First Liberty Power Corp - FORM 10-Q

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EX-32.2 - CERTIFICATION - First Liberty Power Corp	ex322.htm
EX-31.2 - CERTIFICATION - First Liberty Power Corp	ex312.htm
EX-32.1 - CERTIFICATION - First Liberty Power Corp	ex321.htm
EX-31.1 - CERTIFICATION - First Liberty Power Corp	ex311.htm
EXCEL - IDEA: XBRL DOCUMENT - First Liberty Power Corp	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

	For the quarterly period ended January 31, 2014

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

000-52928
Commission File Number

FIRST LIBERTY POWER CORP.
(Exact name of registrant as specified in its charter)

Nevada	90-0748351
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7251 W. Lake Mead Blvd, Suite 300, Las Vegas, NV	89128
(Address of principal executive offices)	(Zip Code)

(702) 675-8198
(Registrant’s telephone number, including area code)

(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 [ ] 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.

Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[ ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [ X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

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

Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

585,683,563 share of common stock issued and outstanding as of March 15, 2014.

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

FIRST LIBERTY POWER CORP

TABLE OF CONTENTS

		Page
	PART I – Financial Information
Item 1.	Consolidated Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4.	Controls and Procedures	8

	PART II – Other Information
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	12
Item 6.	Exhibits	13
	Signatures	14

PART I

ITEM 1. FINANCIAL STATEMENTS

The accompanying unaudited Consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the six month period ended January 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2014. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2013.

	Page
Unaudited Consolidated Financial Statements
Consolidated Balance Sheets	F -1
Consolidated Statements of Operations and Comprehensive Loss	F -2
Consolidated Statements of Cash Flows	F -3
Notes to Consolidated Financial Statements	F-4 to F-19

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	January 31, 2014			July 31, 2013
ASSETS
CURRENT ASSETS:
Cash in bank	$	29,447		$	5,262
Prepaid expense		45,431			-
Inventory		186,102
Available for sale securities		550			3,050
Unamortized financing fees		106,297			57,257
Total current assets		367,827			65,569

NON-CURRENT ASSETS:
Long-term investment		25,000
Property & equipment, net		7,862			2,666
Mineral properties		45,187			45,187
Total non-current assets		78,049			47,853

TOTAL ASSETS	$	445,876		$	113,422



CURRENT LIABILITIES:
Accounts payable	$	245,791		$	293,582
Accounts payable – related parties		109,501			77,441
Accrued interest		54,891			39,971
Due to related parties		319,699			313,920
Notes payable		392,000			442,000
Derivative liability		2,640,023			342,398
Convertible notes payable, net of unamortized discount of $838,081 and $362,382 as of January 31, 2014 and July 31, 2013, respectively		414,142			329,520
Total current liabilities		4,176,047			1,838,832
Total liabilities		4,176,047			1,838,832

Commitments and Contingencies

STOCKHOLDERS’ DEFICIT:
Common stock, par value $0.001 per share; 1,080,000,000 shares authorized; 568,238,598 and 466,752,425 shares issued and outstanding as of January 31, 2014, and July 31, 2013, respectively		568,239			466,753
Additional paid-in capital		5,376,244			2,894,959
Advances to related party		(16,772	)		(16,331	)
Stock payable		34,704			-
Deficit accumulated during the exploration stage		(9,026,303	)		(4,519,928	)
Non-controlling interest		(666,283	)		(550,863	)
Total stockholders' deficit		(3,730,171	)		(1,725,410	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	445,876		$	113,422

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

F-1

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS

(Unaudited)

													Cumulative
	Three Months Ended						Six Months Ended						From Inception
	January 31,						January 31,						(March 28, 2007)
	2014			2013			2014			2013			to Jan 31, 2014

REVENUES	$	-		$	-		$	-		$	-		$	-

EXPENSES:
Exploration costs		86,541			-			178,191			-			737,272
Management & consulting fees		115,226			48,524			160,226			145,173			1,647,580
Professional fees		224,962			201,472			456,032			376,639			1,250,092
General and Administration		222,872			74,794			280,025			165,027			689,716
Impairment of assets		-			-			-			-			814,950
Total expenses		649,601			324,790			1,074,474			686,839			5,139,608

LOSS FROM OPERATIONS		(649,601	)		(324,790	)		(1,074,474	)		(686,839	)		(5,139,608	)

OTHER INCOME (EXPENSE)
Gain on sale of mineral property		-			-			-			-			155,000
Loss on investment		(2,500	)		-			(2,500	)		-			(249,450	)
Loss on derivatives		(1,189,159	)					(2,604,703	)					(2,736,362	)
Interest expense		(564,837	)		(33,899	)		(940,118	)		(61,833	)		(1,748,783	)
Exchange loss		-			-			-			(1,089	)		(3,811	)
TOTAL OTHER INCOME (EXPENSE)		(1,756,496	)		(33,988	)		(3,547,321	)		(62,922	)		(4,583,406	)

NET LOSS	$	(2,406,097	)	$	(358,689	)	$	(4,621,795	)	$	(749,761	)		(9,723,014	)
NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTEREST		(80,807	)		(36,642	)		(115,419	)		(63,826	)		(719,911	)

NET LOSS ATTRIBUTABLE TO THE COMPANY	$	(2,325,290	)	$	(324,047	)	$	(4,506,796	)	$	(685,935	)	$	(9,003,103	)

COMPREHENSIVE LOSS
Change in market value of securities		-			(2,000	)		-			(16,500	)		-

COMPREHENSIVE LOSS	$	(2,406,097	)	$	(360,689	)	$	(4,621,795	)	$	(766,261	)	$	(9,723,014	)

LOSS PER COMMON SHARE:
Loss per common share – basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Comprehensive loss per common share – basic	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC		552,769,140			170,723,583			525,617,057			158,189,398

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

F-2

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


							Cumulative
	Six Months Ended						From Inception
	January 31,						(March 28, 2007)
	2014			2013			to January 31, 2014
OPERATING ACTIVITIES:

Net loss	$	(4,621,795	)	$	(749,761	)	$	(9,723,014	)
Adjustments to reconcile net loss to net cash used in operating activities -
Depreciation		1,400			-			3,048
Debt forgiven		(29,957	)		-			(29,482	)
Gain on sale of property		-			-			91,950
Loss on investment		2,500			-			817,450
Stock based compensation, consulting services		52,777			191,183			1,343,763
Stock issued for financing cost		774,110			112,500			909,110
Convertible note issued for service		-			-			-
Impairment on assets		-			-			-
Loss on derivative		2,604,703						2,736,372
Amortization of financing fees		254,562			171,495			1,054,846
Changes in net assets and liabilities -
Accrued interest		14,920			34,510			106,864
Prepaid expense		(9,375	)		(1,909	)		(9,558	)
Inventory		(186,102	)					(186,102	)
Unamortized fees		(49,040	)		35,487			(97,333	)
Accounts payable		88,034			22,204			377,716
Accounts payable – related parties		32,060			30,000			201,639
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(1,071,203	)		(154,291	)		(2,402,741	)

INVESTING ACTIVITIES:
Proceeds on sale of property		-			-			-
Cash paid for acquisitions		-			-			(725,187	)
Cash paid for investment		25,000						(25,000	)
Cash paid for fixed assets		(6,596	)					(6,596	)
Cash received from Stockpile Reserves, LLC Acquisition		-			1,748			3,555
Loan to other entity		-			-			(42,975	)
NET CASH PROVIDED BY INVESTING ACTIVITIES		(31,596	)		1,748			(796,203	)

