UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549








FORM 10-Q





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



For the quarterly period ended March 31, 2011





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



For the transition period from N/A to N/A





Commission File No. 000-53727








UNITED MINES, INC.





(Name of small business issuer as specified in its charter)








Arizona
83-0452269( State or other jurisdiction of incorporation or organization)
( IRS Employer Identification No.)





11924 North Centaurus Place, Oro Valley, AZ  85737





(Address of principal executive offices)





(520) 742-3111





(Issuer’s telephone number)





Indicate by check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 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  xNo  o




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


Yes oNo x





Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non–accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b–2 of the Exchange Act. (Check one):





Large accelerated filer
 ̈
Accelerated filer
 ̈Non–Accelerated filer
 ̈
Smaller reporting company
x





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


Yes   ̈No  x





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




Class

Outstanding at  May 16, 2011Common stock, $0.01 par value

11,800,917




i


UNITED MINES, INC.


INDEX TO FORM 10-Q FILING


FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010





TABLE OF CONTENTS





PAGEPART I - FINANCIAL INFORMATIONItem 1.

Condensed Consolidated Financial Statements

1Condensed Consolidated Balance Sheets

2Condensed Consolidated Statements of Income

3Condensed Consolidated Statement of Cash Flows

4Notes to Condensed Consolidated Financial Statements

5Item 2.

Management Discussion & Analysis of Financial Condition and Results of Operations

14Item 3

Quantitative and Qualitative Disclosures About Market Risk

26Item 4.

Controls and Procedures

26PART II - OTHER INFORMATIONItem 1.

Legal Proceedings

27Item 1A.

Risk Factors

27Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27Item 3.

Defaults Upon Senior Securities

27Item 4.

Removed and Reserved

27Item 5

Other information

28Item 6.

Exhibits

28CERTIFICATIONS





31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.32.2
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.32.2
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.





ii


PART I


FINANCIAL INFORMATION





Item 1.
Financial Statements





The accompanying reviewed interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q.  Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles.  Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that can be expected for the year ending December 31, 2011.























































1




UNITED MINES, INC.(A Exploration Stage Company)BALANCE SHEETSMarch 31,


December 31,2011


2010ASSETS:

(unaudited)


(audited)CURRENT ASSETSCash

$
5,736


$
1,123Prepaid expense


23,333



51,667Total current assets


29,068



52,789PROPERTY AND EQUIPMENT, net


18,732



18,972OTHER ASSETSOther assets - mining claims


100,500



100,500Deposit


11,000



11,000111,500



111,500TOTAL ASSETS

$
159,300


$
183,261LIABILITIES AND STOCKHOLDERS' DEFICIT:CURRENT LIABILITIES:Notes payable

$
35,000


$
35,000Accounts payable


38,904



26,500Accrued expenses and other liabilities


11,354



10,491Advances from affiliates


119,282



118,584Total current liabilities


204,540



190,575Total liabilities


204,540



190,575COMMITMENTS AND CONTINGENCIES


-



-STOCKHOLDERS' DEFICITCommon stock, $.001 par value, 100,000,000 shares authorized;11,800,917 and  11,624,440 issued and outstanding as ofMarch 31, 2011 and December 31, 2010, respectively


11,803



11,625Additional paid-in capital


5,097,698



5,072,026Accumulated deficit during this exploration stage


(5,154,740
)


(5,090,964
)Total stockholders' deficit


(45,240
)


(7,312
)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

$
159,300


$
183,261The accompanying notes are an integral part of these condensed financial statements.




2




UNITED MINES, INC.(A Exploration Stage Company)STATEMENTS OF OPERATIONS - (unaudited)For the Periodfrom August 20, 1999Three Months Ended

March 31,


(inception) through2011


2010


March 31, 2011REVENUES:Revenues

$
-


$
-


$
-OPERATING EXPENSES:General and administrative expenses


59,800



106,748



4,911,575Sales and marketing expenses


-



-



116,269Exploration expenses


2,673



10,534



101,766Depreciation and amortization


440



440



6,751Total operating expenses


62,912



117,723



5,136,360OPERATING LOSS


(62,912
)


(117,723
)


(5,136,360
)OTHER INCOME (EXPENSE):Interest expense


(863
)


(863
)


(18,380
)TOTAL OTHER INCOME (EXPENSE)


(863
)


(863
)


(18,380
)NET LOSS

$
(63,775
)

$
(118,586
)

$
(5,154,740
)NET LOSS PER SHARE:Basic:

$
(0.01
)

$
(0.01
)Weighted average of number of shares outstanding


11,667,090



10,958,808The accompanying notes are an integral part of these condensed financial statements.






3












UNITED MINES, INC( A Exploration Stage Company)STATEMENTS OF CASH FLOWS - (unaudited)For the Period fromThree Months Ended


August 20, 1999March 31


(inception) to2011


2010


March 31, 2011CASH FLOWS FROM OPERATING ACTIVITIES:Net Loss

$
(63,775
)

$
(118,586
)

$
(5,154,740
)Adjustments to reconcile net loss to net cash(used in) operating activities:Depreciation and amortization


440



440



6,750Amortization of coversion option


-



-



8,750Common stock issued for compensation






108,750



4,309,878Common Stock Cancelled










(18,750
)Changes in assets and liabilities:Prepaid expenses






(40,000
)Accounts payable


40,736



11,500



67,236Accrued expenses and other liabilities


864



863



11,354Net cash used in operating activities


(21,735
)


(37,033
)


(769,522
)CASH FLOWS FROM INVESTING ACTIVITIES:Deposits


-



-



(11,000
)Purchase of Intangible Asset










(5,784
)Purchase of property and equipment


(200
)


(5,000
)


(5,200
)Net cash used in investing activities


(200
)


(5,000
)


(21,984
)CASH FLOWS FROM FINANCING ACTIVITIES:Advances from affilites


698



20,806



199,422Repayments to affiliates


-



-



(74,580
)Proceeds from stock subscriptions


25,850



-



672,400Net cash provided by financing activities


26,548



20,806



797,242-INCREASE (DECREASE) IN CASH


4,613



(21,227
)


5,736CASH, BEGINNING OF YEAR


1,123



28,097



-CASH, END OF PERIOD

$
5,736


$
6,869


$
5,736SUPPLEMENTAL CASH FLOW INFORMATION:Interest paid

$
-


$
-


$
-Taxes paid

$
-


$
-


$
-The accompanying notes are an integral part of these condensed financial statements.













4
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010





NOTE 1 - DESCRIPTION OF BUSINESS





The Company was incorporated under the laws of the State of Arizona on August 20, 1999 ("Inception Date") as Plae, Inc. to engage in the exploration of gold and silver mining properties. The Company has a calendar year end for reporting purposes. The Company is in the process of acquiring mineral properties or claims located in the State of Arizona, USA. The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the underlying properties and/or claims, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements, and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof. The name was changed on February 18, 2005 to King Mines, Inc. and then subsequently changed to its current name on March 30, 2005. No shares of common stock were issued until the Company became United Mines, Inc. The Company's corporate office is located at 11924 N Centaurus PI, Oro Valley, AZ 85737.





