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

o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COLORADO GOLDFIELDS INC.

(Name of registrant as specified in its charter)

Nevada		20-0716175
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
10920 West Alameda Avenue, Suite 201 Lakewood, CO		80226
(Address of principal executive offices)		(Zip Code)

(303) 984-5324
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

(Check one):

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

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

The aggregate market value of the Class A common stock of the registrant held by non-affiliates as of February 26, 2010 the last business day of the registrant’s most recently completed second fiscal quarter based on the closing sale price of the registrant’s Class A common stock on that date as reported on the Over the Counter Bulletin Board was $2,005,839.

Class		Shares Outstanding at November 17, 2010
Class A Common Stock, $0.001 Par Value		2,464,163,308
Class B Common Stock (Restricted), No Par Value		490,367,597

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

TABLE OF CONTENTS

PART I			1
Item 1. Business			3
Item 1A. Risk Factors			7
Risks Relating to Our Company			7
Risks Associated with Our Common Stock in General			11
Item 2. Properties			14
Pride of the West Mill			14
The Brooklyn Mine			16
The King Solomon Mine			17
Item 3. Legal Proceedings			19
Item 4. Submission of Matters to a Vote of Security Holders			20
PART II			21
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			21
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 8. Financial Statements and Supplementary Data			30
Balance Sheets			31
Statements of Operations			32
Statements of Cash Flows			33
Statements of Stockholders’ Equity (Deficit)			34
Notes to the Financial Statements			35
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			49
Item 9A. Controls and Procedures			50
PART III			51
Item 10. Directors, Executive Officers and Corporate Governance			51
Item 11. Executive Compensation			54
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			58
Item 13. Certain Relationships and Related Transactions, and Director Independence			59
Item 14. Principal Accountant Fees and Services			60
PART IV			61
Item 15. Exhibits and Financial Statement Schedules			61
SIGNATURES			62
EXHIBIT INDEX			63
Exhibit 23.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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

Certain statements contained in this report (including information incorporated by reference) are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provided for under these sections. Our forward-looking statements include, without limitation:

•

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.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. Such risks include, but are not limited to: the ability of Colorado Goldfields to obtain or maintain necessary financing; the price of gold, silver and other commodities; currency fluctuations; geological and metallurgical assumptions; operating performance of equipment, processes and facilities; labor relations; timing of receipt of necessary governmental permits or approvals; domestic laws or regulations, particularly relating to the environment and mining; domestic and international economic and political conditions; and other risks and hazards associated with mining operations. More detailed information regarding these factors is included in Item 1, Business, Item 1A, Risk Factors, and elsewhere throughout this report. Given these uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements.

All subsequent written and oral forward-looking statements attributable to Colorado Goldfields or to persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Colorado Goldfields disclaims any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Available Information

Colorado Goldfields maintains an internet website at www.cologold.com. Colorado Goldfields makes available, free of charge, through the Investor Information section of the web site, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Section 16 filings and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. Colorado Goldfields’ Code of Business Ethics and Conduct are available on the web site at

www.cologold.com/uploads/Code_of_Business_Conduct_Ethics.pdf

Any of the foregoing information is available in print to any stockholder who requests it by contacting Colorado Goldfields’ Investor Relations Department at 866-579-9444.

Item 1.		Business

Background

Colorado Goldfields Inc. (“we,” “us,” or the “Company”) is a mining exploration stage company engaged in the acquisition and exploration of mineral properties, primarily for gold, silver, zinc, copper and lead, and the milling and processing of ore from both owned and non-owned mining properties.

We hold leases with an option to purchase the Brooklyn Mine and the King Solomon Mine. We refer to these properties collectively as “the CGFI Properties” throughout this Report. We are presently in the exploration stage at the CGFI Properties. We have not generated revenue from mining operations.

The lease with an option to purchase the Brooklyn Mine, entered into on September 30, 2009, included the issuance of 75,000,000 restricted shares of Class A common stock in Colorado Goldfields. The shares are restricted in a lock up provision for a period of 3 years during which no sales or other conveyances may be undertaken. A work commitment averaging $200,000 per year, and a 5% Net Smelter Royalty are also included in this lease/option. The lease automatically renews in 2012 so long as ores, minerals, or metals are being produced or sold.

The Brooklyn Mine consists of approximately 600 acres of patented and unpatented claims located along the historic Brooklyn Mine and associated structures. Since its discovery around 1900, the Brooklyn Mine has consistently produced exceptionally high-grade gold ore. See our Form 8-K filed on October 6, 2009 for the complete Agreement.

The lease with an option to purchase the King Solomon Mine included the issuance of 50,000,000 restricted shares of Class A common stock in Colorado Goldfields. The shares are restricted in a lock up provision for a period of 3 years during which no sales or other conveyances may be undertaken. A work commitment of $50,000 per year, and a 3.5% Net Smelter Royalty are also included in the lease/option. The lease automatically renews in 2012 so long as ores, minerals, or metals are being produced or sold.

The King Solomon Mine is located on the southern flank of King Solomon Mountain, just a few hundred yards up the mountain from the first discovery of gold in the San Juan Mountains in Little Giant Basin. Opened in 1876, the mine was in production until 1883. See our Form 8-K filed on September 23, 2009 for the complete Agreement.

We were organized under the laws of the State of Nevada on February 11, 2004 under the name Garpa Resources Inc. On June 18, 2007, we changed our name to Colorado Goldfields Inc.

Our principal executive offices are located at 10920 West Alameda Avenue, Suite 201, Lakewood, Colorado, 80226 and our telephone number is (303) 984-5324. Our common stock is quoted on the OTC Bulletin Board System under the symbol “CGFIA.”

Our Business

As an exploration stage mining company, our activities are currently focused on exploration, geological evaluation and feasibility studies for gold and other metals and, where warranted, efforts to develop and construct mining and processing facilities. We may enter into joint ventures, partnerships or other arrangements to accomplish these activities. Additionally, we acquired the Pride of the West Mill located in Howardsville, Colorado in June 2007. The mill is currently not operational. We hope to address the issues, which are more fully described in “Item 2. Properties,” with the mill in 2010-2011 and bring the mill to operating standards.

From time to time, we may also consider the acquisition of other mining companies or their mining properties.

Recent Events

In November 2009, we reached a joint stipulation with the Division of Reclamation Mining and Safety regarding the status, re-activation, and reclamation of the Pride of the West Mill. The joint stipulation allows us to amend the current permit and include procedures for commencing “toll” or “Custom” milling.

Throughout fiscal 2010 we constructed a comprehensive amendment to the permit and have submitted extensive engineering and operations plans to the Colorado Division of Reclamation Mining and Safety. The permit will be considered by the Colorado Mined Land Reclamation Board on December 15, 2010. Additionally, we have completed many refurbishment activities at the site.

In the third and fourth quarter of 2010, two outside funding sources have become involved with the Company. A Delaware Partnership and a group of New York Private Investors have provided funding to us in the form of convertible debt. See Item 8. Notes to the Financial Statements for additional details.

Competitive Business Conditions

We compete with many companies in the mining business, including larger, more established mining companies with substantial capabilities, personnel and financial resources. There is a limited supply of desirable mineral lands available for claim-staking, lease or acquisition in the United States and other areas where we may conduct exploration activities. Because we compete with individuals and companies that have greater financial resources and larger technical staffs, we may be at a competitive disadvantage in acquiring desirable mineral properties. From time to time, specific properties or areas that would otherwise be attractive to us for exploration or acquisition are unavailable due to their previous acquisition by other companies or our lack of financial resources. Competition in the mining industry is not limited to the acquisition of mineral properties but also extends to the technical expertise to find, advance, and operate such properties; the labor to operate the properties; and the capital needed to fund the acquisition and operation of such properties. Competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees, to obtain equipment and personnel to assist in our exploration activities or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation and business.

General Government Regulations

Federal Lands. The Company’s property is situated adjacent to lands owned by the United States, which may require that the Company obtain certain special use permits in order to gain access to our land for exploration and mining activities.

Mining Operations. The operation of mines is governed by both federal and state laws. Federal laws, such as those governing the purchase, transport or storage of explosives, and those governing mine safety and health, also apply.

The State of Colorado likewise requires various permits and approvals before mining operations can commence, and permits and approvals that must regulate all operations. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. The Colorado Division of Reclamation, Mining and Safety is the state agency that administers the reclamation permits, mine permits and related closure plans on our property. Local jurisdictions (such as San Juan County) may also impose permitting requirements (such as conditional use permits or zoning approvals). Some permits require, or will require, monitoring, compliance, reporting, periodic renewal, or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered.

The primary body of law that affects the Company’s operations in Colorado is the Mineral Rules And Regulations Of The Colorado Mined Land Reclamation Board For Hard Rock, Metal And Designated Mining Operations, first Promulgated May, 1977 Amended June-December, 1977; March-July, 1978; July-August, 1979; May, 1980; April, 1981; February-April, 1982; April, 1983; October, 1983; June, 1985; March, 1987; December, 1987; October, 1988; November, 1990; September, 1991; March, 1993; April, 1994; January, 1995; October, 1995; April, 1999, January, 2000; August, 2001;June 2005, and August 2006.

And, Title 34 Mineral Resources Article 32, Colorado Mined Land Reclamation Act. Of the Colorado Revised Statutes. The complete and current Rules may be retrieved from the Internet at:

http://mining.state.co.us/Rules%20and%20Regs.htm.

Environmental Laws. Mining activities at the Company’s properties are also subject to various environmental laws, both federal and state, including but not limited to the federal National Environmental Policy Act, CERCLA (as defined below), the Resource Recovery and Conservation Act, the Clean Water Act, the Clean Air Act and the Endangered Species Act, and certain Colorado state laws governing the discharge of pollutants and the use and discharge of water. Various permits from federal and state agencies are required under many of these laws. Local laws and ordinances may also apply to such activities as construction of facilities, land use, waste disposal, road use and noise levels.

These laws and regulations are continually changing and, as a general matter, are becoming more restrictive. Colorado Goldfields’ policy is to conduct our business in a manner that safeguards public health and mitigates the environmental effects of our business activities. To comply with these laws and regulations, we have made, and in the future may be required to make, capital and operating expenditures.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), imposes strict, joint, and several liability on parties associated with releases or threats of releases of hazardous substances. Liable parties include, among others, the current owners and operators of facilities at which hazardous substances were disposed or released into the environment and past owners and operators of properties who owned such properties at the time of such disposal or release. This liability could include response costs for removing or remediating the release and damages to natural resources. Our properties, because of past mining activities, could give rise to potential liability under CERCLA.

Under the Resource Conservation and Recovery Act (RCRA) and related state laws, mining companies may incur costs for generating, transporting, treating, storing, or disposing of hazardous or solid wastes associated with certain mining-related activities. RCRA costs may also include corrective action or clean up costs.

Mining operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, such as crushers and storage facilities, and from mobile sources such as trucks and heavy construction equipment. All of these sources are subject to review, monitoring, permitting, and/or control requirements under the federal Clean Air Act and related state air quality laws. Air quality permitting rules may impose limitations on our production levels or create additional capital expenditures in order to comply with the permitting conditions.

