- Quarterly Report (10-Q)

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 July 31, 2010

o 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.)

1480 Benevides Street, Sixth Floor "B"

Miraflores, Lima 18, Peru

Issuer’s telephone number, including area code 1-604-639-6250

(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 o

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 proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes o No o

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 o	Accelerated filer o
Non-accelerated filer o (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 o No x

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 33,160,777 Class “A” Common Shares at a par value of $0.001 of the issuer Capital Stock are issued and outstanding as of June 10, 2009.

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, 2010. Significant accounting policies disclosed therein have not changed except as noted below.

Nilam Resources

(A Development Stage Company)

Unaudited

(Express in U.S. Dollars)

July 31, 2010

Unaudited Consolidated Balance Sheets	5
Unaudited Consolidated Statements of Operations	6
Unaudited Consolidated Statement of Stockholders Equity (Deficit)	7
Unaudited Consolidated Statements of Cash Flows	8
Unaudited Notes to the Consolidated Financial Statements	9

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2010

(Stated in US Dollars)

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

CONTENTS

PAGE	5	INTERIM CONSOLIDATED BALANCE SHEETS AS OF JULY 31, 2010 AND APRIL 31, 2010.

PAGE	6	INTERIM CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2010 AND 2009, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JULY 31, 2010.

PAGE	7	INTERIM CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JULY 31, 2010.

PAGE	8	INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED JULY 31, 2010 AND 2009, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JULY 31, 2010.

PAGES	9 - 16	NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

INTERIM CONSOLIDATED BALANCE SHEET

(Unaudited)

(STATED IN U.S. DOLLARS)

	July 31, 2010			April 30, 2010 (Audited)
ASSETS

CURRENT ASSETS
Cash	$	56		$	-
		56			-
Mineral property (Note 3)		100,000			100,000
TOTAL ASSETS	$	100,056		$	100,000


LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	533,737		$	501,683
Due to related parties (Note 6)		16,158			16,158
Convertible debentures (Note 7)		26,583			19,382
Notes payable – related parties (Note 4)		10,338			10,338

TOTAL LIABILITIES		586,816			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, 37,160,779 shares and 37,160,779 shares issued and outstanding, respectively (Note 5)		37,161			37,161

Additional paid in capital (Note 5)		2,795,765			2,792,894

Accumulated deficit during exploration stage		(3,319,686	)		(3,277,616	)
Total stockholders’ deficit		(486,760	)		(447,561	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	100,056		$	100,000

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.

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(STATED IN U.S. DOLLARS)

	For the Three Months Ended July 31, 2010			For the Three Months Ended July 31, 2009			For the Period From July 11, 2005 (Inception) to July 31, 2010
OPERATING EXPENSES
Accounting and auditing fees	$	2,950		$	2,700		$	111,005
Consulting fees		30,000			30,000			449,000
Exploration costs and expenses		-			10,453			59,555
General and administrative		8,320			2,089			56,774
Insurance		-			-			27,000
Investor relation		-			-			55,393
Listing and filing fees		-			75			12,808
Legal fees		800			1,400			99,022
Management fees		-			60,000			330,000
Stock-based compensation (Note 5)		-			-			100,977
Travel		-			-			10,437
Wages		-			-			20,630
Impairment of mineral property		-			-			208,000
Total Operating Expenses		42,070			106,717			1,540,601
LOSS FROM OPERATIONS		(42,070	)		(106,717	)		(1,540,601	)

OTHER INCOME (EXPENSE)

Foreign currency transaction gain		-			-			908
Interest income		-			-			7
Loss on settlement of debt		-			-			(160,000	)

Total Other Expense		-			-			(159,085	)

NET LOSS AND COMPREHENSIVE LOSS	$	(42,070	)	$	(106,717	)	$	(1,699,686	)

Basic and Diluted Loss per Common Share	$	(0.00	)	$	(0.00	)	$	(0.19	)

Weighted average number of shares outstanding during the period – basic and diluted		37,160,779			27,812,953			9,101,778

See accompanying notes to financial statements.

