##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended August 31, 2009
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 000-51718
 COLORADO GOLDFIELDS INC.
  Nevada
(State or other jurisdiction of 
incorporation or organization)
    
    20-0716175
(I.R.S. Employer
Identification No.)10920 West Alameda Avenue, Suite 207 Lakewood, CO
(Address of principal executive offices)
    
    80226
(Zip Code)
 (303) 984-5324
  Class A Common Stock, $0.001 par value
 Yes o No þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ
  Class
    
    Shares Outstanding at November 17, 2009Class A Common Stock, $0.001 Par Value
    
    906,352,627Class B Common Stock (Restricted), No
Par Value
    
    40,594,954
 DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF CONTENTS
 PART I
    
    
    1Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    7Risks Relating to Our Company
    
    
    7Risks Associated with Our Common Stock in General
    
    
    12Item 2. Properties
    
    
    14Pride of the West Mill
    
    
    14The Brooklyn Mine
    
    
    16The King Solomon Mine
    
    
    25The San Juan Properties
    
    
    26Item 3. Legal Proceedings
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    31PART II
    
    
    32Item 5. Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
    
    
    32Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    36Item 8. Financial Statements and Supplementary Data
    
    
    42Balance Sheets
    
    
    43Statements of Operations
    
    
    44Statements of Cash Flows
    
    
    45Statements of Stockholders Equity (Deficit)
    
    
    46Notes to the Financial Statements
    
    
    47Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    59Item 9A. Controls and Procedures
    
    
    60PART III
    
    
    62Item 10. Directors, Executive Officers and Corporate Governance
    
    
    62Item 11. Executive Compensation
    
    
    65Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    70Item 13. Certain Relationships and Related Transactions, and Director
Independence
    
    
    71Item 14. Principal Accountant Fees and Services
    
    
    72PART IV
    
    
    73Item 15. Exhibits and Financial Statement Schedules
    
    
    73SIGNATURES
    
    
    74EXHIBIT INDEX
    
    
    75Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   iii




---



##### Table of Contents



This document (including information incorporated herein by reference) contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, which involve a degree of risk and uncertainty
due to various factors affecting Colorado Goldfields Inc. For a discussion of some of these
factors, see the discussion in Item 1A, Risk Factors, of this report.
 
 PART I
 Forward-Looking Statements
  
    
    Statements regarding future earnings;
 
    
    Estimates of future mineral production and sales, for specific operations and on a
consolidated or equity basis;
 
    
    Estimates of future costs applicable to sales, other expenses and taxes for specific
operations and on a consolidated basis;
 
    
    Estimates of future cash flows;
 
    
    Estimates of future capital expenditures and other cash needs, for specific
operations and on a consolidated basis, and expectations as to the funding thereof;
 
    
    Estimates regarding timing of future capital expenditures, construction, production
or closure activities;
 
    
    Statements as to the projected development of certain ore deposits, including
estimates of development and other capital costs and financing plans for these deposits;
 
    
    Estimates of reserves and statements regarding future exploration results and reserve
replacement and the sensitivity of reserves to metal price changes;
 
    
    Statements regarding the availability and costs related to future borrowing, debt
repayment and financing;
 
    
    Statements regarding modifications to hedge and derivative positions;
 
    
    Statements regarding future transactions;
 
    
    Statements regarding the impacts of changes in the legal and regulatory environment
in which we operate; and
 
    
    Estimates of future costs and other liabilities for certain environmental matters.
   1




---



##### Table of Contents



Available Information
 www.cologold.com.
 www.cologold.com/uploads/code_of_Business_Conduct_Ethics.pdf.
   2




---



##### Table of Contents



Item 1.
    
    Business
 Background
          3




---



##### Table of Contents



Our Business
 Exploration Costs and Plans,
  Recent Events
 Item 2. Properties
    Competitive Business Conditions
   4




---



##### Table of Contents



General Government Regulations
 Federal Lands.
 Mining Operations .
  Mineral Rules
And Regulations Of The Colorado Mined Land Reclamation Board For Hard Rock, Metal And Designated
Mining Operations
  http://mining.state.co.us/Rules%20and%20Regs.htm.
 Environmental Laws .
  Comprehensive Environmental Response, Compensation, and Liability Act of 1980
 Resource Conservation and Recovery Act
  5




---



##### Table of Contents



Clean Air Act
 Clean Water Act Clean Water Act
 National Environmental Policy Act
 Endangered Species Act
  Employees
 Item 11
Executive Compensation
 Office Facilities
   6




---



##### Table of Contents



Item 1A.
    
    Risk Factors
 An investment in our securities involves a high degree of risk. You should consider
carefully the following risks, along with all of the other information included in this report,
before deciding to buy our common stock. Additional risks and uncertainties not currently known to
us or that we currently deem to be immaterial may also impair our business operations. If we are
unable to prevent events that have a negative effect from occurring, then our business may suffer.
  
 Risks Relating to Our Company
 We have incurred losses since our inception in 2004 and may never be profitable which raises
doubt about our ability to continue as a going concern.
    Item 7  Managements Discussion
and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources, .
 Our only interest relating to mining properties is the lease or option to acquire various
mining claims, the feasibility of which has not been established as we have not completed
exploration or other work necessary to determine if it is commercially feasible to acquire and
develop the property.
 See Item 2.
Business and Properties of
this Report for more information regarding our mining assets
  7




---



##### Table of Contents



See Item 3 Legal Proceedings for additional details.
 See
Item 2. Properties of this Report for more information regarding our mining and milling assets
 Item 2  Properties  Pride of the West Mill and  Item 7 
Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity
and Capital Resources for further information.
 We may never find commercially viable gold or other reserves.
  We will require significant additional capital to continue our exploration activities, and, if
warranted, to develop mining operations.
    8




---



##### Table of Contents



Historical production of gold at the Brooklyn, King Solomon, and San Juan Properties may not
be indicative of the potential for future development or revenue.
  Fluctuating gold, metal and mineral prices could negatively impact our business plan.
  Reclamation obligations on the Brooklyn, King Solomon, San Juan Properties and our Mill could
require significant additional expenditures.
   9




---



##### Table of Contents



Title to mineral properties can be uncertain, and we are at risk of loss of ownership of our
property.
  Our ongoing operations and past mining activities of others are subject to environmental
risks, which could expose us to significant liability and delay, suspension or termination of our
operations.
   The CGFI Properties are subject to royalties on production.
    10




---



##### Table of Contents



Weather interruptions in the San Juan County, Colorado area may delay or prevent exploration
on the CGFI Properties
  Our industry is highly competitive, attractive mineral lands are scarce and we may not be able
to obtain quality properties.
  We depend on our Chief Executive Officer and Chief Financial Officer and the loss of these
individuals could adversely affect our business.
  The nature of mineral exploration and production activities involves a high degree of risk and
the possibility of uninsured losses that could materially and adversely affect our operations.
  
    
    economically insufficient mineralized material;
    
    fluctuations in production costs that may make mining uneconomical;
    
    labor disputes;
    
    unanticipated variations in grade and other geologic problems;
    
    environmental hazards;
  11




---



##### Table of Contents




    
    water conditions;
    
    difficult surface or underground conditions;
    
    industrial accidents; personal injury, fire, flooding, cave-ins and landslides;
    
    metallurgical and other processing problems;
    
    mechanical and equipment performance problems; and
    
    decreases in revenues and reserves due to lower gold and mineral prices.
  Our operations are subject to permitting requirements which could require us to delay, suspend
or terminate our operations on our mining property.
  
 Risks Associated with Our Common Stock in General
 Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market
price of our common stock and make it difficult for our stockholders to resell their shares.
  Our stock is a penny stock. Trading of our stock may be restricted by the SECs penny stock
regulations and the FINRAs sales practice requirements, which may limit a stockholders ability to
buy and sell our stock.
   12




---



##### Table of Contents



FINRA sales practice requirements may also limit a stockholders ability to buy and sell our
stock.
  We have never paid a cash dividend on our common stock and we do not anticipate paying any in
the foreseeable future.
  We have not voluntarily implemented various corporate governance measures, in the absence of
which, shareholders may have more limited protections against interested director transactions,
conflicts of interest and similar matters.
   13




---



##### Table of Contents



Item 2.
    
