable as of June 30, 2021 had an intrinsic value of $517,500, based on the closing price of $0.23 per share of the Company’s common stock on June 30, 2021.

NOTE 8 – COMMITMENTS AND CONTINGENCIES:

The Company has the following commitments and contingencies:

Mineral Exploration

A portion of the Company’s mining claims on the Company’s properties are subject to lease and option agreements with various terms, obligations, and royalties payable in certain circumstances.

The Company pays federal and county claim maintenance fees on unpatented claims that are included in the Company’s mineral exploration properties. Should the Company continue to explore all of the Company’s mineral properties, it expects annual fees to total approximately $236,277 per year in the future.

Real Estate Lease Commitments

At September 30, 2020, the Company had real estate lease commitments for certain mineral properties totaling $72,000 annually. The Company’s office in Coeur d’Alene, Idaho and its facilities in Eureka, Nevada are rented on a month-to-month basis.

NOTE 9 – SUBSEQUENT EVENTS:

With the exception of events described in Note 6, as evaluated through the financial statement issuance date, there were no material events subsequent to June 30, 2021 that require disclosure.

14

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

As used in herein, the terms “Timberline,” the “Company,” “we,” “us,” and “our” refer to Timberline Resources Corporation.

This discussion and analysis contains forward-looking statements that involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Except for historical information, the matters set forth herein, which are forward-looking statements, involve certain risks and uncertainties that could cause actual results to differ. Potential risks and uncertainties include, but are not limited to, unexpected changes in business and economic conditions; significant increases or decreases in gold prices; changes in interest and currency exchange rates; unanticipated grade changes; metallurgy, processing, access, availability of materials, equipment, supplies and water; results of current and future exploration and production activities; local and community impacts and issues; timing of receipt and maintenance of government approvals; accidents and labor disputes; environmental costs and risks; competitive factors, including competition for property acquisitions; and availability of external financing at reasonable rates or at all, and those set forth under the heading “Risk Factors” in our Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on January 13, 2021. Forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continues” or the negative of these terms or other comparable terminology. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, or achievements. Forward-looking statements are made based on management’s beliefs, estimates, and opinions on the date the statements are made, and the Company undertakes no obligation to update such forward-looking statements if these beliefs, estimates, and opinions should change, except as required by law.

This discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our consolidated financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its consolidated financial statements and require the most difficult, subjective and complex judgments are outlined below in “Critical Accounting Policies” and have not changed significantly.

Corporate Overview

Our business is mineral exploration in Nevada with a focus on district-scale gold projects such as our district-scale Eureka Project, where we are focused on delivering high-grade Carlin-type gold discoveries. The Eureka property includes the historic Lookout Mountain and Windfall Mines in a total property position of approximately 24 square miles (62 square kilometers). The Eureka mineral resource was reported in compliance with Canadian NI 43-101 in an Updated Technical Report on the Lookout Mountain Project by Mine Development Associates, Effective March 1, 2013, filed on SEDAR April 12, 2013:

Resource Category	Tonnage (million short tons)	Grade (oz/ton)	Grade (grams/tonne)	Contained Au (troy oz)
Measured	3.04	0.035	1.20	106,000
Indicated	25.90	0.016	0.55	402,000
Inferred	11.71	0.012	0.41	141,000

We are also operator of the Paiute Joint Venture Project with Nevada Gold Mines in the Battle Mountain District. Both of these properties lie on the prolific Battle Mountain-Eureka gold trend. We also control the Seven Troughs Project in northern Nevada, which is one of the state's highest-grade former gold producers. In total, we control over 43 square miles (111 square kilometers) of mineral rights in Nevada. Detailed maps and mineral resource estimates for the Eureka Project and NI 43-101 technical reports for its projects may be viewed at http://timberlineresources.co/.

15

We are listed on the OTCQB, where we trade under the symbol “TLRS”, and on the TSX Venture Exchange, where we trade under the symbol "TBR".

Corporate Update

In January 2021, we announced the appointment of Mr. Patrick Highsmith, our President and CEO, to the board of directors effective January 1, 2021. At the Company’s annual meeting of shareholders on April 14, 2021, our shareholders approved a downsized board of directors, including five members: Leigh Freeman (Chairman), Quinton Hennigh, Patrick Highsmith, William Matlack, and Don McDowell. In another event subsequent to the end of the quarter, on May 6, 2021 we announced the appointment of Ms. Pamela Saxton to the board of directors. On August 6, 2021, Quinton Hennigh resigned from the board of directors as he accepted an executive position at Crescat Capital, a major shareholder of Timberline.

Summary of Exploration Activities for the Three Months ended June 30, 2021:

Exploration activities undertaken during the quarter ending June 30, 2021 continued advance of numerous Carlin-type gold occurrences within the 62 km2 (24 mi2) Eureka Project land position.  In 2020 we demonstrated that there are many high-grade (defined as ≥ 3 g/t) gold intercepts both inside the existing resource and beyond its limits, that can add significant size and value to our flagship project. The Carlin-type gold resource at Lookout Mountain includes oxide mineralization that is exposed at the surface which provides a strong foundation for resource expansion.  Nonetheless, we believe the best growth potential at Eureka will come from discovery of high-grade gold associated with many under-drilled targets at Lookout Mountain and elsewhere across the Eureka property. The 2021 program is designed to advance exploration towards discovery of additional high-grade gold through drill testing in step-outs beyond the limits of the current resource area and by advancing new targets through geologic, geochemical, and geophysical evaluations.  

Highlights of the 2021 exploration program to-date include:

·Completed approximately 23% (1,409m) of the planned reverse circulation (RC) drilling at the Eureka Project – 5 holes completed in the Lookout Mountain area;  

·Completed a controlled source audio magnetotellurics (CSAMT) geophysics survey, spanning 19 line-kilometers along four survey lines; 

·Commenced an induced polarization/resistivity (IP) survey – planned for 29 line-kilometers primarily in the Windfall area; 

·Geological mapping well underway in the central Oswego Trend and northern Lookout Trend; and   

·Completed an orientation soil survey across the Windfall Trend and approximately 700 soil geochemical samples in the northern portion of the property.  

Drilling

During late 2020 and early 2021 we announced drill results confirming new areas of high-grade gold inside the existing resource and to the east in the Water Well Zone (WWZ) (see Company news releases December 1, 2020 and January 7, 2021). Much of the Lookout Mountain gold resource is associated with a significant alteration zone and related collapse brecciation along the east-dipping Footwall Fault (Figure 2). East of that structure, high-angle faults cut the graben zone and some may be related to known gold mineralization we discovered in the WWZ (see Company news releases dated April 20, 2015 and January 7, 2021).  The Graben Zone also hosts a 2 km-long strong IP (chargeability) anomaly near its central axis (Figure 1).

The Timberline team has applied geophysics in conjunction with geologic mapping and 3D modeling to develop these targets for testing in the 2021 drill program. RC drilling commenced in mid-July and five holes (1,409 meters) have been completed at the time of this writing (Figure 1). Three of these holes were aimed at expanding the WWZ mineralization to the north, including the northernmost hole, which is more than 200 meters from previous high-grade intercepts. The high-grade WWZ remains open to the northwest, north, south, and east. Several more holes are planned in 2021 to test the zone to the northwest and southeast. The first phase of drilling also included two new target areas to the southwest from the historic Lookout Mountain Pit.

Drilling is on hiatus during August, but drilling will restart in September when drill rigs and crews rotate back to the Eureka Project. The Company has been successful in securing a drilling contractor during a busy year by agreeing to flexibility in schedule so that drillers can manager other commitments in parallel. Timberline expects this drill program to run at least until November 2021.

16

Figure 1.  Lookout Mountain Gold Resource Area and Graben Zone with Major Faults, IP anomalies, and 2021 Planned Drill Holes in Target Areas  

 

Geophysics

During the quarter ending June 30, 2021, Zonge Geosciences, Inc. (Zonge) completed a CSAMT survey along four lines totaling 19 line-kilometers (Figure 3).  The four survey lines transect six major target areas on the Eureka Project: (1) Water Well Zone; (2) West Lookout; (3) Oswego; (4) Rocky Canyon; (5) the gap between South Lookout and the South Adit Zone; and (6) Windfall.  These data are expected to provide enhanced insights into the alteration, structural geology, and stratigraphy of the rocks in three dimensions.  This will be helpful in interpreting how best to drill in some of the newer target areas.  It will also improve understanding how the three major trends on the property are related, the Windfall, the Oswego, and the Lookout Trends.  Processing, analysis, and interpretation of the CSAMT data are on-going and will be integrated with new IP data and recent geologic mapping.

Since completion of the CSAMT survey, in mid-July Zonge has begun a new 29 line-kilometer IP survey.  The IP survey builds on the very successful work conducted during late 2020 and will include multiple lines in the Windfall target area (Figure 3).

17

Figure 2.  Lookout Mountain Geologic Cross Section and Schematic Gold Targets

 

18

Figure 3.  Eureka Project Geologic Trends, and 2021 Geophysical Survey and Soil Sample Locations

 

19

Geochemistry

The gold systems at the Eureka Project often come to the surface where faults and altered rocks can be expressed in gold and pathfinder elements detectable in soils. Each of the three major trends at Eureka is reflected in gold anomalies in existing soils geochemical data (Figure 3), but the northern portion of the property position was never covered by previous workers.  

In the quarter ending June 30th, we initiated a soil geochemical survey across unsurveyed areas of the property.  The survey began with an orientation survey to test sampling and analytical methodology over an area of known mineralization.  Systematic sampling commenced after a period of training and completion of the orientation survey; the sampling team has collected approximately 700 samples at the time of this writing.  The new sampling augments the existing geochemical coverage (Figure 3) across the projected northern extensions of the three gold trends on the property.  Initial samples have been submitted to ALS Global Laboratory for analysis by new state-of-the-art ultra-trace level technology which is likely to yield much more robust and comprehensive data than seen in previous surveys.  The soil geochemistry survey is expected to provide high-resolution data that will support future drill targeting.

