Goldfields International (GDFI) 10-Q 2009 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the Quarterly Period Ended October 31, 2008

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from _____________ to _____________

Commission file number 000-49996

AMERICAN GOLDFIELDS INC.

(Exact name of registrant as specified in its charter)

5836 South Pecos Road

Las Vegas, Nevada, USA  89120

(Address of principal executive offices) (Zip Code)

(800) 942-2201

(Registrant's telephone number, including area code)

200-4170 Still Creek Drive, Burnaby B.C. V5C 6C6, Canada

(Former name, former address and former fiscal year, if changed since last report)

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

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

Large accelerated filer  [  ]	Accelerated filer  [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company  [X]

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 21,292,878 shares of common stock, $0.001 par value, issued and outstanding as of December 1, 2008.

1

TABLE OF CONTENTS

	Page
PART I - Financial Information	3
Item 1. Financial Statements	3
Balance Sheets October 31, 2008, and January 31, 2008 (audited)	3
Statements of Loss for the three and nine-month periods ended October 31, 2008 and 2007,
and for the period from inception on December 21, 2001 to October 31, 2008.	4
Statements of Cash Flows for the three and nine-month periods ended October 31, 2008 and 2007,
and for the period from inception on December 21, 2001 to October 31, 2008.	5
Notes to the Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk	11
Item 4. Controls and Procedures	11
PART II – Other Information	11
Item 1.  Legal Proceedings	11
Item 1A. Risk Factors	11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3. Defaults Upon Senior Securities	11
Item 4. Submission of Matters to a Vote of Security Holders	11
Item 5. Other Information	12
Item 6. Exhibits	12

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

American Goldfields Inc.

(An Exploration Stage Company)

Balance Sheets

(Unaudited)

	October 31			January 31
	2008			2008
Assets
CURRENT ASSETS
Cash and cash equivalents	$	96,077		$	29,771
Prepaid expenses		1,936			22,788
Total current assets		98,013			52,559
Reclamation deposits		41,800			54,968
Total Assets	$	139,813		$	107,527
Liabilities
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	14,130		$	224,015
Total current liabilities		14,130			224,015
Stockholders’ Equity
SHARE CAPITAL
Authorized
600,000,000 common shares with a par value of $0.001 per share     100,000,000 preferred shares with a par value of $0.001 per share
Issued
21,292,878 (January 31, 2008 – 20,980,378) common Shares issued     and outstanding at October 31, 2008		21,293			20,980
Additional paid-in capital		3,137,967			2,919,530
Warrants		829,604			829,604
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE		(3,863,181	)		(3,886,602	)
Total stockholders' equity		125,683			(116,488	)
Total Liabilities and Stockholders' Equity	$	139,813		$	107,527

The accompanying notes are an integral part of these financial statements.

3

American Goldfields Inc.

(An Exploration Stage Company)

Statements of Operations

(Unaudited)

	Three-Months Ended						Nine-Months Ended						Inception
	October 31						October 31						December 21, 2001
	2008			2007			2008			2007			to October 31,2008
Expenses
Mineral claim payments and exploration expenditures	$	26,595		$	96,258		$	(69,216	)	$	509,647		$	2,500,119
Office and sundry		2,819			9,228			20,860			26,158			520,278
Rent		2,211			1,239			5,730			3,545			25,751
Professional fees		2,999			2,574			10,632			16,378			188,308
Transfer agent fees		-			75			50			170			6,340
Amortization		-			-			-			500			18,000
Directors’ fees		2,944			2,877			8,835			8,299			31,913
Interest		-			-			-			-			1,070
Consulting fees		-			-			-			-			583,027
Total expenses	$	37,568		$	112,251		$	(23,109	)	$	564,697		$	3,874,806
Interest income		156			-			312			-			11,625
Net income (loss) for the period	$	(37,412	)	$	(112,251	)	$	23,421		$	(564,697	)	$	(3,863,181	)
Basic and diluted loss per share of common stock	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.03	)
Weighted average shares outstanding – basic and diluted		21,292,878			20,667,878			21,262,084			20,482,713

The accompanying notes are an integral part of these financial statements.

