As
filed with the Securities and Exchange Commission September 29, 2017
Registration
Statement No. 333-209076
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
POST-EFFECTIVE
AMENDMENT
NO. 2
TO
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Liberty
Star Uranium & Metals Corp.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
1000
(Primary Standard Industrial Classification Code Number)
90-0175540
(I.R.S. Employer Identification Number)
5610
E. Sutler Lane
Tucson, Arizona 85712
Telephone: (520) 731-8786
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Nevada
Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, Nevada 89501
Telephone: (775) 322-0626
(Name, address, including zip code, and telephone number, including area code, of agent for service)
With
copies to:
Laura
Anthony, Esq.
Legal&
Compliance, LLC
330
Clematis Street, Suite 217
West
Palm Beach, FL 33401
Phone:
(800) 341-2684
From
time to time after the effective date of this registration statement.
(Approximate date of commencement of proposed sale to the public)
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: [X]
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
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[ ]
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Accelerated
filer
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[ ]
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Non-accelerated
filer
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[ ]
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Smaller
reporting company
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[X]
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(Do
not check if a smaller reporting company)
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Emerging
growth company
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[X]
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|
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Calculation
of Registration Fee
Title of
Each Class
of
Securities
to be
Registered
|
|
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Amount to
be
Registered
(1)
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|
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Proposed
Maximum
Offering
Price
Per Share
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Proposed
Maximum
Aggregate
Offering
Price
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Amount of
Registration
Fee
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Common stock to be offered for resale by selling stockholder
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147,292,204
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(2)
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$
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0.0021
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(3),(4)
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$
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309,313
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(3),(4)
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$
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35.85
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(4)
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(1)
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An
indeterminate number of additional shares of common stock shall be issuable pursuant to Rule 416 under the Securities Act
of 1933 to prevent dilution resulting from stock splits, stock dividends or similar transactions and in such an event the
number of shares registered shall automatically be increased to cover the additional shares in accordance with Rule 416.
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|
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(2)
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Consists
of up to 147,292,204 shares of common stock to be sold to Tangiers Investment Group, LLC under the investment agreement dated
June 20, 2015.
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|
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(3)
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Estimated
solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities
Act of 1933.
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(4)
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Based
on the average of the high and low sales price ($0.0021) of Liberty Star Uranium & Metals Corp.’s common stock on
September 26, 2017, as reported on the OTC Pink market tier of the OTC Markets Group. Prior to the filing of this post-effective
amendment to registration statement on Form S-1, $309,313 aggregate principal amount of securities remained registered and
unsold pursuant to Registration Statement No. 333-209076, which was initially filed by the registrant on January 21, 2016
and declared effective on March 15, 2016. Pursuant to Rule 457(p), all of the total registration fee of $35.85 required in
connection with the registration for resale of $309,313 aggregate principal amount of securities under this registration statement
is being offset against $35.85 of the registration fee associated with the unsold securities registered under Registration
Statement No. 333-209076.
|
The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY
NOTE
This
Post-Effective Amendment No. 2 relates to the Registration Statement on Form S-1 (File No. 333-209076), originally filed by the
registrant with the Securities and Exchange Commission (the “SEC”) on January 21, 2016 (the “Registration Statement”),
registering 350,000,000 shares of the registrant’s common stock for resale, from time to time, by the selling stockholders
named in the Registration Statement and Post-Effective Amendment No. 1 to the Registration Statement filed with the SEC on January
3, 2017 (“Post-Effective Amendment No. 1), registering 246,688,172 shares of the registrant’s common stock for resale,
from time to time, by the selling stockholders named in Post-Effective Amendment No. 1. The Registration Statement was declared
effective by the SEC on March 15, 2016 and Post-Effective Amendment No. 1 was declared effective by the SEC on January 19, 2017.
As of the date hereof, 202,707,796 shares (representing $567,582 of the original proposed maximum aggregate offering price of
$980,000) were sold under the Registration Statement. The registrant is filing this Post-Effective Amendment No. 1 in order to:
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●
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Update
the “Selling Stockholders” table to reflect sales effected since Post-Effective Amendment No. 1 was declared effective,
and
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●
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Provide
updated business and financial information for the six months ended July 31, 2017 and the fiscal year ended January
31, 2017.
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The
information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is
not permitted.
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Subject
to Completion, Dated September 29, 2017
Prospectus
147,292,204
Shares
Liberty
Star Uranium & Metals Corp.
Common
Stock
The
selling stockholder identified in this prospectus may offer and sell up 147,292,204 shares of our common stock to be sold to Tangiers
Investment Group, LLC under the investment agreement dated June 20, 2015. All shares registered in accordance with this registration
statement are being registered solely pursuant to the investment agreement. The investment agreement permits us to “put”
up to $8,000,000 in shares of our common stock to Tangiers Investment Group, LLC over a period of up to 36 months.
The
selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at fixed prices, at prevailing
market prices at the time of sale, at varying prices or at negotiated prices.
Tangiers
Investment Group, LLC is an underwriter within the meaning of the Securities Act of 1933 and any broker-dealers or agents that
are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of
1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act
of 1933.
Our
common stock is quoted on the OTC Pink market tier of OTC Markets Group and the OTC Bulletin Board (“OTCBB”) under
the symbol “LBSR”. On September 26, 2017, the last reported closing price of our common stock was $0.0022 per share.
We
will not receive any proceeds from the sale of shares of our common stock by the selling stockholder. However, we will receive
proceeds from the sale of shares of our common stock pursuant to our exercise of the put right offered by Tangiers Investment
Group, LLC. We will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions
or equivalent expenses and expenses of its legal counsel applicable to the sale of its shares.
Investing
in our common stock involves risks. See “Risk Factors” beginning on page 2
.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is _____________, 2017.
Table
of Contents
About
This Prospectus
You
should rely only on the information that we have provided in this prospectus and any applicable prospectus supplement. We have
not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to give
any information or to represent anything not contained in this prospectus and any applicable prospectus supplement. You must not
rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered hereby,
but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this
prospectus and any applicable prospectus supplement is accurate only as of the date on the front of the document, regardless of
the time of delivery of this prospectus, any applicable prospectus supplement, or any sale of a security.
As
used in this prospectus, the terms “we”, “us”, the “Company” and “Liberty Star”
mean Liberty Star Uranium & Metals Corp. and our subsidiaries, Big Chunk Corp. and Hay Mountain Super Project LLC, unless
otherwise indicated. All dollar amounts refer to U.S. dollars unless otherwise indicated.
Prospectus
Summary
The
Offering
The
selling stockholder identified in this prospectus may offer and sell up to 147,292,204 shares of our common stock to be sold to
Tangiers Investment Group, LLC under the investment agreement dated June 20, 2015. All shares registered in accordance with this
registration statement are being registered solely pursuant to the investment agreement. The investment agreement permits us to
“put” up to $8,000,000 in shares of our common stock to Tangiers Investment Group, LLC over a period of up to 36 months.
We
will not receive any proceeds from the sale of shares of our common stock by the selling stockholder. However, we will receive
proceeds from the sale of shares of our common stock pursuant to our exercise of the put right offered by Tangiers Investment
Group, LLC. We will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions
or equivalent expenses and expenses of its legal counsel applicable to the sale of its shares.
Our
Business
We
were formerly Liberty Star Gold Corp. and formerly Titanium Intelligence, Inc. Titanium Intelligence, Inc. was incorporated on
August 20, 2001 under the laws of the State of Nevada. On February 5, 2004, we commenced operations in the acquisition and exploration
of mineral properties business. Big Chunk Corp. is our wholly owned subsidiary and was incorporated on December 14, 2003 in the
State of Alaska. Big Chunk Corp. is engaged in the acquisition and exploration of mineral properties business in the State of
Alaska. In April 2007, we changed our name to Liberty Star Uranium & Metals Corp. to reflect our current general exploration
for base and precious metals. In October 2014, we formed our wholly owned subsidiary, Hay Mountain Super Project LLC (“HMSP
LLC”), to serve as the primary holding company for development of the potential ore bodies encompassed in the Hay Mountain
area of interest in Arizona. We are in the exploration phase of operations and have not generated any revenues from operations.
A more detailed discussion of this technology and its anticipated benefits is provided under the section “Description of
Business”.
Our
common stock is traded over-the-counter on the OTCBB and on the OTC Pink market tier of the OTC Markets Group under the ticker
symbol “LBSR.”
The
principal offices of our company are located at 5610 E Sutler Lane, Tucson, Arizona 85712. Our telephone number is (520) 731-8786.
Summary
of Financial Data
The
following information represents selected audited financial information for our company for the years ended January 31, 2017 and
2016 and selected unaudited financial information for our company for the six month periods ended July 31, 2017 and 2016. The
summarized financial information presented below is derived from and should be read in conjunction with our audited and unaudited
financial statements, as applicable, including the notes to those financial statements which are included elsewhere in this prospectus
along with the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations beginning
on page 27 of this prospectus.
Statements of Operations Data
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Six Month
Period
Ended
July 31, 2017
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Six Month
Period
Ended
July 31, 2016
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Year
Ended
January 31, 2017
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Year
Ended
January 31, 2016
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Revenue
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Nil
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Nil
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Nil
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Nil
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Net Operating Expenses
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$
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381,008
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$
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451,561
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$
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882,712
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$
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863,032
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Net Income (Loss)
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$
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(459,345
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)
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$
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(858,671
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)
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$
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(1,496,550
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)
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$
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(1,569,662
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)
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Basic and Diluted Net Income (Loss) per Share
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$
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(0.00
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)
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$
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(0.00
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)
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$
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0.00
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|
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$
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0.00
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Balance Sheets Data
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As of
July 31, 2017
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As of
January 31, 2017
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As of
January 31, 2016
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Cash and Cash Equivalents
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$
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46,095
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$
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5,042
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$
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536
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Working Capital (Deficit)
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$
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(1,251,933
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)
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$
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(1,111,399
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)
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$
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(943,763
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)
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Total Assets
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$
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61,243
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$
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17,218
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$
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92,933
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Total Liabilities
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$
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1,307,119
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$
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1,120,151
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$
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1,073,126
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Total Stockholders’ Equity (Deficit)
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$
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(1,245,876
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)
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$
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(1,102,933
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)
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$
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(980,193
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)
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Accumulated Deficit
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$
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(54,604,221
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)
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$
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(54,144,876
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)
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$
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(52,648,326
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)
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Risk
Factors
An
investment in our common stock involves a number of very significant risks. You should carefully consider the following risks
and uncertainties in addition to other information in this prospectus in evaluating our company and our business before purchasing
our securities. Our business, operating results and financial condition could be seriously harmed as a result of the occurrence
of any of the following risks. You could lose all or part of your investment due to any of these risks. You should invest in our
common stock only if you can afford to lose your entire investment.
Risks
Related to Our Company and Our Business
Because
of the speculative nature of the exploration of natural resource properties, there is substantial risk that this business will
fail.
There
is no assurance that any of the claims we explore or acquire will contain commercially exploitable reserves of minerals. Exploration
for natural resources is a speculative venture involving substantial risk. Hazards such as unusual or unexpected geological formations
and other conditions often result in unsuccessful exploration efforts. We may also become subject to significant liability for
pollution or hazards, which we cannot insure or which we may elect not to insure. There is substantial risk that our business
will fail.
If
we cannot compete successfully for financing and for qualified managerial and technical employees, our exploration program may
suffer.
Our
competition in the mining industry includes large established mining companies with substantial capabilities and with greater
financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional financing
on terms we consider acceptable because investors may choose to invest in our competitors instead of investing in us. We also
compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. Our success
will be largely dependent on our ability to hire and retain highly qualified personnel. These individuals are in high demand and
we may not be able to attract the personnel we need. We may not be able to afford the high salaries and fees demanded by qualified
personnel, or may lose such employees after they are hired. If we are unable to successfully compete for financing or for qualified
employees, our exploration program may be slowed down or suspended.
Exploration
and exploitation activities are subject to comprehensive regulation which may cause substantial delays or require capital outlays
in excess of those anticipated causing an adverse effect on our company.
Exploration
and exploitation activities are subject to federal, state, and local laws, regulations and policies, including laws regulating
the removal of natural resources from the ground and the discharge of materials into the environment. Exploration and exploitation
activities are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards
by regulating the design and use of drilling methods and equipment.
Various
permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits
will be received. Environmental and other legal standards imposed by federal, state, or local authorities may be changed and any
such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse
effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess
of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other
environmental damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons.
Any laws, regulations or policies of any government body or regulatory agency may be changed, applied or interpreted in a manner
which will alter and negatively affect our ability to carry on our business.
There
are no known reserves of minerals on our mineral claims and we cannot guarantee that we will find any commercial quantities of
minerals.
We
have not found any mineral reserves on our claims and there can be no assurance that any of our mineral claims contain commercial
quantities of any minerals. Even if we identify commercial quantities of minerals in any of our claims, there can be no assurance
that we will be able to exploit the reserves or, if we are able to exploit them, that we will do so on a profitable basis. Any
such efforts will require financing, which we may not be able to arrange.
Because
the probability of an individual prospect ever having reserves is extremely remote, any funds spent on exploration will probably
be lost.
The
probability of an individual prospect ever having reserves is extremely remote. In all probability our properties do not contain
any reserves. As such, any funds spent on exploration will probably be lost which would most likely result in a loss of your investment.
We
have a limited operating history and as a result there is no assurance we can operate on a profitable basis.
We
have a limited operating history and must be considered in the exploration stage. Our operations will be subject to all the risks
inherent in the establishment of an exploration stage enterprise and the uncertainties arising from the absence of a significant
operating history. Potential investors should be aware of the difficulties normally encountered by mineral exploration companies
and the high rate of failure of such enterprises, especially those with a limited operating history. The likelihood of success
must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated
problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be
made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual
or unexpected formations of rock or land and other conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon
our claim and acquire new claims for new exploration or cease operations. The acquisition of additional claims will be dependent
upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced
to abandon our operations. No assurance can be given that we will ever operate on a profitable basis.
If
we do not obtain additional financing, our business will fail and our investors could lose their investment.
We
had cash and cash equivalents in the amount of $46,095 and negative working capital of $1,251,933 as of July 31, 2017. We currently
do not generate revenues from our operations. Our business plan calls for substantial investment and cost in connection with the
acquisition and exploration of our mineral properties currently under lease and option. Any direct acquisition of any of the claims
under lease or option is subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs
on the subject properties. The requirements are substantial. There is no assurance that we will be able to maintain operations
at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to
be unprofitable. Obtaining additional financing would be subject to a number of factors, including market prices for minerals,
investor acceptance of our properties, contractual restrictions on our ability to enter into further financing arrangements, and
investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us and
our business could fail.
Because
there is no assurance that we will generate revenues, we face a high risk of business failure.
We
have not earned any revenues and have never been profitable. We do not have an interest in any revenue generating properties.
We were incorporated in 2001 and took over our current business in 2004. To date we have been involved primarily in organizational
and exploration activities. We will incur substantial operating and exploration expenditures without realizing any revenues. We
therefore expect to incur significant losses into the foreseeable future. We have limited operating history upon which an evaluation
of our future success or failure can be made. We recognize that if we are unable to generate significant revenues from our activities,
we will not be able to earn profits or continue operations. Based upon current plans, we also expect to incur significant operating
losses in the future. We cannot guarantee that we will be successful in raising capital to fund these operating losses or generate
revenues in the future. We can provide investors with no assurance that we will generate any operating revenues or ever achieve
profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail and our investors
could lose their investment.
Our
independent registered public accounting firm’s report states that there is a substantial doubt about our ability to continue
as a going concern.
Our
independent registered public accounting firm, MaloneBailey, LLP, stated in its audit report attached to our audited financial
statements for the fiscal year ended January 31, 2017 that since we have suffered recurring losses from operations, requires additional
funds for further exploratory activity prior to attaining a revenue generating status, and we may not find sufficient ore reserves
to be commercially mined, there is a substantial doubt about our ability to continue as a going concern.
The
existence of our mining claims depends on our ability to fund exploratory activity or to pay fees.
Our
mining claims, which are the central part of our business, require that we either pay fees, or incur certain minimum development
costs annually, or the claims will be forfeited. Due to our current financial situation we may not be able to meet these obligations
and we could therefore lose our claims. This would impair our ability to raise capital and would negatively impact the value of
our company.
Risks
Related to Our Common Stock
Because
we will likely issue additional shares of our common stock, investment in our company could be subject to substantial dilution.
Investors’
interests in our company will be diluted and investors may suffer dilution in their net book value per share when we issue additional
shares. We are authorized to issue 6,250,000,000 shares of common stock, $0.00001 par value per share. As of September 14, 2017,
there were 2,192,681,952 shares of our common stock issued and outstanding. We anticipate that all or at least some of our future
funding, if any, will be in the form of equity financing from the sale of our common stock. If we do sell more common stock, investors’
investment in our company will likely be diluted. Dilution is the difference between what you pay for your stock and the net tangible
book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in our company’s
common stock could seriously decline in value.
The
sale of our stock under the convertible notes and the common share purchase warrants could encourage short sales by third parties,
which could contribute to the future decline of our stock price.
In
many circumstances, the provision of financing based on the distribution of equity for companies that are traded on the OTC Pink
market tier has the potential to cause a significant downward pressure on the price of common stock. This is especially the case
if the shares being placed into the market exceed the market’s ability to take up the increased stock or if we have not
performed in such a manner to show that the equity funds raised will be used to grow our business. Such an event could place further
downward pressure on the price of our common stock. Regardless of our activities, the opportunity exists for short sellers and
others to contribute to the future decline of our stock price. If there are significant short sales of our common stock, the price
decline that would result from this activity will cause the share price to decline more, which may cause other stockholders of
the stock to sell their shares, thereby contributing to sales of common stock in the market. If there are many more shares of
our common stock on the market for sale than the market will absorb, the price of our common shares will likely decline.
Trading
in our common stock on the OTC Pink market tier is limited and sporadic making it difficult for our stockholders to sell their
shares or liquidate their investments.
Our
common stock is currently quoted for public trading on the OTC Pink market tier. The trading price of our common stock has been
subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to a number of factors, many of which
will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance
that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These
broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance.
In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation
has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s
attention and resources.
Our
bylaws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.
Our
bylaws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by them, including an amount
paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which they are made
parties by reason of their being or having been our directors or officers.
Our
bylaws do not contain anti-takeover provisions which could result in a change of our management and directors if there is a take-over
of our company.
We
do not currently have a shareholder rights plan or any anti-takeover provisions in our bylaws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a change in our management and directors. This could
result in a disruption to the activities of our company, which could have a material adverse effect on our operations.
We
do not intend to pay dividends on any investment in the shares of stock of our company and any gain on an investment in our company
will need to come through an increase in our stock’s price, which may never happen.
We
have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent
that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment
of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through
an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.
Because
our securities are subject to penny stock rules, you may have difficulty reselling your shares.
Our
shares as penny stocks, are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
which imposes additional sales practice requirements on broker/dealers who sell our company’s securities including the delivery
of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer
receives; and, furnishing monthly account statements. These rules apply to companies whose shares are not traded on a national
stock exchange, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the Securities
and Exchange Commission (the “SEC”). These rules require brokers who sell “penny stocks” to persons other
than established customers and “accredited investors” to complete certain documentation, make suitability inquiries
of investors, and provide investors with certain information concerning the risks of trading in such penny stocks. These rules
may discourage or restrict the ability of brokers to sell our shares of common stock and may affect the secondary market for our
shares of common stock. These rules could also hamper our ability to raise funds in the primary market for our shares of common
stock.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In
addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (“FINRA”)
has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds
for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there
is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements
make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability
to buy and sell our stock and have an adverse effect on the market for our shares.
Tangiers
Investment Group, LLC will pay less than the then-prevailing market price for our common stock.
Our
common stock to be issued to Tangiers Investment Group, LLC (“Tangiers”) pursuant to the investment agreement dated
June 20, 2015 will be purchased at the 80% of the lowest day of the daily volume weighed average price of our common stock during
the five consecutive trading days immediately prior to the receipt by Tangiers of the put notice, provided, however, an additional
5% will be added to the discount of each put if (i) we are not DWAC eligible and (ii) an additional 5% will be added to the discount
of each put if we are under DTC “chill” status on the applicable date of the put notice. Tangiers has a financial
incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between
the discounted price and the market price. If Tangiers sells the shares, the price of our common stock could decrease. If our
stock price decreases, Tangiers may have a further incentive to sell the shares of our common stock that it holds. These sales
may have a further impact on our stock price.
Your
ownership interest may be diluted and the value of our common stock may decline by exercising the put right pursuant to the investment
agreement with Tangiers.
Pursuant
to the investment agreement with Tangiers, when we deem it necessary, we may raise capital through the private sale of our common
stock to Tangiers at a discounted price. Because the put price is lower than the prevailing market price of our common stock,
to the extent that the put right is exercised, your ownership interest may be diluted.
We
may not have access to the full amount available under the investment agreement with Tangiers.
Our
ability to draw down funds and sell shares under the investment agreement with Tangiers requires that the registration statement
of which this prospectus forms a part to be declared effective and continue to be effective. The registration statement of which
this prospectus forms a part registers the resale of 350,000,000 shares issuable under the investment agreement with Tangiers,
and our ability to sell any remaining shares issuable under the investment with Tangiers is subject to our ability to prepare
and file one or more additional registration statements registering the resale of these shares. These registration statements
may be subject to review and comment by the staff of the SEC, and will require the consent of our independent registered public
accounting firm. Therefore, the timing of effectiveness of these registration statements cannot be assured. The effectiveness
of these registration statements is a condition precedent to our ability to sell all of the shares of our common stock to Tangiers
under the investment agreement. Even if we are successful in causing one or more registration statements registering the resale
of some or all of the shares issuable under the investment agreement with Tangiers to be declared effective by the SEC in a timely
manner, we may not be able to sell the shares unless certain other conditions are met. For example, we might have to increase
the number of our authorized shares in order to issue the shares to Tangiers. Increasing the number of our authorized shares will
require board and stockholder approval. Accordingly, because our ability to draw down any amounts under the investment agreement
with Tangiers is subject to a number of conditions, there is no guarantee that we will be able to draw down future amounts of
the $8,000,000 under the investment agreement with Tangiers.
Certain
restrictions on the extent of puts and the delivery of advance notices may have little, if any, effect on the adverse impact of
our issuance of shares in connection with the investment agreement with Tangiers, and as such, Tangiers may sell a large number
of shares, resulting in substantial dilution to the value of shares held by existing stockholders.
Tangiers
has agreed, subject to certain exceptions listed in the investment agreement with Tangiers, to refrain from holding an amount
of shares which would result in Tangiers or its affiliates owning more than 4.99% of the then-outstanding shares of our common
stock at any one time. These restrictions, however, do not prevent Tangiers from selling shares of our common stock received in
connection with a put, and then receiving additional shares of our common stock in connection with a subsequent put. In this way,
Tangiers could sell more than 4.99% of the outstanding common stock in a relatively short time frame while never holding more
than 4.99% at one time.
Forward-Looking
Statements
This
prospectus contains forward-looking statements. Forward-looking statements are projections in respect of future events or our
future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”,
“should”, “intend”, “expect”, “plan”, “anticipate”, “believe”,
“estimate”, “predict”, “potential”, or “continue” or the negative of these terms
or other comparable terminology. These statements are only predictions and involve known and unknown risks, including the risks
in the section entitled “Risk Factors”, uncertainties and other factors, which may cause our company’s 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. 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.
Use
of Proceeds
We
will not receive any proceeds from the sale of shares of our common stock by the selling stockholder. However, we will receive
proceeds from the sale of shares of our common stock pursuant to our exercise of the put right offered by Tangiers Investment
Group, LLC. If we receive proceeds upon exercise of warrants, we will use these proceeds for general corporate and working capital
purposes and acquisitions or assets, businesses or operations or for other purposes that our board of directors, in its good faith,
deems to be in the best interest of our company.
We
will pay for expenses of this offering, except that the selling stockholder will pay any broker discounts or commissions or equivalent
expenses and expenses of its legal counsel applicable to the sale of its shares.
Dilution
The
sale of our common stock to Tangiers Investment Group, LLC in accordance with the investment agreement dated June 20, 2015 will
have a dilutive impact on our stockholders. As a result, our net loss per share could increase in future periods and the market
price of our common stock could decline. In addition, the lower our stock price is at the time we exercise our put option, the
more shares of our common stock we will have to issue to Tangiers Investment Group, LLC in order to drawdown pursuant to the investment
agreement. If our stock price decreases during the pricing period, then our existing stockholders would experience greater dilution.
The
Offering
The
selling stockholder identified in this prospectus may offer and sell up to 147,292,204 shares of our common stock to be sold to
Tangiers Investment Group, LLC under the investment agreement dated June 20, 2015. The investment agreement permits us to “put”
up to $8,000,000 in shares of our common stock to Tangiers Investment Group, LLC over a period of up to 36 months. All shares
registered in accordance with this registration statement are being registered solely pursuant to the investment agreement.
Investment
Agreement with Tangiers Investment Group, LLC
On
June 20, 2015, we entered into an investment agreement with Tangiers Investment Group, LLC, a Delaware limited liability company
(“Tangiers”). Pursuant to the terms of the investment agreement, Tangiers committed to purchase up to $8,000,000 of
our common stock over a period of up to 36 months. From time to time during the 36 months period commencing from the effectiveness
of the registration statement, which was on August 5, 2015, we may deliver a put notice to Tangiers which states the dollar amount
that we intend to sell to Tangiers on a date specified in the put notice. The maximum investment amount per notice must be no
more than 150% of the average daily trading dollar volume of our common stock for the 10 consecutive trading days immediately
prior to date of the applicable put notice and such amount must not exceed an accumulative amount per month of $100,000. The minimum
put amount is $5,000. The purchase price per share to be paid by Tangiers will be the 80% of the lowest day of the daily volume
weighed average price of our common stock during the five consecutive trading days immediately prior to the receipt by Tangiers
of the put notice, provided, however, an additional 5% will be added to the discount of each put if (i) we are not DWAC eligible
and (ii) an additional 5% will be added to the discount of each put if we are under DTC “chill” status on the applicable
date of the put notice.
In
connection with the investment agreement with Tangiers, we also entered into a registration rights agreement with Tangiers, pursuant
to which we agreed to use our best efforts to, within 30 days of June 20, 2015, file with the Securities and Exchange Commission
a registration statement, covering the resale of 100,000,000 shares of our common stock underlying the investment agreement with
Tangiers. Accordingly, on July 2, 2015 we filed a Registration Statement on Form S-1 with the Securities and Exchange Commission,
as was amended on July 29, 2015, which was declared effective on August 5, 2015 (“2015 Registration Statement”).
Thereafter,
the Company filed another registration statement on Form S-1 with the SEC on January 21, 2016 and Amendment No. 1 thereto on February
24, 2016, for registration of 350,000,000 shares of the Company’s common stock under the Investment Agreement dated June
20, 2015 with Tangiers Investment Group, LLC. The registration statement, as amended (“2016 Registration Statement”),
was declared effective by the SEC on March 15, 2016.
The
remaining 147,292,204 shares unsold under the 2016 Registration Statement being offered pursuant to this prospectus (forming a
part of Post-Effective Amendment No. 2 to the 2016 Registration Statement) represent 6.72% of the shares issued and outstanding,
assuming that the selling stockholder will sell all of the shares offered for sale. The 147,292,204 shares being offered pursuant
to this prospectus represent 14.59% of the shares issued and outstanding held by non-affiliates of our company. The investment
agreement with Tangiers is not transferable and any benefits attached thereto may not be assigned.
At
an assumed purchase price of $0.0021 we will be able to receive up to $309,313 in gross proceeds, assuming the sale of the 147,292,204
shares of our common stock pursuant to the investment agreement with Tangiers, being the number of shares being offered pursuant
to this prospectus. As of the date hereof, we have received aggregate gross proceeds of $129,751, $289,273, and $129,215 pursuant
to the investment agreement with Tangiers from shares registered under the July 29, 2015 Amended Form S-1 Registration Statement,
the January 21, 2016 Amended Form S-1 Registration Statement, and Post-Effective Amendment No. 1 to the January 21, 2016 Amended
Form S-1 Registration Statement, respectively. If we want to obtain the full $8,000,000 under the investment agreement, after
the sale of 147,292,204 common shares of our stock pursuant to this Post Effective Amendment No. 2 to the January 21, 2016 Amended
Form S-1 Registration Statement, we will have to register an additional 3,401,165,714 shares of our common stock.
We
may be required to further increase our authorized shares in order to receive the entire purchase price. Tangiers has agreed to
refrain from holding an amount of shares which would result in Tangiers owning more than 4.99% of the then-outstanding shares
of our common stock at any one time.
There
are substantial risks to investors as a result of the issuance of shares of our common stock under the investment agreement with
Tangiers. These risks include dilution of stockholders’ percentage ownership, significant decline in our stock price and
our inability to draw sufficient funds when needed.
We
intend to sell Tangiers periodically our common stock under the investment agreement and Tangiers will, in turn, sell such shares
to investors in the market at the market price. This may cause our stock price to decline, which will require us to issue increasing
numbers of common shares to Tangiers to raise the same amount of funds, as our stock price declines.
The
aggregate investment amount of $8 million was determined based on numerous factors, including the following: The proceeds received
from any “puts” tendered to Tangiers under the investment agreement will be used for general corporate and working
capital purposes and acquisitions or assets, businesses or operations or for other purposes that our board of directors, in its
good faith deem to be in the best interest of our company. We are involved in the Hay Mountain Super Project for copper, molybdenum,
gold and silver in South East Arizona. These monies will be completely absorbed by technical activities, drilling and attendant
environmental, archeological and permitting studies. We will need the full amount of $8 million funding under the investment agreement
with Tangiers to fund the preparation and initiation of diamond core drilling connected to the Hay Mountain Super Project Porphyry
Copper-Gold-Molybdenum-Rare Earth Element Mining Target in the Tombstone Mining District of Cochise County, Arizona.
We
may have to increase the number of our authorized shares in order to issue the shares to Tangiers if we reach our current amount
of authorized shares of common stock. Increasing the number of our authorized shares will require board and stockholder approval.
Accordingly, because our ability to draw down any amounts under the investment agreement with Tangiers is subject to a number
of conditions, there is no guarantee that we will be able to draw down any portion or all of the proceeds of $8,000,000 under
the investment agreement with Tangiers.
