Nature of Operations (Note 1)

Subsequent Events (Note 8)

Approved on Behalf of the Board:

/s/ Shahin Tabatabaei, Director

See accompanying notes to financial statements.

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(Unaudited)

(STATED IN U.S. DOLLARS)

See accompanying notes to financial statements.

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See accompanying notes to financial statements.

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(Unaudited)
(STATED IN U.S. DOLLARS)

See accompanying notes to financial statements.

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(Unaudited)

AS OF OCTOBER 31, 2011

NOTE 1 NATURE OF OPERATIONS

These consolidated financial statements inclusive of the accounts of the Nilam Resources Inc. and its Peruvian subsidiary Nilam Resources Peru SAC. Nilam Resources Inc. (an exploration stage company) (the “Company”) was incorporated under the laws of the State of Nevada on July 11, 2005. The Company is a natural resource exploration company with an objective of acquiring, exploring and if warranted and feasible, developing natural resource properties.   On November 23, 2007, the Company incorporated Nilam Resources Peru SAC, in Peru, as a wholly-owned subsidiary.  The purpose of the new subsidiary is to hold the Company’s Peruvian properties and to carry on such business in Peru as is necessary to maintain, explore and develop the Company’s properties.  Nilam Resources Peru SAC. holds the Company’s rights in respect of the Llippa property.  The continuation of the Company is in the exploration stage of its mineral property development and to date has not yet established any proven mineral reserves on its existing properties.  The continued operations of the Company and the recoverability of the carrying value of its assets are ultimately dependent upon the ability of the Company to achieve profitable operations.

The unaudited condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2011, which was filed with the United States Securities and Exchange Commission on October 21, 2011. The results of operations for the three months ended October 31, 2011 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending April 30, 2012.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.  If the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.  These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission.

(B) Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Nilam Resources Peru SAC. Intercompany accounts and transactions have been eliminated in consolidation.

(C) Use of Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and revenues and expenses during the year reported.  By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions are determining the fair value of transactions involving common stock, valuation and impairment losses on mineral property acquisitions and valuation of convertible debentures.

(D) Cash and Cash Equivalents

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

(E) Mineral Properties

The Company is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral property acquisition costs are initially capitalized when incurred. The Company assesses the carrying costs for impairment under Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 360-10, “Property Plant and Equipment”. The ASC requires mining companies to consider cash flows related to the economic value of mining assets (including mineral properties and rights) beyond those assets’ proven and probable reserves, as well as anticipated market price fluctuations, when testing the mining assets for impairment in accordance with FASB ASC 360-10.

(F) Investments

The Company classifies Investment as available-for-sale in its Consolidated Balance Sheets. Securities held for indefinite periods of time, including any securities that may be sold to assist in the clearing of payment service obligations or in the management of the investment portfolio, are classified as available-for-sale securities. These securities are recorded at fair value, with the net after-tax unrealized gain or loss recorded as a separate component of stockholder deficit. Realized gains and losses and other than-temporary impairments are recorded in the Consolidated Statements of Income (Loss).

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(G) Loss Per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC 260, “Earnings Per Share.” Basic loss per share includes no dilution and it`s computed by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per share reflect the potential dilution of securities that could share in the earnings (loss) of the Company.  The common shares potentially issuable on conversion of outstanding warrants were not included in the calculation of weighted average number of shares outstanding because the effect would be anti-dilutive.

(H) Income Taxes

The Company accounts for income taxes under FASB ASC 740, “Income Taxes”.  Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

(I) Foreign Currency Translation

The financial statements are presented in United States dollars.  In accordance with FASB ASC 830-30, “Translation of Financial Statements”, foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date.  Revenue and expenses are translated at average rates of exchange during the year.  Related translation adjustments are reported as a separate component of stockholders’ equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

(J) Business Segments

The Company operates in one industry segment within two geographical areas, Canada and Peru. The mineral property is held solely in the Peru segment.

