UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2019

 

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

 

For the transition period from __________ to __________

 

Commission file number 000-50071

 

LIBERTY STAR URANIUM & METALS CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   90-0175540

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

2 East Congress Street Ste. 900, Tucson, Arizona   85701
(Address of principal executive offices)   (Zip code)

 

520-425-1433

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

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

 

(Check one):

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [X] Smaller reporting company [X]
    Emerging growth company [  ]

 

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. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchanged on Which Registered
Common   LBSR  

OTCPK

 

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 4,481,733,015 shares as of December 20, 2019.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
  PART I  
     
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
     
  PART II  
     
Item 1. Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 19
  Signatures 21

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology.

 

These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. The following discussion should be read in conjunction with our condensed consolidated financial statements and the related notes that appear elsewhere in this quarterly report. As used in this quarterly report, 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.

 

2
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

LIBERTY STAR URANIUM & METALS CORP.

CONSOLIDATED BALANCE SHEETS

 

    October 31,     January 31,  
    2019     2019  
    (Unaudited)        
Assets                
                 
Current:                
Cash and cash equivalents   $ 42,015     $ 890  
Prepaid expenses     4,945       7,044  
Total current assets     46,960       7,934  
                 
Property and equipment, net     41,565       1,739  
Total assets   $ 88,525     $ 9,673  
                 
Liabilities and Stockholders’ Deficit                
                 
Current:                
Accounts payable and accrued liabilities     443,936       708,877  
Accounts payable to related parties     51,119       52,332  
Accrued wages to related parties     811,711       775,574  
Advances from related party     79,422       -  
Note payable     10,636       -  
Notes payable to related parties     143,178       106,943  
Convertible promissory note, net of debt discount of $15,663 and $20,584     165,003       1,057  
Derivative liability     -       58,656  
Total current liabilities     1,705,005       1,703,439  
                 
Total liabilities     1,705,005       1,703,439  
                 
Commitments and Contingencies (Note 10)                
                 
Stockholders’ deficit                
Common stock - $.00001 par value; 6,250,000,000 authorized;
4,441,743,661 and 4,097,457,393 shares issued and outstanding, respectively
    44,418       40,975  
Additional paid-in capital     55,020,319       54,708,186  
Accumulated deficit     (56,681,217 )     (56,442,927 )
Total stockholders’ deficit     (1,616,480 )     (1,693,766 )
                 
Total liabilities and stockholders’ deficit   $ 88,525     $ 9,673  

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements

 

3
 

 

LIBERTY STAR URANIUM & METALS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

    For the Three Months Ended     For the Nine Months Ended  
    October 31     October 31  
    2019     2018     2019     2018  
Revenues   $ -     $ -     $ -     $ -  
Expenses:                                
Geological and geophysical costs     40,803       26,545       42,783       33,521  
Salaries and benefits     56,626       75,298       174,610       230,979  
Public relations     -       -       -       209,216  
Depreciation     241       571       1,011       1,778  
Legal     23,598       5,100       25,073       15,097  
Professional services     12,791       13,183       62,014       52,339  
General and administrative     18,553       29,097       46,679       119,852  
Travel     1,344       138       1,344       4,144  
Net operating expenses     153,956       149,932       353,514       666,926  
Loss from operations     (153,956 )     (149,932 )     (353,514 )     (666,926 )
                                 
Other income (expense):                                
Interest expense     (58,508 )     (238,099 )     (98,111 )     (428,501 )
Impairment of stock subscription receivable     -       -       -       (55,673 )
Gain on settlement of accounts payable     -       -       177,000       -  
Gain on change in fair value of derivative liability     40,797       111,216       36,335       84,007  
Total other income (expense)     (17,711 )     (126,883 )     115,224       (400,167 )
Net loss   $ (171,667 )   $ (276,815 )     (238,290 )     (1,067,093 )
                                 
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     4,395,552,693       2,955,911,512       4,309,268,673       2,686,414,288  

 

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements

 

4
 

 

LIBERTY STAR URANIUM & METALS CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Three and Nine months ended October 31, 2019 and 2018

(Unaudited)

 

                Stock     Additional           Total  
    Common stock     Subscription     paid-in     Accumulated     Stockholders’  
    Shares     Amount     Receivable     Capital     Deficit     Deficit  
Balance, January 31, 2019     4,097,457,393       40,975       -       54,708,186       (56,442,927 )     (1,693,766 )
Issuance of common stock and warrants in private placement     43,215,212       432       -       49,568       -       50,000  
Shares issued for conversion of notes     271,071,056       2,711       -       74,123       -       76,834  
Settlement of accounts payable through issuance of common stock     30,000,000       300       -       35,700       -       36,000  
Reclass of APIC to derivative liabilities for tainted warrants     -       -       -       (146,630 )     -       (146,630 )
Resolution of derivative liabilities due to debt conversions and untainted warrants     -       -       -       218,951       -       218,951  
Stock based compensation     -       -       -       80,421               80,421  
Net loss for the nine months ended October 31, 2019     -       -       -       -       (238,290 )     (238,290 )
Balance, October 31, 2019     4,441,743,661       44,418       -       55,020,319       (56,681,217 )     (1,616,480 )
                                                 
