Attached files
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 March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 000-54073
LIBERTY COAL ENERGY CORP.
(Exact name of registrant as specified in its charter)
Nevada 75-3252264
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
99 - 18th Street, Suite 3000, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
(303) 997-3161
(Registrant's telephone number, including area code)
N/A
(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 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 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small 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 [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
58,666,667 common shares issued and outstanding as of May 13, 2011
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
Item 4. Controls and Procedures 19
PART II - OTHER INFORMATION 19
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds 26
Item 3. Defaults Upon Senior Securities 26
Item 4. [Removed and Reserved] 26
Item 5. Other Information 26
Item 6. Exhibits 27
SIGNATURES 28
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the three and six month periods
ended March 31, 2011 form part of this quarterly report. They are stated in
United States Dollars (US$) and are prepared in accordance with United States
generally accepted accounting principles.
3
Liberty Coal Energy Corp.
(An Exploration Stage Company)
BALANCE SHEETS
(Unaudited)
As of As of
March 31, September 30,
2010 2010
---------- ----------
ASSETS
ASSETS
Cash $ 54,027 $ 59,190
Prepaid 9,837 5,291
---------- ----------
TOTAL CURRENT ASSETS 63,864 64,481
---------- ----------
Website, net of amortization 2,536 3,378
Mineral properties 377,585 350,000
---------- ----------
TOTAL OTHER ASSETS 380,121 353,378
---------- ----------
TOTAL ASSETS $ 443,985 $ 417,859
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 8,135 $ 18,590
Loans payable 101,389 --
---------- ----------
TOTAL LIABILITIES 109,524 18,590
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, (1,500,000) shares authorized;
57,900,000 and 57,900,000 shares issued and outstanding as
of March 31, 2011 and September 30, 2010, respectively) 57,900 57,900
Additional paid-in capital 346,786 346,786
Additional paid-in capital - warrants 183,314 183,314
Accumulated deficit during the exploration sage (253,539) (188,731)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 334,461 399,269
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 443,985 $ 417,859
========== ==========
See Notes to Consolidated Financial Statements
4
LIBERTY COAL ENERGY CORP
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative Amounts
From Date of
For Three Months Ending For Six Months Ending Incorporation on
----------------------------- ----------------------------- August 31, 2007 -
March 31, March 31, March 31, March 31, March, 31,
2011 2010 2011 2010 2011
------------ ------------ ------------ ------------ ------------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
NET SALES -- -- -- -- --
COSTS AND EXPENSES
General & administrative 12,137 187 12,981 1,201 31,382
Consulting services 15,000 13,138 30,000 13,638 90,000
Amortization 422 -- 844 -- 1,265
Investor relations 4,910 -- 13,196 -- 35,312
Transfer agent 382 1,300 382 2,895 14,691
Legal & accounting 1,754 1,300 6,016 2,895 79,500
------------ ------------ ------------ ------------ ------------
Loss before income taxes 34,605 15,925 63,419 20,629 252,150
Provision for income taxes -- -- -- -- --
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (34,605) (15,925) (63,419) (20,629) (252,150)
OTHER INCOME & (EXPENSES)
Interest expense (1,389) -- (1,389) -- (1,389)
------------ ------------ ------------ ------------ ------------
TOTAL OTHER INCOME & (EXPENSES) (1,389) -- (1,389) -- (1,389)
------------ ------------ ------------ ------------ ------------
NET LOSS FROM CONTINUING OPERATIONS (35,994) (15,925) (64,808) (20,629) (253,539)
------------ ------------ ------------ ------------ ------------
NET LOSS $ (35,994) $ (15,925) $ (64,808) $ (20,629) $ (253,539)
============ ============ ============ ============ ============
BASIC AND DILUTED LOSS PER COMMON
SHARE $ (1) $ (1) $ (1) $ (1)
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 57,900,000 75,054,444 57,900,000 74,420,330
============ ============ ============ ============
See Notes to Consolidated Financial Statements
5
Liberty Coal Energy Corp.
Statements of Cash Flows (Unaudited)
(an Exploration Company)
Cumulative Amounts
From Date of
Six Months Six Months Incorporation on
Ended Ended August 31, 2007 -
March 31, March 31, March 31,
2011 2010 2011
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (64,808) $ (17,734) $ (253,540)
Amortization 844 -- 1,266
Accrued interest expense 1,389 -- 1,389
(Increase) decrease in prepaid expenses (4,548) 445 (9,838)
Increase (decrease) in accounts payable and accrued liabilities (9,551) (3,100) 3,131
Increase (decrease) in related party payables (904) -- 5,004
Increase (decrease) in due to stockholder -- (5,000) --
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (77,578) (25,389) (252,588)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in website (3,800)
Acquisition of mineral properties (27,585) (325,000) (352,585)
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (27,585) (325,000) (356,385)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued for cash -- 500,000 563,000
Payments made on loans payable -- -- --
Proceeds from loans payable 100,000 -- 100,000
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 100,000 500,000 663,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (5,163) 149,611 54,027
CASH AT BEGINNING OF PERIOD 59,190 17,430 --
---------- ---------- ----------
CASH AT END OF PERIOD $ 54,027 $ 167,041 $ 54,027
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income taxes paid $ -- $ -- $ --
========== ---------- ==========
Interest paid $ -- $ -- $ --
========== ========== ==========
NON-CASH ACTIVITIES
Notes issued to officers $ -- $ -- $ --
Retirement of debt -- -- --
Reclassified long-term loan to short-term loan -- 219,754 219,754
Stock issued from conversion of convertible notes -- -- --
Notes payable for settlement of notes -- 2,183,000 2,183,000
Stock issued for services -- -- --
Preferred stock issuance for settlement of notes payable -- 3,104,139 3,104,139
---------- ---------- ----------
Total non-cash activities $ -- $5,506,893 $5,506,893
========== ========== ==========
See Notes to Consolidated Financial Statements
6
LIBERTY COAL ENERGY CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
Liberty Coal Energy Corp. (the "Company"), incorporated in the state of Nevada
on August 31, 2007, and was developing business activities in teacher
recruiting. The Company changed its business focus in March, 2010 and now
intends to enter the business of precious mineral exploration, development, and
production. The Company has not yet commenced significant business operations
and is considered to be in the exploration stage (formerly in the development
stage).
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
MANAGEMENT CERTIFICATION
The financial statements herein are certified by the officers of the Company to
present fairly, in all material respects, the financial position, results of
operations and cash flows for the periods presented in conformity with
accounting principles generally accepted in the United States of America,
consistently applied.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and amounts due to Company
stockholder.
The carrying amount of these financial instruments approximates fair value due
either to length of maturity or interest rates that approximate prevailing
market rates unless otherwise disclosed in these financial statements. It is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from its other financial instruments and that
their fair values approximate their carrying values except where separately
disclosed.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States requires management to make estimates
and assumptions that affect the reported amounts 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 year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
7
LOSS PER SHARE
Basic loss per share is calculated using the weighted average number of common
shares outstanding and the treasury stock method is used to calculate diluted
earnings per share. For the years presented, this calculation proved to be
anti-dilutive.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes using an asset and liability approach.