Results of Operations for the nine months ended June 30, 2021 and 2020

Consolidated Results

(US$)		Three Months Ended June 30,				Nine months Ended June 30,
		2021		2020				2021			2020
Exploration expenses:
	Eureka	$	330,599	$	14,221		$	1,471,948	$	173,452
	Other exploration properties	97,309		-				356,032			-
Total exploration expenditures		427,908		14,221				1,827,980			173,452
Non-cash expenses:
	Stock option expenses	519,400		-				646,422			161,100
	Depreciation, amortization and accretion	1,408		18,133				4,224			22,298
	Accretion of discount on senior note payable	-		15,533				-			47,320
Loss on extinguishment of debt		-		-				-			195,611
Impairment of claims		-		1,218,715				-			1,218,715
Total non-cash expenses		520,808		1,252,381				650,646			1,645,044
Professional fees expenses		39,384		10,224				160,257			129,689
Insurance expenses		38,766		21,607				102,367			73,785
Salaries and benefits expenses		74,584		49,931				230,502			242,545
Interest and other (income) expense		44,564		35,460				74,616			113,897
Other general and administrative expenses		117,245		47,954				286,163			133,011
Net loss		$	1,263,259	$	1,431,778		$	3,332,531	$	2,511,423

Our consolidated net loss for the three months ended June 30, 2021 was $1,263,259, compared to a consolidated net loss of $1,431,778 for the three months ended June 30, 2020. As a result of the consolidation of Lookout Mountain LLC, total exploration expenses of $427,908 were recorded on our statement of operations for the three months ended June 30, 2021, compared with $14,221 for the three months ended June 30, 2020. The year-over-year increase in net loss is due to the significant increase in exploration expenses made possible by the infusion of cash that occurred near the close of fiscal year 2020, share-based compensation resulting from stock options issued to directors, officers and consultants, an increase in salaries and benefits resulting from adding an additional corporate officer, and increases in investor and legal fees resulting from costs associated with the preparation for the shareholder meeting held in April 2021, offset by reduced investor relations consulting fees during the three months ended June 30, 2021. These cost increases were offset by the reduction of interest expense and accretion of the discount on senior notes payable as a result of paying off significant debt late in fiscal year 2020. Insurance expense was somewhat higher in the comparative period due to the normal increases the industry is experiencing.

Our consolidated net loss for the nine months ended June 30, 2021 was $3,332,531, compared to a consolidated net loss of $2,511,423 for the nine months ended June 30, 2020. As a result of the consolidation of Lookout Mountain LLC, total exploration expenses of $1,827,980 were recorded on our statement of operations for the nine months ended June 30, 2021, compared with $173,452 for the nine months ended June 30, 2020. The year-over-year increase in net loss is due to the significant increase in exploration expenses made possible by the infusion of cash that occurred near the close of fiscal year 2020, an increase in share-based compensation resulting from stock options issued to directors, officers and consultants, an increase in salaries and benefits resulting from adding an additional corporate officer, all of which were

20

offset by the non-recurrence of the loss on modification of debt, the non-recurrence of a charge for impairment of claims, and the reduction of interest expense and accretion of the discount on senior notes payable as a result of paying off significant debt late in fiscal year 2020. Insurance expense was somewhat higher in the first nine months of 2021 due to the normal increases the industry is experiencing.

As made possible by the additional funding in 2021, we expect to continue to incur exploration expenses for the advancement of our Eureka Project.

Financial Condition and Liquidity

At June 30, 2021, we had assets of $19,434,111, consisting of cash of $2,559,106, subscriptions receivable of $2,492,493, property, mineral rights and equipment of $13,793,084, net of depreciation, reclamation bonds of $538,696, and prepaid expenses, deposits and other assets in the amount of $50,732.

On June 30, 2021, we had total liabilities of $793,474 and total assets of $19,434,111. This compares to total liabilities of $792,085 and total assets of $16,886,921 on September 30, 2020. As of June 30, 2021, our liabilities consist of $167,323 of trade payables and accrued liabilities, $209,312 of interest and expenses payable to related parties, $116,839 for asset retirement obligations, and $300,000 of senior unsecured note payable – related party. Of these liabilities, $416,839 are due within twelve months. The liabilities compared to September 30, 2020 experienced a minor net change as a result of a decrease in accrued trade payables offset by increases in accrued liabilities and accrued interest - related party. The increase in total assets was due to the infusions of cash and subscriptions receivable from private placements of our equity, offset by uses of cash to reduce accounts payable and to pay Company operating expenses.

On June 30, 2021, we had working capital of $4,419,996 and stockholders’ equity of $18,640,637 compared to working capital of $2,155,400 and stockholders’ equity of $16,094,836 for the year ended September 30, 2020. Working capital increased due to the increase in cash and subscriptions receivable associated with the private placement near the close of the quarter ended June 30, 2021, enhanced by reductions of accounts payable, and offset by increases in accrued expenses and accrued interest - related party and the current status of the senior unsecured note payable to a related party.

During the nine months ended June 30, 2021, we used cash from operating activities of $2,715,608, compared to cash used of $801,792 for the nine months ended June 30, 2020. The use of cash from operating activities results primarily from the net loss of $3,332,531 for the nine-month period ended June 30, 2021 compared to net loss of $2,511,423 for the nine months ended June 30, 2020. Each of the comparable periods experienced significantly different non-cash effects as a result of changes in stock-based compensation and non-recurrence of loss on extinguishment of debt and loss on abandonment of claims. Changes to the net loss for the comparative periods are described above.

During the nine-month period ended June 30, 2021, cash of $14,571 was provided by investment activities, compared with cash of $302,007 provided for the nine-month period ended June 30, 2020. During the nine months ended June 30, 2021, we received $78,571 for lease payments to us for company-owned mineral properties offset by $64,000 paid for mineral rights, compared to cash received of $12,500 for refunds of reclamation bonds paid previously, $205,194 from LM LLC for an advance on reclamation bond refunds due on claims assigned to LM LLC and $84,313 for lease payments to us for company-owned mineral properties for the nine months ended June 30, 2020.

During the nine-month period ended June 30, 2021, $2,739,417 was provided by financing activities, compared to cash of $571,706 provided during the nine-month period ended June 30, 2020. For the nine-month period ended June 30, 2021, cash of $1,788,334 was provided through the sale of stock and warrants, $617,750 provided by the exercise of warrants and $333,333 from the proceeds from stock subscriptions paid for which stock had not yet been issued.  For the nine-month period ended June 30, 2020, cash of $600,000 was provided through the sale of stock and warrants, net of offering costs, and $28,294 cash was used for payment of the payment obligation.

Going Concern:

The audit opinion and notes that accompany our consolidated financial statements for the year ended September 30, 2020 disclose a ‘going concern’ qualification to our ability to continue in business. These consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates the realization of our assets and the settlement of our liabilities in the normal course of our operations. Disruptions in the credit and financial markets over the past several years have had a material adverse impact on a number of financial institutions and investors and have limited access to capital and credit for many companies. In addition, commodity prices and mining equities have seen significant volatility which increases the risk to precious metal investors. Market disruptions and alternative investment options, among other things, may make it more difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations. Our access to additional capital may not be available on terms acceptable to us or at all. If we are unable to

21

obtain financing through equity investments, we will seek multiple solutions including, but not limited to, asset sales, corporate transactions, credit facilities or debenture issuances in order to continue as a going concern.

The consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. We believe that the going concern condition cannot be removed with confidence until the Company has entered into a business climate where funding of its activities is more assured. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

At June 30, 2021, we had working capital of $4,419,996. We have a cash balance of approximately $2,559,106 and approximately $676,635 outstanding in current liabilities. As of the date of this report on Form 10-Q, we have sufficient cash to meet our normal operating commitments for the next 12 months. Therefore, we do not expect to be required to engage in financial transactions to increase our cash balance or decrease our cash obligations in the near term. However, we are an exploration company with planned exploration programs that require significant cash expenditures. A significant drilling program, such as those we have planned, will result in depletion of cash and may return us to a position of insufficient cash to support normal operations for the following 12 months. Cash-raising efforts may include equity financings, corporate transactions, joint venture agreements, sales of assets, credit facilities or debenture issuances, or other strategic transactions.

We plan to follow up on our positive drill results on our Eureka and Paiute Projects. Principally, we plan to execute drilling as part of the ongoing exploration program at Eureka. Also, we may continue prudent exploration programs on our material exploration properties and/or fund some exploratory activities on early-stage properties. We will require additional funding and/or reductions in exploration and administrative expenditures in future periods. If we cannot obtain sufficient additional financing, we may be unable to make required property payments on a timely basis and be forced to return some or all of our leased or optioned properties to the underlying owners.

Financing Activities

On June 25, 2021, we closed on total subscriptions for a private placement offering for 23,070,798 Units of the Company at a price of $0.20 per Unit. Each Unit consisted of one share of our common stock and one-half common share purchase Class M Warrant (each whole such warrant a “Warrant”), with each Warrant exercisable to acquire an additional share of our common stock at a price of $0.30 per share until the Warrant expiration date of May 31, 2023. A total of 8,971,666 shares and 5,304,166 Warrants were paid for and issued during the quarter ended June 30, 2021, for net proceeds of $1,788,334 to the Company. Another $333,333 was received for shares subscribed but not yet issued as of the end of the quarter. Additionally, 102,000 broker Warrants were issued for finders fees. No cash was paid for finders fees during the quarter ended June 30, 2021. The units subscribed but not yet paid for at June 30, 2021 were accounted for as subscriptions receivable of $2,492,493. Subsequent to the close of the quarter ended June 30, 2021, and prior to the issuance of the financial statements for that period, cash of $2,375,393, net of $117,100 finders fees, was received and 14,129,132 shares and 6,725,481 Warrants were issued to complete the private placement transactions, including 494,248 Warrants issued during the subsequent period for finders fees.

One corporate shareholder, which is related to a director of the Company, purchased 1,250,000 Units of the of the private placement offering which closed on June 25, 2021, which is disclosed in Note 6, on the same terms as other investors in the offering. The Offering was completed under Rule 506(b) of Regulation D promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”), solely to persons who qualify as accredited investors and in accordance with applicable securities laws.

Subsequent Events

With the exception of events described in Financing Activities above, as evaluated through the financial statement issuance date, there were no material events subsequent to June 30, 2021 that require disclosure.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Critical Accounting Policies and Estimates

See Note 2 to the financial statements contained in this Quarterly Report for a summary of the significant accounting policies used in the presentation of our financial statements. We are required to make estimates and assumptions that

22

affect the reported amounts and related disclosures of assets, liabilities, revenue and expenses. We believe that our most critical accounting estimates are related to asset impairments and asset retirement obligations.

Our critical accounting policies and estimates are as follows:

Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment

Significant property acquisition payments for active exploration properties are capitalized. The evaluation of our mineral properties for impairment is based on market conditions for minerals, underlying mineralized material associated with the properties, and future costs that may be required for ultimate realization through mining operations or by sale. If no mineable ore body is discovered, or market conditions for minerals deteriorate, there is the potential for a material adjustment to the value assigned to such mineral properties.

We review the carrying value of equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment or abandonment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the equipment is used, and the effects of obsolescence, demand, competition, and other economic factors.

