##### 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, 2008
 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
    
    20-0716175(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)10920 West Alameda Avenue, Suite 207 Lakewood, CO
    
    80226(Address of principal executive offices)
    
    (Zip Code)
 (303) 984-5324
  Common Stock, $0.001 par value
 Yes o No þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



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
    
    
    13Item 2. Properties
    
    
    16The San Juan Properties
    
    
    18Pride of the West Mill
    
    
    27Item 3. Legal Proceedings
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33PART II
    
    
    34Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    34Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    38Item 8. Financial Statements and Supplementary Data
    
    
    44Balance Sheets
    
    
    45Statements of Operations
    
    
    46Statements of Cash Flows
    
    
    47Statements of Stockholders Equity (Deficit)
    
    
    48Notes to the Financial Statements
    
    
    49Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    61Item 9A. Controls and Procedures
    
    
    62PART III
    
    
    64Item 10. Directors, Executive Officers and Corporate Governance
    
    
    64Item 11. Executive Compensation
    
    
    68Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    73Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    74Item 14. Principal Accountant Fees and Services
    
    
    76PART IV
    
    
    77Item 15. Exhibits and Financial Statement Schedules
    
    
    77SIGNATURES
    
    
    78EXHIBIT INDEX
    
    
    79Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   i




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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




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Available Information
 www.cologold.com. www.cologold.com/s/pdfs/Code_of_Business_Conduct_Ethics.pdf
   2




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Item 1. Business
 Background
    Our Business
 Exploration Costs and Plans,
  Recent Events
 Exploration Costs and Plans
     3




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Hole ID
    
    Depth (ft)
    
    
    Au (ppm)
    
    
    Ag (ppm)
    
    
    Cu (%)
    
    
    Pb (%)
    
    
    Zn (%)CG08-01
    
    
    639.2
    
    
    
    114.34
    
    
    
    155
    
    
    
    1.04
    
    
    
    0.4
    
    
    
    6.3CG08-01
    
    
    639.6
    
    
    
    116.13
    
    
    
    1,062
    
    
    
    1.45
    
    
    
    2.0
    
    
    
    23.1CG08-01
    
    
    639.8
    
    
    
    43.14
    
    
    
    50.18
    
    
    
    0.35
    
    
    
    1.3
    
    
    
    36.6CG08-01
    
    
    640.4
    
    
    
    64.92
    
    
    
    72.49
    
    
    
    0.70
    
    
    
    1.19
    
    
    
    5.8CG08-01
    
    
    640.5
    
    
    
    69.76
    
    
    
    472
    
    
    
    0.84
    
    
    
    0.81
    
    
    
    90.2CG08-01
    
    
    640.9
    
    
    
    69.00
    
    
    
    58.33
    
    
    
    0.42
    
    
    
    0.94
    
    
    
    47CG08-01
    
    
    641.2
    
    
    
    61.61
    
    
    
    54.37
    
    
    
    0.43
    
    
    
    1.76
    
    
    
    21.7CG08-01
    
    
    641.6
    
    
    
    78.46
    
    
    
    63.8
    
    
    
    0.36
    
    
    
    3.07
    
    
    
    12.8
 Source: Colorado Goldfields Inc. field testing, November 7, 2008, Silverton, Colorado using
Thermo Scientific NITON® XL3t x-ray fluorescence (XRF).
 
    
    Results are reported in parts per million. To convert parts per million to troy
ounces per short ton, divide by 34.2857
 
    
    Sample analyses were performed on whole rock drill core
    
    Analysis duration was 120 seconds
   Competitive Business Conditions
   4




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General Government Regulations
 Federal Lands
 Mining Operations .
  Environmental Laws .
  Comprehensive Environmental Response, Compensation, and Liability Act of 1980
 Resource Conservation and Recovery Act
 Clean Air Act
  5




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Clean Water Act Clean Water Act
 National Environmental Policy Act
 Endangered Species Act
  Employees
  Office Facilities
   6




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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.
      7




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Item 7  Managements
Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital
Resources, .
 Our only interest relating to a mining property is an 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 Business and Properties of this Report
for more information regarding our mining 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.
   8




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We will require significant additional capital to continue our exploration activities, and, if
warranted, to develop mining operations.
   Historical production of gold at the 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.
   9




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Reclamation obligations on the San Juan Properties and our Mill could require significant
additional expenditures.
  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.
     10




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The San Juan Properties which we have under option are subject to royalties on production.
  Weather interruptions in the San Juan County, Colorado area may delay or prevent exploration
on the San Juan 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 Interim Chief Executive Officer and Chief Financial Officer and the loss of
these individuals could adversely affect our business.
   11




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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;
    
    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.
  We do not insure against all risks to which we may be subject in our planned operations.
   12




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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.
  FINRA sales practice requirements may also limit a stockholders ability to buy and sell our
stock.
   13




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A small number of existing shareholders own a significant portion of our common stock, which
could limit other shareholders ability to influence the outcome of any shareholder vote.
  We have never paid a cash dividend on our common stock and we do not anticipate paying any in
the foreseeable future.
  The sale of our common stock by the selling shareholders may depress the price of our common
stock due to the limited trading market which exists.
  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.
   14




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If our Standby Equity Distribution Agreement becomes effective, draws on the agreement may
have various adverse effects on us and the market for our common stock .
  
    
    The SEDA may restrict our ability to engage in alternative financings because we will
be deemed to be involved in a near continuous indirect primary public offering of our
securities. As long as we are deemed to be engaged in a public offering, our ability to
engage in a private placement may be limited because of integration concerns.
 
    
    The pricing for the SEDA is relatively expensive if only a small part of the facility
is ever used.
 
    
    Under the terms of the SEDA, YA Global will purchase the common shares offered under
this agreement at a price equal to 95% of the lowest daily volume weighted average price
or VWAP for our common stock on our primary market over a five-day trading period (the
pricing period) following the date of notice of the exercise of our selling rights under
the SEDA. Although such purchases will not be directly reflected in the market price for
our common stock, market awareness of such below-market purchases may cause the market
price for our common stock to decline.
   15




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Item 2. Properties
 Overview
   Terms of our Option and Related Agreements on the San Juan Properties
          16




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
    
    prepare and present to the Optionors a development plan which details the scope and
timing of exploration and mining activities on the San Juan Properties;
    
    maintain the roads and power line right-ofways;
    
    construct safety fences and maintain surface facilities on the San Juan Properties;
    
    maintain automobile insurance in connection with our vehicles traveling over the San
Juan Properties;
    
    perform restoration and reclamation on the San Juan Properties upon termination of
our operations on the land, including returning the land to Range Land post-mining use
standard as that term is used in the Colorado Mined Land Reclamation Act;
    
    protect existing water resources, including mitigating or eliminating the impact of
our activities on domestic or stock water wells in the vicinity of the San Juan
Properties;
    
    properly store and remove hazardous materials; and
    
    indemnify the Optionors for losses and liabilities they may incur due to our
activities on the San Juan Properties.
  Ownership Maintenance Requirements on the San Juan Properties
    17