4

American Goldfields Inc.

(An Exploration Stage Company)

Statements of Cash Flows

(Unaudited)

	Three-Months Ended						Nine-Months Ended						Inception
	October 31						October 31						December 21, 2001
	2008			2007			2008			2007			to October 31, 2008
Cash provided by (used in):
Cash flows used in operating activities
Net loss for the period	$	(37,412	)	$	(112,251	)	$	23,421		$	(564,697	)	$	(3,863,181	)
Adjustments to reconcile net loss to net
Cash flows used in operating activities:
Stock-based compensation		-			-			-			187,800			1,729,000
Amortization		-			-			-			500			18,000
Changes in assets and liabilities
Prepaid expenses		405			(19,717	)		20,852			(20,294	)		(1,936	)
Accounts payable and accrued liabilities		4,695			36,022			(209,885	)		(105,260	)		18,673
Net cash used in operating activities		(32,312	)		(95,946	)		(165,612	)		(501,951	)		(2,099,444	)
Cash flows from (used in)financing activities
Proceeds from loan		-			-			-			-			60,000
Repayment of loan principal		-			-			-			-			(60,000	)
Cancellation of common stock		-			-			-			-			(60,000	)
Proceeds from the issue of common stock		-			-			-			-			1,304,571
Proceeds from the exercise of stock options		-			-			-			199,500			774,000
Proceeds from the exercise of warrants		-			-			218,750			-			218,750
Net cash from financing activities		-			-			218,750			199,500			2,237,321
Cash flows used in investing activities
Reclamation deposit		-			(11,127	)		13,168			(21,227	)		(41,800	)
Net cash used in investing activities		-			(11,127	)		13,168			(21,227	)		(41,800	)
Increase (decrease) in cash		(32,312	)		(107,073	)		66,306			(323,678	)		96,077
Cash, beginning of period		128,389			168,907			29,771			385,512			-
Cash, end of period	$	96,077		$	61,834		$	96,077		$	61,834		$	96,077
SCHEDULE OF NON-CASH ACTIVITIES
Settlement of accounts payable by contribution from a shareholder	$	-		$	-		$	-		$	-		$	4,543
Web-site development costs related to non-Employee stock-based compensation	$	-		$	-		$	-		$	-		$	18,000

The accompanying notes are an integral part of these financial statements.

5

American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Financial Statements

(Unaudited)

October 31, 2008 and 2007

1. Basis of Presentation and Going Concern Considerations

The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the financial position of American Goldfields Inc. (the “Company”) and the results of its operations for the periods presented.  This report on Form 10-Q should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended January 31, 2008.  The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.  Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the fiscal year ended January 31, 2008 has been omitted.  The results of operations for the three or nine-month periods ended October 31, 2008 are not necessary indicative of results for the entire year ending January 31, 2009.

Organization

The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.  On February 24, 2004, the Company and a majority of the Company’s stockholders authorized the changing of the Company’s name to American Goldfields Inc.  The name change became effective March 31, 2004.

Exploration Stage Activities

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties.  Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $3,863,181for the period from December 21, 2001 (inception) to October 31, 2008, and has no sales.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management is seeking additional capital through an equity financing.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

2. Stock Options

Effective February 1, 2006, the Company adopted the provisions of SFAS No. 123(R) “Share Based Payment” (SFAS No. 123(R)).  SFAS No. 123(R) requires employee equity awards to be accounted for under the fair value method.  Accordingly, share-based compensation is measured at grant date based on the fair value of the award.  No stock options were granted to employees during the three or nine-month periods ended October 31, 2008 or 2007.  Therefore no compensation expense is required to be recognized under provisions of SFAS No. 123(R).

Prior to February 1, 2006, the Company accounted for awards granted to employees under its equity incentive plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended.   No stock options were granted to employees during the year ended January 31, 2006 and accordingly, no compensation expense was recognized under APB No. 25 and no compensation expense was required to be recognized under provisions of SFAS No. 123(R) with respect to employees.

