UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2011

OR

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

For the transition period from                              to                            

Commission file number: 000-53662

BUTTE HIGHLANDS MINING COMPANY

(Exact name of registrant as specified in its charter)

Delaware		81-0409475
(State or other jurisdiction of incorporation  or organization)		(I.R.S. Employer Identification No.)
P.O. Box 99, Liberty Lake, WA		99019
(Address of principal executive offices)		(Zip Code)

(509) 979-3053

(Issuer's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings for the past 90 days.  YES x  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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  

Yes x No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  According to our Transfer Agent, at November 10, 2011, there were 1,317,948 shares of Class A Common Stock and 1,663,941 shares of Class B Common Stock issued and outstanding.

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BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

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ITEM 1.  FINANCIAL STATEMENTS

3

ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

9

ITEM 3.  QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

11

ITEM 4.  CONTROLS AND PROCEDURES

11

PART II – OTHER INFORMATION

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ITEM 1.  LEGAL PROCEEDINGS

12

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

12

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

12

ITEM 4.  REMOVED AND RESERVED

12

ITEM 5.  OTHER INFORMATION

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ITEM 6.  EXHIBITS (filed with this report)

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SIGNATURES

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUTTE HIGHLANDS MINING COMPANY
(A Development Stage Company)
BALANCE SHEETS
		September 30		December 31
		2010		2010
		(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	272,676	$	296,941
Total Current Assets		272,676		296,941
PROPERTY AND EQUIPMENT
Equipment		4,338		4,338
Less: accumulated depreciation		(4,338)		(4,267)
Total Property and Equipment		-		71
TOTAL ASSETS	$	272,676	$	297,012
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	559	$	548
Income tax payable		-		3,107
Total Current Liabilities		559		3,655
COMMITMENTS AND CONTINGENCIES		-		-
STOCKHOLDERS' EQUITY
Common stock, Class A, $0.01 par value; 23,292,907 shares authorized; 1,317,948 shares issued and outstanding		13,179		13,179
Common stock, Class B, $0.01 par value; 1,707,093 shares authorized; 1,663,941shares issued and outstanding		16,640		16,640
Additional paid-in capital		242,632		242,632
Accumulated income prior to development stage		476,706		476,706
Accumulated deficit during development stage		(477,040)		(455,800)
Total Stockholders' Equity		272,117		293,357
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	272,676	$	297,012

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

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BUTTE HIGHLANDS MINING COMPANY  (A Development Stage Company)  STATEMENTS OF OPERATION
												Period from
												May 18, 2007
												(Inception of
				Three Months Ended				Nine Months Ended				Development Stage)
				September 30				September 30				to September 30
				2011		2010		2011		2010		2011
				(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
MINERAL LEASE REVENUES			$	-	$	-	$	-	$	-	$	-
OPERATING EXPENSES
Professional fees				3,058		5,405		18,016		33,924		161,541
Depreciation				16		27		71		81		1,295
Officers & directors fees				-				-		-		3,000
General and administrative				777		327		3,195		2,840		30,534
TOTAL OPERATING EXPENSES				3,851		5,759		21,282		36,845		196,370
INCOME (LOSS) FROM OPERATIONS				(3,851)		(5,759)		(21,282)		(36,845)		(196,370)
OTHER INCOME (EXPENSES)
Interest income				14		24		42		76		8,965
Interest expense				-		-		-		-		(553)
Other income				-		-		-		740		740
Other expense				-		-		-		(459)		(459)
Other than temporary impairment of investment				-		-		-		-		(165,240)
Gain on sale of investment				-		12,874		-		43,799		66,072
TOTAL OTHER INCOME (EXPENSES)				14		12,898		42		44,156		(90,475)
INCOME (LOSS) BEFORE TAXES				(3,837)		7,139		(21,240)		7,311		(286,845)
INCOME TAXES
Income tax benefit				-		-		-		-		(15,501)
Tax expense				-		-		-		-		(174,694)
				-		-		-		-		(190,195)
NET INCOME (LOSS)			$	(3,837)	$	7,139	$	(21,240)	$	7,311	$	(477,040)
NET LOSS PER COMMON SHARE,BASIC AND DILUTED			$	nil	$	nil	$	nil	$	nil
WEIGHTED AVERAGE NUMBER OF COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED				2,981,889		2,981,889		2,981,889		2,981,889