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JULY 31, 2010

(STATED IN U.S. DOLLARS)

											Accumulated
	Preferred								Additional		Deficit During
	Stock				Common Stock				Paid-In		Exploration
	Shares		Amount		Shares		Amount		Capital		Stage			Total

Common stock issued to f ounders for cash ($0.01 per s hare)		-	$	-		600,000	$	600	$	5,400	$	-		$	6,000
Common stock issued for c ash ($0.10 per share)		-		-		550,000		550		54,450		-			55,000
Net loss for the period from J uly 11, 2005 (inception) to A pril 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 c ash ($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 p roperty 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		-		-		-		-		1,081		-			1.081
Issuance of convertible debentures		-		-		-		-		1,790		-			1,790
Net loss for the period		-		-		-		-		-		(42,070	)		(42,070	)

BALANCE, JULY 31, 2010		-	$	-		37,160,779	$	37,161	$	2,795,765	$	(3,319,686	)	$	(486,760	)

See accompanying notes to financial statements.

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(STATED IN U.S. DOLLARS)

	For the Three Months Ended July 31, 2010			For the Three Months Ended July 31, 2009			For the Period From July 11, 2005 (Inception) to July 31, 2010
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss for the period	$	(42,070	)	$	(106,717	)	$	(3,319,686	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of mineral properties		-			-			205,000
In-kind contribution of expenses		1,081			2,064			1,690,633
In-kind contribution of shares		-			-			30,003
Accretion interest (Note 7)		7,074			-			15,074
Loss on debt settlement (Note 5)		-			-			160,000
Settlement of accounts payable		-			-			(14,803	)
Stock-based compensation		-			-			100,977
Changes in operating assets and liabilities:
Prepaid		-			-			-
Accounts receivable		-			-			-
Accounts payable and accrued expenses		32,054			94,174			789,822
Due to related parties		-			10,454			26,158
Net Cash Provided/(Used In) Operating Activities		(1,861	)		(25	)		(316,822	)

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of mineral rights		-			-			(50,000	)
Net Cash Used In Investing Activities		-			-			(50,000	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common shares					-			330,436
Notes payable – related parties		-			-			10,338
Net increase of Convertible debenture		1,917			-			26,104
Net Cash Provided By Financing Activities		1,917			-			366,878

NET INCREASE IN CASH		56			(25	)		56

CASH AT BEGINNING OF PERIOD		-			79			-

CASH AT END OF PERIOD	$	56		$	54		$	56

Supplemental disclosure of cash flow information (Note 10)
Interest paid	$	-		$	-		$	-
Taxes paid	$	-		$	-		$	-

See accompanying notes to financial statements.

NILAM RESOURCES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF JULY 31, 2010

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.

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.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Basis of Presentation

These unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. These financial statements are condensed and do not include all disclosures required for annual financial statements. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company’s audited consolidated financial statements filed as part of the Company’s April 30, 2010 Annual Report on Form 10-K. This quarterly report should be read in conjunction with the annual report.

In the opinion of the Company’s management, these consolidated financial statements reflect all adjustments necessary to present fairly the Company’s consolidated financial position at July 31, 2010, and the consolidated results of operations and the consolidated statements of cash flows for the three months ended July 31, 2010 and 2009. The results of operations for the three ended July 31, 2010 and 2009 are not necessarily indicative of the results to be expected for the entire fiscal year.

(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.

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 period 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) 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.

(G) 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.

(H) 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.

(I) 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.

(J) Hierarchy of Generally Accepted Accounting Principles

In May 2008, the FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”). FAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. SFAS 162 directs the GAAP hierarchy to the entity, not the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to remove the GAAP hierarchy from the auditing standards. SFAS 162 did not have a material impact on our financial statements.