(K) Business Combinations

In December 2007, the FASB issued FASB ASC 805 (revised 2007), “ Business Combinations” (“ASC 805”). ASC 805 significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, in-process research and development, and restructuring costs.

In addition, under ASC 805, changes in an acquired entity's deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. ASC 805 is effective for fiscal periods beginning after December 15, 2008. The Company has adopted ASC 805 on May 1, 2009. This standard did not have a material impact on the Company’s financial statements.

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(L) Derivative Instruments

In March 2008, the FASB issued ASC 815, “ Disclosures about Derivative Instruments and Hedging Activities” (“ASC 815”). ASC 815 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal periods beginning after November 15, 2008. The Company has adopted ASC 815 on May 1, 2009. Adoption of this standard did not have a material impact on the Company’s financial position, results of operations, or cash flows.

(M) Concentration of Credit Risk

Cash includes deposits at a Canadian financial institution in US currency which is not covered by either the US FDIC limits or the Canadian CDI limits. The Company has placed its cash in a high credit quality financial institution.

(N) Fair Value of Financial Instruments

FASB ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. FASB ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

The Company’s financial instruments consist principally of cash, accounts payable, amounts due to related parties, notes payable, and convertible debenture. Pursuant to FASB ASC 820, the fair value of the Company’s cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of its other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

(O) Comprehensive Income

FASB ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the financial statements.  During the period ended October 31, 2011, the Company has other comprehensive income related to its investments in marketable securities (Note 4).

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NOTE 3 MINERAL PROPERTIES

Llippa Property

On December 10, 2007, the Company, through its wholly owned Peruvian subsidiary, entered into an agreement with MRC 1 Exploraciones EIRL of Peru, to purchase the Llippa Project, Peru, for $100,000. Llippa is a mineral claim consisting of two major mining concessions, the Prospera mine and La Prospera XXI.

Linderos Property

In the period ended October 31, 2011, the Company entered into two agreements with Portage Resources Inc. to sell all rights, title and interest for the Linderos 4 and 5 mining concessions, located in the Tabaconas District, San Ignacio Province, Department of Cajamarca, Peru. The Company had previously recognized an impairment loss of $200,000 related to these concessions during the year ended April 30, 2010.

Total consideration for the sale of the Linderos 4 concessions is 10,000,000 common shares of Portage Resources Inc. and total consideration for the sale of the Linderos 5 concessions is 8,000,000 common shares of Portage Resources Inc. Due to the impairment loss recognized in 2010, these concessions had a carrying value of $nil at the sale agreement dates. Consequently, the Company recognized a gain of $1,534,000 on the sale of these concessions, based on the market value of the shares received on the agreement dates.

Others

On July 22, 2011, the Company entered into an agreement to develop the Rocas mining concession in the province of Bolognesi, Department of Ancash, Peru for $10,000. The Company must make a minimum investment of $100,000 in the project within 24 months of the agreement and must share 45% of any resultant profits with the seller of the project. On September 26, 2011, the Company entered into an agreement with Portage Minerais Peru S.A.  to sell 55% of its ownership of the project for seven million shares of Portage Resources Inc. The additional 45% of its ownership can be acquired by Portage Minerais Peru S.A. at any time for $0.675 per each ounce of silver on the total silver resource.

On July 22, 2011, the Company entered into an agreement to develop the Rocas I mining concession in the province of Bolognesi, Department of Ancash, Peru for $5,000. The Company must make a minimum investment of $50,000 in the project within 24 months of the agreement and must share 45% of any resultant profits with the seller of the project.  On September 30, 2011, the Company entered into an agreement with Portage Minerais Peru S.A.  to sell 55% of its ownership of the project for three and a half million shares of Portage Resources Inc. The additional 45% of its ownership can be acquired by Portage Minerais Peru S.A. at any time for $0.675 per each ounce of silver on the total silver resource.

