PINX:NILA Nilam Resources Inc Quarterly Report 10-Q Filing - 1/31/2012

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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 January 31, 2012


[  ]  Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934


For the transition period ______________to _____________


Commission File Number 333-135980


NILAM RESOURCES INC.

(Exact name of small Business Issuer as specified in its charter)


Nevada

98-0487414

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

 

Calle Alcanfores 761 - 1701

Miraflores, Lima 18, Peru

Issuer’s telephone number, including area code 1-917-294-4072



_____________

(Former name, former address and former fiscal year, if changed since last report)



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 preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]


Indicate by check mark whether the registrant has submitted electronically and posted on the 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 [  ]


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


Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ]

(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 [  ]


State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 50,342,595 Class “A” Common Shares at a par value of $0.001 of the issuer Capital Stock are issued and outstanding as of January 31, 2012.  The total number of authorized shares is 345,000,000.




PART I - FINANCIAL INFORMATION


Safe Harbor Statement


This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.


These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.


Item 1. Financial Statements


The unaudited interim consolidated financial statements of Nilam Resources, Inc. (the “Company”, “Nilam”, “we”, “our”, “us”) follow. All currency references in this report are in U.S. dollars unless otherwise noted.


The accompanying Condensed Consolidated Financial Statements of Nilam Resources, Inc. should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended April 30, 2011. Significant accounting policies disclosed therein have not changed except as noted below.


Nilam Resources

(A Development Stage Company)

Unaudited

(Express in U.S. Dollars)


January 31, 2012


Unaudited Consolidated Balance Sheets

5

Unaudited Consolidated Statements of Operations

6

Unaudited Consolidated Statement of Stockholders Equity (Deficit)

7 - 8

Unaudited Consolidated Statements of Cash Flows

9 - 10

Unaudited Notes to the Consolidated Financial Statements

11 - 20








2













NILAM RESOURCES INC.


(AN EXPLORATION STAGE COMPANY)


INTERIM CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)


January 31, 2012


(Stated in US Dollars)














3




NILAM RESOURCES INC.


(AN EXPLORATION STAGE COMPANY)


CONTENTS



PAGE

5

INTERIM CONSOLIDATED BALANCE SHEETS AS OF JANUARY 31, 2012 AND APRIL 30, 2011.

 

 

 

PAGE

6

INTERIM CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2012 AND 2011, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2012.

 

 

 

PAGE

7-8

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2012.

 

 

 

PAGE

9 - 10

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JANUARY 31, 2012 AND 2011, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2012.

 

 

 

PAGES

11 - 20

NOTES TO  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
















4




NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED BALANCE SHEET

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


 

 

January 31, 2012

 

April 30, 2011

(Audited)

(Restated - Note 12)

ASSETS

 

 

 

 

 

 

 

 

 

         CURRENT ASSETS

 

 

 

 

          Cash

$

10,958

$

1,502

          Prepaid expenses and deposits (Note 4)

 

24,545

 

-

          Short-term loan (Note 10)

 

5,520

 

-

 

 

41,023

 

1,502

          Investments (Note 4)

 

720,000

 

-

          Mineral property (Note 3)

 

115,000

 

100,000

          TOTAL ASSETS

$

876,023

$

101,502

  

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

  

 

 

 

 

         CURRENT LIABILITIES

 

 

 

 

          Accounts payable and accrued liabilities

$

423,477

$

318,399

          Due to related parties  (Note 7)

 

16,158

 

16,158

          Share subscription liability  (Note 6)

 

49,310

 

-

          Notes payable - related parties (Note 5)

 

10,338

 

10,338

  

 

 

 

 

          TOTAL LIABILITIES

 

499,283

 

344,895

  

 

 

 

 

         STOCKHOLDERS’ EQUITY

 

 

 

 

          Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding

 

-

 

-

 

 

 

 

 

Common stock, $0.001 par value, 345,000,000 shares authorized, 50,055,595 shares and 50,375,595 shares issued and outstanding, respectively (Note 6)

 

52,056

 

50,376

 

 

 

 

 

          Additional paid in capital  (Note 6)

 

10,651,698

 

10,616,535

 

 

 

 

 

          Accumulated deficit during exploration stage

 

(9,513,014)

 

(10,910,304)

          Accumulated other comprehensive income

 

(814,000)

 

-

          Total stockholders’ equity (deficit)

 

376,740

 

(243,393)

  

 

 

 

 

          TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

876,023

$

101,502


Nature of Operations (Note 1)


Subsequent Events (Note 8)


Approved on Behalf of the Board:

___________________________, Director


See accompanying notes to financial statements.



