10QSB/A 1 mainbody.htm MAINBODY mainbody

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB/A

[X]
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the quarterly period ended March 31, 2006
   
[ ]
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the transition period __________ to __________
   
 
Commission File Number: 000-51013

Colombia Goldfields Ltd.
(Exact name of small business issuer as specified in its charter)

Nevada
76-0730088
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
666 Burrard Street, Suite 500, Vancouver, BC Canada V6C 2X8
(Address of principal executive offices)

604-601-2040
(Issuer’s telephone number)
 
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)


Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No

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

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 56,036,849 common shares as of December 31, 2006

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
 
 
EXPLANATORY NOTE
 
 
 
During fiscal 2006, we acquired several mineral rights in connection with our Marmato and Caramanta projects. On November 20, 2006, we were advised by our independent accountant, PricewaterhouseCoopers LLP, that under GAAP, previously expensed amounts related to mineral property acquisitions were required to be recognized on our consolidated balance sheet. We previously accounted for these acquisitions by capitalizing the mineral rights and then subsequently recording an impairment charge against amounts capitalized. We engaged PricewaterhouseCoopers as our auditor on August 10, 2006 and PricewaterhouseCoopers reviewed the financial statements for the quarterly period ended June 30, 2006 as required by Item 310 of Regulation S-B.

Upon further review of the authoritative guidance and discussions with our auditors, we concluded that FAS 144 was misapplied in the first and second quarters of fiscal 2006. As of the dates of acquisition of our 2006 mineral rights, no impairment provision is permissible under GAAP, and furthermore there have been no changes in circumstances suggesting an impairment charge is warranted.
 
Emerging Issues Task Force (“EITF”) 04-2: Whether Mineral Rights are Tangible or Intangible Assets indicates that acquired mineral rights are tangible assets and should be reported as a separate component of property, plant, and equipment. EITF 04-3: Mining Assets: Impairment and Business Combinations indicates that Values Beyond Proven and Probable Reserves (VBPP) should be considered to the extent that a market participant would include VBPP in determining the fair value of the assets. The mineral rights acquired in each instance were “Long-Lived Assets” as contemplated by FAS 144: Accounting for the Impairment or Disposal of Long-Lived Assets and should have only been subject to FAS 144’s impairment considerations whenever events or changes in circumstances indicated that their carrying amount might not be recoverable.  At the acquisition dates of our mineral rights, there were no events or changes in circumstances that would suggest that an impairment of amounts initially capitalized under EITF 04-2 should be recognized.

In reaching the conclusion that there have been no changes in circumstances subsequent to the acquisition dates of our mineral rights, we considered the following factors:

i)  
Subsequent to the acquisition dates of our mineral rights, we have continued to consolidate the various Marmato concessions during fiscal 2006, and have purchased 70 mining properties, awaiting payment once the documentation and registration is complete;
ii)  
We have completed an independent technical review of available data indicating historical resources of approximately 5.3 million ounces of gold;
iii)  
We have commenced channel sampling of the purchased concessions, supporting the conclusions of the technical review;
iv)  
We have commenced an exploration program on the “el Salto” area of the Caramanta project, with encouraging preliminary results; and
v)  
Progress on the movement of the Town of Marmato is positive, with continued support from the local government.
 
 
We have therefore concluded that it is inappropriate to record an impairment provision against acquired mineral rights at March 31, 2006.

As a result of the forgoing, this Amended Quarterly Report on Form 10-QSB/A is being filed to revise the interim financial statements for the period ended March 31, 2006 to reflect the acquired mineral rights on the balance sheet at their historical acquisition costs without any impairment provision.
 




Our unaudited consolidated financial statements included in this Amended Form 10-QSB/A are as follows:
 
 
 
 
 
F-3
 
 
F-4
 
 
F-45
 

These unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-QSB. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2006 are not necessarily indicative of the results that can be expected for the full year.


COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2006
(UNAUDITED - AS RESTATED)

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS
(AS RESTATED - SEE NOTE 2)
 
As at
(expressed in U.S. dollars)
March 31,
2006
(unaudited;
as restated
- See Note 2)
  
December 31,
2005
       
ASSETS      
       
Current
      
       
Cash and cash equivalents
$
643,423
  
$
1,565,640
Accounts receivable
 
-
    
-
Prepaid expenses
  
39,661
    
22,554
Exploration advances
  
211,861
    
158,202
   
894,945
    
1,746,396
           
Mineral and exploration properties and rights (Notes 2 & 3)
  
2,724,400
    
-
Property and equipment, net of accumulated amortization
of $8,358 (December 31, 2005: $335) (Note 4)
  
62,782
    
1,445
Website Development Cost, net of accumulated amortization
of $6,500 (December 31, 2005: $3,500)
 
29,500
    
17,500
           
 
$
3,711,627
  
$
1,765,341
           
LIABILITIES
           
Current
          
           
Accounts payable and accrued liabilities
$
150,089
  
$
83,004
Due to related parties
  
335,516
    
-
   
485,605
    
83,004
           
Non-Current
          
Future income tax liability (Notes 2 & 3)
  
570,000
    
-
   
1,055,605
    
83,004
STOCKHOLDERS’ EQUITY
          
 
Common stock (Note 5)
          
Authorized: 50,000,000 shares, $0.00001 par value
          
Issued and outstanding: 33,715,183 shares
          
(December 31, 2005: 29,589,100 shares)
  
337
    
296
           
Additional paid-in capital (Note 5)
  
5,539,887
    
1,465,354
           
Share subscriptions (Note 5)
  
-
    
1,767,650
           
Accumulated deficit (Note 2)
  
(2,884,202)
 
  
(1,550,963)
   
2,656,022
    
1,682,337
 
$
3,711,627
  
$
1,765,341

See accompanying Notes to Consolidated Financial Statements
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(AS RESTATED - SEE NOTE 2)
 
 
Three
Months
Ended
March 31, 2006
(unaudited;
as restated
-See Note 2
  
Three
Months
Ended
March 31, 2005
(unaudited)
  