As the Company did not receive the proceeds from Portage Resources Inc. and did not transfer title of the concessions prior to October 31, 2011, the Company has not yet recognized the sale of the Rocas projects.

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NOTE 4 INVESTMENTS AND DEPOSITS

The Company’s investments consist of 18,000,000 shares of Portage Resources Inc. which were acquired in the sales of the Linderos mining concessions (Note 3).  The shares are carried at their market value at October 31, 2011, with any changes in value being recorded as other comprehensive income.

The Company also paid $24,540 as a share subscription deposit to Portage Resource Inc. for a further 245,500 shares at $0.10 per share.

NOTE 5 NOTES PAYABLE - RELATED PARTY

On August 28, 2007, the Company issued a promissory note in the amount of $10,000 to a related party.  This promissory note is unsecured, bears no interest and is due on demand.

On November 6, 2007, a shareholder loaned the Company $338 to establish a bank account in Peru. There are no terms of repayment and the amount is non-interest bearing.

NOTE 6 STOCKHOLDERS’ DEFICIT

For the six months ended October 31, 2011, the Company calculated imputed interest of $362 and fair value of a Director's fee of $1,800, which are all reflected as an in-kind contribution of expenses.

On June 15, 2011, the company signed a subscription agreement for 1,063,600 shares at $0.02 for cash.  The proceeds of this agreement were received during the period ended October 31, 2011, but the shares have not yet been issued, resulting in a share subscription liability of $21,272.

On July 12, 2011, the company issued 1,680,000 common shares at $0.02 per share for cash.

NOTE 7 RELATED PARTY TRANSACTIONS

On August 28, 2007, the Company issued a promissory note in the amount of $10,000 to a related party.  This promissory note is unsecured, bears no interest and is due on demand (Note 4). During fiscal 2008, the officer loaned the Company a further $338. This loan is also unsecured, bears no interest and is due on demand (Note 4).

As of October 31, 2011, $16,158 was owed to former directors and officers of the Company for expenses paid on behalf of the Company in fiscal 2009 and 2010.

As of October 31, 2011, the Company accrued $60,000 (2011 - $60,000) of management fees to the officers of the Company.

NOTE 8 SUBSEQUENT EVENTS

On December 1, 2011, the company signed a subscription agreement for 1,401,900 shares at $0.02 for cash.  

On December 1, 2011, the company signed a subscription agreement for 1,574,250 shares at $0.02 for cash.  

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NOTE 9 COMPARATIVE FIGURES

Certain of the comparative figures have been classified to conform to the presentation adopted in the current period.

NOTE 10 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

For the six months ended October 31, 2011, the Company issued  1,680,000 common shares at $0.02 per share for cash. (Note 5)

On August 10, 2011, the Company entered into a subscription agreement to purchase 195,400 shares from Portage Resources Inc. at $0.10 per share. The Company has also advanced an additional $5,000 to Portage Resource Inc. as a deposit for additional shares at $0.10 per share.

NOTE 11 CONTINGENCIES

There were no contingencies as at the report date.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Business Overview and Uncertainties

Nilam Resources, Inc. was incorporated under the laws of Nevada on July 11, 2005.  Our company is in the exploration stage with limited operations.  As reflected in the accompanying financial statements, our Company had a comprehensive income in the current period of $872,938.  We had a net loss from operations of $45,062, and an unrealized gain from the sale of investments of $918,000.  The company also had a negative cash flow from operations of $14,106 for the current period.  

We have not generated any revenues from operations, and further losses from operations are anticipated in the development of the business. This raises substantial doubt about the company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management plans to seek additional capital funding to implement its business plan through private placement and public offerings of common shares in its capital stock.  Additionally, if necessary, the officers or directors may make loans to enable the Company to meet its minimum cash requirements.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide an opportunity for the Company to continue as a going concern.

Our principal office is located at Calle Alcanfores 761 - 1701, Miraflores, Lima 18, Peru.  Our fiscal year ends April 30th.