Balance, July 31, 2019     4,368,073,332       43,681       -       54,936,982       (56,509,550 )     (1,528,887 )
Shares issued for conversion of notes     73,670,329       737       -       54,383       -       55,120  
Reclass of APIC to derivative liabilities for tainted warrants     -       -       -       (146,630 )     -       (146,630 )
Resolution of derivative liabilities due to debt conversions and untainted warrants     -       -       -       155,833       -       155,833  
Stock based compensation     -                       19,751       -       19,751  
Net loss for the three months ended October 31, 2019     -       -       -               (171,667 )     (171,667 )
Balance, October 31, 2019     4,441,743,661       44,418       -       55,020,319       (56,681,217 )     (1,616,480 )

 

                Stock     Additional           Total  
    Common stock     Subscription     paid-in     Accumulated     Stockholders’  
    Shares     Amount     Receivable     Capital     Deficit     Deficit  
                                     
Balance, January 31, 2018     2,446,425,982       24,464       (55,673 )     53,674,104       (55,137,675 )     (1,494,780 )
Shares issued for conversion of notes     879,257,724       8,793       -       371,047       -       379,840  
Resolution of derivative liabilities due to debt conversions and untainted warrants     -       -       -       374,241       -       374,241  
Impairment of stock subscription receivable     -       -       55,673       -       -       55,673  
Net loss for the nine months ended October 31, 2018     -       -       -       -       (1,067,093 )     (1,067,093 )
Balance, October 31, 2018     3,325,683,706       33,257       -       54,419,392       (56,204,768 )     (1,752,119 )
                                                 
Balance, July 31, 2018     2,685,275,586       26,853       -       53,970,776       (55,927,953 )     (1,930,324 )
Shares issued for conversion of notes     640,408,120       6,404       -       226,116       -       232,520  
Resolution of derivative liabilities due to debt conversions and untainted warrants     -       -       -       222,500       -       222,500  
Net loss for the three months ended October 31, 2018     -       -       -       -       (276,815 )     (276,815 )
Balance, October 31, 2018     3,325,683,706       33,257       -       54,419,392       (56,204,768 )     (1,752,119 )

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements

 

5
 

 

LIBERTY STAR URANIUM & METALS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

    For the Nine Months Ended  
    October 31  
    2019     2018  
             
Cash flows from operating activities:                
Net loss   $ (238,290 )   $ (1,067,093 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     1,011       1,778  
Amortization of debt discount     78,221       379,133  
Impairment of stock subscription receivable     -       55,673  
(Gain) on settlement of accounts payable     (177,000 )     -  
(Gain) on change in fair value of derivative liabilities     (36,335 )     (84,007 )
Share-based compensation     80,421       -  
Changes in operating assets and liabilities:                
Prepaid expenses     2,099       8,680  
Accounts payable and accrued expenses     (51,941 )     279,046  
Accounts payable to related parties     (1,213 )     5,043  
Accrued wages to related parties     36,137       72,500  
Changes in advances from related party     38,585       -  
Accrued interest     13,930       26,020  
Cash flows used in operating activities:     (254,375 )     (323,227 )
                 
Cash flows from financing activities:                
Proceeds from note payable     10,000       -  
Proceeds from notes payable, related parties     28,500       63,407  
Principal activity on convertible promissory notes     207,000       228,000  
Proceeds from the issuance of common stock, net of expenses     50,000       -  
Net cash provided by financing activities     295,500       291,407  
                 
Increase (decrease) in cash and cash equivalents     41,125       (31,820 )
Cash and cash equivalents, beginning of period     890       36,086  
Cash and cash equivalents, end of period   $ 42,015     $ 4,266  
                 
Supplemental disclosure of cash flow information:                
Income tax paid   $ -     $ -  
Interest paid   $ 5,961     $ 23,348  
Supplemental disclosure of non-cash items:                
Settlement of accounts payable through issuance of common stock   $ 36,000     $ -  
Resolutions of derivative liabilities due to debt conversions and untainted warrants   $ 218,951     $ 374,241  
Reclass of APIC to derivative liabilities for tainted warrants   $ 146,630     $ -  
Debt discounts due to derivative liabilities   $ 50,000     $ 373,589  
Common stock issued for conversion of debt and interest   $ 76,834     $ 379,840  
Equipment purchase paid by related party   $ 40,837     $ -  

 

The Accompanying Notes are an Integral Part of the Unaudited Consolidated Financial Statements

 

6
 

 

LIBERTY STAR URANIUM & METALS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – Basis of Presentation

 

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, 2019 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 October 31, 2019 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 nine months ended October 31, 2019 are not necessarily indicative of the results to be expected for the full year.

