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EX-32.2 - CERTIFICATION - First Liberty Power Corpex322.htm
EX-32.1 - CERTIFICATION - First Liberty Power Corpex321.htm
EX-31.2 - CERTIFICATION - First Liberty Power Corpex312.htm
EX-31.1 - CERTIFICATION - First Liberty Power Corpex311.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the fiscal year ended July 31, 2013
   
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
 
For the transition period from __________ to __________

000-52928
Commission File Number
 
FIRST LIBERTY POWER CORP.
(Exact name of registrant as specified in its charter)
   
Nevada
90-0748351
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
   
7251 W. Lake Mead Blvd, Suite 300, Las Vegas, NV
89128
(Address of principal executive offices)
(Zip Code)
 
(702) 675-8198
(Registrant’s  telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:
 
Title of each class
Name of each exchange on which registered
n/a
n/a

Securities registered pursuant to Section 12(g) of the Exchange Act:
 
Common Stock
Title of  class

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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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.

 
Yes
[   ]
No
[X]

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

Large accelerated filer
[   ]
Accelerated filer
[   ]
       
Non-accelerated filer
[   ]
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
[  ]
No
[X]

The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was approximately $1,502,073 (based on 37,551,834 shares held by non-affiliates and an April 30, 2012 closing market price of $0.04 per share) as of April 30, 2012, the last business day of the registrant’s most recently completed third quarter, assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.
 
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST 5 YEARS:

Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

 
Yes
[   ]
No
[   ]
 
APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 
523,048,941 shares of common stock issued and outstanding as of November 13, 2013
 

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g. Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes. 

 
None
 




   
Page
 
PART I
 
     
Business
  4
Risk Factors
  8
Unresolved Staff Comments
  8
Properties
  8
Legal Proceedings
  26
Mine Safety Disclosures
  26
     
 
PART II
 
     
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  27
Selected Financial Data
  30
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  30
Quantitative and Qualitative Disclosures About Market Risk
  34
Financial Statements and Supplementary Data
  34
     
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  35
Controls and Procedures
  35
Other Information
  37
     
 
PART III
 
     
Directors, Executive Officers and Corporate Governance
  38
Executive Compensation
  41
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  43
Certain Relationships and Related Transactions, and Director Independence
  44
Principal Accounting Fees and Services
  44
     
 
PART IV
 
     
Exhibits, Financial Statement Schedules
  45
     
    46



Forward Looking Statements

This Annual Report on Form 10-K (“Annual 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 in the section entitled "Risk Factors" and the risks set out below, any of which 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.

These risks include, by way of example and not in limitation:

·  
the uncertainty that we will not be able to successfully identify commercially viable resources on our exploration properties;
·  
risks related to the large number of established and well-financed entities that are actively competing for limited resources within the mineral property exploration field;
·  
risks related to the failure to successfully manage or achieve growth of our business if we are successful in identifying a viable mineral resource, and;
·  
other risks and uncertainties related to our business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements.  These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  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.

The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 are unavailable to us.

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.

As used in this Annual Report, the terms "we," "us," “Company,” "our" and "First Liberty" mean First Liberty Power Corp., unless otherwise indicated.

Corporate Information

The address of our principal executive office is 7251 W. Lake Mead Blvd, Suite 300, Las Vegas, Nevada, 89128.  Our telephone number is 702-675-8198.

Our common stock is quoted on the OTCQB under the symbol "FLPC".



We were incorporated in the State of Nevada under the name “Quuibus Technology, Inc.” on March 28, 2007, to engage in the business of developing and offering a server-based software product for the creation of wireless communities.  Due to an inability to commence viable operations in the software production industry, new management of the Company began to evaluate various business alternatives available to us.

In accordance with approval by the Board of Directors, effective December 22, 2009, the Nevada Secretary of State effected a forward stock split of our authorized and issued and outstanding shares of common stock on a one (1) old for 27 new basis, such that our authorized capital increased from 20,000,000 shares of common stock with par value of $0.001 to 540,000,000 shares of common stock with a par value of $0.001 and, correspondingly, our issued and outstanding shares of common stock increased from 2,525,000 shares of common stock to 68,175,000 shares of common stock.  Also, effective December 22, 2009, we changed our name from “Quuibus Technology, Inc.” to “First Liberty Power Corp.” by way of a merger with our wholly owned subsidiary First Liberty Power Corp. which was formed solely for the purpose of the change of name.  The change of name and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on February 4, 2010, under the new stock symbol “FLPC”.  The change of name was effected to better reflect the new business direction of our company.

On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of the Company to G8MI plus one hundred thousand dollars ($100,000) cash payment to G8MI.

As the Company and Group8 are considered as common controlled entities, the acquisition is a common control transaction. As a result of this, the accompanying consolidated financial statements have been retroactively combined since Group8’s inception, January 26, 2012.  The accompanying consolidated financial statements also include the operations of the Company, its 50% owned subsidiary Central Nevada Processing Co. LLC (CNPC) since May 31, 2012 and its 50% owned subsidiary Stockpile Reserves LLC (SRL) since May 22, 2012.   CNPC and SRL are both considered variable interest entities (VIE) for which the Company is the primary beneficiary. 

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

We are an exploration stage company engaged in the exploration of mineral properties.

On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property").
 
On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby the Company acquired 81% of the total issued and outstanding shares of Group8. Group8 holds a 50% interest in Central Nevada Processing Co. LLC (CNPC) and a 50% interest in Stockpile Reserves LLC (SRL).  As a result of the acquisition, the Company has an effective 40.5% interest in each of CNPC and SRL.   SRL is an Antimony mining company having a mineral property known as the Fencemaker mine, located in the Stillwater Range of west central Nevada, approximately 194 kilometers northeast of the city of Reno, Nevada, and more locally approximately 60 kilometers east-southeast of the town of Lovelock, and which consists of five unpatented contiguous mining claims that cover a total of 100.0 acres (40.47 hectares).  The Fencemaker Mine was established and first shipped antimony ore in the 1880s, with intermittent minor production continuing until the 1990's.
 

 
SRL recently completed a Phase 1 program of reverse circulation (RC) drilling that was initiated in July 2012 to test the down dip and strike extension of mineralization known to be present in the Fencemaker Mine. This program consisted of a total of 2350 feet (716 m) from thirteen (13) holes collared in the hanging wall of the structure.  Highest value recorded was 18.65% Sb (Stibnite or Antimony ore) from drill hole FM-02 at the 35 to 40 foot (10.7 to 12.2 m) interval below surface. High-grade mineralization exists to a depth of a minimum of 110 feet (33.5 m) below surface. A cut-off grade of 0.40% Sb was selected for an NI43-101 and SEC compliant Inferred Mineral Resource. That Inferred Mineral Resource is from five individual blocks totaling 34,125 short tons with an average grade of 2.92% Sb. Within this estimated total resource higher grade blocks, up to 10,500 tons of 4.17% Sb are present.
 
All necessary permitting has been established to commence mining operations, and the Fencemaker mine is expected to be in operation in 2013, subject to receiving additional funding from the Company.  Subsequent to the fiscal year end, on October 14, 2013, the first production blast occurred at Fencemaker, with additional blasting following through to the date of this report.
 
CNPC, with a property to be permitted for mineral processing in Lovelock, Nevada, will undertake the milling of the Stibnite (Antimony) ore extracted from the Fencemaker mine, and refine it to approximately 55 to 60% purity, at which point it will be sold at market price for grade.  This milling operation, again subject to additional funding from the Company and completion of permitting, is planned to be operational in the latter part of the first calendar quarter of 2014.
 
On November 6, 2012, we entered into a purchase agreement with GeoXplor Corp. (“San Juan Agreement”). Under this Agreement, we have been granted an exclusive five year exploration license in regards to a mineral property described in the San Juan Agreement. The property is comprised of 13 lode claims, totaling 260 acres (the "San Juan Property"), located within the Colorado Plateau near the Utah-Colorado border. A preliminary radon survey was completed on the San Juan Property in 2009 and it indicated an anomalous east-west radiometric trend. The sizes of the anomalies appear to be very similar to the size of the high grade vanadium-uranium beds mined from the nearby Firefly, Gray Daun and Vanadium Queen Mines. This channel system, which was already delineated by a previously completed radon survey, is part of the system that hosts the Pandora and Beaver Shaft mines - both of which are producing Uranium and Vanadium ore that is transported to and processed at the Dennison Mill located near Blanding Utah.

The claims identified in the Lithium and San Juan Agreements are situated on undeveloped raw land.  Exploration work has been undertaken on all of the claims, and we intend to undertake further exploration in the expectation of finding commercially viable deposits of Lithium brine, Vanadium and Uranium, respectively.  In respect to these exploration properties, exploration will continue to be our principal activity, until and if our minerals of interest are discovered in commercially viable quantities, which would then become our principal products, in association with other minerals being mined. For the Fencemaker Project and related milling operation, the Company, subject to completing its funding obligations, expects to be able to commence mining and milling operations through SRL and CNPC, initially on a trial scale, in the first and second calendar quarters of 2013.  Based on those results, we would anticipate being able to ramp up to the permitted capacity of 36,500 tonnes/year of ore.

Our exploration program will be exploratory in nature and there is no assurance that a commercially viable mineral deposit, a reserve, exists until further exploration, particularly drilling, is undertaken and a comprehensive evaluation concludes economic and legal feasibility. We have not yet generated or realized any revenues from our business operations.

In respect of the San Juan Agreement and Lithium Agreement with GeoXplor, the Company is in default on its obligations under the agreements.   Through to the fiscal year end and date of this report, the Company has not yet achieved a formal extension and settlement agreement.  However, the Company believes it will be possible to obtain such an agreement on terms acceptable to all parties.   Until such an agreement is reached, the value of the properties have been impaired to reflect the current status.

Should we be successful in raising sufficient funds in order to conduct our additional exploration programs, the full extent and cost of which is not presently known beyond that required by our proposed drilling program and mandatory work programs as noted below, and such exploration programs results in an indication that production of our minerals of interest is economically feasible, then at that point in time we would make a determination as to the best and most viable approach for mineral extraction.

As all of our minerals of interest are commodity products, they are expected to be readily saleable on an open market at then current prices, therefore we foresee no direct competition per se for the selling of our products, should we ever reach the production stage.  However, we would be competing with numerous other companies in the region, in the state of Nevada, in the country, and globally, for the equipment, manpower, geological expertise, and capital, required to fund, explore, develop, extract, and distribute such minerals.

Our mineral exploration programs are subject to State and Federal regulations, which sets forth rules for: locating claims, posting claims, working claims and reporting work performed. We are also subject to rules on how and where we can explore for minerals. We must comply with these laws to operate our business. Compliance with these rules and regulations will not adversely affect our operations.  We are also subject to the numerous laws for the environmental protection of forests, lakes and rivers, fisheries, wild life etc. These codes deal with environmental matters relating to the exploration and development of mining properties. We are responsible to provide a safe working environment, not disrupt archaeological sites, and conduct our activities to prevent unnecessary damage to the property.

We will secure all necessary permits for exploration and, if development is warranted on the properties, will file final plans of operation before we start any mining operations. We anticipate no discharge of water into active stream, creek, river, lake or any other body of water regulated by environmental law or regulation. No endangered species will be disturbed. Restoration of the disturbed land will be completed according to law. All holes, pits and shafts will be sealed upon abandonment of the property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and know what that will involve from an environmental standpoint.  We are in compliance with all regulations at present and will continue to comply in the future. We believe that compliance with these regulations will not adversely affect our business operations in the future.