Selling
Stockholders
The
selling stockholder may offer and sell, from time to time, any or all of shares of our common stock to be sold to Tangiers Investment
Group, LLC under the investment agreement dated June 20, 2015.
The
following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholder
as of September 14, 2017 and the number of shares of our common stock being offered pursuant to this prospectus. We believe that
the selling stockholder has sole voting and investment powers over its shares.
Because
the selling stockholder may offer and sell all or only some portion of the 147,292,204 shares of our common stock being offered
pursuant to this prospectus, the numbers in the table below representing the amount and percentage of these shares of our common
stock that will be held by the selling stockholder upon termination of the offering are only estimates based on the assumption
that the selling stockholder will sell all of its shares of our common stock being offered in the offering.
The
selling stockholder has not had any position or office, or other material relationship with us or any of our affiliates over the
past three years.
To
our knowledge, the selling stockholder is not a broker-dealer or an affiliate of a broker-dealer. We may require the selling stockholder
to suspend the sales of the shares of our common stock being offered pursuant to this prospectus upon the occurrence of any event
that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires
the changing of statements in those documents in order to make statements in those documents not misleading.
Name of Selling Stockholder
|
|
Shares Owned by the
Selling Stockholder
before the Offering
(1)
|
|
|
Total Shares
Offered in
the Offering
|
|
|
Number of Shares
to Be Owned by
Selling Stockholder After
the Offering and
Percent of
Total Issued and
Outstanding
Shares
(1)
|
|
|
|
|
|
|
|
|
|
# of
Shares
(3)
|
|
|
% of
Class
(2),(3)
|
|
Tangiers Investment Group, LLC
(4)
|
|
|
0
|
(5)
|
|
|
147,292,204
|
|
|
|
Nil
|
|
|
|
*
|
|
(1)
|
Beneficial
ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment
power with respect to shares of common stock. Shares of common stock subject to options and warrants currently exercisable,
or exercisable within 60 days, are counted as outstanding for computing the percentage of the person holding such options
or warrants but are not counted as outstanding for computing the percentage of any other person.
|
|
|
(2)
|
We
have assumed that the selling stockholder will sell all of the shares being offered in this offering.
|
|
|
(3)
|
Based
on 2,192,681,952 shares of our common stock issued and outstanding as of September 14, 2017. Shares of our common stock being
offered pursuant to this prospectus by a selling stockholder are counted as outstanding for computing the percentage of the
selling stockholder.
|
|
|
(4)
|
Robert
Papiri has the voting and dispositive power over the shares owned by Tangiers Investment Group, LLC.
|
|
|
(5)
|
As
of September 14, 2017, Tangiers held no shares of our common stock pursuant to the puts made under the investment agreement.
|
Plan
of Distribution
The
selling stockholder may, from time to time, sell any or all of shares of our common stock covered hereby on the OTCBB, OTC Pink
market tier of the OTC Markets Group, or any other stock exchange, market or trading facility on which the shares are traded or
in private transactions. A selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus
at fixed prices, at prevailing market prices at the time of sale, at varying prices or at negotiated prices. A selling stockholder
may use any one or more of the following methods when selling securities:
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
|
●
|
an
exchange distribution in accordance with the rules of the applicable exchange;
|
|
|
|
|
●
|
privately
negotiated transactions;
|
|
|
|
|
●
|
in
transactions through broker-dealers that agree with the selling stockholder to sell a specified number of such securities
at a stipulated price per security;
|
|
|
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
The
selling stockholder may also sell securities under Rule 144 under the Securities Act of 1933, if available, rather than under
this prospectus.
Broker-dealers
engaged by the selling stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction
not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction
a markup or markdown in compliance with FINRA IM-2440.
In
connection with the sale of the securities or interests therein, the selling stockholder may enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging
the positions they assume. The selling stockholder may also sell securities short and deliver these securities to close out its
short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling stockholder
may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative
securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus,
which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).
Tangiers
Investment Group, LLC is an underwriter within the meaning of the Securities Act of 1933 and any broker-dealers or agents that
are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of
1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act
of 1933. We are required to pay certain fees and expenses incurred by us incident to the registration of the securities.
The
selling stockholder will be subject to the prospectus delivery requirements of the Securities Act of 1933 including Rule 172 thereunder.
The
resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities
laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and
is complied with.
Under
applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale
securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholder will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation
M, which may limit the timing of purchases and sales of securities of the common stock by the selling stockholder or any other
person. We will make copies of this prospectus available to the selling stockholder and will inform it of the need to deliver
a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the
Securities Act of 1933).
Description
of Securities
Capital
Stock
We
are authorized to issue 6,250,000,000 shares of common stock, $0.00001 par value per share.
Common
Stock
As
of September 14, 2017, 2,192,681,952 shares of common stock are issued and outstanding.
The
holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board
of directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon
liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription
or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to
one non-cumulative vote per share on all matters on which stockholders may vote.
All
shares of common stock now outstanding are fully paid for and non-assessable. We refer you to our articles of incorporation, bylaws
and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of
our securities. All material terms of our common stock have been addressed in this section.
Holders
of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding
shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event,
the holders of the remaining shares will not be able to elect any of our directors.
Anti-Takeover
Provisions
Some
features of the Nevada Revised Statutes, which are further described below, may have the effect of deterring third parties from
making takeover bids for control of our company or may be used to hinder or delay a takeover bid.
This
would decrease the chance that our stockholders would realize a premium over market price for their shares of common stock as
a result of a takeover bid.
Acquisition
of Controlling Interest
The
Nevada Revised Statutes contain provisions governing acquisition of controlling interest of a Nevada corporation. These provisions
provide generally that any person or entity that acquires certain percentage of the outstanding voting shares of a Nevada corporation
may be denied voting rights with respect to the acquired shares, unless the holders of a majority of the voting power of the corporation,
excluding shares as to which any of such acquiring person or entity, an officer or a director of the corporation, and an employee
of the corporation exercises voting rights, elect to restore such voting rights in whole or in part. These provisions apply whenever
a person or entity acquires shares that, but for the operation of these provisions, would bring voting power of such person or
entity in the election of directors within any of the following three ranges:
|
●
|
20%
or more but less than 33 1/3%;
|
|
|
|
|
●
|
33
1/3% or more but less than or equal to 50%; or
|
|
|
|
|
●
|
more
than 50%.
|
The
stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from these provisions through
adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation
and bylaws do not exempt our common stock from these provisions.
These
provisions are applicable only to a Nevada corporation, which:
|
●
|
has
200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation;
and
|
|
|
|
|
●
|
does
business in Nevada directly or through an affiliated corporation.
|
At
this time, we do not have 200 or more stockholders of record nor do we believe that we do business in Nevada directly or through
an affiliated corporation. Therefore, we believe that these provisions do not apply to acquisitions of our shares and will not
until such time as these requirements have been met. At such time as they may apply to us, these provisions may discourage companies
or persons interested in acquiring a significant interest in or control of our company, regardless of whether such acquisition
may be in the interest of our stockholders.
Combination
with Interested Stockholder
The
Nevada Revised Statutes contain provisions governing combination of a Nevada corporation that has 200 or more stockholders of
record with an interested stockholder. As of September 14, 2017, we had approximately 143 stockholders of record. Therefore, we
believe that these provisions governing combination of a Nevada corporation do not apply to us and will not until such time as
these requirements have been met. At such time as they may apply to us, these provisions may also have effect of delaying or making
it more difficult to effect a change in control of our company.
A
corporation affected by these provisions may not engage in a combination within three years after the interested stockholder acquires
his, her or its shares unless the combination or purchase is approved by the board of directors before the interested stockholder
acquired such shares. Generally, if approval is not obtained, then after the expiration of the three-year period, the business
combination may be consummated with the approval of the board of directors before the person became an interested stockholder
or a majority of the voting power held by disinterested stockholders, or if the consideration to be received per share by disinterested
stockholders is at least equal to the highest of:
|
●
|
the
highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement
of the combination or within three years immediately before, or in, the transaction in which he, she or it became an interested
stockholder, whichever is higher;
|
|
|
|
|
●
|
the
market value per share on the date of announcement of the combination or the date the person became an interested stockholder,
whichever is higher; or
|
|
|
|
|
●
|
if
higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.
|
Generally,
these provisions define an interested stockholder as a person who is the beneficial owner, directly or indirectly of 10% or more
of the voting power of the outstanding voting shares of a corporation. Generally, these provisions define combination to include
any merger or consolidation with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, in one transaction or a series of transactions with an interested stockholder of assets of the corporation having:
|
●
|
an
aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;
|
|
|
|
|
●
|
an
aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or
|
|
|
|
|
●
|
representing
10% or more of the earning power or net income of the corporation.
|
Articles
of Incorporation and Bylaws
There
are no provisions in our articles of incorporation or our bylaws that would delay, defer or prevent a change in control of our
company and that would operate only with respect to an extraordinary corporate transaction involving our company, such as merger,
reorganization, tender offer, sale or transfer of substantially all of its assets, or liquidation.
Experts
and Counsel
The
financial statements of our company included in this prospectus have been audited by MaloneBailey, LLP, to the extent and for
the period set forth in their report (which contains an explanatory paragraph regarding our ability to continue as a going concern)
appearing elsewhere in the prospectus, and are included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
Legal&
Compliance, LLC, 330 Clematis Street, Suite 217, West Palm Beach, Florida 33401, has provided us with an opinion on the validity
of the shares of our common stock being offered pursuant to this prospectus.
Interest
of Named Experts and Counsel
No
expert named in the registration statement of which this prospectus forms a part as having prepared or certified any part thereof
(or is named as having prepared or certified a report or valuation for use in connection with such registration statement) or
counsel named in this prospectus as having given an opinion upon the validity of the securities being offered pursuant to this
prospectus or upon other legal matters in connection with the registration or offering such securities was employed for such purpose
on a contingency basis. Also at the time of such preparation, certification or opinion or at any time thereafter, through the
date of effectiveness of such registration statement or that part of such registration statement to which such preparation, certification
or opinion relates, no such person had, or is to receive, in connection with the offering, a substantial interest, direct or indirect,
in our company or any of its parents or subsidiaries. Nor was any such person connected with our company or any of its parents
or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
Information
with respect to Our Company
Description
of Business
Business
Development
Liberty
Star Uranium & Metals Corp. (the “Company”, “we” or “Liberty Star”) was formerly Liberty
Star Gold Corp. and formerly Titanium Intelligence, Inc. (“Titanium”). Titanium was incorporated on August 20, 2001
under the laws of the State of Nevada. On February 5, 2004, we commenced operations in the acquisition and exploration of mineral
properties business. Big Chunk Corp. (“Big Chunk”), our wholly owned subsidiary, is engaged in the acquisition and
exploration of mineral properties business in the State of Alaska. In April 2007, we changed our name to Liberty Star Uranium
& Metals Corp. Hay Mountain Super Project LLC (“HMSP”), our wholly owned subsidiary, serves as the primary holding
company for development of the potential ore bodies encompassed in the Hay Mountain area of interest in Arizona. We are in the
exploration phase of operations and have not generated any revenues from operations.
Our
Current Business
We
are engaged in the acquisition and exploration of mineral properties in the States of Arizona and Alaska. Claims in the State
of Alaska are held in the name of Big Chunk. Claims in the State of Arizona are held in the name of Liberty Star. We use the term
“Super Project” to indicate a project in which numerous mineral targets have been identified, any one or more of which
could potentially contain commercially viable quantities of minerals. Our significant projects are described below.
North
Pipes Super Project (“North Pipes” and “NPSP”):
The NPSP is located in Northern Arizona on the Arizona
Strip. We plan to ascertain whether the NPSP claims possess commercially viable deposits of uranium and associated co-product
metals. We have not identified any ore reserves to date.
Big
Chunk Super Project:
The Big Chunk Super Project is located in the Iliamna region of Southwestern Alaska. We plan to ascertain
whether the Big Chunk Super Project claims possess commercially viable deposits of copper, gold, molybdenum, silver, palladium
rhenium and zinc. We have not identified any ore reserves to date.
Tombstone
Super Project (“Tombstone”) (formerly referred to as Tombstone Porphyry Precious Metals Project):
Tombstone is
located in Cochise County, Arizona and covers the Tombstone caldera and its environs. Within the Tombstone caldera is the Hay
Mountain target where we are concentrating our work at this time. We plan to ascertain whether the Tombstone, Hay Mountain claims
possess commercially viable deposits of copper, molybdenum, gold, silver, lead, zinc, manganese and other metals including Rare
Earth Elements (REE’s). We have not identified any ore reserves to date.
East
Silverbell Porphyry Copper Project (“East Silverbell”):
East Silverbell is located northwest of Tucson, Arizona.
We plan to ascertain whether the East Silverbell claims possess commercially viable deposits of copper. We have not identified
any ore reserves to date.
Title
to mineral claims involves certain inherent risks due to difficulties in determining the validity of certain claims, as well as
potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. We
have investigated title to all the Company’s mineral properties and, to the best of our knowledge, title to all properties
are in good standing.
The
mineral resource business generally consists of three stages: exploration, development, and production. Mineral resource companies
that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged
in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially
exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction
of a known mineral resource are in the production stage. We have not found any mineral resources in commercially exploitable quantities.
There
is no assurance that a commercially viable mineral deposit exists on any of our properties, and further exploration is required
before we can evaluate whether any exist and, if so, whether it would be economically feasible to develop or exploit those resources.
Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required
to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will
constitute a commercially viable mineral deposit, known as an “ore reserve.”
To
date, we have not generated any revenues. Our ability to pursue our business plan and generate revenues is subject to our ability
to obtain additional financing, and we cannot give any assurance that we will be able to do so.
Competition
We
are a mineral resource company engaged in the business of mineral exploration. We compete with other mineral resource exploration
companies for financing from a limited number of investors that are prepared to make investments in mineral resource exploration
companies. The presence of competing mineral resource exploration companies may impact our ability to raise additional capital
in order to fund our property acquisitions and exploration programs if investors are of the view that investments in competitors
are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to
investors.
We
also compete for mineral properties of merit with other exploration companies. Competition could reduce the availability of properties
of merit or increase the cost of acquiring additional mineral properties.
Many
of the resource exploration companies with whom we compete may have greater financial and technical resources than we have. Accordingly,
these competitors may be able to spend greater amounts on acquisitions of properties of merit and on exploration of their properties.
In addition, they may be able to afford greater geological expertise in the targeting and exploration of resource properties.
This competition could result in our competitors having resource properties of greater quality and interest to prospective investors
who may finance additional exploration and to senior exploration companies that may purchase resource properties or enter into
joint venture agreements with junior exploration companies. This competition could adversely impact our ability to finance property
acquisitions and further exploration.
Compliance
with Government Regulation
We
will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the
exploration of minerals in the States of Arizona and Alaska.
Our
North Pipes claims are federal lode mining claims located on U.S. federal lands and administered by the Department of Interior,
Bureau of Land Management (the “BLM”). The BLM has prepared an environmental impact statement (“EIS”)
addressing potential for contamination of significant amounts of uranium leaking into the Colorado River. The EIS indicated the
danger of such contamination insignificant. Regardless, the United States Secretary of the Interior, Kenneth Salazar, through
executive order, has withdrawn federal lands from locatable mineral exploration and mining North of the Grand Canyon along the
Utah border in Arizona, the so-called “Arizona Strip”. Nearly 1 million acres of land managed by the BLM and the Forest
Service were segregated in July 2009 by the Secretary of Interior. The executive order has resulted in the withdrawal of an area
of the Arizona Strip from mining in particular, and the moratorium now is instated for the next 20 years. However, the moratorium
permits existing claims and mines to continue as before, including our North Pipes lode mining claims.
We
are required to pay annual rentals for our federal lode mining claims for the North Pipes project in the State of Arizona. The
rental period begins at noon on September 1st through the following September 1st and rental payments are due by the first day
of the rental period. The annual rentals are $155 per claim. The rentals of $1,705 for the period from September 1, 2016 to September
1, 2017 have been paid. The rentals due by September 1, 2017 for the period from September 1, 2017 through September 1, 2018 of
$1,705 have not been paid yet, however, we plan to pay these fees prior to the due date.
We
are required to pay annual rentals for our federal lode mining claims for our East Silverbell project in the State of Arizona.
The rental period begins at noon on September 1st through the following September 1st and rental payments are due by the first
day of the rental period. The annual rental is $155 per claim. The rentals of $4,030 for the period from September 1, 2016 to
September 1, 2017 have been paid. The annual rentals due by September 1, 2017 of $4,030 are required to maintain the East Silverbell
claims are for the period from September 1, 2017 through September 1, 2018 have not been paid yet, however, we plan to pay these
fees prior to the due date. There is no requirement for annual assessment or exploration work on the federal lode mining claims.
There are no royalties associated with the federal lode mining claims.
We
are required to pay annual rentals for our federal lode mining claims for the Tombstone project in the State of Arizona. The rental
period begins at noon on September 1st through the following September 1st and rental payments are due by the first day of the
rental period. The annual rentals are $155 per claim. The rentals due by September 1, 2017 for the period from September 1, 2017
through September 1, 2018 of $14,725 have not been paid yet, however, we plan to pay these fees prior to the due date. We are
required to pay annual rentals for our Arizona State Land Department Mineral Exploration Permits (“AZ MEP”) at our
Tombstone Hay Mountain project in the State of Arizona. AZ MEP permits are valid for 1 year and renewable for up to 5 years. The
rental fee is $2.00 per acre for the first year, which includes the second year, and $1.00 per acre per year for years three through
five. The minimum work expenditure requirements are $10 per acre per year for years one and two and $20 per acre per year for
years three through five. If the minimum work expenditure requirement is not met the applicant can pay the equal amount in fees
to the Arizona State Land Department to keep the AZ MEP permits current. The rental period begins on September 30th through the
following September 29th for our Phase 1 permits, and September 14th through September 13th for our Phase 2 permits. Rental payments
are due by the first day of the rental period. We hold AZ MEP permits for 1,886.88 acres at our Tombstone project. On September
20, 2016, we filed for renewal of three MEP permits. By renewing them simultaneously upon expiration we were given the opportunity
to have them for another five years. We plan to pay rental fees for our Phase 1 AZ MEP’s before September 29, 2017 in the
amount of $1,500. Required minimum work expenditures for the period ending September 29, 2017 is $18,468.80. The annual rental
due by September 13, 2016 to maintain the Phase 2 AZ MEP permit is $540. Required minimum work expenditures for the period ending
September 13, 2017 is $400.
With
respect to the foregoing properties, additional approvals and authorizations may be required from other government agencies, depending
upon the nature and scope of the proposed exploration program. The amount of these costs is not known at this time as we do not
know the size, quality of any resource or reserve at this time, and it is extremely difficult to assess the impact of any capital
expenditures on earnings or our competitive position
Personnel
Currently
we employ one full time geologist who is also our CEO, CFO, President and Chairman of the Board, James A. Briscoe. We also employ
one full time VP for management of finance and accounting, one full time geo-tech, who is also our manager of field operations,
and one investor relations representative and one CPA on an as needed basis. We hire consultants for investor relations, exploration,
derivative accounting, and administrative functions also on an as needed basis.
Recent
Departure of Director
Effective
as of July 21, 2017, Gary Musil resigned as a director of the Board of Directors and as the Secretary of the Company. Mr. Musil’s
decision to resign was solely for personal reasons and time considerations and did not involve any disagreement with the Company,
the Company’s management or the Board of Directors. The Board of Directors currently consists of five directors, four of
which are independent.
Description
of Property
Our
offices
We
rent the premises for our principal office located at 5610 E. Sutler Lane, Tucson, Arizona 85712. We rent this office space for
$522 per month plus a pro rata share of taxes and maintenance. Our employees work either from our principal office or from offices
maintained in their homes.
We
believe that our existing office facilities are adequate for our needs. Should we require additional space in the future, we believe
that such space can be secured on commercially reasonable terms.
Our
Pima Office
The
Company entered into a 24-month office lease at 5232 E Pima Street, Suite D, Tucson, Arizona, effective October 1, 2016 through
September 30, 2018, with a base rent of $2,100 per month through September 30, 2017 and then $2,163 per month through September
30, 2018.
Our
mineral claims
All
of the Company’s claims for mineral properties are in good standing as of July 31, 2017.
North
Pipes:
We
hold a 100% interest in 11 (unpatented) federal lode mining claims strategically placed on the Arizona Strip. The 11 unpatented
federal lode mining claims with an area of 227.7 acres include breccia pipe targets (“Pipes”). Breccia pipes are cylindrical
formations in the earth’s crust sometimes identified by a surface depression, or surface bump or no visible surface expression
at all, and contain a high concentration of fragmented rock “breccia” sometimes cemented by uranium and other minerals.
We plan to ascertain whether our North Pipes claims possess commercially viable deposits of uranium. Due to the moratorium of
location of lode mining claims on the Arizona Strip and the low price of U3O8 we have no current exploration plans and will not
until the uranium price increases and the moratorium expires in about 15 years. We intend to hold a strategic position until such
time that it is economically feasible to mount a new drilling program. We want to take advantage of more than a million dollars
of exploration data which was acquired by Liberty Star when uranium prices were higher and before the moratorium was instituted.
North
Pipes is located on the Arizona Strip, which is located approximately 10 miles south of the town of Fredonia, AZ. Access is by
Hwy 389 and various dirt roads, some of which are maintained and some that are very primitive. 4WD vehicles are necessary for
the primitive dirt roads. Some of the claims cannot be driven to and require hiking to their location or under an approved plan
of operation it is possible to create an access road.
North
Pipes-AZ Claims:
|
|
11
LA Claims
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Total:
11 Claims - 227.7 Acres
|
Our
NPSP claims are undeveloped. There are neither open-pit nor underground mines, nor is there any mining plant or equipment located
on the properties. There is no power supply to the properties. We have not found any mineral resources on any of our claims. The
Arizona Strip was an active exploration district in the 1970’s and 1980’s with multiple producing uranium mines. No
evidence of actual development work has been found on any of our properties and no significant exploration activities have been
performed on our NPSP claims since 2008 due to many factors including the lowered uranium prices and the moratorium on locating
claims. Below is a summary of prior exploration activities performed on our NPSP claims:
Geophysics:
We have completed PEM (Pulse Electro-magnetic) geophysical surveys on some of our NPSP claims. Two types of PEM surveys were
conducted in 2007: (i) Downhole PEM and (ii) In-Loop PEM. We have also used CSAMT and NSAMT (Controlled and Natural Source Audio-range
Magneto Tellurics), run on the ground and executed by Zonge Engineering of Tucson AZ. A survey was also completed on an approximately
six square mile area by VTEM helicopter borne electromagnetic survey along right angle crossing grid lines spaced 100 meters apart,
which was performed by Geotech of Aurora, Ontario, Canada. Significant anomalies resulted from this survey. Preliminary drilling
on one of Liberty Star’s anomalies intersected strong breccia, alteration and pyrite mineralization. The holes did not penetrate
down to the elevation where uranium mineralization would be expected, but are targets for future work. As of this date we have
not developed any uranium resources on the Arizona Strip.
Stereoscopic
geologic color air photo interpretation (photo-geology):
Stereoscopic geologic interpretation of 1:24,000 (1 inch = 2,000
feet) high resolution color air photographs were contracted for and completed by Dr. Karen Wenrich and Edward Ulmer, a Registered
Professional Geologist. Dr. Wenrich worked on the Arizona Strip uranium bearing breccia pipes almost exclusively during her twenty
three year tenure with the United States Geological Survey from which she is now retired. During this period of study she authored
many professional papers on breccia pipes of the Grant Canyon area, and is considered a foremost expert on them. Mr. Ulmer worked
on the Arizona Strip in the mid to late 1970s working on both imagery interpretation and surface geology.
Geologic
field mapping on the surface:
Geological field mapping was conducted in the fall of 2005 through 2007 by our staff geologists
as well as contracted geologists. Approximately 180 of the breccia pipe target areas have been mapped in detail 1:5,000 (1 inch
= 417 feet). Several detailed measured stratigraphic sections have also been completed.
Geochemical
sampling:
A comprehensive soil geochemical survey was completed in 2007. We have collected approximately 14,000 soil samples
over all identifiable breccia pipes, both those with known ore and those that are yet to be proven by drilling. A strict chain
of custody procedures were followed and quality assurance/quality control (QA/QC) samples were inserted regularly into the sample
stream. The samples were assayed for 63 elements. Assay analyses were conducted by a Certified Assay Lab, Acme Analytical Laboratories
of Vancouver, British Columbia, Canada. We believe that these samples allow us to identify potential uranium bearing breccia pipes
versus barren or non-uranium bearing breccia pipes.
Drilling:
In 2007 a drilling program was undertaken using both rotary drilling and core drilling. Rotary drilling was contracted by
Boart Longyear. Diamond core drilling was completed by Redwall Drilling Inc., a former wholly owned subsidiary of Liberty Star.
A total of 22 holes were drilled for a total of 16,226 feet of drilling. Important intersections of rock generally associated
with producing breccia pipes were made. We did not intersect any ore mineralization during the drilling program.
Total
costs including claim staking (initially in 2005), claim maintenance and a drilling program (exploratory) in calendar years 2007
and 2008, are $5,220,794.
Beginning
in 2006, Certified Professional Geologist Dr. Karen Wenrich and a dozen other well regarded geoscientists engaged in an exploratory
program centering on the region’s breccia pipes. By the time Dr. Wenrich came to work on the North Pipes project, she had
27 years with the USGS working on breccia pipe research and was a member of a Nobel Peace Prize winning team of UN atomic science
specialists. The Liberty Star team worked with high resolution color aerial photographs and other reconnaissance covering approximately
2,000 square miles to format geological maps of the terrain. In addition to geology, geophysics gamma ray spectroscopy, approximately
14,000 soil samples were collected and analyzed by a certified lab for 63 elements. These were located precisely as they were
collected using GPS. The results were compiled and plotted using GIS software, and various contouring and interpretation techniques.
Expenses included food and lodging and a daily commute of approximately 100 miles. Road conditions were extreme and resulted in
vehicle expenses of approximately $2.00 per mile. Various contractors were used in claim staking, and other contract work in sample
collection. Helicopters and light planes were used for various transportation tasks. Home office support also involved permanent
and contract support.
Exploratory
drilling includes costs of travel, food and lodging, payments on the drill rig, drill bits, fuel, drilling permits, and maintenance
costs of the drill rig and of support vehicles. Also included are the costs of reclamation bonds and reclamation costs of lands
disturbed by drilling, as well as the costs of conducting archaeological surveys to identify prehistoric remains of human habitation
or human activity.
Currently
there are no planned costs for the North Pipes Super Project unless commodity prices, specifically for uranium, increase sufficiently
to make exploration financially tenable. The Moratorium on acquiring any additional land has also negatively affected the current
investment climate for such work. However we have a letter agreement with Mr. Andrew Mueller to option our existing claims North
Pipes claims to him for mining using his vertical bore technology. He believes this will make the Pipes exploitable.
Big
Chunk Super Project – Location, claims, geology and technical studies:
Big
Chunk Super Project:
The Big Chunk Super Project located in the Iliamna region of Southwestern Alaska: After much caution
and thought, we have decided at this time to no longer put any funds into Big Chunk.
Tombstone:
Our
CEO, CFO, President, Chief Geologist and Chairman of the Board, James A. Briscoe, has long experience in the Tombstone district,
southeast Arizona, where he first worked in 1972. In the mid-1980s, he concluded that much earlier regional geologic work had
reached erroneous conclusions and that Tombstone was a large and ancient (72 million years before the present – or Laramide
in age) volcanic structure – a caldera. He brought this to the attention of the US Geological Survey caldera experts, who
after study concluded that Briscoe was correct. Subsequently, more than seventeen calderas of various ages have been identified
in Arizona by the US Geological survey, the Arizona Geological Survey and others. Such calderas of Laramide age are all associated
with porphyry alteration and copper and associated mineralization; many of these have become very large copper mines. Studies
by Mr. Briscoe over the years, and more recently using advanced technology, have indicated that alteration associated mineralization
at Tombstone is much more extensive than originally thought. This alteration lies largely under cover and is indicated by geochemistry,
geophysics and projection of known geology into covered areas.
We
hold 29 unpatented standard federal lode mining claims with an area of 604 acres located due east and southeast of the town of
Tombstone, Arizona which defines the Walnut Creek Project
The
Hay Mountain Project is located 6.5 miles southeast of Tombstone where we hold 4 Arizona State Mineral Exploration Permits (MEPs)
covering (1,886.88 acres) or 3 square miles.; Access is by Hwy 89, Davis Rd. and Wild West road.
On
April 29, 2008 Liberty Star announced that it had leased, with an option to purchase, three properties from JABA US Inc. in Arizona
and Nevada, USA. Liberty Star President James A. Briscoe controls JABA US INC and Dr. J. M. Guilbert, Director of the Company,
holds a small stock position as well. The properties in Arizona are part of the Tombstone Walnut Creek project, at Tombstone and
the East Silverbell project.
A
26 lode claim block at East Silverbell also belonging to JABA US lies adjunct to ASARCO patented mining claims of the Silverbell
mine, in Pima County about 40 miles NW of Tucson AZ.
In
Clark County Nevada, JABA held title to the Providence patented claim immediately adjacent to the Montgomery Shoshone open pit
silver gold mine, within the Beatty mining district. The Option covering the property in Nevada was sold in October, 2008 to NPX
Metals. Proceeds from that sale were loaned immediately back to Liberty Star by Mr. Briscoe, with the understanding this would
be repaid to JABA (US) Inc.
For
the remaining claims owned by JABA (US) Inc. according to the option agreement, Liberty Star could earn up to 100% interest by
keeping up annual assessment work and spending $175,000 in exploration expenditures on the properties between April 2008 and January
1, 2011 and subject to a Net Smelter Return Royalty (NSR) in perpetuity. This provision payment of assessment and related expenses
has been met and option agreement has been maintained over the Tombstone and East Silverbell Claims.