 

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.

 

          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 October 31, 2019   $ -       -       -     $ -  
Warrant and convertible note derivative liability at January 31, 2019   $ 58,656       -       -     $ 58,656  

 

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 of derivative liability.

 

7
 

 

NOTE 4 – Related party transactions

 

On January 11, 2019, we discontinued renting an office month-to-month from James Briscoe, a director who resigned on September 23, 2019. An amount of $2,610 of rent was unpaid as of October 31, 2019.

 

At October 31, 2019, we had a balance of accrued unpaid wages of $759,949 to James Briscoe. We had a balance of accrued unpaid wages of $36,137 to Patricia Madaris, CFO. Additionally, we had a balance of accrued unpaid wages of $15,625 to a former President.

 

We had an option to explore 1 standard federal lode mining claim at the East Silverbell project and 29 standard federal lode mining claims at the Walnut Creek project from JABA. James Briscoe, (a former director)  controls JABA and the estate of Dr. J. M. Guilbert (deceased), a former director of the Company, holds a small stock position, as well. We paid $4,650 in rental fees to maintain these mineral claims until September 1, 2019 during the year ended January 31, 2019. The original option agreement was for the period from April 11, 2008 through January 1, 2011. The Company did not retain or renew the option for JABA and no further payments for rental fees for JABA were paid.

 

At October 31, 2019, we had accounts payable to JABA of $34,798, which is reflected as accounts payable to related party on the accompanying consolidated balance sheets.

 

At October 31, 2019, we had a balance of $13,325 due to the spouse of James Briscoe, which is reflected as accounts payable to related party on the accompanying consolidated balance sheets.

 

During the nine months ended October 31, 2019, the Company received advances of $28,500 from two directors under two promissory with interest at 10%. Total principal maturities under these two notes are $86,302 due October 31, 2020 (extended from October 31, 2019) and $35,430 due January 31, 2020. Additionally, the Company has a note payable of $10,000 from James Briscoe, under a promissory note dated September 17, 2018, due September 17, 2019   with interest at 10%. The Company wishes to extend this past due note as we have with notes with other directors until the Company has additional funding reserves. As of October 31, 2019, the total balance of all related party notes was $143,178, which includes accrued interest of $11,446.

 

During the nine months ended October 31, 2019, our CEO, Brett Gross, made various payments on behalf of the Company totaling $79,422, reflected as advances from related party on the accompanying consolidated balance sheet. The advances bear no interest and have no specified repayment date.

 

In July and October 2019, the Company issued an aggregate of 60,000,000 Non-qualified stock options to four new directors for services. The options vest immediately, have a 10-year term, an exercise price of $0.003, and resulted in share-based compensation expense of $80,421 during the nine months ended October 31, 2019.

 

In July 2019, the Company issued 43,215,212 shares of its common stock and 21,607,606 warrants to an investor, who also subsequently became a director, for proceeds of $50,000, or $0.001157 per share. The warrants have a three-year term and are exercisable at any time at an exercise price of $0.00162.

 

NOTE 5 – Stock options

 

Qualified and Non-qualified incentive stock options to employees and directors outstanding at October 31, 2019 are as follows:

 

          Weighted
average
 
    Number of     exercise  
    options     price per share  
Outstanding, January 31, 2019     89,754,950     $ 0.033  
Granted     60,000,000       0.003  
Expired     (2,500,000 )     0.038  
Exercised            
Outstanding, October 31, 2019     147,254,950     $ 0.021  
                 
Exercisable, October 31, 2019     147,254,950     $ 0.021  

 

These options had a weighted average remaining life of 5.08 years and an aggregate intrinsic value of $0 as of October 31, 2019.

 

Non-qualified stock options to non-employee consultants and vendors outstanding at October 31, 2019 are as follows:

 

          Weighted
average
 
    Number of     exercise  
    options     price per share  
Outstanding, January 31, 2019     625,000     $ 0.036  
Granted            
Forfeited            
Exercised            
Outstanding, October 31, 2019     625,000     $ 0.036  
                 
Exercisable, October 31, 2019     625,000     $ 0.036  

 

These options had a weighted average remaining life of 1.08 years and an aggregate intrinsic value of $0 as of October 31, 2019.

