- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – Q

(MARK ONE)

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

for the quarterly period ended June 30, 2010

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)

0001419482		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)

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 whether the registrant has submitted electronically or posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Paragraph 232.405 of this chapter) during the preceding 12 months ( or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes o No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes o No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class _ Shares Outstanding at August 23, 2010 Common Stock, $0.0001 Par Value 24,531,753 Exhibit Index located at page 36

		Page

	PART 1 - FINANCIAL INFORMATION

Item 1	FINANCIAL STATEMENTS	3

	Consolidated Financial Statements:		5
	Balance Sheets		5
	Statement of Operations		6
	Statement of Cash Flows		7
	Statement of Shareholders’ Equity		8
	Notes To The Financial Statements		9

Item 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS		21

Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		30

Item 4T	CONTROLS AND PROCEDURES		30

	PART II - OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS		31

Item 1A	RISK FACTORS		31

Item 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		33

Item 3	DEFAULTS UPON SENIOR SECURITIES		33

Item 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		33

Item 5	OTHER INFORMATION		33

Item 6	EXHIBITS		33

	CERTIFICATIONS 31.1 & 31.2

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

SEALE AND BEERS, CPAs

PCAOB & CPAB REGISTERED AUDITORS

www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

International Silver, Inc

(An Exploration Stage Company)

We have reviewed the accompanying condensed consolidated balance sheets of International Silver, Inc. as of June 30, 2010, and the related condensed consolidated statements of operations and cash flows for the three-month and six-month period ended June 30, 2010 and from inception June 16, 2006 through June 30, 2010. These interim financial statements are the responsibility of the Corporation's management.

We conduct our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists of principally applying analytical procedures and making inquiries of persons responsible for the financials and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

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

/s/Seale and Beers, CPAs

Seale and Beers, CPAs

Las Vegas, Nevada

August 16, 2010

50 S. Jones Blvd Suite 202 Las Vegas. NV89107Phone: (888)727-8251 Fax: (888)782-2351

International Silver, Inc.

(An Exploration Stage Company)

Condensed Consolidated Financial Statements

For the Six Months Ended June 30, 2010

(Unaudited)

And

For the Year Ended December 31, 2009

(Unaudited)

International Silver, Inc.
(An Exploration Stage Enterprise)
Unaudited Interim Condensed Consolidated Balance Sheets
	As At
	June 30,			December 31,
	2010			2009
	(Unaudited)			(Unaudited)

ASSETS

CURRENT ASSETS
Cash	$	54,937		$	35,747
Due from related parties - Note H		17,935			17,707
Prepaid expenses		641			966
Total Current Assets	$	73,513		$	54,420


TOTAL ASSETS	$	73,513		$	54,420


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,697		$	1,191
Payroll taxes payable		164			190
Accrued expenses		368			391
Due to related parties - Note H		95,695			95,695
Total Current Liabilities	$	98,924		$	97,467

Total Liabilities	$	98,924		$	97,467

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


SHAREHOLDERS' EQUITY
Common stock - Note G
authorized shares - 500,000,000
Par value $0.0001 per Share
issued & o/s - 12/31/09 18,561,753
issued & o/s - 06/30/10 24,531,753		2,453			1,856
Additional paid-in capital		828,526			844,123
Shares Issuable		-			-
Less: Treasury Stock		-			(30,000	)
Accumulated deficit prior to exploration stage		(176,034	)		(176,034	)
Accumulated deficit during exploration stage		(676,826	)		(679,462	)
Total Shareholders' Equity	$	(21,881	)	$	(39,517	)

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	73,513		$	54,420

See accompanying notes to the condensed consolidated financial statements

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


	Three Months Ended					Six Months Ended						Inception (June 16, 2006)of Exploration Stage through (June 30, 2010)
	June 30,		June 30,			June 30,			June 30,
	2010		2009			2010			2009
	Unaudited		Unaudited			Unaudited			Unaudited
			(Restated)						(Restated)

REVENUES
Consulting-third parties	$	-	$	11,810		$	-		$	19,030		$	44,199
Consulting-related parties		27,390		23,730			56,670			51,420			382,200
Other		145		176			523			176			18,064
Total Revenues	$	27,535	$	35,716		$	57,193		$	70,626		$	444,463

Operating Expenses
Exploration costs	$	-	$	1,200		$	-		$	6,663		$	266,999
General and administration
Bad Debt Expense				5,957			-			5,957			41,624
Consulting		-		14,890			-			27,590			120,960
Professional fees		4,000		9,410			9,000			15,410			139,405
Rent		1,500		1,755			3,900			4,353			78,136
All other general & administrative		13,090		23,471			26,657			39,621			414,528
Depreciation and depletion		-		-			-			97			755
Total operating expenses	$	18,590	$	56,683		$	39,557		$	99,691		$	1,062,407

Operating Income/Loss	$	8,945	$	(20,967	)	$	17,636		$	(29,065	)	$	(617,944	)

OTHER INCOME (EXPENSES)
Impairment Loss	$	-	$	-		$	(15,000	)	$	-		$	(40,000	)
Interest Expense		-		(29	)		-			(109	)		(22,606	)
Total other income/(expense)	$	-	$	(29	)	$	(15,000	)	$	(109	)	$	(62,606	)

Less: Non-Controlling Interest	$	-	$	168		$	-		$	275		$	3,724

Net Income/(Loss)	$	8,945	$	(20,828	)	$	2,636		$	(28,899	)	$	(676,826	)


NET INCOME/(LOSS)	$	8,945	$	(20,828	)	$	2,636		$	(28,899	)


