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, 2009
 
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
(IRS Employer Identification No.)
incorporation or organization)
 
 
35 Du Parc Des Erables, LaPrairie,
Quebec , Canada , J5R 5J2
 
Issuer’s telephone number, including area code 1-514-449-5914
 
(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 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: 1,160,777 Class “A” Common Shares at a par value of $0.001 of the issuer Capital Stock are issued and outstanding as of October 23, 2008.
 
 
 
 
 
 
 
 
NILAM RESOURCES INC.
 
(AN EXPLORATION STAGE COMPANY)
 
CONSOLIDATED FINANCIAL STATEMENTS
 
January 31, 2009
 
(Stated in US Dollars)
 
 


 
 
 
 
 
NILAM RESOURCES INC.
 
(AN EXPLORATION STAGE COMPANY)
 
CONTENTS
 
PAGE
1
CONSOLIDATED BALANCE SHEETS AS OF JANUARY 31, 2009 (UNAUDITED) AND APRIL 30, 2008 RESTATED (NOTE 2).
     
PAGE
2
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2009 AND 2008, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2009 (UNAUDITED).
     
PAGE
3
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM JULY 11, 2005 RESTATED (NOTE 2) (INCEPTION) TO JANUARY 31, 2009.
     
PAGE
4
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JANUARY 31, 2009 AND 2008, AND FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2009 (UNAUDITED).
     
PAGES
5 - 10
NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS



NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(STATED IN U.S. DOLLARS)

   
January 31, 2009
   
April 30, 2008
 
 
 
(Unaudited)
   
(As restated – Note 2)
 
ASSETS
           
CURRENT ASSETS
           
Cash
  $ 79     $ 13,329  
Accounts receivable
    1,896       1,896  
Prepaid
    2,250       25,740  
      4,225       40,965  
                 
Mineral properties (Note 4)
    100,000       100,000  
TOTAL ASSETS
  $ 104,225     $ 140,965  
                 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
CURRENT LIABILITIES
               
Accounts payable and accrued liabilities
  $ 235,148     $ 27,737  
Due to related parties  (Note 7)
    62,491       1,440  
Notes payable – related parties (Note 5)
    72,117       60,338  
                 
TOTAL LIABILITIES
    369,756       89,515  
                 
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, 1,160,779 shares and 1,160,779 shares issued and outstanding, respectively (Note 6)
    1,161       1,161  
              
               
Additional paid in capital  (Note 6)
    524,879       471,203  
                 
Accumulated deficit during exploration stage
    (791,571 )     (420,914 )
Total stockholders’ equity
    (265,531 )     51,450  
 
               
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 104,225     $ 140,965  
 
See accompanying notes to financial statements.
 

 
1
 
 
NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
 (STATED IN U.S. DOLLARS)
(Unaudited)
 
   
For the Three Months Ended January 31, 2009
   
For the Three Months Ended
January 31, 2008
   
For the Nine months Ended
January 31, 2009
   
For the Nine months Ended
January 31, 2008
   
For the Period From
July 11, 2005
(Inception) to
January 31, 2009
 
OPERATING EXPENSES
                             
Accounting and auditing fees
  $ 1,500     $ 4,583     $ 28,764     $ 13,184     $ 79,905  
Consulting fees
    90,000       -       90,000       -       149,000  
Exploration costs and expenses
    -       17,055       3,397       17,055       49,102  
General and administrative
    2,212       9,303       8,102       9,690       29,767  
Insurance
    6,750       -       20,250       -       24,750  
Investor relation
    583       3,000       16,925       3,000       55,393  
Listing and filing fees
    200       2,179       3,538       2,179       10,963  
Legal fees
    -       10,458       47,853       22,317       103,562  
Management fees
    75,000       -       150,000       -       150,000  
Stock-based compensation (Note 7)
    -       -       -       -       100,977  
Travel
    -       4,876       1,828       4,876       10,437  
Wages
    -       -       -       -       20,630  
Impairment of mineral property
    -       5,000       -       5,000       8,000  
Total Operating Expenses
    176,245       56,454       370,657       77,301       792,486  
LOSS FROM OPERATIONS
    (176,245 )     (56,454 )     (370,657 )     (77,301 )     (792,486 )
                                         
OTHER INCOME (EXPENSE)
                                       
                                         
Foreign currency transaction gain
    -       -       -       -       908  
Interest income
    -       7       -       7       7  
                                         
Total Other (Expense)/Income
    -       7       -       7       915  
                                         
 
                                       
NET LOSS AND COMPREHENSIVE LOSS
  $ (176,245 )   $ (56,447 )   $ (370,657 )   $ (77,294 )   $ (791,571 )
                                         
Basic and Diluted Loss per Common Share
  $ (0.15 )   $ (0.05 )   $ (0.32 )   $ (0.07 )   $ (0.86 )
                                         
Weighted average number of shares outstanding during the period – basic and diluted
    1,160,779       1,150,000       1,160,779       1,150,000       923,197  
 
See accompanying notes to financial statements.
 