 

During the nine months ended October 31, 2019, we recognized $80,421 of compensation expense related to incentive and non-qualified stock options granted to officers using the Black-Scholes valuation method with the following assumptions: stock prices of $0.0014 to $0.0015, exercise price of $0.003, expected term of 5 years, volatility of 180.7% to 181.3%, annual rate of dividends of 0%, and discount rates of 1.59% to 1.85%.

 

8
 

 

NOTE 6 – Warrants

 

As of October 31, 2019, there were 176,022,095 whole share purchase warrants outstanding and exercisable. The warrants have a weighted average remaining life of 2.0 years and a weighted average exercise price of $0.005 per whole warrant for one common share. The warrants had an aggregate intrinsic value of $0 as of October 31, 2019.

 

Stock warrants outstanding at October 31, 2019 are as follows:

 

    Number of     Weighted  
    whole share     average  
    purchase
warrants
    exercise
price per share
 
Outstanding, January 31, 2019     154,414,489     $ 0.005  
Issued     21,607,606       0.002  
Expired            
Exercised            
Outstanding, October 31, 2019     176,022,095     $ 0.005  
                 
Exercisable, October 31, 2019     176,022,095     $ 0.005  

 

On July 12, 2019, the Company issued 21,607,606 warrants to an investor, who also subsequently became a director of the Company, as part of their purchase of common stock during the nine months ended October 31, 2019. The warrants have a three-year term and are exercisable at any time at an exercise price of $0.00162.

 

Effective May 1, 2019, the Company’s extended the due date of all warrants expiring during the three months ended July 31, 2019, totaling 33,001,166 warrants, for an additional three years. There was no expense related to the extension of these warrants since these were held by investors.

 

Effective December 5, 2019, the Company’s extended the due date of all warrants expiring during the five months ending December 31, 2019, totaling 19,499,882 warrants, for an additional three years. There was no expense related to the extension of these warrants since these were held by investors.

 

NOTE 7 – Derivative Liabilities

 

The embedded conversion feature in the convertible debt instruments that the Company issued (See Note 8), that became convertible during the nine months ended October 31, 2019, 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. These convertible notes 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.

 

9
 

 

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, and warrants upon tainting, were as follows:

 

  The stock projections are based on the historical volatilities for each date. These volatilities were in the 166% to 270.9% 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 during the nine months ended October 31, 2019 of $146,630 for newly granted and existing warrants (see Note 6) that were tainted and a derivative liability of $64,016 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 “day 1” derivative loss of $14,016 and a debt discount of $50,000 that was amortized over the remaining term of the note using the effective interest rate method. Interest expense related to the amortization of this debt discount for the nine months ended October 31, 2019, was $50,000. The remaining unamortized debt discount related to the derivative liability was $0 as the note was fully converted by October 31, 2019.

 

During the nine months ended October 31, 2019, the Company recorded a reclassification from derivative liability to equity of $136,513  for warrants becoming untainted and $82,438 due to the conversions of a portion of the Company’s convertible notes. The Company also recorded the change in the fair value of the derivative liability as a gain of $36,335 to reflect the value of the derivative liability for warrants and convertible notes as of October 31, 2019. The Company did not have a derivative liability as of October 31, 2019 since none of the outstanding notes remained convertible during the period and consequently, the outstanding warrants were no longer tainted.

 

The following table sets forth a reconciliation of changes in the fair value of the Company’s derivative liability:

 

    Nine months ended
October 31,
 
    2019     2018  
Beginning balance   $ 58,656     $ 168,686  
Total gain on fair value change of derivative liability     (36,335 )     (84,007 )
Settlements     (218,951 )     (374,241 )
Additions recognized as debt discount     50,000       373,589  
Additions due to tainted warrants     146,630       -  
Ending balance   $ -     $ 84,027  

 

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NOTE 8 – Convertible promissory notes and note payable

 

Following is a summary of convertible promissory notes:

 

    October 31, 2019     January 31, 2019  
             
12% convertible note payable issued July 2018, due July 2019     -       21,641  
8% convertible note payable issued April 2019, due February 2020     -       -  
8% convertible note payable issued May 2019, due March 2020     54,940       -  
8% convertible note payable issued August 2019, due May 2020     78,333       -  
8% convertible note payable issued October 2019, due August 2020     47,393       -  
      180,666       21,641  
Less debt discount     (15,663 )     (20,584 )
Less current portion of convertible notes     (165,003 )     (1,057 )
Long-term convertible notes payable   $ -     $ -  

 

On July 23, 2018, we received net proceeds of $48,000 under a convertible note dated July 19, 2018 (the “July 2018 Note”). The total principal under the note is $50,000, bears interest at 12% per annum, includes OID of $2,000, is due on July 19, 2019, 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. During the nine months ended October 31, 2019, the noteholder converted an aggregate of $21,714 of the remaining balance of this note for 197,400,727shares of the Company’s common stock, leaving a balance of $0 as of October 31, 2019.