Changes in Comprehensive Net Gain

The comprehensive net gain in the period ending October 31, 2011 decreased by $602,039 from the period ending July 31, 2011.  The comprehensive net gain for the period ending October 31, 2011 was $ 872,938, and the comprehensive net gain for the period ending July 31, 2011 was $ 1,474,977.

Changes in Net Loss

The net loss from operations in the quarter ending October 31, 2011 decreased by $ 13,961 from the quarter ending July 31, 2011.  The net loss for the period ending October 31, 2011 was $45,062, and the net loss for the period ending July 31, 2011 was $ 59, 023.

Unrealized Gain from Sale of Investment of Rocas Property I

The company had an unrealized gain from the Sale of Investment property of $ 554,555 for the sale of Rocas I Property.  The unrealized gain is not from the ordinary course of business.  On July 22, 2011, the Company entered into an agreement to develop the Rocas I mining concession in the province of Bolognesi, Department of Ancash, Peru for $10,000.  On September 26, 2011, the company sold its interest in Rocas Property I for 7 million shares of Portage Resources, Inc. Valuded at $560,000.  

As the Company did not receive the proceeds from Portage Resources, Inc. And did not transfer title of the concessions prior to October 31, 2001, the Company has not yet recognized the sale of the Rocas 1 project.

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Unrealized Gain from Sale of Investment of Rocas Property II

The company had an another unrealized gain from the Sale of Investment Property of $ 277,195 for the sale of Rocas II.  On July 22, 2011, the Company entered into another agreement to develop the Rocas II mining concession in the province of Bolognesi, Department of Ancash, Peru for $5,000.  On September 26, 2011, the company agreed to sell its interest in Rocas Property II for 3.5 million shares of Portage Resoruces, Inc. valued at $280,000.

As the Company did not receive the proceeds from Portage Resources Inc. and did not transfer title of the concessions prior to October 31, 2011, the Company has not yet recognized the sale of the Rocas II  project.

Critical Accounting Policies - Mineral Interest

Nilam Resources, Inc. is primarily engaged in the acquisition, exploration and development of mineral properties. Mineral property acquisition costs are initially capitalized when incurred using the guidance in EITF 04-02, “Whether Mineral Rights Are Tangible or Intangible Assets”  The Company assesses the carrying costs for impairment under SFAS 144, “Accounting for Impairment or Disposal of Long Lived Assets”. The Emerging Issues Task Force issued EITF 04-3, Mining Assets: Impairment and Business Combinations requires mining companies to consider cash flows related to the economic value of mining assets (including mineral properties and rights) beyond those assets’ proven and probable reserves, as well as anticipated market price fluctuations, when testing the mining assets for impairment in accordance with SFAS 144.

Pursuant to SFAS No. 144, the recoverability of the acquisition costs associated with the purchase of mineral rights presumes to be insupportable prior to determining the existence of a commercially minable deposit and have to be expensed.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position.  The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Item 3.  QUALITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.

Item 4.  CONTROLS and PROCEDURES OVER FINANCIAL REPORTING

Conclusions of Management Regarding Effectiveness of Disclosure Controls and Procedures.

Our management, which includes our CEO, president and sole director, who is also the principal financial officer of the Company, has further evaluated the effectiveness of our disclosure

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controls and procedures pursuant to Exchange Act Rule 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the management has concluded that there was a material weakness affecting our internal control over financial reporting and, as a result management concluded that our disclosure controls and procedures were not effective as of October 31, 2011.

