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, 2011.
For the Fiscal Year Ended December 31, 2012.
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

Accelerated filer

Non-accelerated filer

Smaller reporting company

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, ~~2011~~2012 the aggregate market value of the voting stock held by non-affiliates of the registrant ("aggregate market value") was approximately $23,~~737~~102,~~000~~510.

Issuer's revenues for its most recent fiscal year: $7249,~~900~~744. The number of shares of the registrant's $.0001 par value common stock outstanding as of ~~May~~March 928, ~~2012~~2013 was 3637,~~780~~052,~~828~~280.

Table of Contents

		Page No.
PART I	~~PART I~~
Item 1.	Business		3
Item 1A.	Risk Factors		8
Item 1B.	Unresolved Staff Comments
Item 2.	Properties		15
Item 3.	Legal Proceedings		2827
Item 4.	~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures		2827
PART II	~~PART II~~
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		2928
Item 6.	Selected Consolidated Financial Data		3231
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation		32
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		42
Item 8.	Financial Statements and Supplementary Data		42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		6573
Item 9A.	Controls and Procedures		6573
Item 9B.	Other Information		6674
PART III	~~PART III~~
Item 10.	Directors and Executive Officers of the Registrant		6775
Item 11.	Executive Compensation		7381
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		7483
Item 13.	Certain Relationships and Related Transactions		7685
Item 14.	Principal Accountant Fees and Services		7888
	Part IV
PART IV
Item 15.	Exhibits, Financial Statement Schedules		7989
Signatures			8090

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.

Argentite - 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 of precious metals. 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~~Our primary ~~assets~~rights ofand ~~International~~properties ~~Silver, Inc.,~~ are the 1) Calico Silver Project, an exploration project , located in the Calico Mining District of San Bernardino County, California and held by unpatented Federal lode mining claims owned by the company; 2) ~~its~~a Lease/ Option to acquire and explore the Prince Mine; 3) a block of 495 acres of unpatented Federal lode mining claims adjacent to the Prince Mine and 450 acres of unpatented Federal lode claims adjacent to the Caselton Mine, both claim blocks owned directly by us, located in the Pioche Mining District of Lincoln County, Nevada; and 4) Butte Silver Mining Project, located in the Butte Mining District of Silver Bow County, Montana consisting of approximately 380 acres of surface rights and 1,000 acres of mineral rights.

~~Although~~We we generated total revenues of $63249,~~660~~744 in ~~2010~~2012 from a mineral lease agreement and engineering/mining related consulting services,. Our engineering related revenues ~~decreased~~and inmineral ~~2011~~lease income are insufficient to ~~$7,900.~~maintain ~~Engineering~~our ~~related~~exploration ~~revenues~~efforts; accordingly, ~~along~~we ~~with~~are ~~funding~~dependent ~~from~~upon procuring third-party ~~sources~~funding ~~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~~After December, 31, 2012, management executed a convertible note agreement for $2.2 million and is pursuing additional funding for expand its exploration activities at the Prince Mine in Nevada and Butte properties in Montana 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, and 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

WeAt our Administrative Offices in Tucson, Arizona, we currently have seven employees: (1) Mr. Harold R. Shipes, ~~our~~President and Chief Executive Officer; (2) Mr. John A. McKinney, ~~our~~ Executive Vice President/Chief Financial Officer; (3) Mr. Matthew J. Lang, ~~our~~ Vice President of Administration/Corporate Secretary; (4) Mr. Daniel Dominguez, ~~our~~ Corporate Controller; (5) Mrs. Eileen Shipes, ~~our~~ Office Manager; (6) Ms. Danielle Lang, ~~our~~ Staff Accountant and (7) Mr. Alexander Makaron, ~~our~~ Engineer.

On January 1, 2013, we established an engineering/exploration office in Butte, Montana. We hired two new employees: (1) Robin McCulloch, Manager of Operations; and (2) Jill Sotendahl, a geologist.

Production Distribution Methods

Should we be successful in producing metallic 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 or companies, since we will attempt to sell metals and 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, Las Vegas, Nevada and Butte, Montana; · Sample preparation and assay services ~~in both areas~~ from ~~ALS~~Skyline ~~Chemex,~~Assayers aand ~~world-wide,~~Laboratories ~~registered, assay laboratory located~~ in ~~Canada~~Tucson, Arizona and American Analytical laboratories a certified and registered laboratory with offices in Sparks and Elko Nevada.; · Purchase of bulldozers, excavators, and grading equipment through equipment companies such as the Caterpillar dealer and use equipment dealer.; · Smelting, refining and purchasing of product through Glencore, Trafigura, Gerald Metals, and Penoles; · Transportation through SP or UP Railways ~~in the United States, Ferro Carriles de Mexico,~~ and local truck haulage companies in ~~both~~the ~~major~~United ~~areas~~States; · 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; and · 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:

California Property

The following approvals will be required from the following government agencies relative to our Calico Silver property prior to advanced exploration such as drilling:

● California Department of Wildlife Management. ● Bureau of Land Management inas ~~the~~disclosed ~~case~~in ~~of the~~ Plan of Operation, ~~allowing~~which provides for advanced exploration activities on Federal land held by unpatented mining claims..

Nevada Properties

The following approvals will be required from the following government agencies depending on the level of activity relative to our Pioche properties:

● Water Quality Division of the Nevada Department of Environmental Protection, ~~required~~which ~~prior~~requires toapproval for commercial processing of ore and or de-watering of mines for exploration. ● Air Quality Division of the Nevada Department of Environmental Protection, ~~required~~which ~~only~~is required prior to commercial ore processing operations or construction of related facilities. ● Explosives Permit from the Federal Bureau of Alcohol, Tobacco and Firearms required ~~only~~ prior to mine operation or other blasting activity. ● Bureau of Land Management in– ~~the~~If ~~case of the Plan of Operation , if~~ advanced exploration or mining activities are to be conducted on federal managed land held by unpatented mining claims, Bureau of Land Management approval is required. · Nevada Division of Water Resources approval for drilling exploration wells. · Federal Mine Safety and Health Administration ~~must~~requires beus ~~provided~~to provide notice of renewal of underground mining for inspection scheduling.

Montana Properties

● Since the planned program for the two Montana properties consists of evaluation and exploration on a private mineral estate, ~~the~~we ~~permit responsibility~~ will be required to file a permit application with the Montana Department of ~~environmental~~Environmental Liability. If underground mine exploration is necessary, notification with follow-up inspections will be conducted by the U.S. Mine Safety & Health Administration.

Costs and ~~Effective~~Effect 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~~140,000 for initial permit related work, to be completed by our Consulting Geologist and other contract services.

Research and Development Expenditures/Last ~~Two~~Three Years:

We have not engaged in any research and development or assumed any such expenses over the past ~~two~~three 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 mining 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.

An investment in our securities involves a high degree of risk, and you should only consider an investment in our securities if you can afford to sustain the loss of your entire investment. You should carefully consider the following risk factors and all other information contained herein as well as the information included in this Annual Report on Form 10-K, in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, other than those we describe below, that are not presently known to us or that we currently believe are immaterial, may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed. You should refer to the other information contained in this Annual Report, including our consolidated financial statements and the related notes.

Risks Related to our Business Activities.

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

As of December 31, ~~2011~~2012, we have an accumulated deficit of $25,~~630~~181,~~174~~600. We are an exploration stage enterprise and have generated nominal revenue during our exploration stage. 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~~the entire $4.02 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. Further, if we raise funds through the sale of our equity securities, our shareholders will suffer significant dilution.

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 reserves of silver ore or ores of 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.

Fluctuations in the market price for silver may affect both the value of our assets and the market price of our stock.

Silver is a commodity and its price is very volatile. Our ability to raise funds and the price and terms on which we are able to raise funds may be affected by the both the volatility in the price of silver and the investment community’s perception of the future price of silver. Such changes could affect both the value of our assets and the price of our stock.

We are subject to risks applicable to mining operations.

Mining operations inherently imply certain risk of which investors should be aware, as follows:

● World-wide economic cycles influence prices of base and precious metals. As economies recede, demand for these commodities may decline, which may negatively impact the supply and demand ratio, causing prices to respond accordingly. The cash flow generated by mining activities is dependent on price levels of the metals produced. Future world-wide economic cycles may cause prices to vary outside assumed parameters in cash flow models, ~~which~~which_ include certain price assumptions. ● Ore grades vary within ore bodies. Lower grades than predicted might negatively impact cash flow since less metal may be produced from specific ore blocks. ● Our economic performance is dependent upon production of the predicted and planned tonnage and grade from the mine. Ground conditions in underground mines can cause fluctuation of tonnage production from that planned. Lower tonnage from that planned would imply less metal production, and would negatively impact cash flow. ● Economic performance of the mining operation is dependent on sales of the mine production. While both base and precious metals are commodities that are sold world-wide, they still must be sold. Failure to maintain an orderly market for the products would cause an interruption to cash flow until the production is sold.

● ~~Our~~The ~~economic~~regularity ~~performance~~of cash flow is dependent upon ~~production~~a ofregular ~~the~~sales ~~predicted~~program, ~~and~~which ~~planned~~has ~~tonnage~~not ~~and~~been ~~grade~~finalized ~~from~~by ~~the mine~~us. ~~Ground~~● ~~conditions~~Smelting incosts ~~underground~~fluctuate ~~mines~~over ~~can~~time. ~~cause~~● ~~fluctuation~~Transportation of ~~tonnage~~concentrates ~~production from that planned. Lower tonnage from that planned would imply less metal production,~~ and ~~would~~final ~~negatively~~metals ~~impact~~produced ~~cash~~to ~~flow. ● Economic performance of~~ the ~~mining~~market ~~operation~~ is ~~dependent~~subject onto ~~sales~~weather ~~of the mine production~~interruption. ~~While~~● ~~both~~The ~~base~~start ~~and~~date ~~precious~~of ~~metals~~mining ~~are~~operations ~~commodities~~may ~~that are sold world-wide, they still must~~ be ~~sold.~~impacted ~~Failure~~by todelays ~~maintain~~in ~~an orderly market for~~ the ~~products~~various ~~would~~permits ~~cause~~required anby ~~interruption~~government ~~to cash flow until the production is sold~~agencies.

● The regularity of cash flow is dependent upon a regular sales program which has not been finalized by us. ● Smelting costs fluctuate over time. ● Transportation of concentrates and final metals produced to the market is subject to weather interruption. ● The start date of mining operations may be impacted by delays in the various permits required by government agencies.

We have a limited operating history on which to base an evaluation of our business and prospects.

Although we were incorporated in 1992 and continue to perform engineering services, and acquired the Calico Silver Project in 2007 and gained control of the ~~Prince~~mining ~~and~~leases ~~Pan~~in ~~American~~Nevada ~~Mines~~and Montana in 2010 and ~~mining~~2012, ~~leases in Montana~~respectively, we are still in the exploratory stage due to our change in business plans and have little operating history and have incurred losses during the exploratory period. We have never had any revenues from exploration or mining operations. In addition, our operating history has been restricted to the acquisition and exploration of our mineral properties and this does not provide a meaningful basis for an evaluation of our prospects if we ever determine that we have a mineral reserve and commence the construction and operation of a mine. We have no way to evaluate the likelihood of whether our mineral properties will be found to contain any mineral reserve or, if they do that we will be able to build or operate a mine successfully. We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are exploring our properties. We therefore expect to continue to incur significant losses into the foreseeable future, which will require us to raise funds to cover our ongoing costs. If we are unable to generate significant revenues from mining operations and any dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition. There is no history upon which to base any assumption as to the likelihood that we will prove successful in implementing our current business plan and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

We have no history of mining operations.

The company has no history of mining operations, and there is no assurance that it will successfully operate profitably or provide a return on investment in the future. The costs, timing and complexities of mine construction and development are increased by the remote locations of our properties. It is common in new mining operations to experience unexpected problems and delays during construction, development, and mine start-up. In addition, delays in the commencement of mineral production often occur. Accordingly, there are no assurances that our activities will result in profitable mining operations or that we will profitably produce metals at any of its properties. Other factors mentioned in this section entitled “Risk Factors” may also prevent us from successfully operating a mine.

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 1415 to 40 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 carry only limited property and casualty 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.

We may be unable to successfully manage our growth, and we currently have limited management systems and resources available to us to manage any such potential growth.

We are in the process of expanding our operations and anticipate that significant expansion of our operations will be required in order to address potential market opportunities. This potential growth will place a significant strain on our management, operational and financial resources. We expect to add additional key personnel in the near future. Increases in the number of employees will place significant demands on our management. In order to manage the expected growth of its operations, we will be required to expand existing operations, particularly with respect to mining personnel, to improve existing procedures and controls, including improvement of our financial and other internal management systems, on a timely basis.

