NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies
Basis of Presentation and Organization
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month period ended April 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2014. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2013.
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 and development of domestic strategic mineral properties. The accompanying consolidated 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. On August 20, 2013, 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. On July 2, 2013, the board of directors of First Liberty Power Corp. (“Company”) approved, and on August 30, 2013, the shareholders of the Company approved, an amendment to the Company’s Articles of Incorporation, permitting the creation of up to 10,000,000 shares of “blank check” preferred stock, par value of $0.001 per share (the “Blank Check Preferred Shares”) which may be issued in one or more classes or series, with such rights, preferences, privileges and restrictions as may be fixed by the Company’s Board of Directors. On March 30, 2014, the board of directors approved, and on April 4
th
the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada, which sets forth the rights, preferences and privileges of a class of the Company’s preferred stock. Such class was designated as the “Series A Preferred Stock” and the number of shares constituting such series was 5,000,000 shares.
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.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
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, which has been paid; (b) $500,000 on or before December 31, 2012, which $255,609 has been paid toward this balance; (c) $500,000 on or before February 28, 2013, which amount remains outstanding as of the date of this filing; and (d) $500,000 on or before April 30, 2013, which amount remains outstanding as of the date of this filing.
In accordance with ASC 805, “Business Combinations”, and in particular ASC 805-50-25, 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 require 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.
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 23, 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.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
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 a current emphasis on lithium carbonate. 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 costs, 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.
Revenue Recognition
The Company is in the exploration stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.
Business Combinations – Valuation of Acquired Assets and Liabilities
Allocations of purchase price for business combinations are based on estimates of the fair value of consideration paid and the net assets acquired. Accounting for business combinations requires estimates and judgments as to expectations of future cash flows for acquired businesses and the allocation of those cash flows to identifiable tangible and intangible assets in determining the estimated fair values of assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets and liabilities, including contingent consideration, are based on management’s estimates and assumptions, utilizing customary valuation procedures and techniques. Contingent consideration is measured at its estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in earnings as a component of other income or expense. If actual results differ significantly from the estimates and judgments used in determining the estimated fair values of assets and liabilities recorded as of the date of acquisition, these differences could result in a possible impairment of recorded assets, including intangible assets and goodwill, or require acceleration of amortization expense of finite-lived intangible assets.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
Inventory
Inventories are stated at the lower of costs incurred or market. Inventories include metals product inventory, which is determined by the stage at which the minerals are in processing (stockpiled minerals, work in process and finished goods).
Stockpiled minerals inventory represents Stibnite ore rock that has been excavated from inside the mine and then placed on pad area before being crushed and bagged. Stockpiles reserves are measured by estimating the number of tons added and removed from the stockpile, the number of contained metal ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile mineral tonnages are verified by periodic surveys. Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the minerals, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile’s average cost per recoverable unit.
Work in process inventory represents materials that are currently in the process of being converted to a saleable product and includes inventories in our milling process. This inventory represents excavated stibnite ore that has been removed from the pad, crushed, bagged in one ton storage bags and stored in 40 foot containers at our onsite facilities to be hauled to a third party mill site for processing. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines and stockpiles, plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.
The Company categorizes all of its inventory as work in process. The Company processes its inventory into which its ships to a refiner for final processing, and therefore it never holds finished goods.
At the present time, our inventories consist of the historical cost of extracting raw minerals from our mine site and transporting raw materials to our milling site for further processing. Until we begin receiving regular revenues from our milling and smelting operations, all milling and smelting costs are expensed as incurred.
Long-lived assets
The Company accounts for its long-lived assets in accordance with FASB ASC 360-10, “Property, Plant and Equipment” which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposal value.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
Investments
The Company holdings in marketable securities classified as available-for-sale are carried at fair value. The carrying value of marketable securities is reviewed each reporting period for declines in value that are considered to be other-than temporary and, if appropriate, the investments are written down to their estimated fair value. Realized gains and losses and declines in value judged to be other-than-temporary on available for sale securities are included in the Company’s statements of operations. Unrealized gains and unrealized losses deemed temporary are included in accumulated other comprehensive income (loss).