LIBERTY
STAR
|
|
|
TOMBSTONE-AZ
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|
JABA
Optioned Claims
|
Federal
Unpatented Claims
|
Claim
Names
|
HM
87-143
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TS
129- 152
|
TS
168-176
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|
TS
163- 167
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Claim
Acreage
|
57
HM Claims- 1095.18 acres
|
|
29
TS Claims- 604 acres
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9
TS Claims- 99.5 acres
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|
|
|
|
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State
Exploration Permits
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4
State MEP’s- 1,886.88 acres
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|
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At
Hay Mountain, we plan to ascertain whether the Hay Mountain lode mining claims and AZ MEPs possess commercially viable deposits
of copper, gold, molybdenum, silver, zinc, rare earth metals and other valuable metals. We have a phased exploration plan that
involves diamond core drilling of multiple holes over targets determined by analysis of geochemical sampling and ZTEM electromagnetic
and magnetic survey. Initial phase 1 drilling is planned to take approximately one year. Should results indicate the viability
of the project, additional phased work, both exploration and development, is planned over the course of seven total years to define
the nature and size of an ore body(s) and move toward mining. Any exploration plans are dependent on acquiring suitable funding.
No part of the phased program is currently funded.
The
Tombstone claims are undeveloped. However significant amounts of aeromagnetic surveys, IP (Induced Polarization Surveys), geologic
mapping by the USGS and others, and geochemical surveys including soil, rock and vegetation sampling have been conducted at various
times by various parties, over the last 60 years. When compiled and analyzed these various data suggest a compelling series of
anomalies that are typical of buried, dirt and rock covered porphyry copper system(s). Below is a summary of prior exploration
activities performed on our Tombstone claims:
Technical Report
: In mid-March 2011, Liberty Star contracted SRK to prepare
three (3) Technical studies and Reports in a form similar to mineral reports prescribed under NI 43-101. Members of SRK’s
engineering/scientific staff supervised by a Qualified Person as defined under NI 43-101 and SRK’s Tucson Office Principal
Geologist, Corolla Hoag, and geologist Dr. Jan Rasmussen have visited the Tombstone property. This information was combined with
historic technical reports going back to 1878 and more recent data up to August 2011 (the date of their reports). The three Technical
Reports are entitled: (1) Walnut Creek Exploration Report, Tombstone District, Arizona –August 31, 2011, 147 pages; (2)
The Tombstone Caldera South Exploration Report, Tombstone District, Arizona –August 31, 2011, 144 pages; and (3) Hay Mountain
Exploration Report, Tombstone District, Arizona – August 31 2011, 155 pages. Because the Company’s stock does not
trade on any Canadian stock exchanges, these three Technical Reports were not submitted to SEDAR, the electronic system for the
official filing of documents by public companies and investment funds across Canada. We had also requested that SRK prepare a
report on the Tombstone Consolidated Mines patented claims. These claims covered the entirety of historic productive area of the
Tombstone mines which date to their discovery in 1877. However, before that report could be completed a competitor acquired a
lease on those lands. These Technical Reports thoroughly summarize and illustrate the salient geotechnical data of the Tombstone
Mining District covering about 250 square miles and present much data in computer map format. In such context, they analyze Liberty
Star’s exploration programs as related to the entire area, make estimates and recommend execution of proposed Company exploration
programs. Because of competitive pressure and the unique nature of the data which includes 40+ years of private report compilation
by Mr. Briscoe, these reports are considered confidential and will not be released for the foreseeable future.
Geochemical
sampling at the Hay Mountain Project
: In 2011 and early 2012 we collected nearly 1,800 rock, soil and vegetation samples over
621 sample sites over approximately 14 square miles centered on the Hay Mountain property. These samples have been assayed for
63 elements generating about 113,000 analyses. The samples were prepared by MEG Inc. and have been shipped to ALS Minerals (ALS-Chemex)
a Certified (under NI 43-101 criteria and approved by regulatory processes) geochemical analysis lab in Vancouver, British Columbia.
Assay results have been sent to our Tucson office and all assays have been received. Our geology team has generated computer analyses
that allow interpretation of the data.
Geologic
Mapping:
Small scale geologic mapping was performed in the Hay Mountain area by two different U.S. Geological Survey Senior
Geologists. The first was by James Gilluly starting in the late 1930s and published in the early 1950’s, as a Professional
Paper 281, 1956, and the second by Harold Drewes, published USGS Professional Paper 1144 1981. The Drewes map was a simplified
version of the Gilluly map with faults adjusted to Drewes’s interpretation. Unfortunately, little or no refinement of the
rock types or actual outcropping rocks was accomplished. Gilluly, while apparently generally correct in outcrop identification,
disturbingly on close examination it appears he missed important outcropping rocks and at least in the Hay Mountain area of the
major geochemical anomaly he misinterpreted stratigraphic rock types. In the area we have termed the Chrysocolla Block he failed
to note the outcrop completely and our thorough examination revealed it to be Earp formation, whereas all the surrounding mapped
area was mapped as the younger Colina limestone. This would put the Chrysocolla Block more than 1,000 feet above the Earp and
1,700 feet or more above the receptive-to- mineralization Horquilla formation where most of the production from Bisbee has been
found and high grade which is now being drilled out at Rosemont Camp about 50 miles to the west. This critical error we have corrected
on our maps to show this area as the lower Earp and believe that the recently discovered gossan outcrops are lying perhaps 200
to 400 feet above the Earp- Horquilla contact. Furthermore, neither Gilluly nor Drewes noticed pervasively fluidized and rounded
limestone breccia which covers square miles and is typical feature of porphyry copper deposits. We believe perhaps massive copper
(chalcopyrite) mineralization will be located in the Horquilla formation 200 to 400 feet below the gossan outcrops in the Earp
formation. This analysis plus all of our geochemistry and geophysics is the justification for our currently planned drill hole
program.
ZTEM
EM
Survey
: We requested and received a cost estimate from Geotech of Aurora (Toronto area) Ontario, Canada, which is the
only purveyor of this helicopter borne electromagnetic (EM) geophysical method. This geophysical method has the ability to “look
down” into the crust of the earth about 2,000 meters (6,600 feet) and detect sulfides and other rock types and structures
which may be associated with porphyry copper systems. Test work over known Safford, Arizona porphyry copper deposits along with
thousands of verifying drill holes show the geometry of such mineral systems can be determined, thus identifying whether it is
a porphyry copper system or some other mineral system. When combined with our geochemical data, we can determine the position
of the copper-moly center of the system and design our drill program to efficiently test and define mineralization. We flew ZTEM
in July 2013 and the analysis report was received in February 2014.
East
Silverbell:
Located
northwest of Tucson, Arizona, these claims currently are within the Ironwood Forest National Monument, which was established after
the claims were staked and validated by numerous drill holes in addition to extensive technical studies. We plan to ascertain
whether the East Silverbell claims possess commercially viable deposits of copper. We hold an option to explore 26 unpatented
standard federal lode mining claims with an area of 536.03 acres located in the same region. The optioned mineral claims are owned
by JABA US Inc., a corporation in which two of our directors are owners. On April 29, 2008 Liberty Star announced that it had
leased, with an option to purchase, three properties from JABA US Inc. in Arizona and Nevada, USA. The properties in Arizona,
are part of the Tombstone (and the 26 claims) East Silverbell projects. The option covering the property in Nevada was sold in
October, 2008 to NPX Metals, and the proceeds were paid by JABA US Inc. as a loan to Liberty Star. According to the option agreement,
Liberty Star can earn up to 100% interest by keeping up annual assessment work and spending $175,000 in exploration expenditures
on the properties between April 2008 and January 1, 2011, subject to a Net Smelter Return (NSR) Royalty. This provision has been
met for the assessment work and other related expense payments, and even though the work commitment is now in arrears, the option
agreement has been maintained over the Tombstone and East Silverbell Claims.
JABA
Optioned Properties
|
East
Silverbell-AZ Claims
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ESB
180-191
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ESB
193
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ESB
195
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ESB
238
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ESB
240
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ESB
242-245
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ESB
247-251
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ESB
301
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26
ESB Claims- 536.03 acres
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Located
approximately 30 miles northwest of Tucson, Arizona, 18 miles from the Avra Valley road off ramp and then 18 miles west, just
north of that road on dirt roads (accessible with a 2 wheel drive vehicle), the claims currently are within the Ironwood Forest
National Monument, which was created after the claims were staked, underwent detailed geochem and geophysical studies and drilled
with numerous drill holes revealing a mineralized body. We plan to ascertain whether the East Silverbell claims possess commercially
viable deposits of copper. Due to difficulty of doing work on the Ironwood Forest National Monument, which was created after drill
definition of a mineral body on our claims, we are negotiating with an adjacent fee-simple, land-owner on which half of the mineral
zone lies, to explore in detail to develop a viable ore body.
The
East Silverbell claims are undeveloped. The ESB block of claims were staked circa 1994 about five miles east of the ASARCO Solvent-Extraction-Electro-Winning
(SXEW) plant. The East Silverbell claims are directly adjacent and contiguous to the ASARCO Patented (fee simple) lands. Circa
1994 JABA (US) Inc. compiled geophysics –consisting of existing, widely spaced airborne magnetics, collected soil and vegetation
geochemical samples, performed detailed photo interpretation from high resolution color aerial photography, mapped surface geology,
breccia pipes and performed detailed mapping and interpretation of leached capping and performed very closely spaced man borne
magnetic surveys over alteration and projection of the edge of the Silverbell caldera and associated mineral belt that includes
the Silverbell porphyry copper mines that could be seen on the color air photos. The surface magnetic survey was interpreted by
geophysicist Edward DeRidder, who pointed out a magnetic low that he interpreted as a porphyry copper magnetic low. Subsequently,
north-south Induced Polarization (IP) lines were run and interpreted by Zonge Engineering, to show a sulfide response at 900 to
1,000 feet below the surface. All of this data was plotted in 3D images showing overlapping and mutually reinforcing geochemical,
ground magnetic and IP geophysics, and geologic- alteration mapped anomalies. Half of this responsive area lies on the adjacent
ASARCO ground and half lies on JABA (US) ground. Subsequent to these studies, the ground was lease-optioned to Valarie Gold Exploration
Inc., (Valarie) a Canadian exploration company. They drilled 6 holes to a predetermined depth of 600 feet, using a rotary drill
and recovered drill chips, sampled at 5 foot intervals. The drilling penetrated and recovered classic chalcocite leached capping
typical of that material occurring over ore bodies in the Silverbell mines of North Silverbell, El Tiro and Oxide open pit mines.
Geochemical assays of the cuttings showed three to four relict ghost copper enriched zones to the final arbitrary depth of six
hundred feet. These holes did not penetrate the leached chalcocite capping rock and did not enter sulfides. Valarie relinquished
their lease. Later Kennecott Copper Corp. optioned the claims and drilled three rotary drill holes. Of these holes two twisted
off the drill bits at shallow depth and had to be abandoned while in the leached chalcocite capping. One hole penetrated to a
depth of 1,000 feet but poor sampling procedures negated any meaningful data from this hole, when primary samples were irretrievably
lost. These two drill attempts were predictably not successful but geochemistry from the Valarie drill holes did show shadow geochemical
copper enrichment indicating chalcocite enrichment in the sulfide blanket below and the Kennecott effort did recover some chalcocite
(enriched copper sulfide) circa 1998 the Ironwood Forest National Monument was created over JABA’s valid mining claims.
The surface of these claims cannot be used to extract the copper mineral body below by the open pit mining method. Since half
of the geophysically, geochemically, geologically, alteration indicated mineral body is located on ASARCO patented land and because
the ASARCO SXEW plant is only five miles to the west, it is believed that this mineral body can be extracted from the ASARCO property
by underground – in situ leach technology at some point in the future. To date we have not identified any ore reserves on
the East Silverbell Project.
We
have not found any mineral resources on any of our claims.
Sampling
Protocols for all projects
Liberty
Star trains all employees/contractors conducting sample collection by use of a handheld digital mobile device ( X-ray Fluorescence
Analyzer) to record accurate analysis of 31 elements including gold, silver copper, molybdenum, uranium, thorium, manganese and
other elements from each in situ sample. The XRF device leads the sampler through a series of dropdown menu windows with various
description capabilities and the ability to record a GPS coordinate of the location. Data from the XRF is uploaded to our computer
database daily. The X-ray (XRF) identified by Mr. Briscoe about 25 years ago is now a recognized and valuable portable assay tool.
Liberty
Star also uses professionally created video training to teach samplers the proper techniques of obtaining a representative sample
whether it is soil, rock or vegetation and instruction on avoiding cross contamination between samples. After samples are collected
they are stored in a secure location under lock and key until they are shipped via FedEx or UPS using chain of custody guidelines
to a professional sample prep lab in Washoe Valley, Nevada run by Shea Clark Smith, MSc/ Geochemist. Mr. Smith prepares the samples
by crushing, mixing, pulverizing and homogenizing. Then a 200 gram sample is scientifically split for shipment to a Certified
Assay Laboratory of each original sample. Standards, blanks and duplicates are added to the sample stream, including such Quality
Assurance Quality Control (QA/QC) every 10th assay sample is re-assayed and a blind standard is inserted every tenth sample interval,
before being sent to a certified assay lab using ICP-MS analysis the samples are randomized. Once Liberty Star gets the analysis
data back from the laboratory, checks for quality assurance and control are made using data from the blanks, standards and duplicates.
The results are sent to Liberty Star by email and a paper copy mailed for verification and as a permanent record. The data are
then de- randomized and processed for interpretation by various software programs designed for the purpose.
Legal
Proceedings
We
know of no material pending legal proceedings to which our company or any of our subsidiaries is a party or of which any of our
properties, or the properties of any of our subsidiaries, is the subject. In addition, we do not know of any such proceedings
contemplated by any governmental authorities.
We
know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder
is a party adverse to our company or any of our subsidiaries or has a material interest adverse to our company or any of our subsidiaries.
Market
Price of and Dividends on Our Common Equity
and Related Stockholder Matters
Market
information
Our
common stock is currently quoted on the OTC Pink market tier of the OTC Markets Group and on the OTCBB under the symbol, “LBSR.”
The OTC Markets Group is a network of security dealers who buy and sell stock. The dealers are connected by a computer network
that provides information on current “bids” and “asks”, as well as volume information. Trading in stocks
quoted on the OTC Pink tier is often thin and is characterized by wide fluctuations in trading prices due to many factors that
may be unrelated or have little to do with a company’s operations or business prospects. Prior to January 14, 2016, our
common stock was quoted on the OTCQB market tier of the OTC Markets Group.
The
following table sets forth the range of high and low closing bid quotations for our common stock for each of the periods indicated
as reported by the OTC Markets Group. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
Quarter Ended
|
|
High
|
|
|
Low
|
|
July 31, 2017
|
|
$
|
0.0042
|
|
|
$
|
0.0018
|
|
April 30, 2017
|
|
$
|
0.0040
|
|
|
$
|
0.0014
|
|
January 31, 2017
|
|
$
|
0.0020
|
|
|
$
|
0.0011
|
|
October 31, 2016
|
|
$
|
0.0024
|
|
|
$
|
0.0017
|
|
July 31, 2016
|
|
$
|
0.0025
|
|
|
$
|
0.0022
|
|
April 30, 2016
|
|
$
|
0.0024
|
|
|
$
|
0.0028
|
|
January 31, 2016
|
|
$
|
0.0019
|
|
|
$
|
0.0017
|
|
October 31, 2015
|
|
$
|
0.0021
|
|
|
$
|
0.0011
|
|
July 31, 2015
|
|
$
|
0.0035
|
|
|
$
|
0.0015
|
|
April 30, 2015
|
|
$
|
0.0087
|
|
|
$
|
0.0024
|
|
January 31, 2015
|
|
$
|
0.0199
|
|
|
$
|
0.0084
|
|
October 31, 2014
|
|
$
|
0.0146
|
|
|
$
|
0.0114
|
|
July 31, 2014
|
|
$
|
0.0210
|
|
|
$
|
0.0115
|
|
April 30, 2014
|
|
$
|
0.0235
|
|
|
$
|
0.0120
|
|
The
closing sale price for our common stock on September 26, 2017, as reported on the OTC Pink market tier was $0.0022 per share.
Transfer
Agent
The
Nevada Agency and Transfer Company, of Suite 880 Bank of America, 50 West Liberty Street, Reno, Nevada 89501 USA (telephone: 775.322.0626;
facsimile 775.322.5632) is the registrar and transfer agent for our common stock.
Holders
of Common Stock
As
of September 14, 2017, we had 2,192,681,952 shares of our common stock issued and outstanding, with 143 record stockholders. The
number of record holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers,
nominees or other fiduciaries.
Dividends
We
have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to
increase our working capital and do not anticipate paying any cash dividends in the foreseeable future.
There
are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
|
1.
|
We
would not be able to pay our debts as they become due in the usual course of business; or
|
|
|
|
|
2.
|
Our
total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights
of stockholders who have preferential rights superior to those receiving the distribution.
|
Financial
Statements
Financial
Statements for the Years Ended January 31, 2017 and 2016
Financial Statements for the Six-Month Periods Ended July 31, 2017 and 2016
Report
of Independent Registered Public Accounting Firm
Board
of Directors and Stockholders of
Liberty
Star Uranium & Metals Corp.
Tucson,
Arizona
We
have audited the accompanying consolidated balance sheets of Liberty Star Uranium & Metals Corp. and its subsidiaries (collectively,
the “Company”) as of January 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’
equity (deficit), and cash flows for each of the years then ended. These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 audits 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 internal control
over financial reporting. Our audits include 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position
of Star Uranium & Metals Corp. and its subsidiaries as of January 31, 2017 and 2016, and the results of their operations and
their cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States
of America.
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations, and
requires additional funds for further exploratory activity prior to attaining a revenue generating status. In addition, the Company
may not find sufficient ore reserves to be commercially mined. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The
consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/
MaloneBailey, LLP
|
|
Houston,
Texas
|
|
|
|
May
1, 2017
|
|
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
BALANCE SHEETS
|
|
January 31, 2017
|
|
|
January 31, 2016
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,042
|
|
|
$
|
536
|
|
Advances
|
|
|
-
|
|
|
|
1,152
|
|
Prepaid expenses
|
|
|
3,710
|
|
|
|
77,113
|
|
Total current assets
|
|
|
8,752
|
|
|
|
78,801
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
8,466
|
|
|
|
14,132
|
|
Total assets
|
|
$
|
17,218
|
|
|
$
|
92,933
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
-
|
|
|
$
|
561
|
|
Convertible promissory note, net of debt discount of $2,646 and $8,470
|
|
|
30,821
|
|
|
|
108,670
|
|
Accounts payable and accrued liabilities
|
|
|
443,837
|
|
|
|
385,512
|
|
Accounts payable to related party
|
|
|
34,798
|
|
|
|
35,950
|
|
Accrued wages to related parties
|
|
|
610,695
|
|
|
|
488,578
|
|
Derivative liability
|
|
|
-
|
|
|
|
3,293
|
|
Total current liabilities
|
|
|
1,120,151
|
|
|
|
1,022,564
|
|
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
Long-term convertible note payable, net
|
|
|
-
|
|
|
|
50,562
|
|
Total long-term liabilities
|
|
|
-
|
|
|
|
50,562
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,120,151
|
|
|
|
1,073,126
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit
|
|
|
|
|
|
|
|
|
Common stock - $.00001 par value; 6,250,000,000 authorized; 2,003,844,312 and 1,568,937,905 shares issued and outstanding
|
|
|
20,038
|
|
|
|
15,689
|
|
Stock subscription receivable
|
|
|
(55,673
|
)
|
|
|
(55,673
|
)
|
Additional paid-in capital
|
|
|
53,077,578
|
|
|
|
51,708,117
|
|
Accumulated deficit
|
|
|
(54,144,876
|
)
|
|
|
(52,648,326
|
)
|
Total stockholders’ deficit
|
|
|
(1,102,933
|
)
|
|
|
(980,193
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ deficit
|
|
$
|
17,218
|
|
|
$
|
92,933
|
|
The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
For the Year Ended
|
|
|
|
January 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Geological and geophysical costs
|
|
|
84,140
|
|
|
|
134,511
|
|
Salaries and benefits
|
|
|
331,913
|
|
|
|
318,426
|
|
Public relations
|
|
|
96,546
|
|
|
|
43,787
|
|
Depreciation
|
|
|
5,666
|
|
|
|
22,509
|
|
Legal
|
|
|
80,068
|
|
|
|
80,521
|
|
Professional services
|
|
|
83,124
|
|
|
|
74,329
|
|
General and administrative
|
|
|
192,657
|
|
|
|
178,464
|
|
Travel
|
|
|
8,598
|
|
|
|
10,485
|
|
Net operating expenses
|
|
|
882,712
|
|
|
|
863,032
|
|
Loss from operations
|
|
|
(882,712
|
)
|
|
|
(863,032
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
-
|
|
|
|
1
|
|
Interest expense
|
|
|
(325,195
|
)
|
|
|
(676,495
|
)
|
Gain on settlement of debt
|
|
|
-
|
|
|
|
72,308
|
|
Loss on change in fair value of derivative liability
|
|
|
(288,643
|
)
|
|
|
(102,444
|
)
|
Total other expense
|
|
|
(613,838
|
)
|
|
|
(706,630
|
)
|
Net loss
|
|
$
|
(1,496,550
|
)
|
|
$
|
(1,569,662
|
)
|
|
|
|
|
|
|
|
|
|
Basic net loss per share of common stock
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Diluted net loss per share of common stock
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares of common stock outstanding
|
|
|
1,875,491,709
|
|
|
|
1,262,841,472
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average number of shares of common stock outstanding
|
|
|
1,875,491,709
|
|
|
|
1,262,841,472
|
|
The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
Common stock
|
|
|
Stock subscription
|
|
|
Additional paid-in
|
|
|
Accumulated
|
|
|
Total
stockholders’
equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
receivable
|
|
|
capital
|
|
|
deficit
|
|
|
(deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2015
|
|
|
920,001,430
|
|
|
|
9,200
|
|
|
|
(55,673
|
)
|
|
|
49,798,278
|
|
|
|
(51,078,664
|
)
|
|
|
(1,326,859
|
)
|
Issuance of common stock and warrants in private placement, net
|
|
|
27,194,893
|
|
|
|
272
|
|
|
|
-
|
|
|
|
50,028
|
|
|
|
-
|
|
|
|
50,300
|
|
Issuance of common shares for cash pursuant to investment agreement
|
|
|
100,000,000
|
|
|
|
1,000
|
|
|
|
-
|
|
|
|
128,751
|
|
|
|
-
|
|
|
|
129,751
|
|
Shares issued in exchange for services
|
|
|
5,733,000
|
|
|
|
57
|
|
|
|
-
|
|
|
|
10,263
|
|
|
|
-
|
|
|
|
10,320
|
|
Shares issued for conversion of notes
|
|
|
516,008,582
|
|
|
|
5,160
|
|
|
|
-
|
|
|
|
887,419
|
|
|
|
-
|
|
|
|
892,579
|
|
APIC reclassified to gain on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
(72,308
|
)
|
|
|
-
|
|
|
|
(72,308
|
)
|
Resolution of derivative liabilities due to debt conversions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
833,583
|
|
|
|
-
|
|
|
|
833,583
|
|
Warrants reclassified to derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,804
|
|
|
|
|
|
|
|
31,804
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,299
|
|
|
|
-
|
|
|
|
40,299
|
|
Net loss for the year ended January 31, 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,569,662
|
)
|
|
|
(1,569,662
|
)
|
Balance, January 31, 2016
|
|
|
1,568,937,905
|
|
|
|
15,689
|
|
|
|
(55,673
|
)
|
|
|
51,708,117
|
|
|
|
(52,648,326
|
)
|
|
|
(980,193
|
)
|
Issuance of common stock and warrants in private placement, net
|
|
|
76,220,079
|
|
|
|
762
|
|
|
|
|
|
|
|
222,915
|
|
|
|
|
|
|
|
223,677
|
|
Issuance of common shares for cash pursuant to investment agreement
|
|
|
110,098,238
|
|
|
|
1,101
|
|
|
|
|
|
|
|
178,190
|
|
|
|
|
|
|
|
179,291
|
|
Shares issued in exchange for services
|
|
|
32,519,915
|
|
|
|
325
|
|
|
|
|
|
|
|
66,971
|
|
|
|
|
|
|
|
67,296
|
|
Shares issued for conversion of notes
|
|
|
216,068,175
|
|
|
|
2,161
|
|
|
|
|
|
|
|
274,288
|
|
|
|
|
|
|
|
276,449
|
|
Resolution of derivative liabilities due to debt conversions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
279,112
|
|
|
|
|
|
|
|
279,112
|
|
Warrants reclassified to equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272,637
|
|
|
|
|
|
|
|
272,637
|
|
Warrants issued for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
540
|
|
|
|
|
|
|
|
540
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,808
|
|
|
|
|
|
|
|
74,808
|
|
Net loss for the year ended January 31, 2017
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,496,550
|
)
|
|
|
(1,496,550
|
)
|
Balance, January 31, 2017
|
|
|
2,003,844,312
|
|
|
|
20,038
|
|
|
|
(55,673
|
)
|
|
|
53,077,578
|
|
|
|
(54,144,876
|
)
|
|
|
(1,102,933
|
)
|
The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
For the Year Ended
|
|
|
|
January 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,496,550
|
)
|
|
$
|
(1,569,662
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
5,666
|
|
|
|
22,509
|
|
Amortization of debt discount
|
|
|
276,437
|
|
|
|
606,270
|
|
(Gain) loss on settlement of debt
|
|
|
-
|
|
|
|
(72,308
|
)
|
(Gain) loss on change in fair value of derivative liabilities
|
|
|
288,643
|
|
|
|
102,444
|
|
Share-based compensation
|
|
|
74,808
|
|
|
|
40,299
|
|
Common shares issued for third party services
|
|
|
67,296
|
|
|
|
10,320
|
|
Warrants issued for third party services
|
|
|
540
|
|
|
|
-
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
73,403
|
|
|
|
11,175
|
|
Other current assets
|
|
|
1,152
|
|
|
|
(100
|
)
|
Accounts payable and accrued expenses
|
|
|
58,325
|
|
|
|
134,580
|
|
Accounts payable to related party
|
|
|
(1,152
|
)
|
|
|
35,950
|
|
Accrued wages related parties
|
|
|
122,117
|
|
|
|
83,586
|
|
Accrued interest
|
|
|
23,414
|
|
|
|
44,357
|
|
Cash flows used in operating activities:
|
|
|
(505,901
|
)
|
|
|
(550,580
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
-
|
|
|
|
(4,303
|
)
|
Net cash used in investing activities
|
|
|
-
|
|
|
|
(4,303
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Payments on long-term debt
|
|
|
(561
|
)
|
|
|
(6,149
|
)
|
Principal activity on convertible promissory notes
|
|
|
108,000
|
|
|
|
328,000
|
|
Proceeds from the issuance of common stock, net of expenses
|
|
|
402,968
|
|
|
|
180,051
|
|
Net cash provided by financing activities
|
|
|
510,407
|
|
|
|
501,902
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
4,506
|
|
|
|
(52,981
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
536
|
|
|
|
53,517
|
|
Cash and cash equivalents, end of period
|
|
$
|
5,042
|
|
|
$
|
536
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Income tax paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest paid
|
|
$
|
25,345
|
|
|
$
|
12,271
|
|
Supplemental disclosure of non-cash items:
|
|
|
|
|
|
|
|
|
Resolutions of derivative liabilities due to debt conversions
|
|
$
|
279,112
|
|
|
$
|
833,583
|
|
Warrants reclassed to derivative liabilities
|
|
$
|
272,637
|
|
|
$
|
31,804
|
|
Debt discounts due to derivative liabilities
|
|
$
|
259,813
|
|
|
$
|
549,531
|
|
Common stock issued for conversion of debt and interest
|
|
$
|
276,449
|
|
|
$
|
892,579
|
|
Original issue discount
|
|
$
|
10,800
|
|
|
$
|
22,000
|
|
The
Accompanying Notes are an Integral Part of the Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – Organization
Liberty
Star Uranium & Metals Corp. (the “Company”, “we” or “Liberty Star”) was formerly Liberty
Star Gold Corp. and formerly Titanium Intelligence, Inc. (“Titanium”). Titanium was incorporated on August 20, 2001
under the laws of the State of Nevada. On February 5, 2004, we commenced operations in the acquisition and exploration of mineral
properties business. Big Chunk Corp. (“Big Chunk”) is our wholly owned subsidiary and was incorporated on December
14, 2003 in the State of Alaska. Big Chunk is engaged in the acquisition and exploration of mineral properties business in the
State of Alaska. Redwall Drilling Inc. (“Redwall”) was our wholly owned subsidiary and was incorporated on August
31, 2007 in the State of Arizona. Redwall performed drilling services on the Company’s mineral properties. Redwall ceased
drilling activities in July 2008 and was dissolved on March 30, 2010. We formed the wholly owned subsidiary, Hay Mountain Super
Project LLC (“HMSP”) incorporated on October 24, 2014, to serve as the primary holding company for development of
the potential ore bodies encompassed in the Hay Mountain area of interest in Arizona. In April 2007, we changed our name to Liberty
Star Uranium & Metals Corp. We have not generated any revenues from operations.
These
consolidated financial statements include the results of operations and cash flows of Liberty Star Uranium & Metals Corp.
and its wholly owned subsidiaries, Big Chunk and HMSP. All significant intercompany accounts and transactions were eliminated
upon consolidation.
These
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) with the on-going assumption that we will be able to realize our assets and discharge our
liabilities in the normal course of business. However, certain conditions noted below currently exist which raise substantial
doubt about our ability to continue as a going concern. These consolidated financial statements do not include any adjustments
to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going
concern. Our operations have primarily been funded by the issuance of common stock and debt. Continued operations are dependent
on our ability to complete equity financings or generate profitable operations in the future. Management’s plan in this
regard is to secure additional funds through future equity financings, joint venture agreements or debt. Such financings may not
be available, or may not be available on reasonable terms.
NOTE
2 – Summary of significant accounting policies
The
summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated
financial statements. Such consolidated financial statements and accompanying notes are the representations of the Company’s
management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles
generally accepted in the United States of America in all material respects, and have been consistently applied in preparing the
accompanying consolidated financial statements. The significant accounting policies adopted by the Company are as follows:
Use
of estimates
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The
valuation of stock-based compensation, classification and valuation of common stock purchase warrants, classification and value
of embedded conversion options, value of beneficial conversion features, valuation allowance on deferred tax assets, the determination
of useful lives and recoverability of depreciable assets, accruals, and contingencies are significant estimates made by management.
It is at least reasonably possible that a change in these estimates may occur in the near term.
Principles
of consolidation
The
consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Big Chunk and HMSP. All
significant intercompany accounts and transactions have been eliminated upon consolidation.
Cash
and cash equivalents
We
consider cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and
cash equivalents. We maintain our cash in bank deposit accounts which, for periods of time, may exceed federally insured limits.