(K) Accounting for Financial Guarantee Insurance Contracts

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, “Accounting and Reporting by Insurance Enterprises.” This results in inconsistencies in the recognition and measurement of claim liabilities. This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the statement will improve the quality of information provided to users of financial statements. SFAS No. 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The company adopted SFAS No. 163 and it did not have a material impact on the Company’s financial position.

(L) Subsequent Events

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events," which establishes general standards for accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The pronouncement requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 is effective with interim and annual financial periods ending after June 15, 2009. The Company adopted SFAS 141R on August 1, 2009. This standard did not have a material impact on the Company’s financial statements.

(M) 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.

(N) Non-controlling Interests

In December 2007, the FASB issued ASC 810, “ Non controlling Interests in Consolidated Financial Statements – an amendment of Accounting Research Bulletin No. 51 ” (“ASC 810”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non controlling interest, changes in a parent’s ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated.

The Statement also establishes reporting requirements that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. ASC 810 is effective for fiscal periods beginning after December 15, 2008. The Company has adopted ASC 810 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.

(O) 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.

(P) Accounting for Transfers of Financial Assets

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement” (“SFAS 166”). SFAS No. 166 is intended to establish standards of financial reporting for the transfer of assets and transferred assets to improve the relevance, representational faithfulness, and comparability. SFAS 166 was established to clarify derecognition of assets under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. SFAS No. 166 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009. The Company adopted this standard on May 1, 2010. The standard did not have a material impact on the Company’s financial statements.

(Q) Accounting for Convertible Debt Instruments

In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP 14-1”). FSP 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB Statement No. 133. Convertible debt instruments within the scope of FSP 14-1 are not addressed by the existing APB 14. FSP 14-1 would require that the liability and equity components of convertible debt instruments within the scope of FSP 14-1 be separately accounted for in a manner that reflects the entity’s nonconvertible debt borrowing rate. This will require an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component would be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. FSP APB 14-1 is effective for the Company’s fiscal year beginning July 1, 2009 and will be applied retrospectively to all periods presented. The Company adopted this standard on May 1, 2010. The Standard did not have a material impact on the Company’s financial statements.

(R) Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS No. 167”). SFAS No. 167 eliminates the exception to consolidate a qualifying special-purpose entity, changes the approach to determining the primary beneficiary of a variable interest entity and requires companies to more frequently re-assess whether they must consolidate variable interest entities. Under the new guidance, the primary beneficiary of a variable interest entity is identified qualitatively as the enterprise that has both (a) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance, and (b) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. SFAS No. 167 becomes effective for the Company’s fiscal 2011 year-end and interim reporting periods thereafter. The Company does not expect SFAS No. 167 to have a material impact on its financial statements.

In July 2009, the FASB issued SFAS No. 168, "FASB Accounting Standards Codification" ("SFAS 168"), as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP).

The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards are superseded as described in SFAS 168. All other accounting literature not included in the Codification is non-authoritative. Management is currently evaluating the impact of the adoption of SFAS 168 but does not expect the adoption of SFAS 168 to impact the Company's results of operations, financial position or cash flows. In September 2009, the FASB issued ASC 820-10 Measuring Liabilities at Fair Values (“ASC 820-10”). ASC 820-10 provides additional guidance on how companies should measure liabilities at fair value. Specifically, the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. The Company does not expect adoption of this standard to have a material impact on its consolidated financial position, results of operations, and cash flows.

(S) 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.

(T) 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, 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.

(U) Comprehensive Income

FASB ASC 220, “Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As at July 31, 2010, no element of comprehensive income or loss was noted.

NOTE 3 MINERAL PROPERTY

The Company is in its early stages of exploration and unable to allocate any economic values beyond the proven and probable reserves. In the absence of proven and probable reserves, acquisition costs to date are considered to be impaired and accordingly, have been written off.

Llippa Property

On December 10, 2007, the Company, through its wholly owed Peruvian subsidiary, entered into an agreement with MRC 1 Explorations 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.

NOTE 4 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.