FINANCING ACTIVITIES:
Proceeds from the issuance of common stock		-			-			566,500
Proceeds from notes/loans payable		1,121,648			135,000			2,638,814
Proceeds from related party debt		5,336			70,839			233,807
Payments on related party debt		-			(14,250	)		(93,980	)
Payments on notes payable		-			(73,000	)		(103,000	)
Deferred offering costs		-			-			(13,750	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,126,984			118,589			3,228,391

NET INCREASE (DECREASE) IN CASH		24,185			(33,954	)		29,447
CASH – BEGINNING OF PERIOD		5,262			35,984			-
CASH – END OF PERIOD	$	29,447		$	2,030		$	29,447
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH ACTIVITIES
Cash paid during the period for:
Interest	$	-		$	-		$	-
Tax	$	-		$	-		$	-
Net liability assumed through Stockpile Reserves, LLC acquisition	$	-		$	-		$	41,236
Note payable settled with convertible note	$	50,000		$	-		$	-
Accounts payable settled with convertible note	$	105,868		$	-		$	-
Unamortized financing fees	$	-		$	-		$	(15,000	)
Shares issued for acquisition (see Note 1)	$	-		$	(234,910	)	$	-
Shares issued for prepaid	$	30,056		$	-		$	73,077
Shares issued for conversion of debt and accrued interest	$	1,745,533		$	146,553		$	1,966,8453
Convertible note issued for prepaid	$	-		$	-		$	135,000
Shares issued for deposit on mineral property	$	-		$	-		$	79,950

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

F-3

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies

Basis of Presentation and Organization

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the three month period ended January 31, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2014. For further information refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2013.

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

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

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

Effective December 22, 2009, the Company changed its name from “Quuibus Technology, Inc.” to “First Liberty Power Corp.” by way of a merger with its wholly owned subsidiary First Liberty Power Corp., which was formed solely for the name change.

On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby G8MI transferred 81% of the total issued and outstanding shares of Group8 in exchange for the issuance of 83,000,000 shares of the Company to G8MI plus one hundred thousand dollars ($100,000) cash payment to G8MI. Further, pursuant to the Agreement, the Company is required to undertake certain payments to Group8 aggregating a total of $2,000,000 for associated property payments and exploration costs as follows: (a) $500,000 on or before October 30, 2012, which has been paid; (b) $500,000 on or before December 31, 2012, which $255,609 has been paid toward this balance; (c) $500,000 on or before February 28, 2013, which amount remains outstanding as of the date of this filing; and (d) $500,000 on or before April 30, 2013, which amount remains outstanding as of the date of this filing.

F-4

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

In accordance with ASC 805, “Business Combinations”, and in particular ASC 805-50-25, the acquisition of Group8 is accounted for as an asset purchase without goodwill as Group8 did not meet the definition of a business per ASC 805 at the time of the acquisition. Additionally the CEO of First Liberty and controlling director of the Company is also a 50% director of G8MI as such the transaction was deemed a transaction under common control. As the Company and Group8 are considered as common controlled entities, the acquisition is a common control transaction; therefore, the financial statements require retrospective combination of the entities for all periods presented as if the combination had been in effect since inception of common control. The 83,000,000 shares of the Company’s common stock issued to G8MI for 81% of Group8 will be recorded as founder’s shares to G8MI at Group8’s inception date, January 26, 2013. On May 22, 2012 and May 31, 2012, Group8 obtained 50% control of Stockpile Reserves, LLC (“SRL”) and Central Nevada Processing Co. LLC (“CNPC”), respectively. SRL has a net liability of $37,681 with non-controlling interest of $53,629 at May 22, 2012. The total net liability assumed by Group8 was $91,310, which will be combined with the Company’s financial statements as of July 31, 2012. There was no operation in CNPC as of July 31, 2012.

A summary of SRL net liability allocation is as follows:

Assets acquired:
Cash and cash equivalents	$	3,555
Advances to related party		9,200
Property and equipment, net		4,314
Total assets acquired	$	17,069
Liabilities assumed:
Due to related party	$	54,750
Total liabilities assumed	$	54,750
Non-controlling interest		53,629
Net assets acquired	$	(91,310)

As of July 31, 2013, the Company paid off the $100,000 cash payment to G8MI which was applied against the $100,000 obligation under the agreement to acquire Group8. The 83,000,000 shares of the Company issued to G8MI are valued at $0 as Group8 founder’s shares as of July 31, 2012, and $(100,000) on August 22, 2012 as the Company has the liability to pay G8MI for the acquisition of Group8 when the Company entered into the share exchange agreement with G8MI and Group8.

Basis of Presentation

As a result of the acquisition, the accompanying consolidated financial statements include the operations of G8 Minerals since August 23, 2012. The accompanying consolidated financial statements also include the operations of the Company, its 50% owned subsidiary Central Nevada Processing Co. LLC (CNPC) and its 50% owned subsidiary Stockpile Reserves LLC (SRL). CNPC and SRL are both considered variable interest entities (VIE) for which the Company is the primary beneficiary.

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

F-5

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

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

Cash and Cash Equivalents

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

Mineral Properties

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

Revenue Recognition

The Company is in the exploration stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

Business Combinations – Valuation of Acquired Assets and Liabilities

Allocations of purchase price for business combinations are based on estimates of the fair value of consideration paid and the net assets acquired. Accounting for business combinations requires estimates and judgments as to expectations of future cash flows for acquired businesses and the allocation of those cash flows to identifiable tangible and intangible assets in determining the estimated fair values of assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets and liabilities, including contingent consideration, are based on management’s estimates and assumptions, utilizing customary valuation procedures and techniques. Contingent consideration is measured at its estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in earnings as a component of other income or expense. If actual results differ significantly from the estimates and judgments used in determining the estimated fair values of assets and liabilities recorded as of the date of acquisition, these differences could result in a possible impairment of recorded assets, including intangible assets and goodwill, or require acceleration of amortization expense of finite-lived intangible assets.

F-6

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

Inventory

Inventories are stated at the lower of costs incurred or market. Inventories include metals product inventory, which is determined by the stage at which the minerals are in processing (stockpiled minerals, work in process and finished goods).

Stockpiled minerals inventory represents Stibnite ore rock that has been excavated from inside the mine and then placed on pad area before being crushed and bagged. Stockpiles reserves are measured by estimating the number of tons added and removed from the stockpile, the number of contained metal ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method). Stockpile mineral tonnages are verified by periodic surveys. Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the minerals, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile’s average cost per recoverable unit.

Work in process inventory represents materials that are currently in the process of being converted to a saleable product and includes inventories in our milling process. This inventory represents excavated stibnite ore that has been removed from the pad, crushed, bagged in one ton storage bags and stored in 40 foot containers at our onsite facilities to be hauled to a third party mill site for processing. In-process material is measured based on assays of the material fed into the process and the projected recoveries of the respective plants. In-process inventories are valued at the average cost of the material fed into the process attributable to the source material coming from the mines and stockpiles, plus the in-process conversion costs, including applicable depreciation relating to the process facilities incurred to that point in the process.

The Company categorizes all of its inventory as work in process. The Company processes its inventory into which its ships to a refiner for final processing, and therefore it never holds finished goods.

At the present time, our inventories consist of the historical cost of extracting raw minerals from our mine site and transporting raw materials to our milling site for further processing. Until we begin receiving regular revenues from our milling and smelting operations, all milling and smelting costs are expensed as incurred.

