COLOMBIA ENERGY RESOURCES, INC. - FORM 10-K/A

Attached files

file	filename
EX-23.1 - EXHIBIT 23.1 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex23-1.htm
EX-32.1 - EXHIBIT 32.1 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex31-1.htm
EX-23.2 - EXHIBIT 23.2 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex23-2.htm
EX-32.2 - EXHIBIT 32.2 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - COLOMBIA ENERGY RESOURCES, INC.	v242922_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-32735

Colombia Energy Resources, Inc.

(Exact name of registrant as specified in its charter)

Delaware		87-056703
(State or other jurisdiction of incorporation or organization)		(IRS employer identification number)

One Embarcadero Center, Suite 500, San Francisco, CA		94111
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (415) 460-1165

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $0.001

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ¨ No x

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 x No ¨

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 an post such files).

Yes ¨ No ¨

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. ¨

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 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 ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as of the last business day of the registrant’s most recently competed second fiscal quarter was $150,000.

The number of shares outstanding of the registrant’s common stock on March 28, 2011, was 22,260,204.

DOCUMENTS INCORPORATED BY REFERENCE

None

EXPLANATORY NOTE

Item 8 In Part I of the annual report on Form 10-K for the year ended December 31, 2010 (the “Original 10-K”) of Colombia Energy Resources, Inc., formerly known as Colombia Clean Power & Fuels, Inc., (the “Company”) is amended to correct the report of Burr Pilger Mayer, Inc., the Company’s current independent registered public accounting firm, dated March 31, 2011. The original report inadvertently omitted reference to the audit of the Company’s financial statements for the period from November 6, 1996 (inception) to December 31, 2010. Updated certifications are also filed with this amendment under Item 15 of Part IV as Exhibits 31.1, 31.2, 32.1, and 32.2. Also, consents of the former and current independent registered public accountants are included in this amendment for purposes of the Company’s registration statement on Form S-8 filed with the SEC on December 7, 2011 (SEC File No. 333-178363).

This Amendment No. 1 continues to speak as of the date of the Original Form 10-K, and the Company has not updated or amended the disclosures contained in the amended items to reflect events that have occurred since the filing of the Original Form 10-K, or modified or updated those disclosures in any way other than as described in the preceding paragraph. Accordingly, this Amendment No. 1 should be read in conjunction with the Company’s filings made with the SEC subsequent to the filing of the Original Form 10-K on March 31, 2011. In addition, forward-looking statements made in the Original Form 10-K have not been revised to reflect the passage of time, events, results or developments that occurred or facts that became known after the Original Form 10-K, and such forward-looking statements should be read in their historical context and in the context of the Company’s subsequent reports filed with the SEC

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

We have provided the financial statements required by this item immediately following the signature page of this report.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES

Exhibit Number		Exhibit Description

23.1		Consent of Burr Pilger Mayer, Inc., independent registered public accounting firm

23.2		Consent of Pritchett, Siler & Hardy, P.C., independent registered public accounting firm

31.1		Rule 13a-14(a) Certification by Chief Executive Officer

31.2		Rule 13a-14(a) Certification by Chief Financial Officer

32.1		Section 1350 Certification of Chief Executive Officer

32.2		Section 1350 Certification of Chief Financial Officer

SIGNATURES

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

	Colombia Clean Power & Fuels, Inc.

Date: December 12, 2011	By:	/s/Ronald G. Stovash
		Ronald G. Stovash, Chief Executive Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -

BURR PILGER MAYER, INC.

To the Board of Directors and

Stockholders of Colombia Clean Power & Fuels, Inc. (an exploration stage company)

We have audited the accompanying consolidated balance sheet of Colombia Clean Power & Fuels, Inc. and its subsidiaries (an exploration stage company) (the “Company”) as of December 31, 2010, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year then ended and for the period from November 6, 1996 (inception) to December 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 audit.

We conducted our audit 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. The Company is not required to have, nor have we been engaged to perform, an audit of the Company’s internal control over financial reporting for the year ended December 31, 2010. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Colombia Clean Power & Fuels, Inc. and its subsidiaries as of December 31, 2010, and the results of their operations and their cash flows for the year then ended and from November 6, 1996 (inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had no revenues and had incurred recurring net losses that resulted in an accumulated a deficit of approximately $2.4 million as of December 31, 2010. Also, the Company has limited cash and working capital to fund its future operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Burr Pilger Mayer, Inc.

San Francisco, California

March 31, 2011

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Freedom Resources Enterprises, Inc.

Midvale, Utah

We have audited the accompanying balance sheet of Freedom Resources Enterprises, Inc. [a development stage company] as of December 31, 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 2009. Freedom Resources Enterprises Inc.’s management is responsible for these financial statements. 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Freedom Resources Enterprises, Inc. as of December 31, 2009 and the results of its operations and its cash flows for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming Freedom Resources Enterprises, Inc. will continue as a going concern. As discussed in Note 7 to the financial statements, Freedom Resources Enterprises, Inc. has incurred losses since its inception and has not yet established profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regards to these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ PRITCHETT, SILER & HARDY, P.C.

Salt Lake City, Utah

February 24, 2010

COLOMBIA CLEAN POWER & FUELS, INC.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	December 31, 2010			December 31, 2009
ASSETS
Current Assets
Cash	$	5,027,656		$	89
Other Current Assets		747,588			-
Total Current Assets		5,775,244			89
Property and Equipment
Mining Concessions		2,026,617			-
Construction in Progress		30,000			-
Equipment		2,075			-
Total Property & Equipment		2,058,692			-
Other Assets		341,651			-
TOTAL ASSETS	$	8,175,587		$	89