Under the federal Clean Water Act and the delegated Colorado water-quality program, point-source discharges into Waters of the State are regulated by the National Pollution Discharge Elimination System (NPDES) program. Stormwater discharges also are regulated and permitted under that statute. Section 404 of the Clean Water Act regulates the discharge of dredge and fill material into Waters of the United States, including wetlands. All of those programs may impose permitting and other requirements on our operations.

The National Environmental Policy Act (NEPA) requires an assessment of the environmental impacts of major federal actions. The federal action requirement must be satisfied if the project involves federal land or if the federal government provides financing or permitting approvals. NEPA does not establish any substantive standards, but requires the analysis of any potential impacts. The scope of the assessment process depends on the size of the project. An Environmental Assessment (EA) may be adequate for smaller projects. An Environmental Impact Statement (EIS), which is much more detailed and broader in scope than an EA, is required for larger projects. NEPA compliance requirements for any of our proposed projects could result in additional costs or delays.

The Endangered Species Act (ESA) is administered by the U.S. Fish and Wildlife Service of the U.S. Department of Interior. The purpose of the ESA is to conserve and recover listed endangered and threatened species and their habitat. Under the ESA, endangered means that a species is in danger of extinction throughout all or a significant portion of its range. The term threatened under such statute means that a species is likely to become endangered within the foreseeable future. Under the ESA, it is unlawful to take a listed species, which can include harassing or harming members of such species or significantly modifying their habitat. Future identification of endangered species or habitat in our project areas may delay or adversely affect our operations.

U.S. federal and state reclamation requirements often mandate concurrent reclamation and require permitting in addition to the posting of reclamation bonds, letters of credit or other financial assurance sufficient to guarantee the cost of reclamation. If reclamation obligations are not met, the designated agency could draw on these bonds or letters of credit to fund expenditures for reclamation requirements. Reclamation requirements generally include stabilizing, contouring and re-vegetating disturbed lands, controlling drainage from portals and waste rock dumps, removing roads and structures, neutralizing or removing process solutions, monitoring groundwater at the mining site, and maintaining visual aesthetics.

Employees

There were three people employed by Colorado Goldfields as of August 31, 2010. On September 9, 2008, Todd C. Hennis resigned his positions as our Chief Executive Officer and Director for personal reasons. As of the same date, the remaining members of our Board of Directors elected Lee R. Rice to act as interim Chief Executive Officer. Effective September 10, 2008, Mr. Rice entered into an Executive Employment Agreement with the Company, which is more fully described in Item 11 Executive Compensation. Mr. Rice has been one of our Directors since July 31, 2008.

Office Facilities

Due to frequent travel, our executive staff generally offices remotely from the corporate offices in Lakewood, Colorado and we do not pay rent for the Lakewood facility. We also have an office at our Pride of the West Mill in Howardsville, Colorado in San Juan County. We believe these arrangements are and will be adequate for our needs for the foreseeable future.

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.

This report, including Management’s Discussion and Analysis or Plan of Operation, contains forward-looking statements that may be materially affected by several risk factors, including those summarized below.

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.

Since our inception in 2004, we have had nominal operations and incurred operating losses. As of August 31, 2010, our accumulated deficit since inception was approximately $13 million. We have substantial current obligations and at August 31, 2010, we had approximately $2.2 million of current liabilities as compared to only $0.04 million of current assets. Since August 31, 2009, we have been able to raise only minimal additional capital, and we have minimal cash on hand. Accordingly, the Company does not have sufficient cash resources or current assets to pay its current obligations, and we have been meeting many of our obligations through the issuance of our Class A common stock to our employees, consultants and advisors as payment for the goods and services.

Our management continues to search for additional financing; however, considering the difficult U.S. and global economic conditions along with the substantial problems in the capital and credit markets, there is a significant possibility that we will be unable to obtain financing to continue our operations.

As we are in the beginning stages of our exploration activities on the CGFI Properties, we expect to incur additional losses in the foreseeable future, and such losses may continue to be significant. To become profitable, we must be successful in raising capital to continue with our exploration activities and meet the requirements to exercise our options on the CGFI Properties, discover economically feasible mineralization deposits and establish reserves, successfully develop the properties and finally realize adequate prices on our minerals in the marketplace. It could be years before we receive any revenues from gold and mineral production, if ever. Thus, we may never be profitable.

These circumstances raise substantial doubt about our ability to continue as a going concern as described in an explanatory paragraph to our independent registered public accounting firm’s report on our audited financial statements as of and for the year ended August 31, 2010. If we are unable to continue as a going concern, investors will likely lose all of their investment in our company. The financial statements included in this report do not include any adjustments that might result from the outcome of this uncertainty. Please see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources,” for further information.

Our only interest relating to mining properties is the lease or option to acquire various mining claims, the feasibility of which has not been established as we have not completed exploration or other work necessary to determine if it is commercially feasible to acquire and develop the property.

We are currently a mining exploration stage company. Our only mining assets are related to leases with options to purchase certain mining claims. Additionally, in June 2007 we acquired the Pride of the West Mill, which is currently under a cease and desist order from the Colorado Mined Land Reclamation Board which prohibits operation until certain deficiencies are corrected. See “Item 2. Properties” of this Report for more information regarding our mining assets.

The CGFI Properties do not have any proven or probable reserves. A “reserve,” as defined by the SEC, is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. A reserve requires a feasibility study demonstrating with reasonable certainty that the deposit can be economically extracted and produced. We have not carried out any feasibility study with regard to the CGFI Properties. As a result, we currently have no reserves and there are no assurances that we will be able to prove that there are reserves on the CGFI Properties.

In June 2007, we 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. We paid the seller cash of $250,677 and the remaining $650,000 was financed by the seller. The seller’s loan is secured by the property bearing interest at 12% per year, with all unpaid principal and interest due December 29, 2010. We will be required to obtain debt or equity financing from external sources in order to fund payment on the mortgage. In addition, as the Mill is currently inactive and under a cease and desist order issued by the Colorado Division of Reclamation, Mining and Safety due to operational deficiencies, we will require further funds to cure the deficiencies and bring the Mill back into active status. However, In November 2009, we reached a joint stipulation with the Colorado Division of Reclamation Mining and Safety and the Colorado Mined Land Reclamation Board regarding the status, re-activation, and reclamation of the Pride of the West Mill. See “Item 2. Properties” of this Report for more information regarding our mining and milling assets.

Furthermore, we cannot generate any income from the Mill until such time as we (i) cure the deficiencies contained in the cease and desist order, (ii) obtain approval from the State of Colorado Mined Land Reclamation Board of a comprehensive permit amendment, and (iii) refurbish it to operational status. Please see “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.

Mineral exploration and development involve a high degree of risk and few properties that are explored are ultimately developed into producing mines. We can not assure you that any future mineral exploration and development activities will result in any discoveries of proven or probable reserves as defined by the SEC since such discoveries are remote. Nor can we provide any assurance that, even if we discover commercial quantities of mineralization, a mineral property will be brought into commercial production. Development of our mineral properties will follow only upon obtaining sufficient funding and satisfactory exploration results.

We will require significant additional capital to continue our exploration activities, and, if warranted, to develop mining operations.

Under our lease with an option to purchase the Brooklyn Mine we are required to expend an average of $200,000 per year in the form of a work commitment. We were unable to complete the first year’s work commitment. However, the lessor has extended the first year minimum work commitment through November 30, 2010, and has agreed to extend this commitment on a month-to-month basis going forward. We are currently discussing a formal extension with the lessor.

Under our lease with an option to purchase the King Solomon Mine we are required to expend $50,000 over three years in the form of a work commitment.

In November 2007, we raised approximately $3,284,500 pursuant to a private placement of securities, and as of August 31, 2010, we had expended all of the funds acquired in the private placement except approximately $318,000 placed in a CD as collateral to a letter of credit that satisfies the financial warranty requirement of the State of Colorado pursuant the permit to operate the Pride of the West Mill. Thus, we will be required to raise significantly more capital in order to develop the CGFI Properties for mining production assuming that economically viable reserves exist. There is no assurance that our investments in the CGFI Properties will be financially productive. Our ability to obtain necessary funding depends upon a number of factors, including the price of gold and other base metals and minerals which we are able to mine, the status of the national and worldwide economy and the availability of funds in the capital markets. If we are unable to obtain the required financing in the near future for these or other purposes, our exploration activities would be delayed or indefinitely postponed, we would likely lose our lease/options and option to acquire an ownership interest in the CGFI Properties and this would likely, eventually, lead to failure of our Company. Even if financing is available, it may be on terms that are not favorable to us, in which case, our ability to become profitable or to continue operating would be adversely affected. If we are unable to raise funds to continue our exploration and feasibility work on the Brooklyn and King Solomon Properties, or if commercially viable reserves are not present, the market value of our securities will likely decline, and our investors may lose some or all of their investment.

Historical production of gold at the Brooklyn, King Solomon, and San Juan Properties may not be indicative of the potential for future development or revenue.

Historical production of gold and other metals and minerals from the mines encompassed under our Lease/Options cannot be relied upon as an indication that the CGFI Properties will have commercially feasible reserves. Investors in our securities should not rely on historical operations of the CGFI Properties as an indication that we will be able to place the CGFI Properties into commercial production again. We expect to incur losses unless and until such time as the properties enter into commercial production and generate sufficient revenue to fund our continuing operations.

Fluctuating gold, metal and mineral prices could negatively impact our business plan.

The potential for profitability of our gold and other metal and mineral mining operations and the value of any mining properties we may acquire will be directly related to the market price of gold and the metals and minerals that we mine. Historically, gold and other mineral prices have widely fluctuated, and are influenced by a wide variety of factors, including inflation, currency fluctuations, regional and global demand and political and economic conditions. Fluctuations in the price of gold and other minerals that we mine may have a significant influence on the market price of our common stock and a prolonged decline in these prices will have a negative effect on our results of operations and financial condition.

Reclamation obligations on the Brooklyn, King Solomon, and our Mill could require significant additional expenditures.

We are responsible for the reclamation obligations related to any exploratory and mining activities located on the Brooklyn and King Solomon. Since we have only begun exploration activities, we cannot estimate these costs at this time. In November 2007, the Colorado Division of Reclamation, Mining and Safety transferred the mill permit into our name, and we delivered to the Division a reclamation bond in the amount of $318,154. We have currently estimated the total reclamation costs on the Mill at $612,550 and have recorded a liability in this amount as of August 31, 2010. There is a risk that the Mill reclamation costs may exceed our current estimate, and such excess could be significant. The satisfaction of current and future bonding requirements and reclamation obligations will require a significant amount of capital. There is a risk that we will be unable to fund these additional bonding requirements, and further that increases to our bonding requirements or excessive actual reclamation costs will negatively affect our financial position and results of operation.

Title to mineral properties can be uncertain, and we are at risk of loss of ownership of our property.