Long-lived assets

The Company accounts for its long-lived assets in accordance with FASB ASC 360-10, “Property, Plant and Equipment” which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposal value.

F-7

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

Investments

The Company holdings in marketable securities classified as available-for-sale are carried at fair value. The carrying value of marketable securities is reviewed each reporting period for declines in value that are considered to be other-than temporary and, if appropriate, the investments are written down to their estimated fair value. Realized gains and losses and declines in value judged to be other-than-temporary on available for sale securities are included in the Company’s statements of operations. Unrealized gains and unrealized losses deemed temporary are included in accumulated other comprehensive income (loss).

Effective February 8, 2011, the Company acquired 500,000 shares of New America Energy common stock pursuant to an Agreement between the Company, New America Energy and GeoXplor (refer to Note 3 and 9) for the deemed value of $250,000. The equity investment will be periodically reviewed to determine if impairment is required. During the six months ended January 31, 2014, the Company realized $2,500 in loss on investment. The Company has realized a total of $249,450 in loss on investment as of January 31, 2014.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

Convertible Debentures

Beneficial Conversion Feature

If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method.

Debt Discount

The Company determines if the convertible debenture should be accounted for as liability or equity under ASC 480, Liabilities — Distinguishing Liabilities from Equity. ASC 480, applies to certain contracts involving a company's own equity, and requires that issuers classify the following freestanding financial instruments as liabilities. Mandatorily redeemable financial instruments, Obligations that require or may require repurchase of the issuer's equity shares by transferring assets (e.g., written put options and forward purchase contracts), and Certain obligations where at inception the monetary value of the obligation is based solely or predominantly on:

– A fixed monetary amount known at inception, for example, a payable settleable with a variable number of the issuer's equity shares with an issuance date fair value equal to a fixed dollar amount,

– Variations in something other than the fair value of the issuer's equity shares, for example, a financial instrument indexed to the S&P 500 and settleable with a variable number of the issuer's equity shares, or

– Variations inversely related to changes in the fair value of the issuer's equity shares, for example, a written put that could be net share settled.

F-8

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

If the entity determined the instrument meets the guidance under ASC 480 the instrument is accounted for as a liability with respective debt discount. The Company records debt discounts in connection with raising funds through the issuance of convertible debt (see Note 4). These costs are amortized to non-cash interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Derivative Financial Instruments

Derivative financial instruments, as defined in ASC 815, “Accounting for Derivative Financial Instruments and Hedging Activities”, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements.

Fair Value of Financial Instruments

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of January 31, 2014, and July 31, 2013, the carrying value of the Company’s financial instruments approximated fair value due to the short-term nature and maturity of these instruments.

Determination of Fair Value

The Company’s financial instruments consist of available for sale securities, convertible notes payable and a derivative liability. The Company believes all of the financial instruments’ recorded values approximate their fair values because of their nature and respective durations.

The Company complies with the provisions of ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

F-9

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Organization and summary of significant accounting policies (continued)

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of January 31, 2014 and July 31, 2013, and expenses for the quarters ended January 31, 2014, and 2013, and cumulative from inception. Actual results could differ from those estimates made by management.

Asset retirement obligations

The Company has adopted the provisions of FASB ASC 410-20 “Asset Retirement and Environmental Obligations,” which requires the fair value of a liability for an asset retirement obligation to be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the related oil and gas properties. As of January 31, 2014, there have been no asset retirement obligations recorded.

Cost-Basis Method Valuation

The Company’s non-marketable equity investment is recorded using the cost-basis method of accounting, and is classified as a long-term asset on the accompanying balance sheet as permitted by FASB ASC 325, “Cost Method Investments”, as the Company owned less than 20% of the voting securities and did not have the ability to exercise significant influence over operating and financial policies of the entity. See Note 9, “Investment in Covalent Energy” for more information.

Note 2 – Going concern

The Company is currently in the exploration stage and has engaged in limited operations. While management of the Company believes that the Company will be successful in its planned operating activities, there can be no assurance that it will be able to be successful in the development of its product, sale of its planned product, and services that will generate sufficient revenues to sustain its operations.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred an operating loss since inception of $9,723,014 and has no revenues to offset its operating costs. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

F-10

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – Mineral properties

A) Lithium Agreement:

On May 31, 2012, the Company entered into a new purchase agreement with GeoXplor Corp. (the “Lithium Agreement”), which is effective as of March 15, 2012. Under this Agreement, the Company has been granted an exclusive four year exploration license in regards to the two mineral properties described in the Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smokey Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smokey Valley Property"). Pursuant to the Agreement, upon the completion of the required payments and work commitments, GeoXplor shall transfer title to the properties to the Company and shall retain a 5% royalty, on which we shall have the option to purchase up to 4%, for $1,000,000 per 1%.

The Lithium Agreement is a replacement of all prior agreements pertaining to the Lida Valley claims contained within the Purchase Agreement dated December 24, 2009 between GeoXplor and the Company. This Agreement supersedes and replaces all prior agreements in respect to those claims.

Under the new Lithium Agreement, the Company is required pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $725,000, undertake the issuance of 2,000,000 Shares, and expend not less than One Million Five-Hundred Thousand Dollars ($1,500,000) in Mineral Exploration and Development Testing ("Work").

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

B) Fencemaker Agreement:

Under the Fencemaker Agreement, the Company is required to issue to G8MI a total of 83,000,000 shares of its Common Stock, which stock has been issued; deliver to G8MI cash payments of $100,000, which payments have been completed, and; the Company is required to undertake certain payments to G8 Minerals aggregating a total of $2,000,000 for associated property payments and exploration costs. As of January 31, 2014, the Company has paid $855,608 to G8 Minerals.

C) San Juan Agreement:

On November 6, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Agreement”). Under this Agreement, we have been granted an exclusive five year exploration license in regards to a mineral property described in the Agreement. The mineral property encompasses 13 lode claims (260 acres) located in the Canyon Country

F-11

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – Mineral properties (continued)

District, San Juan County, Utah for Vanadium and Uranium exploration (the "San Juan Property"). Pursuant to the Agreement, upon the completion of the required payments and work commitments, GeoXplor shall transfer title to the San Juan Property to the Company and shall retain a 3% royalty, on which we shall have the option to purchase up to 2%, for $1,000,000 per 1%.

Under the San Juan Agreement, the Company is required to pay GeoXplor in consideration of the grant of the exploration license and other rights granted under this Agreement a total of $500,000, issue 3,000,000 Shares, and expend not less than One Million Five-Hundred Thousand Dollars ($1,000,000) in Mineral Exploration and Development Testing

The Company is presently actively seeking investment capital to undertake the next stages of development on the San Juan Agreement, and is seeking to close this financing within the current quarter. The San Juan Property encompasses certain claims previously included in agreements between the Company and GeoXplor, and this Agreement supersedes and replaces all prior agreements in respect to those claims.