Basic and Diluted
Income/(Loss) per Share	$	0.000	$	(0.001	)	$	0.000		$	(0.002	)

Weighted Average Shares
Outstanding		18,531,753		15,011,753			18,535,086			15,011,753

See accompanying notes to the condensed consolidated financial statements

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

							Inception (June 16, 2006) of Exploration Stage through
	Six Months Ended
	June 30,			June 30,
	2010			2009
	Unaudited			Unaudited			(June 30, 2010)
				(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income/(Loss)	$	2,636		$	(28,899	)	$	(676,826	)
Adjustments used to reconcile net (loss)
to net cash (used) by operating activities:
Non-controlling Interest in Subsidiary		-			(275	)		(3,530	)
Depreciation and depletion		-			97			755
Impairment Loss		15,000			-			40,000
Issuance of common stock
In exchange for land		-			-			30,000
In exchange for services		-			-			157,000
In exchange for exploration costs		-			-			55,385
Changes in operating assets and liabilities
Decrease/(Increase) in receivables		(228	)		(22,711	)		231,726
Decrease/(Increase) in employee receivable		-			1,963			2,317
Decrease/(Increase) in prepaid expenses		325			20,518			(4,115	)
(Decrease)/Increase in payables		1,480			6,456			(11,900	)
(Decrease)/Increase in accrued expenses		(23	)		(2,502	)		23,989
Net Cash Flows (used by) Operating Activities	$	19,190		$	(25,353	)	$	(155,199	)

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

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock:
Cancellation of Debt	$	-		$	-		$	(168,093	)
Recharacterization of debt to equity		-			-			265,072
Net Proceeds from stock issuance		-			-			80,000
Sale of mining property
For treasury stock		-			-			(30,000	)
Exchange for securities		-			-			(25,000	)
Return of deed of trust - mining property		-			-			90,000
Disposal of vehicle		-			-			215
Borrowings from related parties		-			-			152,980
Net Cash Flows from Financing Activities	$	-		$	-		$	365,174

Net (Decrease) in Cash	$	19,190		$	(25,353	)	$	23,307

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

Ending Cash Balance	$	54,937		$	24,921		$	54,937

See accompanying notes to the condensed consolidated financial statements

International Silver, Inc.
(An Exploration Stage Enterprise)
Supplemental Disclosures of Non-cash Financing Activities:
	Six Months Ended					Exploration Stage
	June 30,		June 30,			(June 16, 2006
	2010		2009			through
	Unaudited		Unaudited			June 30, 2010)
The Company issued shares of its common stock in exchange for the following:

For services rendered:
Director services	$	-	$	-		$	21,000
Legal and professional services		-		-		$	116,350
Stock transfer agent services		-		-		$	5,500
Accounting services		-		-		$	6,150
Geology and engineering		-		-		$	8,000
Sub-total	$	-	$	-		$	157,000
For land/mining property	$	12,000		-		$	42,000
For equipment	$	3,000	$	-		$	3,000
For exploration costs		-		-		$	55,385
For contributed capital		-		-		$	265,072
Total non-cash issuances of stock	$	15,000	$	-		$	522,457


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


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

For repurchase of its common stock	$	-	$	(30,000.00	)	$	(30,000.00	)
For marketable securities in another company	$	-	$	(25,000.00	)	$	(25,000.00	)
For deed of trust in the mining property	$	-	$	90,000.00		$	90,000.00

See accompanying notes to the condensed consolidated financial statements

International Silver, Inc.

(An Exploration Stage Company)

Notes to Unaudited Interim Condensed Consolidated Financial Statements

Note A - Organization and Business

General

International Silver, Inc. 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 was incorporated in the State of Arizona, as ARX Engineering, Inc., on September 4, 1992. On June 16, 2006, the Board of Directors adopted a new business strategy to change its emphasis from providing engineering services to conducting mine exploration and development, including changing its name to International Silver, Inc.

The Company’s strategy consists of acquiring and exploring high-grade silver properties throughout North and South America.

Condensed Financial Statements

The accompanying interim consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position for the periods ended June 30, 2010 and December 31, 2009 and results of operations and cash flows for the comparative periods at June 30, 2010 and June 30, 2009 and for the comparative periods June 30, 2010 and June 30, 2009 have been made.

Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2009 audited financial statements. The results of operations for the period ended June 30, 2010 are not necessarily indicative of the operating results for the full year.

Going Concern

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

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

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

Note B - Summary of Significant Accounting Policies

Principles of Consolidation

The financial statements include the accounts of International Silver, Inc. and its subsidiaries Metales Preciosos Atlas, S.A. de C.V., Mexico and Western States Engineering, Inc. The Company’s financial condition and results of operations are based on its consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The Company has elected to adopt U.S. currency as the functional currency for the accounting of its Mexican subsidiary. All inter-company transactions and balances have been eliminated.

The Company has a 98% interest Metales Preciosos Atlas, S.A. de C.V., a Mexico corporation. This foreign subsidiary was acquired November, 2006 when Atlas Precious Metals Inc., a related party, spun off Metales Preciosos Atlas, S.A. de C.V. in exchange for 300,000 shares of International Silver, Inc. common stock. Also, the Company also has a wholly-owned subsidiary, Western States Engineering, Inc., a U.S. company which provides Engineering services, primarily to mining entities.

Recent Accounting Pronouncements

Management has evaluated the recent accounting pronouncements issued since the audited financial statements and in managements’ opinion, the relevant pronouncements reviewed have no material effect on the Company’s condensed financial statements.