 

On April 12, 2019, we received net proceeds of $50,000 from the issuance of a convertible note dated April 10,2019 (the “April 2019 Note”). The note bears interest at 8%, includes OID of $3,000, matures on February 28, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 65% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion. During the nine months ended October 31, 2019, the noteholder converted the note in full (an aggregate of $55,120) for 73,670,329 shares of the Company’s common stock, leaving a balance of $0 as of October 31, 2019.

 

On May 21, 2019, we received net proceeds of $50,000 from the issuance of a convertible note dated May 17,2019 (the “May 2019 Note”). The note bears interest at 8%, includes OID of $3,000, matures on March 17, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 65% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

On August 15, 2019, we received net proceeds of $67,000 from the issuance of a convertible note dated August 13, 2019 (the “August 2019 Note”). The note bears interest at 8%, includes OID of $10,000, matures on May 30, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 75% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

On October 25, 2019, we received net proceeds of $40,000 from the issuance of a convertible note dated October 22, 2019 (the “October 2019 Note”). The note bears interest at 8%, includes OID of $7,300, matures on August 15, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 75% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

During the nine months ended October 31, 2019 and 2018, the Company recorded debt discounts of $50,000 and $373,589, respectively, due to the derivative liabilities, and original issue debt discounts of $23,300 and $14,000, respectively, due to the convertible notes. The Company recorded amortization of these discounts of $78,221 and $379,133 for the nine months ended October 31, 2019 and 2018, respectively.

 

Note payable:

 

In March, 2019, the Company received proceeds of $10,000 from a third-party under a promissory note due in March 2020, with interest at 10%. The total balance of the note was 10,636 as of October 31, 2019, which includes accrued interest of $636.

 

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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.

 

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, 2018. On April 30, 2018, the Company determined that this receivable was impaired and reduced the balance to $0, resulting in a loss of $55,673.

 

During the nine months ended October 31, 2019, the Company issued a total of 271,071,056 shares of our common stock for conversions of $76,834 of convertible notes payable at an exercise prices ranging from of $0.00011 to $0.00078.

 

In July 2019, the Company issued 30,000,000 shares of its common stock to satisfy $213,000 owed for services due an investor relations consultant for services provided in prior years which was previously included in accounts payable and accrued liabilities, resulting in a gain on settlement of accounts payable of $177,000.

 

In July 2019, the Company issued 43,215,212 shares of its common stock and 21,607,606 warrants to an investor, who also subsequently became a director, for proceeds of $50,000, or $0.001157 per share. The warrants have a three-year term and are exercisable at any time at an exercise price of $0.00162.

 

NOTE 10 – Commitments and contingencies

 

We currently rent a storage space for $45 per month in Tombstone, AZ on a month-to-month basis.

 

NOTE 11 – Subsequent events

 

On November 19, 2019, the Company sold 21,121,429 shares of the Company’s common stock to an accredited investor for $20,699, or $0.00098 per share, in a private placement. The purchase includes 10,560,714 warrants (1/2 warrant for each share purchased) with a three-year term to purchase the Company’s stock at an exercise price of 0.00137. The consideration received included $10,000 plus the forgiveness of a note payable of $10,000 plus accrued interest of $699.

 

On November 20, 2019, a noteholder converted $10,000 of the May 2019 Note for 18,867,925 shares of the Company’s common stock at a price of $0.00053.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Much of the information included in this quarterly report includes or is based upon estimates, projections or other “forward-looking statements”. Such forward-looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Such estimates, projections or other “forward-looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward-looking statements”.

 

Business Development

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand the results of operations and financial condition of our company. Management’s Discussion and Analysis of Financial Condition and Results of Operations is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes to the consolidated financial statements.

 

Liberty Star Uranium & Metals Corp. 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”) was 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. Big Chunk was dissolved on June 3, 2019. 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 our mineral properties. Redwall ceased drilling activities in July 2008 and was dissolved on March 30, 2010. In April 2007, we changed our name to Liberty Star Uranium & Metals Corp (“Liberty Star”) to reflect our current general exploration for base and precious metals. We are in the exploration phase of operations and have not generated any revenues from operations.

 

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. On March 5, 2019 we changed the name of Hay Mountain Super Project LLC to Hay Mountain Holdings LLC. On April 11, 2019 we formed a new subsidiary named Earp Ridge Mines LLC wholly owned by Hay Mountain Holdings LLC.

 

Our Current Business

 

We are engaged in the acquisition and exploration of mineral properties in the States of Arizona and the Southwest USA. 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.