Asset Retirement Obligations

We have an obligation to reclaim our properties after the surface has been disturbed by exploration methods at the site. As a result, we have recorded a liability for the fair value of the reclamation costs we expect to incur at our Lookout Mountain Target on our Eureka Project, and our Paiute Project. We estimate applicable inflation and credit-adjusted risk-free rates as well as expected reclamation time frames. To the extent that the estimated reclamation costs change, such changes will impact future reclamation expense recorded. A liability is recognized for the present value of estimated environmental remediation (asset retirement obligation) in the period in which the liability is incurred if a reasonable estimate of fair value can be made. The offsetting balance is charged to the related long-lived asset. Adjustments are made to the liability for changes resulting from passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Conclusions of Management Regarding Effectiveness of Disclosure Controls and Procedures

At the end of the period covered by this Form 10-Q, an evaluation was carried out under the supervision of and with the participation of our management, including the Principal Executive Officer and the Principal Financial Officer of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Principal Executive Officer and the Principal Financial Officer have concluded that our disclosure controls and procedures were not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal control of financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)), that occurred during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

23

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are not aware of any material pending litigation or of any proceedings known to be contemplated by governmental authorities which are, or would be, likely to have a material adverse effect upon us or our operations, taken as a whole. No director, officer or affiliate of Timberline and no owner of record or beneficial owner of more than 5% of our securities or any associate of any such director, officer or security holder is a party adverse to Timberline or has a material interest adverse to Timberline in reference to any currently pending litigation.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended September 30, 2020, which was filed with the SEC on January 13, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

All sales of unregistered equity securities during the fiscal quarter covered by this Quarterly Report on Form 10-Q were previously reported on Form 8-K.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  MINE SAFETY DISCLOSURES

We consider health, safety and environmental stewardship to be a core value for the Company.

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities with respect to mining operations and properties in the United States that are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). During the nine months ended June 30, 2021, our U.S. exploration properties were not subject to regulation by the MSHA under the Mine Act.

ITEM 5.  OTHER INFORMATION

None.

24

ITEM 6. EXHIBITS.

3.1	Certificate of Incorporation of the Registrant as amended through October 31, 2014, incorporated by reference to the Company’s Form 10-K as filed with the Securities and Exchange Commission on December 23, 2014
3.2	Amended By-Laws of the Registrant, incorporated by reference to the Company’s Form 8-K as filed with the Securities and Exchange Commission on August 13, 2015.
4.1	Specimen of the Common Stock Certificate, incorporated by reference to the Company’s Form 10SB as filed with the Securities Exchange Commission on September 29, 2005
4.2	Form of Warrant Agreement incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on August 11, 2016.
4.3	Form of Warrant Agreement for March and April 2017 Offering of Units, incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on May 15, 2017.
4.4	Form of the Series H Warrant, incorporated by reference to exhibit 99.1 to the Company’s Form 8-K as filed with the Securities and Exchange Commission on April 1, 2019
4.5	Form of the Series G Warrant, incorporated by reference to exhibit 4.4 to the Company’s Form 10-Q as filed with the Securities and Exchange Commission on August 14, 2019
4.6	Form of the Series I Warrant, incorporated by reference to exhibit 4.8 to the Company’s Form 10-K as filed with the Securities and Exchange Commission on Jan 10, 2020
4.7	Form of the Series J Warrant, incorporated by reference to exhibit 4.5 to the Company’s Form 8-K as filed with the Securities and Exchange Commission on October 25, 2019
4.8	Form of the Series K Warrant, incorporated by reference to exhibit 4.8 to the Company’s Form 10-K as filed with the Securities and Exchange Commission on January 13, 2021
4.9	Form of the Series L Warrant, incorporated by reference to exhibit 4.1 to the Company’s Form 8-K as filed with the Securities and Exchange Commission on September 1, 2020
4.10*	Form of the Series M Warrant
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act)
32.1*	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
32.2*	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* - Filed herewith

25

SIGNATURES

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

TIMBERLINE RESOURCES CORPORATION

By:  /s/ Patrick Highsmith

      ___________________________________

      Patrick Highsmith

      President and Chief Executive Officer

      (Principal Executive Officer)

Date:  August 16, 2021

By:  /s/ Ted R. Sharp

      ___________________________________

      Ted R. Sharp

      Chief Financial Officer

      (Principal Financial and Accounting Officer)

Date:  August 16, 2021

26

EX-4.10

Exhibit 4.10

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) IF THE SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT IN ACCORDANCE WITH RULE 144 OR RULE 904 THEREUNDER, IF APPLICABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES, AND , IN THE CASE OF CLAUSES (C) AND (D) THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH U.S. SECURITIES LAWS.

THIS WARRANT AND THE SECURITIES DELIVERABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  THIS WARRANT MAY NOT BE EXERCISED UNLESS THE WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE OCTOBER 26, 2021.”

“WITHOUT PRIOR WRITTEN APPROVAL OF TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL OCTOBER 26, 2021.”

TIMBERLINE RESOURCES CORPORATION

SERIES M WARRANTS
TO PURCHASE SHARES

OF COMMON STOCK OF

TIMBERLINE RESOURCES CORPORATION

{Shareholder}

CERTIFICATE NO.: M-¨

Warrant to Purchase

¨####### Shares of Common Stock

June 25,2021

(“Issue Date”)

W-1

FOR VALUE RECEIVED, TIMBERLINE RESOURCES CORPORATION, a Delaware corporation (the "Company"), hereby certifies that __________________________________, its successor or permitted assigns (the "Holder"), is entitled, subject to the provisions of this Series M Warrant, to purchase from the Company, at the times specified herein, ¨###### fully paid and non-assessable shares of Common Stock of the Company, par value $0.001 per share (the "Common Stock"), at a purchase price per share equal to the Exercise Price (as hereinafter defined).

1.Definitions.  (a)  The following terms, as used herein, have the following meanings: 

"Affiliate" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended.

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in the City of Coeur d’Alene, Idaho are authorized by law to close.

"Common Stock" means the Common Stock, par value $0.001 per share, of the Company.

"Duly Endorsed" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

“Exercise Date” means the date a Warrant Certificate and Warrant Exercise Subscription Form are delivered to the Company in the manner provided in Section 10 below.

"Exercise Price" means US$0.30 per share (or its Canadian dollar equivalent on the date of exercise as reported by the U.S. Federal Reserve Bank at https://www.federalreserve.gov/releases/h10/hist/dat00_ca.htm), as the same may be adjusted from time to time pursuant to the terms of this Warrant.

"Expiration Date" means 5:00 p.m. pacific time (Coeur d’Alene, Idaho) on May 31, 2023; provided that if such date shall in the City of Coeur d’Alene, Idaho be a holiday or a day on which banks are authorized to close, then 5:00 p.m. on the next following day which in the City of Coeur d’Alene, Idaho is not a holiday or a day on which banks are authorized to close.

"Initial Warrant Exercise Date" means the date hereof.

"Person" means an individual, partnership, corporation, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

“Principal Market” means the OTCQB orthe primary securities exchanges or market on which such security may at the time be listed or quoted for trading.

"Warrant Shares" means the shares of Common Stock deliverable upon exercise of this Warrant, as adjusted from time to time.

2.Exercise of Warrant. 

(a)The Holder is entitled to exercise this Warrant in whole or in part at any time on or after the Initial Warrant Exercise Date until the Expiration Date.  To exercise this Warrant, the Holder shall deliver to the Company this Warrant Certificate, including the Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder, together with payment of the applicable Exercise Price.  Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.  No fractional shares will be issued. 

W-2

(b)The Exercise Price may be paid to the Company in cash or by certified or official bank check or bank cashier's check payable to the order of the Company, or by wire transfer or by any combination of cash, check or wire transfer. 

(c)If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company.  The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph 6 hereof as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same. 

(d)Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of the shares of Common Stock or other securities or property to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property to the Person or Persons entitled to receive the same.   

(e)In no event may the Holder exercise these Warrants in whole or in part unless the exercise is exempt from registration under the Securities Act of 1933, as amended (the “U.S. Securities Act”).  

3.Exercise Restrictions.  Notwithstanding any other provision hereof, no Holder shall exercise these Warrants, if as a result of such conversion the holder would then become a “ten percent beneficial owner” (as defined in Rule 16a-2 under the Securities Exchange Act of 1934, as amended) of Common Stock.  For greater certainty, the Warrants shall not be exercisable by the Holder or redeemed by the Company, if, after giving effect to such exercise, the holder of such securities, together with its affiliates, would in aggregate beneficially own, or exercise control or direction over that number of voting securities of the Company which is 9.99% or greater of the total issued and outstanding voting securities of the Company, immediately after giving effect to such exercise; provided, however, that upon a holder of these Warrants providing the Company with a Waiver Notice that such holder would like to waive the provisions of this paragraph 3 with regard to any or all shares of Common Stock issuable upon exercise of these Warrants, this paragraph 3 shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of these Warrants. 

4.Restrictive Legend.  Certificates representing shares of Common Stock issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to applicable law. 

6.Covenants of the Company. 

(a)The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued shares of Common Stock or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant.  All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights. 

(b)The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the  

W-3

Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(c)Before taking any action which would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price. 

(d)Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 

(e)The Company covenants that during the period the Warrant is outstanding, it will use its best efforts to comply with any and all reporting obligations under the Securities Exchange Act of 1934, as amended. 

(f)The Company will take all such reasonable action as may be necessary (i) to maintain a Principal Market for its Common Shares in the United States and (ii) to assure that such Warrant Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Principal Market upon which the Common Stock may be listed. 

(g)The Company shall preserve and maintain its corporate existence and all licenses and permits that are material to the proper conduct of its business. 

(h)The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant. 

7.Exchange, Transfer or Assignment of Warrant; Registration. 

(a)Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. 

(b)The Holder agrees that this Warrant is non-transferrable. 

8.Anti-Dilution Provisions.  The Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrant shall be subject to adjustment from time to time upon the happening of certain events as follows: 

(a)In case the Company shall (i) declare a dividend or make a distribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the number of Warrant Shares shall be proportionately adjusted to reflect such dividend, distribution, subdivision, reclassification or combination. For example, if the Company declares a 2 for 1 stock split and the number of Warrant Shares immediately prior to such event was 200,000, the number of Warrant Shares immediately after such event would be 400,000.  Such adjustment shall be made successively whenever any event listed above shall occur.   

(b)Whenever the number of Warrant Shares is adjusted pursuant to Subsection (a) above, the Exercise Price shall simultaneously be adjusted by multiplying the Exercise Price immediately prior to such event by the number of Warrant Shares immediately prior to such event and dividing the product so obtained by the number of Warrant Shares, as adjusted. If an Exercise Price has not yet been established, an adjustment thereof shall be deferred until one is established pursuant to the terms of this Warrant. 

