10-Q 1 g6625.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2012 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission File Number 000-54073 LIBERTY COAL ENERGY CORP. (Exact name of registrant as specified in its charter) Nevada 90-0819102 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 99 - 18th Street, Suite 3000, Denver, Colorado 80202 (Address of principal executive offices) (Zip Code) (888) 399-3989 (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. [X] YES [ ] 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 (ss.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). [X] 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 [X] NO APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 316,287,267 common shares issued and outstanding as of February 11, 2013 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION 3 Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 19 Item 4. Controls and Procedures 19 PART II - OTHER INFORMATION 19 Item 1. Legal Proceedings 19 Item 1A. Risk Factors 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Defaults Upon Senior Securities 20 Item 4. Mine Safety Disclosures 20 Item 5. Other Information 20 Item 6. Exhibits 21 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited interim financial statements for the three month period ended December 31, 2012 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. 3 Liberty Coal Energy Corp. (An Exploration Stage Company) Balance Sheets (Unaudited)

As of As of ~~June~~December 3031, September 30, 2012 ~~2011~~2012 ------------ ------------ ASSETS ASSETS Cash $ 967,~~317~~556 $ ~~341~~11,~~207~~365 Prepaid 1expenses 185,~~570~~630 15490,~~784~~450 ------------ ------------ TOTAL CURRENT ASSETS 97193,~~887~~186 ~~356~~501,~~991~~815 ------------ ------------ Website, net of amortization ~~844~~-- ~~2,111~~422 Mineral properties 80220,000 ~~397~~160,~~985~~000 ------------ ------------ TOTAL OTHER ASSETS 80220,~~844~~000 ~~400~~160,~~096~~422 ------------ ------------ TOTAL ASSETS $ ~~178~~413,~~731~~186 $ ~~757~~662,~~087~~237 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 10145,~~055~~180 $ 1182,~~032~~028 Accounts payable - related ~~party~~parties 1025,504 7,504 ~~Loans~~Convertible note payable 70,000 37,500 ------------ ------------ TOTAL CURRENT LIAILITIES 240,684 127,032 ------------ ------------ TOTAL LIABILITIES 20240,~~559~~684 18127,~~536~~032 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, $0.001 par value, (1,500,000,000) shares authorized; 60316,~~566~~287,~~667~~267 and 58316,~~566~~287,~~667~~267 shares issued and outstanding as of ~~June~~December 3031, 2012 and September 30, ~~2011~~2012, respectively) 60316,~~567~~288 58316,~~567~~288 Additional paid-in capital ~~890~~6,~~760~~317,650 ~~692~~6,~~760~~317,650 Additional paid-in capital - warrants ~~336~~4,~~673~~390,203 ~~336~~4,~~673~~390,203 ~~Accumulated~~Stock ~~deficit~~subscription receivable (9,196,500) (9,196,500) Deficit accumulated during the exploration sage (1,~~129~~655,~~828~~139) (~~349~~1,~~450~~292,436) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY ~~158,~~172,502 ~~738~~535,~~550~~205 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ ~~178~~413,~~731~~186 $ ~~757~~662,~~086~~237 ============ ============

See Notes to Consolidated Financial Statements 4 Liberty Coal Energy Corp. (An Exploration Stage Company) Statements of Operations (Unaudited)

Cumulative Amounts From Date of Incorporation on For the Three ~~Months~~Month ~~Ending~~Period ~~For Nine Months~~ Ending August 31, 2007 - ~~June~~December 3031, ~~June~~December 3031, ~~June~~December 3031, ~~June 30, June 30,~~ 2012 2011 2012 ~~2011 2012~~ ------------ ------------ ------------ ~~------------ ------------~~ REVENUES ~~Revenues~~ $ -- $ -- $ -- $ -- $ -- --------~~----~~ ------------ ------------ ~~------------ ------------ NET SALES -- -- -- -- --~~ COSTS AND EXPENSES ~~Royalty Payments 20,000 -- 20,000 -- 20,000~~ Development ~~Costs~~costs ~~10,000~~ -- ~~10,000~~ -- 10,000 General & administrative 21,~~255~~244 610,~~157~~939 2475,~~578~~889 ~~19,138 71,873~~ Consulting services 38304,~~500~~320 22,500 87651,~~500~~259 ~~52,500 222,500~~ Stock-based compensation -- -- 200,000 Impairment -- ~~200~~-- 400,~~000~~570 Amortization 422 422 13,~~266~~800 ~~1,267 2,955~~ Investor relations 539,~~600~~200 84,~~185~~200 14104,~~515~~727 ~~21,381 62,212~~ Transfer agent ~~507~~325 --100 ~~910 382 16~~22,~~201~~684 Legal & accounting 1015,~~511~~433 711,~~690~~433 23180,~~624~~810 ~~13,706 122,602~~ ------------ ------------ ------------ ~~------------~~TOTAL ~~------------~~COSTS ~~Loss~~AND ~~before~~EXPENSES ~~income taxes 87~~360,~~795~~944 4449,~~954~~594 ~~382~~1,~~393 108~~649,~~374~~739 ~~728,343 Provision for income taxes~~ -- -- -- -- ---- ------------ ------------ LOSS FROM OPERATIONS (360,944) (49,594) (1,649,739) ------------ ------------ ------------ ~~LOSS FROM OPERATIONS (87,795) (44,954) (382,393) (108,374) (728,343)~~ OTHER INCOME & (EXPENSES) ~~Other~~Interest expense (~~315~~1,~~400~~759) -- (~~397~~5,~~985~~400) -- ~~(397,985) Interest expense~~ -- ~~(2,111)~~ -------- ~~(3,500) (3,500)~~ ------------ ------------ TOTAL OTHER INCOME & (EXPENSES) (1,759) -- (5,400) ------------ ------------ ------------ ~~TOTAL~~LOSS ~~OTHER~~BEFORE ~~INCOME~~PROVISION &FOR ~~(EXPENSES)~~INCOME --TAXES -- (~~397~~362,~~985~~703) (349,~~500~~594) (~~401~~1,~~485~~655,139) PROVISION FOR INCOME TAXES -- --~~--------~~ --~~----------~~ ------------ ------------ ------------ NET LOSS $ (~~403~~362,~~195~~703) $ (4749,~~065~~594) $ (~~780,378) $ (111,874) (~~1,~~129~~655,~~828~~139) ============ ============ ============ ~~============ ============~~ BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.0100) $ ~~-- $~~ (0.0100) ~~$ -- ------------ ------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 58,566,667 57,900,000 57,900,000 74,420,330~~ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 316,287,267 58,566,667 ============ ============

See Notes to Consolidated Financial Statements 5 Liberty Coal Energy Corp. (An Exploration Stage Company) Statements of Cash Flows (Unaudited)

Cumulative Amounts From Date of ~~For~~Three ~~the~~months ~~For~~Three ~~the~~months Incorporation on ~~Period~~ended ~~Ended~~ended ~~Period Ended~~ August 31, 2007 - ~~June~~December 3031, ~~June~~December 3031, ~~June~~December 3031, 2012 2011 2012 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net ~~income (~~loss) for the period $ (~~780~~362,~~378~~703) $ (~~105~~49,~~933~~594) $ (1,~~129~~655,~~827~~139) ~~Amortization~~Adjustments ~~1,266~~to ~~844~~reconcile ~~2,955~~net ~~Accrued~~loss ~~interest~~to ~~expense~~net --cash ~~1,389~~provided --by ~~Other~~(used ~~Expense~~in) ~~397,985~~operating --activities: ~~397,985~~Amortization ~~Shares~~422 ~~issuance~~422 ~~for~~3,800 Stock Compensation ~~200~~-- -- 289,~~000~~940 Impairment -- ~~200~~-- 400,~~000~~570 ~~(Increase)~~Changes ~~decrease~~in assets and liabilities: Decrease in prepaid expenses 14304,~~214~~820 ~~(12~~8,~~179)~~371 (1264,~~570)~~070 Increase ~~(decrease)~~ in accounts payable and accrued liabilities ~~(977)~~63,152 (71,~~107)~~801 10145,~~055~~181 Increase ~~(decrease)~~ in related party payables 318,000 ~~(904)~~3,078 1025,504 ~~Increase (decrease) in due to stockholder~~ -- -- -- ------~~------~~ ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES ~~(164~~23,~~890)~~691 (~~123~~35,~~890~~922) (~~509~~526,~~898~~074) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Investment in website -- -- (3,800) Acquisition of mineral properties (8060,000) ~~(27,585)~~-- (~~452~~595,~~985~~570) ------------ ------------ ------------ NET CASH ~~PROVIDED BY~~ (USED IN) INVESTING ACTIVITIES (8060,000) ~~(27,585)~~-- (~~456~~599,~~785~~370) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Stock issued for cash -- -- 1,063,000 Payments made on loans payable -- -- --(100,000) Proceeds from loans payable 32,500 -- ~~100~~170,000 -- ------------ ------------ ------------ NET CASH PROVIDED BY ~~(USED IN)~~ FINANCING ACTIVITIES 32,500 -- ~~100,000~~ 1,~~063~~133,000 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH (~~244~~3,~~890~~809) (5135,~~475~~922) 967,~~317~~556 CASH AT BEGINNING OF PERIOD 11,365 341,207 ~~59,190~~ -- ------------ ------------ ------------ CASH AT END OF PERIOD $ 967,~~317~~556 $ 7305,~~715~~285 $ 967,~~317~~556 ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Income taxes paid $ -- $ -- $ -- =-=========== ~~------------~~============ =-=========== Interest paid $ -- $ -- $ -- ============ ============ ============ SUPPLEMENTAL NON-CASH ~~ACTIVITIES~~INVESTING AND FINANCING INFORMATION: Reclassified long-term loan to short-term loan $ -- $ -- $ 219,754 ============ ============ ============ Notes payable for settlement of notes $ -- $ -- $ 2,183,000 ~~Stock~~============ ~~issued~~============ ~~for~~============ ~~services 200,000 -- 200,000~~ Preferred stock issuance for settlement of notes payable $ -- $ -- $ 3,104,139 ~~------------~~============ ============ ============ Common stock issued for services and prepaid expenses $ --~~----------~~ $ --~~----------~~ ~~Total~~$ ~~non-cash~~539,640 ~~activities~~============ ============ ============ Stock issued for subscription receivable $ ~~200,000~~-- $ ~~5,506,893~~-- $ 59,~~506~~196,~~893~~500 ============ ============ ============