    Properties
 
 Pride of the West Mill
      Item 3. Legal Proceedings
   14




---



##### Table of Contents



Estimated Cost(amounts in thousands)New Tailings Facility
    
    $
    221Reactivation Costs
    
    
    75Water Improvements
    
    
    100Building Maintenance
    
    
    50Total Estimated Costs
    
    $
    446
    15




---



##### Table of Contents



The Brooklyn Mine
   1
 Overview of the Property
 History
  2
 3 4
  
 1
    
    Chessher, H.B., 1982, Report on the Brooklyn
Mine, San Juan County, Colorado, 13 pp. Darnton, B., 1981, Brooklyn Milling
Report for Bakers Park Mining and Milling Company, 6 pp.2
    
    Schmidt, E., M., 1945, Brooklyn Mining
Claims, 5 pp.3
    
    Crawford, J.W., 1977, Geologic Report of
the Brooklyn Mine, San Juan County, Colorado, 13 pp. Crawford, J.W., 1978,
17 pp., Summary Letter of Diamond Drilling Results, Drill Logs,
and Sections.
Crawford, J.W., 1974, Letter to: file, from: Crawford, J.W.4
    
    Youngblood, S., 1981, Geologic Summary and
Progress Report of the Brooklyn Mine, San Juan County, Colorado, Alpha Energy
and Gold, 10 pp.  16




---



##### Table of Contents



5 6
  
    
    1901-1906; No.1 Level driven 500 and No.2 Level driven 400, and No.3 Level 150:
ore mined form 2 shoots on No.1 and No. 2 Levels
    
    1934-1942; No.1 Level 1265, No.2 Level 960, No.3 Level 600: ore shoot found at
700-800, and a winze connecting 1&2 Levels at 825
    
    1957-1959; Richardson removed stope fill from 710 Stope
    
    1960s; No.1 Level driven to 2200 in length with no ore encountered
    
    1978-81; No.2 Level driven to 1560: ore shoot found near 1550
    
    1983-85; Brooklyn Mining Company, no ore mined, core drilled below No.2 Level,
survey of property generating other targets
 Geology and Mineralization
    
 5
    
    Banfield, A., F., 1959, letter from: Behre
Dolbear & Company by Banfield, A., F., to: Colt, Z., C., Re: site visit by
Donald, D., 9 pp. Molley, J., S., of Cerro Mineral Exploration Company, Inc.
(Cerro), 1974, letter to: Peter Loncar of: Idarado Mining Company, Re: Brooklyn
Claim Group of Frank O. Richardson, San Juan County, Colorado, 14 pp., various
maps of Gloucester, assay results, etc. Morehouse, G., E., 1981, Examination
of the Brooklyn Mine for The Richardson Trust and the First National Bank of
Grand Junction, Colorado, 22 pp.6
    
    Rosemeyer, Tom, 2002, History, Geology, and
Mineralogy of the Brooklyn Mine, San Juan County, Colorado, Rocks and Minerals,
pp.154-167, Vol. 77, May/June, 2002.  17




---



##### Table of Contents



Exploration and Development of the Brooklyn Mine
 Overview
  Surface reconnaissance
  Geochemical soil survey
  Geophysical survey(s)
   18




---



##### Table of Contents



Exploration Targets
  7
 Target
    
    Comment1. Growler
    
    Low grade (4-8 oz.) silver in Tunnel, possible breccia pipe2. Rainbow/Gloucester
    
    High-grade gold on Rainbow, ore-grade on Gloucester3. Brooklyn, No.2 Level
    
    Down dip continuity of important ore shoots, production4. Frankie No.1
    
    High-grade sample, decent width, on Rainbow zone strike5. Tabor Vein (Magnet?)
    
    Unknown potential, free gold, hessite, ~2 qtz vein6. Emporium
    
    6 strong shear zone, 6 chip returned 0.03 Au, 0.27 Ag opt7. Tivoline
    
    Unknown, follow-up based on Patent surveys8. Venetian Discovery
    
    Unknown, follow-up based on Patent surveys
 Table 1 Exploration targets generated during field reconnaissance by John Wright and Janice
Fetchenhier in 1984.
  
 7
    
    Fetchenhier and Wright. Brooklyn Mining
Company, 1984, Evaluation and Economic Report- The Brooklyn Mine, San
Juan County, Colorado.  19




---



##### Table of Contents



Discussion of targets for immediate work
 1. The Rainbow Shear
  8 9
 see
Appendix I
  
 8
    
    Price, M., E., 1969, Preliminary Report of
the Brooklyn Mine, Red Mountain Mining District, San Juan County,
Colorado, 10
pp.9
    
    Crawford, J., W., 1974, Letter to: file,
from: Crawford, J.W.  20




---



##### Table of Contents



2. Gloucester
 Appendix I
 3. Frankie No. 1-2
  4. Growler
   21




---



##### Table of Contents



5. Other targets Tabor, Magnet, etc.
  Resource Definition and Development
   22




---



##### Table of Contents



7
 
  23




---



##### Table of Contents



24




---



##### Table of Contents



Terms of our Lease/Option and Related Agreements on the Brooklyn Mine
  1.
    
    The Lease/Option is for a period of three years in consideration for which we
issued 75,000,000 shares of restricted Class A Common Stock. The stock is further
restricted from sale during the initial term of the lease.
 2.
    
    The Lease/Option shall automatically renew and continue so long as ores,
minerals, or metals are produced or sold.
 3.
    
    We shall perform exploration, mining, development, production, processing or
any other activity (work herein) which benefits the Leased Premises at a minimum
cost of $150,000 for the first year, $200,000 for the second year and $250,000 for the
third year.
 4.
    
    We shall pay Lessor a Five Percent (5%) Net Smelter Royalty on all mineral
bearing ores.
 5.
    
    We have the sole and exclusive option to purchase all of Lessors right,
title and interest in the property (the Leased Premises) for a total purchase price of
$4,000,000, plus a perpetual 2% Net Smelter Royalty. This amount may be paid in cash
or other cash equivalent as mutually agreed by us and the Lessor.
 
 The King Solomon Mine
    Terms of our Option and Related Agreements on the King Solomon Mine
  1.
    
    The Lease/Option is for a period of three years in consideration for which we
issued 50,000,000 shares of restricted Class A Common Stock. The stock is further
restricted from sale during the initial term of the lease.
 2.
    
    The Lease/Option shall automatically renew and continue so long as ores,
minerals, or metals are produced or sold.
 3.
    
    We shall perform exploration, mining, development, production, processing or
any other activity (work herein) which benefits the Leased Premises at a minimum
cost of $50,000 for each successive three year term during the term of the
Lease/Option.
 4.
    
    We shall pay Lessor a 3.5% Net Smelter Royalty on all mineral bearing ores.
 5.
    
    We have the sole and exclusive option to purchase all of Lessors right,
title and interest in the property (the Leased Premises) 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 us.
  25




---



##### Table of Contents



The San Juan Properties
  Item 3. Legal
Proceedings.
 Terms of our Option and Related Agreements on the San Juan Properties
      a)
    
    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). See Item 3. Legal Proceedings
for further details.
 b)
    
    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.
 c)
    
    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 10th 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.
  26




---



##### Table of Contents



Ownership Maintenance Requirements on the San Juan Properties
  Royalty Encumbrances
   27




---



##### Table of Contents



Item 3.
    
    Legal Proceedings
 Pride of the West Mill Proceedings
     1.
    
    Colorado Goldfields intends to work with the Division to assure that a comprehensive
permit amendment meets the Divisions requirements and expectations.
 2.
    
    Colorado Goldfields commits to submittal of:
 a.
    
    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;
 b.
    
    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.
 3.
    
    The current financial warranty increase deadline is 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.
 4.
    
    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.
 5.
    
    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.
  28




---



##### Table of Contents



6.
    
    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 16th 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.
 7.
    
    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.
  San Juan Properties and Hennis Proceedings
   Former Law Firm Litigation
  Other Legal Matters
   29




---



##### Table of Contents



30




---



##### Table of Contents



Item 4.
    