5




NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(STATED IN U.S. DOLLARS)

 

 

For the Three

Months Ended

January 31, 2012

For the Three

Months Ended

January 31, 2011

For the Nine

Months Ended

January 31, 2012

For the Nine

Months Ended

January 31, 2011

For the Period

From July 11, 2005

 (Inception) to

January 31,  2012

(Restated - Note 12)

OPERATING EXPENSES

 

 

 

 

 

Accounting and auditing fees

$        4,377

$      2,550

$       11,808

$     8,116

$     144,927

Consulting fees  

22,697

30,000

105,414

90,000

644,414

Exploration costs and expenses  

-

-

-

-

59,555

General and administrative

1,300

1,210

6,813

11,864

68,926

Insurance

-

-

-

-

27,000

Investor relation

-

-

-

-

55,393

Listing and filing fees

700

790

2,040

2,810

17,908

Legal fees

3,000

1,000

10,072

2,600

111,894

Management fees

-

-

-

-

330,000

Stock-based compensation (Note 6)

-

-

-

-

100,977

Travel

-

1,708

-

1,708

14,695

Wages

-

-

-

-

20,630

Impairment of mineral property

-

-

 

 

7,208,000

Total Operating Expenses

32,074

37,258

136,147

117,098

8,804,319

LOSS FROM OPERATIONS

(32,074)

(37,258)

(136,147)

(117,098)

(8,804,319)

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gain

(68)

-

(79)

-

829

Interest income

-

-

-

-

8

Loss on settlement of debt

-

-

-

-

(2,243,048)

Gain on sale of mineral properties

-

-

1,534,000

-

1,534,000

Total Other (Expense)/Income

(68)

-

1,533,921

-

(708,211)

 

 

 

 

 

 

NET INCOME/LOSS BEFORE INCOME TAXES

$      (32,142)

$      (37,258)

$      1,397,774

$      (117,098)

$ (9,512,530)

 

 

 

 

 

 

Income taxes

484

-

484

-

484

NET INCOME/LOSS AND COMPREHENSIVE LOSS

$      (32,626)

$      (37,258)

$      1,397,290

$      (117,098)

$ (9,513,014)

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

$         (0.00)

$         (0.00)

$            0.03

$            (0.00)

$        (0.50)

 

 

 

 

 

 

Weighted average number of shares outstanding during the period - basic and diluted

53,015,148

37,199,472

51,868,850

45,555,179

18,972,407


See accompanying notes to financial statements



6




NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JULY 31, 2011
(STATED IN U.S. DOLLARS)


 

(Restated - Note 12)

 

 

(Restated - Note 12)

 

(Restated - Note 12)

Accumulated

(Restated - Note 12)

Accumulated

 

 

  

Preferred

(Restated - Note 12)

 

Additional

 

Other

Deficit During

 

 

  

Stock

Common Stock

 

Paid-In

 

Comprehensive

Exploration

 

 

 

Shares

Amount

Shares

 

Amount

 

Capital

 

Income

Stage

 

Total

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued to

 

 

 

 

 

 

 

 

 

 

 

 

 

founders for cash ($0.01 per

 

 

 

 

 

 

 

 

 

 

 

 

 

share)

-

$

-

600,000

$

600

$

5,400

$

 

-

$

6,000

Common stock issued for

 

 

 

 

 

 

 

 

 

 

 

 

 

cash ($0.10 per share)

-

 

-

550,000

 

550

 

54,450

 

 

-

 

55,000

Net loss for the period from

 

 

 

 

 

 

 

 

 

 

 

 

 

July 11, 2005 (inception) to

 

 

 

 

 

 

 

 

 

 

 

 

 

April 30, 2006

-

 

-

-

 

-

 

-

 

 

(10,193)

 

(10,193)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2006

-

 

-

1,150,000

 

1,150

 

59,850

 

 

(10,193)

 

50,807

In-kind contribution of stock to officer

-

 

-

-

 

-

 

30,000

 

 

-

 

30,000

Net loss for the year

-

 

-

-

 