At January 31, 2017 and 2016, we had no cash balances in bank deposit accounts that exceeded federally insured limits.
Mineral
claim costs
We
account for costs incurred to acquire, maintain and explore mineral properties as a charge to expense in the period incurred until
the time that a proven mineral resource is established, at which point development of the mineral property would be capitalized.
Currently, we do not have any proven mineral resources on any of our mineral properties.
Long-lived
assets and impairment of long-lived assets
Property
and equipment is stated at cost. We capitalize all purchased equipment over $500 with a useful life of more than one year. Depreciation
is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are stated
at cost and are amortized over their estimated useful lives or the lease term, whichever is shorter. Maintenance and repairs are
expensed as incurred while betterments or renewals are capitalized. Property and equipment is reviewed periodically for impairment.
The estimated useful lives range from 3 to 7 years.
We
review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the
carrying amount to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset
group. If such asset group is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount
of the asset group exceeds its fair value. Long-lived assets to be disposed of are carried at the lower of cost or fair value
less the costs of disposal.
Convertible
promissory notes
We
report convertible promissory notes as liabilities at their carrying value less unamortized discounts, which approximates fair
value. We bifurcate conversion options and detachable common stock purchase warrants and report them as liabilities at fair value
at each reporting period when required in accordance with the applicable accounting guidance. When convertible promissory notes
are converted into shares of our common stock in accordance with the debt’s terms, no gain or loss is recognized. We account
for inducements to convert as an expense in the period incurred, included in debt conversion expense.
Derivative
liabilities
The
valuation of the derivative liability of our warrants is determined through the use of a Monte Carlo options model that values
the liability of the warrants based on a risk-neutral valuation where the price of the option is its discounted expected value.
The technique applied generates a large number of possible (but random) price paths for the underlying common stock via simulation,
and then calculates the associated exercise value (i.e. “payoff”) of the option for each path. These payoffs are then
averaged and discounted to a current valuation date resulting in the fair value of the option.
The
valuation of the derivative liability attached to the convertible debt is arrived at through the use of a Monte Carlo model that
values the derivative liability within the notes. The technique applied generates a large number of possible (but random) price
paths for the underlying (or underlyings) via simulation, and then calculates the associated payment value (cash, stock, or warrants)
of the derivative features. The price of the underlying common stock is modeled such that it follows a geometric Brownian motion
with constant drift, and elastic volatility (increasing as stock price decreases). The stock price is determined by a random sampling
from a normal distribution. Since the underlying random process is the same, for enough price paths, the value of the derivative
is derived from path dependent scenarios and outcomes. The features in the notes are analyzed and incorporated into the model
included the conversion features with the reset provisions, the call/redemption/prepayment options, and the default provisions.
Based on these features, there are six primary events that can occur; payments are made in cash; payments are made with stock;
the note holder converts upon receiving a redemption notice; the note holder converts the note; the issuer redeems the note; or
the Company defaults on the note. The model simulates the underlying economic factors that influenced which of these events would
occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. stock price, conversion
price, etc.). Probabilities are assigned to each variable such as redemption likelihood, default likelihood, and timing and pricing
of reset events over the remaining term of the notes based on management projections. This leads to a cash flow simulation over
the life of the note. A discounted cash flow for each simulation is completed, and is compared to the discounted cash flow of
the note without the embedded features, thus determining a value for the derivative liability.
Common
stock purchase warrants
We
report common stock purchase warrants as equity unless a condition exists which requires reporting as a derivative liability at
fair market value.
Stock
based compensation
The
Company recognizes stock-based compensation for all share-based payment awards made to employees based on the estimated fair values,
using the Black-Scholes option pricing model.
Non-employee
stock-based compensation is accounted for based on the fair value of the related stock or options or the fair value of the services
on the grant date, whichever is more readily determinable. The fair value of options to be granted are estimated on the date of
each grant using the Black-Scholes option pricing model and amortized ratably over the option’s vesting periods, which approximates
the service period.
Environmental
expenditures
Our
operations have been and may in the future be affected from time to time in varying degree by changes in environmental regulations,
including those for future removal and site restoration costs. The likelihood of new regulations and their overall effect upon
us are not predictable. We provide for any reclamation costs in accordance with the accounting standards codification section
410-30. It is management’s opinion that we are not currently exposed to significant environmental and reclamation liabilities
and have recorded no reserve for environmental and reclamation expenditures as of January 31, 2017 or 2016.
Fair
Value of Financial Assets and Liabilities
The
Company measures and discloses certain financial assets and liabilities at fair value. Authoritative guidance defines fair value
as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Authoritative guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may
be used to measure fair value:
Level
1
- Quoted prices in active markets for identical assets or liabilities.
Level
2
- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially
the full term of the assets or liabilities.
Level
3
- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
Income
taxes
Income
taxes are recorded using the asset and liability method. Under the asset and liability method, tax assets and liabilities are
recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted tax rates expected
to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax
rates is recognized in income in the period that enactment occurs. To the extent that the Company does not consider it more likely
than not that a future tax asset will be recovered, it provides a valuation allowance against the excess. Interest and penalties
associated with unrecognized tax benefits, if any, are classified as additional income taxes in the statement of operations. With
few exceptions, we are no longer subject to U.S. federal, state and local examinations by tax authorities for the tax year ended
January 31, 2013 and prior.
Net
income (loss) per share
Basic
net income (loss) per share is computed by dividing net loss attributable to common shareholders by the weighted average number
of shares of common stock outstanding during the period. Diluted net income (loss) per share takes into consideration shares of
common stock outstanding (computed under basic income or loss per share) and potentially dilutive shares of common stock that
are not anti-dilutive. For the years ended January 31, 2017 and 2016, potentially dilutive instruments were not included in the
determination of diluted loss per share as their effect was anti-dilutive.
Statement
Presentation
Certain
amounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation
in the current-year financial statements.
Newly
Issued Accounting Pronouncements
In
May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09 (ASU 2014-09)
“Revenue from Contracts with Customers.” ASU 2014-09 will supersede most current revenue recognition guidance, including
industry-specific guidance. The underlying principle is that an entity will recognize revenue upon the transfer of goods or services
to customers in an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides
a five- step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization
of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable
consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced
disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts
with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2016 (early adoption
is not permitted). The guidance permits the use of either a retrospective or cumulative effect transition method. On July 9, 2015,
the FASB decided to delay the effective date of the new revenue standard by one year. The FASB also agreed to allow entities to
choose to adopt the standard as of the original effective date. The Company is currently evaluating the impact of this standard.
In
August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 defines management’s responsibility
to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide
related footnote disclosures. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and
for annual periods and interim periods thereafter, although early adoption is permitted. This guidance is not expected to have
an impact on the financial statements of the Company. If any event occurs in future periods that could affect our ability to continue
as going concern, we will provide appropriate disclosures as required by ASU 2014-15.
In
July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-11 (ASU 2015-11),
Simplifying the Measurement of Inventory. According to ASU 2015-11, an entity should measure inventory within the scope of this
update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course
of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged
for inventory measured using LIFO or the retail inventory method. The amendments in ASU 2015-11 more closely align the measurement
of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The Board has amended
some of the other guidance in Topic 330 to more clearly articulate the requirements for the measurement and disclosure of inventory.
However, the Board does not intend for those clarifications to result in any changes in practice. Other than the change in the
subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory within
the scope of ASU 2015-11, there are no other substantive changes to the guidance on measurement of inventory. For public business
entities, the amendments in ASU 2015-11 are effective for fiscal years beginning after December 15, 2016, including interim periods
within those fiscal years. The amendments in ASU 2015-11 should be applied prospectively with earlier application permitted as
of the beginning of an interim or annual reporting period. The Company elected to early adopt the above. The adoption doesn’t
have a significant impact on the Company’s consolidated financial position or results of operations.
During
November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation
of deferred income taxes. ASU 2015-17 provides presentation requirements to classify deferred tax assets and liabilities as noncurrent
in a classified statement of financial position. The standard is effective for fiscal years beginning after December 15, 2016,
including interim periods within that reporting period. Early adoption is permitted for any interim and annual financial statements
that have not yet been issued. We early adopted ASU 2015-17 effective December 31, 2015 on a prospective basis. The adoption did
not have a significant impact on the Company’s consolidated financial position or results of operations.
In
January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets
and Financial Liabilities. The pronouncement requires equity investments (except those accounted for under the equity method of
accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized
in net income. ASU 2016-01requires public business entities to use the exit price notion when measuring the fair value of financial
instruments for disclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement
category and form of financial asset, and eliminates the requirement for public business entities to disclose the method(s) and
significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at
amortized cost. These changes become effective for the Company’s fiscal year beginning January 1, 2018. The expected adoption
method of ASU 2016-01 is being evaluated by the Company and the adoption is not expected to have a significant impact on the Company’s
consolidated financial position or results of operations.
In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases
(Topic 840). ASU 2016-02 requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged.
The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal
years. Early application is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases
existing at, or entered into after, the date of initial application, with an option to elect to use certain transition relief.
The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
NOTE
3 – Going concern
The
Company has incurred losses from operations and requires additional funds for further exploratory activity and to maintain its
claims prior to attaining a revenue generating status. There are no assurances that a commercially viable mineral deposit exists
on any of our properties. In addition, the Company may not find sufficient ore reserves to be commercially mined. As such, there
is substantial doubt about the Company’s ability to continue as a going concern.
Management
is working to secure additional funds through the exercise of stock warrants already outstanding, equity financings, debt financings
or joint venture agreements. The consolidated financial statements do not include any adjustments that might result from the outcome
of these uncertainties.
NOTE
4 – Mineral claims
At
January 31, 2017, we held a 100% interest in 11 standard federal lode mining claims on the Colorado Plateau Province of Northern
Arizona (the “North Pipes Claims”).
At
January 31, 2017, we held a 100% interest in 95 standard federal lode mining claims located in the Tombstone region of Arizona.
29 federal lode mining claims are owned by JABA US Inc, an Arizona Corporation in which two of our directors are owners and 66
federal lode mining claims belong to Liberty Star Uranium & Metals Corp. At January 31, 2017, we held Arizona State Land Department
Mineral Exploration Permits covering 1,886.88 acres in the Tombstone region of Arizona.
At
January 31, 2017, we held an option to explore 26 standard federal lode mining claims located in the East Silverbell region of
northwest Tucson, Arizona. The mineral claims are owned by JABA US Inc., an Arizona Corporation in which two of our directors
are owners.
Title
to mineral claims involves certain inherent risks due to difficulties of determining the validity of certain claims as well as
potential for problems arising from the frequently ambiguous conveyance history characteristic of many mineral properties.
All
of the Company’s claims for mineral properties are in good standing as of January 31, 2017.
NOTE
5 – Prepaid expenses
At
January 31, 2016, the company had prepaid approximately $70,000 relating to a private investor event scheduled for a future date.
This amount is included in prepaid expenses as of January 31, 2016, and was expensed in full during the year ended January 31,
2017.
NOTE
6 – Property and equipment
The
balances of our major classes of depreciable assets and useful lives are:
|
|
January 31, 2017
|
|
|
January 31, 2016
|
|
Geology Equipment (3 to 7 years)
|
|
$
|
264,734
|
|
|
$
|
264,734
|
|
Vehicles and transportation equipment (5 years)
|
|
|
44,284
|
|
|
|
44,284
|
|
Office furniture and equipment (3 to 7 years)
|
|
|
85,363
|
|
|
|
85,363
|
|
|
|
|
394,381
|
|
|
|
394,381
|
|
Less: accumulated depreciation and amortization
|
|
|
(385,915
|
)
|
|
|
(380,249
|
)
|
|
|
$
|
8,466
|
|
|
$
|
14,132
|
|
Depreciation
expense was $5,666 and $22,509 for the years ended January 31, 2017 and 2016, respectively.
NOTE
7 – Long-term debt and convertible promissory notes
A
note payable to Ford Credit was payable in monthly installments of $544 including interest at a fixed rate of 9.49% through maturity
in February 2016. The principal balance at January 31, 2017 and 2016 is $0 and $561, respectively. The carrying amount of the
vehicle that serves as collateral was $0 at January 31, 2017 and 2016.
Following
is a summary of convertible promissory notes:
|
|
January 31, 2017
|
|
|
January 31, 2016
|
|
|
|
|
|
|
|
|
12% convertible note payable issued August 2013, due in August 2016
|
|
$
|
-
|
|
|
$
|
62,160
|
|
12% convertible note payable issued November 2015, due November 2017
|
|
|
-
|
|
|
|
55,000
|
|
12% convertible note payable issued December 2015, due September 2016
|
|
|
-
|
|
|
|
50,542
|
|
10% convertible note payable issued December 2016, due December 2017
|
|
|
33,467
|
|
|
|
-
|
|
|
|
|
33,467
|
|
|
|
167,702
|
|
Less debt discount
|
|
|
(2,646
|
)
|
|
|
(8,470
|
)
|
Less current portion of convertible notes
|
|
|
(30,821
|
)
|
|
|
(108,670
|
)
|
Long-term convertible notes payable
|
|
$
|
-
|
|
|
$
|
50,562
|
|
In
August 2013, we entered into a promissory note (the “August 2013 Note”) for a principal sum of $555,000 plus accrued
and unpaid interest and any other fees. The consideration is up to $500,000, which would produce an original issue discount of
$55,000 if all the consideration is received. The lender paid $150,000 upon closing pursuant to the terms of the August 2013 Note.
The August 2013 Note has a maturity of one year from the delivery of each payment. The August 2013 Note may be convertible into
shares of common stock of our company at any time from 180 days after the date of each payment of consideration, at a conversion
price which is 70% of the average of the three lowest closing prices in the 20 trading days previous to the conversion. We may
repay the August 2013 Note at any time on or before 90 days from the effective date of the August 2013 Note with an interest rate
of 0%, after which we may not make any further payments on the August 2013 Note prior to the maturity date without written approval
from the lender. If we elect not to repay the August 2013 Note on or before 90 days from the effective date of the August 2013
Note, a one-time interest charge of 12% will be applied to the principal sum. We elected not to pay the $150,000 portion of the
August 2013 Note within 90 days from the effective date. After the $150,000 portion of the August 2013 Note became convertible,
the note holder elected to convert the principal and interest totaling $186,480 into 17,937,915 shares of the company’s
common stock during the months of February through May of 2014. On December 9, 2013, we received additional consideration of $75,000
pursuant to the terms of the August 2013 Note. We elected not to pay the $75,000 portion of the August 2013 Note within 90 days
from the effective date. In June, October and August 2014, the note holder converted principal and interest totaling $93,240 into
9,983,507 shares of the Company’s common stock. On June 24, 2014 and September 3, 2014, we received additional consideration
of $75,000 and $75,000, respectively, pursuant to the terms of the August 2013 Note. In December 2014 and January 2015, the note
holder converted principal and interest totaling $41,961 into 5,900,000 shares of the Company’s common stock. On February
25, 2015, we received additional consideration of $50,000 with $5,500 of original issue discount pursuant to the terms of the
August 2013 Note. On August 28, 2015, we received additional consideration of $50,000 with $5,500 of original issue discount pursuant
to the terms of the August 2013 Note. We elected not to repay the $50,000 portion of the August 2013 Note within 90 days from
the effective date. During the year ended January 31, 2016, the note holder converted principal and interest totaling $206,679
into 123,158,044 shares of the Company’s common stock. During the year ended January 31, 2017, the note holder converted
principal and interest totaling $62,160 into 46,526,995 shares of the Company’s common stock. As January 31, 2017 and 2016,
we had $0 and $62,160, respectively, of principal and interest outstanding for the August 2013 Note.
On
November 18, 2013, we entered into a securities purchase agreement (the “November 2013 Note”), whereby we agreed to
issue a convertible note to one lender in the principal amount of $250,000. The proceeds from the note were $225,000, which created
an original issue discount of $25,000. The note was payable in full on November 18, 2014 and bears no interest except in an event
of default. The lender may, at its option, after the 183rd day (after May 20, 2014) following the closing date, convert the principal
amount or any portion of such principal amount of the note into shares of common stock of our company at the price equal to the
lesser of (a) 100% of the volume weighted average price (VWAP), as reported on the closing date (November 18, 2013), and (b) 70%
of the average of the 5 day VWAP immediately prior to the day of conversion. On November 13, 2014, we entered into an Assignment
of Promissory Note & Acknowledgment, whereby we consented to an assignment of the note to another lender, pursuant to which
$250,000 remains owing by the Company. The maturity date of the November 2013 Note was extended to November 18, 2015. From November
2014 through January 2015, the new noteholder converted principal of $102,500 into 11,792,944 shares of the Company’s common
stock. During the year ended January 31, 2016, the new noteholder converted principal of $153,046 into 48,243,936 shares of the
Company’s common stock. As of January 31, 2016, we had $0 of principal and interest outstanding for the November 2013 Note.
In
August 2014, we received $150,000 pursuant to the terms of a convertible promissory note (the “August 2014 Note”)
dated August 26, 2014. The Note bears interest at 12%, is due on August 26, 2015, and is convertible after 180 days at a 45% discount
to the average of the daily VWAP prices for the previous 10 trading days before the date of conversion. During March and April
30, 2015, the new noteholder converted principal and accrued interest of $160,834 into 56,676,739 shares of the Company’s
common stock. As of January 31, 2016, we had $0 of principal and interest outstanding for this Note.
On
October 14, 2014, we entered into a securities purchase agreement, whereby we agreed to issue a convertible note (the “October
2014 Note”) to one lender in the principal amount of $105,000. The Note is payable in full on October 14, 2015, bears interest
at the rate of 10% per annum, and includes a $5,000 original issuance discount. The Note may be convertible into shares of common
stock of our company at any time from 180 days after the execution date of the Note at a price per share of 40% discount to the
average of the daily VWAP for the previous five trading days before the date of conversion. During the year ended January 31,
2016, the note holder converted principal and interest totaling $110,901 into 74,878,264 shares of the Company’s common
stock. As of January 31, 2016, we had $0 of principal and interest outstanding for this Note.
On
December 3, 2014, we entered into a note purchase agreement, whereby we agreed to issue a convertible note (the “December
2014 Note”) to lender in the principal amount of $210,000, with a $10,000 original issuance discount. The initial purchase
price was $105,000 of consideration of which $100,000 was received our company and $5,000 was retained through the original issue
discount. An additional $50,000 was received on February 27, 2015 with a $2,500 original issue discount. An additional $30,000
was received on June 11, 2015 with a $1,500 original issue discount. An additional $20,000 was received on July 9, 2015 with a
$1,000 original issue discount. The Note bears interest at 10%, is due on December 3, 2016, and is convertible after six months
of advance of funds at a 37.5% discount to the average of the daily VWAP prices for the previous 5 trading days before the date
of conversion. During the year ended January 31, 2016, the note holder converted principal and interest totaling $231,000 into
196,244,876 shares of the Company’s common stock. As of January 31, 2016, we had of $0 of principal and interest outstanding
for the December 2014 Note.
On
November 2, 2015, we entered into a promissory note (the “November 2015 Note”) for a principal sum of up to $500,000.
The consideration is up to $450,000, which would produce an original issue discount of $50,000 if all the consideration is received.
The lender paid $50,000 upon closing pursuant to the terms of the November 2015 Note, which resulted in the Company recording
a $5,000 original issue discount. The maturity date is two years from the effective date of each payment, as well as any unpaid
interest and other fees. The November 2015 Note may be convertible into shares of common stock of our company at any time at a
conversion price of 70% of the average of the three lowest closing prices in the 20 trading days previous to the conversion. We
may repay the November 2015 Note at any time on or before 90 days from the effective date of the November 2015 with an interest
rate of 0%, after which we may not make any further payments on the November 2015 Note prior to the maturity date without written
approval from the lender. If we elect not to repay the November 2015 Note on or before 90 days from the effective date of the
November 2015, a one-time interest charge of 12% will be applied to the principal sum. On March 23, 2016, the November 2015 Note
was amended to allow for conversion only after 180 days. On March 10, 2016, we received an additional $50,000 under the November
2015 Note, with a $5,000 original issue discount. On May 25, 2016, we received an additional $28,000 under the November 2015 Note,
with a $2,800 original issue discount. During the year ended January 31, 2017, the note holder converted principal and interest
totaling $159,289 into 122,373,003 shares of the Company’s common stock. As of January 31, 2017 and 2016, we had of $0 and
$55,000, respectively, of principal and interest outstanding for the November 2015 Note.
On
December 29, 2015, the Company entered into a convertible promissory note (the “December 2015 Note”) for a principal
sum of $50,000, due on demand by the lender at any time on or after September 29, 2016, with interest at 12% per annum. The lender
paid $49,000 upon closing of the December 2015 Note, which included the lender retaining $1,000 as an original issue discount.
The December 2015 Note may be convertible into shares of the common stock of our company at any time after 180 days at a conversion
price of the lower of: (i) a 45% discount to the second lowest trading price during the previous ten trading days to the date
of a conversion notice; or (ii) a 45% discount to the second lowest trading price during the previous ten trading days before
the date the December 2015 Note was executed on December 29, 2015. During the year ended January 31, 2017, the note holder converted
principal and interest totaling $55,000 into 47,168,177 shares of the Company’s common stock. As of January 31, 2017 and
2016, we had of $0 and $50,542 of principal and interest outstanding for the December 2015 Note.
On
December 14, 2016, we entered into a convertible promissory note (the “December 2016 Note”) to Tangiers Investment
Group, LLC (“Tangiers”) for a principal sum of up to $110,000, bearing interest at 12% per annum. The consideration
is up to $100,000, which would produce an original issue discount of $10,000 if all the consideration is received. The lender
paid $30,000 pursuant to the terms of the December 2016 Note on December 19, 2016, which resulted in the Company recording a $3,000
original issue discount. The maturity date is one year from the effective date of each payment, as well as any unpaid interest
and other fees. The December 2016 Note may be convertible into shares of common stock of our company after 180 days of funding
at a conversion price of 62.5% of the volume weighted average price of the Company’s common stock during the five trading
days previous to the conversion. We may repay the December 2016 Note at any time before 150 days from the effective date of the
December 2016 Note, or prepay at 130% of the principal from 151 to 180 days, after which we may not make any further payments
on the December 2016 Note prior to the maturity date without written approval from the lender. As of January 31, 2017, we had
of $33,467 of principal and interest outstanding for the December 2016 Note.
On
February 2, 2017, the Company and Tangiers entered into Amendment #1 to the Note (“Amendment #1”). Amendment #1 provides
that, on or before February 2, 2017, Tangiers would make a payment to the Company of $77,000, which includes a 10% OID. The net
proceeds of $70,000 were received on February 2, 2017.
Also
on February 2, 2017, the Company and Tangiers entered into Amendment #2 to the Note (“Amendment #2”). Amendment #2
provides that the conversion price under the Note is equal to 60% of the lowest trading price of the Company’s common stock
during the 20 consecutive trading days prior to Tangier’s conversion election. The default percentages of 5% and 10% of
the discount of conversion price point remained the same other than reflecting the amended discount price. In addition, the provision
in the Note relating to a right of first refusal was removed by Amendment #2.
During
the years ended January 31, 2017 and 2016, the Company recorded debt discounts of $259,813 and $549,531, respectively, due to
the derivative liabilities, and original issue debt discounts of $10,800 and $22,000, respectively, due to the convertible notes.
The Company recorded amortization of these discounts of $276,437 and $606,270 for the years ended January 31, 2017 and 2016, respectively.
NOTE
8 – Derivative Liabilities
The
embedded conversion feature in the convertible debt instruments that the Company issued (See Note 7), that became convertible
during the years ended January 31, 2017 and 2016, qualified it as a derivative instrument since the number of shares issuable
under the note is indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. This convertible note tainted all
other equity linked instruments including outstanding warrants and fixed rate convertible debt on the date that the instrument
became convertible.
The
valuation of the derivative liability of the warrants was determined through the use of a Monte Carlo options model that values
the liability of the warrants based on a risk-neutral valuation where the price of the option is its discounted expected value.
The technique applied generates a large number of possible (but random) price paths for the underlying common stock via simulation,
and then calculates the associated exercise value (i.e. “payoff”) of the option for each path. These payoffs are then
averaged and discounted to a current valuation date resulting in the fair value of the option.
The
valuation of the derivative liability attached to the convertible debt was arrived at through the use of a Monte Carlo model that
values the derivative liability within the notes. The technique applied generates a large number of possible (but random) price
paths for the underlying (or underlyings) via simulation, and then calculates the associated payment value (cash, stock, or warrants)
of the derivative features. The price of the underlying common stock is modeled such that it follows a geometric Brownian motion
with constant drift, and elastic volatility (increasing as stock price decreases). The stock price is determined by a random sampling
from a normal distribution. Since the underlying random process is the same, for enough price paths, the value of the derivative
is derived from path dependent scenarios and outcomes. The features in the notes that were analyzed and incorporated into the
model included the conversion features with the reset provisions, the call/redemption/prepayment options, and the default provisions.
Based on these features, there are six primary events that can occur; payments are made in cash; payments are made with stock;
the note holder converts upon receiving a redemption notice; the note holder converts the note; the issuer redeems the note; or
the Company defaults on the note. The model simulates the underlying economic factors that influenced which of these events would
occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. stock price, conversion
price, etc.). Probabilities were assigned to each variable such as redemption likelihood, default likelihood, and timing and pricing
of reset events over the remaining term of the notes based on management projections. This led to a cash flow simulation over
the life of the note. A discounted cash flow for each simulation was completed, and it was compared to the discounted cash flow
of the note without the embedded features, thus determining a value for the derivative liability.
Key
inputs and assumptions used to value the convertible notes and warrants upon issuance or tainting and also as of January 31, 2017:
|
●
|
The
stock projections are based on the historical volatilities for each date. These ranged in the 158-170% range. The stock price
projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility, starting
with the market stock price at each valuation date;
|
|
|
|
|
●
|
An
event of default would not occur during the remaining term of the note;
|
|
|
|
|
●
|
Conversion
of the notes to stock would be completed monthly after any holding period and would be limited based on: 5% of the last 6
months average trading volume and the ownership limit identified in the contract assuming the underlying number of common
shares increases at 1% per month.
|
|
|
|
|
●
|
The
effective discount was determined based on the historical trading history of the Company based on the specific pricing mechanism
in each note;
|
|
|
|
|
●
|
The
Company would not have funds available to redeem the notes during the remaining term of the convertible notes;
|
|
|
|
|
●
|
Discount
rates were based on risk free rates in effect based on the remaining term and date of each valuation and instrument.
|
|
|
|
|
●
|
The
Holder would exercise the warrant at maturity if the stock price was above the exercise price;
|
|
|
|
|
●
|
The
Holder would exercise the warrant after any holding period prior to maturity at target prices starting at 2 times the exercise
price for the Warrants or higher subject to monthly limits of: 5% of the last 6 months average trading volume increasing by
1% per month and the ownership limit identified in the contract assuming the underlying number of common shares increases
at 1% per month.
|
Using
the results from the model, the Company recorded a derivative liability of $923,911 for newly granted warrants (see note 11) and
a derivative liability of $279,987 for the fair value of the convertible feature included in the Company’s convertible debt
instruments. The derivative liability recorded for the convertible feature created a debt discount of $259,813 which is being
amortized over the remaining term of the note using the effective interest rate method, and is classified as convertible debt
on the balance sheet. Interest expense related to the amortization of this debt discount for the year ended January 31, 2017,
was $259,813. Additionally, $16,624 of original issuance cost was charged to interest expense as a result of the conversion of
a portion of the underlying debt instrument (See Note 7).The remaining unamortized debt discount related to the derivative liability
was $0 as of January 31, 2017. The Company recorded the change in the fair value of the derivative liability as a loss of $288,643
to reflect the value of the derivative liability for warrants and convertible notes as $0 as of January 31, 2017. The Company
also recorded a reclassification from derivative liability to equity of $272,637 for the conversions of a portion of the Company’s
convertible notes.
Since
no convertible note was convertible as of January 31, 2017, no derivative liability remained as of that date.
The
following table sets forth a reconciliation of changes in the fair value of the Company’s derivative liability:
|
|
Year Ended January 31,
|
|
|
|
2017
|
|
|
2016
|
|
Beginning balance
|
|
$
|
3,293
|
|
|
$
|
216,705
|
|
Total (gains) losses
|
|
|
288,643
|
|
|
|
102,444
|
|
Settlements
|
|
|
(551,749
|
)
|
|
|
(865,387
|
)
|
Additions
|
|
|
259,813
|
|
|
|
549,531
|
|
Ending balance
|
|
$
|
-
|
|
|
$
|
3,293
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized (gains) losses included in earnings relating to derivatives still held as of January 31, 2017 and 2016
|
|
$
|
288,643
|
|
|
$
|
211
|
|
NOTE
9 – Common stock
Our
common shares are all of the same class, are voting and entitle stockholders to receive dividends as defined. Upon liquidation
or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets or any dividends that
may be declared.
On
July 15, 2015, the Company’s shareholders approved an amendment to the Company’s articles of incorporation to increase
the number of authorized common shares from 1,250,000,000 to 6,250,000,000.
Between
February 2014 and July 2014, pursuant to the investment agreement with KVM, KVM purchased 34,214,226 shares for $456,924, of which
$55,673 is still owed to the Company and is reflected as a stock subscription receivable as of January 31, 2017.
During
the year ended January 31, 2016, $206,679 of the August 2013 Note was converted into 123,158,044 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00098 to $0.00574.
During
the year ended January 31, 2016, $153,046 of the November 2013 Note was converted into 48,243,936 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00147 to $0.00609.
During
the year ended January 31, 2016, $160,833 of the August 2014 Note was converted into 56,676,739 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00193 to $0.00416.
During
the year ended January 31, 2016, $110,901 of the October 2014 Note was converted into 74,878,264 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00101 to $0.00263.
During
the year ended January 31, 2016, $231,000 of the December 2014 Note was converted into 196,244,876 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00090 to $0.00197.
In
May of 2015, we issued 2,941,176 units to an investor for total proceeds of $10,000. Each unit consists of one share of our common
stock and two warrants to purchase one share each of the Company’s common stock. The warrants have an exercise price of
$0.0048 and have a three-year term.