Under the modified prospective method of adoption for SFAS No. 123(R), the compensation cost recognized by the Company beginning on February 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of February 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to February 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R).  The Company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assets for options and restricted stock units with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the Company followed the alternative transition method discussed in FASB Staff Position No. 123(R)-3.

6

American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Financial Statements

(Unaudited)

October 31, 2008 and 2007

2. Stock Options - continued

In March 2004, the Board of Directors adopted the American Goldfields Inc.’s 2004 Stock Option Plan (the 2004 Plan) reserving 5,000,000 common shares for grant to employees, directors and consultants.  Because additional stock options are expected to be granted in future periods, the following stock-based compensation expenses are not representative of the effects on reported financial results for future periods.

During the nine-months ended October 31, 2008 the Company did not grant any options under the 2004 plan.  During the nine-months ended October 31, 2007, the Company granted 300,000 options under the 2004 plan.  These options were valued using the Black-Scholes option pricing model with the following assumptions:

	2007
Dividend yield		0	%
Expected volatility		126	%
Risk-free rate		4.61	%
Expected life	10 years

For the nine-month period ended October 31, 2007, $187,800 has been included in mineral claim payments and exploration expenditures on the Statement of Operations.

Activity under the 2004 Plan is summarized as follows:

			Weighted
			Average
	Options		Exercise
	Outstanding		Price
Balance, January 31, 2008		850,000	$	1.09
Options granted		-	$	-
Options exercised		-	$	-
Balance, October 31, 2008		850,000	$	1.09

The following table summarizes information concerning outstanding and exercisable common stock options under the 2004 Plan at October 31, 2008:

		Weighted
		Average
Remaining		Weighted		Number of		Weighted
Range of		Number of		Contractual		Average		Options		Average
Exercise		Options		Life		Exercise		Currently		Exercise
Prices		Outstanding		(in Years)		Price		Exercisable		Price
$	0.06		50,000		5.42	$	0.06		50,000	$	0.06
$	1.00		200,000		7.67	$	1.00		200,000	$	1.00
$	1.20		600,000		7.00	$	1.20		600,000	$	1.20
			850,000		7.06	$	1.09		850,000	$	1.09

The aggregate intrinsic value of stock options outstanding, as well as those exercisable, at October 31, 2008 is $1,000.  All stock options currently outstanding are exercisable so there is no unrecognized compensation expense at October 31, 2008.  No stock options were exercised during the three or nine-months ended October 31, 2008.

7

American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Financial Statements

(Unaudited)

October 31, 2008 and 2007

3. Warrants

	Warrants Outstanding
Balance, January 31, 2008		1,835,800
Warrants granted		-
Warrants exercised		(312,500	)
Balance, October 31, 2008		1,523,300

The following table lists the common share warrants outstanding at October 31, 2008.  Each warrant is exchangeable for one common share.

Quantity	Exercise Price	Exercise Period
403,600	$ 1.50	November 4, 2005 to November 4, 2010
403,600	$ 2.00	May 4, 2006 to May 4, 2011
403,600	$ 2.50	November 4, 2006 to November 4, 2011
312,500	$ 0.74	February 6, 2008 to February 6, 2013
1,523,300

4. Related Party Transactions

On May 26, 2004, Mr. Richard Kern joined the Company’s Board of Directors and on September 12, 2008 he was appointed as the Company’s President, Chief Executive Officer, Secretary, and Treasurer.  Mr. Kern is also the President of MinQuest Inc. (“MinQuest”).  All of the Company’s mineral properties have been optioned from MinQuest.  The Cortez Property Option Agreement requires the Company to use MinQuest as the primary contractor for exploration activity undertaken on the properties.  All exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.   For the nine-months ended October 31, 2008, the Company made total property option payments of $65,000 (October 31, 2007 - $75,000) to MinQuest related to the property option payments for the Cortez ($50,000) and the Gilman ($15,000) properties.  Included in the net loss for nine-months ended October 31, 2008 is an amount of $4,980 (October 31, 2007 - $5,500) with respect to fees paid to Mr. Kern for geological services rendered to the Company.