Effective February 8, 2011, the Company acquired 500,000 shares of New America Energy common stock pursuant to an Agreement between the Company, New America Energy and GeoXplor (refer to Note 3 and 7) for the deemed value of $250,000. The equity investment will be periodically reviewed to determine if impairment is required. During the nine months ended April 30, 2014, the Company realized $2,500 in loss on investment. The Company has realized a total of $249,450 in loss on investment as of April 30, 2014.
Loss per Common Share
Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
Convertible Debentures
|
Beneficial Conversion Feature
If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20
“Debt with Conversion and Other Options.”
In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.
|
|
Debt Discount
The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company's own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, Obligations that require or may require repurchase of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and Certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:
– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair value equal to a fixed dollar amount,
– Variations in something other than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer's equity shares, or
– Variations inversely related to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled.
|
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of convertible debt (see Note 4). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Derivative Financial Instruments
Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements.
Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of April 30, 2014, and July 31, 2013, the carrying value of the Company’s financial instruments approximated fair value due to the short-term nature and maturity of these instruments.
Determination of Fair Value
|
The Company’s financial instruments consist of available for sale securities, convertible notes payable and a derivative liability. The Company believes all of the financial instruments’ recorded values approximate their fair values because of their nature and respective durations.
|
The Company complies with the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and summary of significant accounting policies (continued)
Estimates
The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of April 30, 2014 and July 31, 2013, and expenses for the quarters ended April 30, 2014, and 2013, and cumulative from inception. Actual results could differ from those estimates made by management.
Asset retirement obligations
The Company has adopted the provisions of FASB ASC 410-20 “Asset Retirement and Environmental Obligations,”
which requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the related oil and gas properties. As of April 30, 2014, there have been no asset retirement obligations recorded.
Cost-Basis
Method
Valuation
The Company’s non-marketable equity investment is recorded using the cost-basis method of accounting, and is classified as a long-term asset on the accompanying balance sheet as permitted by FASB ASC 325, “Cost Method Investments”, as the Company owned less than 20% of the voting securities and did not have the ability to exercise significant influence over operating and financial policies of the entity. See Note 7, “Investment in Covalent Energy” for more information.
Note 2 – Going concern
The Company is currently in the exploration stage and has engaged in limited operations. While management of the Company believes that the Company will be successful in its planned operating activities, there can be no assurance that it will be able to be successful in the development of its product, sale of its planned product, and services that will generate sufficient revenues to sustain its operations.
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception of $11,046,781 and has no revenues to offset its operating costs. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Mineral properties
A) Lithium Agreement:
On May 31, 2012, the Company entered into a new purchase agreement with GeoXplor Corp. (the “Lithium Agreement”), which is effective as of March 15, 2012. Under this Agreement, the Company has been granted an exclusive four year exploration license in regards to the two mineral properties described in the 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"). Pursuant to the Agreement, upon the completion of the required payments and work commitments, GeoXplor shall transfer title to the properties to the Company and shall retain a 5% royalty, on which we shall have the option to purchase up to 4%, for $1,000,000 per 1%.
The Lithium Agreement is a replacement of all prior agreements pertaining to the Lida Valley claims contained within the Purchase Agreement dated December 24, 2009 between GeoXplor and the Company. This Agreement supersedes and replaces all prior agreements in respect to those claims.
Under the new Lithium Agreement, the Company is required to pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $725,000, undertake the issuance of 2,000,000 Shares, and expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work").
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.
B) Fencemaker Agreement:
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
.
Under the Fencemaker Agreement, the Company is required to issue to G8MI a total of 83,000,000 shares of its Common Stock, which stock has been issued; deliver to G8MI cash payments of $100,000, which payments have been completed, and; the Company is required to undertake certain payments to G8 Minerals aggregating a total of $2,000,000 for associated property payments and exploration costs. As of April 30, 2014, the Company has paid $934,266 to G8 Minerals.
C) San Juan Agreement:
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
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Mineral properties (continued)
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%.
Under the San Juan Agreement, the Company is required to pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $500,000, issue 3,000,000 Shares, and expend not less than One Million Five-Hundred Thousand Dollars ($1,000,000) in Mineral Exploration and Development Testing.
The Company is not going to pursue renewal on this property due to focus on Fencemaker and others.