We intend to subcontract exploration work out to third parties, which are identified below in our more detailed discussions.  We intend to use the services of subcontractors for manual labor and mining work.

Employees

We have not entered into employment agreements with the officers or directors of the Company.

However, in order to undertake the administrative and management operations of the Company, the Company has entered into consulting agreements to provide required services to the Company, with the particulars as follows.

·  
On March 1, 2010, the Company entered into a consulting agreement with Mr. John Rud, wherein Mr. Rud has agreed to provide, among other things, consulting services to the Company for a period of 12 months.  By mutual consent, this agreement was extended for an additional year under the same terms and conditions.  Mr. Rud resigned as a director in November 2011, and his agreement has ended.
·  
On May 3, 2010, we entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak has agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continued to March 24, 2012. Mr. Hoak resigned as a director in March 2012, and his agreement has ended
·  
On December 4, 2009, Mr. Glynn Garner was appointed President, Secretary, Treasurer, and a member of the board of directors of the Company.  Mr. Garner did not enter into any formal employment or consulting agreement at the time.  Mr. Garner resigned all of his officer and director positions on December 28, 2010, effective January 1, 2011.
·  
On November 29, 2010, Mr. Don Nicholson was appointed as a member of the board of directors of the Company, and on December 28, 2010, effective January 1, 2011; Mr. Nicholson was appointed Chief Executive Officer, President, and Secretary-Treasurer. The services of Mr. Nicholson are provided to the Company through an agreement with LTV International Holdings Ltd., for which company Mr. Nicholson provides consulting service, as entered into on July 2, 2011, effective November 15, 2010.  On December 1, 2012, the Company entered into a new consulting agreement with LTV to provide management services to the Company over a one year period.
·  
Effective April 1, 2012, we entered into a consulting agreement with Robert B. Reynolds Jr., wherein Mr. Reynolds has agreed to provide, among other things, consulting services to the Company for a period of 12 months. On December 1, 2012, the Company entered into a new consulting agreement with Mr. Reynolds for services associated with performing duties of being a director of the Company over a one year period.
·  
On December 1, 2012, the Company entered into a consulting agreement with Mario Beckles for services associated with performing duties of being a chief financial officer of the Company over a one year period.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K. and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding reporting companies.


As a “smaller reporting company”, we are not required to provide the information required by this Item.


None.


Executive Offices

The address of our principal executive office is 7251 W. Lake Mead Blvd, Suite 300, Las Vegas, Nevada, 89128.  Our telephone number is 702-675-8198.

Fencemaker Property

Claims
 
On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby the Company acquired 81% of the total issued and outstanding shares of Group8. Group8 holds a 50% interest in Central Nevada Processing Co. LLC (CNPC) and a 50% interest in Stockpile Reserves LLC (SRL).  As a result of the acquisition, the Company has an effective 40.5% interest in each of CNPC and SRL.   SRL is an Antimony mining company having a mineral property known as the Fencemaker mine, located in the Stillwater Range of west central Nevada, approximately 194 kilometers northeast of the city of Reno, Nevada, and more locally approximately 60 kilometers east-southeast of the town of Lovelock.  On March 14, 2009 Stockpile acquired a five (5) year Mining Lease from Silver Bell Mining & Developing, Inc., a Nevada Corporation, which agreement was extended for a further five (5) years in 2013.  It includes five unpatented contiguous mining claims that cover a total of 100.0 acres (40.47 hectares). The position of the property is Latitude 40° 04’20.03"N, Longitude 117° 51'36.25" W. All of the claims are in sections 31, Township 26 and section 6, Township 25 North, both in Range 37 East (T26N, R37E; T25, R37E); Mount Diablo Base and Meridian (MDB&M) + (Mine Area) of Pershing County, Nevada.
 

Concession
Name
Certificate
Number
Owner
Area (acres)
Staking Date
Annual Expiration Date
Fencemaker 1
2696391
Silver Bell Mining & Developing, Inc. (100%)
20.0
May 3, 1983
September 1, 2014
Fencemaker B
269640
Silver Bell Mining & Developing, Inc. (100%)
20.0
May 4, 1983
September 1, 2014
Fencemaker C
269641
Silver Bell Mining & Developing, Inc. (100%)
20.0
May 4, 1983
September 1, 2014
Fencemaker D
269642
Silver Bell Mining & Developing, Inc. (100%)
20.0
May 4, 1983
September 1, 2014
Fencemaker E
269643
Silver Bell Mining & Developing, Inc. (100%)
20.0
May 4, 1983
September 1, 2014
TOTAL
5 concessions
 
100.00
   
Under the Fencemaker Agreement, the Company is required to:

(1)  
Issue to G8MI a total of 83,000,000 shares of its Common Stock, which stock has been issued.
(2)  
Deliver to G8MI cash payments of $100,000, which payments have been completed.
(3)  
Further, the Company is required to undertake certain loan payments to G8 Minerals aggregating a total of $2,000,000 for associated property payments and exploration costs as follows: (a) $500,000 on or before October 30, 2012; (b) $500,000 on or before December 31, 2012; (c) $500,000 on or before February 28, 2013; and (d) $500,000 on or before April 30, 2013.    The loan payments are presently in arrears, however G8MI has not undertaken to issue any default notice, and the Company does not expect it will do so.

 

Conditions for Transfer of Title and Subsequent Limitations

 
(1)
At such time as the First Liberty has completed the required loan payments, the terms of the Agreement will have been fulfilled and the Company’s interest will be fully secured.

Fencemaker Claims, Pershing County, NV

Location and Access
 
The Fencemaker Project is located approximately 194 kilometers northeast of the city of Reno, Nevada, and more locally approximately 60 kilometers east-southeast of the town of Lovelock, in the west central part of the state of Nevada, southwestern United States. The five (5) mining claims total 100 acres (40.47 hectares), and are referred to in general as the Fencemaker Mine. They are situated in the center of Table Mountain, northeastern Stillwater Range, Pershing County, State of Nevada. The approximate position of the property is Latitude 40° 04’20.03"N, Longitude 117° 51'36.25" W. All of the claims are in sections 31, Township 26 and section 6, Township 25 North, both in Range 37 East (T26N, R37E; T25, R37E); Mount Diablo Base and Meridian (MDB&M) + (Mine Area) Pershing County, Nevada (Figures 1, 2, 3 and 4). These certificates are duly recorded in book 146 at the Pershing County, Nevada Recorder’s Office and the B.L.M. Winnemucca, NV, Notice N82695. The sorting/processing plant is located at Section 32, Township 28 N, Range 32 E, Pershing County and covers 111.8 acres (45.24 hectares).
 
Access to the Fencemaker Project is by paved two-lane Hwy. 80 north-northeast from Lovelock for a distance of 10 kilometers, and then turning east onto East Coal Canyon Road and tertiary roads for an additional 61 kilometers to the Fencemaker minesite. The sorting/processing plant is on the west side of Hwy. 80 at the turnoff to East Coal Canyon Road.
 

 
Regional & Property Geology
 
Regional geology is shown below. The Fencemaker property lies in the westcentral part of the Great Basin, which in turn is part of the Basin and Range Physiographic Province. The Great Basin is characterized by northnortheast trending mountain ranges separated by wide flat valleys. In this part of Nevada, the ranges are generally made up of Mesozoic and Tertiary volcanic and sedimentary rocks. The Great Basin is characterized by internal drainage and a long period of episodic magmatism.
 
Paleozoic rocks of the Great Basin are primarily sedimentary rocks deposited along a continental margin. The early Paleozoic was a relatively quiescent geological time in the Great Basin, with slow eastward advancement of the shoreline. The Antler Orogeny deformation began in the Devonian and lasted through the midMississippian. This orogeny caused uplift to the west, producing later waning of sedimentation. It imposed low angle regional scale tectonics, causing siliciclastic rocks to be thrust over the carbonate sequence. The Sonoma Orogeny of Permian/Triassic age again thrust Mesozoic age siliciclastic, turbidites, carbonates and volcanic rocks over the Antler assemblages of the eastern assemblage.
 
The Mesozoic sedimentary rocks have been classified into five major depositional groups of strata (Johnson, 1977). The basal Koipato Group is comprised of nonmarine volcanic and sedimentary rocks. Unconformably overlying this is the Star Peak Group, comprised of laterally interfingering limestones and dolostones. Overlying this is a thick sequence of clastic rocks, the Auld Lang Syne Group. The youngest Mesozoic unit is a pure quartzite referred to as the Boyer Ranch Formation.  Mesozoic plutonic rocks are of four ages: 1) Early Triassic leucogranites and intrusive rhyolite porphyry, 2) Jurassic granodiorite and gabbro; 3) early Late Cretaceous granodiorite, and; 4) Late Cretaceous granodiorite and quartz monzonite.
 
Cenozoic rocks in Pershing County consist of sedimentary and volcanic sequences, including andesite and basalt flows, tuffaceous sediments and minor tuff units. These widespread volcanic and volcaniclastic units were deposited over much of central and western Nevada. By mid Cenozoic time volcanic ash, ash flows and ash flow tuffs from numerous vent areas covered the preCenozoic age rocks. Following the extrusion of these large amounts of volcanic material, extensional tectonics caused collapse that formed the numerous circular calderas that occur across much of Nevada’s Great Basin. In the Quaternary, Lake Lahontan, a large fresh water lake, was formed and covered most of central and western Nevada. Walker Lake, Pyramid Lake and several smaller lakes all exhibit internal drainage and are all that remain of the widespread Lake Lahontan (Wilson, S.E., 2010).
 
The compressional Laramide Orogeny (including Sonoma) occurred from Late Mesozoic (Cretaceous) to Early Cenozoic. By the Oligocene (mid-Cretaceous, approximately 30 ma) the major tectonic component had changed to extension and about 19 Ma the characteristic “basin and range” topography was formed. These extensional normal and listric faults bound most of the north to northeast trending ranges of the Great Basin and cut the major Antler and Laramide structures.
 
The property is situated in the center of the Table Mountain range, part of the much longer Stillwater Range of southwestern Pershing County. Permian to Early Triassic Koipato andesite flows and rhyolite tuffs and flows cap (are overthrust upon?) Late Triassic Dun Glen Formation dolomites of Auld Lang Syne Group (Burke and Silberling, 1973). Minor Tertiary sediments and tuffs may also be present. Cretaceous quartz monzonite and/or granodiorite in the immediate area may be the heat source for circulating hydrothermal metal-enriched fluids.
 
The Fencemaker project has not been mapped in any detail. The Mine is hosted in calcareous siltstone dolostone) of the Late Triassic Dun Glen Formation, part of the Auld Lang Syne Group. The host formation has experienced thermal metamorphism and recrystallization as shown by the coarsely crystalline marble near the mine portal. A diabase dike was reported nearby (Lawrence, 1963, pgs. 192, 193 as reported in Johnson, 1977, p. 94) but not observed during the site visit. A brief examination of the rock above the mine workings showed rusty/buff colored hematized rhyolite. Pervasive reddish brown weathering suggests andesite flows of Koipato Group. Alternately this alteration could occur along the limestone/volcanic contact.
 