Deferred tax assets are reduced by a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. No provision for income taxes is
included in the statement due to its immaterial amount, net of the allowance
account, based on the likelihood of the Company to utilize the loss
carry-forward. See Note 5.
NET LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number of
common shares outstanding and common stock equivalents, if not anti-dilutive.
The Company has not issued any potentially dilutive common shares.
RECENTLY ADOPTED PRONOUNCEMENTS
VARIABLE INTEREST ENTITIES
In June 2009, the FASB issued changes to require an enterprise to perform an
analysis to determine whether the enterprise's variable interest or interests
give it a controlling financial interest in a variable interest entity; to
require ongoing reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity; to eliminate the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity; to add an additional reconsideration event for
determining whether an entity is a variable interest entity when any changes in
facts and circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly
impact the entity's economic performance; and to require enhanced disclosures
that will provide users of financial statements with more transparent
information about an enterprise's involvement in a variable interest entity. The
guidance became effective for the Company on February 1, 2010. The adoption of
the guidance did not have an impact on the Company's consolidated financial
statements. CODIFICATION OF GAAP
In June 2009, the FASB issued guidance to establish the Accounting Standards
Codification TM ("Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. The FASB will no longer
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead, the FASB will issue Accounting Standards
Updates ("ASU"). ASUs will not be authoritative in their own right as they will
only serve to update the Codification. The issuance of SFAS 168 and the
Codification does not change GAAP. The guidance became effective for the Company
for the period ending October 31, 2009. The adoption of the guidance did not
have an impact on the Company's consolidated financial statements.
8
SUBSEQUENT EVENTS
On July 31, 2009, the Company adopted changes issued by the FASB that
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. Specifically, the guidance sets forth the period
after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and the disclosures that an entity should make
about events or transactions that occurred after the balance sheet date. The
Company has evaluated subsequent events through the date the financial
statements were issued.
BUSINESS COMBINATIONS
The Company adopted the changes issued by the FASB that requires the acquiring
entity in a business combination to recognize all (and only) the assets acquired
and liabilities assumed in the transaction; establishes the acquisition-date
fair value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose additional information needed to
evaluate and understand the nature and financial effect of the business
combination.
The Company also adopted the changes issued by the FASB which requires assets
and liabilities assumed in a business combination that arise from contingencies
be recognized on the acquisition date at fair value if it is more likely than
not that they meet the definition of an asset or liability; and requires that
contingent consideration arrangements of the target assumed by the acquirer be
initially measured at fair value.
HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")
In May 2008, the FASB issued changes to identify the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP (the GAAP hierarchy). The guidance is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU section 411, THE MEANING OF PRESENT FAIRLY IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Management is
currently evaluating the guidance and assessing the impact, if any, on the
Company's consolidated financial statements.
REVENUE RECOGNITION
In September 2009, the FASB issued new revenue recognition guidance on multiple
deliverable arrangements. It updates the existing multiple-element revenue
arrangements guidance currently included under the Accounting Standards
Codification ("ASC") 605-25. The revised guidance primarily provides two
significant changes: 1) eliminates the need for objective and reliable evidence
of the fair value for the undelivered element in order for a delivered item to
be treated as a separate unit of accounting, and 2) requires the use of the
relative selling price method to allocate the entire arrangement consideration.
In addition, the guidance also expands the disclosure requirements for revenue
recognition. ASU 2009-13 will be effective for the first annual reporting period
beginning on or after fiscal 2011, with early adoption permitted provided that
the revised guidance is retroactively applied to the beginning of the year of
adoption. Management is currently evaluating the impact of adopting this
guidance on the Company's consolidated financial statements.
RECLASSIFICATIONS
Certain balances in the prior years have been reclassified to conform to the
current year presentation.
9
NOTE 3 - MINERAL PROPERTIES
CAMPBELL PROPERTY
On February 1, 2010 the Company entered into, and closed, a Mineral and Mining
Lease with Miller and Associates, LLC. Pursuant to this agreement, the Company
issued 100,000 (post split) shares of its common stock to Miller and Associates,
LLC and acquired a 5 year lease on certain mining claims in the state of
Wyoming. In addition to the 100,000 (post split) shares issued, the Company
agreed to pay an annual fee of US $20,000, adjusted for inflation, as well as a
production royalty of 4% on the gross sales of product produced by the mineral
claims considered by this agreement.
SHERIDAN PROPERTY
The Company acquired a mineral property leasehold interest in exchange for
$55,000 (paid), $25,000 within 90 days of the each of the next three following
anniversaries of the date of the Agreement. The first of the $25,000 payments
has been paid. Additionally, the Company must spend $2,750,000 on development of
the property within three years of the date of the Agreement. Additionally, the
lessor would receive a royalty of $1 per ton of coal produced from the property
and sold with a maximum of $5,000,000. The maximum amount of royalty must be
paid within 15 years of the date of the Agreement.
NOTE 4 - LOANS PAYABLE
Loans payable as of March 31, 2011 and September 30, 2010 consist of the
following:
March 31, September 30,
2011 2010
-------- --------
Loan at 10% interest $101,389 $ --
-------- --------
Net deferred tax asset $101,389 $ --
======== ========
Loans payable consists of a note totaling $101,389, including interest thereon
of $1,389 which accrues interest at the rate of 10% per annum. The note requires
no minimum payments and may be repaid at anytime.
NOTE 5 - CAPITAL STOCK
The company has 1,500,000,000 common shares authorized at a par value of $0.001
per share.
On August 31, 2007, the company issued 1,500,000 common shares to founders for
total proceeds of $15,000.
On May 31, 2008, the company completed a private placement whereby it issued
960,000 common shares at $0.05 per share for total proceeds of $48,000.
On February 1, 2010, the company completed a private placement whereby it issued
1,000,000 units for $0.25 per unit. Each unit consists of one common share and
common share purchase warrant allowing the holder to purchase a common share at
$0.25 per share expiring February 1, 2012.
On February 1, 2010, the company issued 100,000 common shares as partial
consideration to acquire the Campbell Property.
On February 11, 2010, the company completed a private placement whereby it
issued 1,000,000 units for $0.25 per unit. Each unit consists of one common
share and common share purchase warrant allowing the holder to purchase a common
share at $0.25 per share expiring February 1, 2012.
10
On March 15, 2010, the Company increased its authorized common shares from
50,000,000 shares to 1,500,000,000 shares and effected a 30 for 1 forward stock
split. All share amounts reflected in the financial statements have been
adjusted to reflect the results of the stock split.
On March 20, 2010, the Company cancelled 18,000,000 of its common stock
outstanding.
WARRANTS
Outstanding at
Issue Date Number Price Expiry Date March 31, 2011
---------- ------ ----- ----------- --------------
February 1, 2010 1,000,000 $0.25 February 1, 2012 1,000,000
February 11, 2010 1,000,000 $0.25 February 11, 2012 1,000,000
NOTE 6 - INCOME TAXES
The Company provides for income taxes using an asset and liability approach.
Deferred tax assets and liabilities are recorded based on the differences
between the financial statement and tax bases of assets and liabilities and the
tax rates in effect currently.
Deferred tax assets are reduced by a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. In the Company's opinion, it is
uncertain whether they will generate sufficient taxable income in the future to
fully utilize the net deferred tax asset. Accordingly, a valuation allowance
equal to the deferred tax asset has been recorded.