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities
Current Liabilities
Accounts Payable and Accrued Liabilities	$	1,181,295		$	6,681
Accrued Interest Related Party		-			1,339
Loans from Officers & Directors		-			117,000
Total Current Liabilities		1,181,295			125,020
Long Term Liabilities
Convertible Notes - Related Party		19,122			5,000
Convertible Notes Payable (Net of Issuance Discount)		2,885,022			-
Accrued Interest on Convertible Notes Payable		110,846			-
Other Noncurrent Liabilities		400,000			-
Derivative Liability - embedded conversion feature		2,816,000			-
Total Long Term Liabilities		6,230,990			5,000
Total Liabilities		7,412,285			130,020
Stockholders' Equity (Deficit)
Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued and outstanding		0			0
Common Stock, $.001 par value, 100,000,000 shares authorized, 20,549,637 shares and 1,120,000 shares issued and outstanding in 2010 and 2009, respectively		20,550			1,120
Additional Paid in Capital		3,263,345			94,556
Accumulated Deficit		(2,438,927	)		(225,607	)
Accumulated Other Comprehensive Loss		(81,666	)		-
Total Stockholders' Equity (Deficit)		763,302			(129,931	)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)	$	8,175,587		$	89

COLOMBIA CLEAN POWER & FUELS, INC.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	For the Years						From Inception on
	Ended						Nov. 6, 1996
	December 31,						through December 31,
	2010			2009			2010
Revenue	$	-		$	-		$	3,560

Expenses
General and administrative		1,935,450			14,817			2,138,568

Loss before other expense		(1,935,450	)		(14,817	)		(2,135,008	)

Other income (expense)
Unrealized gain on change in fair value of derivative liability - embedded conversion feature		256,000			-			256,000
Interest expense, net		(533,870	)		(9,288	)		(559,919	)
Total other expense, net		(277,870	)		(9,288	)		(303,919	)

Loss before income taxes		(2,213,320	)		(24,105	)		(2,438,927	)

Provision for Income Taxes		-			-			-

Net loss		(2,213,320	)		(24,105	)		(2,438,927	)

Other comprehensive loss
Foreign currency translation		(81,666	)		-			(81,666	)

Total comprehensive loss	$	(2,294,986	)	$	(24,105	)	$	(2,520,593	)

Basic and diluted loss per common share	$	(0.12	)	$	(0.02	)

Weighted average common shares		18,887,765			1,120,000

COLOMBIA CLEAN POWER & FUELS, INC.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

														Accumulated			Total
	Preferred Stock				Common Stock				Additional Paid		Accumulated			Other			Stockholders'
Description	Shares		Amount		Shares		Amount		in Capital		Deficit			Comprehensive Loss			Equity

Balance, November 6, 1996		-	$	-		-	$	-	$	-	$	-		$	-		$	-

Issuance of Common Stock						200,000		200		2,300								2,500
Net Loss for the Period Ending December 31, 1996												(50	)					(50	)

Balance, December 31, 1996						200,000		200		2,300		(50	)					2,450

Issuance of Common Stock						19,000		19		9,481								9,500
Net Loss for the Period Ending December 31, 1997												(1,661	)					(1,661	)

Balance, December 31, 1997						219,000		219		11,781		(1,711	)					10,289

Issuance of Common Stock						81,000		81		35,419								35,500
Net Loss for the Period Ending December 31, 1998												(4,942	)					(4,942	)

Balance, December 31, 1998						300,000		300		47,200		(6,653	)					40,847

Net Loss for the Period Ending December 31, 1999												(2,243	)					(2,243	)

Balance, December 31, 1999						300,000		300		47,200		(8,896	)					38,604

Net Loss for the Period Ending December 31, 2000												(40,956	)					(40,956	)

Balance, December 31, 2000						300,000		300		47,200		(49,852	)					(2,353	)

Net Loss for the Period Ending December 31, 2001												(15,669	)					(15,669	)

Balance, December 31, 2001						300,000		300		47,200		(65,521	)					(18,022	)

Net Loss for the Period Ending December 31, 2002												(13,921	)					(13,921	)

Balance, December 31, 2002						300,000		300		47,200		(79,442	)					(31,943	)

Net Loss for the Period Ending December 31, 2003												(20,946	)					(20,946	)

Balance, December 31, 2003						300,000		300		47,200		(100,388	)					(52,889	)

Conversion of Note Payable						80,000		80		5,088								5,168
Net Loss for the Period Ending December 31, 2004												(2,129	)					(2,129	)

Balance, December 31, 2004						380,000		380		52,288		(102,517	)					(49,850	)

Issuance of Common Stock						580,000		580		6,670								7,250
Net Loss for the Period Ending December 31, 2005												(19,843	)					(19,843	)

Balance, December 31, 2005						960,000		960		58,958		(122,360	)					(62,443	)

Issuance of Common Stock						80,000		80		5,468								5,548
Imputed Interest on Shareholder Advances										3,409								3,409
Net Loss for the Period Ending December 31, 2006												(18,353	)					(18,353	)

Balance, December 31, 2006						1,040,000		1,040		67,835		(140,713	)					(71,839	)

Issuance of Common Stock						80,000		80		5,722								5,802
Imputed Interest on Shareholder Advances										5,235								5,235
Net Loss for the Period Ending December 31, 2007												(20,363	)					(20,363	)

Balance, December 31, 2007						1,120,000		1,120		78,792		(161,076	)					(81,165	)

Imputed Interest on Shareholder Advances										6,876								6,876
Net Loss for the Period Ending December 31, 2008												(40,426	)					(40,426	)

Balance, December 31, 2008						1,120,000		1,120		85,668		(201,502	)					(114,714	)

Imputed Interest on Shareholder Advances										8,888								8,888
Net Loss for the Period Ending December 31, 2009												(24,105	)					(24,105	)

Balance, December 31, 2009						1,120,000		1,120		94,556		(225,607	)					(129,931	)

Issuance of Common Stock						19,080,000		19,080		80,920								100,000
Exercise of Stock Warrants						269,636		270		1,830								2,100
Net Loss for the Period Ending December 31, 2010												(2,213,320	)					(2,213,320	)
Stock Compensation Expense										304,977								304,977
Forgiveness of Debt to a Shareholder										41,196								41,196
Conversion of Notes Payable						80,001		80		6,359								6,439
Issuance of Stock Warrants in Connection with Debt Issued										2,733,507								2,733,507
Foreign Currency Translation Adjustment															(81,666	)		(81,666	)
Balance, December 31, 2010		-	$	-		20,549,637	$	20,550	$	3,263,345	$	(2,438,927	)	$	(81,666	)	$	763,302

