Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended May 31, 2010


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

For the transition period from to

Commission File No. 000-51718

COLORADO GOLDFIELDS INC.

(Exact name of small business issuer as specified in its charter)


Nevada		20-0716175

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10920 W. Alameda Avenue, Suite 207, Lakewood, Colorado, 80226, USA
(Address of principal executive offices)

303-984-5324

(Issuer’s telephone number, including area code)

N/A

(Former Name, Former Address if Changed Since last Report)

Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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


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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PROCEEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o

APPLICABLE ONLY TO CORPORATE ISSURERS:

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


Class		Shares Outstanding at July 8, 2010

Class A Common Stock, $0.001 Par Value		1,572,796,550
Class B Common Stock (Restricted), No Par Value		40,744,353

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Colorado Goldfields Inc. (An Exploration Stage Company)

Balance Sheets



	May 31,			August 31,
	2010			2009
	(unaudited)

ASSETS
Current Assets
Cash	$	8,082		$	559
Prepaid expenses and other		31,316			262,508

Total Current Assets		39,398			263,067


Non-Current Assets
Property, plant and equipment, net (Note 3)		1,669,528			1,699,620
Mining rights (Note 4)		314,514			—
Restricted cash (Note 3)		318,154			318,154
Other		13,520			13,520

Total Non-Current Assets		2,315,716			2,031,294

Total Assets	$	2,355,114		$	2,294,361


LIABILITIES & STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable (Note 9)	$	303,416		$	267,564
Accrued liabilities (Note 9)		104,045			105,610
Convertible debt, less unamortized discount of $48,630 (Note 7)		1,370			—
Derivative liability (Note 7)		50,000			—
Notes payable, including accrued interest — related parties (Note 5)		307,796			100,774
Promissory note payable, including accrued interest (Note 6)		124,321			143,009
Mortgage notes payable, including accrued interest (Note 3)		788,663			729,895

Total Current Liabilities		1,679,611			1,346,852


Non-Current Liabilities
Asset retirement obligation		602,025			571,500

Total Non-Current Liabilities		602,025			571,500

Total Liabilities		2,281,636			1,918,352


Contingencies and Commitments

Stockholders’ Equity (Note 8)
Class A common stock, 2,500,000,000 shares authorized, $0.001 par value; 1,411,684,867 and 535,398,127 shares issued and outstanding, respectively		1,353,424			477,137

Class B common stock, 500,000,000 shares authorized, no par value; 40,734,353 and 35,732,285 shares issued and outstanding		—			—

Additional paid in capital		10,568,612			9,250,058
Donated capital		29,250			29,250
Deficit accumulated during the exploration stage		(11,877,808	)		(9,380,436	)

Total Stockholders’ Equity		73,478			376,009

Total Liabilities and Stockholders’ Equity	$	2,355,114		$	2,294,361

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Operations

(Unaudited)


													Accumulated
													from February 11,
	For the Three			For the Three			For the Nine			For the Nine			2004 (Date of
	Months Ended			Months Ended			Months Ended			Months Ended			Inception) to
	May 31, 2010			May 31, 2009			May 31, 2010			May 31, 2009			May 31, 2010

Revenue	$	—		$	—		$	—		$	—		$	—


Operating expenses

Donated rent		—			—			—			—			9,750
Donated services		—			—			—			—			19,500
General and administrative		638,420			1,732,414			1,950,018			3,783,822			9,011,834
Mineral property and exploration costs		97,939			90,222			286,652			499,908			1,604,671
Professional fees		46,488			77,365			204,097			197,051			1,095,107


Total operating expenses		(782,847	)		(1,900,001	)		(2,440,767	)		(4,480,781	)		(11,740,862	)


Other income (expense)
Other income		13,715			—			25,715			2,500			80,504
Interest income		194			1,348			1,706			13,997			32,933
Interest expense		(28,671	)		(19,442	)		(84,026	)		(51,314	)		(250,383	)


Total other expense		(14,762	)		(18,094	)		(56,605	)		(34,817	)		(136,946	)


Net Loss	$	(797,609	)	$	(1,918,095	)	$	(2,497,372	)	$	(4,515,598	)	$	(11,877,808	)

Net Loss Per Common Share — Basic and Diluted		*		$	(0.01	)		*		$	(0.02	)

Weighted Average Number of Common Shares Outstanding		1,290,978,024			299,605,103			1,041,180,616			218,406,571


*		Amount is less than $(0.01) per share.

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Cash Flows

(Unaudited)


							Accumulated from
	For the Nine			For the Nine			February 11, 2004
	Months Ended			Months Ended			(Date of Inception) to
	May 31, 2010			May 31, 2009			May 31, 2010

Cash Flows Used in Operating Activities:

Net loss	$	(2,497,372	)	$	(4,515,598	)	$	(11,877,808	)


Adjustments to reconcile net loss to cash used in operating activities:
Donated services and rent		—			—			29,250
Amortization of debt discount		1,370						1,370
Depreciation and amortization		28,808			41,657			88,912
Impairment of mining rights		92,986			—			92,986
Stock issued for services		1,737,280			3,455,220			6,590,803
Stock-based compensation — options		—			4,094			899,303
Accrued interest on debt		76,487			14,088			177,533
Accretion expense on asset retirement obligation		30,525			36,660			102,025
Gain on sale of property, plant and equipment		(13,716	)		—			(52,955	)
Change in operating assets and liabilities:
Increase in restricted cash		—			—			(318,154	)
Decrease in prepaid expenses and other		5,009			69,000			—
Increase in accounts payable		312,096			388,058			1,087,719
(Decrease) increase in accrued liabilities		(1,650	)		28,429			103,960
Increase in other assets		—			—			(13,520	)

Net cash used in operating activities		(228,177	)		(478,392	)		(3,088,576	)


Cash Flows from Investing Activities:
Proceeds from sale of property, plant and equipment		15,000			—			159,500
Acquisition of property, plant and equipment		—			(4,120	)		(717,736	)

Net cash provided (used) in investing activities		15,000			(4,120	)		(558,236	)


Cash Flows from Financing Activities:
Advances received		—			—			405,733
Repayment of advances		—			—			(405,733	)
Proceeds from notes from related parties		195,700			352,000			581,452
Repayment of advances from related party		—			—			(10,052	)
Proceeds from note payable		—			—			100,000
Repayment of note payable		(25,000	)		—			(125,000	)
Proceeds from issuance of convertible debt		50,000						50,000
Net proceeds from issuance of common stock		—			—			3,058,494

Net cash provided by financing activities		220,700			352,000			3,654,894


Increase (decrease) in cash		7,523			(130,512	)		8,082

Cash — Beginning of Period		559			134,856			—


Cash — End of Period	$	8,082		$	4,344		$	8,082


Supplemental Disclosures:
Interest paid	$	—		$	15,783		$	71,586
Income taxes paid	$	—		$	—		$	—


Non-cash investing and financing activities:
Exchange of accounts payable for promissory note	$	—		$	135,294		$	135,294
Issuance of common stock to satisfy accounts payable	$	276,244		$	299,059		$	646,259
Issuance of common stock for prepaid expenses	$	62,000		$	34,000		$	319,499
Issuance of common stock for mining rights	$	407,500					$	407,500
Exchange of property, plant and equipment for accounts payable	$	—		$	—		$	2,750
Forgiveness of related party debt and accrued interest	$	—		$	105,171		$	288,361

Acquisition of land and building:
Cash paid	$	—		$	—		$	250,677
Mortgage note given to seller		—			—			650,000
Asset retirement obligation assumed		—			—			500,000

Assets acquired	$	—		$	—		$	1,400,677

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

Statements of Stockholders’ Equity (Deficit)

From February 11, 2004 (Date of Inception) to May 31, 2010


													Deficit
													Accumulated			Total
	Class A				Class B				Additional				During the			Stockholders’
	Common Stock				Common Stock				Paid in		Donated		Exploration			Equity
Number of Shares	Shares		Amount		Shares		Amount		Capital		Capital		Stage			(Deficit)

Balances — February 11, 2004 (Date of inception)		—	$	—		—	$	—	$	—	$	—	$	—		$	—
Issuance of common stock for cash		51,350,000		2,500		—		—		—		—		—			2,500
Donated services and rent		—		—		—		—		—		4,500		—			4,500
Net loss		—		—		—		—		—		—		(5,898	)		(5,898	)


Balances — August 31, 2004		51,350,000		2,500		—		—		—		4,500		(5,898	)		1,102
Issuance of common stock for cash		63,160,500		53,750		—		—		—		—		—			53,750
Donated services and rent		—		—		—		—		—		9,000		—			9,000
Net loss		—		—		—		—		—		—		(35,319	)		(35,319	)