The cumulative net operating loss carry-forward is approximately $253,539 at
March 31, 2011, and will expire beginning in the year 2028.
The cumulative tax effect at the expected rate of 22% of significant items
comprising our net deferred tax amount is as follows:
March 31, September 30,
2011 2010
-------- --------
Deferred tax asset attributable to:
Net operating loss carryover $ 55,569 $ 41,388
Valuation allowance (55,569) (41,388)
-------- --------
Net deferred tax asset $ -- $ --
======== ========
NOTE 7 - RELATED PARTY TRANSACTION
As of March 31, 2011, there is a balance owing to an officer of the Company in
the amount of $5,000 (September 30, 2010 - $5,908). This amount is included in
accounts payable.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
11
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about the Company's ability to continue as a going
concern. Without realization of additional capital, it would be unlikely for the
Company to continue as a going concern. The financial statements do not include
any adjustments that might result from this uncertainty.
The Company's activities to date have been supported by equity financing. It has
sustained losses in all previous reporting periods with an inception to date
loss of $253,539 as of March 31, 2011. Management continues to seek funding from
its shareholders and other qualified investors to pursue its business plan. In
the alternative, the Company may be amenable to a sale, merger or other
acquisition in the event such transaction is deemed by management to be in the
best interests of the shareholders.
NOTE 9 - SUBSEQUENT EVENTS
On May 11, 2011, Liberty Coal Energy Corp. ("Registrant") sold 666,667 shares of
its common stock to one investor in exchange for $500,000, or $0.75 per share as
specified in the subscription agreement ("Subscription Agreement"). A copy of
the form of Subscription Agreement is attached hereto as Exhibit 10.1. This
brief description of the Subscription Agreement is not intended to be complete
and is qualified in its entirety by reference to the full text of the
Subscription Agreement as attached.
In connection with the sale of shares, the investor also received warrants to
purchase six hundred sixty-six thousand six hundred sixty-seven (666,667) shares
of the Registrant's common stock at a purchase price of $0.82 per share. The
warrant agreement ("Warrant Agreement") provides for an expiration period of two
years from the date of the investment. A copy of the form of Warrant Agreement
is included in the Subscription Agreement.
The shares and warrants were issued in reliance upon exemption from registration
under the Securities Act of 1933, as amended ("Securities Act"), pursuant to
Rule 506 of Regulation D promulgated thereunder. The share and warrants were
issued to an investor who is an "accredited investor," as such term is defined
in Rule 501(a) under the Securities Act, based upon representation made by such
investor.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks noted herein in the
section entitled "Risk Factors," that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States Dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this quarterly report, the terms "we," "us," "our company," mean
Liberty Coal Energy Corp., a Nevada corporation, unless otherwise indicated.
CORPORATE HISTORY
The address of our principal executive office is 99 18th Street, Suite 3000,
Denver, Colorado 80202. Our telephone number is 303.997.3161.
Our common stock is quoted on the OTC Bulletin Board under the symbol "LBTG."
We were incorporated on August 31, 2007 as "ESL Teachers Inc." under the laws of
the State of Nevada. Our original business plan was to develop and sell online
employment services specifically for both ESL Teachers and ESL operations
seeking to hire teachers worldwide. On March 15, 2010, we changed our name to
Liberty Coal Energy Corp. by way of a merger with our wholly owned subsidiary
"Liberty Coal Energy Corp." which was formed solely for the purpose of the
change of name. The change of name was to better represent the new business
direction of our company to that of a coal exploration, development, and
production company.
In addition, on March 15, 2010, we effected a 30 for 1 forward stock split of
our authorized and issued and outstanding shares of common stock such that our
authorized capital increased from 50,000,000 shares of common stock, $0.001 par
value per share to 1,500,000,000 shares of common stock, par value $0.001 per
share.
OUR CURRENT BUSINESS
Our primary business focus is to acquire, explore and develop coal properties in
North America. We are currently developing two properties, the Sheridan County
Project in Sheridan County, Wyoming and the Campbell Project in Campbell County,
Wyoming.
Our first project is the Sheridan County Project. In May 2010, we entered into a
letter of agreement for the acquisition of private mineral leasehold rights to
certain coal mining properties in Sheridan County, Wyoming with Rocking Hard
Investment, LLC and Synfuel Technology, Inc. Effective May 2, 2011 we entered
into that certain Second Amended Agreement with Rocking Hard Investment, LLC to
revise certain terms of the agreements related to the Sheridan, Wyoming coal
13
property. In consideration for the mineral leasehold, we were required to pay
$25,000 by February 13, 2011 and an additional $25,000 on or before February 13,
2012. Additionally, we must spend $500,000 on development of the property within
three years of the date of the agreement. As part of the agreement, Rocking Hard
is to receive certain royalties including a royalty of $1.00 per ton of coal
produced from the property and sold with a maximum royalty of $5,000,000. The
minimum royalty shall be paid beginning February 13, 2013 in the amount of
$35,000, $45,000 in 2014, and $55,000 in 2015. Minimum royalties shall remain at
$55,000 annually until production royalties becomes due or the Company
surrenders the property to Synfuel Technology, Inc. The maximum amount of
royalty must be paid within 15 years of the date of the agreement.
The second project is the Campbell Project. On February 1, 2010, we entered into
a lease agreement with Miller and Associates, LLC to acquire a 100% interest in
the project by issuing 100,000 shares of common stock, an annual payment of
$20,000 adjusted annually by the CPI (consumer price index as published by the
US Government) - according to this formula each year's payment is calculated by
multiplying $20,000 by [1+ fractional CPI index]. For example, if the CPI is 3%,
the payment will be $20,000 x 1.03 or $20,600. In addition, we agreed to pay on
the 25th day of each calendar month, for the right to mine all coal on the
project, a production royalty of 4% of the gross sales price of all coal mined
and sold from the project.
We are an exploration stage company with limited operations and no revenues from
our business activities.
The following is a discussion and analysis of our plan of operation for the
quarter ended March 31, 2011, and the factors that could affect our future
financial condition and plan of operation.
GOING CONCERN CONSIDERATION
Our registered independent auditors included an explanatory paragraph in their
report on our financial statements as of and for the years ended September 30,
2010 and 2009, regarding concerns about our ability to continue as a going
concern.
RESULTS OF OPERATIONS
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended March 31, 2011 which are
included herein.
THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2010
The following table summarizes key items of comparison for the three months
ended March 31, 2011, and 2010:
Three Months Ended
March 31,
2011 2010
-------- --------
Amortization $ 422 $ --
General and administrative 12,137 187
Legal and accounting 1,754 1,300
Investor Relations 4,910 --
Consulting 15,000 13,138
Transfer agent 382 1,300
Interest Expense 1,389 --
-------- --------
Net Loss $ 35,994 $ 15,925
======== ========
We had a net loss of $34,605 for the quarter ended March 31, 2011, which was
$20,069 greater than the net loss of $15,925 for the quarter ended March 31,
2010. The significant change in our results over the two periods is primarily
the result of management's activities around the companies projects.
