INTERNATIONAL SILVER INC - FORM 10-K

Attached files

file	filename
EX-31.2 - CERTIFICATION - INTERNATIONAL SILVER INC	islv_ex312.htm
EX-32.2 - CERTIFICATION - INTERNATIONAL SILVER INC	islv_ex322.htm
EX-31.1 - CERTIFICATION - INTERNATIONAL SILVER INC	islv_ex311.htm
EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - INTERNATIONAL SILVER INC	islv_ex231.htm
EX-32.1 - CERTIFICATION - INTERNATIONAL SILVER INC	islv_ex321.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – K

(MARK ONE)
x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2010.

OR

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

FOR THE TRANSITION PERIOD FROM _______ TO _______.

International Silver, Inc.

(Exact name of registrant as specified in its charter)

Arizona

(State or other jurisdiction of incorporation or

organization)

333-147712		86-0715596
(Commission File Number)		(IRS Employer Identification Number)

5210 E. Williams Circle, Suite 700

Tucson, Arizona 85711

(Address of principal executive offices including zip

code)

(520) 889-2040

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

(None)

Securities registered pursuant to Section 12(g) of the Exchange Act:

(None)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 13(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. To the best of registrants' knowledge, there are no disclosures of delinquent filers required in response to Item 405 of Regulation S-K. 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 "small reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of December 31, 2010, the aggregate market value of the voting stock held by non-affiliates of the registrant ("aggregate market value") was approximately $3,691,350.

Issuer's revenues for its most recent fiscal year: $63,660. The number of shares of the registrant's $.0001 par value common stock outstanding as of March 31, 2011 was 28,581,753.

Table of Contents

		Page No.
	PART I

Item 1.	Business		1
Item 1A.	Risk Factors		6
Item 1B.	Unresolved Staff Comments
Item 2.	Properties		8
Item 3.	Legal Proceedings		13
Item 4.	Submission of Matters to a Vote of Security Holders		13

	PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		15
Item 6.	Selected Consolidated Financial Data		16
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation		16
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 8.	Financial Statements and Supplementary Data		26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		27
Item 9A.	Controls and Procedures		27
Item 9B.	Other Information		27

	PART III

Item 10.	Directors and Executive Officers of the Registrant		28
Item 11.	Executive Compensation		33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		35
Item 13.	Certain Relationships and Related Transactions		36
Item 14.	Principal Accountant Fees and Services		37

	Part IV

Item 15.	Exhibits, Financial Statement Schedules		38
Signatures			39

PART I

Item 1. Business

International Silver is referred to herein as “we”, “our” or “us”

Business

Glossary

Adits - An underground mine tunnel with only one end daylighting.

Alluvial (valleys) - Material created by the erosion of rocks by water, air and climate conditions.

Argzntite - Silver sulfide

Arroyo - Spanish word that defines a dry creek bed.

Banded barite and jasper - Rock formed by the action of hot solutions containing dissolved silica, which forms layers composed of barium sulfate and silica.

Barite - Barium Sulfate.

Cerussite - Lead carbonate, an oxide ore mineral of lead.

Dolomite - Refers to magnesium bearing limestone.

Flotation tests - The use of flotation for the separation of minerals by the mixing of reagents, air and water during agitation to cause the minerals to separate by floating to the surface of the solution along with air bubbles.

Galena - Lead sulfide mineral.

Hemimorphite - Zinc silicate mineral.

Igneous bodies - Rock masses created by intrusion of molten rock.

Igneous rock out crops - Masses of igneous rocks, which are exposed.

Limonite - Porous iron oxides.

Limonitic Anglesite - Form of lead sulfate with oxidized iron found in many lead-zinc-silver ore zones.

Mine planning - Computerized mine planning; the use of computers to simulate a multi-dimensional mine to form a visual image of a planned mine.

Pyrite - Refers to iron sulfide.

Scout Sampling - Refers to the practice of taking samples of rocks in areas previously not sampled.

Shoring - The use of wood braces to support underground workings to prevent rock cave-ins.

Smithsonite - Refers to zinc carbonate, an oxide ore mineral of zinc.

Sphalerite - Refers to zinc sulfide, a common ore mineral of zinc.

Staking - Refers to the practice of placing stakes in the form of pipes or wooden posts to identify property being claimed under the rules of the Bureau of Land Management of the United States.

Veins - Natural conduits of mineral deposition of varying grades and thickness, typically linear in form.

Wulfenite - A mineral of tungsten.

General

We are an exploration stage company that searches for mineral deposits or reserves. We have not yet engaged in either development or production stage activities. We plan to acquire, stake claims, or lease exploration properties, and conduct exploration activities in North America.

The primary assets of International Silver, Inc., are the Leviathon Mine located in Calico Mining District of San Bernardino County, California; its Options to acquire and explore the Prince and Pan American Mines and the Caselton Mill; and a block of 500 acres of unpatented mining claims adjacent to the Prince Mine and 400 acres adjacent to the Caselton Mine and Mill, both owned directly by us, all located in the Pioche Mining District of southern Nevada. The Leviathon Mine is currently on ‘care and maintenance’ as are the Prince and Pan American Mines and the Caselton Concentrator.

Although we generated total revenues of $145,659 in 2009 from engineering/mining related consulting services, revenues generated decreased to $63,660 in 2010. Engineering related revenues, along with funding from third-party sources allow us to continue our focus on exploration and development activities.

We have relied upon funds raised from the sale of our common stock funds from private placements and limited engineering services to cover our operating costs and expenses. Management is pursuing additional funding for the Prince and Pan American Mines and for general corporate activities. Our independent accountant has issued an opinion that there is substantial doubt about our ability to continue as a going concern.

DESCRIPTION OF BUSINESS

Business Development

We were incorporated in the State of Arizona on September 6, 1992 as Western States Engineering and Construction, Inc. On June 16, 2006, we changed our name to International Silver, Inc. to reflect our present business plan of conducting exploration activities in North America, but continue providing limited engineering consulting services. Prior to June 16, 2006, we only conducted engineering mining related consulting services.

We have never filed or been involved in any bankruptcy, receivership or similar proceeding. We have never been involved or conducted any transaction involving a material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.

Business

We are an exploration stage company that engages in exploration activities. An exploration stage company searches for mineral deposits or reserves, which has not yet engaged in either development or production stage activities. We plan to acquire, stake claims, or lease exploration properties, and conduct exploration activities in North America.

Competition

We compete with other exploration companies, most of which have greater financial, operational, and technical resources than us. Additionally, many of our competitors have longer operating histories, more established and a greater number of exploration properties and have strategic partnerships and relationships that benefit their activities, which we do not currently have.

Hedging Transactions

We do not engage in hedging transactions and we have no hedged mineral resources.

Employees

We currently have six employees: (a) Mr. Harold R. Shipes, our Chief Executive Officer; (b) Mr. John A. McKinney, our Executive Vice President/Chief Financial Officer; (c) Mr. Matthew J. Lang, our Vice President of Administration/Corporate Secretary; and (d) Mr. Daniel Dominguez our Corporate Controller; (e) Alexander Makaron, our Engineer and (f) Danielle Lang, Staff Accountant.

Production Distribution Methods

Should we be successful in producing concentrates, we will attempt to sell such concentrates directly to smelters or to metals trading companies for shipment to smelters around the world. Should we be successful in producing precious metals, we will attempt to sell them directly to precious metals trading companies that purchase the metals in connection with their ongoing trading activities of such metals.

Sources and Availability of Raw Materials

We do not use raw materials.

Dependence on One or a Few Major Customers

We do not expect to become dependent upon a few major customers, since we will attempt to sell concentrates directly to smelters and metals trading companies and to do not expect to become dependent upon any one or a few such companies.

Dependence on Third Party Contractors Not Yet Hired or Equipment Sellers Not Yet Contracted With

We will depend on outside contractors for the following:

	·	Exploration equipment rentals from companies in Barstow, California, Cedar City, Utah, Ely and Las Vegas, Nevada;
	·	Sample preparation and assay services in both areas from ALS Chemex, a world-wide assay laboratory located in Canada;
	·	Purchase of bulldozers, excavators, and grading equipment through equipment companies such as the Catepillar dealer and use equipment dealer.
	·	Smelting, refining and purchasing of product through Glencore, Trafigura, Gerald Metals, and Penoles;
	·	Transportation through SP Railways in the United States, Ferro Carriles de Mexico, and local truck haulage companies in both major areas;
	·	Diesel fuel and gasoline for the generation of electricity and fueling of equipment, which we will purchase from commercial suppliers in Barstow, California, Cedar City, Utah, Ely and Las Vegas, Nevada;
	·	Tires to be purchased from Goodyear or Michelin;
	·	Equipment, parts and service to be furnished by local suppliers;
	·	Flotation reagents, that are used for separating valuable minerals from their gangue rock, which will be purchased from Dow Chemicals or other suppliers;
	·	Consumables to be furnished by local suppliers;
	·	Grinding media that is used for milling of mined products to enable flotation recovery of valuable minerals, to be purchased from Nucor Steel or other commercial foundries;

We have no verbal or written agreements or any arrangements, whatsoever, with any of the above companies or other third party contractors or equipment sellers to operate on our properties or to sell us the items or provide the services reflected above. The above information only reflects our projected operational plan to use these companies if we can purchase the items from them or secure their services at the time they are needed.

Patents, Trademarks, Licenses, Royalty Agreements, Franchise Agreements:

We do not have any patents, trademarks, licenses, royalty agreements, or franchise agreements, nor do we anticipate the need in our future operations for the foregoing.

Compliance with Government Regulations and Need for Government Approval and Environmental Permits

There are various levels of governmental controls and regulations that govern environmental impact of mineral exploration activities and mineral processing operations, including performance standards, air and water quality emission standards and other design or operational requirements, and health and safety standards. We will be subject to various levels of federal and state laws and regulations, which include the following:

Leviathon Property

The following approvals will be required from the government of California relative to our Leviathon property:

	·	Water Quality Division of the California Department of Environmental Quality.
	·	Air Quality Division of the California Department of Environmental Quality.
	·	Department of Wildlife Management.
	·	Bureau of Land Management in the case of the Plan of Operation of Leviathon.

Nevada Properties

The following approvals will be required from the government of Nevada relative to our Pioche properties:

·	Water Quality Division of the Nevada Department of Environmental Protection.

·	Air Quality Division of the Nevada Department of Environmental Protection.

·	Explosives Permit from the Federal Bureau of Alcohol, Tobacco and Firearms.

·	Bureau of Land Management in the case of the Plan of Operation of the Prince and Pan American.

Costs and Effective of Compliance with Federal, State and Local Environmental Laws

Effect of Existing of Probable Governmental Regulations on our Business

Cost of Permits

We have budgeted $150,000 for initial permit related work, to be completed by our Consulting Geologist and other contract services.

Research and Development Expenditures/Last Two Years:

We have not engaged in any research and development or assumed any such expenses over the past two years, nor do we anticipate any such expenditure in the future. The processing technologies we will use for the recovery of metals are the standard technology used by the exploration industry around the world.

Disclosure Regarding Forward-Looking Statements And Risk Factors

Forward-Looking Statements.

This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this Annual Report regarding our financial position, business strategy, plans and objectives of our management for future operations and capital expenditures, and other matters, other than historical facts, are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements and the assumptions upon which the forward-looking statements are based are reasonable, we can give no assurance that such expectations will prove to have been correct.

Additional statements concerning important factors that could cause actual results to differ materially from our expectations are disclosed in the following "Risk Factors" section and elsewhere in this Annual Report. In addition, the words "believe", "may", "will", "when", "estimate", "continue", "anticipate", "intend", "expect" and similar expressions, as they relate to us, our business, or our management, are intended to identify forward-looking statements. All written and oral forward-looking statements attributable to us or persons acting on our behalf subsequent to the date of this Annual Report are expressly qualified in their entirety by the following Risk Factors.

Available Information.

Item 1A. Risk Factors.

Risk Factors

In addition to the other information provided in this Form 10-K, you should carefully consider the following risk factors (and others in our S-1 Registration Statement, which may be accessed at: www.sec.gov/Archives/edgar/data/1419482/000114420408011274/v104636_s1a.htmn) in evaluating our business before purchasing our common stock. Our exploration activities are highly risky and speculative; accordingly, an investment in our common stock shares involves a high degree of risk. You should not invest in our common stock if you cannot afford to lose your entire investment. In considering an investment in our common shares, you should carefully consider the following risk factors together with all of the other information contained in our filings with the Securities and Exchange Commission, including our S-1 Registration Statement. Any of the following (along with other risk factors that are discussed in our S-1 Registration Statement, and which includes more expansive risk factor discussions pertaining to the risk factors discussed below), may cause our exploration activities, prospects, financial condition or results of operations to be negatively impacted, which may lead to the loss of all or part of your investment.

Risks Related to our Business Activities.

Our financial condition raises substantial doubt about our ability to continue as a going concern.

As of our December 31, 2010 year-end, we have an accumulated deficit of $1,327,174. Our auditor has issued a going concern opinion that there is substantial doubt whether we can continue as an ongoing business. If we fail to obtain approximately $4.5 million of financing, we will be unable to pursue our business plan and operations will have to be curtailed or terminated, in which case you will lose part or all of your investment in our common stock.

Because our properties or claims may never have reserves or be profitable, your investment in our common shares may be negatively impacted.

None of the properties or claims on which we have the right to explore for silver and other precious metals is known to have any confirmed commercially mineable deposits of silver or other metals that may be mined at a profit. We may be unable to develop our properties at a profit, either because:

	·	the deposits are not of the quality or size that would enable us to make a profit from actual mining activities; or
	·	because it may not be economically feasible to extract metals from the deposits.

In either case, you may lose part or all of you entire investment.

Because we are an exploration stage company, we have no mining operations, and our future operations are subject to substantial risks, we may never be successful in conducting any future mining operations.

We are not a mining company, but rather a beginning stage exploration company. We will be unable to generate revenues or make profits, unless we actually mine deposits, if any actually exist.

We lack an operating history in our current business plan and we have losses, which make it difficult for you to evaluate whether we will be able to continue our operations or ever be profitable.

In June 2006, we began our current business plan of conducting exploration for silver and other minerals — our short operating history has consisted of preliminary exploration activities and non-income-producing activities. Accordingly, we have no adequate operating history for you to evaluate our future success or failure.

Our management has conflicts of interest that may favor the interests of our management, but to the detriment of our minority shareholders’ interests.

Our officers and directors also serve as officers and/or directors of other mining exploration companies and are related by family relations to one another. As a result, their personal interests and those of the companies that they are affiliated with may come into conflict with our interests and those of our minority stockholders. We as well as the other companies that our officers and directors are affiliated with may present our officers and directors with business opportunities that are simultaneously desired. Additionally, we may compete with these other companies for investment capital, technical resources, key personnel and other things. You should carefully consider these potential conflicts of interest before deciding whether to invest in our shares of our common stock. We have not yet adopted a policy for resolving such conflicts of interests. Because the interests of our officers and the companies that they are affiliated with may disfavor our own interests and those of our minority stockholders, you should carefully consider these conflicts of interest before purchasing shares of our common stock.

The services of our President and Chief Executive Officer, Executive Vice President/Chief Financial Officer, Consulting Geologist, and our Vice President of Administration and Logistics, are essential to the success of our business; the loss of any of these personnel will adversely affect our business.

Our business depends upon the continued involvement of our officers, directors, and Consulting Geologist, each of whom have mining experience from 12 to 38 years. The loss, individually or cumulatively, of these personnel would adversely affect our business, prospects, and our ability to successfully conduct our exploration activities. Before you decide whether to invest in our common stock, you should carefully consider that the loss of their expertise, may negatively impact your investment in our common stock.

We may be denied the government licenses and permits or otherwise fail to comply with federal and state requirements for our exploration activities.

Our future exploration activities will require licenses, permits, or compliance with other state and federal requirements regarding prospecting, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Delays or failures to acquire required licenses or permits or successfully comply with the pertinent federal and state regulations will negatively impact our operations.