Our ability to explore and mine the leased and optioned properties depends on the validity of title to that property. The CGFI Properties, which are subject to our Lease/Options, consist of patented and unpatented mining claims. Unpatented mining claims are effectively only a lease from the federal government to extract minerals; thus an unpatented mining claim is subject to contest by third parties or the federal government. These uncertainties relate to such things as the sufficiency of mineral discovery, proper posting and marking of boundaries, failure to meet statutory guidelines, assessment work and possible conflicts with other claims not determinable from descriptions of record. Since a substantial portion of all mineral exploration, development and mining in the United States now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry. We have not obtained a title opinion on our leased properties or the San Juan Properties we have under option. Thus, there may be challenges to the title to the properties which, if successful, could impair development and/or operations.

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.

Mining exploration and exploitation activities are subject to federal, state and local laws, regulations and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Exploration and exploitation activities are also subject to federal, state and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of exploration methods and equipment.

Environmental and other legal standards imposed by federal, state or local authorities are constantly evolving, and typically in a manner which will require stricter standards and enforcement, and increased fines and penalties for non-compliance. Such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages that we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Unknown environmental hazards may exist on the CGFI Properties, or we may acquire properties in the future that have unknown environmental issues caused by previous owners or operators, or that may have occurred naturally.

The CGFI Properties are subject to royalties on production.

As part of the Lease/Options for the Brooklyn and King Solomon Mines, the Company granted Net Smelter Royalties of 5% and 3.5% respectively. In addition, historical royalties may be asserted by third-parties which are currently unknown to us.

Weather interruptions in the San Juan County, Colorado area may delay or prevent exploration on the CGFI Properties

The Brooklyn and King Solomon mines are located in a mountainous, high alpine region of the Colorado Rocky Mountains. The area receives extreme winter conditions which delay or prevent exploration of the properties during the winter months.

Our industry is highly competitive, attractive mineral lands are scarce and we may not be able to obtain quality properties.

We compete with many companies in the mining industry, including large, established mining companies with capabilities, personnel and financial resources that far exceed our limited resources. In addition, there is a limited supply of desirable mineral lands available for claim-staking, lease or acquisition in the United States, and other areas where we may conduct exploration activities. We are at a competitive disadvantage in acquiring mineral properties, since we compete with these larger individuals and companies, many of which have greater financial resources and larger technical staffs. Likewise, our competition extends to locating and employing competent personnel and contractors to prospect, develop and operate mining properties. Many of our competitors can offer attractive compensation packages that we may not be able to meet. Such competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation and business.

We depend on our Chief Executive Officer and Chief Financial Officer and the loss of these individuals could adversely affect our business.

Our company is completely dependent on our Chief Executive Officer, Lee R. Rice, and on our Chief Financial Officer, C. Stephen Guyer, both of whom are also members of our Board of Directors. As of the date of this report, we only employed three individuals: Messrs. Rice and Guyer and our Director of Operations. Thus, the loss of either Messrs. Rice or Guyer could significantly and adversely affect our business, and certainly the loss of both individuals on or about the same time could result in a complete failure of the Company. We do not carry any life insurance on the lives of either Messrs. Rice or Guyer.

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.

Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of economically feasible mineralization. Few properties that are explored are ultimately advanced to the stage of producing mines. We are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties such as, but not limited to:

	•		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.

Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable.

Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our mining property.

Our operations, including our planned exploration activities on our leased and optioned properties, require permits from the state and federal governments. We may be unable to obtain these permits in a timely manner, on reasonable terms or at all. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for exploration of the CGFI Properties will be adversely affected.

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 common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority (“FINRA”). Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on other stock exchanges such as the NASDAQ Stock Market, New York Stock Exchange or American Stock Exchange. Accordingly, our shareholders may have difficulty reselling any of 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.

Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines penny stock to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term accredited investor refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customers account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability or willingness of broker-dealers to trade our securities. We believe that the penny stock rules discourage broker-dealer and investor interest in, and limit the marketability of, our common stock.

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

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

We have never paid a cash dividend on our common stock and we do not anticipate paying any in the foreseeable future.

We have not paid a cash dividend on our common stock to date, and we do not intend to pay cash dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Notwithstanding, we will likely elect to retain any earnings, if any, to finance our growth. Future dividends may also be limited by bank loan agreements or other financing instruments that we may enter into in the future. The declaration and payment of dividends will be at the discretion of our Board of Directors.

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.

Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight and the adoption of a code of ethics. While our Board of Directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these corporate governance measures and, since our securities are not listed on a national securities exchange or NASDAQ, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

Item 2.		Properties

Pride of the West Mill

The Pride of the West Mill (“Mill”) is an inactive mining mill located at Howardsville, Colorado in San Juan County. The Pride of the West Mill is located on approximately 120 acres of patented mining claims on San Juan County Road 2, within a six air mile radius of the Gold King Property, the Mogul Mine Property and the Mayflower Mine Property. The physical address is 2201 County Road 2, Silverton, Colorado. No mineral is known to exist in deposit form on the property. The economic significance of the property is as a mineral processing site, with residual post-mining value. The Mill is located within the famous “San Juan Triangle” mining center of southwestern Colorado, which also includes the historic mining towns of Telluride and Ouray, and encompasses one of the most richly mineralized areas of North America. Fourteen thousand feet mountain peaks tower over the mill, which is accessible year round because of its location on county maintained access roads.

The mill has the capability to process five metals: gold, silver, copper, lead, and zinc. In operation as recently as 2004, the mill contains virtually all of its working components enclosed within one complex. The complex includes: 1) ore stockpile pad, 2) crushing plant consisting of a coarse ore bin adjacent to the stockpile area, an apron feeder, conveyor to the crushing section, a 3 foot Symons vibrating grizzly, jaw crusher, 4’x 8’ Symons rod deck screen, conveyors, a 3 foot Symons standard cone crusher, and electromagnets, 3) grinding circuit including a Macy Rod mill and a Denver Ball mill, 4) flotation circuit and ancillary equipment all in one building. The leach plant is in a separate building and is configured for 2 or 4 tank agitation leach with carbon in leach. The carbon stripping plant is in the main mill building as is the melt furnace. A separate building houses a metallurgical laboratory for sample preparation, and an assay laboratory. A large steel frame metal building houses offices and a truck shop, with living quarters for personnel upstairs.

The mill is readily accessible by heavy trucks, has a power substation in place, and has two water rights from Cunningham and Hematite Creeks with associated water pipelines on the property that are sufficient to supply the needs of the mill complex.

In March 2008, the Colorado Division of Reclamation, Mining and Safety transferred the mill permit into our name, and in connection therewith, we posted a bond in the amount of $318,154 with the Division in the form of a letter of credit. We have recorded an estimated asset retirement obligation of $612,550 in connection with our estimated future reclamation costs.

The Pride of the West Mill was (and is) the subject of a cease and desist order (“C&D”), issued by the State of Colorado Mined Land Reclamation Board due to the operational deficiencies of the previous operator (Silver Wing Company, Inc.) in the period 2002-2003.

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

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

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

	1.		Colorado Goldfields intends to work with the Division to assure that a comprehensive permit amendment meets the Divisions requirements and expectations.
	2.		Colorado Goldfields commits to submittal of:

	a.		a comprehensive permit amendment, complete for the purposes of filing, that includes an engineered analysis and plans for placement, construction, certification, and monitoring of new Environmental Protection Facilities designed to allow the re-activation of the Mill, and to clarify the Operator’s authorization to perform “custom” or “toll” milling, by no later than January 13, 2010, extended to February 19, 2010. The comprehensive permit amendment was submitted to the Colorado Division of Reclamation and Mining Safety on January 8, 2010. The permit amendment application was deemed complete for filing by the Division on February 19, 2010.
	b.		within 180 days of filing, all documentation necessary to allow Division approval of the subject amendment, including an acceptable financial warranty in the amount calculated by the Division incorporating all the revised reclamation cost provisions detailed in the amendment.

3.

The current financial warranty increase deadline was December 7, 2009, however, it is agreed that this deadline is extended and the Division will re-calculate the bond during the permit amendment review process. The financial warranty compliance date has been extended to January 15, 2011.

4.

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

5.

Colorado Goldfields commits to on-the-ground compliance with the requirements of the Act, the Rules, and provisions of Permit No. M-1984-049, modified by the subject amendment, by no later than October 29, 2010, later extended to August 31, 2011.

6.

Colorado Goldfields acknowledges that, without intention, it did not comply with the procedural requirements of its permit or the Cease and Desist Order when relocating the waste rock to the lower tailings pond at the Mill. Therefore, Colorado Goldfields is in violation pursuant to C.R.S. 34-32-124(1) for failure to comply with conditions of permit No. M-1984-049 and failure to comply with the conditions of a Cease and Desist order. In accordance with Rule 3.3.2(2)(b) and C.R.S. 34-32-124(7) the Board shall assess a civil penalty in the range of $5,700 to $57,000 for each violation, reflecting 57 days of violation at $100 to $1,000 per day, as measured from the September 16th inspection to the November 12, 2009 hearing. Colorado Goldfields respectfully requests that the Board suspend all but $250 for each of the violations, totaling $500, pending completion of the corrective actions and requirements described herein. The Division does not object to this request. The $500 penalty was paid on December 21, 2009.

7.

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

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

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

On November 2, 2010, the formal board hearing was extended to December 15, 2010 and the pre-hearing conference set for December 2, 2010.

The Company is prepared to present final solutions to any remaining adequacy issues directly to the Mined Land Reclamation Board on December 15, 2010. We believe that the Board will approve the permit amendment on that date.

The estimated remaining cost to bring the mill into active status is highly dependent upon the result of the accepted final operational, EPF, and plan designs, which have changed significantly since 2008. The Company estimates in very broad terms that the cost may be between $1 and $2 million depending upon final approved designs.

We have been approached by operators of other mines in the vicinity to potentially process their ores. We are actively considering processing other ores in order to demonstrate the operability of the Pride of the West Mill and generate revenue until the Company can generate sufficient ore tonnage of its own to operate the mill. To that end, we are including in the comprehensive permit amendment a plan specific to “toll” or “custom” milling.

As of the date of this report, four Colorado companies have entered into preliminary purchase orders with us for custom milling, representing $9.2 million in future cash flows to Colorado Goldfields. This is predicated upon our successful reactivation of the mill.

The Pride of the West Mill is also subject to certain local, state and federal regulations.

The Brooklyn Mine

On September 30, 2009, we entered into a Lease with an Option to Purchase the Brooklyn Mine.

The Brooklyn properties consist of approximately 600 acres of patented and unpatented claims located along the historic Brooklyn Mine and associated structures. The Brooklyn Mine has produced exceptionally high-grade gold ore since its discovery around 1900.

The abundance of free gold associated with the ore makes historical production records difficult to interpret. However, a historic resource estimate of $13.8 million (14,535 ounces of gold times $950 per ounce) at a grade of 0.69 ounces per ton contained in two known and accessible ore shoots below the existing workings is based on well-documented and confirmed prior exploration.¹ The Brooklyn has produced some of the most spectacular specimen quality gold in the Country.

Terms of our Lease/Option and Related Agreements on the Brooklyn Mine

In summary,

1.

The Lease/Option is for a period of three years in consideration for which we issued 75,000,000 shares of restricted Class A Common Stock. The stock is further restricted from sale during the initial term of the lease.

2.