D) Arabia Agreement:
On April 4, 2014, we entered into an 10 year term exploration and mining lease earn-in purchase agreement with Renaissance Exploration, Inc. (“Arabia Agreement”). Under this Agreement, we have been granted the exclusive right to explore, evaluate, and develop the mineral property and to earn a 100% undivided interest in the mineral property. The mineral property encompasses 21 Unpatented and 7 patented mining claims and 8 patented leasing claims located in the Pershing County, Nevada for gold, silver, platinum, antimony, mercury, copper, lead, zinc, and all other minerals elements and mineral compounds.
Under the Arabia Agreement, the Company is required to pay Renaissance Exploration a) an amount of $10,000 plus reimbursement costs of all mining claim maintenance and lease fees paid in the past year and a commitment to pay the 2014 claim and lease fees prior to the effective date (the “Payment). In addition, in order to vest 100% interest in the property, the Company is also required to pay b) $22,500 at the beginning of month 4, 7, 9, 11 in the first year of agreement as well as to pay all land maintenance and obligation costs 60 days prior to their due date, and c) a minimum of $50,000 in exploration and development expenses within each of the first two years of the ten year term. As of April 30, 2014, The Company has paid a total of $35,333, which consisted of $12,833 related to reimbursement costs of all mining claim and lease fees and $22,500 related to the month 4 payment.
Note 4 – Convertible notes payable
Convertible debentures treated as original issue discount as per ASC 480 consisted of the following:
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Balance at
|
|
|
|
4/30/2014
|
|
|
7/31/2013
|
|
|
|
|
|
|
|
|
Note issued July 19, 2012 with interest at 8% per annum. Principal and interest are due on April 19, 2013. The conversion price shall be equal to 65% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
$
|
-
|
|
|
$
|
17,049
|
|
|
|
|
|
|
|
|
|
|
Note issued February 07, 2013 with interest at 8% per annum. Principal and interest are due on October 29, 2013. The conversion price shall be equal to 65% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
-
|
|
|
|
47,414
|
|
|
|
|
|
|
|
|
|
|
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 – Convertible notes payable (continued)
|
|
|
|
|
|
|
Note issued October 21, 2013 with interest at 6% per annum. Principal and interest are due on October 21, 2014. The conversion price shall be equal to 65% multiplied by the average of the two closing prices during the five (5) trading days prior to the conversion notices.
|
|
|
113,847
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued March 4, 2013 with interest at 8% per annum. Principal and interest are due on December 31, 2013. The conversion price shall be equal to 50% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
Note issued April 12, 2013 with interest at 8% per annum. Principal and interest are due on December 31, 2013. The conversion price shall be equal to 50% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
-
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
Note issued December 9, 2013 with interest at 12% per annum. Principal and interest are due on September 4, 2014. The conversion price shall be equal to 60% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
92,592
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued February 5, 2013 with interest at 12% per annum. Principal and interest are due on March 27, 2013. The conversion price shall be equal to 58% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
|
|
|
|
33,000
|
|
|
|
|
|
|
|
|
|
|
Note issued February 20, 2014 with interest at 12% per annum. Principal and interest are due on February 20, 2015. The conversion price shall be equal to 60% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
92,592
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued March 12, 2013 with interest at 12% per annum. Principal and interest are due on October 5, 2013. The conversion price shall be equal to 58% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
|
|
|
|
33,000
|
|
|
|
|
|
|
|
|
|
|
Note issued August 31, 2012 with interest at 10% per annum. Principal and interest are due on February 8, 2013. The conversion price shall be equal to a fixed price of $0.02.
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Balance of convertible debentures treated as original issued discount
|
|
|
299,031
|
|
|
|
270,463
|
|
|
|
|
|
|
|
|
|
|
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 – Convertible notes payable (continued)
Convertible debentures with bifurcated derivative liability under ASC 815 consisted of the following
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note issued November 18, 2013 with interest at 8% per annum. Principal and interest are due on August 20, 2014. The conversion price shall be equal to 58% multiplied by the average of the three lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
$
|
63,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued March 03, 2014 with interest at 8% per annum. Principal and interest are due on December 05, 2014. The conversion price shall be equal to 58% multiplied by the average of the three lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
63,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued October 08, 2013 with interest at 8% per annum. Principal and interest are due on July 04, 2014. The conversion price shall be equal to 55% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
25,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued November 08, 2013 with interest at 10% per annum. Principal and interest are due on August 08, 2014. The conversion price shall be equal to 60% multiplied by the average of the two price during the ten (10) trading days prior to the conversion notices.