We do carry property and casualty insurance but the limits are minimal for such insurance which may expose us to liabilities that will negatively affect our financial condition.

The search for valuable minerals exposes us to numerous hazards. As a result, we may become subject to liability for such hazards, including environmental pollution, cave-ins, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes or other hazards that we cannot insure against or which we may elect not to insure. At the present time we have no coverage to insure against these hazards. Should we incur liabilities involving these hazards that may have a material adverse effect on our financial condition.

Our management devotes less than full time to our business, which may negatively impact our operations and/or reduce our revenues.

Harold Roy Shipes, our Chief Executive Officer, John McKinney, our Executive Vice President/Chief Financial Officer, and Matthew Lang, our Vice President of Administration/Corporate Secretary, devote less than full time to our business. Each member of our management described above devotes approximately 50% of their time to us. Because our management may be unable to devote the time necessary to our business, we may be unsuccessful in the implementation of our business plan.

Item 2. Properties

Our Corporate Offices

Tucson, Arizona

Our corporate offices, which are located at 5210 E. Williams Circle, Suite 700, Tucson, Arizona 85711, are leased from an affiliate, Atlas Precious Metals, Inc., who have a five-year lease with WC Partners, a Los Angeles, California-based company, whereby Atlas Precious Metals pays a base rent of $8,393 monthly, including utilities. We pay Atlas Precious Metals Inc. $500 per month for our space at this location. Our space is adequate for our purposes.

Exploration Properties and Claims

We have the right to explore for various metals, including gold, silver, copper, lead, manganese, zinc, barite; however, our initial primary activities will focus on the exploration of silver. Our rights were obtained through outright property acquisition, staking of Bureau of Land Management claims, purchase of Bureau of Land Management claims and through leases. Our properties are located in San Bernardino County, California and the Pioche mining district of Lincoln County, Nevada. These properties are known as:

	·	The Prince and Pan American Mines and the Castelton Concentrator;
	·	The Leviathon Mine.

With respect to our properties for exploration purposes, our properties may or may not progress to the development stage. We are subject to competitive conditions for exploration properties since our competitors may be in a better operational and financial position to compete against us for desirable properties. Additionally, there are material issues regarding whether we do or do not insure our properties.

The Pioche Mining District, Lincoln County, Nevada

Introduction:

Our principal area of interest is the Pioche District of Lincoln County, Nevada. We believe that this District represents a unique opportunity in North American mining, in that, we have locked up over half of a very unique silver district and plan to continue to expand our holdings in this area. For the next few years, we will exclusively devote our attention to this district, to completing the acquisition of the Prince and Pan American Mines and the Caselton Concentrator, all of which we have under a purchase option. Having a complete concentrator will enable us to effect a relatively quick start of production at a time when metal prices are at unprecedented highs. Estimates of district wide mineral resources range as high as 30 million tons of material with silver grades of 2.3 ounces per ton, hosting as much as 60 million ounces of silver with significant by-product metals credits. Much of the mineral resource is completely oxidized, making it potentially amenable to low cost sulfuric acid leaching, solvent extraction and electro-winning to produce special high grade zinc, obviating the need for downstream smelting and dramatically increasing our recovery of zinc. The acid leaching will convert the lead to an insoluble lead sulfate which will act as a collector of precious metals and is amenable to re-flotation to produce a commercial lead/precious metals concentrate. Manganese will require reduction ahead of leaching, to produce a commercial electro-manganese dioxide through electro-winning. The district is of a size that may give many years of profitable commercial operations. Strong indications are that an open pit orebody of approximately 15 million tons between the Prince Mine and the Caselton Concentrator may exist and our initial focus will be in this area and in the fully developed Pan American Mine.

History:

Silver was discovered on the eastern slope of the Pioche Mountains in 1869 and exploited for high grade, bonanza silver ore until the 1930's when the known fissures were fundamentally depleted. This ore occurred in brecciated fissure veins hosted in the Cambrian age Prospect Mountain Quartzite. This type of ore was found near the town of Pioche mostly in the Treasure Hill area. The veins ranged in thickness from one to four feet, with swells up to ten feet, but the three most productive extended for several thousand feet in strike and to a depth of 1200 feet. The silver ore was mostly oxidized and contained lead as cerussite, some galena, with silver chloride and argentite. Supergene processes apparently removed the zinc from the non-reactive siliceous rock which was likely present in the original sulfides.

Just to the west of the bonanza silver vein area and extending from it into exposures of stratigraphically higher limestones and shales, bedded replacement lead/zinc/silver ore was discovered. The lower part of the Combined Metals Member of the Pioche Shale has been the most productive sequence for non-oxidized sulfide replacements. This unit is the first of the beds enclosed in shales directly above the Cambrian age, Prospect Mountain Quartzite. An east-west structural zone termed the Caselton Channel was found to host replacement mineralization for a strike of over 10,000 feet. The ore zone ranged in thickness from 4 to 40 feet, averaged six feet and had a width of 100 to 1800 feet. The grade of the 3.2 million tons of sulfide ore mined between 1924 and 1959 averaged 4.8 ounces of silver, 0.044 ounces per ton gold, 4.5% lead and 12% zinc. The ore consisted primarily of sphalerite, galena and pyrite in a gangue of manganiferous siderite and minor quartz. Oxidized replacements exist above the sulfide zone but were only partially mined mostly due to smelting issues.

Geology:

The Pioche Mining District encompasses roughly the northern half of the Pioche Hills. This relatively minor mountain range follows a northwest trend between Meadow and Lake Valleys. This trend is in marked contrast to the ranges both east and west which align themselves north-south. The Pioche Hills are largely composed of Cambrian sedimentary rocks but these are obscured on the southeast flank where overlain by Tertiary volcanic flow rocks. The mineralized area is entirely within Paleozoic sediments. The principal formations in ascending order are the Prospect Mountain Quartzite, Pioche Shale, Lyndon Limestone, Chisholm Shale and Highland Peak Limestone.

The structural setting of the Pioche Hills has been interpreted mostly in terms of regional thrust faulting. The exposed Paleozoic sedimentary rocks were apparently overridden by a regional thrust plate. This plate termed the Highland thrust consists of a stacked sequence of Upper Cambrian sediments similar to the lower plate but may include some Tertiary volcanic rocks as well. The Highland Peak Formation and a stratigraphic section down to the lower part of the Lyndon Limestone were displaced eastward along the thrust structures. Some flat thrust faults tend to follow shale beds and cut out thicknesses of rock units with little obvious physical expression.

The early Tertiary (and possibly similar pre-Mesozoic?) structures have in turn been displaced by subsequent events. The most traceable set of faults are related to Tertiary extensional basin and range faulting. There appears to be a strike slip component to these major features. They tend to strike north and dip away from the range. Further, the Cambrian rocks are offset by a series of closely spaced, northeast trending normal faults which drop the strata deeper toward the center of the range.

Both the Prince and Pan American Mines were underground mines which were developed on the very large sulfide replacement "channels" containing silver, zinc, lead, gold and manganese with commercial ore grades, roughly the same grade in each channel. The three principle and most significant channels are the Caselton Channel, the Combined Metals Channel and the Pan American Channel. These channels are known to extend for several miles in length and range from 100 feet to as much as 1,800 feet wide with ore up to 90 feet thick. Typically, they grade 2.3 ounces of silver and 0.02 ounces of gold per ton, 2.5% lead, 3.5% zinc and 12% manganese dioxide. While the initial operations of both Prince and Pan American both focused on sulfide replacement orebodies in limestone with much higher grades, massive oxidized orebodies remain which have only been minimally mined, at the above grades. As technology has advanced, significant opportunity remains in using the very low cost acid leaching of oxidized zinc, followed by solvent extraction and electro-winning to produce special high grade zinc cathode which can be sold at a premium. In the solvent extraction process, sulfuric acid is regenerated for re-use which minimizes costs of operation.

Property Description, Geology and History

The Prince Mine

The Prince Mine is characterized by substantial faulting and displacement of the carbonate replacements. The Prince member of the Lyndon formation has been uplifted along a northwest trending mineralized structure bringing a large block of oxidized ore very near the surface, to within ten feet in some areas. International Silver sampling and analysis indicates that this mineralizing structure likely continues past all known workings in the mine and past any drilling, and most likely intersects the Caselton Channel to the North. Our target is an open pit ore body hosting as much as 15 million tons of material at the above grades.

The Prince Mine is a fully developed mine with over 2 million tons of measured ore grade mineralization accessible through existing workings. Its main shaft is 850 feet deep and has several levels of drifts extending outward. It is located 1.5 miles from the Caselton Concentrator, a 1,500-ton per day complete processing plant. The open pit target is between the Prince Mine and the Concentrator, shortening the haul to the plant. Our immediate focus will be to develop and expand the mineral resource through geochemical and geophysical surveys and surface drilling. Due to its proximity to the surface, the drill holes will be relatively shallow. At the same time, access to underground workings will be cleaned and repaired to allow inspection and verification sampling of known mineralization.

The Pan American Mine

The Pan American Mine operated as a Joint Venture between the Anaconda Corporation and Bunker Hill at a rate of 1,200 tons per day of sulfide replacement ore grading 2.4 ounces of silver and 0.027 ounces of gold per ton, 2.5% lead, 3.4% zinc and 11.8 % manganese carbonate. The ore was trucked 12 miles to the Caselton Concentrator for processing. A clean zinc concentrate containing an average of 52% zinc, and a lead/precious metals concentrate were produced. The lead/precious metals concentrates as well as the zinc concentrates, were shipped by rail to the Bunker Hill Company's smelting and refining complex in Kellogg, Idaho.

Mine records of the Pan American Mine indicate that between 1.7 and 6.0 million tons of similar grade mineralization exists in the mine which has been offset downward by faulting. The remaining offset ore zone has been identified through drilling but a measured reserve has not yet been established.

The mine operated as a room and pillar mine which allowed bulk mining using rubber tired haulage and mining equipment. The main entry adit is in very good condition as are haulage ways within the mine. The remaining historic resource reported by Bunker Hill is sulfide in nature. However, there are substantial amounts of undefined oxidized mineralization in the Pan American Channel above and adjacent to the mine.

The focus of International Silver as regards the Pan American will be to determine how much readily accessible mineralization remains in the mine that would support a rapid start of operations of the Caselton Concentrator and to quantify the cost thereof. At the same time, the oxide resources of the Pan American Channel will be defined to determine their potential.

Property Location and Access

Leviathon Property

The Leviathon Property is an exploration project with a substantial land position in an area of known bulk mineable disseminated silver-barite mineralization. A wide and elongated zone of epithermal silver-barite veining which is exposed on the property will be the area initially investigated.

Geology and History

The mineralization of the Leviathon Property occurs in a series of parallel veins up to 50 feet wide in a zone several hundred feet wide and primarily visible at the surface. The veins strike NW/SE, dip steeply to almost vertical, and are traceable for 1.25 miles on the property. Country rock is tertiary volcanics in related pyroclastic and sedimentary formations. The vein system is located northeast of the Calico Fault.

Over 100,000 tons of barite ore were mined in the early 1950’s by open pit methods in a large cut known as the Leviathon Cut. Approximately 50,000 tons of drilling mud grade barite was shipped. Previous to this, all workings on the property were underground silver mining in the Silverado Mine and the Silver Bow Mine, believed to occur in the late 1890’s. Records are sketchy and no reliable information on these two mines has been located. The above information pertaining to mining only depicts historical information and has no significance whatsoever whether mineable mineral deposits presently exist on the Leviathon property

Property Description

The Leviathon Property consists of 60 unpatented mining claims, which were acquired through staking and filing Notices of Location with the Bureau of Land Management. The Claims are referred to collectively as the Leviathon Claims and are grouped as Leviathon 1 through Leviathon 14, and Lilly 11-20 that were approved by the Bureau of Land Management in September and October 2007, at which time the Bureau of Land Management approved the Company’s Notice of Location for Lode Mining Claims stating that we have located and have the right to the Leviathon unpatented mining claims. Each claim consists of 20.7 acres, for a total of 1,304 acres.

The Leviathon Property, is located approximately 10 miles northeast of the town of Barstow, California, 145 miles northeast of Los Angeles. The small communities of Dagget and Yermo, California lie about six miles east from Barstow on Interstate 15 and taking the Meridian Road exit, then east one mile on Frontage Road to the Yermo cutoff, then 3.2 miles north on Merdian Road to the paved portion of the Randberg-Barstow Road, then two miles north to a dirt road which leads eastward onto the claims. Access to the property is accessible year round. There are no weather related conditions preventing access to the property on a year round basis. We know of no environmental or archeological issues related to this property.

Property Location and Access

Item 3. Legal Proceedings

There are no pending or threatened lawsuits against us.

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted during the fourth quarter of 2010 or at any other time

PART II

Item 5. Market Price of and Dividends on our Common Equity and Related Stockholder Matters.

Market Information

Our common stock has been quoted on the Over the Counter Bulletin Board (the "OTCQB") under the trading symbol "ISLV" commencing March 31, 2008.

Holders

As of December 31, 2010, there were 78 shareholders of record.

Dividends

We have not declared or paid any cash dividends on our common stock since our formation and do not presently anticipate paying any cash dividends on our common stock in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

Since our inception and to date, we have not established an Option Plan or any other Equity Compensation Plan.

Miscellaneous Rights and Provisions

Holders of our common stock have no preemptive rights. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. All outstanding shares of our common stock are, and the common stock to be outstanding upon completion of this offering will be, fully paid and non-assessable. There are not any provisions in our Articles of Incorporation or Bylaws that would prevent or delay change in our control.

Preferred Stock

We are not authorized to issue Preferred Shares of stock in any series.

Options

We have not issued and do not have outstanding any options to purchase shares of our common stock.

Convertible Securities

We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.

Purchasers of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable. We have no equity securities that are registered pursuant to Section 12 of the Securities and Exchange Act of 1934. In November, 2008, we repurchased 30,000 shares of our Company’s common stock.

Sales Of Unregistered Securities

On June 12, 2008, we issued 150,000 shares of our common stock to Hamilton & Lehrer, P.A. in exchange for legal services.

On September 8, 2008, we issued 335,567 shares of our common stock to our Chief Executive Officer, Harold R. Shipes and his wife, Eileen Shipes, in full satisfaction of the principal portion of the $90,000 loan that our Chief Executive Officer extended to us to place an option towards the purchase of the Langtry property and $6,979 in business debts that he paid on our behalf.

In October, 2009, the Board of Directors approved a resolution to compensate its directors and employees for services rendered to the Company. On October 6, 2009, we issued 3,550,000 shares of our common stock to the Directors of our Company and to its employees for services rendered.

On January 21, 2010, the Company cancelled 30,000 shares of common stock previously issued to a third-party in exchange for the Tecoma mining property, when the property reverted back to its original owners.

On March 1, 2010, the Company purchased a 70% interest in the Estrades Mine, from a related party, in exchange for 6,000,000 shares of its common stock, at a share price of $0.0025 per share.

On August 18, 2010, the Company issued 2,000,000 shares of common stock at $0.025 per share in exchange for an outstanding debt of $50,000 owed to Harold R. Shipes, director/officer.

On August 24, 2010, the Company conducted a private placement and issued an additional 2,000,000 shares of common stock at $0.02 per share for $40,000. Cork Investments, Inc. and Ron Nash, were each issued 1,000,000 shares of common stock, respectively.

On December 31, 2010, the Company issued 50,000 shares of common stock in exchange for a convertible note to Tintic Standard Gold, Inc. for $75,000.

We relied upon Sections 4(2) and 4(6) of the Securities Act of 1933, as amended (“the Securities Act”) for the offer and sale of the above shares. We believed that Section 4(2) was available because: (a) there was no general solicitation in the offer or sale; (b) all purchasers were accredited investors; (c) we placed restrictive legends on the certificates representing these securities issued to the accredited investors stating that the securities were not registered under the Securities Act and are subject to restrictions on their transferability and resale; and (d) the offer and sale did not involve a public offering.