14
SIX MONTHS ENDED MARCH 31, 2011 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2010
The following table summarizes key items of comparison for the six months ended
March 31, 2011, and 2010:
Six Months Ended
March 31,
2011 2010
-------- --------
Amortization $ 844 $ --
General and administrative 12,981 1,201
Legal and accounting 6,016 2,895
Investor Relations 13,196 --
Consulting 30,000 13,638
Transfer agent 2,895 2,895
Interest Expense 1,389 --
-------- --------
Net Loss $ 64,808 $ 20,629
======== ========
We had a net loss of $64,808 for the six months ended March 31, 2011, which was
$44,179 greater than the net loss of $20,629 for the six months ended March 31,
2010. The significant change in our results over the two periods is primarily
the result of management's activities around the companies projects.
PERIOD FROM INCEPTION, AUGUST 31, 2007 TO MARCH 31, 2011
Since inception, we have an accumulated deficit of $253,539. We expect to
continue to incur losses as a result of continued exploration and development of
our coal mining interests.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of March 31, 2011, reflects assets of $443,985. We had cash
in the amount of $54,027 and negative working capital in the amount of $(45,660)
as of March 31, 2011. We do not have sufficient working capital to enable us to
carry out our stated plan of operation for the next twelve months as of the date
of these financials. We did however secure the necessary capital subsequently.
Six Months Six Months
Ended Ended
March 31, March 31,
2011 2010
---------- ----------
Net Cash (Used in) Operating Activities $ (77,578) $ (25,389)
Net Cash (Used in) Investing Activities (27,585) (325,000)
Net Cash Provided by Financing Activities 100,000 500,000
---------- ----------
Increase (Decrease) in Cash $ (5,163) $ 149,611
========== ==========
Our current cash requirements are significant due to planned exploration and
development of our current coal mining property interests, and we anticipate
generating losses. In order to execute on our business strategy, including the
exploration and development of our current coal interest, we will require
additional working capital, commensurate with the operational needs of our
planned projects and obligations. Our management believes that we should be able
to raise sufficient amounts of working capital through debt or equity offerings,
as may be required to meet our short-term obligations. However, changes in our
operating plans, increased expenses, acquisitions, or other events, may cause us
to seek additional equity or debt financing in the future. We anticipate
continued and additional operations on our properties. Accordingly, we expect to
continue to use debt and equity financing to fund operations for the next twelve
months, as we look to expand our asset base and fund exploration and development
of our properties.
There are no assurances that we will be able to raise the required working
capital on terms favorable, or that such working capital will be available on
any terms when needed. Any failure to secure additional financing may force us
to modify our business plan. In addition, we cannot be assured of profitability
or continued operations in the future.
15
OPERATING ACTIVITIES
Net cash flow used in operating activities during the six months ended March 31,
2011 was $(77,578), an increase of $52,189 from the $(25,389) net cash used in
operating activities during the six months ended March 31, 2010.
INVESTING ACTIVITIES
The primary driver of cash used in investing activities in previous periods was
capital spending in the acquisition of coal properties.
Cash used in investing activities during the six months ended March 31, 2011 was
$27,585, which resulted in a decrease from the $325,000 cash used in investing
activities during the six months ended March 31, 2010.
FINANCING ACTIVITIES
Financing activities during the six months ended March 31, 2011, provided
$100,000, which resulted in a decrease from the $500,000 cash proceeds in
financing activities during the six months ended March 31, 2010.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
MANAGEMENT CERTIFICATION
The financial statements herein are certified by the officers of the Company to
present fairly, in all material respects, the financial position, results of
operations and cash flows for the periods presented in conformity with
accounting principles generally accepted in the United States of America,
consistently applied.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and amounts due to Company
stockholder.
The carrying amount of these financial instruments approximates fair value due
either to length of maturity or interest rates that approximate prevailing
market rates unless otherwise disclosed in these financial statements. It is
management's opinion that the Company is not exposed to significant interest,
currency or credit risks arising from its other financial instruments and that
their fair values approximate their carrying values except where separately
disclosed.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States requires management to make estimates
and assumptions that affect the reported amounts 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 year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
16
Impairment losses are recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
LOSS PER SHARE
Basic loss per share is calculated using the weighted average number of common
shares outstanding and the treasury stock method is used to calculate diluted
earnings per share. For the years presented, this calculation proved to be
anti-dilutive.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes using an asset and liability approach.
Deferred tax assets are reduced by a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. No provision for income taxes is
included in the statement due to its immaterial amount, net of the allowance
account, based on the likelihood of the Company to utilize the loss
carry-forward. NET LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number of
common shares outstanding and common stock equivalents, if not anti-dilutive.
The Company has not issued any potentially dilutive common shares.
RECENT ACCOUNTING PRONOUNCEMENTS
VARIABLE INTEREST ENTITIES
In June 2009, the FASB issued changes to require an enterprise to perform an
analysis to determine whether the enterprise's variable interest or interests
give it a controlling financial interest in a variable interest entity; to
require ongoing reassessments of whether an enterprise is the primary
beneficiary of a variable interest entity; to eliminate the quantitative
approach previously required for determining the primary beneficiary of a
variable interest entity; to add an additional reconsideration event for
determining whether an entity is a variable interest entity when any changes in
facts and circumstances occur such that holders of the equity investment at
risk, as a group, lose the power from voting rights or similar rights of those
investments to direct the activities of the entity that most significantly
impact the entity's economic performance; and to require enhanced disclosures
that will provide users of financial statements with more transparent
information about an enterprise's involvement in a variable interest entity. The
guidance became effective for the Company on February 1, 2010. The adoption of
the guidance did not have an impact on the Company's consolidated financial
statements.
CODIFICATION OF GAAP
In June 2009, the FASB issued guidance to establish the Accounting Standards
Codification TM ("Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative GAAP for SEC registrants. The FASB will no longer
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts; instead, the FASB will issue Accounting Standards
Updates ("ASU"). ASUs will not be authoritative in their own right as they will
only serve to update the Codification. The issuance of SFAS 168 and the
Codification does not change GAAP. The guidance became effective for the Company
for the period ending October 31, 2009. The adoption of the guidance did not
have an impact on the Company's consolidated financial statements.
17
SUBSEQUENT EVENTS
On July 31, 2009, the Company adopted changes issued by the FASB that
establishes general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. Specifically, the guidance sets forth the period
after the balance sheet date during which management of a reporting entity
should evaluate events or transactions that may occur for potential recognition
or disclosure in the financial statements, the circumstances under which an
entity should recognize events or transactions occurring after the balance sheet
date in its financial statements, and the disclosures that an entity should make
about events or transactions that occurred after the balance sheet date. The
Company has evaluated subsequent events through the date the financial
statements were issued.
BUSINESS COMBINATIONS
The Company adopted the changes issued by the FASB that requires the acquiring
entity in a business combination to recognize all (and only) the assets acquired
and liabilities assumed in the transaction; establishes the acquisition-date
fair value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose additional information needed to
evaluate and understand the nature and financial effect of the business
combination.
The Company also adopted the changes issued by the FASB which requires assets
and liabilities assumed in a business combination that arise from contingencies
be recognized on the acquisition date at fair value if it is more likely than
not that they meet the definition of an asset or liability; and requires that
contingent consideration arrangements of the target assumed by the acquirer be
initially measured at fair value.
HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")
In May 2008, the FASB issued changes to identify the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with GAAP (the GAAP hierarchy). The guidance is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU section 411, THE MEANING OF PRESENT FAIRLY IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. Management is
currently evaluating the guidance and assessing the impact, if any, on the
Company's consolidated financial statements.
REVENUE RECOGNITION
In September 2009, the FASB issued new revenue recognition guidance on multiple
deliverable arrangements. It updates the existing multiple-element revenue
arrangements guidance currently included under the Accounting Standards
Codification ("ASC") 605-25. The revised guidance primarily provides two
significant changes: 1) eliminates the need for objective and reliable evidence
of the fair value for the undelivered element in order for a delivered item to
be treated as a separate unit of accounting, and 2) requires the use of the
relative selling price method to allocate the entire arrangement consideration.
In addition, the guidance also expands the disclosure requirements for revenue
recognition. ASU 2009-13 will be effective for the first annual reporting period
beginning on or after fiscal 2011, with early adoption permitted provided that
the revised guidance is retroactively applied to the beginning of the year of
adoption. Management is currently evaluating the impact of adopting this
guidance on the Company's consolidated financial statements.
RECLASSIFICATIONS
Certain balances in the prior years have been reclassified to conform to the
current year presentation.
REVENUES
We have not generated revenues since inception.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting issuer," we are not required to provide the information
required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
Our management evaluated, with the participation of our chief executive officer
and chief financial officer (our principal executive officer, principal
financial officer and principal accounting officer), the effectiveness of the
design and operation of our disclosure controls and procedures as of the end of
the period covered by this quarterly report. Based on this evaluation, our chief
executive officer and our chief financial officer (our principal executive
officer, principal financial officer and principal accounting officer) concluded
that our disclosure controls and procedures are effective as of March 31, 2011
to ensure that information we are required to disclose in reports that we file
or submit under the Securities Exchange Act of 1934 (i) is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms, and (ii) is accumulated and communicated
to our management, including our chief executive officer and our chief financial
officer (our principal executive officer, principal financial officer and
principal accounting officer), as appropriate, to allow timely decisions
regarding required disclosure. Our disclosure controls and procedures are
designed to provide reasonable assurance that such information is accumulated
and communicated to our management. Our disclosure controls and procedures
include components of our internal control over financial reporting.
Management's assessment of the effectiveness of our internal control over
financial reporting is expressed at the level of reasonable assurance that the
control system, no matter how well designed and operated, can provide only
reasonable, but not absolute, assurance that the control system's objectives
will be met.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the period covered by this quarterly report, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered beneficial shareholder, is an adverse
party or has any material interest adverse to our interest.
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward-looking statements." Such
forward-looking statements include any projections and estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other
"forward-looking statements".
19
RISKS RELATED TO OUR BUSINESS
WE ARE IN THE EXPLORATION STAGE AND HAVE YET TO ESTABLISH OUR MINING OPERATIONS,
WHICH MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS. THERE CAN BE NO ASSURANCE
THAT WE WILL EVER GENERATE REVENUES FROM OPERATIONS OR EVER OPERATE PROFITABLY.
We are currently in the exploration stage and have yet to establish our mining
operations. Our limited history makes it difficult for potential investors to
evaluate our business. We need to complete a drilling program and obtain
feasibility studies on the properties in which we have an interest in order to
establish the existence of commercially viable coal deposits and proven and
probable reserves on such properties. Therefore, our proposed operations are
subject to all of the risks inherent in the unforeseen costs and expenses,
challenges, complications and delays frequently encountered in connection with
the formation of any new business, as well as those risks that are specific to
the coal industry in general. Despite our best efforts, we may never overcome
these obstacles to financial success. There can be no assurance that our efforts
will be successful or result in revenue or profit, or that investors will not
lose their entire investment.
WE FACE NUMEROUS UNCERTAINTIES IN CONFIRMING THE EXISTENCE OF ECONOMICALLY
RECOVERABLE COAL RESERVES AND IN ESTIMATING THE SIZE OF SUCH RESERVES, AND
INACCURACIES IN OUR ESTIMATES COULD RESULT IN LOWER THAN EXPECTED REVENUES,
HIGHER THAN EXPECTED COSTS OR FAILURE TO ACHIEVE PROFITABILITY.
We have not established the existence of a commercially viable coal deposit on
the properties in which we have an interest. Further exploration will be
required in order to establish the existence of economically recoverable coal
reserves and in estimating the size of those reserves. However, estimates of the
economically recoverable quantities and qualities attributable to any particular
group of properties, classifications of reserves based on risk of recovery and
estimates of net cash flows expected from particular reserves prepared by
different engineers or by the same engineers at different times may vary
substantially. Actual coal tonnage recovered from identified reserve areas or
properties and revenues and expenditures with respect to such reserves may vary
materially from estimates. Inaccuracies in any estimates related to our reserves
could materially affect our ability to successfully commence profitable mining
operations.
OUR FUTURE SUCCESS DEPENDS UPON OUR ABILITY TO ACQUIRE AND DEVELOP COAL RESERVES
THAT ARE ECONOMICALLY RECOVERABLE AND TO RAISE THE CAPITAL NECESSARY TO FUND
MINING OPERATIONS.
Our future success depends upon our conducting successful exploration and
development activities and acquiring properties containing economically
recoverable coal deposits. In addition, we must also generate enough capital,
either through our operations or through outside financing, to mine these
reserves. Our current strategy includes completion of exploration activities on
our current properties and, in the event we are able to establish the existence
of commercially viable coal deposits on such properties, continuing to develop
our existing properties. Our ability to develop our existing properties and to
commence mining operations will depend on our ability to obtain sufficient
working capital through financing activities.
DUE TO VARIABILITY IN COAL PRICES AND IN OUR COST OF PRODUCING COAL, AS WELL AS
CERTAIN CONTRACTUAL COMMITMENTS, WE MAY BE UNABLE TO SELL COAL AT A PROFIT.
In the event we are able to commence coal production from our properties, we
will plan to sell any coal we produce for a specified tonnage amount and at a
negotiated price pursuant to short-term and long-term contracts. Price
adjustment, "price reopener" and other similar provisions in long-term supply
agreements may reduce the protection from short-term coal price volatility
traditionally provided by such contracts. Any adjustment or renegotiation
leading to a significantly lower contract price would result in decreased
revenues and lower our gross margins. Coal supply agreements also typically
contain force majeure provisions allowing temporary suspension of performance by
us or our customers during the duration of specified events beyond the control
of the affected party. Most coal supply agreements contain provisions requiring
us to deliver coal meeting quality thresholds for certain characteristics such
as Btu, sulfur content, ash content, hardness and ash fusion temperature.
Failure to meet these specifications could result in economic penalties,
including price adjustments, the rejection of deliveries or, in the extreme,
termination of the contracts. Consequently, due to the risks mentioned above
with respect to long-term supply agreements, we may not achieve the revenue or
20
profit we expect to achieve from any such future sales commitments. In addition,
we may not be able to successfully convert these future sales commitments into
long-term supply agreements.