Balances — August 31, 2005		114,510,500		56,250		—		—		—		13,500		(41,217	)		28,533
Donated services and rent		—		—		—		—		—		9,000		—			9,000
Net loss		—		—		—		—		—		—		(36,148	)		(36,148	)


Balances — August 31, 2006		114,510,500		56,250		—		—		—		22,500		(77,365	)		1,385
Donated services and rent		—		—		—		—		—		6,750		—			6,750
Net loss		—		—		—		—		—		—		(300,193	)		(300,193	)


Balances — August 31, 2007		114,510,500		56,250		—		—		—		29,250		(377,558	)		(292,058	)
Issuance of common stock for cash (net of offering costs of $282,231)		11,386,180		11,386		—		—		2,990,858		—		—			3,002,244
Shares issued for services		9,829,440		9,829		—		—		859,910		—		—			869,739
Stock-based compensation — options		—		—		—		—		895,209		—		—			895,209
Net loss		—		—		—		—		—		—		(3,721,021	)		(3,721,021	)


Balances — August 31, 2008		135,726,120		77,465		—		—		4,745,977		29,250		(4,098,579	)		754,113
Shares issued for services		370,282,860		370,283		—		—		3,871,000		—		—			4,241,283
Issuance of common stock to satisfy accounts payable		29,389,147		29,389		—		—		340,626		—		—			370,015
Stock-based compensation — options		—		—		—		—		4,094		—		—			4,094
Stock issued to beneficial owners of Class A Common Stock		—		—		35,732,285		—		—		—		—			—
Forgiveness of related party debt converted to equity		—		—		—		—		288,361		—		—			288,361
Net loss		—		—		—		—		—		—		(5,281,857	)		(5,281,857	)


Balances — August 31, 2009		535,398,127		477,137		35,732,285		—		9,250,058		29,250		(9,380,436	)		376,009
Shares issued for services (Note 8)		646,848,099		646,848		—		—		864,249		—		—			1,511,097
Issuance of common stock to satisfy accounts payable (Note 8)		104,438,641		104,439		—		—		171,805		—		—			276,244
Shares issued for mining rights (Note 4)		125,000,000		125,000						282,500							407,500
Stock issued to beneficial owners of Class A Common Stock		—		—		5,002,068		—		—		—		—			—
Net loss		—		—		—		—		—		—		(2,497,372	)		(2,497,372	)

Balances — May 31, 2010 (unaudited)		1,411,684,867	$	1,353,424		40,734,353	$	—	$	10,568,612	$	29,250	$	(11,877,808	)	$	73,478

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

Notes to the Unaudited Financial Statements

May 31, 2010

Organization, Nature of Business, Going Concern and Management’s Plans

Organization and Nature of Business:

The Company was incorporated in the State of Nevada on February 11, 2004. The Company is considered to be an Exploration Stage Company. The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether the properties it intends to acquire contain mineral reserves that are economically recoverable.

Going Concern and Management’s Plans:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception in February 2004, the Company has not generated revenue and has incurred net losses. The Company has a working capital deficit of $1,640,213 at May 31, 2010, incurred net losses of $797,609 and $2,497,372 for the three and nine months ended May 31, 2010, respectively, and has incurred a deficit accumulated during the exploration stage of $11,877,808 for the period from February 11, 2004 (inception) through May 31, 2010. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts or classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Management’s plans with regards to these conditions are described below.

The Company continues to explore sources of additional financing to satisfy its current operating requirements. In May 2010, the Company closed a one-year funding arrangement with an institutional investor (the “Investor”), in which the Investor may provide convertible debt financing in $25,000 tranches, up to $1 million. The Investor is under no obligation to fund any or all of the $1 million, and the timing of funding is solely at the discretion of the Investor. Proceeds from this financing are to pay the Company’s existing aged debt and for working capital requirements. Through May 31, 2010, the Company received $50,000 under this facility; $25,000 was used to pay off a promissory note payable (note 6). The Company currently faces a severe working capital shortage and is not currently generating any revenues. The Company will need to obtain additional capital to fund its operations, continue mining exploration activities and plans, and fulfill its obligations under its mineral property lease/option agreements and satisfy existing creditors.

Considering the difficult U.S. and global economic conditions, along with the substantial stability problems in the capital and credit markets, there is a significant possibility that the Company will be unable to obtain financing to continue its operations.

There is no assurance that required funds during the next twelve months or thereafter will be generated from operations, or that those funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on the Company’s existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

Summary of Significant Account Policies

Basis of Presentation

The accompanying interim financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements reflect all adjustments (consisting of only normal recurring entries) that, in the opinion of management, are necessary to present fairly the financial position of the Company at May 31, 2010 and the results of its operations and cash flows for the three and nine months ended May 31, 2010 and 2009, respectively. Operating results for the three and nine months ended May 31, 2010 are not necessarily indicative of the results that may be expected for the year ending August 31, 2010.

These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and footnotes thereto included in its Annual Report on Form 10-K for the year ended August 31, 2009.

Mining Rights

The Company has determined that its mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, the costs of mining rights are initially capitalized as tangible assets when purchased. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserves. For mining rights in which proven and probable reserves have not yet been established, the Company assesses the carrying value for impairment at the end of each reporting period. During the three and nine months ended May 31, 2010, the Company recorded impairment charges of $33,958 and $92,986, respectively.

Mining rights are stated at cost less accumulated amortization and any impairment losses. Mining rights for which probable reserves have been established will be amortized based on actual units of production over the estimated reserves of the mines. The Company’s rights to extract minerals are contractually limited by time. However, the Company has the ability to extend the leases (Note 4).

Basic and Diluted Net Loss Per Share

Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares of the Class A Common Stock outstanding (denominator) during the period. During the nine months ended May 31, 2010, the Company issued Class B Common Stock, which are not publicly traded shares, share dividends equally with Class A Common Stock, and are defined as participating securities under US Generally Accepted Accounting Principles; however, they have no contractual obligation to share in losses of the Company. The Company has therefore not included the Class B Common Stock in determining basic EPS. Diluted EPS gives effect to all potential dilutive common shares outstanding during the period using the treasury stock method (for options and warrants) and the two-class method (for Class B common stock). In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. For the three and nine months ended May 31, 2010 and 2009, the effect of the conversion of outstanding options and warrants and Class B common shares would have been anti-dilutive.

The following table presents information regarding the potential dilutive shares for the periods presented:


	Three and nine months ended		Three and nine months ended
	May 31, 2010		May 31, 2009
Class B Common Stock		40,734,353		28,307,598
Class B warrants		40,734,353		28,307,598
Convertible debt		44,642,857		—

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The Company uses a fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value.

Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 — assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

As of May 31, 2010, the Company had the following financial assets and liabilities which are measured at fair value:


	Level 1		Level 2		Level 3
Restricted cash (time deposits)		—	$	318,154		—
Derivative liability		—	$	50,000		—

The fair values of financial instruments, which include cash, accounts payable, notes payable, and convertible debt were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The fair value of amounts due to related parties are not practicable to estimate, due to the related party nature of the underlying transactions. The fair value of the letter of credit issued in conjunction with the reclamation bond (Note 4) approximates the fees paid to obtain it.

Property, Plant and Equipment

On June 29, 2007, the Company acquired the Pride of the West Mill (the “Mill”) located in Howardsville, Colorado for consideration of $900,677 plus the assumption of an estimated asset retirement obligation of $500,000 for a total cost of $1,400,677. The Company paid the seller cash of $250,677 and the remaining $650,000 was paid through a mortgage with the seller, which is collateralized by the property and bears interest at 7% per year. All unpaid principal was originally due June 29, 2009. The due date on the mortgage was extended in July 2009 and again in June 2010 and is currently due in full on December 29, 2010. In connection with the July 2009 extension, the interest rate on the mortgage was increased to 12% per annum. Interest expense related to the Mill note for the three months ended May 31, 2010 and 2009 was $19,660 and $11,375, respectively, and $58,767 and $34,125 for the nine months ended May 31, 2010 and 2009, respectively.

In connection with the acquisition of the Mill, the Company was obligated to replace a financial warranty that the seller had provided to the Colorado Division of Reclamation, Mining, and Safety (“DRMS”). In December 2007, the Company replaced the financial warranty by purchasing a certificate of deposit, which is restricted, to secure an irrevocable standby letter of credit (the “LOC”) totaling $318,154, with a financial institution. The LOC is used to secure possible future payment requests made by the State of Colorado.