|
|
|
51,500
|
|
|
|
-
|
|
Note issued March 17, 2014 with interest at 10% per annum. Principal and interest are due on March 17, 2015. The conversion price shall be equal to 60% multiplied by the average of the two price during the ten (10) trading days prior to the conversion notices.
|
|
|
60,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued December 04, 2013 with interest at 10% per annum. Principal and interest are due on December 04, 2014. The conversion price shall be equal to 60% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.
|
|
|
84,249
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued January 09, 2014 with interest at 10% per annum. Principal and interest are due on January 09, 2015. The conversion price shall be equal to 65% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.
|
|
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued May 21, 2013 with interest at 10% per annum. Principal and interest are due on May 21, 2014. The conversion price shall be equal to 50% multiplied by the lowest price during the twenty (20) trading days prior to the conversion notices.
|
|
|
-
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
Note issued October 21, 2013 with interest at 10% per annum. Principal and interest are due on October 21 2014. The conversion price shall be equal to 60% multiplied by the lowest closing prices during the ten (10) trading days prior to the conversion notices.
|
|
|
130,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 – Convertible notes payable (continued)
|
|
|
|
|
|
|
Note issued January 09, 2014 with interest at 10% per annum. Principal and interest are due on January 09, 2015. The conversion price shall be equal to 65% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.
|
|
|
35,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Note issued April 26, 2013 with interest at 8% per annum. Principal and interest are due on December 18, 2014. The conversion price shall be equal to a fixed price of $0.015.
|
|
|
287,188
|
|
|
|
260,739
|
|
|
|
|
|
|
|
|
|
|
Balance of convertible debentures treated as derivative liabilities
|
|
|
848,937
|
|
|
|
385,739
|
|
|
|
|
|
|
|
|
|
|
Total convertible debentures as of April 30, 2014 and July 31, 2013
|
|
$
|
1,147,968
|
|
|
$
|
656,202
|
|
|
|
|
|
|
|
|
|
|
Total unamortized discount as of April 30, 2014 and July 31, 2013
|
|
|
(539,853
|
)
|
|
|
(326,682
|
)
|
Convertible debentures, net as of April 30, 2014 and July 31, 2013
|
|
$
|
608,115
|
|
|
$
|
329,520
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities as of April 30, 2014 and July 31, 2013
|
|
$
|
2,638,010
|
|
|
$
|
342,398
|
|
In connection with the August 13, 2013, September 25, 2013, November 18, 2013, October 8, 2013, September 12, 2013, November 08, 2013, December 04, 2013, October 9, 2013, October 21, 2013, two notes dated January 09, 2014, the May 21, 2013, the April 26, 2013, March 03, 2014, and March 17, 2014 Secured Convertible Notes, the notes included a Debt Conversion Feature (see Note 4). The relative fair value of the Debt Conversion Features as of April 30, 2014 was estimated, using Level 3 inputs, at $944,052 using a Black-Scholes model with the following assumptions: expected volatility of 175.10% , risk free interest rate of 0.13%, expected life of 1 year and no dividends. Expected volatility was based on the historical volatility of the Company.
As of April 30, 2014 and July 31, 2013, the Company accrued $63,206 and $21,985 interest payable related to the convertible notes payable, respectively; and unamortized financing fees of $85,563 and $57,257, respectively. During the nine months ended April 30, 2014, the Company incurred $1,341,057 interest expense and $410,070 financing expense related to the convertible notes payable.