W-4

(c)No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five percent (5%) in such price; provided, however, that any adjustments which by reason of this Subsection (c) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section 7 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. 

(d)Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly cause a notice setting forth the adjusted Exercise Price and adjusted number of Shares issuable upon exercise of each Warrant to be mailed to the Holder.  The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section 7, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment. 

(e)In the event that at any time, as a result of an adjustment made pursuant to Subsection (a) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsection (a), above. 

(f)Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant. 

(g)In case at any time or from time to time conditions arise by reasons of action taken by the Company, which in the reasonable opinion of its Board of Directors, are not adequately covered by the provisions of Section 7 hereof, and which might materially and adversely affect the exercise rights of the Holder hereof, the Board of Directors shall appoint a firm of independent certified public accountants, which may be the firm regularly retained by the Company, which will give their opinion upon the adjustment, if any, on a basis consistent with the standards established in the other provisions of Section 7 necessary with respect to the Exercise Price then in effect and the number of shares of Common Stock for which the Warrant is exercisable, so as to preserve, without dilution, the exercise rights of the Holder.  Upon receipt of such opinion, the Board of Directors shall forthwith make the adjustments described therein. 

9.Loss or Destruction of Warrant.  Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date. 

W-5

10.Notices.  Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company, as the case may be, at its address (or telecopier number) set forth below, or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery: 

If to the Company:TIMBERLINE RESOURCES CORPORATION 

101 East Lakeside Avenue

Coeur d’Alene, ID  83814

Attn:  Ted Sharp, CFO

Fax:  208-664-4860

With a copy to:J.P. Galda & Co. 

40 E. Montgomery Avenue
LTW 220
Ardmore, PA 19003

Email: jpgalda@jpgaldaco.com

Attention:  Joseph P. Galda, Esq.

If to the Holder: at the address set forth on the last page of this Warrant. 

Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.  

11.Rights of the Holder.  Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions, to exercise any preemptive right or any notice of any proceedings of the Company except as may be specifically provided for herein. 

12.GOVERNING LAW.  THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS. 

13.Amendments; Waivers.  Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective.  No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 

14.Company Reorganization.  In the event of any sale of substantially all the assets of the Company or any reorganization, reclassification, merger or consolidation of the Company where the Company is not the surviving entity, then as a condition to the Company entering into such transaction, the entity acquiring such assets or the surviving entity, as the case may be, shall agree to assume the Company's obligations hereunder. 

************

W-6

IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed by its duly authorized officer and to be dated as of June 25, 2021

TIMBERLINE RESOURCES CORPORATION

By:

Name: Patrick Highsmith                            

Title: President & CEO                               

HOLDER:

______________________________

______________________________

______________________________

(Name and address)

W-7

WARRANT EXERCISE SUBSCRIPTION FORM

(To be executed only upon exercise of the Warrant

after delivery of Warrant Exercise Notice)

To:TIMBERLINE RESOURCES CORPORATION 

The undersigned irrevocably exercises the Series M Warrant for the purchase of _______________ shares (the "Shares") of Common Stock, par value $0.001 per share, of TIMBERLINE RESOURCES CORPORATION (the "Company") at US$0.30 per Share (or the Canadian dollar equivalent at the time of exercise based on the Federal Reserve Bank reported exchange rate) (the Exercise Price currently in effect pursuant to the Warrant).

The undersigned herewith makes payment of US$_____________ (or the Canadian dollar equivalent at the time of exercise) (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended (the “U.S. Securities Act”), and is exercising these Warrants in a transaction that does not require registration under the U.S. Securities Act and has provided herewith a certification of its status as an accredited investor by delivery of a Certification substantially in the form of the attached as Exhibit A to the Subscription Agreement pursuant to which the Series L Warrants were offered and sold.

Number of shares of Common Stock beneficially owned or deemed beneficially owned by the Holder on the date of

Exercise: _________________________

Date:

(Signature of Owner) 

(Street Address) 

(City)(State)(Zip Code) 

W-8

Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:  

Street Address:

City, State and Zip Code:

W-9

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Patrick Highsmith, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Timberline Resources Corporation; 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  August 16, 2021

By:   /s/ Patrick Highsmith                      

           Patrick Highsmith, President, Chief Executive Officer and Principal Executive Officer

A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ted R. Sharp, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Timberline Resources Corporation; 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. 

4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors: 

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

Date:  August 16, 2021

By:   /s/  Ted R. Sharp                                                   

        Ted R. Sharp, Chief Financial Officer, Principal Financial Officer

A signed original of this written statement has been provided to the registrant and will be retained by the registrant to be furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Timberline Resources Corporation, (the "Company") on Form 10-Q for the period ending June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Patrick Highsmith, Chief Executive Officer, President and Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Timberline Resources Corporation. 

       /s/ Patrick Highsmith                                DATE:  August 16, 2021 

      Patrick Highsmith, Chief Executive Officer and President

A signed original of this written statement required by Section 906 has been provided to Timberline Resources Corporation and will be retained by Timberline Resources Corporation to be furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Timberline Resources Corporation, (the "Company") on Form 10-Q for the period ending June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ted R. Sharp, Chief Financial Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Timberline Resources Corporation. 

       /s/ Ted R. Sharp                               DATE:  August 16, 2021 

      Ted R. Sharp, Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Timberline Resources Corporation and will be retained by Timberline Resources Corporation to be furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2021	Aug. 16, 2021
Registrant CIK	0001288750
Fiscal Year End	--09-30
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-34055
Entity Registrant Name	TIMBERLINE RESOURCES CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-0291227
Entity Address, Address Line One	101 EAST LAKESIDE AVENUE
Entity Address, City or Town	COEUR D’ALENE
Entity Address, State or Province	ID
Entity Address, Postal Zip Code	83814
City Area Code	208
Local Phone Number	664-4859
Title of 12(g) Security	Common Stock, $0.001 par value
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		139,558,522
Amendment Flag	false
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
OTCQB
Trading Symbol	TLRS
Security Exchange Name	NONE
TSX-V
Trading Symbol	TBR
Security Exchange Name	NONE

XML

Timberline Resources Corp and Subsidiaries Consolidated Balance Sheets (Unaudited) - USD ($)		Jun. 30, 2021	Sep. 30, 2020
CURRENT ASSETS:
Cash		$ 2,559,106	$ 2,520,726
Prepaid expenses and other current assets		45,032	14,144
Subscriptions receivable		2,492,493	0
TOTAL CURRENT ASSETS		5,096,631	2,534,870
Property, mineral rights, and equipment, net	[1]	13,793,084	13,807,655
OTHER ASSETS:
Reclamation bonds		538,696	538,696
Deposits and other assets		5,700	5,700
TOTAL OTHER ASSETS		544,396	544,396
TOTAL ASSETS		19,434,111	16,886,921
CURRENT LIABILITIES:
Accounts payable		116,339	173,981
Accrued expenses		13,780	39,440
Accrued expenses - related party		3,536	0
Accrued interest - related party		205,776	142,492
Accrued payroll, benefits and taxes		37,204	23,557
Senior unsecured note payable - related party		300,000	0
TOTAL CURRENT LIABILITIES		676,635	379,470
LONG-TERM LIABILITIES:
Asset retirement obligation		116,839	112,615
Senior unsecured note payable - related party		0	300,000
TOTAL LONG-TERM LIABILITIES		116,839	412,615
TOTAL LIABILITIES		793,474	792,085
COMMITMENTS AND CONTINGENCIES (Note 8)	[1]	0	0
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, no shares issued and outstanding		0	0
Common stock, $0.001 par value; 500,000,000 shares authorized, 125,429,390 and 112,075,224 shares issued and outstanding, respectively		125,429	112,075
Subscribed shares		333,333	0
Shares to be issued		2,492,493	0
Additional paid-in capital		82,652,745	79,613,593
Accumulated deficit		(66,963,363)	(63,630,832)
TOTAL STOCKHOLDERS' EQUITY		18,640,637	16,094,836
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 19,434,111	$ 16,886,921

[1] Note 8

XML

Timberline Resources Corp and Subsidiaries Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares	Jun. 30, 2021	Sep. 30, 2020
Details
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	500,000,000	500,000,000
Common Stock, Shares, Issued	125,429,390	112,075,224
Common Stock, Shares, Outstanding	125,429,390	112,075,224

XML

Timberline Resources Corp and Subsidiaries Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
OPERATING EXPENSES:
Mineral exploration	$ 427,908	$ 30,221	$ 1,827,980	$ 189,452
Salaries and benefits	74,584	49,931	230,502	242,545
Professional fees	39,384	10,224	160,257	129,689
Insurance expense	38,766	21,607	102,367	73,785
Other general and administrative	638,053	50,087	936,809	300,409
Impairment loss on claims - Elder Creek	0	1,218,715	0	1,218,715
TOTAL OPERATING EXPENSES	1,218,695	1,380,785	3,257,915	2,154,595
LOSS FROM OPERATIONS	(1,218,695)	(1,380,785)	(3,257,915)	(2,154,595)
OTHER INCOME (EXPENSE):
Foreign exchange gain (loss)	(22,165)	(691)	(10,037)	(297)
Loss on debt modification - related party	0	0	0	(195,611)
Interest expense	0	(3,230)	0	(22,761)
Interest expense - related party	(22,424)	(47,075)	(64,658)	(138,187)
Miscellaneous other income	25	3	79	28
TOTAL OTHER INCOME (EXPENSE)	(44,564)	(50,993)	(74,616)	(356,828)
LOSS BEFORE INCOME TAXES	(1,263,259)	(1,431,778)	(3,332,531)	(2,511,423)
INCOME TAX PROVISION (BENEFIT)	0	0	0	0
NET LOSS	$ (1,263,259)	$ (1,431,778)	$ (3,332,531)	$ (2,511,423)
NET LOSS PER SHARE BASIC AND DILUTED	$ (0.01)	$ (0.02)	$ (0.03)	$ (0.03)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED	118,906,357	74,895,260	115,200,298	74,265,698