Further, our management will be required to establish and maintain relationships with various third parties and to maintain control over our strategic direction in a rapidly changing environment. There can be no assurance that our current personnel, systems, procedures and controls will be adequate to support our future operations, that management will be able to identify, hire, train, retain, motivate and manage required personnel or that our management will be able to manage and exploit existing and potential market opportunities successfully. If we are unable to manage growth effectively, our business, results of operations and financial condition will be materially adversely affected.

We may be unable to obtain funds for our operations.

We may not have adequate funds to complete the acquisition and initiate and achieve operations of any or our present or proposed properties. Implementation of our plan to develop these properties is dependent upon receiving financing, for which there are no assurances. If we are unable to obtain financing, we may have to curtail, delay or cease operations, which will negatively affect the value of an investment in our securities. Unless we are able to generate revenue from our operations, we may be unable to obtain traditional bank financing on reasonable terms, if at all, and we may be limited to equity-based offerings, which is likely to dilute the interest of our stockholders. Further, there is no assurance that we will be successful in obtaining financing through debt or equity offerings, on commercially reasonable terms or at all. Any of these eventualities would have a material adverse effect on our business and operations.

There are uncertainties regarding development of the mining properties.

Any mining operations we undertake will involve substantial development. We may encounter various technical and control problems during our development of mining operations. No assurance can be given that any of our proposed mining operations will not involve a longer period of time or the expenditure of a greater amount of funds and other resources than is presently contemplated. Such technical or operational problems may negatively impact the economic performance of the project.

Our operations are subject to extensive governmental regulation.

Both mineral exploration and extraction require permits from various ~~foreign,~~ federal, state, ~~provincial~~ and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.

Although we believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance. Current laws and regulations could be amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.

Land reclamation requirements for exploration properties may be burdensome and may divert funds from our exploration programs

Although variable, depending on location and the governing authority, land reclamation requirements are generally imposed on mineral exploration companies, as well as companies with mining operations, in order to minimize long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents and to reasonably re-establish pre-disturbance land forms and vegetation. In order to carry out reclamation obligations imposed on us in connection with its mineral exploration, we must allocate financial resources that might otherwise be spent on further exploration programs.

Because of the inherent dangers involved in mineral exploration and exploitation, there is a risk that we may incur liability or damages as we conduct our business.

The search for and exploitation of valuable minerals involves numerous hazards. In the course of carrying out our operations, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. We currently have no such insurance nor do we expect to get such insurance for the foreseeable future. If a hazard were to occur, the costs of rectifying the hazard may exceed our asset value and cause us to liquidate all of our assets, resulting in the loss of your entire investment in us.

Foreign investments and operations are subject to numerous risks associated with operating in foreign jurisdictions.

We may seek to have mining, development or exploration activities in Mexico. Foreign mining investments are subject to the risks normally associated with the conduct of business in foreign countries. The occurrence of one or more of these risks could have a material and adverse effect on our profitability or the viability of its affected foreign operations, which could have a material and adverse effect on our future cash flows and earnings (if any), as well as results of operations and financial condition.

Risks may include, among others, labor disputes, invalidation of governmental orders and permits, corruption, uncertain political and economic environments, sovereign risk, war (including in neighboring states), civil disturbances and terrorist or drug-gang actions, arbitrary changes in laws or policies, the failure of foreign parties to honor contractual relations, corruption, foreign taxation, delays in obtaining or the inability to obtain necessary governmental permits, opposition to mining from environmental or other non-governmental organizations, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on gold exports, instability due to economic under- development, inadequate infrastructure and increased financing costs. In addition, the enforcement by us of our legal rights to exploit its properties may not be recognized by the government of Mexico or by its court system. These risks may limit or disrupt our operations, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation. The economy and political system of Mexico should be considered by investors to be less predictable than those in countries in which the majority of investors are likely to be resident. The possibility that the current, or a future, government may adopt substantially different policies, take arbitrary action which might halt production, extend to the re-nationalization of private assets or the cancellation of contracts, the cancellation of mining and exploration rights and/or changes in taxation treatment cannot be ruled out, the happening of any of which could result in a material and adverse effect on our results of operations and financial condition.

We face competition in many areas of our business.

We will compete with other companies engaged in the mining industry, most of which are larger than us. Therefore, we will face substantial competition in connection with the hiring and retaining of highly qualified mining, metallurgical, financial and administrative personnel, which creates a high degree of risk. Among our competitors are BHP/Billiton and Freeport McMoran, as well as numerous other foreign and domestic companies in the mining business. Many of these competitors are well established, have substantially greater financial and other resources than we have, and have an established reputation for success in mining that will be competitive with our operations.

In addition, the mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of mineral products. Therefore, we will likely be able to sell any mineral products that we identify and produce.

In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future.

Accordingly, there can be no assurance that we will be able to compete successfully with other companies or that we will ever achieve profitability.

SPECIFIC RISKS RELATING TO THE COMPANY AND OUR COMMON STOCK

We have not paid dividends in the past and do not expect to pay dividends in the future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

There is a limited market for our common stock, which may make it more difficult to dispose of your stock.

Our common stock is currently quoted on the Over the Counter OTC QB market under the symbol "ISLV". There is a limited trading market for our common stock. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock to sell our common stock, or the prices at which holders may be able to sell our common stock.

We may have difficulty in attracting and retaining management and outside independent members to our board of directors as a result of their concerns relating to their increased personal exposure to lawsuits and stockholder claims by virtue of holding these positions in a publicly held company.

The directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and stockholder claims, as well as governmental and creditor claims which may be made against them, particularly in view of recent changes in securities laws imposing additional duties, obligations and liabilities on management and directors. Due to these perceived risks, directors and management are also becoming increasingly concerned with the availability of directors and officers liability insurance to pay on a timely basis the costs incurred in defending such claims. We currently ~~do not~~ carry limited directors and officer’s liability insurance. Directors and officers liability insurance ~~has~~is ~~recently become much more~~ expensive and difficult to obtain. If we are unable to provide directors and officers liability insurance at affordable rates, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our board of directors.

We are effectively controlled by our management.

Our senior management owns in the aggregate a majority of our outstanding common stock. Accordingly, they will be able to elect our entire board of directors, and to take action requiring stockholder approval without the vote of other stockholders, subject to governing laws, rules and regulations. Investors in the Company will thus have little ability to influence our business or operations.

Our directors have the right to authorize the issuance of shares of our preferred stock and additional shares of our common stock.

Our directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our stockholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any other preferences, special rights and qualifications of any such series. Any issuance of additional shares of preferred stock could adversely affect the rights of holders of our common stock. Should we issue additional shares of our common stock at a later time, each investor's ownership interest in our stock would be proportionally reduced. No investor will have any preemptive right to acquire additional shares of our common stock, or any of our other securities. A sale of a substantial number of shares of our common stock may cause the price of its common stock to decline. If our stockholders sell substantial amounts of the Company’s common stock in the public market, the market price of its common stock could fall. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

The SEC requires us, as a reporting company, to include a report of management on our internal controls over financial reporting in our annual reports on Form 10-K. Our chief executive officer and chief financial officer, neither of which is an accountant, have concluded that our financial controls are ineffective, we cannot assure you that, if our controls were reviewed by our independent registered accounting firm, such firm would reach the same conclusion. We have not engaged any independent firm to evaluate our internal controls or to make recommendations with respect to internal controls. If our auditors are unable to conclude that we have effective internal controls over financial reporting, investors could lose confidence in the reliability of our financial statements, especially in view of our need to restate prior financial statements, which could result in a decrease in the value of our securities. We cannot assure you that we will be able to adequately address in a timely manner any internal controls issues in a timely manner. Further, although the Dodd-Frank Wall Street Reform and Consumer Protection Act exempts companies with a public float of less than $75 million from the requirement that our independent registered public accounting firm attest to our financial controls, this exemption does not affect the requirement that we include a report of management on our internal controls over financial reporting and will not affect the requirement to include the auditor’s attestation if our public float exceeds $75 million. Regardless of whether we are required to receive an attestation from our independent registered public accounting firm with respect to our internal controls, if we are unable to do so, potential investors may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.

Our common stock is thinly traded and the market price of our common stock is very volatile, leading to the possibility of its value being depressed at a time when you may want to sell your shares.

Our stock is quoted on the OTC QB, the middle tier of the OTC market. It had previously been quoted on the OTC Bulletin Board and the OTC Pink. The OTC QB is not a stock exchange. There is not an active market for our common stock. There may be many periods, some of significant duration, in which there is no or insignificant trading volume in our common stock. The absence of any significant activity can result in a very volatile stock. When there is little trading activity, the purchase or sale of a relatively small number of shares could result in a disproportionate change in the stock price. In addition, numerous other factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for specific business reasons. Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources.

Our common stock is subject to the "Penny Stock" rules of the SEC and the trading market in our securities is limited, which makes transaction in our stock cumbersome and may reduce the value of an investment in our stock.

The SEC has adopted Rule 3a51-1 which establishes the definition of a "penny stock," for the purposes relevant to us, is any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires: that a broker or dealer approve a person's account for transactions in penny stocks; and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: obtain financial information and investment experience objectives of the person; and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: sets forth the basis on which the broker or dealer made the suitability determination; and that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

An investment in our securities involves a high degree of risk, and you should only consider an investment in our securities if you can afford to sustain the loss of your entire investment.

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~~(“APMI”). APMI ~~have~~has a five-year lease with WC Partners, a Los Angeles, California-based company, which expires on September 30, 2013. We pay Atlas Precious Metals Inc. $910,~~500~~280 per month for our space at this location. Our space is adequate for our purposes.

Exploration Properties and Claims

We may 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 exploration rights were obtained through outright property acquisition, staking of federal mining claims on lands managed by the U.S. Bureau of Land Management, purchase options of privately held surface and mineral rights, purchase of unpatented claims on Bureau of Land Management managed federal lands and through exploration leases. ~~All~~These rights are held by ~~International~~us ~~Silver~~ without underlying royalty interests. Our properties are located in San Bernardino County, California, the Pioche mining district of Lincoln County, Nevada and Butte, Montana. These properties and the land tenure are further discussed in later sections as:

·	The Prince Mine
·	Montana Properties
·	The Calico Silver Project

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 secured control of a large portion of a very unique silver district. Additionally, ~~and~~we plan to continue to expand our holdings in this area. For the next few years, we will focus our attention to this district, to completing the acquisition of the Prince Mine, which we have under a lease with a purchase option. The district is of a size that potentially may ~~give~~provide ~~many~~us ~~years~~with of profitable commercial operations, subject to adequate financing and other risks attendant to our operations.

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 but extends into the Highland Range to the west. The Pioche Hills are a relatively minor mountain range that 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.

The Prince Mine was an underground mine which was developed on the very large sulfide replacement "channels" or structural zones containing silver, zinc, lead, gold and manganese with commercial ore grades, but with varying grade in each channel. The three principle and most significant channels are the Caselton Channel, the Prince 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 historically grade d 2.3 ounces of silver and 0.02 ounces of gold per ton, 2.5% lead, 3.5% zinc and 12% manganese dioxide. (P. Gemmill, 1968, pp 1128-1147: In Ridge, Ore Deposits of the United States, AIME, NY.)

While the initial operations of the Prince Mine focused on sulfide replacement ore bodies in limestone with much higher grades, massive oxidized mineralization is believed to remain which has only been minimally mined. 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. These methods of processing oxide ores will be evaluated in conjunction with our exploration activities in the district.16

17While the initial operations of the Prince Mine focused on sulfide replacement ore bodies in limestone with much higher grades, massive oxidized mineralization is believed to remain which has only been minimally mined. 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. These methods of processing oxide ores will be evaluated in conjunction with our exploration activities in the district.

Property Description, Geology and History

The Prince Mine

AnWe entered into an exploration lease with an option to acquire the Prince Mine property ~~was entered into by International Silver~~ on November 6, 2010 as further discussed in Note D to our financial statements. The initial land position held under the lease/option consists of twelve patented lode mining claims held in fee simple title by Prince Mine LLC. These claims comprise 227 acres of surface and mineral rights. Should the purchase rights be exercised the property title will transfer to International Silver without a retained royalty. ~~Subsequent~~After to the exercise of the lease, ~~International~~we ~~Silver~~ acquired through Federal mining law by location, an additional 495 acres in 25 lode mining claims on BLM managed lands next to the patented leased land. The lease / option requires annual payments to the lessor. The Federal lode mining claims require annual maintenance fee payments to the U.S. BLM.