Cumulative
from
inception
(March 25, 2003)
through
March 31, 2006
(unaudited;
as restated
-See Note 2
REVENUES
          
Interest income
$
3,552
  
$
-
  
$
3,552
                 
OPERATING EXPENSES
                
                 
General and administrative
  
337,784
    
23,187
    
749,975
Amortization - equipment
  
2,444
    
-
    
2,779
Amortization - website development cost
  
3,000
    
-
    
6,500
Mineral property rights exploration (Note 2)
  
507,074
    
-
    
1,651,838
Stock based compensation
  
486,489
          
486,489
                 
Total operating expenses
  
1,336,791
    
23,187
    
2,897,581
                 
Loss from continuing operations
  
(1,333,239)
 
  
(23,187)
 
  
(2,894,029)
                 
Income from discontinued operations
  
-
    
763
    
9,827
                 
NET LOSS FOR THE PERIOD
$
(1,333,239)
 
$
(22,424)
 
$
(2,884,202)
                 
LOSS PER SHARE - BASIC AND DILUTED
                
                 
Loss from continuing operations
$
(0.04)
 
$
(0.00)
 
    
Income from discontinued operations
  
0.00
    
0.00
     
                 
NET LOSS
$
(0.04)
 
$
(0.00)
 
    
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUSTANDING - BASIC AND DILUTED
  
32,395,377
    
24,000,000
      

See accompanying Notes to Consolidated Financial Statements
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

(AS RESTATED - SEE NOTE 2)
 
From Inception (March 25, 2003) to March 31, 2006:
(unaudited)
 
 
Common
Shares
  
 
 
Stock
Amount
  
 
 
Additional
Paid-in
Capital
  
Share Subscriptions received
  
Deficit
Accumulated During
The
Exploration
Stage
  
 
Total
Stockholders’ Equity
(Deficiency)
       $  
$
    $  
$
  
$
Issue of common stock for cash at
$0.000125 per share on March 25, 2003
  
8
    
-
    
1
    
-
    
-
    
1
Issue of common stock for cash at $0.000125
per share on May 5, 2003
  
16,000,000
    
160
    
1,840
    
-
    
-
    
2,000
Repurchase of common stock for cash at $0.000125
per share on October 31, 2003
  
(8,000,008)
 
  
(80)
 
  
(920)
 
  
-
    
-
    
(1,000)
Donated Capital
 
-
    
-
    
35,200
    
-
    
-
    
35,200
Net loss for the period
 
-
    
-
    
-
    
-
    
(36,399)
 
  
(36,399)
Balance, December 31, 2003
  
8,000,000
    
80
    
36,121
    
-
    
(36,399)
 
  
(198)
Issue of common stock for cash at $0.00625
per share on December 20, 2004
  
16,000,000
    
160
    
99,840
    
-
    
-
    
100,000
Donated Capital
 
-
    
-
    
19,200
    
-
    
-
    
19,200
Net loss for the year
  
-
    
-
    
-
    
-
    
(23,094)
 
  
(23,094)
Balance, December 31, 2004
  
24,000,000
    
240
    
155,161
    
-
    
(59,493)
 
  
95,908
Issue of common stock for Mineral concessions at $0.25
per share on September 22, 2005
  
1,000,000
    
10
    
249,990
    
-
    
-
    
250,000
Issue of 4,221,000 common stocks for cash at $0.25 per share and 368,100 common stocks for finder fee on
October 14, 2005
  
4,589,100
    
46
    
1,055,204
    
-
    
-
    
1,055,250
Forgiveness of advances from a related party
              
4,999
    
-
    
-
    
4,999
Share Subscriptions Received
  
-
    
-
    
-
    
1,767,650
    
-
    
1,767,650
Net loss for the year
  
-
    
-
    
-
    
-
    
(1,491,470)
 
  
(1,491,470)
Balance, December 31, 2005
  
29,589,100
  
$
296
  
$
1,465,354
  
$
1,767,650
  
$
(1,550,963)
 
$
1,682,337

See accompanying Notes to Consolidated Financial Statements
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

(AS RESTATED - SEE NOTE 2)
 
From Inception (March 25, 2003) to March 31, 2006 (cont’):
 
 
 
 
 
(unaudited)
  CommonShares    StockAmount  
Additional
Paid-in
Capital
  
Share
Subscriptions
Received
  
Deficit
Accumulated During
The
Exploration
Stage
  
Total
Stockholders’
Equity
(Deficiency)
                                   
Balance, December 31, 2005
  
29,589,100
    
296
    
1,465,354
    
1,767,650
    
(1,550,963)
 
  
1,682,337
                                   
Issue of common stock for cash at $0.60 per share on
January 24, 2006, net of $187,565 finders fee
  
3,126,083
    
31
    
1,688,054
    
(1,767,650)
 
  
-
    
(79,565)
                                   
Issue of common stock for Mineral concessions at
$1.90 per share on February 14, 2006
  
1,000,000
    
10
    
1,899,990
    
-
    
-
    
1,900,000
                                   
Stock based compensaton
  
-
    
-
    
486,489
    
-
    
-
    
486,489
                                   
Net loss for the period
  
-
    
-
    
-
    
-
    
(1,333,239)
 
  
(1,333,239)
                                   
Balance, March 31, 2006 (unaudited)
  
33,715,183
    
337
    
5,539,887
    
-
    
(2,884,202)
 
  
2,656,022

See accompanying Notes to Consolidated Financial Statements
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)
(AS RESTATED - SEE NOTE 2)
 
 
Three
Months
March 31, 2006
(unaudited;
as restated
-See Note 2
  
Three
Months
March 31, 2005
(unaudited)
  
Cumulative
from
inception
(March 25, 2003)
through
March 31, 2006
(unaudited;
as restated
-See Note 2
OPERATING ACTIVITIES:
          
Loss from operations
$
(1,333,239)
 
$
(22,424)
 
$
(2,884,202)
Items not requiring cash outlay:
                