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Royalty Encumbrances
  
 The San Juan Properties
  Gold King Mine Property
 SJ-13
     18




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19




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History of Operations 1
 2
   Current and Proposed Exploration Activities Exploration Costs and Plans
  Environmental and Regulatory Issues
  
 1
    
    Source: Page i of the Evaluation Report IV on the Gold
King Mines Property, San Juan County, Colorado by E.D. Black, P.E., Denver,
Colorado, February 15, 1990.2
    
    Source: Page 73 of the Evaluation Report IV on the Gold
King Mines Property, San Juan County, Colorado by E.D. Black, P.E., Denver,
Colorado, February 15, 1990.  20




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21




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Mogul Mine Property
      Exploration Costs and Plans
   22




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Mayflower Mine Property
 1901-1957 3
    
 3
    
    Page 6 of the SEG Newsletter October 1993 article
entitled Comparison of Gold-Rich and Gold-Poor Quartz-Base Metal Veins,
Western San Juan Mountains, Colorado: The Mineral Point Area As An Example by
Paul J. Bartos.  23




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Exploration Costs and Plans
 Managements Discussion and analysis of plan of Operation.
 Recent Exploration Events
  24




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Exploration Costs and Plans
   ®
  Hole ID
    
    Depth (ft)
    
    
    Au (ppm)
    
    
    Ag (ppm)
    
    
    Cu (%)
    
    
    Pb (%)
    
    
    Zn (%)CG08-01
    
    
    639.2
    
    
    
    114.34
    
    
    
    155
    
    
    
    1.04
    
    
    
    0.4
    
    
    
    6.3CG08-01
    
    
    639.6
    
    
    
    116.13
    
    
    
    1,062
    
    
    
    1.45
    
    
    
    2.0
    
    
    
    23.1CG08-01
    
    
    639.8
    
    
    
    43.14
    
    
    
    50.18
    
    
    
    0.35
    
    
    
    1.3
    
    
    
    36.6CG08-01
    
    
    640.4
    
    
    
    64.92
    
    
    
    72.49
    
    
    
    0.70
    
    
    
    1.19
    
    
    
    5.8CG08-01
    
    
    640.5
    
    
    
    69.76
    
    
    
    472
    
    
    
    0.84
    
    
    
    0.81
    
    
    
    90.2CG08-01
    
    
    640.9
    
    
    
    69.00
    
    
    
    58.33
    
    
    
    0.42
    
    
    
    0.94
    
    
    
    47CG08-01
    
    
    641.2
    
    
    
    61.61
    
    
    
    54.37
    
    
    
    0.43
    
    
    
    1.76
    
    
    
    21.7CG08-01
    
    
    641.6
    
    
    
    78.46
    
    
    
    63.8
    
    
    
    0.36
    
    
    
    3.07
    
    
    
    12.8
 Source: Colorado Goldfields Inc. field testing, November 7, 2008, Silverton, Colorado using
Thermo Scientific NITON® XL3t x-ray fluorescence (XRF).
 
    
    Results are reported in parts per million. To convert parts per million to troy
ounces per short ton, divide by 34.2857
    
    Sample analyses were performed on whole rock drill core
    
    Analysis duration was 120 seconds
   25




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Estimated Exploration Costs(amounts in thousands)Gold King
    
    
    Mogul
    
    
    MayflowerBonds and Permits
    
    $
    300
    
    
    $
    100
    
    
    $
    20Surface Drilling
    
    
    600
    
    
    
    700
    
    
    
    500Underground Rehabilitation &
Development
    
    
    3,500
    
    
    
    1,000
    
    
    
    400Underground Drilling
    
    
    900
    
    
    
    100
    
    
    
    Surface and Power Improvements
    
    
    150
    
    
    
    
    
    
    
    40Consultants and Studies
    
    
    75
    
    
    
    75
    
    
    
    100Other Costs
    
    
    150
    
    
    
    150
    
    
    
    150Total Estimated Costs
    
    $
    5,675
    
    
    $
    2,125
    
    
    $
    1,210
  Managements Discussion and Analysis or Plan of Operation.
  26




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Past Exploration Activities
  
 Pride of the West Mill
      27




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1.
    
    Leaks in the mill roof allowing rain and melt water to collect in the
basement of the mill, transiting the single walled pipe to the mill drainage pond.2.
    
    Piping from the main mill building to the mill building drainage pond is
currently only of single wall thickness; two-walled thickness is required.3.
    
    Existing holes in the existing single tailing pond liner.4.
    
    The mill building drainage pond needs an additional liner.
         28




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29




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30




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Estimated Cost(amounts inthousands)New Tailings Facility
    
    $
    600Reactivation Costs
    
    
    250Water Improvements
    
    
    100Building Maintenance
    
    
    150Total Estimated Costs
    
    $
    1,100
     31




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Item 3. Legal Proceedings
        Item 7  Managements Discussion and Analysis of Financial Condition and Results of Operations
 Pride of the West Mill,
  32




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Management Discussion and Analysis of Financial Condition and
Results of Operation
  
 Item 4. Submission of Matters to a Vote of Security Holders
   33




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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
    
    
    
    0.08
 
 *
    
    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.(1)
    
    The low price during this period, before being adjusted for the forward stock splits, was
$0.15.    The Securities Enforcement and Penny Stock Reform Act of 1990
   34




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
    
    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 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.
   35




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Securities Authorized for Issuance Under Equity Compensation Plans
 Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number of securitiesto be issued upon
    
    
    Weighted averageexercise of
    
    
    exercise price of
    
    
    Number of securitiesoutstanding options,
    
    
    outstanding options,
    
    
    remaining availablePlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    for future issuanceEquity compensation
plans approved by
security holders:NoneEquity compensation
plans not approved
by security
holders:2008 Employee Stock
Incentive Plan
    
    
    1,250,000
    (1)
    
    $
    0.50
    
    
    
    3,575,000
 
 (1)
    
    Represents options to purchase shares granted to two of our officers and three of our
Directors under the 2008 Stock Incentive Plan. The options have ten-year terms and were
granted in 2008. Please see Item 11  Executive Compensation  Equity Compensation plans,
for a description of this plan. 2008 Non-Qualified Consultants & Advisors Stock Compensation Plan
   36




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2008 Employee & Director Stock Compensation Plan
  Transfer Agent
  Issuer purchase of equity securities
   37




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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 2009;
 
    
    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
   (i)
    
    an undivided 40% interest in the San Juan Properties will vest when we have
incurred expenditures of not less than $6,000,000 on the San Juan Properties,
provided that such expenditures must be incurred within five years from the date of
the option agreement;
 (ii)
    
    an additional undivided 20% interest in the San Juan Properties will vest
when: (a) we have incurred additional expenditures of not less than $3,500,000 on the
San Juan Properties, provided that such expenditures must be incurred within 7.5
years from the date of the Option Agreement, and (b) we issue, subject to compliance
with applicable securities laws, 10,000,000 shares of our common stock to the
optionors; and
 (iii)
    
    an additional undivided 20% interest in the San Juan Properties (for an
aggregate of
80%) will vest when: (a) we have incurred additional expenditures of not less than
$3,500,000 on the San Juan Properties, provided that such expenditures must be
incurred within 10 years from the date of the option agreement, and (b) we issue,
subject to compliance with applicable securities laws, an additional 10,000,000
shares of our common stock to the optionors.
  38