The regional geology map (Figure 5) shows several major N-S and NNE-SSW high-angle structures in the area. These could be either high-angle imbricate faults or part of the listric and normal fault system related to extension. One or more of these probably acted as conduits for the movement of mineralizing fluids. The structure at the minesite follows an east to southeast (105o to 120o steeply south dipping (75o south-southwest) fault zone which also follows a narrow diabase dike.
 
 
 

 
 

 

Exploration
 
The recommended Phase 1 drill program was initiated on July 12, 2012 to test the strike and down-dip continuity of Sb mineralization known to be present at surface in the Fencemaker Mine. A total of thirteen (13) Reverse Circulation (RC) holes were drilled to a maximum depth of 235 feet (71.6 meters) below surface.
 
The drill program was supervised by Dr. Duncan Bain, P.Geo., who did the initial site visit and report in March 2012. The program was managed in the field by Mr. Kim Craig, a seasoned U.S. geologist with many years of experience working in Nevada.
 
Phase 1 drilling commenced on July 13 using a single Reverse Circulation drill supplied by National Exploration based in Elko, Nevada. The reverse circulation drill bores a hole 5 ½ inches (140 mm) in diameter.  Thirteen (13) holes totaling 2350 feet (716.28 m) were drilled to intersect the known mineralization downdip from known mineralization and to explore for extension of the mineralized zone along strike of the known mineralization. Locations of drill holes are presented in Table 2 and Figures 7. Sections are shown on Figures 8 to 14.  The holes were spotted with a global positioning system unit and the azimuths were set using a Brunton compass.  Water was delivered to the drill sites by a water truck from a well drilled 250 feet (80 m) to the west.
 
Sample was in the form of chips collected in sample bags taken by the drill crew under the supervision of the geologist Mr. Craig. Each sample contained chips from a 5 foot (~1.5 m) interval from beginning to end down each hole. Each sample was tagged at the drill by the drill core. These samples were delivered to a secure core site close to the drill. Here they were given new sample numbers by the geologist to maintain independence from the numbers given by the drill crew. The chips from each sample interval were examined by the geologist to look for Sb mineralization, both in the interval expected to contain continuation of the mineralization known at surface, and any new zones of potential Sb mineralization. The longest sample taken within any geological unit was 5 feet (1.5) meters.
 
Each sample from the drill weighed approximately 20 pounds (~10 kg). Sample material was reduced down by a splitter to approximately 3-4 pounds (1.5-2.0 kg). Following examination by the geologist the samples from each interval considered to contain Sb mineralization and two (2 X 5 feet) samples on either side of those intervals were put into plastic bag. Each five (5) foot (1.5 m) sample went into an individual bag with a numbered sample ticket on each bag. The corresponding sample number was written on the outside of the bag with a waterproof marker.  The remainder of each original sample was retained and stored in a secure site, available for re-sampling and additional examination.
 
DRILL HOLE #
COLLAR N
COLLAR E
COLLAR ELEVATION
AZIMUTH
DIP
DEPTH TOTAL
FAN
 
NAD27
NAD27
FT (m)
DEGREES
FROM HORIZONTAL
FT (m)
 
FM01
4435901
426777
5505(1678)
30
-40
200(61)
AA
FM02
4435900
426777
5505(1678)
30
-65
145(44)
AA
FM03
4445899.5
426777
5505(1678)
30
-90
145(44)
A
FM04
4435900
426779
5505(1678)
70
-40
125(38)
AC
FM05
4435899.5
426778.5
5505(1678)
70
-65
125(38)
AC
FM06
4435900
426775
5505(1678)
350
-40
40(12)
AB
FM07
4435899.5
426775.5
5505(1678)
350
-65
105(32)
AB
FM08
4435869
426837
5521(1683)
27
-50
145(44)
B
FM09
4435867.5
426836.5
5521(1683)
27
-90
105(32)
B
FM10
4435936
426692
5478(1678)
105
-80
200(61)
Well
FM11
4435900
426742
5498(1676)
27
-65
325(99)
C
FM12
4435903
426745
5498(1678)
61
-45
345(105)
D
FM13
4435905
426742
5498 (1678)
15
-35
345(105)
E
           
Total
2350 (716)
               
   
Drilling to confirm continuity of Sb mineralization was successful.


 Drillhole Samples and Assay Results
 
 
 
 
 
SAMPLING METHODS AND APPROACH
 
Drill chip sampling was supervised by the Mr. Craig, the geologist on site. As the drilling was performed using a Reverse Circulation machine no core was extracted. Instead rock chips were produced and collected by the drill crew. A sample of chips was taken of 5 foot (1.5 m) sections from top to bottom of hole. Each sample was examined by the geologist on site, and a brief drill log was made. From this information the geologist selected samples which he considered likely to contain antimony mineralization, in the form of stibnite. The sample numbering 1 to 195 was for the first examination of sample material from all holes. Assay results led to a review of samples to test intervals that appeared to contain mineralization not recognized in the initial examination. This led to additional samples being selected, and are labeled 1a to 80a. All samples were split and reduced down to a sample 1 to 2 pounds (0.5 to 1.0 kg) in weight. Each of these samples was placed in a plastic bag with an identifying numbered sample tag and the bag was tied shut. The sample number was also written on the outside of the plastic sample bag and the samples were placed in larger bags not exceeding 20 kilograms in weight for transport to the laboratory. The sample number was also entered into the geologic log at the appropriate down hole interval. A total of 195 samples of 5 foot (1.5 m) intervals were sampled and samples were submitted to the laboratory for assaying.
 
Two duplicate samples were submitted to the same lab to check for nugget effect. To check the lab accuracy every 20th sample submitted was a blank sample. Blanks consisted of samples taken from an outcrop of massive siltstone located approximately five kilometres to the west. Standards were also analyzed. Only five (5) standards were submitted as the availability of standards of high-grade Sb are very rare.
 
Samples were delivered by one of the company’s representatives to a globally recognized ISO certified laboratory (ALS-Chemex Labs) in Reno for assaying. All samples were of rock chips and weighed an average of one to kilogram.
 
SAMPLE PREPARATION, ANALYSES AND SECURITY
 
Samples were taken by the author, with a label placed inside each bag. Samples were then sealed and the sample number was written ofn the outside of each bag. They were transported to Reno, where they were shipped by courier to the ALS Group Sample Preparation office in Reno. Assay results were requested to be sent only to the author. Sample and analysis methods are described below:
 
PREP-31B
 
The sample is logged in the tracking system, weighed, dried and finely crushed to better than 70 % passing a 2 mm (Tyler 9 mesh, US Std. No.10) screen. A split of up to 1000 g is taken and pulverized to better than 85 % passing a 75 micron (Tyler 200 mesh) screen. This method is appropriate for rock chip or drill samples.

ME-ICP41
 
The sample is digested in a mixture of nitric, perchloric and hydrofluoric acids. Perchloric acid is added to assist oxidation of the sample and to reduce the possibility of mechanical loss of sample as the solution is evaporated to moist salts. Elements are determined by inductively coupled plasma – atomic emission spectroscopy (ICP-AES). Four acid digestions are able to dissolve most minerals; however, although the term “near complete” is used, depending on the sample matrix, not all elements are quantitatively extracted.
 
Au-AA23
 
Samples were tested for low grade but anomalous Au with this method. This consisted of Fire Assay with an Atomic Absorption finish of a 30 g sample.
 
Sb-AA08
 
Ore grade sample were re-analyzed for Sb using this method. This involved a more complete 4 acid leach and Atomic Absorption analysis.
 
All pulps have been retained by the lab on an ongoing basis. Rejects were discarded.
 
Lida Valley Property

A) Lithium Agreement:

Claims

On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). These requirements apply to both the Lida Valley Property and the Smokey Valley Property, and the Work Program requirements may be allocated to the respective properties at the discretion of the Company.  The Lida Valley Property encompasses claims previously included in agreements between the Company and GeoXplor, specifically the Purchase agreement between the Company and GeoXplor dated December 24, 2009.  This Agreement supersedes and replaces all prior agreements in respect to those claims.

Under the Lithium Agreement, the Company is required to:

Make Cash Payments - First Liberty shall pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $725,000, according to the following schedule:

 
(1)  
Twenty-Five Thousand Dollars ($25,000.00) within 5 days of the execution of this agreement, which amount was paid during the year ended July 31, 2012;

 
(2)
One-hundred Thousand Dollars ($100,000.00) to GeoXplor on or before December 31, 2012, which amount remains outstanding as the date of this filing;

 
(3)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2013;

 
(4)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2014;

 
(5)
Two-hundred Thousand Dollars ($200,000.00) to GeoXplor on or before December 31, 2015;

Stock Issuance – As additional consideration, the Purchase Price shall include the issuance of 2,000,000 Shares, subject to such conditions as may be imposed by the rules and regulations of the United States Securities and Exchange Commission, as follows:

 
(1)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2012, which amount remains outstanding as the date of this filing;

 
(2)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2013;

 
(3)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2014;

 
(4)
Five-hundred Thousand (500,000) Shares to GeoXplor on or before December 31, 2015;

Work Commitment – First Liberty shall expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work"). The Work shall be scheduled according to the following schedule:

 
(1)
One Hundred Thousand Dollars ($100,000.00) on or before November 15, 2012, which amount remains outstanding as of the date of this filing;

 
(2)
Four-hundred Thousand Dollars ($400,000.00) on or before December 31, 2012, which amount remains outstanding as of the date of this filing;

 
(3)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2013;

 
(4)
Five-hundred Thousand Dollars ($500,000.00) on or before December 31, 2014;

As of date of this report, the Company has expended approximately $80,000 towards the required work program. The Company is presently in negotiations for an amendment to the Lithium Agreement, which will adjust the stock and payment work requirements.

The Company is in default on its obligations under the agreements.   Through to the fiscal year end and date of this report, the Company has not yet achieved a formal extension and settlement agreement.  However, the Company believes it will be possible to obtain such an agreement on terms acceptable to all parties.   Until such an agreement is reached, the value of the properties under the Lithium Agreement have been impaired to reflect the current status.

        Conditions for Transfer of Title and Subsequent Limitations

 
(1)
At such time as the First Liberty has completed the required payments, work program and stock transfers, the Properties shall be transferred to First Liberty by Quitclaim Deed.

 
(2)
Concurrently with the transfer of title to First Liberty, First Liberty shall convey to GeoXplor a “Net Value Royalty” on production of lithium carbonate and other lithium minerals from the Properties measured by five percent (5%) of the gross proceeds received by the First Liberty from the sale or other disposition of lithium carbonate or other lithium compounds less (i) transportation of the product from the place of treatment to the purchaser, (ii) all handling and insurance charges associated with the transportation, and (iii) any taxes associated with the sale or disposition of the product (excluding any income taxes of First Liberty). First Liberty shall have the further right to purchase up to four percent (4%) of the Net Value Royalty, in whole percentage points, for One Million Dollars ($1,000,000) for each one percent (1%).

 
(3)
If First Liberty, its assignee or a joint venture including First Liberty, (i) delivers to its Board of Directors or applicable other management a feasibility study recommending mining of lithium carbonate or other lithium compound from the Properties and such Board of management authorizes implementation of a mining plan, or (ii) sells, options, assigns, disposes or otherwise alienates all or a portion of its interest in the Properties, First Liberty shall pay GeoXplor an additional bonus of Five Hundred Thousand Dollars ($500,000) in cash or Shares of First Liberty.  The election to obtain cash or shares of First Liberty shall be at the sole election of GeoXplor.