The geology of the Prince Mine is characterized by substantial faulting and displacement of the silver – lead – zinc - gold carbonate replacement type of mineralization . The Prince member of the Lyndon formation has been uplifted along a northwest trending mineralized structure bringing a large block of oxidized mineralization very near the surface, to within ten feet in some areas. ~~International~~Our ~~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 exploration target is an open pit ore body hosting as much as 15 million tons of mineralized material in these carbonate replacement horizons.

The Prince Mine is a nan historic underground silver producer which reportedly contains over 2 million tons of historically measured in-situ 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 minerals processing plant. Our immediate focus will be to explore the mineralized zone through geochemical and geophysical surveys and surface drilling. Due to its proximity to the surface, the drill holes will be relatively shallow, 1000 feet or less . At the same time, access to underground workings will be cleaned and repaired to allow inspection and verification sampling. The program hopes to delineate mineralization amenable to mining but there are presently no known mineable reserves established for the mine property.

Property Location and Access

~~The~~Our ~~International Silver Inc.~~ Pioche Mining District property is located near the town of Pioche, the county seat of Lincoln County Nevada U.S.A. State Highway 93 serves Pioche. The Prince Mine is about two miles southwest of the town. The mine is accessible by paved State Road 320, which connects to Highway 93. The following maps further illustrate the access and relative positions of the Pioche District properties.

Butte District Properties, Silver Bow County Montana

~~International~~We ~~Silver Inc.~~ began work to acquire mineral properties in the Butte district in 2008. In 2011, ~~the~~we ~~Company~~were ~~was~~ successful in securing a leasehold interest on a large group of former producing silver mines and mineral claims once held by the Anaconda Company. These properties are believed to still contain a large resource of un-mined silver – zinc and silver – copper mineralization. Inactive mines now held by ~~the~~us ~~Company~~ include the Badger State, the Lexington, the Alice, the Diamond, the Speculator and the High Ore. It isWe ~~the~~intend ~~intent of the Company~~ to evaluate the feasibility of renewed mining of the historic resources in several of these mines and to conduct exploration for porphyry copper – silver in the district.

History

Mining in the district first began with gold and silver, then copper. In 1910 the Anaconda Company was formed to consolidate the district under singular ownership and to mine and process the rich ores found there. The properties held by ~~the~~us ~~Company~~ were last operated by the Anaconda Company in 1967.

District Geology

The Butte porphyry copper center is in the south western part of a regional composite intrusive complex termed the Boulder batholith. The batholith as exposed is about 70 miles long by 35 miles wide and trends in a northeastward direction toward Helena MT. The intrusive complex is composed of dozens of chemically distinct plutons ranging in age from middle to late Cretaceous. The batholith is fault bounded to the southeast with right lateral shears. The northwest side also has wrench fault boundaries but also in places appears to be largely concordant with late Cretaceous age volcanics.

In the vicinity of Butte the dominant rock type is 70 to 72 m.y. old Butte Quartz Monzonite. Compositionally, this intrusive may also be termed a hornblende – biotite granodiorite. It in turn has been intruded by quartz porphyry dikes which are differentiates from a larger copper bearing porphyry intrusive at depth and now exposed as an up thrown fault block in the Montana Resources Continental Pit. Younger 48 m.y. volcanics and rhyolitic intrusives cut or unconformably overlie the older intrusives locally, particularly to the west of Butte.

All of the mineralization mined in the central, north and west parts of the district has been found in vein zones created by structural fracturing in the wall rock. The most economically important of these vein zones were termed the Anaconda System. These veins trend generally east-west, with an arc like curvature, were very wide and contained high grade copper ores mostly as chalcocite with native silver. Dips were sinuous but were all southward below the 2800 foot level. Connecting the Anaconda veins, a second somewhat thinner, northwest set of cross cutting veins were developed and mined. These were termed the Blue System.

As the structurally controlled vein systems extended across the district, mineralogic zoning patterns were recognized. A copper rich Central Zone on Butte Hill gave way to an intermediate zone in a rough, semi-circular map pattern, which contained mixed zinc and copper mineralization. This zone extended outward and graded into a peripheral zone characterized by manganese, zinc and silver veining. ~~The~~ ~~International~~Our ~~Silver Inc.~~ lands are located within all three mineralogic zones. (C. Meyer, E. Shea, C Goddard, Jr., 1968, pp 1373-1416: In Ridge, Ore Deposits in the United States, AIME, New York.)

Property Location and Access.

The land position consists of approximately ~~380~~1,400 acres of surface rights and ~~1000~~2,000 acres of mineral rights in the Butte District, Silver Bow County Montana.

Claims Map

Property Description, Geology, History.

Alice Mine

Rainbow & Rising Star Veins

The Alice mine is in the outer part of the intermediate mineralogic zone at Butte and was developed on a group of main stage silver zinc veins containing manganese. This mine was first opened in 1886 when rich shallow ores of native silver and silver chloride were mined. The mine is accessed through a tunnel level with track for haulage and two points of ingress and egress. A 400 ‘ deep ventilation shaft is also in place as is a cross cut on the 400 foot level to the Lexington mine shaft. The workings have been maintained and are in relatively good condition.

The vein zone strikes east – west and dips 60 – 80 degrees south. The width varies as numerous veins come together and diverge, with individual veins averaging from 14 feet to 90 feet combining to form a vein zone up to 187 feet wide. Some of the narrower higher grade veins have been mined by historic operations to about the 500 foot level. The water table is below 800 feet.

Oxidized minerals with silver with manganese extend from surface in this wide vein zone down to about 100 feet where they transition into a sulfide zone containing argentite, sphalerite and galena in quartz veins with rhodonite and rhodochrosite. In 1986, an independent engineering firm, Robertson Research International Ltd, calculated a near surface geologic resource to a depth of 75 feet as having 1,418,000 tons with an average grade of 4.68 ounce per ton silver and 0.018 ounce per ton gold.

An estimate of the sulfide zone geologic resource from the 100 foot level to the 1000 foot level was made by Tatman and Potresou in1990, for New Butte Mining Inc. based on Anaconda “Green Book Reserve Reports” and underground drilling. This estimate by two reputable professionals quotes a potential resource of 8,776,736 tons averaging 4.08 ounces per ton silver, 0.024 ounces per ton gold, 4.24 % zinc and 1.31% lead. These estimates are presented as historic data only as mine planning and verification studies have not yet even been initiated.

These estimates are presented as historic data only as mine planning and verification studies have not yet even been initiated.

Lexington Mine

Skyrme, State, Gaul, Grey Rock and Blue Wing veins

The Lexington Mine adjoins and connects on the south with the Alice Mine area development. A good three compartment shaft extends through the tunnel level to 2600 feet but is flooded at about the 1000 level. The shaft is principally useful for ventilation but could be used for hoisting materials between levels. It has a good steel head frame but is not suited for large tonnage production hoisting. The shaft was last operated by the Anaconda Company in 1959. Other parts of the mine including stopes in the Grey Rock Vein on the 400 haulage level were operated in 1990 by New Butte Mining Inc.

The Lexington is developed on the inside edge of the intermediate mineralogic zone on several groups of relatively narrow silver veins and sulfide vein breccias. The veins widen with depth, averaging 4.2 feet to the 600 level after which they increase to 7.6 feet to the 2600 foot level. The historic resource tabulated on the books of the Anaconda Company in developed and probable categories with a 4.6% zinc cutoff grade, are cited as 1,702,864 tons grading 3.57 ounces per ton silver and 8.31% zinc.

Another 1,536,234 tons grading 2.59 ounce per ton silver with 8.27% zinc are listed as “future reserve blocks” by Anaconda. About half of this tonnage is listed above the level of mine flooding. ~~The~~ ~~Company~~We ~~lists~~list no current ore reserves for the property.

2423

Badger State Mine

State, Emily, Badger, Snow Ball and South Split of Rainbow veins

The Badger State Mine was operated by the Anaconda Company from 1960 to 1967 as a 1500 tpd block cave silver – zinc mine. The mine has a substantial steel head frame and large steel frame hoist and compressor building. The three compartment shaft extends downward to the 3800 level. It is presently bulkheaded at the surface and will require repairs for renewed use.

The Badger is located north of the Berkeley Pit and is in the intermediate silver-zinc zone but grades into the periphery of the central copper zone at depth. A substantial tonnage of silver – zinc ore grade mineralization is believed to remain un-mined as plans for re-opening by Anaconda are referenced in company files.

High Ore and Diamond Bell Mines

Syndicate, Bell, Speculator and High Ore veins

The Diamond is located near the north high wall of the Berkeley Pit and ~~the~~our ~~Company’s~~ mineral rights extend southerly into the pit area.

The Diamond has a steel production head frame but no hoisting facilities. The shaft is bulkheaded for safety at the surface and was last used for ventilation in 1973. The High Ore Mine connected with the Diamond but the shaft was caved by Anaconda as the area became part of the Berkeley open pit.

The mines are former high grade copper- silver producers in the central mineralogic zone. Ore was found in structurally controlled chalcocite – bornite veins which had lower grade alteration envelopes surrounding them. These veins were mined to several thousand feet of depth. Presently there are no identified mineral resources remaining in the mines, however, ~~the~~we ~~Company~~believe ~~believes~~ that the exploration potential for lesser grade disseminated copper is extremely good.

25West Butte Property, Silver Bow County, Montana

On August 7, 2012, we the entered into a purchase agreement and contract deed with Chattel LLC, a Montana Limited Liability Company, for 1022 acres of surface and mineral rights in the West Butte area of the Butte Mining District, Silver Bow County Montana. The West Butte Property is immediately west of Big Butte hill and lies within the peripheral mineralogic zone of the Butte District. Mineralization in this area is characterized by zinc, manganese, silver bearing veins, oxidized near surface. Numerous WNW directed, structurally controlled vein zones occur on the property that are hosted by various phases of the intrusive Butte Quartz Monzonite. There has been no active mining on the property since the 1950s when limited underground mining for silver-manganese ore was conducted.

Although the property is believed to have good exploration potential for silver mineralization and is as yet relatively unexplored, the property was principally acquired for other reasons. The location was selected as a future site for an underground access decline into the intermediate and Central Zones of the Butte District as well as for a future site for a flotation mill and metallurgical treatment facilities.

Calico Silver Project

The Calico Silver Project 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 project is in the Calico Mining District of Southern California. The district has been the site of historic underground mining of bonanza grade silver deposits since the 1880’s and more recently has attracted notice for the discovery of large tonnage disseminated silver deposits. The mineralization of the Calico Silver Project 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 Leviathon claims. Country rock is tertiary volcanics in related pyroclastic and sedimentary formations. The Leviathon vein system is located northeast of the Calico Fault. The Lilly claims are southwest of the fault in argillically altered tuffaceous sediments of the Barstow formation. These claims lie directly between two known disseminated silver deposits, the Waterloo and Langtry but have not been adequately tested by exploration drilling.

Over 100,000 tons of barite ore was mined in the early 1950’s on the claims by open pit methods in a large cut known as the Leviathon Mine. Approximately 50,000 tons of drilling mud grade barite was shipped. Previous to this, all workings on the property were for underground silver mining in the Silverado Mine and the Silver Bow Mine and is believed to have occur red 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 mining claims. The claims are presently under lease to Calico Exploration, LLC. These claims are held for exploration only as no mineable mineral reserves have as yet been discovered or developed.

Property Description

The Calico Silver Property consists of 60 unpatented Federal lode mining claims, which were acquired through staking and filing Notices of Location with the Bureau of Land Management. The Claims are grouped as Leviathon, Silverado and Lilly groups that were located in September and October 2007, at which time the Bureau of Land Management approved the ~~Company’s~~ our Notice of Location for Lode Mining Claims accepting that we have located and have the right to the unpatented mining claims. Each claim generally consists of 20. 66 acres for a total of 1,30300 0 acres. Annual maintenance fees of $140 per claim are required to be paid to the BLM each August in order to maintain the rights to explore and possibly mine on the federal land.

Property Location and Access

The Calico Silver Project, is located approximately 15 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 overriding environmental or archeological issues related to this property although it is located within the Mohave Desert Conservation Area and will be held to the applicable environmental compliance standards associated with that area. The property is an exploration stage project without reserves and the sources for power and water, should exploration be successful, have yet to be determined.

27Mine Safety Disclosure

Section 1503 of the Dodd-Frank Wall Street Reform Act requires that issuers that are conducting operations of a mine must disclose in their periodic reports with the Securities and Exchange Commission, specific information regarding health and safety and any violations related assessments and legal actions pertaining to mine related facilities.

As we have disclosed herein, we are an Exploration Company and we do not have any mines, operational or otherwise. As such, the Mine and Safety Disclosure is inapplicable to us and there is no disclosure required.