Note 4 – Convertible notes payable

Convertible debentures treated as original issue discount as per ASC 480 consisted of the following:
	Balance at		Balance at
	1/31/2014		7/31/2013

Note issued July 19, 2012 with interest at 8% per annum. Principal and interest are due on April 19, 2013. The conversion price shall be equal to 65% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.	$	-	$	17,049

Note issued February 07, 2013 with interest at 8% per annum. Principal and interest are due on October 29, 2013. The conversion price shall be equal to 65% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.				47,414

Note issued October 21, 2013 with interest at 6% per annum. Principal and interest are due on October 21, 2014. The conversion price shall be equal to 65% multiplied by the average of the two closing prices during the five (5) trading days prior to the conversion notices.		115,385		-

Note issued March 4, 2013 with interest at 8% per annum. Principal and interest are due on December 31, 2013. The conversion price shall be equal to 50% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.		-		50,000

Note issued April 12, 2013 with interest at 8% per annum. Principal and interest are due on December 31, 2013. The conversion price shall be equal to 50% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.		-		70,000

F-12

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4 – Convertible notes payable (continued)
Note issued September 5, 2013 with interest at 0% per annum. Principal and interest are due on September 5, 2014. The conversion price shall be equal to 60% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.	46,296		-

Note issued December 9, 2013 with interest at 12% per annum. Principal and interest are due on September 4, 2014. The conversion price shall be equal to 60% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.	50,000		-

Note issued February 5, 2013 with interest at 12% per annum. Principal and interest are due on March 27, 2013. The conversion price shall be equal to 58% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.			33,000

Note issued March 12, 2013 with interest at 12% per annum. Principal and interest are due on October 5, 2013. The conversion price shall be equal to 58% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.			33,000

Note issued August 31, 2012 with interest at 10% per annum. Principal and interest are due on February 8, 2013. The conversion price shall be equal to a fixed price of $0.02.			20,000

Balance of convertible debentures treated as original issued discount	211,681		270,463

Convertible debentures with bifurcated derivative liability under ASC 815 consisted of the following:

Note issued August 13, 2013 with interest at 8% per annum. Principal and interest are due on May 9, 2014. The conversion price shall be equal to 58% multiplied by the average of the three lowest closing prices during the ten (10) trading days prior to the conversion notices.	53,000	$	-

Note issued September 25, 2013 with interest at 8% per annum. Principal and interest are due on June 12, 2014. The conversion price shall be equal to 58% multiplied by the average of the three lowest closing prices during the ten (10) trading days prior to the conversion notices.	53,000		-

Note issued November 18, 2013 with interest at 8% per annum. Principal and interest are due on August 20, 2014. The conversion price shall be equal to 58% multiplied by the average of the three lowest closing prices during the ten (10) trading days prior to the conversion notices.	63,000		-

Note issued October 08, 2013 with interest at 8% per annum. Principal and interest are due on July 04, 2014. The conversion price shall be equal to 55% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.	50,000		-

F-13

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4 – Convertible notes payable (continued)
Note issued September 12, 2013 with interest at 8% per annum. Principal and interest are due on June 12, 2014. The conversion price shall be equal to 55% multiplied by the average of the two lowest closing prices during the ten (10) trading days prior to the conversion notices.		77,000			-

Note issued November 08, 2013 with interest at 10% per annum. Principal and interest are due on August 08, 2014. The conversion price shall be equal to 60% multiplied by the average of the two price during the ten (10) trading days prior to the conversion notices.		51,500			-

Note issued December 04, 2013 with interest at 10% per annum. Principal and interest are due on December 04, 2014. The conversion price shall be equal to 60% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.		84,249			-

Note issued January 09, 2014 with interest at 10% per annum. Principal and interest are due on January 09, 2015. The conversion price shall be equal to 65% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.		50,000			-

Note issued May 21, 2013 with interest at 10% per annum. Principal and interest are due on May 21, 2014. The conversion price shall be equal to 50% multiplied by the lowest price during the twenty (20) trading days prior to the conversion notices.		-			125,000

Note issued October 09, 2013 with interest at 10% per annum. Principal and interest are due on October 9, 2014. The conversion price shall be equal to 50% multiplied by the lowest closing prices during the twenty (20) trading days prior to the conversion notices.		21,619			-

Note issued October 21, 2013 with interest at 10% per annum. Principal and interest are due on October 21 2014. The conversion price shall be equal to 60% multiplied by the lowest closing prices during the ten (10) trading days prior to the conversion notices.		130,000

Note issued January 09, 2014 with interest at 10% per annum. Principal and interest are due on January 09, 2015. The conversion price shall be equal to 65% multiplied by the lowest price during the ten (10) trading days prior to the conversion notices.		35,000

Note issued April 26, 2013 with interest at 8% per annum. Principal and interest are due on December 18, 2014. The conversion price shall be equal to a fixed price of $0.015.		372,174			260,739

Balance of convertible debentures treated as derivative liabilities		1,040,542			385,739

Total convertible debentures as of January 31, 2014 and July 31, 2013	$	1,252,223		$	656,202

Total unamortized discount as of January 31, 2014 and July 31, 2013		(838,081	)		(326,682	)
Convertible debentures, net as of January 31, 2014 and July 31, 2013	$	414,142		$	329,520

Derivative liabilities as of January 31, 2014 and July 31, 2013	$	2,640,023		$	342,398

F-14

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 4 – Convertible notes payable (continued)

Debt Conversion Features

In connection with the August 13, 2013, September 25, 2013, November 18, 2013, October 8, 2013, September 12, 2013, November 08, 2013, December 04, 2013, October 9, 2013, October 21, 2013, two notes dated January 09, 2014, the May 21, 2013, and the April 26, 2013 Secured Convertible Notes, the notes included a Debt Conversion Feature (see Note 4). The relative fair value of the Debt Conversion Features as of January 31, 2014 was estimated, using Level 3 inputs, at $2,640,023 using a Black-Scholes model with the following assumptions: expected volatility of 256% , risk free interest rate of 0.10%, expected life of 1 year and no dividends. Expected volatility was based on the historical volatility of the Company.

As of January 31, 2014 and July 31, 2013, the Company accrued $42,892 and $21,985 interest payable related to the convertible notes payable, respectively; and unamortized financing fees of $106,297 and $57,257, respectively. During the six months ended January 31, 2014, the Company incurred $803,596 interest expense and $77,821 financing expense related to the convertible notes payable.

Tonaquint Convertible Note Warrants

In connection with the Convertible Note offering on April 26, 2013, the Company issued 47,457,627 Convertible Note Warrants. The Convertible Note Warrants are exercisable at $0.25. The relative fair value of the warrants as of January 31, 2014 was estimated at $963,705 using a Black-Scholes model with the following assumptions: expected volatility of 256.17%, risk free interest rate of 0.10%, expected life of 1 year and no dividends. Expected volatility was based on the historical volatility of the Company. The loss on derivative liability and interest expense for the quarter ended January 31, 2014 have been included in the loss on derivative liability and interest expense for the debt conversion features as noted above.

Note 5 – Related parties transactions

On May 3, 2010, the Company entered into a consulting agreement with Mr. John Hoak, wherein Mr. Hoak agreed to provide, among other things, consulting services to the Company. The agreement was effective March 24, 2010 and continued to March 24, 2012. In consideration for agreeing to provide such consulting services, on May 3, 2010, we issued to Mr. Hoak 250,000 shares of our common stock valued at $187,500, which had been fully earned and expensed as of March 24, 2012. The agreement also contained a provision for the cash payment of $2,500 a month during the term of the agreement. Mr. Hoak resigned as a director in March 2012. The Company has recorded a due to related party to Mr. Hoak of $55,798 and $55,798 as of January 31, 2014 and July 31, 2013, respectively.

As of January 31, 2014, the Company has a payable of $46,100 to a former officer and Director of the Company, which consists of an outstanding loan amount to the Company of $9,910 and expenses paid by this former officer and Director on behalf of the Company for a total of $36,190. The loan is unsecured, non-interest bearing, and has no specific terms for repayment.