Lida Valley Claims, Esmeralda County, NV

Location and Access

The Lida Valley Property is located in South Western Nevada, approximately 150 miles north of Las Vegas and within 15 miles of the Montezuma peak. The project area has excellent infrastructure including a network of roads, railroads and cellular telephone coverage.

Regional & Property Geology

Lida Valley is one of a group of inter-mountain basins in west-central Nevada and is surrounded by Cuprite Hills to the Northwest, Stonewall Mountains to the East and Slate Ridge to the Southwest. It has a playa floor of about 12 square miles that receives surface drainage from an area of about 60 square miles. The playa floor contains erosion remnants of Lithium-rich rhyolite tuff and is surrounded by alluvial fan slopes of the mountain ranges. Altitudes range from 4,630 feet on the playa floor to 7,000 feet on the Stonewall Ridge.
 
The tertiary volcanic rocks are considered to be involved in the origin of the Lithium deposits in south-central Nevada. The volcanism that created the volcanic rocks also provided the heat energy and hydrothermal activity required to mobilize the Lithium from volcanic glass and other relatively unstable minerals. The Tertiary rhyolites from the Montezuma Range and surrounding mountain ranges are considered to be the most lithium rich rhyolites in the world, (MacDonald et. Al; 1992) Transport of the Lithium would require a hydrothermal fluid, surface water or meteoric groundwater. Evaporation concentrated the Lithium in the brine to economic grades which are considered to be in the 100 to 300 ppm range. The Lithium rich water would also alter the playa sediments to form Lithium-rich clays and Lithium rich inclusions in halite.

Exploration

In March of 2010, the Company commissioned a gravity survey on the Lida Valley Property, total cost of $85,287, undertaken by Hasbrouck Geophysics, Inc. of Prescott, Arizona, which report was completed in June 2010.  The gravity survey was conducted for lithium brine exploration over claims Lida Valley Property. The purpose of the survey was to map depth to bedrock or thickness of sediments, map any geologic structures that may be significant to the occurrence of lithium   brine, and provide information for the selection and design of additional geophysical surveys.

Interpretation of the modeled gravity data indicates several areas with increased bedrock depths or lower bedrock elevations. These areas may be conducive for concentration of lithium-bearing brines, but the presence, dip and continuity of aquifer beds plus the detailed mapping of any structures both within the sedimentary section and bedrock should be determined through high resolution geophysical means prior to drilling.

In order to further detail on the above gravity survey, a 2nd gravity survey was commissioned for a cost of $22,000, which was completed in August 2010.

Based on the positive indicators found from the two gravity survey reports, two geophysical approaches were recommended in areas selected from the gravity surveys: 1) controlled-source audiomagnetotellurics / magnetotellurics (CSAMT/MT) surveys, and 2) reflection seismic surveys. It was recommended that the CSAMT/MT surveys be conducted because they will determine if conductive zones, possibly indicative of lithium-bearing brines, are present and continuous. Additionally these surveys may help define aquifer dip.

Based on the above recommendation, the Company engaged GeoXplor, in association with Hasbrouck Geophysics, Inc., to undertake the CSAMT/MT surveys.  The work was completed and a report provided to the Company in February 2011, for a total cost of $112,500.  As with the previous two geophysical surveys conducted, the results were positive, and include having identified areas of potential lithium brine deposits. The mapping indicated a geologic stratigraphy and structure relative to the occurrence of lithium brine, and identified conductors that are thought to be representative of lithium-bearing brine, thus providing information for the selection and design of additional geophysical surveys or the identification of drilling locations.
 
 
 
Collectively, the three reports show several clear targets for further exploratory investigations. Drilling targets in both the southern end of the Property and in the northern area of the playa have been located based on the identification of several areas showing areas of low resistivity. The complete reports from Hasbrouck Geophysics from all exploration stages on the Property are currently available at the Company’s website, www.firstlibertystrategic.com.

Based on these results, in May 2011, the Company determined that the best and most efficient approach is to bypass seismic surveys, and proceed directly to a 3 – 5 hole drilling program, and therefore requested a work program estimate from GeoXplor, which has now been presented to the Company in October 2011.  The drill program, estimated at 3000m total, will target areas of significant Lithium brine potential identified by the Company's exploration program (i.e., areas marked by gravity lows and low resistivity) through certain initial holes followed by the remaining holes depending on first results. By penetrating the formations comprising the basin fill in the Lida Valley Property, the drill results will allow the Company to identify the concentration, if any, of Lithium and other constituents in the groundwater in these target zones. GeoXplor Corp., who will perform the drilling, estimates that each hole will require one week's time, with a budgeted cost of $343,000.

The Company is required to undertake a combined total of approximately $1,500,000 worth of work on the Lida Valley Property and Smokey Valley Property prior to December 2014.  The next steps for exploration, over the next year, are expected to be the drill program as indicated above.  If the results are positive for the drill program, we will base our next phase exploration program on those results, though we would expect additional drilling to be involved.

As of July 31, 2012 and to date, the exploration work undertaken has provided continued positive indications that additional exploration is warranted, but there are as of yet no known or proven reserves, and substantial additional exploration work must be undertaken on the Lida Valley Property in order to determine if a commercially viable reserve does exist.

At present, the Company does not have sufficient funds for the planned drill program, and would need to raise additional capital either through obtaining additional loans, or through the sale of its common stock.  While initial arrangements have been made to accomplish the raising of additional funds, and the Company expects to be able to raise the required funds for the next phases of the exploration program, our success in doing so cannot be assured.

Smokey Valley Claims, Esmeralda County, NV

Location and Access

The Smokey Valley Property is also located in South Western Nevada, approximately 170 miles north of Las Vegas and within 15 miles of the Montezuma peak, positioned North-West as opposed to South, as is the Lida Valley Property. The project area, off highway 265 approximately 5 miles from Silver Creek road, the location of the lithium producing Chemetall Foote project, has excellent infrastructure including a network of paved roads, railroads and cellular telephone coverage.

Regional & Property Geology

The Smokey Valley Property, adjacent to Clayton Valley, is also located in one of a group of inter-mountain basins in west-central Nevada and is surrounded by Cuprite Hills to the Northwest, Stonewall Mountains to the East and Slate Ridge to the Southwest. It has a playa floor of an estimated 15 square miles that receives surface drainage from an area of about 140 square miles. The playa floor contains erosion remnants of Lithium-rich rhyolite tuff and is surrounded by alluvial fan slopes of the mountain ranges.
 
 
The tertiary volcanic rocks are considered to be involved in the origin of the Lithium deposits in south-central Nevada. The volcanism that created the volcanic rocks also provided the heat energy and hydrothermal activity required to mobilize the Lithium from volcanic glass and other relatively unstable minerals. The Tertiary rhyolites from the Montezuma Range and surrounding mountain ranges are considered to be the most lithium rich rhyolites in the world, (MacDonald et. Al; 1992) Transport of the Lithium would require a hydrothermal fluid, surface water or meteoric groundwater. Evaporation concentrated the Lithium in the brine to economic grades which are considered to be in the 100 to 300 ppm range. The Lithium rich water would also alter the playa sediments to form Lithium-rich clays and Lithium rich inclusions in halite.

Exploration

In the 1970’s USGS conducted a gravity survey covering Clayton Valley and the valley connecting Clayton Valley to Big Smoky where the Smokey Valley Property claims are located. The resulting maps show a relationship between the brine field in Clayton Valley and the deepest parts of the valley. The map also suggests that there is a height of bedrock between the Smokey Valley claims and Clayton Valley which may act as a barrier for water moving from Big Smokey Valley to Clayton Valley.  The USGS performed two exploratory drill holes in Big Smokey Valley, (not on Smokey Valley Property) as part of a program to evaluate the lithium resource potential of the basins adjacent to Clayton Valley. Hole BS13 was terminated to 675 feet, Lithium in sediments ranged from 48-365ppm averaging 160ppm, lithium in water ranged from 100-1,700ppb. Hole BS14 was terminated at 215 feet. Lithium in sediments ranged from 40-287ppm, averaging 150ppm, lithium in water ranged from 820-1300ppb.   These results were of indicative of the validity of additional work being performed on the Smoky Valley Property.

In February 2011, Hasbrouck Geophysics conducted a preliminary controlled source audio magnetotellurics / magnetotellurics (CSMAT/MT), the purpose of the survey was to determine if conductors that might be representative of lithium-bearing brine were present near a previously identified low value gravity anomaly.  This geophysical survey indicated the presence of predominant zones of lower resistivities, which are interpreted as salty, water-saturated sediments or highly fractured bedrock, of sufficient extent and depth to further warrant additional exploration activity.
 

In May 2012, First Liberty commissioned a Gravity Survey report at a cost of $74,000, which survey was completed by July 2012.

A total of 116 separate gravity stations were acquired along seven profiles, as shown in Figure 1, at nominal line and station spacings of one kilometer. The station locations were first located on a topographic map, uploaded to a hand-held Global Positioning System (GPS), and then staked in the field. Elevations of individual stations were acquired in the field with a Trimble GeoXH GPS unit and confirmed with elevations taken from USGS topographic maps. Because the survey was considered reconnaissance in nature, the generally better than one-half meter elevation accuracies of the stations were considered adequate.


From results of previous modeling conducted in the general area by the report author and other investigators, a density contrast between valley fill sediments and Paleozoic bedrock of 0.5 g/cm3 was chosen to best represent a two-layer case. All lines, except number 1, extended to outcrop at the beginning and/or ending stations and thus the depth to bedrock at those stations was considered as zero for modeling purposes. The middle of survey line number 1 was located near the base of the prominent cinder cone in the area with the idea that bedrock might be near the surface. The most accurate depth modeling results would require bedrock depths from drilling along the line(s) as constraints in the modeling. Since the survey was considered essentially reconnaissance, lines with identified bedrock outcrop at either or both ends were considered sufficiently accurate for the purposes of the survey.

There are two main factors that must be considered regarding target areas for lithium mineralization and concentration: 1) where is the source of the lithium, and 2) does a basin environment exist for the concentration of the lithium transported by meteoric water from the source In the Clayton Valley region it is thought that the source of the lithium is the dark gray lithium enriched rhyolite tuffs that outcrop near Montezuma Peak. Once lithium has been liberated into the water system it remains highly mobile and movement of the lithium with surface water and groundwater will follow basic hydrological principles. Hydrologic basins in Nevada consist of basin fill underlain by either low-permeability or permeable rock with water movement through the basin fill, permeable rock and along faults. Nothing more complex than a topographic low or closed basin is required to concentrate lithium-bearing water. For topographic lows with larger catchment areas there is a greater opportunity to accumulate lithium from wider sources. The water trapped in these lows may move through dipping aquifers until it reaches an impermeable barrier such as a fault scarp.

The complete Bouguer gravity map shown in Figure 2 is contoured from the total 116 stations, using Golden Software’s Surfer computer program (version 10.7.972), with a Bouguer slab density of 2.67 g/cm3. The bedrock depth map can be thought of as a thickness of sediments map, but because the surface elevation within the gravity survey area varies then the bedrock elevation map can often be more useful for identification of low bedrock areas.