THE COAL INDUSTRY IS HIGHLY COMPETITIVE AND INCLUDES MANY LARGE NATIONAL AND
INTERNATIONAL RESOURCE COMPANIES. THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO
EFFECTIVELY COMPETE IN THIS INDUSTRY AND OUR FAILURE TO COMPETE EFFECTIVELY
COULD CAUSE OUR BUSINESS TO FAIL OR COULD REDUCE OUR REVENUE AND MARGINS AND
PREVENT US FROM ACHIEVING PROFITABILITY.
In the event we are able to produce coal, we will be in competition for sale of
our coal with numerous large producers and hundreds of small producers who
operate globally. The markets in which we may seek to sell our coal are highly
competitive and are affected by factors beyond our control. There is no
assurance of demand for any coal we are able to produce, and the prices that we
may be able to obtain will depend primarily on global coal consumption patterns,
which in turn are affected by the demand for electricity, coal transportation
costs, environmental and other governmental regulations and orders,
technological developments and the availability and price of competing
alternative energy sources such as oil, natural gas, nuclear energy and
hydroelectric energy. In addition, during the mid-1970s and early 1980s, a
growing coal market and increased demand for coal attracted new investors to the
coal industry and spurred the development of new mines and added production
capacity throughout the industry. Although demand for coal has grown over the
recent past, the industry has since been faced with overcapacity, which in turn
has increased competition and lowered prevailing coal prices. Moreover, because
of greater competition for electricity and increased pressure from customers and
regulators to lower electricity prices, public utilities are lowering fuel costs
and requiring competitive prices on their purchases of coal. Accordingly, there
is no assurance that we will be able to produce coal at competitive prices or
that we will be able to sell any coal we produce for a profit. Our inability to
compete effectively in the global market for coal would cause our business to
fail.
OUR INABILITY TO DIVERSIFY OUR OPERATIONS MAY SUBJECT US TO ECONOMIC
FLUCTUATIONS WITHIN OUR INDUSTRY.
Our limited financial resources reduce the likelihood that we will be able to
diversify our operations. Our probable inability to diversify our activities
into more than one business area will subject us to economic fluctuations within
the coal industry and therefore increase the risks associated with our
operations.
THE INTERNATIONAL COAL INDUSTRY IS HIGHLY CYCLICAL, WHICH WILL SUBJECT US TO
FLUCTUATIONS IN PRICES FOR ANY COAL WE PRODUCE.
In the event we are able to produce coal, we will be exposed to swings in the
demand for coal, which will have an impact on the prices for our coal. The
demand for coal products and, thus, the financial condition and results of
operations of companies in the coal industry, including us, are generally
affected by macroeconomic fluctuations in the world economy and the domestic and
international demand for energy. In recent years, the price of coal has been at
historically high levels, but these price levels may not continue. Any material
decrease in demand for coal could have a material adverse effect on our
operations and profitability.
THE PRICE OF COAL IS DRIVEN BY THE GLOBAL MARKET. IT IS AFFECTED BY CHANGING
REQUIREMENTS OF CUSTOMERS BASED ON THEIR NEEDS AND THE PRICE OF ALTERNATIVE
SOURCES OF ENERGY SUCH AS NATURAL GAS AND OIL.
In the event that we are able to begin producing coal, our success will depend
upon maintaining a consistent margin on our coal sales to pay our costs of
mining and capital expenditures. We intend to seek to control our costs of
operations, but pressures by government policies and the price of substitutes
could drive the price of coal down to make it unprofitable for us. The price of
coal is controlled by the global market and we will be dependent on both
economic and government policies to maintain the price above our future cost
structure.
OPERATING A MINE HAS HAZARDOUS RISKS THAT CAN DELAY AND INCREASE THE COSTS OF
PRODUCTION.
Our mining operations, if any, will be subject to conditions that can impact the
safety of the workforce, or delay production and deliveries or increase the full
cost of mining. These conditions include fires and explosions from methane gas
or coal dust; accidental discharges; weather, flooding and natural disasters;
unexpected maintenance problems; key equipment failures; variations in coal seam
thickness; variations in the amount of rock and soil overlying the coal deposit;
21
variations in rock and other natural materials and variations in geologic
conditions. Despite our efforts, once operational, significant mine accidents
could occur and have a substantial impact.
OUR PLANNED MINING OPERATIONS ARE INHERENTLY SUBJECT TO CONDITIONS THAT COULD
AFFECT LEVELS OF PRODUCTION AND PRODUCTION COSTS AT PARTICULAR MINES FOR VARYING
LENGTHS OF TIME AND COULD REDUCE OUR PROFITABILITY.
Our planned coal mining operations are subject to conditions or events beyond
our control that could disrupt operations, affect production and increase the
cost of mining for varying lengths of time and negatively affect our
profitability. These conditions or events include, (i) unplanned equipment
failures, which could interrupt production and require us to expend significant
sums to repair our capital equipment that we would use to remove the soil that
overlies coal deposits; (ii) geological conditions, such as variations in the
quality of the coal produced from a particular seam, variations in the thickness
of coal seams and variations in the amounts of rock and other natural materials
that overlie the coal that we are mining; (iii) unexpected delays and
difficulties in acquiring, maintaining or renewing necessary permits or mining
or surface rights; (iv) unavailability of mining equipment and supplies and
increases in the price of mining equipment and supplies; (v) shortage of
qualified labor and a significant rise in labor costs; (vi) fluctuations in the
cost of industrial supplies, including steel-based supplies, natural gas, diesel
fuel and oil; (vii) unexpected or accidental surface subsidence from underground
mining; (viii) accidental mine water discharges, fires, explosions or similar
mining accidents; (ix) regulatory issues involving the plugging of and mining
through oil and gas wells that penetrate the coal seams we mine; and (x) adverse
weather conditions and natural disasters, such as heavy rains and flooding. If
any of these conditions or events occur in the future at any of our mining
properties, our cost of mining and any delay or halt of production either
permanently or for varying lengths of time could adversely affect our operating
results.
WE MAY HAVE RECLAMATION OBLIGATIONS AND IF WE ARE REQUIRED TO HONOR RECLAMATION
OBLIGATIONS THAT HAVE BEEN ASSUMED BY PREVIOUS MINE OPERATORS, WE COULD BE
REQUIRED TO EXPEND GREATER AMOUNTS THAN WE CURRENTLY ANTICIPATE, WHICH COULD
AFFECT OUR PROFITABILITY IN FUTURE PERIODS.
We are responsible under federal and state regulations for the ultimate
reclamation of the mines we operate. In some cases, the previous mine operators
have assumed these liabilities by contract and have posted bonds or have funded
escrows to secure their obligations. We estimate our future liabilities for
reclamation and other mine-closing costs from time to time based on a variety of
assumptions. If our assumptions are incorrect, we could be required in future
periods to spend more on reclamation and mine-closing activities than we
currently estimate, which could harm our profitability. Likewise, if previous
mine operators default on the unfunded portion of their contractual obligations
to pay for reclamation, we could be forced to make these expenditures ourselves
and the cost of reclamation could exceed any amount we might recover in
litigation, which would also increase our costs and reduce our profitability.