The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern.  However, the Company has sustained losses from operations and no revenues from operations.  Through March 31, 2011 the Company accumulated a net loss of $5,154,740.  Further, the Company has inadequate working capital to maintain or develop its operations, and is dependent upon funds from private investors and the support of certain stockholders.





These factors raise substantial doubt about the ability of the Company to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.  In this regard, Management is planning to raise any necessary additional funds through loans and additional sales of its common stock. There is no assurance that the Company will be successful in raising additional capital.





The Company's ability to meet its obligations and continue as a going concern is dependent upon its ability to obtain additional financing, achievement of profitable operations and/or the discovery, exploration, development and sale of mining reserves. The Company cannot reasonably be expected to earn revenue in the exploration stage of operations. Although the Company plans to pursue additional financing, there can be no assurance that the Company will be able to secure financing when needed or to obtain such financing on terms satisfactory to the Company, if at all.





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America.  Significant accounting policies are as follows:





Basis of Presentation





The Company has produced minimal revenue from its principal business and is an exploration stage company as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915-10 “Development Stage Entities”. The Company devotes substantially all of its efforts to acquiring and exploring mining interests that management believes will eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in major commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage.  Mining companies subject to this Topic are required to label their financial statements as an “Exploratory Stage Company,” pursuant to guidance provided by SEC Guide 7 for Mining Companies.


5
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Use of Estimates





The 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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.  These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period.  Management evaluates these estimates and assumptions on a regular basis.  Actual results could differ from those estimates.





Revenue Recognition





As the Company is continuing exploration of its mineral properties, no significant revenues have been earned to date. The Company recognizes revenues at the time of delivery of the product to the customers





Revenue includes sales value received for our principle product, silver, and associated by-product revenues from the sale of by-product metals consisting primarily of gold and copper. Pursuant to guidance in Topic 605, "Revenue Recognition for Financial Statements", revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, no obligations remain and collectibility is probable. Revenue is recognized when title to silver and gold passes to the buyer and when collectibility is reasonably assured. The passing of title to the buyer is based on terms of the sales contract. Product pricing is determined at the point revenue is recognized by reference to active and freely traded commodity markets (for example, the London Bullion Market, an active and freely traded commodity market for both gold and silver).





Cash and Cash Equivalents





The Company considers all highly liquid investments with an original maturity of year ended or less to be cash equivalents.  Cash equivalents include cash on hand and cash in the bank.





Property and Equipment





Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized thereon.  Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized.





The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow:




Asset Category

Depreciation/

Amortization PeriodFurniture and Fixture

3 YearsOffice equipment

3 YearsLeasehold improvements

5 Years







6
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Mine Exploration and Development Costs





All exploration costs are expensed as incurred. Mine development costs are capitalized after proven and probable reserves have been identified.  Amortization is calculated using the units-of-production method over the expected life of the operation based on the estimated recoverable mineral ounces.





Mineral Properties





Significant payments related to the acquisition of mineral properties, mineral rights, and mineral leases are capitalized.  If a commercially mineable ore body is discovered, such costs are amortized when production begins using the units-of-production method based on proven and probable reserves. If no commercially mineable ore body is discovered, or such rights are otherwise determined to have no value, such costs are expensed in the period in which it is determined the property has no future economic value.





Property Evaluations





Management of the Company will periodically review the net carrying value of its properties on a property-by-property basis. These reviews will consider the fair value of each property to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss will be recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset.  Measurement of an impairment loss will be based on the estimated fair value of the asset if the asset is expected to be held and used.





Although management will make its best estimate of the factors that affect fair value based on current conditions, it is reasonably possible that changes could occur in the near term which could adversely affect management's estimate of net cash flows expected to be generated from its assets, and necessitate asset impairment write-downs.





Reclamation and Remediation Costs (Asset Retirement Obligations)





The Company had no operating properties at March 31, 2011, but the Company’s mineral properties will be subject to standards for mine reclamation that are established by various governmental agencies. For these non-operating properties, the Company accrues costs associated with environmental remediation obligations when it is probable that such costs will be incurred and they are reasonably estimable. Costs of future expenditures for environmental remediation are not discounted to their present value. Such costs are based on management's current estimate of amounts that are expected to be incurred when the remediation work is performed within current laws and regulations.





It is reasonably possible that due to uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.





The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made.  The associated asset retirement costs are capitalized as part of the carrying amount of the associated long-lived assets and depreciated over the lives of the assets on a units-of-production basis.  Reclamation costs are accreted over the life of the related assets and are adjusted for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate on the underlying obligation.


7
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Mineral Property Rights





All direct costs related to the acquisition of mineral property rights are capitalized. Exploration costs are charged to operations in the period incurred until such time as it has been determined that a property has economically recoverable reserves, at which time subsequent exploration costs and the costs incurred to develop a property are capitalized.





The Company management reviews the carrying values of its mineral property rights whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts. An impairment loss is recognized when the carrying value of those assets is not recoverable and exceeds its fair value. As of March 31, 2011, management has determined that no impairment loss is required.





At such time as commercial production may commence, depletion of each mining property will be provided on a unit-of-production basis using estimated proven and probable recoverable reserves as the depletion base. In cases where there are no proven or probable reserves, depletion will be provided on the straight-line basis over the expected economic life of the mine.





Asset Retirement Obligations





The Company plans to recognize liabilities for statutory, contractual or legal obligations, including those associated with the reclamation of mineral and mining properties and any plant and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. Initially, a liability for an asset retirement obligation will be recognized at its fair value in the period in which it is incurred. Upon initial recognition of the liability, the corresponding asset retirement cost will be added to the carrying amount of the related asset and the cost will be amortized as an expense over the economic life of the asset using either the unit-of-production method or the straight-line method, as appropriate. Following the initial recognition of the asset retirement obligation, the carrying amount of the liability will be increased for the passage of time and adjusted for changes to the amount or timing of the underlying cash flows needed to settle the obligation.





The Company has posted reclamation bonds with the State of Arizona Reclamation Bond Pool for its properties as required by the United States Bureau of Land Management, to secure potential clean-up and land restoration costs if the projects were to be abandoned or closed. The Company has recorded the cost of these bonds as an asset in the accompanying balance sheets.





Impairment of Long-Lived Assets





In accordance with ASC Topic 3605, “Long-Lived Assets,” such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Goodwill and other intangible assets are tested for impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. There were no events or changes in circumstances that necessitated an impairment of long lived assets.





8
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
 
 Income Taxes
 
 Deferred income taxes are provided based on the provisions of ASC Topic 740, “Accounting for IncomeTaxes,” to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.





The Company adopted the provisions of FASB Interpretation No. 48; “Accounting For Uncertainty In Income Taxes” - An Interpretation of ASC Topic 740 ("FIN 48"). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At March 31, 2011, the Company did not record any liabilities for uncertain tax positions.