    Submission of Matters to a Vote of Security Holders
   31




---



##### Table of Contents



PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
 Market Information
   Year Ended
    
    High
    
    
    LowAugust 31, 2006April 11 to May 31, 2006 (1)
    
    $
    0.32
    
    
    $
    NilFourth Quarter
    
    
    0.32
    
    
    
    0.31August 31, 2007First Quarter
    
    $
    0.31
    
    
    $
    0.04Second Quarter
    
    
    0.06
    
    
    
    0.04Third Quarter
    
    
    0.19
    
    
    
    0.04Fourth Quarter
    
    
    0.63
    
    
    
    0.19August 31, 2008First Quarter
    
    $
    0.85
    
    
    $
    0.51Second Quarter
    
    
    0.85
    
    
    
    0.55Third Quarter
    
    
    0.85
    
    
    
    0.22Fourth Quarter
    
    
    0.25
    
    
    
    0.08August 31, 2009First Quarter
    
    $
    0.13
    
    
    $
    0.02Second Quarter
    
    
    0.02
    
    
    
    0.01Third Quarter
    
    
    0.02
    
    
    
    0.0058Fourth Quarter
    
    
    0.0091
    
    
    
    0.0030
 
 *
    
    We effectuated a 7.9 for one stock split effective June 18, 2007 and a two for one stock split
effective October 29, 2007. The prices set forth above have been adjusted for these forward stock
splits. Prices have not been adjusted for the 30% stock dividend, which was effective November 6,
2008.(1)
    
    The low price during this period, before being adjusted for the forward stock splits, was
$0.15.     32




---



##### Table of Contents



The Securities Enforcement and Penny Stock Reform Act of 1990
    
    
    contains a description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary trading;
 
    
    contains a description of the brokers or dealers duties to the customer and of the
rights and remedies available to the customer with respect to a violation to such duties
or other requirements of the Securities Act of 1934, as amended;
 
    
    contains a brief, clear, narrative description of a dealer market, including bid and
ask prices for penny stocks and the significance of the spread between the bid and ask
price;
 
    
    contains a toll-free telephone number for inquiries on disciplinary actions;
 
    
    defines significant terms in the disclosure document or in the conduct of trading penny
stocks; and
 
    
    contains such other information and is in such form (including language, type, size and
format) as the Securities and Exchange Commission shall require by rule or regulation.
 
    
    The broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:
 
    
    the bid and offer quotations for the penny stock;
 
    
    the compensation of the broker-dealer and its salesperson in the transaction;
 
    
    the number of shares to which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for such stock; and
 
    
    monthly account statements showing the market value of each penny stock held in the
customers account.
   33




---



##### Table of Contents



Securities Authorized for Issuance Under Equity Compensation Plans
 Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number of securitiesto be issued upon
    
    
    Weighted average
    
    
    Number of securitiesexercise of
    
    
    exercise price of
    
    
    remaining available foroutstanding options,
    
    
    outstanding options,
    
    
    future issuance as ofPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    November 18, 2009Equity compensation
plans approved by
security holders:
    
    
    
    
    
    
    
    
    
    
    Equity compensation
plans not approved
by security
holders:
    
    
    
    
    
    
    
    
    
    
    2008 Employee Stock
Incentive Plan
    
    
    
    
    
    
    
    
    
    
    67,7302008 Non-Qualified
Consultants &
Advisors Stock
Compensation Plan
    
    
    
    
    
    
    
    
    
    
    165,238,9972008 Employee &
Director Stock
Compensation Plan
    
    
    
    
    
    
    
    
    
    
    88,739,267
   2008 Non-Qualified Consultants & Advisors Stock Compensation Plan
   34




---



##### Table of Contents



2008 Employee & Director Stock Compensation Plan
  Transfer Agent
  Issuer purchase of equity securities
   35




---



##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
   
    
    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 fiscal 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 and Comparison, which sets forth an analysis of the operating
results for the last two years;
 
    
    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 consolidated 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
      36




---



##### Table of Contents



Liquidity and Capital Resources
  $
   37




---



##### Table of Contents



Contractual Obligations
  Contractual Obligations
    
    Total
    
    
    Less than 1
Year
    
    
    2 and 3
    
    
    4 and 5Principal payment on Pride of the West
Mill(1)
    
    $
    650,000
    
    
    $
    650,000Note payable to vendor(2)
    
    $
    138,005
    
    
    $
    138,005Notes payable to officers(3)
    
    $
    100,774
    
    
    $
    100,774
 
 (1)
    
    This amount is due on June 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. We continue to explore structured alternatives for
satisfaction of this judgment; however a definitive agreement has not been reached.(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. Results of Operations
  Year Ended August 31, 2009 Compared to Year Ended August 31, 2008
    38




---



##### Table of Contents



Critical Accounting Policies
  Exploration and Development Costs
 Long-lived Assets
  39




---



##### Table of Contents



Property Retirement Obligation
 Stock- Based Compensation
 Recent Accounting Pronouncements
 Fair Value Measurements Effective Dates of FASB Statement No. 157
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115.
  40




---



##### Table of Contents



Business Combinations
 Determining
Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of SFAS 162
  41




---



##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ GHP HORWATH, P.C.
Denver, ColoradoNovember 18, 2009
  42




---



##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Balance Sheets
 August 31,
    
    
    August 31,2009
    
    
    2008ASSETSCurrent AssetsCash and cash equivalents
    
    $
    559
    
    
    $
    134,856Prepaid expenses and other
    
    
    262,508
    
    
    
    79,656Total Current Assets
    
    
    263,067
    
    
    
    214,512Non-Current AssetsProperty,
plant and equipment, net (Note 3)
    
    
    1,699,620
    
    
    
    1,819,834Restricted cash (Note 3)
    
    
    318,154
    
    
    
    318,154Other
    
    
    13,520
    
    
    
    13,520Total Non-Current Assets
    
    
    2,031,294
    
    
    
    2,151,508Total Assets
    
    $
    2,294,361
    
    
    $
    2,366,020LIABILITIES & STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable (Note 8)
    
    $
    267,564
    
    
    $
    398,671Accrued liabilities (Note 8)
    
    
    105,610
    
    
    
    38,236Notes payable, including accrued interest  related parties
(Note 4)
    
    
    100,774
    
    
    
    Promissory note payable, including accrued interest (Note 5)
    
    
    143,009
    
    
    
    Mortgage notes payable, including accrued interest (Note 3)
    
    
    729,895
    
    
    
    650,000Total Current Liabilities
    
    
    1,346,852
    
    
    
    1,086,907Non-Current LiabilitiesAsset retirement obligation (Note 2)
    
    
    571,500
    
    
    
    525,000Total Non-Current Liabilities
    
    
    571,500
    
    
    
    525,000Total Liabilities
    
    
    1,918,352
    
    
    
    1,611,907Contingencies and Commitments (Notes 3, 4, 5, 6, 8, 10 and 11)Stockholders Equity (Note 7)Class A common stock, 2,500,000,000 shares authorized,
$0.001 par value; 535,398,127 and 135,726,120 shares
issued and outstanding, respectively
    
    
    477,137
    
    
    
    77,465Class B common stock, 500,000,000 shares authorized,
no par value; 35,732,285 and zero shares issued and
outstanding
    
    
    
    
    
    
    Additional paid in capital
    
    
    9,250,058
    
    
    
    4,745,977Donated capital
    
    
    29,250
    
    
    
    29,250Deficit accumulated during the exploration stage
    
    
    (9,380,436
    )
    
    
    (4,098,579
    )Total Stockholders Equity
    
    
    376,009
    
    
    
    754,113Total Liabilities and Stockholders Equity
    
    $
    2,294,361
    
    
    $
    2,366,020
   43




---



##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Statements of Operations
 Accumulated fromFor the Year
    
    
    For the Year
    
    
    February 11, 2004Ended
    
    
    Ended
    
    
    (Date of Inception) toAugust 31, 2009
    
    
    August 31, 2008
    
    
    August 31, 2009Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expensesDonated rent
    
    
    
    
    
    
    
    
    
    
    9,750Donated services
    
    
    
    
    
    
    
    
    
    
    19,500General and administrative
    
    
    4,390,367
    
    
    
    2,607,001
    
    
    
    7,061,816Mineral property and exploration costs
    
    
    601,788
    
    
    
    587,279
    
    
    
    1,318,019Professional fees
    
    
    251,829
    
    
    
    494,359
    
    
    
    891,010Total operating expenses
    
    
    (5,243,984
    )
    
    
    (3,688,639
    )
    