 
 
NILAM RESOURCES INC.
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM JULY 11, 2005 (INCEPTION) TO JANUARY 31, 2009
(STATED IN U.S. DOLLARS)
(Unaudited)
 
   
Preferred
Stock
   
Common Stock
   
Additional
   
Accumulated
Deficit During
   
 
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Paid-In
   
Exploration
   
 
 
                           
Capital
   
Stage
   
Total
 
                           
(As restated- Note 2)
   
(As restated- Note 2)
   
(As restated- Note 2)
 
                                           
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 cash ($25 per share)
    -       -       10,779       11       269,426       -       269,437  
                                                         
Net loss for the year
    -       -       -       -       -       (342,242 )     (342,242 )
                                                         
                                                         
BALANCE, APRIL 30, 2008
    -       -       1,160,779       1,161       471,203       (420,914 )     51,450  
                                                         
In-kind contribution  of expenses
    -       -       -       -       53,676       -       53,676  
                                                         
Net loss for the period
    -       -       -       -       -       (370,657 )     (370,657 )
                                                         
BALANCE, JANUARY 31, 2009
    -     $ -       1,160,779     $ 1,161     $ 524,879     $ (791,571 )   $ (265,531 )
 
See accompanying notes to financial statements.
 

 
3
 

(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(STATED IN U.S. DOLLARS)
(Unaudited)
   
For the Nine
Months Ended
January 31, 2009
   
For the Nine
Months Ended
January 31, 2008
   
For the Period From
July 11, 2005
 (Inception) to
January 31, 2009
 
CASH FLOWS USED IN OPERATING ACTIVITIES:
                 
Net loss for the period
  $ (370,657 )   $ (77,294 )   $ (791,571 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Impairment of mineral properties
    -       5,000       5,000  
In-kind contribution of expenses
    53,676       881       57,420  
In-kind contribution of shares
    -       -       30,000  
Stock-based compensation
    -       -       100,977  
Changes in operating assets and liabilities:
                       
Prepaid
    23,490       329       (2,250 )
Accounts receivable
    -       -       (1,896 )
Accounts payable and accrued expenses
    207,411       4,658       235,148  
Due to related party
    61,051       -       62,491  
Net Cash Used In Operating Activities
    (25,029 )     (66,426 )     (304,681 )
                         
CASH FLOWS USED IN INVESTING ACTIVITIES:
                       
Purchase of mineral rights
    -       (100,000 )     (100,000 )
Net Cash Used In Investing Activities
    -       (100,000 )     (100,000 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Issuance of common shares
    -       269,437       332,643  
Notes payable – related parties
    11,779       60,338       72,117  
Net Cash Provided By Financing Activities
    11,779       329,775       404,760  
                         
NET INCREASE (DECREASE) IN CASH
    (13,250 )     163,349       79  
                         
CASH AT BEGINNING OF PERIOD
    13,329       13,027       -  
                         
CASH AT END OF PERIOD
  $ 79     $ 176,376     $ 79  
 
See accompanying notes to financial statements.
 

 
4
 

(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JANUARY 31, 2009
 
NOTE 1           NATURE OF OPERATIONS
 
These consolidated financial statements inclusive of the accounts of the Nilam Resources Inc. and its Peruvian subsidiary Nilam Resources Peru SAC. Nilam Resources Inc. (an exploration stage company) (the “Company”) was incorporated under the laws of the State of Nevada on July 11, 2005. The Company is a natural resource exploration company with an objective of acquiring, exploring and if warranted and feasible, developing natural resource properties.   On November 23, 2007, the Company incorporated Nilam Resources Peru SAC, in Peru, as a wholly-owned subsidiary.  The purpose of the new subsidiary is to hold the Company’s Peruvian properties and to carry on such business in Peru as is necessary to maintain, explore and develop the Company’s properties.  Nilam Resources Peru SAC. holds the Company’s rights in respect of the Llippa and El Baron properties.  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.