On November 20, 2007, the Company issued a promissory note in the amount of $50,000 to a related party for their interest in the Llippa property. The value of the transfer occurred at fair value. This promissory note is unsecured, bears no interest and is due on demand. On June 10, 2009, this promissory note was settled with 12,000,000 common shares of the Company (Note 5).

NOTE 5 STOCKHOLDERS’ DEFICIT

On February 28, 2006, the Company issued 600,000 shares of common stock to its founders for cash of $6,000 ($0.01 per share).

On April 28, 2006, the Company issued 550,000 shares of common stock for cash of $55,000 ($0.10 per share).

On February 26, 2007, the Board of Directors approved a 5 for 1 forward stock split for all shareholders of the Company as of March 5, 2007. All share and per share amounts have been retroactively restated to reflect this stock split.

During fiscal 2007, a former officer and director gave the President and Chief Financial Officer 30,000 shares each of the Company’s common stock. The shares were valued for financial statements purpose at a recent price of $0.5 per share or $30,000.

On November 2, 2007, 600,000 restricted shares were transferred from two outgoing Directors to two incoming Directors split evenly between the two incoming Directors. No compensation expense was recognized as the transfer of shares was not intended to compensate the incoming Directors for services to the Company.

On December 3, 2007, the Company sold 6,810 units for cash of $170,208 ($25 per unit). Each unit consists of one share of common stock and one warrant to purchase one share of common stock at $30 per share exercisable for two years. Of the 6,810 units, 4,303 units were issued to a Director.

On January 16, 2008, the Company sold 3,969 units for cash of $99,229 ($25 per unit). Each unit consists of one share of common stock and one warrant to purchase one share of common stock at $30 per share exercisable for two years. Of the 3,969 units, 394 units were issued to a Director.

During fiscal 2008, a benefit of $100,997 was assigned to 4,697 units issued to the Directors of the Company.

During fiscal 2008, the Company calculated the fair value of a Director’s fee of $5,950; and staking right contribution from another Director in the amount of $5,000, which are all reflected as an in-kind contribution of expenses.

During fiscal 2009, the Company calculated imputed interest of $4,224; fair value of a Director’s fee of $6,000; and expenses paid by a former director and offices of the Company in the amount of $46,250, which are all reflected as an in-kind contribution of expenses.

On October 10, 2008, the Board of Directors approved a 1 for 50 reverse stock split for all shareholders of the Company as of as of August 22, 2008. All share and per share amounts have been retroactively restated to reflect this stock split.

On February 10, 2009, the Company issued 20,000,000 shares of common stock on the acquisition of Linderos property. The property was considered to be impaired and accordingly, was written off during fiscal 2010.

On June 10, 2009, the Company converted $60,000 of its debt into 12,000,000 common shares (Note 4 and 6).

On February 4, 2010, the company converted $240,000 of its debt into 4,000,000 common shares. The common shares issued on settlement of the notes were assigned a value of $400,000, 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. As a result of this settlement the Company recorded a loss of $160,000.

During fiscal 2010, the Company calculated imputed interest of $1,217 and fair value of a Director’s fee of $6,000, which are all reflected as an in-kind contribution of expenses.

During the three months ended July 31, 2010, the Company calculated imputed interest of $127 which is reflected as an in-kind contribution of expense.

NOTE 6 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 5).

On November 20, 2007, the Company issued a promissory note in the amount of $50,000 to a related party. This promissory note is unsecured, bears no interest and is due on demand (Note 5).

During the year ended April 30, 2010, Company settled the promissory notes of $10,000 and $50,000 as noted above through the issuance of 12,000,000 shares of common stock (Note 5). 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. As this transaction was with a related party, the loss on the extinguishment of debt of $1,620,000 has been recorded as a capital transaction.

On December 2007 and January 2008, a total of 4,697 units (Note 6) were sold to the Directors of the Company in connection with the private placement. The benefit of $100,997 was assigned to those units, computed by taking the difference between the market price per unit and the selling price per unit and multiplying it by number of shares issued to Directors.