XML

Timberline Resources Corp and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock	Receivables from Stockholder	Additional Paid-in Capital	Retained Earnings	Total
Equity Balance at Sep. 30, 2019	$ 67,395	$ 0	$ 74,568,258	$ (60,253,741)	$ 14,381,912
Equity balance, shares at Sep. 30, 2019	67,395,260
Stock based compensation	$ 0	0	161,100	0	161,100
Common stock and warrants issued for cash	$ 7,500	0	592,500	0	600,000
Common stock and warrants issued for cash	7,500,000
Warrants issued with Debt	$ 0	0	170,500	0	170,500
Net loss	$ 0	0	0	(764,619)	(764,619)
Equity balance, shares at Dec. 31, 2019	74,895,260
Equity Balance at Dec. 31, 2019	$ 74,895	0	75,492,358	(61,018,360)	14,548,893
Equity Balance at Sep. 30, 2019	$ 67,395	0	74,568,258	(60,253,741)	14,381,912
Equity balance, shares at Sep. 30, 2019	67,395,260
Equity balance, shares at Jun. 30, 2020	74,895,260
Equity Balance at Jun. 30, 2020	$ 74,895	0	75,492,358	(62,765,164)	12,802,089
Equity Balance at Dec. 31, 2019	$ 74,895	0	75,492,358	(61,018,360)	14,548,893
Equity balance, shares at Dec. 31, 2019	74,895,260
Net loss	$ 0		0	(315,026)	(315,026)
Equity balance, shares at Mar. 31, 2020	74,895,260
Equity Balance at Mar. 31, 2020	$ 74,895	0	75,492,358	(61,333,386)	14,233,867
Net loss	$ 0		0	(1,431,778)	(1,431,778)
Equity balance, shares at Jun. 30, 2020	74,895,260
Equity Balance at Jun. 30, 2020	$ 74,895	0	75,492,358	(62,765,164)	12,802,089
Equity Balance at Sep. 30, 2020	$ 112,075	0	79,613,593	(63,630,832)	16,094,836
Equity balance, shares at Sep. 30, 2020	112,075,224
Common stock issued for exercise of warrants, Value	$ 950	0	132,050	0	133,000
Common stock issued for exercise of warrants, Shares	950,000
Stock based compensation	$ 0	0	127,022	0	127,022
Net loss	$ 0	0	0	(1,584,113)	(1,584,113)
Equity balance, shares at Dec. 31, 2020	113,025,224
Equity Balance at Dec. 31, 2020	$ 113,025	0	79,872,665	(65,214,945)	14,770,745
Equity Balance at Sep. 30, 2020	$ 112,075	0	79,613,593	(63,630,832)	16,094,836
Equity balance, shares at Sep. 30, 2020	112,075,224
Exercised shares to be issued	$ 0	2,492,493	0	0	2,492,493
Equity balance, shares at Jun. 30, 2021	125,429,390
Equity Balance at Jun. 30, 2021	$ 125,429	2,825,826	82,652,745	(66,963,363)	18,640,637
Equity Balance at Dec. 31, 2020	$ 113,025	0	79,872,665	(65,214,945)	14,770,745
Equity balance, shares at Dec. 31, 2020	113,025,224
Common stock issued for exercise of warrants, Value	$ 1,312	0	182,438	0	183,750
Common stock issued for exercise of warrants, Shares	1,312,500
Net loss	$ 0	0	0	(485,159)	(485,159)
Equity balance, shares at Mar. 31, 2021	114,337,724
Equity Balance at Mar. 31, 2021	$ 114,337	0	80,055,103	(65,700,104)	14,469,336
Common stock issued for exercise of warrants, Value	$ 2,150	0	298,850	0	301,000
Common stock issued for exercise of warrants, Shares	2,150,000
Stock based compensation	$ 0	0	519,400	0	519,400
Common stock and warrants issued for cash	$ 8,942	0	1,779,392	0	1,788,334
Common stock and warrants issued for cash	8,941,666
Common stock to be issued for cash	$ 0	333,333	0	0	333,333
Net loss	$ 0	0	0	(1,263,259)	(1,263,259)
Equity balance, shares at Jun. 30, 2021	125,429,390
Equity Balance at Jun. 30, 2021	$ 125,429	$ 2,825,826	$ 82,652,745	$ (66,963,363)	$ 18,640,637

XML

Timberline Resources Corp and Subsidiaries Consoldiated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,332,531)	$ (2,511,423)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock based compensation	646,422	161,100
Accretion of asset retirement obligation	4,224	22,298
Amortization of discount on senior unsecured notes payable - related party	0	47,320
Loss on debt modification - related party	0	195,611
Impairment loss on claims - Elder Creek	0	1,218,715
Changes in assets and liabilities:
Prepaid expenses and other current assets	(30,888)	(22,760)
Accounts receivable	0	118,525
Accounts payable	(57,642)	(71,412)
Accrued expenses	(25,660)	(82,529)
Accrued interest	0	(5,125)
Accrued payroll, benefits and taxes	13,647	37,020
Increase Decrease Accrued Expenses Related Party	3,536	0
Increase Decrease Interest Payable Related Party	63,284	90,868
Net cash used by operating activities	(2,715,608)	(801,792)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of mineral rights	(64,000)	0
Proceeds from lease of mineral rights	78,571	84,313
Proceeds from bond advance	0	205,194
Increase decrease in Accrued Cost of Mineral Reclamation	0	12,500
Net cash provided by investing activities	14,571	302,007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and warrants, net	1,788,334	600,000
Proceeds from subscribed shares	333,333	0
Payments on payment obligation	0	(28,294)
Proceeds from exercise of warrants	617,750	0
Net cash provided by financing activities	2,739,417	571,706
Net increase in cash and cash equivalents	38,380	71,921
CASH AT BEGINNING OF PERIOD	2,520,726	30,757
CASH AT END OF PERIOD	2,559,106	102,678
Non-cash financing and investing activities:
Shares to be issued	$ 2,492,493	$ 0

XML

Note 1 - Organization and Description of Business

9 Months Ended

Jun. 30, 2021

Notes

Note 1 - Organization and Description of Business:

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS:

Timberline Resources Corporation (“Timberline” or “the Company) was incorporated in August of 1968 under the laws of the State of Idaho as Silver Crystal Mines, Inc., for the purpose of exploring for precious metal deposits and advancing them to production. In 2008, the Company reincorporated into the State of Delaware, pursuant to a merger agreement approved by its shareholders.

XML

Note 2 - Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2021

Notes

Note 2 - Summary of Significant Accounting Policies:

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

a.Basis of Presentation and Going Concern – The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. 

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020.

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception. The Company has sufficient cash to fund normal operations and meet all of its obligations for the next 12 months without raising additional funds. However, we are an exploration company with exploration programs that require significant cash expenditures. A significant drilling program, such as that we have planned, can result in depletion of cash and return us to a position of insufficient cash to support normal operations for 12 months. The Company currently has no historical recurring source of revenue, and its ability to continue as a going concern is dependent on its ability to raise capital to fund future exploration and working capital requirements, or the Company’s ability to profitably execute its business plan. The Company’s plans for the long-term continuation as a going concern include financing its future operations through sales of common stock and/or debt and the eventual profitable exploitation of its mining properties. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

b.New Accounting Pronouncements - In August 2020, the FASB issued ASU No. 2020-06 Debt - Debt With Conversion And Other Options (Subtopic 470-20) And Derivatives And Hedging - Contracts In Entity’s Own Equity (Subtopic 815-40): Accounting For Convertible Instruments And Contracts In An Entity’s Own Equity.  The update simplifies the accounting for and disclosures related to company debt that is convertible or can be settled in a company’s own equity securities. The update is effective for fiscal years beginning after December 15, 2021. Management is evaluating the impact of this update on the Company’s financial statements. 

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

c.Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, BH Minerals USA, Inc.; Lookout Mountain LLC; Wolfpack Gold (Nevada) Corp.; Staccato Gold Resources, Ltd.; and Talapoosa Development Corp., after elimination of intercompany accounts and transactions. Due to the change in ownership of Lookout Mountain LLC and the associated transfer to the Company of all management and approval responsibilities, the Company began consolidating all balance sheet and expense transactions relative to the Lookout Mountain Project into its consolidated financial statements as of July 29, 2020. 

d.Exploration Expenditures – All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, the Company determines to focus its exploration efforts elsewhere, claims fees and holding fees are not remitted, or for other  

reasons, previously capitalized costs are expensed in the period the property is abandoned. When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives. To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.

e.Property Holding Costs – Holding costs to maintain a property, excluding mineral lease payments, are expensed in the period they are incurred. These costs include security and maintenance expenses, claim fees and payments, and environmental monitoring and reporting costs. 

f.Fair Value Measurements – When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. 

At June 30, 2021 and September 30, 2020, the Company had no assets or liabilities accounted for at fair value on a recurring basis or nonrecurring basis. The carrying amounts of financial instruments, including a senior unsecured note payable-related party, approximate fair value at June 30, 2021 and September 30, 2020.

g.Cash Equivalents – For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000 for accounts at each financial institution. 

h.Reclamation Bonds – Bonds paid to assure reclamation of properties covered by exploration permits are capitalized in the period paid, reduced as refunds are received or expensed as they are applied to reclamation obligations. 

i.Estimates and Assumptions – The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments, asset retirement obligations, and stock-based compensation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations. 

j.Property and Equipment – Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from two to seven years. Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating income or expenses. 

k.Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment – The Company reviews the carrying value of property, mineral rights, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the related assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, the effects of obsolescence, demand, competition, and other economic factors.  

l.Asset Retirement Obligations – The Company accounts for asset retirement obligations by following the methodology for accounting for estimated reclamation and abandonment costs as prescribed by GAAP. This guidance provides that the fair value of a liability for an asset retirement obligation (“ARO”) will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and a contractual obligation exists. An ARO asset is capitalized as part of the carrying value of the assets to which it is associated, and depreciated over the useful life of the asset. Adjustments are made to the liability for changes resulting from passage of time and changes to either the timing or amount of the original estimate underlying the obligation. The Company has an asset retirement obligation associated with its exploration program at the Lookout Mountain Target on its Eureka Project, and its Paiute Project. 

m.Stock-based Compensation – The Company estimates the fair value of its stock-based option compensation, and warrants when issued, using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation.  

The fair value of common stock awards is determined based upon the closing price of the Company’s stock on the grant date of the award. Compensation expense for grants that vest is recognized ratably over the vesting period.

n.Net Income (Loss) per Share – Basic earnings per share (“EPS”) is computed as net income (loss) available to common shareholders divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.  

The dilutive effect of convertible and outstanding securities as of June 30, 2021 and 2020 is as follows:

	June 30, 2021	June 30, 2020
Stock options – vested	8,722,500	5,400,000
Warrants	67,628,336	45,541,908
Total potential dilution	76,350,836	50,941,908

At June 30, 2021 and 2020, the effect of the Company’s common stock equivalents would have been anti-dilutive. Accordingly, only basic EPS is presented.