ASC 740 requires the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considered available positive and negative evidence, giving greater weight to its recent cumulative losses and its ability to carry-back losses against prior taxable income and lesser weight to its projected financial results due to the challenges of forecasting future periods. The Company also considered, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences. The Company performed this evaluation as of the year ended December 31, 2010 and the quarter ended March 31, 2011. At that time the Company continued to have sufficient positive evidence, including recent cumulative profits, a reduction in operating expenses, the ability to carry back losses against prior taxable income and an expectation of improving operating results, showing a valuation allowance was not required. At the end of the quarter ended March 31, 2011, changes in previously anticipated expectations and continued operating losses necessitated a valuation allowance against the tax benefits recognized in this quarter and prior quarters since they are no longer “more-likely-than-not” realizable. Under current tax laws, this valuation allowance will not limit the Company’s ability to utilize federal and state deferred tax assets provided it can generate sufficient future taxable income in the  United States.





The Company anticipates it will continue to record a valuation allowance against the losses of certain jurisdictions, primarily federal and state, until such time as we are able to determine it is “more-likely-than-not” the deferred tax asset will be realized. Such position is dependent on whether there will be sufficient future taxable income to realize such deferred tax assets The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction.





Concentration of Credit Risk





The Company maintains its operating cash balances in banks located in Arizona. Currently the Federal Depository Insurance Corporation (FDIC) insures interest bearing accounts at each institution up to $250,000.





Share-Based Compensation





The Company applies FASB ASC Topic 718 “Share-Based Payments” (“Topic 718”) to share-based compensation, which requires the measurement of the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award.  Compensation cost is recognized when the event occurs.  The Black-Scholes option-pricing model is used to estimate the fair value of options granted.


9
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued





Earnings Per Share





Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Diluted loss per share is the same as basic loss per share, because the effects of the additional securities are anti-dilutive.





Fair Value of Financial Instruments





The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties other than in a forced sale or liquidation.





The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued liabilities, income tax payable and related party payable, if any, approximate fair value.





Reclassification





Certain prior period amounts have been reclassified to conform to current year presentations.





Recent Accounting Pronouncements





Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.





The Company adopted ASC Topic 718, using a modified prospective application transition method, which establishes accounting for stock-based awards in exchange for employee services. Under this application, the Company is required to record stock-based compensation expense for all awards granted after the date of adoption and unvested awards that were outstanding as of the date of adoption. ASC Topic 718 requires that stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized in expense over the requisite services period. Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.




Common stock, stock options and warrants issued to other than employees or directors in exchange for services are recorded on the basis of their fair value, as required by ASC Topic 718, which is measured as of the date required by ASC Topic 505-50. In accordance with ASC Topic 505-50, the non-employee stock options or warrants are measured at their fair value as of the earlier of the date at which a commitment for performance to earn the equity instruments is reached (“performance commitment date”) or the date at which performance is complete (“performance completion date”).





No other accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s consolidated financial position, operations or cash flows.








10
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 3 - PROPERTY AND EQUIPMENT
 
 The Company’s fixed assets as of March 31, 2011 and December 31, 2010 are as follows:
 
 March 31,
December 31,2011


2010Equipment

$
25,483


$
25,283Accumulated depreciation


(6,751)



(6,311)
)Total

$
18,732


$
18,972
 
 Depreciation expense for the three months ended March 31, 2011 is $440 compared to $440 for March 31, 2010.


NOTE 4 – PURCHASE OF MINING RIGHTS





On October 1, 2005 the Company purchased 23 mining claims and related assets from two then unrelated third parties in exchange for an aggregate of 3,600,000 common shares of the Company.  Since the sellers did not obtain majority ownership of the Company in the transaction it was accounted for as a purchase rather than a reverse merger.





According to the FASB ASC Topic 845, transfers of nonmonetary assets to a company by its promoters or shareholders in exchange for stock prior to the company’s initial public offering normally should be recorded at the transferor’s historic cost basis determined under GAAP.  Since the sellers were unable to determine and document their historic cost as determined under GAAP, management elected to record the purchase at an investment of $100,000, the estimated scrap value of the equipment.





Additionally, according to the SEC, Issues in Extractive Industries No. 1 “Recoverability of capitalized costs is likely to be insupportable under FASB ASC 944 prior to determining the existence of a commercially minable deposit, as contemplated by SEC Industry Guide 7 for a mining company in the exploration stage.  As a result, the staff would generally challenge capitalization of exploration costs, and believes that those costs should be expensed as incurred during the exploration state under US GAAP.”





NOTE 5 – SHARE CAPITAL





On August 20, 1999, the Company authorized the issuance of 1,000,000 shares of common stock and amended is Articles of Incorporation in 2006 to authorize the issuance of 100,000,000 shares of common stock, at $.001 par value. As of May 16, 2011, 11,800,917 are issued and outstanding.





During the three months ended March 31, 2011, the Company issued 174,477 shares of common stock as stock dividends to its shareholders.





NOTE 6 – STOCK BASED COMPENSATION





The Company accounts for stock-based compensation awards in accordance with the provisions of FASB ASC Topic 718, which addresses the accounting for employee stock options.  FASB ASC Topic 718 requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the financial statements over the vesting period based on the estimated fair value of the awards.








11
 
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 7 – COMMITMENTS AND CONTINGENCIES





The Company may enter into various consulting agreements with outside consultants. Certain of these agreements may include additional compensation on the basis of performance.





NOTE 8– NOTES PAYABLE





On December 7, 2007, the Company issued a 10% note payable to the Lebrecht Group, PC for services rendered related to the registration of certain securities of the Company.  The note and accrued interest were due December 7, 2008 and at the option of the holder payable in full on the maturity date or in 12 monthly payments beginning on the maturity date.  The note and accrued interest are convertible to common shares at any time at the option of the holder at 75% of the average closing bid price on the five trading days immediately preceding the conversion.  Management estimates, at this time, that 20,000 shares may be issued if this conversion feature is exercised.





In accordance with generally accepted accounting principles, the 25% discount to market related to the conversion feature has been reported as a component of additional paid in capital.  Additionally, since this represents a prepayment for services related to a future public offering, management has elected to offset the cost to future capital raised as a result of the offering, if any.





NOTE 9 - RELATED PARTY TRANSACTIONS





The Company is managed by its key shareholders who are also officers and directors of the Company.  The balance of advances from our key shareholders for cash advanced to the Company as of March 31, 2011 is $119,282 and was $118,584 at December 31, 2010.  These advances do not convert to common stock and they are non interest bearing advances.





An entity affiliated with two of the shareholders provides office space and other support on a month to month basis.





NOTE 10 - NET LOSS PER SHARE





Basic loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share for the three months ended March 31, 2011 and 2010 is the same as basic loss per share. For the three months ended March 31, 2011 and 2010, the following potential shares of common stock that would have been issuable have been excluded from the calculation of diluted loss per share because the effects, as a result of our net loss, would be anti-dilutive.





The following table represents the computation of basic and diluted losses per share at March 31, 2011 and 2010.





2011


2010Losses available for common shareholders

$
(63,775
)

$
(118,586
)Basic and diluted weighted average common shares outstanding


11,667,090



10,958,808Basic and diluted loss per share

$
(0.01
)

$
(0.01
)





Net loss per share is based upon the weighted average shares of common stock outstanding.





12
 UNITED MINES, INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010


NOTE 11 – SUBSEQUENT EVENTS





In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, and have determined that the following events are reasonably likely to impact the financial statements except the following.