Use of Estimates

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

Foreign Currency

The functional currency for our foreign subsidiary is U.S. dollars. The Company has elected to use the “remeasurement method”, also referred to as the “monetary/nonmonetary method” pursuant to ASC 830-10. This method translates monetary assets at the current rate, while nonmonetary assets, liabilities and equity are translated at their appropriate historical rates. Where the local currency is used to record transactions, any material currency translation gains or losses would be included as an element of comprehensive income in the statement of operations and in the equity section of the balance sheet.

Concentration of Credit Risk

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

Concentrations and Economic Vulnerability

Concentrations and economic vulnerability include reliance on several areas containing our mining prospects in isolated regions of Mexico, limited financial capacity of related parties and/or others to continue funding operations.

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Accounts Receivable

Accounts receivable are stated, net of an allowance for uncollectible accounts. At June 30, 2010 and at December 31, 2009, respectively, account receivables were $29,199 with an allowance for uncollectible accounts for the full amount, bringing the net amount due to zero. The receivable stems from a third-party engineering consulting contract with Western Utah Copper Company who ceased remitting payments. It is not anticipated that this third-party will remit amounts due anytime soon, therefore management elected to establish a provision for the remainder of the receivable balance.

Investments

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

1)	available for sale

2)	held to maturity

3)	trading securities

The accounting treatment accorded any investment will depend on whether the presence of ‘significant influence” over an investee exisits. If the investor owns at least 20% of its common stock, then significant influence is assumed. If there is less than 20% ownership or if there is no significant influence over an investee, the investment is valued at the Fair Value Method, otherwise the Equity Method is utilized. At June 30, 2010 and December 31, 2009, the Company held securities “available for sale” that were reported under the Fair Value method.

At June 30, 2010, the Company held 25,000 shares of Atlas Precious Metals Inc. common stock, whose value was considered impaired. Refer to Note D – Investment in Securities for further discussion.

Mineral Development

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

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

Mineral Interests and Property

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

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

Mineral interests related to mining properties in the production stage are amortized over the life of the related property using the Units of Production method in order to match the amortization with the expected underlying future cash flows. Development stage mineral interests are not amortized until such time as the underlying property is converted to the production stage. At June 30, 2010 and December 31, 2009, all mineral interests were in the exploration stage.

Impairment of Long-Lived Assets

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

Revenue Recognition and Production Costs

Revenue is recognized when the price is determinable, upon delivery and transfer of title of product to the customer and when the collection of sales proceeds is assured. Production costs of silver, gold and other precious metals sold include labor and related direct and indirect costs of mine and plant operations. Production costs are charged to operations as incurred. At June 30, 2010, there had been no production from any of the Company's properties.

Reclamation and Remediation Costs (Asset Retirement Obligations)

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

Earnings (Loss) Per Share

Basic income (loss) per share is computed by dividing income (loss) attributable to the common shareholders by the weighted-average number of common shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if dilutive securities and other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company, unless the effect is to reduce a loss or increase earnings per share. The Company has no potential common stock instruments, which would result in diluted income (loss) per share as of June 30, 2010 and December 31, 2009.

Income Taxes

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

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax assets are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The total deferred tax asset is 37% of the cumulative net operating loss.

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

There were no interest cash payments during the six months ended June 30, 2010 and $109 for the six months ended June 30, 2009. “Non-cash" investing and financing transactions during the reported periods related primarily to the sale of mining property in exchange for shares of common stock, as discussed in Note D.

Comprehensive Income

ASC 220-10-55-2 - Comprehensive Income, requires companies to classify items of other comprehensive income by their nature in a financial statement and display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. On June 30, 2010 and December 31, 2009, the Company did not have any material items of comprehensive income.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board, issued ASC 718 - Share-Based Payment, requires “public” companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions. ASC 718 also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions. For small-business filers, ASC 718 is effective for interim periods beginning after December 15, 2005. In 2009, the Board of Directors of the Company approved a resolution for the stock issuance to officers and employees to recognize the cost of employee services. The Company does not presently have a plan in place, nor does it anticipate having one in the near future. At June 30, 2010, the Company has not been significantly impacted by ASC 718.

Note C – Mining Properties

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

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

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

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

During March, 2010, the Company negotiated the terms in a contract for the sale of the Estrades Mine in exchange for 6,000,000 shares of common stock in Continental Mining and Smelting Limited. As of June 30, 2010 the finalization was pending the issuance of stock from Continental Mining and Smelting Limited.

Note D – Investment in Securities

During 2008, the Company relinquished its holdings in the Tecoma Mining District back to the original seller, in return for the shares in common stock that were part of the consideration given on the original purchase of the property As a result, the Company obtained 25,000 shares of the common stock of Atlas Precious Metals Inc., a privately-held and related company to International Silver, Inc. These shares were originally held by the Company’s shareholder/officer, who transferred these shares to the seller of the Tecoma Mining District property, in exchange for a note from the Company (Refer to Note G). At June 30, 2010 and December 31, 2009, the carrying value of these securities was considered impaired and have no value at the end of each respectively accounting period.

At June 30, 2010, the Company held the following securities:

Fair

No. of shares

Price

Value

Common Stock:

Available for Sale Securities -

Atlas Precious Metals Inc.