- Consulting fees
              
52,400
- Website design and software development
  
-
    
-
    
2,000
- Amortization of equipment
  
2,444
    
-
    
2,779
- Amortization of website development cost
  
3,000
    
-
    
6,500
- Mineral property exploration
  
-
    
-
    
250,000
- Stock based compensation
  
486,489
    
-
    
486,489
Changes in non-cash working capital items:
                
- Accounts receivable
  
-
    
910
    
-
- Prepaid expenses
 
14,149
    
(40,000)
 
  
(8,405)
- Exploration expenditure advances
  
(53,659)
 
  
-
    
(211,861)
- Accounts payable and accrued liabilities
  
10,586
    
743
    
93,590
- Due to/from related parties
  
335,516
    
-
    
340,515
                 
Net cash used in operating activities
  
(534,714)
 
  
(60,771)
 
  
(1,870,195)
                 
FINANCING ACTIVITIES:
                
Issuance of common stock, net of finder fees
  
(79,565)
 
  
-
    
1,076,686
Proceeds of share subscription received
  
-
    
-
    
1,767,650
                 
Net cash provided by (used in) financing activities
  
(79,565)
 
  
-
    
2,844,336
                 
INVESTING ACTIVITIES:
                
Purchase of mineral exploration rights
  
(254,400)
 
  
-
    
(254,400)
Purchase of equipment
  
(38,538)
 
  
-
    
(40,318)
Purchase of website development cost
  
(15,000)
 
  
(15,000)
 
  
(36,000)
                 
Net cash used in investing activities
  
(307,938)
 
  
(15,000)
 
  
(330,718)
                 
INCREASE (DECREASE) IN CASH
  
(922,217)
 
  
(75,771)
 
  
643,423
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
  
1,565,640
    
104,685
    
-
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
643,423
  
$
28,914
  
$
643,423
                 
SUPPLEMENTAL CASH FLOWS INFORMATION
                
Interest expense
  
-
    
-
    
-
Taxes
  
-
    
-
    
-
 
See accompanying Notes to Consolidated Financial Statements
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)
MARCH 31, 2006

NOTE 1 - GOING CONCERN AND NATURE OF OPERATIONS
 
The Company was incorporated under the laws of the State of Nevada, U.S.A., on March 25, 2003. The Company changed its name from Secure Automated Enterprises, Inc. to Colombia Goldfields Ltd. on May 13, 2005. The Company changed its operational focus from providing electronic filings services for public access document submissions to the U.S. Securities Exchange Commission, to acquisition of, exploration for and development of mineral properties. The Company is currently in the exploration stage.
 
In the first quarter of 2005, the Company discontinued its electronic filings services operations and its income and expense relating to its operations have been classified as discontinued operations in the Statements of Operations for all comparative periods.
 
The Company has incurred a net loss for the period from inception on March 23, 2003 to March 31, 2006 and has no source of revenue. The Company’s future is dependent upon its ability to obtain financing and upon future acquisition, exploration and development of profitable operations from its mineral properties. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. Management intends to continue relying upon the issuance of securities to finance the development of its business. There can be no assurance that it will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should the Company cease to continue as a going concern.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006.

The consolidated balance sheet at December 31, 2005 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-KSB for the year ended December 31, 2005.

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2006

Restatement of Previously Issued Financial Statements

As outlined in Note 3, during fiscal 2006 the Company acquired several Mineral rights in connection with the Marmato and Caramanta projects. On November 20, 2006, the Company determined that under GAAP, previously expensed amounts related to fiscal 2006 mineral property acquisitions were required to be recognized on the Company’s consolidated balance sheet. The Company previously accounted for the acquisition of mineral rights in fiscal 2006 by capitalizing these mineral rights and then subsequently recording an impairment charge against amounts capitalized. Upon further review of the authoritative guidance and discussions with its auditors, the Company has concluded that FAS 144 was misapplied in the first and second quarters of fiscal 2006. As of the dates of acquisition of the Company’s mineral rights, no impairment provision is permissible under GAAP, and furthermore there have been no changes in circumstances suggesting an impairment charge is warranted.

In reaching the conclusion that there have been no changes in circumstances subsequent to the acquisition dates of the Company’s mineral rights, the Company considered the following factors:

i)  
Subsequent to the acquisition dates of the Company’s mineral rights, the Company has continued to consolidate the various Marmato concessions during fiscal 2006, and currently has purchased 70 mining properties, awaiting payment once the documentation and registration is complete;
ii)  
The Company has completed an independent technical review of available data indicating historical resources of approximately 5.3 million ounces of gold;
iii)  
The Company has commenced channel sampling of the purchased concessions, supporting the conclusions of the technical review;
iv)  
The Company has commenced an exploration program on the “el Salto” area of the Caramanta project, with encouraging preliminary results; and
v)  
Progress on the movement of the Town of Marmato is positive, with continued support from the local government.

The Company has therefore concluded that it was inappropriate to record an impairment provision against acquired mineral rights at March 31, 2006 and June 30, 2006. The Company has restated its financial statements for the first and second quarters of fiscal 2006 to i) recognize acquired mineral and exploration properties and rights and their associated future income tax liabilities in the consolidated balance sheets, ii) reduce the Company’s’ previously recorded net losses in the consolidated statements of operations by the amount of previously recognized impairment charges, and iii) reclassify cash flows associated with mineral and explorations properties and rights acquisitions as investing activities in the consolidated statements of cash flows.