Property, plant and equipment consist of the following as of May 31, 2010 and August 31, 2009:


	May 31, 2010			August 31, 2009
	(unaudited)
Computer equipment	$	2,118		$	2,118
Mine and drilling equipment		111,250			113,278
Mobile mining equipment		61,519			61,519
Land and mill		1,567,176			1,567,176

		1,742,063			1,744,091
Less accumulated depreciation		(72,535	)		(44,471	)

	$	1,669,528		$	1,699,620

Depreciation expense was $9,580 and $28,808 for the three and nine months ended May 31, 2010, respectively, and $13,885 and $41,657 for the three and nine months ended May 31, 2009, respectively. Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives ranging from three to five years. However, a significant portion of the of the Company’s property, plant and equipment has not yet been placed in service.

Mineral property rights

King Solomon Mine

On September 18, 2009 the Company entered into a lease with an option to purchase the King Solomon Mine, in consideration for which the Company issued 50,000,000 shares of restricted Class A Common Stock valued at $0.0035 per share (the quoted market price on the date the Company entered into the agreement and obtained the mining rights) totaling $175,000. The lease/option is for a period of three years. The stock is restricted from sale during the initial term of the lease. The lease/option is to automatically renew and continue so long as ores, minerals, or metals are produced or sold. The lease grants the Company the exclusive right to perform exploration, mining, development, production, processing or any other activity which benefits the leased premises and requires a minimum work commitment of $50,000 to be expended by the Company for each successive three year term during the term of the lease/option. The lease also requires the Company to pay the lessor a 3.5% net smelter royalty (“NSR”) on all mineral bearing ores. In addition, before royalties are computed, 5% of the value of NSR on all materials produced and sold from the mining property must be deducted for the purpose of a contingency reclamation reserve fund for paying potential reclamation costs, up to $200,000. The Company has the sole and exclusive option to purchase all of lessor’s right, title and interest in the property for a total purchase price of $1,250,000. This amount may be paid in cash or other cash equivalent as mutually agreed by lessor and the Company.

Brooklyn Mine

On September 30, 2009 the Company entered into a lease with an option to purchase the Brooklyn Mine, in consideration for which the Company issued 75,000,000 shares of restricted Class A Common Stock valued at $0.0031 per share (the quoted market price on the date of the Company entered into the agreement and obtained the mining rights) totaling $232,500. The lease/option is for a period of three years. The stock is restricted from sale during the initial term of the lease. The lease/option is to automatically renew and continue so long as ores, minerals, or metals are produced or sold. The lease grants the Company the exclusive right to perform exploration, mining, development, production, processing or any other activity which benefits the leased premises and requires a minimum work commitment of $150,000 for the first year, $200,000 for the second year and $250,000 for the third year to be expended by the Company. The lease also requires the Company to pay the lessor a 5% NSR on all mineral bearing ores. In addition, before royalties are computed, 5% of the value of NSR on all materials produced and sold from the mining property must be deducted for the purpose of a contingency reclamation reserve fund for paying potential reclamation costs, up to $500,000. The Company has the sole and exclusive option to purchase all of lessor’s right, title and interest in the property for a total purchase price of $4,000,000, plus a perpetual 2% NSR. This amount may be paid in cash or other cash equivalent as mutually agreed by the Company and the lessor.

San Juan Properties

On June 17, 2007, the Company entered into an option agreement, amended November 8, 2007, July 10, 2008 and again on September 25, 2008, among the Company as Optionee, and San Juan Corp., a company controlled by Mr. Todd C. Hennis (“Hennis”) and Hennis as Optionors, whereby the Company was granted the exclusive right and option to acquire an 80% undivided right, title and interest in certain properties located in San Juan County, Colorado.

In order to keep the option in good standing, the Company must make payments to the Optionors as follows:

cash payment of $50,000 within 30 days from the date of the option agreement (which was paid by the Company in August 2007 and recorded as expense);

cash payment of $100,000 within one year from the date of the option agreement (which was extended to March 15, 2009 and includes accrued interest at 8.5% per annum from the original date of June 17, 2008), which was not made. See Note 10 for additional details;

cash payment of $200,000 within two years from the date of the option agreement, originally due on June 19, 2009, which was not made. See Note 10 for additional details.

100 troy ounces of gold contained in gold ore, or the cash equivalent thereof, within three years of the date of the option agreement, and annually thereafter up to and including the 10^th year from the date of the option agreement, which payments shall only be made if the Company successfully operates the Mill during any part of the year in which payment is due.

Pursuant to the option agreement, the Company has been appointed as the initial operator on the properties, with certain rights and obligations as described in the option agreement.

The Company received notice of default of the option agreement on March 16, 2009 when the Company did not make the payment due on March 15, 2009. The Company does not dispute the technical default. However, the termination of the option agreement is now the subject of litigation more fully described in Note 10.

The option agreement is the subject of current litigation in San Juan County, Colorado. See Note 10 for additional details.

Notes payable — related parties

As of May 31, 2010, the Company has borrowed $72,500 and $498,900 from its chief executive officer (“CEO”) and its chief financial officer (“CFO”), respectively. In connection with the borrowings, the Company executed unsecured promissory notes (“Notes”) which are due six months from the dates of issue and accrue interest at 6.5% per annum (or 18% per annum, if the Notes are in default). The Company subsequently entered into amended note agreements with its CEO to extend the due dates until September 18, 2010. During the year ended August 31, 2009, the Company’s CFO forgave certain notes and accrued interest which has been accounted for as a capital transaction resulting in an increase in equity of $288,361. During the nine months ended May 31, 2010 the Company entered into amended note agreements with its CFO to extend certain of the due dates on the Notes an additional six months. During the three and nine months ended May 31, 2010 and 2009, the Company recorded interest expense of $4,539 and $4,288, respectively, and $11,322 and $8,504, respectively, relating to the Notes. The notes outstanding at May 31, 2010 are due at varying times between July 18, 2010 and May 10, 2011. None of the promissory notes are currently in default.

Promissory note payable

On October 2, 2008, the Company executed an unsecured promissory note with one of its vendors for services rendered totaling $135,294. The promissory note bears interest at 6.25% per annum and the principal and interest were due on December 19, 2008. The promissory note is in default and a Motion for Summary Judgment has been granted (see Note 10). During the three months ended May 31, 2010, $25,000 was paid towards the promissory note. The Company recorded interest expense of $2,118 and $2,131 for the three months ended May 31, 2010 and 2009, and $6,312 and $5,584 for the nine months ended May 31, 2010 and 2009, respectively. Subsequent to May 31, 2010, an additional $25,000 was paid to the vendor in partial satisfaction of the promissory note and judgment.

Convertible notes

On May 21, 2010, the Company issued two $25,000 convertible notes under a funding arrangement with the Investor, totaling $50,000, which bear interest at 6.25% per annum and mature on May 21, 2011. The notes are convertible at any time, at the option of the holder, into shares of Class A common stock of the Company at a conversion rate of 70% of the average of the two lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten trading days immediately prior to the date a conversion notice is received by the Company.

In accordance with ASC 815-15, Embedded Derivatives, the Company determined that the conversion feature of the note met the criteria of an embedded derivative and therefore the conversion feature of the debt has been bifurcated and accounted for as a derivative. The debt does not meet the definition of “conventional convertible debt” because the number of shares which may be issued upon the conversion of the debt is not fixed. Therefore, the conversion feature, pursuant to ASC 815-40, Contracts in Entity’s Own Equity, has been accounted for as a derivative liability. The Company calculated the fair value of the conversion feature and recognized a discount to the debt of $50,000. The Company used the Black-Scholes pricing model to calculate the fair value of this derivative liability. Key assumptions used to apply this model included an expected term of one year, a volatility of 160%, a risk-free interest rate of .35% and a dividend yield of 0%.

The Company will adjust the carrying value of the derivative liability to its fair value at each reporting date. During the three and nine months ended May 31, 2010, there was no change in the fair value of the derivative liability.

For the three and nine months ended May 31, 2010, the Company accreted interest expense of $1,370, increasing the carrying value of the note to $1,370.

Subsequent to May 31, 2010, the Company issued two additional $25,000 convertible notes to the Investor.

Stockholders’ Equity

Class A and Class B Common Stock:

On February 20, 2009 the Company effected a reclassification and exchange of its common stock to Class A Common Stock on a 1 for 1 basis, obtained a new CUSIP number (19647Y302), and began trading under the symbol CGFIA.

Also in February 2009, the Company authorized a new series of common stock entitled Class B Common Stock with no par value. Class B Common Stock is not convertible, has no preference over Class A Common Stock and shares equally in dividends with Class A Common Stock. The total number of authorized Class B Common Stock is 500,000,000 shares and each share of Class B common stock is entitled to two votes.