Tonaquint Convertible Note Warrants
In connection with the Convertible Note offering on April 26, 2013, the Company issued 47,457,627 Convertible Note Warrants. The Convertible Note Warrants are exercisable at $0.25. The relative fair value of the warrants as of April 30, 2014 was estimated at $963,705 using a Black-Scholes model with the following assumptions: expected volatility of 175.10%, risk free interest rate of 0.10%, expected life of 1 year and no dividends. Expected volatility was based on the historical volatility of the Company. The loss on derivative liability and interest expense for the quarter ended April 40, 2014 have been included in the loss on derivative liability and interest expense for the debt conversion features as noted above.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 – Related parties transactions
On May 3, 2010, the Company entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continued to March 24, 2012. In consideration for agreeing to provide such consulting services, on May 3, 2010, we issued to Mr. Hoak 250,000 shares of our common stock valued at $187,500, which had been fully earned and expensed as of March 24, 2012. The agreement also contained a provision for the cash payment of $2,500 a month during the term of the agreement. Mr. Hoak resigned as a director in March 2012. The Company has recorded a due to related party to Mr. Hoak of $55,798 and $55,798 as of April 30, 2014 and July 31, 2013, respectively.
As of January 31, 2014, the Company has a payable of $46,100 to a former officer and Director of the Company, which consists of an outstanding loan amount to the Company of $9,910 and expenses paid by this former officer and Director on behalf of the Company for a total of $36,190. The loan is unsecured, non-interest bearing, and has no specific terms for repayment.
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 Company entered into an agreement on July 2, 2011, effective November 15, 2010, with LTV International Holdings Ltd. (“LTV”), to provide management services to the Company over a two year period. The terms of which required the issuance of 5,000,000 shares to LTV, issued on July 15, 2011 valued at $750,000, and a monthly fee of $2,500 payable to LTV. Mr. Don Nicholson is the designated service provider under the agreement with LTV. During each period, compensation expense was determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from the prepaid expense (initially $750,000 from the initial issuance) accordingly each period. The Company has recorded a total of $109,375 and $187,500 as consulting expenses during the six months ended January 31, 2013 and 2012, leaving a prepaid expense balance of $0 and $109,375 as of January 31, 2013 and July 31, 2012, respectively. As of January 31, 2013, there are no outstanding amounts owing under this agreement. 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. The terms of which require a monthly fee of $5,000 payable to LTV. Mr. Don Nicholson is the designated service provider under the agreement with LTV. For the nine months ended April 30, 2014, an amount of $45,000 was recorded by the Company as management consulting expense and $35,091 was paid in the form of cash and $35,000 was paid in the form of common stock. As of April 30, 2014, an amount of $10,703 has been accrued as accounts payable to related party for LTV.
On April 1, 2012, the Company entered into a consulting agreement with Mr. Robert B. Reynolds Jr., wherein Mr. Reynolds agreed to provide, among other things, services associated with performing duties associated with being a director of the Company. The agreement was effective April 1, 2012, and continues to March 30, 2013. In consideration for agreeing to provide such services, in April 2012, we issued to Mr. Reynolds 250,000 shares of our common stock, valued at $11,500. During each period, the compensation expense is determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from prepaid expense accordingly in each period, which amount of $2,889 was recorded as consulting expense during the quarter ended January 31, 2013, leaving a prepaid expense balance of $1,889. 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. The terms of which require a monthly fee of $5,000 payable to Mr. Reynolds. For the nine months ended April 30, 2014, an amount of $45,000 was recorded by the Company as management consulting expense and $21,500 was paid in the form of cash and $21,500 was paid in the form of common stock. As of April 30, 2014, an amount of $27,945 has been accrued as accounts payable to related party for Mr. Reynolds.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5 – Related parties transactions (continued)
On June 12, 2012, the Company entered into a loan agreement with Sanning Management, Ltd., wherein Sanning Management agrees to loan a sum of $119,000 to the Company with interest at the rate of eight percent (8%) per annum, until the maturity date of June 12, 2014. As of April 30, 2014, the Company has a note payable to Sanning Management of $99,025 and accrued interest of $14,911. Sanning Management is the 100% owner of Group8 Mining Innovations, which Group8 Mining Innovations was the 100% owner of Group8 Mineral prior to the acquisition and is currently the 19% owner post-acquisition.
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. The terms of which require a monthly fee of $5,000 payable to Mr. Beckles. For the six months ended January 31, 2014, an amount of $45,000 was recorded by the Company as management consulting expense and the Company has paid $26,284 in cash. As of April 30, 2014 an amount of $38,148 has been accrued as accounts payable to related party for Mr. Beckles.