XML

Note 3 - Property, Mineral Rights, and Equipment

9 Months Ended

Jun. 30, 2021

Notes

Note 3 - Property, Mineral Rights, and Equipment:

NOTE 3 – PROPERTY, MINERAL RIGHTS, AND EQUIPMENT:

The following is a summary of property, mineral rights, and equipment and accumulated depreciation at June 30, 2021 and September 30, 2020, respectively:

	Expected Useful Lives (years)		June 30, 2021		September 30, 2020
Mineral rights - Eureka	-	$	13,676,607	$	13,701,178
Mineral rights – Other	-		65,000		55,000
Total mineral rights			13,741,607		13,756,178
Equipment and vehicles	2-5		53,678		53,678
Office equipment and furniture	3-7		70,150		70,150
Land	-		51,477		51,477
Total property and equipment	-		175,305		175,305
Less accumulated depreciation	-		(123,828)		(123,828)
Property, mineral rights, and equipment, net	-	$	13,793,084	$	13,807,655

For the nine months ended June 30, 2021 and 2020, the Company received mineral lease payments of $78,571 and $84,313, respectively, from a third party on two property blocks the Company leases at the Company’s Eureka property. Monthly payments in the amount of approximately $8,700 terminated subsequent to the end of the period on July 31,2021 due to the termination of the lease by the lessee. These receipts are recorded as a reduction to property, mineral rights, and equipment.

On June 25, 2021, in accordance with the terms of the leases, the lessee notified Timberline that it had elected to terminate its leases on the two property blocks effective June 30, 2021.  The monthly payments in the amount of approximately $8,700 will cease for subsequent periods due to the termination of the lease.  The claims in question had seen no exploration activity in many years, and they remain the property of BH Minerals USA, Inc., a wholly owned subsidiary of the Company. 

XML

Note 4 - Related-party Transactions

9 Months Ended

Jun. 30, 2021

Notes

Note 4 - Related-party Transactions:

NOTE 4 – RELATED-PARTY TRANSACTIONS:

A senior unsecured note payable and interest accrued thereon payable to William Matlack, a shareholder and director of the Company, is disclosed in Note 5.

One corporate shareholder, which is related to a director of the Company, purchased 1,250,000 Units of the of the private placement offering which closed on June 25, 2021, which is disclosed in Note 6, on the same terms as other investors in the offering.

During the year ended September 30, 2020, two directors participated in a private placement offering of units of the Company, purchasing 909,091 units for total proceeds of $100,000. Each Unit was priced at $0.11 and consisted of one share of common stock of the Company and one common share Class L Warrant, with each warrant exercisable to acquire an additional share of common stock of the Company at a price of $0.20 per share until August 15, 2023. The participation of the directors of the Company in this private placement was on the same terms as other investors in the private placement offering. The Board of Directors approved the insiders’ participation in the private placement.

At June 30, 2021, two officers were owed a total of $3,536 for expenses recorded in accounts payable – related party on the consolidated balance sheet that were reimbursed subsequent to the end of the period.

XML

Note 5 - Senior Unsecured Note Payable - Related Party

9 Months Ended

Jun. 30, 2021

Notes

Note 5 - Senior Unsecured Note Payable - Related Party

NOTE 5 – SENIOR UNSECURED NOTE PAYABLE – RELATED PARTY:

On July 30, 2018, the Company entered into a loan agreement and promissory note with William Matlack, a significant shareholder and a director as of October 29, 2019, (the “Lender”). Under the loan agreement, the Lender loaned the Company $300,000 in the form of a senior unsecured note payable, with the principal bearing interest at an annual rate of 18%, compounded monthly. The loan is unsecured and has a maturity date of January 20, 2023. At June 30, 2021 and at September 30, 2020, the senior unsecured note payable was $300,000.

The accrued interest on the senior unsecured note payable was $205,776 and $142,492 at June 30, 2021 and September 30, 2020, respectively. Interest expense related to the senior unsecured note payable to this related party was $22,424 and $47,075 for the three months ended June 30, 2021 and June 30, 2020, respectively, and $64,658 and $138,187 for the nine months ended June 30, 2021 and June 30, 2020, respectively.

The $300,000 senior unsecured note payable is senior to any other debt obtained by the Company subsequent to June 30, 2021. The senior unsecured note payable requires that when the Company enters into any other financings, 25% of the proceeds of such financings will be paid toward reduction of the principal and interest accrued on the note. No payments have been made by the Company to the Lender; however, with the common stock private placement financing completed during June and July 2021, the 25% is payable to the holder, and the principal therefore is classified as a current liability at June 30, 2021. Management is working with the holder to pay $250,000 prior to the end of fiscal year 2021 to pay the interest payable on the note and a portion of the note principal and negotiate an amendment to the terms of the note. The Lender provided a waiver of default as of September 30, 2020 on the note that would otherwise have occurred due to such non-payment of the 25% of proceeds at the time of the financing in 2020.

XML

Note 6 - Stockholders' Equity

9 Months Ended

Jun. 30, 2021

Notes

Note 6 - Stockholders' Equity

NOTE 6 – STOCKHOLDERS’ EQUITY:

Common Shares - Private Placement

On June 25, 2021, the Company closed on total subscriptions for a private placement offering for 23,070,798 Units of the Company at a price of $0.20 per Unit. Each Unit consisted of one share of common stock of the Company and one-half common share purchase Series M Warrant (each whole such warrant a “Warrant”), with each Warrant exercisable to acquire an additional share of common stock of the Company at a price of $0.30 per share until the Warrant expiration date of May 31, 2023. A total of 8,941,666 shares and 5,304,166 Warrants were paid for and issued during the quarter ended June 30, 2021, for net proceeds of $1,788,334 to the Company. Another $333,333 was received for shares subscribed but not yet issued as of the end of the quarter. Additionally, 102,000 broker Warrants were issued for finders fees. No cash was paid for finders fees during the quarter ended June 30, 2021. The units subscribed but not yet paid for at June 30, 2021 were accounted for as subscriptions receivable of $2,492,493. Subsequent to the close of the quarter ended June 30, 2021, and prior to the issuance of the financial statements for that period, cash of $2,375,393, net of $117,100 finders fees, was received and 14,129,132 shares and 6,725,481 Warrants were issued to complete the private placement transactions, including 494,248 Warrants issued for finders fees.

Common Shares issued for Exercise of Warrants

During the three months ended June 30, 2021, holders of Series D Warrants exercised 1,775,000 warrants for $0.14 per share to acquire 1,775,000 shares of the Company’s common stock for total cash proceeds of $248,500 to the Company. Also, holders of Series H Warrants exercised 375,000 warrants for $0.14 per share to acquire 375,000 shares of the Company’s common stock for total cash proceeds of $52,500 to the Company. During the three months ended June 30, 2021, 9,000,000 Series D warrants expired.

During the nine months ended June 30, 2021, holders of Series D Warrants exercised 3,500,000 warrants for $0.14 per share to acquire 3,500,000 shares of the Company’s common stock for total cash proceeds of $490,000 to the Company. Also, holders of Series E Warrants exercised 537,500 warrants for $0.14 per share to acquire 537,500 shares of the Company’s common stock for total cash proceeds of $75,250 to the Company. Also, holders of Series H Warrants exercised 375,000 warrants for $0.14 per share to acquire 375,000 shares of the Company’s common stock for total cash proceeds of $52,500 to the Company.  At June 30, 2021, the Company has a total of 67,628,336 warrants outstanding.

	Shares	Exercise Price ($)	Expiration Date
Warrants:
Outstanding and exercisable at September 30, 2020	75,634,670
Series M Warrants issued June 25, 2021	5,304,166	0.30	May 31, 2023
Series M Warrants issued for finders fees	102,000	0.30	May 31, 2023
Series D Warrants exercised	(3,500,000)	0.14
Series E Warrants exercised	(537,500)	0.14
Series H Warrants exercised	(375,000)	0.14
Series D Warrants expired April 30, 2021	(9,000,000)	0.14
Outstanding and exercisable at June 30, 2021	67,628,336

XML

Note 7 - Stock-based Awards

9 Months Ended

Jun. 30, 2021

Notes

Note 7 - Stock-based Awards:

NOTE 7 – STOCK-BASED AWARDS:

On October 8, 2020, the Company granted a total of 1,100,000 options to purchase shares of the Company’s common stock that expire in five years with an exercise price of $0.25 in conjunction with the appointment of Patrick Highsmith as CEO (750,000 options), Mr. Steven Osterberg as VP-Exploration (250,000 options), and addition of Mr. Quinton Hennigh to the Board of Directors (100,000 options). Of Mr. Highsmith’s options, 187,500 vested immediately, with 187,500 vesting at each of the following three grant anniversary dates.  

On May 6, 2021, the Company granted a total of 2,785,000 options to employees, consultants, officers and directors to purchase shares of the Company’s common stock that expire in five years with an exercise price of $0.25. All options vested upon issuance.

The fair value of the option awards granted and vested during the three months ended June 30, 2021 and 2020 was $519,400 and nil. The fair value of the option awards granted and vested during the nine months ended June 30, 2021 and 2020 was $646,422 and $161,100, respectively. The fair value of unvested options will be recognized as compensation in the amount of $44,321 in each of the following three years covered by the vesting period. Fair values of options issued

were measured on the date of the grant with a Black-Scholes option-pricing model using the assumptions noted in the following table:

	Options Granted at May 6, 2021	Options Granted at October 8, 2020	Options Granted at October 29, 2019
Expected volatility	167.9%	171.9%	149.5%
Stock price on date of grant	$0.20	$0.25	$ 0.07
Exercise price	$0.25	$0.25	$ 0.08
Expected dividends	-	-	-
Expected term (in years)	5	5	5
Risk-free rate	0.05%	0.09%	1.66%
Expected forfeiture rate	0%	0%	0%
Fair value at grant date	$519,400	$259,985	$161,100

The following is a summary of options issued and outstanding at June 30, 2021:

		Options		Weighted Average Exercise Price
Outstanding at September 30, 2019			3,280,000	$	0.26
Granted			2,550,000		0.08
Expired			(430,000)		(0.43)
Outstanding at September 30, 2020			5,400,000		0.16
	Granted		3,885,000		0.25
	Expired		-		-
Outstanding at June 30, 2021			9,285,000	$	0.20
Outstanding and exercisable at June 30, 2021			8,722,500	$	0.20
Weighted average remaining contractual term (years)					3.22

The aggregate of options exercisable as of June 30, 2021 had an intrinsic value of $517,500, based on the closing price of $0.23 per share of the Company’s common stock on June 30, 2021.

XML

Note 8 - Commitments and Contingencies

9 Months Ended

Jun. 30, 2021

Notes

Note 8 - Commitments and Contingencies:

NOTE 8 – COMMITMENTS AND CONTINGENCIES:

The Company has the following commitments and contingencies:

Mineral Exploration

A portion of the Company’s mining claims on the Company’s properties are subject to lease and option agreements with various terms, obligations, and royalties payable in certain circumstances.

The Company pays federal and county claim maintenance fees on unpatented claims that are included in the Company’s mineral exploration properties. Should the Company continue to explore all of the Company’s mineral properties, it expects annual fees to total approximately $236,277 per year in the future.