COLOMBIA CLEAN POWER & FUELS, INC.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							From Inception on
	For the Years Ended						November 6, 1996
	December 31,						through
	2010			2009			December 31, 2010
Cash flows from operating activities:
Net loss	$	(2,213,320	)	$	(24,105	)	$	(2,438,927	)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock compensation expense		304,977			-			304,977
Amortization of discount on note payable		364,933			-			364,933
Amortization of debt issuance cost		58,620			-			58,620
Unrealized gain on change in fair value of embedded conversion feature		(256,000	)					(256,000	)
Other		-			-			(4,097	)
Changes in assets and liabilities:		-			-			-
Other current assets		(579,503	)		-			(579,503	)
Other assets		(223,638	)		-			(223,638	)
Accounts payable and accrued liabilities		1,174,715			8,885			1,212,758
Accrued interest payable		110,845			-			110,845
Other non-current liabilities		400,000			-			400,000

Net cash used in operating activities		(858,371	)		(15,220	)		(1,050,032	)

Cash flows from investing activities:
Increase in property and equipment		(2,058,692	)		-			(2,058,692	)

Net cash used in investing activities		(2,058,692	)		-			(2,058,692	)

Cash flows from financing activities:
Proceeds from issuance of convertible notes payable		8,000,000			-			8,020,000
Proceeds from issuance of common stock		100,000			-			154,750
Proceeds from exercise of warrants		2,100						2,100
Advances to (payment from) officer and shareholder		(75,804	)		14,500			41,196

Net cash provided by financing activities		8,026,296			14,500			8,218,046

Effect of exchange rate currency changes on cash		(81,666	)		-			(81,666	)

Net increase (decrease) in cash		5,027,567			(720	)		5,027,656

Cash at beginning of period		89			809			-

Cash at end of period	$	5,027,656		$	89		$	5,027,656

Supplemental disclosure of noncash financing activities:
Fair value of embedded conversion feature	$	3,072,000		$	-		$	3,072,000
Issuance of stock warrants in connection with debt issued	$	2,733,508		$	-		$	2,733,508
Issuance of common stock in connection with conversion of note payable	$	6,439		$	-		$	6,439
Extinguishment of payable to a related party	$	41,196		$	-		$	41,196

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Colombia Clean Power & Fuels, Inc. (the “Company”) is an exploration stage company engaged in the business of acquiring and developing coal mining assets, and the mining and sale of coal, coke and coal by-products using traditional and clean coal technologies, initially in Colombia, South America. The Company anticipates that its initial operations will include the mining of high-grade, metallurgical coal and coal coking, and that, within the next several years, its operations will include power generation and alternative energy production, such as coal gasification and coal-to-liquids. The Company adopted its new operating strategy based on the size of the Colombia coal market, and opportunities it has identified to acquire substantial coal resources and to build mines in Colombia.

The Company’s current operations are focused on exploration and development activities. The Company has retained leading engineering and geological services firms in the U.S. and Colombia to conduct exploration work in selected concessions under consideration for acquisition by the Company. The Company’s team of executives, advisors and partners is comprised of experienced entrepreneurs and business professionals in the U.S., Colombia and China that have a broad breadth of experience in coal mining and clean coal technologies and substantial industry relationships.

Through a wholly-owned subsidiary, the Company owns 100% of Energia Andina Santander Resources S.A.S., a Colombian company established to acquire and develop coal concessions. Energia Andina Santander Resources S.A.S. has established a corporate office in Bogota and is in the process of recruiting its team of operations, technical, financial, logistics, mining and marketing employees and consultants.

History and Basis of Reporting

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which contemplate continuation of the Company as a going concern. However, the Company had not commenced commercial operations. It incurred recurring loses since the date of inception that resulted in an accumulated deficit of approximately $2.4 million as of December 31, 2010. Although the Company had about $5 million of available cash at December 31, 2010, that amount is not adequate to meet its capital expenditure and operating requirements over the next twelve (12) months. In addition, the Company is dependent upon obtaining funds from investors. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Management plans to raise additional funds through issuance of notes or shares of stock in May 2011 and in October 2011 in order to meet its capital expenditures and operating requirements. However, there is no assurance that the Company will be successful in raising the additional funds it needs. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The Company was incorporated in the State of Nevada on November 6, 1996 under the name “Freedom Resources Enterprises, Inc.” to engage in the business of self-help publications and workshops. Between November 1996 and September 2005 the Company generated minimal revenues, and in October 2005, the Company ceased all business operations. From October 2005 to early May 2010, the Company did not engage in any business activities. Prior to this period, the Company’s management had been evaluating potential business opportunities that might be available to the Company to preserve its shareholders’ investment in its common shares.

On May 6, 2010, the Company entered into a subscription agreement (the “Subscription Agreement”) with LIFE Power & Fuels, LLC (“LIFE”), pursuant to which it issued to LIFE 19,080,000 shares post split of its common stock, which shares represented approximately 94.1% of its issued and outstanding shares of common stock at such time, elected one new director to its board of directors and changed its management team. Concurrently with the closing of the transactions contemplated by the Subscription Agreement, the Company ceased to be a shell company, as defined in Rule 12b-2 of the Exchange Act, and adopted a new plan of operations. See Note 2. Subsequently, LIFE sold approximately 4,800,000 shares post split of the Company's common stock to certain related parties. As of December 31, 2010, LIFE owned approximately 49.8% (diluted interest) of the outstanding shares of the Company.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

On July 28, 2010, the Company effected a reverse stock split of two shares for every five shares of common stock outstanding. Accordingly, outstanding shares of common stock and stock options were adjusted to account for the effects of the reverse stock split.

Effective July 28, 2010, the Company changed its name from Freedom Resources Enterprises, Inc. to “Colombia Clean Power & Fuels, Inc.”