    
    (9,300,095
    )Other income (expense)Other income
    
    
    53,741
    
    
    
    
    
    
    
    54,789Interest income
    
    
    15,389
    
    
    
    15,838
    
    
    
    31,227Interest expense
    
    
    (107,003
    )
    
    
    (48,220
    )
    
    
    (166,357
    )Total other expense
    
    
    (37,873
    )
    
    
    (32,382
    )
    
    
    (80,341
    )Net Loss
    
    $
    (5,281,857
    )
    
    $
    (3,721,021
    )
    
    $
    (9,380,436
    )Net Loss Per Common Share  Basic and Diluted
    
    $
    (0.02
    )
    
    $
    (0.03
    )Weighted Average Number of Common Shares Outstanding
    
    
    268,677,008
    
    
    
    124,045,964
   44




---



##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Statements of Cash Flows
 Accumulated fromFor the Year
    
    
    For the Year
    
    
    February 11, 2004Ended
    
    
    Ended
    
    
    (Date of Inception) toAugust 31, 2009
    
    
    August 31, 2008
    
    
    August 31, 2009Cash Flows Used in Operating Activities:Net loss
    
    $
    (5,281,857
    )
    
    $
    (3,721,021
    )
    
    $
    (9,380,436
    )Adjustments
to reconcile net loss to net cash used in
operating activities:Donated services and rent
    
    
    
    
    
    
    
    
    
    
    29,250Depreciation
    
    
    51,322
    
    
    
    8,782
    
    
    
    60,104Stock issued for services
    
    
    3,983,784
    
    
    
    869,739
    
    
    
    4,853,523Stock-based compensation  options
    
    
    4,094
    
    
    
    895,209
    
    
    
    899,303Accrued interest on debt
    
    
    101,046
    
    
    
    
    
    
    
    101,046Accretion expense on asset retirement obligation
    
    
    46,500
    
    
    
    25,000
    
    
    
    71,500Gain on sale of property, plant and equipment
    
    
    (39,239
    )
    
    
    
    
    
    
    (39,239
    )Change in operating assets and liabilities:Decrease (increase) in restricted cash
    
    
    
    
    
    
    19,965
    
    
    
    (318,154
    )Decrease (increase) in prepaid expenses and other
    
    
    74,647
    
    
    
    (72,917
    )
    
    
    (5,009
    )Increase in accounts payable
    
    
    376,952
    
    
    
    322,225
    
    
    
    775,623Increase in accrued liabilities
    
    
    67,374
    
    
    
    9,810
    
    
    
    105,610Increase in reclamation bond
    
    
    
    
    
    
    (318,154
    )
    
    
    Decrease (increase) in other assets
    
    
    
    
    
    
    600
    
    
    
    (13,520
    )Net cash used in operating activities
    
    
    (615,377
    )
    
    
    (1,960,762
    )
    
    
    (2,860,399
    )Cash Flows from Investing Activities:Proceeds from sale of property, plant and equipment
    
    
    109,500
    
    
    
    35,000
    
    
    
    144,500Acquisition of property, plant and equipment
    
    
    (4,120
    )
    
    
    (462,939
    )
    
    
    (717,736
    )Net cash provided by (used in) investing activities
    
    
    105,380
    
    
    
    (427,939
    )
    
    
    (573,236
    )Cash Flows from Financing Acitvities:Advances received
    
    
    
    
    
    
    
    
    
    
    405,733Repayment of advances
    
    
    
    
    
    
    (400,733
    )
    
    
    (405,733
    )Proceeds from notes from related parties
    
    
    375,700
    
    
    
    
    
    
    
    385,752Repayment of advances from related party
    
    
    
    
    
    
    
    
    
    
    (10,052
    )Proceeds from note payable
    
    
    
    
    
    
    
    
    
    
    100,000Repayment of note payable
    
    
    
    
    
    
    (100,000
    )
    
    
    (100,000
    )Net proceeds from issuance of common stock
    
    
    
    
    
    
    3,002,244
    
    
    
    3,058,494Net cash provided by financing activities
    
    
    375,700
    
    
    
    2,501,511
    
    
    
    3,434,194(Decrease) increase in cash and cash equivalents
    
    
    (134,297
    )
    
    
    112,810
    
    
    
    559Cash and cash equivalents  Beginning of Period
    
    
    134,856
    
    
    
    22,046
    
    
    
    Cash and cash equivalents  End of Period
    
    $
    559
    
    
    $
    134,856
    
    
    $
    559Supplemental Disclosures:Interest paid
    
    $
    15,783
    
    
    $
    48,220
    
    
    $
    71,586Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    Non-cash investing and financing activities:Exchange of accounts payable for promissory note
    
    $
    135,294
    
    
    $
    
    
    
    $
    135,294Issuance of common stock to satisfy accounts payable
    
    $
    370,015
    
    
    $
    
    
    
    $
    370,015Issuance of common stock for prepaid expenses
    
    $
    257,499
    
    
    $
    
    
    
    $
    257,499Exchange of property, plant and equipment for
accounts payable
    
    $
    2,750
    
    
    $
    
    
    
    $
    2,750Forgiveness of related party debt and accrued interest
    
    $
    288,361
    
    
    
    
    
    
    $
    288,361Acquisition of land and building:Cash paid
    
    $
    
    
    
    $
    
    
    
    $
    250,677Mortgage note given to seller
    
    
    
    
    
    
    
    
    
    
    650,000Asset retirement obligation assumed
    
    
    
    
    
    
    
    
    
    
    500,000Assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    1,400,677
   45




---



##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Statements of Stockholders Equity (Deficit)  From February 11, 2004 (Date of Inception) to August 31, 2009
 DeficitAccumulated
    
    
    TotalClass A
    
    
    Class B
    
    
    Additional
    
    
    
    
    
    
    During the
    
    
    StockholdersCommon Stock
    
    
    Common Stock
    
    
    Paid in
    
    
    Donated
    
    
    Exploration
    
    
    EquityNumber 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,898
    )
    
    
    (5,898
    )Balances  August 31, 2004
    
    
    51,350,000
    
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500
    
    
    
    (5,898
    )
    
    
    1,102Issuance of common stock for cash
    
    
    63,160,500
    
    
    
    53,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,750Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,319
    )
    
    
    (35,319
    )Balances  August 31, 2005
    
    
    114,510,500
    
    
    
    56,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,500
    
    
    
    (41,217
    )
    
    
    28,533Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,148
    )
    
    
    (36,148
    )Balances  August 31, 2006
    
    
    114,510,500
    
    
    
    56,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,500
    
    
    
    (77,365
    )
    
    
    1,385Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,750
    
    
    
    
    
    
    
    6,750Net 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) (Note 7)
    
    
    11,386,180
    
    
    
    11,386
    
    
    
    
    
    
    
    
    
    
    
    2,990,858
    
    
    
    
    
    
    
    
    
    
    
    3,002,244Shares issued for services (Note 7)
    
    
    9,829,440
    
    
    
    9,829
    
    
    
    
    
    
    
    
    
    
    
    859,910
    
    
    
    
    
    
    
    
    
    
    
    869,739Stock-based compensation  options (Note 7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    895,209
    
    
    
    
    
    
    
    
    
    
    
    895,209Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,721,021
    )
    
    
    (3,721,021
    )Balances  August 31, 2008
    
    
    135,726,120
    
    
    
    77,465
    
    
    
    
    
    
    
    
    
    
    
    4,745,977
    
    
    
    29,250
    
    
    
    (4,098,579
    )
    
    
    754,113Shares issued for services (Note 7)
    
    
    370,282,860
    
    
    
    370,283
    
    
    
    
    
    
    
    
    
    
    
    3,871,000
    
    
    
    
    
    
    
    
    
    
    
    4,241,283Issuance of common stock to satisfy accounts payable (Note 7)
    
    
    29,389,147
    
    
    
    29,389
    
    
    
    
    
    
    
    
    
    
    
    340,626
    
    
    
    
    
    
    
    
    
    
    
    370,015Stock-based compensation  options (Note 7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,094
    
    
    
    
    
    
    
    
    
    
    
    4,094Stock issued to beneficial owners of Class A Common Stock
    
    
    
    
    
    
    
    
    
    
    35,732,285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forgiveness
of related party debt and accrued interest (Note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288,361
    
    
    
    
    
    
    
    
    
    
    
    288,361Net 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
   46




---



##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Notes to the Financial Statements
 August 31, 2009
 1.
    
