7. Convertible notes	3 Months Ended
Nov. 30, 2013
Notes to Financial Statements
7. Convertible notes	Delaware Partnership Investor At September 1, 2013, the Company owed the Delaware Partnership Investor $113,195 (net of unamortized discounts of $183,712), under multiple funding arrangements. During the three months ended November 30, 2013, the Company issued 1 convertible note under a funding arrangement with the Delaware Partnership Investor, totaling $15,000 which bears interest at 10% per annum and matures on September 30, 2014. Proceeds from the note were used to reduce the mill mortgage. The note is convertible at any time, at the option of the holder, into shares of Class A common stock of the Company at conversion rates of 40% of the average of the two lowest, or single, 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 discount in the amount of $15,000 related to the conversion features on the note issued during the three months ended November 30, 2013 (Note 8). During the three months ended November 30, 2013, $29,976 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 three months ended November 30, 2013, the Company recorded $69,527 of debt discount amortization and the carrying value of the notes was $168,479 (net of unamortized discounts of $114,121) as of November 30, 2013. On June 18, 2013, the Company secured $278,802 of the amounts owed to the Delaware Partnership Investor, with the Mill, which was filed in San Juan County on September 12, 2013. New York Private Investors At September 1, 2013, the Company owed the New York Private Investors $92,517 (net of unamortized discount of $94,103), under multiple funding arrangements. The notes are under funding arrangements with the group of New York Private Investors, bearing interest at 8% per annum and with maturities between October 25, 2013 and May 29, 2014. 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 conversion rates of 35%, 45% and 51% of the average of the three lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten or thirty trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $18,800 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $48,643 and the carrying value of the notes as of November 30, 2013 was $122,359 (net of unamortized discounts of $45,461). New York Alternative Investment Firm At September 1, 2013, the Company owed the New York Alternative Investment Firm $63,117 (net of unamortized discount of $49,813), under multiple funding arrangements, bearing interest at 12% per annum, with maturities between December 13, 2013 and April 8, 2014. Proceeds from two of the notes were used to reduce the mill mortgage by $175,984, and are convertible into shares of Class A common stock. The remaining two notes mature on February 8, 2014. The four notes are convertible at any time 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 45% of the lowest volume-weighted average closing prices of the Company’s Class A common stock for the five trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $24,585 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $24,555 and the carrying value of the notes as of November 30, 2013 was $71,401 (net of unamortized discounts of $65,498). San Diego Private Investor At September 1, 2013, the Company owed the San Diego Private Investor $16,027 (net of unamortized discount of $58,973). The notes are interest free for the first three months, then a one-time interest charge of 12% is applied to the principal balance. The notes mature on April 10, 2014, June 4, 2014 and August 28, 2014 and are convertible at any time 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 the lesser of $1.25 post-split or 60% of the lowest closing price of the Company’s Class A common stock for 25 trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $6,925 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $18,009 and the carrying value of the notes as of November 30, 2013 was $30,286 (net of unamortized discounts of $37,789).

7. Convertible notes

3 Months Ended

Nov. 30, 2013

Delaware Partnership Investor

At September 1, 2013, the Company owed the Delaware Partnership Investor $113,195 (net of unamortized discounts of $183,712), under multiple funding arrangements. During the three months ended November 30, 2013, the Company issued 1 convertible note under a funding arrangement with the Delaware Partnership Investor, totaling $15,000 which bears interest at 10% per annum and matures on September 30, 2014. Proceeds from the note were used to reduce the mill mortgage. The note is convertible at any time, at the option of the holder, into shares of Class A common stock of the Company at conversion rates of 40% of the average of the two lowest, or single, 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 discount in the amount of $15,000 related to the conversion features on the note issued during the three months ended November 30, 2013 (Note 8). During the three months ended November 30, 2013, $29,976 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 three months ended November 30, 2013, the Company recorded $69,527 of debt discount amortization and the carrying value of the notes was $168,479 (net of unamortized discounts of $114,121) as of November 30, 2013. On June 18, 2013, the Company secured $278,802 of the amounts owed to the Delaware Partnership Investor, with the Mill, which was filed in San Juan County on September 12, 2013.

New York Private Investors

At September 1, 2013, the Company owed the New York Private Investors $92,517 (net of unamortized discount of $94,103), under multiple funding arrangements. The notes are under funding arrangements with the group of New York Private Investors, bearing interest at 8% per annum and with maturities between October 25, 2013 and May 29, 2014. 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 conversion rates of 35%, 45% and 51% of the average of the three lowest volume-weighted average closing prices of the Company’s Class A common stock for the ten or thirty trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $18,800 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $48,643 and the carrying value of the notes as of November 30, 2013 was $122,359 (net of unamortized discounts of $45,461).

New York Alternative Investment Firm

At September 1, 2013, the Company owed the New York Alternative Investment Firm $63,117 (net of unamortized discount of $49,813), under multiple funding arrangements, bearing interest at 12% per annum, with maturities between December 13, 2013 and April 8, 2014. Proceeds from two of the notes were used to reduce the mill mortgage by $175,984, and are convertible into shares of Class A common stock. The remaining two notes mature on February 8, 2014. The four notes are convertible at any time 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 45% of the lowest volume-weighted average closing prices of the Company’s Class A common stock for the five trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $24,585 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $24,555 and the carrying value of the notes as of November 30, 2013 was $71,401 (net of unamortized discounts of $65,498).

San Diego Private Investor

At September 1, 2013, the Company owed the San Diego Private Investor $16,027 (net of unamortized discount of $58,973). The notes are interest free for the first three months, then a one-time interest charge of 12% is applied to the principal balance. The notes mature on April 10, 2014, June 4, 2014 and August 28, 2014 and are convertible at any time 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 the lesser of $1.25 post-split or 60% of the lowest closing price of the Company’s Class A common stock for 25 trading days immediately prior to the date a conversion notice is received by the Company. During the three months ended November 30, 2013, $6,925 of the convertible notes were converted into Class A common stock (any unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). For the three months ended November 30, 2013, the Company recorded debt discount amortization of $18,009 and the carrying value of the notes as of November 30, 2013 was $30,286 (net of unamortized discounts of $37,789).

COLORADO GOLDFIELDS INC. 10-Q