On
May 29, 2015, we issued a non-interest bearing promissory note with the principal amount of $30,000 to Brett Gross, a director
of our company. The promissory note is convertible into 16,806,723 units at a price of $0.001785 per unit upon the increase of
the authorized capital of our company. Each unit is comprised of one share of common stock and two warrants. Each warrant will
be exercisable for a period of three years at a price of $0.002499. On August 11, 2015, the note was converted in full and the
16,806,723 common shares were issued.
In
June of 2015, we issued 1,846,154 units to an investor for total proceeds of $3,000. Each unit consists of one share of our common
stock and one warrant to purchase one share of our common stock. The warrants have an exercise price of $0.002275 and have a three-year
term.
In
August of 2015, the Company issued 16,077,170 units to an investor for total proceeds of $25,000. Each unit consists of one share
of the Company’s common stock and one warrant to purchase one share of the Company’s common stock. The warrants have
an exercise price of $0.00218 and have a three-year term.
In
July of 2015, the Company issued 2,822,912 units to an investor, the Company’s CEO, CFO, President and Chairman of the Board,
for proceeds of $4,300. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share
each of the Company’s common stock. The warrants have an exercise price of $0.002130 and have a three-year term.
In
September of 2015, the Company issued 1,851,852 units to an investor for total proceeds of $3,000. Each unit consists of one share
of the Company’s common stock and one warrant to purchase one share of the Company’s common stock. The warrants have
an exercise price of $0.00227 and have a three-year term.
In
November of 2015, we issued 1,655,629 units to an investor for total proceeds of $5,000. Each unit consists of one share of our
common stock and one warrant to purchase one share of our common stock. The warrants have an exercise price of $0.00423 and have
a three year term.
On
June 20, 2015, we entered into an investment agreement (the “Investment Agreement”) with Tangiers Investment Group,
LLC (the “Investor”), whereby the Investor has agreed to invest up to $8,000,000 to purchase shares of our common
stock. Subject to the terms and conditions of the Investment Agreement and a registration rights agreement, we may, in our sole
discretion, deliver a notice to the Investor which states the dollar amount which we intend to sell to the Investor on a certain
date. The amount that we shall be entitled to sell to Investor shall be equal to one hundred and fifty percent (150%) of the average
daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable notice date so long
as such amount does not exceed an accumulative amount per month of $100,000. The minimum amount shall be equal to $5,000. In connection
with the Investment Agreement, we also entered into a registration rights agreement dated June 20, 2015, whereby we agreed to
file a Registration Statement on Form S-1 with the SEC within thirty (30) days of the date of the registration rights agreement
and to have the Registration Statement declared effective by the SEC within ninety (90) days after we have filed the Registration
Statement. We filed Form S-1 on July 2, 2015 and Form S-1 Amendment No. 1 on July 29, 2015, for registration of 100,000,000 shares
of the Company’s common stock under the Investment Agreement, which was declared effective by the SEC on August 5, 2015.
During the year ended January 31, 2016, the Company issued an aggregate of 100,000,000 shares of common stock for total proceeds
of $129,751 to Tangiers Investment Group, LLC under the Investment Agreement.
In
September 2015, the Company issued 5,733,000 shares to a former service provider for services totaling $10,320.
During
the year ended January 31, 2017, $62,160 of the August 2013 Note was converted into 46,526,995 shares of the Company’s common
stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00117 to $0.00152.
During
the year ended January 31, 2017, the Company issued 76,220,079 units to investors for total proceeds of $223,677. Each unit consists
of one share of the Company’s common stock and one or one-half warrant to purchase one share or one-half equivalent share
each of the Company’s common stock. The warrants have an exercise price of $0.0027, $0.0028, or $0.0040 and have a three-year
term.
During
the year ended January 31, 2017, $159,289 of the November 2015 Note was converted into 122,373,003 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00098 to $0.00149.
During
the year ended January 31, 2017, $55,000 of the December 2015 Note was converted into 47,168,177 shares of the Company’s
common stock. The conversions occurred on multiple dates with conversion prices ranging from $0.00105 to $0.00116.
The
Company filed a registration statement on Form S-1 with the SEC on January 21, 2016 and Amendment No. 1 thereto on February 24,
2016, for registration of 350,000,000 shares of the Company’s common stock under the Investment Agreement dated June 20,
2015 with Tangiers Investment Group, LLC. The registration statement, as amended, was declared effective by the SEC on March 15,
2016. During the year ended January 31, 2017, the Company issued an aggregate of 110,098,238 shares of common stock for total
proceeds of $179,291 to Tangiers Investment Group, LLC under the Investment Agreement.
During
the year ended January 31, 2017, the Company issued 32,519,915 shares to third-parties for services with an aggregate fair value
of approximately $67,296. These shares include 30,644,915 shares issued to a service provider for services pursuant to a subscription
agreement that allows for additional shares to be issued in the event the service provider receives aggregate proceeds less than
$40,000 from their sale of this stock.
NOTE
10 – Share-based compensation
The
2010 Stock Option Plan was approved and adopted by the Board of Directors on August 10, 2010. The plan allows for up to 95,500,000
shares to be granted to key employees and non-employee consultants after specific objectives are met. The 2007 Stock Option Plan
was approved and adopted by the Board of Directors on December 10, 2007. The plan allows for up to 2,500,000 shares to be granted
to key employees and non-employee consultants after specific objectives are met. The 2004 Stock Option Plan was approved and adopted
by the Board of Directors on December 27, 2004. The plan allows for up to 962,500 shares to be granted to key employees and non-employee
consultants after specific objectives are met. Employees can receive incentive stock options and non-qualified stock options while
non-employee consultants can receive only non-qualified stock options. The options granted vest under various provisions using
graded vesting, not to exceed four years. The options granted have a term not to exceed ten years from the date of grant or five
years for options granted to more than 10% stockholders. The option price set by the Plan Administration shall not be less than
the fair market value per share of the common stock on the grant date or 110% of the fair market value per share of the common
stock on the grant date for options granted to greater than 10% stockholders. Options remaining available for grant under the
2010 Stock Option Plan at January 31, 2017 and 2016 are 0 and 13,000,000, respectively. Options remaining available for grant
under the 2007 Stock Option Plan at January 31, 2017 and 2016 are 75,000 and 50,000, respectively. Options remaining available
for grant under the 2004 Stock Option Plan at January 31, 2017 and 2016 are 41,250 and 127,626.
In
September 2013, there were 7,423,624 stock options granted at an exercise price of $0.0257 per share, exercisable until September
5, 2023 with a fair value net of forfeitures at grant date of $210,300. The options granted were 100% vested for directors and
shall vest in 25% immediately and 25% over four years increments on a yearly basis over the next four years for employees. In
order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. The volatility
used was based on our historical volatility. The expected term was determined based on the simplified method outlined in Staff
Accounting Bulletin No. 110. The risk-free interest rate for periods within the contractual life of the option is based on the
U.S. Treasury yield curve in effect at the time of grant. Remaining stock option expense to be recognized in future periods related
to the award is $6,991 as of January 31, 2017.
During
the year ended January 31, 2017, the Company granted 1,951,376 incentive stock options to employees and directors previously reserved
under the Company’s stock option plans with an exercise price of $0.0257. The options all fully vested by September 2016
and expire in September 2023.
The
following tables summarize the Company’s stock option activity during the years ended January 31, 2017 and 2016. Incentive
stock options to employees and directors outstanding at January 31, 2017 are as follows:
|
|
Number of
options
|
|
|
Weighted
average
exercise price
|
|
|
Weighted
average
remaining life
(years)
|
|
|
Aggregate
intrinsic value
|
|
Outstanding, January 31, 2015
|
|
|
85,421,374
|
|
|
$
|
0.042
|
|
|
|
1.27
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2016
|
|
|
85,421,374
|
|
|
$
|
0.042
|
|
|
|
4.81
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
12,081,326
|
|
|
|
0.007
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
(110,250
|
)
|
|
|
2.872
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2017
|
|
|
97,392,450
|
|
|
$
|
0.034
|
|
|
|
4.48
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, January 31, 2017
|
|
|
96,798,700
|
|
|
$
|
0.034
|
|
|
|
4.46
|
|
|
$
|
-
|
|
In
December 2015, the board of directors approved a five-year extension of 77,500,000 options expiring on August 16, 2015 to an extended
expiration date of August 16, 2020. This modification resulted in a charge of $29,067 to share based compensation for the year
ended January 31, 2016, representing the fair value of option extension. The options are held by four directors. The options cancelled
during the year ended January 31, 2015 were a result of the options expiring. The aggregate intrinsic value is calculated based
on the stock price of $0.0016 and $0.0019 per share as of January 31, 2017 and 2016, respectively.
We
estimate the fair value of option awards on the grant date using the Black-Scholes valuation model. The Company uses historical
volatility, disregarding identifiable periods of time in which share price was extraordinarily volatile due to certain events
that are not expected to recur during the expected term, as its method to estimate expected volatility. The Company used the following
assumptions to estimate the fair value of stock option grants to employees and non-employees:
|
|
|
|
|
Expected
|
|
|
|
|
|
Risk-free
|
|
|
|
|
|
|
Expected
|
|
|
dividend
|
|
|
Expected
|
|
|
interest
|
|
|
Forfeiture
|
|
Grant date
|
|
|
volatility
|
|
|
|
yield
|
|
|
|
term
|
|
|
|
rate
|
|
|
|
rate
|
|
June 10, 2016
|
|
|
142
|
%
|
|
|
0
|
%
|
|
|
5 years
|
|
|
|
0.87
|
%
|
|
|
0
|
%
|
August 11, 2016
|
|
|
143
|
%
|
|
|
0
|
%
|
|
|
5 years
|
|
|
|
1.30
|
%
|
|
|
0
|
%
|
Share-based
compensation expense is reported in our statement of operations as follows:
|
|
January 31, 2017
|
|
|
January 31, 2016
|
|
Geological and geophysical costs
|
|
$
|
4,882
|
|
|
$
|
4,728
|
|
Salaries and benefits
|
|
|
66,964
|
|
|
|
33,795
|
|
Investor relations
|
|
|
1,834
|
|
|
|
1,776
|
|
General and administrative
|
|
|
1,128
|
|
|
|
-
|
|
|
|
$
|
74,808
|
|
|
$
|
40,299
|
|
At
January 31, 2017, there is $6,991 of unrecognized share-based compensation for all share-based awards outstanding with a weighted
average remaining period for amortization of 0.7 years.
Non-qualified
stock options to non-employee consultants and vendors outstanding as of January 31, 2017 are as follows:
|
|
Number of
options
|
|
|
Weighted
average
exercise price
|
|
|
Weighted
average
remaining life
(years)
|
|
|
Aggregate
intrinsic value
|
|
Outstanding, January 31, 2015
|
|
|
863,500
|
|
|
$
|
0.316
|
|
|
|
1.67
|
|
|
$
|
-
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2016
|
|
|
863,500
|
|
|
$
|
0.316
|
|
|
|
2.23
|
|
|
$
|
-
|
|
Granted
|
|
|
1,421,300
|
|
|
|
0.003
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(831,500
|
)
|
|
|
0.304
|
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
|
|
7.17
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, January 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
|
|
7.17
|
|
|
$
|
-
|
|
The
aggregate intrinsic value is calculated based on the stock price of $0.0016 and $0.0019 per share for the years ended January
31, 2017 and 2016, respectively.
At
January 31, 2017, there were 1,453,800 non-qualified stock options outstanding with a weighted average exercise price of $0.017
per option; of those options 1,453,800 are exercisable. At January 31, 2017, there were 97,392,450 incentive stock options outstanding
with a weighted average exercise price of $0.034 per option; of those options 96,798,700 are exercisable with a weighted average
exercise price of $0.034.
During
the years ended January 31, 2017 and 2016, we recognized $74,808 and $40,299 of compensation expense related to incentive and
non-qualified stock options previously granted to officers, employees and consultants.
NOTE
11 – Warrants
As
of January 31, 2017, there were 130,682,120 whole share purchase warrants outstanding and exercisable. The warrants have a three-year
term, a weighted average remaining life of 3.55 years and a weighted average exercise price of $0.006 per whole warrant for one
common share. Whole share purchase warrants outstanding at January 31, 2017 and 2016 are as follows:
|
|
Number of
whole share
purchase warrants
|
|
|
Weighted
average exercise
price per share
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2015
|
|
|
59,566,708
|
|
|
$
|
0.024
|
|
Issued
|
|
|
63,749,514
|
|
|
|
0.003
|
|
Expired
|
|
|
(24,584,937
|
)
|
|
|
0.034
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Outstanding, January 31, 2016
|
|
|
98,731,285
|
|
|
$
|
0.008
|
|
Issued
|
|
|
39,425,829
|
|
|
|
0.003
|
|
Expired
|
|
|
(7,474,994
|
)
|
|
|
0.020
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Outstanding, January 31, 2017
|
|
|
130,682,120
|
|
|
$
|
0.006
|
|
|
|
|
|
|
|
|
|
|
Exercisable, January 31, 2017
|
|
|
130,682,120
|
|
|
$
|
0.006
|
|
The
weighted average intrinsic value for warrants outstanding was $0 and $0 as of January 31, 2015 and 2014, respectively.
On
May 31, 2016, the Company extended the expiration date of all 93,887,870 warrants issued between May 1, 2013 and May 1, 2016 for
an additional three years at their original exercise prices ranging from $0.0021 to $0.0324. These warrants included 43,156,160
warrants purchased by officers and directors at their original exercise prices ranging from $0.0021 to $0.0207.
NOTE
12 – Income taxes
As
of January 31 our deferred tax asset is as follows:
|
|
January 31, 2017
|
|
|
January 31, 2016
|
|
Deferred Tax Assets
|
|
$
|
9,883,000
|
|
|
$
|
9,391,000
|
|
Less Valuation Allowance
|
|
|
(9,883,000
|
)
|
|
|
(9,391,000
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Management
has elected to provide a deferred tax asset valuation allowance equal to the potential benefit due to our history of losses. If
we demonstrate the ability to generate future taxable income, management will re-evaluate the allowance. The increase in the valuation
allowance of $492,000 and $538,000 during the years ended January 31, 2017 and 2016, respectively, primarily represents the increase
in net operating loss carry-forwards during the period offset against the valuation allowance. As of January 31, 2017, our estimated
net operating loss carry-forward is approximately $29,000,000 and expires beginning in 2026 through 2037.
Internal
Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year
period. Such limitation of the net operating losses may have occurred but we have not analyzed it at this time as the deferred
tax asset is fully reserved. We have federal and state net operating loss carry-forwards that are available to offset future taxable
income.
NOTE
13 – Related party transactions
We
entered into the following transactions with related parties during the year ended January 31, 2017:
We
rented an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, on a month-to-month basis for $522 per month. The total
rent expense related to this office was $6,264 for the year ended January 31, 2017. No amount was due as of January 31, 2017.
At
January 31, 2017, we had a balance of accrued unpaid wages of $595,070 to Jim Briscoe, our Chairman of the Board, CEO, CFO and
President. Additionally, we had a balance of accrued unpaid wages of $15,625 to a former President.
On
May 31, 2016, the Company extended the expiration date of all 93,887,870 warrants issued between May 1, 2013 and May 1, 2016 for
an additional three years at their original exercise prices ranging from $0.0021 to $0.0324. These warrants included 43,156,160
warrants purchased by officers and directors at their original exercise prices ranging from $0.0021 to $0.0207.
On
October 11, 2016, the Company issued 6,879,950 stock options to Jim Briscoe, our Chairman of the Board, CEO and CFO, at an exercise
price of $0.003. The options vested immediately and have a 10-year term.
We
have an option to explore 26 standard federal lode mining claims at the East Silverbell project and 29 standard federal lode mining
claims at the Walnut Creek project from JABA US Inc., (“JABA”) an Arizona corporation in which two of our directors
are owners. We are required to pay annual rentals to maintain the claims in good standing. We paid $27,494 in rental fees to maintain
the mineral claims during the year ended January 31, 2017. The original option agreement was for the period from April 11, 2008
through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and then to June 1, 2021. This may be further extended
in five year periods or increments in the future by any JABA director.
At
January 31, 2017, we had accounts payable to JABA of $34,798, which is reflected as accounts payable to related party on the accompanying
balance sheet.
We
entered into the following transactions with related parties during the year ended January 31, 2016:
Paid
or accrued $6,263 in rent on an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, and President on a month-to-month
basis for $522 per month.
At
January 31, 2016, we had a balance of accrued unpaid wages of $472,953 to Jim Briscoe, our Chairman of the Board, CEO, CFO and
President.
At
January 31, 2016, we had a balance of accrued unpaid wages of $15,625 to Larry Liang, our former President.
We
have an option to explore 26 standard federal lode mining claims at the East Silverbell project and 29 standard federal lode mining
claims at the Walnut Creek project from JABA US Inc., an Arizona Corporation in which two of our directors are owners. We are
required to pay annual rentals to maintain the claims in good standing. During the year ended January 31, 2016 we paid $8,525
in rental fees to maintain the mineral claims in good standing. The original option agreement was for the period from April 11,
2008 through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and now to June 1, 2021. This may additionally
be extended in five year periods or increments in the future by any JABA director.
NOTE
14 – Commitments and Contingencies
We
are required to pay annual rentals for our federal lode mining claims for the North Pipes project in the State of Arizona. The
rental period begins at noon on September 1st through the following September 1st and rental payments are due by the first day
of the rental period. The annual rentals are $155 per claim. The rentals of $1,705 for the period from September 1, 2016 to September
1, 2017 have been paid. The rentals due by September 1, 2017 for the period from September 1, 2017 through September 1, 2018 of
$1,705 have not been paid.
We
are required to pay annual rentals for our federal lode mining claims for our East Silverbell project in the State of Arizona.
The rental period begins at noon on September 1st through the following September 1st and rental payments are due by the first
day of the rental period. The annual rental is $155 per claim. The rentals of $4,030 for the period from September 1, 2016 to
September 1, 2017 have been paid. The annual rentals due by September 1, 2017 of $4,030 are required to maintain the East Silverbell
claims are for the period from September 1, 2017 through September 1, 2018 have not been paid. There is no requirement for annual
assessment or exploration work on the federal lode mining claims. There are no royalties associated with the federal lode mining
claims.
We
are required to pay annual rentals for our federal lode mining claims for the Tombstone project in the State of Arizona. The rental
period begins at noon on September 1st through the following September 1st and rental payments are due by the first day of the
rental period. The annual rentals are $155 per claim. The rentals due by September 1, 2017 for the period from September 1, 2017
through September 1, 2018 of $14,725 have not been paid. We are required to pay annual rentals for our Arizona State Land Department
Mineral Exploration Permits (“AZ MEP”) at our Tombstone Hay Mountain project in the State of Arizona. AZ MEP permits
are valid for 1 year and renewable for up to 5 years. The rental fee is $2.00 per acre for the first year, which includes the
second year, and $1.00 per acre per year for years three through five. The minimum work expenditure requirements are $10 per acre
per year for years one and two and $20 per acre per year for years three through five. If the minimum work expenditure requirement
is not met the applicant can pay the equal amount in fees to the Arizona State Land Department to keep the AZ MEP permits current.
The rental period begins on September 30th through the following September 29th for our Phase 1 permits, and September 14th through
September 13th for our Phase 2 permits. Rental payments are due by the first day of the rental period. We hold AZ MEP permits
for 1,886.88 acres at our Tombstone project. On September 20, 2016 we filed for renewal of three MEP’s permits which were
set to expire by retaining them the full 5 year term and requesting from the Arizona State Land Department that we let them expire
and simultaneously reapply for them which gives us the opportunity to have them for another five years We will need to pay rental
fees for our Phase 1 AZ MEP’s before September 29, 2017 in the amount of $1,500. Required minimum work expenditures for
the period ending September 29, 2017 is $18,468.80. The annual rental due by September 13, 2016 to maintain the Phase 2 AZ MEP
permit is $540. Required minimum work expenditures for the period ending September 13, 2017 is $400.
The
Company entered into a 24-month office lease at 5232 E Pima Street, Suite D, Tucson, Arizona, effective October 1, 2016 through
September 30, 2018, with a base rent of $2,100 per month through September 30, 2017 and then $2,163 per month through September
30, 2018.
NOTE
15 – Fair value of financial instruments
|
|
|
|
|
Fair value measurements at reporting date using:
|
|
Description
|
|
Fair
Value
|
|
|
Quoted
prices in
active markets
for
identical
liabilities
(Level 1)
|
|
|
Significant
other
observable
inputs
(Level 2)
|
|
|
Significant
unobservable
inputs
(Level 3)
|
|
Warrant
and convertible note derivative liability at January 31, 2017
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Warrant
and convertible note derivative liability at January 31, 2016
|
|
$
|
3,293
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3,293
|
|
Our
financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities, convertible notes payable,
notes payable, and derivative liability. It is management’s opinion that we are not exposed to significant interest, currency
or credit risks arising from these financial instruments. With the exception of the derivative liability, the fair value of these
financial instruments approximates their carrying values based on their short maturities or for long-term debt based on borrowing
rates currently available to us for loans with similar terms and maturities. Gains and losses recognized on changes in estimated
fair value of the warrant liability are reported in other income (expense) as gain (loss) on change in fair value.
NOTE
16 – Subsequent events
On
February 3, 2017, we received proceeds of $70,000 under the December 2016 Note.
On
April 11, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated April 10, 2017
(the “April 2017 Note”). The total principal under the April 2017 Note is $50,000, bears interest at 12% per annum,
is due on January 10, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price
with a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion.
From
February through April 2017, we issued 14,315,887 units to investors for total proceeds of $29,000. Each unit consists of one
share of our common stock and one-half warrant to purchase one-half equivalent share each of our common stock at a price of $0.0028
per share.
From
February through April 2017, we issued 24,410,828 shares of common stock for proceeds of $31,950 under the Investment Agreement.
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
BALANCE SHEETS
|
|
July
31
|
|
|
January
31,
|
|
|
|
2017
|
|
|
2017
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
46,095
|
|
|
$
|
5,042
|
|
Prepaid
expenses
|
|
|
9,091
|
|
|
|
3,710
|
|
Total
current assets
|
|
|
55,186
|
|
|
|
8,752
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
6,057
|
|
|
|
8,466
|
|
Total
assets
|
|
$
|
61,243
|
|
|
$
|
17,218
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Convertible
promissory note, net of debt discount of $9,396 and $2,646
|
|
|
227,701
|
|
|
|
30,821
|
|
Accounts
payable and accrued liabilities
|
|
|
389,425
|
|
|
|
443,837
|
|
Accounts
payable to related party
|
|
|
34,798
|
|
|
|
34,798
|
|
Accrued
wages to related parties
|
|
|
655,195
|
|
|
|
610,695
|
|
Total
current liabilities
|
|
|
1,307,119
|
|
|
|
1,120,151
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
deficit
|
|
|
|
|
|
|
|
|
Common
stock - $.00001 par value; 6,250,000,000 authorized; 2,151,802,609 and 2,003,844,312 shares issued and outstanding
|
|
|
21,518
|
|
|
|
20,038
|
|
Stock
subscription receivable
|
|
|
(55,673
|
)
|
|
|
(55,673
|
)
|
Additional
paid-in capital
|
|
|
53,392,500
|
|
|
|
53,077,578
|
|
Accumulated
deficit
|
|
|
(54,604,221
|
)
|
|
|
(54,144,876
|
)
|
Total
stockholders’ deficit
|
|
|
(1,245,876
|
)
|
|
|
(1,102,933
|
)
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit
|
|
$
|
61,243
|
|
|
$
|
17,218
|
|
The
Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
July
31,
|
|
|
July
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geological
and geophysical costs
|
|
|
26,972
|
|
|
|
34,908
|
|
|
|
47,025
|
|
|
|
44,783
|
|
Salaries
and benefits
|
|
|
79,817
|
|
|
|
107,436
|
|
|
|
152,651
|
|
|
|
172,553
|
|
Public
relations
|
|
|
4,282
|
|
|
|
11,318
|
|
|
|
25,470
|
|
|
|
16,578
|
|
Depreciation
|
|
|
1,205
|
|
|
|
1,316
|
|
|
|
2,409
|
|
|
|
3,143
|
|
Legal
|
|
|
7,701
|
|
|
|
6,439
|
|
|
|
17,399
|
|
|
|
47,154
|
|
Professional
services
|
|
|
18,218
|
|
|
|
30,734
|
|
|
|
43,898
|
|
|
|
52,344
|
|
General
and administrative
|
|
|
49,290
|
|
|
|
61,342
|
|
|
|
82,847
|
|
|
|
110,576
|
|
Travel
|
|
|
4,336
|
|
|
|
2,671
|
|
|
|
9,309
|
|
|
|
4,430
|
|
Net
operating expenses
|
|
|
191,821
|
|
|
|
256,164
|
|
|
|
381,008
|
|
|
|
451,561
|
|
Loss
from operations
|
|
|
(191,821
|
)
|
|
|
(256,164
|
)
|
|
|
(381,008
|
)
|
|
|
(451,561
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(56,526
|
)
|
|
|
(123,609
|
)
|
|
|
(69,004
|
)
|
|
|
(204,909
|
)
|
Loss
on settlement of accounts payable
|
|
|
(9,333
|
)
|
|
|
-
|
|
|
|
(9,333
|
)
|
|
|
-
|
|
Loss
on change in fair value of derivative liability
|
|
|
-
|
|
|
|
(196,689
|
)
|
|
|
-
|
|
|
|
(202,201
|
)
|
Total
other expense
|
|
|
(65,859
|
)
|
|
|
(320,298
|
)
|
|
|
(78,337
|
)
|
|
|
(407,110
|
)
|
Net
loss
|
|
|
(257,680
|
)
|
|
|
(576,462
|
)
|
|
|
(459,345
|
)
|
|
|
(858,671
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share of common stock - basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares of common stock outstanding - basic and diluted
|
|
|
2,100,339,464
|
|
|
|
1,697,188,373
|
|
|
|
2,062,643,604
|
|
|
|
1,648,841,243
|
|
The
Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For
the Six Months Ended
|
|
|
|
July
31
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(459,345
|
)
|
|
$
|
(858,671
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,409
|
|
|
|
3,143
|
|
Amortization
of debt discount
|
|
|
42,549
|
|
|
|
174,077
|
|
Loss
on settlement of accounts payable
|
|
|
9,333
|
|
|
|
-
|
|
Loss
on change in fair value of derivative liabilities
|
|
|
-
|
|
|
|
202,201
|
|
Share-based
compensation
|
|
|
5,616
|
|
|
|
46,960
|
|
Common
shares issued for third party services
|
|
|
3,748
|
|
|
|
47,500
|
|
Warrants
issued for third party services
|
|
|
-
|
|
|
|
540
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
(5,381
|
)
|
|
|
(3,365
|
)
|
Other
current assets
|
|
|
-
|
|
|
|
1,152
|
|
Accounts
payable and accrued expenses
|
|
|
(10,412
|
)
|
|
|
48,926
|
|
Accrued
wages related parties
|
|
|
44,500
|
|
|
|
65,452
|
|
Accrued
interest
|
|
|
10,590
|
|
|
|
18,281
|
|
Net
cash used in operating activities
|
|
|
(356,393
|
)
|
|
|
(253,804
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Payments
on long-term debt
|
|
|
-
|
|
|
|
(563
|
)
|
Principal
activity on convertible promissory notes
|
|
|
216,000
|
|
|
|
78,000
|
|
Proceeds
from the issuance of common stock, net of expenses
|
|
|
181,446
|
|
|
|
211,780
|
|
Net
cash provided by financing activities
|
|
|
397,446
|
|
|
|
289,217
|
|
|
|
|
|
|
|
|
|
|
Increase
in cash and cash equivalents
|
|
|
41,053
|
|
|
|
35,413
|
|
Cash
and cash equivalents, beginning of period
|
|
|
5,042
|
|
|
|
536
|
|
Cash
and cash equivalents, end of period
|
|
$
|
46,095
|
|
|
$
|
35,949
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Income
tax paid
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest
paid
|
|
$
|
13,094
|
|
|
$
|
12,553
|
|
Supplemental
disclosure of non-cash items:
|
|
|
|
|
|
|
|
|
Resolutions
of derivative liabilities due to debt conversions
|
|
$
|
35,299
|
|
|
$
|
175,792
|
|
Warrants
reclassed to derivative liabilities
|
|
$
|
-
|
|
|
$
|
189,988
|
|
Debt
discounts due to derivative liabilities
|
|
$
|
35,299
|
|
|
$
|
164,369
|
|
Common
stock issued for conversion of debt and interest
|
|
$
|
36,960
|
|
|
$
|
179,382
|
|
Shares
issuance for settlement of accounts payable
|
|
$
|
44,000
|
|
|
$
|
-
|
|
The
Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements
LIBERTY
STAR URANIUM & METALS CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – Interim financial statement disclosure
The
consolidated financial statements included herein have been prepared by Liberty Star Uranium & Metals Corp. (the “Company”,
“we”, “our”) without audit, pursuant to the rules and regulations of the United States Securities and
Exchange Commission (“SEC”) and should be read in conjunction with our annual report on Form 10-K for the year ended
January 31, 2017 as filed with the SEC under the Securities and Exchange Act of 1934 (the “Exchange Act”). Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe
the disclosures which are made are adequate to make the information presented not misleading. The consolidated financial statements
reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at
July 31, 2017 and the results of our operations and cash flows for the periods presented.
Interim
results are subject to significant seasonal variations and the results of operations for the three and six months ended July 31,
2017 are not necessarily indicative of the results to be expected for the full year.
Certain
amounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation
in the current-year financial statements.
NOTE
2 – Going concern
The
Company has incurred losses from operations, and requires additional funds for further exploratory activity and to maintain its
claims prior to attaining a revenue generating status. There are no assurances that a commercially viable mineral deposit exists
on any of our properties. In addition, the Company may not find sufficient ore reserves to be commercially mined. As such, there
is substantial doubt about the Company’s ability to continue as a going concern.
Management
is working to secure additional funds through the exercise of stock warrants already outstanding, equity financings, debt financings
or joint venture agreements. The consolidated financial statements do not include any adjustments that might result from the outcome
of these uncertainties.
NOTE
3 – Summary of Significant Accounting Policies
Fair
Value
ASC
820 Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring
fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy
which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. The standard describes three levels of inputs that may be used to measure fair value:
Level
1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include
quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities
that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable.
Valuations may be obtained from, or corroborated by, third-party pricing services.
Level
3: Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the
measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs
are available without undue cost and effort.