See Notes to Consolidated Financial Statements 6 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 1 - NATURE OF OPERATIONS Liberty Coal Energy Corp. (the "Company"), incorporated in the state of Nevada on August 31, 2007, and was developing business activities in teacher recruiting. The Company changed its business focus in March, 2010 and now intends to enter the business of precious mineral exploration, development, and production. The Company has not yet commenced significant business operations and is considered to be in the exploration stage (formerly in the development stage). NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES MANAGEMENT CERTIFICATION The financial statements herein are certified by the officers of the Company to present fairly, in all material respects, the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America, consistently applied. BASIS OF PRESENTATION Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. We believe that the disclosures are adequate to make the financial information presented not misleading. These condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended September 30, 2012. All adjustments were of a normal recurring nature unless otherwise disclosed. In the opinion of management, all adjustments necessary for a fair statement of the financial position results of operations for the interim period have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash, prepaid expenses, accounts payable and accrued liabilities, amounts due to officers and convertible notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. 7 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS MINERAL PROPERTIES Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. LOSS PER SHARE Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. INCOME TAXES The Company provides for income taxes using an asset and liability approach. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. See Note 5. NET LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. RECENTLY ADOPTED PRONOUNCEMENTS The Company does not expect the adoption of other recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow. RECLASSIFICATIONS Certain balances in the prior years have been reclassified to conform to the current year presentation. 8 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 3 - MINERAL PROPERTIES OWSLEY COUNTY KENTUCKY PROPERTY On February 1, 2012, the Company entered into a letter of intent for the acquisition of private mineral leasehold rights to certain coal mining property in Owsley County, Kentucky with AMS Development LLC. and Colt Resources, Inc. (the "Owsley Agreement"). The Owsley property covers approximately 1,000 acres and has 3,600,000 tons of coal recoverable by surface and high wall (auger) methods. There are underground reserves in place which are not being considered for production at this time. The Owsley project has a permit completed and technically approved by the Kentucky Department of Natural Resources for the first 80 acre phase. The permit can be placed on active status and mining initiated by posting a $175,000 reclamation bond. The Company believes mining can be commenced within 90 days of breaking ground. In consideration for the mineral property leasehold, the Company paid $80,000 to purchase the rights to the mining permits and operate under leasehold. It has also paid an additional $50,000 to minimal lease payments and accrued another $90,000 which is currently behind. These payments have been capitalized as part of the purchase price of the property. As part of the Owsley Agreement, the Company has agreed to enter into a purchase agreement with AMS Development LLC & Colt Resources, Inc., pursuant to which AMS & Colt would receive The agreement provides for the purchase of the 1,000 acres of surface property at $600,000, as well as surface mineable coal, (3.6 million tons at $.75/ton), underground coal rights (2.2 million tons at $.20/ton) and the discharge of a first mortgage due to a former owner of $150,000 for a total purchase price of $3,890,000. The total purchase price is payable through a combination of cash, a promissory note and Liberty Coal common shares. To this date the Company has not been able to close on this agreement. NOTE 4 - CAPITAL STOCK The Company has 1,500,000,000 common shares authorized at a par value of $0.001 per share. On August 31, 2007, the Company issued 1,500,000 