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Liquidity and Capital Resources
   Liquidity and Capital Resources
    39




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Contractual Obligations
  Less than 1Contractual Obligations
    
    Total
    
    
    Year
    
    
    2 and 3
    
    
    4 and 5Principal payment on
Pride of the West
Mill(1)
    
    $
    650,000
    
    
    $
    650,000
 
 (1)
    
    This amount is due on June 29, 2009, 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. Critical Obligations
  Less than 1Critical Obligations
    
    Total
    
    Year
    
    2 and 3
    
    4 and 5Option payment to San Juan Corp.(1)
    
    $
    300,000

    
    $
    100,000

    
    $
    200,000Royalty option exercise(2)
    
    $
    250,000

    
    $
    250,000
 
 (1)
    
    Should we default on the Option Agreement with San Juan Corp., (see paragraph 6 of Notes to the
Financial Statements), our only remaining fixed asset would be the Pride of the West Mill, which is
subject to a $650,000 Deed of Trust in favor of Tusco, Inc.(2)
    
    Should we be unable to execute the Option Contract to purchase the legacy royalties described
in paragraph 6(b) of the Notes to the Financial Statements, then those royalties would remain
payable to the royalty holder and would reduce our ultimate profitability.  Results of Operations
  Year Ended August 31, 2008 Compared to Year Ended August 31, 2007
    41




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##### Table of Contents



Critical Accounting Policies
  Exploration and Development Costs
 Long-lived Assets
 Property Retirement Obligation
 Stock-Based Compensation Share-Based Payment
  42




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##### Table of Contents



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.
 Business Combinations
  43




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
  44




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##### Table of Contents



Colorado Goldfields Inc. (An Exploration Stage Company)
 
 Balance Sheets
 August 31,
    
    
    August 31,2008
    
    
    2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    134,856
    
    
    $
    22,046Restricted cash (Note 3)
    
    
    
    
    
    
    19,965Prepaid expenses and other
    
    
    79,656
    
    
    
    6,739Total Current Assets
    
    
    214,512
    
    
    
    48,750Non-Current AssetsProperty, plant and equipment (Note 4)
    
    
    1,819,834
    
    
    
    1,400,677Reclamation bond (Note 4)
    
    
    318,154
    
    
    
    Other
    
    
    13,520
    
    
    
    14,120Total Non-Current Assets
    
    
    2,151,508
    
    
    
    1,414,797Total Assets
    
    $
    2,366,020
    
    
    $
    1,463,547LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT)Current LiabilitiesAccounts payable (Note 8)
    
    $
    398,671
    
    
    $
    76,446Accrued liabilities
    
    
    38,236
    
    
    
    28,426Advances payable (Note 5)
    
    
    
    
    
    
    400,733Notes payable (Notes 4 and 5)
    
    
    650,000
    
    
    
    100,000Total Current Liabilities
    
    
    1,086,907
    
    
    
    605,605Non-Current LiabilitiesLong-term debt (Note 4)
    
    
    
    
    
    
    650,000Asset retirement obligation (Note 4)
    
    
    525,000
    
    
    
    500,000Total Non-Current Liabilities
    
    
    525,000
    
    
    
    1,150,000Total Liabilities
    
    
    1,611,907
    
    
    
    1,755,605Contingencies and Commitments (Notes 4, 5, 6, 7, 8, 10, 11 and 12)Stockholders Equity (Deficit)Common stock, 1,185,000,000 shares authorized, $0.001
par value; 104,404,708 and 88,085,000 shares
issued and outstanding, respectively
    
    
    72,570
    
    
    
    56,250Additional paid in capital
    
    
    4,750,872
    
    
    
    Donated capital
    
    
    29,250
    
    
    
    29,250Deficit accumulated during the exploration stage
    
    
    (4,098,579
    )
    
    
    (377,558
    )Total Stockholders Equity (Deficit)
    
    
    754,113
    
    
    
    (292,058
    )Total Liabilities and Stockholders Equity
    
    $
    2,366,020
    
    
    $
    1,463,547
   45




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##### 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, 2008
    
    
    August 31, 2007
    
    
    August 31, 2008Revenue
    
    $
    
    
    
    $
    
    
    
    $
    Operating expensesDonated rent (Note 9)
    
    
    
    
    
    
    2,250
    
    
    
    9,750Donated services (Note 9)
    
    
    
    
    
    
    4,500
    
    
    
    19,500General and administrative
    
    
    2,607,001
    
    
    
    62,948
    
    
    
    2,671,449Mineral property and exploration costs
    
    
    587,279
    
    
    
    93,862
    
    
    
    716,231Professional fees
    
    
    494,359
    
    
    
    126,547
    
    
    
    639,181Total operating expenses
    
    
    (3,688,639
    )
    
    
    (290,107
    )
    
    
    (4,056,111
    )Other income (expense)Other income
    
    
    
    
    
    
    1,048
    
    
    
    1,048Interest income
    
    
    15,838
    
    
    
    
    
    
    
    15,838Interest expense
    
    
    (48,220
    )
    
    
    (11,134
    )
    
    
    (59,354
    )Total other expense
    
    
    (32,382
    )
    
    
    (10,086
    )
    
    
    (42,468
    )Net Loss
    
    $
    (3,721,021
    )
    
    $
    (300,193
    )
    
    $
    (4,098,579
    )Net Loss Per Share  Basic and Diluted
    
    $
    (0.04
    )
    
    
    *Weighted Average Shares Outstanding 
Basic and Diluted
    
    
    95,419,972
    
    
    
    88,085,000
 *
    
    Amount is less than $(0.01) per share.   46




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##### 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, 2008
    
    
    August 31, 2007
    
    
    August 31, 2008Cash Flows Used in Operating Activities:Net loss
    
    $
    (3,721,021
    )
    
    $
    (300,193
    )
    
    $
    (4,098,579
    )Adjustments to reconcile net loss to cash used in
operating activities:Donated services and rent
    
    
    
    
    
    
    6,750
    
    
    
    29,250Depreciation
    
    
    8,782
    
    
    
    
    
    
    
    8,782Stock issued for services
    
    
    869,739
    
    
    
    
    
    
    
    869,739Stock-based compensation  options (Note 7)
    
    
    895,209
    
    
    
    
    
    
    
    895,209Accretion expense on asset retirement obligation
    
    
    25,000
    
    
    
    
    
    
    
    25,000Change in operating assets and liabilities:Decrease (increase) in restricted cash
    
    
    19,965
    
    
    
    (19,965
    )
    
    
    Increase in prepaid expenses and other
    
    
    (72,917
    )
    
    
    (6,739
    )
    
    
    (79,656
    )Increase in accounts payable
    
    
    322,225
    
    
    