-

 

-

 

 

(68,479)

 

(68,479)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2007

-

 

-

1,150,000

 

1,150

 

89,850

 

 

(78,672)

 

12,328

In-kind contribution  of property

-

 

-

-

 

-

 

5,000

 

 

-

 

5,000

In-kind contribution  of expenses

-

 

-

-

 

-

 

5,950

 

 

-

 

5,950

Stock-base compensation

-

 

-

-

 

-

 

100,977

 

 

-

 

100,977

Common stock issued for

-

 

-

10,779

 

11

 

269,426

 

 

-

 

269,437

cash ($25 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

-

 

-

-

 

-

 

-

 

 

(342,242)

 

(342,242)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2008

-

 

-

1,160,779

 

1,161

 

471,203

 

 

(420,914)

 

51,450

Common stock issued on

 

 

 

 

 

 

 

 

 

 

 

 

 

property acquisition

-

 

-

20,000,000

 

20,000

 

7,180,000

 

 

-

 

7,200,000

In-kind contribution  of expenses

-

 

-

-

 

-

 

56,474

 

 

-

 

56,474

Net loss for the period

-

 

-

-

 

-

 

-

 

 

(7,483,077)

 

(7,483,077)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2009

-

 

-

21,160,779

$

21,161

$

7,707,677

 

 

(7,903,991)

 

(175,153)

In-kind contribution  of expenses

-

 

-

-

 

-

 

7,217

 

 

-

 

7,217

Debt settlement

-

 

-

16,000,000

 

16,000

 

284,000

 

 

-

 

300,000

Loss on debt settlement

-

 

-

 

 

 

 

1,780,000

 

 

(1,620,000)

 

160,000

Issuance of convertible debentures

-

 

-

 

 

 

 

14,000

 

 

-

 

14,000

Net loss for the period

-

 

-

-

 

-

 

-

 

 

(753,625)

 

(753,625)

.

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2010

-

 

-

37,160,779

$

37,161

 

9,792,894

 

 

(10,277,616)

 

(447,561)

In-kind contribution of expenses

-

 

-

-

 

-

 

4,324

 

 

-

 

4,324

Debt settlement

-

 

-

12,214,816

 

12,215

 

808,527

 

 

-

 

820,742

Issuance of convertible debentures

-

 

-

 

 

 

 

1,790

 

 

-

 

1,790

Common stock issued for cash ($0.01 per share)

-

 

-

1,000,000

 

1,000

 

9,000

 

 

-

 

10,000

Net loss for the period

-

 

-

-

 

-

 

-

 

 

(632,688)

 

(632,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2011

-

 

-

50,375,595

$

50,376

 

10,616,535

 

 

(10,910,304)

$

(243,393)

In-kind contribution of expenses

-

 

-

-

 

-

 

3,243

 

 

-

 

3,243

Common stock issued for cash ($0.02 per share)

-

 

-

1,680,000

 

1,680

 

31,920

 

 

-

 

33,600

Unrealized loss on available for sale investments

-

 

-

-

 

-

 

-

 

(814,000)

-

 

(814,000)

Net income for the period

-

 

-

-

 

-

 

-

 

 

1,397,290

 

1,397,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 31, 2012

-

 

-

52,055,595

 

52,056

 

10,651,698

 

(814,000)

(9,513,014)

 

376,740


See accompanying notes to financial statements.



7




NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

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


 

 

For the Nine

Months Ended

January 31,  2012

 

For the Nine

Months  Ended

January 31,  2011

 

For the Period From

July 11, 2005

(Inception) to

January 31,  2012

(Restated - Note 12)

CASH FLOWS USED IN OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income/loss for the period

$

1,397,290

$

(297,378)

$

(9,513,014)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Gain on sale of mineral properties

 

(1,534,000)

 

-

 

(1,534,000)

Foreign exchange gain

 

-

 

(814)

 

-

Impairment of mineral properties

 

-

 

-

 

7,205,000

In-kind contribution of expenses

 

3,243

 

5,809

 

77,118

In-kind contribution of shares

 

-

 

-

 

30,003

Accretion interest (Note 7)

 

-

 

-

 

15,790

Loss on debt settlement (Note 5)

 

-

 

-

 

2,243,048

Settlement of accounts payable

 

-

 

-

 

(14,803)

Stock-based compensation

 