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amount 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 period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. There are no cash equivalents at December 31, 2010 and 2009.

Other Current Assets and Other Assets

Other current assets and other assets include direct expenses incurred, and stock warrants issued to brokers, as a result of the Company’s Note financing, for which the most recent closing was held on December 21, 2010 (see Note 4). Placement agent fees and other direct costs incurred in this transaction are being amortized over the life of the Notes, using the effective-interest method.

Property and Equipment

Property and equipment, which consist of three mining concessions in Santander, Colombia, equipment, and construction in progress, are stated at cost. Mining concessions will be amortized using the units-of-production method based upon proven and probable reserves of the mine and when the Company commences operation. Equipment is depreciated using the straight-line method over the estimated useful life of the asset of 5 years. Repairs and maintenance are charged to expense as incurred, and costs of significant renewals and improvements are capitalized. There was no depreciation expense during the years ended December 31, 2010 and 2009.

Mineral Exploration and Development Costs

We account for mineral exploration costs in accordance with Accounting Standards Codification (ASC) No. 932, Extractive Activities. All exploration expenditures are expensed as incurred. Expenditures to explore new mines (e.g., acquisition of mining concession), to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and will be amortized on a units of production basis over proven and probable reserves.

Mineral Properties

We account for mineral properties in accordance with ASC No. 930, Extractive Activities-Mining. Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Mineral properties are periodically assessed for impairment of value and any diminution in value. There were no mineral properties at December 31, 2010 and 2009.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Derivative Instruments

The Company issued Notes that are considered hybrid financial instruments that blend the characteristics of both equity and debt securities. They embody settlement alternatives available to the holder providing for either redemption of the principal and interest for cash at maturity (“Forward Component”) or conversion into the Company’s common stock (“Embedded Conversion Feature” or “ECF”). The Notes also embody contingent equity-linked share price protections on the ECF in the form of down-round, anti-dilution adjustments to the conversion price during the term to maturity. The Company determined that the Notes contain an embedded derivative feature that is bifurcated and accounted for as a derivative instrument in accordance with ASC No. 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity. The embedded conversion feature is carried at fair value and marked-to-market at the end of each reporting period. The Company uses the binomial lattice model to estimate the fair value of the embedded conversion feature. See Note 4.

Foreign Currency Translation

The Company and the following subsidiaries, Energia Andina Santander Resources Cooperatieve U.A. and Colombia Clean Power and Fuels, LLC, maintain accounting records using U.S. dollars. Energia Andina Santander Resources S.A.S., the Company’s Colombian subsidiary, maintains accounting records using the Colombian Peso.

Foreign currency transactions during the year are translated to their functional currencies at the approximate rates of exchange on the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the approximate rates of exchange at that date. Non-monetary assets and liabilities are translated at the rates of exchange prevailing at the time the asset or liability was acquired. Exchange gains or losses are recorded in the consolidated statements of operations.

The financial statements of Energia Andina Santander Resources S.A.S. are translated into U.S. dollars using the closing rate method. The balance sheet items are translated into U.S. dollars using the exchange rates at the respective balance sheet dates. The capital account is translated at the historical exchange rate prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the year. All exchange differences are presented as accumulated other comprehensive loss within the “consolidated statements stockholders’ equity.”

Earnings (Loss) Per Share

Earnings (loss) per share are presented in accordance with the provisions of the ASC No. 260, “Earnings Per Share.”ASC No. 260 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share.

Basic earnings (loss) per share excludes dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the treasury method. The basic and diluted earnings (loss) per share are the same for the years ended December 31, 2010 and 2009 because the Company was in a net loss position.

The Company’s issued and outstanding common shares as of December 31, 2010 do not include for the underlying shares exercisable with respect to the issuance of the 3,200,000 warrants exercisable at $0.01 per share. The Company has given effect to the issuance of these warrants in computing loss per share in accordance with ASC No. 260.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

As of December 31, 2010, the Company had stock warrants and stock options exercisable to purchase, and convertible notes that were convertible into, an aggregate of 3,825,589 shares of common stock that were considered anti-dilutive because of the net loss.

Earnings (loss) per share are reflective of a two-for-five reverse stock split that occurred on July 28, 2010. Accordingly, if the number of common shares outstanding decreases as a result of a reverse stock split, the computations of basic and diluted earnings (loss) per share shall be adjusted retroactively for all periods presented to reflect that change in capital structure.

Below is the calculation of basic and diluted earnings (loss) per share:

	Year Ended December 31
	2010			2009
Net loss for basic and diluted earnings (loss) per share	$	(2,213,320	)	$	(24,105	)

Weighted average shares used in basic and diluted computation		18,887,765			1,120,000

Earnings (loss) per share:

Basic and diluted	$	(0.12	)	$	(0.02	)

Segments

The Company operates in one business segment. The Company and its subsidiaries’ assets are located primarily in the United States of America and in Colombia. As of December 31, 2010, approximately $2.0 million and $6.2 million of the Company’s assets are in Colombia and in the United States, respectively. For the year ended December 31, 2010, operating loss in Colombia and in the United States was approximately $584,000 and $1.4 million respectively.

Reclassification

Certain balances in the prior year’s financial statements were reclassified to conform to the current year’s presentation.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. Cash is deposited with high credit quality financial institutions to minimize credit risk; however, the Company may periodically exceed federal deposit insurance limits.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that such assets will be realized.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

The Company recognizes liabilities for uncertain positions based upon the provisions of ASC No. 740, “Income Taxes”. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company accounts for interest and penalties generated by income tax contingencies as interest expense in the consolidated statements of operations.

The Company’s subsidiaries are subject to foreign taxation.

Share-Based Compensation

The Company accounts for share-based compensation in accordance with ASC No. 718, “Compensation-Stock Compensation”, which establishes accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as expense on a straight-line basis over the employee requisite service period, which is generally four years.

ASC No. 718 requires forfeitures to be estimated at the time of grant and revised if necessary in subsequent periods if actual forfeitures differ from those estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of compensation expense to be recognized in future periods. During the years ended December 31, 2010, the Company granted 2,023,334 with an estimated total grant-date fair value of approximately $1.3 million. The stock compensation expense for the stock options granted during the year ended December 31, 2010 that are not expected to vest was considered immaterial.