On July 12, 2006 the Company and its former President entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by the former President for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.

5. Mineral Property Interests

On May 30, 2008, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with Patriot Gold Corp., a Nevada corporation (“Patriot”), to assign the exclusive option to an undivided right, title and interest in 24 unpatented Federal mining claims located in Esmeralda County, Nevada known as the Imperial Property (the “Property”). The Company had originally acquired its exclusive option on the Property on June 30, 2004, when it entered into a Property Option Agreement (the “Property Agreement”) with MinQuest, the owner of the Property.

Pursuant to the Agreement, Patriot assumed the rights, and agreed to perform all of the duties and obligations, of the Company arising under the Property Agreement. Simultaneous with the execution and delivery of the Agreement, Patriot paid the Company $250,000, which amount represents the full payment and satisfaction for the assignment by the Company to Patriot of the Property Agreement and all rights and obligations with respect thereto. Included in the assignment were, without limitation, all sums incurred by the Company in connection with the Property, specifically (i) the refunding of the reclamation bond previously paid by the Company to the Bureau of Land Management in Nevada in the amount of $13,256; (ii) the $276,944 of expenditures incurred by the Company prior to the Agreement; and (iii) the $120,000 paid to MinQuest as option payments under the Property Agreement.

The payment of $250,000 has been recorded as a $236,744 reduction in mineral claim payments and exploration expenditures and a $13,256 recovery of the reclamation deposits for the nine-months ended October 31, 2008.

8

Item 2.  Management’s Discussion and Analysis or Plan of Operation

The following discussion should be read in conjunction with the financial statements of American Goldfields Inc. (the “Company”), which are included elsewhere in this Form 10-Q.  Certain statements contained in this report, including statements regarding the anticipated development and expansion of the Company's business, the intent, belief or current expectations of the Company, its directors or its officers, primarily with respect to the future operating performance of the Company and the products it expects to offer and other statements contained herein regarding matters that are not historical facts, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act (the "Reform Act"). Future filings with the Securities and Exchange Commission, future press releases and future oral or written statements made by or with the approval of the Company, which are not statements of historical fact, may contain forward-looking statements, as defined under the Reform Act. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. For a more detailed listing of some of the risks and uncertainties facing the Company, please see the January 31, 2008 Form 10-K filed by the Company with the Securities and Exchange Commission.

All forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.

Business Overview

The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.  The Company has been in the exploration stage since its formation and has not yet realized any revenues from operations.  It is primarily engaged in the acquisition and exploration of mining properties.  Upon location of a commercially minable reserve, the Company expects to actively prepare the site for extraction and enter a development stage.

On May 30, 2008, the Company entered into an Assignment and Assumption Agreement (the “Agreement”) with Patriot Gold Corp., a Nevada corporation (“Patriot”), to assign the exclusive option to an undivided right, title and interest in 24 unpatented Federal mining claims located in Esmeralda County, Nevada known as the Imperial Property (the “Property”). The Company had originally acquired its exclusive option on the Property on June 30, 2004, when it entered into a Property Option Agreement (the “Property Agreement”) with MinQuest, the owner of the Property.

Pursuant to the Agreement, Patriot assumed the rights, and agreed to perform all of the duties and obligations, of the Company arising under the Property Agreement. Simultaneous with the execution and delivery of the Agreement, Patriot paid the Company $250,000, which amount represents the full payment and satisfaction for the assignment by the Company to Patriot of the Property Agreement and all rights and obligations with respect thereto. Included in the assignment were, without limitation, all sums incurred by the Company in connection with the Property, specifically (i) the refunding of the reclamation bond previously paid by the Company to the Bureau of Land Management in Nevada in the amount of $13,256; (ii) the $276,944 of expenditures incurred by the Company prior to the Agreement; and (iii) the $120,000 paid to MinQuest as option payments under the Property Agreement. The payment of $250,000 has been recorded as a $236,744 reduction in mineral claim payments and exploration expenditures and a $13,256 recovery of the reclamation deposits for the nine-months ended October 31, 2008.