-

 

-

 

100,977

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid

 

-

 

-

 

-

Short-term loan (Note 10)

 

(5,520)

 

-

 

(5,520)

Accounts receivable

 

-

 

-

 

-

Accounts payable and accrued expenses

 

105,078

 

270,862

 

1,010,084

Due to related parties

 

-

 

10,454

 

26,158

Net Cash Used In Operating Activities

 

(33,909)

 

(11,067)

 

(359,159)

 

 

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES:

 

 

 

 

 

 

Subscription for marketable securities

 

(24,545)

 

-

 

(24,545)

Purchase of mineral rights

 

(15,000)

 

-

 

(65,000)

Net Cash Used In Investing Activities

 

(39,545)

 

-

 

(89,545)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Share subscription liability

 

82,910

 

-

 

423,346

Notes payable - related parties

 

-

 

-

 

10,338

Proceeds from convertible debenture

 

-

 

11,000

 

25,978

Net Cash Provided By Financing Activities

 

82,910

 

11,000

 

459,662

  

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

9,456

 

(67)

 

10,958

  

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

1,502

 

79

 

-

  

 

 

 

 

 

 

CASH AT END OF PERIOD

$

10,958

$

12

$

10,958

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information (Note 10)

 

 

 

 

 

 

Interest paid

 

-

 

-

 

-

Taxes paid

 

-

 

-

 

-

 

 

-

 

-

 

-


See accompanying notes to financial statements.



8




NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

AS OF JANUARY 31, 2012



NOTE 1 NATURE OF OPERATIONS


These interim 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 interim 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 interim 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 nine months ended January 31, 2012 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending April 30, 2012.


These interim 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.



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.



9





(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).


(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.




10





(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.


(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.




11





(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:


Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

 

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

 

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


The Company’s financial instruments consist principally of cash, investments, 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 and investments are 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 January 31, 2012, the Company has other comprehensive income related to its investments in marketable securities (Note 4).



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 January 31, 2012, 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.




12




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 January 31, 2012, the Company has not yet recognized the sale of the Rocas projects.



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 January 31, 2012, 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 nine months ended January 31, 2012, the Company calculated imputed interest of $543 and fair value of a Director's fee of $2,700, which are all reflected as an in-kind contribution of expenses.


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


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 January 31, 2012, but the shares have not yet been issued, resulting in a share subscription liability of $21,272.



13





On December 1, 2011, the company signed a subscription agreement for 1,401,900 shares at $0.02 for cash. The proceeds of this agreement were received during the period ended January 31, 2012, but the shares have not yet been issued, resulting in a share subscription liability of $28,038.

 

On December 1, 2011, the company signed a subscription agreement for 1,574,250 shares at $0.02 for cash. The shares have not been issued and no proceeds of this agreement were received during the period ended January 31, 2012.



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 January 31, 2012, $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 January 31, 2012, the Company accrued $60,000 (2011 - $90,000) of management fees to the officers of the Company.



NOTE 8 SUBSEQUENT EVENTS


On February 1, 2012, the company signed a subscription agreement for 990,000 shares at $0.02 for cash.  



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 nine months ended January 31, 2012, the Company issued 1,680,000 common shares at $0.02 per share for cash. (Note 6)


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.


On November 30, 2011, the Company entered into short-term loan agreement to lend Portage Resources Inc. in the amount of $5,520. This loan is unsecured and is due on or before a day which is six months from the date of the loan agreement. The loan bears no interest for six months whereby non-payment after six months would incur a $100 per month non-compounded interest charge.   



NOTE 11 CONTINGENCIES


There were no contingencies as at the report date.




14





NOTE 12 RESTATEMENT


On November 20, 2007, the Company issued a promissory note in the amount of $60,000 to a related party. On June 10, 2009, this promissory note was settled with 12,000,000 common shares of the Company. The common shares issued on settlement of the notes were assigned a value of $1,680,000, which was calculated based on the trading value of the Company’s stock on the date the settlement was approved by the Board of Directors. The Company presented this transaction as a capital transaction in its financial statements for the year ended April 30, 2010; however the Company has determined that the difference between the carrying amount of the debt and the value of the common shares issued should have been recorded as a loss on extinguishment.  