Fair Value of Financial Instruments

For financial instruments consisting of cash, accounts payable, and accrued liabilities, the carrying amounts are reasonable estimates of fair value due to their relative short maturities. Based on borrowing rates available to the Company, the convertible notes payable approximate their fair value. The fair value of derivative liability was determined using level 3 inputs described below.

The Company adopted amendments to the accounting standard addressing the measurement of the fair value of financial assets and financial liabilities. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair values of all reported assets and liabilities that represent financial instruments, the Company uses the carrying market values of such amounts. The standard establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources. Unobservable inputs reflect a reporting entity’s pricing an asset or liability developed based on the best information available in the circumstances. The fair value hierarchy consists of the following three levels:

Level 1–instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2–instrument valuations are obtained from readily-available pricing sources for comparable instruments.

Level 3–instrument valuations are obtained without observable market values and require a high-level of judgment to determine the fair value.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of December 31, 2010:

							December 31,
	Level 1		Level 2		Level 3		2010
Liabilities:
Derivative liability –
Embedded conversion feature	$	-	$	-	$	2,816,000	$	2,816,000

The following table shows the changes in Level 3 liability measured at fair value on a recurring basis for the year ended December 31, 2010:

	Derivative liability- embedded conversion feature			Total Level 3
Balance, December 31, 2009	$	-		$	-
Issuance during the year		3,072,000			3,072,000
Unrealized gain on change in fair value		(256,000	)		(256,000	)
Balance, December 31, 2010		2,816,000			2,816,000

There were no financial assets or financial liabilities measured at fair value on a recurring basis as of December 31, 2009.

Recent Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements (ASU 2010-06). The Company adopted ASU 2010-06 effective January 1, 2010, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements which are deferred until fiscal years beginning after December 15, 2010. The Company believes that the disclosures will not have a material impact on financial position, results of operations or cash flows.

2.	PRIVATE PLACEMENT

On May 6, 2010, the Company entered into a Subscription Agreement with LIFE. Pursuant to the Subscription Agreement, the Company sold an aggregate of 19,080,000 shares (the “Shares”) of its common stock to LIFE for an aggregate purchase price of $100,000, which funds were used to eliminate the Company’s then current liabilities. The Shares represented 94.1% of the Company’s issued and outstanding shares of common stock immediately following the transaction, and the transaction resulted in a change in control of the Company.

At the closing, Neil Christiansen resigned as the Company’s President, effective immediately, and Edward P. Mooney was appointed the Company’s President and Chief Executive Officer and as a member of the Company’s board of directors. At the closing, Daniel F. Carlson was also appointed the Company’s Chief Financial Officer, Secretary and Treasurer.

Simultaneous with the closing of the Subscription Agreement, the following transactions occurred to reflect the payment of $100,000 of the purchase price to reduce the Company’s liabilities as follows: $10,664 to pay accounts payable; $8,689 to pay expenses incurred subsequent to March 31, 2010; and $80,647 to pay advances to related parties. Related parties forgave $41,196 of loans due to them, which has been recorded as a capital contribution.

Also simultaneous with the closing of the Subscription Agreement, the Company issued 80,001 shares of its common stock upon conversion of a note payable in the amount of $5,000 and related accrued interest of $1,439.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

3.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities of $1,181,295 existed at December 31, 2010. This figure represented professional fees incurred as of December 31, 2010 to mining engineers, auditors and financial professionals as well as accounts payable related to our acquisition of mining concessions.

4.	CONVERTIBLE NOTES PAYABLE

Notes Payable

In multiple closings, the most recent taking place on December 21, 2010, the Company issued $8,000,000 aggregate principal amount of 10% convertible promissory notes (the “Notes”) to accredited investors in a private placement transaction. The Company has, as of December 31, 2010, issued a total of $8,000,000 in the Note offering. The proceeds of the Note offering are being used to fund exploration-stage activities of the Company, including the identification, analysis and negotiation for coal resources in Colombia that meet the Company’s criteria for mining, processing and export potential.

The notes are secured by the Company’s interest in the business operation of its subsidiary in Colombia. The Notes accrue interest at an annual rate of 10%. Principal and interest are due on June 30, 2012. The Notes can be converted at any time into common stock at a rate equal to $2.50 of principal for each share of common stock. The Notes are hybrid financial instruments that blend characteristics of both equity and debt securities. They embody settlement alternatives available to the holder providing for either redemption of the principal and interest for cash at maturity (“Forward Component”) or conversion into the Company’s common stock (“Embedded Conversion Feature” or “ECF”). The Notes also embody contingent equity-linked share price protections on the ECF in the form of down-round, anti-dilution adjustments to the conversion price during the term to maturity. As a result, the Company determined that the Notes contain certain embedded derivative features. The Company’s evaluation resulted in the conclusion that the compound derivative financial instrument required bifurcation and separately accounted for the embedded conversion option as a derivative liability, carried at fair value and marked-to-market each period. The aggregate fair value of the embedded conversion feature was estimated at $ 3,072,000 on the date of issuance of the notes. The original discount from separating the embedded conversion feature is accreted to interest expense through the maturity date of the notes using the effective interest method. At December 31, 2010, the fair value of the embedded conversion feature was estimated at $2,816,000. The charge in fair value of $256,000 is included in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2010.

At the closings of the Note issuance, the Company also issued to the Note investors five-year warrants to purchase an aggregate of 3,200,000 shares of common stock for a purchase price of $0.01 per share. The total number of outstanding warrants issued in the Note offering as of December 31, 2010 is 2,930,000. The stock warrants were recorded as discount on notes payable and were allocated based upon their relative fair values on the date of the issuance, which aggregated to $2,388,790. The fair value of the stock warrants were calculated using the Black-Scholes pricing model. See Note 5. The discount will be amortized to interest expense using the effective interest method through the maturity date of the Notes.

