10-Q 1 g6829.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 March 31, 2013 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. 81,068,086 common shares issued and outstanding as of April 16, 2013 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 Item 4. Controls and Procedures 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings 19 Item 1A. Risk Factors 19 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19 Item 3. Defaults Upon Senior Securities 19 Item 4. Mine Safety Disclosures 19 Item 5. Other Information 20 Item 6. Exhibits 20 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Our unaudited interim financial statements for the three and six month period ended March 31,2013 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 ~~December~~March 31, September 30, 2012 2012 ------------ ------------ ASSETS ASSETS Cash $ 76,~~556~~200 $ 11,365 Prepaid expenses ~~185~~2,~~630~~875 490,450 ------------ ------------ TOTAL CURRENT ASSETS ~~193~~9,~~186~~075 501,815 ------------ ------------ Website, net of amortization -- 422 Mineral properties ~~220~~280,000 160,000 ------------ ------------ TOTAL OTHER ASSETS ~~220~~280,000 160,422 ------------ ------------ TOTAL ASSETS $ ~~413~~289,~~186~~075 $ 662,237 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable and accrued liabilities $ ~~145~~183,~~180~~589 $ 82,028 Accounts payable related parties 2549,504 7,504 Convertible note payable net of debt discount of $30,303 and $0 respectivley 70,~~000~~797 37,500 Derivative Liability 13,845 -- ------------ ------------ TOTAL CURRENT LIAILITIES ~~240~~317,~~684~~735 127,032 ------------ ------------ TOTAL LIABILITIES ~~240~~317,~~684~~735 127,032 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock, $0.001 par value, 1,500,000,000 shares authorized; ~~316~~80,~~287~~866,~~267~~788 and 316,287,267 shares issued and outstanding as of ~~December~~March 31, ~~2012~~2013 and September 30, 2012, respectively ~~316~~80,~~288~~867 316,288 Series C Preffered $0.001 par vlaue, 100,000 shares authorized; 100,000 and 0 shares issued and outstanding as of March 31, 2013 and September 30, 2012 100 -- Additional paid-in capital 61,~~317~~544,~~650~~000 6,317,650 Additional paid-in capital - warrants 4336,~~390,203~~673 4,390,203 Stock subscription receivable ~~(9,196,500)~~-- (9,196,500) Deficit accumulated during the exploration sage (1,~~655~~990,~~139~~300) (1,292,436) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY ~~172~~(DEFICIT) (28,~~502~~660) 535,205 ------------ ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ ~~413~~289,~~186~~075 $ 662,237 ============ ============

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 ~~Month~~Months ~~Period~~Ending For Six Months Ending August 31, 2007 - ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, March 31, March 31, 2013 2012 ~~2011~~2013 2012 2013 ------------ ------------ ------------ ------------ ------------ REVENUES Revenues $ -- $ -- $ -- $ -- $ -- ------------ ------------ ------------ ~~COSTS~~------------ ~~AND~~------------ NET SALES -- -- -- -- -- OPERATING EXPENSES Development ~~costs~~Cost -- -- -- -- 10,000 General & administrative 15,~~244~~712 1011,~~939~~383 756,~~889~~957 22,323 81,601 Consulting services ~~304~~214,~~320~~380 22109,~~500~~085 ~~651~~518,~~259~~700 131,585 865,639 Stock~~-based~~ compensation --122,000 --200,000 122,000 200,000 322,000 Impairment -- -- -- -- 400,570 Amortization -- 422 422 844 3,800 Investor relations 394,~~200~~460 4,~~200~~715 ~~104~~43,~~727~~660 8,915 109,187 Transfer agent ~~325~~723 ~~100~~303 221,~~684~~048 403 23,407 Legal & accounting 152,~~433~~275 111,~~433~~680 ~~180~~17,~~810~~708 13,113 183,085 Amortization of debt discount 7,197 -- 7,197 -- 7,197 Derivative expense 20,473 -- 20,473 --~~----~~ 20,473 ------------ ------------ ~~TOTAL COSTS AND EXPENSES 360,944 49,594 1,649,739~~ ------------ ------------ ------------ ~~LOSS~~Loss ~~FROM~~before ~~OPERATIONS~~income ~~(360~~taxes 377,~~944)~~220 ~~(49~~327,~~594)~~588 (1738,~~649~~165 377,~~739)~~183 2,026,959 Provision for income taxes -- -- -- -- ---- ------------ ------------ ~~OTHER INCOME & (EXPENSES) Interest expense (1,759)~~ -- ~~(5,400)~~ ------------ ------------ ------------ ~~TOTAL~~LOSS FROM OPERATIONS (377,220) (327,588) (738,165) (377,183) (2,026,959) OTHER INCOME & (EXPENSES) Gain/loss on change of derivative 44,128 -- 44,128 44,128.00 Interest expense (12,~~759~~068) -- (53,~~400~~827) -- (7,468) ------------ ------------ ------------ ~~LOSS~~------------ ~~BEFORE~~------------ ~~PROVISION~~TOTAL ~~FOR~~OTHER INCOME ~~TAXES~~& (~~362,703~~EXPENSES) ~~(49~~42,~~594)~~060 (1-- 40,~~655,139)~~301 ~~PROVISION~~-- ~~FOR~~36,660 ~~INCOME TAXES~~ -- ---------- ------------ ------------ ------------ ------------ NET LOSS $ (~~362~~335,~~703~~160) $ (49327,~~594~~588) $ (697,864) $ (377,183) $ (1,~~655~~990,~~139~~300) ============ ============ ============ ============ ============ BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.0001) $ -- $ (0.0001) $ -- ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ~~316~~78,~~287~~641,~~267~~022 5857,~~566~~900,~~667~~000 78,728,327 57,900,000 ============ ============ ============ ============

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 ~~Three~~Six months ~~Three~~Six months Incorporation on ended ended August 31, 2007 - ~~December~~March 31, ~~December~~March 31, ~~December~~March 31, ~~2012~~2013 ~~2011~~ 2012 2013 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ (~~362~~697,~~703~~864) $ (49377,~~594~~183) $ (1,~~655~~990,~~139~~300) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Amortization 422 422 3,800 ~~Stock~~Debt ~~Compensation~~discouint amortization 7,197 -- 7,197 Derivative expense 20,473 -- ~~289~~20,~~940~~473 ~~Impairment~~Gain / loss on change of derivative (44,128) -- (44,128) Stock Compensation 122,000 200,000 411,940 Impairment -- 83,006 400,570 Changes in assets and liabilities: Decrease in prepaid expenses ~~304~~487,~~820~~574 814,~~371~~214 ~~264~~446,~~070~~824 Increase in accounts payable and accrued liabilities 63101,~~152~~561 1(5,~~801~~825) ~~145~~183,~~181~~590 Increase in related party payables 1842,000 ~~3,078~~-- 2549,504 ------------ ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2339,~~691~~235 (3585,~~922~~366) (~~526~~510,~~074~~530) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Investment in website -- -- (3,800) Acquisition of mineral properties (60120,000) --(80,000) (~~595~~655,570) ------------ ------------ ------------ NET CASH (USED IN) INVESTING ACTIVITIES (60120,000) --(80,000) (~~599~~659,370) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Stock issued for cash -- -- 1,063,000 Payments made on loans payable -- -- (100,000) Proceeds from loans payable 3275,~~500~~600 -- ~~170~~213,~~000~~100 ------------ ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 3275,~~500~~600 -- 1,~~133~~176,~~000~~100 ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH (35,~~809~~165) (35165,~~922~~366) 76,~~556~~200 CASH AT BEGINNING OF PERIOD 11,365 341,207 -- ------------ ------------ ------------ CASH AT END OF PERIOD $ 76,~~556~~200 $ ~~305~~175,~~285~~841 $ 76,~~556~~200 ============ ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Income taxes paid $ -- $ -- $ -- ============ -=~~===========~~---------- ============ Interest paid $ -- $ -- $ -- ============ ============ ============ SUPPLEMENTAL NON-CASH INVESTING AND FINANCING INFORMATION: Reclassified long-term loan to short-term loan $ -- $ -- $ 219,754 ============ ============ ============ Notes payable for settlement of notes $ -- $ -- $ 2,183,000 ============ ============ ============ Preferred stock issuance for settlement of notes payable $ -- $ -- $ 3,104,139 ============ ============ ============ Common stock issued for services and prepaid expenses $ --122,000 $ --200,000 $ ~~539~~661,640 ============ ============ ============ Stock issued for subscription receivable $ -- $ -- $ 9,196,500 ============ ============ ============ Stock issued for debt conversion $ 12,000 $ -- $ 12,000 ============ ============ ============

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.. 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 - CONVERTIBLE NOTES