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

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BUTTE HIGHLANDS MINING COMPANY (A Development Stage Company) STATEMENTS OF CASH FLOWS
										Period from
										May 18, 2007
										(Inception of
					Nine Months Ended					Development Stage)
					September 30					to September 30
				2011			2010			2011
				(unaudited)			(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)				$          (21,240)			$             7,311		$	(477,040)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Depreciation				71			81			1,295
Gain on sale of investments				-			(43,799)			(66,072)
Other than temporary impairment of investment				-			-			165,240
Changes in assets and liabilities:
Decrease (increase) in prepaid expense				-			-			961
Decrease (increase) in deferred tax asset				-			-			50,830
Decrease (increase) in interest receivable				-			-			-
Decrease (increase) in refund receivable				-			19,478			-
Increase (decrease) in accounts payable				11			(1,481)			559
Increase (decrease) in income tax payable				(3,107)			-			-
Net cash used by operating activities				(24,265)			(18,410)			(324,227)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for equipment purchased				-			-			(543)
Cash received for mining claims				-			-			405,000
Cash received for sale of investment				-			80,459			116,832
Net cash used by investing activities				-			80,459			521,289
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received from sale of common stock				-			-			35,000
Net cash used by financing activities				-			-			35,000
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS				(24,265)			62,049			232,062
Cash, beginning of period				296,941			202,496			40,614
Cash, end of period				$         272,676			$        264,545		$	272,676
				-
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid				$                    -			$                    -		$	-
Income taxes paid				$            3,107			$                    -		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Investment received for mining claims				$                    -			$                    -		$	216,000

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

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BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

September 30, 2011

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Butte Highlands Mining Company (hereinafter “Butte” or “the Company”) was incorporated in May 1929 under the laws of the State of Delaware for the purpose of exploring and mining the Butte Highland’s (Only Chance) Mine, south of Butte, Montana.  The Company was reorganized in October 1996 for the purpose of acquiring and developing mineral properties.  As of the date of reorganization, stockholders representing approximately 76% of the outstanding capital stock could not be located.  In order to obtain the quorum necessary for the special meetings, the Company obtained an order from the Superior Court of Spokane County, Washington appointing a trustee for the benefit of those stockholders which could not be located.  

As of May 17, 2007 the Company had disposed of all of its historical mineral properties or claims, and has reentered the development stage.  The Board of Directors intends to seek out an appropriate business opportunity and has not limited its search to any particular industry. Management believes it can identify opportunities in several sectors and will proceed with the appropriate diligence to create value for the shareholders. Operations are primarily conducted from the Company headquarters in Spokane, Washington.

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements.  These unaudited interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2010.  In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.  Operating results for the nine month period ended September  30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Butte Highlands Mining Company is presented to assist in understanding the Company’s financial statements.  The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity.  These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

Property and Equipment

Fixed assets are recorded at cost.  Depreciation is calculated using the straight line method over the estimated useful lives of the assets.  Maintenance and repairs are charged to expense as incurred.  Major renewals and betterments are capitalized.  When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations.  Depreciation expense for the periods ended September 30, 2011 and 2010 was $71 and $81, respectively.

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BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

September 30, 2011

Fair Value of Financial Instruments

The Company's financial instruments as defined by FASB ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses.  All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2011.

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements.  FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1.  Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3.  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company measures its investments at fair value on a recurring basis.

The Company did not have any assets measured at fair value at September 30, 2011.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition.  Under the approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. See Note 5.

NOTE 3 – RELATED PARTY TRANSACTIONS

The Company utilized office facilities provided by its president.  The value of the office facilities provided by the Company’s president is nominal and immaterial to the financial statements.

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BUTTE HIGHLANDS MINING COMPANY

(A Development Stage Company)

CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS

September 30, 2011

NOTE 4 – INCOME TAXES

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition.  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740-10-25-5.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Deferred tax assets are calculated at a rate of 37%.

Significant components of the deferred tax assets for the periods ended September 30, 2011 and December 31, 2010 are as follows:

	September 30, 2011		December 31, 2010
Net operating loss carryforwards	$   7,753		-
Unrealized loss on investments	-		-
Deferred tax asset	7,753		-
Valuation allowance for deferred asset	(7,753)		-
Net deferred tax asset	-		-

At September 30, 2011, the Company has net operating loss carryforwards of approximately $21,240, which begin to expire in the year 2031. The change in the allowance account from December 31, 2010 to September 30, 2011 was $7,753.

NOTE 5 – SUBSEQUENT EVENTS

For the period ended September 30, 2011, there were no recognizable or non recognizable subsequent events. Subsequent events have been evaluated through the date the financial statements were issued.