The total unamortized discount was $5,095,857 as of December 31, 2010. Total amortization of discount on notes payable was $364,933 during the year ended December 31, 2010.

The notes payable to LIFE amounted to $19,122, net of unamortized discount of $60,878 as of December 31, 2010. See Note 7.

At December 31, 2009, the Company had a 8% interest bearing convertible debt to the former officer/shareholder totaling $5,000. In connection with the acquisition of the Company by LIFE (see Note 2), the note payable and the accrued interest at that time (aggregate of $6,439) was converted into 80,001 shares of common stock.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

5.	STOCKHOLDERS’ EQUITY

Reverse Stock Split

On July 28, 2010, the Company executed a reverse stock split of its common stock in which two new shares of common stock were issued for every five shares of common stock held as of the date of the reverse stock split. This reverse split has been applied retrospectively in the consolidated financial statements.

Stock Repurchase Agreement

On June 10, 2010, the Company entered into a Stock Repurchase Agreement with Latin-American Fuels Corporation, a British Virgin Islands corporation, and Fernando Casas, the president and principal shareholder of that company, who were at the time of the transaction and currently are joint beneficial owners of in excess of 5% of the Company’s outstanding common stock. Under the terms of the agreement, the Company has the option, but not the obligation, to repurchase up to 2,400,000 shares owned by Latin-American Fuels under certain conditions. After June 10, 2011, and before June 10, 2012, the Company has the right to repurchase up to 1,200,000, and after June 10, 2012, the Company has no further right to repurchase any of these shares. Latin-American Fuels does not have the right to transfer any shares for which we have repurchase rights. If the Company will employ Mr. Casas and then terminate him or if he were to terminate any employment with the Company without good reason, the shares which are then subject to repurchase will be forfeited by Latin-American Fuels to the Company without further consideration. In the event the Company will terminate him without cause or if Mr. Casas were to terminate his employment for good reason, the Company has the right to repurchase the shares at fair market value as of the date of termination. The Company's option to repurchase the shares expires 30 days after termination of Mr. Casas as an employee. Mr. Casas is currently not an employee of the Company.

Stock Options

The Company is seeking to recruit and retain experienced professionals from the global energy, natural resource development and mining industries. The Company will seek to offer compensation that is commensurate with the qualifications of future employees and advisors, including the ability to offer equity participation with vesting provisions typical of early-stage public companies. On May 12, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (“Incentive Plan”), which gives the Company the ability to grant stock options, stock appreciation rights (“SARs”), restricted stock and stock bonuses (collectively, “Awards”) to employees or consultants of the Company or of any subsidiary of the Company and to non-employee members of the Company’s advisory board or the board of directors of the Company or the Company’s subsidiaries.

The Board of Directors has authorized 3,300,000 shares of common stock for issuance under the Incentive Plan. In the event of any change in the number of shares of Company common stock outstanding by reason of any stock dividend or split, reverse stock split, recapitalization, merger, consolidation, combination or exchange of shares or similar corporate change, the maximum number of shares of common stock with respect to which the Board of Directors may grant awards, appropriate adjustments will be made to the shares subject to the Incentive Plan and to any outstanding Awards. Shares available for Awards under the Incentive Plan may be either newly-issued shares or treasury shares. If an Award or portion thereof shall expire or terminate for any reason without having been exercised in full, the unexercised shares covered by such Award shall be available for future grants of Awards under the Incentive Plan

Stock Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant; those option awards generally vest based on four years of continuous service and have a 5-year contractual term.

The fair value of each option award is determined using the Black-Scholes pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate of U.S. Treasuries over the expected life of the option. The assumptions used in the Black-Scholes pricing model for stock options granted during the year ended December 31, 2010 were as follows:

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Risk-free interest rate		1.98	%
Expected volatility of common stock		76.4	%
Dividend yield		0	%
Estimated life of options	5 years

Fair Value of Common Stock - The fair value of the underlying common stock is determined based upon the last traded price of the stock on the date of grant.

Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the option’s expected term.

Expected Volatility - The expected volatility was based on the historical stock volatilities of the Company’s publicly-listed peers as the Company did not have a sufficient trading history to use the volatility of its own common stock.

Expected Dividend - The Company has never paid dividends and does not expect to pay dividends.

Expected Term - The expected term represents the period that the Company’s stock-based awards are expected to be outstanding.

The Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options, and the Company’s options do not have the characteristics of traded options, the option valuation models do not necessarily provide a reliable measure of the fair value of its options.

A summary of the stock option activity during the year ended December 31, 2010 is presented below:

	Number of shares subject to option 2010			Weighted average exercise price		Weighted Average Remaining Contractual Term
Outstanding at January 1, 2010		0			-		-
Granted during the year		2,023,334			1.89		-
Exercised		-			-		-
Cancelled		(100,000	)		0.01		-
Outstanding at December 31, 2010		1,923,334		$	1.98	4.8 Years
Exercisable at December 31, 2010		430,834		$	2.10	4.8 Years

The weighted-average grant-date fair value of stock options granted for the year ended December 31, 2010 was $0.43 per share.

Stock compensation expense was $304,977 for the year ended December 31, and for the cumulative period from November 6, 1996 (date of inception) through December 31, 2010.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2010.

		Stock Options Outstanding						Stock Options Exercisable
				Weighted-
				Average		Weighted-				Weighted-
Range of		Number		Remaining		Average		Number		Average
Exercise		of Shares		Contractual		Exercise		of Shares		Exercise
Price		Outstanding		Life in Years		Price		Exercisable		Price
$	0.05		640,000		4.5	$	0.05		160,000	$	0.05
$	1.50		425,000		4.8	$	1.50		31,250	$	1.50
$	2.50		458,334		5.00	$	2.50		139,584	$	2.50
$	5.00		400,000		5.00	$	5.00		100,000	$	5.00
			1,923,334						430,834

The total number of stock options outstanding are expected to vest. The aggregate intrinsic value of the outstanding options expected to vest at December 31, 2010 was $1,407,250. The aggregate intrinsic value of the options exercisable at December 31, 2010 was $308,500. The actual value, if any, an optionee may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised. There is no assurance the value realized by an optionee will be at or near the value estimated by the Black-Scholes pricing model.