On February 27, 2009 the Company announced that the beneficial owners of Class A Common Stock as of that date will be issued one share of restricted Class B Common Stock and one restricted Class B warrant, (“Class B Securities”) for every four shares of Class A common stock. The Class B warrants have a term of one year from date of issuance and an exercise price of $0.50 per share. The Class B Securities will be issued only to, and in the name of bona fide and verified beneficial owners of Class A common stock. In order for Class A common stockholders to receive Class B Securities, certain conditions must be met. As of May 31, 2010, 40,734,353 (out of a potential of 50,376,756) Class B Securities have been issued. The date of any future issuances of Class B Securities is uncertain.

On March 4, 2010, the Board of Directors extended the expiration date of the Class B Warrants to February 27, 2011. All other terms of the Class B Warrants remain the same.

In September 2008, the Company approved the 2008 Non-qualified Consultants and Advisors Stock Compensation Plan (“2008 Consultants Plan”); whereby the Company may grant shares of the Company’s stock in exchange for services rendered to the Company. As of May 31, 2010 the Company is authorized to grant up to 1,065,000,000 shares under the 2008 Consultants Plan, of which 718,514,243 shares have been issued as of May 31, 2010. During the nine months ended May 31, 2010, 467,074,040 shares of Class A Common Stock were issued to consultants for services rendered valued at $0.0017 to $0.0036 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $853,029 being recorded as expense, $62,000 being recorded as prepaid expenses and $257,816 recorded as a reduction in accounts payable at issuance. During the nine months ended May 31, 2010 the company recorded expense of $288,183 for prepaid services previously issued in shares that have been earned during the period.

In November 2008, the Company approved the 2008 Employee and Director Stock Compensation Plan (“2008 Employee Plan”), whereby the Company may grant shares of the Company’s stock in exchange for services rendered to the Company. As of May 31, 2010, the Company is authorized to grant up to 410,800,000 shares under the 2008 Employee Plan, of which 252,130,933 have been issued as of May 31, 2010. During the nine months ended May 31, 2010, 182,212,700 shares of Class A Common Stock were issued to employees for services rendered valued at $0.0017 to $0.0036 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $387,530 being recorded as expense and $18,428 recorded as a reduction in accounts payable.

Stock options

The Company recorded compensation expense related to stock options of zero for both the three months ended May 31, 2010 and 2009, and zero and $4,094 for the nine months ended May 31, 2010 and 2009, respectively. As of May 31, 2010, the Company had no unrecognized compensation cost related to stock options. During the nine months ended May 31, 2010, the Company did not grant options, and no options were cancelled or forfeited. As of May 31, 2010, no options are outstanding.

Related Party Transactions

For the nine months ended May 31, 2010 and 2009 the Company recognized zero and $6,000, respectively, for mineral property and exploration costs that were incurred from a company owned by the former president of the Company.

Accounts payable and accrued liabilities at May 31, 2010 and August 31, 2009, include $39,167 for both periods, due to affiliated companies for mineral property and exploration costs, general and administrative costs and property, plant and equipment.

10.

Litigation

The Company is involved in the following legal proceedings:

On March 2, 2009 the Company’s former legal counsel filed a Complaint in District Court, Denver, Colorado, claiming breach of contract of the promissory note executed by the Company October 2, 2008 (Note 6). On October 16, 2009, the Court granted a motion for summary judgment against the Company in the amount of $138,005 plus interest at 6.25% until satisfied. No activity has occurred regarding the judgment since it was granted in October 2009. However, in May 2010, an Investor entered into an agreement with the complainant in this matter, in which the Investor may purchase, at its option, individual tranches of $25,000, up to the total amount of the $138,005 promissory note.

On April 6, 2009, Todd C. Hennis (the former President and CEO of the Company), and entities San Juan Corp., and Salem Minerals Inc. (which are substantially owned by Mr. Hennis), served upon the Company a Complaint seeking among other things, a $100,000 payment pursuant to the option agreement (Note 4), and release from his shareholder lock-up agreement and from Rule 144 trading restrictions on approximately 51,500,000 shares of Class A Common Stock held by Hennis. Company counsel advises that the Hennis complaint is barred due to Hennis’s affiliate and control person status and moreover is filed in bad faith, since among other things, on June 17, 2008 as President and CEO of the Company, Hennis elected not to pay the option fee then due. The Company received a written settlement offer from Mr. Hennis two days after the Company was served on April 8, 2009. A counter-claim with jury demand has been filed against Mr. Hennis and his entities for wrongful conversion, breach of duty of loyalty, lack of good faith, breach of fiduciary duty, and significant conflicts of interest. No trial date has been set. The outcome of the litigation is not certain; however, it does appear that the Company has legitimate defenses to mitigate damages, if any exist. Hennis filed a Motion for Summary Judgment on October 16, 2009. The Company responded to this motion on November 16, 2009. The Company has recorded liabilities of approximately $58,000 related to the claims of the litigation. Additional claims between a range of $190,000 and $220,000 are asserted by Mr. Hennis. However, the Company believes that the probability of having to recognize these additional liabilities is remote. A hearing regarding the Motion for Summary Judgment was held on May 7, 2010 in Durango, Colorado. As of the date of this filing, no decision has been rendered by the court. A telephonic pre-trial conference hearing is scheduled for August 13, 2010, and a three day jury trial has been scheduled to begin August 25, 2010 in Silverton, Colorado.

On November 12, 2009, an individual filed a breach of contract complaint in San Juan County, Colorado claiming damages of $67,140. The Company believes this lawsuit is without merit and has filed Motion for Change of Venue with the court. On January 15, 2010, the Court denied the Company’s Motion to Change Venue. On February 11, 2010, the Company filed a Request to Reconsider its Motion to Change Venue. As of the date of this filing, that request remains pending. The ultimate outcome of the litigation is uncertain, however, the Company believes that the probability of having to recognize the potential liability is remote.

11.

Commitments and contingencies

On July 1, 2009, the Company entered into a twelve-month executive employment agreement with its CFO. Under the terms of the Agreement, the CFO received a salary of $20,000 per month, along with certain employee benefits such as health insurance. The CFO was also entitled to six months salary if terminated by the Company for convenience or due to a change of control. This contract expired on July 1, 2010; management anticipates this contract will be renewed during the quarter ended August 31, 2010.

12.

Subsequent Events

Subsequent to May 31, 2010, the Board of Directors has issued 125,397,400 shares of its Class A Common Stock to employees and consultants for services, valued at approximately $215,102 under the various stock compensation plans of the Company, and 35,714,283 shares of restricted Class A Common Stock pursuant to the conversion of $37,500 debt. Subsequent to May 31, 2010, 10,000 shares of Class B Common Stock and Class B Warrants were issued in accordance with the February 27, 2009 issuance rules and procedures. See Note 8 for additional details.


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Form 10-Q may contain certain “forward-looking” statements as such term is defined in the private securities litigation reform act of 1995 and by the securities and exchange commission in its rules, regulations and releases, which represent the company’s expectations or beliefs, including but not limited to, statements concerning the company’s operations, economic performance, financial condition, growth and acquisition strategies, investments, and future operational plans. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “intent”, “could”, “estimate”, “might”, “plan”, “predict” or “continue” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the company’s control, and actual results may differ materially depending on a variety of important factors, including uncertainty related to acquisitions, governmental regulation, managing and maintaining growth, the operations of the company and its subsidiaries, volatility of stock price and any other factors discussed in this and other registrant filings with the securities and exchange commission. The company does not intend to undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate.

This discussion addresses matters we consider important for an understanding of our financial condition and results of operations as of and for the three and nine months ended May 31, 2010, as well as our future results. It consists of the following subsections:

•

“Introduction and Plan of Operation,” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for 2010;

•

“Liquidity and Capital Resources,” which contains a discussion of our cash flows and liquidity, investing activities and financing activities, contractual obligations, and critical obligations;

•

“Results of Operations,” which sets forth an analysis and comparison of the three and nine months ended May 31, 2010 compared to the three and nine months ended May 31, 2009.

•

“Critical Accounting Policies,” which provides an analysis of the accounting policies we consider critical because of their effect on the reported amounts of assets, liabilities, income and/or expenses in our financial statements and/or because they require difficult, subjective or complex judgments by our management;

•

“Recent Accounting Pronouncements and Developments,” which summarizes recently published authoritative accounting guidance, how it might apply to us, and how it might affect our future results.

Introduction and Plan of Operation

The following discussion updates our plan of operation for the foreseeable future. The discussion also summarizes the results of our operations for the three and nine months ended May 31, 2010 and compares those results to the three and nine months ended May 31, 2009.

We continued to experience the negative effects of the financial markets upheaval, which made capital acquisitions extremely difficult during the three months ended May 31, 2010. The litigation commenced by our former president, Todd C. Hennis necessarily caused all work relating to the Gold King Mine to be suspended, including the N.I. 43-101 report which was originally expected to be completed in the spring of 2009. We can not now predict when (if ever), the N.I. 43-101 report will be completed for the Gold King Mine pending the results of the litigation.