DEFECTS IN TITLE OR LOSS OF ANY LEASEHOLD INTERESTS IN OUR PROPERTIES COULD
LIMIT OUR ABILITY TO MINE THESE PROPERTIES OR RESULT IN SIGNIFICANT
UNANTICIPATED COSTS.
We plan to conduct some of our mining operations on properties that we lease. A
title defect or the loss of any lease could adversely affect our ability to mine
any associated reserves. Because title to most of our leased properties and
mineral rights is not usually verified until we make a commitment to develop a
property, which may not occur until after we have obtained necessary permits and
completed exploration of the property, our right to mine some of our reserves
may, in the future, be adversely affected if defects in title or boundaries
exist. In order to obtain leases or mining contracts to conduct our mining
operations on property where these defects exist, we may in the future have to
incur unanticipated costs. In addition, we may not be able to successfully
negotiate new leases or mining contracts for properties containing additional
reserves or maintain our leasehold interests in properties where we have not
commenced mining operations during the term of the lease.
THE COAL INDUSTRY COULD HAVE OVERCAPACITY WHICH WOULD AFFECT THE PRICE OF COAL
AND IN TURN, WOULD IMPACT OUR ABILITY TO REALIZE A PROFIT FROM FUTURE COAL
SALES.
Current prices of alternative fuels such as oil are at high levels, spurring
demand and investment in coal. This can lead to over investment and over
capacity in the sector, dropping the price of coal to unprofitable levels. Such
an occurrence would adversely affect our ability to commence mining operations
or to realize a profit from any future coal sales we may seek to make.
22
ENVIRONMENTAL PRESSURES COULD INCREASE AND ACCELERATE REQUIREMENTS FOR CLEANER
COAL OR COAL PROCESSING.
Environmental pressures could drive potential purchasers of coal to either push
the price of coal down in order to compete in the energy market or move to
alternative energy supplies therefore reducing demand for coal. Requirements to
have cleaner mining operations could lead to higher costs for us which could
hamper our ability to make future sales at a profitable level. Coal plants emit
carbon dioxide, sulfur and nitrate particles to the air. Various countries have
imposed cleaner air legislations in order to minimize those emissions. Some
technologies are available to do so, but also increase the price of energy
derived by coal. Such an increase will drive customers to make a choice on
whether or not to use coal as their driver for energy production.
EXPLORATION AND EXPLOITATION ACTIVITIES ARE SUBJECT TO COMPREHENSIVE REGULATION
WHICH MAY CAUSE SUBSTANTIAL DELAYS OR REQUIRE CAPITAL OUTLAYS IN EXCESS OF THOSE
ANTICIPATED CAUSING AN ADVERSE EFFECT ON OUR COMPANY.
Exploration and exploitation activities are subject to federal, state, and local
laws, regulations, and policies, including laws regulating the removal of
natural resources from the ground and the discharge of materials into the
environment. Exploration and exploitation activities are also subject to
federal, state, and local laws and regulations which seek to maintain health and
safety standards by regulating the design and use of drilling methods and
equipment.
Various permits from government bodies are required for drilling operations to
be conducted, and no assurance can be given that such permits will be received.
Environmental and other legal standards imposed by federal, state, or local
authorities may be changed and any such changes may prevent us from conducting
planned activities or increase our costs of doing so, which would have material
adverse effects on our business. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages which we may not be able
to or elect not to insure against due to prohibitive premium costs and other
reasons. Any laws, regulations, or policies of any government body or regulatory
agency may be changed, applied, or interpreted in a manner which will alter and
negatively affect our ability to carry on our business.
SEVERE WEATHER OR VIOLENT STORMS COULD MATERIALLY AFFECT OUR OPERATIONS DUE TO
DAMAGE OR DELAYS CAUSED BY SUCH WEATHER. Our exploration activities are subject
to normal seasonal weather conditions that often hamper and may temporarily
prevent exploration activities. There is a risk that unexpectedly harsh weather
or violent storms could affect areas where we conduct exploration activities.
Delays or damage caused by severe weather could materially affect our operations
or our financial position.
RISKS ASSOCIATED WITH OUR COMPANY
BECAUSE WE MAY NEVER EARN REVENUES FROM OUR OPERATIONS, OUR BUSINESS MAY FAIL
AND THEN INVESTORS MAY LOSE ALL OF THEIR INVESTMENT IN OUR COMPANY.
We have no history of revenues from operations. We have never had significant
operations and have no significant assets. We have yet to generate positive
earnings and there can be no assurance that we will ever operate profitably. Our
company has a limited operating history. If our business plan is not successful
and we are not able to operate profitably, then our stock may become worthless
and investors may lose all of their investment in our company.
We expect to incur significant losses into the foreseeable future. We recognize
that if we are unable to generate significant revenues from our properties, we
will not be able to earn profits or continue operations. There is no history
upon which to base any assumption as to the likelihood that we will prove
successful, and we can provide no assurance that we will generate any revenues
or ever achieve profitability. If we are unsuccessful in addressing these risks,
our business will fail and investors may lose all of their investment in our
company.
WE HAVE A HISTORY OF LOSSES AND HAVE NEGATIVE CASH FLOWS FROM OPERATIONS, WHICH
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have not generated any revenues since our incorporation and we will continue
to incur operating expenses without revenues until we are in commercial
deployment. To date we have had negative cash flows from operations and we have
23
been dependent on sales of our equity securities and debt financing to meet our
cash requirements and have incurred net losses from inception to March 31, 2011
of $(253,540). Our net cash used in operations for the three months ended March
31, 2011 was $(77,578). As of March 31, 2011, we had a working capital of
$(45,660). We do not expect positive cash flow from operations in the near term.
There is no assurance that actual cash requirements will not exceed our
estimates. In particular, additional capital may be required in the event that
drilling and completion costs increase beyond our expectations; or we encounter
greater costs associated with general and administrative expenses or offering
costs. The occurrence of any of the aforementioned events could adversely affect
our ability to meet our business plans. We cannot provide assurances that we
will be able to successfully execute our business plan. These circumstances
raise substantial doubt about our ability to continue as a going concern. If we
are unable to continue as a going concern, investors will likely lose all of
their investments in our company.
There is no assurance that we will operate profitably or will generate positive
cash flow in the future. In addition, our operating results in the future may be
subject to significant fluctuations due to many factors not within our control,
such as the unpredictability of when customers will purchase our coal, the size
of customers' purchases, the demand for our coal, and the level of competition
and general economic conditions. If we cannot generate positive cash flows in
the future, or raise sufficient financing to continue our normal operations,
then we may be forced to scale down or even close our operations.
IF WE DO NOT OBTAIN FINANCING WHEN NEEDED, OUR BUSINESS WILL FAIL.
As of March 31, 2011, we had $54,027 in cash and cash equivalents in our
accounts. We estimate that we will need approximately US$1,200,000 in working
capital to fund capital and operational costs with respect to our planned
exploration phase. We do not have any arrangements for additional financing and
we may not be able to obtain financing when required. Obtaining additional
financing would be subject to a number of factors, including the market prices
for our products, production costs, the availability of credit, prevailing
interest rates and the market price for our common stock.
We will depend almost exclusively on outside capital to pay for the continued
exploration and development of our properties. Such outside capital may include
the sale of additional stock and/or commercial borrowing. There is no guarantee
that sufficient capital will continue to be available to meet these continuing
development costs or that it will be on terms acceptable to us. The issuance of
additional equity securities by us would result in a significant dilution in the
equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.