    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
an Exploration Stage Company, as defined by Statement of Financial Accounting Standard
(SFAS) No. 7 Accounting and Reporting for Development Stage Enterprises. 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 $1,083,785 at August 31, 2009, incurred a net loss of $5,281,857 for the year ended
August 31, 2009, and has incurred a deficit accumulated during the exploration stage of
$9,380,436 for the period from February 11, 2004 (inception) through August 31, 2009.
Accordingly, it has not generated cash flows from operations and has primarily relied upon
advances from officers, 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. The Company currently faces a severe working capital shortage and
is not 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 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.
  47




---



##### Table of Contents



2.
    
    Summary of Significant Account Policies
 Basis of Presentation
 The accompanying financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and are expressed in US
dollars. The Companys fiscal year-end is August 31.
 Use of Estimates
 The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
 Basic and Diluted Net Loss Per Share
 The Company computes net loss per share in accordance with SFAS No. 128, Earnings per
Share. SFAS No. 128 requires presentation of both basic and diluted earnings per share
(EPS) on the face of the statement of operations. Basic 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 year
ended August 31, 2009, 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 years ended August 31, 2009 and 2008, the effect 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:
 Year ended
    
    
    Year endedAugust 31,
    
    
    August 31,2009
    
    
    2008Stock options
    
    
    
    
    
    
    1,250,000Class A warrants
    
    
    11,386,180
    
    
    
    11,386,180Class B Common Stock
    
    
    35,732,285
    
    
    
    Class B warrants
    
    
    35,732,285
    
    
    
    
 Comprehensive Income (Loss)
 SFAS No. 130, Reporting Comprehensive Income,establishes standards for reporting and
display of comprehensive income (loss), its components, and accumulated balances. For the
periods presented there were no differences between net loss and comprehensive loss.
 Cash and Cash Equivalents
 The Company considers all highly liquid instruments with maturity of three months or less
at the time of issuance to be cash equivalents.
  48




---



##### Table of Contents



Mineral Property and Exploration Costs
 The Company has been in the exploration stage since its formation on February 11, 2004, and
has not yet realized any revenues from its planned operations. It is primarily engaged in
the acquisition and exploration of mining properties.
 Costs incurred before mineralization is classified as proven and probable reserves are
expensed and classified as Mineral property and exploration costs. Capitalization of mine
development project costs, that meet the definition of an asset, begins once mineralization
is classified as proven and probable reserves.
 When it has been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves, the costs incurred to acquire and
develop such property are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. If mineral
properties are subsequently abandoned or impaired, any capitalized costs will be charged to
operations.
 Long-Lived Assets
 In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, the Company tests long-lived assets or asset groups for recoverability when events
or changes in circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to: significant
decreases in the market price of the asset; significant adverse changes in the business
climate or legal factors; accumulation of costs significantly in excess of the amount
originally expected for the acquisition or construction of the asset; current period cash
flow or operating losses combined with a history of losses or a forecast of continuing
losses associated with the use of the asset; and current expectation that the asset will
more likely than not be sold or disposed significantly before the end of its estimated
useful life.
 Recoverability is assessed based on the carrying amount of the asset and its fair value
which is generally determined based on the sum of the undiscounted cash flows expected to
result from the use and the eventual disposal of the asset, as well as specific appraisal
in certain instances. An impairment loss is recognized when the carrying amount is not
recoverable and exceeds fair value. Management believes no impairment exists as of August
31, 2009.
 Financial Instruments
 Effective September 1, 2008, the Company partially adopted SFAS No. 157, Fair Value
Measurements.This statement defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosure about fair
value measurements. As permitted by FASB (Financial Accounting Standards Board) Staff
Position No. FAS 157-2, Effective Dates of FASB Statement No. 157, the Company elected to
defer the adoption of SFAS No. 157 for all nonfinancial assets and liabilities, except
those that are recognized or disclosed at fair value on a non-recurring basis, until
September 1, 2009. The partial adoption of SFAS No. 157 did not have a material impact on
the Companys financial statements.
  49




---



##### Table of Contents



To increase consistency and comparability in fair value measurements, SFAS No. 157
establishes a fair value hierarchy that prioritizes the inputs into valuation techniques
used to measure fair value into three levels as follows:
 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 August 31, 2009, the Company had the following financial assets and liabilities which
are measured at fair value:
 Level 1
    
    
    Level 2
    
    
    Level 3Restricted
cash (time deposits)
    
    
    
    
    
    $
    318,154
    
    
    
    
 The Company has no financial assets or liabilities measured at fair value using Level 1 or
Level 3 inputs.
 The fair values of other financial assets and liabilities, which include cash, accounts
payable and notes payable were estimated to approximate their carrying value due to the
immediate or short-term maturity of these financial instruments. The fair value of the
letter of credit issued in conjunction with the reclamation bond (Note 4) approximates the
fees paid to obtain it.
 Income Taxes
 Potential benefits of income tax losses are not recognized in the accounts until
realization is determined to be more likely than not. The Company has adopted SFAS No. 109, Accounting for
Income Taxesas of its inception. The potential benefit
of net operating losses have not been recognized in these financial statements because the
Company cannot be assured that it is more likely than not it will utilize the net operating
losses carried forward in future years.
 The Company has no unrecognized tax benefits. The Company files income tax returns in the U.S.
federal jurisdiction and in the state of Colorado. Management does not believe there will
be any material changes in the Companys unrecognized tax positions over the next 12
months.
 The Companys policy is to recognize interest and penalties accrued on any unrecognized tax
benefits as a component of income tax expense. There was no income tax expense recognized
during the years ended August 31, 2009 or 2008 for interest and penalties.
 Share Based Payments
 The Company recognizes the cost of employee services received in exchange for an award of
equity instruments in the financial statements, and the cost is measured based on the grant
date fair value of the award. Stock-based compensation expense is recognized over the
period during which an employee is required to provide service in exchange for the award
(the requisite service period). The Company utilizes the Black-Scholes option-pricing
model to determine fair value of stock option awards. Key assumptions of the Black-Scholes
option-pricing model include applicable volatility rates, risk-free interest rates and the
instruments expected remaining life. These assumptions require significant management
judgment.
  50




---



##### Table of Contents



Asset Retirement Obligation
 SFAS 143, Accounting for Asset Retirement Obligations,requires the fair value of a
liability for an asset retirement obligation to be recognized in the period that it is
incurred if a reasonable estimate of fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the long-lived asset
(see Note 3). Accretion expense is recorded in each subsequent period to recognize the
changes in the liability resulting from the passage of time. During the years ended August
31, 2009 and 2008, the Company recorded accretion expense of $46,500 and $25,000,
respectively. 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 long-lived
asset. Other than the increase due to accretion, no other changes or revisions to the
original fair value of the liability occurred during the years ended August 31, 2009 or
2008.
 Recent Accounting Pronouncements
 Effective September 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an amendment of FASB Statement No.
115.This statement permits entities to choose to measure eligible items at fair value
at specified election dates. The adoption of SFAS No. 159 did not have a material impact
on the Companys financial statements.
 In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141
(Revised 2007), Business Combinations(SFAS 141R). SFAS 141R continues to require the
purchase method of accounting to be applied to all business combinations, but it
significantly changes the accounting for certain aspects of business combinations. Under
SFAS 141R, an acquiring entity is required to recognize all the assets acquired and
liabilities assumed in a transaction at the acquisition-date fair value with limited
exceptions. SFAS 141R changes the accounting treatment for certain specific acquisition
related items including: (1) expensing acquisition related costs as incurred; 2) valuing
non-controlling interests at fair value at the acquisition date; and (3) expensing
restructuring costs associated with an acquired business. SFAS 141R also includes a
substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively
to business combinations for which the acquisition date is on or after September 1, 2009
for the Company. The Company does not expect that the adoption of SFAS 141R will have an
impact on its financial statements unless the Company enters into business acquisitions in
the future.
 In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated
Financial Statements(SFAS 160). SFAS 160 establishes new accounting and reporting
standards for the non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a non-controlling interest in a subsidiary (minority
interest) is an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements and separate from the parent companys
equity. Among other requirements, this statement requires consolidated net income to be
reported at amounts that include the amounts attributable to both the parent and the
non-controlling interest. It also requires disclosure, on the face of the consolidated
statement of operations, of the amounts of consolidated net income attributable to the
parent and to the non-controlling interest. This statement is effective for the Company on
September 1, 2009. The adoption of SFAS 160 will not have an impact on the Companys
financial statements.
 In June 2008, the FASB issued Emerging Issues Task Force (EITF) Issue No. 07-5,
Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock
(EITF 07-5). EITF 07-5 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal years. EITF
07-5 requires the application of a two-step model in determining whether a financial
instrument or an embedded feature is indexed to an issuers own stock, including evaluation
of the instruments contingent
exercise and settlement provisions. This statement is effective for the Company on
September 1, 2009. The Company does not expect the adoption of this statement will have a
material impact on its financial statements.
  51