If one reasonably assumes that lithium source material and transport mechanisms for this gravity survey area are present and similar to those that have supplied Clayton Valley lithium-bearing brines then areas with lower bedrock elevations (i.e., bedrock topographic lows) may be conducive to increased lithium-bearing brines concentration. Increased bedrock depth, or increased sedimentary thickness, and lower bedrock elevations that form a basin are present in the approximate middle of the survey area. This bedrock topographic low appears to be closed off to the south, but remains open to the north. The deepest portion of the bedrock low is modeled as about 1,850 meters below ground surface (bgs), or approximately -300 meters elevation, along line 7. Because no drilling results are available to those depths, the gravity modeling depths should be considered approximate. However, it is important that the gravity modeling results indicate the presence of a deep basin that extends over a large area particularly if an arbitrary depth of 600 meters is chosen to represent the boundaries of the basin. With such a large catchment area there is a greater opportunity to accumulate lithium from wider sources. On both the bedrock depth and elevation maps it appears that an additional small, closed basin at a depth of about 900 meters is present near the eastern one-third of line 3 (essentially centered between stations 313 and 314). Somewhat similarly, an anomalous area is present at about the western one-third of line 4 (near station 405) and also approximately three to four kilometers from the western beginning of line 7 (between about stations 705 and 706). These additional anomalous areas may or may not be related to the main bedrock topographic low. From these profiles (either A-A’ or BA’) it is apparent that significantly shallower bedrock is located at the southern end of the geophysically surveyed area, while the bedrock continues to deepen to the northern extent of the survey area.

Based on the interpretation of the modeled gravity data indicates a large topographic low, or basin, that appears to be closed off to the south but remains open to the north. This extensive basin area may be favorable for the accumulation of lithium-bearing brines, but additional investigations need to be conducted. Additional geophysical surveys will further determine the structure of the basin identified in this survey, and map the presence, dip and continuity of conductive zones within the basin.

Recommended additional geophysical surveys prior to drilling are: 1) extend the gravity survey along line 1 to the west and east and add one additional line one kilometer south of line 1 to better define the indicated southern basin closure, 2) acquire additional gravity data along at least two lines to the north, separated by one kilometer each, to determine if the basin closes in that direction, and 3) conduct controlled-source audio-magnetotellurics / magnetotellurics (CSAMT / MT) surveys in selected areas from the gravity survey(s) to determine if conductive zones, possibly indicative of lithium-bearing brines, are present and if so then to map the dip and continuity of those aquifer beds. It is estimated that to satisfy items number 1 and 2 above that approximately 60 additional gravity stations will be required. It is anticipated that nominally 100 CSAMT / MT stations will be sufficient to satisfy item number 3 above. After additional gravity data and new CSAMT / MT data are acquired, processed and interpreted then either reflection seismic surveys or drilling can be conducted. The reflection seismic surveys will detail any possible lithium-bearing brines beds (e.g., similar to the Main Ash and Lower Gravel Aquifers, amongst others, in Clayton Valley) and will map structure in greater detail than the other geophysical techniques.

At present, the Company does not have sufficient funds for the planned additional exploration program, and would need to raise additional capital either through obtaining additional loans, or through the sale of its common stock.  While initial arrangements have been made to accomplish the raising of additional funds, and the Company expects to be able to raise the required funds for the next phases of the exploration program, our success in doing so cannot be assured.

B) Uravan Claims, San Juan Country, Utah (“Van-Ur Property”)

On November 6, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Agreement”). Under this Agreement, we have been granted an exclusive five year exploration license in regards to a mineral property described in the Agreement. The mineral property encompasses 13 lode claims (260 acres) located in the Canyon Country District, San Juan County, Utah for Vanadium and Uranium exploration (the "San Juan Property").  Pursuant to the Agreement, upon the completion of the required payments and work commitments, GeoXplor shall transfer title to the San Juan Property to the Company and shall retain a 3% royalty, on which we shall have the option to purchase up to 2%, for $1,000,000 per 1%.

We are required to (1) make cash payments of $500,000 over a five year period; (2) issue a total of 3,000,000 restricted shares of common stock over a five year period; and (3) comply with a work commitment of $1,000,000 within three years.

The San Juan Property encompasses certain claims previously included in agreements between the Company and GeoXplor, and this Agreement supersedes and replaces all prior agreements in respect to those claims.

The Company is in default on its obligations under the Agreement.   Through to the fiscal year end and date of this report, the Company has not yet achieved a formal extension and settlement agreement.  However, the Company believes it will be possible to obtain such an agreement on terms acceptable to all parties.

Location and Access

The Uravan Property is located in the northeast corner of San Juan County approximately 40 miles southeast of Moab, Utah. The area is sparsely populated with a small village of La Sal, Utah, about 10 miles west of the claim block. Utah Highway 46, an all-weather paved road provides access to the southern region of the mineral claims. A network of forest roads, drill access roads and jeep trails make most of the claim block accessible year round.

The climate of San Juan County is semi-arid with minor precipitation. The average annual precipitation is 12.83 inches with an average snowfall of 44.5 inches. The snowfalls during November to May occasionally reach 15 inches or more. The Uravan Property is located in the high desert ecosystem with erosional landscape exposing the sandstone formations. Deep canyons with canyon walls composed of alternating erosion-resistant benches and highly erodible slopes, and broad flat benches are the predominant landscape features. Vegetation consists of greasewood, salt bush, rabbit bush with willows and cottonwood in the drainage area.

Regional & Property Geology

The Uravan Mineral claims are located within the Colorado Plateau near the Utah-Colorado border. The Colorado Plateau is a broad area of regional uplift consisting mainly of flat-lying Paleozoic, Mesozoic and Cenozoic sedimentary rocks. The strata is gently folded and faulted by uplift, intrusion and collapse of plastic evaporite formations on the east and by intrusion of laccolithic complexes now composing the La Sal Mountains on the west.

The uranium-vanadium deposits in the La Sal quadrangle occur in the uppermost sandstone of the Salt Wash Member of the Morrison Formation. The ore bearing sandstone range in thickness from a few feet to 100 feet. The sandstone is a medium to fine grained quartzose interbedded with siltstone and mudstone. Near the uranium-vanadium mineralization, the sandstone is white, light gray or light brown, and the siltstone and mudstone are usually light green or gray green.

The uranium-vanadium deposits mined in the nearby producing mines occur in the uppermost sandstone beds within the Salt Wash member of the Morrison Formation. This unit is commonly called the ore-bearing sandstone or third rim in reference to its position above the Entrada Sandstone.

The ore-bearing sandstone is composed of a single broad lens of cross-laminated sandstone ranging from 0 to 30 feet in thickness. In other areas it is composed of overlapping sandstone lenses which have a combined thickness of 30 to 100 feet. The cross-laminated sandstone appears to have been deposited in a flood-plain environment. Scour and fill bedding consisting of cross-bedded sandstone lenses truncated by and direct contact with other truncated lenses separated by thin discontinuous mudstone lenses or mudstone conglomerate. Fragments of fossil wood are abundant in the scour and fill beds and occur either along the bedding planes or in pot like masses called “trash pockets”.

Exploration

A radon survey was completed on the Uravan Mineral Claims during September, 2009. The theory of radon soil surveys is based on the element radon which is a radioactive daughter product of uranium decay. Radon is produced by the radioactive decay of radium, a product of uranium and thorium decay in rocks and soils. Theoretically, radon-222 concentrations in soil should be directly related to the uranium content of the minerals in the soil and rocks. Radon is a daughter product of uranium-238 and a non-reactive, highly mobile gas that migrates away from the site of its uranium parent by diffusion and advection along joints, faults, and intergranular permeable pathways.

The magnitude of a radon anomaly associated with a parent concentration of uranium will be due to the size and grade of the parent body. Dispersion and dilution along the pathways to the surface increase the size of the radon footprint but also reduce the magnitude. The location of the anomaly relative to the uranium body will be strongly influenced by the orientation of the pathways to the surface.

The radon survey uses a system that measures the radon by utilizing an ion chamber with a electrically charged Teflon, called an electret, located inside an electrically conducting plastic chamber of known air volume. The electrets serve as a source of high voltage needed for the chamber to operate as an ion chamber. It also serves as a sensor for the measurement of ionization in air. The ions produced inside the sensitive volume of the chamber are collected by the electrets causing a depletion of charge. The measurement of the depleted charge during the exposure period is a measure of integrated ionization during the measurement period. The electrets charge is read before and after the exposure using a specially built non-contact electret voltage reader.

The Uravan mineral claims radon survey consisted of 101 readings with a minimum reading of 0.35 and a maximum reading of 27.75. The median reading was 6.75 with a midrange of 14.05. The grid results were then contoured and presented in the attached report. Proposed drill locations have also been located and presented on the following map.

The preliminary radon survey data indicates an anomalous east-west radiometric trend. The size of the anomalies appears to be similar to the size of the high grade vanadium-uranium beds mined from the Firefly, Gray Daun and Vanadium Queen Mine. A detailed radon survey would define drill targets and thereby, delineate tonnage and grade within the Uravan Claim Block.

Data compiled from mining activity and regional studies indicates ground considered favorable for Vanadium-Uranium mineralization has the following features:

•  
Sandstone beds over 30 feet in thickness with a light brown to light gray color with a medium to fine grain size.
•  
The sandstone contains carbonaceous material and a gray or grayish-green mudstone.
•  
The beds contain mudstone as a film, pebbles or seams.
•  
The sandstone is overlain by gray, greenish-gray or green mudstone

As of July 31, 2013, the exploration conducted to date has provided positive indications that additional exploration is warranted, but there are no known or proven reserves, and substantial additional exploration work must be undertaken on the Van-Ur Property.

As the Company is no longer in possession of this property as at July 31, 2013, the provided data is for historical reference only.

 

We know of no material, active or pending legal proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us.


None.


PART II


Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information

Our Common Stock is traded on the over-the-counter market and quoted on the OTCBB under the symbol “FLPC”

The table below sets forth the range of high and low bid information for our Common Shares as quoted on the OTCBB for each of the quarters during the two fiscal years ended July 31, 2013:

For the Quarter ended
 
High
   
Low
 
October 31, 2011
  $ 0.10     $ 0.04  
January 31, 2012
  $ 0.08     $ 0.07  
April 30, 2012
  $ 0.05     $ 0.04  
July 31, 2012
  $ 0.05     $ 0.03  
October 31, 2012
  $ 0.03     $ 0.03  
January 31, 2013
  $ 0.01     $ 0.01  
April 30, 2013
  $ 0.01     $ 0.01  
July 31, 2013
  $ 0.01     $ 0.01  

The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders of our Common Stock

On November 13, 2013, the shareholders’ list of our common stock showed 18 registered shareholders and 523,048,941 shares outstanding.

Dividend Policy

We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock.  Our future dividend policy will be determined from time to time by our Board of Directors.

Securities Authorized for Issuance under Equity Compensation Plans

As of July 31, 2013, we had not adopted an equity compensation plan and had not granted any stock options.

Recent Sales of Unregistered Securities

On August 9, 2011, the Company signed a confidential term sheet in respect to the creation of a $3,000,000 Equity Line financing structure.  Pursuant to the term sheet, the Company paid a document preparation fee of $7,500, and issued a total of 136,364 shares valued at $15,000.  As of April 30, 2012, the Company has determined that it will not be proceeding with this transaction, and has expensed all costs accordingly.