Mr. Richard Kern is the President of MinQuest Inc. and he became a member of the Board of Directors of the Company on May 26, 2004. In addition, on September 12, 2008 he was also appointed as the Company’s President, Chief Executive Officer, Secretary, and Treasurer.  All of the Company’s current mineral properties have been optioned from MinQuest. In addition, MinQuest has been engaged by the Company as its principal exploration contractor for all exploration performed on the Company’s current properties. As a result, a significant portion of the Company’s expenses have been the result of activities performed directly by Mr. Kern or by subcontractors managed by Mr. Kern or MinQuest.  For the nine-months ended October 31, 2008, the Company made total property option payments of $65,000 (October 31, 2007 - $75,000) to MinQuest related to the property option payments for the Cortez ($50,000) and the Gilman ($15,000) properties.  The Company also paid $4,980 (October 31, 2007 - $5,500) in fees to Mr. Kern for geological services rendered to the Company during such period.

Plan of Operation

Over the next twelve months, the Company intends to explore its various properties to determine whether there are commercially exploitable reserves of gold and silver or other metals.  The Company does not intend to hire any employees or to make any purchases of equipment over the next twelve months, as it intends to rely upon outside consultants to provide all the tools needed for the exploratory work being conducted.

During 2007 the Company conducted drill programs on the Hercules Property, where drilling was completed in March 2008, and on the Gilman Property, where drilling started in January 2008 but was suspended due to winter conditions and has not been restarted yet.  The Company is currently evaluating proposed budgets for its various properties and as of yet has not determined the budgets for the remainder of 2008 or for 2009.

9

Even with the $250,000 received on May 30, 2008 from the assignment of the Imperial Property, current cash on hand is insufficient for all of the Company’s commitments for the next 12 months. We anticipate that the additional funding that we require will be in the form of equity financing from the sale of our common stock.  However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program, should we decide to proceed.  We believe that debt financing will not be an alternative for funding any further phases in our exploration program.  The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated.  We do not have any arrangements in place for any future equity financing.

Notwithstanding, we cannot be certain that any required additional financing will be available on terms favorable to us. If additional funds are raised by the issuance of our equity securities, such as through the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If additional funds are raised by the issuance of debt or other equity instruments, we may be subject to certain limitations in our operations, and issuance of such securities may have rights senior to those of the then existing holders of common stock. If adequate funds are not available or not available on acceptable terms, we may be unable to fund expansion, develop or enhance services or respond to competitive pressures.

Results of Operations

We did not earn any revenues during the three or nine-months ended October 31, 2008 or 2007.  We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties.  We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.

During the nine-months ended October 31, 2008, we had a net income of $23,421 compared to a net loss of $564,697 for the comparative period in 2007.  We had a net income for the nine-months ended October 31, 2008 due to the receipt of $250,000 received from the assignment of the Imperial Property to Patriot Gold Corp.  Of the $250,000, a total of $236,744 was recorded as a reduction in exploration expenditures.  Excluding the effect of the receipt of the funds from the assignment of the Imperial Property, the balance of mineral claim payments and exploration expenditures was $167,528 for the nine-months ended October 31, 2008 compared to $509,647 for the same period in 2007.  A significant portion of the decrease was due to the effect of stock-based compensation which was recorded as mineral claim payments and exploration expenditures in 2007.  Stock-based compensation for 2007 was $187,800 while there was no stock-based compensation in 2008.  In the first nine-months of 2008 the Company’s most significant mineral claim payments and exploration expenditures related to the final costs of the drilling program and assay and lab analysis costs for the Hercules Property as well as property option payments of $50,000 for the Cortez Property and $15,000 for the Gilman Property.  In the first nine-months of 2007 the Company was completing the drill programs on its Hercules and Bankop properties.  Both of these drill programs had begun in the late fall of 2006.  In addition, during 2007 the Company made property option payments of $40,000 relating to the Cortez Property and $15,000 for the Gilman Property.  The other factor was that in 2007 the Company made a $20,000 property option payment on the Imperial Property whereas in 2008 the Company assigned the Imperial Property to Patriot Gold Corp. and as a result was not required to make the Imperial payment in 2008.