Real Estate Lease Commitments

At September 30, 2020, the Company had real estate lease commitments for certain mineral properties totaling $72,000 annually. The Company’s office in Coeur d’Alene, Idaho and its facilities in Eureka, Nevada are rented on a month-to-month basis.

XML

Note 9 - Subsequent Events

9 Months Ended

Jun. 30, 2021

Notes

Note 9 - Subsequent Events:

NOTE 9 – SUBSEQUENT EVENTS:

With the exception of events described in Note 6, as evaluated through the financial statement issuance date, there were no material events subsequent to June 30, 2021 that require disclosure.

XML

Note 2 - Summary of Significant Accounting Policies: a. Basis of Presentation and Going Concern (Policies)

9 Months Ended

Jun. 30, 2021

Policies

a. Basis of Presentation and Going Concern

a.Basis of Presentation and Going Concern – The unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the interim financial statements have been included. Operating results for the three and nine-month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2021. 

For further information refer to the financial statements and footnotes thereto in the Company’s Annual Report on Form 10-K for the year ended September 30, 2020.

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception. The Company has sufficient cash to fund normal operations and meet all of its obligations for the next 12 months without raising additional funds. However, we are an exploration company with exploration programs that require significant cash expenditures. A significant drilling program, such as that we have planned, can result in depletion of cash and return us to a position of insufficient cash to support normal operations for 12 months. The Company currently has no historical recurring source of revenue, and its ability to continue as a going concern is dependent on its ability to raise capital to fund future exploration and working capital requirements, or the Company’s ability to profitably execute its business plan. The Company’s plans for the long-term continuation as a going concern include financing its future operations through sales of common stock and/or debt and the eventual profitable exploitation of its mining properties. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary in the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.

XML

Note 2 - Summary of Significant Accounting Policies: b. New Accounting Pronouncements (Policies)

9 Months Ended

Jun. 30, 2021

Policies

b. New Accounting Pronouncements

b.New Accounting Pronouncements - In August 2020, the FASB issued ASU No. 2020-06 Debt - Debt With Conversion And Other Options (Subtopic 470-20) And Derivatives And Hedging - Contracts In Entity’s Own Equity (Subtopic 815-40): Accounting For Convertible Instruments And Contracts In An Entity’s Own Equity.  The update simplifies the accounting for and disclosures related to company debt that is convertible or can be settled in a company’s own equity securities. The update is effective for fiscal years beginning after December 15, 2021. Management is evaluating the impact of this update on the Company’s financial statements. 

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

XML

Note 2 - Summary of Significant Accounting Policies: c. Principles of Consolidation (Policies)

9 Months Ended

Jun. 30, 2021

Policies

c. Principles of Consolidation

c.Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, BH Minerals USA, Inc.; Lookout Mountain LLC; Wolfpack Gold (Nevada) Corp.; Staccato Gold Resources, Ltd.; and Talapoosa Development Corp., after elimination of intercompany accounts and transactions. Due to the change in ownership of Lookout Mountain LLC and the associated transfer to the Company of all management and approval responsibilities, the Company began consolidating all balance sheet and expense transactions relative to the Lookout Mountain Project into its consolidated financial statements as of July 29, 2020. 

XML

Note 2 - Summary of Significant Accounting Policies: d. Exploration Expenditures (Policies)

9 Months Ended

Jun. 30, 2021

Policies

d. Exploration Expenditures

d.Exploration Expenditures – All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, the Company determines to focus its exploration efforts elsewhere, claims fees and holding fees are not remitted, or for other  

reasons, previously capitalized costs are expensed in the period the property is abandoned. When it is determined that a mineral deposit can be economically developed as a result of establishing proven and probable reserves, the costs incurred after such determination will be capitalized and amortized over their useful lives. To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all exploration costs are being expensed.

XML

Note 2 - Summary of Significant Accounting Policies: e. Property Holding Costs (Policies)

9 Months Ended

Jun. 30, 2021

Policies

e. Property Holding Costs

e.Property Holding Costs – Holding costs to maintain a property, excluding mineral lease payments, are expensed in the period they are incurred. These costs include security and maintenance expenses, claim fees and payments, and environmental monitoring and reporting costs. 

XML

Note 2 - Summary of Significant Accounting Policies: f. Fair Value Measurements (Policies)

9 Months Ended

Jun. 30, 2021

Policies

f. Fair Value Measurements

f.Fair Value Measurements – When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. 

At June 30, 2021 and September 30, 2020, the Company had no assets or liabilities accounted for at fair value on a recurring basis or nonrecurring basis. The carrying amounts of financial instruments, including a senior unsecured note payable-related party, approximate fair value at June 30, 2021 and September 30, 2020.

XML

Note 2 - Summary of Significant Accounting Policies: g. Cash Equivalents (Policies)

9 Months Ended

Jun. 30, 2021

Policies

g. Cash Equivalents

g.Cash Equivalents – For the purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000 for accounts at each financial institution. 

XML

Note 2 - Summary of Significant Accounting Policies: h. Reclamation Bonds (Policies)

9 Months Ended

Jun. 30, 2021

Policies

h. Reclamation Bonds

h.Reclamation Bonds – Bonds paid to assure reclamation of properties covered by exploration permits are capitalized in the period paid, reduced as refunds are received or expensed as they are applied to reclamation obligations. 

XML

Note 2 - Summary of Significant Accounting Policies: i. Estimates and Assumptions (Policies)

9 Months Ended

Jun. 30, 2021

Policies

i. Estimates and Assumptions

i.Estimates and Assumptions – The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments, asset retirement obligations, and stock-based compensation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations. 

XML

Note 2 - Summary of Significant Accounting Policies: j. Property and Equipment (Policies)

9 Months Ended

Jun. 30, 2021

Policies

j. Property and Equipment

j.Property and Equipment – Property and equipment are stated at cost. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from two to seven years. Maintenance and repairs are charged to operations as incurred. Significant improvements are capitalized and depreciated over the useful life of the assets. Gains or losses on disposition or retirement of property and equipment are recognized in operating income or expenses. 

XML

Note 2 - Summary of Significant Accounting Policies: k. Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment for Impairment (Policies)

9 Months Ended

Jun. 30, 2021

Policies

k. Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment for Impairment

k.Asset Impairments - Carrying Value of Property, Mineral Rights and Equipment – The Company reviews the carrying value of property, mineral rights, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the related assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, the effects of obsolescence, demand, competition, and other economic factors.  

XML

Note 2 - Summary of Significant Accounting Policies: l. Asset Retirement Obligations (Policies)

9 Months Ended

Jun. 30, 2021

Policies

l. Asset Retirement Obligations

l.Asset Retirement Obligations – The Company accounts for asset retirement obligations by following the methodology for accounting for estimated reclamation and abandonment costs as prescribed by GAAP. This guidance provides that the fair value of a liability for an asset retirement obligation (“ARO”) will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made and a contractual obligation exists. An ARO asset is capitalized as part of the carrying value of the assets to which it is associated, and depreciated over the useful life of the asset. Adjustments are made to the liability for changes resulting from passage of time and changes to either the timing or amount of the original estimate underlying the obligation. The Company has an asset retirement obligation associated with its exploration program at the Lookout Mountain Target on its Eureka Project, and its Paiute Project. 

XML

Note 2 - Summary of Significant Accounting Policies: m. Stock-based Compensation (Policies)

9 Months Ended

Jun. 30, 2021

Policies

m. Stock-based Compensation

m.Stock-based Compensation – The Company estimates the fair value of its stock-based option compensation, and warrants when issued, using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation.  

The fair value of common stock awards is determined based upon the closing price of the Company’s stock on the grant date of the award. Compensation expense for grants that vest is recognized ratably over the vesting period.

XML

Note 2 - Summary of Significant Accounting Policies: n. Net Income (Loss) per Share (Policies)

9 Months Ended

Jun. 30, 2021

Policies

n. Net Income (Loss) per Share

n.Net Income (Loss) per Share – Basic earnings per share (“EPS”) is computed as net income (loss) available to common shareholders divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities.  

The dilutive effect of convertible and outstanding securities as of June 30, 2021 and 2020 is as follows:

	June 30, 2021	June 30, 2020
Stock options – vested	8,722,500	5,400,000
Warrants	67,628,336	45,541,908
Total potential dilution	76,350,836	50,941,908

At June 30, 2021 and 2020, the effect of the Company’s common stock equivalents would have been anti-dilutive. Accordingly, only basic EPS is presented.

XML

Note 2 - Summary of Significant Accounting Policies: n. Net Income (Loss) per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Tables)

9 Months Ended

Jun. 30, 2021

Tables/Schedules

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

	June 30, 2021	June 30, 2020
Stock options – vested	8,722,500	5,400,000
Warrants	67,628,336	45,541,908
Total potential dilution	76,350,836	50,941,908

XML

Note 3 - Property, Mineral Rights, and Equipment: Property, Plant and Equipment (Tables)

9 Months Ended

Jun. 30, 2021

Tables/Schedules

Property, Plant and Equipment

	Expected Useful Lives (years)		June 30, 2021		September 30, 2020
Mineral rights - Eureka	-	$	13,676,607	$	13,701,178
Mineral rights – Other	-		65,000		55,000
Total mineral rights			13,741,607		13,756,178
Equipment and vehicles	2-5		53,678		53,678
Office equipment and furniture	3-7		70,150		70,150
Land	-		51,477		51,477
Total property and equipment	-		175,305		175,305
Less accumulated depreciation	-		(123,828)		(123,828)
Property, mineral rights, and equipment, net	-	$	13,793,084	$	13,807,655

XML

Note 6 - Stockholders' Equity: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables)

9 Months Ended

Jun. 30, 2021

Tables/Schedules

Schedule of Stockholders' Equity Note, Warrants or Rights

	Shares	Exercise Price ($)	Expiration Date
Warrants:
Outstanding and exercisable at September 30, 2020	75,634,670
Series M Warrants issued June 25, 2021	5,304,166	0.30	May 31, 2023
Series M Warrants issued for finders fees	102,000	0.30	May 31, 2023
Series D Warrants exercised	(3,500,000)	0.14
Series E Warrants exercised	(537,500)	0.14
Series H Warrants exercised	(375,000)	0.14
Series D Warrants expired April 30, 2021	(9,000,000)	0.14
Outstanding and exercisable at June 30, 2021	67,628,336

XML

Note 7 - Stock-based Awards: Summary of fair value of options issued and outstanding (Tables)