The Lease/Option shall automatically renew and continue so long as ores, minerals, or metals are produced or sold.

3.

We shall perform exploration, mining, development, production, processing or any other activity (“work” herein) which benefits the Leased Premises at a minimum cost of $150,000 for the first year, $200,000 for the second year and $250,000 for the third year.

4.

We shall pay Lessor a Five Percent (5%) Net Smelter Royalty on all mineral bearing ores.

5.

We have the sole and exclusive option to purchase all of Lessor’s right, title and interest in the property (the Leased Premises) for a total purchase price of $4,000,000, plus a perpetual 2% Net Smelter Royalty. This amount may be paid in cash or other cash equivalent as mutually agreed by us and the Lessor.

The King Solomon Mine

The King Solomon Mine is located on the southern flank of King Solomon Mountain, just a few hundred yards up the mountain from the first discovery of gold in the San Juan Mountains in Little Giant Basin. Opened in 1876, the mine was in production until 1883. Newspaper accounts and shipping records of the day indicate that the product was good to very high grade silver ore with substantial credits for lead and copper.

The King Solomon Mine is of particular interest to Colorado Goldfields because of its strategic placement in Little Giant Basin. Although no activity has occurred on the property since 1883, nearby properties in Little Giant Basin have produced significant gold.

We intend to commence an exploration program to determine whether the veins will become more important for their gold content with depth as has been the case in many of the San Juan County mining properties which were first mined for the silver content.

Terms of our Option and Related Agreements on the King Solomon Mine

In summary,

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

San Juan Properties

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

The Company received notice of default of the option agreement on March 16, 2009 when the Company did not make the payment due on March 15, 2009. The Company does not dispute the technical default.

The option agreement is the subject of current litigation in San Juan County, Colorado. See Item 3. Legal Proceedings for additional details.

Item 3.		Legal Proceedings

Pride of the West Mill Proceedings

See “Item 2. Properties” for a description of the proceedings relating to the Pride of the West Mill.

San Juan Properties and Hennis Proceedings

On April 6, 2009, Todd C. Hennis (the former President and CEO of the Company), and entities San Juan Corp., and Salem Minerals Inc. (which are substantially owned by Mr. Hennis), served upon the Company a Complaint seeking among other things, a $100,000 payment pursuant to the San Juan Properties’ option agreement, and release from his shareholder lock-up agreement and from Rule 144 trading restrictions on approximately 51,500,000 shares of Class A Common Stock held by Hennis. Company counsel advises that the Hennis complaint is barred due to Hennis’s affiliate and control person status and moreover is filed in bad faith, since among other things, on June 17, 2008 as President and CEO of the Company, Hennis elected not to pay the option fee then due. The Company received a written settlement offer from Mr. Hennis two days after the Company was served on April 8, 2009. A counter-claim with jury demand was filed against Mr. Hennis and his entities for wrongful conversion, breach of duty of loyalty, lack of good faith, breach of fiduciary duty, and significant conflicts of interest.

Hennis filed a Motion for Summary Judgment on October 16, 2009. The Company responded to this motion on November 16, 2009. On September 2, 2010, the court granted partial summary judgment in favor of Mr. Hennis and awarded damages of $230,707. An evidentiary hearing regarding the remaining portion of the judgment was held on September 22, 2010. At that hearing, the court awarded additional damages in the amount of $114,896 to Mr. Hennis for a total of $345,603, which has been recorded as an accrued liability by the Company as of August 31, 2010.

The Company has filed a motion for (a) a new trial on all or part of the issues; (b) an amendment of findings; and (c) an amendment of judgment pursuant to C.R.C.P. Rule 58(a). As of the date of this report, the court has not ruled on this motion. The Company is prepared to present the entire proceeding to the Colorado Court of Appeals. The outcome of the appeal process is not certain; however, Company counsel advises that it does appear that the appeal does have merit. Should the appeal process allow for the case to be remanded for the purposes of trial, and should the court rule for attorney fees for Mr. Hennis, the estimate of potential loss would increase to approximately $400,000.

Former Law Firm Litigation

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

Other Legal Matters

On November 12, 2009, an individual filed a breach of contract complaint in San Juan County, Colorado claiming damages of $67,140. We believe that this lawsuit is without merit and have filed a Motion for Change of Venue with the court. On January 15, 2010, the Court denied our Motion to Change Venue. On February 11, 2010 we filed a Request to Reconsider Motion to Change Venue. The motion to change venue was denied. In July 2010 the Company filed a motion to dismiss and filed a reply to the plaintiff’s response to the motion to dismiss on August 25, 2010. The court has not yet ruled on the motion to dismiss. The ultimate outcome of the litigation is uncertain, however, the Company has accrued $67,140 related to this matter as of August 31, 2010.

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

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

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

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our Class A common stock has been quoted on the OTC Bulletin Board since April 6, 2006. Our trading symbol is “CGFIA.” Our Class B common stock is restricted and does not trade on any market.

The table below sets forth the high and low sales prices for our common stock for the periods indicated as reported by the OTCBB. Sales prices represent prices between dealers, do not include retail markups, markdowns or commissions and do not necessarily represent prices at which actual transactions were effected.*

Year Ended		High				Low
August 31, 2006
April 11 to May 31, 2006 (1)		$	0.32			$	Nil
Fourth Quarter			0.32				0.31
August 31, 2007
First Quarter		$	0.31			$	0.04
Second Quarter			0.06				0.04
Third Quarter			0.19				0.04
Fourth Quarter			0.63				0.19
August 31, 2008
First Quarter		$	0.85			$	0.51
Second Quarter			0.85				0.55
Third Quarter			0.85				0.22
Fourth Quarter			0.25				0.08
August 31, 2009
First Quarter		$	0.13			$	0.02
Second Quarter			0.02				0.01
Third Quarter			0.02				0.0058
Fourth Quarter			0.0091				0.0030
August 31, 2010
First Quarter		$	0.0043			$	0.0012
Second Quarter			0.0031				0.0015
Third Quarter			0.0029				0.0016
Fourth Quarter			0.0021				0.0009

On November 18, 2010 the last reported sales price of our Class A common stock as reported on the OTCBB was $0.0022 per share. As of November 17, 2010, there were 47 holders of record of our Class A common stock.

On October 17, 2008, the Company’s Board of Directors authorized a 30% (thirty percent) stock dividend of the Company’s Class A Common Stock for its Stockholders of Record as of November 6, 2008. The Stock Dividend Pay Date to stockholders was November 26, 2008.

We have never paid a cash dividend. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for growth. Our initial earnings, if any, will likely be retained to finance our growth. At the present time, we are not party to any agreement that would limit our ability to pay dividends.

The Securities Enforcement and Penny Stock Reform Act of 1990

The Securities and Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares are currently subject to the penny stock rules.

A purchaser is purchasing penny stock which limits the ability to sell the stock. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:

•

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

•

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;

•

contains a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the bid and ask price;

•

contains a toll-free telephone number for inquiries on disciplinary actions;

•

defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

•

contains such other information and is in such form (including language, type, size and format) as the Securities and Exchange Commission shall require by rule or regulation.

•

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

•

the bid and offer quotations for the penny stock;

•

the compensation of the broker-dealer and its salesperson in the transaction;

•

the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

•

monthly account statements showing the market value of each penny stock held in the customer’s account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements have the effect of reducing the trading activity in the secondary market for our stock. Thus, stockholders may have difficulty selling their securities.

Securities Authorized for Issuance Under Equity Compensation Plans

Equity Compensation Plan Information

The following sets forth information for the equity compensation plans outstanding as of August 31, 2010 (including individual compensation arrangements) under which shares of our common stock are authorized for issuance:

Equity Compensation Plan Information

		Number of securities
		to be issued upon				Weighted average				Number of securities
		exercise of				exercise price of				remaining available for
		outstanding options,				outstanding options,				future issuance as of
Plan Category		warrants and rights				warrants and rights				November 17, 2010
Equity compensation plans approved by security holders:			—				—				—
Equity compensation plans not approved by security holders:			—				—				—
2008 Employee Stock Incentive Plan			—				—				67,730
2008 Non-Qualified Consultants & Advisors Stock Compensation Plan.			—				—				768,609,057
2008 Employee & Director Stock Compensation Plan			—				—				639,934,667

2008 Stock Incentive Plan

In February 2008, the Company approved the 2008 Stock Incentive Plan (“2008 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company. The 2008 Plan provides that awards may be granted for up to 12,480,000 shares of the Company’s Class A common shares.

2008 Non-Qualified Consultants & Advisors Stock Compensation Plan

On September 12, 2008, our Board of Directors approved the 2008 Non-Qualified Consultants & Advisors Stock Compensation Plan (the “2008 Consultants Plan”). As of November 17, 2010 we are authorized to issue up to 1,865,000,000 shares of our Class A Common Stock (subject to adjustment in case of a subdivision of our outstanding shares of Common Stock, recapitalization, stock dividend, or other change in our corporate structure that affects our Common Stock) to consultants or advisors in connection with services rendered by such persons or entities. The 2008 Consultants Plan is administered by our Compensation Committee of the Board of Directors, or if the we do not have a Compensation Committee, then a committee appointed by the Board which is to consist of one executive officer of the Company and at least one independent, non-employee member of the Board. If no committee is appointed, then the Board of Directors administers the plan. We currently do not have a Compensation Committee. Our Board has appointed C. Stephen Guyer, our Chief Financial Officer and Director, and Norman J. Singer, one of our independent Directors, to act as the committee to administer the 2008 Consultants Plan. We have registered with the Securities and Exchange Commission the common shares issuable under the 2008 Consultants Plan. One of the primary purposes of the plan is to give our company the flexibility to pay for services with shares of our common stock rather than with cash during our exploratory stage.

2008 Employee & Director Stock Compensation Plan

In November, 2008, our Board of Directors approved the Employee & Director Stock Compensation Plan (the “2008 Employee Plan”). The purpose of the 2008 Employee Plan is (i) to further our growth by allowing us to compensate employees and Directors who have provided bona fide services to our company through the award of shares of our Common Stock, and (ii) attract, motivate, retain and reward quality employees and directors to acquire or increase a proprietary interest in our company. Considering that we are an exploratory mining company which faces challenging economic times and difficult capital markets, the Board of Directors believes that using our common stock is an important means of retaining and compensating employees and directors. As of November 17, 2010 we are authorized to issue up to 1,110,800,000 Shares of our Class A Common Stock (subject to adjustment in case of a subdivision of our outstanding shares of Common Stock, recapitalization, stock dividend, or other change in our corporate structure that affects our Common Stock). The 2008 Employee Plan is administered by a committee consisting of at least two persons to be appointed by the Board of Directors, one of whom is an independent director, or in the absence of such a committee, the Plan is to be administered by the Board of Directors. Our Board of Directors appointed C. Stephen Guyer, our CFO, and Norman J. Singer, one of our independent directors, to the committee. Any of our employees or directors are eligible to receive awards under the Plan.

Transfer Agent

Corporate Stock Transfer is the transfer agent for our common stock. Their address is at 3200 Cherry Creek Drive, Suite 430, Denver, Colorado 80209, and their telephone number is (303) 282-4800.