25,000

0.0000

At December 31, 2009, The Company had a net operating loss carry-forward of $495,873 for federal income tax purposes that may be offset against future taxable income from years 2009 through 2027. No tax benefit has been reported in the June 30, 2010 unaudited condensed consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

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

Note E - Income Taxes

The Company has reported (for income tax purposes) net operating losses for 2009, 2008 and prior years as follows:

Net Operating Loss carry-forward to Year 2006	$	106,508
Net Operating Income - Year 2006 (Applied)		(4,693	)
Net Operating Loss carry-forward to Year 2007		101,815
Net Operating Loss - Year 2007		111,921
Net Operating Loss carry-forward to Year 2008		213,736
Net Operating Loss - Year 2008		212,017
Net Operating Loss carry-forward to Year 2009		425,753
Net Operating Loss - Year 2009		70,120
Net Operating Loss carry-forward to Year 2010	$	495,873

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

At June 30, 2010 the Company recorded a deferred tax benefit of $178,248, but due to a going-concern issue, Management made an allowance for a provision of an equal amount, should the Company not be able to avail itself of that tax benefit. Deferred tax asset is based on prevailing IRS gradued tax tables which average 32% at December 31, 2009 and June 30, 2010.

Net deferred tax assets consists of the following components:

	June 30, 2010			December 31 , 2009
Deferred Tax Asset	$	178,248		$	175,249
Valuation Account		(178,248	)		(175,249	)
Net Deferred Tax Asset	$	0		$	0

At December 31, 2009, The Company had a net operating loss carry-forward of $495,873 for federal income tax purposes that may be offset against future taxable income from years 2009 through 2027. Our deferred tax benefit is adjusted for interim results, but we simultaneously adjust the allowance for a net zero effect.

Note F – Shareholders’ Equity

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

At June 30, 2010, the Company had authorized 500,000,000 shares of common stock, 24,531,753 shares had been issued and are outstanding.

Note G - Related Party Transactions

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

	At June 30, 2010		At December 31, 2009
Receivable from Related Entities
Atlas Base Metals, Inc.	$	145	$	0
Atlas Precious Metals Inc.		17,790		16,731
Atlas Minerals, Inc.		0		635
Arimetco		0		308
New Edge Gold, Inc.		0		33
	$	17,935	$	17,707

Atlas Precious Metals Inc. contracts engineering services from International Silver, Inc. related to feasibility studies and other general engineering services at their smelter located in Potosi, Bolivia. The balance due from Atlas Precious Metals Inc. at June 30, 2010 of $17,790 and December 31, 2009 of $16,731 related to these engineering services rendered. Other amounts due from various related parties pertain to courier services paid by International Silver, Inc. and reimbursed by these related companies:

Payable to Related Entities
Shareholder/Officer-H.R. Shipes	$	93,732	$	93,732
Atlas Precious Metals Inc.		1,500		1,500
American International Trading Co.		463		463
	$	95,695	$	95,695

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

In the early part of 2008, H.R. Shipes, a shareholder/officer, lent the Company $90,000 to the Company so it could avail itself of an option to purchase mineral properties in the State of California. The principal part of this loan was paid on September 8, 2008, in an exchange for 335,567 shares of the Company’s common stock.

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

Note H- Office Leases

The Company rents (subleases) its administrative offices from an affiliate in Tucson, Arizona and is billed an allocated portion ($500 per month), commencing October 1, 2008 based on percentage of floor space occupied. During 2008 and through mid-year 2009, the foreign exploration office for Metales Preciosos Atlas , S.A. de C.V. , located in Hermosillo, Sonora, Mexico rented on a month-to-month basis at $500 per month. Rental expense for all administrative offices for the six months ended June 30, 2010 was $3,900 and June 30, 2009 was $1,755.

Note I – Exploration Costs

Acquired mineral interests are presented as “exploration costs” as required by “Industry Guide 7” of the Securities and Exchange Commission’s Guides for the Preparation of Registration Statements and with the Society for Mining, Metallurgy and Exploration’s “Guide for Reporting Exploration Information, Mineral Resources, and Mineral Reserves”. Exploration costs incurred since inception through June 30, 2010 are $266,999. Exploration costs incurred for the six months ended June 30, 2010 were nil and for the six months ended June 30, 2009 were $6,663.

Note J – Restatement of Prior Periods

The financial statements for the six months ended June 30, 2009 have been restated due to write-offs relating to prepaid expenses and due from related parties and recognition of impairment of marketable securities. The changes to the balance sheet at June 30, 2009 and the impact to current earnings for the three and six months ended June 30, 2009, respectively, are as follows:


BALANCE SHEETS	Original			Change			Restated

CURRENT ASSETS
Cash	$	24,921		$	-		$	24,921
Accounts receivables, net		54,614			(10,058	)		44,556
Employee advances		354			-			354
Prepaid expenses		487			6,666			7,153
Total Current Assets	$	80,376		$	(3,392	)	$	76,984


OTHER ASSETS
Deferred financing costs	$	40,000		$	(40,000	)	$	-
Investment in securities		25,000			(25,000	)		-
Total Other Assets	$	65,000		$	(65,000	)	$	-

TOTAL ASSETS	$	145,376		$	(68,392	)	$	76,984


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	9,436		$	(8,374	)	$	1,062
Due to related parties		-			91,316			91,316
Accrued expenses		82,318			(79,748	)		2,570
Total Current Liabilities	$	91,754		$	3,194		$	94,948

Total Liabilities	$	91,754		$	3,194		$	94,948

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


STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2009	Original			Change			Restated

REVENUES
Consulting - third parties	$	-		$	11,810		$	11,810
Consulting - related parties		35,540			(11,810	)		23,730
Other		176			-			176
Total Revenues	$	35,716		$	-		$	35,716