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2006
 
The impacts of the restatement adjustments on the Company’s historical financial statements are as follows:

i)  
Balance Sheet:

 
March 31, 2006
Mineral and exploration properties and rights as previously reported
$
-
Adjustments
  
2,724,400
Mineral and exploration properties and rights, as restated
$
2,724,400
Future income tax liability, as previously reported
$
-
Adjustments
  
(570,000)
Future income tax liability as restated
  
(570,000)
Accumulated Deficit, as previously reported
$
(5,038,602)
Adjustments
  
2,154,400
Accumulated Deficit,as restated
$
(2,884,202)
 
ii)  
Statements of Operations

 
Three Months
Ended
March 31, 2006
  
Cumulative
From
Inception
(March 25,
2003 through
March 31, 2006)
Net loss, as previously reported
$
(3,487,639)
 
$
(5,038,602)
Adjustments
  
2,154,400
    
2,154,400
Net loss, as restated
$
(1,333,239)
 
$
(2,884,202)
Loss per share - basic and diluted, as previously reported
$
(0.11)
 
    
Adjustments
  
0.07
      
Los per share - basic and diluted, as restated
$
(0.04)
 
    
 
F-8
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2006
 
iii) Statements of Cash Flows:
 
Three months Ended
March 31, 2006
  
Cumulative from
Inception (March
25, 2003 through
March 31, 2006
Net Cash used in operating activities, as previously reported
$
(789,114)
 
$
(2,124,595)
Adjustments
  
254,400
    
254,400
Net Cash used in operating activities, as restated
$
(534,714)
 
$
(1,870,195)
Net cash used in investing activities, as previously reported
$
(53,538)
 
$
(76,318)
Adjustments
$
(254,400)
 
$
(254,400)
Net cash used in investing activities, as restated 
$
(307,938)
 
$
(330,718)
 
Consolidation

These consolidated financial statements include the accounts of (i) Colombia Goldfields Ltd., a Neveda corporation (ii) 25% variable interest entity - RNC (Colombia) Limited, a Belize corporation and its 94.99% owned subsidiary - Compania Minera De Caldas, S.A., a Colombia corporation. All significant inter-company transactions and balances have been eliminated upon consolidation.

In accordance with Interpretation No. 46R, Consolidation of Variable Interest Entities (“FIN 46R”), variable interest entities (VIEs) are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

In connection with the adoption of FIN 46R, the Company concluded that RNC (Colombia) Limited and its 94.99% owned subsidiary, Compania Minera De Caldas, S.A., are VIEs as that the company is the principal financial support and primary beneficiary. Under FIN 46R transition rules, the financial statements of RNC (Colombia) Limited and Compania Minera De Caldas, S.A. are then consolidated into the Company’s consolidated financial statements.  

NOTE 3 - MINERAL PROPERTIES AND EXPLORATION RIGHTS

The Company has determined that the Caramanta and Marmato properties constitute one reportable segment, due to the nature of the Company’s business and the geographic location of these properties.

Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising for the frequently ambiguous conveyance history characteristic of many mining properties. Currently, the Company is in the process of investigating the title of mineral concessions for which it holds the options to acquire, the Company cannot give any assurance that title to such properties will not be challenged or impugned and cannot be certain that will have valid title to its mining properties. The Company relies on title opinions by legal counsel who base such opinions on the laws of countries in which the Company operates.
 
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(i) Caramanta Project

On September 22, 2005, the Company entered into an Assignment Agreement with Investcol Limited (Investcol) where Investcol assigned, transferred, and conveyed to the Company all of its rights under a contract for Purchase Option of Mining Concessions (“Original Option Contract”) entered into with Cia Servicios Y Logisticos ltda. As the result of the Assignment Agreement, the Company acquired an option to purchase certain mining and mineral rights on property known as Concession 6602, 1343 and 6329 located in Carmanta Municipality, Antioquia Department, Medellin, Colombia for $10,000, on condition that $2,990,000 is invested in exploratory work on the property over a three year period. The Company issued 1,000,000 common stock to Investcol at a deemed fair market value $ 0.25 per share for total consideration of $ 250,000.

Pursuant to the Assignment Agreement, the Company is committed to fund the $2,990,000 exploratory work as follows:

a)  
$500,000 (advanced) upon the closing of the Assignment Agreement
b)  
$750,000 during the 12 month period commencing June 25, 2005; and on the earlier of June, 2006 or commencement of the second exploration phase, one million restricted shares of the Company’s common shares
c)  
$1,740,000 during the 12-month period commencing June 25, 2007.

In addition, the Company agreed to pay $7,500 per month as an office fee through July 31, 2006 to Investcol for the management of exploration activities.
 
On February 16, 2006 the Company entered into a Letter of Intent (“LOI”) with Investcol to acquire Investcol’s rights in a Contract for Purchase (“Purchase Contract”) entered into with Cia Servicios y Logisticos Ltda. The LOI outlined a proposed transaction where the Company intended to acquire Investcol’s rights in certain mining contracts to exclusively engage in mining activities on concessions 6993, 7039, 6821 and 6770 (the “Contracts”) and options that Investcol holds to acquire the exclusive rights to engage in mining activities on concessions HET 31, 32, 26, 27 and HETG 01 (the “Options”) all located within an area in Colombia referred to as the Caramanta location.

The LOI was non-binding and subject to final negotiation and the execution of a definitive agreement. On April 10, 2006, the Company entered into a definitive agreement with Investcol finalizing this transaction (“Assignment Agreement”). In consideration for this Assignment Agreement, the Company paid Investcol total consideration in the amount of $350,000 and issued 1,000,000 restricted shares of common stock. Under the terms of the Assignment Agreement, Investcol agreed to pay the exercise price of $150,000 on the Options whose titles will remain in the name of Cia Servicios until the final exploration commitments have been made. The final option payments were made prior to July 30, 2006.

The Company has no additional obligations under the Assignment Agreement. Provided the Company satisfies its exploration work obligations on concessions 6602, 1343 and 6329 as described above or completes the same exploratory work on any of these Contracts or Options, these Options will become exercisable. If not exercised, these Options will terminate on November 10, 2008.

(ii) Marmato Project

On January 12, 2006, the Company entered into a Stock Purchase Agreement with Investcol Limited ("Investcol") and RNC (Colombia) Limited (the "Agreement"), whereby the Company would (i) acquire twenty-five percent (25%) of the issued and outstanding stock of RNC (Colombia) Limited, a Belize corporation ("RNC") and (ii) hold an option to acquire the remaining seventy five percent (75%) of RNC's issued and outstanding stock over a period of time. RNC is a subsidiary of Investcol, the beneficial holder of 94.99% of the issued and outstanding stock of Compania Minera De Caldas, S.A. ("Caldas"), a Colombia corporation that (i) owns certain mining rights, (ii) has options to acquire mining rights and (iii) has exclusive rights to evaluate certain property, all located in the Zona Alta portion of the Marmato project in Colombia. 