common shares to founders for total proceeds of $15,000. On May 31, 2008, the Company completed a private placement whereby it issued 960,000 common shares at $0.05 per share for total proceeds of $48,000. On February 1, 2010, the Company completed a private placement whereby it issued 1,000,000 units for $0.25 per unit. Each unit consists of one common share and common share purchase warrant allowing the holder to purchase a common share at $0.25 per share expiring February 1, 2012. On February 1, 2010, the Company issued 100,000 common shares as partial consideration to acquire the Campbell Property. On February 11, 2010, the Company completed a private placement whereby it issued 1,000,000 units for $0.25 per unit. Each unit consists of one common share and common share purchase warrant allowing the holder to purchase a common share at $0.25 per share expiring February 1, 2012. 9 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 4 - CAPITAL STOCK (CONTINUED) On March 15, 2010, the Company increased its authorized common shares from 50,000,000 shares to 1,500,000,000 shares and effected a 30 for 1 forward stock split. All share amounts reflected in the financial statements have been adjusted to reflect the results of the stock split. On March 20, 2010, the Company cancelled 18,000,000 of its common stock outstanding. On May 11, 2011, the Company completed a private placement whereby it issued 666,667 units for $0.75 per unit. Each unit consists of one common share and common share purchase warrant allowing the holder to purchase a common share at $0.82 per share expiring April 30, 2013. On January 18, 2012, the Company issued 2,000,000 shares @ $0.10 to its CFO and Director as part of his compensation. On August 17, 2012, the Company completed a financing whereby it issued 237,732,600 units for a escrowed equity line in the amount of $9,196,500. In conjunction with this transaction the company also issued common share purchase warrant to purchase 250,095,420 common shares at an exercise price of $0.07 expiring on August 16, 2018. On September 10, 2012, the Company issued 17,988,000 shares of common stock to three non-employee consultants pursuant to the Plan valued at $539,640. The stock was issued for services to be rendered from September 1, 2012 through February 28, 2013. As of September 30, 2012, $449,700 had been recorded as prepaid expenses related to this stock issuance. The balance of the prepaid consulting was $179,880 as of December 31, 2012. On September 13, 2012, Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a September 4, 2012 resolution of Company's Board of Directors. The parties agreed that Asher would acquire from the Company five promissory notes totaling $37,500, due and payable on June 19, 2013 with interest payable at 8%. The Notes are convertible into Common Shares of the Company, for which the Company has reserved 10,500,000 shares. On October 24, 2012, Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to an October 24, 2012 resolution of Company's Board of Directors. The parties agreed that Asher would acquire from the Company five promissory notes totaling $32,500, due and payable on September 26, 2013 with interest payable at 8%. The Notes are convertible into Common Shares of the Company, for which the Company has reserved 14,300,000 shares. 10 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 4 - CAPITAL STOCK (CONTINUED) As of December 31, 2012, the Company had warrants issued as follows: Warrants Outstanding at December 31, Issue Date Number Price Expiry Date 2012 ---------- ------ ----- ----'------- ---- May 11, 2011 666,667 $0.82 May 11, 2013 666,667 August 17, 2012 17,025,000 $0.03 August 17, 2017 17,025,000 August 17, 2012 15,985,920 $0.032 August 17, 2017 15,985,920 August 17, 2012 15,010,250 $0.034 August 17, 2017 15,010,250 August 17, 2012 14,094,130 $0.036 August 17, 2017 14,094,130 August 17, 2012 13,233,930 $0.039 August 17, 2017 13,233,930 August 17, 2012 12,426,220 $0.041 August 17, 2017 12,426,220 August 17, 2012 11,667,810 $0.044 August 17, 2017 11,667,810 August 17, 2012 10,955,690 $0.047 August 17, 2017 10,955,690 August 17, 2012 10,287,040 $0.050 August 17, 2017 10,287,040 August 17, 2012 9,659,190 $0.053 August 17, 2017 9,659,190 August 17, 2012 9,069,660 $0.056 August 17, 2017 9,069,660 August 17, 2012 8,516,110 $0.060 August 17, 2017 8,516,110 August 17, 2012 8,000,260 $0.064 August 17, 2017 8,000,260 August 17, 2012 7,511,990 $0.068 August 17, 2017 7,511,990 August 17, 2012 7,053,510 $0.072 August 17, 2017 7,053,510 August 17, 2012 6,623,010 $0.077 August 17, 2017 6,623,010 