On January 11, 2012, the Company entered into a 13 month agreement with an unrelated third party for the provision of non-exclusive financial advisor, investment bank and placement agent services to the Company.  Pursuant to this agreement, the Company was required to issue 350,000 shares, which were issued in January 2012, and valued at $24,675 of which $12,390 has been expensed during the fiscal year ended July 31, 2012, and leaving a prepaid expense balance of $12,285.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of these 136,364 and 350,000 shares, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

According to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, 250,000 shares valued at $16,250, were issuable on the second anniversary of the Agreement, December 24 2011, which shares were issued in January 2012.

Further to the Company’s Lithium Agreement with GeoXplor, detailed in Note 3 – Mineral Properties above, a cash payment of $100,000 was required on December 15, 2011. On January 6, 2012, effective December 15, 2011, GeoXplor agreed to defer the payment until March 15, 2012, in exchange for the issuance of 500,000 compensation shares (issued January 2012 valued at $37,450), and the further issuance of 500,000 shares (issued in January 2012 valued at $28,500) to be held by GeoXplor as security against the Payment. Upon fulfilling the Payment obligations within the extension, these security shares are to be returned to the Company for cancellation.  If the Company does not complete in full the Payment obligation before March 15, 2012, such shares may be sold by GeoXplor with the proceeds applied towards any remaining amounts owing.   If there are proceeds in excess of the amounts owing, the excess shall be applied as a pre-payment towards exploration work obligations under the Lithium Agreement. According to an agreement between GeoXplor and the Company signed subsequent to the end of the period (May 31, 2012), effective as of March 15, 2012, all rights and obligations under the original agreement were replaced by those in the new agreement. The additional 500,000 shares, issued in January 2012 valued at $28,500, were agreed to be retained by GeoXplor as compensation and revalued at the effective date of the new agreement, March 15, 2012, for a value of $26,250.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of these 1,250,000 shares to GeoXplor, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

On December 24, 2009, the Company borrowed $200,000 from an unrelated third party under a promissory note. The loan was unsecured, bore interest at 10 percent per annum, and was due and payable on or before December 23, 2010. On February 1, 2010, the Company borrowed an additional $50,000 from the same third party lender, which amount was also unsecured, bore interest at 10 percent per annum, and was due on or before February 1, 2011. On December 23, 2010, the Company and the lender agreed to consolidate the principal amounts, as of December 24, 2010, into a single consolidated loan. The new consolidated loan is in the amount of $250,000 and is unsecured, bears interest at 10 percent per annum, and is due on or before December 23, 2011. On December 23, 2011, the combined principal and interest of the note amounted to $301,973. On January 9, 2012, effective December 23, 2011, the Company and the Lender agreed to convert the entire $301,973 principal and interest, based on the average closing price of the Borrower’s shares for the 10 trading days prior and up to the effective date of the conversion agreement, into restricted common stock of the Company.  The resultant quantity of shares amounted to 3,753,544 shares, which were issued in January 2012.

The 3,753,544 shares issued were in compliance with the exemption from the registration requirements found in Regulation S promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933.  The offer and sale to the purchaser was made in an offshore transaction as defined by Rule 902(h).  No directed selling efforts were made in the U.S. as defined in Rule 902(c).  The offer and sale to the purchaser was not made to a U.S. person or for the account or benefit of a U.S. person.  The following conditions were present in the offer and sale:  a) The purchaser of the securities certified that it is not a U.S. person and did not acquire the shares for the account or benefit of any U.S. person; b) The purchaser has agreed to resell the securities only in compliance with Regulation S pursuant to a registration under the Securities Act, or pursuant to an applicable exemption from registration; and has agreed not to engage in hedging transactions with regard to the securities unless in compliance with the Securities Act; c) The purchaser has acknowledged and agreed with the Company that the Company shall refuse registration of any transfer of the securities unless made in accordance with Regulation S, pursuant to a registration statement under the Securities Act, or pursuant to an applicable exemption from registration and; d) The purchaser has represented that it is acquiring the shares for its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the shares in violation of the United States federal securities laws. Neither the Company nor any person acting on its behalf offered or sold these securities by any form of general solicitation or general advertising. The shares sold are restricted securities and the certificates representing these shares have been affixed with a standard restrictive legend, which states that the securities cannot be sold without registration under the Securities Act of 1933 or an exemption therefrom.  No commissions or finder’s fees were paid by the Company in connection with the issuance of these shares.

On December 16, 2011, the Company received a total of $15,000 from the proceeds of the sale of 187,500 shares of its common stock under a private placement agreement, priced at $0.08 / share, which shares were issued in January 2012.  The purchaser has received 187,500 warrants, each with the right to purchase a share at the price of $0.08/share, valid through to December 15, 2013.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of these 187,500 pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.

On April 16, 2012, the Company issued 250,000 shares, according to the terms of a consulting agreement with Mr. Robert B. Reynolds Jr., valued at $0.046/share for a total valuation of $11,500.

The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended,  for the issuance of 250,000 shares to Mr. Reynolds, pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale, and the Company is taking appropriate measures to restrict the transfer of the securities.
 
On August 31, 2012, the Company entered into a Securities Purchase Agreement with Tangiers Investors, LP, to purchase up to $2,000,000 of the Company’s common stock. Under the agreement, amongst other terms, the Company is obligated to issue certain shares in payment of the agreed upon commitment fee. On December 7, 2012, the Company issued 1,666,667 shares of common stock pursuant to the first tranche of this requirement, valued at $50,000.
 
On January 11, 2013, the Company issued 1,612,903 shares of common stock to Denali Equity for investor relation services, valued at $14,516.

On February 8, 2013, Tangiers Capital Secured Convertible Promissory note dated August 31, 2012 matured and is now considered in default.  As of the date of this filing Tangiers Capital has fully converted its notes dated February 23, 2012 and March 07, 2012.  Tangiers Capital is in negotiations with the Company to convert its remaining Convertible Promissory Notes held by the Company dated August 31, 2012.

On March 1, 2013, the Company issued 600,000 shares of restricted common stock to Mary Fitzpatrick valued at $1,860 in exchange for her ongoing financial support services at the subsidiary level for Stock Pile Reserves, LLC and Central Nevada Processing Co., LLC.

On February 28, 2013, the Company issued 2,857,143 restricted shares of common stock to LTV International Holdings valued at $9,143 in lieu of cash for consulting fees that had been accrued as compensation for services.  Mr. Don Nicholson is the designated service provider under the agreement with LTV.

On March 4, 2013, the Company issued 3,015,625 restricted shares of common stock to Robert Reynolds, VP of Operations, valued at $10,555 in lieu of cash for consulting fees that had been accrued as compensation for his services.

On March 5, 2013, the Company issued 2,969,700 restricted shares of common stock to Mario Beckles, CFO, valued at $8,018 in lieu of cash for consulting fees that had remained accrued as compensation for his services.

During the year ended July 31, 2013 the Company issued a total of 289,028,553 shares directly related to debt conversions of increments totaling $1,086,056.

Purchases of Equity Securities by the Issuer and Affiliated Purchases

During each month within the fourth quarter of the fiscal year ended July 31, 2012, neither we nor any “affiliated purchaser,” as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.


As a “smaller reporting company”, we are not required to provide the information required by this Item.


This Annual Report on Form 10-K contains forward-looking statements relating to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "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 which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance.  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.

Given these uncertainties, readers of this Annual Report on Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements.  The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

All dollar amounts stated herein are in US dollars unless otherwise indicated.

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").  The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended July 31, 2012, together with notes thereto.

As used in this quarterly report, the terms "we", "us", "our", and the "Company" mean First Liberty Power Corp.

Our Current Business

We are an exploration stage company engaged in the exploration of mineral properties.
 
Liquidity & Capital
 
Cash Flow and Working Capital
 
As of July 31, 2013, we had cash and cash equivalents of approximately $5 thousand and a working capital deficit of approximately $1.8 million as compared to cash and cash equivalents of $68 thousand and working capital deficit of $614 thousand as of July 31, 2012. Our working capital deficit as of July 31, 2013 included $334 thousand in accounts payable and accrued interest, $391 thousand in due to related parties, $442 thousands to an external note holder, $329 thousand of convertible notes payable and $343 thousand of derivative liability.
 
 Operating Activities
 
During the year ended July 31, 2013, operating activities used $416 thousand in cash, while for the year ended July 31, 2012 operating activities used $377 thousand in cash. We incurred additional legal and financing fees associated with increased convertible note conversions during the twelve month period in addition to increased consulting fees due to new management additions.
 
Investing Activities
 
During year ended July 31, 2013, approximately $13 thousand in cash was used in investing activities, principally for the acquisition of 50% Central Nevada Processing Co. LLC (CNPC) and 50% of Stockpile Reserves LLC (SRL).
 
Financing Activities
 
During the year ended July 31, 2013, our financing activities provided $365 thousand compared to $937 thousand for the twelve months ended July 31, 2012. The cash provided during the 2013 period resulted from proceeds of $419 thousand from the proceeds from borrowing on convertible notes and proceeds from related parties of $98 thousand. We made payments of notes payable to certain related parties of $78 thousand and also paid approximately $74 thousand to our external note holder.
 
At present, the Company’s cash position is insufficient to meet its obligations through to the end of the fiscal year, as we are not currently generating any revenues, and, over the next 12 months, we will require additional funds to meet our operating obligations and property payment / work program obligations, as well as the repayment of the convertible notes should they not be converted to equity prior to their maturity dates.  At present, we anticipate our funding requirements to be approximately $3.0 million. This estimate is comprised of $1 million for required and additional exploration and maintenance expenditures on our properties, approximately $1.2 million for required development expenditures on our Antimony property, and a further $800 thousand to cover operating, debt and overhead costs. Additional amounts will be required if we identify additional acquisition targets, or determine that additional exploration / development on our properties are required to accelerate their development.
 
This amount may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. We need to raise additional funds in the near future in order to proceed with our exploration and development program, as our available cash is insufficient.
 
The Company intends to pursue all available and reasonable avenues to raise the additional funds required to continue the exploration and development of its properties.

There is no assurance we will be able to identify or acquire these additional funds, or additional funds on a commercially reasonable basis.

Results of Operations
 
Total Revenues
 
Our revenue since inception (March 28, 2007) has been nil.
 
Exploration Costs
 
Our exploration costs were approximately $207 thousand for the fiscal year ended July 31, 2013 and $122 thousand for the fiscal year ended July 31, 2012. The increase is due to advanced drilling and exploration costs associated with the Fencemaker project under Stockpile Reserves LLC subsidiary.
 
Management and Consulting Fees
 
Our management and consulting fees were approximately $238 thousand for the fiscal year ended July 31, 2013 and $429 thousand for the fiscal year ended July 31, 2012. The decrease is due to the completion of the amortization of prepaid consulting fees associated with our CEO which ended during the third quarter of the fiscal year.
 
Professional Fees Expense
 
Our professional fees expense for the fiscal year ended July 31, 2013 was approximately $353 thousand. For the fiscal year ended July 31, 2012, our professional fees expense was approximately $296 thousand. The increase is primarily due to the consulting fees associated with the addition of our new subsidiary SRL of $115 thousand, management consulting expense due new management additions of $85 thousand, $34 thousand in accounting fees, and $31 thousand in other legal and corporate expenses.
 