Use of Proceeds

We did not receive any proceeds from the issuance of our common stock in 2008, as it was in exchange for debt.

We did not receive any proceeds during 2009 from the resale of our common stock by the Selling Shareholders indicated in our S-1 Registration Statement.

In 2010, we received $40,000 in proceeds on a private placement of 2,000,000 shares of our common stock, whose funds were applied towards general corporate use.

Item 6. Selected Financial Data

	December 31, 2010			December 31, 2009			Exploration Stage (since inception) June 16, 2006 to December 31, 2010
				(Restated)

Revenue		63,660			145,659			433,389
Total Operating Expenses		108,507			227,985			1,106673
Cash on Hand		35,983			35,747			N/A
Total Assets		132,432			54,420			N/A
Current Liabilities		67,627			90,324			N/A
Working Capital (Deficit)		64,805			(35,904	)		N/A
Accumulated Deficit		(1,327,174	)		(848,353	)		(1,151,140	)
Exploration Costs		16,923			19,183			283,922

Item 7 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Forward-Looking Statements

This Management’s Discussion and Analysis should be read in conjunction with our financial statements and its related notes. The terms “we,” “our” or “us” refer to International Silver, Inc. This discussion contains forward-looking statements based on our current expectations, assumptions, and estimates. The words or phrases “believe,” “expect,” “may,” “anticipates,” or similar expressions are intended to identify “forward-looking statements.” The results shown herein are not necessarily indicative of the results to be expected in any future periods. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties pertaining to our business, included the risk factors contained herein.

We are an exploration stage company that engages in minerals exploration activities in the United States involving silver, gold, zinc, copper and other minerals. To-date, we have not generated any revenues from any of these activities since June, 2006, when we switched our emphasis in our business plan and commenced our mineral exploration business. To date, our exploration activities have been limited to the exploration and leasing of mineral interests in the United States and Mexico.

We have realized consulting fees from on-going engineering services, which along with funding received on two private placements, have enabled us to continue, on a limited basis, our exploration activities until additional funding resources are obtained.

Financial Condition and Changes in Financial Condition

At December 31, 2010, we had cash resources $35,983 and receivables due from related parties in the amount of $15,919, including on-going engineering contract work to enable us to continue to conduct our exploration activities and meet our maturing obligations for several months. Our continued activities are dependent upon obtaining adequate financing, as described below. Our financial condition as of December 31, 2010, compared to December 31, 2009 is summarized below, as follows:

Assets.

As of December 31, 2010, we had total assets of $132,432 compared to total assets of $54,420 as of December 31, 2009, representing a 143% increase or $78,012. Current assets comprise 100% our total assets at December 31, 2010 and December 31, 2009 as further depicted below:

	At December 31, 2010		At December 31, 2009		Net Incr./(Decr.)
Current Assets:
Cash	$	35,983	$	35,747	$	236
Due from Related Parties		15,919		17,707		(1,788)
Prepaid Expenses		80,530		966		79,564
Current Assets	$	132,432	$	54,420	$	78,012

Total Assets	$	132,432	$	54,420	$	78,012

The increase in prepaid expenses of $79,564 from December 2009 to December 31, 2010 relate to two mineral leases transacted during the fourth quarter of 2010.

Liabilities and Shareholders’ Equity

	At December 31, 2010			At December 31, 2009			Net Incr./(Decr.)
				(Restated)
Liabilities
Accounts Payable	$	2,741		$	1,381		$	1,360
Accrued Expenses		8,464			391			8,073
Due to Related Parties		48,089			88,552			(40,463	)
Note Payable		8,333			0			8,333
Total Liabilities	$	67,627		$	90,324		$	(22,697	)

Non-Controlling Interest	$	0		$	(3,530	)	$	3,530

Shareholders’ Equity
Capital Stock	$	1,391,979		$	845,979		$	546,000
Accum. Deficit – Prior to exploration stage		(176,034	)		(176,034	)		0
Accum.Deficit – During exploration stage		(1,151,140	)		(672,319	)		(478,821	)
Treasury Stock		0			(30,000	)		30,000

Total Shareholder’s Equity	$	64,805		$	(32,374	)	$	97,179

Total Liabilities & Equity.	$	132,432		$	54,420		$	78,012

Total liabilities decreased by 25% or $22,697 to $67,627 at December 31, 2010, compared to $90,324 at December 31, 2009. The resultant decrease is primarily from a bridge loan of $75,000, net of a discount on the note of $66,667 obtained in the fourth quarter of 2010 and a reduction in related party debt of $50,000 in exchange for common stock. Additionally, there was an increase in accounts payable and accrued expenses of $9,433 plus an increase of $9,537 in other related party debt.

Shareholders’ Equity decreased by $97,179 to $64,805 as of December 31, 2010; compared to ($32,374) as of December 31, 2009. The net increase results from stock issuances valued at $576,000 and the net loss from operations of $478,821.

The increase in common stock and additional paid-in capital, with an aggregate value of approximately $576,000 are comprised of the following transactions:

- 2.0 million shares of common stock in exchange for debt in the amount of $50,000

- 6.0 million shares of common stock valued at $15,000 in exchange for property

- 2.0 million shares of common stock in a private placement of stock, netting $40,000

- 50,000 shares of common stock in exchange for a convertible note of $75,000.

- common stock option grant awards of $396,000

Liquidity and Capital Resources

Working capital increased by $100,709 to $64,805 at December 31, 2010, compared to $35,904 at December 31, 2009. This increase results principally from the prepayment of two mineral land leases of $90,000, a reduction of related party receivables of $40,463, less a convertible note negotiated in the amount of $75,000 less a discount of $66,667, an increase in accounts payable and accrued expenses of $9,433 and the write-off of prepaid leases in the amount of expenditures of approximately $11,000.

Net cash flow from operating activities decreased by $108,355 to ($114,764) at December 31, 2010, compared to ($14,742) at December 31, 2009. The decrease in cash flow from operations is attributed principally to (1) a net change in working capital of approximately $141,000, primarily from the lease option prepayments on two mineralized properties and 2) an increase in operating income of $37,000, resulting from decreased revenues of $82,000 and decreased operating expenses of $119,000.

Cash flows from financing activities in 2010 increased by $114,785 to $115,000 for the year ended December 31, 2010 compared to only $215 in 2009. The primary sources of financing during year 2010 included a $75,000 bridge loan from Tintic Standard Gold, Inc. and $40,000 in cash proceeds from a private placement sale of common stock.

Our business plan does not reflect, nor do we anticipate, any revenues during our exploration phase, aside from ongoing engineering services rendered to an affiliate. We do not anticipate any other type of revenue until we confirm previously demonstrated mineralization, obtain operating permits, and construct mining and processing facilities at any of our properties; there is no assurance that we will have sufficient financing to accomplish or otherwise be successful at meeting these objectives. There is no guarantee of success or that we will have sufficient financing to accomplish those objectives.

Our auditors have issued a going concern opinion on our audited financial statements for the fiscal year ended December 31, 2010 as we have an accumulated deficit of $1,327,174. These and other matters raise substantial doubt about our ability to continue as a going concern. We will have to supplement our currently available funds to satisfy our cash requirements for the immediate months by attempting to collect upon existing receivables and raising funds through an equity funding. We anticipate total spending requirements of approximately $4.5 million pending adequate financing over the next twelve months, in the following areas:

Our global capital budget for the completion of acquisitions, exploration and development programs in the Pioche District are as follows:

Activity	Cost - U.S.$

1. Mine Salaries and Benefits, one year	$	950,000
2. Geological Evaluation and Drilling Contracts	$	600,000
3. Mine Re-habilitation, mobilization	$	250,000
4. Miscellaneous Equipment	$	200,000
5. Working Capital	$	150,000
6. Corporate Overhead, One Year	$	800,000
7. Legal	$	50,000
8. Property Payments and Acquisitions	$	1,200,000
9. Offering Commissions	$	300,000

TOTAL	$	4,500,000

We plan to undertake the following steps in our attempt to overcome our going concern qualification and our need for $4,500,000 of financing to accomplish our operational plan:

	·	Contact broker-dealers to discuss and negotiate a broker dealer acting as an underwriter to conduct a public offering of our common stock sufficient to raise $4.5 million;
	·	Contact other companies with sufficient financial resources to fund our operational activities to discuss and negotiate a joint venture arrangement or a merger transaction where we would combine our business interests and objectives;
	·	Contact the fund managers of hedge funds and mutual funds to determine whether their interest in investing in our common stock sufficient to obtain adequate financing; and
	·	Raise financing through a private placement of our common stock

Results of Operations

We incurred losses of $478,821 for the year ended December 31, 2010, an increase in losses of $396,661 over the prior year. The increase in losses are due to decreased revenues of $82,000, stock compensation expense of $396,000, an increase interest expense of $19,000, an impairment loss of $15,000 less a reduction in operating expenditures of $119,000.

An analysis of the major components of our results of operations is, as follows:

Revenues - In the year ended December 31, 2010, revenues were $63,660, representing a 56% decrease or $82,000 from $145,659 in revenues for the year ended December 31, 2009. The decrease in revenues stems partly from the non-recognition of $48,720 in billings due to the uncertainty of collectibility of receivables due from a related party, with the remainder resulting from decreased third-party engineering services.

Exploration Expenses - Exploration costs decreased by 12% or $2,260 to $16,923 for the year ended December 31, 2010 from $19,183 for the comparable 2009 period. The level of exploration work for both 2010 and 2009 remain relatively the same.

General & Administrative Expenses - General and administrative expenses decreased by 56% or $117,121 to ($91,584) for the year ended December 31, 2010 from ($208,705) for the year ended December 31, 2009. This decrease in loss over those incurred in 2009 resulted primarily in two areas (1) from decreased professional and consulting fees in the amount of $72,000 and (2) a reduction in bad debts expense of $33,000.

Depreciation and Depletion Expenses - Depreciation expense for 2010 was nil and for 2009 was $97.

Other Income and Expenses – An impairment loss of $15,000 was recognized in 2010 on a mining property acquired from a related party. In 2010, the Company adopted a stock option plan resulting in the recognition of $396,000 in stock compensation expense. Interest or financing costs for the year ended December 31, 2010 increased $19,335 to $19,444 compared to $109 for the year ended December 31, 2009. In 2010, $8,333 in financing cost was incurred and paid with shares of the Company’s common stock at December 31, 2010, pursuant to a bridge loan negotiated with Tintic Standard Gold, Inc. Additionally, $10,000 in financing-related costs were paid relating to this bridge loan.

Extra-ordinary Items - A $3,530 loss was recognized in 2010 due to the deconsolidation of the Company’s foreign subsidiary, Metales Preciosos Atlas, S.A. de C.V.

Exploration Costs – Inception to Date

On June 16, 2006, our Board of Directors passed a resolution to change the nature of its operations from an engineering services company to an exploration company. Since converting our business plan to conducting exploration activities, we have engaged in the following exploration activities.

	1)	Hired a geotechnical consultant to assist launching an exploration program;
	2)	Commenced the development of an exploration plan;
	3)	Actively sought mineral interests containing precious metals; and
	4)	Acquired the following minerals interests and option to purchase mineralized property: · Leviathon · Prince Mine · Pan American Mine · Castelton Concentrator

Capitalized Acquisitions

Since converting our business plan to conducting exploration activities, we have incurred the following costs related directly to our exploration activities:

Mineral Land Acquisition

a) Purchased the Tecoma Mine (fee simple) – Year 2007	$	90,000

b) Sale of Tecoma Mine – Year 2008		(90,000	)

Exploration Costs:
a)Acquired a 98% interest in Metales Preciosos, S.A. de C.V., a Mexican company, whose concessions for mineralized interests are as indicated below:

1) El Cumbro property	$	14,260

2) El Cusito property		15,000

3) Canada de Oro property		15,000

4) La Moneda property		10,000

b) Langtry property
1) Option payment		10,000

2) Option payment – extension		90,000

3) Exploration		21,075

c) Acquisition of BLM mineral claims - Calico District
1) Silverado mining claims		4,250

2) Leviathon mining claims		38,224

d) Other exploration sites (evaluation)
1) Anaconda		7,500

2) Oro Blanco		8,840

3) Pioche		28,522

e) General Administrative Costs		21,251

Total acquisitions and exploration costs	$	283,922

During our early stage of exploration activities, from June 16, 2006 through December 31, 2010, we have incurred $283,922 in exploration costs, as detailed above, and general and administration expenses of $822,751, primarily consisting of salaries, rent, consulting fees, and travel expenditures, for a total of $1,106,673 in operating costs.

Accumulated losses of $1,151,140 incurred from the inception of the “exploration phase” accounts for approximately 86% of the accumulated deficit of $1,327,174 reflected in the Shareholders’ Equity section of our financial statements. Our prior engineering activities accounts for the other portion of the deficit.

Uncertainties and Trends

Our revenues are dependent now, and in the future, upon the following factors:

	·	Price volatility in worldwide commodity prices, including silver, gold, and other minerals, which is affected by: (a) sale or purchase of silver by central banks and financial institutions; (b) interest rates; (c) currency exchange rates; (d) currency exchange rates; (e) inflation or deflation; (f) speculation; and (g) fluctuating prices in worldwide and local commodities for petroleum-related products, chemicals, and solvents, which will affect our ability to obtain additional and continuing funding;
	·	Global and regional supply and demand of silver, gold, and other minerals, including investment, industrial and jewelry demand;
	·	Political and economic conditions of major silver, gold or other mineral-producing countries;
	·	Threatened changes to the U.S. Mining Law that may cause increasing federal land royalties, or other unanticipated consequences and related increased costs of conduct in mining operations in the United States; and
	·	Global economic conditions may affect pricing and availability of materials and supplies.

Off-Balance Sheet Arrangements

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have

·	An obligation under a guarantee contract

·	a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

·	any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or

any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.”

We do not have any off-balance sheet arrangements or commitments that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material, other than those which may be disclosed in this Management’s Discussion and Analysis of Financial Condition and the audited Consolidated Financial Statements and related notes.

Changes in Accounting Policies

The significant accounting policies outlined within our Consolidated Financial Statements for the year ended December 31, 2010 have been applied consistently for the December 31 year-ends of 2010 and 2009.

Recent Accounting Pronouncements

Management has evaluated the recent accounting pronouncements issued since the audited financial statements and in management’s opinion, the relevant pronouncements that apply to the Company’s activities and their effect as of December 31, 2010, are as follows:

In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. During 2010, the Company sold an interest in a mining property, whose share-based payment transaction was accounted based on Level 3 fair value measurements.

In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-05 (ASU 2010-05), Compensation – Stock Compensation (Topic 718). This standard codifies EITF Topic D-110 Escrowed Share Arrangements and the Presumption of Compensation. At December 31, 2010, stock options granted were valued at $396,000, based on fair value measurements utilizing the Black Sholes Option pricing model.

In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. During 2010, the Company abandoned its mining concessions in Sonora, Mexico and a resolution was ratified and approved by the Board of Directors to dissolve its Mexican subsidiary, Metals Precious Atlas, S.A. de C.V., thus ceasing any further exploration work in Mexico.

In June 2009, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance announced the release of Staff Accounting Bulletin (SAB) No. 112. The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws.

PLAN OF OPERATIONS

Our Plan of Operations has been organized for each of our properties and claims to account for the similarities and differences in the location, geology, the prospective metals that may be hosted by each property or claim, and the current stage of exploration of each property and claim; accordingly, we have several Plans of Operations to account for those similarities and differences among our various properties and claims. Our Plans of Operations represent our Phase I exploration activities and are for a period of twelve months, at an approximate cost of $2.9 million. We will begin with evaluation of existing mine plans and reserves of both the Prince and Pan American Mines, and mechanical and electrical evaluation of the Caselton Concentrator. Clean up and repair of underground workings to provide safe access will be followed by geologic sampling. and mapping of known structures and existing workings with a view to commencement of operations since both were operating mines. Based upon our analysis of the test results and studies, we will determine whether to proceed with Phase II exploration and development, which will be focused on developing a near surface reserve on the Prince property and re-start evaluation of the Pan American Mine to feed theCastleton Concentrator. We cannot determine, predict, or assure whether we will be able to proceed with Phase II exploration and development activities regarding any of our properties or claims. Our exploration activities will be conducted under the overall direction of our Consulting Geologist, but each Plan of Operations described below will be directly managed and supervised by a Project Manager that we hire.