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ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement

Some sections of this management’s discussion and analysis of our financial condition and results of operations may contain forward-looking statements.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions that are not statements of historical facts.  This document and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance.  The words “believe,” “expect,” “anticipate,” “intends,” “estimates,” “forecast,” “project” and similar expressions identify forward-looking statements.  The forward-looking statements in this document are based upon various assumptions, and although we believe that these assumptions were reasonable when made, these statements are not guarantees of future performance and are subject to certain risks and uncertainties, some of which are beyond our control, and are difficult to predict.  Actual results could differ materially from those expressed in forward-looking statements.   Readers are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s view only as of the date of this report.

Business of Butte Highlands Mining Company

Butte Highlands Mining Company (hereinafter “Butte,” “We” or “the Company”) was incorporated in May 1929 under the laws of the State of Delaware for the purpose of exploring and mining the Butte Highland’s (Only Chance) Mine, south of Butte, Montana. The Company is inactive, having sold the last of its mining claims in 2007.

We intend to acquire an interest in a business seeking the perceived advantages of a publicly registered corporation.  We will not restrict our search to any specific business or industry, and we may participate in a business venture of virtually any kind or nature. The Company may seek a business opportunity with an entity which has recently commenced operations, wishes to utilize the public marketplace in order to raise additional capital to expand into new products or markets, develop a new product or service, or for other corporate purposes.  The Company may acquire assets and/or establish subsidiaries in various businesses, or acquire existing businesses as subsidiaries.  Business opportunities may be available in many different industries at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

Management of the Company, while not experienced in matters relating to the new direction of the Company, will rely primarily upon their own efforts to accomplish the business purposes.  The Company does not anticipate a significant change in the number of employees during the next 12 months. It is not anticipated that any outside consultants or advisors, other than the Company's legal counsel, will be utilized to effectuate its business purposes described herein. During the next twelve months, the Company expects to be able to satisfy its cash requirements, and does not foresee the need to raise additional capital during this period.

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Effective July 6, 2009 the Company’s Class A Common Stock was registered under the Securities Exchange Act of 1934.  Effective April 29, 2010, our Class A Common Stock was listed for quotation on the OTC Bulletin Board.  Our trading symbol is “BTHI”

Result of Operations for period ended September 30, 2011 compared to the period ended September 30, 2010

During the three and Nine month periods ended September 30, 2011, the Company had a net loss of $3,837 and $21,240 respectively compared to a net income of $7,139and $7,311 during the three month and six month periods ended September 30, 2010.  This represents a decrease of net income in the amount of $10,976 and $28,551 over the respective three and nine month periods ended September 30, 2010. This decreased income is due to primarily a non-recurring gain on the sale of investments in 2010.

Total operating expenses decreased to $3,851 during the three month period ended September 30, 2011 from $ 5,759 for the comparable period ended September 30, 2010.  The decrease is primarily due to lower professional fees.

Liquidity and Capital Resources

The Company’s working capital at September 30, 2011 was $272,117 compared to working capital of $293,357 at December 31, 2010. Working capital decreased primarily due to continuing operating expenses with no income.

Net cash used in operating activities was $24,265 during the nine month period ended September 30, 2011 compared with $18,410 during the nine month period ended September 30, 2010.

Cash flow from investing activities was $0 during the nine month period ended September 30, 2011 compared to $55,835 during the nine month period ended September 30, 2010.

Cash flow from financing activities was $0 during the nine month period ended September 30, 2011 compared with $80,459 during the nine month period ended September 30, 2010.

As a result, cash decreased by $24,265 during the nine month period ended September 30, 2011. The Company had cash of $272,676 as of September 30, 2011.  It will not be necessary for the Company to raise additional capital to continue its business activities for the next twelve months.

Off-Balance Sheet Arrangements

There are no preliminary agreements or understandings between the Company and its officers and directors or affiliates or lending institutions with respect to any loan agreements.

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ITEM 3.  QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Smaller reporting companies are not required to provide this information.

ITEM 4.  CONTROLS AND PROCEDURES

a)  Evaluation of Disclosure Controls and Procedures

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

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

b)  Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended June 30, 2011 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None

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

None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.  REMOVED AND RESERVED

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS (filed with this report)

Exhibit 31.1 - Certification required by Rule 13a-14(a) or Rule 15d-14(a)

Exhibit 31.2 - Certification required by Rule 13a-14(a) or Rule 15d-14(a)

Exhibit 32.1 - Certification required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

Exhibit 32.2 - Certification required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

101*

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows, and (v) Notes to Financial Statements

_____________________

*

In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BUTTE HIGHLANDS MINING COMPANY

By:      /s/ Paul Hatfield                                        

Paul Hatfield, President and Director

Date:  November 14, 2011  

By         /s/Paul Hatfield                                          

Paul Hatfield, Principal Accounting Officer

Date:  November 14, 2011  

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