August 17, 2012 6,218,790 $0.082 August 17, 2017 6,218,790 August 17, 2012 5,839,240 $0.087 August 17, 2017 5,839,240 August 17, 2012 5,482,850 $0.093 August 17, 2017 5,482,850 August 17, 2012 5,148,220 $0.099 August 17, 2017 5,148,220 August 17, 2012 4,834,010 $0.106 August 17, 2017 4,834,010 August 17, 2012 4,538,980 $0.112 August 17, 2017 4,538,980 August 17, 2012 4,261,950 $0.120 August 17, 2017 4,261,950 August 17, 2012 4,001,830 $0.127 August 17, 2017 4,001,830 August 17, 2012 3,757,590 $0.136 August 17, 2017 3,757,590 August 17, 2012 3,528,250 $0.145 August 17, 2017 3,528,250 August 17, 2012 3,312,910 $0.154 August 17, 2017 3,312,910 August 17, 2012 3,110,720 $0.164 August 17, 2017 3,110,720 August 17, 2012 2,920,860 $0.175 August 17, 2017 2,920,860 August 17, 2012 2,742,590 $0.186 August 17, 2017 2,742,590 August 17, 2012 2,575,200 $0.198 August 17, 2017 2,575,200 August 17, 2012 2,418,030 $0.211 August 17, 2017 2,418,030 August 17, 2012 2,270,450 $0.225 August 17, 2017 2,270,450 August 17, 2012 2,131,880 $0.239 August 17, 2017 2,131,880 August 17, 2012 2,001,760 $0.255 August 17, 2017 2,001,760 August 17, 2012 1,879,590 $0.271 August 17, 2017 1,879,590 ----------- ----------- TOTAL 250,762,087 250,762,087 =========== =========== 11 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 5 - INCOME TAXES The Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The cumulative net operating loss carry-forward is approximately $ 1,655,139 at December 31, 2012, and will expire beginning in the year 2029. The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows: December 31, September 30, 2012 2012 ---------- ---------- Deferred tax asset attributable to: Net operating loss carryover $ 562,747 $ 439,428 Valuation allowance (562,747) (439,428) ---------- ---------- Net deferred tax asset $ -- $ -- ========== ========== NOTE 6 - RELATED PARTY TRANSACTION As of December 31, 2012, there is a balance owing to two officers of the Company in the amount of $25,504 (September 30, 2012 - $7,504). This amount is included in accounts payable-related party. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 7 - GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the financial statements, the Company has no established source of revenue. This raises substantial doubt about the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company's activities to date have been supported by equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $1,655,139 as of December 31, 2012. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. 12 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 8 - COMMITMENTS The Company has agreed to purchase 1,000 acres of surface property at $600,000 surface mineable coal, (3.6 million tons at $.75/ton), underground coal rights (2.2 million tons at $.20/ton) and the discharge of a first mortgage due a former owner of $150,000 for a total purchase price of $3,890,000. The total is payable through a combination of cash, a promissory note and Liberty Coal common shares. The company needs to continue to make it minimum lease payments until such time it can pay an initial $500,000. The minimum payments of $20,000 per month are applied to the initial payment. NOTE 9 - SUBSEQUENT EVENTS On January 14, 2013 Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a January 14, 2013 resolution of Company's Board of Directors. Asher agreed to purchase a Convertible Note in the amount of $10,600, due and payable on September 26, 2013 with interest payable at 8%. The Note will be funded on January 16, 2013. The Note is convertible into Common Shares of the Company, for which the Company has reserved 40,000,000 shares. On January 24, 2013 Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a January 24, 2013 resolution of Company's Board of Directors. Asher agreed to purchase a Convertible Note in the amount of $32,500, due and payable on October 28, 2013 with interest payable at 8%. The Note was funded on January 30, 2013. The Note is convertible into Common Shares of the Company, for which the Company has reserved 64,800,000 shares. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks noted herein in the section entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States Dollars (US$), unless otherwise specified, and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we," "us," "our Company," and the "Company" mean Liberty Coal Energy Corp., a Nevada corporation, unless otherwise indicated. CORPORATE HISTORY The address of our principal executive office is 99 18th Street, Suite 3000, Denver, Colorado 80202. Our telephone number is 888.399.3989. Our common stock is quoted on the OTC Bulletin Board under the symbol "LBTG." We were incorporated on August 31, 2007 as "ESL Teachers Inc." under the laws of the State of Nevada. Our original business plan was to develop and sell online employment services specifically for both ESL Teachers and ESL operations seeking to hire teachers worldwide. On March 15, 2010, we changed our name to Liberty Coal Energy Corp. by way of a merger with our wholly owned subsidiary "Liberty Coal Energy Corp." which was formed solely for the purpose of the change of name. The change of name was to better represent the new business direction of our Company to that of a coal exploration, development, and production company. In addition, on March 15, 2010, we effected a 30 for 1 forward stock split of our authorized and issued and outstanding shares of common stock such that our authorized capital increased from 50,000,000 shares of common stock, $0.001 par value per share to 1,500,000,000 shares of common stock, par value $0.001 per share. OUR CURRENT BUSINESS Our primary business focus is to acquire and develop advanced coal properties in North America. We are currently holding one property- The Owsley Project in Owsley county, Eastern Kentucky. OWSLEY COAL PROJECT On February 1, 2012, the Company entered into a letter of intent for the acquisition of private mineral leasehold rights to certain coal mining property in Owsley County, Kentucky with AMS Development LLC. and Colt Resources, Inc. (the "Owsley Agreement"). The Owsley property covers approximately 1,000 acres and has 3,600,000 tons of coal recoverable by surface and high wall (auger) methods. There are underground reserves in place which are not being considered for production at this time. 14 The Owsley project has a permit completed and technically approved by the Kentucky Department of Natural Resources for the first 80 acre phase. The permit can be placed on active status and mining initiated by posting a $175,000 reclamation bond. The Company believes mining can be commenced within 90 days of breaking ground. In consideration for the mineral property leasehold, the Company paid $80,000 to purchase the rights to the mining permits and operate under a leasehold. It has also paid an additional $50,000 to minimal lease payments and accrued another 90,000 which are currently behind. These payments have been capitalized as part of the purchase price of the property. As part of the Owsley Agreement, the Company has agreed to enter into a purchase agreement with AMS Development LLC & Colt Resources, Inc., pursuant to which AMS & Colt would receive The agreement provides for the purchase of the 1,000 acres of surface property at $600,000, as well as surface mineable coal, (3.6 million tons at $.75/ton), underground coal rights (2.2 million tons at $.20/ton) and the discharge of a first mortgage due to a former owner of $150,000 for a total purchase price of $3,890,000. The total purchase price is payable through a combination of cash, a promissory note and Liberty Coal common shares. To this date the Company has not been able to close on this agreement. We are an exploration stage company with limited operations and no revenues from our business activities. The following is a discussion and analysis of our results of operations for the quarter ended December 31, 2012, and the factors that could affect our future financial condition and results of operations. GOING CONCERN CONSIDERATION Our registered independent auditors included an explanatory paragraph in their report on our financial statements as of and for the years ended September 30, 2012 and 2011, regarding concerns about our ability to continue as a going concern. RESULTS OF OPERATIONS The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended December 31, 2012 which are included herein. THREE MONTHS ENDED DECEMBER 31, 2012 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 2011 The following table summarizes key items of comparison for the three months ended December 31, 2012, and 2011: Three Months Ended December 31, 2012 2011 -------- -------- Amortization $ 422 $ 422 General and administrative 1,244 10,939 Legal and accounting 15,433 11,433 Investor relations 39,200 4,200 Consulting 304,320 22,500 Transfer agent 325 100 Interest Expense 1,759 -- -------- -------- NET LOSS $362,703 $ 49,594 ======== ======== We had a net loss of $362,703 for the quarter ended December 31, 2012, which was an increase of $313,109 compared to the net loss of $49,594, for the quarter ended December 31, 2011. The significant change in our results over the two periods is primarily the result of management's activities around the Company's projects and a 3rd party consulting expense as the Company expensed $269,820 of these contracts from prepaid expenses during the three months ended December 31, 2012. 