Properties - The Leviathon property in San Bernardino County, California and the Pioche mining district properties in Lincoln County, Nevada.

We will continue to hold the Leviathon property and will focus our exploration efforts on the Pioche Mining District at a total cost of $3,000,000. We will use thirteen employees and infrastructure for the Prince Mine, Pan American Mine and Caselton Concentrator. Our exploration program is shown below:

Exploration Phase I:

1) Evaluation of existing mine plans and reserves calculations:

BothPrince and Pan American were operating mines when shut down and have operations plans and reserves calculations. These will be organized and evaluated and prepared for required supplemental work and digitizing to determine the accuracy and reliability of existing data. Initial attention will focus on the development of an open pit resource at the Prince Mine and plan the drilling program to develop that resource. Simultaneously, a second crew will evaluate the Pan American Mine for re- start. The initial programs will require approximately three months and will proceed simultaneously with the physical rehabilitation of underground workings of both mines.

2) Repair of existing underground workings to allow safe access.

This will entail three months of work by three laborers and one supervisor. The main Prince shaft will be re-conditioned and put into working order to identify the scope of underground work required to access existing workings in a safe and secure manner.

3) Clean up of surface dumps, ore piles, facilities, etc.

This will entail surveying and mapping of the property with reference points for each surface dump. Dumps will be measured and tonnage calculations produced. A general clean-up campaign of the surface will be conducted. This will require two laborers under the supervision of the Mine Manager. Surveying and mapping will be contracted to local surveyors. It will require less than one month and will be conducted simultaneously with items 1) and 2).

4) Mapping and sampling of underground workings.

Mapping will be conducted with contract surveyors under the supervision our geologist with a view to verifying existing mine plans, ore locations and status of workings. It will require one month. It will commence following month three when the workings have been secured and made safe. Sampling of underground structures will be conducted by our geologist with three helpers. It will commence in month four and will require one to two months. Assaying will be done either in Ely, Nevada, or Salt Lake using a recognized assay lab under contract.

5) Geophysical studies.

This phase will begin immediately and require two months. An Induced Polarization Study will immediately be contracted to further define the zone identified for open pit mining and will require approximately two months to complete. It will be coordinated by our Geologist.

6) Mechanical and electrical inspection of the Caselton Concentrator.

During the first months of operation, the Caselton Concentrator will be inspected both mechanically and electrically to quantify its condition and determine the extent of repairs and the time and cost that will be required to initiate operations. It is anticipated that this work will require approximately 30 days to complete.

Exploration Phase II:

1)	Surface and underground drilling of identified mineralization and extensions thereof.

No later than month six, all accumulated data from underground and surface sampling, geo-chemical and geo-physical studies will be evaluated to confirm the highest priority targets for open mining on the Prince Mine. A drilling contractor will be hired to conduct the drilling program to define tonnages and grades of reserves. The contractor will be managed by the Mine Manager with sampling under the supervision of our Geologist. Two helpers will be required. It is estimated that this program will require up to four months

2)	Mine planning based on identified reserves.

As assays come back from drilling programs, the Mine Manager will enter them into a mine planning software to produce a scoping study. Assuming the reserves developed are adequate, an independent engineering firm will be hired to produce an independent ore reserve estimate, compliant with Canadian Instrument 43-101. This phase will require approximately three months and will most probably commence at approximately month nine.

3)	Feasibility Studies.

This phase of the Operations Plan will commence following development of reserve estimates, probably at approximately 8 months following commencement of work and will be done in 'house' and under contract with an independent engineering firm. It will include metallurgical testing of core samples to determine the appropriate flow sheet for processing the ore. This phase will require approximately six months to completion.

4)	Environmental Permitting

This phase of the Operations Plan will be on-going with the Feasibility Study and will require a minimum of six months, depending on the size of the reserve defined by the various testing programs, mine planning and the feasibility report. It will commence as soon as possible and will be managed by the Mine Manager, our Geologist and Environmental Engineer.

5)	Mine development

This phase of the Operating Plan will commence upon granting the required environmental permits and operating licenses. Mine development will be under the Mine Manager and will be done by outside contractors.

6)	Pan American re-start budget

During the first three months of Phase II, a re-start plan and budget based on Pan American ore to the Caselton Concentrator will be developed. The concentrator will require new environmental permits and will be a part of the Item 4) work. A new tailings dam will be designed and permitted as soon as practical.

Item 7A Quantitative and Qualitative disclosures About Market Risk

Not applicable. We do not presently invest or otherwise engage in market risk sensitive instruments.

Item 8 Financial Statements and Supplementary Data

The information required by this item is filed herewith.

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

International Silver, Inc.

(A Development Stage Company)

We have audited the accompanying balance sheets of International Silver, Inc. (A Development Stage Company) as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2010 and 2009 and since inception on June 16, 2006 through December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of International Silver, Inc. (A Development Stage Company) as of December 31, 2010 and 2009, and the related statements of operations, stockholders’ (deficit) and cash flows for the years ended December 31, 2010 and 2009, and since inception on June 16, 2006 through December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the financial statements, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

April 14, 2011

50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351

F-1

International Silver, Inc.

(An Exploration Stage Company)

Consolidated Financial Statements

(Audited)

For the Year Ended December 31,2010

And

For the Year Ended December 31,2009

F-2

International Silver, Inc.
(An Exploration Stage Enterprise)
Consolidated Balance Sheets

	As At
	December 31,			December 31,
	2010			2009
				(Restated)
ASSETS

CURRENT ASSETS
Cash	$	35,983		$	35,747
Due from related parties - Note I		15,919			17,707
Prepaid expenses - Note C		80,530			966
Total Current Assets	$	132,432		$	54,420

TOTAL ASSETS	$	132,432		$	54,420

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,467		$	1,191
Payroll taxes payable		274			190
Accrued expenses		8,464			391
Due to related parties - Note I		48,089			88,552
Note payable, net of discount - Note F		75,000			-
Discount on Notes payable		(66,667	)		-
Total Current Liabilities	$	67,627		$	90,324

Total Liabilities	$	67,627		$	90,324

NON-CONTROLLING INTEREST	$	-		$	(3,530	)

SHAREHOLDERS' EQUITY
Common stock - Note H
authorized shares - 500,000,000
par value $0.0001 per share
issued & o/s - 12/31/09 18,561,753
issued & o/s - 12/31/10 28,581,753	$	2,858		$	1,856
Additional paid-in capital		1,389,121			844,123
Less: treasury stock		-			(30,000	)
Accumulated deficit prior to exploration stage		(176,034	)		(176,034	)
Accumulated deficit during exploration stage		(1,151,140	)		(672,319	)
Total Shareholders' Equity	$	64,805		$	(32,374	)

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	132,432		$	54,420

See accompanying notes to the consolidated financial statements

F-3

International Silver, Inc.

(An Exploration Stage Enterprise)

Consolidated Statement of Income

							Inception
	Twelve Months Ended						(June 16, 2006) of Exploration Stage through
	December 31 2010			December 31 2009			(December 31, 2010)
				(Restated)
REVENUES
Consulting-third parties	$	-		$	44,199		$	44,199
Consulting-related parties		63,660			101,460			389,190
Total Revenues	$	63,660		$	145,659		$	433,389

Operating Expenses
Exploration costs	$	16,923		$	19,183		$	283,922
General and administration
Bad debt expense		236			33,253			41,860
All other general & administrative		91,348			175,452			780,136
Depreciation and depletion		-			97			755
Total operating expenses	$	108,507		$	227,985		$	1,106,673

Operating Income/Loss	$	(44,847	)	$	(82,326	)	$	(673,284	)

Other Income (Expenses)
Impairment loss	$	(15,000	)	$	-		$	(40,000	)
Stock compensation expense	$	(396,000	)	$	-			(396,000	)
Interest expense		(19,444	)		(109	)		(42,050	)
Total other income/(expense)	$	(430,444	)	$	(109	)	$	(478,050	)

Extraordinary Items
Deconsolidation of Subsidiary		(3,530	)		275		$	194

Net Income/(Loss) Before Taxes	$	(478,821	)	$	(82,160	)	$	(1,151,140	)
Provision for income taxes		-			-			-
Net Income/(Loss) Before Taxes	$	(478,821	)	$	(82,160	)	$	(1,151,140	)

Accumulated Deficit
Beginning of Period	$	(848,353	)	$	(766,193	)

End of Period	$	(1,327,174	)	$	(848,353	)

Basic and Diluted
Income/(Loss) per Share	$	(0.02	)	$	(0.01	)


Weighted Average Shares Outstanding		22,571,012			15,848,191

See accompanying notes to the consolidated financial statements

F-4

International Silver, Inc.

(An Exploration Stage Enterprise)

Consolidated Statement of Cash Flows

							Inception (June 16,2006)
							of Exploration
	Twelve Months Ended						Stage through
	December 31, 2010			December 31, 2009			(December 31, 2010)
				(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	(478,821	)	$	(82,160	)	$	(1,151,140	)
Adjustments used to reconcile net (loss)
to net cash (used) by operating activities:
Non-controlling interest in subsidiary		-			(275	)		(3,530	)
Dissolution of subsidiary		3,530						3,530
Depreciation and depletion		-			97			755
Impairment loss		15,000			-			40,000
Financing Cost		8,333			-			8,333
Issuance of common stock
In exchange for land		-			-			30,000
In exchange for services		-			35,500			157,000
In exchange for exploration costs		-			-			55,385
In exchange for debt		50,000			-			50,000
Issuance of Incentive Stock Option Grants		396,000			-			396,000
Changes in operating assets and liabilities
Decrease/(Increase) in receivables		1,788			3,744			233,742
Decrease/(Increase) in employee receivable		-			2,317			2,317
Decrease/(Increase) in prepaid expenses		(79,564	)		26,706			(84,004	)
(Decrease)/Increase in payables		(39,103	)		4,258			37,353
(Decrease)/Increase in accrued expenses		8,073			(4,929	)		32,085
Net Cash Flows (used by) Operating Activities	$	(114,764	)	$	(14,742	)	$	(192,174	)

CASH FLOW FROM INVESTMENT ACTIVITIES
Lease/purchase option on land	$	-		$	-		$	(90,000	)
Purchase of land		-			-			(90,000	)
Purchase of equipment		-			-			(6,668	)
Net Cash Flows from Investment Activities	$	-		$	-		$	(186,668	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock:
Cancellation of debt	$	-		$	-		$	-
Net proceeds from stock issuance		40,000			-			120,000
Sale of mining property
For treasury stock		-			-			(30,000	)
Exchange for securities		-			-			(25,000	)
Return of deed of trust - mining property		-			-			90,000
Disposal of vehicle		-			215			215
Third-party loan		75,000			-			75,000
Borrowings from related parties		-			-			152,980
Net Cash Flows from Financing Activities	$	115,000		$	215		$	383,195

Net Increase/(Decrease) in Cash	$	236		$	(14,527	)	$	4,353

Beginning Cash Balance	$	35,747		$	50,274		$	31,630

Ending Cash Balance	$	35,983		$	35,747		$	35,983

See accompanying notes to the consolidated financial statements

F-5

International Silver, Inc.
(An Exploration Stage Enterprise)
Supplemental Disclosures of Non-Cash Financing Activities

	Twelve Months Ended					Exploration Stage
	December 31,		December 31,			(June 16, 2006
	2010		2009			through
	Unaudited		Unaudited			December 31, 2010)


The Company issued shares of its common stock in exchange for the following:

For services rendered:
Director services	$	-	$	-		$	21,000
Legal and professional services		-		-			116,350
Stock transfer agent services		-		-			5,500
Accounting services		-		-			6,150
Geology and engineering		-		-			8,000
Sub-total	$	-	$	-		$	157,000
For land/mining property		12,000		-			42,000
For equipment		3,000		-			3,000
For exploration costs		-		-			55,385
For contributed capital		50,000		-			315,072
Total non-cash issuances of stock	$	65,000	$	-		$	572,457

Shares of common stock cancelled
Repurchase of its common stock	$	30,000	$	-		$	30,000

Issuance of incentive stock option grants
Grants issued	$	396,000	$	-		$	396,000



The Company relinquished its mining property in exchange for the following:

For repurchase of its common stock	$	-	$	(30,000	)	$	(30,000	)
For marketable securities in another company	$	-	$	(25,000	)	$	(25,000	)
For deed of trust in the mining property	$	-	$	90,000		$	90,000

See accompanying notes to the consolidated financial statements

F-6

International Silver, Inc.
(An Exploration Stage Enterprise)
Consolidated Statement of Shareholders' Equity

																								Accumulated Deficit
			Common Stock						Additional															Prior			During
	Share		No. of			$	0.0001		Paid-In			Shares Issuable						Treasury Stock						Exploration			Exploration
	Price		Shares			Par Value			Capital			Shares			Amount			Shares			Amount			Stage			Stage			Total
Shares issued:
Prior to June 16, 2006				1,000					$	258,522														$	(176,034	)	$	0		$	82,488
At June 16, 2006				1,000					$	258,522			0		$	0			0		$	0		$	(176,034	)	$	0		$	82,488

Stock Split - 12,000:1
July 24, 2006				12,000,000		$	1,200			(1,200	)																				0
Shares issued for services
September 13, 2006	$	0.0750		1,000,000			100			74,900																					75,000
October 21, 2006	$	0.0500		100,000			10			4,990																					5,000
Shares issued for property
September 19, 2006	$	1.0000		30,000			3			29,997																					30,000
Shares issued for acquisition
of Metales Preciosos, S.A. de C.V.
October 21, 2006	$	0.1846		300,000			30			55,355																					55,385
Net Income/(Loss)																												(163,224	)		(163,224	)
At December 31, 2006				13,430,000		$	1,343		$	422,564			0		$	0			0		$	0		$	(176,034	)	$	(163,224	)	$	84,649

Shares issued for cash
May 4, 2007	$	0.5000		400			0			200																					200
May 11, 2007	$	0.5000		2,000			0			1,000																					1,000
May 14, 2007	$	0.5000		4,000			0			2,000																					2,000
May 16, 2007	$	0.5000		600			0			300																					300
June 4, 2007	$	0.5000		3,000			0			1,500																					1,500
October 29, 2007	$	0.5000		4,000			0			2,000																					2,000
November 6, 2007	$	0.5000		28,000			3			13,997																					14,000
November 8, 2007	$	0.5000		18,000			2			8,998																					9,000
November 13, 2007	$	0.2500		200,000			20			49,980																					50,000
Shares issued for services
May 22, 2007	$	0.0550		100,000			10			5,490																					5,500
September 13, 2007	$	0.0400		250,000			25			9,975																					10,000
September 21, 2007	$	0.0400		150,000			15			5,985																					6,000
Shares exchanged for debt
June 30, 2007	$	0.5000		336,186			33			168,060																					168,093
Net Income/(Loss)																												(128,147	)		(128,147	)
At December 31, 2007				14,526,186		$	1,452		$	692,048			0		$	0			0		$	0		$	(176,034	)	$	(291,371	)	$	226,095

Shares issued for services
June 12, 2008	$	0.1333		150,000			15			19,985																					20,000
Shares exchanged for debt
September 8, 2008	$	0.2890		335,567			35			96,945																					96,980
Shares repurchased
November 10, 2008																			(30,000	)		(30,000	)								(30,000	)
Net Income/(Loss)																												(298,788	)		(298,788	)
At December 31, 2008				15,011,753		$	1,501		$	808,978			0		$	0			(30,000	)	$	(30,000	)	$	(176,034	)	$	(590,159	)	$	14,286

Shares issued for services
October 6, 2009	$	0.0100		3,550,000			355			35,145																					35,500
Net Income/(Loss)																												(82,160	)		(82,160	)
At December 31, 2009				18,561,753		$	1,856		$	844,123			0		$	0			(30,000	)	$	(30,000	)	$	(176,034	)	$	(672,319	)	$	(32,374	)

Shares cancelled
January 10, 2010	$	1.0000		(30,000	)		(3	)		(29,997	)								30,000		$	30,000									0
Shares issuable
March 3, 2010	$	0.0025		0									6,000,000			15,000															15,000
Shares issued for land
April 26, 2010	$	0.0025		6,000,000			600			14,400			(6,000,000	)		(15,000	)														0
Shares exchanged for debt
August 18, 2010	$	0.0250		2,000,000			200			49,800																					50,000
Shares issued for cash
August 24, 2010	$	0.0200		2,000,000			200			39,800																					40,000
Incentive stock option - grants issued







November 1, 2010	$	0.1200								396,000																					396,000

Shares exchanged for convertible note
December 31, 2010				50,000
Allocable to Shares							5			21,423																					21,428
Fair Value of Beneficial										53,572																					53,572
Conversion Feature
Net Income/(Loss)																												(478,821	)		(478,821	)

At December 31, 2010				28,581,753		$	2,858		$	1,389,121			0		$	0			0		$	0		$	(176,034	)	$	(1,151,140	)	$	64,805

See accompanying notes to the consolidated financial statements

F-7

International Silver, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Note A - Organization and Business

General

International Silver, Inc., an exploration stage company, as set forth in FASB ASC 915 – Development Stage Entities and “Industry Guide 7” of the Securities and Exchange Commission’s Guides for the Preparation of Registration Statements and with the Society for Mining, Metallurgy and Exploration’s “Guide for Reporting Exploration Information, Mineral Resources, and Mineral Reserves” dated March 1, 1999. The Company’s strategy consists of acquiring and exploring high-grade silver properties throughout North and South America.