Item 3. Legal Proceedings

There are no pending or threatened lawsuits against us.

Item 4. ~~(Removed~~Mine ~~and~~Safety ~~Reserved)~~Disclosures

28Not Applicable.

PART II

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

Market Information

Our common stock is quoted on the OTCQB under the trading symbol ISLV. The following table sets forth, for ~~2011~~2012 and ~~2010~~2011, the quarterly high and low bid prices for our common stock in the over-the-counter market. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions

	2010				2011
	2012				2011
	High		Low		High		Low
First Quarter	$	10.0035	$	0.0520	$	0.65	$	0.25
Second Quarter	$	0.5221	$	0.0221	$	0.77	$	0.20
Third Quarter	$	0.1565	$	0.0320	$	0.25	$	0.10
Fourth Quarter	$	10.0165	$	0.0730	$	0.30	$	0.10

Holders

As of December 31, ~~2011~~2012, there were 7055 shareholders of record.

Transfer Agent

Our transfer agent is Island Stock Transfer, 15500 Roosevelt Boulevard, Suite 301, Clearwater, Florida 33760, telephone (727) 289-0010.

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

On November 1, 2010, our Board of Directors authorized the approval of a stock option plan,. ~~which~~The plan was amended, onafter ~~May~~December 531, ~~2011.~~2012, ~~The~~on ~~plan~~February 28, ~~which~~2013 ~~covers~~by 3the Board of Directors to authorize a maximum of 5,~~800~~000,000 shares, ~~has~~of ~~not~~our ~~been~~common ~~approved by the stockholders~~stock. 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 share of common stock on the date the option is granted, or (ii) 110% of the fair market value of one 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. The options granted to employees were deemed as “incentive stock options” by the Board of Directors in accordance with the Plan; provided, that the treatment of the options as incentive stock options is subject to shareholder approval of the plan. Options granted to non-employees are non-qualified stock options. These option grants are fully vested and expire on November 1, 2015. No options were exercised or forfeited during the year 2010.28

~~Except~~On November 1, 2010, stock options for ~~the~~3,300,000 ~~plan~~shares ~~described~~were ~~above~~granted to directors, weofficers, ~~have~~key ~~not~~employees ~~established~~and consultants at an ~~option~~exercise ~~plan~~price orof ~~any~~$0.20, ~~other~~which ~~equity compensation~~was ~~plan~~in ~~except~~excess ~~for~~of the ~~following~~quoted ~~option~~market price of $0.12 of our shares at the date of the grant. The options granted to employees were deemed as “incentive stock options” by the Board of Directors in accordance with the Plan; provided, that the treatment of the options as incentive stock options is subject to shareholder approval of the plan. Options granted to non-employees are non-qualified stock options. These option grants are fully vested and expire on November 1, 2015.

On November 5, 2012, stock options for 400,000 shares were granted to members of the Board of Directors at an exercise price of $0.34, which was in excess of the quoted market price of $0.30 of the our shares at the date of the grant. Stock options for 150,000 shares granted to new directors are fully vested and expire on November 5, 2015. The additional stock options for 250,000 shares issued to all directors vest on September 15, 2013. All these options were deemed as “incentive stock options” by the Board of Directors in accordance with the Plan of common stock.

At December 31, 2012, we had 3,700,000 stock options outstanding. No options were exercised or forfeited during the years ended December 31, 2012 or 2011.

Except for the plan described above, we have not established 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, 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.

Purchasers of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any shares of our common stock during ~~2011~~2012 or ~~2010~~2011.

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~~us. On October 6, 2009, we issued 3,550,000 shares of our common stock to ~~the Directors of~~ our ~~Company~~directors and to ~~its~~ our employees for services rendered. Harold Shipes, John McKinney and Matthew Lang each received 1,000,000 shares. Michael Harrington, Herbert Dunham, Daniel Dominguez, Harrison Matson and Danielle Lang each received 100,000 shares. Alexander Makaron received 35,000 and Viviana Medina received 15,000.

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.29

On ~~March~~January 121, 2010, ~~the~~we ~~Company~~cancelled ~~purchased a 70% interest in the Estrades Mine~~30, ~~from a related party, in exchange for 6,~~000~~,000~~ shares of ~~its~~ common stock, atpreviously ~~a share price of $0.0025 per share. The property is carried on our books on a fair value of the equity instrument~~ issued ~~basis. The value allocated~~ to ~~the acquired property is based on~~ a ~~97.5%~~third-party ~~discount~~in ~~from~~exchange ~~the~~for ~~market price on~~ the ~~date~~Tecoma ofmining ~~the transaction~~property, ~~($0.40~~when ~~per share) based on~~ the ~~number~~ ofproperty ~~shares~~reverted ~~issued~~back to ~~the~~its ~~related~~original ~~party and the minimal trading volume of the common stock~~owners.

On ~~August~~March 181, 2010, we purchased a 70% interest in the ~~Company~~Estrades ~~issued~~Mine, 2from a related party, in exchange for 6,000,000 shares of its common stock, at a share price of $0.~~025~~0025 per share. inThe ~~exchange~~property ~~for~~is ancarried ~~outstanding~~on ~~debt~~our books on a fair value of ~~$50,000~~the ~~owed~~equity instrument issued basis. The value allocated to ~~Harold~~the Racquired property is based on a 97.5% ~~Shipes,~~discount ~~director/officer~~from the market price on the date of the transaction ($0.40 per share) based on the number of shares issued to the related party and the minimal trading volume of the common stock.

On August 2418, 2010, ~~the Company conducted a private placement and~~ we issued ~~an additional~~ 2,000,000 shares of common stock at $0.02025 per share ~~for~~in ~~$40,000.~~exchange ~~Cork~~for ~~Investments,~~an ~~Inc.~~outstanding ~~and~~debt ~~Ron~~of ~~Nash~~$50,000 ~~were~~owed ~~each~~to ~~issued~~Harold 1R. Shipes,~~000,000~~ ~~shares of common stock~~director/officer.

On August 24, 2010, 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.

On December 21, 2010, we issued a 90-day convertible note to Tintic Standard Gold, Inc. in the principal amount of $75,000. As consideration for the issuance of the note, we issued 50,000 shares of common stock to Tintic Standard Gold. We agreed to issue an additional 25,000 shares to Tintic to extend the note for an additional 90 days. On April 25, 2011, the note was converted into 474,077 shares of common stock. A total of 499,077 shares were issued, including the 25,000 shares for the note extension.

On August 25, 2011, we ~~the Company completed~~ a private placement of its common stock totaling $1,155,000. Casimir Capital LP was the placement agent for the financing. The private placement consisted of the issuance and sale of an aggregate of 7,699,998 units at a purchase price of $0.15 per unit. Each unit is comprised of one share of common stock and a three-year warrant to purchase one share of common stock at a price of $0.20 per share. The sale of unregistered securities were to third party individuals and companies not related to ~~International Silver, Inc~~us. The aggregate sales price was $1,155,000 with placement agent fees paid in the amount of $80,850, including the issuance of three-year placement agent options to purchase a total of 539,000 units at a purchase price of $0.15 per unit. Proceeds realized have been initially utilized to pay for legal and administrative fees related to this private placement. Additionally, as of June 30, 2011, ~~the~~we ~~Company has~~ applied some of these proceeds to pay for additional exploration activities and general administrative services.

On August 28, 2012, we issued 271,452 shares of common stock at $0.20 per share in exchange for an outstanding debt owed to a shareholder/officer in the amount of $54,290.

We relied upon Sections 4(2) and 4(6) of the Securities Act of 1933, as amended 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

On August 24, 2010, we received $40,000 in proceeds from a private unrelated investor on a private placement of 2,000,000 shares of our common stock, ~~whose~~the funds of which were applied towards general corporate use. Proceeds from a convertible note issued to Tintic Standard Gold, Inc. on December 21, 2010 for $75,000 were applied to exploration activities , as well as for general administration services in year 2011.

~~Proceeds of $1,100,000 received from the private placement completed on August 25, 2011 with Casimir Capital, LP were applied for exploration activities and general corporate use.~~30

31On August 25, 2011, proceeds of $1,015,000 were received from the private placement completed with Casimir Capital, LP, were applied for exploration activities and general corporate use.

Item 6. Selected Financial Data

December 31, 2011

December 31, 2010

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

December 31, 2012

December 31, 2011

Exploration Stage (since inception) June 16, 2006 to December 31, 2012

Revenue

7249,~~990~~744

~~63,660~~7.990

~~441~~691,~~289~~033

Total Operating Expenses

12,~~103~~337,~~243~~418

~~504~~1,~~507~~103,243

24,~~605~~943,~~722~~140

Cash on Hand

1211,~~913~~188

351,~~983~~913

N/A

Total Assets

46712,~~692~~858

~~132~~46,~~432~~692

N/A

Current Liabilities

~~167~~490,~~253~~503

67167,~~627~~253

N/A

Working Capital (Deficit)

(~~121~~112,~~279~~341

)

64(121,~~805~~279)

N/A

Accumulated Deficit

(25,~~630~~181,~~174~~600

)

(12,~~327~~630,174

)

(25,~~454~~005,~~140~~566

)

Exploration Costs

82870,~~835~~543

1682,~~923~~835

~~366~~1,~~757~~237,300

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

Our financial condition as of December 31, ~~2011~~2012, compared to December 31, ~~2010~~2011 is summarized below, as follows:

Assets.

As of December 31, ~~2011~~2012, we had total assets of $46712,~~692~~858 compared to total assets of $~~132~~46,~~432~~692 as of December 31, ~~2010~~2011, representing an ~~decrease~~increase of $85666,~~740~~166. Current assets at December 31, ~~2011~~2012 of $45378,~~974~~162 and $~~132~~45,~~432~~974 at December 31, ~~2010~~2011 are comprised ~~primarily~~ of prepaid insurance and prepaid mine lease costs. Property, plant and equipment of $135,290 at December 31, 2012, reflects primarily the acquisition the Magna Charta property and the deposit on the Chattel property, both located in Butte, Montana. Other ~~Assets~~assets ~~reflect~~as ~~deferred~~of ~~interest~~December ~~costs~~31, ~~relating~~2012, toincludes a$150,000 ~~contemplated~~of deposits in an investment, an option payment of $35,000 on the purchase of the Pan American Zinc, Inc. assets and an environmental bond posted on the Caselton Tailings property ~~acquisition~~of $14,406.

	At December 31, 2011			At December 31, 2010			Net Incr./(Decr.)
	December 31,			December 31,			Net Increase/
Current Assets:
	2012			2011			(Decrease)
Cash	$	1,913		$	35,983		$	(34,070	)
Assets
Due from Related Parties		299			15,919			(15,620	)
Cash	$	211,188		$	1,913		$	209,275
Prepaid Expenses		43,762			80,530			(36,768	)
Accounts Receivable, incl. Related Parties		61,323			299			61,024
Current Assets	$	45,974		$	132,432		$	(86,458	)
Prepaid Expenses		105,651			43,762			61,889
Property, Plant & Equipment-Net	$	718		$	0		$	718
	$	378,162		$	45,974		$	332,188
Total Assets	$	46,692		$	132,432		$	(85,740	)
Property, Plant & Equipment-Net		135,290			718			134,572
Other Assets		199,406			0			199,406
	$	712,858		$	46,692		$	666,166
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts Payable and Accrued Expenses	$	490,503		$	139,916		$	350,587
Note Payable		0			27,337			(27,337	)
	$	490,503		$	167,253		$	323,250
Long-Term Liabilities
Convertible Notes Payable	$	2,139,266		$	0		$	2,139,266
Shareholders’ Equity
Capital Stock	$	3,264,689		$	2,509,613		$	755,076
Accumulated Deficit		(5,181,600	)		(2,630,174	)		(2,551,426	)
	$	(1,916,911	)	$	(120,561	)	$	(1,796,350	)
	$	712,858		$	46,692		$	666,166

Total Liabilities ~~and~~& ~~Shareholders’~~ Equity

	At December 31, 2011			At December 31, 2010			Net Incr./(Decr.)
Current Liabilities
Accounts Payable	$	55,575		$	2,741		$	52,834
Accrued Expenses		68,775			8,464			60,311
Due to Related Parties		25,566			48,089			(22,523	)
Note Payable		17,337			8,333			9.004
	$	167,253		$	67,627		$	99,626
Shareholders’ Equity
Capital Stock	$	2,509,613		$	1,391,979		$	1,117,634
Accum. Deficit – Prior to exploration stage		(176,034	)		(176,034	)		0
Accum. Deficit – During exploration stage		(2,454,140	)		(1,151,140)			(1,303,000	)
Total Shareholder’s Equity	$	(120,561	)	$	64,805		$	(185,366	)
Total Liabilities & Equity.	$	46,692		$	132,432		$	(85,740	)

Total liabilities and equity at December 31, 2012 of $712,858, reflects debt financing of $2,600,000 procured during the year from ISLV Partners, LLC and the accumulated deficit of $5,181,600. Current liabilities increased by $323,250 to $490,503 at December 31, 2012 compared to $167,253 at December 31, 2011. The increase is attributable to higher payables and accrued expenses arising from the drilling program undertaken by us at the leased Prince mine property located in Nevada during the latter part of the year.