Operating Expenses
Exploration costs	$	1,200		$	-		$	1,200
General and administration					-
Bad Debt Expense		-			5,957			5,957
Consulting		4,890			10,000			14,890
Professional fees		9,410			-			9,410
Rent		1,755			-			1,755
All other general & administrative		29,393			(5,922	)		23,471
Depreciation and depletion		-			-			-
Total operating expenses	$	46,648		$	10,035		$	56,683

Operating Income/Loss	$	(10,932	)	$	(10,035	)	$	(20,967	)

OTHER INCOME (EXPENSES)
Interest Expense	$	(29	)	$	-		$	(29	)
Total other income/(expense)	$	(29	)	$	-		$	(29	)

Less: Non-Controlling Interest	$	168		$	-		$	168

Net Income/(Loss)	$	(10,793	)	$	(10,035	)	$	(20,828	)


NET INCOME/(LOSS)	$	(10,793	)	$	(10,035	)	$	(20,828	)

STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2009	Original			Change			Restated

REVENUES
Consulting	$	70,450		$	-		$	70,450
Other		176			-			176
Total Revenues	$	70,626		$	-		$	70,626

Operating Expenses
Exploration costs	$	6,663		$	-		$	6,663
General and administration					-
Bad Debt Expense		-			5,957			5,957
Consulting		7,590			20,000			27,590
Professional fees		15,410			-			15,410
Rent		1,896			2,457			4,353
All other general & administrative		50,455			(10,834	)		39,621
Depreciation and depletion		97			-			97
Total operating expenses	$	82,111		$	17,580		$	99,691

Operating Income/Loss	$	(11,485	)	$	(17,580	)	$	(29,065	)

OTHER INCOME (EXPENSES)
Interest Expense	$	(109	)	$	-		$	(109	)
Total other income/(expense)	$	(109	)	$	-		$	(109	)

Less: Non-Controlling Interest	$	275		$	-		$	275

Net Income/(Loss)	$	(11,319	)	$	(17,580	)	$	(28,899	)


NET INCOME/(LOSS)	$	(11,319	)	$	(17,580	)	$	(28,899	)

Note K – Subsequent Events

Management has reviewed all subsequent events through the issuance date of the condensed financial statements and has disclosed all material events that have transpired subsequent to December 31, 2009 up through the issuance date. This includes the pending investment in securities as discussed in Note D.

ITEM 2 – MANAGEMENT DISCUSSION’S AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Management Discussion and Analysis Section

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 and Mexico involving silver, gold, zinc, copper and other minerals. To-date, we have not generated any revenues from any of these activities since approximately 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 purchasing of mineral interests in the United States and Mexico.

Financial Condition and Changes in Financial Condition

Changes in our financial condition for the three months ended June 30, 2010 as compared to the three months ended June 30, 2009 are summarized as follows:

Assets

As of June 30, 2010, we had total assets of $73,513 compared to total assets of $76,984 as of June 30, 2009, representing a decrease of 5% or $3,471 from a year ago. Changes for the three months ended June 30, 2010 in comparison to the three months ended June 30, 2009 were as follows:

Cash on hand at June 30, 2010 was $54,937, an increase by $13,779 for the three months ended June 30, 2010 versus a cash balance of $24,921 at June 30, 2009, an increase of $1,489 for the three months ended June 30, 2009. The increase in cash during the current quarter is attributable to decreased expenditures and collection of receivables, whereas the changes were insignificant for three months ended June 30, 2009.

Trade receivable and amounts due from related parties at June 30, 2010 were $17,935, a decrease of $3,330 for the three months ended June 30, 2010 versus a receivables balance of $44,556 at June 30, 2009, which decreased by $8,315 for the three months ended June 30, 2009. The reductions are attributable to continued efforts on the collection of receivables, which have resulted in the substantial decrease in receivables over the last two years.

Prepaid expenses at June 30, 2010 were $641, reflecting a slight decrease of $77 for the three months ended June 30, 2010 versus prepaid expenses of $7,153 at June 30, 2009, a decrease of $10,260 for the three months ended June 30, 2009. Last year’s change resulted from a write-off on the expired portion ($10,000) of a prepaid contract with DME Capital, LLC for finance procurement services.

Liabilities and Equity Changes

As of June 30, 2010, we had total liabilities of $98,924 compared to total liabilities of $94,948 as of June 30, 2009, representing an increase of 4% or $3,975 from a year ago. Changes for the three months ended June 30, 2010 in comparison to the three months ended June 30, 2009 were as follows:

Trade payables and accrued expenses at June 30, 2010 were $3,229, an increase of $1,457 for three month period ended June 30, 2010 versus a payables balance of $3,632 at June 30, 2009, a decrease of $3,357 for the three months ended June 30, 2009. There was no significant change ($404) in trade payables and accrued expenses from the current quarter in comparison to the same time period in the prior year.

Due to related parties at June 30, 2010 were $95,695, reflecting no change for the three months ended June 30, 2010, versus a balance of $91,316, an increase of $6,873 for the three months ended June 30, 2009. The net change, an increase of $4,379, from the current quarter in comparison to the same time period in the prior year, resulted from reimbursable business-related travel costs to an officer.

As of June 30, 2010, Shareholders’ Equity was ($21,881), reflecting an increase of $8,945 for the three months ended June 30, 2010 versus a Shareholders’ Equity balance of $14,434 at June 30, 2009, reflecting an increase of $20,700 for the three months ended June 30, 2009. Changes for the three months ended June 30, 2010 in comparison to the three months ended June 30, 2009 were as follows:

-	The increases for both three-month ending periods reflect the net income realized. Lower profits were realized in the current quarter as compared to prior year’s comparative period due to decreased third-party engineering consulting.