Issuer purchase of equity securities

There were no issuer purchases of securities during the period covered by this report.

Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides information that management believes is relevant to an assessment and understanding of the financial condition and results of operations of Colorado Goldfields Inc. (the “Company”).

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

•

“Introduction and Plan of Operation” which provides a brief summary of our consolidated results and financial position and the primary factors affecting those results, as well as a summary of our expectations for fiscal 2011;

•

“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.

This item should be read in conjunction with our financial statements and the notes thereto included in this annual report.

Introduction and Plan of Operation

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

During fiscal 2010 we continued to experience the negative effects of the financial markets upheaval, which made capital acquisition extremely difficult. The litigation commenced by our former president, Todd C. Hennis necessarily caused all work relating to the Gold King Mine to be suspended, including the N.I. 43-101 report which was originally expected to be completed in the spring of 2009. We have determined that we will not pursue any further involvement with the Gold King Mine.

Therefore, in fiscal 2010 we focused primarily on re-activation of the Pride of the West Mill, securing agreements for “custom” or “toll” milling, and seeking out new properties to explore and develop. In that regard, we were generally successful. We entered into two new lease/option agreements for properties located near our Mill facility, and completed several milestones regarding mill re-activation.

In 2007, our former management predicted profitability by end of calendar year 2009. Last year we predicted operational revenue to begin in November 2010. Given the events described above, and a longer than expected permit amendment process related to the mill, we are now targeting profits from operations by August 2011.

Weather conditions in San Juan County, Colorado vary by season. During the winter season our activities are concentrated on analysis, planning, and development of properties in more temperate climates. Surface drilling and property exploration in San Juan County can reasonably take place between May and late October. Of course underground operations continue year-round.

Our plan of operation for fiscal 2011 is to continue seeking funding for our operations and mining exploration program, complete all necessary permitting requirements, bring the Pride of the West Mill into operation, and commence custom/toll milling of ore from the companies that have entered into preliminary purchase with us.

Liquidity and Capital Resources

We were formed in early 2004 and have primarily had limited activity until our acquisition of the option to acquire interests in the San Juan Properties. Since we have received no revenue from the production of gold or other metals, we have relied on funds received in connection with our equity and debt offerings to finance our ongoing operations. We have experienced net losses since inception, and we expect we will continue to incur losses for the next year. As of the date of this filing, we do not have any available external source of funds. We require additional capital in the near term to maintain our current operations. Although we are actively seeking additional equity and debt financing, such financing may not be available on acceptable terms, if at all.

Our financial statements have been prepared assuming that we will continue as a going concern. Since our inception in February 2004, we have not generated revenue and have incurred net losses. We have a working capital deficit of $2,114,107 at August 31, 2010, incurred net losses of $3,660,418 and $5,281,857 for the years ended August 31, 2010 and 2009 respectively, and have a deficit accumulated during the exploration stage of $13,040,854 for the period from February 11, 2004 (inception) through August 31, 2010. Accordingly, we have not generated cash flow from operations and have primarily relied upon loans from officers, promissory notes and advances from unrelated parties, sale of assets, and equity financing to fund our operations. These conditions (as indicated in the 2010 audit report of our Independent Registered Public Accounting Firm), raise substantial doubt about the Company’s ability to continue as a going concern.

We currently have minimal cash on hand. Accordingly, we do not have sufficient cash resources or current assets to pay our obligations, and we have been meeting many of our obligations through the issuance of our common stock to our employees, consultants and advisors as payment for goods and services. Considering the foregoing, we are dependent on additional financing to continue our operations and exploration efforts and, if warranted, to develop and commence mining operations. Our significant capital requirements for the foreseeable future include exploration commitments of $650,000 on our mining property options, payment on a $650,000 promissory note which is collateralized by the Pride of the West Mill and related accrued interest of $157,896, payment on notes payable including accrued interest to related parties totaling $312,579, re-activation expenses for the mill, and our corporate overhead expenses.

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

As of August 31, 2010, we had cash of approximately $20,000, and other current assets of approximately $18,000 and current liabilities of approximately $2,153,000, resulting a working capital deficit of $2,114,000. We used cash and cash equivalents of $296,000 in operating activities for the year ended August 31, 2010. Investing activities for the year ended August 31, 2010 of $15,000 consisted of the sale of property, plant and equipment. Financing activities consisted of cash proceeds from loans made by private investors and officers during the year, net of repayments, of $301,000.

Results of Operations

We are presently in the exploration stage of our business and have not earned any revenues to date, and we do not anticipate earning revenues until we acquire and develop mining properties with proven reserves or perform milling for other mining companies.

Year Ended August 31, 2010 Compared to Year Ended August 31, 2009

For the year ended August 31, 2010, we incurred a net loss of approximately $3,660,000 compared to a net loss of approximately $5,282,000 for the year ended August 31, 2009.

For the years ended August 31, 2010 and 2009, overall mineral property and exploration costs were comparable year over year of approximately $568,000 and $602,000, respectively. Professional fees primarily relate to the re-activation of the Pride of the West Mill and increased to $270,000 from $252,000 from 2009 to 2010.

General and administrative costs were approximately $2,620,000 and $4,390,000 for the years ended August 31, 2010 and 2009, respectively; a 40 percent decrease of $1,770,000. The decrease is due to the specific reasons presented below.

Consulting expenses were $1,053,000 and $2,127,000 for the years ended August 31, 2010 and 2009, respectively, a 51% decrease of $1,075,000. These expenses are in the form of stock based compensation. The decrease is due to suspended geological and engineering analysis of potential mining property acquisitions, environmental consulting, corporate communications, research and development of international opportunities in favor of focusing on the Pride of the West Mill re-activation. Furthermore, the decrease partially reflects a lower valuation of stock based compensation.

Salaries and related payroll liabilities were $453,000 and $604,000 for the years ended August 31, 2010 and 2009, respectively, a $151,000 decrease. The decrease is due to no renewal bonuses being paid pursuant to our executive compensation agreements with our Chief Executive Officer and Chief Financial Officer in fiscal 2010. All salaries are paid in the form of stock awards in lieu of cash exempt under Rule 16b-3.

Travel and related costs were $14,000 and $9,000 for the years ended August 31, 2010 and 2009, respectively, an increase of $5,000. The increase in travel during the 2010 fiscal year was due to a higher level of management’s physical presence at the operations site in Silverton, Colorado.

Website costs were $55,000 and $224,000 for the years ended August 31, 2010 and 2009, respectively, a decrease of $169,000. The decrease was due to less redesign activities related to our website; focusing mainly on maintenance and smaller enhancements in fiscal 2010.

Investor relations expenses were $511,000 and $168,000 for the years ended August 31, 2010 and 2009, respectively, an increase of $343,000. The increase is due to the use of a much higher caliber of media resources to keep our shareholders informed of the Company’s progress.

Interest expense was $241,000 and $107,000 for the years ended August 31, 2010 and 2009 respectively, an increase of $134,000. Interest expenses are related to the mortgage on the mill which was purchased in June 2007, the issuance of convertible promissory notes in 2010, (including amortization of debt discount and deferred financing fees), and legal settlement interest. See Item 3. Legal Proceedings for additional details.

Other income was $28,000 and $69,000 during the years ended August 31, 2010 and 2009 respectively, a decrease of $41,000 due primarily to reduced gains on the sale of assets that are not immediately needed for operations.

Legal settlement costs of $245,000 are included in operating expenses in 2010. This was due to recording a potential liability to our former president Todd C. Hennis who, as result of litigation, may have a claim against the Company if we are not successful in the Colorado Court of Appeals. See Item 3. Legal Proceedings for additional details.

Critical Accounting Policies

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

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

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

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

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

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

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, “Improving Disclosures about Fair Value Measurements” (ASU 2010-06). This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after December 15, 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 (September 1, 2011 for the Company). As ASU 2010-06 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its financial statements.

In August 2009, the FASB issued authoritative guidance clarifying the measurement of the fair value of liabilities. The amendments reduce potential ambiguity in financial reporting when measuring the fair value of liabilities and help to improve consistency in the application of authoritative guidance. This update is effective for the first reporting period, including interim periods, beginning after issuance, which for the Company was September 1, 2009. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or cash flows.

In June 2009, the FASB issued a new accounting standard which provides guidance that, among other things, requires a qualitative rather than quantitative analysis to determine the primary beneficiary of a variable interest entity (“VIE”), which amends previous guidance for consideration of related party relationships in the determination of the primary beneficiary of a VIE, amends certain guidance for determining whether an entity is a VIE, requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and requires enhanced disclosures about an enterprise’s involvement with a VIE. The adoption of this guidance (effective for the Company on September 1, 2010), is not expected to have a material impact on the Company’s financial statements.

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

Item 8.		Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Colorado Goldfields Inc.

We have audited the accompanying balance sheets of Colorado Goldfields Inc. (an Exploration Stage Company) as of August 31, 2010 and 2009 and the related statements of operations, cash flows and stockholders’ (deficit) equity for each of the two years in the period ended August 31, 2010, and for the period from February 11, 2004 (inception) through August 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Colorado Goldfields Inc. as of August 31, 2010 and 2009, and the results of its operations and cash flows for each of the two years in the period ended August 31, 2010, and for the period from February 11, 2004 (inception) through August 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a net loss of $3,660,418 for the year ended August 31, 2010, and a deficit accumulated during the exploration stage of $13,040,854 for the period from February 11, 2004 (inception) through August 31, 2010. The Company also has a limited history and no revenue producing operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ GHP HORWATH, P.C.