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           RESTATEMENTS
 
 
(A) As a Result of Correcting Stock Compensation Expense
 
These consolidated financial statements previously showed a restatement of the previously issued financial statements for the period ended April 30, 2008.  This was in relation to a transfer in November 2007 of 600,000 restricted shares from two outgoing Directors to two incoming Directors.  Initially, in the nine months of fiscal 2008 financial year no entry was recorded for this transaction. Upon further review, it was determined that the Company would record a stock-based compensation expense in accordance with Statement of Financial Accounting Standards ("FAS") No. 123R, Share Based Payments.  The Company therefore increased the Additional paid in capital and the Net loss for the period by $3,000,000, being the estimated fair value of the shares transferred.  However, upon further review, it was determined that no compensation expense should have been recognized as the transfer of shares was not intended to compensate the incoming Directors for services to the Company.

(B) As a Result of Correcting Write Off of Mineral Property

On December 10, 2007, the Company, through its wholly owed Peruvian subsidiary, entered into an agreement with MRC 1 Exploraciones EIRL of Peru, to purchase the Llippa Project, Peru. Llippa is a mineral claim consisting of two major mining concessions, the Prospera mine and La Prospera XXI.  As of April 30, 2008, the Company recorded $100,000 relating to the acquisition of the Llippa Project.  During the year ending April 30, 2008, the company was unable to allocate any economic values beyond the proven and probable reserves.  However, upon further review, it was determined that there was sufficient reliable information available at April 30, 2008 that established that there existed sufficient probable reserves that would allow for the property to be commercially developed.  In addition, there are significant tailings on the property that are estimated to have in excess of the $100,000 carrying value.  Therefore, the $100,000 was written off in error.



The following presents the effect on the Company's previously issued financial statements for the year ended April 30, 2008:

   
PREVIOUSLY
   
INCREASE
       
   
REPORTED
   
(DECREASE)
   
RESTATED
 
                   
Mineral properties
  $ -     $ 100,000     $ 100,000  
Accumulated deficit during exploration stage
    520,914       (100,000 )     420,914  
 
NOTE 3           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(A) Basis of Presentation

These unaudited consolidated financial statements of Nilam Resources Inc. (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, 2008 Annual Report on Form 10-KSB.  This quarterly report should be read in conjunction with such 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 January 31, 2009, and the consolidated results of operations and the consolidated statements of cash flows for the nine months ended January 31, 2009 and 2008.  The results of operations for the nine months ended January 31, 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.

(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 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 stock-based compensation.
 
(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 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.
 
6
 
(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 Financial Accounting Standards No. 128, “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 the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”).  Under Statement 109, 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 Statement 109, 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 SFAS No. 52, “Foreign Currency Translation”, 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. As of January 31, 2009, the Company recorded a transaction gain from the settlement of subscriptions receivable received in Canadian Dollars. The gain was determined at the exchange rates on the date of settlement.
 
(I) Business Segments
 
The Company operates in one industry segment within two geographical areas, Canada and Peru. The mineral properties are held solely in the Peru segment.
 
(J) Recent Accounting Pronouncements
 
In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”.  This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement is not expected to have a material effect on the Company's financial statements. The management did not elect fair value treatment for any assets or liabilities under SFAS 159 as of August 31, 2008.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which is a revision of SFAS No. 141, “Business Combinations.” SFAS No. 141R will apply to all business combinations and will require most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to be recorded at “full fair value.” At the acquisition date, SFAS No 141R will also require transaction-related costs to be expensed in the period incurred, rather than capitalizing these costs as a component of the respective purchase price. SFAS No. 141R is effective for acquisitions completed after January 1, 2009 and early adoption is prohibited. The adoption will have a significant impact on the accounting treatment for acquisitions occurring after the effective date.

In December 2007, the Securities and Exchange Commission issued SAB 110, Certain Assumptions Used in Valuation Methods, which extends the use of the "simplified" method, under certain circumstances, in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123R. Prior to SAB 110, SAB 107 stated that the simplified method was only available for grants made up to December 31, 2007.
 
7
 
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 is not expected to have a material impact on our financial statements.

(K) Concentration of Credit Risk

Cash includes deposits at Canadian and Peruvian financial institutions in US and Peruvian currency which is not covered by either the US FDIC limits or the Canadian CDI limits and therefore the entire cash balance of $79 is uninsured. The Company has placed its cash in a high credit quality financial institution.