In September 2012, October 2012, January 2013 the Company borrowed $37,500, $32,500, 10,600 and $32,500 respectively, from Asher Enterprises, Inc. All four notes accrue interest at the rate of 8% per annum. They are due on June 19, 2013, September 16, 2013, September 26, 2012 and October 28, respectively. These notes are convertible by the holder after 180 days at 65% of the average of the lowest five closing bid prices in the ten trading day period before the conversion. The note has no financial covenants. The notes as of March 31, 2013 have accrued interest of $3,345 and a debt discount of $30,303. On March 21, 2013 Asher converted 12,000 of its principle from its first note into 1,212,121 shares of common stock. 9 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS NOTE 5 - 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. 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. As of February 21, 2013 the company has canceled this agreement and canceled all associated shares and warrants. In conjunction of this cancelation the Company has issued 1,100,000 shares at $0.02. 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 expensed as of March 31, 2013. 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. 10 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS 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. 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. On March 21, 2013 Liberty Coal Energy Corp, issued 1,212,121 shares of its common stock on a conversion of $12,000 from its principal note from September 13, 2012. On March 6, 2013 Liberty Coal Energy Corp. issued 100,000 Preferred Series C shares at a value of $1.00 per share. The Series C shares have no conversion feature and have a voting right of 537 votes per share. As of March 31, 2013, the Company had warrants issued as follows: WARRANTS Outstanding at March 31, Issue Date Number Price Expiry Date 2013 ---------- ------ ----- ----------- -------- May 11, 2011 666,667 $0.82 May 11, 2013 666,667 -------- -------- TOTAL 666,667 666,667 ======== ======== NOTE 6 - 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 $1,990,300 at March 31, 2013, 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: 11 Liberty Coal Energy Corp. (An Exploration Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, September 30, 2013 2012 ---------- ---------- Deferred tax asset attributable to: Net operating loss carryover $ 676,702 $ 439,428 Valuation allowance (676,702) (439,428) ---------- ---------- Net deferred tax asset $ -- $ -- ========== ========== NOTE 7 - RELATED PARTY TRANSACTION As of March 31, 2013 and September 30, 2012, there is a balance owing to two officers of the Company in the amount of $49,504 and 7,504, respectively. 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 8 - 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 $1,990,300 as of March 31, 2013. 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. NOTE 9 - 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. At this time the Company is $150,000 behind in its payments. NOTE 10 - SUBSEQUENT EVENTS On April 12, 2013 Asher Enterprises converted $15,500 to 2,012,997 shares and on April 17, 2013 they converted the balance of $11,500 to 1,493,506 shares including the interest on its first note due June 16, 2013 leaving a principle balance of $ 0. On April 16, 2013 Liberty Coal Energy Corp. consummated a Securities Purchase Agreement with Asher Enterprises, Inc. The agreement was entered into pursuant to a April 16, 2013 resolution of Company's Board of Directors. Asher agreed to purchase a Convertible Note in the amount of $42,500, due and payable on January 16, 2014 with interest payable at 8%. The Note was funded on May 2, 2013. The Note is convertible into Common Shares of the Company. The Company has reserved an aggregate of 99,000,000 shares for all the Asher notes. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks noted herein in the section entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States Dollars (US$), 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, 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. 