Shareholders’ Equity decreased by $1,796,350 to ($1,916,911) as of December 31, 2012 compared to ($120,561) as of December 31, 2011. The decrease results from the net loss from operations of $2,551,426 during 2012, less the valuation assigned to warrants (recognized as equity financing) issued to ISLV Partners, LLC on the convertible loan financing that occurred during the first half of 2012.

Current liabilities increased by $99,626 to $167,253 at December 31, 2011 compared to $67,927 at December 31, 2010. This is attributable to higher accounts payable and accrued expenses in the amount of $113,145, partially offset by a reduction of $22,523 of related party debt.

Shareholders’ Equity decreased by ($185,366) to ($120,561) as of December 31, 2011 compared to $64,805 as of December 31, 2010. The decrease results the net loss from operations of $1,303,000 and an increase in common stock and additional paid-in capital, with an aggregate value of approximately $1,117,634 resulted from a private placement completed during the month of June, 2011. A total of 8,238,998 units of he Company stock were sold. Each unit grants the holder the right to purchase one share of common stock at an exercise price of $0.20 share, with each warrant expiring in three years.

Liquidity and Capital Resources

Working capital decreased by $~~186~~8,~~084~~938 to ($~~121~~112,~~279~~341) at December 31, ~~2011~~2012, compared to ($64121,~~805~~279) at December 31, ~~2010~~2011. The decrease in working capital resulted principally from ~~the~~ ~~reduction~~increased ofpayables ~~operating~~due ~~cash,~~to ~~reduction~~the indrilling ~~related~~program ~~party~~initiated ~~receivables~~at ~~and~~the ~~decreased~~Prince ~~prepaid~~ mine ~~leases, as well as increased payable and accrued expenses of $121,960~~property.

Net cash flow from operating activities decreased by $~~838~~1,~~970~~126,680 to ($~~953~~2,~~734~~080,414) at December 31, ~~2011~~2012, compared to ($~~114~~953,~~764~~734) at December 31, ~~2010~~2011. The bulk of the decrease pertains to exploration, ~~and~~ general and administrative costs associated with ~~Company’s~~our efforts on procuring various mining leases and ~~exploration~~a ~~activities.~~drilling program initiated at the Prince mine property in the Pioche Mining District in Lincoln County, Nevada

Cash flows from investing activities inwere ~~2011~~$334,601 ~~were~~for ~~minimal~~the atyear ~~$15~~ended December 31,~~612~~ as2012, ~~compared~~an toincrease ~~zero~~of ~~for~~$318,989 from the ~~year~~period ended December 31, ~~2010~~2011, which reflected minimal investing activities of $15,612. ~~Minor~~During ~~building~~2012, ~~improvements~~the ~~comprised~~following occurred - Deposits of $150,000 were made towards an investment in a joint venture, purchase of the ~~bulk~~Magna Charta and Chattel properties in Montana requiring cash outlays of $103,388, a payment of $35,000 on the ~~spending~~purchase option for the Pan American Zinc Co. assets in ~~2011~~Nevada, the placement of an reclamation bond of $14,406 at the Caselton Tailings property and leasehold improvements and equipment expenditures of $31,807.

Cash flows from ~~investing~~financing activities increased by $~~820~~1,~~276~~689,014 to $~~935~~2,~~276~~624,290 for the year ended December 31, ~~2011~~2012 compared to ~~115~~$935,~~000~~276 for the year ended December 31, ~~2010~~2011. ~~Cash~~In ~~proceeds~~2012, ~~realized~~third-party ~~from~~financing ~~a private placement~~ in ~~2011~~the ~~netted~~amount of $12,~~155~~600,000 ~~less~~was obtained by the issuance ~~costs~~of convertible notes. Our debt obligations in the amount of $~~139~~54,~~724~~290 were satisfied by the issuance of common stock to one its officers and debt service payments of $~~80.~~30,000 were made to extinguish the debt owed on a promissory note. In ~~2010~~comparison, ~~proceeds~~during the year ended December 31, 2011, a net of $401,~~000~~015,276 ~~were~~was realized ~~from~~in a private placement of our common stock and debt service payments of $7580,000 ~~from~~were ~~a third-party loan~~made.

Our business plan does not reflect, nor do we anticipate, any revenues during our exploration phase, aside from ongoing engineering services rendered toon anthird-party ~~affiliate~~contracts. 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, 2012 as we have an accumulated deficit of $5,181,600. 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 $4.2 million pending adequate financing over the next twelve months.

Our ~~auditors~~capital ~~have~~budget ~~issued a going concern opinion on our audited financial statements~~ for the ~~fiscal~~completion ~~year ended December 31, 2011 as we have an accumulated deficit~~ of $2acquisitions,~~630,174.~~ ~~These~~exploration and ~~other~~development ~~matters~~programs ~~raise~~in ~~substantial~~the ~~doubt~~Pioche ~~about~~Mining ~~our~~District ~~ability~~in toNevada, ~~continue as a going concern. We will have to supplement our currently available funds to satisfy our cash requirements for~~ the ~~immediate~~Calico ~~months~~Project byin ~~attempting~~California ~~to collect upon existing receivables~~ and ~~raising~~in ~~funds through an equity funding. We anticipate total spending requirements of approximately $4.3 million pending adequate financing over~~ the ~~next~~Silver ~~twelve~~Bow ~~months,~~Mining District in ~~the~~Montana ~~following~~are ~~areas~~as follows:

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

Project	Cost – U.S.$

1. Caselton Tailings	$	787,000
2. Prince Mine	$	872,000
3. Caselton Mill/Pan American Mine	$	528,000
4. Other Pioche Projects	$	155,000
5. Butte Projects	$	663,000
6. Calico Project	$	(50,000)
7. Corporate Overhead	$	1,260,000

TOTAL	$	4,215,000

Activity	Cost - U.S.$
1. Mine Salaries and Benefits	$	300,000
2. Geological Evaluation and Drilling Contracts	$	300,000
3. Mine Re-habilitation, Mobilization	$	250,000
4. Miscellaneous Equipment	$	250,000
5. Permitting	$	150,000
6. Corporate Overhead	$	1,200,000
7. Legal	$	50,000
8. Property Payments and Acquisitions	$	1,600,000
9. Commissions and Expenses	$	150,000
TOTAL	$	4,250,000

We cannot meet these requirements from our operations. We intend to seek to finance these activities through the sale of our equity securities. We cannot assure you that we will be able to raise sufficient funds, if any, through the sale of our equity securities, and our inability to raise these funds will impair our ability to develop our business. Further, any sale of equity securities is likely to result in significant dilution to our shareholders.

Results of Operations

We incurred losses of $12,~~303~~551,~~000~~426 for the year ended December 31, ~~2011~~2012, an increase in losses of $~~824~~1,~~179~~248,426 over the prior year. The increase in losses are due to higher exploration, consulting, professional fees, travel and lodging and salaries in connection with increased exploration drilling and due diligence and investigative work on the properties located in the Pioche Mining District ~~properties~~in Nevada and the Silver Bow Mining District in Montana. An analysis of the major components of our results of operations is, as follows:

Revenues - In the year ended December 31, 2012, revenues were $249,744, representing an increase or $241,844 over the $7,900 earned in the year ended December 31, 2011. The increase in revenues are a result of third-party contracts for management and engineering consulting services. No revenues have been realized from production of metal in either year.

Exploration Expenses - Exploration costs increased by 951% or $787,708 to $870,543 for the year ended December 31, 2012 compared to $82,835 for the year ended December 31, 2011. The level of exploration work increased substantially in 2012 due to the acquisition of several mineral leases in Nevada and Montana and commencement of a drilling program at the Prince mine property located in Nevada.

AnGeneral ~~analysis~~& ofAdministrative Expenses - General and administrative expenses increased by 44% or $445,916 to $1,466,252 for the ~~major~~year ~~components~~ended ofDecember ~~our~~31, ~~results~~2012 offrom ~~operations~~$1,020,336 for the year ended December 31, 2011. Increased emphasis on the Nevada and Montana properties resulted is due diligence, exploration and investigative work. Substantial costs were expended for drilling and assaying services, consultants, legal, travel costs and staff salaries for work done in the Pioche Mining District properties located in Nevada, as ~~follows:~~well as work done in the County of Silver Bow, Montana, where several other properties are undergoing exploratory activities.

~~Revenues~~Depreciation -and InDepletion ~~the~~Expenses ~~year~~- ~~ended~~Depreciation ~~December~~expense ~~31,~~for ~~2011,~~2012 ~~revenues~~was ~~were~~only $~~7,900,~~623 ~~representing~~and a$72 ~~88%~~for ~~decrease~~2011. orNo ~~$55,760~~depreciation ~~reduction~~has ~~from~~been ~~$63,660~~taken ~~earned~~to-date inon ~~the~~any ~~year~~mining ~~ended~~plant ~~December~~or 31equipment, ~~2010.~~as ~~The~~none ~~decrease~~has ~~in revenues stems mostly from decreased engineering services. No revenues have~~ been ~~realized~~placed ~~from production of metal~~ in ~~either year~~service.

~~Exploration~~Other Income and Expenses -– ~~Exploration~~Other ~~costs~~Income/Expenses ~~increased~~for bythe ~~390%~~year orended December 31, 2012 were $65463,~~912~~752 toor $82256,~~835~~095 less than for the year ended December 31, ~~2010~~2011, ~~from~~which were $16207,~~923~~657. The ~~for~~cost ~~the~~of ~~comparable~~discounted ~~2010~~shares, ~~period.~~interest ~~The~~accrued ~~level~~on ofthe ~~exploration~~convertible ~~work~~notes ~~increase~~issued ~~substantially~~during in2012 ~~2011~~and ~~due~~interest toaccrued on the ~~acquisition~~contract note on the purchase of ~~several~~the ~~mineral~~Chattel ~~leases~~property in ~~Nevada~~Montana ~~and~~comprised ~~Montana~~the total of $463,752 in interest expense.

~~General~~In &2011, ~~Administrative~~Other Income/Expenses -were ~~General~~primarily ~~and~~comprised ~~administrative~~of ~~expenses~~interest ~~increased~~costs byof ~~109% or~~ $~~532~~99,~~752~~918 relating to ~~$1,020,336~~a ~~for~~promissory ~~the~~note ~~year~~on ~~ended December 31, 2011 from 487,584 for~~ the ~~year~~Pan ~~ended~~American ~~December 31~~property, ~~2010. The~~which ~~substantial~~was ~~increase~~relinquished isback ~~due~~ to ~~increased emphasis on~~ the ~~Nevada~~seller ~~and~~at ~~Montana properties~~year-end, ~~which resulted in substantial due diligence, exploration~~ and ~~investigative work. Substantial costs were expended for consultants~~$92,917 ~~legal,~~interest ~~travel~~incurred ~~costs~~on ~~and~~a ~~staff~~bridge ~~salaries~~loan ~~for~~from ~~work~~Tintic ~~done~~Standard inGold ~~the~~Mines, ~~Pioche~~Inc. In ~~Mining District properties located in Nevada~~addition, asan ~~well~~impairment asloss ~~work done in the County~~ of ~~Silver Bow~~$14,822 ~~Montana,~~was ~~where~~recognized aon ~~mineral~~building ~~lease agreement has been signed and several other properties are under investigation~~improvements.

Depreciation and Depletion Expenses - Depreciation expense for 2011 was only $72 and for 2010 was nil. No depreciation has been taken to-date on any mining plant or equipment, as none has been placed in service.

Other Income and Expenses – Other Expenses for the year ended December 31, 2011 were $207,657 or $173,213 more than for the year ended December 31, 2010, which were only $34,444. A gain on the settlement of debt in the amount of $1,678,634 was recognized at the end of the year resulting from the Company's decision not to proceed with the purchase of the Pan American acquisition and relinquish its rights to the assets. An impairment loss on Goodwill, which was recognized upon exercise of the lease/purchase option in the amount of $1,678,634 and an additional impairment of building improvements in the amount of $14,822 were both recognized in 2011. Interest costs of $99,918 relating to a promissory note on the Pan American property, which was relinquished back to the seller at year-end. In addition there were interest costs of $92,917 incurred on a bridge loan from Tintic Standard Gold Mines, Inc.