Effective May 112011 Glenn E. Martin was appointed as Chief Financial Officer of the Company.




























































13


In this Quarterly Report on Form 10-Q,  “Company,” “our company,” “us,” and “our” refer to United Mines, Inc., an Arizona corporation, unless the context requires otherwise.





ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





Forward-Looking Statements





Management’s Discussion and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”, “future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, profitability of mineral resources and mineralized material, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of the Company. The Company adopted at management’s discretion, the most conservative recognition of revenue based on the most astringent guidelines of the SEC. Management will elect additional changes to revenue recognition to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar markets. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein.





Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include those identified in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.





In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.





Overview





The Mining Industry





Mining operations generally progress through four stages:  (1) prospecting, or the search for mineral deposits; (2) exploration, or the work involved in assessing the size, shape, location, and economic value of the deposit; (3) development, or the work of preparing access to the deposit so that the minerals can be extracted from it; and (4) exploitation, the work of extracting the minerals.





Companies in the mining industry are categorized based on the current activities taking place at the properties where they own rights.  An exploration stage company is one that is engaged in the search for minerals (reserves) which are not in either the development stage or production stage.  A development stage company is one that is engaged in the preparation of an established commercially mineable deposit (reserves) for its extraction which is not in the production stage.  A production stage company is one that is engaged in the exploitation of a mineral deposit (reserve).





14


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
 
 The exploration stage of mining consists of numerous steps, including:  i) locate vein structures; ii) rock chipsample along the lengths of the vein; iii) rock chip sample the surrounding host rock; iv) send samples to assay labs for assay results; v) upon favorable results, perform a soil geochemical assay test along and around the vein structure to get a better detail of where the vein runs; vi) assay the soils that are collected; vii) using test results, map out a test drill pattern for the Diamond Core drilling; viii) drill the cores based on the drill map created; ix) sample the cores at various depths and send to assay; and x) either plot out a total drilling program or put together a pilot production plant for approximately the same cost as a full drill program (approximately $1.2 million).





A glossary of the mining and mineral resource terms used in this filing can be found in Exhibit 99.4 to our Registration Statement on Form S-1, filed December 30, 2008.





Company Overview





We were originally incorporated under the name Plae, Inc., in the State of Arizona on August 20, 1999.  At the time we operated under the name Plae, Inc., no business was conducted.  No books or records were maintained and no meetings were held.   In essence, no  actions were taken  after incorporation until Glenn E. Martin took control of Plae, Inc.  On February 18, 2005, the corporate name was changed to King Mines, Inc. and then subsequently changed to its current name, United Mines, Inc., on March 30, 2005.  No shares of common stock were issued until we became United Mines, Inc.





We are an exploration stage mineral exploration company and have been in the mining industry since January 2005.  An exploration stage company is one engaged in the search for mineral deposits or reserves which are not in either the development or production stage.  We currently own four groups of mining claims.  These groups include one primary silver exploration stage mining project, seven gold exploration stage mining projects, three copper exploration stage projects, and one placer gold exploration stage project, all in Arizona, USA.  To date we have no assurance that commercially viable mineral deposits exist on any of the properties we own or where we have mineral rights. Further exploration, at a significant cost to us, will be required before a final evaluation as to the economic and legal feasibility of the properties is determined.  If this evaluation determines that some of the properties do have mineral deposits, we will have to spend substantial funds for their drilling and engineering studies before we will know if we have a commercially viable mineral deposit (a reserve).





In October, 2005, we contracted with Glynn A. Burkhardt and Glynn G. Burkhardt, our current Senior Vice President and our former Emeritus Chairman of the Board, respectively, to transfer the rights and interests they held in 23 mining claims to us, by quitclaim deed, in exchange for 3,600,000 shares of our common stock.  These rights and interests were actually transferred to us in September 2006.





In March and April 2006, we obtained 3 state “exploration permits” from the State of Arizona, which are renewable on an annual basis for a maximum of 5 years.  The “exploration permits” are the precursor to obtaining a lease from the state, but leases cannot be obtained until we either conduct exploration for a year on the properties or show economic feasibility.





During 2006, we acquired 69 additional unpatented mining claims on BLM land, including the 9 claims that make up the Blue Copper mining property.





As a result of these acquisitions, we currently own four groups of mining claims.  As detailed below, these groups include one primary silver exploration stage mining project, seven gold exploration stage mining projects, three copper exploration stage projects, and one placer gold exploration stage project, all in Arizona, USA.





Our four groups of mining claims include 92 unpatented Bureau of Land Management (BLM) mining claims in Southern Arizona, USA, totaling 1,840 acres.  These claims are renewable annually for $140 per claim and currently paid through August 31, 2011.


15


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued


In addition to the unpatented mining claims, we own three Arizona State Land Department (ASLD) Mineral Exploration Permits, Nos. 08-110135, 08-110136 and 08-110137, each of which is good for 5 years, currently thru April 13, 2011.  This Arizona state land department position totals 1,920 acres of land.  These are renewable annually, at $2.00 per acre for year one, no charge per acre for the second year, and $1.00 per acre for years 3-5, plus a $500 renew application fee.  This fee had been paid thru April 13, 2011.





A brief description of the properties where we have mineral rights are discussed below.  For ease of reference we have split our claims and permitted land into “material” projects, those where we plan to begin our exploration activities, and “non-material” projects, those that we will begin any activity on until after we have begun initial exploration on our “material” projects.  For our material projects we have included various maps and information related to the project in our prior quarterly and annual disclosures.  For our non-material projects we do not include as much in-depth information.





Our Current Material Projects





Primary Silver Mining Exploration Project (Group 1 Claims and State Exploration Permits)





Overview





Our primary silver exploration project is known as “The Cerro Colorado Silver Mining Project.”  This project contains the famous “Cerro Colorado” mine, also known as the Heintzelman Silver Mines.  The Cerro Colorado mines have produced silver in the past, but, to date, we have not extracted any silver from this mine, but we have conducted test sampling.





Size:  This project encompasses 24 unpatented lode claims totaling 480 acres and three state mineral exploration permits, encompassing 1,920 acres.   All land under this project falls within T.20S. R10E of the Salt River Base Meridian, Pima County, Arizona.





Lode claims C-1 through C-9 and LC 58 and LC 59 form a contiguous block in Section 25 and the north 1/2 of Section 36.   One additional 20 acre lode claim covers the Waterman Mine on the SW 1/4 of Section 22.   Claim corner posts and DM monuments were observed on the ground, and appear in accordance with federal staking regulations.  These are the lode claims that were purchased from the Burkhardts.





Permitted heap leach facilities, under lead agency jurisdiction of the Arizona State Department of Environmental Quality, are located in central portions of lode claim 58 and 59 (LC58 and LC59).  The permitted twin plant facility is discussed in further detail under “Mill Sites” below.





The reclamation bonds are currently held by Glynn A. Burkhardt in the name of Glynn A. Burkhardt and Glynn G. Burkhardt, under contract to us.  A BLM required Reclamation Bond of $9,000 is in place.   In addition, a $5,000 ADEQ bond is in place for aquifer protection permit #P-101031.  Transfer of these bonds from the Burkhardts to UMI, is in process.