    73,988
    
    
    
    398,671Increase in accrued liabilities
    
    
    9,810
    
    
    
    22,985
    
    
    
    38,236Increase in reclamation bond
    
    
    (318,154
    )
    
    
    
    
    
    
    (318,154
    )Decrease (increase) in other assets
    
    
    600
    
    
    
    (14,120
    )
    
    
    (13,520
    )Net cash used in operating activities
    
    
    (1,960,762
    )
    
    
    (237,294
    )
    
    
    (2,245,022
    )Cash Flows from Investing Activities:Proceeds from sale of property, plant and
equipment
    
    
    35,000
    
    
    
    
    
    
    
    35,000Acquisition of property, plant and equipment
    
    
    (462,939
    )
    
    
    (250,677
    )
    
    
    (713,616
    )Net cash used in investing activities
    
    
    (427,939
    )
    
    
    (250,677
    )
    
    
    (678,616
    )Cash Flows From Financing Activities:Advances received
    
    
    
    
    
    
    405,733
    
    
    
    405,733Repayment of advances (Note 5)
    
    
    (400,733
    )
    
    
    (5,000
    )
    
    
    (405,733
    )Advances from related party
    
    
    
    
    
    
    10,000
    
    
    
    10,052Repayment of advances from related party
    
    
    
    
    
    
    (10,000
    )
    
    
    (10,052
    )Proceeds from note payable
    
    
    
    
    
    
    100,000
    
    
    
    100,000Repayment of note payable (Note 5)
    
    
    (100,000
    )
    
    
    
    
    
    
    (100,000
    )Net proceeds from issuance of common stock
    
    
    3,002,244
    
    
    
    
    
    
    
    3,058,494Net cash provided by financing activities
    
    
    2,501,511
    
    
    
    500,733
    
    
    
    3,058,494Increase in cash and cash equivalents
    
    
    112,810
    
    
    
    12,762
    
    
    
    134,856Cash and cash equivalents  Beginning of Period
    
    
    22,046
    
    
    
    9,284
    
    
    
    Cash and cash equivalents  End of Period
    
    $
    134,856
    
    
    $
    22,046
    
    
    $
    134,856Supplemental Disclosures:Interest paid
    
    $
    48,220
    
    
    $
    7,583
    
    
    $
    55,803Income taxes paid
    
    $
    
    
    
    $
    
    
    
    $
    Non-cash investing and financing activities:Acquisition of land and building:Cash paid
    
    $
    
    
    
    $
    250,677
    
    
    $
    250,677Mortgage note given to seller
    
    
    
    
    
    
    650,000
    
    
    
    650,000Asset retirement obligation assumed
    
    
    
    
    
    
    500,000
    
    
    
    500,000Assets acquired
    
    $
    
    
    
    $
    1,400,677
    
    
    $
    1,400,677
   47




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##### 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, 2008
 DeficitAccumulated
    
    
    TotalAdditional
    
    
    
    
    
    
    During the
    
    
    StockholdersCommon Stock
    
    
    Paid in
    
    
    Donated
    
    
    Exploration
    
    
    EquityNumber of Shares
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Capital
    
    
    Stage
    
    
    (Deficit)Balances  February 11, 2004(Date of
inception)
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Issuance of common stock for cash
    
    
    39,500,000
    
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,898
    )
    
    
    (5,898
    )Balances  August 31, 2004
    
    
    39,500,000
    
    
    
    2,500
    
    
    
    
    
    
    
    4,500
    
    
    
    (5,898
    )
    
    
    1,102Issuance of common stock for cash
    
    
    48,585,000
    
    
    
    53,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,750Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,319
    )
    
    
    (35,319
    )Balances  August 31, 2005
    
    
    88,085,000
    
    
    
    56,250
    
    
    
    
    
    
    
    13,500
    
    
    
    (41,217
    )
    
    
    28,533Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,148
    )
    
    
    (36,148
    )Balances  August 31, 2006
    
    
    88,085,000
    
    
    
    56,250
    
    
    
    
    
    
    
    22,500
    
    
    
    (77,365
    )
    
    
    1,385Donated services and rent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,750
    
    
    
    
    
    
    
    6,750Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300,193
    )
    
    
    (300,193
    )Balances  August 31, 2007
    
    
    88,085,000
    
    
    
    56,250
    
    
    
    
    
    
    
    29,250
    
    
    
    (377,558
    )
    
    
    (292,058
    )Issuance of common stock for cash (net of
offering costs
of $282,231) (Note 8)
    
    
    8,758,600
    
    
    
    8,759
    
    
    
    2,993,485
    
    
    
    
    
    
    
    
    
    
    
    3,002,244Shares issued for services
    
    
    7,561,108
    
    
    
    7,561
    
    
    
    862,178
    
    
    
    
    
    
    
    
    
    
    
    869,739Stock options issued to employees (Note 8)
    
    
    
    
    
    
    
    
    
    
    895,209
    
    
    
    
    
    
    
    
    
    
    
    895,209Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,721,021
    )
    
    
    (3,721,021
    )Balances  August 31, 2008
    
    
    104,404,708
    
    
    $
    72,570
    
    
    $
    4,750,872
    
    
    $
    29,250
    
    
    $
    (4,098,579
    )
    
    $
    754,113
   48




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##### Table of Contents



Colorado Goldfields Inc.
(An Exploration Stage Company)
 
 Notes to the Financial Statements
 As of and for the years ended August 31, 2008 and 2007
 1.
    
    Organization, Nature of Business, Going Concern and Managements PlansOrganization 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
$872,395 at August 31, 2008, incurred net losses of $3,721,021 and $300,193 for the years
ended August 31, 2008 and 2007, respectively, and a deficit accumulated during the
exploration stage of $4,098,579 for the period from February 11, 2004 (inception) through
August 31, 2008. Accordingly, it has not generated cash flow from operations and has
primarily relied upon advances from stockholders, promissory notes and advances from
unrelated parties, and equity financing to fund its operations. These conditions raise
substantial doubt about the Companys ability to continue as a going concern. The
financial statements do not include any adjustments to reflect the possible future effects
on the recoverability and classification of assets, or the amounts or classification of
liabilities that may result from the possible inability of the Company to continue as a
going concern. Managements plans with regards to these conditions are described below.On August 29, 2008 the Company entered into a Standby Equity Distribution Agreement
(SEDA) with YA Global Investments, LP (YA), whereby the Company may be able to sell
common shares of the Company under the SEDA in tranches over the next two years up to a
maximum of $5,000,000. For each common share purchased under the SEDA, YA will pay the
Company 95% of the lowest volume weighted average price of the common shares on the market
during the five consecutive trading days after the Company notifies YA of its intention to
sell common shares under the SEDA. The Company may sell tranches of common shares up to
$250,000 every five trading days. The terms of the SEDA will become effective pursuant to
the acceptance by the Securities Exchange Commission (SEC) of a Form S-1 registration
statement which was filed on October 15, 2008. In November 2008, the Company received a
comment letter from the SEC regarding the filing and are in the process of analyzing a
response thereto. The Company cannot guarantee that the SEC will declare the registration
statement effective. If the registration statement is not eventually declared effective by
the SEC, the Company will be unable to take any draws on the SEDA. In addition, at our
recent stock price level of $0.02 per share, the 30,000,000 shares that the Company has
proposed to register with the SEC will only net approximately $570,000 in proceeds. Thus,
the Company will have to register additional shares with the SEC in order to draw further
on the SEDA. Under SEC rules, the Company may be limited as to the number of shares we can
register at any given time.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 currently generating any revenues. The Company will need to obtain additional
capital to fund its operations, continue mining exploration activities and plans, fulfill
its obligations under its mineral property option agreements and satisfy existing creditors. There is no assurance
the Company will be able to obtain the funds that it needs to stay in business or complete
its planned exploration activities.
  49




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##### Table of Contents



There can be no assurance that funds required 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.2.
    