Pursuant to the Stock Purchase Agreement, the Company has the option to:

a.  
acquire 25% of the total outstanding shares of RNC by the issuance of 1,000,000 common shares of the Company to Investcol and the advance to RNC of a $1,200,000 non-interest bearing loan. (The Company acquired 25% of ownership on February 14, 2006)

b.  
to acquire an additional 25% of RNC (total 50% of RNC) by issuance of 2,000,000 shares of the Company to Investcol and the advance of an additional $4,000,000 non-interest bearing loan to RNC in two instalments of $1,000,000 and $3,000,000 on or before March 15, 2006 and April 30, 2006, respectively. (On March 10, 2006, the Company entered an extension agreement with Investcol to extend the terms to April, 30, 2006, and completed the acquisition subsequent to March 31, 2006

c.  
to acquire an additional 25% of RNC (total 75% of RNC) by the issuance of 4,000,000 common shares of the Company to Investcol and an additional $15,000,000 non-interest bearing loan to RNC on or before October 30, 2006.

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
d.  
have the option until May 1, 2009 to acquire the final 25% of RNC (total 100% of RNC) for a price equal to the 25% of the value of Caldas determined by a bankable feasibility study prepared by a certified mineral property evaluator, or other acceptable third party. Payment of the purchase price can be made by the Company in either cash or the Company’s common shares (which will be valued at 90% of the average closing provide of the Company’s common shares)

On February 14, 2006, the Company completed the acquisition of 25% of RNC by the issuance of 1,000,000 common stock of the Company to Investcol and the advancement of $1,200,000 by way of a non-interest bearing loan to RNC.

On May 1, 2006, the Company completed the acquisition of an additional 25% of RNC by the issuance to Investcol Limited of 2,000,000 common stock and the advancement of $4,000,000 by way of a non-interest bearing demand loan to RNC.

Pursuant to the above noted Stock Purchase Agreement and as a consequence of the subsequent acquisition of the additional 25% of RNC, the Company became the principal financial support and primary beneficiary for the operations of RNC and its subsidiary Caldas. In accordance with Interpretation No. 46R, Consolidation of Variable Interest Entities (“FIN 46R”), the Company concluded that RNC and Caldas are VIEs and that the financial statements of RNC and Caldas should be consolidated into the Company’s consolidated financial statements.  

Mineral Property Rights Acquisition and Exploration Expenditures

The Company’s mineral property rights acquisition and exploration activities consist of:

I)  
The acquisition of mineral concessions;
II)  
The acquisition of mineral and exploration rights from existing titleholders; and
III)  
The exploration of acquired mineral properties and related activities.
 
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
The Company capitalizes all expenditures that result in the acquisition and retention of resource properties or an interest therein. The recoverability of the carrying values of the properties is dependent on the ability of the Company to obtain the necessary financing and permits to continue exploration, the establishment of economically recordable reserves, future profitable production and/or proceeds from the disposition thereof. The following table summarizes the Company’s historical expenditures with respect to the aforementioned projects:

 
Three Months
Ended
March 31, 2006
  
Three Months
Ended
March 31, 2005
  
Cumulative
From
Inception
(March 31,
2003
Through
March 31, 2006
 
 
          
I)
Acqusition of mineral concessions
$
1,900,000
  
$
-
  
$
1,900,000
 
 
                
II)
Acquistion of mineral and exploration properties and rights
  
254,400
    
-
    
254,400
     
2,154,400
    
-
    
2,154,400
III)
Exploration of acquired mineral properties
  
507,074
    
-
    
1,651,838
 
 
                
 
Total mineral property rights acquisition and exploration expenditures
$
2,661,474
  
$
-
  
$
3,806,238

Capitalized Mineral and Exploration Properties and Rights

Acquired mineral and exploration properties and exploration rights of $2,154,400 have been recorded at amounts necessary to reflect temporary differences associated with the differences between their accounting and tax bases. As a result, these properties are recorded in the consolidated balance sheet at March 31, 2006 at $2,724,400 with a corresponding future tax liability of $570,000.

NOTE 4 - PROPERTY AND EQUIPMENT

As at March 31, 2006
Cost
  
Accumulated
Amortization
  
Net book
Value
Furniture and office equipment
$
61,848
  
$
(6,035)
 
$
55,813
Vehicle
  
9,292
    
(2,323)
 
  
6,969
Total
$
71,140
  
$
(8,358)
 
$
62,782
 
              
 
As at December 31, 2005
  
Cost
    
Accumulated
Amortization
    
Net book
Value
Office equipment
$
1,780
  
$
(335)
 
$
1,445
 
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - STOCKHOLDERS’ EQUITY

Common Stock

Effective March 7, 2005, the Company completed eight shares for one share stock split. The Company’s share transactions disclosed in these financial statements have been retroactively restated to reflect the above stock split.

During the year ended December 31, 2004 and 2005, the Company:

a.  
completed its initial public offering and issued 16,000,000 common stock at a price of $0.00625 per share for total proceeds of $100,000.

b.  
issued 1,000,000 restricted common shares valued at an estimated market price of $0.25 per share, pursuant to an option to acquire a 100% interest in certain mining and mineral rights on three gold properties known as the Caramanta concessions in the Marmato Mountain mining district, Colombia.

c.  
completed a private placement and issued 4,221,000 units at a price of $0.25 per share for total proceeds of $1,055,250. Each unit consisted of one common share and one non-transferable warrant, entitling the holder to acquire one additional common share at a price of $ 0.50, exercisable on or before October 14, 2006. The Company also issued 368,100 shares as a finders’ fee relating to this private offering.

On January 24, 2006, the Company issued 3,126,083 common shares at $0.60 per share for total proceeds of $1,875,650. The Company paid finders fees in the amount of $187,565.