On February 10, 2009, the Company, through its wholly owned Peruvian subsidiary, acquired the right, title and interest in and to Linderos mining concessions, Peru. In consideration for the property, the Company issued 20,000,000 of its common shares, which it valued at $200,000.   The Company has determined that common shares issued should have been valued at their then trading price of $0.36 per share, resulting in a valuation of the Linderos property of $7,200,000.  Subsequent to recording the property at $7,200,000 the company wrote the property down to the fair value of $200,000.


The Company has restated the financial statements as follows:


Consolidated Balance Sheet:

 

April 30, 2011

(Previously Reported)

April 30, 2011

(Restated)

April 30, 2010

(Previously Reported)

 

April 30, 2010

(Restated)

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

          CURRENT ASSETS

 

 

 

 

 

 

          Cash

$

1,502

1,502

-

$

-

 

 

1,502

1,502

-

 

-

          Mineral properties (Note 3)

 

100,000

100,000

100,000

 

100,000

          TOTAL ASSETS

$

101,502

101,502

100,000

$

100,000

  

 

 

 

 

 

 

  

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

          CURRENT LIABILITIES

 

 

 

 

 

 

          Accounts payable and accrued liabilities

$

318,399

318,399

501,683

$

501,683

          Due to related parties  (Note 6)

 

16,158

16,158

16,158

 

16,158

          Convertible debentures (Note 7)

 

-

-

19,382

 

19,382

          Notes payable - related parties (Note 4)

 

10,338

10,338

10,338

 

10,338

  

 

 

 

 

 

 

          TOTAL LIABILITIES

 

344,895

344,895

547,561

 

547,561

 

 

 

 

 

 

 

          STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

          Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding

 

-

-

-

 

-

 

 

 

 

 

 

 

Common stock, $0.001 par value, 345,000,000 shares authorized, 50,375,595 shares and 37,160,779 shares issued and outstanding, respectively (Note 5)

 

50,376

50,376

37,161

 

37,161

 

 

 

 

 

 

 

          Additional paid in capital  (Note 5)

 

3,616,535

10,616,535

2,792,894

 

9,792,894

 

 

 

 

 

 

 

          Accumulated deficit during exploration stage

 

(3,910,304)

(10,910,304)

(3,277,616)

 

(10,277,616)

          Total stockholders’ deficit

 

(243,393)

(243,393)

(447,561)

 

(447,561)

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT


$


101,502


101,502


100,000


$


100,000




15





Consolidated Statement of Operations:


 

 

As Previously Reported

For the Year

 Ended

April 30, 2010

 

As Restated

For the Year

 Ended

April 30, 2010

As Previously

Reported

For the Period

from inception to

April 30, 2011

As Restated

For the Period

from Inception to

 April 30, 2011

OPERATING EXPENSES

 

 

 

 

 

 

Accounting and auditing fees

$

15,350

$

15,350

133,119

133,119

Consulting fees  

 

240,000

 

240,000

539,000

539,000

Exploration costs and expenses  

 

10,453

 

10,453

59,555

59,555

General and administrative

 

15,878

 

15,878

62,113

62,113

Insurance

 

-

 

-

27,000

27,000

Investor relation

 

-

 

-

55,393

55,393

Listing and filing fees

 

1,180

 

1,180

15,868

15,868

Legal fees

 

(9,236)

 

(9,236)

101,822

101,822

Management fees

 

120,000

 

120,000

330,000

330,000

Stock-based compensation

 

-

 

-

100,977

100,977

Travel

 

-

 

-

14,695

14,695

Wages

 

-

 

-

20,630

20,630

Impairment of mineral property

 

200,000

 

200,000

208,000

7,208,000

Total Operating Expenses

 

593,625

 

593,625

1,668,172

8,668,172

LOSS FROM OPERATIONS

 

(593,625)

 

(593,625)

(1,668,172)

(8,668,172)

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency transaction gain

 

-

 

-

908

908

Interest income

 

-

 

-

8

8

Loss on settlement of debt

 

(160,000)

 

(1,780,000)

(2,243,048)

(2,243,048)

 

 

 

 

 

 

 

Total Other (Expense)/Income

 

(160,000)

 

(1,780,000)

(2,242,132)

(2,242,132)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS AND COMPREHENSIVE LOSS

$

(753,625)

$

(2,373,625)

(3,910,304)

(10,910,304)

 

 

 

 

 

 

 

Basic and Diluted Loss per Common Share

$

(0.02)