 

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Tombstone Super Project (“Tombstone”): 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 Silver Bell Porphyry Copper Project (“East Silver Bell”): East Silver Bell is located northwest of Tucson, Arizona. East Silver Bell was under option to the Company from JABA (US) Inc. We have decided to not renew that option in 2019.

 

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 its knowledge, title to all properties retained 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

 

Material Changes in Financial Condition for the Nine-Month Period Ended October 31, 2019

 

We had cash and cash equivalents in the amount of $42,015 as of October 31, 2019 compared to $890 as of January 31, 2019. We had negative working capital of $1,658,045  as of October 31, 2019 compared to $1,695,505 as of January 31, 2019. We used $254,375  of net cash in operating activities during the nine months ended October 31, 2019 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 (aeormagnetics and aero electromagnetics). We purchased $40,837 of new equipment during the nine months ended October 31, 2019. We have been raising capital primarily by issuing convertible promissory notes, related party notes and the sale of common stock. 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.

 

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Material Changes in Results of Operations for the Three and Nine Month Periods Ended October 31, 2019 and 2018  

 

We had a net loss of $171,667 and $238,290  for the three and nine months ended October 31, 2019, respectively, compared to a net loss of $276,815 and $1,067,093 for the three months and nine months ended October 31, 2018 respectively.

 

During the three and nine months ended October 31, 2019, we had an increase of $14,258 and $9,262, respectively, in geological and geophysical expense compared to the three and nine months  ended October 31, 2018, due primarily to an increase in exploration activity and land rental fees for mineral claims. During the three and nine months ended October 31, 2019, we had a decrease of $18,672 and $56,369, respectively, in salaries and benefit expense compared to the three and nine months ended October 31, 2018, due primarily to the change in our CEO in December 2018. During the nine months ended October 31, 2019, we had a decrease in public relations expense of $209,216, compared to the nine months ended October 31, 2018, due primarily to a decrease in stock-based compensation issued for public relations services. The increase in legal expenses of $18,498 and $9,976 for the three and nine month periods ended October 31, 2019 and 2018, respectively, were primarily the result of increased use of legal services related to operations and organizational matters. We had a decrease in general and administrative expenses of $10,544 and $73,173 during the three and nine months ended October 31, 2019, respectively, as compared to the three and nine months ended October 31, 2018, respectively, due primarily to a decrease in expenses related to vehicle and occupancy expenses. We had a decrease in interest expense of approximately $179,591 and $330,390 during the three and nine months ended October 31, 2019, respectively as compared to the three and nine months ended October 31, 2018, respectively, due primarily to a reduction in convertible debt, variances in the timing of convertible debt conversions and the related interest expense from the write-off of the derivative liability debt discount. We had a gain on settlement of accounts payable of $177,000 during the nine months ended October 31, 2019 related to the settlement of accounts payable with the issuance of common stock. We had a gain on change in fair value of derivative liability of $40,797 and $36,335 during the three and nine months ended October 31, 2019, respectively as compared to a gain of $111,216 and $84,007 for the three and nine months ended October 31, 2018, respectively, due primarily to decreases in the fair value of the derivative liability at the valuation dates. During the nine months ended October 31, 2018, we recorded a loss of $55,673 related to a non-collectible stock subscription receivable.

 

Liquidity and Capital Resources

 

We had cash and cash equivalents in the amount of $42,015 as of October 31, 2019. We had negative working capital of $1,658,045  as of October 31, 2019. We used cash in operating activities of $254,375   for the nine months ended October 31, 2019. We will need additional funds in order to proceed with our planned exploration program.

 

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.

 

On April 12, 2019, we received net proceeds of $50,000 from the issuance of a convertible note dated April 10,2019 (the “April 2019 Note”). The note bears interest at 8%, includes OID of $3,000, matures on February 28, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 65% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

On May 21, 2019, we received net proceeds of $50,000 from the issuance of a convertible note dated May 17,2019 (the “May 2019 Note”). The note bears interest at 8%, includes OID of $3,000, matures on March 17, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 65% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

On August 15, 2019, we received net proceeds of $67,000 from the issuance of a convertible note dated August 13, 2019 (the “August 2019 Note”). The note bears interest at 8%, includes OID of $10,000, matures on May 30, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 75% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

On October 25, 2019, we received net proceeds of $40,000 from the issuance of a convertible note dated October 22,  2019 (the “October 2019 Note”). The note bears interest at 8%, includes OID of $7,300, matures on August 15, 2020, and is convertible after 180 days into shares of the Company’s common stock at a price of 75% of the average of the lowest 5 weighted average market price of the Company’s common stock during the 10 trading days prior to conversion.