---



##### Table of Contents



In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles  a replacement of SFAS 162(SFAS
No. 168). SFAS No. 168 provides for the FASB Accounting Standards Codification to be the
single official source of authoritative, non-governmental GAAP. The Codification did not
change GAAP, but reorganizes the structure. SFAS No. 168 is effective for interim and
annual periods ending after September 15, 2009 and will be adopted by the Company beginning
in the first quarter of its fiscal year 2010. The Company does not expect the adoption of
SFAS 168 to have a material impact on its financial statements.
 3.
    
    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 bearing interest at 7% per year with
interest only payable monthly for two years, with all unpaid
principal originally due June 29, 2009.
In July 2009, the due date on the mortgage was extended until June 29, 2010. Interest on
the unpaid interest and principal balance accrues at the rate of 12% per annum from August
28, 2008 forward. Interest expense related to the Mill note for the years ended August 31,
2009 and 2008 was $79,897 and $45,500, 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 August 31, 2009 and 2008:
 August 31,
    
    
    August 31,2009
    
    
    2008Computer equipment
    
    $
    2,118
    
    
    $
    2,118Vehicle
    
    
    
    
    
    
    3,267Mine and drilling equipment
    
    
    113,278
    
    
    
    116,379Mobile mining equipment
    
    
    61,519
    
    
    
    140,585Land and mill
    
    
    1,567,176
    
    
    
    1,566,2671,744,091
    
    
    
    1,828,616Less accumulated depreciation
    
    
    (44,471
    )
    
    
    (8,782
    )$
    1,699,620
    
    
    $
    1,819,834
 Depreciation expense was $51,322 and $8,782 for the years ended August 31, 2009 and 2008,
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.
 4.
    
    Notes payable  related parties
 During the year ended August 31, 2009, the Company borrowed $72,500 and $303,200 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 an additional six months from the
original due dates. 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 year ended August 31, 2009, the
Company recorded interest expense of $13,435 relating to the Notes. The notes outstanding
at August 31, 2009 are due at varying times between January 19, 2010 and September 18,
2010.
  52




---



##### Table of Contents



5.
    
    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 Company
recorded interest expense of $7,715 for the year ended August 31, 2009. The promissory
note is in default and a Motion for Summary Judgment has been granted. See Note 10 for
additional details.
 6.
    
    Mineral properties interests
 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:
 a)
    
    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);
 b)
    
    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) See Note 10 for additional
details;
 c)
    
    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.
 d)
    
    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 10th 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.
 e)
    
    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 option agreement: (i) will terminate in the event the Company fails to make any of the
payments required to maintain the option in good standing; and (ii) notwithstanding
anything else in the option agreement, may be terminated by the Company within 18 (amended
to 12), months from date of the option agreement by providing 10 days written notice to
the Optionors. See Note 10 for additional details.
  53




---



##### Table of Contents



7.
    
    Stockholders Equity
 Stock Split
 In October 2008, the Company effected a stock split in the form of a 30% stock dividend for
its shareholders of record as of November 6, 2008. The dividend was paid on November 28,
2008. Where applicable, the Company has restated its capital accounts, shares outstanding,
weighted average shares and loss per share calculations for all periods presented in these
financial statements and related footnotes to reflect the stock dividend. The par value
per share was not changed.
 Fiscal 2008 Common Stock Transactions:
 On November 20, 2007, the Company issued a total of 11,386,180 common shares at a price of
$0.2885 per common share under a private placement for gross proceeds of $3,284,475 (net
proceeds of $3,002,244). Each common share was issued with one non-transferable share
purchase warrant. Each warrant entitles the holder thereof to purchase an additional
common share at a price of $0.50 per share. All warrants expired on November 14, 2009.
 During the year ended August 31, 2008, the Company issued 130,000 shares of its restricted
stock to a consultant for investor relations services valued at $0.17 per share (the quoted
market price at the date of issuance), which resulted in $22,000 being recorded as expense.
The Company also issued 1,866,940 shares to YA Global Investments
pursuant to the terms of an unsuccessful financing. The shares were valued at $0.06 per
share (the quoted market price at the date of issuance), resulting in $114,889 being
recorded as expense.
 In February 2008, the Company approved the 2008 Stock Incentive Plan (2008 Plan) which
provides incentive stock and non-statutory options to be granted to select employees,
directors and consultants of the Company. The 2008 Plan provides that awards may be
granted for up to 12,480,000 shares of the Companys common shares.
 Pursuant to the 2008 Plan, during the year ended August 31, 2008, the Company issued
7,832,500 shares of its common stock to employees, directors and consultants for services
rendered. The common shares were valued based on the quoted market price on the date of
the respective stock grant, which ranged from $0.06 to $0.11 per share. The total grant
date fair value of these shares was $974,389. Of the 7,832,500 common shares issued,
1,014,000 common shares, valued at $109,200, have vesting requirements and are being
amortized and recorded to expense over the requisite service period, which is six to
eighteen months. During the year ended August 31, 2008, the Company recorded expense of
$732,850 related to the 7,832,500 shares.
 Fiscal 2009 Common Stock Transactions:
 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, 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 at 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 Series A common
stockholders to receive Class B Securities, certain conditions must be met. As of August
31, 2009, 35,732,285 (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.
  54




---



##### Table of Contents



During the year ended August 31, 2009, the Company issued 975,000 shares of restricted
Class A Common Stock valued at $0.02 to $0.04 per share (the quoted market prices at the
dates of the respective stock grants) and an additional 68,250,000 shares of its restricted
Class A common stock valued at $0.0035 to $0.02 per share (the quoted market prices at the
dates of the respective stock grants), to a consultant for corporate communications
services which resulted in $318,000 being recorded as expense. Also during the year ended
August 31, 2009, the Company issued 50,000,000 shares of restricted Class A Common Stock to
employees, directors and consultants valued at $0.0133 per share (the quoted market prices
at the dates of the respective stock grants), for services rendered during the year ended
August 31, 2009, which resulted in $665,000 being recorded as expense.
 Pursuant to the 2008 Plan the Company issued 4,579,770 shares of its Class A Common Stock
to employees, directors and consultants for services rendered during the year ended August
31, 2009. The common shares were valued based upon the quoted market price on the date of
the respective stock grants, which ranged from $0.02 to $0.08 per share. The total grant
date fair value of these shares was $224,250, of which $55,250 was expensed upon issue. Of
the 12,412,270 common shares issued under the 2008 Plan as of August 31, 2009, 3,809,000
common shares, valued at $278,200, have vesting requirements and are being amortized and
recorded to expense over the requisite service period, which is six to eighteen months.
During the year ended August 31, 2009, the Company recorded expense of $209,111 related to
the 3,809,000 shares.
 In September 2008, the Company approved the 2008 Non-qualified Consultants and Advisors
Stock Compensation Plan (2008 Consultants Plan) whereby the Company may grant up to
65,000,000 shares of the Companys stock in exchange for services rendered to the Company.
In January 2009 and again in March 2009, the Company authorized an additional 50,000,000
shares under the 2008 Consultants Plan. In June 2009, the Company authorized an additional
100,000,000 shares under the 2008 Consultants Plan. Therefore, the total authorized shares
available for grant under the 2008 Consultants Plan is 265,000,000 as of August 31, 2009.
During the year ended August 31, 2009, the Company has issued 206,630,586 shares of its
Class A Common Stock under the 2008 Consultants Plan for services rendered by various
consultants valued at $0.0035 to $0.08 per share (the quoted market prices at the dates of
the respective stock grants), which resulted in $2,809,610 being recorded as expense.
 In November 2008, the Company approved the 2008 Employee and Director Stock Compensation
Plan (2008 Employee Plan), whereby the Company may grant up to 46,800,000 shares of the
Companys stock in exchange for services rendered to the Company. In January 2009, the
Company authorized an additional 39,000,000 shares under the 2008 Employee Plan. During
the year ended August 31, 2009, 69,236,650 shares of Class A Common Stock were issued to
employees valued at $0.0034 to $0.08 per share (the quoted market prices at the dates of
the respective stock grants), for services rendered during the year ended August 31, 2009,
which resulted in $554,276 being recorded as expense.
 Stock options
 The Company recorded compensation expense related to stock options of $4,094 and $895,209
for the years ended August 31, 2009 and 2008, respectively. As of August 31, 2009, the
Company had no unrecognized compensation cost related to stock options. During the year
ended August 31, 2009, the Company did not grant options, 600,000 options were cancelled
and 650,000 options were forfeited. As of August 31, 2009, no options are outstanding
under the 2008 Plan.
  55




