Goldfields International (GDFI) 10-Q 2011 Q2 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 July 31, 2010

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)

3481 E. Sunset Road

Las Vegas, Nevada, USA  89120

(Address of principal executive offices) (Zip Code)

(800) 315-655

(Registrant's telephone number, including area code)

_______________________________________________________________

(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: 21,346,972 shares of common stock, $0.001 par value, issued and outstanding as of September 13, 2010.

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TABLE OF CONTENTS

	Page
PART I - Financial Information
Item 1. Financial Statements
Balance Sheets July 31, 2010, and January 31, 2010
Statements of Loss for the three and six-month periods ended July 31, 2010 and 2009, and for the period from inception on December 21, 2001 to July 31, 2010.
Statements of Cash Flows for the three and six-month periods ended July 31, 2010 and 2009, and for the period from inception on December 21, 2001 to July 31, 2010.
Notes to the Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II – Other Information
Item 1.  Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

American Goldfields Inc.
(An Exploration Stage Company)
Consolidated Balance Sheets
(Unaudited)
	July 31,			January 31,
	2010			2010
Assets
CURRENT ASSETS
Cash and cash equivalents	$	6,163		$	811
Prepaid expenses		-			-
Total current assets		6,163			811
Reclamation deposits		41,800			41,800
Total Assets	$	47,963		$	42,611
Liabilities
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	21,953		$	47,982
Total current liabilities		21,953			47,982
Stockholders' Equity
SHARE CAPITAL
Authorized:
600,000,000 (January 31, 2009 – 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:
21,346,932 (January 31, 2010 – 21,292,878) common
issued and outstanding at July 31, 2010		21,347			21,293
Additional paid-in capital		4,007,517			3,967,571
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE		(4,002,854	)		(3,994,235	)
Total stockholders' equity		26,010			(5,371	)
Total Liabilities and Stockholders' Equity	$	47,963		$	42,611
The accompanying notes are an integral part of these financial statements

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American Goldfields Inc.
(An Exploration Stage Company)
Consolidated Statements of Operations
(Unaudited)													Inception
													December 21,
	For the Three-Months Ended July 31,						For the Six-Months Ended July 31,						2001 to
	2010			2009			2010			2009			July 31,2010
Expenses
Mineral claim payments and
exploration expenditures	$	-		$	22,125		$	-		$	32,653		$	2,800,525
Office, rent and sundry		1,945			-			5,308			2,106			566,436
Professional fees		1,206			7,205			1,206			9,503			238,707
Transfer agent fees		55			-			105			-			6,445
Amortization		-			-			-			-			18,000
Directors’ fees		1,500			-			2,000			894			37,154
Interest expense		-			-			-			-			1,070
Consulting fees		-			-			-			-			583,027
Total expenses		(4,706	)		(29,330	)		(8,619	)		(45,156	)		(4,251,364	)
Gain on disposal of mineral properties		-			-			-			-			236,745
Interest income		-			-			-			33			11,765
Net loss for the period	$	(4,706	)	$	(29,330	)	$	(8,619	)	$	(45,123	)	$	(4,002,854	)
Basic and diluted loss per share
of common stock	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Weighted average shares outstanding
– basic and diluted		21,346,932			21,292,878			21,337,674			21,292,878
The accompanying notes are an integral part of these financial statements

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American Goldfields Inc.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
							Inception
	For the Six Months Ended July 31,						December 21, 2001 to
	2010			2009			July 31, 2010
Cash provided by (used in):
Cash flows used in operating activities
Net loss for the period	$	(8,619	)	$	(45,123	)	$	(4,002,854	)
Adjustments to reconcile net loss to net
Cash flows used in operating activities:
Stock-based compensation		-			-			1,729,000
Amortization		-			-			18,000
Changes in assets and liabilities
Prepaid expenses		-			894			-
Accounts payable and accrued liabilities		(26,029	)		14,833			26,496
Net cash used in operating activities		(34,648	)		(29,396	)		(2,229,358	)
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		-			-			774,000
Proceeds from the exercise of warrants		40,000			-			258,750
Net cash from financing activities		40,000			-			2,277,321
Cash flows used in investing activities
Reclamation deposit		-			-			(41,800	)
		-			-			(41,800	)
Increase (decrease) in cash		5,352			(29,396	)		6,163
Cash, beginning of period		811			75,128			-
Cash, end of period	$	6,163		$	45,732		$	6,163
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

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American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited)

July 31, 2010 and 2009

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, 2010.  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 wo uld substantially duplicate the disclosure contained in the Company’s Form 10-K for the fiscal year ended January 31, 2010 has been omitted.  The results of operations for the three and six-month periods ended July 31, 2010 are not necessarily indicative of results for the entire year ending January 31, 2011.

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.

On March 10, 2010, we caused the incorporation of our wholly owned subsidiary, Goldmin Exploration Inc., (“Goldmin”) under the laws of Nevada.  On March 11, 2010 the Company entered into two Assignment Agreements to assign the exclusive option to an undivided right, title and interest in the Gilman property; and the Crescent Fault, Bankop and Bullion Mountain, collectively named the Cortez property to Goldmin.  Pursuant to the Assignment Agreements, Goldmin assumed the rights, and agreed to perform all of the duties and obligations, of the Company arising under the Gilman Property Option Agreement; and the Cortez Property Option Agreement.  Goldmin Explorations Inc.’s only assets are the aforementioned agreements and it does not have any liabilities.