F-15

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5 – Related parties transactions (continued)

On November 29, 2010, Mr. Don Nicholson was appointed as a member of the board of directors of the Company, and on December 28, 2010, effective January 1, 2011; Mr. Nicholson was appointed Chief Executive Officer, President, and Secretary-Treasurer. The Company entered into an agreement on July 2, 2011, effective November 15, 2010, with LTV International Holdings Ltd. (“LTV”), to provide management services to the Company over a two year period. The terms of which required the issuance of 5,000,000 shares to LTV, issued on July 15, 2011 valued at $750,000, and a monthly fee of $2,500 payable to LTV. Mr. Don Nicholson is the designated service provider under the agreement with LTV. During each period, compensation expense was determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from the prepaid expense (initially $750,000 from the initial issuance) accordingly each period. The Company has recorded a total of $109,375 and $187,500 as consulting expenses during the six months ended January 31, 2013 and 2012, leaving a prepaid expense balance of $0 and $109,375 as of January 31, 2013 and July 31, 2012, respectively. As of January 31, 2013, there are no outstanding amounts owing under this agreement. On December 1, 2012, the Company entered into a new consulting agreement with LTV to provide management services to the Company over a one year period. The terms of which require a monthly fee of $5,000 payable to LTV. Mr. Don Nicholson is the designated service provider under the agreement with LTV. For the six months ended January 31, 2014, an amount of $30,000 was recorded by the Company as management consulting expense and $24,760 was paid in the form of cash. As of January 31, 2014, an amount of $32,124 has been accrued as accounts payable to related party for LTV.

On April 1, 2012, the Company entered into a consulting agreement with Mr. Robert B. Reynolds Jr., wherein Mr. Reynolds agreed to provide, among other things, services associated with performing duties associated with being a director of the Company. The agreement was effective April 1, 2012, and continues to March 30, 2013. In consideration for agreeing to provide such services, in April 2012, we issued to Mr. Reynolds 250,000 shares of our common stock, valued at $11,500. During each period, the compensation expense is determined based on the number of days for which services were provided relative to 365 days, multiplied by the common stock valuation. This amount is deducted from prepaid expense accordingly in each period, which amount of $2,889 was recorded as consulting expense during the quarter ended January 31, 2013, leaving a prepaid expense balance of $1,889. On December 1, 2012, the Company entered into a new consulting agreement with Mr. Reynolds for services associated with performing duties of being a director of the Company over a one year period. The terms of which require a monthly fee of $5,000 payable to Mr. Reynolds. For the six months ended January 31, 2014, an amount of $30,000 was recorded by the Company as management consulting expense and $14,000 was paid in the form of cash. As of January 31, 2014, an amount of $41,945 has been accrued as accounts payable to related party for Mr. Reynolds.

On June 12, 2012, the Company entered into a loan agreement with Sanning Management, Ltd., wherein Sanning Management agrees to loan a sum of $119,000 to the Company with interest at the rate of eight percent (8%) per annum, until the maturity date of June 12, 2014. As of January 31, 2014, the Company has a note payable to Sanning Management of $99,025 and accrued interest of $12,979. Sanning Management is the 100% owner of Group8 Mining Innovations, which Group8 Mining Innovations was the 100% owner of Group8 Mineral prior to the acquisition and is currently the 19% owner post-acquisition.

On December 1, 2012, the Company entered into a consulting agreement with Mario Beckles for services associated with performing duties of being a chief financial officer of the Company over a one year period. The terms of which require a monthly fee of $5,000 payable to Mr. Beckles. For the six months ended January 31, 2014, an amount of $30,000 was recorded by the Company as management consulting expense and the Company has paid $14,000 in cash. As of January 31, 2014 an amount of $35,432 has been accrued as accounts payable to related party for Mr. Beckles.

F-16

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5 – Related parties transactions (continued)

On November 1, 2013, the Company entered into a consulting agreement with G8 Mining Innovations Corp. to provide services to the Company over a one year period. These services include bringing on line the Company’s Fencemaker mine and Lovelock Mill, including the specification and design/development of the mill sight equipment, additional mine site equipment, potential project development, outside of Antimony projects. The terms of which require a monthly fee of $20,000 payable to G8MI. For the six months ended January 31, 2014, an amount of $60,000 was recorded by the Company as management consulting expense and $60,000 was paid in the form of cash.

Note 6 – Common stock

The Company is authorized to issue 540,000,000 shares of $.001 par value common stock. On August 20, 2013, the Company’s authorized common stock increased from 540,000,000 shares of common stock with a par value of $0.001 to 1,080,000,000 shares of common stock with a par value of $0.001. As of January 31, 2014 and July 31, 2013, 568,238,598 and 466,752,425 shares were issued and outstanding, respectively.

On September 16, 2013 the Company issued 7,386,221 shares of restricted common stock associated with the August 31, 2013 Security Purchase Agreement to purchase $2,000,000 of the Company’s common stock as a commitment fee. Under the agreement, amongst other terms, the Company is obligated to pay the remaining 50% commitment fee equivalent to $50,000. The shares were valued as of the date of grant resulting in a value of $153,049. The amount was recorded as operation expense.

On September 20, 2013, the Company issued 750,000 shares of restricted common stock to Carter Terry & Co. as compensation for services. The shares were valued at $2,625 based on the closing price on the grant date.

On October 1, 2013, the Company issued 10,000,000 shares of restricted common stock, valued at $128,000, to Dan Crofoot and Chaowalit Pullapat as compensatory payment in lieu of default of the agreement to purchase Fencemaker Millsite property at the subsidiary level of Central Nevada Processing Co. LLC.

On December 03, 2013, the Company issued 625,000 shares of restricted common stock to Integrative Business Alliance as compensation for services. The shares were valued at $32,500 based on the closing price on the grant date.

On December 10, 2013, the Company issued 150,000 shares of restricted common stock to Carter Terry & Co. as compensation for services. The shares were valued at $5,100 based on the closing price on the grant date.

On December 10, 2013, the Company issued 850,000 shares of restricted common stock to Icon Asset Management. as compensation for services. The shares were valued at $28,900 based on the closing price on the grant date.

On December 21, 2013, January 21, 2014, and January 31, 2014, the Company issued 416,667 on each of the three dates for a total of 1,250,000 shares of restricted common stock to Murdock Capital Partners as compensation for services. The shares were valued at $41,333 based on the closing price on the grant date.

On January 9, 2014, the Company issued 5,430,233 shares of common stock directly under notice of warrant cashless exercise, which were valued at $421,729.

On January 24, 2014, the Company issued 500,000 shares of restricted common stock to Chienn Consulting as compensation for services. The shares were valued at $15,000 based on the closing price on the grant date.

F-17

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 7 –Common Stock (continued)

During the six months ended January 31, 2014 the Company issued a total of 74,544,716 shares directly related to debt conversions of principal amount totaling to $477,861, which were valued at $1,754,532.

