Current Assets

Cash and cash equivalents

Restricted cash (Note 3)

Note receivable (Note 4)

Prepaid expenses and other (Note 4)

 

Total Current Assets

 

 

Non-Current Assets

Property, plant and equipment (Note 5)

Reclamation bond (Note 5)

Other

 

Total Non-Current Assets

 

Total Assets

 

 

 

Current Liabilities

Accounts payable (Note 9)

Accrued liabilities

Advances payable (Note 6)

Note payable (Note 6)

 

Total Current Liabilities

 

 

Non-Current Liabilities

Long-term debt (Note 5)

Asset retirement obligation (Note 5)

 

Total Non-Current Liabilities

 

Total Liabilities

 

 

Contingencies and Commitments (Notes 7, 9 and 10)

 

Stockholders’ Equity (Deficit)

Common stock, 1,185,000,000 shares authorized, $0.001 par value; 96,843,600 shares issued and outstanding

Additional paid in capital

Donated capital

Deficit accumulated during the exploration stage

 

Total Stockholders’ Equity (Deficit)

 

Total Liabilities and Stockholders’ Equity

 

 

Revenue

 

 

Operating expenses

 

Donated rent (Note 9)

Donated services (Note 9)

General and administrative

Stock-based compensation (Note 8)

Mineral property and exploration costs

Professional fees

 

 

Total operating expenses

 

 

Other income (expense)

Interest income

Interest expense

 

 

Total other expense

 

 

Net Loss

 

Net Loss Per Share — Basic and Diluted

 

Weighted Average Shares Outstanding

 

 

Cash Flows Used in Operating Activities:

 

Net loss

 

 

Adjustments to reconcile net loss to cash used in operating activities:

Donated services and rent

Depreciation

Stock-based compensation (Note 8)

Change in operating assets and liabilities:

Decrease in restricted cash

Increase in prepaid expenses and other

Increase in accounts payable

Increase in accrued liabilities

Increase in reclamation bond

Increase in other assets

 

Net cash used in operating activities

 

 

Cash Flows from Investing Activities:

Increase in note receivable

Acquisition of property, plant and equipment

 

Net cash used in investing activities

 

 

Cash Flows From Financing Activities:

Advances received

Repayment of advances (Note 6)

Advances from related party

Repayment of advances from related party

Proceeds from note payable

Repayment of note payable (Note 6)

Net proceeds from issuance of common stock

 

Net cash provided by financing activities

 

 

Increase in cash and cash equivalents

 

Cash and cash equivalents — Beginning of Period

 

 

Cash and cash equivalents — End of Period

 

 

Supplemental Disclosures:

Interest paid

 

Non-cash investing and financing activities:

Purchase of property, plant and equipment included in accounts payable

 

Acquisition of land and building:

Cash paid

Mortgage note given to seller

Asset retirement obligation assumed

 

Assets acquired

 

 

Balances — February 11, 2004 (Date of inception)

Issuance of common stock for cash

Donated services and rent

Net loss

 

 

Balances — August 31, 2004

Issuance of common stock for cash

Donated services and rent

Net loss

 

 

Balances — August 31, 2005

Donated services and rent

Net loss

 

 

Balances — August 31, 2006

Donated services and rent

Net loss

 

 

Balances — August 31, 2007

Issuance of common stock for cash (net of offering costs of $277,132) (Note 8)

Stock-based compensation (Note 8)

Net loss

 

 

Balances — May 31, 2008

 

Organization and Nature of Business:

The Company was incorporated in the State of Nevada on February 11, 2004, under the name of Garpa Resources, Inc. On June 18, 2007, the Company changed its name to Colorado Goldfields Inc. (the “Company”). The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting and Reporting for Development Stage Enterprises.” The Company’s principal business is the acquisition and exploration of mineral resources. The Company has not presently determined whether the properties it intends to acquire contain mineral reserves that are economically recoverable.

Going Concern and Management’s Plans:

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception in February 2004, the Company has not generated revenue and has incurred net losses. The Company has a working capital surplus of $719,046 at May 31, 2008, incurred a net loss of $439,461 and $1,943,883 for the three and nine months ended May 31, 2008, respectively, and a deficit accumulated during the exploration stage of $2,321,441 for the period from February 11, 2004 (inception) through May 31, 2008. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from stockholders, promissory notes and advances from unrelated parties, and equity financing to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

As discussed in Note 8, the Company received gross proceeds of $3,284,475 from equity financings that management believes will enable the Company to commence mining exploration activities on its optional properties in San Juan County, Colorado, and fund its operations through the fiscal year ended August 31, 2008.

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 form the possible inability of the Company to continue as a going concern.

Basis of Presentation

The accompanying interim financial statements have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements reflect all adjustments (consisting of only normal recurring entries) that, in the opinion of management, are necessary to present fairly the financial position at May 31, 2008 and the results of operations and cash flows of the Company for the three and nine months ended May 31, 2008 and 2007, respectively. Operating results for the three and nine months ended May 31, 2008 are not necessarily indicative of the results that may be expected for the year ending August 31, 2008.

These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and footnotes thereto included in its Annual Report on Form 10-KSB, and amended 10-KSB/A for the year ended August 31, 2007.

Income Taxes

The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty In Income Taxes, an Interpretation of FASB Statements No. 109,” on September 1, 2007. There were no unrecognized tax benefits and accordingly, there was no effect on the Company’s financial condition or results of operations as a result of implementing FIN 48.

The Company files income tax returns in the U.S. federal jurisdiction and in the state of Colorado. Management does not believe there will be any material changes in the Company’s unrecognized tax positions over the next 12 months.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of the date of adoption of FIN 48, there was no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the quarter.

Share-Based Payment

SFAS 123(R), “Share-Based Payment,” requires the recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. SFAS 123(R) also requires the stock option compensation expense to be recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period). The Company utilizes the Black-Scholes option-pricing model to determine fair value (See Note 8).

During the year ended August 31, 2007, the Company prepaid $19,