Bonding requirements for proposed exploration and mining activities on state land have been met.  Currently, we have $11,000 in mineral exploration reclamation bonds covering UMI’s 3 Arizona State Land Department Mineral Exploration Permits 08-110135, 08-110136 and 08-110137.





Cerro Colorado Exploration:   Several groups of mining claims on the Cerro Colorado properties are currently being evaluated for various phases of exploration activity.  Planned 2011/2012 exploration includes underground and surface drilling on The South Clark properties in an effort to discover any possible mineralized materials.





16





ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued





Cerro Colorado Exploration:   Several groups of mining claims on the Cerro Colorado properties are currently being evaluated for various phases of exploration activity.  Planned 2011/2012 exploration includes underground and surface drilling on The South Clark properties in an effort to discover any possible mineralized materials.  (See Exhibit 99.4)





Cerro Colorado Strategy:   This is the location we plan on exploring first.  We hope to establish precious metals production from this location in order to produce cash flow which will sustain the company while exploration of further company owned sites is begun.  We will initiate bulk sample metallurgical testing of mineralized material from several of our silver mines at this location.





United Mines Assets at Cerro Colorado and Processing Facility:Currently, we have mineralized materials in side cast mine dumps, ready to process.     However, this material is not listed on our financial statements as we will not consider these materials as assets until the mineralized materials from the property is processed and extracted.  Bureau of Land Management Inspector William Auby visited our Twin Plant mineralized material processing facility on September 28, 2007  and Inspector Daniel Moore visited November 2009 and gave permission to go ahead under the current Plan of Operations to start to processing mineralized material with our permitted 100-ton a day gravity float and to upgrade our heap leach system.   A modified Plan of Operations will be submitted for approval once we receive sufficient funding to cover our anticipated costs associated with these operations.  In November 2009, our Twin Plant mill site passed our ADEQ permitting processing.





Nicholas Barr, Geologist, was commissioned in 2000 by Glynn A. Burkhardt and Glynn G. Burkhardt, to do a pre-feasibility geological investigation on the Cerro Colorado Mining District.   Ongoing sampling and assays reported from 2001 through 2005 were incorporated into the Barr pre-feasibility report, complete thru 2006 for the Company.





UMI Group 1 Claims:





The UMI Group 1 Claims comprising our Cerro Colorado silver properties consist of 6 sub-groups of claims and 3 AZ State Exploration Permits which, all total, contain 2,400 acres are as follows:





1.
Twin Plant Mineralized Material Processing Facility (claims LC58 and LC59)T20S, R10E, Sec 25, G & SR Meridian 2 X 20 acre claims or 40 acres.1.a.
Twin Plant contiguous Cerro Colorado mining claims (claims C1-9)T20S, R10E, Sec 25, G & SR Meridian 9 X 20 acre claims or 180 acres.2.
Silver Hill: T20S, R10E, Sec. 17, G&SR Meridian

2 X 20 acre claims or 40 acres3.
Walapi Tiger:  T20S, R10E, Sec. 22, G&SR Meridian

4 X 20 acre claims or 80 acres4.
Walapi Tiger:  T20S, R10E, Sec. 22, G&SR Meridian

2 X 20 acre claims or 40 acres5.
Liberty:  T20S, R10E, Sec. 16, G&SR Meridian

4 X 20 acre claims or 80 acres6.
Waterman  #1:  T20S, R10E, Sec 22, G&SR Meridian

1 X 20 acre claim or 20 acres





17


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued




7.
Mary G:  T20S, R10E, Sec. 21, G&SR Meridian.

State Lease   08-1101368.
South Clark:  T20S, R10E, Sec. 35 G&SR Meridian.

State Lease 08-1101359.
Central Clark; T20S, R10E, Sec. 26 G&SR Meridian.

State Lease 08-11013710.
North Clark:  T20S, R10E, Sec. 26 G&SR Meridian.

State Lease 08-11013711.
State Mineral Exploration Permit No. 08-110135

T20S, R10E, Sec. 26, G & SR Meridian. 640 acres.12.
State Mineral Exploration Permit No. 08-110136

T20S, R10E, Sec. 21, G & SR Meridian. 640 acres.13.
State Mineral Exploration Permit No. 08-110137

T20S, R10E, Sec. 35, G & SR Meridian. 640 acres





Location and Access





The UMI Group 1 claims are located in Pima County, Arizona, about 40 miles southwest of Tucson, off exit 48 on Interstate 19 going to Nogales.  Take Amado/Arivaca Rd west 15 miles to properties.  Various gravel/dirt roads go north into the claim group area.





Geology of Group One Claims Area





Mineralization is hosted by a low relief sequence of Tertiary or Cretaceous-age andesite porphyry, quartz latite porphyry, rhyodacite and flow breccia.  Extensive faulting, including numerous broad hematitic fracture zones is thought related to multiple episodes of uplift and fracturing generated by Laramide intrusive activity allowed by Tertiary caldera formation and basin and range extension.  A long duration of tectonic activity has allowed for deep penetration of descending solutions and development of secondary mineralization to depths of 300 feet or greater.





Mill Site Buildings





We own a twin plant facility which includes a heap leach mill with a 100-ton a day gravitational float mill.  In November 2009, we received our current Arizona Department of Environmental Quality (ADEQ) permit, approving this mill for general use.  We must still obtain operating permits when we actually begin processing minerals through the mill, but the ADEQ permit is the primary permit approving the mill for operations.  Within one year we plan on having limited production on our side cast mine dumps at the Cerro Colorado mine site, and gradually increase production thereafter.





Existing buildings include the precipitation house, spare parts and hardware storage building and a laboratory.  There are four small mobile homes used for on-site housing.   During the expansion of mining activities, the heap leach pad and ponds will be reconstructed, as will a shower/locker room/restroom building and a 120' by 40' maintenance and storage building.   The precipitation house will eventually be upgraded with higher capacity processing equipment.





18


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued
 
 We will operate strictly in accordance with Mine Safety and Health Administration (MSHA), Occupational Safety and Health Administration (OSHA), Arizona State Mine Inspector and ADEQ regulations.  We will install heavier gauge geomembranes in the heap leach pad and ponds than required by ADEQ together with a compacted clay liner underneath the geomembranes in order to further decrease the potential for cyanide solution leakage into the ground.





Chain link fence topped with barbed wire will be erected to surround the heap leach pad, the pregnant solution pond and the overflow pond.  Each of these fences will be lined at the bottom with 2 inch mesh chicken wire from ground level to two feet high to keep out small animals and snakes.  To avoid birds landing in the two ponds, the ponds will be protected by one inch netting that is stretched from the top of the fences and supported by cables.





All employees will be required to take mine safety training and cyanide safe handling training. Employees will be equipped with safety equipment including hard hats, gloves, ear plugs, respirators and protective clothing suitable for their particular jobs.  Emergency showers and emergency eye washes will be provided.





The heap leach pad and ponds, and all the buildings, will be lighted with bright lights on 25 foot poles for safety and security.  We will provide several gasoline and diesel engine generators to keep the processing going 24 hours a day in case of power failure.