Consolidation

The accompanying consolidated financials statements include the amounts of the company and its wholly owned subsidiary Goldmin Explorations, Inc.  Intercompany transactions and balances have been eliminated in consolidation.

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 $4,002,854 for the period from December 21, 2001 (inception) to July 31, 2010, 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 ASC 718-10-25 “Share Based Payment” (formerly SFAS No. 123(R)).  ASC 718-20-25 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 six-month periods ended July 31, 2009 or 2008.  Therefore no compensation expense is required to be recognized.

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 ASC 718-10-25 with respect to employees.

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American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited)

July 31, 2010 and 2009

2. Stock Options - continued

Under the modified prospective method of adoption for ASC 718-10-25, 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 ASC 718-10-25.  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 restrict ed 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.

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 stock-based compensation expenses recorded in previous periods are not representative of the effects on reported financial results for future periods.

During the six months ended July 31, 2010 and 2009, the Company did not grant any options under the 2004 plan.

Activity under the 2004 Plan is summarized as follows:

			Weighted
			Average
	Options		Exercise
	Outstanding		Price
Balance, January 31, 2010		750,000	$	1.07
Options granted		-		-
Options exercised		-		-
Balance, July 31, 2010		750,000	$	1.07

The following table summarizes information concerning outstanding and exercisable common stock options under the 2004 Plan at July 31, 2010:

		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		3.67	$	0.06		50,000	$	0.06
$	1.00		200,000		5.92	$	1.00		200,000	$	1.00
$	1.20		500,000		5.25	$	1.20		500,000	$	1.20
			750,000		5.32	$	1.07		750,000	$	1.07

The aggregate intrinsic value of stock options outstanding, as well as those exercisable, at July 31, 2010 is $500.  All stock options currently outstanding are exercisable so there is no unrecognized compensation expense at July 31, 2010.  No stock options were exercised during the three or six-months ended July 31, 2010.

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American Goldfields Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Unaudited)

July 31, 2010 and 2009

3. Warrants

	Warrants Outstanding
Balance, January 31, 2010		1,523,300
Warrants granted		-
Warrants exercised		(54,054	)
Balance, July 31, 2010		1,469,246

The following table lists the common share warrants outstanding at July 31, 2010.  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
258,446	$ 0.74	February 6, 2008 to February 6, 2013
1,469,246

4. Related Party Transactions

On May 26, 2004, Mr. Richard Kern joined the Company’s Board of Directors.  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 property.  All exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.   As a result of the extension granted to the Company by MinQuest on April 21, 2009 the Company did not make any property option payments during the six-months ended July 31, 2009.  For the six months ended July 31, 2008, the Company made total property option payments of $65,000 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 six-months ended July 31, 2010 is an amount of $Nil (July 31, 2009 - $4,800) with respect to fees paid to Mr. Kern for geological services rendered to the Company.

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

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 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 o r 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, 2010 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.

Plan of Operation

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.

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. Also, 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.  As a result of the extension granted to the Company by MinQuest on April 21, 2009 the Company did not mak e any property option payments during the six-months ended July 31, 2009.  The Company made total property payments of $65,000 to MinQuest related to property option payments for the Cortez and Gilman Properties for the six-months ended July 31, 2008.  During the six-months ended July 31, 2010 the Company made a total of $nil (July 31, 2009 - $4,800) in payments to Mr. Kern related to geological services provided to the Company.

On April 21, 2009 MinQuest granted the Company a one year extension on all of its property option payments and annual property exploration expenditure commitments.  As a result of the extension and due to limited resources available to the Company at the current time, the Company does not have any immediate plans to undertake any exploration programs on any of its properties.  However, the Company is seeking new financing and if sufficient financing can be obtained, the Company will work with MinQuest to prepare budgets for its respective properties.

Results of Operations

We did not earn any revenues during the three or six-months ended July 31, 2010 or 2009.  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 six months ended July 31, 2010, we had a net loss of $8,619 compared to a net loss of $45,123 for the comparative period in 2009.  Our year to date net loss for 2010 has decreased from 2009 largely due to lower mineral claim payments and exploration expenditures.  As a result of limited resources available to the Company, the Company did not have any active exploration programs for the six-months ended July 31, 2010.  In addition, general and administrative expenses have decreased in 2010 compared to 2009 as a result of lower professional fees and rent costs.

During the three months ended July 31, 2010, we had a net loss of $4,706 compared to a net loss of $29,330 for the comparative period in 2009.  The decrease in net loss was largely due to lower mineral claim payments and exploration expenditures.  For the three months ended July 31, 2010, mineral claim payments and exploration expenditures were $nil compared to $22,125 for the same period in 2009.    General and administrative costs have decreased to $4,706 in 2010 compared to $7,205 in 2009 due to lower professional fees.

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Liquidity and Capital Resources

We had cash of $6,163 as of July 31, 2010.  We anticipate that we will incur the following through to the end of July 2010:

·   $380,000 in connection with mineral claim payments and $1,840,000 in exploration expenditures of the Company’s properties;

·   $43,000 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 six-months ended July 31, 2010 was $34,648 compared to $29,396 during the six-months ended July 31, 2009.  The increase in cash used in operating activities was largely due to payment of accounts payable and accrued liabilities.

For the six-months ended July 31, 2010, there was $40,000 cash received from financing and investing activities compared to $nil in 2009.

Going Concern Consideration

As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $4,002,854 for the period from December 21, 2001 (inception) to July 31, 2010, 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, 2010 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.

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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.

None.

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.

None.

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

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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:   September 13, 2010

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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