Therefore, in fiscal 2009 we turned away from concentrating only on the Hennis-owned Gold King Mine, and focused primarily on re-activation of the Pride of the West Mill, securing agreements for “custom” or “toll” milling, and seeking out new properties to explore and develop. Those activities continued during the nine months of fiscal year 2010. We entered into two new lease/option agreements for properties located near our mill facility, and completed the first major milestone regarding mill re-activation.

In second quarter of fiscal 2010, we commenced a comprehensive permit amendment process with the State of Colorado Division of Reclamation Mining and Safety. The permitting amendment process for the Pride of the West Mill officially commenced on February 19, 2010. Following intense study, analysis, and collaboration, the Company’s 500-page permit amendment application was deemed “complete for filing” under the Colorado Mined Land Reclamation Act by the Colorado Division of Reclamation Mining and Safety. As described in Part II, Item 1. Legal Proceedings, an amendment to the amendment application was required. Therefore, the approval date is now expected to be September 8, 2010.

Concurrent with the permitting process described above, on May 17, 2010 the Company received approval and commenced active refurbishment work on the Pride of the West Mill. Core items necessary to bring the mill into production began in the areas of electrical systems improvements, reagent organization, renovation and modernization of the laboratory building, and reactivation of mechanical operations including testing of the large ball mill and rod mill, and flotation tank operations.

The scale of the approved work by the State of Colorado’s Division of Reclamation Mining and Safety at the Mill was substantial and specific. While the final decision regarding the entire Reclamation Permit has been extended, the Division’s simultaneous approval of other key elements of the reactivation plan will allow us to move forward with our business plan.

As of the filing date of this report, we have received preliminary purchase orders totaling $9.2 million for custom gold ore milling from active mines in southwestern Colorado. Initial gold ore flow to Colorado Goldfields is estimated to be approximately 300 tons per day.

In 2007, our former management predicted profitability by end of calendar year 2009. Given the events described above, we are now targeting profits from operations by November 2010. Weather conditions in San Juan County, Colorado vary by season. During the winter season our activities are concentrated on analysis, planning, and development of properties in more temperate climates. Surface drilling and property exploration in San Juan County can reasonably take place between May and late October. Of course underground operations may continue year-round.

Our plan of operation for fiscal year 2010 is to continue seeking funding for our operations and mining exploration, development and acquisition program.

We will be primarily focused on three areas in fiscal year 2010, 1) Re-activation of the Pride of the West Mill, 2) Exploration and development of the Brooklyn and King Solomon Mine, 3) Potential acquisition of other suitable mining properties.

Liquidity and Capital Resources

We were formed in early 2004 and have primarily had limited activity. Since we have received no revenue from the production of gold or other metals, we have not generated cash flow from operations and have primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund our operations. We have experienced net losses since inception, and do not expect operating revenue until the Pride of the West Mill is re-activated. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.

Our financial statements have been prepared assuming that we will continue as a going concern. Since our inception in February 2004, we have not generated revenue and have incurred net losses. We have a working capital deficit of $1,640,213 at May 31, 2010, incurred net losses of $797,609 and $2,497,372 for the three and nine months ended May 31, 2010, respectively, and have incurred a deficit accumulated during the exploration stage of $11,877,808 for the period from February 11, 2004 (inception) through May 31, 2010. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from unrelated parties, sale of assets, and equity financing to fund its operations. These conditions (as indicated in the 2009 audit report of our Independent Registered Public Accounting Firm), raise substantial doubt about the Company’s ability to continue as a going concern.

We currently have minimal cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations and exploration efforts and, if warranted, to develop and commence mining operations. Our capital requirements for the foreseeable future include exploration of our mining properties, payment on a $650,000 promissory note which is collateralized by the Pride of the West Mill and accrued interest of $138,663, payment on notes payable including accrued interest to related parties totaling $307,796, payment on a promissory note payable, including interest of $124,321 to one of our vendors, re-activation expenses at the Mill, and our corporate overhead expenses.

In May 2010, we closed a funding arrangement with an institutional investor in the amount of $1 million. Funding is provided to us in tranches at the institutional investor’s option. The financing will, over the course of the facility timeline, provide funding for the Company’s aged debt and for working capital requirements.

We continue to seek additional equity or debt financing. However, there can be no assurance that funds required during the next twelve months or thereafter will be available from external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significantly dilutive effect on our existing shareholders. All of these factors have been exacerbated by the extremely unsettled credit and capital markets presently existing.

As of May 31, 2010, we had cash of $8,082 and other current assets of $31,316 and current liabilities of $1,679,611. We used cash of $228,177 in operating activities for the nine months ended May 31, 2010. The sale of property, plant and equipment generated $15,000 during the nine months ended May 31, 2010. Financing activities consisted of cash proceeds from loans made by officers during the nine months ended May 31, 2010 of $195,700.

Contractual Obligations

The table below summarizes contractual obligations as of May 31, 2010 due in the future.


			Less than 1
Contractual Obligations	Total		Year		2 and 3		4 and 5
Principal payment on Pride of the West Mill⁽¹⁾	$	650,000	$	650,000
Accrued interest Pride of the West Mill⁽¹⁾	$	138,663	$	138,663
Note payable to vendor⁽²⁾	$	124,321	$	124,321
Notes payable to officers⁽³⁾	$	307,796	$	307,796
Convertible Note	$	50,000	$	50,000
Work Commitment for Brooklyn Mine⁽⁴⁾	$	600,000	$	150,000	$	450,000
Work Commitment for King Solomon Mine⁽⁴⁾	$	50,000		—	$	50,000


(1)		This amount was extended from June 29, 2010 and is due on December 29, 2010, along with any unpaid interest. The note is secured by the Mill; thus, a default on this obligation could result in foreclosure on our Mill.

(2)		This amount was ordered by judgment of the court on October 16, 2009 payable to our former law firm Jackson Kelly PLLC. The promissory note has been purchased by an unrelated third-party in individual transactions of $25,000. As of the filing date of this report, $50,000 has been paid to the vendor in partial satisfaction of the promissory note and judgment.

(3)		This amount is due to our Chief Executive Officer and Chief Financial Officer. While historically these officers have either forgiven or extended our indebtedness to them, there is no assurance that they will continue to do so.

(4)		These amounts represent work commitments pursuant to our Mining Leases with Option to Purchase. The work commitment may be satisfied by a combination of cash paid to third-parties, allocation of internal resources, or any other activities that improve the properties. The amounts enumerated above are not paid to the lessor.

Results of Operations

Three Months Ended May 31, 2010 Compared to the Three Months Ended May 31, 2009

For the three months ended May 31, 2010, we incurred a net loss of approximately $798,000 compared to a net loss of approximately $1,918,000 for the three months ended May 31, 2009, a 58% improvement of $1,120,000.

For the three months ended May 31, 2010 and 2009, overall mineral property and exploration costs were approximately $98,000 and $90,000, respectively; an unremarkable change.

General and administrative costs were approximately $646,000 and $1,732,000 for the three months ended May 31, 2010 and 2009, respectively; a decrease of $1,086,000. The change is due to the specific reasons presented below.

Consulting expenses were $252,000 and $546,000 for the three months ended May 31, 2010 and 2009, respectively, a 54% decrease of $294,000. The vast majority of these expenses are in the form of stock based compensation and the decrease is due to reduced expenditures on public relations and corporate communications consulting.

Salaries and related payroll taxes were $92,000 and $126,000 for the three months ended May 31, 2010 and 2009, respectively; a decrease of $34,000. All salaries are paid in the form of stock awards in lieu of cash, which are exempt under Rule 16b-3.

Travel and related costs were $1,400 and $1,700 for the three months ended May 31, 2010 and 2009, respectively, a decrease of $300. The decrease in travel during the three months ended May 31, 2010 was due to management’s use of technology related communication processes.

Investor relations costs were $195,000 and $25,000 for the three months ended May 31, 2010 and 2009, respectively, an increase of $170,000. The increase was due to moving the investor relations function into the corporate office, re-launching certain investor relations activities, and consolidating support personnel.

Repairs and maintenance expenses were $4,100 and $7,000 for the three months ended May 31, 2010 and 2009, respectively, a decrease of $2,900. The decrease was due to more repairs being performed by in-house personnel.

Overall professional fees decreased $31,000 from $77,000 for the three months ended May 31, 2009, to $46,000 for the same period in 2010. The decrease is due to reduced legal consulting related to the permit amendment application for the Pride of the West Mill and other litigation matters.

Interest expense was $29,000 and $20,000 for the three months ended May 31, 2010 and 2009, respectively, related to the mortgage on the Pride of the West Mill which was purchased in June 2007. The increase of $9,000 is primarily related to an increase in the interest rate to 12% pursuant to the note extension to June 29, 2010.