9 Months Ended

Jun. 30, 2021

Options

Summary of fair value of options issued and outstanding

	Options Granted at May 6, 2021	Options Granted at October 8, 2020	Options Granted at October 29, 2019
Expected volatility	167.9%	171.9%	149.5%
Stock price on date of grant	$0.20	$0.25	$ 0.07
Exercise price	$0.25	$0.25	$ 0.08
Expected dividends	-	-	-
Expected term (in years)	5	5	5
Risk-free rate	0.05%	0.09%	1.66%
Expected forfeiture rate	0%	0%	0%
Fair value at grant date	$519,400	$259,985	$161,100

XML

Note 7 - Stock-based Awards: Share-based Compensation, Stock Options, Activity (Tables)

9 Months Ended

Jun. 30, 2020

Tables/Schedules

Share-based Compensation, Stock Options, Activity

		Options		Weighted Average Exercise Price
Outstanding at September 30, 2019			3,280,000	$	0.26
Granted			2,550,000		0.08
Expired			(430,000)		(0.43)
Outstanding at September 30, 2020			5,400,000		0.16
	Granted		3,885,000		0.25
	Expired		-		-
Outstanding at June 30, 2021			9,285,000	$	0.20
Outstanding and exercisable at June 30, 2021			8,722,500	$	0.20
Weighted average remaining contractual term (years)					3.22

XML

Note 2 - Summary of Significant Accounting Policies: a. Basis of Presentation and Going Concern (Details)	9 Months Ended
	Jun. 30, 2021
Details
Substantial Doubt about Going Concern	The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company has incurred losses since its inception. The Company has sufficient cash to fund normal operations and meet all of its obligations for the next 12 months without raising additional funds. However, we are an exploration company with exploration programs that require significant cash expenditures. A significant drilling program, such as that we have planned, can result in depletion of cash and return us to a position of insufficient cash to support normal operations for 12 months. The Company currently has no historical recurring source of revenue, and its ability to continue as a going concern is dependent on its ability to raise capital to fund future exploration and working capital requirements, or the Company’s ability to profitably execute its business plan. The Company’s plans for the long-term continuation as a going concern include financing its future operations through sales of common stock and/or debt and the eventual profitable exploitation of its mining properties. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.
Substantial Doubt about Going Concern, Conditions or Events	The Company has incurred losses since its inception. The Company has sufficient cash to fund normal operations and meet all of its obligations for the next 12 months without raising additional funds. However, we are an exploration company with exploration programs that require significant cash expenditures. A significant drilling program, such as that we have planned, can result in depletion of cash and return us to a position of insufficient cash to support normal operations for 12 months
Substantial Doubt about Going Concern, Management's Evaluation	The Company’s plans for the long-term continuation as a going concern include financing its future operations through sales of common stock and/or debt and the eventual profitable exploitation of its mining properties.

XML

Note 2 - Summary of Significant Accounting Policies: n. Net Income (Loss) per Share: Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Details
Stock options	8,722,500	5,400,000
Warrants	67,628,336	45,541,908
Total potential dilution	76,350,836	50,941,908

XML

Note 3 - Property, Mineral Rights, and Equipment: Property, Plant and Equipment (Details) - USD ($)		Jun. 30, 2021	Sep. 30, 2020
Property, mineral rights, and equipment, net	[1]	$ 13,793,084	$ 13,807,655

[1] Note 8

XML

Note 3 - Property, Mineral Rights, and Equipment (Details) - USD ($)	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Details
Proceeds from lease of mineral rights	$ 78,571	$ 84,313

XML

Note 4 - Related-party Transactions (Details) - USD ($)	3 Months Ended			9 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Common stock issued for exercise of warrants, Value	$ 301,000	$ 183,750	$ 133,000
Related parties
Subsequent Event, Description				At June 30, 2021, two officers were owed a total of $3,536 for expenses recorded in accounts payable – related party on the consolidated balance sheet that were reimbursed subsequent to the end of the period.
Private placement
Common stock issued for exercise of warrants, Shares					909,091
Common stock issued for exercise of warrants, Value					$ 100,000
Stock options issued to officer, value					$ 0.11

XML

Note 5 - Senior Unsecured Note Payable - Related Party (Details) - USD ($)		3 Months Ended		9 Months Ended
	Jul. 30, 2018	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Interest Expense		$ 0	$ 3,230	$ 0	$ 22,761
Senior Unsecured Notes Payable, Transaction #1
Debt Instrument, Issuance Date				Jul. 30, 2018
Debt Instrument, Description	a loan agreement and promissory note
Debt Instrument, Face Amount	$ 300,000	300,000		$ 300,000		$ 300,000
Debt Instrument, Interest Rate, Stated Percentage	18.00%
Senior Unsecured Notes Interest Paid
Debt Instrument, Increase, Accrued Interest				205,776	205,776
Interest Expense		$ 22,424	$ 47,075	$ 64,658	$ 138,187

XML

Note 6 - Stockholders' Equity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Dec. 31, 2019	Jun. 30, 2021	Sep. 30, 2020
Subscribed shares	$ 333,333		$ 333,333	$ 0
Subscriptions receivable	2,492,493		$ 2,492,493	$ 0
Common stock and warrants issued for cash	$ 1,788,334	$ 600,000
Warrants outstanding	67,628,336		67,628,336
Event #1
Subsequent Event, Description			Subsequent to the close of the quarter ended June 30, 2021, and prior to the issuance of the financial statements for that period, cash of $2,375,393, net of $117,100 finders fees, was received and 14,129,132 shares and 6,725,481 Warrants were issued to complete the private placement transactions, including 494,248 Warrants issued for finders fees
Class M Warrants: (Issued for Finders Fees)
Warrants issued	102,000		102,000
Warrants issued	102,000		102,000
Class D Warrants: (Issued for Private Placement)
Warrants exercised	(3,500,000)		(3,500,000)
Warrants expired	9,000,000		9,000,000
Sale of Stock, Transaction #1
Sale of Stock, Transaction Date			Jun. 25, 2021
Sale of Stock, Description of Transaction			Company closed on total subscriptions for a private placement offering for 23,070,798 Units of the Company at a price of $0.20 per Unit
Stock options issued to officer, value	$ 0.30		$ 0.30
Shares, Issued	8,941,666		8,941,666
Warrants issued	5,304,166		5,304,166
Stock Issued			$ 1,788,334
Subscribed shares	$ 333,333		$ 333,333
Warrants issued	5,304,166		5,304,166
Sale of Stock, Transaction #2
Stock options issued to officer, value	$ 0.14		$ 0.14
Warrants exercised	1,775,000		1,775,000
Common stock and warrants issued for cash			1,775,000
Common stock and warrants issued for cash			$ 248,500
Sale of Stock, Transaction #3
Stock options issued to officer, value	$ 0.14		$ 0.14
Warrants exercised	375,000		375,000
Common stock and warrants issued for cash	375,000
Common stock and warrants issued for cash			$ 52,500
Sale of Stock, Transaction #4
Stock options issued to officer, value	$ 0.14		$ 0.14
Warrants exercised	3,500,000		3,500,000
Common stock and warrants issued for cash			3,500,000
Common stock and warrants issued for cash			$ 490,000
Sale of Stock, Transaction #5
Stock options issued to officer, value	$ 0.14		$ 0.14
Warrants exercised	537,500		537,500
Common stock and warrants issued for cash			537,500
Common stock and warrants issued for cash			$ 75,250
Sale of Stock, Transaction #6
Stock options issued to officer, value	$ 0.14		$ 0.14
Warrants exercised	375,000		375,000
Common stock and warrants issued for cash			375,000
Common stock and warrants issued for cash			$ 52,500

XML

Note 6 - Stockholders' Equity: Schedule of Stockholders' Equity Note, Warrants or Rights (Details) - $ / shares	Jun. 30, 2021	Sep. 30, 2020
Warrants outstanding	67,628,336
Class M Warrants: (Issued for Private Placement)
Warrant exercise price	$ 0.30
Warrants expiration date	May 31, 2023
Warrants issued	5,304,166
Class M Warrants: (Issued for Finders Fees)
Warrant exercise price	$ 0.30
Warrants expiration date	May 31, 2023
Warrants issued	102,000
Class D Warrants: (Issued for Private Placement)
Warrant exercise price	$ 0.14
Warrants exercised	(3,500,000)
Warrants issued	(9,000,000)
Class E Warrants: (Issued for Private Placement)
Warrant exercise price	$ 0.14
Warrants exercised	(537,500)
Class H Warrants: (Issued for Private Placement)
Warrant exercise price		$ 0.14
Warrants exercised		(375,000)

XML

Note 7 - Stock-based Awards (Details)	9 Months Ended
	Jun. 30, 2021 $ / shares shares
Intrinsic value of options outstanding and exercisable	$ 517,500
Shares Issued, Price Per Share	$ 0.23
Stock-based Award #1
Sale of Stock, Transaction Date	Oct. 08, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares	1,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.25
Stock-based Award #2
Sale of Stock, Transaction Date	May 06, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares	2,785,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 0.25

XML

Note 7 - Stock-based Awards: Summary of fair value of options issued and outstanding (Details) - Options - USD ($)	9 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2019
Expected volatility	167.90%	171.90%	149.50%
Stock price on date of grant	$ 0.20	$ 0.25	$ 0.07
Exercise price	$ 0.25	$ 0.25	$ 0.08
Expected dividends	$ 0	$ 0	$ 0
Expected term (in years)	5 years	5 years	5 years
Risk-free rate	0.05%	0.09%	1.66%
Expected forfeiture rate	0.00%	0.00%	0.00%
Fair value at grant date	$ 519,400	$ 259,985	$ 161,100

XML

Note 7 - Stock-based Awards: Share-based Compensation, Stock Options, Activity (Details) - $ / shares	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Details
Outstanding	9,285,000	5,400,000	3,280,000
Granted	3,885,000	2,550,000
Expired		(430,000)
Outstanding	8,722,500
Weighted average fair value of options granted	$ 3.22

XML

Note 8 - Commitments and Contingencies (Details)	9 Months Ended
	Jun. 30, 2021
Other Commitments, Description	At September 30, 2020, the Company had real estate lease commitments for certain mineral properties totaling $72,000 annually.
Commtment or Contingency #1
Other Commitments, Description	A portion of the Company’s mining claims on the Company’s properties are subject to lease and option agreements with various terms, obligations, and royalties payable in certain circumstances
Commtment or Contingency #2
Other Commitments, Description	The Company pays federal and county claim maintenance fees on unpatented claims that are included in the Company’s mineral exploration properties.

XML

Note 9 - Subsequent Events (Details)	9 Months Ended
	Jun. 30, 2021
Event #2
Subsequent Event, Description	With the exception of events described in Note 6, as evaluated through the financial statement issuance date, there were no material events subsequent to June 30, 2021 that require disclosure.