Note 7 –Marketable securities and investments

The following is a summary of available-for-sale marketable securities as of January 31, 2014 and July 31, 2013:

	January 31, 2014
	Cost		Unrealized (Gain)		Realized (Losses)			Market or Fair Value
Equity securities	$	3,050	$	-	$	(2,500	)	$	550
Total	$	3,050	$	-	$	(2,500	)	$	550

	July 31, 2013
	Cost		Unrealized Gain		Realized (Losses)			Market or Fair Value
Equity securities	$	250,000	$	-	$	(246,950	)	$	3,050
Total	$	250,000	$	-	$	(246,950	)	$	3,050

The Company classifies securities that have a readily determinable fair value and are not bought and not held principally for the purpose of selling them in the near term as securities available-for-sale, pursuant to FASB ASC 320-10, Investments-Debt & Equity Securities. Under FASB ASC 320-10, unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported in other comprehensive income until realized.

Effective January 27, 2013, the Company entered into an agreement to purchase a 1.4% net revenue interest in Covalent Energy International, Inc. (Covalent) for $50,000. As of January 31, 2014, the Company has paid $25,000. Covalent has had no operations to date.

Note 8 –Inventory

Inventories are stated at the lower of cost or market, with cost determined on an average cost basis. Inventory balances are as follows:


	January 31, 2014		July 31, 2013
Finished goods	$	-	$	-
Work in process		186,102		-
Raw materials		-		-
Total	$	186,102	$	-

F-18

FIRST LIBERTY POWER CORP.

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 19 –Subsequent note

On February 06, 2014 and March 5, 2014, the company issued 4,000,000 shares on each date for a total of 8,000,000 shares to an accredited investor under notice of a cashless warrant exercise.

On February 10, 2014, the Company issued 650,000 shares of restricted common stock to Carter Terry & Company as compensation for services. The shares were valued at $18,850 based on the closing price on the grant date.

Subsequent to the quarter ended January 31, 2014 and as of the date of this report the Company issued a total of 8,794,965 shares directly related to debt conversions of increments totaling $97,616.

F-19

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "intends", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

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

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

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

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

The management’s discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended July 31, 2013, together with notes thereto.

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

Our Current Business

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

On August 22, 2012, the Company entered into an agreement with Group8 Minerals, a Nevada Corporation ("Group8”), and Group8 Mining Innovations, a Nevada Corporation (“G8MI”), the sole Shareholder of Group8, whereby the Company acquired 81% of the total issued and outstanding shares of Group8. Group8 holds a 50% interest in Central Nevada Processing Co. LLC (CNPC) and a 50% interest in Stockpile Reserves LLC (SRL). As a result of the acquisition, the Company has an effective 40.5% interest in each of CNPC and SRL. SRL is an Antimony mining company having a mineral property known as the Fencemaker mine, located in the Stillwater Range of west central Nevada, approximately 194 kilometers northeast of the city of Reno, Nevada, and more locally approximately 60 kilometers east-southeast of the town of Lovelock, and which consists of five unpatented contiguous mining claims that cover a total of 100.0 acres (40.47 hectares). The Fencemaker Mine was established and first shipped antimony ore in the 1880s, with intermittent minor production continuing until the 1990's.

SRL recently completed a Phase 1 program of reverse circulation (RC) drilling that was initiated in July 2012 to test the down dip and strike extension of mineralization known to be present in the Fencemaker Mine. This program consisted of a total of 2350 feet (716 m) from thirteen (13) holes collared in the hanging wall of the structure. Highest value recorded was 18.65% Sb (Stibnite or Antimony ore) from drill hole FM-02 at the 35 to 40 foot (10.7 to 12.2 m) interval below surface. High-grade mineralization exists to a depth of a minimum of 110 feet (33.5 m) below surface. A cut-off grade of 0.40% Sb was selected for an NI43-101 and SEC compliant Inferred Mineral Resource. That Inferred Mineral Resource is from five individual blocks totaling 34,125 short tons with an average grade of 2.92% Sb. Within this estimated total resource higher grade blocks, up to 10,500 tons of 4.17% Sb are present. Analysis for gold in the drill samples shows a zone of anomalous (up to 294 ppb Au; 0.294 g/t Au).

All necessary permitting has been established to commence mining operations, and as of October 31, 2013 the Fencemaker mine commenced initial limited mining operations.

CNPC, with a property to be permitted for mineral processing in Lovelock, Nevada, will undertake the milling of the Stibnite (Antimony) ore extracted from the Fencemaker mine, and concentrate it to approximately 55 to 60%, at which point it will be sold at market price for grade. This milling operation, again subject to additional funding from the Company, and requisite permitting requirements, is expected to be operational in late 2014.

On May 31, 2012, we entered into a purchase agreement with GeoXplor Corp. (“Lithium Agreement”). Under this Lithium Agreement, we have been granted an exclusive four year exploration license in regards to the two mineral properties described in the Lithium Agreement. One property encompasses 58 placer claims (9280 acres) located in Lida Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Lida Valley Property"), and the other encompasses 70 placer claims (11,200 acres) located in Smoky Valley, Esmeralda County, Nevada for Lithium and Lithium Carbonate exploration (the "Smoky Valley Property").

On November 6, 2012, we entered into a purchase agreement with GeoXplor Corp. (“San Juan Agreement”). Under this Agreement, we have been granted an exclusive five year exploration license in regards to a mineral property described in the San Juan Agreement. The property is comprised of 13 lode claims, totaling 260 acres (the "San Juan Property"), located within the Colorado Plateau near the Utah-Colorado border. A preliminary radon survey was completed on the San Juan Property in 2009 and it indicated an anomalous east-west radiometric trend. The sizes of the anomalies appear to be very similar to the size of the high grade vanadium-uranium beds mined from the nearby Firefly, Gray Daun and Vanadium Queen Mines. This channel system, which was already delineated by a previously completed radon survey, is part of the system that hosts the Pandora and Beaver Shaft mines - both of which are producing Uranium and Vanadium ore that is transported to and processed at the Dennison Mill located near Blanding Utah.

The claims identified in the Lithium and San Juan Agreements are situated on undeveloped raw land. Exploration work has been undertaken on all of the claims, and we intend to undertake further exploration in anticipation of finding commercially viable deposits of Lithium brine, Vanadium and Uranium, respectively. In respect to these exploration properties, exploration will continue to be our principal activity, until and if our minerals of interest are discovered in commercially viable quantities, which would then become development projects. For the Fencemaker Project and related milling operation, the Company has been able to commence mining through SRL, initially on a trial scale during the fiscal quarters ended January 2014. Based on those results, we would anticipate being able to ramp up to the permitted capacity of 36,500 tonnes/year of ore through 2014. We expect to commence the related milling operation through CNPC during fourth quarter 2014.

Our exploration programs will be exploratory in nature and there is no assurance that a commercially viable mineral deposit, a reserve, exists until further exploration, particularly drilling, is undertaken and a comprehensive evaluation concludes economic and legal feasibility. Our mining and milling operations are not yet established and operational, and are subject to further funding by the Company in order to be completed and initiated, and are subject to start-up risks associated with initiating underground mining operations and milling operations, which may delay or prevent our mining and milling operations. We have not yet generated or realized any revenues from our business operations.

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

Material Changes in Financial Condition

Liquidity & Capital Resources

Cash Flow and Working Capital

As of January 31, 2014, we had cash and cash equivalents of approximately $29,447 and a working capital deficit of approximately $3.8 million as compared to cash and cash equivalents of $5 thousand and working capital deficit of $1.8 million as of July 31, 2013. Our working capital deficit as of January 31, 2014 included $2.64 million in derivative liability, $319 thousand in notes payable to related parties, $392 thousand to an external note holder, $414 thousand of convertible notes payable, $55 thousand in accrued interest and $355 thousand in accounts payable, offset by $186 thousand in inventory, $45 thousand in prepaid expense and $106 thousand in unamortized financing fees.