Heap Leach Pad and Ponds





The heap leach facility is a hydrometallurgical silver leaching operation that will process mineralized material from active and inactive mines throughout the Cerro Colorado Mining District as well as open pit mined mineralized material.  The heap leach facility will consist of a lined heap leach pad (initially one acre in size); a double-lined, pregnant (metal-bearing) solution pond (25 feet by 25 feet); a non-storm water, single-lined overflow pond (60 feet by 145 feet); process pipelines, pumps and holding tanks; and storm water berms and diversion trenches.





Mineralized Material Crushing, Screening and Agglomeration





Mineralized material will be deposited on the lined heap leach pad.  The pad has been designed to accommodate 55,000 tons of mineralized material for processing.  Mineralized material bearing rock will be crushed and conveyed to a vibrator screen. Mineralized material that is +1/2" to 3/4" will be transferred directly to the mineralized material heap via conveyor belt.  Mineralized material that is less than 1/2" will move to a cement agglomeration unit and, after agglomeration, be transported via conveyor belt to the mineralized material heap.  The mineralized material will be stacked on the leach pad in 5 foot lifts to a height of 55 feet.





The maximum height of the mineralized material heap will be 55 feet; however, after it is at that height, tests will be conducted, and an engineering opinion obtained, in the interest of adding another 10,000 to 20,000 tons to the original pad.  If compression test and slope stability check out, the angle of repose may be amended to accommodate the additional mineralized material.  This is a cost saving measure and offers the added benefit of leaching small amounts of gold and silver that will result from the additional leaching time for the earlier lifts.  Each 5,000 ton lift is projected to yield 10 oz Ag per ton and 0.03 oz Au per ton based on a 75% recovery rate.  Pilot testing without fine crushing has yielded 72-77% recovery.  With agglomeration, the actual recovery rate should be in the 77%-82% range.





While the one acre heap leach pad is being constructed, UMI will begin preparing an application for the ADEQ to permit expansion of the pad to 4.9 acres.  When the additional 3.9 acre pad is available, it will be loaded and heap leached as two sections.  Each section will take one month to load and will be leached for two months.  Lifts for each section will be 10 feet high and cover nearly twice the area of the one acre pad resulting in approximately 3.75 times as much production as the original one acre pad.  The larger pad will permit the height to be increased to at least 100 feet, perhaps as high as 150 feet depending on test results.


19





ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued





Heap Leach Process





Each lift of mineralized material on the one acre pad will be leached for approximately 21 days with a dilute solution of sodium cyanide.  The solution will be dripped onto the mineralized material from a grid of PVC pipes.  The resulting pregnant solution will be collected by another grid of perforated piping which overlays the geomembrane pad liner.  The piping network will transport the pregnant solution from the leach pad to the pregnant solution pond.





Extraction Process and Cyanide Recirculation





The pregnant solution from the pond is pumped to the precipitation house where a Merrill-Crowe zinc extraction plant will be used to extract the silver.  Barren solution from the extraction plant will flow by gravity to a 500 gallon tank where it is pumped to a 1,000 gallon makeup tank for the addition of cyanide.  The solution is then re-circulated to the heap leach pad.





Primary Copper Exploration Project (Group 2)





Overview





Our primary copper exploration project is called the Blue Copper/Green Copper/Red Beds mining exploration project.





Size:  This project consists of 14 material BLM mining claims and 4 non-material BLM mining claims totaling 20 acres each.





UMI Group 2 Claims





The UMI Group 2 Claims consist of 3 sub-groups of claims as follows:





1.
BLUE COPPER;   T8S, R12E, Sec 18 and 19, G and SR Meridian.

13 X 20 acre claims or 260 acres.  This includes 9 material claims and 4 non-material claims




2.
GREEN COPPER;   T9S, R12E, Sec 15, G and SR Meridian.

1 x 20 acre claims or 20 acres.





3.
RED BEDS; T8S, R12E, Sec 33 and 34.

4 x 20 acre claims or 80 acres.


The above Group 2 Claims contain a total of 360 acres.





To date we have not performed any work on these Group 2 UMI 100% owned properties.   We are presently in the exploration stage and there is no assurance that commercially viable mineralized material, or a reserve, exists on this property.   We will not be able to make such a determination until exploration and drilling programs are completed and a comprehensive evaluation concludes economic and legal feasibility.





Blue Copper Project 2011/2012 Exploration:  We plan on road repair, surface mapping/ sampling, possible geo-physical and drilling, and then initiate surface and underground mapping/ sampling, exploration, bulk sample metallurgical testing, drilling, step out and possible in-fill reverse circulation and core drilling of high grade areas, at some point in the future.  However, we will not begin any of these activities until we submit a proposed Plan of Operations.  We do not plan on submitting a proposed Plan of Operations for this property until we receive sufficient funding to move forward with activities at this location.


20





ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued


Location and Access





Our Group 2 Claims are located 25 miles northwest of Oracle AZ, in Pinal County, Arizona along state highway 77.  Turn at mile post 106, 5 miles west to Red Beds property, turn at mile post 108, turn west on dirt road Ѕ mile to Blue Copper, and Green Copper properties.Electrical access is 1/2 mile away on highway 77 and there are no current water facilities at these claims.





Physiographic





The Durham Hills are located approximately 30 mi NW of Tucson, Pinal County, Arizona off State highway 77 at between Mile Posts 104 and 108.  Two main Cr0x deposits are hosted in two structural blocks, a west block and an east block, separated by a NW-trending high-angle normal fault.  There are two deposits known as the Cross Triangle Ranch deposit, located in the western block and the Magna Well deposit, located in the eastern.  The Magma Well deposit has also been referred to as the Edwards Mine, the Owen Mine and more regularly as the Blue Copper Mine.  In this report, the name Blue Copper will be used.





The Cross Triangle ranch deposit is located in a series of NW to NS trending, low-lying hills, informally referred to by the owners as, from north to south, Rattlesnake Hill, Green Hill, and Blue Hill.  The Cross Triangle has been heavily prospected by trenches and pits, and minor amounts of Cu0x-strained building stone have been shipped.  The Blue Copper mine is located approximately ѕ of a mile NE of the Cross Triangle and consists of a heavily prospected, low-lying hill adjacent to a cattle tank with several surrounding small prospect pits.  Building stone has also reportedly been shipped from this deposit.





Structural Geology





Folation and lineation in the quartz monzonite and mylonitic schist is highly suggestive of detachment fault processes.  The overall strike and dip of the foliation and lineation would seem to suggest a top to the NE extension.  However, preliminary analysis of possible shear indicators in the mylonite (stretched and rotated quartz grains) suggests top to the SW extension, which is consistent with the regional sense of shear in the Catalina-Tortolita metamorphic core complex.  This geometry indicates that the rocks in the Durham Hills have been rotated and back-tilted along high-angle, listric normal faults.





Our Current Non-Material Projects (Group 3 and 4 Claims)





Description of Properties





To complement the primary silver and copper projects under our exclusive control and operation, we also own 100% of the following unpatented non-material mining properties under jurisdiction of the Bureau of Land Management, Department of Interior.