(L) Fair Value of Financial Instruments

The carrying amounts on the Company’s financial instruments including accounts payable and notes payable, related parties, approximate fair value due to the relatively short period to maturity for this instrument.

 
1)
Cash is classified as held for trading due to the liquid and short term nature of cash
 
2)
Accounts receivable is classified as loans and receivables as this account consists of amounts owing from independent third parties.
 
3)
Accounts payable and accrued liabilities and due to related parties are classified as other liabilities as this account is consist of trade amounts payable to vendors.
 
4)
Notes payable are classified as other liabilities as this account is consist of non-interest bearing demand notes payable with no specified maturity date.

(M)   Comprehensive Income

SFAS No. 130, “Reporting Comprehensive Income” establishes standards for the reporting and display of comprehensive income and its components in the financial statements.  As at January 31, 2009, no element of comprehensive income or loss was noted.

NOTE 4 MINERAL PROPERTIES
 
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.

Lucky Strike Property
 
Pursuant to a mineral property purchase and sale agreement dated March 1, 2006, the Company acquired a 100% interest in the mineral rights at the Lucky Strike Property located in the Similkameen Mining Davison, British Columbia, Canada for a purchase price of $3,000.  During the year ending April 30, 2006, the company was unable to allocate any economic values beyond the proven and probable reserves. In addition, the Company has no intention of pursuing the development of these properties.  Therefore, the property is considered to be impaired and accordingly, has been written off.

Llippa Property

On December 10, 2007, the Company, through its wholly owed 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 (See Note 2).
 
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El Baron Property
 
On December 10, 2007, the Company, through its wholly owed Peruvian subsidiary, acquired the El Baron (a.k.a “El Varon”) mineral claim from a director of the Company, who transferred the claim to the Company for no consideration.  El Varon project consists of the Tati and San Marino No.2 mining concessions, Peru.  The value of $5,000 was assigned to the property based on actual staking costs incurred by the director. During the year ending April 30, 2008, the company was unable to allocate any economic values beyond the proven and probable reserves. In addition, the Company has no intention of pursuing the development of these properties.  Therefore, the property is considered to be impaired and accordingly, has been written off.

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.

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.

In August 2008, the Company issued a promissory note in the amount of $11,779 to a related party.  This promissory note is unsecured, bears no interest and is due on demand.

NOTE 6           STOCKHOLDERS’ EQUITY
 
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 $2,926; fair value of a Director’s fee of $4,500; 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.
 
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Share Purchase Warrants
 
Number
Weighted  Average
 
of  Warrants
Exercise Price
     
Balance, April 30, 2007
-
$            -
Granted
10,777
30
     
Balance, April 30, 2008 and January 31, 2009
10,777
$         30

As at January 31, 2009, the Company has the following warrants outstanding:

     
Shares
Exercise Price
Expiry Date
     
6,810
$  30
December 3, 2009
3,969
$  30
January 16, 2010
10,777
   

 
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 5).

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 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).

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 the period ended January 31, 2009, the Company calculated imputed interest of $2,926 on the related parties notes.

During the period ended January 31, 2009, the officer loaned the Company an additional $11,779. As of January 31, 2009, $72,117 was owed to that officer. This loan is unsecured, bears no interest and is due on demand.

During the three months period ended January 31, 2009, the Company incurred $60,000 of management fees to the officer of the Company. As of January 31, 2009, $62,491 is owed to that officer.

NOTE 8           COMPARATIVE FIGURES

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

 
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
Critical Accounting Policies - Mineral Interest

The Company 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

As reflected in the accompanying financial statements, the Company is in the exploration stage with limited operations and an accumulated deficit from inception of $ 467,082 and negative cash flows from operations of $289,977 from inception.  Further losses are anticipated in the development of its business. This raises substantial doubt about its 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 has 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 the opportunity for the Company to continue as a going concern.
 

 
11
 
 
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 January 31, 2009.

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, 2009 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, 2009.  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.
 

 
12
 

Changes in internal control over financial reporting

Except as noted above, there have been no changes during the quarter ended January 31, 2009 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.
 
Item 6. EXHIBITS AND REPORT ON FORM 8-K

31.1
Certification of Mr. Len De Melt, Chief Executive Officer and Acting Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1
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.

 
13
 
 
 
SIGNATURES
 
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Dated: April 21, 2009
Nilam Resources Inc.
 
/s/ Len De Melt
 
Len De Melt
Director and acting Chief Executive Officer  
 
 
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