15 PERIOD FROM INCEPTION, AUGUST 31, 2007 TO DECEMBER 31, 2012 Since inception, we have an accumulated deficit of $1,655,139. We expect to continue to incur losses as a result of continued exploration and development of our coal mining interests. LIQUIDITY AND CAPITAL RESOURCES Our balance sheet as of December 31, 2012, reflects assets of $413,186. We had cash in the amount of $7,556 and working capital in the amount of $(47,498) as of December 31, 2012. Three Months Three Months Ended Ended December 31, December 31, 2012 2011 -------- -------- Net Cash Provided by (Used in) Operating Activities $ 23,691 $(35,922) Net Cash (Used in) Investing Activities (60,000) -- Net Cash Provided by Financing Activities 32,500 -- -------- -------- Increase (Decrease) in Cash $ (3,809) $(35,922) ======== ======== Our current cash requirements are significant due to planned exploration and development of our current coal mining property interests, and we anticipate generating losses. In order to execute on our business strategy, including the exploration and development of our current coal interest, we will require additional working capital, commensurate with the operational needs of our planned projects and obligations. Our management believes that we should be able to raise sufficient amounts of working capital through debt or equity offerings, as may be required to meet our short-term obligations. However, changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future. We anticipate continued and additional operations on our properties. Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months, as we look to expand our asset base and fund exploration and development of our properties. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability or continued operations in the future. OPERATING ACTIVITIES Net cash flow provided by operating activities during the three months ended December 31, 2012 was $23,691, a change of $59,613 from the $(35,922) net cash used in operating activities during the three months ended December 31, 2011. INVESTING ACTIVITIES Net Investing activities during the three months ended December 31, 2012 used $(60,000) of cash, an increase of $60,000 from the nil cash used in Investing Activities during the three months ended December 31, 2011. FINANCING ACTIVITIES Net Financing activities during the three months ended December 31, 2012 brought in 32,500, an increase of $32,500 from the nil cash brought in by Financing Activities during the three months ended December 31, 2011. 16 APPLICATION OF CRITICAL ACCOUNTING POLICIES MANAGEMENT CERTIFICATION The financial statements herein are certified by the officers of the Company to present fairly, in all material respects, the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America, consistently applied. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash, prepaid expenses, accounts payable and accrued liabilities, amounts due to officers and convertible notes payable. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. MINERAL PROPERTIES Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. LOSS PER SHARE Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. 17 INCOME TAXES The Company provides for income taxes using an asset and liability approach. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. NET LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. RECENT ACCOUNTING PRONOUNCEMENTS VARIABLE INTEREST ENTITIES In June 2009, the FASB issued changes to require an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests give it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity; to add an additional reconsideration event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity's economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise's involvement in a variable interest entity. The guidance became effective for the Company on February 1, 2010. The adoption of the guidance did not have an impact on the Company's financial statements. CODIFICATION OF GAAP In June 2009, the FASB issued guidance to establish the Accounting Standards Codification TM ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, the FASB will issue Accounting Standards Updates ("ASU"). ASUs will not be authoritative in their own right as they will only serve to update the Codification. The issuance of SFAS 168 and the Codification