Other income was $14,000 and zero for the three months ended May 31, 2010 and 2009, respectively. The increase was due to the sale of used equipment.

Nine Months Ended May 31, 2010 Compared to the Nine Months Ended May 31, 2009

For the nine months ended May 31, 2010, we incurred a net loss of approximately $2,497,000 compared to a net loss of approximately $4,516,000 for the nine months ended May 31, 2009, an improvement of $2,019,000 primarily due to re-focusing our efforts on the Pride of the West Mill project.

For the nine months ended May 31, 2010 and 2009, overall mineral property and exploration costs were $287,000 and $500,000, respectively, a decrease of $213,000 reflecting our focus on Mill reactivation rather than exploratory drilling on the Gold King property.

General and administrative costs were approximately $1,958,000 and $3,784,000 for the nine months ended May 31, 2010 and 2009, respectively; a decrease of $1,826,000. The change is due to the specific reasons presented below.

Consulting expenses were $836,000 and $1,892,000 for the nine months ended May 31, 2010 and 2009, respectively, a 56% decrease of $1,056,000. The vast majority of these expenses are in the form of stock based compensation, and the decrease is due to reduced expenditures on geological, environmental, and engineering consulting costs.

Salaries and related payroll taxes were $309,000 and $396,000 for the nine months ended May 31, 2010 and 2009, respectively; a decrease of $87,000. The decrease is due to bonuses that were paid in 2009 not being paid in 2010. All salaries are paid in the form of stock awards in lieu of cash, which are exempt under Rule 16b-3.

Travel and related costs were $8,400 and $7,000 for the nine months ended May 31, 2010 and 2009, respectively, an increase of $1,400. The increase in travel during the nine months ended May 31, 2010 was due to management’s due diligence procedures relating to potential acquisitions.

Investor relations costs were $434,000 and $173,000 for the nine months ended May 31, 2010 and 2009, respectively, an increase of $261,000. The increase, paid in the form of stock based compensation, was due to the implementation of new and continuing support of existing corporate communications programs.

Repairs and maintenance expenses were $59,000 and $20,000 for the nine months ended May 31, 2010 and 2009, respectively, and increase of $39,000. This increase reflects work at the Pride of the West Mill in preparation for re-activation.

Overall professional fees increased $7,000 from $197,000 for the nine months ended May 31, 2009, to $204,000 for the same period in 2010, an unremarkable change.

Interest expense was $84,000 and $51,000 for the nine months ended May 31, 2010 and 2009, respectively, related to the mortgage on the Pride of the West Mill which was purchased in June 2007. The increase of $33,000 is primarily related to an increase in the interest rate to 12% pursuant to the note extension to June 29, 2010.

Other income was $26,000 and $2,500 for the nine months ended May 31, 2010 and 2009, respectively. The increase was primarily due to the sale and rental of used equipment.

Critical Accounting Policies

We have identified the following critical accounting policies which were used in the preparation of our financial statements.

Exploration and Development Costs: Costs of exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property is a commercially minable property. When it has been determined that a mineral property can be economically developed as a result of established proven and probable reserves, the costs to develop such property will be capitalized. Costs of abandoned projects will be charged to operations upon abandonment.

Long-lived Assets: We periodically evaluate the carrying value of property, plant and equipment costs, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain circumstances.

Property Retirement Obligation: Asset retirement costs are capitalized as part of the carrying amount of certain long-lived assets. Accretion expense is recorded in each subsequent period to recognize the changes in the liability resulting from the passage of time. Changes resulting from revisions to the original fair value of the liability are recognized as an increase or decrease in the carrying amount of the liability and the related asset retirement costs capitalized as part of the carrying amount of the related long-lived asset.

Stock- Based Compensation: We utilize the Black-Scholes option-pricing model to determine fair value of options and warrants granted as stock-based compensation, which requires us to make judgments relating to the inputs required to be included in the model. In this regard, the expected volatility is based on the historical price volatility of the Company’s common stock. The dividend yield represents the Company’s anticipated cash dividend on common stock over the expected life of the stock options. The U.S. Treasury bill rate for the expected life of the stock options is utilized to determine the risk-free interest rate. The expected term of stock options represents the period of time the stock options granted are expected to be outstanding.

Mining Rights: The Company has determined that its mining rights meet the definition of mineral rights and are tangible assets. As a result, the costs of mining rights are initially capitalized as tangible assets when purchased. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserves. For mining rights in which proven and probable reserves have not yet been established, the Company assesses the carrying value for impairment at the end of each reporting period. Mining rights are stated at cost less accumulated amortization and any impairment losses. Mining rights for which probable reserves have been established will be amortized based on actual units of production over the estimated reserves of the mines.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued a standard that established the FASB Accounting Standards Codification (“ASC”) and amended the hierarchy of U.S. GAAP such that the ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC did not change current U.S. GAAP, but was intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. All previously existing accounting standard documents were superseded and all other accounting literature not included in the ASC is considered non-authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (“ASU”s). This standard did not have an impact on the Company’s results of operations or financial condition. However, references in the notes to the financial statements previously made to various former authoritative U.S. GAAP pronouncements have been changed to reflect the appropriate section of the ASC.

In May 2009, the FASB established general standards for accounting and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. The pronouncement required the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, whether that date represents the date the financial statements were issued or were available to be issued. In February 2010, the FASB amended this standard whereby SEC filers, like the Company, are required by GAAP to evaluate subsequent events through the date its financial statements are issued, but are no longer required to disclose in the financial statements that the Company has done so or disclose the date through which subsequent events have been evaluated.


Item 4T.		Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Under the supervision of, and the participation of, our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of our disclosure controls and procedures as of May 31, 2010. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of May 31, 2010 as a result of the material weaknesses in internal control over financial reporting due to lack of segregation of duties and a limited corporate governance structure as discussed in Item 9A of the Company’s Form 10-K for the fiscal year ended August 31, 2009.

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full time staff. We believe that this is typical in most exploration stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

(b) Changes in Internal Control over Financial Reporting

There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION


Item 1.		Legal Proceedings.

Pride of the West Mill Proceedings

The Pride of the West Mill is currently under a Cease and Desist Order from the Colorado Division of Reclamation, Mining and Safety that was issued against a previous operator. The Cease and Desist Order prohibits operation of the Pride of the West Mill until deficiencies in the mill tailing impoundment area, the mill drain water impoundment area, and other problems are corrected.

As a result of our activities in the summer of 2009 which we believed were in compliance with our permit and Cease & Desist Order, by letters dated October 8, 2009, the Division of Reclamation Mining & Safety (“Division”) notified the Company of its “Reason to Believe a Violation Exists,” “Scheduling of Board Hearing,” “Revocation of Permit,” and “Forfeiture of Financial Warranty,” regarding the permit for the Pride of west Mill.

By letter of October 8, 2009, the Division also notified the Company of its inspection of the Pride of the West Mill performed on September 16, 2009. The inspection report included an increase in the reclamation cost to $514,630 from $318,154; an increase of $196,476.

On November 6, 2009 we reached an agreement with the Division in the form of a Joint Stipulation which was presented to the Mined Land Reclamation Board (“Board”) at the Board’s November 12, 2009 hearing, and approved. The joint stipulation provides (in part), that:

Colorado Goldfields intends to work with the Division to assure that a comprehensive permit amendment meets the Divisions requirements and expectations.

Colorado Goldfields commits to submittal of:

a comprehensive permit amendment, complete for the purposes of filing, that includes an engineered analysis and plans for placement, construction, certification, and monitoring of new Environmental Protection Facilities designed to allow the re-activation of the Mill, and to clarify the Operator’s authorization to perform “custom” or “toll” milling, by no later than January 13, 2010;

within 180 days of filing, all documentation necessary to allow Division approval of the subject amendment, including an acceptable financial warranty in the amount calculated by the Division incorporating all the revised reclamation cost provisions detailed in the amendment.

The current financial warranty increase deadline was December 7, 2009, however, it is agreed that this deadline is extended and the Division will re-calculate the bond during the permit amendment review process.

The permit amendment will include analyses related to waste rock relocation and designs for new tailing pond facilities in compliance with the requirements of the Act and Rules. Under the permit amendment all portions of the Reclamation Plan will be updated.

Colorado Goldfields commits to on-the-ground compliance with the requirements of the Act, the Rules, and provisions of Permit No. M-1984-049, modified by the subject amendment, by no later than October 29, 2010.