 

Proceeds from issuance of common stock

 

In July 2019, the Company issued 43,215,212 shares of its common stock and 21,607,606 warrants to an investor, who also subsequently became a director, for proceeds of $50,000, or $0.001157 per share. The warrants have a three-year term and are exercisable at any time at an exercise price of $0.00162.

 

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Critical Accounting Policies

 

The unaudited consolidated financial statements of Liberty Star have been prepared in conformity with accounting principles generally accepted in the United States of America. Our significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 in our Form 10-K for the year ended January 31, 2019. 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 and we have included a reference to the substantial doubt about our ability to continue as a going concern in connection with our unaudited consolidated financial statements as of October 31, 2019. Our total stockholders’ deficit at October 31, 2019 was approximately $1.6 million.

 

These unaudited 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 consolidated financial statements. We report convertible promissory notes as liabilities at their carrying value less unamortized discounts in accordance with the applicable accounting guidance. We record conversion options and detachable common stock purchase warrants and report them as derivative 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.

 

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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. For common stock purchase warrants reported as a derivative liability, as well as new and modified warrants reported as equity, we utilize a Monte Carlo options model in order to determine fair value.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

As required by Rule 13a-15 under the Exchange Act, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures at October 31, 2019, which is the end of the fiscal quarter covered by this report. This evaluation was carried out by Mr. Brett Gross, our principal executive officer and Ms. Patricia Madaris, our principal financial officer. Based on this evaluation, Mr. Brett Gross and Ms. Patricia Madaris have concluded that our disclosure controls and procedures were not effective as at the end of the period covered by this report. Given the size of our current operation and existing personnel, the opportunity to implement internal control procedures that segregate accounting duties and responsibilities is limited. Until the organization can increase in size to warrant an increase in personnel, formal internal control procedures will not be implemented until they can be effectively executed and monitored. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

 

Management believes that despite our material weaknesses set forth above, our financial statements for the quarter ended October 31, 2019 are fairly stated, in all material respects, in accordance with U.S. GAAP.

 

Changes in Internal Control over Financial Reporting

 

During the quarter ended October 31, 2019 there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We currently have no outstanding litigation.

 

Item 1A. Risk Factors

 

Not applicable

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the nine months ended October 31, 2019, the Company issued a total of 271,071,056 shares of our common stock for conversions of $76,834 of convertible notes payable at an exercise prices ranging from of $0.00011 to $0.00078.

 

In July 2019, the Company issued 43,215,212 shares of its common stock and 21,607,606 warrants to an investor, who also subsequently became a director, for proceeds of $50,000, or $0.001157 per share. The warrants have a three-year term and are exercisable at any time at an exercise price of $0.00162.

 

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.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and under Item 104 of Regulation S-K, each operator of a coal or other mine is required to include disclosures regarding certain mine safety results in its periodic reports filed with the SEC. The operation of our mine(s) that may be developed in the future would be subject to regulation by the federal Mine Safety and Health Administration (MSHA) under the Federal Mine Safety and Health Act of 1977. We do not own any mines in the United States and as a result, this information is not required.

 

Item 5. Other Information.

 

None.

 

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Item 6. Exhibits

 

Exhibit Number   Description of Exhibit
3.1   Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our registration statement on Form SB-2, filed with the SEC on May 14, 2002).
3.2   Bylaws (incorporated by reference to Exhibit 3.2 to our quarterly report on Form 10-QSB, filed with the SEC on December 14, 2007).
3.3   Certificate of Change to Authorized Capital (incorporated by reference to Exhibit 3.1 to our current report on Form 8-K, filed with the SEC on September 2, 2009).
3.4   Articles of Merger (incorporated by reference to Exhibit 3.4 to our annual report on Form 10-KSB, filed with the SEC on March 31, 2004).
10.1   Letter Agreement dated November 14, 2011 with Northern Dynasty (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on November 25, 2011).
10.2   Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on December 29, 2011).
10.3   Form of Stock Option Agreement (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on January 24, 2012).
10.4   Form of Warrant Certificate (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on July 30, 2012).
10.5   Settlement Agreement dated November 13, 2012 with Northern Dynasty Minerals Ltd. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on November 15, 2012).
10.6   Convertible Promissory Note issued to JSJ Investments Inc. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on September 2, 2014).
10.7   Securities Purchase Agreement dated October 15, 2014 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on October 20, 2014).
10.8   Convertible Promissory Note dated October 15, 2014 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on October 20, 2014).
10.9   Investment Agreement dated December 15, 2014 with Tangiers Capital, LLC (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on December 19, 2014).
10.10   Registration Rights Agreement dated December 15, 2014 with Tangiers Capital, LLC (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on December 19, 2014).
10.11   Investment Agreement dated June 20, 2015 with Tangiers Capital, LLC (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on June 30, 2015).
10.12   Registration Rights Agreement dated June 20, 2015 with Tangiers Capital, LLC (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on June 30, 2015).
10.13   Convertible Promissory Note dated November 2, 2015 issued to JMJ Financial (incorporated by reference to Exhibit 10.13 to our Form 10-Q, filed with the SEC on December 15, 2015).
10.14   12% Convertible Promissory Note dated December 29, 2015 issued to JSJ Investments, Inc. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on January 7, 2016).
10.15   Promissory Note issued to Tangiers Investment Group, LLC dated December 14, 2016 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on February 9, 2017)
10.16   Amendment No. 1 dated February 2, 2017 by and between Liberty Star Uranium & Metals Corp. and Tangiers Investment Group, LLC. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on February 9, 2017)
10.17   Amendment #2 dated February 2, 2017 by and between Liberty Star Uranium & Metals Corp. and Tangiers Investment Group, LLC. (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K, filed with the SEC on February 9, 2017)
10.18   12% Convertible Promissory Note dated April 10, 2017 issued to JSJ Investments, Inc (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on April 18, 2017)
10.19   8% Convertible Promissory Note dated June 20, 2017 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on June 26, 2017)