Organization and Nature of Business

The Company was incorporated in the State of Arizona on September 4, 1992 as ARX Engineering, Inc. On October 6, 1992, ARX Engineering, Inc. changed its name to Western States Engineering and Construction, Inc. On June 20, 2006, the Company changed its name to International Silver, Inc. in connection with its new business plan of acquisition of exploration properties, along with providing engineering services.

Further, on July 14, 2006, the Company amended its Articles of Incorporation to reflect the Board’s decision to expand its authorized common stock from 1,000 shares to 500,000,000 to accommodate future equity financing.

The business strategy consists of acquiring and exploring high-grade silver properties throughout North and South America. The Company will initiate an intensive reconnaissance and exploration program around the Prince Mine and Pan American properties located in Nevada, to identify potentially high-grade silver targets and to evaluate other properties in each of the districts for possible acquisition. The Company will continue to seek and evaluate new opportunities for exploration and/or development properties.

Key Mineral Properties

Prince Mine and Pan American Mine Properties, Lincoln County, Nevada

The Company recently entered into a lease /purchase agreement to explore and acquire the historic Prince Mine in Lincoln County, Nevada, USA. The Prince Mine is a former producer of silver, gold, lead, zinc and manganese sulfide and oxide fluxing ore. Past production from the mine, which last operated in 1951, amounts to 3.6 million ounces of silver, 68 million pounds of lead, 110 million pounds of zinc and 17 thousand ounces of gold from 1.2 million tons of ore. Past production was from both underground and surface operations which exploited bedded replacements of limestone units within the Cambrian stratigraphic section.

F-8

The Company has also entered into another lease/purchase agreement to acquire the historic Pan American Zinc/Silver Mine and the Caselton Concentrator in Pioche/Comet Mining District of Lincoln County, Nevada, USA. The Pan American Zinc/Silver Mine last operated as a Joint Venture between Bunker Hill and the Anaconda Corporation. Ore was mined underground as a rate of 2,000 tons per day using bulk mining via a haulage ramp decline with a 7% dip along the dip of the orebody. Past production from the mine, which last operated in 1979, amounted to 5.0 million tons of ore containing 13 million ounces of silver, 68 millions pounds of lead, 150 million pounds of zinc and 94 thousand ounces of gold. Past production was from bedded replacements of limestone units within the Cambrian sections of the Combined Metals Bed, the same structure mined and present at the Prince Mine 12 miles away.

Leviathon Project, San Bernardino Co. CA

The Leviathon Project is located in the Calico silver mining district about 15 miles northeast of Barstow or 145 miles northeast of Los Angeles in the Mojave Desert of Southern California. The project is held for exploration with approximately 1300 acres of U.S federal lode mining claims owned in 100 percent interest by International Silver Inc.

The Calico district is a historic mining area with silver production from high grade veins commencing in 1882 and ending in 1931. Modern exploration methods applied in the district beginning in the 1970’s have delineated large deposits of disseminated epithermal silver mineralization potentially amenable to bulk mining. Known deposits of this type which exceed several hundred million ounces of contained silver in ore grading 2 to 4 ounces per ton, adjoin the project on two sides. There are no mineral reserves as yet defined on the Leviathon ground. An unverified historical estimate by a previous operator has postulated an existing resource of five million tons grading 2 ounce/ton silver with 65% barite. The property was mined for barite by open pit methods during the late 1950’s and into the 1960’s. A production of 100,000 tons of barite ore was recorded from this period.

It is the intention of the company to maintain the claims and to continue with exploration on this project.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) initiating an initial public offering.

F-9

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other resources of financing and attain profitable operations. The accompanying condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Note B - Summary of Significant Accounting Policies

Principles of Consolidation

The financial statements include the accounts of International Silver, Inc. and its subsidiary Western States Engineering, Inc. for the twelve months ended December 31, 2010. For the twelve months ended December 31, 2009, the financial statements include International Silver, Inc. and its subsidiaries Western States Engineering, Inc, and Metales Preciosos Atlas, S.A de C.V. During 2009, the Company closed its Hermosillo, Sonora, Mexico exploration office. The entity had no assets nor obligations on its books at December 31, 2009. The Company’s financial condition and results of operations are based on its consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP).

Recent Accounting Pronouncements

Management has evaluated the recent accounting pronouncements issued since the audited financial statements and in managements’ opinion, the relevant pronouncements reviewed have no material effect on the Company’s financial statements. At December 31, 2010 there were no recent accounting standards that apply to the Company activities.

Use of Estimates

Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant areas requiring the use of management estimates include the determination of mineral ore quantities; the depletion expense calculation, if applicable; useful lives of property and equipment for depreciation; impairment valuations and calculation of any deferred taxes. Actual results may differ from those estimates, and such differences may be material to the condensed financial statements.

Concentration of Credit Risk

Our cash equivalents and prepaid expenses (and trade receivables when recorded) are exposed to concentrations of credit risk. We manage and control risk by maintaining cash with major financial institutions. Management believes that the financial institutions are financially sound and the risk of loss is low.

Concentrations and Economic Vulnerability

Concentrations and economic vulnerability include reliance on related parties. During the year 2010, 100% of the revenue was realized from a related party.

F-10

Fair Value of Financial Instruments

Due to their short-term nature, the carrying value of our current financial assets and liabilities approximates their fair values. The fair value of our borrowings, if recalculated based on current interest rates, would not significantly differ from the recorded amounts.

Cash and Cash Equivalents

For the statement of cash flows, any liquid investments with a maturity of three months or less at the time of acquisition are considered to be cash equivalents.

Accounts Receivable

Accounts receivable are stated, net of an allowance for uncollectible accounts. At December 31, 2010 and at December 31, 2009, there were no trade receivables, only related party receivables of $15,919 and $17,707, respectively. No allowance for uncollectible accounts was established, as management deem the accounts as fully-collectible.

Investments

Investments in marketable securities are classified under one of three methods:

1)	available for sale

2)	held to maturity

3)	trading securities

The accounting treatment accorded any investment will depend on whether the presence of ‘significant influence” over an investee exists. If the investor owns at least 20% of its common stock, then significant influence is assumed. If there is less than 20% ownership or if there is no significant influence over an investee, the investment is valued at the Fair Value Method, otherwise the Equity Method is utilized. At December 31, 2010 and December 31, 2009, the Company held securities “available for sale” that were reported under the Fair Value method.

At December 31, 2010, the Company held 25,000 shares of Atlas Precious Metals Inc. common stock, whose value was considered impaired. Refer to Note D – Investment in Securities for further discussion.

Mineral Development

Costs associated with the acquisition of mineral interests, in the exploration stage, are “expensed”. Mineral exploration costs are also “expensed” as incurred. Mine infrastructure development costs incurred prior to establishing proven and probable reserves are expensed. When it otherwise becomes probable that infrastructure costs will not be recoverable, they are impaired. When it has been determined that a mineral property can be economically developed, the costs incurred to develop such property, including costs to further delineate the ore body and remove overburden to initially expose the ore body, are capitalized as incurred. These costs will then be amortized using the units-of-production method over the estimated life of the ore body based on estimated recoverable ounces of proven and probable reserves.

To the extent that any development costs benefit an entire mineralized property, they are amortized over the estimated life of the property. The specific capitalized cost bases subject to depletion are calculated on a formula based on the number of tons of ore that are expected to be mined divided by the total tons in proven and probable reserves in the property. To date, no development has occurred, nor has depletion has been taken, since production has not commenced.

F-11

Mineral Interests and Property

Mineral interests include the costs of acquired mineral rights and royalty interests in production, development and exploration stage properties.

Production stage mineral interests represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves. Exploration stage mineral interests represent interests in properties that are believed to potentially contain mineralized material.

Mineral interests related to mining properties in the production stage are amortized over the life of the related property using the Units of Production method in order to match the amortization with the expected underlying future cash flows. Development stage mineral interests are not amortized until such time as the underlying property is converted to the production stage. At December 31, 2010 and December 31, 2009, all mineral interests were in the exploration stage.

Impairment of Long-Lived Assets

The company adheres to ASC 360-10-20, "Accounting for the Impairment and Disposal of Long-Lived Assets," which requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when the estimated future cash flows are less than the carrying amount of the asset and would be calculated based on discounted cash flows. At March 31, 2010, the Company incurred an impairment loss on mining property, as disclosed in Note D – Investment in Securities.

Revenue Recognition and Production Costs

Revenue is totally from engineering consulting services. At December 31, 2010, there had been no production from any of the Company's properties.

Reclamation and Remediation Costs (Asset Retirement Obligations)

The Company has adopted ASC 410-20 - Asset Retirement Obligation which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Since the Company’s activities are in the exploration and feasibility stage, there is no legal or contractual obligation for reclamation or remediation of our mines or mining interests. As a result, the adoption of ASC 410-20 does not currently have a material impact on our financial position, results of operations or cash flows.

Earnings (Loss) Per Share

Basic income (loss) per share is computed by dividing income (loss) attributable to the common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share. On November 1, 2010, the Company adopted and granted incentive stock options to its directors, employees and key consultants.

F-12

Income Taxes

The Company accounts for income taxes under ASC 740-10-30 - Accounting for Income Taxes. ASC 740-10-30 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. In estimating future tax consequences, ASC 740-10-35 generally considers all expected future events other than enactments of changes in the tax law or rates. Income tax information is disclosed in Note G - Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax assets are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Statement of Cash Flows Information and Supplemental Non-Cash Financing Activities

There were no interest cash payments for the year ended December 31, 2010 and only a minimal amount for the year ended December 31, 2009. “Non-cash" investing and financing transactions during the reported periods related primarily to the sale of mining property in exchange for shares of common stock, as discussed in Note D – Investment in Securities and financing costs attributed to procure of debt financing, as discussed in Note F – Short-Term Debt

Comprehensive Income

ASC 220-10-55-2 - Comprehensive Income, requires companies to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. On December 31, 2010 and December 31, 2009, the Company did not have any material items of comprehensive income.

Derivative Instruments

The Company revalues derivative liabilities as of each balance sheet date, and otherwise complies with the provisions of ASC 815-10.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board, issued ASC 718 - Share-Based Payment, requires “public” companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions. ASC 718 also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions. In 2009, the Board of Directors of the Company approved a resolution for the stock issuance to officers and employees to recognize the cost of employee services. The Company adopted an incentive stock option plan on November 1, 2010, which is accounted for pursuant to ASC 718.

F-13

Note C – Prepaid Expense

Prepaid expenses encompass, two mineral property leases, which are treated as operating lease, pursuant to FASB ASC 840-20. Disclosure of lease terms is explained in Note D – Mining Properties. At December 31, 2010, prepaid expenses were comprised of the following:

	December 31, 2010		December 31, 2009

Prepaid lease - Prince Mine	$	42,467	$	0

Prepaid lease - Pan American Mine		36,712		0

Prepaid – Other		1,351		966

Total Prepaid Expense	$	80,530	$	966

Note D – Mining Properties

Estrades Mine – Quebec, Canada

On March 1, 2010, the Company purchased a 70% interest in the Estrades Mine, including all facilities and equipment located at or used in connection with the property and certain other related properties, and mining claims and leases located in the Township of Estrades, Oivilliers in the Province of Quebec, Canada, from Atlas Precious Metals Inc., a related party, in exchange for 6,000,000 shares of the Company’s common stock.

The valuation in this interest was determined by applying ASC 505-50 – Equity Based Payments To Non-Employees. Specifically, ASC 505-50-30-6 requires that, “if the fair value of the equity instruments issued in a share-based payment transaction with non-employees is more reliably measurable than the fair value of the consideration received, the transaction shall be measured based on the fair value of the equity instruments issued”.

Although issuance of the stock to be given in exchange was pending at March 31, 2010, the quantity and terms of the equity instrument was known up front, thus the fair value assigned is based on the ‘lowest aggregate fair value. In establishing the “lowest aggregate fair value”, the 6,000,000 shares exchanged for this interest was deemed to have a value of $0.0025/share, for an aggregate amount of $15,000. This represents a 97.5% discount from the market price of our stock on the date of the contractual agreement, recognizing the large size of the block we issued compared with the average monthly volume and the restrictions on the shares we issued.

On March 31, 2010, the Company reviewed its mineral holdings and determined that the 70% interest in the Estrades Mine valuation was impaired, as it had not been operational for several years and future positive cash flows determined on a discounted cash flow method could not be ascertained, consequently recorded an impairment of $15,000 on that date.

During March, 2010, the Company negotiated the terms in a contract for the sale of the Estrades Mine in exchange for 6,000,000 shares of common stock in Continental Mining and Smelting Limited. As of December 31, 2010, the finalization of the contract was pending the issuance of stock from Continental Mining and Smelting Limited.

Prince Mine

On November 6, 2010, the Company entered into a lease /purchase agreement to explore and acquire the historic Prince Mine in Lincoln County, Nevada, USA. The Prince Mine is a former producer of silver, gold, lead, zinc and manganese sulfide and oxide fluxing ore. Past production from the mine, which last operated in 1951, amounts to 3.6 million ounces of silver, 68 million pounds of lead, 110 million pounds of zinc and 17 thousand ounces of gold from 1.2 million tons of ore. Past production was from both underground and surface operations which exploited bedded replacements of limestone units within the Cambrian stratigraphic section.

F-14

The five-year lease requires annual lease payments of $50,000 payable annually on each anniversary date from the date of the lease agreement. Pursuant to FASB ASC 840 – 20 Operating Leases, the lease meets the criteria to be treated as an operating lease. Future minimum lease payments are as follows:

Year 2011 -	$ 50,000
Year 2012 -	$ 50,000
Year 2013 -	$ 50,000
Year 2014 -	$ 50,000
Total	$200,000

For the twelve months ended December 31, 2010, lease expense on the Prince Mine lease was $7,534.

Should the Company exercise the purchase option, the total purchase price shall be $2,750,000, less any amounts paid as advance/lease payments. The initial payment is due within 30 days of the option exercise. Installment payments are as follows:

No. 1 - Initial payment	$ 687,500
No. 2 - 1st anniversary of exercise	$ 687,500
No. 3 - 2nd anniversary of exercise	$ 687,500
No. 4 - 3rd anniversary of exercise	$ 687,500

Prepayment of all or any portion thereof, are not subject to penalty.