does not change GAAP. The guidance became effective for the Company for the period ending October 31, 2009. The adoption of the guidance did not have an impact on the Company's financial statements. BUSINESS COMBINATIONS The Company adopted the changes issued by the FASB that requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. The Company also adopted the changes issued by the FASB which requires assets and liabilities assumed in a business combination that arise from contingencies be recognized on the acquisition date at fair value if it is more likely than not that they meet the definition of an asset or liability; and requires that contingent consideration arrangements of the target assumed by the acquirer be initially measured at fair value. 18 RECLASSIFICATIONS Certain balances in the prior years have been reclassified to conform to the current year presentation. REVENUES We have not generated revenues since inception. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a "smaller reporting issuer," we are not required to provide the information required by this Item. ITEM 4. CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES Our management evaluated, with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on this evaluation, our chief executive officer and our chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures are effective as of December 31, 2012 to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and our chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There have been no changes in our internal controls over financial reporting that occurred during the period covered by this quarterly report, 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 We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has any material interest adverse to our interest. 19 ITEM 1A. RISK FACTORS Not applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS On October 24, 2012, Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a October 24, 2012 resolution of Company's Board of Directors. The parties agreed that Asher would acquire from Company five promissory notes totaling $32,500, due and payable on September 26, 2013 with interest payable at 8%. The Notes are convertible into Common Shares of the Company, for which the Company has reserved 14,300,000 shares On January 14, 2013 Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a January 14, 2013 resolution of Company's Board of Directors. Asher agreed to purchase a Convertible Note in the amount of $10,600, due and payable on September 26, 2013 with interest payable at 8%. The Note will be funded on January 16, 2013. The Note is convertible into Common Shares of the Company, for which the Company has reserved 40,000,000 shares. On January 24, 2013 Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a January 24, 2013 resolution of Company's Board of Directors. Asher agreed to purchase a Convertible Note in the amount of $32,500, due and payable on October 28, 2013 with interest payable at 8%. The Note was funded on January 30, 2012. The Note is convertible into Common Shares of the Company, for which the Company has reserved 64,800,000 shares. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES None ITEM 5. OTHER INFORMATION None. 20 ITEM 6. EXHIBITS Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation (Incorporated by reference to our Registration Statement on Form SB-2 originally filed on January 23, 2008). 3.2 By-laws (Incorporated by reference to our Registration Statement on Form S1/A filed on February 27, 2008). 3.3 Articles of Merger (Incorporated by reference to our Current Report on Form 8-K filed on March 29, 2010). 3.4 Certificate of Change (Incorporated by reference to our Current Report on Form 8-K filed on March 29, 2010). 10.1 Form of Subscription Agreement (Incorporated by reference to our Quarterly Report on Form 10-Q filed on May 16, 2011) 10.2 Second Amended Agreement by and between Liberty Coal Energy Corp. and Rocking Hard Investments, LLC, dated May 2, 2010 (Incorporated by reference to our Quarterly Report on Form 10-Q filed on May 16, 2011) 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101* Interactive data files pursuant to Rule 405 of Regulation S-T. ---------- * Filed herewith 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LIBERTY COAL ENERGY CORP. Date: February 14, 2013 /s/ Robert T. Malasek -------------------------------------- ROBERT T. MALASEK Chief Financial Officer, Secretary and Director (Principal Financial Officer & Principal Accounting Officer) 22

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