Operating Activities

During the six months ended January 31, 2014, operating activities used $1 million in cash, while for the six months ended January 31, 2013 operating activities used $154 thousand in cash. We incurred additional mining contractor costs fees associated with increased mining activity at Stockpile Reserves, LLC during the three month period as well as increased amortization of financing fees during the quarter.

Investing Activities

During the six months ended January 31, 2014, we used approximately $31.6 thousand in cash in investing activities, principally purchase of additional fixed assets at our subsidiary Stockpile Reserves, LLC and for the purchase of our investment in Covalent.

Financing Activities

During the six months ended January 31, 2014, our financing activities provided $1.1 million compared to $119 thousand for the six months ended January 31, 2013. The cash provided during the 2013-2014 period resulted from proceeds of $1.1 million from the proceeds from borrowing on convertible notes and proceeds from related parties of $6 thousand.

At present, the Company’s cash position is insufficient to meet its obligations through to the end of the fiscal year, as we are not currently generating any revenues, and, over the next 12 months, we will require additional funds to meet our operating obligations and property payment / work program obligations, as well as the repayment of the convertible notes should they not be converted to equity prior to the maturity. At present, we anticipate our funding requirements to be approximately $3.0 million. This estimate is comprised of $1 million for required and additional exploration and maintenance expenditures on our properties, approximately $1.2 million for required development expenditures on our Antimony property, and a further $800 thousand to cover operating, debt and overhead costs. Additional amounts will be required if we identify additional acquisition targets, or determine that additional exploration / development on our properties are required to accelerate their development.

This amount may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. We need to raise additional funds in the near future in order to proceed with our exploration program, as our available cash is insufficient.

The Company intends to pursue all available and reasonable avenues to raise the additional funds required to continue the exploration and development of its properties.

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

Results of Operations

Three Months Ended January 31, 2014 Compared to Three Months Ended January 31, 2013:

Total Revenues

Our revenue since inception (March 28, 2012) has been nil.

Management and Consulting Fees

Our management and consulting fees were approximately $115 thousand for the three months ended January 31, 2014 and $48 thousand for the three months ended January 31, 2013. The increase is due to a management fee accrual for our CEO, CFO and VP of Operations during the three month period ended January 31, 2014 and the new consulting agreement entered with a related party, which the Company incurred $60 thousand during the three month period ended January 31, 2014.

Professional Fee Expense

Our professional fee expense for the three months ended January 31, 2014 was approximately $225 thousand. For the same period in 2013, our professional fee expense was approximately $201 thousand. The increase is primarily due to increased financing fees of $200 thousand associated with new convertible notes entered into during the quarter.

General and Administrative Expense

General and administrative expenses were approximately $194 thousand and $74 thousand during the three months ended January 31, 2014 and 2013, respectively. The increase is due to increased travel expenses by management because of operational activity associated with management travel to and from the Fencemaker site and $50 thousand investor relations expense associated with bringing on new advisors such as Murdoch Capital Partners and Integrative Business Alliance, of $70 thousand.

Operating Loss

Our operating loss was approximately $650 thousand in the 2014 period versus a loss of approximately $325 thousand in the 2013 period. The increase in the operating loss is due primarily to increased financing fees associated with convertible notes as well as the addition of two new advisors, Murdoch Capital Partners and Integrative Business Alliance and increased travel expenses.

Interest Expense

Our interest expense was approximately $565 thousand in the 2014 period versus approximately $33 thousand in the 2013 period. The increase in the interest expense is due primarily to an increase in the number of convertible notes issued during 2014.

Six Months Ended January 31, 2014 Compared to Six Months Ended January 31, 2013:

Total Revenues

Our revenue since inception (March 28, 2012) has been nil.

Management and Consulting Fees

Our management and consulting fees were approximately $160 thousand for the six months ended January 31, 2014 and $145 thousand for the six months ended January 31, 2013. The increase is due primarily to an accrual of $45 thousand associated with consulting fees to our CEO, CFO and VP of Operations and the new consulting agreement entered with a related party, which the Company incurred $60 thousand during the three month period ended January 31, 2014 offset by the completion of the amortization of prepaid consulting fees of $93 thousand associated with our CEO which ended during the previous year.

Professional Fee Expense

Our professional fee expense for the six months ended January 31, 2014 was approximately $456 thousand. For the same period in 2013, our professional fee expense was approximately $377 thousand. The increase is primarily due to an increase in financing fees associated with new convertible notes entered into during the quarter of $386 thousand during the current period ended January 31, 2014.

General and Administrative Expense

General and administrative expenses were approximately $280 thousand and $165 thousand during the six months ended January 31, 2014 and 2013, respectively. The increase in the operating loss is due primarily to increased financing fees associated with convertible notes as well as the addition of two new advisors, Murdoch Capital Partners and Integrative Business Alliance and increased travel expenses.

Operating Loss

Our operating loss was approximately $1 million in the 2014 period versus a loss of approximately $686 thousand in the 2013 period. The increase in the operating loss is due primarily to increased financing fees of $270 thousand, increased investor relations expense associated with adding Murdoch Capital Partners and Integrative Business Alliance of $70 thousand, increased exploration activity of $178 thousand and increased consulting fees associated with increased operational activity Fencemaker of $55 thousand.

Interest Expense

Our interest expense was approximately $940 thousand in the 2014 period versus approximately $62 thousand in the 2013 period. The increase in the interest expense is due primarily to an increase in the number of convertible notes issued during 2014.

Should the Company be successful in raising additional capital and completing its payment obligations, and the Fencemaker mine and related milling operation become operational as planned within the fourth calendar quarter of 2014, the Company would anticipate obtaining its first revenues from operations. The profitability of such operations can’t yet be determined until all cost structures are known, and operations ramp up to full production levels.

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

Going Concern

In their audit report relating to our financial statements for the period ended July 31, 2013; our independent accountants indicated that there are a number of factors that raise substantial doubt about our ability to continue as a going concern. Such factors identified in the report are our lack of revenue resulting in a net loss position and insufficient funds to meet our business objectives. All of these factors continue to exist and raise doubt about our status as a going concern.

We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e). Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of January 31, 2013, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of January 31, 2014. In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of January 31, 2014, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of January 31, 2014:

Lack of an independent audit committee or audit committee financial expert, and no independent directors. We do not have any members of the Board who are independent directors and we do not have an audit committee. These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;

Inadequate staffing and supervision within our bookkeeping operations. We have one consultant involved in bookkeeping functions, who provides two staff members. The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC; On December 1, 2012, the Company entered into a consulting agreement with Mario Beckles for services associated with performing duties of being a chief financial officer of the Company over a one year period. His involvement serves to address our lack of staffing and supervision of our bookkeeping operations and serves to strengthen our internal controls as it relates to segregation of duties.

Outsourcing of our accounting operations. Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm. The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management. This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the independent firm; As mentioned earlier, the addition of our Chief Financial Officer on December 1, 2012 has eliminated our need to outsource accounting operations thus addressing the material weakness associated with outsourcing of our accounting operations.

4)	Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;

5)	Ineffective controls over period end financial disclosure and reporting processes.

Management's Remediation Initiatives

As of January 31, 2014, management assessed the effectiveness of our internal control over financial reporting. Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting. However, management believes these weaknesses did not have an effect on our financial results. During the course of their evaluation, we did not discover any fraud involving management or any other personnel who played a significant role in our disclosure controls and procedures or internal controls over financial reporting.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size. Management also believes that these weaknesses did not have an effect on our financial results.