Changes in our financial condition for the six months ended June 30, 2010 as compared to the six months ended June 30, 2009 are summarized as follows:

Assets

As of June 30, 2010, we had total assets of $73,513 compared to total assets of $76,984 as of June 30, 2009, representing a decrease of 5% or $3,471 from a year ago. Changes for the six months ended June 30, 2010 in comparison to the six months ended June 30, 2009 were as follows:

Cash on hand at June 30, 2010 was $54,937, an increase $19,190 for the six months ended June 30, 2010 versus cash on hand at June 30, 2009 of $24,921, a decrease of $25,353 for the six months ended June 30, 2009. The increase in cash during the current quarter is attributable to decreased expenditures and collection of receivables. The decrease for the same six month period in the prior year was a result a reduction in receivable collections for engineering services and payment of professional and consulting fees that were higher than normal.

Amounts due from related parties were $17,935 at June 30, 2010, a slight decrease of $228 for the six months ended June 30, 2010 versus a balance due from related parties of $44,556 at June 30, 2009, an increase of $21,675 for the six months ended June 30, 2009. The increase for the six months ended June 30, 2009 is attributable to increased receivables due from Atlas Precious Metals Inc. for engineering services.

Prepaid expenses were $641 at June 30, 2010, a decrease of $325 for the six month period ended June 30, 2010 versus a prepaid expense balance of $7,153, a decrease of $20,519 for the six months ended June 30, 2009. The change for the prior year comparative period is due to the write-off or expiration of a portion of a prepaid consulting contract with DME Capital, LLC for finance procurement services.

Liabilities and Equity Changes

As of June 30, 2010, we had total liabilities of $98,924 compared to total liabilities of $94,948 as of June 30, 2009, representing an increase of 4% or $3,975 from a year ago. Changes for the six months ended June 30, 2010 in comparison to the six months ended June 30, 2009 were as follows:

Trade payables and accrued expenses were $3,229 at June 30, 2010, an increase of $1,457 for the six months ended June 30, 2010 versus a payable balance of $3,633 at June 30, 2009, a decrease of $3,343 for the six months ended June 30, 2009. Although payables and accrued expense balance were comparable at June 30, 2010 versus June 30, 2009, the net change of $4,800 stems from accrued consulting fees at December 31, 2008, not present as of December 31, 2009.

Due to related parties was $95,695 at June 30, 2010, reflecting no change for the six months ended June 30, 2010, versus a balance of $91,316 at June 30, 2009, a slight increase of $321 for the six months ended June 30, 2009. Although there is no significant change between the two comparative periods, the increase of $4,380 in due to related parties resulted from additional reimburseable business travel costs due an officer.

As of June 30, 2010, Shareholders’ Equity was ($21,881), reflecting an increase of $17,636 for the six months ended June 30, 2010 versus a Shareholder Equity balance of ($14,435) at June 30, 2009, reflecting a decrease of $28,721 for the six months ended June 30, 2009. Changes for the six months ended June 30, 2010 in comparison to the six months ended June 30, 2009 were as follows:

This increase for the six months ended June 30, 2010 is primarily due to the issuance of six million (6,000,000) shares to Atlas Precious Metals Inc., valued at a discounted share price of $0.0025/share or $15,000 in exchange a 70% interest in the Estrades Mine located in Quebec, Canada and the cancellation of $30,000 in common shares previously issued. It also reflects net income from operations of $2,636 during the six months ended June 30, 2010.

The decrease in shareholders’ equity during the six- months ended June 30, 2009 reflects the loss incurredduring those six months. During that period, we realized $70,626 in revenues with expenditures of $99,691 . The loss is attributable primarily to bad debt write-offs amounting to $5,957 and higher than normal consulting fees in the amount of $27,000 associated with contracting DME Capital for procurement of financing for the Company. In comparison, we realized $57,193 in revenues, but we incurred only $39,557 in expenditures during the six months ended June 30, 2010 or net income of $2,636.

Liquidity and Capital Resources

Our financial statements as presented in Item 1 of this report have been prepared in conformity with US GAAP, which contemplate our continuation as a going concern. However, the report of our independent registered public accounting firm on our financial statements, as of and for the year ended December 31, 2009 and the six months ended June 30, 2010, contains an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern. The “going concern” qualification results from, among other things, our development-stage status, no revenue recognized since inception and our net losses from inception as a development stage company, which total approximately $676,826, the outstanding arrangements with related parties and uncertainty in raising additional capital. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary if we were unable to continue as a going concern.

As of June 30, 2010, we had $54,937 in cash and have funded our operations through short-term notes payable with related parties and some on-going engineering consulting services. The capital required to execute our total business vision and objectives is significant. In 2010, we continue to be engaged in efforts to raise capital to fund the working capital requirements and exploration and development activities necessary to meet our business objectives. At present, we have been unsuccessful in raising capital in sufficient amounts to meet those objectives. During the first half of this year, we have substantially reduced our exploration activities in order to conserve cash. At this time, there is no assurance that we will be successful in raising the sufficient additional capital that is required to execute our exploration and development plans.

Cash and Cash Flows

Cash flow increased by $19,190 during the six months ended June 30, 2010, primarily as a result of decreased exploration activity and a reduction in consulting fees.

Working capital increased by $17,636 to $(25,411) at June 30, 2010, compared to $(43,047) at December 31, 2009, as a result of increased receivables and lower expenditures giving rise to increased cash.

Net cash flows from operating activities increased by 176% or $44,543 to $19,190 for the six months ended June 30, 2010 as compared to ($25,353) for the comparative six months ended June 30, 2009. The increase results primarily from decreased general and administrative expenses of $53,374, net of increased revenues of $13,433.