Pan American Mine

On December 21, 2010, the Company entered into another lease/purchase agreement to acquire the historic Pan American Zinc/Silver Mine and the Caselton Concentrator in the Pioche/Comet Mining District of Lincoln County, Nevada, USA. The Pan American Zinc/Silver Mine last operated as a Joint Venture between Bunker Hill and the Anaconda Corporation. Ore was mined underground as a rate of 2,000 tons per day using bulk mining via a haulage ramp decline with a 7% dip along the dip of the orebody. Past production from the mine, which last operated in 1979, amounted to 5.0 million tons of ore containing 13 million ounces of silver, 68 millions pounds of lead, 150 million pounds of zinc and 94 thousand ounces of gold. Past production was from bedded replacements of limestone units within the Cambrian sections of the Combined Metals Bed, the same structure mined and present at the Prince Mine 12 miles away.

The lease is for a twelve-month period, with an initial option payment of $40,000 paid on the date of the lease agreement, thereafter monthly lease payments of $10,000 are due, commencing April 21, 2011. Pursuant to FASB ASC 840 – 20 Operating Leases, the lease meets the criteria to be treated as an operating lease. Future minimum lease payments are as follows:

April - December, 2011 $80,000

For the twelve months ended December 31, 2010, lease expense on the Pan American Mine lease was $3,288. The Company is obligated to pay property taxes and claim maintenance fees for the duration of the lease.

Leviathon Project

On August of 2010, the Company paid its annual maintenance fees to the Bureau of Land Management (BLM) on its mining claims. The Company expenses these maintenance fees in the year paid.

F-15

Note E – Investment in Securities

In 2008, the Company relinquished its holdings in the Tecoma Mining District back to the original seller, in return for the shares in common stock that were part of the consideration given on the original purchase of the property As a result, the Company obtained 25,000 shares of the common stock of Atlas Precious Metals Inc., a privately-held and related company to International Silver, Inc. These shares were originally held by the Company’s shareholder/officer, who transferred these shares to the seller of the Tecoma Mining District property, in exchange for a note from the Company.

At December 31, 2010 and December 31, 2009, the carrying value of these securities was considered impaired and have no value at the end of each respectively accounting period.

On March 3, 2010, the Company signed a sales agreement with Continental Mining and Smelting, Limited, conveying its 70% interest in the Estrades Mine located in Quebec, Canada in exchange for 6,000,000 shares of Continental’s common stock (refer to Note D - Mining Properties). At December 31, 2010, the value of the stock could not be determined, as Continental Mining and Smelting Limited, is a newly-organized private company, still in the formation process.

At December 31, 2010, the Company held the following securities:

			Share		Fair
	No. of shares		Price		Value
Common Stock:
Available for Sale Securities -
Continental Mining and Smelting, Limited		6,000,000	$	0.0000	$	0
Atlas Precious Metals Inc.		25,000	$	0.0000	$	0

Note F – Short-Term Debt

On December 21, 2010, the Company obtained a convertible note in the amount of $75,000 from Tintic Standard Gold Mines, Inc. This bridge loan was made in contemplation of the Company obtaining $2,000,000 in equity financing from other independent third-parties.

Stated interest for the ninety-day period is $10,000 and as additional consideration, the holder was granted fifty thousand shares of our common stock on December 31, 2010. These shares shall be “restricted” shares and bear “piggyback and demand registration” rights.

F-16

Terms of the note state that payment of principal, plus accrued interest shall be payable ninety days from the date of the note. If the company elects to extend the loan, interest will accrue at $10,000 per quarter (53% annual interest rate) and as additional consideration, we the Company shall grant Tintic Standard Gold Mines, Inc. twenty-five thousand shares of our common stock, for each quarter extended, under the same restrictions.

Tintic Standard Gold Mines, Inc. has the option to convert the note into shares of common stock of International Silver, Inc. prior to the maturity date or at maturity.

The Holder shall be entitled to receive, 1) prior to maturity date –principal, plus unpaid interest converted at ninety (90%) percent of the offering price of the Maker’s most recent equity offering or 2) at the maturity date, by $0.30.

Outstanding convertible instrument

On December 21, 2010, the Company opted for a short-term loan until its contemplated equity financing is finalized. The terms of the derivative transactions are as follows:

The number of shares of the Maker that Holder shall be entitled to receive upon such conversion shall be determined as follows: (1) prior to maturity date – by dividing the unpaid balance of the principal sum, plus accrued interest and unpaid interest (the ”conversion factor”), by ninety (90%) percent of the offering price of the Maker’s most recent equity offering. In the event no offerings of have occurred, the conversion price shall be thirty-five cents ($0.35); or 2) at the maturity date, by dividing the conversion factor by $0.30.

	December 31, 2010

Carrying amount	$	75,000
Principal amount – liability component		75,000
Amortization		8,333
Unamortized discount		66,667
Net carrying amount	$	8,333
Conversion (factor) price	$	0.018
No. of shares, if converted		4,166,666
Market Value per share at December 31, 2010	$	0.65
Convertible note – if-converted value	$	2,708,333
Principal amount	$	75,000
Excess of value over principal value	$	2,633,333

The effective annual interest rate on the liability component 112%, with interest costs of $8,333 recognized from the inception of the contract, dated December 21, 2010 through December 31, 2010. On April 21, 2010, the note was converted to 499,077 shares of common stock.

F-17

Note G - Income Taxes

The Company has reported (for income tax purposes) net operating losses for 2010, 2009 and prior years as follows:

Net Operating Loss carry-forward to Year 2006	$	106,508
Net Operating Income - Year 2006 (Applied)		(4,693	)
Net Operating Loss carry-forward to Year 2007	$	101,815
Net Operating Loss - Year 2007		111,921
Net Operating Loss carry-forward to Year 2008	$	213,736
Net Operating Loss - Year 2008		237,958
Net Operating Loss carry-forward to Year 2009	$	451,694
Net Operating Loss - Year 2009		62,811
Net Operating Loss carry-forward to Year 2010	$	514,505
Net Operating Loss - Year 2010		47,369
Net Operating Loss carry-forward to Year 2011	$	561,874

Pursuant to the provisions of the Internal Revenue Code, the Company has elected to forego the carry-back provisions, allowable under the IRS regulations, for the stated accounting periods.

At December 31, 2010 the Company recorded a deferred tax benefit of $203,503, but due to a going-concern issue, Management made an allowance for a provision of an equal amount, should the Company not be able to avail itself of that tax benefit. Deferred tax asset is based on prevailing IRS graduated tax tables which average 32% at December 31, 2010 and December 31, 2009.

Net deferred tax assets consists of the following components:

	December 31, 2010		December 31, 2009

Deferred Tax Asset	$	203,503	$	172,499
Valuation Account		(203,503)		(172,499)
Net Deferred Tax Asset	$	0	$	0

At December 31, 2010, The Company had a net operating loss carry-forward of $561,874 for federal income tax purposes that may be offset against future taxable income from years 2011 through 2028. Our deferred tax benefit is adjusted for interim results, but we simultaneously adjust the allowance for a net zero effect.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.

F-18

Note H – Shareholders’ Equity

The Company was incorporated on September 4, 1992 with the initial issuance of 1,000 shares of common stock at a par value of $1.00 per share. On June, 2006 the Board of Directors adopted a new business strategy to change its emphasis from providing engineering services to conducting mine exploration and development. As a result, the Board of Directors amended its Articles of Incorporation to authorize 500,000,000 shares of common stock, at a par value of $0.0001 to allow for equity financing. Additionally, the Board of Directors passed a resolution, dated June 16, 2006, to effectuate a stock split of 12,000 to 1, for all represented shares. On July 24, 2006, the three shareholders of record were given their new share distribution of 4,000,000 shares each.

On September 13, 2006, the Company issued 1,000,000 shares of common stock at $0.075 per share in exchange for legal services.

On September 19, 2006, the Company issued 30,000 shares of common stock at $1.00 per share for land.

On October 21, 2006, the Company issued 300,000 shares of common stock at $.185 per share in exchange for a 98% interest in the holdings of Metales Preciosos Atlas, S.A. de C.V., a Mexican subsidiary.

On October 21, 2006, the Company issued 100,000 shares of common stock at $.050 per share in exchange for Directors fees.

During 2007, the Company conducted a private placement and issued an additional 260,000 shares of common stock for cash as follows:

On May, 2007, the Company issued 7,000 shares of common stock at $0.500 per share for $3,500.

On June, 2007, the Company issued 3,000 shares of common stock at $0.500 per share for $1,500.

On October, 2007, the Company issued 4,000 shares of common stock at $0.500 per share for $2,000.

On November, 2007, the Company issued 246,000 shares of common stock at $0.297 per share for $73,000.

On May 22, 2007, the Company issued 100,000 shares of common stock at $0.055 per share in exchange for transfer agent fees.

On June 30, 2007, the Company issued 336,186 shares of common stock at $0.500 per share in exchange for an outstanding debt owed a shareholder/officer, as explained in Note H.

On September 13, 2007, the Company issued 100,000 shares of common stock at $0.040 per share in exchange for Director fees.

On September 13, 2007, the Company issued 150,000 shares of common stock at $0.040 per share in exchange for engineering consulting services.

On September 21, 2007, the Company issued 150,000 shares of common stock at $0.040 per share in exchange for consulting services.

On June 12, 2008, the Company issued 150,000 shares of common stock at $0.133 per share in exchange for legal services.

On September 8, 2008, the Company issued 335,567 shares of common stock at $0.289 per share in exchange for an outstanding debt owed to a shareholder/officer.

F-19

On November 10, 2008, the Company repurchased 30,000 of its own shares in common stock upon relinquishing its holdings in the Tecoma Mining District. These shares are being held in Treasury as of December 31, 2009, valued at $1.00 per share, their original issue price.

On September 23, 2009, the Board of Directors passed a resolution for the issuance of 3,550,000 shares of common stock at $0.010 to its directors, officers and certain consultants for services rendered. The share certificates were effective October 6, 2009, but are “restricted” pursuant to Rule 144 of the Securities Act of 1934.

On March 1, 2010, the Company purchased its 70% interest in the Estrades Mine in exchange for 6,000,000 shares of its common stock, at a share price of $0.0025 per share.

On August 18, 2010, the Company issued 2,000,000 shares of common stock at $0.025 per share in exchange for an outstanding debt of $50,000 owed to a shareholder/officer.

On August 24, 2010, the Company conducted a private placement and issued an additional 2,000,000 shares of common stock at $0.02 per share for $40,000

On December 31, 2010, the Company issued 50,000 shares of common stock in exchange for a convertible note to Tintic Standard Gold, Inc. for $75,000.

At December 31, 2010, the Company had authorized 500,000,000 shares of common stock, 28,581,753 shares had been issued and are outstanding.

Note I – Stock Option Plan

At November 1, 2010, the Board of Directors (“Board”) of the Company authorized the approval of a stock option plan (the “Plan”). The plan allows the Board of Directors, or a committee thereof at the Board’s discretion, to grant stock options to officers, directors, key employees and consultants of the company and its affiliates. The Board authorized the Corporation to issue up to 20% of the total number of outstanding shares of the Company’s common stock as Stock Options. No vesting will be required.

Pursuant to the Plan, in the case of Incentive Stock Options, the exercise price shall not be less than (i) 100% of the fair market value of one (1) share of common stock on the date the option is granted, or (ii) 110% of the fair market value of one (1) share of common Stock on the date the option is granted if, at that time the option is granted, the participant owns, directly or indirectly more than 10% of the total combined voting power of all classes of stock of the company. In the case of Non-Statutory Stock Options, the per share price to be paid by the Participant, at the time the option is exercised, shall be determined by the Committee in its sole discretion.

During the year ended December 31, 2010, total stock options for 3,300,000 shares were granted to directors, officers, key employees and consultants under the plan. On November 1, 2010, stock options for 3,300,000 shares were granted at an exercise price of $0.20, which was in excess of the quoted market price of $0.12 of the Company’s shares at the date of the grant. All these options were deemed as “incentive stock options” by the Board of Directors in accordance with the Plan. These option grants are fully vested and expire on November 1, 2015. No options were exercised or forfeited during the year 2010.

Compensation expense has been recorded pursuant to ASC 718 – Compensation – Stock Compensation based on fair value derived by means of applying the Black Sholes (BSM) option-pricing model. The fair value of each option grant is calculated assuming an expected life of five years, volatility of 823%, an interest rate of 3.5% and a dividend yield of zero. A summary of the status of the Company’s stock options as of December 31, 2010 and changes during the year then ended, is presented below:

F-20

	Year 2010
			Weighted-Average		Contractual
	No. of shares		Exercise Price		Life

Outstanding – Beginning of year		0	$	-

Granted		3,300,000		0.20	5.0 years

Exercised		0		-

Forfeited		0		-

Outstanding – End of year		3,300,000	$	0.20	5.0 years

Options exercisable at year-end		3,300,000	$	0.20	5.0 years

Compensation expense of $396,000 has been recorded for grants awarded for the year ended December 31, 2010.

Note J - Related Party Transactions

Amounts due from and to related parties, are receivable from or payable to entities controlled by the shareholders, officers, or directors of the Company (“Related Entities”). The underlying transactions are with these related parties. These amounts are unsecured and not subject to specific terms of repayment.

	December 31,		December 31,
	2010		2009
Receivable from Related Parties:

Atlas Precious Metals Inc.	$	15,860	$	16,731

Arimetco		59		308

Atlas Corporation		0		635

New Edge Corporation		0		33

Total Related Party Receivables	$	15,919	$	17,707

Atlas Precious Metals Inc. contracts engineering services from International Silver, Inc. related to various engineering services for the Fort Cady project located near Barstow, California. The balance due from Atlas Precious Metals Inc. at December 31, 2010 and December 31, 2009 are $64,580 and $16,731, respectively. Other amounts due from various related parties pertain to courier services paid by International Silver, Inc. and reimbursed by these related companies:

F-21

	December 31,		December 31,
	2010		2009

Payales to Related Parties:

Atlas Precious Metals Inc.	$	11,500	$	1,500

Harold R. Shipes		36,589		86,589

American International Trading Co.		0		463

Total Related Party Receivables	$	48,089	$	88,552

Amounts due to related parties stems from various loans made, prior to 2007, by a shareholder/officer, H.R. Shipes, who principally funded the Company operations prior to the Company going public. In 2007, the “principal” portion of the loans were paid off, leaving only the accrued interest due the shareholder/officer. No further interest has accrued on this loan indebtedness

On August 18, 2010, the Company reduced its debt by $50,000 with its principal shareholder, H.R. Shipes by issuing two million shares of common stock – Refer to Note H – Shareholders” Equity

The Company also subleases office space from Atlas Precious Metals Inc. at a rate of $500 per month.

Note K- Office Leases

The Company rents (subleases) its administrative offices from an affiliate in Tucson, Arizona and is billed an allocated portion based on percentage of floor space occupied. Rental expenses for the twelve months ended December 31, 2010 was $6,900 and December 31, 2009 was $7,353. In 2009 the Hermosillo exploration office located in the State of Sonora, Mexico was closed.

Note L – Exploration Costs

Acquired mineral interests are presented as “exploration costs” as required by “Industry Guide 7” of the Securities and Exchange Commission’s Guides for the Preparation of Registration Statements and with the Society for Mining, Metallurgy and Exploration’s “Guide for Reporting Exploration Information, Mineral Resources, and Mineral Reserves”. Exploration costs incurred since inception through December 31, 2010 are $283,922. Exploration costs incurred for the twelve months ended December 31, 2010 were $16,923 and for the twelve months ended December 31, 2009 were $19,183.