Primary Gold Mining Exploration Projects





Overview





Our primary gold exploration consists of three projects: The Big Three/Ostrich, Tres Amigos and Sorrel Top.





Size:  The Ostrich/Big Three gold exploration project consists of 17 BLM mining claims (20 acres each) and the Tres Amigos/Sorrel Top gold exploration project consists of 18 BLM mining claims (20 acres each).





The Ostrich/Big Three 2011/2012 Explorations:  We will handle road repair, surface mapping and/or sampling and possible geo-physical & drilling.  Cleanup of the mine portals as well as collar repair and/or replacement will be accomplished as required.  In the future we also hope to proceed with road repair, surface and underground mapping and/sampling, underground clean out, repair and exploration, bulk sample metallurgical testing, surface and possible underground drilling.  We will not begin any of these activities until we submit a proposed Plan of Operations.  The Plan of Operations will not be submitted to BLM until we receive sufficient funding to conduct operations at this property.


21


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued


Tres Amigos & Sorrel Top 2011/2012 Exploration:  Several portions of mining claims on the Tres Amigos and Sorrel Top properties are currently being evaluated for after we receive sufficient funding to conduct operations at this property.  Exploration activities will include underground and surface drilling on the Tres Amigos and Sorrel Top properties.  Surface and underground mapping & sampling, geo-chem, and possible geo-physical exploration is also planned for this site once we receive sufficient funding to conduct operations at this property.





Ostrich/Big Three/Tres Amigos & Sorrel Top Strategy:  Once we receive sufficient funding, we plan to establish precious metals exploration which, in the future, we believe will produce cash flow to sustain us and allow the opportunity to then initiate core drilling & bulk sample metallurgical testing of mineralized materials from our gold mining claims.





UMI Group 3 Non-Material Claims:





The UMI Group 3 claims consist of 4 sub-groups of claims as follows:





1.
Ostrich; T22S, R10E, Sec. 22; G & SR Meridian.

7 X 20 acre claims or 140 acres.




2.
Big Three; T22S, R10E, sec. 27; G & SR Meridian.

10 X 20 acre claims or 200 acres.




3.
Tres Amigos; T23S, R11E Sec. 19; G & SR Meridian.

17 X 20 acre claims or 340 acres.




4.
Sorrel Top; T23S, R11E, Sec. 18 & 19, G & SR Meridian.

1 X 20 acre claim or 20 acres




The above UMI Group 3 claims contain a total of 700 acres.





To date we have not performed any work on these four properties.  We are presently in the exploration stage and there is no assurance that commercially viable mineralized material, or a reserve, exists on this property.  We will not be able to make such a determination until exploration and drilling programs are completed and a comprehensive evaluation concludes economic and legal feasibility.





Location and Access





The UMI Group 3 claims are located in Santa Cruz County, Arizona, about 62 miles southwest of Tucson off exit 48 on Interstate 19 going to Nogales.





Ostrich/Big Three mining claims:   Take Amado/Arivaca Rd west 24 miles to Town of Arivaca; then south on Ruby road (paved) 3.5 miles to Yellow Jacket Road (dirt), follow 5 miles to Ostrich/Big Three Gold mining properties.





Tres Amigos/Sorrel Top mining claims:   Take Amado/Arivaca Rd west 24 miles to Town of Arivaca, then south on Ruby road (paved) 12 miles east to various gravel/dirt roads going south & east on to the claim group area.


22




ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued





Geology of Group 3 Claim Area





Physical Geology





Topography of the project area is moderately steep with elevations ranging from about 4,200 to 4,700 feet.  NW-SE trending Cobre Ridge, characterized by mostly bluffy outcrops, flanks the project area.  Fraguita Peak (elev. 5,374), is a prominent landmark about 1 mile to the northwest.





Regional Geology and Mineralization





The Oro Blanco Mining District, extending from Arivaca south to the international boundary, encompasses roughly 40 square miles and lies within the southern part of the Basin and Range Province of Arizona.   Jurassic-age welded and non-welded quartz latite tuff and rhyolite tuff, underlying Cobre Ridge and central portions of the district are the oldest rocks.  Outcrops of conglomerate and sandstone of the Cretaceous Oro Blanco Formation are common east of Cobre Ridge and across southern sections of the District. Mostly flat lying and bluff forming   Tertiary-age dacite and andesite flows, tuffs and pryoclastics mark the south and east edge of the area.  Plutonic rocks, consisting of Jurassic quartz monzonite and Cretaceous diorite and andesite are widely scattered as irregular masses up to 0.5 to 1 mile in aerial extent.  Aligned closely with the northwest tectonic fabric of the region are conspicuous dikes, dike swarms and elongate plugs of Tertiary-age quartz monzonite and lesser andesite and porphyritic rhyolite.





UMI Group 4 Non-Material Claims





The UMI Group 4 Claims consist of 3 sub-groups of claims as follows:





1.
EDWARDS GOLD MINE; T22S, R10E, Sec 8, G and SR Meridian.

6 X 20 acre claims or 120 acres.





2.
AJAX GOLD MINE; T22S, R10E, Sec 5, G and SR Meridian.

7 X 20 acre claims or 140 acres





3.
Placer gold claims; T22S, R10E, Sec. 22 and 27, G and SR Meridian.

2 X 20 acre claims or 40 acres





The above Group 4 Claims contain a total of 300 acres.





To date we have not performed any work on these 3 UMI 100% owned properties.   We are presently in the exploration stage and there is no assurance that commercially viable mineralized material, or a reserve, exists on this property.   We will not be able to make such a determination until exploration and drilling programs are completed and a comprehensive evaluation concludes economic and legal feasibility.





Location and Access





Take Interstate 19 south to exit 48 at Amado.  Then take Amado/Arivaca Rd west 24 miles to Town of Arivaca; then south on Ruby road (paved) 3.5 miles to Yellow Jacket Road (dirt), follow 6 miles on Yellow Jacket Road past Ajax/Edwards mines to placer gold mining properties.





UMI Placer Gold Claims





The placer gold claims (GPA-1 and 2) are primarily a recreational gold panning area and do not anticipate active exploration on commercial level until future circumstances warrant.


23


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued





General Overview





Due to our fairly recent formation and acquisition of the mineral rights associated with the above properties, we are still early in the process of mapping and sampling these properties for potential mineral deposits.  Therefore, despite our ownership of the mineral rights described above and the fact we have begun plotting, mapping, and sampling from some of the properties, as of the date of this quarterly report we have not extracted any minerals from these properties, other than samples, and have not received any revenue from these exploration activities.  We do not know when, or if, we will begin to receive revenue from these activities.





As noted above, our current and immediate plans for exploration are only at the Cerro Colorado Silver Mining Project.  Though we have had a geologist out to the other properties, we do not intend to move ahead with any exploration activities at the other properties, until we receive sufficient money to fund operations at the properties.