Investing activities during the six months ended June 30, 2010 involved the purchase of mining property in exchange for 6.0 MM shares of common stock.

Our business plan does not reflect, nor do we anticipate, any revenues during our exploration phase, aside from ongoing engineering services rendered to an affiliate and others. 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 either our US or Mexican properties or both.

Spending Requirements

We anticipate total spending requirements of approximately $2,527,000 pending adequate financing over the next twelve months. We plan to undertake the following steps in our attempt to overcome our going concern qualification and our need of financing to accomplish our operational plan:

Contact broker-dealers to discuss and negotiate a broker dealer acting as an underwriter to conduct a public offering of our common stock ;

Contact other companies with sufficient financial resources to fund our operational activities to discuss and negotiate a joint venture arrangement or a merger transaction where we would combine our business interests and objectives;

Contact the fund managers of hedge funds and mutual funds to determine whether their interest in investing in our common stock sufficient to obtain adequate financing; and

Raise financing through a private placement of our common stock

Results of Operations – For The Three Months Ended June 30, 2010 (the “June 2010 Quarter”) as compared to The Three Months Ended June 30, 2009 (the “June 2009 Quarter”)

For the June 2010 Quarter , we recorded a net income of $8,945, as compared to a net loss of $20,828 for June 2009 Quarter or an increase of $29,776. The increase in net income is due to reduced expenditures in the areas of exploration and general and administrative expenses.

During June 2010 Quarter and June 2009 Quarter, we had revenues of $27,535 and $35,716, respectively. Revenues decreased by $8,181, attributable to decreased engineering services rendered to a third-party. No revenue is being currently being generated from mineral extraction activities, as we are still in the exploration stage.

Operating income increased by 143% or $29,912 to $8,945 for the June 2010 Quarter, from ($20,967) for the June 2009 Quarter. This increase is primarily due to reduced exploration costs and consulting expenditures. Exploration costs decreased by $1,200 to zero for the June 2010 Quarter, from $1,200 for the June 2009 quarter. Consulting fees decreased by $20,000 for the June 2010 quarter, as compared to the June 2009 Quarter.

Depreciation expense for the June 2010 quarter was nil, as was Interest expense, while depreciation and interest for June 2009 Quarter were insignificant.

Results of Operations – For The Six Months Ended June 30, 2010 (the “First Half of 2010 ”) as compared to The Six Months Ended June 30, 2009 (the “first Half of 2009 ”)

For the First Half of 2010, we recorded a net income of $2,636, as compared to a net loss of $28,899 for First Half of 2009 or an increase of $31,535. The increase in net income is due to reduced expenditures in the areas of exploration and general and administrative expenses.

During First Half of 2010 and First Half of 2009, we had revenues of $57,193 and $70,626, respectively. Revenues decreased by $13,181, attributable to decreased engineering services rendered to a third-party. No revenue is being currently being generated from mineral extraction activities, as we are still in the exploration stage.

Operating income increased by $46,701 to $17,636 for the First Half of 2010, from ($29,065) for the First Half of 2009. This increase is primarily due to reduced exploration costs and consulting and professional fees as a result of a cutback in exploration activities. Exploration costs decreased by $6,663 to zero for the First Half of 2010, from $6,663 for the First Half of 2009. Consulting fees decreased by $27,590 due to the expiration of a prepaid contract for the financing procurement services, as compared to the First Half of 2009, while professional fees also decreased by $11,410, as compared to the First Half of 2009.

Depreciation expense for the First Half of 2010 was nil, as was Interest expense, while depreciation and interest for first Half of 2009 were insignificant.

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 and incurred the following costs:

Capitalized Acquisitions

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 mineralized interests are as indicated in 1)–4):

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		29,056

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

2) Oro Blanco		8,840

3) Pioche		20,767

e) General Administrative Costs		21,251

Total acquisitions and exploration costs	$	266,999

These direct exploration costs account for approximately 25% of the total operating expenditures of $1,062,407, since our exploration activities commenced on June 16, 2006. General and administrative expenses, which include salaries, consulting, rent, and travel, comprise the majority of the remaining of the operating expenditures for this time period.

Uncertainties and Trends

Our operations, potential funding, and potential 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) inflation or deflation; (e) speculation; and (f) fluctuating prices in worldwide and local commodities for petroleum-related products, chemicals, and solvents,

·	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

·	Our Mexican properties are subject to foreign risk, such as passage of onerous regulatory exploration and mining requirements and availability of materials and supplies.

Off-Balance Sheet Arrangements

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

·	an obligation under a guarantee contract,

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

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

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

We do not have any off-balance sheet arrangements or commitments that have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material.

Changes in Accounting Policies

The significant accounting policies outlined within our Consolidated Financial Statements for the quarter ended June 30, 2010 have been applied consistently with the year ended December 31, 2009.

Recently Enacted Accounting Standards

Management has evaluated the recent accounting pronouncements issued since the audited financial statements and in managements’s opinion, the relevant pronouncements reviewed have no material effect on the Company’s financial statements.

PLAN OF OPERATIONS

Our Plan of Operations has been organized for each of our properties and claims to account for the similarities and differences in the location, geology, the prospective metals that may be hosted by each property or claim, and the current stage of exploration of each property and claim; accordingly, we have several Plans of Operations to account for those similarities and differences among our various properties and claims. Our Plans of Operations represent our Phase I exploration activities and are for a period of eighteen months, at an approximate cost of $2.5 million. Based upon our analysis of the test results and feasibility studies, we will determine whether to proceed with Phase II exploration and development, which will consist of expanding identified ore blocks to the proven classification, permitting, and development. We cannot determine, predict, or assure whether we will be able to proceed with Phase II exploration and development activities regarding any of our properties or claims. Our exploration activities will be conducted under the overall direction of our Consulting Geologist, but each Plan of Operations described below will be directly managed and supervised by a Field Geologist that we hire.