During the three months ended October 31, 2008, we incurred a net loss of $37,412 compared to a net loss of $112,251 for the comparative period in 2007.  Our loss in the current quarter has decreased from the corresponding period in 2007 largely due to decreased exploration expenditures.  In the third quarter of 2007 the Company’s exploration activity on the Hercules Property was greater than its mineral property exploration expenditures for the quarter ended October 31, 2008.  Exploration activity for the three months ended October 31, 2008 related to expenses associated with new claim costs as well as mapping expenses.  General and administrative expenses were largely similar between 2008 and 2007.

Liquidity and Capital Resources

We had cash of $96,077 as of October 31, 2008. We anticipate that we will incur the following through the next twelve months:

·   $110,000 in connection with property option payments and $693,000 in exploration expenditures of the Company’s properties;

·   $53,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934.

Net cash used in operating activities during the nine-months ended October 31, 2008 was $165,612 compared to $501,951 during the nine-months ended October 31, 2007.  The decrease in cash used in operating activities was largely the result of net income generated in 2008 due to the receipt of $250,000 received from the assignment of the Imperial Property to Patriot Gold Corp.  The receipt of the $250,000 resulted in a net income of $23,421 in 2008 compared to a net loss of $564,697 in 2007.  The effect of the higher loss in 2007 was reduced by the recognition of $187,800 in stock-based compensation in 2007 while none was recognized during 2008.  The paying down of accounts payable resulted in a cash outflow of $209,885 in 2008 while for the same period in 2007 the outflow from the payment of accounts payable was $105,260.

Cash from financing in 2008 was $218,750 received from the exercise of warrants while in 2007 $199,500 was received from the exercise of common stock options.  Investing activities in 2008 related to the net refund of reclamation deposits of 13,168 while in 2007 investing related to the payment of reclamation bonds of $21,227.

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Going Concern Consideration

As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $3,863,181 for the period from December 21, 2001 (inception) to October 31, 2008, and has no sales.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management has plans to seek additional capital through a private placement and public offering of its common stock.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

There is substantial doubt about our ability to continue as a going concern. Accordingly, our independent auditors included an explanatory paragraph in their report on the January 31, 2008 financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Off-Balance Sheet Arrangements

We  do  not  have  any  off-balance sheet debt nor did we have any transactions, arrangements,  obligations  (including  contingent  obligations)  or  other relationships  with any unconsolidated entities or other persons that may have a material  current or future effect on financial conditions, changes in financial conditions,  result  of  operations,  liquidity,  capital  expenditures, capital resources,  or  significant  components  of  revenue  or  expenses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this Item 3.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our  disclosure controls and procedures are designed  to  ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed,  summarized  and  reported  within  the  time  periods specified  in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and  principal  financial officer have reviewed the effectiveness  of  our "disclosure controls  and  procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report and  have  concluded  that our disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a  timely  manner.  There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive officer and principal financial officer.

Changes in Internal Controls over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company is a party or has a material interest adverse to the Company.  The Company’s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors.

Smaller reporting companies are not required to provide the information required by this Item 1A.

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

None.

Item 3. Defaults upon Senior Securities.

None.

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

There was no matter submitted to a vote of security holders during the fiscal quarter ended October 31, 2008

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Item 5. Other information.

The disclosure provided pursuant to Part II Item 2 above is incorporated herein by reference.

Item 6. Exhibits.

Exhibit No.	Description	Where Found
31.1	Rule 13a-14(a)/15d14(a) Certifications	Attached Hereto
32.1	Section 1350 Certifications	Attached Hereto

SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange act of 1934, as amended, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.

Date:   December 1, 2008

AMERICAN GOLDFIELDS INC.

By:  /s/ Richard Kern

       Richard Kern

       President, Chief Executive

       Officer, Secretary and Treasurer

       (Principal Executive, Financial, and Accounting Officer)

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