During the fiscal 2008, the officer loaned the Company $338. This loan is unsecured, bears no interest and is due on demand (Note 5).

During the fiscal 2008, a director of the Company transferred the title of the El Baron property to the Company’s name without consideration. The value of $5,000 was assigned to the property (Note 4).

During fiscal 2009, the Company calculated imputed interest of $4,224 on the related parties’ notes.

During fiscal 2009, the officers of the Company incurred $14,705 for the expenses paid on behalf of the Company.

During fiscal 2009, the Company accrued $90,000 of management fees to the officers of the Company.

During fiscal 2010, the Company calculated imputed interest of $1,217 on the related parties’ notes.

During fiscal 2010, the officers of the Company incurred $10,454 for the expenses paid on behalf of the Company (Note 5).

During fiscal 2010, the Company accrued $120,000 of management fees to the officers of the Company.

As of July 31, 2010, $13,667 was owed to the officers of the Company for expenses paid on behalf of the Company in fiscal 2009 and 2010.

As of July 31, 2010, $210,000 management fees owed to the officers of the Company was included in accounts payable.

NOTE 7 CONVERTIBLE DEBENTURES

On August 10, 2009, the Company issued a 5% convertible debenture with a principal amount of $10,187 which is due and payable on August 10, 2010. Interest is due at the maturity date payable at the option of the Company in cash or shares. The principal and accrued interest on the debenture may be converted at any time into shares of the Company’s common stock at a price of $0.05 per share, at the option of the holder.

On February 3, 2010, the Company issued a 10% convertible debenture with a principal amount of $10,000 which is due and payable on August 1, 2010. The principal and accrued interest on the debenture may be converted at any time, at the option of the holder, into shares of the Company’s common stock at a price that with 50% discount to the market on the day of conversion called by the holder. The debt carries a beneficial conversion feature which resulted in a debt discount of $10,000 which was recorded against the convertible debenture and offset in additional paid in capital. This discount will be amortized as interest expense over the life of the debt which resulted in amortization of approximately $6,000 for the three months ended July 31, 2010.

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.

On May 10, 2010, the Company issued a 5% convertible debenture with a principal amount of $1,790 which is due on October 1, 2010. The debt carries a beneficial conversion feature which resulted in a debt discount of $1,790 which was recorded against the convertible debenture and offset in additional paid in capital. This discount will be amortized as interest expense over the life of the debt which resulted in amortization of approximately $1,074 for the three months ended July 31, 2010.

NOTE 8 SUBSEQUENT EVENTS

There were no subsequent events as at the report date.

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

During fiscal 2010, the Company settled accounts payable of $240,000 through the issuance of 4,000,000 shares of common stock (Note 5).

During fiscal 2010, the Company recorded accretion interest on beneficial conversion features related to convertible debt of $8,000 (Note 7).

During fiscal 2010, the Company settled an amount of $10,000 (included in accounts payable) and an amount of $50,000 (included in notes payable) through the issuance of 12,000,000 common shares (Notes 5 and 6).

For the three months ended July 31, 2010, the Company recorded accretion interest on beneficial conversion features related to convertible debt of $7,074 (Note 7).

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

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.

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 has an accumulated deficit from inception of $3,319,686 and negative cash flows from operations of $316,822 from inception. 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 1480 Benevides Street, Sixth Floor “B,” Miraflores, Lima 18, Peru. Our fiscal year ends April 30.

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 president and sole director, who are also the principal financial officers of the Company, have 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 July 31, 2010.

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 July 31, 2010 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 July 31, 2010. The material weakness which 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.

Changes in internal control over financial reporting

Except as noted above, there have been no changes during the quarter ended July 31, 2010 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.

PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

As of July 31, 2010, 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.

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.

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 July 31, 2010, all warrants were expired.

Item 6. EXHIBITS AND REPORT ON FORM 8-K

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

31.2	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.

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.