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 registered geologist as a 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: · Prince Mine · Pan American Mine · ~~Castelton~~Caselton Concentrator · Montana Properties · Calico Silver Project

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

Capitalized Acquisitions

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

A) Purchase of the Tecoma Mine – Year 2007	$	90,000

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

C) Purchase of Magna Charta property located in Silver Bow County, Montana		47,500

D) Deposit on land purchase of - Chattel property located in Silver Bow County, Montana		55,888
Total Acquisitions	$	103,388

Exploration Costs:

A) Acquired a 98% interest in Metales Preciosos, S.A. de C.V., a Mexican company - exploration abandoned
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 (options expired – exploration abandoned)
1) Option payment		10,000

2) Option payment		90,000

3) Exploration		21,075

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

2) Leviathon mining claims		47,609

D) Pioche Mining District – Lincoln County, Nevada
1) Prince Mine lease		695,817

2) Caselton Tailings		152,236

3) Caselton Mine		8,874

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) Butte, Montana		11,000
2) Oro Blanco		0
3) Pioche		54,906
e) General Administrative Costs		83,042
Total acquisitions and exploration costs	$	366,757

During our early stage of exploration activities, from June 16, 2006 through December 31, 2010, we have incurred $366,757 in exploration costs, as detailed above, and general and administration expenses of $2,238,138 primarily consisting of salaries, stock compensation expense, mine leases, office rent, consulting fees, and travel expenditures, and depreciation of $827 for a total of $2,605,722 in operating costs.

E) Silver Bow County, Montana
1) New Butte Property lease		53,417

2) Continental Public Land Trust		13,808

3) Silver Bar (Option) - abandoned		6,819

4) Butte Properties - General		37,501

F) Other Exploration Sites (evaluation)

1) Anaconda		7,500

2) Oro Blanco		8,840

4) SE Arizona Silver		4,829

5) Mohave Gold		1,050

6) Zonia Mine		6,650

e) General Administrative Costs		12,765

Total Exploration Costs	$	1,237,300

~~Accumulated~~During ~~losses~~our ofexploration $2activities,~~454~~ from June 16,~~140~~ ~~incurred~~2006 ~~from~~through ~~the~~December ~~inception~~31, of2012, ~~the~~we ~~“exploration~~have ~~phase”~~incurred ~~accounts~~$1,237,300 ~~for~~in ~~approximately~~exploration ~~94%~~costs, ofas ~~the~~summarized ~~accumulated~~above, ~~deficit~~general and administration expenses of $23,~~630~~704,~~174~~390 ~~reflected~~primarily inconsisting ~~the~~of ~~Shareholders’~~salaries, ~~Equity~~stock ~~section~~compensation ofexpense, ~~our~~office ~~financial~~rent, ~~statements~~legal and consulting fees, and travel expenditures. In ~~Our~~addition, ~~prior~~we ~~engineering~~have ~~activities~~incurred ~~accounts~~impairment ~~for~~losses, ~~the~~interest ~~other~~and ~~portion~~financing costs of ~~the~~$753,459 ~~deficit~~for a total of $5,005,566.

Accumulated losses of $5,005,566 incurred from the inception of the “exploration phase”, accounts for approximately 97% of the accumulated deficit of $5,181,600 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, 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, ~~2011~~2012 have been applied consistently for the December 31 year-ends of ~~2011~~2012 and ~~2010~~2011.

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~~our ~~Company’s~~ activities and their effect as of December 31, ~~2010~~2011 and December 31, ~~2011~~2012, 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.39

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, we 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~~ we abandoned ~~its~~our 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 expected exploration activities and are for a period of twelve months. The total amount budgeted for exploration, byacquisition ~~International~~and ~~Silver~~development ~~Inc.~~ in ~~2012~~2013 is $ 4,~~090~~215,000.

39We are continuing with the evaluation of mine plans, Phase II drill program and resource potential of the Prince Mine. Phase 1 Drill program of the projected extensions of the known silver mineralization was completed in the fall of 2012. On the Caselton Tailings remediation Project, we will conduct site characterization studies in conjunction with metallurgical testing. The data generated from the program will be used to design a processing facility and to determine the feasibility of economic precious metals recovery. At the newly acquired Butte Silver Mines properties, we will be evaluating and compiling the voluminous historic exploration and mining data on the properties and will commence with preliminary mine development planning. We believe that we have adequate mineral resources defined on the Butte properties to merit initiation of this planning which will be concurrent with geologic mapping and sampling of mineralized structures and surveying of existing underground development. Based upon our analysis of the test results and studies, we will determine whether to proceed with development plans. We cannot determine, predict, or assure whether we will be able to proceed with advanced exploration and development activities regarding any of our properties or claims. Our exploration activities will be conducted under the overall direction of our registered consulting geologist using industry standard quality assurance and control procedures.

We are continuing with the evaluation of mine plans, potential drill targets and resource potential of the Prince Mine. Drill testing of the projected extensions of the known silver mineralization should begin in the fall of 2012. On the Caselton Tailings remediation Project, we will conduct site characterization studies with geotechnical drilling in conjunction with metallurgical testing. The data generated from the program will be used to design a processing facility and to determine the feasibility of economic precious metals recovery. At the newly acquired Butte Silver Mines properties, we will be evaluating and compiling the voluminous historic exploration and mining data on the properties and will commence with preliminary mine development planning. We believe that we have adequate mineral resources defined on the Butte properties to merit initiation of this planning which will be concurrent with geologic mapping and sampling of mineralized structures and surveying of existing underground development. Based upon our analysis of the test results and studies, we will determine whether to proceed with development plans. We cannot determine, predict, or assure whether we will be able to proceed with advanced exploration and development activities regarding any of our properties or claims. Our exploration activities will be conducted under the overall direction of our registered Consulting Geologist using industry standard quality assurance and control procedures.

Properties - The Calico Silver Project in San Bernardino County, California, the Pioche mining district properties in Lincoln County, Nevada and the Butte Silver Mines properties in Silver Bow County, Montana.

We will continue to hold the Calico Silver property and will focus our exploration efforts on the Pioche and Butte Mining Districts. We will use employees, consultants and existing infrastructure to conduct our activities in the Pioche Nevada and the Butte, Montana properties. Our exploration program is shown below:

Exploration at Butte Silver Mines

1) Data and property acquisition. Company staff will continue to compile the exploration records from these historic Anaconda Company mines. While much data is in possession of the Company, other sources will be utilized in order to make the records as complete as possible. Once acquired, the exploration and development data will be compiled using mine planning software to regenerate resource estimates. Underground levels will be plotted as will drift sampling records and exploration drill holes. Selected mineral and surface interests ancillary to the Company’s properties are also slated for acquisition.

2) Development Planning. Based on the presently known historic resources and proposed AMC underground mine plans, the Company expects to be able to create new preliminary mine development plans for the Project. This will require underground mapping, surveying and confirmation sampling. As the condition of much of the existing underground development headings is presently unknown, the extent of this work to be conducted in 2012 is uncertain.

Properties - The Calico Silver Project in San Bernardino County, California, the Pioche Mining District properties in Lincoln County, Nevada and the Butte Silver Mines properties in Silver Bow County, Montana.

We have leased the Calico Silver property to another exploration company and will focus our exploration efforts on the Pioche and Butte Mining Districts. We will use employees, consultants and existing infrastructure to conduct our activities in the Pioche Nevada and the Butte, Montana properties. Our exploration program is shown below:

Exploration at Butte Silver Mines

Data and property acquisition.

Our staff will continue to compile the exploration records from these historic Anaconda Company mines. While much data is in our possession, other sources will be utilized in order to make the records as complete as possible. Once acquired, the exploration and development data will be compiled using mine planning software to regenerate resource estimates. Underground levels will be plotted as will drift sampling records and exploration drill holes. Selected mineral and surface interests ancillary to our properties are also slated for acquisition.

Development Planning.

Based on the presently known historic resources and proposed AMC underground mine plans, we expect to be able to create new preliminary mine development plans for the Project. This will require underground mapping, surveying and confirmation sampling. As the condition of much of the existing underground development headings is presently unknown, the extent of this work to be conducted in 2013 is uncertain.

Exploration at Prince Mine:

1) Surface and underground drilling. All accumulated data from ~~underground~~the ~~and~~2012 ~~surface~~Phase ~~sampling~~I Drill Program, geochemical and geophysical studies will be evaluated to confirm the highest priority targets for Phase II exploration on the Prince Mine. A drilling contractor will be hired to conduct the drilling program using the dual tube reverse circulation air rotary method of drilling and sample collection under the supervision of our registered Geologist. This drilling method is widely accepted as providing high quality sample integrity. Industry standard chain of custody and quality assurance and control procedures will be followed. This will include the use of duplicate samples and sample standards. Accurate geologic logs of the drill holes will be created and the drill hole locations surveyed. Geologic samples will be continuously collected and delivered to an independent certified analytical laboratory for assaying. It is estimated that this program will require up to four months for completion.

2) Mine planning. As assays come back from drilling programs, the corporate engineering department will enter them into a data base with mine planning software to produce a preliminary scoping study. Assuming the continued exploration is successful, an independent engineering firm will be hired to produce a deposit model using computerized mine planning software. This phase will require approximately three months and will most probably commence at approximately month twelve.

Site Characterization and Planning at the Caselton Tailings:

Geotechnical drilling. Upon receipt of permit authority, a drilling contractor will be hired to conduct the drilling program using split spoon sampling and hollow stem auger drill methods. All hole locations will be surveyed. Sample collection will be conducted under the supervision of a registered professional geologist. Samples will be split and the duplicates stored for reference. The first split will be shipped for chemical analysis and metallurgical testing. Industry standard chain of custody and quality control procedures will be followed.

Feasibility and Permitting. This phase of the Operations Plan will commence providing the results of the drill testing and metallurgical work has been positive. The study will be done in 'house' by the Western States Engineering division with assistance from an established and reputable independent mining engineering firm. Permit applications for the combined metal recovery and site remediation project will be prepared for submittal in conjunction with the process design work.

~~Our~~Site ~~ability~~Characterization to complete any of the activities described under “Plan of Operations” require significant funding. We presently have a commitment for portion of the funding, but we cannot assure you that we will be able to obtain full funding or that the terms on which additional funding may be available will be acceptable. To the extent that we are able to secure funding for a portion of our needs, we will have to allocate such funding among the projects, and wePlanning ~~may~~at not be able to complete components of these projects. If we are able to obtain only limited funding, it may result in significant dilution to our shareholders. Further, our use of proceeds may be determined by the ~~investors~~Caselton ~~based on their priorities, which may be different from our priorities.~~Tailings:

1)	Metallurgical testing The initial Phase I bench scale test work has been completed and the metallurgical lab is working on optimizing metal recoveries before commencing Phase II pilot scale test work using a continuous-feed fluidized-bed system.

2)	Feasibility and Permitting. This phase of the Operations Plan will commence once all the metallurgical test work is completed. Aerial surveying of the entire site will be completed during the first half of 2013. The permitting will be done ‘in- house' by our Western States Engineering division with assistance from an established and reputable independent mining engineering firm. Permit applications for the combined metal recovery and site remediation project will be prepared for submittal in conjunction with the process design work.

Our ability to complete any of the activities described under “Plan of Operations” will require significant funding. We presently have a commitment for portion of the funding, but we cannot assure you that we will be able to obtain full funding or that the terms on which additional funding may be available will be acceptable. To the extent that we are able to secure funding for a portion of our needs, we will have to allocate such funding among the projects, and we may not be able to complete components of these projects. If we are able to obtain only limited funding, it may result in significant dilution to our shareholders. Further, our use of proceeds may be determined by the investors based on their priorities, which may be different from our priorities.

Item 7A Quantitative and Qualitative disclosures About Market Risk

Not applicable.

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 and Stockholders of

International Silver, Inc.

(An Exploration Stage Company)

We have audited the accompanying balance sheets of International Silver, Inc. (An Exploration Stage Company) as of December 31, ~~2011~~2012 and ~~2010~~2011, and the related statements of ~~income~~operations, stockholders’ equity ~~and~~(deficit) ~~comprehensive income,~~ and cash flows for each of the years in the two -year period ended December 31, ~~2011~~2012 and ~~2010~~from inception on June 16, 2006 through December 31, 2012. International Silver, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the ~~audit~~audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The ~~company~~Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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. (An Exploration Stage Company) as of December 31, ~~2011~~2012 and ~~2010~~2011, and the ~~results~~related statements of ~~its~~ operations, ~~and~~stockholders’ ~~its~~equity (deficit) and cash flows for each of the years in the two -year period ended December 31, ~~2011~~2012 and ~~2010~~from inception on June 16, 2006 through December 31, 2012, 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, has negative working capital at December 31, 2012, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit 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

~~May~~March 922, 2012

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

International Silver, Inc.