13 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 March 31, 2013, 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 March 31, 2013 which are included herein. THREE MONTHS ENDED MARCH 31, 2013 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2012 The following table summarizes key items of comparison for the three months ended March 31, 2013 and 2012: Three Months Ended March 31, 2013 2012 -------- -------- Amortization $ -- $ 422 General and administrative 5,712 11,383 Legal and accounting 2,275 1,680 Investor relations 4,460 4,715 Consulting 214,380 109,085 Stock Compensation 122,000 200,000 Transfer agent 723 303 Amortization of debt discount 7,791 -- Derivative expense 20,473 -- Gain / loss on change of derivative 44,128 -- Interest Expense 2,068 -- -------- -------- NET LOSS $335,160 $327,588 ======== ======== We had a net loss of $335,160 for the quarter ended March 31, 2013, which was an increase of $7,572 compared to the net loss of 14 $327,588, for the quarter ended March 31, 2012. The slight variance 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 $180,000 of these contracts from prepaid expenses during the three months ended March 31, 2013. In the prior year the company had a similar expense to one of its officers for $200,000. SIX MONTHS ENDED MARCH 31, 2013 COMPARED TO THE SIX MONTHS ENDED MARCH 31, 2012 The following table summarizes key items of comparison for the Six months ended March 31, 2013 and 2012: Six Months Ended March 31, 2013 2012 -------- -------- Amortization $ 422 $ 844 General and administrative 6,957 22,323 Legal and accounting 17,708 13,113 Investor relations 43,660 8,915 Consulting 518,700 131,585 Stock Compensation 122,000 200,000 Transfer agent 1,048 403 Amortization of debt discount 7,791 -- Derivative expense 20,473 -- Gain / loss on change of derivative 44,128 -- Interest Expense 3,827 -- -------- -------- NET LOSS $697,864 $377,183 ======== ======== We had a net loss of $697,864 for the six months ended March 31, 2013, which was an increase of $320,681 compared to the net loss of $377,183, for the six months ended March 31, 2012. 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 $449,700 of these contracts from prepaid expenses during the six months ended March 31, 2013. PERIOD FROM INCEPTION, AUGUST 31, 2007 TO MARCH 31, 2013 Since inception, we have an accumulated deficit of $1,990,300. 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 March 31, 2013, reflects assets of $289,075. We had cash in the amount of $6,200 and a working capital deficit in the amount of $(308,660) as of March 31, 2013. Six Months Six Months Ended Ended March 31, March 31, 2013 2012 ---------- ---------- Net Cash Provided by (Used in) Operating Activities $ 39,235 $ (85,366) Net Cash (Used in) Investing Activities (120,000) (80,000) Net Cash Provided by Financing Activities 75,600 -- ---------- ---------- Increase (Decrease) in Cash $ (5,165) $ (165,366) ========== ========== 15 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 six months ended March 31, 2013 was $39,235, a change of $124,601 from the $(85,366) net cash used in operating activities during the six months ended March 31, 2012. INVESTING ACTIVITIES Net Investing activities during the six months ended March 31, 2013 used $(120,000) of cash, an increase of $40,000 from the $(80,000) cash used in Investing Activities during the six months ended March 31, 2012. FINANCING ACTIVITIES Net Financing activities during the six months ended March 31,2013 brought in $75,600, an increase of $75,600 from the nil cash brought in by Financing Activities during the three months ended March 31, 2012. 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 16 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. 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. 17 RECENT ACCOUNTING PRONOUNCEMENTS 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. 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 March 31,2013 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 18 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. 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 19 ITEM 5. OTHER INFORMATION None. 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 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: May 9, 2013 /s/ Robert T. Malasek -------------------------------------- ROBERT T. MALASEK Chief Financial Officer, Secretary and Director (Principal Financial Officer & Principal Accounting Officer) 20

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