Note M – Correction of Error in Previously Issued Financials Statements

The Company’s previously issued financials statements for the period ended December 31, 2009 have been restated due to a correction of error relating the duplication of reimburseable costs to a related party causing an overstatement of liabilities and understatement of income by $7,143. Additionally, Other Revenue was reclassified to Other General & Administrative Expense due to the inclusion of reimburseable expenses reflected in Other Revenue in error. The effect of the correction of errors is noted below:

F-22

	At December 31, 2009
	Original			Change			Restated
BALANCE SHEET

Liabilities

Due To related Parties	$	95,695		$	( 7,143	)	$	88,552

Shareholders’ Equity

Accumulated Deficit	$	(855,496	)	$	7,143		$	(848,353	)

STATEMENT OF OPERATIONS

Revenues

Other	$	1,275		$	( 1,275	)	$	0

Total Revenues	$	146,934		$	( 1,275	)	$	145,659

Operating Expenses

All Other General & Administrative	$	93,750		$	( 8,418	)	$	85,332

Operating Income/(Loss)	$	( 89,469	)	$	7,143		$	( 82,326	)

Net Income/(Loss)	$	( 89,303	)	$	7,143		$	( 82,160	)

Accumulated Deficit – End of period	$	(855,496	)	$	7,143		$	(848,353	)

Basic and Diluted

Income/(Loss) per Share	$	( 0.006	)	$	0.001		$	( 0.005	)

STATEMENT OF CASH FLOWS

Net Income/(Loss)	$	( 89,303	)	$	7,143		$	( 82,160	)

Changes in operating assets and liabilities

(Decrease)/Increase in accounts	$	11,401		$	( 7,143	)	$	4,258

payable

F-23

STATEMENT OF SHAREHOLDERS’ EQUITY

Net Income/(Loss)	$	( 89,303	)	$	7,143	$	( 82,160	)

Accumulated Deficit During Exploration

Stage– At December 31, 2009	$	(855,496	)	$	7,143	$	(848,353	)

Total - Shareholders’ Equity	$	( 39,517	)	$	7,143	$	( 32,374	)

Note N – Subsequent Events

Management has reviewed all subsequent events through the issuance date of the audited financial statements and has disclosed all material events that have transpired subsequent to December 31, 2010 up through the issuance date. This includes the pending investment in securities of Continental Mining and Smelting, Limited as discussed in Note D- Mining Properties.

In addition, subsequent to the issuance of the audited financial statements, the promissory note, with convertible features, as disclosed in Note F – Short-Term Debt, has been extended pursuant to the provisions of that note.

F-24

Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer evaluated our disclosure controls and procedures on December 31, 2010 as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in connection with our filing of our annual report on Form 10-K for the year ended December 31, 2010.

Changes in internal controls.

There were no significant changes in our internal controls or in other factors that could significantly affect these internal controls subsequent to the date of their evaluation.

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Our Board of Directors and our executive officers consist of the persons named in the table below. Directors are elected at our annual meeting of Shareholders. Vacancies on our Board of Directors may only be filled by the majority vote of the remaining Directors. Each director shall hold office until the next annual meeting of Shareholders and until his successor has been elected. Our bylaws provide that we have at least one director.

The table below sets forth our corporate officers and directors:

Name of Service	Age	Position	Term as Director	Period as Director
Harold Roy Shipes	68	President/CEO/Chairman/Director	Two year	9/92 to Present

Herbert E. Dunham	67	Director	Two year	6/06 to Present

Michael S. Harrington	73	Director	Two year	9/07 to Present

John A. McKinney	50	Chief Financial Officer/Executive Vice President

Matthew J. Lang	32	Vice President/Corporate Secretary

Mr. Harold Roy Shipes, Chairman/President/Chief Executive Officer. Mr. Shipes has been our President/Chief Executive Officer since April 13, 1999, and our co-founder and Chairman of the Board since 1992. From 1992 until December 2010, Mr. Shipes provided us with engineering services, specializing in mining related engineering projects. Including his affiliation with us, Mr. Shipes has over 38 years experience in the mining industry in senior management positions with companies around the world and has worked extensively in copper, zinc and precious metals, as well as engineering, construction and project development, as follows:

	a)	In 2004, Mr. Shipes became President and Chief Executive Officer of Atlas Minerals, Inc., now known as Atlas Corporation, an SEC reporting company that is currently delinquent in its reporting obligations, but will attempt to become current in its SEC reporting by June 2008.
	b)	Mr. Shipes founded American International Trading Company in 1996 and has been its Chairman and Chief Executive Officer from 1996 to present. American International Trading Company is a privately held mining company based in Tucson, Arizona, that is engaged in exploration and development of tin mines in Bolivia.

	c)	Mr. Shipes co-founded Western Gold Resources in 1994, which merged with Atlas Precious Metals, Inc. in 2004. Mr. Shipes continues as Chairman and Chief Executive Officer of Atlas Precious Metals, Inc., a Tucson, Arizona private based mining company that has several gold exploration properties in Sonora, Mexico, and projects in Bolivia, including a Joint Venture on the Karachipampa Lead Smelter in Potosi, Bolivia, and zinc, lead and silver exploration properties.
	d)	In 1988, Mr. Shipes founded Arimetco International, Inc., a Toronto Stock Exchange listed company from 1988 to 1996 based in Tucson, Arizona, which was a copper mining company with operations in Arizona and Nevada. Mr. Shipes was President and Chief Executive Officer of Arimetco International, Inc. from 1988 until 1999.
	e)	From November 1992 to October 1994, Mr. Shipes served as Chairman of Breakwater Resources, a zinc mining company located in Toronto Canada that was listed on the Toronto Stock Exchange at the time and continues to have such listing.
	f)	From January 1993 to December 1995, Mr. Shipes served as a Director of Transoceanic Trading Company, a Barbados based metals trading company. In 1986, Mr. Shipes founded American Pacific Mining and acquired the El Mochito Mine, a zinc, lead and silver mine in Honduras.
	g)	From 1984 to 1988, Mr. Shipes was the President and Chief Executive Officer of American Pacific Mining, a then listed Toronto Stock Exchange that engaged in mining activities in Honduras, Central America, and Arizona. The El Mochito Mine produced zinc and lead-silver concentrates that were shipped around the world for smelting; and the Johnson Camp Mine produced cathode copper that was consumed in the United States.
	h)	Mr. Shipes was General Manager and Chief Executive Officer of Ok Tedi Mining Limited, a copper and gold mining company in Papua, New Guinea, from 1984 to 1986.
	i)	From 1975 to 1983, Mr. Shipes was the Vice President and General Manager of the copper producing company, Southern Peru Copper Company, and from 1981 to 1983, as Vice President and General Manager of Southern Peru Copper Company.

In 1967, Mr. Shipes received a Bachelor of Science Degree in Biochemistry from the University of Arizona. In 1977, he completed postgraduate studies in Mining and Metallurgical Engineering at the University of Arizona and received a Bachelor of Science Degree in Biochemistry and Mining Metallurgical Engineering.

Mr. John A. McKinney, Executive Vice President and Chief Financial Officer. Mr. McKinney has been our Executive Vice President/Chief Financial Officer since June 16, 2006. From September 4, 1992 to December 31, 2001, Mr. McKinney was our Corporate Secretary. Including his affiliation with us, Mr. McKinney, has performed in senior management positions in the mining industry for approximately 20 years, as follows:

	a)	In 1992, Mr. McKinney co-founded us when we were an engineering company specializing in mining related engineering projects.
	b)	Since May 1994, Mr. McKinney has been a Director of American International Trading Company, a Tucson, Arizona based company that engaged in the business of mining exploration in Bolivia.
	c)	In 1994, Mr. McKinney co-founded Western Gold Resources that merged with Atlas Precious Metals, Inc., a Tucson, Arizona based private mining company that has gold exploration properties in Sonora, Mexico, a Joint Venture on the Karachipampa Lead Smelter in Potosi, Bolivia lead smelter, and zinc, lead and silver exploration properties in Bolivia. Mr. McKinney has been Executive Vice President and Chief Financial Officer of Atlas Precious Metals Inc. since May 1994.
	d)	From 1992 to 1995, Mr. McKinney served as a Director of Breakwater Resources, a Toronto Stock Exchange listed zinc mining company; during the same time period, he served on the management committee of Transoceanic Trading Company, a Barbados metals trading company that was a subsidiary of Breakwater Resources.
	e)	Mr. McKinney served in the following positions with Arimetco International, Inc., a then Toronto Stock Exchange listed company based in Tucson, Arizona, which was a copper mining company with operations in Arizona and Nevada: (a) from 1989 to 1991, as the Director of Purchasing; (b) from 1991 to 1994, as the Vice President of Corporate Administration; (c) from 1994 to 1999, as Executive Vice President; and (d) from 1997 to 1999, as Chief Financial Officer.
	f)	From 1989 to 1992, he was President/Director of Arisur, Inc., a Grand Cayman private company that owned the Andacaba Silver and Zinc mine in Bolivia and was a wholly owned subsidiary of Arimetco International, Inc.

In addition to the above mining related positions, in 1999, Mr. McKinney founded and became Chairman and President of Western Manufacturing Inc., a Phoenix, Arizona manufacturer, wholesaler and retailer of plantation shutters, until 2005, at which time all of the assets of Western Manufacturing Inc. were sold.

In 1984, Mr. McKinney received a Bachelor of Science Degree in Business Administration from the University of Arizona.

Mr. Matthew J. Lang, Vice President Administration and Corporate Secretary. Mr. Lang has been our Vice President of Administration and Corporate Secretary since June 16, 2006 and manages our general administration, including corporate administrative maintenance and reporting, coordinates shareholder meetings, director meetings and manages shareholder relations.. From approximately January 2003 and continuing to date, Mr. Lang also has acted as our General Logistics Manager and directed our administration and logistics management and coordinated the flow of materials required by on-going operations, from purchasing through delivery. Since May 2006, Mr. Lang has been the Vice President of Administration and Corporate Secretary for Atlas Precious Metals, Inc., a Tucson, Arizona based mining company that has several gold exploration properties in Sonora, Mexico, zinc, lead, and silver exploration properties in Bolivia, and a joint venture of the Karachipampa Lead Smelter in Potosi, Bolivia. From January 2002 to January 2003, Mr. Lang was the Operations Manager of the White Cliffs Diatomite Mine for Atlas Minerals, Inc., now known as Atlas Corporation, an industrial minerals company currently based in Tucson, Arizona that is an SEC reporting company, but delinquent in its reporting obligations. . From February 1999 to June 2002, he was General Purchasing and Sales Manager for Tucson, Arizona based Mining and Construction Suppliers Inc., a company that supplies tooling products to other businesses in the field of repair, construction, and mining.

Mr. Herbert Eugene Dunham, Director. Mr. Dunham has been our Director since June 16, 2006. From May 2003 to present, Mr. Dunham has been the owner of Dunham Mining Consultants, a sole proprietorship, located in Tucson, Arizona, that provides consulting services to the natural resource industry. Mr. Dunham was a Director of Golden Eagle International, Inc., an SEC reporting company, from May 9, 2006 to September 21, 2006, its Chief Operating Officer from July 27, 2006 to September 21, 2006, and an Interim Chief Financial Officer from August 15, 2006 to September 21, 2006.

From June 1997 to May 2003, Mr. Dunham was the Chairman/Chief Executive Officer of Affiliated Companies, a consortium of five companies conducting diversified energy and mining related business, including mining, oil and gas, power and utilities, and telecommunications.

Mr. Dunham has an additional 29 years in senior management positions in the mining industry, as follows:

	a)	From June 1994 to June 1997, Mr. Dunham was the Chief Executive Officer/Director of Suramco, Inc., which managed diversified business enterprises, acquisitions, joint ventures, and expansions, including acquiring and operating five mining properties in the United States, Canada, and South America
	b)	From 1988 to 1994, Mr. Dunham was the Chief Executive Officer of New Mexico operations for Phelps Dodge Corporation and a Director of an affiliated acquired company, Chino Mines Company, where he provided leadership in corporate planning, finance, technical areas and general operations, including the mining sector.
	c)	From 1972 to 1988, Mr. Dunham was the Chief Executive Officer of Phelps Dodge Morenci, Inc., Chairman of Morenci Mining, Inc., and a Director of Morenci Water and Electric, all of which were associated with Phelps Dodge Corporation. During this period, Mr. Dunham directed and managed mining properties in Arizona, New Mexico, and Chile.
	d)	From 1968 to 1972, Mr. Dunham was the Mining, Exploration, and Finance Manager of Rio Tinto, PLC, a natural resources and mining company conducting business in England, Spain, Australia, and Canada.

Mr. Dunham received the following degrees from Michigan Technological University located in Houghton, Michigan: (a) in 1968, a Bachelor of Science Degree in Mining Engineering; and (b) in 1970, a Bachelor of Science Degree in Geological Engineering. In 1972, Mr. Dunham received a Masters of Business Administration from the University of Pennsylvania’s Wharton Business School.

Michael Harrington, Director. Mr. Harrington has been our Director since October 23, 2007. In 1998, Mr. Harrington went into semi-retirement. Since that time, he has held the following Director positions:

	a)	From April 1998 to the present, he has served as a Director and since January 2006 he has served as a Director and Vice-Chairman the Board of Directors of KWC Resources, a Montreal, Canada based company. KWC Resources is a publicly traded company listed on the Toronto Stock Exchange. KWC Resources is a Diamonds and Base Metals exploration company with a focus in northern Canada.
	b)	From January 2006 to the present he has served as a Director of the Board of Directors of SGV Resources Inc, a Nevada corporation based in Reno, Nevada. SGV Resources is in the business of exploration and mine development with a primary focus in Arizona and Nevada. SGV Resources is a wholly owned subsidiary of St. Genevieve Resources Ltd. Located in Montreal, Canada and which is a publicly held Canadian company traded on the CNQ Stock Exchange.
	c)	From April 2007 to the present, he has served as a Director of the Board of Directors of Cadillac Ventures Inc. Cadillac Ventures is an exploration company headquartered in Toronto, Canada. Its primary focus is in Gold and Tungsten exploration in eastern Canada. Cadillac Ventures is a publicly held Canadian company traded on the CNQ Stock Exchange.

From May of 1994 to June of 1998, Mr. Harrington worked as a private consultant and technical advisor to international mining companies seeking to invest in gold and silver mining companies in Russia, including Asarco, Pan American Silver Company, Kinross Gold Corporation, Armada Gold Corporation and Gippsland Resources Inc.

From 1979 to 1994, Mr. Harrington served in the following positions with Cyprus Minerals Company, previously known as Amoco Minerals Company, a subsidiary of Amoco Oil Company, a publicly held company located in Englewood, Colorado, whose shares were traded on the New York Stock Exchange: (a) from 1979 to 1989 as Vice President of Coal Development; (b) from 1982 to 1989 as Vice-President of Coal Sales and Marketing; and (c) positions held concurrently, from 1989 to 1990 as Vice President of General Corporate Development, and from January 1990 to December 1991 as Vice President of North Shore Mining Company, a Taconite pellet producer wholly owned by Cyprus Minerals Company; and (d) . from January 1992 to June 2004 as Vice President of General Corporate Development. In connection with these positions, Mr. Harrington was: (a) lead negotiator for approximately 10 acquisitions made by Cyprus Minerals Company; (b) responsible for the successful restart of North Shore Mining Company in Silver Bay Minnesota which had been idled under bankruptcy proceedings for 5 years; (c)Lead negotiator in the disposition of various assets, including gold and industrial mineral properties; (d) lead negotiator for long term coal sales contracts; (d) President of Omolon Gold Mining Company where he managed the negotiations for Cyprus’s investment and start up of the Kubaka Gold mining operation in Russia, and worked with OPIC and the EBRD, where he negotiated the first gold export agreement for the private exportation of gold from Russia.