General and Administrative Expense
 
General and administrative expenses were approximately $230 thousand and $75 thousand during the fiscal years ended July 31, 2013 and 2012, respectively. The increase is primarily due to increased investor relations expense of $120 thousand and the addition of our two subsidiaries CNPC and SRL.
 
Operating Loss
 
Our operating loss was approximately $1.8 million in the 2013 period versus a loss of approximately $922 thousand in the 2012 period. The increase in the operating loss is due to primarily the addition of our two subsidiaries, CNPC and SRL.
 
Impairment of Assets
 
During the fiscal year ended July 31, 2013, we incurred a one time, non-recurring impairment charge of $319 thousand on our Lithium properties and $495 thousand on our subsidiaries, CNPC's millsite.
 
Interest Expense

Our interest expense was approximately $744 thousand in the 2013 period versus a loss of approximately $808 thousand in the 2012 period. The increase in the interest expense is due primarily to an increase in the number of convertible notes issued during 2013.

We have incurred recurring losses from operations. The continuation of our Company is dependent upon attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have successfully raised additional capital through equity offerings and loan transactions in the past, and presently believe we will be able to do so in the future, though we can offer no assurance of this outcome as no specific arrangements are in place.

Going Concern
 
In their audit report relating to our financial statements for the period ended July 31, 2013, our independent accountants indicated that there are a number of factors that raise substantial doubt about our ability to continue as a going concern. Such factors identified in the report are our lack of revenue resulting in a net loss position and insufficient funds to meet our business objectives. All of these factors continue to exist and raise doubt about our status as a going concern.
 
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.




FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXLORATION STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS





 

 
 
 

 
To the Board of Directors and Stockholders,
First Liberty Power Corp.
 
We have audited the accompanying balance sheets of First Liberty Power Corp. and subsidiaries (An Exploration Stage Company) (the “Company”) as of July 31, 2013 and 2012, and the related statements of operations, stockholders’ deficit, and cash flows for the years ended July 31, 2013 and 2012, and for the period from inception (March 28, 2007) to July 31, 2013. First Liberty Power Corp.’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 also 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 First Liberty Power Corp. and subsidiaries as of July 31, 2013 and 2012, and the related statements of operations, stockholders’ deficit, and cash flows for the years ended July 31, 2013 and 2012, and for the period from inception (March 28, 2007) to July 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 

/s/ De Joya Griffith, LLC
Henderson, Nevada
November 12, 2013


De Joya Griffith, LLC ● 2580 Anthem Village Dr. ● Henderson, NV ● 89052
Telephone (702) 563-1600 ● Facsimile (702) 920-8049
www.dejoyagriffith.com


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
(Audited)

   
July 31,
2013
   
July 31,
2012
 
ASSETS
           
CURRENT ASSETS:
           
Cash in bank
  $ 5,262     $ 68,660  
Prepaid expense
    -       253,948  
      Available for sale securities
    3,050       20,000  
                      Total current assets
    8,312       342,608  
                 
PROPERTY:
               
Deposit on mineral property
    45,187       846,950  
Property & equipment, net
    2,666       4,314  
                 
OTHER ASSETS:
               
      Unamortized financing fees
    57,257       54,050  
                 
TOTAL ASSETS
  $ 113,422     $ 1,247,922  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
 CURRENT LIABILITIES:
               
      Accounts payable
  $ 293,582     $ 90,278  
      Accounts payable – related parties
    77,441       -  
      Accrued interest
    39,971       12,730  
      Due to related parties – current portion
    313,920       201,252  
      Notes payable – current portion
    442,000       300,000  
      Derivative liability
    342,398       -  
      Convertible notes payable, net of unamortized discount
               
      of $362,382 and $148, 680 as of July 31, 2013 and 2012, respectively
    329,520       406,094  
                      Total current liabilities
    1,838,832       1,010,354  
                 
LONG TERM LIABILITIES:
               
      Convertible note payable, net of unamortized discount of $0
               
      and $14,375 as of July 31, 2013 and 2012, respectively
    -       135,625  
      Note payable
    -       170,000  
      Due to related party
    -       42,866  
                 
                      Total liabilities
    1,838,832       1,358,845  
                 
Commitments and Contingencies
               
                 
STOCKHOLDERS’ DEFICIT
               
Common stock, par value $0.001 per share; 1,080,000,000 shares authorized;  466,752,425  and 165,001,834  shares issued and outstanding in 2013 and 2012, respectively
    466,753       165,002  
Additional paid-in capital
    2,894,959       2,096,562  
Advances to related party
    (16,331 )     (39,675 )
Deficit accumulated during the exploration stage
    (4,519,927 )     (2,336,391 )
        Non-controlling interest
    (550,864 )     3,579  
                     Total stockholders' deficit
    (1,725,410 )     (110,923 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
  $ 113,422     $ 1,247,922  

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


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
(Audited)

         
Cumulative
 
   
July 31,
   
From Inception
 
   
2013
   
2012
   
(March 28, 2007) to July 31, 2013
 
                   
REVENUES
  $ -     $ -     $ -  
                         
EXPENSES:
                       
       Exploration costs
    206,583       121,987       559,081  
   General and administrative-
                       
       Management & consulting fees
    238,922       429,100       1,487,354  
       Professional fees
    353,159       296,521       794,060  
       General and administration
    230,708       74,585       409,689  
       Impairment of assets
    814,950       -       814,950  
   Total general and administrative expenses
    1,844,322       922,193       4,065,134  
LOSS FROM OPERATIONS
    (1,844,322 )     (922,193 )     (4,065,134 )
                         
OTHER EXPENSE:
                       
     Gain on sale of mineral property
    -       -       155,000  
     Loss on investment
    (16,950 )     (230,000 )     (246,950 )
     Loss on derivative
    (131,659 )     -       (131,659 )
     Interest expense
    (743,959 )     (23,711 )     (808,665 )
     Exchange loss
    (1,089 )     (1,744 )     (3,811 )
 
                       
TOTAL OTHER EXPENSE
    (893,657 )     (255,455 )     (1,036,085 )
                         
NET LOSS
  $ (2,737,979 )   $ (1,177,648 )   $ (5,101,219 )
                         
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST
    (554,443 )     (50,050 )     (604,493 )
 
                       
NET LOSS ATTRIBUTABLE TO THE COMPANY
    (2,183,536 )     (1,127,598 )     (4,496,726 )
                         
COMPREHENSIVE LOSS
                       
     Change in market value of securities
    -       -       (75,000 )
                         
COMPREHENSIVE LOSS
  $ (2,737,979 )   $ (1,177,648 )   $ (5,176,219 )
                         
LOSS PER COMMON SHARE:
                       
      Loss per common share – basic
  $ (0.01 )   $ (0.01 )        
      Comprehensive loss per common share-basic
  $ (0.01 )   $ (0.01 )        
                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC
    262,842,223       122,049,604          

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


FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
FOR THE PERIOD FROM INCEPTION (MARCH 28, 2007)
THROUGH JULY 31, 2013
(Audited)

   
Common Stock:
Shares
   
Common Stock: Amount
   
Additional Paid-in Capital
   
Stock Payable
   
Advances to Related party
   
Deficit Accum During Exploration Stage
   
Accum Other Comprehensive Income
   
Total Equity Attributable to FLPC
   
Non Controlling Interest
   
Totals
 
Balance – March 28, 2007
    -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $       $    
                                                                                 
Common stock issued for cash
    43,200,000       43,200       -       -       -       (23,200 )     -       20,000               20,000  
Net loss for the period
    -       -       -       -       -       (520 )     -       (520 )             (520 )
Balance - July 31, 2007
    43,200,000       43,200       -       -       -       (23,720 )     -       19,480               19,480  
                                                                                 
Common stock issued for cash
    24,975,000       24,975       21,525       -       -       -       -       46,500               46,500  
Deferred offering costs
    -       -       (13,750 )     -       -       -       -       (13,750 )             (13,750 )
Forgiveness of related party debt
    -       -       475       -       -       -       -       475               475  
Net loss for the period
    -       -       -       -       -       (41,576 )     -       (41,576 )             (41,576 )
Balance July 31, 2008
    68,175,000       68,175       8,250       -       -       (65,296 )     -       11,129               11,129  
                                                      -                          
Net loss for the period
    -       -       -       -       -       (20,196 )     -       (20,196 )             (20,196 )
Balance July 31, 2009
    68,175,000       68,175       8,250       -       -       (85,492 )             (9,067 )             (9,067 )
                                                      -                          
Common stock to be issued for services
    -       -       -       64,973       -       -       -       64,973               64,973  
Common stock issued for services
    250,000       250       187,250       -       -       -       -       187,500               187,500  
Net loss for the period
    -       -       -       -       -       (383,203 )     -       (383,203 )             (383,203 )
Balance July 31, 2010
    68,425,000       68,425       195,500       324,973       -       (468,695 )             120,203               120,203  
                                                                                 
Common stock subscribed for cash
    970,000       970       484,030       (260,000 )     -       -       -       225,000               225,000  
Common stock to be issued for services
    5,750,000       5,750       980,002       (64,973 )     -       -       -       920,779               920,779  
Common stock issued for property acquisitions
    929,426       929       149,071       -       -       -       -       150,000               150,000  
Change in market value of securities
    -       -       -       -       -       -       (75,000 )     (75,000 )             (75,000 )
Net loss for the period
    -       -       -       -       -       (740,098 )     -       (740,098 )             (740,098 )
Balance July 31, 2011 (audited)
    76,074,426     $ 76,074     $ 1,808,603     $ -     $ -     $ (1,208,793 )   $ (75,000 )   $ 600,884               600,884  
                                                                                 
Common stock subscribed for cash
    187,500       188       14,812       -       -       -               15,000               15,000  
Common stock to be issued for services
    736,364       736       50,439       -       -       -       -       51,175               51,175  
Common stock issued for conversion of debt
    3,753,544       3,754       298,218       -       -       -       -       301,972               301,972  
Common stock issued for property acquisitions
    1,250,000       1,250       78,700       -       -       -       -       79,950               79,950  
Common stock issued for Group8 Mineral founder shares
    83,000,000       83,000       (83,000 )                                                        
Warrants granted for commission fees
    -       -       20,100       -       -       -       -       20,100               20,100  
Acquisition of 50% Stockpile Reserves, LLC
    -       -       (91,310 )     -       (9,200 )                     (100,510 )     53,629       (46,881 )
Change in market value of securities
    -       -       -       -       -       -       (155,000 )     (155,000 )             (155,000 )
Realized loss on securities
    -       -       -       -       -       -       230,000       230,000               230,000  
Advances to related party
    -       -       -       -       (30,475 )     -       -       (30,475 )             (30,475 )
Net loss for the period
    -       -       -       -       -       (1,127,598 )     -       (1,127,598 )     (50,050 )     (1,177,648 )
Balance July 31, 2012
    165,001,834     $ 165,002     $ 2,096,562     $ -     $ (39,675 )   $ (2,336,391 )   $ -     $ (114,502 )     3,579       (110,923 )

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


 
FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT) - CONTINUED
FOR THE PERIOD FROM INCEPTION (MARCH 28, 2007)
THROUGH JULY 31, 2013
(Audited)
 


   
Common Stock:
Shares
   
Common Stock: Amount
   
Additional Paid-in Capital
   
Stock Payable
   
Advances to Related party
   
Deficit Accum During Exploration Stage
   
Accum Other Comprehensive Income
   
Total Equity Attributable to FLPC
   
Non Controlling Interest
   
 
 