On February 14, 2006, the Company issued 1,000,000 common share at fair value of $1.90 per
share to Investcol in connection of acquisition of 25% ownership of RNC (Colombia) Limited.

Warrants

As at March 31, 2006, the following warrants were issued and outstanding:
 
4,589,100
$ 0.50 per share
Expiry - October 14, 2006

Stock Options

During the period ended March 31, 2006, the Company adopted the 2006 Stock Incentive Plan, which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, performance shares and performance units, and stock awards to officers, directors or employees of, as well as advisers and consultants to, the Company.

Under the 2006 Stock Incentive Plan, the Company has reserved 3,500,000 shares of common stock for the granting of options and rights. All stock options and rights are to vest over a period determined by the Board of Directors and expire not more than ten years from the date of granted.

Pursuant to the Plan, the Company granted 1,750,000, 500,000 and 100,000 stock options to employees, directors and consultants of the Company with exercise prices of $0.75, $1.65 and $1.90 per share, respectively, during the three month period ending March 31, 2006. These stock options vest at a rate of 25% every six months over a period of two years, and expire over a life of 10 years. For the period ended March 31, 2006, the Company recorded a total of $486,489 for stock based compensation expenses.

COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
A summary of the stock options granted and exercised is as follows.

 
Shares
  
Weighted
Average
Exercise
Price
Options outstanding at December 31, 2005
$
-
  
$
-
Granted
 
2,350,000
    
0.99
Options outstanding at March 31, 2006
$
2,350,000
  
$
0.99

The fair value of each option granted has been estimated as of the date of the grant using the Black-Scholes option pricing model with the following assumptions: risk-interest rate of 4.45%, dividend yield 0%, volatility of 63.72% and expected lives of approximately 10 years. A summary of weighted average fair value of stock options granted during the period end March 31, 2006 is as follows:

 
Weighted
Average
Fair
Price
  
Weighted
Average
Fair
Value
Exercise price below market price at grant date:
$
0.81
  
$
1.11
Exercise price is equal market price at granted date:
$
1.65
  
$
1.24

A summary of stock options outstanding and exercisable is as follows:

Options outstanding
 
 
Range of
Exercise Prices
 
 
Number
Outstanding
Weighted
Average
Remaining
Contractual Life (yr)
Weighted
Average
Exercise
Price
$0.01 - $1.00
1,750,000
9.77
$0.75
$1.01 - $2.00
600,000
9.97
$1.69
 
2,350,000
9.82
$0.99

No options were exercisable as at March 31, 2006.

NOTE 6 - RELATED PARTY TRANSACTIONS

During the period ended March 31, 2006 the Company:

a.  
paid $85,400 (2005: $nil) for management / consulting fees to directors, senior officer and shareholders of the Company.

b.  
paid $22,500 (2005: $nil) for administration of exploration activities to a shareholder of the Company.

c.  
paid $5,128 (2005: $nil) for office rent to a company related to a director of the Company.

Included in accounts payable and accrued liabilities as at March 31, 2006 are is $36,289 (2005: $nil) payable to directors, senior officer and shareholder of the Company.

Amounts due to a related party are non-secured, non-interest bearing and have no stated terms of repayment.
F-14
COLOMBIA GOLDFIELDS LTD.
(An Exploration Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 7 - COMMITMENTS

See Note 3.

NOTE 8 - SUBSEQUENT EVENTS

(i)  
On April 26, 2006, the Company completed a private equity offering of 6,500,666 Units at $1.50 per Unit to a total of 26 investors for a total proceeds of $9,751,000. Each Unit consists of one (1) share of common stock, and one (1) Warrant to purchase one (1) share of common stock, exercisable at $2.50 for twenty-four (24) months from the closing date of the offering.

(ii)  
On February 16, 2006, the Company entered into a Letter of Intent (LOI) with Investcol Limited (Investcol) to acquire Investcol’s rights in certain properties. The non-binding LOI outlines a proposed transaction where the Company intends to acquire Investcol’s rights in certain mining contracts to exclusively engage in mining activities on Concessions 6993, 7039, 6821 and 6770 (the “Contracts”) and options that Investcol holds to acquired the exclusive rights to engage in mining activities on Concessions HET-31, 32, 26, 27 and HETG-01 (the “Options”) all located within an area in Colombia referred to as the Caramanta location. Under the terms of the proposed transaction, the Company would pay to Investcol total consideration in the amount of 1,000,000 shares of restricted stock and USD$350,000. Furthermore, Investcol would be required to pay the exercise price of $150,000 on the Options and facilitate the transfer of the mining contracts underlying the Options into the Company’s name.

On April 10, 2006, the Company closed and completed the above noted LOI by issuance of 1,000,000 common stocks of the Company and cash payment of $350,000.
 
(iii)  
See Note 3(ii).

NOTE 9 - RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to the current period presentation.
 
 

Forward-Looking Statements
 
Historical results and trends should not be taken as indicative of future operations. Management’s statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ materially from those included in the forward-looking statements. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “prospects,” or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

We were incorporated in the state of Nevada on March 25, 2003 under the name Secure Automated Filing Enterprises Inc. Since our incorporation, our business was focused on servicing corporations that are required by the federal securities laws to publicly file various reports with the Securities and Exchange Commission (‘SEC”).

On May 13, 2005, we changed our name to Colombia Goldfields Ltd. Our current focus is on the acquisition and development of our interests in mining properties located in the Marmato Mountain Gold District located in Colombia. The disclosure that follows is a discussion of each of the properties that we have an interest in. We are an exploration stage company and there is no assurance that commercially exploitable reserves of gold exists on any of our property interests. In the event that commercially exploitable reserves of gold exist on any of our property interests, we can not guarantee that we will make a profit. If we can not acquire or locate gold deposits, or if it is not economical to recover the gold deposits, our business and operations will be materially adversely affected.