Denver, Colorado
November 19, 2010

Colorado Goldfields Inc. (An Exploration Stage Company)

		August 31,				August 31,
		2010				2009
ASSETS
Current Assets
Cash		$	20,019			$	559
Prepaid expenses and other			18,459				262,508
Total Current Assets			38,478				263,067
Non-Current Assets
Property, plant and equipment, net (Note 3)			1,660,015				1,699,620
Mining rights (Note 4)			280,556				—
Restricted cash (Note 3)			318,154				318,154
Deferred financing costs			13,206				—
Other			11,520				13,520
Total Non-Current Assets			2,283,451				2,031,294
Total Assets		$	2,321,929			$	2,294,361
LIABILITIES & STOCKHOLDERS’ (DEFICIT) EQUITY
Current Liabilities
Accounts payable (Note 10)		$	317,149			$	267,564
Accrued liabilities (Note 10)			507,140				105,610
Convertible debt, less unamortized discount of $126,238 (Note 7)			23,762				—
Derivative liabilities (Note 8)			140,284				—
Notes payable, including accrued interest — related parties (Note 5)			280,600				100,774
Promissory note payable, including accrued interest (Note 6)			75,754				143,009
Mortgage notes payable, including accrued interest (Note 3)			807,896				729,895
Total Current Liabilities			2,152,585				1,346,852
Non-Current Liabilities
Notes payable, including accrued interest — related parties (Note 5)			31,979				—
Asset retirement obligation			612,550				571,500
Total Non-Current Liabilities			644,529				571,500
Total Liabilities			2,797,114				1,918,352
Contingencies and Commitments
Stockholders’ (Deficit) Equity (Note 9)
Class A common stock, 2,500,000,000 shares authorized, $0.001 par value; 1,773,286,964 and 535,398,127 shares issued and outstanding, respectively			1,715,026				477,137
Class B common stock, 500,000,000 shares authorized, no par value; 40,744,353 and 35,732,285 shares issued and outstanding, respectively			—				—
Additional paid in capital			10,821,393				9,250,058
Donated capital			29,250				29,250
Deficit accumulated during the exploration stage			(13,040,854	)			(9,380,436	)
Total Stockholders’ (Deficit) Equity			(475,185	)			376,009
Total Liabilities and Stockholders’ (Deficit) Equity		$	2,321,929			$	2,294,361

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

										Accumulated
										from February 11,
		For the Year				For the Year				2004 (Date of
		Ended				Ended				Inception) to
		August 31, 2010				August 31, 2009				August 31, 2010
Revenue		$	—			$	—			$	—
Operating expenses
Donated rent			—				—				9,750
Donated services			—				—				19,500
General and administrative			2,619,760				4,390,367				9,681,576
Mineral property and exploration costs			567,927				601,788				1,885,946
Professional fees			270,452				251,829				1,161,462
Total operating expenses			(3,458,139	)			(5,243,984	)			(12,758,234	)
Other income (expense)
Other income			26,033				53,741				80,822
Interest income			1,907				15,389				33,134
Gain on derivative liabilities			10,789				—				10,789
Interest expense			(241,008	)			(107,003	)			(407,365	)
Total other expense			(202,279	)			(37,873	)			(282,620	)
Net Loss		$	(3,660,418	)		$	(5,281,857	)		$	(13,040,854	)
Net Loss Per Common Share — Basic and Diluted			*			$	(0.02	)
Weighted Average Number of Common Shares Outstanding			1,186,999,066				268,677,008

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

										Accumulated from
		For the Year				For the Year				February 11, 2004
		Ended				Ended				(Date of Inception) to
		August 31, 2010				August 31, 2009				August 31, 2010
Cash Flows Used in Operating Activities:
Net loss		$	(3,660,418	)		$	(5,281,857	)		$	(13,040,854	)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated services and rent			—				—				29,250
Amortization of debt discount and deferred financing costs			88,767				—				88,767
Depreciation and amortization			38,321				51,322				98,425
Gain on derivative liabilities			(10,789	)			—				(10,789	)
Impairment of mining rights			126,944				—				126,944
Stock issued for services			2,189,801				3,983,784				7,043,324
Stock-based compensation — options			—				4,094				899,303
Accrued interest on debt			101,850				101,046				202,896
Accretion expense on asset retirement obligation			41,050				46,500				112,550
Gain on sale of property, plant and equipment			(13,716	)			(39,239	)			(52,955	)
Change in operating assets and liabilities:
Increase in restricted cash			—				—				(318,154	)
Decrease in prepaid expenses and other			5,009				74,647				—
Increase in accounts payable			393,412				376,952				1,169,035
Increase in accrued liabilities			401,529				67,374				507,139
Decrease (increase) in other assets			2,000				—				(11,520	)
Net cash used in operating activities			(296,240	)			(615,377	)			(3,156,639	)
Cash Flows from Investing Activities:
Proceeds from sale of property, plant and equipment			15,000				109,500				159,500
Acquisition of property, plant and equipment			—				(4,120	)			(717,736	)
Net cash provided by (used in) investing activities			15,000				105,380				(558,236	)
Cash Flows from Financing Acitvities:
Advances received			—				—				405,733
Repayment of advances			—				—				(405,733	)
Proceeds from notes from related parties			195,700				375,700				581,452
Repayment of advances from related party			—				—				(10,052	)
Proceeds from note payable			—				—				100,000
Repayment of note payable			(75,000	)			—				(175,000	)
Proceeds from issuance of convertible debt			200,000				—				200,000
Loan acquisition costs			(20,000	)			—				(20,000	)
Net proceeds from issuance of common stock			—				—				3,058,494
Net cash provided by financing activities			300,700				375,700				3,734,894
Increase (decrease) in cash			19,460				(134,297	)			20,019
Cash — Beginning of Period			559				134,856				—
Cash — End of Period		$	20,019			$	559			$	20,019
Supplemental Disclosures:
Interest paid		$	6,736			$	15,783			$	78,322
Income taxes paid		$	—			$	—			$	—
Non-cash investing and financing activities:
Exchange of accounts payable for promissory note		$	—			$	135,294			$	135,294
Issuance of common stock to satisfy accounts payable		$	343,828			$	370,015			$	713,843
Issuance of common stock for prepaid expenses		$	79,940			$	257,499			$	337,439
Issuance of common stock for mining rights		$	407,500			$	—			$	407,500
Exchange of convertible debt for common shares		$	107,136			$	—			$	107,136
Exchange of property, plant and equipment for accounts payable		$	—			$	2,750			$	2,750
Forgiveness of related party debt and accrued interest		$	—			$	288,361			$	288,361
Acquisition of land and building:
Cash paid		$	—			$	—			$	250,677
Mortgage note given to seller			—				—				650,000
Asset retirement obligation assumed			—				—				500,000
Assets acquired		$	—			$	—			$	1,400,677

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

																										Deficit
																										Accumulated				Total
		Class A								Class B								Additional								During the				Stockholders’
		Common Stock								Common Stock								Paid in				Donated				Exploration				(Deficit)
Number of Shares		Shares				Amount				Shares				Amount				Capital				Capital				Stage				Equity
Balances — February 11, 2004 (Date of inception)			—			$	—				—			$	—			$	—			$	—			$	—			$	—
Issuance of common stock for cash			51,350,000				2,500				—				—				—				—				—				2,500
Donated services and rent			—				—				—				—				—				4,500				—				4,500
Net loss			—				—				—				—				—				—				(5,898	)			(5,898	)
Balances — August 31, 2004			51,350,000				2,500				—				—				—				4,500				(5,898	)			1,102
Issuance of common stock for cash			63,160,500				53,750				—				—				—				—				—				53,750
Donated services and rent			—				—				—				—				—				9,000				—				9,000
Net loss			—				—				—				—				—				—				(35,319	)			(35,319	)
Balances — August 31, 2005			114,510,500				56,250				—				—				—				13,500				(41,217	)			28,533
Donated services and rent			—				—				—				—				—				9,000				—				9,000
Net loss			—				—				—				—				—				—				(36,148	)			(36,148	)
Balances — August 31, 2006			114,510,500				56,250				—				—				—				22,500				(77,365	)			1,385
Donated services and rent			—				—				—				—				—				6,750				—				6,750
Net loss			—				—				—				—				—				—				(300,193	)			(300,193	)
Balances — August 31, 2007			114,510,500				56,250				—				—				—				29,250				(377,558	)			(292,058	)
Issuance of common stock for cash (net of offering costs of $282,231) (Note 9)			11,386,180				11,386				—				—				2,990,858				—				—				3,002,244
Shares issued for services (Note 9)			9,829,440				9,829				—				—				859,910				—				—				869,739
Stock-based compensation — options (Note 9)			—				—				—				—				895,209				—				—				895,209
Net loss			—				—				—				—				—				—				(3,721,021	)			(3,721,021	)
Balances — August 31, 2008			135,726,120				77,465				—				—				4,745,977				29,250				(4,098,579	)			754,113
Shares issued for services (Note 9)			370,282,860				370,283				—				—				3,871,000				—				—				4,241,283
Issuance of common stock to satisfy accounts payable (Note 9)			29,389,147				29,389				—				—				340,626				—				—				370,015
Stock-based compensation — options (Note 9)			—				—				—				—				4,094				—				—				4,094
Stock issued to beneficial owners of Class A Common Stock (Note 9)			—				—				35,732,285				—				—				—				—				—
Forgiveness of related party debt and accrued interest (Note 5)			—				—				—				—				288,361				—				—				288,361
Net loss			—				—				—				—				—				—				(5,281,857	)			(5,281,857	)
Balances — August 31, 2009			535,398,127				477,137				35,732,285				—				9,250,058				29,250				(9,380,436	)			376,009
Shares issued for services (Note 9)			921,203,109				921,203				—				—				1,029,557				—				—				1,950,760
Issuance of common stock to satisfy accounts payable (Note 9)			144,810,731				144,811				—				—				199,017				—				—				343,828
Shares issued for mining rights (Note 4)			125,000,000				125,000				—				—				282,500				—				—				407,500
Shares issued for convertible debt (Note 7)			46,874,997				46,875				—				—				60,261				—				—				107,136
Stock issued to beneficial owners of Class A Common Stock (Note 9)			—				—				5,012,068				—				—				—				—				—
Net loss			—				—				—				—				—				—				(3,660,418	)			(3,660,418	)
Balances — August 31, 2010			1,773,286,964			$	1,715,026				40,744,353			$	—			$	10,821,393			$	29,250			$	(13,040,854	)		$	(475,185	)

The accompanying notes are an integral part of these financial statements

Colorado Goldfields Inc. (An Exploration Stage Company)

Notes to the Financial Statements

1.

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

Organization and Nature of Business

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

Going Concern and Management’s Plans

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception in February 2004, the Company has not generated revenue and has incurred net losses. The Company has a working capital deficit of $2,114,107 at August 31, 2010, incurred net losses of $3,660,418 and $5,281,857 for the years ended August 31, 2010 and 2009, respectively, and has incurred a deficit accumulated during the exploration stage of $13,040,854 for the period from February 11, 2004 (inception) through August 31, 2010. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts or classification of liabilities that may result from the possible inability of the Company to continue as a going concern. Management’s plans with regards to these conditions are described below.

The Company continues to explore sources of additional financing to satisfy its current operating requirements. In May 2010, the Company closed a one-year funding arrangement with an institutional investor (the “Delaware Partnership”), in which the Delaware Partnership may provide convertible debt financing in $25,000 tranches, up to $1 million. The Investor is under no obligation to fund any or all of the $1 million, and the timing of funding is solely at the discretion of the Investor. Proceeds from the financings are to pay the Company’s existing aged debt and for working capital requirements. Through August 31, 2010, the Company received $150,000 under this facility (Note 7) of which $75,000 was used to pay off a promissory note payable (Note 6). In July 2010, the Company also closed a $50,000 funding arrangement with a group of New York Private Investors in the form of a convertible note, which matures on April 20, 2011.

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 lease/option agreements, and satisfy existing creditors.

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

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

2.

Summary of Significant Account Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and are expressed in US dollars. The Company’s fiscal year-end is August 31.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Basic and Diluted Net Loss Per Share

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

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

		Year ended				Year ended
		August 31, 2010				August 31, 2009
Class A warrants			—				11,386,180
Class B Common Stock			40,744,353				35,732,285
Class B warrants			40,744,353				35,732,285
Convertible debt			254,515,600				—

Comprehensive Income (Loss)

For the years ended August 31, 2010 and 2009 there were no differences between net loss and comprehensive loss.

Cash

Cash includes deposits in banks which are unrestricted as to withdrawal or use.

Mineral Property and Exploration Costs

The Company has been in the exploration stage since its formation on February 11, 2004, and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties.