    Summary of Significant Account Policies
 a)
    
    Basis of PresentationThe 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.b)
    
    Use of EstimatesThe 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.c)
    
    Basic and Diluted Net Loss Per ShareThe 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 outstanding (denominator) during the period.
Diluted EPS gives effect to all potential dilutive common shares (options and
warrants) outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. 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 year ended August 31, 2008, the effect the conversion of
outstanding options and warrants would have been anti-dilutive. The Company did
not have any dilutive securities outstanding for the years ended August 31, 2007.d)
    
    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.
  50




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##### Table of Contents



e)
    
    Cash and Cash EquivalentsThe Company considers all highly liquid instruments with maturity of three months
or less at the time of issuance to be cash equivalents.f)
    
    Mineral Property and Exploration CostsThe 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.g)
    
    Long-Lived AssetsIn 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, 2008.h)
    
    Financial InstrumentsThe fair values of financial instruments, which include cash, accounts payable and
notes payable were estimated to approximately 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.
  51




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##### Table of Contents



i)
    
    Income TaxesPotential benefits of income tax losses are not recognized in the accounts until
realization is more likely than not. The Company has adopted SFAS No. 109,
Accounting for Income Taxesas of its inception. Pursuant to SFAS No. 109, the Company is
required to compute tax asset benefits for net operating losses carried forward.
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 adopted the provisions of Financial Accounting Standards Board
Interpretation No. 48 (FIN 48), Accounting for Uncertainty In Income Taxes, an
Interpretation of FASB Statements No. 109,on September 1, 2007. There were no
unrecognized tax benefits and accordingly, there was no effect on the Companys
financial condition or results of operations as a result of implementing FIN 48.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. As of the date of
adoption of FIN 48, there was no accrued interest or penalties associated with any
unrecognized tax benefits, nor was any interest expense recognized during the year.j)
    
    Foreign Currency TranslationThe Companys functional and reporting currency is the United States dollar.
Monetary assets and liabilities denominated in foreign currencies are translated in
accordance with SFAS No. 52, Foreign Currency Translation, using the exchange rate
prevailing at the balance sheet date. Gains and losses arising on settlement of
foreign currency transactions or balances are included in the determination of
income. Foreign currency transactions have in the past been primarily undertaken
in Canadian dollars. The effects of foreign currency translations and transactions
are not material.k)
    
    Share Based PaymentsSFAS 123(R), Share-Based Payment,requires the recognition of the cost of employee
services received in exchange for an award of equity instruments in the financial
statements and is measured based on the grant date fair value of the award. SFAS
123(R) also requires the stock option compensation expense to be 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 (See Note 8).l)
    
    Asset Retirement ObligationSFAS 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 4). Accretion expense is recorded in each subsequent
period to recognize the changes in the liability resulting from the passage of
time. During the year ended August 31, 2008, the Company recorded accretion
expense of $25,000. During 2007, accretion was not material. 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,
2008 or 2007.
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m)
    
    Recent Accounting PronouncementsDuring October 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This
statement does not require any new fair value measurements but provides guidance on
how to measure fair value and clarifies the definition of fair value under
accounting principles generally accepted in the United States of America. The
statement also requires new disclosures about the extent to which fair value
measurements in financial statements are based on quoted market prices,
market-corroborated inputs, or unobservable inputs that are based on managements
judgments and estimates. The statement is effective for fiscal years beginning
after November 15, 2007. In February 2008, the FASB issued FASB Staff Position No.
FAS 157-2, Effective Dates of FASB Statement No. 157(the FSP). The FSP amends
SFAS 157 to delay its effective date for non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (that is, at least annually). For items
within its scope, the FSP defers the effective date of SFAS 157 to fiscal years
beginning after November 15, 2008, and interim periods within those fiscal years.
The statement will be applied prospectively by the Company for any fair value
instruments that arise after the date of adoption.In February 2007, the FASB issued 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 statement is effective as of
the beginning of an entitys first fiscal year that begins after November 15, 2007,
although early adoption is permitted provided that an entity also adopts SFAS 157.
The Company has not determined the impact this standard will have on its financial
statements upon adoption.In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations. 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 will be required to recognize all the assets acquired and
liabilities assumed in a transaction at the acquisition-date fair value with
limited exceptions. SFAS 141R will change 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.
 3.
    
    Restricted CashDuring the year ended August 31, 2007, the Company prepaid $19,965 of outstanding fees and
disbursements with respect to the promissory note as disclosed in Note 5. This amount,
which was held in escrow by the Companys legal representative, was ultimately used to
repay the aforementioned promissory note in November 2007.
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4.
    
    Property, Plant and EquipmentOn 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 due June 29, 2009. Interest
expense related to the Mill note for the years ended August 31, 2008 and 2007, was $45,500
and $7,583, respectively.In connection with the acquisition of the Mill, the Company was obligated to replace a bond
that the seller had on deposit with the Colorado Division of Reclamation, Mining, and
Safety. In December 2007, the Company replaced the bond by purchasing a certificate of
deposit, which is restricted, used 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, 2008 and 2007:
 2008
    
    
    2007Computer equipment
    
    $
    2,118
    
    
    $
    Vehicle
    
    
    3,267
    
    
    
    Mine and drilling equipment
    
    
    116,379
    
    
    
    Mobile mining equipment
    
    
    140,585
    
    
    
    Land and mill
    
    
    1,566,267
    
    
    
    1,400,6771,828,616
    
    
    
    1,400,677Less accumulated depreciation
    
    
    (8,782
    )
    
    
    $
    1,819,834
    
    
    $
    1,400,677
 Depreciation expense was $8,782 and zero for the years ended August 31, 2008 and 2007,
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.5.
    
    Other Notes and Advances PayableOn May 15, 2007, the Company issued a promissory note to an unrelated third party in
exchange for cash proceeds of $100,000. Under the terms of the promissory note, interest
was accrued at 12% per annum. The promissory note, including all principal and interest
totaling $106,267 was repaid on November 9, 2007. In addition, through August 2007, the
Company received a total of $400,733 in unsecured non-interest bearing advances from an
unrelated third party. The advances were repaid in November, 2007. The note and advances
payable were repaid from the proceeds of the private placement described in Note 7.6.
    