---



##### Table of Contents



A summary of option activity under the 2008 Plan for the years ended August 31, 2008 and
2009 is as follows:
 Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOutstanding at September 1, 2007
    
    
    Granted
    
    
    2,400,000
    
    
    $
    0.59Forfeited
    
    
    (608,332
    )
    
    
    0.70Cancelled
    
    
    (541,668
    )
    
    
    0.69Outstanding at August 31, 2008
    
    
    1,250,000
    
    
    
    0.50Granted
    
    
    
    
    
    
    Forfeited
    
    
    (650,000
    )
    
    
    0.32Cancelled
    
    
    (600,000
    )
    
    
    0.70Outstanding at August 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Exercisable at August 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
 The following table presents information relating to nonvested stock options as of
August 31, 2009:
 Weighted Average Grant-DateShares
    
    
    Fair ValueNonvested at September 1, 2008
    
    
    500,000
    
    
    $
    0.13Vested
    
    
    (125,000
    )
    
    
    (0.13
    )Forfeited
    
    
    (375,000
    )
    
    
    (0.13
    )Nonvested at August 31, 2009
    
    
    
    
    
    $
    
 8.
    
    Related Party Transactions
 a)
    
    For the year ended August 31, 2009, the Company recognized $9,000 for mineral
property and exploration costs that were incurred from a company owned by the former
president of the Company. For the year ended August 31, 2008, the Company recognized
$41,540 for mineral property and exploration costs that were incurred directly or from
a company partially owned by a former officer and director of the Company. For the
year ended August 31, 2008, the Company recognized $77,985 for mineral property and
exploration costs and property, plant and equipment costs that were incurred from a
company owned by the former president of the Company. In addition during the year
ended August 31, 2008, the Company sold property, plant and equipment and other assets
to an affiliated company at book value for cash of $35,000. No gain or loss was
recorded on the sale.
 b)
    
    Accounts payable and accrued liabilities at August 31, 2009 and 2008, include
$39,167 and $24,258, respectively, due to affiliated companies for mineral property
and exploration costs, general and administrative costs and property, plant and
equipment.
  56




---



##### Table of Contents



9.
    
    Income Taxes
 The reconciliation between the expected federal income tax benefit computed by
applying the Federal statutory rate to loss before income taxes and the actual benefit for
taxes on loss for the years ended August 31, 2009 and 2008 are as follows:
 2009
    
    
    2008Expected income tax benefit at statutory rate
    
    $
    1,848,650
    
    
    $
    1,302,357State taxes
    
    
    132,046
    
    
    
    93,024Permanent difference
    
    
    391
    
    
    
    1,760Other
    
    
    (980
    )
    
    
    5,586Change in valuation allowance
    
    
    (1,980,107
    )
    
    
    (1,402,727
    )Income tax benefit
    
    $
    
    
    
    $
    
 The Company has net operating loss carry-forwards (NOLs) for tax purposes of
approximately $7,295,000 as of August 31, 2009. These NOLs expire on various dates through
2029. On June 17, 2007, a change in control occurred which may substantially limit
utilization of net operating losses incurred prior to that date.
 The Companys deferred tax assets as of August 31, 2009 and 2008 are estimated as follows:
 2009
    
    
    2008Net operating loss
    
    $
    2,744,816
    
    
    $
    949,736Property, plant and equipment
    
    
    334,052
    
    
    
    166,153Deferred financing costs
    
    
    
    
    
    
    62,823Stock-based compensation
    
    
    436,111
    
    
    
    356,160Deferred tax assets
    
    
    3,514,979
    
    
    
    1,534,872Valuation allowance
    
    
    (3,514,979
    )
    
    
    (1,534,872
    )Net deferred tax assets
    
    $
    
    
    
    $
    
 Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The Company has provided a valuation
allowance of 100% of its net deferred tax asset due to the uncertainty of generating
future profits that would allow for the realization of such deferred tax assets.
 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 on 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.
 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 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.
  57




---



##### Table of Contents



11.
    
    Commitments and contingencies
 On July 1, 2009, the Company entered into a new twelve month executive employment agreement
with its CFO. Under the terms of the Agreement, the CFO will receive a salary of $20,000
per month, in addition to certain employee benefits such as health insurance. The CFO is
also entitled to six months salary if terminated by the Company for convenience or due to
a change of control.
 12.
    
    Subsequent Events
 The Company has evaluated subsequent events through November 18, 2009,
the date the financial statements were issued.
 Common Stock Transactions
 Subsequent to August 31, 2009, the Company has issued 245,954,500 shares of its Class A
Common Stock to employees and consultants for services, valued at approximately $756,422
under the various stock compensation plans of the Company, and 125,000,000 restricted shares of its Class A Common Stock pursuant to two lease with an option to purchase leases,
for a total of 370,954,500 shares. The Company has issued 4,857,669 shares of Class B
Common Stock pursuant to its stock dividend of February 27, 2009.
 Subsequent to August 31, 2009, the Company has borrowed $116,000 from its CFO. In
connection with the borrowings, the Company executed unsecured promissory notes, which have
the same characteristics as the Notes described in Note 4.
 On September 14, 2009, the Company authorized an increase of 300,000,000 shares under the
2008 Consultants Plan and an increase of 125,000,000 shares under the 2008 Employee Plan.
 Mining Property Agreements
 On September 18, 2009 the Company entered into a lease with an option to purchase the King
Solomon Mine. The Lease/Option is for a period of three years in consideration for which
the Company issued 50,000,000 shares of restricted Class A Common Stock. The stock is
further 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 Company is to perform exploration, mining, development, production, processing or any
other activity which benefits the leased premises at a minimum cost of $50,000 for each
successive three year term during the term of the Lease/Option. The Company is to pay
lessor a 3.5% net smelter royalty on all mineral bearing ores. 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.
 On September 30, 2009 the Company entered into a lease with an option to purchase the
Brooklyn Mine. The lease/option is for a period of three years in consideration for which
the Company issued 75,000,000 shares of restricted Class A Common Stock. The stock is
further 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 Company is to
perform exploration, mining, development, production, processing or any other activity
which benefits the leased premises at a minimum cost of $150,000 for the first year,
$200,000 for the second year and $250,000 for the third year. The Company is to pay lessor
a 5% net smelter royalty on all mineral bearing ores. 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% net smelter royalty. This amount
may be paid in cash or other cash equivalent as mutually agreed by the Company and the
lessor.
 
  58




---



##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   59




---



##### Table of Contents



Item 9A.
    
    Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  Managements Report on Internal Control Over Financial Reporting
   60




---



##### Table of Contents




    
    Lack of segregation of duties in certain accounting and financial reporting processes
including the approval and execution of disbursements;
 
    
    Certain reports prepared and accounting and reporting conclusions reached in
connection with the financial statement preparation process are not submitted timely to
the Board of Directors for review or approval;
 
    
    The Companys corporate governance responsibilities are performed by the Board of
Directors; we do not have an audit committee or compensation committee. Because our Board
of Directors only meets periodically throughout the year, several of our corporate
governance functions are not performed concurrent (or timely) with the underlying
transaction, evaluation, or recordation of the transaction.
    61




---



##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
 Identify Directors and Executive Officers
   FirstBecame OfficerName and Address
    
    Age
    
    
    and/or Director
    
    Position(s)Lee R. Rice
10920 W. Alameda Ave.
Suite 207
Lakewood, CO 80226
    
    
    65
    
    
    July 2008
    
    Director, President and CEOC. Stephen Guyer
10920 W. Alameda Ave.
Suite 207
Lakewood, CO 80226
    
    
    56
    
    
    February 2008
    
    Director and CFOBeverly E. Rich
1553 Greene St.
Silverton, CO 81433
    
    
    58
    
    
    July 2007
    
    DirectorNorman J. Singer
885 S. Garfield St.
Denver, CO 80209
    
    
    68
    
    
    September 2008
    
    Director
 
    62




---



##### Table of Contents



th
  Significant Employees
  Director Independence
  Board Meetings
    63




---



##### Table of Contents



Audit, Compensation and Nominating Committees
    Shareholder Communications
 ,
 Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Business Conduct and Ethics
 www.cologold.com/s/pdfs/Code_of_Business_Conduct_Ethics.pdf
  64




---



##### Table of Contents



Item 11.
    
    Executive Compensation
 Compensation Covered  All Executive Officers
    Summary Compensation Table
  Non-
    
    
    NonqualifiedName
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity
    
    
    Deferredand
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Incentive
    
    
    Compensation
    
    
    All otherPrincipal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Plan
    
    
    Earnings
    
    
    Compensation
    
    
    TotalPosition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    Compensation
    
    
    ($)
    
    
    ($)
    
    
    ($)Lee R. Rice
    
    
    2009
    
    
    
    58,350
    
    
    
    
    
    
    
    104,331
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,681President, CEO
    
    
    2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    C. Stephen Guyer,
    
    
    2009
    
    
    
    165,000
    
    
    
    243,375
    
    
    
    136,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    544,775Chief Financial Officer
    
    
    2008
    
    
    
    94,423
    
    
    
    
    
    
    
    50,000
    
    
    
    32,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,175Todd C. Hennis,
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Former President, CEO
    
    
    2008
    
    
    
    115,000
    
    
    
    
    
    
    
    
    
    
    
    408,600
    
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    527,800Gary Schellenberg,
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Former VP Exploration
    
    
    2008
    
    
    
    2,438
    
    
    
    
    
    
    
    
    
    
    
    337,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339,938
  Description of Summary Compensation Table
 Executive Employment Agreements
 Lee R. Rice.
 C. Stephen Guyer
  65




---



##### Table of Contents



Equity Compensation Plans
 2008 Stock Incentive Plan
    2008 Non-Qualified Consultants & Advisors Stock Compensation Plan
   66




---



##### Table of Contents



2008 Employee & Director Stock Compensation Plan
  Outstanding Equity Awards at Fiscal Year-end.
  Stock Option Exercised
  Expense Reimbursement
  Retirement Plans and Benefits.
   67




---



##### Table of Contents



Director Compensation
  Fees earned or
    
    
    Stock
    
    
    Option
    
    
    TotalName
    
    paid in cash ($)
    
    
    awards ($)(1)
    
    
    awards ($)
    
    
    ($)Lee R. Rice
    
    
    
    
    
    
    104,331
    
    
    
    
    
    
    
    104,331C. Stephen Guyer
    
    
    
    
    
    
    136,400
    
    
    
    
    
    
    
    136,400Eric Owens (2)
    
    
    
    
    
    
    5,600
    
    
    
    
    
    
    
    5,600Beverly E. Rich
    
    
    
    
    
    
    64,431
    
    
    
    
    
    
    
    64,331Norman Singer
    
    
    
    
    
    
    136,400
    
    
    
    
    
    
    
    136,400
 
 (1)
    
    The stock awards noted in the foregoing table contain the following provisions.(2)
    
    Mr. Owens resigned as a director effective February 9, 2009. Name and Position
    
    No. of Shares
    
    Vesting ProvisionsBeverly E. Rich, Director
    
    
    325,000

    

65,000 of the shares vested; the remaining 260,000 shares
vest if the participant continues as a Director of the
Company through February 28, 2010.Eric O. Owens, Director
    
    
    325,000

    

65,000 of the shares vested; the remaining 260,000 shares
vest if the participant continues as a Director of the
Company through February 28, 2010.Lee R. Rice, Director
    
    
    325,000

    

65,000 of the shares vested; the remaining 260,000 shares
vest if the participant continues as a Director of the
Company through February 28, 2010.Beverly E. Rich, Director
    
    
    325,000

    
    Fully vested.Eric O. Owens, Director
    
    
    325,000

    
    Fully vested.Lee R. Rice, Director
    
    
    325,000

    
    Fully vested.Norman Singer, Director
    
    
    325,000

    
    Fully vested.Beverly E. Rich, Director
    
    
    2,000,000

    
    Restricted, under Rule 144, shares issued on March 26, 2009Lee R. Rice, Director
    
    
    5,000,000

    
    Restricted, under Rule 144, shares issued on March 26, 2009Norman J. Singer, Director
    
    
    2,000,000

    
    Restricted, under Rule 144, shares issued on March 26, 2009C. Stephen Guyer, Director
    
    
    8,000,000

    
    Restricted, under Rule 144, shares issued on March 26, 2009
 Standard Director Compensation Arrangement
   68




---



##### Table of Contents



Indemnification and Limitation on Liability of Directors
     
    
    any breach of the duty of loyalty to us or our stockholders;
 
    
    acts or omissions not in good faith or that involved intentional misconduct or a
knowing violation of law;
 
    
    dividends or other distributions of corporate assets that are in contravention of
certain statutory or contractual restrictions;
 
    
    violations of certain laws; or
 
    
    any transaction from which the director derives an improper personal benefit.
  69




---



##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  Amount andNature ofName and Address of
    
    Beneficial
    
    
    Percentage ofTitle of Class
    
    Beneficial Owner
    
    Ownership
    
    
    Common StockCommon Stock
    
    C. Stephen Guyer
    
    
    84,944,064
    (1)
    
    
    9.4
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    Todd C. Hennis
    
    
    51,350,000
    (1)
    
    
    5.7
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    Lee R. Rice
    
    
    19,383,450
    (1)(2)
    
    
    2.1
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    Beverly E. Rich
    
    
    2,650,000
    (1)(2)
    
    
    0.3
    %1553 Greene StreetSilverton, CO 81433Common Stock
    
    Norman J. Singer
    
    
    2,650,000
    (1)
    
    
    0.3
    %885 S. Garfield St.Denver, CO 80209Common Stock
    
    All officers and directors (4 persons)
    
    
    160,977,514
    
    
    
    17.8
    %Total outstanding
    
    
    
    
    906,352,627Total Affiliate
    
    
    
    
    212,327,514Total non-affiliate
    
    
    
    
    694,025,113
 
 (1)
    
    All shares are owned directly.(2)
    
    All shares are owned directly. 200,000 shares are subject to forfeiture provisions, which
lapse if the recipient continues as a Director of the Company through February 28, 2010.  70




---



##### Table of Contents



Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
  Director Independence
   71




---



##### Table of Contents



Item 14.
    
    Principal Accountant Fees and Services
  Audit Fees
   72




---



##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
   73




---



##### Table of Contents



SIGNATURES
  Colorado Goldfields Inc.By:
    
    /s/ Lee R. RiceLee R. RiceChief Executive OfficerBy:
    
    /s/ C. Stephen GuyerC. Stephen GuyerChief Financial Officer & Principal Accounting Officer
   Signature
    
    Title/s/ Lee R. Rice

Lee R. Rice
    
    President, Chief Executive Officer and Director

(Principal Executive Officer)/s/ C. Stephen Guyer

C. Stephen Guyer
    
    Chief Financial Officer (Principal Accounting
Officer) 
and Director/s/ Beverly E. Rich

Beverly E. Rich
    
    Director/s/ Norman J. Singer

Norman J. Singer
    
    Director
  74




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2
    
    
    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.
  75




---



##### Table of Contents



ExhibitNumber
    
    Description10.14
    
    
    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.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.14
    
    
    Code of Business Conduct and Ethics. Filed as Exhibit
14 to Form 8-K filed February 20, 2008, and
incorporated herein by reference.23.1
    
    
    Consent of GHP Horwath, P.C.*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.  76