Costs incurred before mineralization is classified as “proven and probable” reserves are expensed and classified as Mineral property and exploration costs. Capitalization of mine development project costs, that meet the definition of an asset, begins once mineralization is classified as “proven and probable reserves.”

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to acquire and develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Mining Rights

The Company has determined that its mining rights meet the definition of mineral rights, as defined by accounting standards, and are tangible assets. As a result, the costs of mining rights are initially capitalized as tangible assets when purchased. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserves. The Company’s rights to extract minerals are contractually limited by time. However, the Company has the ability to extend the leases (Note 4). For mining rights in which proven and probable reserves have not yet been established, the Company assesses the carrying value for impairment at the end of each reporting period. During the years ended August 31, 2010 and 2009, the Company recorded impairment charges of $126,944 and zero, respectively.

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, 2010.

Fair Value Measurements

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

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

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

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

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

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

		Level 1				Level 2				Level 3
Restricted cash (time deposits)			—			$	318,154				—
Derivative liabilities			—			$	140,284				—

The fair values of financial instruments, which include cash, accounts payable, notes payable, and convertible debt were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The fair value of amounts due to related parties are not practicable to estimate, due to the related party nature of the underlying transactions. The fair value of the letter of credit issued in conjunction with the reclamation bond (Note 3) approximates the fees paid to obtain it.

Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is determined to be more likely than not. The potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured that it is more likely than not it will utilize the net operating losses carried forward in future years.

The Company has no unrecognized tax benefits. The Company files income tax returns in the U.S. federal jurisdiction and in the state of Colorado. Management does not believe there will be any significant changes in the Company’s tax positions over the next 12 months.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There was no income tax expense recognized during the years ended August 31, 2010 or 2009, for interest and penalties.

Share Based Payments

The Company recognizes the cost of employee services received in exchange for an award of equity instruments in the financial statements and the cost is measured based on the grant date fair value of the award. Stock-based compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (the requisite service period). The Company utilizes the Black-Scholes option-pricing model to determine fair value of stock option awards. Key assumptions of the Black-Scholes option-pricing model include applicable volatility rates, risk-free interest rates and the instrument’s expected remaining life. These assumptions require significant management judgment.

Asset Retirement Obligation

The fair value of a liability for an asset retirement obligation is required to be recognized in the period that it is incurred if a reasonable estimate of fair value can be made. In connection with the Company’s acquisition of the Pride of the West Mill (the “Mill”) in June 2007, an asset retirement obligation was recorded. The associated asset retirement costs were capitalized as part of the carrying amount of the Mill (See Note 3). Accretion expense is recorded in each subsequent period to recognize the changes in the liability resulting from the passage of time. During the years ended August 31, 2010 and 2009, the Company recorded accretion expense of $41,050 and $46,500, respectively. Changes resulting from revisions to the original fair value of the liability are recognized as an increase or decrease in the carrying amount of the liability and the related asset retirement costs capitalized as part of the carrying amount of the long-lived asset. Other than the increase due to accretion, no other changes or revisions to the original fair value of the liability occurred during the years ended August 31, 2010 or 2009.

Recent accounting pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06). This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after December 15, 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 (September 1, 2011 for the Company). As ASU 2010-06 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its financial statements.

In August 2009, the FASB issued authoritative guidance clarifying the measurement of the fair value of liabilities. The amendments reduce potential ambiguity in financial reporting when measuring the fair value of liabilities and help to improve consistency in the application of authoritative guidance. This update is effective for the first reporting period, including interim periods, beginning after issuance, which for the Company was September 1, 2009. The adoption of this guidance did not have an impact on the Company’s results of operations, financial position or cash flows.

In June 2009, the FASB issued a new accounting standard which provides guidance that, among other things, requires a qualitative rather than quantitative analysis to determine the primary beneficiary of a variable interest entity (“VIE”), which amends previous guidance for consideration of related party relationships in the determination of the primary beneficiary of a VIE, amends certain guidance for determining whether an entity is a VIE, requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and requires enhanced disclosures about an enterprise’s involvement with a VIE. The adoption of this guidance (effective for the Company on September 1, 2010), is not expected to have a material impact on the Company’s financial statements.

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

3.

Property, Plant and Equipment

On June 29, 2007, the Company acquired the Mill located in Howardsville, Colorado for consideration of $900,677 plus the assumption of an estimated asset retirement obligation of $500,000 for a total cost of $1,400,677. The Company paid the seller cash of $250,677 and the remaining $650,000 was paid through a mortgage with the seller, which is collateralized by the property and bears interest at 7% per year. All unpaid principal was originally due June 29, 2009. The due date on the mortgage was extended in July 2009 and again in June 2010 and is currently due in full on December 29, 2010. In connection with the July 2009 extension, the interest rate on the mortgage was increased to 12% per annum. Interest expense for the years ended August 31, 2010 and 2009 was $78,000 and $79,897, respectively.

Subsequent to August 31, 2010, $75,000 of the mortgage was paid though the issuance of convertible notes (See Note 7).

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

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

		August 31, 2010				August 31, 2009
Computer equipment		$	2,118			$	2,118
Mine and drilling equipment			111,250				113,278
Mobile mining equipment			61,519				61,519
Land and mill			1,567,176				1,567,176
			1,742,063				1,744,091
Less accumulated depreciation			(82,048	)			(44,471	)
		$	1,660,015			$	1,699,620

Depreciation expense was $38,321 and $51,322 for the years ended August 31, 2010 and 2009, respectively. Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives ranging from three to five years. However, a significant portion of the of the Company’s property, plant and equipment has not yet been placed in service.

4.

Mineral property rights

King Solomon Mine

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

Brooklyn Mine

On September 30, 2009 the Company entered into a lease with an option to purchase the Brooklyn Mine, in consideration for which the Company issued 75,000,000 shares of restricted Class A Common Stock valued at $0.0031 per share (the quoted market price on the date of the Company entered into the agreement and obtained the mining rights) totaling $232,500. The lease/option is for a period of three years. The stock is restricted from sale during the initial term of the lease. The lease/option is to automatically renew and continue so long as ores, minerals, or metals are produced or sold. The lease grants the Company the exclusive right to perform exploration, mining, development, production, processing or any other activity which benefits the leased premises and requires a minimum work commitment of $150,000 for the first year, $200,000 for the second year and $250,000 for the third year to be expended by the Company. The work commitment for the first year of the lease/option was not met. However, the lessor has extended the first year minimum work commitment until November 30, 2010. The Company has entered into an informal agreement with the lessor to continue to extend the terms of the agreement on a month-to-month basis until a formal agreement is made. The lease also requires the Company to pay the lessor a 5% NSR on all mineral bearing ores. In addition, before royalties are computed, 5% of the value of NSR on all materials produced and sold from the mining property must be deducted for the purpose of a contingency reclamation reserve fund for paying potential reclamation costs, up to $500,000. The Company has the sole and exclusive option to purchase all of lessor’s right, title and interest in the property for a total purchase price of $4,000,000, plus a perpetual 2% NSR. This amount may be paid in cash or other cash equivalent as mutually agreed by the Company and the lessor.

San Juan Properties

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

The Company received notice of default of the option agreement on March 16, 2009 when the Company did not make the payment due on March 15, 2009. The Company does not dispute the technical default. The option agreement is the subject of current litigation in San Juan County, Colorado. (See Note 12).

5.

Notes payable — related parties

As of August 31, 2010, the Company has borrowed $72,500 and $498,900 from its chief executive officer (“CEO”) and its chief financial officer (“CFO”), respectively. In connection with the borrowings, the Company executed unsecured promissory notes (“Notes”) which are due six months from the dates of issue and accrue interest at 6.5% per annum (or 18% per annum, if the Notes are in default). The funds received in exchange for the notes have primarily been used by the Company to finance working capital requirements. During the year ended August 31, 2009, the Company’s CFO forgave certain notes and accrued interest which has been accounted for as a capital transaction resulting in an increase in equity of $288,361. During the year ended August 31, 2010 the Company entered into amended note agreements with its CEO and CFO to extend certain of the due dates on the Notes. The notes outstanding at August 31, 2010 are due at varying dates between January 19, 2011 and November 11, 2011. None of the promissory notes are currently in default. During the years ended August 31, 2010 and 2009, the Company recorded interest expense of $16,104 and $13,435, respectively, relating to the Notes.

6.

Promissory note payable

On October 2, 2008, the Company executed an unsecured promissory note with one of its vendors for services rendered totaling $135,294. The promissory note bears interest at 6.25% per annum and the principal and interest were due on December 19, 2008. The promissory note is in default and a Motion for Summary Judgment has been granted (see Note 12). During the year ended August 31, 2010, $75,000 was paid towards the promissory note. The Company recorded interest expense of $7,745 and $7,715 for the years ended August, 2010 and 2009, respectively. Subsequent to August 31, 2010, the promissory note and judgment were paid in full. The Company made this payment with funds raised through the issuance of convertible notes (Note 7).

7.

Convertible notes

Delaware Partnership Investor

During the year ended August 31, 2010, the Company issued six $25,000 convertible notes under multiple funding arrangements with a Delaware Partnership Investor, totaling $150,000, which bear interest at 6.25% per annum and mature at various dates between May 21, 2011 and August 26, 2011. The notes are convertible at any time, at the option of the holder, into shares of Class A common stock of the Company at a conversion rate of 70% of the average of the two lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten trading days immediately prior to the date a conversion notice is received by the Company. The Company recorded a debt discount in the amount of $146,032 related to the conversion features on the notes (see Note 8). During the year ended August 31, 2010, $50,000 of the convertible notes were converted into common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). During the year ended August 31, 2010 the Company recorded $62,285 of debt discount amortization and the carrying value of the notes was $16,253 as of August 31, 2010. The terms of the agreement require the Company to, at all times, have authorized and reserved a sufficient number of shares to provide for full conversion of the outstanding notes (158,730,159 shares as of August 31, 2010).

Subsequent to August 31, 2010, the Company has issued three additional convertible notes under the same terms as described above totaling $303,978, and $101,989 has been converted into common stock by the investor.

New York Private Investors

During the year ended August 31, 2010, the Company issued a $50,000 convertible note under a funding arrangement with a group of New York Private Investors, which bears interest at 8% per annum and matures on April 20, 2011. The notes are convertible at any time after 180 days from the date of the note’s execution, at the option of the holder, into shares of Class A common stock of the Company at a conversion rate of 58% of the average of the three lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten trading days immediately prior to the date a conversion notice is received by the Company. The Company recorded a debt discount of $50,000 relating to the conversion features of the note. For the year ended August 31, 2010, the Company record debt discount amortization of $7,509 and the carrying value of the note as of August 31, 2010 was $7,509. The terms of the agreement require the Company to, at all times, have authorized and reserved five times the number of shares that are actually issuable upon full conversion of the note (478,927,203 shares as of August 31, 2010).

Subsequent to August 31, 2010, the Company has issued two additional convertible notes under the same terms as described above totaling $65,000.

8.