If we are unable to obtain financing in the amounts and on terms deemed
acceptable to us, we may be unable to continue our business and as a result may
be required to scale back or cease operations for our business, the result of
which would be that our stockholders would lose some or all of their investment.
AS WE FACE INTENSE COMPETITION IN THE COAL EXPLORATION INDUSTRY, WE WILL HAVE TO
COMPETE WITH OUR COMPETITORS FOR FINANCING AND FOR QUALIFIED MANAGERIAL AND
TECHNICAL EMPLOYEES.
Our properties are in Wyoming and our competition there includes large,
established coal companies with substantial capabilities and with greater
financial and technical resources than we have. As a result of this competition,
we may have to compete for financing and be unable to acquire financing on terms
we consider acceptable. We may also have to compete with the other energy
companies in the recruitment and retention of qualified managerial and technical
employees. If we are unable to successfully compete for financing or qualified
employees, our exploration programs may be slowed down or suspended, which may
cause us to cease operations as a company.
WE MAY BE REQUIRED TO INCUR SIGNIFICANT COSTS AND REQUIRE SIGNIFICANT MANAGEMENT
RESOURCES TO EVALUATE OUR INTERNAL CONTROL OVER FINANCIAL REPORTING AS REQUIRED
UNDER SECTION 404 OF THE SARBANES-OXLEY ACT, AND ANY FAILURE TO COMPLY OR ANY
ADVERSE RESULT FROM SUCH EVALUATION MAY HAVE AN ADVERSE EFFECT ON OUR STOCK
PRICE.
As a smaller reporting company as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended, we are required to evaluate our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act of
2002 ("Section 404"). Section 404 requires us to include an internal control
report with our Annual Report on Form 10-K. This report must include
24
management's assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year. This report must also
include disclosure of any material weaknesses in internal control over financial
reporting that we have identified. Failure to comply, or any adverse results
from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the trading price of our equity
securities.
Achieving continued compliance with Section 404 may require us to incur
significant costs and expend significant time and management resources. We
cannot assure you that we will be able to fully comply with Section 404 or that,
we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at
fiscal year end. As a result, investors could lose confidence in our reported
financial information, which could have an adverse effect on the trading price
of our securities, as well as subject us to civil or criminal investigations and
penalties. In addition, our independent registered public accounting firm may
not agree with our management's assessment or conclude that our internal control
over financial reporting is operating effectively.
RISK RELATED TO AN INVESTMENT IN OUR SECURITIES
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like the NYSE. Accordingly, shareholders may
have difficulty reselling any of their shares.
OUR STOCK IS CATEGORIZED AS A PENNY STOCK. TRADING OF OUR STOCK MAY BE
RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A SHAREHOLDER'S
ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
25
FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A SHAREHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described above, the Financial Industry
Regulatory Authority ("FINRA") has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
TO DATE, WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID
IN THE FORESEEABLE FUTURE.
We do not anticipate paying cash dividends on our common stock in the
foreseeable future and we may not have sufficient funds legally available to pay
dividends. Even if the funds are legally available for distribution, we may
nevertheless decide not to pay any dividends. We presently intend to retain all
earnings for our operations.
THE ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES UNDER NEVADA LAW AND THE EXISTENCE OF INDEMNIFICATION RIGHTS TO OUR
DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN SUBSTANTIAL EXPENDITURES BY OUR
COMPANY AND MAY DISCOURAGE LAWSUITS AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES.
Our Articles of Incorporation contain a provision permitting us to eliminate the
personal liability of our directors to our company and shareholders for damages
for breach of fiduciary duty as a director or officer to the extent provided by
Nevada law. The foregoing indemnification obligations could result in the
Company incurring substantial expenditures to cover the cost of settlement or
damage awards against directors and officers, which we may be unable to recoup.
These provisions and resultant costs may also discourage our company from
bringing a lawsuit against directors and officers for breaches of their
fiduciary duties, and may similarly discourage the filing of derivative
litigation by our shareholders against our directors and officers even though
such actions, if successful, might otherwise benefit our company and
shareholders.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 11, 2011, the Company sold 666,667 shares of its common stock ("Shares")
to one investor in exchange for $500,000, or $0.75 per share as specified in the
subscription agreement ("Subscription Agreement"). In connection with the sale
of the Shares, the investor also received warrants to purchase six hundred
sixty-six thousand six hundred sixty-seven (666,667) shares of the Company's
common stock at a purchase price of $0.82 per share ("Warrants"). The Warrants
provide for an expiration period of two years from the date of the investment.
The foregoing description of the Subscription Agreement, Shares and Warrants is
not intended to be complete and is qualified in its entirety by reference to the
full text of the Subscription Agreement as attached hereto as Exhibit 10.1.
The Shares and Warrants were issued in reliance upon exemption from registration
under the Securities Act pursuant to Rule 506 of Regulation D. The Share and
Warrants were issued to an investor who is an "accredited investor," as such
term is defined in Rule 501(a) under the Securities Act, based upon
representation made by such investor.
ITEM 3. DEFAULTS
UPON SENIOR SECURITIES
None.
ITEM 4. [REMOVED AND RESERVED]
ITEM 5. OTHER INFORMATION
Effective May 2, 2011, the Company entered into that certain Second Amended
Agreement by and between the Company and Rocking Hard Investments, LLC, a Utah
limited liability company ("RHI") regarding the Company's coal project north of
26
Sheridan, Wyoming. The Second Amended Agreement combines and replaces in its
entirety that certain Amended Agreement by and between the Company and RHI and
that certain Royalty Agreement by and between the Company and RHI, both dated
May 20, 2010. The Second Amended Agreement revises exploration, development and
feasibility requirements to better fit with the projected timing of the State
permitting process. Minimum royalties were also more accurately defined in the
Second Amended Agreement. A copy of the Second Amended Agreement is attached
hereto as Exhibit 10.2.
ITEM 6. EXHIBITS
Exhibit No. Description
----------- -----------
(3) (I) ARTICLES OF INCORPORATION; AND (II) BY-LAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement on Form SB-2 originally filed on January
23, 2008).
3.2 By-laws (Incorporated by reference to our Registration Statement
on Form S1/A filed on February 27, 2008).
3.3 Articles of Merger (Incorporated by reference to our Current
Report on Form 8-K filed on March 29, 2010).
3.4 Certificate of Change (Incorporated by reference to our Current
Report on Form 8-K filed on March 29, 2010).
10.1* Form of Subscription Agreement
10.2* Second Amended Agreement by and between Liberty Coal Energy Corp.
and Rocking Hard Investments, LLC, dated May 2, 2010
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
(32) SECTION 1350 CERTIFICATIONS
32.1* Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
----------
* Filed herewith
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LIBERTY COAL ENERGY CORP.
Date: May 16, 2011 /s/ Edwin G. Morrow
---------------------------------------
EDWIN G. MORROW
President, Chief Executive Officer
and Director
Date: May 16, 2011 /s/ Robert T. Malasek
---------------------------------------
ROBERT T. MALASEK
Chief Financial Officer, Secretary
and Director
28