Stock Warrants

As described in Note 4, the Company issued stock warrants to purchase an aggregate of 3,200,000 shares of common stock to investors in the Notes offering issued in various tranches during the year ended December 31, 2010. All of the warrants issued to investors in the Notes offering expire on June 30, 2015 and have an exercise price of $0.01 per share. The aggregate fair value of these warrants were estimated at $$2,388,790 using the Black-scholes pricing model and were accounted for as an increase in additional paid in capital and as a discount in notes payable. The discount in notes payable is being amortized to interest expense over the term of the Notes.

In connection with the Notes financing, the Company also issued stock warrants to purchase an aggregate of 340,640 shares of common stock to the security brokers in the Notes offering on December 23, 2010. All of the warrants issued to the security brokers expire on December 15, 2015 and have an exercise price of $2.50 per share. The fair value of these warrants were estimated at $344,717 using the Black-scholes pricing model and were accounted for as an increase in additional paid in capital and a deferred debt issuance cost. The debt issuance cost is being amortized to interest expense over the term of the Notes.

The Black-Scholes pricing model used to estimate the value of the stock warrants includes inputs of the stock price at the grant date, the expected life of the warrants, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate of U.S. Treasuries over the expected life of the warrants. The assumptions used in the Black-Scholes pricing model for stock warrants granted in 2010 were as follows:

	2010

Risk-free interest rate		0.51% – 1.99	%
Expected volatility of common stock		76.4	%
Dividend yield		0	%

During the year ended December 31, 2010, certain warrant holders exercised warrants to purchase 210,000 of the Company’s common stock for an aggregate of $2,100. In addition, certain warrant holders exercised 60,000 warrants to purchase common stock through the cashless provision exercise. 364 shares of common stock were surrendered in the cashless exercise, resulting in 59,636 shares being issued.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

A summary of the stock warrants activity during the year ended December 31, 2010 is presented below:

				Weighted-
				Average
	Number			Exercise
	of Shares			Price

Outstanding at December 31, 2009		-			-
Granted		3,540,640		$	0.25
Exercised		(270,000	)	$	0.01
Cancelled		-			-

Outstanding at December 31, 2010		3,270,640		$	0.27

The following table summarizes information about stock warrants outstanding and exercisable as of December 31, 2010:

		Stock Warrants Outstanding						Stock Warrant Exercisable
				Weighted-
				Average		Weighted-				Weighted-
Range of		Number		Remaining		Average		Number		Average
Exercise		of Shares		Contractual		Exercise		of Shares		Exercise
Price		Outstanding		Life in Years		Price		Exercisable		Price
$	0.01		2,930,000		4.5	$	0.01		2,930,000	$	0.01
$	2.50		340,640		4.9	$	2.50		340,640	$	2.50
			3,270,640						3,270,640

6.	INCOME TAXES

The Company had no domestic and foreign income taxes during the years ended December 31, 2010 and 2009, and the cumulative period ended December 31, 2010.

A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:

Statutory federal income tax rate	34.00	%
State income tax, net of federal income tax effect	0.00	%
Foreign income tax	0.00	%
Valuation allowance	-34.00	%
Effective tax rate	0.00	%

The Company is in an exploration stage and is expected to incur continuing losses. Substantially all expenses during the exploration stage are capitalized for income tax purposes and will be amortized upon commencement of operations. As of December 31, 2010, the deferred tax assets are associated primarily with the capitalized costs and net operating loss carryover (NOL) totaling approximately $1.2 million for both Federal and State income tax. A valuation allowance has been established to offset 100% of the deferred tax assets since future realization is uncertain. The change in valuation allowance was approximately $553,000 during the year ended December 31, 2010.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Internal Revenue Code section 382 places a limitation (Sec. 382 Limitation) on the amount of taxable income that can be offset by NOL carryforward after a change in control (i.e., generally greater than 50% change in ownership) of a loss corporation. Generally, a loss corporation cannot deduct NOL carryforward in excess of the Sec. 382 Limitation after a change in control. As described in Note 2, LIFE subscribed approximately 94.1% of the Company’s stock in May 2010 which resulted in a change in ownership and control. Management has not yet determined the impact of the Sec. 382 Limitation on the utilization of the Company’s NOL carryforward against taxable income in future periods

7.	RELATED PARTY TRANSACTIONS

As of the date of this report, LIFE owns approximately 49.8% (diluted) of the outstanding shares of the Company.

As described in Note 4, the Company had a convertible note payable to LIFE totaling $80,000 as of December 31, 2010. The note matures on June 30, 2012 and accrues interest at an annual rate of 10%. In connection with the issuance of the note, the Company also issued LIFE stock warrants to purchase 32,000 shares of the Company’s common stock with an exercise price of $0.01 per share. The stock warrants mature on June 30, 2015. The note payable to LIFE amounted to $19,122 (net of unamortized discount) as of December 31, 2010.

On August 3, 2010, the Company entered into a 3-year management and services agreement with LIFE pursuant to which LIFE agreed to provide certain corporate, financial, and merger and acquisition advisory services to the Company and assistance with securing equipment leases and other equipment financing through June 30, 2013. Under the terms of the contract, LIFE is paid a fee equal to the lesser of 1% of gross coal sales or $2 per ton of coal sold with a minimum monthly fee of $25,000 plus expenses. Total management fees and expenses during the year ended December 31, 2010 were $155,000 and accrued management fee payable as of December 31, 2010 was $137,954, included in “Accounts Payable & Accrued Liabilities” in the Consolidated Balance Sheets.

At December 31, 2009, the Company had a advances from the previous officer/shareholder totaling $117,000. The advances bore no interest and were due on demand; however, the Company imputed interest at 8% per annum and included the amount as an increase in additional paid in capital. In connection with the acquisition of the Company by LIFE (see Note 2), the former officer/shareholder was paid a total amount of $75,804. The remaining balance of $41,196 was forgiven and was recorded as an increase in additional paid in capital during the year ended December 31, 2010.