Our
financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities and convertible notes payable,
and derivative liability. It is management’s opinion that we are not exposed to significant interest, currency or credit
risks arising from these financial instruments. With the exception of the derivative liability, the fair value of these financial
instruments approximates their carrying values based on their short maturities or for long-term debt based on borrowing rates
currently available to us for loans with similar terms and maturities. Gains and losses recognized on changes in estimated fair
value of the derivative liability are reported in other income (expense) as gain (loss) on change in fair value.
During
the six months ended July 31, 2017, one of the Company’s convertible promissory notes had become convertible under its terms
and was converted immediately, thus no derivative liability existed at July 31, 2017.
NOTE
4 – Related party transactions
We
entered into the following transactions with related parties during the six months ended July 31, 2017:
We
rented an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, on a month-to-month basis for $522 per month. The total
rent expense related to this office was $3,132 for the six months ended July 31, 2017. No amount was due as of July 31, 2017,
At
July 31, 2017, we had a balance of accrued unpaid wages of $639,570 to Jim Briscoe, our Chairman of the Board, CEO, CFO and President.
Additionally, we had a balance of accrued unpaid wages of $15,625 to a former President.
We
have an option to explore 26 standard federal lode mining claims at the East Silverbell project and 29 standard federal lode mining
claims at the Walnut Creek project from JABA US Inc., (“JABA”) an Arizona corporation in which two of our directors
are owners. We are required to pay annual rentals to maintain the claims in good standing. We paid $8,525 in rental fees to maintain
these mineral claims during the six months ended July 31, 2017. The original option agreement was for the period from April 11,
2008 through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and then to June 1, 2021. This may be further
extended in five year periods or increments in the future by any JABA director.
At
July 31, 2017, we had accounts payable to JABA of $34,798, which is reflected as accounts payable to related party on the accompanying
consolidated balance sheet.
NOTE
5 – Stock options
Qualified
and Non-qualified incentive stock options to employees and directors outstanding at July 31, 2017 are as follows:
|
|
|
|
|
Weighted
average
|
|
|
|
Number
of
|
|
|
exercise
|
|
|
|
options
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
97,392,450
|
|
|
$
|
0.034
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Outstanding,
July 31, 2017
|
|
|
97,392,450
|
|
|
$
|
0.034
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
96,798,700
|
|
|
$
|
0.034
|
|
These
options had a weighted average remaining life of 3.97 years and an aggregate intrinsic value of $0 as of July 31, 2017.
Non-qualified
stock options to non-employee consultants and vendors outstanding at July 31, 2017 are as follows:
|
|
|
|
|
Weighted
average
|
|
|
|
Number
of
|
|
|
exercise
|
|
|
|
options
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Outstanding,
July 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
These
options had a weighted average remaining life of 6.68 years and an aggregate intrinsic value of $0 as of July 31, 2017.
During
the six months ended July 31, 2017, we recognized $5,616 of compensation expense related to incentive and non-qualified stock
options granted to officers, employees and consultants.
NOTE
6 – Warrants
As
of July 31, 2017, there were 141,414,488 whole share purchase warrants outstanding and exercisable. The warrants have a weighted
average remaining life of 3.03 years and a weighted average exercise price of $0.006 per whole warrant for one common share. The
warrants had an aggregate intrinsic value of $4,771 as of July 31, 2017.
Whole
share purchase warrants outstanding at July 31, 2017 are as follows:
|
|
Number
of
|
|
|
Weighted
average
|
|
|
|
whole
share
|
|
|
exercise
|
|
|
|
purchase
warrants
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
130,682,120
|
|
|
$
|
0.006
|
|
Issued
|
|
|
12,482,369
|
|
|
|
0.003
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
(1,750,000
|
)
|
|
|
0.003
|
|
Outstanding,
July 31, 2017
|
|
|
141,414,489
|
|
|
$
|
0.006
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
141,414,489
|
|
|
$
|
0.006
|
|
During
the six months ended July 31, 2017, the Company issued 12,482,369 warrants to investors at exercise prices ranging from $0.0028
to $0.0053 with a three-year term. The warrants were issued with common stock (one-half warrant for each common share purchased)
and there is no additional accounting for these investor warrants.
During
the six months ended July 31, 2017, the Company issued 1,750,000 shares to an investor for the exercise of warrants at a price
of $0.0028 per share for cash proceeds of $4,900.
NOTE
7 – Derivative Liabilities
The
embedded conversion feature in the convertible debt instruments that the Company issued beginning in December 2016 (See Note 8),
and became convertible in June 2017, qualified it as a derivative instrument since the number of shares issuable under the note
is indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. The convertible note was converted to common shares
immediately, thus, no derivative liability existed at July 31, 2017.
The
valuation of the derivative liability attached to the convertible debt was arrived at through the use of a Monte Carlo model that
values the derivative liability within the notes. The technique applied generates a large number of possible (but random) price
paths for the underlying (or underlyings) via simulation, and then calculates the associated payment value (cash, stock, or warrants)
of the derivative features. The price of the underlying common stock is modeled such that it follows a geometric Brownian motion
with constant drift, and elastic volatility (increasing as stock price decreases). The stock price is determined by a random sampling
from a normal distribution. Since the underlying random process is the same, for enough price paths, the value of the derivative
is derived from path dependent scenarios and outcomes. The features in the notes that were analyzed and incorporated into the
model included the conversion features with the reset provisions, the call/redemption/prepayment options, and the default provisions.
Based on these features, there are six primary events that can occur; payments are made in cash; payments are made with stock;
the note holder converts upon receiving a redemption notice; the note holder converts the note; the issuer redeems the note; or
the Company defaults on the note. The model simulates the underlying economic factors that influenced which of these events would
occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e. stock price, conversion
price, etc.). Probabilities were assigned to each variable such as redemption likelihood, default likelihood, and timing and pricing
of reset events over the remaining term of the notes based on management projections. This led to a cash flow simulation over
the life of the note. A discounted cash flow for each simulation was completed, and it was compared to the discounted cash flow
of the note without the embedded features, thus determining a value for the derivative liability.
Key
inputs and assumptions used to value the convertible note when it became convertible and upon settlement were as follows:
|
●
|
The
stock projections are based on the historical volatilities for each date. These volatilities were in the 145% range. The stock
price projection was modeled such that it follows a geometric Brownian motion with constant drift and a constant volatility,
starting with the market stock price at each valuation date;
|
|
|
|
|
●
|
An
event of default would not occur during the remaining term of the note;
|
|
|
|
|
●
|
Conversion
of the notes to stock would be completed monthly after any holding period and would be limited based on: 5% of the last 6
months average trading volume and the ownership limit identified in the contract assuming the underlying number of common
shares increases at 1% per month. The effective discount was determined based on the historical trading history of the Company
based on the specific pricing mechanism in each note;
|
|
|
|
|
●
|
The
Company would not have funds available to redeem the notes during the remaining term of the convertible notes;
|
|
|
|
|
●
|
Discount
rates were based on risk free rates in effect based on the remaining term and date of each valuation and instrument.
|
Using
the results from the model, the Company recorded a derivative liability of $35,299 for the fair value of the convertible feature
included in the Company’s convertible debt instruments for the six months ended July 31, 2017. The derivative liability
recorded for the convertible feature created a debt discount of $35,299 which was charged to interest expense upon conversion
of the underlying debt instrument. The remaining unamortized debt discount related to the derivative liability was $0 as of July
31, 2017. The Company recorded the change in the fair value of the derivative liability as a loss of $0 to reflect the value of
the derivative liability for warrants and convertible notes as $0 as of July 31, 2017. The Company also recorded a reclassification
from derivative liability to equity of $35,299 for the conversions of a portion of the Company’s convertible notes during
the six months ended July 31, 2017.
The
following table sets forth a reconciliation of changes in the fair value of the Company’s derivative liability:
|
|
Six
months ended
July 31,
|
|
|
|
2017
|
|
|
2016
|
|
Beginning
balance
|
|
$
|
—
|
|
|
$
|
3,293
|
|
Total
losses
|
|
|
—
|
|
|
|
202,201
|
|
Settlements
|
|
|
(35,299
|
)
|
|
|
(786,496
|
)
|
Additions
|
|
|
35,299
|
|
|
|
585,085
|
|
Ending
balance
|
|
$
|
—
|
|
|
$
|
4,083
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized losses included in earnings relating to derivatives still held as of July 31, 2017 and 2016
|
|
$
|
—
|
|
|
$
|
202,201
|
|
NOTE
8 – Convertible promissory notes
Following
is a summary of convertible promissory notes:
|
|
July
31, 2017
|
|
|
January
31, 2017
|
|
|
|
|
|
|
|
|
12%
convertible note payable issued December 2016, due December 2017
|
|
$
|
-
|
|
|
$
|
33,467
|
|
12%
convertible note payable issued February 2017, due February 2018
|
|
|
81,506
|
|
|
|
—
|
|
12%
convertible note payable issued April 2017, due January 2018
|
|
|
51,824
|
|
|
|
—
|
|
8%
convertible note payable issued June 2017, due June 2018
|
|
|
53,701
|
|
|
|
—
|
|
12%
convertible note payable issued July 2017, due April 2018
|
|
|
50,066
|
|
|
|
—
|
|
|
|
|
237,097
|
|
|
|
33,467
|
|
Less
debt discount
|
|
|
(9,396
|
)
|
|
|
(2,646
|
)
|
Less
current portion of convertible notes
|
|
|
(227,701
|
)
|
|
|
(30,821
|
)
|
Long-term
convertible notes payable
|
|
$
|
—
|
|
|
$
|
—
|
|
On
December 14, 2016, we entered into a convertible promissory note (the “December 2016 Note”) to Tangiers Investment
Group, LLC (“Tangiers”) for a principal sum of up to $110,000, bearing interest at 12% per annum. The consideration
is up to $100,000, which would produce an original issue discount of $10,000 if all the consideration is received. The lender
paid $30,000 pursuant to the terms of the December 2016 Note on December 19, 2016, which resulted in the Company recording a $3,000
original issue discount. The maturity date is one year from the effective date of each payment, as well as any unpaid interest
and other fees. The December 2016 Note may be convertible into shares of common stock of our company after 180 days of funding
at a conversion price of 62.5% of the volume weighted average price of the Company’s common stock during the five trading
days previous to the conversion. We may repay the December 2016 Note at any time before 150 days from the effective date of the
December 2016 Note, or prepay at 130% of the principal from 151 to 180 days, after which we may not make any further payments
on the December 2016 Note prior to the maturity date without written approval from the lender. As of January 31, 2017, we had
$33,467 of principal and interest outstanding for the December 2016 Note. On June 16, 2017, Tangiers converted this note in full
for 34,222,222 shares of the Company’s common stock. As of July 31, 2017, we had $0 of principal and interest outstanding
for the December 2016 Note.
On
February 2, 2017, the Company and Tangiers entered into Amendment #1 to the December 2016 Note (“Amendment #1”). Amendment
#1 provides that, on or before February 2, 2017, Tangiers would make a payment to the Company of $77,000, which includes a 10%
OID. The net proceeds of $70,000 were received on February 2, 2017. The maturity date is February 3, 2018. Also on February 2,
2017, the Company and Tangiers entered into Amendment #2 to the December 2016 Note (“Amendment #2”). Amendment #2
provides that the conversion price under the Note is equal to 60% of the lowest trading price of the Company’s common stock
during the 20 consecutive trading days prior to Tangier’s conversion election. The default percentages of 5% and 10% of
the discount of conversion price point remained the same other than reflecting the amended discount price. In addition, the provision
in the Note relating to a right of first refusal was removed by Amendment #2. As of July 31, 2017, we had $81,506 of principal
and interest outstanding under this note.
On
April 11, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated April 10, 2017
(the “April 2017 Note”). The total principal under the April 2017 Note is $50,000, bears interest at 12% per annum,
is due on January 10, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price
with a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion.
As of July 31, 2017, we had $51,824 of principal and interest outstanding under the note.
On
June 20, 2017, we received proceeds of $50,000, net of a $3,000 fee, under a convertible note dated June 20, 2017 (the “June
2017 Note”). The total principal under the June 2017 Note is $53,000, bears interest at 8% per annum, is due on June 20,
2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price of 65% of the lowest
weighted average market price during the previous 10 trading days to the date of conversion. As of July 31, 2017, we had $53,701
of principal and interest outstanding.
On
July 27, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible note dated July 26, 2017 (the “July
2017 Note”). The total principal under the July 2017 Note is $50,000, bears interest at 12% per annum, is due on April 26,
2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price with a 45% discount
to the lowest weighted average market price during the previous 20 trading days to the date of conversion. As of July 31, 2017,
we had $50,066 of principal and interest outstanding.
During
the six months ended July 31, 2017 and 2016, the Company recorded debt discounts of $35,299 and $102,209, respectively, due to
the derivative liabilities, and original issue debt discounts of $14,000 and $7,800, respectively, due to the convertible notes.
The Company recorded amortization of these discounts of $ 42,549 and $174,077 for the six months ended July 31, 2017 and 2016,
respectively.
NOTE
9 – Stockholders’ deficit
Our
common shares are all of the same class, are voting and entitle stockholders to receive dividends as defined. Upon liquidation
or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets or any dividends that
may be declared.
On
July 15, 2015, the Company’s shareholders approved an amendment to the Company’s articles of incorporation to increase
the number of authorized common shares from 1,250,000,000 to 6,250,000,000.
Between
February 2014 and July 2014, pursuant to the investment agreement with KVM, KVM purchased 34,214,226 shares for $456,924, of which
$55,673 is still owed to the Company and is reflected as a stock subscription receivable as of July 31, 2017.
On
June 20, 2015, we entered into an investment agreement (the “Investment Agreement”) with Tangiers Investment Group,
LLC (the “Investor”), whereby the Investor has agreed to invest up to $8,000,000 to purchase shares of our common
stock. Subject to the terms and conditions of the Investment Agreement and a registration rights agreement, we may, in our sole
discretion, deliver a notice to the Investor which states the dollar amount which we intend to sell to the Investor on a certain
date. The amount that we shall be entitled to sell to Investor shall be equal to one hundred and fifty percent (150%) of the average
daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable notice date so long
as such amount does not exceed an accumulative amount per month of $100,000. The minimum amount shall be equal to $5,000. In connection
with the Investment Agreement, we also entered into a registration rights agreement dated June 20, 2015, whereby we agreed to
file a Registration Statement on Form S-1 with the SEC within thirty (30) days of the date of the registration rights agreement
and to have the Registration Statement declared effective by the SEC within ninety (90) days after we have filed the Registration
Statement. We filed Form S-1 on July 2, 2015 and Form S-1 Amendment No. 1 on July 29, 2015, for registration of 100,000,000 shares
of the Company’s common stock under the Investment Agreement, which was declared effective by the SEC on August 5, 2015.
During the year ended January 31, 2016, the Company issued an aggregate of 100,000,000 shares of common stock for total proceeds
of $129,751 to Tangiers Investment Group, LLC under the Investment Agreement.
The
Company filed a registration statement on Form S-1 with the SEC on January 21, 2016 and Amendment No. 1 thereto on February 24,
2016, for registration of 350,000,000 shares of the Company’s common stock under the Investment Agreement dated June 20,
2015 with Tangiers Investment Group, LLC. The registration statement, as amended, was declared effective by the SEC on March 15,
2016. During the year ended January 31, 2017, the Company issued an aggregate of 110,098,238 shares of common stock for total
proceeds of $179,291 to Tangiers Investment Group, LLC under the Investment Agreement. During the six months ended July 31, 2017,
the Company issued an aggregate of 61,779,435 shares of common stock for total proceeds of $118,546 to Tangiers Investment Group,
LLC under the Investment Agreement.
During
the six months ended July 31, 2017, the Company received aggregate proceeds of $58,000 from investors to purchase a total of 24,964,736
units. Each unit consists of one share of the Company’s common stock and one-half warrant to purchase one-half equivalent
share each of the Company’s common stock. The warrants have exercise prices ranging from $0.0028 to $0.0053 with a three-year
term.
During
the six months ended July 31, 2017, the Company issued 34,222,222 shares for the conversion of $36,960 of a convertible note payable
at an exercise price of $0.00108.
During
the six months ended July 31, 2017, the Company issued 1,750,000 shares to an investor for the exercise of warrants at a price
of $0.0028 per share for cash proceeds of $4,900.
During
the six months ended July 31, 2017, the Company issued 999,480 shares for services with a fair value of $3,748. The Company also
issued 24,242,424 shares with a fair value of approximately $53,333 to settle accounts payable of $44,000. The Company recorded
a $9,333 loss on settlement of accounts payable for the excess of fair value of the stock issued over the accounts payable settled.
NOTE
10 – Commitments and contingencies
The
Company entered into a 24-month office lease at 5232 E Pima Street, Suite D, Tucson, Arizona, effective October 1, 2016 through
September 30, 2018, with a base rent of $2,100 per month through September 30, 2017 and then $2,163 per month through September
30, 2018.
NOTE
11 – Subsequent events
In August of 2017, the Company issued an aggregate of 26,173,461 shares of common stock for total proceeds
of $43,890 to Tangiers Investment Group, LLC under the Investment Agreement.
On
August 15, 2017, the Company issued 14,705,882 shares for the conversion of $15,000 of a convertible note at an exercise price
of $0.00102.
On September 15, 2017, the
Company received proceeds of $40,000, net of a $3,000 fee, under a convertible note dated September 13, 2017 (the “September
2017 Note”). The total principal under the September 2017 Note is $43,000, bears interest at 8% per annum, is due on September
13, 2018, and is convertible in shares of the Company's common stock after 180 days at a conversion price of 65% of the lowest
weighted average market price during the previous 10 trading days to the date of conversion.
Management’s
Discussion and Analysis of Financial Condition
and Results of Operations
Our
management’s discussion and analysis provides a narrative about our financial performance and condition that should be read
in conjunction with the audited and unaudited consolidated financial statements and related notes thereto included in this prospectus.
This discussion contains forward looking statements reflecting our current expectations and estimates and assumptions about events
and trends that may affect our future operating results or financial position. Our actual results and the timing of certain events
could differ materially from those discussed in these forward-looking statements due to a number of factors, including, but not
limited to, those set forth in the sections of this prospectus titled “Risk Factors” beginning at page 2 above and
“Forward-Looking Statements” beginning at page 7 above.
Overview
Business
Development
Liberty
Star Uranium & Metals Corp. (the “Company”, “we” or “Liberty Star”) was formerly Liberty
Star Gold Corp. and formerly Titanium Intelligence, Inc. (“Titanium”). Titanium was incorporated on August 20, 2001
under the laws of the State of Nevada. On February 5, 2004, we commenced operations in the acquisition and exploration of mineral
properties business. Big Chunk Corp. (“Big Chunk”), our wholly owned subsidiary, is engaged in the acquisition and
exploration of mineral properties business in the State of Alaska. In April 2007, we changed our name to Liberty Star Uranium
& Metals Corp. Hay Mountain Super Project LLC (“HMSP”), our wholly owned subsidiary, serves as the primary holding
company for development of the potential ore bodies encompassed in the Hay Mountain area of interest in Arizona. We are in the
exploration phase of operations and have not generated any revenues from operations.
Our
Current Business
We
are engaged in the acquisition and exploration of mineral properties in the States of Arizona and Alaska. Claims in the State
of Alaska are held in the name of Big Chunk. Claims in the State of Arizona are held in the name of Liberty Star. We use the term
“Super Project” to indicate a project in which numerous mineral targets have been identified, any one or more of which
could potentially contain commercially viable quantities of minerals. Our significant projects are described below.
North
Pipes Super Project (“North Pipes” and “NPSP”):
The NPSP is located in Northern Arizona on the Arizona
Strip. We plan to ascertain whether the NPSP claims possess commercially viable deposits of uranium and associated co-product
metals. We have not identified any ore reserves to date.
Big
Chunk Super Project:
The Big Chunk Super Project is located in the Iliamna region of Southwestern Alaska. We plan to ascertain
whether the Big Chunk Super Project claims possess commercially viable deposits of copper, gold, molybdenum, silver, palladium
rhenium and zinc. We have not identified any ore reserves to date.
Tombstone
Super Project (“Tombstone”) (formerly referred to as Tombstone Porphyry Precious Metals Project):
Tombstone is
located in Cochise County, Arizona and covers the Tombstone caldera and its environs. Within the Tombstone caldera is the Hay
Mountain target where we are concentrating our work at this time. We plan to ascertain whether the Tombstone, Hay Mountain claims
possess commercially viable deposits of copper, molybdenum, gold, silver, lead, zinc, manganese and other metals including Rare
Earth Elements (REE’s). We have not identified any ore reserves to date.
East
Silverbell Porphyry Copper Project (“East Silverbell”):
East Silverbell is located northwest of Tucson, Arizona.
We plan to ascertain whether the East Silverbell claims possess commercially viable deposits of copper. We have not identified
any ore reserves to date.
Title
to mineral claims involves certain inherent risks due to difficulties in determining the validity of certain claims, as well as
potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. We
have investigated title to all the Company’s mineral properties and, to the best of our knowledge, title to all properties
are in good standing.
The
mineral resource business generally consists of three stages: exploration, development, and production. Mineral resource companies
that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged
in exploring land in an effort to discover them. Mineral resource companies that have located a mineral resource in commercially
exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction
of a known mineral resource are in the production stage. We have not found any mineral resources in commercially exploitable quantities.
There
is no assurance that a commercially viable mineral deposit exists on any of our properties, and further exploration is required
before we can evaluate whether any exist and, if so, whether it would be economically feasible to develop or exploit those resources.
Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required
to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will
constitute a commercially viable mineral deposit, known as an “ore reserve.”
To
date, we have not generated any revenues. Our ability to pursue our business plan and generate revenues is subject to our ability
to obtain additional financing, and we cannot give any assurance that we will be able to do so.
Results
of Operations
Years
Ended January 31, 2017 and 2016
We
had a net loss of $1,496,550 for the fiscal year ended January 31, 2017 compared to net loss of $1,569,662 for the fiscal year
ended January 31, 2016. Net loss decreased by $73,112 due to a decrease in geological and geophysical costs of $50,371 due to
decreased survey and land research, a decrease in depreciation expense of $16,843 due to property and equipment becoming fully
depreciated, and a decrease in interest expense of $351,300 due to a decrease in convertible notes and the related derivative
liability. These decreases were partially offset by an increase in public relations expense of $52,759, due primarily to an increase
in investor conference expense during the year ended January 31, 2017.
Three
and Six-Month Periods Ended July 31, 2017 and 2016
We
had net losses of $257,680 and $459,345 for the three and six months ended July 31, 2017, respectively, compared to a net loss
of $576,462 and $858,671 for the three and six months ended July 31, 2016, respectively.
During
the three and six months ended July 31, 2017, we had a decrease of approximately $27,619 and $19,902, respectively, in salary
and benefits expense compared to the three and six months ended July 31, 2016, due primarily to decrease in stock option expense
related to employee stock options. During the six months ended July 31, 2017, we had a decrease in legal expenses of approximately
$29,755, compared to the six months ended July 31, 2016, due primarily to the reduced costs associated with land inquiry work
and work related to the Company’s S-1 filings. During the three and six months ended July 31, 2017, we had a decrease of
approximately $12,516 and $8,446, respectively, in professional services expense compared to the three and six months ended July
31, 2016, due primarily to decreased costs related to accounting and financial reporting. We had a decrease in general and administrative
expenses of approximately $12,052 and $27,729, respectively, during the three and six months ended July 31, 2017, as compared
to the three and six months ended July 31, 2016, due primarily to decreased expenses related to outside services, conventions,
and vehicles. We had a decrease in interest expense of approximately $67,083 and $135,905 during the three and six months ended
July 31, 2017, as compared to the three and six months ended July 31, 2016, respectively, due primarily to decreases in convertible
debt conversions and the related interest expense from the write-off of derivative liability debt discount. We incurred a non-cash
loss on the change in fair value of our derivative liabilities of $0 and $0 during the three and six months ended July 31, 2017,
respectively, as compared to a loss of $196,689 and $202,201 during the three and six months ended July 31, 2016, respectively,
due to a decrease in expense related to the embedded conversion features in our debt instruments that require us to record our
equity linked instruments including outstanding warrants and fixed rate convertible debt at fair value.
Liquidity
and Capital Resources
We
had cash and cash equivalents in the amount of $46,095 as of July 31, 2017 compared to $5,042 as of January 31, 2017. We had negative
working capital of $1,251,933 as of July 31, 2017 compared to $1,111,390 as of January 31, 2017. We had net cash inflows from
financing activities of $397,446 for the six months ended July 31, 2017 compared to $510,407 for the fiscal year ended January
31, 2017. We used $356,393 net cash in operating activities during the six months ended July 31, 2017 which was utilized for working
capital. We also utilized our cash funds to continue exploration activities at our Hay Mountain mineral lands by working on geochemical
interpretation of the soil, rock chip and vegetation sampling and ZTEM (aero magnetics and aero electromagnetics). We purchased
no new equipment during the six months ended July 31, 2017. We have been raising capital by issuing convertible promissory notes
and selling equity by way of private placements and the Investment Agreement with Tangiers Investment Group, LLC. We intend to
continue to raise capital from such sources. In addition to seeking sources of funding through the sale of equity, we may seek
to enter into joint venture agreements, or other types of agreements with other companies to finance our projects for the long
term. In addition, we may choose to sell a portion of our assets to finance our projects. Should our properties prove to be commercially
viable, we may be in a position to seek debt financing to help build infrastructure, and eventually we may obtain revenues from
commercial mining of our properties.
Convertible
promissory notes
We
have issued the following convertible promissory notes in private placements of our securities to institutional investors pursuant
to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933.
In
August 2013, we entered into a promissory note (the “
August 2013 Note
”) for a principal sum of $555,000 plus
accrued and unpaid interest and any other fees. The consideration is up to $500,000, which would produce an original issue discount
of $55,000 if all the consideration is received. The lender paid $150,000 upon closing pursuant to the terms of the August 2013
Note. The August 2013 Note has a maturity of one year from the delivery of each payment. The August 2013 Note may be convertible
into shares of common stock of our company at any time from 180 days after the date of each payment of consideration, at a conversion
price which is 70% of the average of the three lowest closing prices in the 20 trading days previous to the conversion. We may
repay the August 2013 Note at any time on or before 90 days from the effective date of the August 2013 Note with an interest rate
of 0%, after which we may not make any further payments on the August 2013 Note prior to the maturity date without written approval
from the lender. If we elect not to repay the August 2013 Note on or before 90 days from the effective date of the August 2013
Note, a one-time interest charge of 12% will be applied to the principal sum. We elected not to pay the $150,000 portion of the
August 2013 Note within 90 days from the effective date. After the $150,000 portion of the August 2013 Note became convertible,
the note holder elected to convert the principal and interest totaling $186,480 into 17,937,915 shares of the company’s
common stock during the months of February through May of 2014. On December 9, 2013, we received additional consideration of $75,000
pursuant to the terms of the August 2013 Note. We elected not to pay the $75,000 portion of the August 2013 Note within 90 days
from the effective date. In June, October and August 2014, the note holder converted principal and interest totaling $93,240 into
9,983,507 shares of the Company’s common stock. On June 24, 2014 and September 3, 2014, we received additional consideration
of $75,000 and $75,000, respectively, pursuant to the terms of the August 2013 Note. In December 2014 and January 2015, the note
holder converted principal and interest totaling $41,961 into 5,900,000 shares of the Company’s common stock. On February
25, 2015, we received additional consideration of $50,000 with $5,500 of original issue discount pursuant to the terms of the
August 2013 Note. On August 28, 2015, we received additional consideration of $50,000 with $5,500 of original issue discount pursuant
to the terms of the August 2013 Note. We elected not to repay the $50,000 portion of the August 2013 Note within 90 days from
the effective date. During the year ended January 31, 2016, the note holder converted principal and interest totaling $206,679
into 123,158,044 shares of the Company’s common stock. During the year ended January 31, 2017, the note holder converted
principal and interest totaling $62,160 into 46,526,995 shares of the Company’s common stock. As July 31, 2017, we had $0
of principal and interest outstanding for the August 2013 Note.
On
November 2, 2015, we entered into a promissory note (the “
November 2015 Note
”) for a principal sum of up to
$500,000. The consideration is up to $450,000, which would produce an original issue discount of $50,000 if all the consideration
is received. The lender paid $50,000 upon closing pursuant to the terms of the November 2015 Note, which resulted in the Company
recording a $5,000 original issue discount. The maturity date is two years from the effective date of each payment, as well as
any unpaid interest and other fees. The November 2015 Note may be convertible into shares of common stock of our company at any
time at a conversion price of 70% of the average of the three lowest closing prices in the 20 trading days previous to the conversion.
We may repay the November 2015 Note at any time on or before 90 days from the effective date of the November 2015 with an interest
rate of 0%, after which we may not make any further payments on the November 2015 Note prior to the maturity date without written
approval from the lender. If we elect not to repay the November 2015 Note on or before 90 days from the effective date of the
November 2015, a one-time interest charge of 12% will be applied to the principal sum. On March 23, 2016, the November 2015 Note
was amended to allow for conversion only after 180 days. On March 10, 2016, we received an additional $50,000 under the November
2015 Note, with a $5,000 original issue discount. On May 25, 2016, we received an additional $28,000 under the November 2015 Note,
with a $2,800 original issue discount. During the year ended January 31, 2017, the note holder converted principal and interest
totaling $159,289 into 122,373,003 shares of the Company’s common stock. As of July 31, 2017, we had of $0 of principal
and interest outstanding for the November 2015 Note.
On
December 29, 2015, the Company entered into a convertible promissory note (the “
December 2015 Note
”) for a
principal sum of $50,000, due on demand by the lender at any time on or after September 29, 2016, with interest at 12% per annum.
The lender paid $49,000 upon closing of the December 2015 Note, which included the lender retaining $1,000 as an original issue
discount. The December 2015 Note may be convertible into shares of the common stock of our company at any time after 180 days
at a conversion price of the lower of: (i) a 45% discount to the second lowest trading price during the previous ten trading days
to the date of a conversion notice; or (ii) a 45% discount to the second lowest trading price during the previous ten trading
days before the date the December 2015 Note was executed on December 29, 2015. During the year ended January 31, 2017, the note
holder converted principal and interest totaling $53,100 into 47,168,177 shares of the Company’s common stock. As of July
31, 2017, we had of $0 of principal and interest outstanding for the December 2015 Note.