Derivative Liabilities

In accordance with ASC 815-15, Embedded Derivatives, the Company determined that the conversion features of the convertible notes described in Note 7 meet the criteria of an embedded derivative and therefore the conversion features of the debt have been bifurcated and accounted for as a derivative. The debt does not meet the definition of “conventional convertible debt” because the number of shares which may be issued upon the conversion of the debt is not fixed. Therefore, the conversion features, pursuant to ASC 815-40, Contracts in Entity’s Own Equity, have been accounted for as derivative liabilities. The Company adjusts the fair value of these derivative liabilities to fair value at each reporting date.

The Company uses the Black-Scholes pricing model to calculate the fair value of its derivative liabilities. Key assumptions used to apply this model were as follows:

Expected term		71/2 to 12 months
Volatility		139% – 166%
Risk-free interest rate		0.19 – 0.38%
Dividend yield		0%

The following table represents the Company’s derivative liability activity for the embedded conversion features for the year ended August 31, 2010:

Balance at August 31, 2010		$	—
Issuance of derivative liability			50,000
Balance at May 31, 2010			50,000
Issuance of derivative liabilities			158,209
Derecognition of derivative liabilities related to conversion of convertible debt			(57,136	)
Gain on derivative liabilities			(10,789	)
Balance at August 31, 2010		$	140,284

9.

Stockholders’ Equity

Fiscal 2008 Common Stock Transactions

On November 20, 2007, the Company issued a total of 11,386,180 common shares at a price of $0.2885 per common share under a private placement for gross proceeds of $3,284,475 (net proceeds of $3,002,244). Each common share was issued with one non-transferable share purchase warrant. Each warrant entitles the holder thereof to purchase an additional common share at a price of $0.50 per share. All warrants expired on November 14, 2009.

During the year ended August 31, 2008, the Company issued 130,000 shares of its restricted stock to a consultant for investor relations services valued at $0.17 per share (the quoted market price at the date of issuance), which resulted in $22,000 being recorded as expense. The Company also issued 1,866,940 shares of its restricted to YA Global Investments pursuant to the terms of an unsuccessful financing. The shares were valued at $0.06 per share (the quoted market price at the date of issuance), resulting in $114,889 being recorded as expense.

In February 2008, the Company approved the 2008 Stock Incentive Plan (“2008 Plan”) which provides incentive stock and non-statutory options to be granted to select employees, directors and consultants of the Company. The 2008 Plan provides that awards may be granted for up to 12,480,000 shares of the Company’s common shares.

Pursuant to the 2008 Plan, during the year ended August 31, 2008, the Company issued 7,832,500 shares of its common stock to employees, directors and consultants for services rendered. The common shares were valued based on the quoted market price on the date of the respective stock grant, which ranged from $0.06 to $0.11 per share. The total grant date fair value of these shares was $974,389. Of the 7,832,500 common shares issued, 1,014,000 common shares, valued at $109,200, have vesting requirements and are being amortized and recorded to expense over the requisite service period, which is six to eighteen months. During the year ended August 31, 2008, the Company recorded expense of $732,850 related to the 7,832,500 shares.

Fiscal 2009 Common Stock Transactions

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

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

On February 27, 2009 the Company announced that the beneficial owners of Class A Common Stock as of that date will be issued one share of restricted Class B Common Stock and one restricted Class B warrant, (“Class B Securities”) for every four shares of Class A common stock. The Class B warrants have a term of one year from date of issuance at an exercise price of $0.50 per share. The Class B Securities will be issued only to, and in the name of bona fide and verified beneficial owners of Class A common stock. In order for Series A common stockholders to receive Class B Securities, certain conditions must be met. As of August 31, 2010, 40,744,353 (out of a potential of 50,376,756) Class B Securities have been issued. The pay date of any future issuances of Class B Securities is uncertain. On March 9, 2010, the Board of Directors extended the date of the Class B Warrants to February 27, 2011. All other terms of the Class B Warrants remain the same.

During the year ended August 31, 2009, the Company issued 975,000 shares of restricted Class A Common Stock valued at $0.02 to $0.04 per share (the quoted market prices at the dates of the respective stock grants) and an additional 68,250,000 shares of its restricted Class A common stock valued at $0.0035 to $0.02 per share (the quoted market prices at the dates of the respective stock grants), to a consultant for corporate communications services which resulted in $318,000 being recorded as expense. Also during the year ended August 31, 2009, the Company issued 50,000,000 shares of restricted Class A Common Stock to employees, directors and consultants valued at $0.0133 per share (the quoted market prices at the dates of the respective stock grants), for services rendered during the year ended August 31, 2009, which resulted in $665,000 being recorded as expense.

Pursuant to the 2008 Plan the Company issued 4,579,770 shares of its Class A Common Stock to employees, directors and consultants for services rendered during the year ended August 31, 2009. The common shares were valued based upon the quoted market price on the date of the respective stock grants, which ranged from $0.02 to $0.08 per share. The total grant date fair value of these shares was $224,250, of which $55,250 was expensed upon issue. Of the 12,412,270 common shares issued under the 2008 Plan as of August 31, 2009, 3,809,000 common shares, valued at $278,200, have vesting requirements and are being amortized and recorded to expense over the requisite service period, which is six to eighteen months. During the years ended August 31, 2010 and 2009, the Company recorded expense of $21,538 and $209,111 related to the 3,809,000 shares, respectively.

In September 2008, the Company approved the 2008 Non-qualified Consultants and Advisors Stock Compensation Plan (“2008 Consultants Plan”) whereby the Company may grant up to 65,000,000 shares of the Company’s stock in exchange for services rendered to the Company. In January 2009 and again in March 2009, the Company authorized an additional 50,000,000 shares under the 2008 Consultants Plan. In June 2009, the Company authorized an additional 100,000,000 shares under the 2008 Consultants Plan. During the year ended August 31, 2009, the Company issued 205,949,003 shares of its Class A Common Stock under the 2008 Consultants Plan for services rendered by various consultants valued at $0.0035 to $0.08 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $2,795,978 being recorded as expense.

In November 2008, the Company approved the 2008 Employee and Director Stock Compensation Plan (“2008 Employee Plan”), whereby the Company may grant up to 46,800,000 shares of the Company’s stock in exchange for services rendered to the Company. In January 2009, the Company authorized an additional 39,000,000 shares under the 2008 Employee Plan. During the year ended August 31, 2009, 69,918,233 shares of Class A Common Stock were issued to employees valued at $0.0034 to $0.08 per share (the quoted market prices at the dates of the respective stock grants), for services rendered during the year ended August 31, 2009, which resulted in $567,908 being recorded as expense.

Fiscal 2010 Common Stock Transactions

During the year ended August 31, 2010, the Company issued 152,000,000 shares of restricted Class A Common Stock to a various consultants for corporate communications services valued at $0.0012 to $0.002 per share which resulted in $254,500 being recorded as expense. Also during the year ended August 31, 2010, the Company issued 125,000,000 shares of restricted Class A Common Stock to individuals valued at $.0031 to $0.0035 per share (the quoted market prices at the dates of the respective stock grants), for the purchase of mining rights totaling $407,500. During the year ended August 31, 2010, the Company converted debt totaling $50,000 into shares of restricted Class A Common Stock (Note 7).

As of August 31, 2010 the Company is authorized to grant up to 1,065,000,000 shares under the 2008 Consultants Plan, of which 839,205,543 shares have been issued as of August 31, 2010. During the year ended August 31, 2010, 633,256,540 shares of Class A Common Stock were issued to consultants for services rendered valued at $0.0013 to $0.0036 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $1,078,129 being recorded as expense, $79,940 being recorded as prepaid expenses and $300,965 recorded as a reduction in accounts payable at issuance. During the year ended August 31, 2010 the Company recorded expense of $318,981 for prepaid services previously issued in shares that have been earned during the period.

As of August 31, 2010, the Company is authorized to grant up to 410,800,000 shares under the 2008 Employee Plan, of which 350,675,533 have been issued as of August 31, 2010. During the year ended August 31, 2010, 280,757,300 shares of Class A Common Stock were issued to employees for services rendered valued at $0.0013 to $0.0036 per share (the quoted market prices at the dates of the respective stock grants), which resulted in $516,653 being recorded as expense and $42,863 recorded as a reduction in accounts payable.

Common Stock Transactions Subsequent to August 31, 2010

Subsequent to August 31, 2010, the Board of Directors has issued 257,185,400 shares of its Class A Common Stock to consultants and advisors for services, valued at approximately $239,528 under the 2008 Consultants Plan. The Board of Directors also has issued 120,189,800 shares of its Class A Common Stock to employees and directors for services, valued at approximately $102,130 under the 2008 Employee Plan, and 313,501,144 shares of restricted Class A Common Stock pursuant to the conversion of debt and services rendered.

Subsequent to August 31, 2010, 449,623,244 shares of Class B Common Stock were issued to the Chief Executive Officer and Chief Financial Officer in exchange for their foregoing any further issuances of Class A Common Stock in exchange for services for a period of one year. In October 2010, the Board of Directors amended the voting rights of Class B shares. Each Class B share is now entitled to 100 votes.

Subsequent to August 31, 2010, the stockholders of the Company and the Board of Directors approved an amendment to the articles of incorporation of the Company to establish and fix the number of authorized shares of Class A Common Stock that the Company can have outstanding at five billion (5,000,000,000).

Stock options

The Company recorded compensation expense related to stock options of zero, and $4,094 and $895,209 for the years ended August 31, 2010, 2009 and 2008, respectively. As of August 31, 2010, the Company had no unrecognized compensation cost related to stock options.

A summary of option activity under the 2008 Plan for the years ended August 31, 2010 and 2009 is as follows:

										Weighted-
						Weighted-				Average
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Shares				Price				Life				Value
Outstanding at September 1, 2008			1,250,000			$	0.50
Granted			—				—
Forfeited			(650,000	)			0.32
Cancelled			(600,000	)			0.70
Outstanding at August 31, 2009			—				—
Granted			—				—
Forfeited			—				—
Cancelled			—				—
Outstanding at August 31, 2010			—			$	—				—			$	—
Exercisable at August 31, 2010			—			$	—				—			$	—

10.

Related Party Transactions

For the years ended August 31, 2010 and 2009 the Company recognized zero and $9,000, respectively, for mineral property and exploration costs that were incurred from a company owned by the former President and CEO of the Company. Additionally, during the year ended August 31, 2010, the Company recorded $286,621 of legal settlement expenses related to proceedings with the former President and CEO.

Accounts payable and accrued liabilities at August 31, 2010 and 2009, include $345,603 and $58,982, respectively, due to the former President and CEO of the Company and entities substantially owned by him. See Note 12 for additional disclosure related to legal proceedings with the former President and CEO.

11.

Income Taxes

The reconciliation between the expected federal income tax benefit computed by applying the Federal statutory rate to loss before income taxes and the actual benefit for taxes on loss for the years ended August 31, 2010 and 2009 are as follows:

		2010				2009
Expected income tax benefit at statutory rate		$	1,281,146			$	1,848,650
State taxes			91,510				132,046
Permanent difference			(25,980	)			391
Other			(8,077	)			(980	)
Change in valuation allowance			(1,338,599	)			(1,980,107	)
Income tax benefit		$	—			$	—