On November 1, 2013, the Company entered into a consulting agreement with G8 Mining Innovations Corp. to provide services to the Company over a one year period. These services include bringing on line the Company’s Fencemaker mine and Lovelock Mill, including the specification and design/development of the mill sight equipment, additional mine site equipment, potential project development, outside of Antimony projects. The terms of which require a monthly fee of $20,000 payable to G8MI. For the nine months ended April 30, 2014, an amount of $120,000 was recorded by the Company as management consulting expense and $120,000 was paid in the form of cash.
On April 29, 2014, the Company entered into a consulting agreement with Mr. Jimmy Triketiotis. to provide services to the Company over a one year period. These services include performing duties as a chief operating officer and will oversee all aspects of First Liberty’s mining, milling, sales and logistcs. The terms of which require a monthly fee of $5,000 payable to Mr. Triketiotis. For the nine months ended April 30, 2014, nothing has been accrued or paid to Mr. Triketiotis.
Note 6 – Capital Stock
Common Stock Issuances
The Company is authorized to issue 540,000,000 shares of $.001 par value common stock. On August 20, 2013, 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. As of April 30, 2014 and July 31, 2013, 630,802,235 and 466,752,425 shares were issued and outstanding, respectively.
On September 16, 2013 the Company issued 7,386,221 shares of restricted common stock associated with the August 31, 2013 Security Purchase Agreement to purchase $2,000,000 of the Company’s common stock as a commitment fee. Under the agreement, amongst other terms, the Company is obligated to pay the remaining 50% commitment fee equivalent to $50,000. The shares were valued as of the date of grant resulting in a value of $153,049. The amount was recorded as operation expense.
On September 20, 2013, the Company issued 750,000 shares of restricted common stock to Carter Terry & Co. as compensation for services. The shares were valued at $2,625 based on the closing price on the grant date.
On October 1, 2013, the Company issued 10,000,000 shares of restricted common stock, valued at $128,000, to Dan Crofoot and Chaowalit Pullapat as compensatory payment in lieu of default of the agreement to purchase Fencemaker Millsite property at the subsidiary level of Central Nevada Processing Co. LLC.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 –Capital Stock (continued)
On December 3, 2013, the Company issued 625,000 shares of restricted common stock to Integrative Business Alliance as compensation for services. The shares were valued at $32,500 based on the closing price on the grant date.
On December 10, 2013, the Company issued 150,000 shares of restricted common stock to Carter Terry & Co. as compensation for services. The shares were valued at $5,100 based on the closing price on the grant date.
On December 10, 2013, the Company issued 850,000 shares of restricted common stock to Icon Asset Management. as compensation for services. The shares were valued at $28,900 based on the closing price on the grant date.
On December 21, 2013, January 21, 2014, and January 31, 2014, the Company issued 416,667 on each of the three dates for a total of 1,250,000 shares of restricted common stock to Murdock Capital Partners as compensation for services. The shares were valued at $41,333 based on the closing price on the grant date.
On January 24, 2014, the Company issued 500,000 shares of restricted common stock to Chienn Consulting as compensation for services. The shares were valued at $15,000 based on the closing price on the grant date.
On February 10, 2014, the Company issued 650,000 shares of restricted common stock to Carter Terry & Company as compensation for services. The shares were valued at $18,850 based on the closing price on the grant date.
On February 21, 2014, March 21, 2014 and April 21, 2014 the Company issued 416,667 on each of the three dates for a total of 1,250,000 shares of restricted common stock to Murdock Capital Partners as compensation for services. The shares were valued at $22,917 based on the closing price on the grant date.
During the nine months ended April 30, 2014 the Company issued a total of 25,430,233 shares directly related to common stock issued under notice of warrant cashless exercise, which were valued at $587,884.
During the nine months ended April 30, 2014 the Company issued a total of 115,208,260 shares directly related to debt conversions of principal amount totaling to $843,995, which were valued at $2,534,790.