Management’s Report on Internal Control over Financial Reporting.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. The Company’s internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

The management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of Octorber 31, 2011 based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.  In its evaluation, Management evaluated whether the Company had sufficient “preventive controls” which are controls that have the objective of preventing the occurrence of errors or fraud that could result in a misstatement of the financial statements, and “detective controls” which have the objective of detecting errors or fraud that has already occurred that could result in a misstatement of the financial statements.   In its evaluation, Management considered whether there were sufficient internal controls over financial reporting, in the context of the Company’s control environment, financial risk assessment, internal control activities, monitoring, and communication to determine whether sufficient controls are present and functioning effectively.  Based upon this assessment, we determined that there was a material weakness affecting our internal control over financial reporting and, as a result of that weakness, our internal control over financial reporting was not effective as of October 31, 2011.  The material weakness has been disclosed to, and reviewed with, our independent auditor.

Management’s Remediation Initiatives

The Company recognizes the importance of implementing and maintaining disclosure controls and procedures and internal controls over financial reporting and is working to implement an effective system of controls.  Management is currently evaluating avenues for mitigating our internal controls weaknesses, but mitigating controls that are practical and cost effective based on the size, structure, and future existence of our organization.  Since the Company has not engaged in any substantive operations since the loss of the right to purchase the Pativilca Mineral Property in Peru, or generated any significant revenues, the Company is limited in its options for remediation efforts. Management, within the confines of its budgetary resources, will engage its outside accounting firm to assist with an assessment of the Company’s internal controls over financial reporting on an on-going basis.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent

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limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.  

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in internal control over financial reporting

Except as noted above, there have been no changes during the quarter ended October 31, 2011 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

The Company’s management does not expect that our Disclosure Controls or our internal control over financial reporting will prevent or detect all error and all fraud.  A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.  The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake.  Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls.  The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Projections of any evaluation of controls effectiveness to future periods are subject to risks.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

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PART II  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

As of October 31, 2011, the end of the quarterly period covered by this report, the Company was not subject to any legal proceedings.  

Item 1A.  RISK FACTORS

Inherent Risks in Our Business and the Mining Industry

The search for valuable minerals as a business involves substantial risks.  The likelihood of our success and success in the mining industry must be considered in light of the substantial risks, problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that the Company plans to undertake. These potential problems include, but are not limited to, the inherent speculative nature of exploration of mining properties, numerous hazards including pollution, cave-ins and other hazards against which we cannot, or may elect not to, insure, burdensome government regulations and other legal uncertainties, market fluctuations relating to the minerals and metals which we seek to exploit, other unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

Compliance with Government Regulation

The Company will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in Peru.

The Company will have to sustain the cost of reclamation and environmental mediation for all exploration and development work undertaken.  The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the currently planned work programs.  Because there is presently no information on the size, tenor, or quality of any resource or reserves at this time, it is impossible to assess the impact of any capital expenditures on earnings or our competitive position in the event a potentially economic deposit is discovered.

If the Company enters into production, the cost of complying with permit and regulatory environment laws will be greater than in the exploration phases because the impact on the project area is greater.  Permits and regulations will be required.

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

On August 10, 2009, the Company issued a 5% convertible debenture with a principal amount of $10,187 that is due and payable on August 10, 2010.  The interest and principal is due at maturity at the option of the Company in either cash or shares.  The convertible debenture may be converted into the Company’s common stock at a price of $0.05 per share, at the option of the holder.  As of October 31, 2011, the convertible debenture was not paid and not converted.

On October 9, 2009, the Company issued a 5% convertible debenture with a principal amount of $4,000 which is due on January 1, 2010.  The Company has defaulted on the convertible debenture therefore it is due and payable on demand from the creditor. The debt carries a beneficial conversion feature which resulted in a debt discount of $4,000 which was recorded against the convertible debenture and offset in additional paid in capital during fiscal 2010.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

None.  

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

None.

Item 5.  OTHER INFORMATION

As of October 31, 2011, all warrants were expired.

Item 6.  EXHIBITS AND REPORT ON FORM 8-K

31.

Certification of Mr. Shahin Tabatabaei, Chief Executive Officer and Acting Chief Financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes Oxley Act of 2002.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on this behalf by the undersigned, thereunto duty authorized.

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