On
December 14, 2016, we entered into a convertible promissory note (the “
December 2016 Note
”) to Tangiers Investment
Group, LLC (“
Tangiers
”) for a principal sum of up to $110,000, bearing interest at 12% per annum. The consideration
is up to $100,000, which would produce an original issue discount of $10,000 if all the consideration is received. The lender
paid $30,000 pursuant to the terms of the December 2016 Note on December 19, 2016, which resulted in the Company recording a $3,000
original issue discount. The maturity date is one year from the effective date of each payment, as well as any unpaid interest
and other fees. The December 2016 Note may be convertible into shares of common stock of our company after 180 days of funding
at a conversion price of 62.5% of the volume weighted average price of the Company’s common stock during the five trading
days previous to the conversion. We may repay the December 2016 Note at any time before 150 days from the effective date of the
December 2016 Note, or prepay at 130% of the principal from 151 to 180 days, after which we may not make any further payments
on the December 2016 Note prior to the maturity date without written approval from the lender. On June 16, 2017, Tangiers converted
this note in full for 34,222,222 shares of the Company’s common stock. As of July 31, 2017, we had $0 of principal and interest
outstanding for the December 2016 Note.
On
February 2, 2017, the Company and Tangiers entered into Amendment #1 to the December 2016 Note (“
Amendment #1
”).
Amendment #1 provides that, on or before February 2, 2017, Tangiers would make a payment to the Company of $77,000, which includes
a 10% original issue discount. The net proceeds of $70,000 were received on February 2, 2017. The maturity date is February of
2018.
Also
on February 2, 2017, the Company and Tangiers entered into Amendment #2 to the December 2016 Note (“
Amendment #2
”).
Amendment #2 provides that the conversion price under the Note is equal to 60% of the lowest trading price of the Company’s
common stock during the 20 consecutive trading days prior to Tangier’s conversion election. The default percentages of 5%
and 10% of the discount of conversion price point remained the same other than reflecting the amended discount price. In addition,
the provision in the Note relating to a right of first refusal was removed by Amendment #2. As of July 31, 2017, we had $81,506
of principal and interest outstanding under this note.
On
April 11, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated April 10, 2017
(the “April 2017 Note”). The total principal under the April 2017 Note is $50,000, bears interest at 12% per annum,
is due on January 10, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price
with a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion.
As of July 31, 2017, we had of $51,824 of principal and interest outstanding under the April 2017 Note.
On
June 20, 2017, we closed on a securities purchase agreement, whereby we issued a convertible note (the “June 2017 Note”)
to one lender in the principal amount of $53,000. The Note is payable in full on June 20, 2018 and bears interest at the rate
of 8.00% per annum. The June 2017 Note may not be prepaid in whole or in part except as set forth in the note. Any amount of principal
or interest on the June 2017 Note which is not paid when due shall bear interest at the rate of 22% per annum from the due date
until paid. The June 2017 Note may be convertible into shares of common stock of our company at any time from 180 days after the
execution date of the note and ending on the later of the maturity date, or the date of payment of the Default Amount (as defined
in the securities purchase agreement relating to the note) at a price per share of 65% (representing a 35% discount) of the average
of the lowest five (5) VWAP’s (as defined in the securities purchase agreement relating to the note) for our common stock
during the 10-trading day period ending on the latest completed trading day prior to the date of conversion. As of July 31, 2017,
we had $53,701 of principal and interest outstanding under the June 2017 Note.
On
July 26, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated July 26, 2017 (the
“July 2017 Note”). The total principal under the July 2017 Note is $50,000, bears interest at 12% per annum, is due
on April 26, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price with
a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion. As of
July 31, 2017, we had $50,066 of principal and interest outstanding for the July 2017 Note.
Proceeds
from issuance of common stock
During
the fiscal years ended January 31, 2017 and 2016, we also entered into certain private investment agreements pursuant to which
we received a total of $402,968 and $180,051 in net proceeds, respectively.
During
the six months ended July 31, 2017, we entered into certain private investment agreements pursuant to which we received a total
of $58,000 in net proceeds.
Investment
agreement with Tangiers Investment Group, LLC
On
June 20, 2015, we entered into an investment agreement (the “Investment Agreement”) with Tangiers Investment Group,
LLC (the “Investor”), whereby the Investor has agreed to invest up to $8,000,000 to purchase shares of our common
stock. Subject to the terms and conditions of the Investment Agreement and a registration rights agreement, we may, in our sole
discretion, deliver a notice to the Investor which states the dollar amount which we intend to sell to the Investor on a certain
date. The amount that we shall be entitled to sell to Investor shall be equal to one hundred and fifty percent (150%) of the average
daily volume (U.S. market only) of the common stock for the ten (10) trading days prior to the applicable notice date so long
as such amount does not exceed an accumulative amount per month of $100,000. The minimum amount shall be equal to $5,000. In connection
with the Investment Agreement, we also entered into a registration rights agreement dated June 20, 2015, whereby we agreed to
file a Registration Statement on Form S-1 with the SEC within thirty (30) days of the date of the registration rights agreement
and to have the Registration Statement declared effective by the SEC within ninety (90) days after we have filed the Registration
Statement. We filed Form S-1 on July 2, 2015 and Form S-1 Amendment No. 1 on July 29, 2015, for registration of 100,000,000 shares
of the Company’s common stock under the Investment Agreement, which was declared effective by the SEC on August 5, 2015.
During the year ended January 31, 2016, the Company issued an aggregate of 100,000,000 shares of common stock for total proceeds
of $129,751 to Tangiers Investment Group, LLC under the Investment Agreement.
Thereafter,
the Company filed a registration statement on Form S-1 with the SEC on January 21, 2016 and Amendment No. 1 thereto on February
24, 2016 (collectively, referred to herein as “January 21, 2016 Amended Registration Statement”), for registration
of 350,000,000 shares of the Company’s common stock under the Investment Agreement dated June 20, 2015 with Tangiers Investment
Group, LLC. The January 21, 2016 Amended Registration Statement was declared effective by the SEC on March 15, 2016. On January
3, 2017, the Company filed Post-Effective Amendment No. 1 to the January 21, 2016 Amended Registration Statement, to provide updated
business and financial information for the nine months ended October 31, 2016 and the fiscal year ended January 31, 2016 as well
as to provide an updated selling stockholders table to reflect sales effected since the January 21, 2016 Amended Registration
Statement was declared effective. On September 29, 2017, the Company filed this Post-Effective Amendment No. 2 to the January
21, 2016 Amended Registration Statement, to provide updated business and financial information for the six months ended July 31,
2017 and the fiscal year ended January 31, 2017 as well as to provide an updated selling stockholders table to reflect sales effected
since Post-Effective Amendment No. 1 to the January 21, 2016 Amended Registration Statement was declared effective. We will not
sell any shares under the January 21, 2016 Amended Registration Statement until Post-Effective Amendment No. 2 to the January
21, 2016 Amended Registration Statement is deemed effective by the SEC. During the year ended January 31, 2017, the Company issued
an aggregate of 110,098,238 shares of common stock for total proceeds of $179,291 to Tangiers Investment Group, LLC under the
Investment Agreement. During the six months ended July 31, 2017, the Company issued an aggregate of 61,779,435 shares of common
stock for total proceeds of $118,546 to Tangiers Investment Group, LLC under the Investment Agreement.
Warrants
As
of July 31, 2017, there were 141,414,489 whole share purchase warrants outstanding and exercisable. The warrants have a weighted
average remaining life of 3.03 years and a weighted average exercise price of $0.006 per whole warrant for one common share. The
warrants had an aggregate intrinsic value of $4,771 as of July 31, 2017.
Whole
share purchase warrants outstanding at July 31, 2017 are as follows:
|
|
Number
of
|
|
|
Weighted
average
|
|
|
|
whole
share
|
|
|
exercise
|
|
|
|
purchase
warrants
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
130,682,120
|
|
|
$
|
0.006
|
|
Issued
|
|
|
12,482,369
|
|
|
$
|
0.003
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
(1,750,000
|
)
|
|
|
0.003
|
|
Outstanding,
July 31, 2017
|
|
|
141,414,489
|
|
|
$
|
0.006
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
141,414,489
|
|
|
$
|
0.006
|
|
During
the six months ended July 31, 2017, the Company issued 12,482,369 warrants to investors at exercise prices ranging from
$0.0028 to $0.0053 with a three year term. The warrants were issued with common stock (one-half warrant for each common share
purchased) and there is no additional accounting for these investor warrants.
During
the six months ended July 31, 2017, the Company issued 1,750,000 shares to an investor for the exercise of warrants at a price
of $0.0028 per share for cash proceeds of $4,900.
Stock
options
Qualified
and Non-qualified incentive stock options to employees and directors outstanding at July 31, 2017 are as follows:
|
|
|
|
|
Weighted
average
|
|
|
|
Number
of
|
|
|
exercise
|
|
|
|
options
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
97,392,450
|
|
|
$
|
0.034
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Outstanding,
July 31, 2017
|
|
|
97,392,450
|
|
|
$
|
0.034
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
96,798,700
|
|
|
$
|
0.034
|
|
These
options had a weighted average remaining life of 3.97 years and an aggregate intrinsic value of $0 as of July 31, 2017.
Non-qualified
stock options to non-employee consultants and vendors outstanding at July 31, 2017 are as follows:
|
|
|
|
|
Weighted
average
|
|
|
|
Number
of
|
|
|
exercise
|
|
|
|
options
|
|
|
price
per share
|
|
Outstanding,
January 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
Outstanding,
July 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
July 31, 2017
|
|
|
1,453,800
|
|
|
$
|
0.017
|
|
These
options had a weighted average remaining life of 6.68 years and an aggregate intrinsic value of $0 as of July 31, 2017.
During
the six months ended July 31, 2017, we recognized $5,616 of compensation expense related to incentive and non-qualified stock
options granted to officers, employees and consultants.
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to stockholders.
Presentation
of Financial Information
Our
consolidated financial statements for the fiscal year ended January 31, 2017 reflect financial information for the fiscal years
ended January 31, 2017 and 2016.
Since
we have not generated any revenue, we have included a reference to our ability to continue as a going concern in connection with
our consolidated financial statements for the fiscal years ended January 31, 2017 and 2016. Our accumulated deficit at January
31, 2017, was $54,144,876 and the net loss from operations for the fiscal year ended January 31, 2017 was $882,712. All of our
exploration costs are expensed as incurred.
These
consolidated financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing
will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business.
Accordingly, these consolidated financial statements do not include any adjustments related to the recoverability of assets and
classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
In
order to continue as a going concern, we require additional financing. There can be no assurance that additional financing will
be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able
to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances
set out in the preparation of the consolidated financial statements.
Critical
Accounting Policies
Our
consolidated financial statements have been prepared in conformity with GAAP. The critical accounting policies adopted by our
company are as follows:
Going
Concern
Since
we have not generated any revenue, we have negative cash flows from operations, and negative working capital we have included
a reference to the substantial doubt about our ability to continue as a going concern in connection with our consolidated financial
statements for the year ended January 31, 2017. Our total stockholders’ deficit at January 31, 2017 was $1,102,933.
These
consolidated financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing
will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business.
Accordingly, these consolidated financial statements do not include any adjustments related to the recoverability of assets and
classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
Mineral
claims
We
account for costs incurred to acquire, maintain and explore mineral properties as charged to expense in the period incurred until
the time that a proven mineral resource is established at which point development of the mineral property would be capitalized.
Currently, we do not have any proven mineral resources on any of our mineral properties.
Convertible
promissory notes
We
reviewed the convertible promissory notes and the related subscription agreements to determine the appropriate reporting within
the financial statements. We report convertible promissory notes as liabilities at their carrying value less unamortized discounts
in accordance with the applicable accounting guidance. We bifurcate conversion options and detachable common stock purchase warrants
and report them as liabilities at fair value at each reporting period when required in accordance with the applicable accounting
guidance. No gain or loss is reported when the notes are converted into shares of our common stock in accordance with the note’s
terms.
Common
stock purchase warrants
We
report common stock purchase warrants as equity unless a condition exists which requires reporting as a derivative liability at
fair market value. The valuation of the derivative liability of the warrants is determined through the use of a Monte Carlo options
model that values the liability of the warrants based on a risk-neutral valuation where the price of the option is its discounted
expected value.
Directors
and Executive Officers
Directors
and Executive Officers
All
directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected
and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation
or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
Name
|
|
Position(s)
Held with the Company
|
|
Age
|
|
Date
First Elected
or Appointed
|
James
A. Briscoe
|
|
Chief
Executive Officer, Chief Financial Officer, President and Chairman of the Board
|
|
75
|
|
February
3, 2004
|
John
Guilbert
|
|
Director
|
|
85
|
|
February
5, 2004
|
Keith
Brill
|
|
Director
|
|
39
|
|
December
23, 2009
|
Peter
O’Heeron
|
|
Director
|
|
53
|
|
September
6, 2012
|
Brett
Gross
|
|
Director
|
|
57
|
|
October
20, 2014
|
Patricia
Madaris
|
|
VP
Finance
|
|
66
|
|
May
8, 2015
|
Business
Experience
The
following is a brief account of the education and business experience of directors and executive officers during at least the
past five years, indicating their principal occupation during the period, and the name and principal business of the organization
by which they were employed.
James
A. Briscoe.
Mr.
Briscoe was appointed as our Chief Executive Officer, President and Chairman of the Board in 2004 and Chief Financial Officer
in 2008. Mr. Briscoe is a Registered Professional Geologist in the states of Arizona and California. From 1996 to 2005, Mr. Briscoe
was the Vice President of Exploration, and Chairman of the Board of JABA Exploration Inc., a TSX Venture Exchange Canadian public
company. Mr. Briscoe was also the President, Chief Executive Officer and a Geologist of JABA (US) Inc. and President of Compania
Minera JABA, S.A. de C.V. in Mexico. Compania Minera JABA, S.A. de C.V. is no longer active and is in the process of dissolution.
We
believe Mr. Briscoe is qualified to serve on our board of directors because of his knowledge of our company’s history and
current operations, which he gained from working for our company as described above, in addition to his extensive experience in
the industry.
John
Guilbert.
Dr.
Guilbert was appointed as one of our directors in 2004. Dr. Guilbert is a Professor Emeritus at the University of Arizona and
is a world-renowned geologist and author of the book, The Geology of Ore Deposits, a popular 900 page text used throughout the
world and a co-developer of the Lowell-Guilbert porphyry copper model and recipient of two mining awards, the R.A.F. Penrose Medal
and the D.C. Jackling Award. These gold medal awards, the most coveted in American Mining, were awarded back-to-back in successive
years. Dr. Guilbert served as a director of Excellon Inc., a Vancouver Stock Exchange listed company from 1992 to 1996 and as
Board Chairman and director for JABA Inc., an Alberta Stock Exchange (later CDNX then TSX) listed company from 1996 to 2002.
We
believe Dr. Guilbert is qualified to serve on our board of directors because of his knowledge of our company’s history and
current operations, which he gained from working for our company as described above, in addition to his education and business
experience as described above.
Keith
Brill.
Mr.
Brill was appointed as one of our directors in, 2009. Mr. Brill received an International Master of Business Administration (IMBA)
from the Moore School of Business, University of South Carolina in 2005. He graduated from the South Carolina Honors College,
University of South Carolina in 2003 with a Bachelor of Science, magna cum laude, major in Economics and Finance, minor in Spanish.
Mr. Brill has been a management consultant with PA Consulting Group, Inc., a leading global consulting firm, since 2004. He has
provided multinational Fortune 500 companies with consulting advice on topics including cost reduction, operational efficiency,
and IT strategy. Mr. Brill has extensive experience in conducting ROI analysis, developing business cases, and providing strategic
financial advice on major business transformation programs.
We
believe Mr. Brill is qualified to serve on our board of directors because of his knowledge of our company’s history and
current operations, which he gained from working for our company as described above, in addition to his education and business
experience as described above.
Peter
O’Heeron.
Mr.
O’Heeron joined the board in 2012. Mr. O’Heeron leads an operational investment group which identifies early stage
opportunities in the medical field with strong intellectual property positions. Through his 20+ years of medical product development
experience, Mr. O’Heeron brings together the resources from strategic disciplines necessary to commercialize unique technologies.
Prior to founding Advanced Medical Technologies LLC, Mr. O’Heeron founded NeoSurg Technologies, Inc. to develop a minimally
invasive access system. As a result of his efforts, NeoSurg Technologies was successful in developing the T2000 Minimally Invasive
Access System, the world leader in reposable surgical instrumentation. Mr. O’Heeron completed the sale of NeoSurg Technologies
to CooperSurgical in 2005. Mr. O’Heeron graduated from Texas State University with a BS in Healthcare Administration and
a minor in Business Administration. He received his Masters in Healthcare Administration from the University of Houston. Mr. O’Heeron
currently holds 5 patents and has 4 patents pending.
We
believe Mr. O’Heeron is qualified to serve on our board of directors because of his knowledge of our company’s history
and current operations, which he gained from working with our company as described above, in addition to his education and business
experience as described above. He also catalyzed a negotiation with Northern Dynasty which benefited the company by millions of
dollars.
Brett
Gross.
Mr.
Gross joined the board in 2014. Mr. Gross has served as Vice President and Regional Managing Attorney for URS Energy& Construction,
Inc., an AECOM company, fka Washington Group International, Inc. since August 2005. Mr. Gross is a mining engineer (BS, Ohio State
University, 1982; MS, Virginia Polytechnic Institute, 1988; PE, Colorado and Alabama) and attorney (JD, University of Denver,
2001) with over 30 years of experience, both domestic and international. His work experience includes surface and underground
mining operations, engineering, and delivery of construction mega-projects across multiple industrial and commercial markets,
and the practice of law related to each of these sectors. Mr. Gross brings a combination of professional skills that benefits
every aspect of our business. Mr. Gross’ engineering career began at Virginia Tech, with research focused on rock mechanics
and the stability of underground openings, particularly the phenomenon of “coal bumps” and “rock bursts,”
and studying methods to monitor stress changes in the longwall barrier pillar during the onset of the active longwall face. The
ensuing years of his career have been intimately involved with a broad spectrum of engineering, operations, management and project
delivery. Since 2002, Mr. Gross has practiced law both in private practice and as in-house counsel, negotiating and closing complex
deals with what today is among the largest engineering and construction firms in the United States.
We
believe Mr. Gross is qualified to serve on our board of directors because of his education and business experience as described
above.
Patricia
Madaris.
Ms.
Madaris has served as our VP Finance since May 2015. Prior to that time, Ms. Madaris served as the Executive Assistant to our
CEO and Board of Directors since 2011. Since beginning her work at our company, she has proven to be beneficial in facilitating
many areas of our public company, working to engage, negotiate, and close financings, and overseeing and working actively in financial
reporting, and projected budgeting for ongoing operations. She has also worked as an accountant/manager for corporations in Arizona,
Florida, and California since 2005. Ms. Madaris has a Bachelor’s of Science Degree, graduating Summa Cum Laude, and an
MBA in Accounting and Finance from Indiana Wesleyan University.
Family
Relationships
There
are no family relationships among our directors or officers.
Board
and Committee Meetings
The
board of directors of our company held three formal meetings during the fiscal year ended January 31, 2017.
There
have been no material changes to the procedures by which our shareholders may recommend nominees to our board of directors during
the fiscal year ended January 31, 2017. Shareholders may contact our President, James A. Briscoe, to recommend nominees to our
board of directors.
For
the fiscal year ended January 31, 2017 our only standing committee of the board of directors was our audit committee. We do not
have a nominating committee or a compensation committee.
Audit
Committee
Currently
our audit committee consists of our entire board of directors. We do not have a separately-designated standing audit committee
established in accordance with section 3(a)(58)(A) of the Exchange Act.
During
the fiscal year ended January 31, 2017, the audit committee did not hold any meetings. Rather, the business of the audit committee
was conducted by resolutions consented to in writing by all the members of the board and filed with the minutes of the proceedings
of the board.
Audit
Committee Financial Expert
Our
board of directors has determined that it does not have a member of its board of directors or audit committee that qualifies as
an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K.
We
believe that the members of our board of directors are collectively capable of analyzing and evaluating our consolidated financial
statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining
an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome
and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any
material revenues to date.
Involvement
in Certain Legal Proceedings
Our
directors and executive officers have not been involved in any of the following events during the past 10 years:
1.
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
2.
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
|
|
|
3.
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities;
|
|
|
4.
|
being
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
|
5.
|
being
the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law
or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent
cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or
|
|
|
6.
|
being
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self- regulatory
organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in
Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a member.
|
Code
of Ethics
Effective
March 15, 2004, our company’s board of directors adopted a Code of Business Conduct and Ethics that applies to all employees,
including our company’s Chief Executive Officer, Chief Financial Officer and VP Finance. As adopted, our Code of Business
Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1.
|
honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
|
|
|
2.
|
full,
fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and
in other public communications made by us;
|
|
|
3.
|
compliance
with applicable governmental laws, rules and regulations;
|
|
|
4.
|
the
prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified
in the Code of Business Conduct and Ethics; and
|
|
|
5.
|
accountability
for adherence to the Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics requires, among other things,
that all of our company’s Senior Officers commit to timely, accurate and consistent disclosure of information; that
they maintain confidential information; and that they act with honesty and integrity.
|
In
addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility
for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal
and state securities laws. Any senior officer who becomes aware of any incidents involving financial or accounting manipulation
or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to
report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company
policy to retaliate against any individual who reports in good faith the violation or potential violation of our company’s
Code of Business Conduct and Ethics by another.
Our
Code of Business Conduct and Ethics was filed with the SEC on March 13, 2004 as Exhibit 14.1 to our annual report on Form 10-KSB
for the fiscal year ended December 31, 2003. We will provide a copy of the Code of Business Conduct and Ethics to any person without
charge, upon request. Requests can be sent to: Liberty Star Uranium & Metals Corp., 5610 E. Sutler Lane, Tucson, Arizona 85712.
Executive
Compensation
Summary
Compensation
The
particulars of compensation paid to the following persons:
|
(a)
|
all
individuals serving as our principal executive officer during the year ended January 31, 2017;
|
|
|
|
|
(b)
|
each
of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended
January 31, 2017; and
|
|
|
|
|
(c)
|
up
to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual
was not serving as our executive officer at January 31, 2017,
|
who
we will collectively refer to as the named executive officers, for all services rendered in all capacities to our company and
subsidiaries for the years ended January 31, 2017 and 2016 are set out in the following summary compensation table:
Summary
Compensation Table –Years ended January 31, 2017 and 2016
Name
and Principal Position
|
|
Year
Ended
January
31,
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Nonequity
Incentive Plan
Compensation
|
|
|
Change
in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All
Other
Compensation
(1)
|
|
|
Total
|
|
James
A. Briscoe, Chief Executive Officer,
|
|
|
2017
|
|
|
|
148,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
13,9150
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
161,915
|
|
Chief
Financial Officer and President
|
|
|
2016
|
|
|
|
148,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
148,000
|
|
(1)
|
The
value of perquisites and other personal benefits and property have been excluded because they total, in the aggregate, less
than $10,000.
|
Outstanding
Equity Awards at 2016 Fiscal Year-End
The
following table sets forth for each named executive officer certain information concerning the outstanding equity awards as of
January 31, 2017.
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of Securities Underlying Unexercised Options Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
|
|
|
Option
Exercise Price
|
|
|
Option
Expiration Date
|
|
Number
of
Shares
or Units
of Stock
that
Have
Not
Vested
|
|
|
Market
Value of
Shares or
Units of
Stock that
Have Not
Vested
|
|
|
Equity
Incentive Plan Awards : Number of Unearned Shares, Units or Other Rights that Have Not Vested
|
|
|
Awards
: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested
|
|
James
A. Briscoe
|
|
|
52,500,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.038
|
|
|
8/10/2020
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
75,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.880
|
|
|
5/21/2018
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
6,879,950
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.003
|
|
|
10/11/2026
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Compensation
Plans
As
of January 31, 2016, we had three compensation plans in place, entitled “2004 Stock Option Plan”, “2007 Stock
Option Plan” and “2010 Stock Option Plan”. These plans have been approved by our security holders. These plans
have been given retroactive effect of the 1-for-4 reverse stock split on September 1, 2009.
A
total of 13,502,626 and 0 options were granted during the fiscal years ended January 31, 2017 and 2016, respectively.
In
December 2015, the board of directors approved a five-year extension of 77,500,000 options expiring on August 16, 2015 to an extended
expiration date of August 16, 2020. The options are held by four directors.
Long-Term
Incentive Plans
There
are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers,
except that our directors and executive officers receive stock options at the discretion of our Board. We do not have any material
bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive
officers, except that stock options may be granted at the discretion of our Board.
We
have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate
such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change
of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Employment
Contracts
We
have not entered into any written employment agreements or compensation arrangements with any of our named executive officers.
We have entered into a verbal agreement with James A. Briscoe, our Chief Executive Officer, Chief Financial Officer, President
and Chairman of the Board, for an annual salary of $148,000, plus a monthly automobile allowance.
Compensation
of Directors
We
have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are
expected in the future to receive stock options to purchase common stock as awarded by our board of directors or (as to future
stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors
may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required
of a director. No director received and/or accrued any compensation for their services as a director, including committee participation
and/or special assignments.
No
compensation was paid to or earned by any director in his capacity as a director, during the fiscal year ended January 31, 2017.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth, as of September 14, 2017, certain information with respect to the beneficial ownership of our common
stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our directors
and executive officers and by our directors and executive officers as a group.
Name
and Address of Beneficial Owner
|
|
Title
of Class
|
|
Amount
and Nature of
Beneficial Ownership
|
|
Percentage
of Class
(1)
|
|
James
A. Briscoe 5610 E. Sutler Lane Tucson, AZ 85712 USA
|
|
Common
Stock
|
|
|
67,288,274
|
(2)
|
|
Direct/Indirect
|
|
|
2.98
|
%
|
John
Guilbert 961 E. Linda Vista Blvd. Tucson, AZ 85727 USA
|
|
Common
Stock
|
|
|
15,032,500
|
(3)
|
|
Direct
|
|
|
*
|
|
Keith
Brill 250 Central Ave., Apt. B204 New York, NY 11559 USA
|
|
Common
Stock
|
|
|
2,500,000
|
(3)
|
|
Direct
|
|
|
*
|
|
Peter
O’Heeron 17300 El Camino Real #110 Houston, TX 77058 USA
|
|
Common
Stock
|
|
|
9,122,987
|
(4)
|
|
Direct
|
|
|
*
|
|
Brett
Gross 15290 E. Powers Place Centennial, CO 80015 USA
|
|
Common
Stock
|
|
|
74,858,600
|
(5)
|
|
Direct
|
|
|
3.35
|
%
|
Patricia
Madaris 5610 E. Sutler Lane Tucson, AZ 85629 USA
|
|
Common
Stock
|
|
|
2,250,000
|
(6)
|
|
Direct
|
|
|
*
|
|
All
executive officers and directors as a group (6 persons)
|
|
Common
Stock
|
|
|
171,052,361
|
|
|
Direct/Indirect
|
|
|
7.37
|
%
|
Notes
(1)
|
Based
on 2,192,681,952 shares of common stock issued and outstanding as of September 14, 2017. Beneficial ownership is determined
in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except
as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished
by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where
applicable.
|
|
|
(2)
|
Represents:
(i) 52,575,000 incentive stock options that are currently exercisable; (ii) 6,879,950 non-qualified stock options that are
currently exercisable; (iii) 2,822,912 common stock purchase warrants that are currently exercisable and owned jointly by
James Briscoe and his wife, Mardee Briscoe, as joint tenants with rights of survivorship; (iv) 2,187,500 shares are held by
Alaska Star Minerals LLC, which is wholly owned by Mr. Briscoe; and (v) 2,822,912 shares owned jointly by James Briscoe and
his wife, Mardee Briscoe, as joint tenants with rights of survivorship.
|
|
|
(3)
|
This
amount represents incentive stock options that are currently exercisable or exercisable within 60 days.
|
|
|
(4)
|
This
amount includes 5,542,973 incentive stock options and 677,507 common stock purchase warrants that are currently exercisable
or exercisable within 60 days.
|
|
|
(5)
|
This
amount includes 39,655,742 common stock purchase warrants that are currently exercisable or exercisable within 60 days.
|
|
|
(6)
|
Represents:
(i) 1,125,000 incentive stock options that are currently exercisable and (ii) 1,125,000 non-qualified stock options that are currently
exercisable.
|
Changes
in Control
We
are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control
of our company.
Transactions
with Related Persons, Promoters and Certain Control Persons and Corporate Governance
Other
than as disclosed below, there has been no transaction, since February 1, 2013, or currently proposed transaction, in which our
company was or is to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of
our total assets at year end for the last two completed fiscal years, and in which any of the following persons had or will have
a direct or indirect material interest:
|
(a)
|
Any
director or executive officer of our company;
|
|
|
|
|
(b)
|
Any
person who beneficially owns, directly or indirectly, more than 5% of any class of our voting securities; and
|
|
|
|
|
(c)
|
Any
member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons.
|
We
entered into the following transactions with related parties during the six months ended July 31, 2017:
We
rented an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, on a month-to-month basis for $522 per month. The total
rent expense related to this office was $3,132 for the six months ended July 31, 2017. No amount was due as of July 31, 2017.
At
July 31, 2017, we had a balance of accrued unpaid wages of $639,570 to Jim Briscoe, our Chairman of the Board, CEO, CFO and President.
Additionally, we had a balance of accrued unpaid wages of $15,625 to a former President.
We
have an option to explore 26 standard federal lode mining claims at the East Silverbell project and 29 standard federal lode mining
claims at the Walnut Creek project from JABA US Inc., (“JABA”) an Arizona corporation in which two of our directors
are owners. We are required to pay annual rentals to maintain the claims in good standing. We paid $8,525 in rental fees to maintain
the mineral claims during the three months ended July 31, 2017. The original option agreement was for the period from April 11,
2008 through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and then to June 1, 2021. This may be further
extended in five year periods or increments in the future by any JABA director.
At
July 31, 2017, we had accounts payable to JABA of $34,798, which is reflected as accounts payable to related party on the accompanying
consolidated balance sheet.
We
entered into the following transactions with related parties during the year ended January 31, 2017:
We
rented an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, on a month-to-month basis for $522 per month. The total
rent expense related to this office was $6,264 for the year ended January 31, 2017. No amount was due as of January 31, 2017.
At
January 31, 2017, we had a balance of accrued unpaid wages of $595,070 to Jim Briscoe, our Chairman of the Board, CEO, CFO and
President. Additionally, we had a balance of accrued unpaid wages of $15,625 to a former President.