On June 24, 2010, a large stockholder of the Company through his holdings in our majority shareholder, LIFE, loaned the Company $5,000 to pay for certain expenses related to mining concession acquisitions in Colombia. As of December 31, 2010, these funds have been repaid to the stockholder with no interest or further compensation.

8.	COMMITMENTS AND CONTINGENCIES

Mining Concessions:

On July 19, 2010 the Company entered into an agreement to purchase 2 coal concessions (Ingeominas Titles GG7-111 and GG7-11522X). As of December 31, 2010, the concessions have been fully paid for and are listed under the Company’s name on the official website of the Colombian mining authority, Ingeominas. Under the terms of the contract, the Company will pay to the sellers a royalty payment of $2.00 per ton of coal extracted under the term of the concession. This royalty payment applies to all coal mined by our Company from these concessions.

On October 20, 2010 the Company entered into an agreement to purchase an additional coal concession (Ingeominas title FLG-092). The Company has paid to the seller $95,000 and owes an additional $1,420,000 in seven payments. The next payment is $220,000 and is due upon official transfer of the concession by Ingeominas. The last six payments of $200,000 are due every three months thereafter. In addition, the Company has paid to Ingeominas $114,502 which represents past due governmental fees owed by the seller. Also, as per the terms of the contract, the Company will pay to the sellers a royalty payment of $2.00 per ton of coal extracted under the term of the concession. This royalty payment applies to all coal mined by our Company from this concession.

All the mining concessions are in the exploration phase. While in the exploration and construction phase, royalties to the government are owed based on the applicable minimum wage rate times the number of hectares. Once the concessions enter the production phase, royalties owed to the government are equal to 5% of production. Each concession has a 30 year production phase, less the total time spent in exploration and construction.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

Royalty Payment to LIFE

On August 3, 2010, we entered into a Management and Services Agreement with LIFE Power & Fuels LLC, a Delaware limited liability company and one of our principal shareholders, pursuant to which LIFE agreed to provide certain corporate, financial, and merger and acquisition advisory services and assistance with securing equipment leases and other equipment financing. In exchange for its services, LIFE is entitled to receive a monthly fee equal to the lesser of 1% of our gross coal sales or $2 per ton of coal sold by us; provided, however, that such monthly fee shall not be less than $25,000. The term of the Management Agreement is initially 36 months, but the agreement shall automatically renew for successive 12-month periods unless it is terminated by either party in writing. Upon termination, and for a period of five years thereafter, LIFE will continue to be entitled to receive an amount equal to the lesser of 1% of our gross coal sales or $2 per ton of coal sold by us from all mines and coking facilities on concessions acquired or coke projects initiated during the term of the Management Agreement. During the initial term of this agreement, we have agreed to pay a minimum of $900,000 to LIFE, which is included in the “General and Administrative” expenses in the consolidated statements of operations and comprehensive loss.

Lease Commitments

The Company’s subsidiary leases its office facility in Bogota, Colombia under a noncancelable operating lease agreement that expires in 2011. The future minimum lease payments under this operating lease are as follows:

	Bogota		San Anselmo
	Operating		Operating		Total
	Lease		Lease		All Leases
Year ending December 31:
2011		69,600		17,100		86,700
2012		69,600		20,520		90,120

Total	$	139,200	$	37,620	$	176,820

Asset Retirement Obligations

The Company is subject to certain environmental and regulatory obligations which will require the Company to restore the mine properties after the mining has been completed. As a result, the Company will be required to recognize an asset retirement obligation in the period in which the obligation is incurred in accordance with ASC 410, Asset Retirement and Environmental Obligation. The Company believes that any retirement obligation as of and for the year ended December 31, 2010 is not material because it is still in the exploration stage.

9.	SUBSEQUENT EVENTS

In accordance with the provisions of FASB Accounting Standards Codification 855, Subsequent Events, management evaluated all material events occurring subsequent to the balance sheet date through the time of filing of this Form 10-K for events requiring disclosure or recognition in the Company’s consolidated financial statements. Management determined the following significant events:

On January 1, 2011, the Company entered into an employment with agreement with Carlos J. Soto. Mr. Soto has agreed to employment as President of Energia Andina Santander Resources, SAS, the Company’s wholly owned subsidiary.

Colombia Clean Power & Fuels, Inc.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

On February 1, 2011, the Company entered into an agreement with Hong Kong Dongshi Coal Chemistry Engineering Consultancy & Management Co., Ltd. (“Dongshi”) whereby Dongshi shall prepare a comprehensive and bankable feasibility study for the Company’s intended energy park facilities. Total amount paid and payable to Dongshi is $680,000.

On February 1, 2011, the Company entered into an agreement with CCG Investor Relations (“CCG”) whereby CCG would provide investor relations services to the Company. As per the terms of that agreement, CCG was issued 100,000 options to purchase shares of common stock. The options have a five year term and $2.50 strike price.

On February 11, 2011, the Company placed a $100,000 deposit on three additional coal concessions in the state of Boyaca, Colombia. Under the terms of the agreement, should the Company decide to continue with the purchase of these concessions, the Company would be responsible for paying upfront fees of $300,000. In March, the Company made a second payment to the sellers of $200,000. Total fees for the purchase amount to $2,550,000. There is also an ongoing royalty payment to the sellers of $2.75 per ton of coal mined.

On March 8, 2011, the Company announced the appointment of Barry Markowitz to its board of directors in the role of Chairman. As per the terms of his agreement, Mr. Markowitz received 200,000 options to purchase common stock. The options have a five year term and a $2.50 strike price.

On March 18, 2011, the Company terminated its employment agreement with Jerrie Colish. As a result of the termination, Mr. Colish received 50,000 of the 300,000 options originally granted to him under his employment agreement, the balance of the options being canceled.

COLOMBIA ENERGY RESOURCES, INC. - FORM 10-K/A - December 14, 2011

Attached files

COLOMBIA ENERGY RESOURCES, INC. Reports