Series A Preferred Stock
On March 30, 2014, the board of directors approved, and on April 4
th
the Company filed a Certificate of Designation with the Secretary of State of the State of Nevada, which sets forth the rights, preferences and privileges of a class of the Company’s preferred stock. Such class was designated as the “Series A Preferred Stock” and the number of shares constituting such series was 5,000,000 shares. Holders of Series A Preferred Stock will be entitled to a preference over all of the shares of the Company’s common stock of the Company and shall rank pari passu with any other series of the Company’s Preferred Stock. The holders of common stock and the holders of Series A preferred stock vote together as a single class with the holders of the Series A preferred stock having eighty (80) votes per share of Series A preferred stock and the holders of common stock having 1 vote per share of common stock. The shares of Series A Preferred Stock shall be convertible, at any time, and/or from time to time, with each one (1) Series A preferred share convertible into one (1) share of the Company's common stock, par value $0.001 per share. No shares of Series A preferred stock have been issued as of the filing date of this report.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 –Marketable securities and investments
The following is a summary of available-for-sale marketable securities as of April 30, 2014 and July 31, 2013:
|
|
April 30, 2014
|
|
|
|
Cost
|
|
|
Unrealized
(Gain)
|
|
|
Realized
(
Losses)
|
|
|
Market or
Fair Value
|
|
Equity securities
|
|
$
|
3,050
|
|
|
$
|
-
|
|
|
$
|
(2,500
|
)
|
|
$
|
550
|
|
Total
|
|
$
|
3,050
|
|
|
$
|
-
|
|
|
$
|
(2,500
|
)
|
|
$
|
550
|
|
|
|
July 31, 2013
|
|
|
|
Cost
|
|
|
Unrealized
Gain
|
|
|
Realized
(
Losses)
|
|
|
Market or
Fair Value
|
|
Equity securities
|
|
$
|
250,000
|
|
|
$
|
-
|
|
|
$
|
(246,950
|
)
|
|
$
|
3,050
|
|
Total
|
|
$
|
250,000
|
|
|
$
|
-
|
|
|
$
|
(246,950
|
)
|
|
$
|
3,050
|
|
The Company classifies securities that have a readily determinable fair value and are not bought and not held principally for the purpose of selling them in the near term as securities available-for-sale, pursuant to FASB ASC 320-10,
Investments-Debt & Equity Securities
. Under FASB ASC 320-10, unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported in other comprehensive income until realized.
Effective January 27, 2013, the Company entered into an agreement to purchase a 1.4% net revenue interest in Covalent Energy International, Inc. (Covalent) for $50,000. As of April 30, 2014, the Company has paid $50,000. Covalent has had no operations to date.
Note 8 –Inventory
Inventories are stated at the lower of cost or market, with cost determined on an average cost basis. Inventory balances are as follows:
|
|
|
April 30,
2014
|
|
|
|
July 31,
2013
|
|
Finished goods
|
|
$
|
-
|
|
|
$
|
-
|
|
Work in process
|
|
|
304,957
|
|
|
|
-
|
|
Raw materials
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
304,957
|
|
|
$
|
-
|
|
Note 9 – Installment Notes Payable
As a result of the acquisition of G8MI on August 22, 2012, the company assumed an installment notes payable associated with a property purchase agreement (”Agreement”) from Dan Crofoot and Chaowalit Pullapat. The agreement was for the purchase of two parcels of property, located at 5833 and 5815 Upper Valley Road, Lovelock NV 89419. The properties are currently occupied by Stockpile Reserves, LLC. The total purchase of the properties is $495,000 to be paid over 20 months from the date of the agreement. The payment terms were as follows: $25,000 2 days from signing of the agreement, $26,000(consisting of principal of $25,000 and interest of $1,000) during each of the months 2 through 19; and a final payment of $21,000 on month 20. Since the assumption of the Note payble, the company has paid a total of $103,000 in cash.
FIRST LIBERTY POWER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9 –Installment Notes Payable (continued)
On December 21, 2012 the company was issued a notice of default as result of not being able to make the prescribed payment schedule. As of April 30, 2014, the company has an outstanding balance of $392,000 and accrued interest of $15,000. The company is currently in negotiations with the sellers to resolve the unpaid balance.
Note 10 –Subsequent note
Subsequent to the quarter ended April 30, 2014 and as of the date of this report the Company issued a total of 21,546,459 shares directly related to debt conversions and 8,000,000 directly related to exercises of warrant notices.