Colorado Goldfields acknowledges that, without intention, it did not comply with the procedural requirements of its permit or the Cease and Desist Order when relocating the waste rock to the lower tailings pond at the Mill. Therefore, Colorado Goldfields is in violation pursuant to C.R.S. 34-32-124(1) for failure to comply with conditions of permit No. M-1984-049 and failure to comply with the conditions of a Cease and Desist order. In accordance with Rule 3.3.2(2)(b) and C.R.S. 34-32-124(7) the Board shall assess a civil penalty in the range of $5,700 to $57,000 for each violation, reflecting 57 days of violation at $100 to $1,000 per day, as measured from the September 16^th inspection to the November 12, 2009 hearing. Colorado Goldfields respectfully requests that the Board suspend all but $250 for each of the violations, totaling $500, pending completion of the corrective actions and requirements described herein. The Division does not object to this request.

The Division has indicated that the water quality of the Las Animas River degrades in the vicinity of the Mill. Colorado Goldfields has agreed to conduct an analysis of the potential source of this degradation, which might relate to the Mill site (including pre-law tailings located on the Mill site), or might be caused by a naturally occurring iron bog or other natural sources in the area. Colorado Goldfields has agreed to conduct this analysis as part of the amendment application discussed herein.

A Formal Board Hearing before the Mined Land Reclamation Board was held November 12, 2009 in Denver. The Board approved the above described joint stipulation.

The $500 penalty was paid on December 21, 2009. The comprehensive permit amendment was submitted to the Colorado Division of Reclamation and Mining Safety on January 8, 2010. The permit amendment application was deemed complete for filing by the Division on February 19, 2010.

In April, 2010, the Division informally indicated that they believe that the water supply structures associated with Hematite Creek Pipeline and Cunningham Creek Pipeline (“Water Structures”), constitute “affected land” as defined by Rule 1.1(4), and that the Division will require that the application for AM-02 to Permit no.: M-1984-049 be amended to include such lands within the boundary of affected land. Further, that the Division has informally indicated that they will require a new submittal to the County Clerk, new public notices, and that all review timeframes shall begin anew.

While the Company did not agree with the Division’s conclusion, an amended permit amendment application was filed on May 24, 2010. This amendment to the permit amendment application was deemed complete for filing by the Division as of June 10, 2010. The decision date for the application has been set for September 8, 2010. A new submittal to the County Clerk was made on May 24, 2010, and new public notices and publications were begun on June 17, 2010.

San Juan Properties and Hennis Proceedings

The San Juan Properties are currently the object of litigation between us and our former President Todd C. Hennis. On April 6, 2009, Todd C. Hennis (the former President and CEO of the Company), and entities San Juan Corp., and Salem Minerals Inc. (which are substantially owned by Mr. Hennis), served upon the Company a Complaint seeking among other things, a $100,000 payment pursuant to the option agreement (Note 6a), and release from his shareholder lock-up agreement and from Rule 144 trading restrictions on approximately 50,000,000 shares of Class A Common Stock held by Hennis. Company counsel advises that the Hennis complaint is barred due to Hennis’s affiliate and control person status and moreover is filed in bad faith, since among other things, on June 17, 2008 as President and CEO of the Company, Hennis elected not to pay the option fee then due. The Company received a written settlement offer from Mr. Hennis two days after the Company was served on April 8, 2009. A counter-claim with jury demand has been filed against Mr. Hennis and his entities for wrongful conversion, breach of duty of loyalty, lack of good faith, breach of fiduciary duty, and significant conflicts of interest. No trial date has been set. The outcome of the litigation is not certain; however, it does appear that the Company has legitimate defenses to mitigate damages, if any exist. We have recorded liabilities of approximately $58,000 related to the claims of the litigation. Additional claims of between a range of $190,000 and $220,000 are asserted by Mr. Hennis. However, we believe that the probability of having to recognize these additional liabilities is remote.

Mr. Hennis filed a Motion for Summary Judgment on October 5, 2009. We responded to the motion on November 16, 2009. Even though the Company has valid claims against Mr. Hennis, the Company continues to pursue settlement.

A hearing regarding the Motion for Summary Judgment was held on May 7, 2010 in Durango, Colorado. As of the date of this filing, no decision has been rendered by the court. A telephonic pre-trial conference hearing is scheduled for August 13, 2010, and a three day jury trial has been scheduled to begin August 25, 2010 in Silverton, Colorado.

Former Law Firm Litigation

On March 2, 2009 the Company’s former legal counsel, Jackson Kelly PLLC, filed a Complaint in District Court, Denver, Colorado, claiming breach of contract of the promissory note executed by the Company October 2, 2008 (Note 5). On October 16, 2009, the Court granted a Motion for Summary Judgment against the Company in the amount of $138,005 plus interest at 6.25% until satisfied. The promissory note has been purchased by an unrelated third-party in individual transactions of $25,000. As of the filing date of this report, $50,000 has been paid to the vendor in partial satisfaction of the promissory note and judgment.

On November 12, 2009, an individual filed a breach of contract complaint in San Juan County, Colorado claiming damages of $67,140. We believe that this lawsuit is without merit and have filed a Motion for Change of Venue with the court. On January 15, 2010, the Court denied our Motion to Change Venue. On February 11, 2010 we filed a Request to Reconsider Motion to Change Venue. As of the date of this filing, that request remains pending. The ultimate outcome of the litigation is uncertain, however, the Company believes that the probability of having to recognize the potential liability is remote.

Other Legal Matters

Mines and mining claims nearby the San Juan Properties are owned by other parties. Because the various mines possibly have interconnections between adits and tunnels and common stormwater conveyances and treatment sites, the environmental issues are both factually complex and legally complex. Disputes among the various property owners, over environmental liabilities, responsibility for clean-up and maintenance of the sites and facilities, and responsibility for site remediation continue.

The following applies to the San Juan properties, which are the subject of litigation. Therefore, depending upon the out come of that litigation, the following considerations may or may not be applicable.

The Gold King Property is subject to federal, state and local regulations regarding environmental conditions at the site and activities at the site. In August 2007, we filed a “Notice of Intent to Conduct Prospecting Operations for Hard Rock/Metal Mines” with the State of Colorado, Division of Reclamation, Mining and Safety governing our proposed surface drilling activities at the Gold King and Mogul Properties, and we were approved for drilling on five pads. In addition, in June 2008 we filed a Notice of Intent seeking approval for drilling on another four pads.

The Gold King Property has an active, acid mine drainage occurring from the Gold King #7 Level. This mine water flow has substantially increased in volume since 2000, and recent flow measurements have shown a large increase in flows. This water discharge is believed by our management to originate substantially from the 2150 vein workings of the Sunnyside Mine, which is owned by another company, and which vein workings extend into the Gold King Property. To date, our management has not been able to prove the origin of this water flow.

We are in negotiations with the Water Quality Control Division (“WQCD”) of the Colorado Department of Public Health and Environment to authorize us and San Juan Corp. to undertake reconnaissance and mitigate activities to hopefully prevent a potential “blow out” of underground blockages at the Gold King Mine, which if it occurred could be a potential threat to public health. We are also in negotiations with the WQCD to obtain a discharge permit and we are working towards plans to develop the support necessary to construct the treatment works necessary to comply with a discharge permit. In connection with our environmental and permitting efforts, we have hired an environmental remediation specialist to assist us with our negotiations and permitting process with the WQCD.

We received correspondence from the State of Colorado Attorney General’s Office stating that the Company was required to apply for a stormwater discharge permit for the Gold King Mine by the end of January 2008. We applied for the stormwater discharge permit in January 2008, and received Permit COR-040237 for the Gold King Mine on January 28, 2008. The stormwater permit requires a Stormwater Management Plan for the site, and we have incorporated such a plan into an existing Environmental Management Plan for the Gold King Mine.

Permitting requirements can be a costly undertaking and we could be at risk for fines and penalties if required permits are not timely in place.


Item 1A.		Risk Factors.

A restated description of some of the risk factors associated with our business is set forth below. This description includes any material changes to and supersedes the description of the risk factors included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2009. The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations and financial condition.

We Have Material Future Financing Needs

Our business model requires additional financing. No assurance can be given that additional financing will be available to us on acceptable terms, if at all. If we raise additional funds by issuing additional equity securities, further dilution to existing equity holders will result. If adequate additional funds are not available, we may be required to curtail significantly our long-term business objectives and our results from operations may be materially and adversely affected. Accordingly, there is substantive doubt whether we can fulfill our business plan or commence revenue generating operations.