    Mineral properties interests
 a)
    
    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, which option is to be exercised by the Company
in stages as follows:
 (i)
    
    an undivided 40% interest in the properties is to vest upon
the Company incurring expenditures of not less than $6,000,000 on the
properties within five years from the date of the option agreement;(ii)
    
    an additional undivided 20% interest in the properties is to
vest upon: (a) the Company incurring additional expenditures of not less than
$3,500,000 on the properties within 7.5 years from the date of the option
agreement, and (b) the issuance by the Company, subject to compliance with
applicable securities laws, of 10,000,000 shares (adjusted for stock splits)
of the Companys common stock; and
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(iii)
    
    an additional undivided 20% interest in the properties is to
vest upon: (a) the Company incurring additional expenditures of not less than
$3,500,000 on the properties within 10 years from the date of the option
agreement, and (b) the issuance by the Company, subject to compliance with
applicable securities laws, of 10,000,000 shares (adjusted for stock splits)
of the Companys common stock.
  (i)
    
    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);(ii)
    
    cash payment of $100,000 within one year from the date of the
option agreement (which has been extended to December 15, 2008 and includes
accrued interest at 8.5% per annum from the original date of June 17, 2007);(iii)
    
    cash payment of $200,000 within two years from the date of
the option agreement; and(iv)
    
    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.(v)
    
    Pursuant to the option agreement, the Company: (i) has been
appointed as the initial operator on the properties, with certain rights and
obligations as described in the option agreement; and (ii) has executed and
entered into an employment agreement with Hennis, as described in Note 8(b).
   (i)
    
    prepare and present to the optionors a development plan which
details the scope and timing of exploration and mining activities on the San
Juan Properties;(ii)
    
    maintain the roads and power line right-of-ways;(iii)
    
    construct safety fences and maintain surface facilities on
the San Juan Properties;(iv)
    
    maintain automobile insurance in connection with the
Companys vehicles traveling over the San Juan Properties;(v)
    
    perform restoration and reclamation on the San Juan
Properties upon termination of the Companys operations on the land, including
returning the land to Range Land post-mining use standard as that term is used in the Colorado Mined
Land Reclamation Act;
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(vi)
    
    protect existing water resources, including mitigating or
eliminating the impact of the Companys activities on domestic or stock water
wells in the vicinity of the San Juan Properties;(vii)
    
    properly store and remove hazardous materials; and(viii)
    
    indemnify the optionors for losses and liabilities they may incur due to the
Companys activities on the San Juan Properties.
 The Company is also required to pay or reimburse the optionors for all annual
property taxes on the San Juan Properties and for any additional taxes which may be
assessed on the San Juan Properties by reason of improvements that the Company
places on the San Juan Properties. The surface rights agreement terminates upon the
earlier of (i) termination of the mineral rights on the San Juan Properties; (ii)
complete reclamation and restoration of the San Juan Properties; (iii) termination
of the option agreement prior to our exercising the option; (iv) failure to pay the
property or other taxes on the San Juan Properties; or (v) June 17, 2032.b)
    
    The mining claims that are subject to the Companys Option Agreement with
Hennis and San Juan Corp. are subject to the following pre-existing royalties: (i)
3.0% net smelter return royalty on Gold King Mine, (ii) 2.5% net profits interest on
Gold King Mine, (iii) 2.0% net smelter return royalty on the Mayflower Group, (iv)
2.5% net profits interest in the Mayflower Group, and (v) a 2% net smelter royalty on
the Gold King Mine. The Company finalized an option agreement on December 19, 2007,
with an unrelated party, whereby the Company paid $10,000 for the rights to acquire
the royalties. The original expiration date of the option was November 21, 2008,
however, the expiration date been extended until December 21, 2008.
 7.
    
    Stockholders EquityCommon sharesOn November 20, 2007, the Company issued a total of 8,758,600 post-split common shares at a
price of $0.375 per post-split 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 post-split share until the
close of business on November 14, 2009.During the year ended August 31, 2008, the Company issued 100,000 shares of its restricted
stock to a consultant for investor relations services valued at $0.22 per share (the quoted
market price at the date of issuance), which resulted in $22,000 being recorded as expense.
The Company also issued 1,436,108 shares of its restricted to YA Global Investments
pursuant to the terms of the SEDA (Note 1). The shares were valued at $0.08 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 9,600,000 shares of the Companys common shares.Pursuant to the 2008 Plan, during the year ended August 31, 2008, the Company issued
6,025,000 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 $0.08 to $0.14 per share. The total grant
date fair value of these shares
was $974,389. Of the 6,025,000 common shares issued, 780,000 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 6,025,000 shares.
  56




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Stock options
   Volatility
    
    174-185%Dividend yield
    
    0%Risk-free interest rate
    
    2.76% to 3.41%Forfeiture rate
    
    50%Expected life (years)
    
    5 to 6.5
   Weighted-Weighted-
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Exercise Price
    
    
    Contractual 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
    
    
    $
    0.50
    
    
    
    9.7
    
    
    $
    Exercisable at August 31, 2008
    
    
    750,000
    
    
    $
    0.25
    
    
    
    9.5
    
    
    $
    
   57




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Weighted AverageGrant-DateShares
    
    
    Fair ValueNonvested at September 1,
2007
    
    
    
    
    
    $
    Granted
    
    
    2,400,000
    
    
    
    0.54Vested
    
    
    (750,000
    )
    
    
    (0.64
    )Forfeited
    
    
    (608,332
    )
    
    
    (0.68
    )Cancelled
    
    
    (541,668
    )
    
    
    (0.70
    )Nonvested at August 31, 2008
    
    
    500,000
    
    
    $
    0.13
 8.
    
    Related Party Transactions
 a)
    
    During the year ended August 31, 2008, the Company recognized $0 (2007 -
$4,500) for donated services and $0 (2007  $2,250) for donated rent provided by an
officer and director of the Company. In addition, the Company recognized $41,540 for
the year ended August 31, 2008, for mineral property and exploration costs that were
incurred directly or by a company partially owned by an officer and director of the
Company. Also during the year ended August 31, 2008, the Company incurred mineral
property and exploration costs and property, plant and equipment costs of $77,985 from
a company owned by the President of the Company. In addition 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)
    
    On June 17, 2007, the Company entered into an executive employment agreement
with Hennis, whereby the Company agreed to employ Hennis as Chief Executive Officer
and President for the term of 18 months ending December 17, 2008, in consideration
for: (1) monthly salary of $8,000 per month for the first six months, to be increased
to not less than $8,500 per month thereafter; (2) monthly automobile allowance of $350
per month, plus reimbursement for mileage at the IRS standard rate; (3) certain
employee benefits, including group health insurance, pension and profit sharing and
other benefits elected. Pursuant to the terms of the executive employment agreement,
effective January 17, 2008, Hennis monthly salary increased to $10,000 per month.
Effective September 9, 2008, Mr. Hennis resigned as Chief Executive Officer and
President of the Company.
 c)
    
    Accounts payable and accrued liabilities at August 31, 2008 and 2007, include
$24,258 and $6,377 due to affiliated companies for mineral property and exploration,
general and administrative costs and property, plant and equipment.
 9.
    