(An Exploration Stage Company)

Consolidated Financial Statements

(Audited)

For the Year Ended December 31, ~~2011~~2012

And

For the Year Ended December 31, ~~2010~~2011

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

(An Exploration Stage Enterprise)

	As At
	December 31,			December 31,
	2012			2011

ASSETS

CURRENT ASSETS
Cash	$	211,188		$	1,913
Accounts receivable		61,323			-
Due from related parties - Note L		-			299
Prepaid expenses - Note C		105,651			43,762
Total Current Assets	$	378,162		$	45,974

PROPERTY,PLANT AND EQUIPMENT- Note D
Mineral properties	$	103,388		$	-
Leasehold Improvements		26,812			-
Equipment		5,399			2,042
Furniture & Fixtures		3,502			3,502
Computer equipment		2,429			790
	$	141,530		$	6,334
Accumulated depreciation		(6,240	)		(5,616	)
	$	135,290		$	718

Other Assets – Note E
Deposit toward investment	$	150,000		$	-
Other Deposits – Note F		49,406			-
	$	199,406		$	-

TOTAL ASSETS	$	712,858		$	46,692

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	234,745		$	17,311
Payroll taxes payable		8,658			28,264
Accrued expenses		194,882			68,775
Due to related parties - Note L		52,218			25,566
Note payable - Note G		-			27,337
Total Current Liabilities	$	490,503		$	167,253

LONG-TERM LIABILITIES
Convertible notes payable - Note H	$	2,139,266		$	-
	$	2,139,266		$	-

Total Liabilities	$	2,629,769		$	167,253

SHAREHOLDERS' EQUITY - Note K
Common stock
authorized shares - 500,000,000
par value $0.0001 per share
issued & o/s at 12/31/11 - 36,780,828
issued & o/s at 09/30/12 - 37,052,280	$	3,705		$	3,678
Additional paid-in capital		3,260,984			2,505,935
Accumulated deficit prior to exploration stage		(176,034	)		(176,034	)
Accumulated deficit during exploration stage		(5,005,566	)		(2,454,140	)
Total Shareholders' Equity	$	(1,916,911		$	(120,561	)

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	712,858		$	46,692

Consolidated Balance Sheets

	As At
	December 31,			December 31,
	2011			2010
ASSETS
CURRENT ASSETS
Cash	$	1,913		$	35,983
Due from related parties - Note K		299			15,919
Prepaid expenses - Note C		43,762			80,530
Total Current Assets	$	45,974		$	132,432
PROPERTY,PLANT AND EQUIPMENT- Note E
Computer Equipment	$	790		$	-
	$	790		$	-
Accumulated depreciation		(72	)		-
	$	718		$	-
TOTAL ASSETS	$	46,692		$	132,432
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	27,311		$	2,467
Payroll taxes payable		28,264			274
Accrued expenses		68,775			8,464
Due to related parties - Note K		25,566			48,089
Note payable - Note H		17,337			8,333
Total Current Liabilities	$	167,253		$	67,627
Total Liabilities	$	167,253		$	67,627
SHAREHOLDERS' EQUITY - Note L
Common stock
authorized shares - 500,000,000
par value $0.0001 per share
issued & o/s at 12/31/10 - 28,581,753
issued & o/s at 12/31/11 - 36,780,828	$	3,678		$	2,858
Additional paid-in capital		2,505,935			1,389,121
Accumulated deficit prior to exploration stage		(176,034	)		(176,034	)
Accumulated deficit during exploration stage		(2,454,140	)		(1,151,140	)
Total Shareholders' Equity	$	(120,561	)	$	64,805
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	46,692		$	132,432

See accompanying notes to the consolidated financial statements

International Silver, Inc. (An Exploration Stage Enterprise) Consolidated Statement of Income

Consolidated Statement of Income

							Inception (June 16, 2006) of Exploration Stage through (December 31, 2012)
	Twelve Months Ended
	December 31,			December 31,
	2012			2011

REVENUES
Mineral lease income	$	100,000		$	-		$	100,000
Consulting-third parties		149,744			-			193,943
Consulting-related parties		-			7,900			397,090
Total Revenues	$	249,744		$	7,900		$	691,033

Operating Expenses
Exploration costs	$	870,543		$	82,835		$	1,237,300
General and administration
Rent expense - related party		116,339			81,000			289,297
Bad debt expense		-			-			41,860
All other general & administrative		1,349,913			939,336			3,373,233
Depreciation and depletion		623			72			1,450
Total operating expenses	$	2,337,418		$	1,103,243		$	4,943,140

Operating Income/(Loss)	$	(2,087,674	)	$	(1,095,343	)	$	(4,252,107	)

Other Income/(Expense)
Gain on settlement of debt	$	-		$	1,678,634		$	1,678,634
Impairment loss		-			(1,693,456	)		(1,733,456	)
Interest expense		(463,752	)		(192,835	)		(698,637	)
Total other income/(expense)	$	(463,752	)	$	(207,657	)	$	(753,459	)

Net Income/(Loss)	$	(2,551,426	)	$	(1,303,000	)	$	(5,005,566	)

Basic Earnings per Share
Income/(Loss) per Share	$	(0.07	)	$	(0.04	)

Weighted Average Shares
Outstanding		36,916,926			33,467,276

	Twelve Months Ended						Inception (June 16, 2006) of Exploration Stage through
	December 31, 2011			December 31, 2010			(December 31, 2011)
REVENUES
Consulting-third parties	$	-		$	-		$	44,199
Consulting-related parties	$	7,900		$	63,660		$	397,090
Total Revenues	$	7,900		$	63,660		$	441,289
Operating Expenses
Exploration costs	$	82,835		$	16,923		$	366,757
General and administration
Rent expense - related party		81,000			6,900			172,958
Bad debt expense		-			236			41,860
All other general & administrative		939,336			480,448			2,023,320
Depreciation and depletion		72			-			827
Total operating expenses	$	1,103,243		$	504,507		$	2,605,722
Operating Income/(Loss)	$	(1,095,343	)	$	(440,847	)	$	(2,164,433	)
Other Income/(Expense)
Gain on Settlement of Debt	$	1,678,634		$	-		$	1,678,634
Impairment loss		(1,693,456	)		(15,000	)		(1,733,458	)
Interest expense		(192,835	)		(19,444	)		(234,885	)
Total other income/(expense)	$	(207,657	)	$	(34,444	)	$	(289,707	)
Extraordinary Items
Deconsolidation of subsidiary	$	-		$	(3,530	)	$	-
Net Income/(Loss)	$	(1,303,000	)	$	(478,821	)	$	(2,454,140	)
Basic and Diluted
Income/(Loss) per Share	$	(0.04	)	$	(0.02	)
Weighted Average Shares
Outstanding		33,467,276			22,571,012

See accompanying notes to the consolidated financial statements

International Silver, Inc. (An Exploration Stage Enterprise) Consolidated Statement of Cash Flows

(An Exploration Stage Enterprise)

							Inception (June 16,
	Twelve Months Ended						2006) of Exploration Stage through
	December 31,			December 31,			(December 31,
	2012			2011			2012)
							(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	(2,551,426	)	$	(1,303,000	)	$	(5,005,566	)
Adjustments used to reconcile net (loss)
to net cash (used) by operating activities:
Non-controlling interest in subsidiary		-			-			(3,530	)
Dissolution of subsidiary		-			-			3,530
Depreciation and depletion		623			72			1,450
Impairment loss		-			14,822			1,733,456
Gain on settlement on debt		-			-			(1,678,634	)
Financing cost		214,715			191,054			414,102
Stock compensation expense		28,000			-			28,000
Issuance of common stock
In exchange for land		-			-			30,000
In exchange for services		-			-			157,000
In exchange for exploration costs		-			-			55,385
In exchange for debt		-			-			50,000
Issuance of incentive stock option grants		-			-			396,000
Changes in operating assets and liabilities
Decrease/(Increase) in receivables		(61,024	)		15,620			188,338
Decrease/(Increase) in employee receivable		-			-			2,317
Decrease/(Increase) in prepaid expenses		(61,889	)		36,768			(109,125	)
(Decrease)/Increase in payables		224,480			30,619			282,452
(Decrease)/Increase in accrued expenses		126,107			60,311			218,503
Net Cash Flows (used by) Operating Activities	$	(2,080,414	)	$	(953,734	)	$	(3,236,322	)

CASH FLOW FROM INVESTMENT ACTIVITIES
Lease/purchase option on land	$	-		$	-		$	(90,000	)
Purchase of land		-			-			(90,000	)
Leasehold Improvements		(26,812	)		-			(26,812	)
Purchase of equipment		(4,995	)		(790	)		(12,453	)
Building improvements		-			(14,822	)		(14,822	)
Deposits towards investment		(150,000	)		-			(150,000	)
Nonrefundable deposit - Option payment		(35,000	)		-			(35,000	)
Refundable deposit - reclamation bond		(14,406	)		-			(14,406	)
Purchase of mineral land		(103,388	)		-			(103,388	)
Net Cash Flows from Investment Activities	$	(334,601	)	$	(15,612	)	$	(536,881	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock:
Net proceeds from stock issuance	$	54,290		$	1,155,000		$	1,329,290
Less: Stock issuance costs		-			(139,724	)		(139,724	)
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
Third-party loan		2,600,000			-			2,675,000
Debt service payments		(30,000	)		(80,000	)		(100,000	)
Borrowings from related parties		-			-			152,980
Net Cash Flows from Financing Activities	$	2,624,290		$	935,276		$	3,952,761

Net Increase/(Decrease) in Cash	$	209,275		$	(34,070	)	$	179,558

Beginning Cash Balance	$	1,913		$	35,983		$	31,630

Ending Cash Balance	$	211,188		$	1,913		$	211,188

Consolidated Statement of Cash Flows

	Twelve Months Ended						Inception (June 16, 2006) of Exploration Stage through
	December 31, 2011			December 31, 2010			(December 31, 2011)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	(1,303,000	)	$	(478,821	)	$	(2,454,140	)
Adjustments used to reconcile net (loss)
to net cash (used) by operating activities:
Non-controlling interest in subsidiary		-			3,530			(3,530	)
Dissolution of subsidiary		-			-			3,530
Depreciation and depletion		72			-			827
Impairment loss		14,822			15,000			54,822
Financing cost		191,054			8,333			199,387
Issuance of common stock
In exchange for land		-			-			30,000
In exchange for services		-			-			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		15,620			1,788			249,362
Decrease/(Increase) in employee receivable		-			-			2,317
Decrease/(Increase) in prepaid expenses		36,768			(79,564	)		(47,236	)
(Decrease)/Increase in payables		30,619			(39,103	)		67,972
(Decrease)/Increase in accrued expenses		60,331			8,073			92,396
Net Cash Flows (used by) Operating Activities	$	(953,734	)	$	(114,764	)	$	(1,145,908	)
CASH FLOW FROM INVESTMENT ACTIVITIES
Lease/purchase option on land	$	-		$	-		$	(90,000	)
Purchase of land		-			-			(90,000	)
Purchase of equipment		(790	)		-			(7,458	)
Building improvements		(14,822	)					(14,822	)
Net Cash Flows from Investment Activities	$	(15,612	)	$	-		$	(202,280	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock:
Net proceeds from stock issuance	$	1,155,000		$	40,000		$	1,275,000
Less: Stock issuance costs		(139,724	)					(139,724	)
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
Third-party loan		-			75,000			75,000
Debt service payments		(80,000	)		-			(80,000	)
Borrowings from related parties		-			-			152,980
Net Cash Flows from Financing Activities	$	935,276		$	115,000		$	1,318,471
Net Increase/(Decrease) in Cash	$	(34,070	)	$	236		$	(29,717	)
Beginning Cash Balance	$	35,983		$	35,747		$	31,630
Ending Cash Balance	$	1,913		$	35,983		$	1,913

See accompanying notes to the consolidated financial statements

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

(An Exploration Stage Enterprise)

					Exploration Stage
	Twelve Months Ended				(June 16, 2006 through
	December 31,		December 31,		December 31,
	2012		2011		2012)


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		-		-		42,000
For equipment		-		-		3,000
For exploration costs		-		-		55,385
For debt retirement		54,290		102,361		156,651
For contributed capital		-		-		315,072
Total non-cash issuances of stock	$	54,290	$	102,361	$	729,108

Shares of common stock issuable
For debt interest	$	-	$	-	$	16,250
	$	-	$	-	$	16,250