Disputes over land ownership are common, especially in the context of resource developments. Identifying all the affected landowners or related stakeholders, and structuring compensation arrangements that are both fair and acceptable to all of them, is often extremely difficult. We believe that the satisfactory resolution of any local landowner or related stakeholder concerns is essential to the eventual development and operation of modern gold mines in the Marmato and Caramanta projects. The failure to adequately address any such landowner or related stakeholder issues will disrupt our plans. Although we will spend considerable time, effort and expense in an attempt to resolve any landowner or related stakeholder issues associated with our planned operations, no assurance can be given that disruptions arising out of landowner or related stakeholder dissatisfaction will not occur.


Marmato Mountain Development Project

Acquisition of an interest in RNC (Colombia) Limited

On January 12, 2006, we entered into a Stock Purchase Agreement with Investcol Limited ("Investcol") and RNC (Colombia) Limited (the "Agreement"), whereby we would (i) acquire twenty-five percent (25%) of the issued and outstanding stock of RNC (Colombia) Limited, a Belize corporation ("RNC") and (ii) hold an option to acquire the remaining seventy five percent (75%) of RNC's issued and outstanding stock over a period of time. RNC is a subsidiary of Investcol that is the beneficial holder of 94.99% of the issued and outstanding stock of Compania Minera de Caldas S.A. ("Caldas"), a Colombia corporation that (i) owns certain mining rights, (ii) has options to acquire mining rights and (iii) has exclusive rights to evaluate certain property, all located in the Zona Alta portion of the Marmato project in Colombia. The closing of this transaction was subject to the completion of certain schedules to the Agreement to our satisfaction and compliance with certain closing conditions. These conditions were satisfied and the Agreement closed on February 14, 2006.

Under the terms of the Agreement, we acquired a 25% interest in RNC in consideration for the issuance of 1,000,000 shares of our common stock to Investcol and a $1,200,000 non-interest bearing demand loan which has been advanced in full.

On April 28, 2006, we exercised our option to acquire an additional 25% of RNC’s issued and outstanding common stock, resulting in us owning 50% of RNC’s issued and outstanding common stock. In consideration for the acquisition of the additional 25% interest in RNC, we issued Investcol 2,000,000 shares of our common stock and issued a $4,000,000 non-interest bearing demand loan to RNC.

We have the option to acquire an additional 25% interest in RNC, resulting in us owning 75% of RNC, in consideration for the issuance of 4,000,000 shares of our common stock to Investcol and a $15,000,000 non-interest bearing demand loan to RNC on or before October 30, 2006

We have the option to acquire the remaining 25% interest in RNC until May 1, 2009, resulting in us owning 100% of RNC, in consideration for a purchase price equal to 25% of the value of Caldas as determined by a full feasibility study. The purchase price is payable in either cash or shares of our common stock.

Our business plan is to complete the acquisition of the remaining 50% equity interest in RNC which will require additional funds of at least approximately $15,000,000 over the next 8 months, in addition to the issuance of 4 million additional shares of our common stock to purchase the additional 50% ownership of RNC. The final 25% interest can be purchased by us at a price to be determined by a full feasibility study we plan to complete. There can be no assurance that we will be successful in securing sufficient financing to continue to acquire more than our twenty-five percent equity interest in RNC. Caldas, RNC’s wholly-owned subsidiary, is continuing to increase its ownership interest in certain mining rights in the Zona Alta portion of the Marmato project with the goal of consolidating all of its mining interests into a single mining license.
 

Caramanta Exploration Projects

Concessions 6602, 1343, and 6329

On September 22, 2005, we entered into an Assignment Agreement with Investcol Limited (“Investcol”), a corporation organized and existing under the laws of Belize, where Investcol assigned, transferred, and conveyed to us all of its rights under a Contract for Purchase Option of Mining Concessions (“Original Option Contract”) entered into with CIA Servicios Y Logisticos Ltda., a corporation organized and existing under the laws of Colombia. As a result of the Assignment Agreement with Investcol, we acquired an option to purchase certain mining and mineral rights on property known as Concession 6602, 1343, and 6329 located in Caramanta Municipality, Antioquia Department, Medellin, Colombia (the “Property”) for $10,000, on condition that $2,990,000 is invested in exploratory work on the Property over a three year period. Our option on this property is currently unexercised. In consideration for this assignment, we issued to Investcol one million (1,000,000) restricted shares of our common stock. We also agreed to pay Investcol fees for the management, exploration, and development of the Property over the three year period to satisfy our exploratory work obligations under the Original Option Contract as follows:

(a)  
five hundred thousand dollars ($500,000), which has been paid in full;

(b)  
seven hundred fifty thousand dollars ($750,000) during the 12 month period of the Assignment Agreement commencing June 25, 2006, and, on the earlier of June 26, 2006 or commencement of the second exploration phase, one million restricted shares of our common stock; and

(c)  
one million seven hundred and forty thousand dollars ($1,740,000) during the 12 month period of the Assignment Agreement, commencing June 25, 2007.

In addition, we agreed to pay Investcol $7,500 per month as an office fee through July 31, 2006.

Concessions 6993, 7039, 6821, and 6770 and HET-31, 32, 26, 27, and HETG-01

On February 16, 2006, we entered into a Letter of Intent (“LOI”) with Investcol Limited, a corporation incorporated under the laws of Belize (“Investcol”), to acquire Investcol’s rights in a Contract for Purchase (“Purchase Contract”) entered into with CIA Servicios Y Logisticos Ltda. The LOI outlined a proposed transaction where we intended to acquire Investcol’s rights in certain mining contracts to exclusively engage in mining activities on Concessions 6993, 7039, 6821, and 6770 (the “Contracts”) and options that Investcol holds to acquire the exclusive rights to engage in mining activities on Concessions HET-31, 32, 26, 27, and HETG-01 (the “Options”) all located within an area in Colombia referred to as the Caramanta location.

The LOI was non-binding and subject to final negotiation and the execution of a definitive agreement. On April 10, 2006, we entered into a definitive agreement with Investcol finalizing this transaction (“Assignment Agreement”). In consideration for this Assignment Agreement, we paid Investcol total consideration in the amount of $350,000 and issued 1,000,000 restricted shares of our common stock. Under the terms of the Assignment Agreement, Investcol agreed to pay the exercise price of $150,000 on the Options and facilitate the transfer of the mining contracts underlying the Options into our name. The Options are currently unexercised and terminate on November 10, 2008.