Other positions held by Mr. Harrington include the following; (a) From 1971 to 1979 as Vice President of Finance of Atlantic, Gulf and Pacific Company, a privately held New York City based company in the business of marine construction; (b) from 1974 to 1979 as President of Atlantic, Gulf and Pacific companies coal mining subsidiary (AGP Coal Company); (c) From 1969 to 1971, as founder and Vice President of privately held South Hopkins Coal Company located in Madisonville, Kentucky; (d) From 1962 to 1969, he served as Controller of Handley Mills Corporation, a privately held textile company based in New York City; and (d) From 1958 to 1960, he worked as a Senior Auditor for Peat Marwick Mitchell and Co. in their New York City office.

Mr. Harrington received a Bachelor of Arts degree in Accounting from Iona College in 1956

Other Significant Persons

Harrison Matson, Consulting Geologist - Mr. Matson has been our Consulting Geologist since September 2007. From January 2001 to present, Mr. Matson has been the President and General Manager of Western Range Services, a private company based in Tucson, Arizona that conducts business in geotechnical engineering services;

Mr. Matson has approximately 22 years of mining experience, including:

	a)	From August 1998 to December 2001, he served as Technical Engineering Manager of Equatorial Mining North America, Inc., a copper mining company based in Sydney Australia with operations in Arizona, Nevada, and Chile;
	b)	From July 1989 to August 1988, as Chief Geologist of Arimetico, Inc., a then Toronto Stock Exchange listed company based in Tucson, Arizona, which was a copper mining company with operations in Arizona and Nevada;
	c)	From November 1987 to July 1989, a Mining Engineer for the State of Arizona Department of Mines and Mineral Resources in Tucson, Arizona; and
	d)	From January 1979 to November 1987, as exploration geologist for several companies, including Exploration, Ltd., Meridian Minerals, Inc., Gulf Resources, and Chemical Co.

In 1977, Mr. Matson received a Bachelor of Science Degree in Geology from the University of Arizona and completed his graduate studies in Geological Engineering in 1986 from the same university. Since 1987, Mr. Matson has been a registered Professional Geologist in the State of Arizona.

Family Relationships

One of our officers and director are related to one another. John A. McKinney, our Executive Vice-President/Chief Financial Officer, is the son-in-law of Harold R Shipes, our Chief Executive Officer/Chairman of the Board. Apart from that relationship, there are no family relationships between or among any of our directors or executive officers. There is no arrangement or understanding between any of our directors or executive officers and any other person in which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings to our knowledge between non-management shareholders that may directly or indirectly participate in or influence the management of our affairs.

Involvement in Certain Legal Proceedings

None of our officers, directors, or persons nominated for such position, has been involved in legal proceedings that would be material to an evaluation of their ability or integrity, including:

	·	involvement in any bankruptcy;
	·	involvement in any conviction in a criminal proceeding;
	·	being subject to a pending criminal proceeding;
	·	being subject to any order or judgment, decree permanently or temporarily enjoining barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; and
	·	being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Compliance with Section 16(a) of the Exchange Act

Not applicable. We do not have a class of equity securities registered under Section 12 of the Exchange Act.

Code of Ethics

We have adopted a Code of Ethics.

Corporate Governance:

a. Director Independence

Our common stock is quoted on the OTC Bulletin Board; that trading medium does not have director independence requirements. Under Item 407(a) of Regulation S-B, we have adopted the definition of independence used by the American Stock Exchange, which may be found in the American Stock Exchange Company guide at (s) 121(A)(2) (2007). Under this definition, none of our directors are independent, because our Board of Directors cannot affirmatively determine that any of our directors do not have a relationship that would interfere with the exercise of independent judgment in carrying out their responsibilities of a director.

b. Committees

Our Board of Directors, as a whole, decides such matters, including those that would be performed by a standing nominating committee. Our Board of Directors has adopted procedures for considering executive and director compensation. We have not yet elected audit, compensation, or nominating committees because we have not sufficiently developed our operations since we changed our business model to exploration activities. We have established minimum criteria for the election of nominees to our Board of Directors and have a process or procedure for evaluating such nominees.

c. Shareholder Communications

Our Board of Directors has adopted a defined or procedure requirements for our stockholders to send communications to our Board of Directors, including submission of recommendations for nominating directors. We have also adopted a process for our security holders to communicate with our Board of Directors.

d. Board of Director Meetings.

During 2010, all but one of the eight board resolutions were adopted in lieu of actual board member meetings. All three board members, Harold R. Shipes, Michael Harrington and Herbert E. Dunham approved the resolutions. On November 1, 2010, the Board met and approved the adoption of a stock option plan.

During 2009, three board resolutions were adopted during the year in lieu of actual board member meetings. All three board members, Harold R. Shipes, Michael Harrington and Herbert E. Dunham approved the resolutions.

e. Annual Shareholder Meetings

During 2010, there was no annual shareholder meeting. We request that all of our Directors attend our Annual Shareholder Meetings; however, we have no formal policy regarding their attendance.

Item 11 Executive Compensation

The following table sets forth the total compensation currently being paid by us for services rendered by our executive officers.

Summary Compensation Table

	Annual Compensation							Long-Term Compensation Awards
Name and Principal Position	Year	Salary ($)		Bonus ($)		Other Annual Compensation($)		Restricted Stock Awards ($)		Securities Underlying Options/ SARs (#)		LTIP Payouts($)		All Other Compensation ($)
H. Roy Shipes	2009		0		0		0		10,000		0		0		0
President and Chief Executive Officer	2010		0		0		0		0				0		60,000
John A. McKinney	2009		0		0				10,000		0		0		0
Executive Vice President and Chief Financial Officer	2010		0		0		0		0		0		0		60,000
Matthew J. Lang	2009		0		0		0		10,000		0		0		0
Vice President, Secretary	2010		0		0		0		0		0		0		60,000

Employment Agreements, Termination of Employment and Change-in-Control Arrangement

There are no employment agreements between any member of our management and us. There are no changes of control arrangements, either by means of a compensatory plan, agreement, or otherwise, involving our current or former executive officers.

Management Compensation

In 2010, there was no direct cash compensation paid to the Company’s management, although they were each granted incentive stock options on November 1, 2010. The three officers of the Company were each granted 500,000 shares of the Company’s common stock with an assigned fair value of $0.12 per share or $60,000 each.

In 2009, our management received shares in the Company’s common stock as compensation for past services.

Board Compensation

SUMMARY COMPENSATION TABLE

Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)		Option Awards ($) (f)		Non-Equity Incentive Plan Compensation ($) (g)	Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Harold R. Shipes	2009			$	10,000						$	10,000
Harold R. Shipes	2010					$	60,000				$	60,000
Herbert E Dunham	2006			$	5,000						$	5,000
Herbert E. Dunham	2009			$	1,000						$	1,000
Herbert E. Dunham	2010					$	12,000				$	12,000
Michael Harrington	2007			$	4,000						$	4,000
Michael Harrington	2009			$	1,000						$	1,000
Michael Harrington	2010					$	12,000				$	12,000

In 2010, the Board of Directors approved a resolution to adopt a stock option plan for its directors, officers, key employees and consultants for the purpose of providing an incentive through equity participation in the Company and by rewarding those who contribute towards the achievement by the Company of its long-term economic objectives. On November1, 2010, options for 700,000 common shares, valued at $84,000 were granted to its directors. The option exercise price is $0.20 per share.

In 2009, Herbert E Dunham and Michael Harrington, our Directors, have each received 100,000 shares of our common stock for their services as Directors The shares issued to Director Dunham on October 6, 2009 were valued at $0.01 per share, for an aggregate value of $1,000. The shares issued to Director Harrington on October 6, 2009, were valued at $0.01 per share, for an aggregate value of $1,000.

In 2008. there was no compensation paid to any director.

On September 13, 2007, Director Harrington was issued 100,000 shares of common stock, valued at $0.04 per share, for an aggregate value of $4,000, for services as Director.

On October 21, 2006, Director Dunham was issued 100,000 shares of common stock, valued at $0.05 per share, for an aggregate value of $5,000, for services as Director.

Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following tables set forth the ownership, as of the date of this Form 10-K, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. There are not any pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable common share property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown

NAME AND ADDRESS	TITLE	CLASS OF SECURITIES	TOTAL SHARES OWNED		PERCENTAGE

Harold Roy Shipes and his wife, Eileen Shipes* 11251 E. Camino Del Sahuaro Tucson, AZ 85749	Chief Executive Officer/Chairman of the Board	Common		6,313,613		22.1	%

John McKinney and his wife, Lynette McKinney** 12509 E. Jeffers Place Tucson, AZ 85749	Executive Vice President/Chief Financial Officer	Common		4,904,000		17.2	%

Matthew Lang 9526 E. Corte Puente Del Sol Tucson, AZ 85748	Vice President /Secretary	Common		3,000,000		10.5	%

Herbert E. Dunham 6555 E. Via Cavalier Tucson, AZ 85715-4732	Director	Common		192,000		.7	%

Michael Harrington 14190 E. Caly Avenue Aurora, CO 80016	Director	Common		200,000		.7	%

TOTAL				14,609,613		51.2	%

* Shares held as community property.

** Shares held as joint tenants in the entirety.

This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 28,581,753 shares of common stock outstanding as of the date of this registration statement.

Item 13 Certain Relationships and Related Transactions

Our founders, who are also considered “promoters” under the Securities Act are: (a) Harold Roy Shipes, our Chief Executive Officer/Chairman of the Board; (b) John McKinney, our Executive Vice President/Chief Financial Officer; and (c) Matt J. Lang, our Vice President of Administration/Secretary. The information set forth below describes transactions with Messrs Shipes, McKinney, and Lang in connection with Messrs. Shipes, McKinney, and Lang, each being issued 4,000,000 shares of our common stock on September 13, 2006. These issuances were the result of the following:

	a.	Prior to January 1, 1994, Arimetco International, Inc. owned 100% of our issued and outstanding shares of common;
	b.	On or about January 1, 1994, Mr. Shipes and his wife, Eileen Shipes, purchased 800 shares of our common stock from Arimetco International, Inc. which represented 80% of our then issued and outstanding shares, for an aggregate purchase price of $200,000;
	c.	On or about January 1, 1994, Mr. McKinney, purchased 200 shares of our common stock from Arimetco International, Inc. for $50,000, which represented 20% ;
	d.	On or about July 13, 2006, of his 800 shares of our common stock, Mr. Shipes sold : (i) 333 shares to Matt Lang, our Vice President of Administration/Corporate Secretary, and his wife Danielle Lang, for an aggregate purchase price of $333 or $1.00 per share; and (ii) 133 of his shares to Mr. McKinney and his wife, Lynette McKinney, for an aggregate purchase price of $133 or $1.00 per share.

As a result of the transactions described in a - d, as of July 13, 2006, Mr. Shipes and his wife owned 334 shares of our common stock, and Messrs. McKinney, and Lang each had 333 shares of our common stock. On July 14, 2006, we increased our authorized shares to 500,000,000 and thereafter on the same day we forward split our issued and outstanding shares at a ratio of 12,000 to 1. This 12,000 to 1 split resulted in Mr. and Mrs. Shipes, Mr. and Mrs. Lang, and Mr. and Mrs. McKinney each jointly own 4,000,000 shares of our common stock.

On October 21, 2006, we issued 300,000 shares of our common stock to our affiliate, Atlas Precious Metals, Inc., for our acquisition of 98% of Preciosos S.A. de C.V, a Mexico incorporated entity, which is now our 98% owned subsidiary. Our Chief Executive Officer, Mr. Shipes, owns the remaining 2%.

Indebtedness to our Chief Executive Officer , Roy Shipes

As of December 31, 2010, we owe our Chief Executive Officer, Harold R. Shipes, a total of $36,589 of which is accrued interest of $29,748 from various loans made in earlier years, with the balance representing business expenses incurred on behalf of the Company

As of December 31, 2009, we owe our Chief Executive Officer, Harold R. Shipes, a total of $86,589 of which is accrued interest of $79,748 from various loans made in earlier years, with the balance representing business expenses incurred on behalf of the Company.

As of December 31, 2008, we owed our Chief Executive Officer, Harold R. Shipes, a total of $84,019 representing accrued interest from various loans made in earlier years. From December 1998 to December 31, 2008, our Chief Executive Officer, Harold R. Shipes, loaned us an aggregate of $335,508. These loans, which are unsecured, bear interest at a rate of ten (10%) percent per year.

On September 8, 2008, we issued 335,567 shares of our common stock to Harold R. Shipes, in satisfaction of $96,979 in loans from Mr. Shipes. $90,000 represented the principal portion of a $90,000 loan made in 2008; the remainder represents business debts Mr. Shipes incurred on behalf of the Company.

On June 30, 2007, we issued 336,186 shares of our common stock to Mr. Shipes, in satisfaction of $168,093 of loans that he extended to us.

Stock Issuances to Directors

In 2010, Harold R. Shipes was issued 8,000,000 shares of common stock in exchange for reduction in company indebtedness to him.

In 2009, Herbert E Dunham and Michael Harrington, each received 100,000 shares of our common stock for their services as a Director The shares issued to Director Dunham on October 6, 2009 were valued at $0.01 per share, for an aggregate value of $1,000. The shares issued to Director Harrington on October 6, 2009, were valued at $0.01 per share, for an aggregate value of $1,000.

On June 30, 2007, we issued 336,186 shares of our common stock to Mr. Shipes, in satisfaction of $168,093 of loans that he extended to us.

Our Directors, Herbert E. Dunham and Michael Harrington each received 100,000 shares of our common stock on October 21, 2006 and September 13, 2007, respectively, for their services as our Directors. Mr. Dunham shares were valued at $0.05 per share for an aggregate value of $5,000. Mr. Harrington’s shares were valued at $0.04 per share, for an aggregate value of $4,000.

Apart from the above transactions, none of the following parties has, since our date of incorporation, had any other material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

	·	Any of our directors or officers;
	·	Any person proposed as a nominee for election as a director;
	·	Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our outstanding shares of common stock;
	·	Our promoters, or
	·	Any member of the immediate family of any of the foregoing persons.

Item 14 Principal Accountant Fees and Services

Principal Accountant Fees and Services

Audit Fees

Audit fees paid to our independent auditors, Seale and Beers, CPA’s in 2010 were $11,080.

Audit fees paid to Moore and Associates, Chartered in 2009 were $6,800 and $2,000 to our successor auditors, Seale and Beers, CPA’s. During 2009, the Securities Exchange Commission advised us that Moore and Associates, Chartered, was not in compliance with appropriate auditing standards and procedures and their license to practice under the auspices of the Public Company Accounting Oversight Board (PCAOB) was revoked. Pursuant to SEC requirements, the Company filed the appropriate 8-K filing and has contracted with Seale and Beers, CPA’s to reaudit the Company’s financial records for the Year 2008 at a cost of $5,000.

Tax Fees

No such fees were paid to Seale and Beers, CPA’s at any time.

All Other Fees

No such fees were paid to Seale and Beers, CPA’s at any time

PART IV

Item 15 Exhibits and Financial Statement Schedules

EXHIBITS

Exhibit23(a):

Consent of Seale and Beers, CPA’s dated April 20, 2011

Exhibit31.1

Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002

Exhibit31.2

Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002

Exhibit32.1

Certification by the Principal Executive Officer pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

Exhibit32.2

Certification by the Principal Financial Officer pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTERNATIONAL SILVER, INC.

Dated: April 20, 2011	By:	/s/Harold R Shipes
		Harold R. Shipes, Chief Executive Officer/Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated.

Signature	Title	Date

/s/ Harold R. Shipes	Chairman of the Board/Director	April 20, 2011
Harold R. Shipes	Principal Executive Officer Chief Executive Officer

/s/Herbert E Dunham	Director	April 20, 2011
Herbert E Dunham

/s/ Michael Harrington	Director	April 20, 2011
Michael Harrington

/s/John A. McKinney	Chief Financial Officer	April 20, 2011
John A. McKinney	Principal Accounting Officer Executive Vice President

/s/ Matt J. Lang	Secretary/Vice President of Administration	April 20, 2011
Matt J. Lang

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the act by Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act.

Inapplicable. We have not provided an annual report to our security holders and we have never filed a Proxy Statement.

Attached files

INTERNATIONAL SILVER INC Reports

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