The Market Price for Our Common Stock Will Likely Be Volatile and May Change Dramatically At Any Time

The market price of our common stock, like that of the securities of other early-stage companies, may be highly volatile. Our stock price may change dramatically as the result of announcements of our quarterly results, the rate of our expansion, significant litigation or other factors or events that would be expected to affect our business or financial condition, results of operations and other factors specific to our business and future prospects. In addition, the market price for our common stock may be affected by various factors not directly related to our business, including the following:

•

intentional manipulation of our stock price by existing or future stockholders;

•

Short selling activity by certain investors, including any failures to timely settle short sale transactions;

•

a single acquisition or disposition, or several related acquisitions or dispositions, of a large number of our shares;

•

the interest, or lack of interest, of the market in our business sector, without regard to our financial condition or results of operations;

•

the adoption of governmental regulations and similar developments in the United States or abroad that may affect our ability to offer our products and services or affect our cost structure;

•

developments in the businesses of companies that purchase our products; and

•

economic and other external market factors, such as a general decline in market prices due to poor economic indicators or investor distrust.

In addition to the other information provided in this Form 10-Q, you should carefully consider the risk factors contained in our Annual Report on Form 10-K, which may be accessed at:

http://www.sec.gov/Archives/edgar/data/1344394/000095012309063920/0000950123-09-063920-index.htm

in evaluating our business before purchasing our common stock. Our exploration activities are highly risky and speculative; accordingly, an investment in our common stock shares involves a high degree of risk. You should not invest in our common stock if you cannot afford to lose your entire investment. In considering an investment in our common shares, you should carefully consider all of the other information contained in our filings with the Securities and Exchange Commission.


Item 6.		Exhibits and Financial Statement Schedules

Exhibit Index


Exhibit Number		Description
	2	Articles of Merger between Colorado Goldfields Inc. (surviving entity) and Garpa Resources, Inc., effective June 18, 2007. Filed with Form 8-K dated June 20, 2007, and incorporated herein by reference.
	3.2	Amended and Restated Bylaws filed as Exhibit 3.1 to Form 8-K dated September 4, 2008 and incorporated herein by reference.
	4.1	2008 Non-Qualified Consultants & Advisors Stock Compensation Plan. Filed as Exhibit 4.1 to the Registration Statement on Form S-8 dated September 17, 2008 (SEC file # 333-153528) and incorporated herein by reference.
	10.1	Option Agreement, Gold King, Mayflower and Mogul Properties, between San Juan Corp., Todd C. Hennis, and Garpa Resources, Inc., dated June 17, 2007. Filed as Exhibit 10.1 to Form 8-K dated June 26, 2007, and incorporated herein by reference.
	10.2	Executive Employment Agreement between Garpa Resources, Inc. and Todd C. Hennis dated June 17, 2007. Filed as Exhibit 10.2 to Form 8-K dated June 26, 2007, and incorporated herein by reference.
	10.3	Purchase and Sale Agreement between Tusco Incorporated and Garpa Resources, Inc. dated June 13, 2007, relating to the Pride of the West Mill. Filed as Exhibit 10.1 to Form 8-K/A dated June 28, 2007, and incorporated herein by reference.
	10.4	Amendment to Option Agreement between San Juan Corp., Todd C. Hennis, and Colorado Goldfields Inc. (fka Garpa Resources, Inc.), dated November 8, 2007. Filed as Exhibit 10.1 to Form 8-K dated November 13, 2007, and incorporated herein by reference.
	10.5	Form of Private Placement Subscription Agreement (Offshore Subscribers). Filed as Exhibit 10.1 to Form 8-K dated November 15, 2007, and incorporated herein by reference.
	10.6	Form of Private Placement Subscription Agreement (U.S. Subscribers). Filed as Exhibit 10.2 to Form 8-K dated November 15, 2007, and incorporated herein by reference.
	10.7	Option Contract (for Royalties) between Recreation Properties LTD., Thomas A. Warlick and Colorado Goldfields Inc. dated December 19, 2007. Filed with the Registration Statement on Form SB-2, filed January 11, 2008 and incorporated herein by reference.
	10.8	2008 Stock Incentive Plan. Filed as exhibit 10.11 to Form 8-K filed February 20, 2008, and incorporated herein by reference.
	10.9	Letter of Intent between Colorado Goldfields Inc. dated March 17, 2008 and C.P. Victor Salas Gamero, Ing., Victor Salas Martos, and Liliana Salas (“Sellers”) owners of 100% of the capital stock of Besmer, S.A. de C.V. Filed as exhibit 10.12 to Form 8-K filed March 18, 2008, and incorporated herein by reference.
	10.10	Addendum To The Letter Of Intent dated March 12, 2008. Filed as exhibit 10.1 to Form 8-K filed May 5, 2008, and incorporated herein by reference.
	10.11	Employment Agreement: C. Stephen Guyer dated July 31, 2008. Filed as Exhibit 10.1 to Form 8-K filed August 4, 2008, and incorporated herein by reference.
	10.12	Standby Equity Distribution Agreement dated August 29, 2008 between YA Global Investments, L.P. and Colorado Goldfields Inc. Filed as Exhibit 10.1 to Form 8-K filed September 4, 2008, and incorporated herein by reference.
	10.13	Registration Rights Agreement dated August 29, 2008 between YA Global Investments, L.P. and Colorado Goldfields Inc. Filed as Exhibit 10.2 to Form 8-K filed September 4, 2008, and incorporated herein by reference.
	10.14	2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on September 17, 2008 and incorporated herein by reference.
	10.15	2008 Employee and Director Stock Compensation Plan. Filed as exhibit 10.1 to Form 8-K filed on November 14, 2008 and incorporated herein by reference.
	10.16	Employment Agreement: Lee R. Rice dated September 10, 2008. Filed as Exhibit 10.1 to Form 8-K filed December 17, 2008, and incorporated herein by reference.
	10.17	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on January 23, 2009 and incorporated herein by reference.
	10.18	Amendment to 2008 Employee and Director Stock Compensation Plan. Filed as exhibit 4.1 to Form S-8 filed on January 23, 2009 and incorporated herein by reference.


Exhibit Number		Description
	10.19	Form RW filed with the Securities and Exchange Commission on February 17, 2009 and incorporated herein by reference.
	10.20	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on April 3, 2009 and incorporated herein by reference.
	10.21	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on June 26, 2009 and incorporated herein by reference.
	10.22	Employment Agreement of C. Stephen Guyer dated July 1, 2009. Filed as Exhibit 10.1 to Form 8-K filed on August 4, 2009, and incorporated herein by reference.
	10.23	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on September 18, 2009 and incorporated herein by reference.
	10.24	Amendment to 2008 Employee and Director Stock Compensation Plan. Filed as exhibit 4.1 to Form S-8 filed on September 18, 2009 and incorporated herein by reference.
	10.25	Mining Lease Agreement between Colorado Goldfields Inc. and Larry H. Killian dated September 18, 2009. Filed as Exhibit 10.1 to Form 8-K filed on September 23, 2009 and incorporated herein by reference.
	10.26	Mining Lease Agreement between Colorado Goldfields Inc. and Frank J. Montonati and Don Laeding dated September 30, 2009. Filed as Exhibit 10.1 to Form 8-K filed on October 6, 2009 and incorporated herein by reference.
	10.27	Amendment to 2008 Non-Qualified Consultants & Advisors Stock Compensation. Filed as exhibit 4.1 to Form S-8 filed on December 21, 2009 and incorporated herein by reference.
	10.28	Amendment to 2008 Employee and Director Stock Compensation Plan. Filed as exhibit 4.1 to Form S-8 filed on April 23, 2010 and incorporated herein by reference.
	14	Code of Business Conduct and Ethics. Filed as Exhibit 14 to Form 8-K filed February 20, 2008, and incorporated herein by reference.
	31.1	Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Executive Officer*
	31.2	Certification Pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by the Principal Financial Officer*
	32.1	Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Principal Executive Officer,*
	32.2	Certification Required by 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Chief Financial Officer*


*		Filed herewith.


	Colorado Goldfields Inc.
	By:	/s/ Lee R. Rice
		Lee R. Rice
		Chief Executive Officer

	By:	/s/ C. Stephen Guyer
		C. Stephen Guyer
		Chief Financial Officer & Principal Accounting Officer

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PART I—FINANCIAL INFORMATION			1

Item 1. Financial Statements			1

Balance Sheets			1

Statements of Operations			2

Statements of Cash Flows			3

Statements of Stockholders’ Equity (Deficit)			4

Notes to the Unaudited Financial Statements			5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14

Item 4T. Controls and Procedures			21

PART II—OTHER INFORMATION			22

Item 1. Legal Proceedings			22

Item 1A. Risk Factors			25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26

Item 3. Defaults Upon Senior Securities			26

Item 4. Submission of Matters to a Vote of Security Holders			26

Item 5. Other Information			26

Item 6. Exhibits and Financial Statement Schedules			27

Exhibit Index			27

SIGNATURES			29

CERTIFICATIONS			30

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.


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


	/s/ C. STEPHEN GUYER
	C. Stephen Guyer
	Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)