We have no additional obligations under the Assignment Agreement. Provided we satisfy our exploratory work obligations on Concessions 6602, 1343, and 6329 as described above or complete the same exploratory work on any of these Contracts or Options, these Options will become exercisable.


Results of Operations for the period ending March 31, 2006

We generated interest income of $3,552 for the three months ended March 31, 2006, but did not generate any revenue during the reporting period from our current operations. Our current operations are focused on the acquisition and development of our interests in mining properties located in the Marmato Mountain Gold District located in Colombia. We do not anticipate earning any revenues until such time that commercial production commences on the mining properties for which we currently hold an interest or may acquire an interest in the future. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our property interests, or if such resources are discovered, that we will enter into commercial production. In addition, numerous regulatory, practical, legal and other obstacles could adversely affect our ability to achieve profitable operations.

During the three months ended March 31, 2005, we generated $763 from our prior business plan which was discontinued in the first quarter of 2005 to pursue the acquisition and development of mining properties located in the Marmato Mountain Gold District located in Colombia.

We incurred operating expenses of $1,336,791 for the three month period ended March 31, 2006, compared to operating costs and expenses of $23,187 for the same three month period in the prior year. The increase in our operating expenses for the three months ended March 31, 2006 when compared to the same reporting period in the prior year is attributable to expenditures relating to mineral property exploration operations under our new business plan and stock based compensation. Our expenses for the three months ended March 31, 2006 consisted primarily of mineral property rights exploration in the amount of 507,074, stock based compensation of $486,489, and general and administrative expenses in the amount of $337,784.

We incurred a net loss of $1,333,239 in the three months ended March 31, 2006, as compared to a net loss of $22,424 in the three months ended March 31, 2005.
 
Liquidity and Capital Resources

As of March 31, 2006, we had current assets of $894,945 and current liabilities of $485,605. As a result, we had working capital of $409,340.

Operating activities used $534,714 in cash for the three months ended March 31, 2006. Our net loss of $1,333,239 was the primary component of our negative operating cash flow. Investing activities during the three months ended March 31, 2006 consisted of website development costs of $15,000, the purchase of equipment in the amount of $38,538, and $254,400 cash used in the purchase of mineral exploration rights. Cash flows related to financing activities during the three months ended March 31, 2006 consisted of $79,565 related to the issuance of common stock, net of finders fee.

We primarily relied on equity capital to fund our operations during the three months ended March 31, 2006. During the reporting period, we sold securities to accredited investors. Subsequent to the reporting period on April 26, 2006, we completed a private equity offering of 6,500,666 Units at $1.50 per Unit to a total of 26 investors.  Each Unit consisted of one (1) share of common stock, par value $0.00001, and one (1) Warrant (the “ Warrant”) to purchase one (1) share of common stock, exercisable for twenty-four (24) months from the closing of the offering.  As a result, we issued a total of 6,500,666 shares of common stock and warrants to purchase 6,500,666 shares of our common stock in connection with this private equity offering. The exercise price for the Warrant is priced at $2.50.  The gross proceeds we received from this offering was $ 9,751,000
 

Based upon the current financial condition of the company, our management anticipates that the current cash on hand is insufficient for us to operate our business through the end of the fiscal year. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our expenditures or other cash requirements for the year ending December 31, 2006. We plan to seek additional financing in a private equity offering to secure funding for our operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired and we may lose our option to purchase certain mining and mineral rights. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

Going Concern  
 
We have incurred a net loss of $2,884,202 for the period from inception on March 23, 2003 to March 31, 2006 and have no current source of revenue. Our future is dependent upon our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. These conditions raise substantial doubt about our ability to continue as a going concern. Although there are no assurances that management’s plans will be realized, management believes that we will be able to continue operations in the future. Management intends to continue relying upon the issuance of securities to finance the development of our business. There can be no assurance that we will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The financial statements do not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern.
 

In connection with the restatement of our interim financial statements for the period ended March 31, 2006, we reevaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2006. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. James Martin Randall, and Chief Financial Officer, Mr. James Kopperson. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2006, our disclosure controls and procedures are ineffective. As a result of this restatement, the following remedial actions were undertaken:
  • Mr. James Kopperson, a CPA with extensive public company financial reporting experience, was appointed as CFO on December 1, 2006.
  • We have subscribed to a financial reporting service to ensure that we are current with U.S. GAAP accounting and disclosure pronouncements.
  • We have reviewed our quarterly reporting procedures with our independent auditors to ensure that all material accounting and disclosure issues are identified on a timely basis.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
 

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
 
 


We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.


The information set forth below relates to our issuances of securities without registration under the Securities Act during the reporting period which were not previously included in a Current Report on Form 8-K.

On January 6, 2006, we granted to our officers and directors options to purchase a total of 1,750,000 shares of our common stock at the exercise price of $0.75 per share with the options vesting completely over two years and exercisable for a period of ten years from the date of issuance. These shares and options were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. We did not engage in any general solicitation or advertising.

On March 17, 2006, we granted to a member of the board of directors options to purchase 500,000 shares of our common stock at the exercise price of $1.65 per share with the options vesting completely over two years and exercisable for a period of ten years from the date of issuance. These shares and options were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. We did not engage in any general solicitation or advertising.

On March 24, 2006, we granted to a consultant in connection with services to be rendered, options to purchase 100,000 shares of our common stock at the exercise price of $1.90 per share with the options vesting completely over two years and exercisable for a period of ten years from the date of issuance. These shares and options were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended. We did not engage in any general solicitation or advertising.


None


No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended March 31, 2006.


None.
 


 

SIGNATURES

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

 
Colombia Goldfields Ltd.
   
Date:
February 9, 2007
   
 
By:     /s/ J. Randall Martin       
            J. Randall Martin
Title:    Chief Executive Officer and Director