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

Issuance of incentive stock option grants
Grants issued	$	28,000	$	-	$	424,000

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

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

Supplemental Disclosures of Non-Cash Financing Activities

						Exploration Stage
						(June 16, 2006)
	Twelve Months Ended					through
	December 31, 2011		December 31, 2010			(December 31, 2011)
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		-		-			42,000
For equipment		-		-			3,000
For exploration costs		-		-			55,385
For debt retirement		102,361		-			102,361
For contributed capital		-		-			315,072
Total non-cash issuances of stock	$	102,361	$	-		$	674,818
Shares of common stock cancelled
Repurchase of its common stock	$	-	$	-		$	30,000
Issuance of incentive stock option grants
Grants issued	$	-	$	-		$	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

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

(An Exploration Stage Enterprise)

																		Accumulated Deficit
			Common Stock						Additional			Treasury Stock/						Prior			During
	Share		No. of			$0.0001			Paid-In			Shares Issuable						Exploration			Exploration
	Price		Shares			Par Value			Capital			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			(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	$	0.075		1,000,000			100			74,900															75,000
October 21, 2006	$	0.050		100,000			10			4,990															5,000
Shares issued for property
September 19, 2006	$	1.000		30,000			3			29,997															30,000
Shares issued for acquisition
Metales Preciosos,
S.A. de C.V.
October 21, 2006	$	0.185		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			(176,034	)		(163,224	)		84,649

Shares issued for cash
May 4, 2007	$	0.500		400			0			200															200
May 11, 2007	$	0.500		2,000			0			1,000															1,000
May 14, 2007	$	0.500		4,000			0			2,000															2,000
May 16, 2007	$	0.500		600			0			300															300
June 4, 2007	$	0.500		3,000			0			1,500															1,500
October 29, 2007	$	0.500		4,000			0			2,000															2,000
November 6, 2007	$	0.500		28,000			3			13,997															14,000
November 8, 2007	$	0.500		18,000			2			8,998															9,000
November 13, 2007	$	0.250		200,000			20			49,980															50,000
Shares issued for services
May 22, 2007	$	0.055		100,000			10			5,490															5,500
September 13, 2007	$	0.040		250,000			25			9,975															10,000
September 21, 2007	$	0.040		150,000			15			5,985															6,000
Shares exchanged for debt
June 30, 2007	$	0.500		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			(176,034	)		(291,371	)		226,095

Shares issued for services
June 12, 2008	$	0.133		150,000			15			19,985															20,000
Shares exchanged for debt
September 8, 2008	$	0.289		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			(30,000	)		(30,000	)		(176,034	)		(590,159	)		14,286

Shares issued for services
October 6, 2009	$	0.010		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			(30,000	)		(30,000	)		(176,034	)		(672,319	)		(32,374	)

Treasury shares cancelled
January 10, 2010	$	1.000		(30,000	)		(3	)		(29,997	)		30,000			30,000									0
Shares issuable
March 3, 2010	$	0.003		0									6,000,000			15,000									15,000
Shares issued for land
April 26, 2010	$	0.003		6,000,000			600			14,400			(6,000,000	)		(15,000	)								0
Shares exchanged for debt
August 18, 2010	$	0.025		2,000,000			200			49,800															50,000
Shares issued for cash
August 24, 2010	$	0.020		2,000,000			200			39,800															40,000
Stock option - grants issued
November 1, 2010	$	0.120								396,000															396,000
Shares exchanged for
convertible note
December 31, 2010	$	0.600		50,000			5			74,995															75,000
Net Income/(Loss)																						(478,821	)		(478,821	)

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

Shares issuable
March 31, 2011	$	0.650		0									25,000			16,250									16,250
Retirement of convertible note
April 21, 2011	$	0.205		499,077			50			102,309			(25,000	)		(16,250	)								86,109
Private placement:
May 18, 2011	$	0.150		2,666,667			266			399,734															400,000
May 25, 2011	$	0.150		1,333,334			133			199,867															200,000
May 27, 2011	$	0.150		1,500,001			150			224,850															225,000
May 31, 2011	$	0.150		533,331			53			79,947															80,000
June 1, 2011	$	0.150		333,333			33			49,967															50,000
June 15, 2011	$	0.150		1,000,000			100			149,900															150,000
June 23, 2011	$	0.150		333,332			34			49,966															50,000
Stock issuance costs										(139,725	)														(139,725	)
Net Income/(Loss)																						(1,303,000	)		(1,303,000	)

At December 31, 2011				36,780,828			3,678			2,505,935			0			0			(176,034	)		(2,454,140	)		(120,561	)

Convertible Debt
Issuance of Warrants
February 6, 2012										133,334															133,334
Convertible Debt
Issuance of Warrants
May 25, 2012										444,444															444,444
Shares exchanged for debt
August 28, 2012	$	0.200		271,452			27			54,263															54,290
Cost of Discounted Shares
August 28, 2012										95,008															95,008
Stock option - grants issued
November 7, 2012	$	0.070								28,000															28,000
Net Income/(Loss)																						(2,551,426	)		(2,551,426	)

At December 31, 2012				37,052,280			3,705			3,260,984			0			0			(176,034	)		(5,005,566	)		(1,916,911	)

Consolidated Statement of Shareholders' Equity

																		Accumulated Deficit
			Common Stock						Additional			Treasury Stock/						Prior			During
	Share		No. of			$	0.0001		Paid-In			Shares Issuable						Exploration			Exploration
	Price		Shares			Par Value			Capital			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		$	(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
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		$	(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		$	(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			(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			(30,000	)	$	(30,000	)	$	(176,034	)	$	(672,319	)	$	(32,374	)
Treasury 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
Stock option - grants issued
November 1, 2010	$	0.1200								396,000															396,000
Shares exchanged for
convertible note
December 31, 2010	$	0.6000		50,000			5			74,995															75,000
Net Income/(Loss)																						(478,821	)		(478,821	)
At December 31, 2010				28,581,753		$	2,858		$	1,389,121			0		$	0		$	(176,034	)	$	(1,151,140	)	$	64,805
Shares issuable
March 31, 2011	$	0.6500		0									25,000			16,250									16,250
Retirement of convertible note
4/21/2011	$	0.2050		499,077			50			102,308			(25,000	)	$	(16,250	)								86,108
Private placement:
5/18/2011	$	0.1500		2,666,667			266			399,734															400,000
5/25/2011	$	0.1500		1,333,334			133			199,867															200,000
5/27/2011	$	0.1500		1,500,001			150			224,850															225,000
5/31/2011	$	0.1500		533,331			53			79,947															80,000
6/1/2011	$	0.1500		333,333			33			49,967															50,000
6/15/2011	$	0.1500		1,000,000			100			149,900															150,000
6/23/2011	$	0.1500		333,332			34			49,966															50,000
Stock issuance costs										(139,724	)														(139,724	)
Net Income/(Loss)																						(1,303,000	)		(1,303,000	)
At December 31, 2011				36,780,828		$	3,678		$	2,505,935			0		$	0		$	(176,034	)	$	(2,454,140	)	$	(120,561	)

See accompanying notes to the consolidated financial statements

International Silver, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Note A - Organization and Business

General

International Silver, Inc., (the “Company”) is 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~~The Company was incorporated in the State of Arizona, as ARX Engineering, Inc. on September 4, 1992 and ~~Nature~~then later changed their corporate company name to Western States Engineering, Inc. On June 20, 2006, the Company changed its name to International Silver, Inc. in connection with its new business plan of ~~Business~~acquiring exploration properties, along with providing engineering services.

The Company’s ~~was~~business ~~incorporated~~strategy inconsists ~~the~~of ~~State~~acquiring ofand ~~Arizona~~exploring onhigh-grade ~~September~~silver 4,properties ~~1992~~throughout asNorth ~~ARX~~and ~~Engineering,~~South ~~Inc~~America. OnContingent ~~October~~upon 6,adequate ~~1992~~funding, ~~ARX~~the ~~Engineering,~~Company ~~Inc.~~intends ~~changed~~to ~~its~~initiate ~~name~~a toreconnaissance ~~Western~~and ~~States~~exploration ~~Engineering~~program ~~and~~in ~~Construction,~~the ~~Inc.~~Pioche OnMining ~~June~~District 20located in Nevada, ~~2006~~in Silver Bow County, ~~the~~Montana ~~Company~~and ~~changed~~in ~~its~~Calico ~~name~~Mining District in California to ~~International~~identify ~~Silver,~~potentially ~~Inc.~~high-grade insilver ~~connection~~targets ~~with~~and ~~its~~to ~~new~~evaluate ~~business~~other ~~plan~~properties in each of the districts for possible acquisition. ofThe ~~exploration~~Company ~~properties,~~will ~~along~~continue ~~with~~to ~~providing~~seek ~~engineering~~and ~~services~~evaluate new opportunities for exploration and/or development properties.

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.

On November 23, 2011, the Company formed a wholly-owned subsidiary, Butte Silver Mines, Inc. located in Butte, Montana.

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 in the Pioche Mining District located in Nevada and in the Butte Mining District located in Silver Bow County, Montana, 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 Property, Lincoln County, Nevada

~~The~~On November 6, 2010, the Company has 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. The Company has completed a preliminary drilling program and is in the process of analyzing their findings. At December 31, 2012, there are no proven and probable reserves.

~~The Company had also entered into another lease/purchase agreement to acquire the historic Pan American Zinc/Silver Mine and the~~ Caselton ~~Concentrator~~Tailings ~~in Pioche/Comet Mining District of Lincoln County, Nevada, USA. At December 31, 2011, the Company had opt not to purchase the property and relinquished the property back to the seller.~~Project

On March 27, 2012, the Company entered into a joint venture operating agreement to evaluate, remediate, reclaim and develop the Caselton Tailings that are located in the Pioche Mining District in Lincoln County, Nevada. The Company has deposited funds towards this investment (refer to Note E – Deposit in Investment) which constitutes the Company capital contribution towards the joint venture. Formation of the joint venture is pending.

New Butte Mining Properties, Silver Bow County, Montana

On December 1, 2011, the Company executed a mining lease agreement on a954 ~~large~~acres ~~block~~ of ~~private~~mineral ~~land~~rights ~~with~~and an additional 362 acres of surface and mineral rights located in the Butte District of Montana. The lease provides full access for mining on the land for a term of fifty years and thereafter as long as minerals are produced. The New Butte Properties were historically owned and operated as silver-zinc and silver-copper mines by the Anaconda Company. The major formerly operating underground mines now held by the Company are known as the Alice, the Lexington, the Badger, the Diamond and the High One.

Magna Charta Property, Silver Bow County, Montana

On March 1, 2012, the Company purchased 18 acres of land, a patented mining claim, which includes surface rights situated in the County of Silver Bow, Montana under a fee simple contract.

~~Calico~~Continental ~~Silver~~Public ~~Project~~Land Trust, ~~San~~Silver ~~Bernardino~~Bow ~~Co.~~County, CAMontana

~~The~~On ~~Calico~~April ~~Silver~~23, ~~Project~~2012, isthe ~~located~~Company inexecuted ~~the~~a ~~Calico~~99-year ~~silver~~ mining ~~district~~lease ~~about~~on 151,100 ~~miles~~acres ~~northeast~~ of ~~Barstow~~mineral orrights ~~145~~with ~~miles~~Continental ~~northeast~~Public ofland ~~Los~~Trust ~~Angeles~~with inan ~~the~~option ~~Mojave~~to ~~Desert~~purchase ofcertain ~~Southern~~patented ~~California.~~lode ~~The~~and ~~project~~placer ismining ~~held~~claims, ~~for~~including ~~exploration~~surface ~~with~~rights ~~approximately~~and ~~1300~~other ~~acres~~interests ofSilver ~~U.S~~Bow ~~federal~~County, ~~lode~~Montana. The ~~mining~~Belmont ~~claims~~mine ~~owned~~property inis ~~100~~part ~~percent~~of ~~interest~~the byCPLT ~~International Silver Inc~~lease.

ItWest isButte ~~the~~- ~~intention~~Chattel ofProperty. ~~the~~Silver ~~company~~Bow toCounty ~~maintain the claims and to continue with exploration on this project.~~Montana

On August 7, 2012, the Company entered into a purchase agreement and contract for deed with Chattel, LLC, a Montana limited liability company, for 1,022 acres of land and mineral rights, located in Silver Bow County, Montana.

Calico Silver Project, San Bernardino County, California

The Calico Silver 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. There are approximately 1,300 acres of U.S federal lode mining claims wholly owned by the Company. In 2012, the Company leased this property to Calico Exploration, LLC.

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~~There is substantial doubt of the ability of the Company to continue as a going concern since it 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~~Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for the Company may include (1) ~~obtaining~~a ~~capital~~private

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