Mexico Properties

We will continue to hold the El Cumbro, El Cusito, and Canada de Oro Properties for future exploration.

USA Properties - The Leviathon property in San Bernardino County, California

We will explore the Leviathon property for silver and barite at a total cost of $2,527,000. We will use one Field Geologist, four workers and infrastructure for our Leviathon property. Equipment to be used to conduct the Leviathon exploration program is shown below:

	Time Period to Complete Task	Cost
Exploration Phase I:
· Hire Project Geologist to manage exploration, sampling and sample preparation activities and workers	18 months	$	75,000
· Our Project Geologist will hire 4 workers who will conduct sampling, drill core handling and cataloging, splitting and general sample preparation	12 months	$	144,000
· Our Project Geologist will contract a local construction company to prepare access roads and drill pads in preparation for drilling and will supervise the work	2 months	$	50,000
· Our Field Geologist will map the mineralized structures, which are visible at surface, to determine the strike and dip of the ore bodies, and based on this, will design our drilling program for the property. Since Leviathon is a series of wide veins, drilling will be designed to intercept the ore bodies from the surface by angling the holes.	3 months	$	0
· Our Project Geologist will hire a drilling contractor to drill 5,000 meters at determined drill stations, probably split evenly between core and reverse circulation drilling.	3 months	$	1,000,000
· Our Project Geologist will collect the drill samples, log and catalog them, and send them for sample preparation in anticipation of assaying. The samples will be split, with half stored in the storage building	4 months	$	20,000
· Our Project Geologist will arrange contract assaying with an independent assay laboratory	4 months	$	100,000
· Our Project Geologist will hire an independent mining engineer to design the mine based on the results of our drilling program	3 months	$	150,000
· Our Project Geologist will hire an independent research firm to conduct metallurgical testing of the samples to determine the optimal recovery strategy and equipment	4 months	$	250,000
· Our Project Geologist will hire an independent environmental engineering firm to conduct fauna, archeological, wild life, hydrology and base line studies to complete and submit project permit requests.	12 months	$	350,000
Sub-total		$	2,139,000
Exploration Equipment Purchases:
· Light Duty Transportation, 2 Pick-ups and 1 van	1 month	$	65,000
· Office Trailer, used	12 months	$	15,000
· Purchase steel building for sample preparation and storage	6 months	$	125,000
· Purchase two core splitters	3 months	$	30,000
· Purchase shelving for sample storage	2 months	$	25,000
· Purchase diesel fuel tank	1 month	$	8,000
· Purchase 20,000 gallon water head tank, Used	1 month	$	20,000
· Purchase office furniture and equipment, including computers	1 month	$	30,000
· Purchase a 20 kwh generator for water pumping and a 10kwh generator for project power	1 month	$	30,000
· Portable X-ray device for field assaying	1 month	$	40,000
Sub-Total		$	388,000
Grand Total		$	2,527,000

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None

ITEM 4T. - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended ("Exchange Act") that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rule 13a-15(b), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the second quarter ending June 30, 2010, to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

Changes in internal controls

Our management, with the participation our Chief Executive Officer and Chief Financial Officer, performed an evaluation as to whether any change in our internal controls over financial reporting occurred during the financial quarter ending June 30, 2010. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in our internal controls over financial reporting during the financial quarter ending June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

None

ITEM 1A - RISK FACTORS

Risk Factors

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

Risks Related to our Business Activities .

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

As of June 30, 2010, we have an accumulated deficit of $852,860. 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 $2.5 million of financing, we will be unable to pursue our planned business operations and will have to be curtailed or terminated, in which case you will lose part or all of your investment in our common stock.

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

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

·	the deposits are not of the quality or size that would enable us to make a profit from actual mining activities; or

·	because it may not be economically feasible to extract metals from the deposits.

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

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

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

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

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

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

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

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

Our business depends upon the continued involvement of our officers, directors, and consulting geologist, each of whom have mining experience from 9 to 35 years. The loss, individually or cumulatively, of these personnel would adversely affect our business, prospects, and our ability to successfully conduct our exploration activities. Before you decide whether to invest in our common stock, you should carefully consider that the loss of their expertise, may negatively impact your investment in our common stock.

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

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

We do not carry any property or casualty insurance and do not intend to carry such insurance in the near future 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.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5 - OTHER INFORMATION

None

ITEM 6 - EXHIBITS

See Exhibit Index

SIGNATURES

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

INTERNATIONAL SILVER, INC.

/s/Harold R Shipes
Harold R. Shipes,
Chief Executive Officer/Chairman of the Board
Dated: August 23, 2010

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

Signature	Title	Date

/s/ Harold R. Shipes	Chairman of the Board/Director	August 23, 2010
Harold R. Shipes	Chief Executive Officer
	(Principal Executive Officer)

/s/John A. McKinney	Chief Financial Officer	August 23, 2010
John A. McKinney	Executive Vice President
	(Principal Financial Officer)

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION	PAGE

31.1	Certification Pursuant to Rule 13a-14(a) under the Exchange Act

31.2	Certification Pursuant to Rule 13a-14(a) under the Exchange Act

32.1	Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley act of 2002