    Income Taxes
  2008
    
    
    2007Expected income tax benefit at statutory rate
    
    $
    1,302,357
    
    
    $
    105,068State taxes
    
    
    93,024
    
    
    
    Permanent difference
    
    
    1,760
    
    
    
    Other
    
    
    5,586
    
    
    
    Change in valuation allowance
    
    
    (1,402,727
    )
    
    
    (105,068
    )Income tax benefit
    
    $
    
    
    
    $
    
  58




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2008
    
    
    2007Net operating loss
    
    
    949,736
    
    
    
    105,364Property, plant and equipment
    
    
    166,153
    
    
    
    26,781Deferred financing costs
    
    
    62,823Stock-based compensation
    
    
    356,160
    
    
    
    Deferred tax assets
    
    
    1,534,872
    
    
    
    132,145Valuation allowance
    
    
    (1,534,872
    )
    
    
    (132,145
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  10.
    
    Litigation
  11.
    
    Commitments and contingencies
  12.
    
    Subsequent Events
     59




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Loans from Related Parties
    60




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
   61




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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
     (1)
    
    We adopted a code business conduct and ethics (the Code) that applies to
all of our directors, executive officers and employees. The Code addresses conflicts
of interest and compliance with all laws and other legal requirements. The Code also
outlines acceptable methods of conducting business in an honest and ethical manner
with integrity and actions in the Companys best interest. Directors, officers and
employees are required to report any conduct that they believe in good faith to be an
actual or apparent violation of the Code.
 (2)
    
    We adopted corporate policies and procedures related to the review and
disbursement of funds. Additionally, we have applied technological resources to
support those employees
engaged in the authorization, recording, processing and reporting of transactions,
as well as the overall financial reporting process. We have also adopted a
formalized employee handbook and policy manual.
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##### Table of Contents



(3)
    
    On February 14, 2008, we employed C. Stephen Guyer, as Chief Financial
Officer on a part-time basis, and on July 1, 2008 Mr. Guyer entered into a full-time
Executive Employment Agreement with us.
 (4)
    
    We have hired an outside consultant with experience in SEC reporting and US
GAAP to assist us with the preparation of our financial statements, evaluation of
complex accounting issues and the implementation of systems to improve controls and
review procedures over all financial statement and account balances.
 (5)
    
    We retained an outside bookkeeper and have defined clear segregation of
duties between our management, bookkeeper, and outside consultant.
   
    
    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.
    63




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##### 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
    
    
    64
    
    
    July 2008
    
    Director and Interim CEO(1)10920 W. Alameda Ave.Suite 207Lakewood, CO 80226C. Stephen Guyer
    
    
    55
    
    
    February 2008
    
    Director(2) and CFO10920 W. Alameda Ave.Suite 207Lakewood, CO 80226Eric O. Owens
    
    
    51
    
    
    July 2007
    
    Director100 Adelaide Street WestSuite 405Toronto, Ontario M5H 1S3Beverly E. Rich
    
    
    56
    
    
    July 2007
    
    Director1553 Greene St.Silverton, CO 81433Norman J. Singer
    
    
    67
    
    
    September 2008(3)
    
    Director885 S. Garfield St.Denver, CO 80209
 
 (1)
    
    Todd C. Hennis, our former Chief Executive Officer, resigned for personal reasons on
September 9, 2008. Lee R. Rice, one of our Directors, was appointed Interim Chief
Executive Officer on September 12, 2008.(2)
    
    Mr. Guyer became a Director on September 12, 2008.(3)
    
    Mr. Singer became a Director on September 29, 2008.   64




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th
   65




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Significant Employees
  Director Independence
  Board Meetings
   Audit, Compensation and Nominating Committees
    Shareholder Communications
 ,
  66




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Business Conduct and Ethics
  www.cologold.com/s/pdfs/Code_of_Business_Conduct_Ethics.pdf
  67




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##### Table of Contents



Item 11. Executive Compensation
 Compensation Covered  All Executive Officers
  
 Summary Compensation Table
  Change inNon-
    
    
    Pension andEquity
    
    
    NonqualifiedIncentive
    
    
    Deferred
    
    
    All otherStock
    
    
    Option
    
    
    Plan
    
    
    Compensation
    
    
    Compen-Name and
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compen-
    
    
    Earnings
    
    
    sation
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    sation
    
    
    ($)
    
    
    ($)
    
    
    ($)Todd C. Hennis,
    
    
    2008
    
    
    
    115,000
    
    
    
    
    
    
    
    
    
    
    
    408,600
    
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    527,800President, CEO
    
    
    2007
    
    
    
    16,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    700
    
    
    
    16,700C. Stephen Guyer,
    
    
    2008
    
    
    
    94,423
    
    
    
    
    
    
    
    50,000
    
    
    
    32,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,175Chief Financial Officer
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gary Schellenberg,
    
    
    2008
    
    
    
    2,438
    
    
    
    
    
    
    
    
    
    
    
    337,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339,938VP Exploration
    
    
    2007
    
    
    
    4,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,900
  Description of Summary Compensation Table
 Executive Employment Agreement
 C. Stephen Guyer
   68




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Equity Compensation Plans
    Exercise Price
    
    
    Expiration
    
    # SharesName and Position
    
    No. of Options
    
    
    Per Share
    
    
    Date
    
    VestedTodd C. Hennis, CEO &
Director
    
    
    600,000
    (1)
    
    $
    0.25
    
    
    February 13, 2018
    
    
    600,000Beverly Rich, Director
    
    
    50,000
    
    
    $
    0.25
    
    
    February 13, 2018
    
    
    50,000Eric O. Owens, Director
    
    
    50,000
    
    
    $
    0.25
    
    
    February 13, 2018
    
    
    50,000Lee R. Rice, Director
    
    
    50,000
    
    
    $
    0.25
    
    
    July 31, 2018
    
    
    50,000C. Stephen Guyer, CFO
& Director
    
    
    500,000
    (2)
    
    $
    0.25
    
    
    July 31, 2018
    
    
    0
 
 (1)
    
    Mr. Hennis resigned his positions with the Company on September 9, 2008. Pursuant to the
terms of the Plan, these options have expired unexercised.(2)
    
    125,000 shares vested on October 1, 2008. An additional 125,000 shares will vest on every
three-month anniversary date thereafter.  Name and Position
    
    No. of Shares
    
    Vesting ProvisionsC. Stephen Guyer, CFO and
Director
    
    400,000
    
    All shares are vested
   69




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Outstanding Equity Awards at Fiscal Year-end
  Option AwardsNumber of
    