$

(0.07)

(0.29)

(0.82)








16




Consolidated Statement of Changes in Stockholders’ Equity:


As Previously Reported:

 

 

 

Common Stock

 

Additional Paid-In

 

Accumulated

 

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

BALANCE, APRIL 30, 2008

-

 

-

1,160,779

 

1,161

 

471,203

 

(420,914)

 

51,450

Common stock issued on property acquisition

-

 

-

20,000,000

 

20,000

 

180,000

 

-

 

200,000

In-kind contribution  of expenses

-

 

-

-

 

-

 

56,474

 

-

 

56,474

Net loss for the period

-

 

-

-

 

-

 

-

 

(483,077)

 

(483,077)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2009

-

$

-

21,160,779

$

21,161

$

707,677

$

(903,991)

$

(175,153)

In-kind contribution  of expenses

-

 

-

-

 

-

 

7,217

 

-

 

7,217

Debt settlement

-

 

-

16,000,000

 

16,000

 

284,000

 

-

 

300,000

Loss on debt settlement

-

 

-

 

 

 

 

1,780,000

 

(1,620,000)

 

160,000

Issuance of convertible debentures

-

 

-

 

 

 

 

14,000

 

-

 

14,000

Net loss for the period

-

 

-

-

 

-

 

-

 

(753,625)

 

(753,625)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2010

-

$

-

37,160,779

$

37,161

$

2,792,894

$

(3,277,616)

$

(447,561)

In-kind contribution of expenses

-

 

-

-

 

-

 

4,324

 

-

 

4,324

Debt settlement

-

 

-

12,214,816

 

12,215

 

808,527

 

-

 

820,742

Issuance of convertible debentures

-

 

-

 

 

 

 

1,790

 

-

 

1,790

Common stock issued for cash ($0.01 per share)

-

 

-

1,000,000

 

1,000

 

9,000

 

-

 

10,000

Net loss for the period

-

 

-

-

 

-

 

-

 

(632,688)

 

(632,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2011

-

$

-

50,375,595

$

50,376

$

3,616,534

$

(3,910,304)

$

(243,393)








17





As Restated:

 

 

 

Common Stock

 

Additional Paid-In

 

Accumulated

 

 

 

 

 

 

Shares

 

Amount

 

Capital

 

Deficit

 

Total

BALANCE, APRIL 30, 2008

-

 

-

1,160,779

 

1,161

 

471,203

 

(420,914)

 

51,450

Common stock issued on property acquisition

-

 

-

20,000,000

 

20,000

 

7,180,000

 

-

 

7,200,000

In-kind contribution  of expenses

-

 

-

-

 

-

 

56,474

 

-

 

56,474

Net loss for the period

-

 

-

-

 

-

 

-

 

(7,483,077)

 

(7,483,077)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2009

-

$

-

21,160,779

$

21,161

$

7,707,677

$

(7,903,991)

$

(175,153)

In-kind contribution  of expenses

-

 

-

-

 

-

 

7,217

 

-

 

7,217

Debt settlement

-

 

-

16,000,000

 

16,000

 

2,064,000

 

-

 

2,080,000

Issuance of convertible debentures

-

 

-

 

 

 

 

14,000

 

-

 

14,000

Net loss for the period

-

 

-

-

 

-

 

-

 

(2,373,625)

 

(2,373,625)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2010

-

$

-

37,160,779

$

37,161

$

9,792,894

$

(10,277,616)

$

(447,561)

In-kind contribution of expenses

-

 

-

-

 

-

 

4,324

 

-

 

4,324

Debt settlement

-

 

-

12,214,816

 

12,215

 

808,527

 

-

 

820,742

Issuance of convertible debentures

-

 

-

 

 

 

 

1,790

 

-

 

1,790

Common stock issued for cash ($0.01 per share)

-

 

-

1,000,000

 

1,000

 

9,000

 

-

 

10,000

Net loss for the period

-

 

-

-

 

-

 

-

 

(632,688)

 

(632,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, APRIL 30, 2011

-

$

-

50,375,595

$

50,376

$

10,616,535

$

(10,910,304)

$

(243,393)









18





Consolidated Statement of Cash Flows:


 

 

As Previously Reported

For the Year

 Ended

April 30, 2010

 