 

19
 

 

10.20   12% Convertible Promissory Note dated July 26, 2017 issued to JSJ Investments, Inc. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on August 1, 2017)
10.21   Convertible Promissory Note issued to Power Up Lending Group, Ltd dated September 13, 2017 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on September 21, 2017)
10.22   12% Convertible Promissory Note issued to JSJ Investments, Inc., dated October 18, 2017 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on November 27, 2017)
10.23   12% Convertible Promissory Note issued to JSJ Investments, Inc., dated November 20, 2017 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on November 27, 2017)
10.24   12% Convertible Promissory Note issued to JSJ Investments Inc. dated October 18, 2017 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on November 27, 2017).
10.25   12% Convertible Promissory Note issued to JSJ Investments Inc. dated November 20, 2017 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on November 27, 2017).
10.26   12% Convertible Promissory Note issued to JSJ Investments Inc. dated December 20, 2017 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on December 27, 2017).
10.27   12% Convertible Promissory Note issued to JSJ Investments Inc. dated January 22, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on January 26, 2018).
10.28   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated February 23, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on March 1, 2018).
10.29   Securities Purchase Agreement dated as of February 23, 2018, by and between the registrant and Power Up Lending Group Ltd. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on March 1, 2018).
10.30   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated March 26, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on April 5, 2018).
10.31   Securities Purchase Agreement dated as of March 26, 2018, by and between the registrant and Power Up Lending Group Ltd. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on April 5, 2018).
10.32   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated April 25, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on May 2, 2018).
10.33   Securities Purchase Agreement dated as of April 25, 2018, by and between the registrant and Power Up Lending Group Ltd. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on May 2, 2018).
10.34   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated May 29, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on June 5, 2018).
10.35   Securities Purchase Agreement dated as of May 29, 2018, by and between the registrant and Power Up Lending Group Ltd. (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K, filed with the SEC on June 5, 2018).
10.36   12% Convertible Promissory Note issued to JSJ Investments, Inc., dated July 19, 2018 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on July 26, 2018
10.37   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated April 10, 2019 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on April 16, 2019).
10.38   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated May 17, 2019 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on May 21, 2019).
10.39   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated August 15, 2019 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on August 22, 2019).
10.40   Convertible Promissory Note issued to Power Up Lending Group Ltd. dated October 25, 2019 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K, filed with the SEC on October 29, 2019).
14.1   Code of Ethics (Filed as an exhibit to our Annual Report on Form 10-KSB, filed with the SEC on March 31, 2004).
31.1*   Section 302 Certification under Sarbanes-Oxley Act of 2002 of Brett Gross and Patricia Madaris
32.1*   Section 906 Certification under Sarbanes-Oxley Act of 2002 of Brett Gross and Patricia Madaris
101.INS*   XBRL INSTANCE DOCUMENT
101.SCH*   XBRL TAXONOMY EXTENSION SCHEMA
101.CAL*   XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*   XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*   XBRL TAXONOMY EXTENSION LABEL LINKBASE
101.PRE*   XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

* Filed herewith.

 

20
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

LIBERTY STAR URANIUM & METALS CORP.  
     
By: /s/ Brett Gross  
  Brett Gross,  
  Chief Executive Officer  
  (Principal Executive Officer)  

 

By: /s/ Patricia Madaris  
  Patricia Madaris,  
  Chief Financial Officer  
  (Principal Financial Officer and Principal Accounting Officer)  

 

Date: December 20, 2019

 

21
 

 

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