Totals
 
Balance July 31, 2012
    165,001,834     $ 165,002     $ 2,096,562     $ -     $ (39,675 )   $ (2,336,391 )   $ -     $ (114,502 )   $ 3,579      $ (110,923 )
                                                                                 
Acquisition of Group8 Mineral
    -       -       (100,000 )     -       -       -               (100,000 )             (100,000 )
Common stock to be issued for services
    1,612,903       1,613       12,903       -       -       -       -       14,516               14,516  
Common stock issued for conversion of debt
    289,028,553       289,028       797,027       -       -       -       -       1,086,056               1,086,056  
Common stock issued for financing
    1,666,667       1,667       48,333       -       -       -       -       50,000               50,000  
Common stock issued to officers for service
    9,442,468       9,442       20,134                                       29,576               29,576  
BCF on Convertible Note
    -       -       20,000       -       -       -       -       20,000               20,000  
Change in market value of securities
    -       -       -       -       -       -       -       -               -  
Realized loss on securities
    -       -       -       -       -       -       -       -               -  
Advances to related party
    -       -       -       -       23,344       -       -       23,344               23,344  
Net loss for the period
    -       -       -       -       -       (2,183,536 )     -       (2,183,536 )     (554,443 )     (2,737,979 )
Balance July 31, 2013 (audited)
    466,752,425     $ 466,753     $ 2,894,959     $ -     $ (16,331 )   $ (4,519,927 )   $ -     $ (1,174,546 )     (550,864 )     (1,725,410 )

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



FIRST LIBERTY POWER CORP.
(FORMERLY QUUIBUS TECHNOLOGY, INC.)
(AN EXPLORATION STAGE COMPANY)
(Audited)

         
Cumulative
 
   
July 31,
   
From Inception
 
               
(March 28, 2007)
 
   
2013
   
2012
   
To July 31, 2013
 
 OPERATING ACTIVITIES:
                 
Net loss
  $ (2,737,979 )   $ (1,177,648 )   $ (5,101,219 )
  Adjustments to reconcile net loss to net cash (used in) operating activities:
                       
Depreciation
    1,648       -       1,648  
Debt forgiven
    -       -       475  
Gain/loss on sale of investment
    16,950       230,000       91,950  
Stock based compensation, consulting service
    195,723       470,745       1,290,986  
Convertible note issued for service
    112,500       22,500       135,000  
Impairment on assets
    814,950       -       814,950  
Loss on derivative
    131,659       -       131,659  
Amortization of financing fees
    729,015       71,269       800,284  
      Changes in net assets and liabilities -
                       
Accrued interest
    27,241       23,711       91,944  
Prepaid expense
    12,101       (10,701 )     (183 )
Change in unamortized financing fees
    3,207       (51,500 )     (48,293 )
Accounts payable - trade
    199,405       29,010       289,682  
Accounts payable – related parties
    77,441       15,150       169,579  
NET CASH USED IN OPERATING ACTIVITIES
    (416,139 )     (377,464 )     (1,331,538 )
 
                       
INVESTING ACTIVITIES:
                       
    Cash paid for acquisitions
    (13,187 )     (527,000 )     (725,187 )
    Cash received from Stockpile Reserves, LLC Acquisition
    -       3,555       3,555  
    Loan to other entity
    -       (42,975 )     (42,975 )
NET CASH USED IN INVESTING ACTIVITIES
    (13,187 )     (566,420 )     (764,607 )
                         
FINANCING ACTIVITIES:
                       
   Proceeds from the issuance of common stock
    -       15,000       566,500  
   Proceeds from notes/loans payable
    419,166       848,000       1,517,166  
   Proceeds from related party debt
    98,766       119,944       228,471  
   Payments on notes payable
    (78,000 )     (25,000 )     (103,000 )
   Payments on related party debt
    (74,005 )     (19,975 )     (93,980 )
   Deferred offering costs
    -       -       (13,750 )
NET CASH PROVIDED BY FINANCING ACTIVITIES
    365,927       937,969       2,101,407  
                         
NET INCREASE (DECREASE) IN CASH
    (63,399 )     (5,915 )     5,262  
                         
CASH – BEGINNING OF PERIOD
    68,661       74,576       -  
CASH – END OF PERIOD
  $ 5,262     $ 68,661     $ 5,262  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH ACTIVITIES
                       
   Cash paid during the period for:
                       
      Interest
  $ -     $ -     $ -  
      Income taxes
  $ -     $ -     $ -  
      Net liability assumed through Stockpile Reserves, LLC acquisition
  $ -     $ 41,236     $ 41,236  
      Unamortized financing fees
  $ -     $ -     $ (15,000 )
      Change in prepaid, net
  $ -     $ 19,972     $ 73,077  
      Conversion of debt to equity
  $ 1,113,771     $ 301,973     $ 1,415,744  
      Convertible note issued for prepaid
  $ -     $ 135,000     $ 135,000  
      Shares issued for deposit on mineral property
  $ -     $ 79,950     $ 79,950  

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


 (AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012

Note 1 – Organization and summary of significant accounting policies

Basis of Presentation and Organization

First Liberty Power Corp. (“First Liberty Power” or the “Company” and formerly Quuibus Technology, Inc.) is a Nevada corporation in the exploration stage.  The Company was incorporated under the laws of the State of Nevada on March 28, 2007.  The original business plan of the Company was focused on developing and offering a server-based software product for the creation of wireless communities. The Company commenced a capital formation activity to effect a Registration Statement on Form SB-2 with the Securities and Exchange Commission, and raise capital of up to $60,000 from a self-underwritten offering of 1,200,000 shares of newly issued common stock in the public markets. The Registration Statement on Form SB-2 was filed with the SEC on November 13, 2007, and declared effective on November 21, 2007. On February 18, 2008, the Company completed an offering of its registered common stock.

In December 2009, the Company changed its business direction, and the Company’s primary focus is on exploration of domestic strategic energy and mineral properties to supply the emerging demand for clean energy.  The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

On December 22, 2009, the Company declared a 27 for 1 forward stock split of its authorized and issued and outstanding common stock. The Company’s authorized common stock increased from 20,000,000 shares of common stock with a par value of $0.001 to 540,000,000 shares of common stock with a par value of $0.001. The effect of the stock split has been recognized retroactively in the stockholders’ equity accounts as of March 28, 2007, the date of our inception, and in all shares and per share data in the financial statements. In July 2013 the board of directors authorized, and in August 2013, further to shareholder approval, the Company’s authorized common stock increased from 540,000,000 shares of common stock with a par value of $0.001 to 1,080,000,000 shares of common stock with a par value of $0.001.

Effective December 22, 2009, the Company changed its name from “Quuibus Technology, Inc.” to “First Liberty Power Corp.” by way of a merger with its wholly owned subsidiary First Liberty Power Corp., which was formed solely for the name change.
On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of the Company to G8MI plus one hundred thousand dollars ($100,000) cash payment to G8MI. Further, pursuant to the Agreement, the Company is required to undertake certain payments to Group8 aggregating a total of $2,000,000 for associated property payments and exploration costs as follows: (a) $500,000 on or before October 30, 2012; (b) $500,000 on or before December 31, 2012; (c) $500,000 on or before February 28, 2013; and (d) $500,000 on or before April 30, 2013, the timing of which remaining payments have been extended by mutual agreement pending additional funding of the Company.

In accordance with ASC 805, “Business Combinations”, and in particular ASC 805-50, the acquisition of Group8 is accounted for as an asset purchase without goodwill as Group8 did not meet the definition of a business per ASC 805 at the time of the acquisition. Additionally the CEO of First Liberty and controlling director of the Company is also a 50% director of G8MI as such the transaction was deemed a transaction under common control. As the Company and Group8 are considered as common controlled entities, the acquisition is a common control transaction; therefore, the financial statements requires retrospective combination of the entities for all periods presented as if the combination had been in effect since inception of common control. The 83,000,000 shares of the Company’s common stock issued to G8MI for 81% of Group8 will be recorded as founder’s shares to G8MI at Group8’s inception date, January 26, 2013.

On May 22, 2012 and May 31, 2012, Group8 obtained 50% control of Stockpile Reserves, LLC (“SRL”) and Central Nevada Processing Co. LLC (“CNPC”), respectively. SRL has a net liability of $37,681 with non-controlling interest of $53,629 at May 22, 2012. The total net liability assumed by Group8 was $91,310, which will be combined with the Company’s financial statements as of July 31, 2012. There was no operation in CNPC as of July 31, 2012.

 

FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 JULY 31, 2013 AND 2012
 
A summary of SRL net liability allocation is as follows:
Assets acquired:
     
  Cash and cash equivalents
 
$
3,555
 
  Advances to related party
   
9,200
 
  Property and equipment, net
   
4,314
 
Total assets acquired
 
$
17,069
 
Liabilities assumed:
       
 Due to related party
 
$
54,750
 
 Total liabilities assumed
 
$
54,750
 
Non-controlling interest
   
53,629
 
Net assets acquired
 
$
(91,310)
 
 
As of July 31, 2013, the Company paid off the $100,000 cash payment to G8MI which was applied against the $100,000 obligation under the agreement to acquire Group8. The 83,000,000 shares of the Company issued to G8MI are valued at $0 as Group8 founder’s shares as of July 31, 2012, and $(100,000) on August 22, 2012 as the Company has the liability to pay G8MI for the acquisition of Group8 when the Company entered into the share exchange agreement with G8MI and Group8.

Basis of Presentation

As a result of the acquisition, the accompanying consolidated financial statements include the operations of G8 Minerals since August 22, 2012.  The accompanying consolidated financial statements also include the operations of the Company, its 50% owned subsidiary Central Nevada Processing Co. LLC (“CNPC”) and its 50% owned subsidiary Stockpile Reserves LLC (“SRL”).   CNPC and SRL are both considered variable interest entities (VIE) for which the Company is the primary beneficiary.  

The Company consolidates all entities in which the Company holds a “controlling financial interest.” For voting interest entities, the Company is considered to hold a controlling financial interest when the Company is able to exercise control over the investees’ operating and financial decisions. For variable interest entities (“VIEs”), the Company is considered to hold a controlling financial interest when it is determined to be the primary beneficiary. For VIEs, a primary beneficiary is a party that has both: (1) the power to direct the activities of a VIE that most significantly impact that entity's economic performance, and (2) the obligation to absorb losses, or the right to receive benefits, from the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE is based on the amount and characteristics of the entity's equity.

All significant inter-company balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.
 
Mineral Properties

The Company is primarily engaged in the business of the acquisition, exploration, development, mining, and production of domestic strategic energy and mineral properties, with emphasis on lithium carbonate and additional strategic minerals.  Mineral claim and other property acquisition costs are capitalized as incurred.  Such costs are carried as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations.  Mineral exploration costs are expensed as incurred, and when it becomes apparent that a mineral property can be economically developed as a result of establishing proven or probable reserve, the exploration costs, along with mine development cost, are capitalized.  The costs of acquiring mineral claims, capitalized exploration costs, and mine development costs are recognized for depletion and amortization purposes under the units-of-production method over the estimated life of the probable and proven reserves.  If mineral properties, exploration, or mine development activities are subsequently abandoned or impaired, any capitalized costs are charged to operations in the current period.


FIRST LIBERTY POWER CORP.
 (AN EXPLORATION STAGE COMPANY)