    
    Number ofsecurities
    
    
    securitiesunderlying
    
    
    underlying
    
    
    Optionunexercised
    
    
    unexercised
    
    
    Exercise
    
    
    Optionoptions
    
    
    options
    
    
    Price
    
    
    ExpirationName and Principal Position
    
    # exercisable
    
    
    # unexercisable
    
    
    $
    
    
    DateTodd C. Hennis, President,
Chief Executive Officer
    
    
    600,000
    (1)
    
    
    
    
    
    
    0.25
    
    
    
    10/09/08C. Stephen Guyer, Chief
Financial Officer
    
    
    
    
    
    
    500,000
    
    
    
    0.25
    
    
    
    07/31/18
 
 (1)
    
    Mr. Hennis resigned his positions with our company on September 9, 2008 and these options have
expired unexercised. Stock Option Exercised
  Expense Reimbursement
  Retirement Plans and Benefits
   70




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Director Compensation
  Fees earned or
    
    
    Stock
    
    
    Option
    
    
    TotalName
    
    paid in cash ($)
    
    
    awards ($)(1)
    
    
    awards ($)
    
    
    ($)Lee R. Rice
    
    
    
    
    
    
    1,400
    
    
    
    3,275
    
    
    
    4,675Eric Owens
    
    
    
    
    
    
    1,400
    
    
    
    33,900
    
    
    
    35,300Beverly E. Rich
    
    
    
    
    
    
    1,400
    
    
    
    33,900
    
    
    
    35,300
 (1)
    
    The stock awards noted in the foregoing table contain the following provisions. Name and Position
    
    No. of Shares
    
    Vesting ProvisionsBeverly E. Rich, Director
    
    
    250,000

    
    50,000 of the shares vest
if the participant
continues as a Director of
the Company through
December 31, 2008; the
remaining 200,000 shares
vest if the participant
continues as a Director of
the Company through
February 28, 2010.Eric O. Owens, 
Director
    
    
    250,000

    
    50,000 of the shares vest
if the participant
continues as a Director of
the Company through
December 31, 2008; the
remaining 200,000 shares
vest if the participant
continues as a Director of
the Company through
February 28, 2010.Lee R. Rice, 
Director
    
    
    250,000

    
    50,000 of the shares vest
if the participant
continues as a Director of
the Company through
December 31, 2008; the
remaining 200,000 shares
vest if the participant
continues as a Director of
the Company through
February 28, 2010.
 Standard Director Compensation Arrangement
  Indemnification and Limitation on Liability of Directors
    71




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
    
    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.
  72




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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
    
    Todd C. Hennis
    
    
    39,500,000
    (1)
    
    
    29.7
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    C. Stephen Guyer
    
    
    2,423,623
    (2)
    
    
    1.8
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    Lee R. Rice
    
    
    500,000
    (3)
    
    
    0.4
    %10920 W. Alameda Avenue, Suite 207Lakewood, CO 80226Common Stock
    
    Beverly E. Rich
    
    
    500,000
    (3)
    
    
    0.4
    %1553 Greene StreetSilverton, CO 81433Common Stock
    
    Eric O. Owens
    
    
    500,000
    (3)
    
    
    0.4
    %100 Adelaide Street West, Suite 405Toronto, ON M5H 1S3 CANADACommon Stock
    
    Norman J. Singer
    
    
    500,000
    (4)
    
    
    0.4
    %885 S. Garfield St.Denver, CO 80209Common Stock
    
    All officers and directors (5 persons)
    
    
    4,423,623
    
    
    
    3.3
    %
 
 (1)
    
    All shares are owned directly.(2)
    
    All shares are owned directly. 500,000 of the shares are subject to forfeiture provisions
which lapse if the recipient continues as a Director of the Company through August 31, 2009.(3)
    
    All shares are owned directly. 500,000 shares are subject to forfeiture provisions
(forfeiture lapse as to 50,000 shares if the recipient continues as a Director of the Company
through December 31, 2008, lapse as to 250,000 shares if the recipient continues as a Director
of the Company through August 31, 2009, and lapse as to the remaining 200,000 shares if the
recipient continues as a Director of the Company through February 28, 2010.)(4)
    
    All shares are owned directly. 500,000 shares are subject to forfeiture provisions lapse if
the recipient continues as a Director of the Company through August 31, 2009.  73




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions, and Director Independence
   (i)
    
    an undivided 40% interest in the San Juan Properties will vest when we have
incurred expenditures of not less than $6,000,000 on the San Juan Properties, provided
that such expenditures must be incurred within five years from the date of the Option
Agreement;
 (ii)
    
    an additional undivided 20% interest in the San Juan Properties will vest
when: (a) we have incurred additional expenditures of not less than $3,500,000 on the
San Juan Properties, provided that such expenditures must be incurred within 7.5 years
from the date of the Option Agreement, and (b) we issue, subject to compliance with
applicable securities laws, 10,000,000 shares of our Common Stock to the Optionors;
and
 (iii)
    
    an additional undivided 20% interest in the San Juan Properties (for an
aggregate of 80%) will vest when: (a) we have incurred additional expenditures of not
less than $3,500,000 on the San Juan Properties, provided that such expenditures must
be incurred within 10 years from the date of the Option Agreement, and (b) we issue,
subject to compliance with applicable securities laws, an additional 10,000,000 shares
of our Common Stock, to the Optionors.
  (i)
    
    cash payment of $100,000 within one year from the date of the Option
Agreement (the Optionors have extended the payment date until December 15, 2008;
 (ii)
    
    cash payment of an additional $200,000 within two years from the date of the
Option Agreement; and
 (iii)
    
    100 troy ounces of gold contained in gold dore, 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.
The foregoing payments are, however, contingent upon: (i) our successful acquisition
of the Pride of the West Mill located in Howardsville, Colorado, which acquisition
occurred in June of this year; and (ii) the Pride of the West Mill actually being in
operation during any part of the year in which payment is due. Currently, the mill is
not operational.
   74




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Director Independence
   75




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Item 14. Principal Accountant Fees and Services
  Audit Fees
   76




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
   77




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SIGNATURES
  Colorado Goldfields Inc.By:
    /s/ Lee R. RiceLee R. RiceChief Executive Officer By:
    /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/ Eric O. Owens

Eric O. Owens
    
    Director/s/ Beverly E. Rich

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

Norman J. Singer
    
    Director
  78




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##### Table of Contents



EXHIBIT INDEX
 Exhibit 
Number
    
    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.
  79




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##### Table of Contents



Exhibit 
Number
    
    Description10.13
    
    
    Registration Rights Agreement dated August 29, 2008 between
YA Global Investments, L.P. and Colorado Goldfields Inc.
Filed as Exhibit 10.2 to Form 8-K filed September 4, 2008,
and incorporated herein by reference.10.14
    
    
    2008 Non-Qualified Consultants & Advisors Stock
Compensation. Filed as exhibit 4.1 to Form S-8 filed on
September 17, 2008 and incorporated herein by reference.10.15
    
    
    2008 Employee And Director Stock Compensation Plan. Filed
as exhibit 10.1 to Form 8-K filed on November 14, 2008 and
incorporated herein by reference.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.*23.2
    
    
    Consent of E. D. Black, P.E.*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.