We are committed to improving our financial organization. As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create written policies and procedures sufficient to address the internal controls over accounting and the financial reporting process. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.

This Quarterly Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

A smaller reporting company is not required to provide the information required by this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company is authorized to issue 540,000,000 shares of $.001 par value common stock. On August 20, 2013, the Company’s authorized common stock increased from 540,000,000 shares of common stock with a par value of $0.001 to 1,080,000,000 shares of common stock with a par value of $0.001. As of October 31, 2013 and July 31, 2013, 531,185,162 and 466,752,425 shares were issued and outstanding, respectively.

On September 16, 2013 the Company issued 7,386,221 shares of restricted common stock associated with the August 31, 2013 Security Purchase Agreement to purchase of the $2,000,000 of the Company’s common stock as a commitment fee. Under the agreement, amongst other terms, the Company is obligated to pay the remaining 50% commitment fee equivalent to $50,000.

On September 20, 2013, the Company issued 750,000 shares of restricted common stock to Carter Terry & Co. as compensation for services.

On October 1, 2013, the Company issued 10,000,000 shares of restricted common stock to Dan Crofoot and Chaowalit Pullapat as compensatory payment in lieu of default of the agreement to purchase Fencemaker Millsite property at the subsidiary level of Central Nevada Processing Co. LLC.

On January 9, 2014, the Company issued 5,430,233 shares of common stock directly under notice of warrant cashless exercise, which were valued at $421,729.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

On August 31, 2012, the Company entered into a Securities Purchase Agreement (“SPA”) with Tangiers Investors, LP (“Tangiers”). Under the agreement, the Company would agree to issue and sell its common stock to Tangiers for an aggregate purchase price of up to $2,000,000 (“Commitment Amount”). The funding obligates Tangiers to buy the Company’s stock in amounts of $5,000 up to $100,000 per draw down, at the Company’s discretion over a period of 24 months after an effective registration statement. The purchase and sale of common stock is predicated upon the Company filing a S1 Registration with the Securities and Exchange Commission, which at January 31, 2013, was not yet completed. As part of the SPA, the Company has an obligation for a Commitment Fee, in that it is required to sell to Tangiers five percent (5%) of the total Commitment Amount worth of restricted Common Stock as a commitment fee. The commitment fee shares shall be issued in tranches in accordance with the following schedule: 50% of the Commitment Fee worth of Common Stock shall be sold upon the execution of the Securities Purchase Agreement (“Tranche #1”). Tranche #1 shall carry a minimum Formula Price of three cents ($.03) per share; b) 25% of the Commitment Fee worth of Common Stock shall be sold to the Investor 90 days following the sale of the Common Stock in Tranche #1 (“Tranche #2”); b) 25% of the Commitment Fee worth of Common Stock shall be sold to the Investor 180 days following the sale of the Common Stock in Tranche #2 (“Tranche #3”); The number of Investor Shares issued to the Investor in each of aforementioned Tranches shall be calculated by dividing the dollar amount of each such Tranche by the Formula Price. The purchase price of each Tranche shall be set at one (1%) percent of the dollar value of each tranche. As of October 31, 2013, the Company paid the Commitment fee by issuing 7,386,221. See note 6 to the notes of the Consolidated Financial Statement.

ITEM 6. EXHIBITS

#	Exhibit	Reference
3.1	Articles of Incorporation.	Incorporated by reference to Registration Statement on Form SB-2 filed with the SEC on Nov 13, 2007
3.2	Bylaws.	Incorporated by reference to Registration Statement on Form SB-2 filed with the SEC on Nov 13, 2007
10.1	Purchase Agreement dated effective December 24, 2009 between GeoXplor Corp. and Quuibus Technology Inc.	Incorporated by reference to Form 8-K filed with the SEC on January 21, 2010.
10.2	Purchase Agreement dated effective December 24, 2009 between GeoXplor Corp. and Quuibus Technology Inc.	Incorporated by reference to Form 8-K filed with the SEC on January 21, 2010.
10.3	Consulting Agreement between First Liberty and John Rud dated March 1, 2010	Incorporated by reference to Form 10-K/A3 filed with the SEC on November 14, 2011
10.4	Unsecured promissory notes in the amount of $200,000 and $50,000 dated December 24, 2009 and March 15, 2010 respectively	Incorporated by reference to Form 10-K/A3 filed with the SEC on November 14, 2011
10.5	Consulting Agreement between First Liberty and John H. Hoak dated May 3, 2010	Incorporated by reference to Form 8-K filed with the SEC on August 4, 2010.
10.6	Property assignment and acquisition agreement between First Liberty, GeoXplor and New America dated February 3, 2011	Incorporated by reference to Form 8-K filed with the SEC on February 7, 2011
10.7	Extension agreement between First Liberty, GeoXplor Corp. And New America Energy Corp. dated effective May 31, 2011	Incorporate by reference to Form 8-K filed with the SEC on August 4, 2011
10.8	Consulting Agreement dated effective November 15, 2010 between LTV International Holdings and First Liberty dated July 2, 2011.	Incorporated by reference to Form 10-K filed with the SEC on November 15, 2011
10.9	Letter of Agreement dated effective December 15, 2011, between GeoXplor and the Company	Incorporated by reference to Form 10-Q filed with the SEC on March 16, 2012.
10.10	Loan Conversion Agreement dated effective December 23, 2011 between the Company and lender	Incorporated by reference to Form 10-Q filed with the SEC on March 16, 2012.
10.11	Note Purchase Agreement dated February 23, 2012 between the Company and lender	Incorporated by reference to Form 10-Q filed with the SEC on March 16, 2012.
10.12	Secured Convertible Promissory Note #1 dated February 23, 2012 between the Company and lender	Incorporated by reference to Form 10-Q filed with the SEC on March 16, 2012.
10.13	Security Agreement for Note #1 dated February 23, 2012 between the Company and lender	Incorporated by reference to Form 10-Q filed with the SEC on March 16, 2012.
10.14	Consulting Agreement dated effective April 1, 2012 between First Liberty and Mr. Robert Reynolds	Incorporated by reference to Form 8-K filed with the SEC on April 17, 2012.
10.15	Purchase Agreement dated May 31, 2012, effective March 15, 2012, between the Company and GeoXplor Corp.	Incorporated by reference to Form 8-K filed with the SEC on June 4, 2012.
10.16	Purchase Agreement dated Aug 19, 2012, between Group8 Mining Innovations, Group8 Minerals, and the Company	Incorporated by reference to Form 8-K filed with the SEC on August 28, 2012.
10.18	Purchase Agreement dated November 6, 2012, between the Company and GeoXplor Corp.	Incorporated by reference to Form 8-K filed with the SEC on November 19, 2012.
31.1	Section 302 Certification - Principal Executive Officer	Filed herewith
31.2	Section 302 Certification - Principal Financial Officer	Filed herewith
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Principal Executive Officer	Filed herewith
32.2	Certification Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Principal Financial Officer	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.INS	XBRL Taxonomy Extension Instance Document	Filed herewith

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.

		FIRST LIBERTY POWER CORP.

Date:	March 24, 2014	By:	/s/ Don Nicholson
		Name:	Don Nicholson
		Title:	President, Director, Principal Executive Officer

Date:	March 24, 2014	By:	/s/ Mario Beckles
		Name:	Mario Beckles
		Title:	Principal Financial and Accounting Officer

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