At our properties we have controls in place to ensure that no unauthorized individuals tamper with any mineralized material.  To that effect we have hired Burkhardt Mining to gather samples being used for assay.  The samples are sent to, or dropped off at, a certified assay lab by the person that removed the sample from the property.  The assays are prepared and the data is sent via email with a hard copy follow-up (in most cases) to the independent geologist and/or mining engineer with copies to us.  At no time does the sample leave the professional handling the sampling of the mineralized material.  When we are ready to proceed with assay work, we plan on utilizing the services of Jacobs Assay Office in Tucson, Arizona, BSI Spectorate, and IPL Laboratories, to conduct our assay work.  The assay work is what determines what minerals, if any, are contained in the rock samples. No assurances can be provided as to the timing of engaging the services of Jacobs Assay Office in Tucson, Arizona, BSI Spectorate, and IPL Laboratories.





Our Growth Strategy





Our objective is to successfully locate properties with mineral deposits, acquire the necessary rights to explore those properties, and then sell those minerals on the open market.





We intend to grow in two ways.  First, we intend to continue exploring the existing properties where we have mineral rights to hopefully locate mineral reserves that we can excavate and sell on the open market.  Second, we intend to be active in locating and acquiring mineral rights at properties that we explore and that we believe will have a high probability of having mineral reserves.  As noted above, we are currently in the various stages of exploring the locations where we have mineral rights.  Currently, in addition to our existing properties, we are targeting the Southwestern United States in our search for additional mineral rights that we may be interested in purchasing.





Results of Operations





We are an exploration stage company that is in the process of acquiring mineral properties or claims located in the State of Arizona. The recoverability of amounts from the properties or claims will be dependent upon the discovery of economically recoverable reserves, confirmation of the our interest in the underlying properties and/or claims, our ability to obtain necessary financing to satisfy the expenditure requirements under the property and/or claim agreements and to complete the development of the properties and/or claims, and upon future profitable production or proceeds for the sale thereof.





For the three months ended March 31, 2011 and 2010, we generated no revenue. Our future revenue plan is uncertain and is dependent on our ability to effectively mine our products, generate sales, and obtain contract mining opportunities. There are no assurances of the ability of our company to begin to mine our claim. Mining is cost intensive. Accordingly, it is critical for us to raise appropriate capital to implement our business plan.  We incurred losses of $63,775 and $118,586 for the three months ended March 31, 2011 and 2010, respectively. Our losses since our inception through March 31, 2011 amount to $5,154,740.


24


ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued





Liquidity and Capital Resources





We have maintained a minimum of three months of working capital in its bank account since June 1, 2008. This reserve was intended to allow for an adequate amount of time to secure additional funds from investors as needed. To date, we have has succeeded in securing capital as needed, but there is no guarantee this will continue.





There is no historical financial information about us on which to base an evaluation of our performance. We are an exploration stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our property, and possible cost overruns due to increases in the cost of services. To become profitable and competitive, we must conduct the exploration of our properties before we start into production of any minerals we may find.





We believe we will have to rely on public and private equity and debt financings to fund our liquidity requirements over the intermediate term. We may be unable to obtain any additional financings on terms favorable to us, or obtain additional funding at all. If adequate funds are not available on acceptable terms, and if cash and cash equivalents together with any income generated from operations fall short of our liquidity requirements, we may be unable to sustain operations. Continued negative cash flows could create substantial doubt regarding our ability to fully implement our business plan and could render us unable to expand our operations, successfully promote our brand, develop our products, respond to competitive pressures, or take advantage of acquisition opportunities, any of which may have a material adverse effect on our business. If we raise additional funds through the issuance of equity securities, our stockholders may experience dilution of their ownership interest, and the newly issued securities may have rights superior to those of our common stock. If we raise additional funds by issuing debt, we may be subject to limitations on our operations, including limitations on the payments of dividends.





Off-balance sheet arrangements





We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.





WHERE YOU CAN FIND MORE INFORMATION





You are advised to read this Quarterly Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular, please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.








25





ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Our business is currently conducted principally in the United States. As a result, our financial results are not affected by factors such as changes in foreign currency exchange rates or economic conditions in foreign markets. We do not engage in hedging transactions to reduce our exposure to changes in currency exchange rates, although if the geographical scope of our business broadens, we may do so in the future.





Our exposure to risk for changes in interest rates relates primarily to our investments in short-term financial instruments. Investments in both fixed rate and floating rate interest earning instruments carry some interest rate risk. The fair value of fixed rate securities may fall due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Partly as a result of this, our future interest income may fall short of expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that have fallen in estimated fair value due to changes in interest rates. However, as substantially all of our cash equivalents consist of bank deposits and short-term money market instruments, we do not expect any material change with respect to our net income as a result of an interest rate change.





We do not hold any derivative instruments and do not engage in any hedging activities.





ITEM 4. - CONTROLS AND PROCEDURES





(a)
Evaluation of Disclosure Controls and Procedures





We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.





Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting.





Based on this assessment, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting was effective as of March 31, 2011.




(b)
Changes in Internal Controls Over Financial Reporting





There have been no changes in our internal controls over financial reporting or in other factors that could materially affect, or are reasonably likely to affect, our internal controls over financial reporting during the quarter ended March 31, 2011. There have not been any significant changes in the Company's critical accounting policies identified since the Company filed its Annual Report on Form 10-K as of December 31, 2010.





26








PART II


OTHER INFORMATION





ITEM 1. - LEGAL PROCEEDINGS





We are currently not involved in any litigation except noted below that we believe could have a material adverse effect on our financial condition or results of operations. Other than described below, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.





ITEM 1A - RISK FACTORS





There were no material changes from the risk factors previously disclosed in Part II, Item 6, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010.





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





During the three months ended March 31, 2011, the Company issued 174,477 shares of common stock as stock dividends to its shareholders.





The Claude & Barbara Lee Family Trust purchase of 2,000 shares @ $2.50 per share with matching 1 year warrants.





Jeffrey Sparks 2nd purchase of 5,000 shares @ $2.50 per share  with matching 1 year warrants


Lawrence G. Dykers investment of $5,000 for 2,000 shares @ $2.50 per share with 10,000 1 year warrants at $2.50 per share.





The value of those shares is normally determined based on the value of the stock at the dates on which the agreements entered into for the services. The offer and sale of such shares of our common stock were effected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Rule 506 of Regulation D promulgated under the Securities Act and in Section 4(2) of the Securities Act. A legend was placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequent registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act





ITEM 3. - DEFAULTS UPON SENIOR SECURITIES





There were no defaults upon senior securities during the period ended March 31, 2011.





ITEM 4. – REMOVED AND RESERVED





27


ITEM 5. - OTHER INFORMATION
 
 There is no information with respect to which information is not otherwise called for by this form except as follows:
 
 Robert Leitzman has resigned as our CFO and principal accounting officer, effective May 11, 2011.Glenn E. Martin will act as ourCFO and principal accounting officer as of that date.





ITEM 6. – EXHIBITS








31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act.32.1
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.32.2
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act.








SIGNATURES





Pursuant to the requirements of Section 13 or 15(d) 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.





Registrant



Date: May 24, 2011

United Mines, Inc.



By: /s/ Glenn E. MartinGlenn E. MartinChief Executive Officer (Principal Executive Officer)











Registrant



Date: May 24, 2011

United Mines, Inc.



By: /s/ Glenn E. MartinGlenn E. MartinChief Financial Officer (Principal Financial Officer)























28