As Restated

For the Year

 Ended

April 30, 2010

As Previously

Reported

For the Period

from inception to

April 30, 2011

As Restated

For the Period

from Inception to

 April 30, 2011

CASH FLOWS USED IN OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss for the period

$

(753,625)

$

(2,373,625)

(3,910,304)

(10,910,304)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Impairment of mineral properties

 

200,000

 

200,000

205,000

7,205,000

In-kind contribution of expenses

 

7,217

 

7,217

73,875

73,875

In-kind contribution of shares

 

-

 

-

30,003

30,003

Accretion interest (Note 7)

 

8,000

 

8,000

15,790

15,790

Loss on debt settlement (Note 5)

 

160,000

 

1,780,000

2,243,048

2,243,048

Settlement of accounts payable (Note 12)

 

(14,803)

 

(14,803)

(14,803)

(14,803)

Stock-based compensation

 

-

 

-

100,977

100,977

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid

 

-

 

-

-

-

Accounts receivable

 

-

 

-

-

-

Accounts payable and accrued expenses

 

357,492

 

357,492

905,006

905,006

Due to related parties

 

11,453

 

11,453

26,158

26,158

Net Cash Used In Operating Activities

 

(24,266)

 

(24,266)

(325,250)

(325,250)

 

 

 

 

 

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES:

 

 

 

 

 

 

Purchase of mineral rights

 

-

 

-

(50,000)

(50,000)

Net Cash Used In Investing Activities

 

-

 

-

(50,000)

(50,000)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Issuance of common shares

 

 

 

 

340,436

340,436

Notes payable - related parties

 

-

 

-

10,338

10,338

Proceeds from Convertible debenture

 

24,187

 

24,187

25,978

25,978

Net Cash Provided By Financing Activities

 

24,187

 

24,187

376,752

376,752

  

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

(79)

 

(79)

1,502

1,502

  

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

79

 

79

-

-

  

 

 

 

 

 

 

CASH AT END OF PERIOD

$

-

$

-

1,502

1,502





19




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 Net Loss


The net loss from operations in the quarter ending January 31,  2012 decreased by $12,988 from the quarter ending October 31, 2011.  The net loss for the period ending January 31, 2012 was $ 32,074, and the net loss for the period ending October 31, 2011 was $45,062.


Restatement of Entries in 1-0K for the Period Ended April 30, 2010


We made two restatements to the 10-K for the period Ended April 30, 2010.  The restatement is a reduction in $1,620,000.  On November 20, 2007, the company issued a promissory note for $60,000.  On June 10, 2009, the company settled the promissory note by issuing 12,000,000 common shares.  The company later determined that the assigned value of the shares was $1,680,000.   


On February 10, 2009, the company issued 20,000,000 common shares for the right, title and interest in the Linderos Mining Concession.  The company later determined the value of the real property was $200,000, and the value of the shares was $7,200,000.  Therefore, there was a reduction of $7,000.000.


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.



20




Going Concern 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 loss in the current period of $32,626, and positive cash flows from operations of $9,456 for the current period.  We have not generated any revenues from operations, and further losses 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.


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 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 January 31, 2012.






21




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 January 31, 2021 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 January 31, 2012.  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 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.




22




Changes in internal control over financial reporting


Except as noted above, there have been no changes during the quarter ended January 31, 2012 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.


















23




PART II  OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS


As of January 31, 2012, 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.


 

-

Water discharge will have to meet water standards;

 

 

 

 

-

Dust generation may have to be minimal or otherwise re-mediated;

 

 

 

 

-

Dumping of material on the surface may have to be re-contoured and re-vegetated;

 

 

 

 

-

An assessment of all material to be left on the surface will need to be environmentally benign;

 

 

 

 

-

Ground water will have to be monitored for any potential contaminants;

 

 

 

 

-

The socio-economic impact of the project will have to be evaluated and if deemed negative, will    have to be re-mediated; and

 

 

 

 

-

There will likely have to be an impact report of the work on the local fauna and flora.





24




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 January 31, 2012, 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 January 31, 2012, 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.










25




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.



 

Nilam Resources, Inc.

 

 

Dated  March 15, 2012

 

 

/s/ Shahin Tabatabaei

 

Shahin Tabatabaei

 

CEO and Acting CFO



















26



PINX:NILA Nilam Resources Inc Quarterly Report 10-Q Filling

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