On
May 31, 2016, the Company extended the expiration date of all 93,887,870 warrants issued between May 1, 2013 and May 1, 2016 for
an additional three years at their original exercise prices ranging from $0.0021 to $0.0324. These warrants included 43,156,160
warrants purchased by officers and directors at their original exercise prices ranging from $0.0021 to $0.0207.
On
October 11, 2016, the Company issued 6,879,950 stock options to Jim Briscoe, our Chairman of the Board, CEO and CFO, at an exercise
price of $0.003. The options vested immediately and have a 10-year term.
We
have an option to explore 26 standard federal lode mining claims at the East Silverbell project and 29 standard federal lode mining
claims at the Walnut Creek project from JABA US Inc., (“JABA”) an Arizona corporation in which two of our directors
are owners. We are required to pay annual rentals to maintain the claims in good standing. We paid $27,494 in rental fees to maintain
the mineral claims during the year ended January 31, 2017. The original option agreement was for the period from April 11, 2008
through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and then to June 1, 2021. This may be further extended
in five year periods or increments in the future by any JABA director.
At
January 31, 2017, we had accounts payable to JABA of $34,798, which is reflected as accounts payable to related party on the accompanying
consolidated balance sheet.
We
entered into the following transactions with related parties during the year ended January 31, 2016:
Paid
or accrued $6,263 in rent on an office from Jim Briscoe, our Chairman of the Board, CEO and CFO, and President on a month-to-month
basis for $522 per month.
At
January 31, 2016 we had a balance of accrued unpaid wages of $472,953 to Jim Briscoe, our Chairman of the Board, CEO, CFO and
President.
At
January 31, 2016, we had a balance of accrued unpaid wages of $15,625 to Larry Liang, our former President.
We
have an option to explore 26 standard federal lode mining claims at the East Silver Bell project and 29 standard federal lode
mining claims at the Walnut Creek project from JABA US Inc., an Arizona Corporation in which two of our directors are owners.
We are required to pay annual rentals to maintain the claims in good standing. During the year ended January 31, 2016 we paid
$8,525 in rental fees to maintain the mineral claims in good standing. The original option agreement was for the period from April
11, 2008 through January 1, 2011 and was extended through June 1, 2013, June 1, 2015 and now to June 1, 2021. This may additionally
be extended in five year periods or increments in the future by any JABA director.
Compensation
for Executive Officers and Directors
For
information regarding compensation for our executive officers and directors, see “Executive Compensation”.
Director
Independence
We
currently act with five directors consisting of James Briscoe, John Guilbert, Keith Brill, Peter O’Heeron and Brett Gross.
Our common stock is quoted on the OTCBB and on the OTC Pink market tier of the OTC Market Group, which do not impose any director
independence requirements. Under NASDAQ rule 5605(a)(2), a director is not independent if he or she is also an executive officer
or employee of the corporation or was, at any time during the past three years, employed by the corporation. Using this definition
of independent director, we have four independent directors consisting of John Guilbert, Keith Brill, Peter O’Heeron and
Brett Gross.
Where
You Can Find More Information
We
are not required to deliver an annual report to our stockholders unless our directors are elected at a meeting of our stockholders
or by written consents of our stockholders. If our directors are not elected in such manner, we are not required to deliver an
annual report to our stockholders and will not voluntarily send an annual report.
We
file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission.
Such filings are available to the public over the Internet at the Securities and Exchange Commission’s website at
http://www.sec.gov
.
We
have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act of 1933 with
respect to the securities offered under this prospectus. This prospectus, which forms a part of that registration statement, does
not contain all information included in the registration statement. Certain information is omitted and you should refer to the
registration statement and its exhibits.
You
may review a copy of the registration statement at the Securities and Exchange Commission’s public reference room at 100
F Street, N.E. Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information
on the operation of the public reference room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You may also
read and copy any materials we file with the Securities and Exchange Commission at the Securities and Exchange Commission’s
public reference room. Our filings and the registration statement can also be reviewed by accessing the Securities and Exchange
Commission’s website at http://www.sec.gov.
|
The
information in this prospectus is not complete and may be changed. The selling stockholder may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is
not permitted.
|
|
|
147,292,204
Shares
|
|
Liberty
Star Uranium & Metals Corp.
|
|
Common
Stock
|
|
Prospectus
|
|
_____________,
2017
Until
________, 2017 (the 25
th
day after the date of this prospectus), all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition
to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
|
|
Information
Not Required in Prospectus
Other
Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities
being registered hereunder. The selling stockholder will bear no expenses associated with this offering except for any broker
discounts and commissions or equivalent expenses and expenses of the selling stockholder’s legal counsel applicable to the
sale of its shares. All of the amounts shown are estimates, except for the Securities and Exchange Commission registration fees.
Securities
and Exchange Commission registration fees
|
|
$
|
35.85
|
|
|
|
|
|
|
Accounting
fees and expenses
|
|
$
|
2,000
|
|
|
|
|
|
|
Legal
fees and expenses
|
|
$
|
10,000
|
|
|
|
|
|
|
Miscellaneous
fees and expenses
|
|
$
|
0
|
|
|
|
|
|
|
Total
|
|
$
|
12,035.85
|
|
Indemnification
of Directors and Officers
The
Nevada Revised Statutes provide that:
|
●
|
a
corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or
in the right of the corporation, by reason of the fact that he or she is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or
proceeding if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful;
|
|
|
|
|
●
|
a
corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact
that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred
by him or her in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a
manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification
may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled
to indemnity for such expenses as the court deems proper; and
|
|
|
|
|
●
|
to
the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation must indemnify
him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection
with the defense.
|
The
Nevada Revised Statutes provide that we may make any discretionary indemnification only as authorized in the specific case upon
a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination
must be made:
|
●
|
by
our stockholders;
|
|
|
|
|
●
|
by
our board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
|
|
|
|
|
●
|
if
a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion;
|
|
|
|
|
●
|
if
a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion; or
|
|
|
|
|
●
|
by
court order.
|
Our
bylaws provide that every person who was or is a party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he
is the legal representative is or was a director or officer of our company or is or was serving at the request of our company
or for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise, must be indemnified and held harmless to the fullest extent legally permissible under the corporate
law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys’ fees, judgments,
fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. The expenses
of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by our company as
they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by our company. Such right of indemnification is a contract right which may be enforced
in any manner desired by such person. Such right of indemnification is not exclusive of any other right which such directors,
officers or representatives may have or acquire and they are entitled to their respective rights of indemnification under any
bylaw, agreement, vote of stockholders, provision of law or otherwise, as well as their rights under our bylaws.
Our
bylaws provide that our board of directors may cause our company to purchase and maintain insurance on behalf of any person who
is or was a director or officer of our company, or is or was serving at the request of our company as a director or officer of
another corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of such status, whether or not our company would
have the power to indemnify such person.
Recent
Sales of Unregistered Securities
The
following is a summary of transactions by us within the past three years involving sales or our securities that were not registered
under the Securities Act.
In
March 2014, the Company issued 1,000,000 units of common stock to a designee of MBGS, LLC, pursuant to a settlement agreement.
Each unit consists of one share of the Company’s common stock and a warrant to purchase one-half share of the Company’s
common stock. The value of the shares issued is $17,500. The 500,000 warrants have an exercise price of $0.028 and have a two
year term. In issuing these securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities
Act of 1933, as amended.
In
August 2014, we received $150,000 pursuant to the terms of a convertible promissory note (the “August 2014 Note”)
dated August 26, 2014. The Note bears interest at 12%, is due on August 26, 2015, and is convertible after 180 days at a 45% discount
to the average of the daily VWAP prices for the previous 10 trading days before the date of conversion. During the six months
ended July 31, 2015, the new noteholder converted principal of $160,834 into 56,676,739 shares of the Company’s common stock.
The conversions happened on multiple dates with conversion prices ranging from $0.00193 to $0.00416. As of July 31, 2015, we had
$0 of principal and interest outstanding for this Note. We issued the security to one U.S. person who is an accredited investor
(as that term is defined in Rule 501 of Regulation D, promulgated by the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, and in issuing these securities to this investor we relied on the registration exemption provided for
in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
On
October 14, 2014, we entered into a securities purchase agreement, whereby we agreed to issue a convertible note (the “October
2014 Note”) to one lender in the principal amount of $105,000. The Note is payable in full on October 14, 2015, bears interest
at the rate of 10% per annum, and includes a $5,000 original issuance discount. The Note may be convertible into shares of common
stock of our company at any time from 180 days after the execution date of the Note at a price per share of 40% discount to the
average of the daily VWAP for the previous five trading days before the date of conversion. We issued the security to one U.S.
person who is an accredited investor (as that term is defined in Rule 501 of Regulation D, promulgated by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, and in issuing these securities to this investor we relied on the
registration exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
On
December 3, 2014, we entered into a note purchase agreement, whereby we agreed to issue a convertible note (the “December
2014 Note”) to Tangiers Capital, LLC (the “Lender”) in the principal amount of $210,000 and to pay interest
on the principal balance hereof (which principal balance shall be increased by the Lender’s payment of additional consideration
as set forth in the December 2014 Note and which increase shall also include the prorated amount of the original issue discount
in connection with Lender’s payment of additional consideration) at the rate of 10%, all of which interest shall be deemed
earned as of the date of each such payment of additional consideration by the Lender on December 3, 2016 (the “Maturity
Date”), to the extent such principal amount and interest have been repaid or converted into our company’s common stock,
in accordance with the terms of the December 2014 Note. The December 2014 Note is payable in full on the Maturity Date and bears
interest at the rate of 10% per annum. There is a $10,000 original issuance discount on the December 2014 Note. The initial purchase
price was $105,000 of consideration of which $100,000 was received by our company and $5,000 was retained through the original
issue discount. The December 2014 Note may be prepaid according to the following schedule: between 1 and 90 days from the date
of execution, the December 2014 Note may be prepaid for 110% of face value plus accrued interest; between 91 and 180 days from
the date of execution, the December 2014 Note may be prepaid for 130% of face value plus accrued interest; after 180 days from
the date of execution until the Maturity Date, the December 2014 Note may not be prepaid without written consent from the Lender.
The December 2014 Note may be convertible into shares of common stock of our company at a price per share of 62.5% discount to
the average of the daily volume weighted average price for the previous five trading days before the date of conversion. The chart
below lists each amendment increasing the consideration paid for the December 2014 Note, as well as each conversion of the Note’s
balance into equity by Tangiers.
December
3, 2014 Note with Tangiers Capital, LLC
|
DATE
|
|
AMOUNT
OF CONVERSION
|
|
|
NUMBER
OF SHARES ISSUED
|
|
|
REMAINING
PRINCIPAL
|
|
December
3, 2014
|
|
Original Purchase Price: $105,000 (includes OID)
|
February
27, 2015
|
|
Amendment, Additional Consideration: $52,500 (includes OID)
|
June
4, 2015
|
|
$
|
15,000
|
|
|
|
12,371,134
|
|
|
$
|
142,500.00
|
|
June
9, 2015
|
|
Amendment, Additional Consideration: $31,500 (includes OID)
|
June
23, 2015
|
|
$
|
14,356.75
|
|
|
|
13,837,831
|
|
|
$
|
159,643.25
|
|
July
6, 2015
|
|
Amendment, Additional Consideration: $21,000 (includes OID)
|
July
23, 2015
|
|
$
|
20,000
|
|
|
|
16,842,105
|
|
|
$
|
160,643.25
|
|
July
29, 2015
|
|
$
|
20,000
|
|
|
|
17,977,528
|
|
|
$
|
140,643.25
|
|
August
5, 2015
|
|
$
|
25,000
|
|
|
|
23,809,524
|
|
|
$
|
115,643.25
|
|
September
21, 2015
|
|
$
|
21,143.25
|
|
|
|
18,385,435
|
|
|
$
|
105,000.00
|
|
October
2, 2015
|
|
$
|
31,500
|
|
|
|
35,000,000
|
|
|
$
|
78,750.00
|
|
November
2, 2015
|
|
$
|
26,250
|
|
|
|
26,582,278
|
|
|
$
|
52,500.00
|
|
December
9, 2015
|
|
$
|
34,650
|
|
|
|
17,544,304
|
|
|
$
|
21,000.00
|
|
January
12, 2016
|
|
$
|
23,100
|
|
|
|
13,894,737
|
|
|
$
|
0.00
|
|
*All
issuances of securities pursuant to the December 2014 Note were made in reliance upon registration exemption provided for in Rule
506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933
There
is no balance left on the December 14 Note. Additionally, the Company entered into an investment agreement and registration rights
agreement with Tangiers Capital, LLC for an equity line of credit. The Company has the ability to repay the indebtedness to Tangiers
Capital, LLC without recourse to the monies received or to be received under the equity line. Additionally, the amount of indebtedness
may not be reduced or relieved by the issuance of shares under the equity line.
During
the year ended January 31, 2015, the Company issued 6,424,979 units to three investors for total proceeds of $73,000. Each unit
consists of one share of the Company’s common stock and a warrant to purchase one share of the Company’s common stock.
The warrants have exercise prices ranging from $0.015 to $0.021 and have a three year term. In issuing these securities we relied
on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933, as amended.
In
May 2015, we issued 2,941,176 units to an investor for total proceeds of $10,000. Each unit consists of one share of our common
stock and two warrants to purchase one share each of the Company’s common stock. The warrants have an exercise price of
$0.0048 and have a three year term. In issuing these securities we relied on the registration exemption provided for in Section
4(a)(2) of the Securities Act of 1933, as amended.
In
May of 2015, $38,784 of a convertible note issued in August 2013 (the “August 2013 Note”) was converted into 31,715,187
shares of the Company’s common stock.
On
May 29, 2015, we issued a non-interest bearing promissory note in the principal amount of $30,000 to Brett Gross, a director of
our company. The promissory note is convertible into 16,806,723 units at a price of $0.001785 per unit upon the increase of the
authorized capital of our company. Each unit is comprised of one share of common stock and two warrants. Each warrant will be
exercisable for a period of three years at a price of $0.002499. On August 11, 2015, the note was converted in full and the 16,806,723
common shares were issued. In issuing this security we relied on the registration exemption provided for in Section 4(a)(2) of
the Securities Act of 1933, as amended.
In
May 2015, we issued 2,941,176 units to an investor for total proceeds of $10,000. Each unit consists of one share of our common
stock and two warrants to purchase one share each of the Company’s common stock. The warrants have an exercise price of
$0.0048 and have a three year term.
In
June 2015, we issued 1,846,154 units to an investor for total proceeds of $3,000. Each unit consists of one share of our common
stock and one warrant to purchase one share of our common stock. The warrants have an exercise price of $0.002275 and have a three
year term. In issuing these securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities
Act of 1933, as amended.
In
July 2015, the Company issued 2,822,912 units to the Company’s CEO, CFO, President and Chairman of the Board for proceeds
of $4,300. Each unit consists of one share of the Company’s common stock and one warrant to purchase one share each of the
Company’s common stock. The warrants have an exercise price of $0.002130 and have a three year term. In issuing the securities
set forth above, we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2) of the
Securities Act of 1933, as amended.
In
August 2015, the Company issued 16,077,170 units to an investor for total proceeds of $25,000. Each unit consists of one share
of the Company’s common stock and one warrant to purchase one share of the Company’s common stock. The warrants have
an exercise price of $0.00218 and have a three year term. In issuing the securities set forth above, we relied on the registration
exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
In
September 2015, the Company issued 1,851,852 units to an investor for total proceeds of $3,000. Each unit consists of one share
of the Company’s common stock and one warrant to purchase one share of the Company’s common stock. The warrants have
an exercise price of $0.00227 and have a three year term. In issuing the securities set forth above, we relied on the registration
exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
In
September 2015, the Company issued 5,733,000 shares to a former service provider for services totaling $10,320. In issuing the
securities set forth above, we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(a)(2)
of the Securities Act of 1933, as amended.
In
November 2015, we issued 1,655,629 units to an investor for total proceeds of $5,000. Each unit consists of one share of our common
stock and one warrant to purchase one share of our common stock. The warrants have an exercise price of $0.00423 and have a three
year term. In issuing the securities set forth above, we relied on the registration exemption provided for in Rule 506 of Regulation
D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the fiscal year ended January 31, 2016, $206,679 of a convertible note issued in August 2013 (the “August 2013 Note”)
was converted into 123,158,044 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00098 to $0.00574. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the fiscal year ended January 31, 2016, $160,833 of a convertible note issued in August 2014 (the “August 2014 Note”)
was converted into 56,676,739 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00193 to $0.00416. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the fiscal year ended January 31, 2016, $110,901 of a convertible note issued in October 2014 (the “October 2014 Note”)
was converted into 74,878,264 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00101 to $0.00263. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the fiscal year ended January 31, 2016, $153,046 of a convertible note issued in November 2013 (the “November 2013 Note”)
was converted into 48,243,936 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00147 to $0.00609. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the fiscal year ended January 31, 2016, $231,000 of a convertible note issued in December 2014 (the “December 2014 Note”)
was converted into 196,244,876 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00090 to $0.00197. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the year ended January 31, 2017, the Company issued 32,519,915 shares to third-parties for services with an aggregate fair value
of approximately $67,296. In issuing the securities set forth above, we relied on the registration exemption provided for in Rule
506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the year ended January 31, 2017, $55,000 of a convertible note issued in December 2015 (the “December 2015 Note”)
was converted into 47,168,177 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00105 to $0.00116. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the year ended January 31, 2017, $159,289 of a convertible note issued in November 2015 (the “November 2015 Note”)
was converted into 122,373,003 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00098 to $0.00149. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the year ended January 31, 2017, $62,160 of a convertible note issued in August 2013 (the “August 2013 Note”) was
converted into 46,526,995 shares of the Company’s common stock. The conversions occurred on multiple dates with conversion
prices ranging from $0.00117 to $0.00152. In issuing the securities set forth above, we relied on the registration exemption provided
for in Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
During
the year ended January 31, 2017, the Company issued 76,220,079 units to investors for total proceeds of $223,677. Each unit consists
of one share of the Company’s common stock and one or one-half warrant to purchase one share or one-half equivalent share
each of the Company’s common stock. The warrants have an exercise price of $0.0027, $0.0028, or $0.0040 and have a three-year
term. In issuing the securities set forth above, we relied on the registration exemption provided for in Rule 506 of Regulation
D and/or Section 4(a)(2) of the Securities Act of 1933, as amended.
On
December 14, 2016, we entered into a convertible promissory note (the “December 2016 Note”) to Tangiers Investment
Group, LLC (“Tangiers”) for a principal sum of up to $110,000, bearing interest at 12% per annum. The consideration
is up to $100,000, which would produce an original issue discount of $10,000 if all the consideration is received. The lender
paid $30,000 pursuant to the terms of the December 2016 Note on December 19, 2016, which resulted in the Company recording a $3,000
original issue discount. The maturity date is one year from the effective date of each payment, as well as any unpaid interest
and other fees. The December 2016 Note may be convertible into shares of common stock of our company after 180 days of funding
at a conversion price of 62.5% of the volume weighted average price of the Company’s common stock during the five trading
days previous to the conversion. We may repay the December 2016 Note at any time before 150 days from the effective date of the
December 2016 Note, or prepay at 130% of the principal from 151 to 180 days, after which we may not make any further payments
on the December 2016 Note prior to the maturity date without written approval from the lender. As of January 31, 2017, we had
of $33,467 of principal and interest outstanding for the December 2016 Note. On June 16, 2017, Tangiers converted this note in
full for 34,222,222 shares of the Company’s common stock. As of July 31, 2017, we had $0 of principal and interest outstanding
for the December 2016 Note.
On
February 2, 2017, the Company and Tangiers entered into Amendment #1 to the December 2016 Note (“Amendment #1”). Amendment
#1 provides that, on or before February 2, 2017, Tangiers would make a payment to the Company of $77,000, which includes a 10%
OID. The net proceeds of $70,000 were received on February 2, 2017. The maturity date is February of 2018.
Also
on February 2, 2017, the Company and Tangiers entered into Amendment #2 to the December 2016 Note (“Amendment #2”).
Amendment #2 provides that the conversion price under the Note is equal to 60% of the lowest trading price of the Company’s
common stock during the 20 consecutive trading days prior to Tangier’s conversion election. The default percentages of 5%
and 10% of the discount of conversion price point remained the same other than reflecting the amended discount price. In addition,
the provision in the Note relating to a right of first refusal was removed by Amendment #2. As of July 31, 2017, we had of $81,506
of principal and interest outstanding under this note.
On
April 11, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated April 10, 2017
(the “April 2017 Note”). The total principal under the April 2017 Note is $50,000, bears interest at 12% per annum,
is due on January 10, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price
with a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion.
As of July 31, 2017, we had of $51,824 of principal and interest outstanding under the April 2017 Note.
In
May and June of 2017, the Company issued an aggregate of 27,676,767 shares of common stock for total proceeds of $69,870 to Tangiers
Investment Group, LLC under the Investment Agreement.
In
May and June of 2017, the Company issued an aggregate of 4,715,935 units to investors for aggregate proceeds of $16,000. Each
unit consists of one share of the Company’s common stock and one-half warrant to purchase one-half equivalent share each
of the Company’s common stock. The warrants have an exercise price of 40% above the share price, calculated using the average
4-day look-back period from the date of deposit of investment funds, with a floor of $0.002, and have a three-year term.
In
May 2017, the Company issued 999,480 shares for services with a fair value of approximately $3,748.
On
June 29, 2017, the Company issued 24,242,424 shares to a third-party with an aggregate fair value of approximately $44,000 to
settle unpaid services which is reflected in accounts payable as of July 31, 2017.
On
June 20, 2017, we closed on a securities purchase agreement, whereby we issued a convertible note (the “June 2017 Note”)
to one lender in the principal amount of $53,000. The Note is payable in full on June 20, 2018 and bears interest at the rate
of 8.00% per annum. The June 2017 Note may not be prepaid in whole or in part except as set forth in the note. Any amount of principal
or interest on the June 2017 Note which is not paid when due shall bear interest at the rate of 22% per annum from the due date
until paid. The June 2017 Note may be convertible into shares of common stock of our company at any time from 180 days after the
execution date of the note and ending on the later of the maturity date, or the date of payment of the Default Amount (as defined
in the securities purchase agreement relating to the note) at a price per share of 65% (representing a 35% discount) of the average
of the lowest five (5) VWAP’s (as defined in the securities purchase agreement relating to the note) for our common stock
during the 10-trading day period ending on the latest completed trading day prior to the date of conversion. As of July 31, 2017,
we had of $53,701 of principal and interest outstanding for the June 2017 Note.
On
July 26, 2017, we received proceeds of $48,000, net of a $2,000 fee, under a convertible promissory note dated July 26, 2017 (the
“July 2017 Note”). The total principal under the July 2017 Note is $50,000, bears interest at 12% per annum, is due
on April 26, 2018, and is convertible in shares of the Company’s common stock after 180 days at a conversion price with
a 45% discount to the lowest weighted average market price during the previous 20 trading days to the date of conversion. As of
July 31, 2017, we had of $50,066 of principal and interest outstanding for the July 2017 Note.
During
the six months ended July 31, 2017, the Company issued 34,222,222 shares for the conversion of $36,960 of a convertible note payable
at an exercise price of $0.00108.
During
the six months ended July 31, 2017, the Company issued 1,750,000 shares to an investor for the exercise of warrants at a price
of $0.0028 per share for cash proceeds of $4,900.
On September 15, 2017, we received
proceeds of $40,000, net of a $3,000 fee, under a convertible note dated September 13, 2017 (the “September 2017 Note”).
The total principal under the September 2017 Note is $43,000, bears interest at 8% per annum, is due on September 13, 2018, and
is convertible in shares of the Company's common stock after 180 days at a conversion price of 65% of the lowest weighted average
market price during the previous 10 trading days to the date of conversion.
Exhibits
Exhibit
Number
|
|
Description
|
|
|
|
(3)
|
|
Articles
of Incorporation and Bylaws
|
3.1
|
|
Articles
of Incorporation (incorporated by reference from our Registration Statement on Form SB-2, filed on May 14, 2002)
|
3.2
|
|
Bylaws (incorporated by reference from our Quarterly Report on Form 10-QSB, filed on December 14, 2007)
|
3.3
|
|
Certificate
of Change to Authorized Capital (incorporated by reference from our Current Report on Form 8-K, filed on September 1, 2009)
|
3.4
|
|
Articles
of Merger (incorporated by reference from our Current Report on Form 8-K, filed on September 1, 2009)
|
3.5
|
|
Certificate of Amendment to Articles of Incorporation (incorporated by reference to the Amended Registration Statement on Form S-1, filed on July 29, 2015)
|
(5)
|
|
Opinion
regarding Legality
|
5.1*
|
|
Opinion
of the Law Office of Legal & Compliance, LLC regarding the legality of the securities being registered
|
(10)
|
|
Material
Contracts
|
10.1
|
|
Letter
Agreement dated November 14, 2011 with Northern Dynasty (incorporated by reference from our Current Report on Form 8-K, filed
on November 25, 2011)
|
10.2
|
|
Form
of Stock Option Agreement (incorporated by reference from our Current Report on Form 8-K, filed on January 24, 2012)
|
10.3
|
|
Form
of Warrant Certificate (incorporated by reference from our Current Report on Form 8-K, filed on July 30, 2012)
|
10.4
|
|
Settlement
Agreement dated November 13, 2012 with Northern Dynasty Minerals Ltd. (incorporated by reference from our Current Report on
Form 8-K, filed on November 15, 2012)
|
10.5
|
|
Convertible
Note issued to JSJ Investments Inc. (incorporated by reference from our Current Report on Form 8-K, filed on September 2,
2014)
|
10.6
|
|
Securities
Purchase Agreement dated October 15, 2014 (incorporated by reference from our Current Report on Form 8-K, filed on October
20, 2014)
|
10.7
|
|
Convertible
Note dated October 15, 2014 (incorporated by reference from our Current Report on Form 8-K, filed on October 20, 2014)
|
10.8
|
|
Form
of Note Purchase Agreement dated December 3, 2014 (incorporated by reference from our Registration Statement on Form S-1,
filed on February 24, 2016)
|
10.9
|
|
Form
of 10% Convertible Promissory Note dated December 3, 2014 (incorporated by reference from our Registration Statement on Form
S-1, filed on February 24, 2016)
|
10.10
|
|
Investment
Agreement dated December 15, 2014 with Tangiers Capital, LLC (incorporated by reference from our Current Report on Form 8-K,
filed on December 19, 2014)
|
10.11
|
|
Registration
Rights Agreement dated December 15, 2014 with Tangiers Capital, LLC (incorporated by reference from our Current Report on
Form 8-K, filed on December 19, 2014)
|
10.12
|
|
Form
of Amendment to December 3, 2014 Note Purchase Agreement dated February 27, 2015 (incorporated by reference from our Registration
Statement on Form S-1, filed on February 24, 2016)
|
10.13
|
|
Form
of Amendment to December 3, 2014 Note Purchase Agreement dated June 9, 2015 (incorporated by reference from our Registration
Statement on Form S-1, filed on February 24, 2016)
|
10.14
|
|
Form
of Amendment to December 3, 2014 Note Purchase Agreement dated July 6, 2015 (incorporated by reference from our Registration
Statement on Form S-1, filed on February 24, 2016)
|
10.15
|
|
Investment
Agreement dated June 20, 2015 with Tangiers Capital, LLC (incorporated by reference from our Current Report on Form 8-K, filed
on June 30, 2015)
|
10.16
|
|
Registration
Rights Agreement dated June 20, 2015 with Tangiers Capital, LLC (incorporated by reference from our Current Report on Form
8-K, filed on June 30, 2015)
|
10.17
|
|
Convertible Note dated December 14, 2016 issued to Tangiers Investment Group, LLC (incorporated by reference from our Post-Effective Amendment No. 1 to our Registration Statement on Form S-1, filed on January 3, 2017).
|
10.18
|
|
Amendment No. 1 to Convertible Note dated December 14, 2016 issued to Tangiers Investment Group, LLC (incorporated by reference from our Current Report on Form 8-K, filed on February 9, 2017)
|
10.19
|
|
Amendment No. 2 to Convertible Note dated December 14, 2016 issued to Tangiers Investment Group, LLC (incorporated by reference from our Current Report on Form 8-K, filed on February 9, 2017)
|
10.20
|
|
Convertible
Note dated April 10, 2017 issued to JSJ Investments Inc. (incorporated by reference from our Current Report on Form 8-K, filed
on April 18, 2017)
|
10.21
|
|
Securities
Purchase Agreement dated June 7, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on June 26, 2017)
|
10.22
|
|
Convertible
Note dated June 20, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on June 26, 2017)
|
10.23
|
|
Convertible
Note dated July 26, 2017 issued to JSJ Investments Inc. (incorporated by reference from our Current Report on Form 8-K, filed
on August 1, 2017)
|
10.24
|
|
Securities Purchase Agreement dated September 13, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on September 21, 2017)
|
10.25
|
|
Convertible Note dated September 13, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on September 21, 2017)
|
(14)
|
|
Code
of Ethics
|
14.1
|
|
Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB, filed on March 31, 2004)
|
(21)
|
|
Subsidiaries
|
21.1*
|
|
Subsidiaries
of Liberty Star Uranium & Metals Corp.
|
*Filed
herewith.
Undertakings
The
undersigned registrant hereby undertakes:
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i.
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii.
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and
iii.
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
2.
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof;
3.
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering; and
4.
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant
to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
5.
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424;
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
iii.
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
iv.
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
Signatures
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Tucson, State of Arizona, on September 29, 2017.
Liberty
Star Uranium & Metals Corp.
By:
/s/
James Briscoe
|
|
James
Briscoe
|
|
President,
Chief Executive Officer, Chief Financial Officer, Chairman of the Board and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
|
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the
capacities indicated on September 29, 2017.
/s/
James Briscoe
|
|
James
Briscoe
|
|
President,
Chief Executive Officer, Chief Financial Officer, Chairman of the Board and Director
|
|
(Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
*
|
|
John
Guilbert
|
|
Director
|
|
|
|
*
|
|
Peter
O’Heeron
|
|
Director
|
|
|
|
*
|
|
Keith
Brill
|
|
Director
|
|
|
|
*
|
|
Brett
Gross
|
|
Director
|
|
*
|
By:
|
/s/
James Briscoe
|
|
|
|
James
Briscoe
|
|
|
|
Attorney-in-fact
|
|
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