LIBERTY STAR URANIUM & METALS CORP. - Quarter Report: 2010 April (Form 10-Q)

1

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 April 30, 2010

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

For the transition period from __________ to __________

Commission file number 000-50071

LIBERTY STAR URANIUM & METALS CORP.
(Exact name of registrant as specified in its charter)

5610 E Sutler Lane, Tucson, Arizona 85712
(Address of principal executive offices)

520.731.8786
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]    No [   ]

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

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

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

The number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
511,184,657 common shares issued and outstanding as of July 9, 2010.

2

TABLE OF CONTENTS

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 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.

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

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

As used in this quarterly report, the terms "we", "us", "Company", and "Liberty Star" mean Liberty Star Uranium & Metals Corp. and our subsidiaries Big Chunk Corp. and Redwall Drilling Inc., unless otherwise indicated. All dollar amounts refer to U.S. dollars unless otherwise indicated.

3

PART I - FINANCIAL INFORMATION

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS

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

4

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

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

5

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)

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

6

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

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

7

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 – Organization

Liberty Star Uranium & Metals Corp. (the “Company” or “We” or “Liberty Star”) was formerly Liberty Star Gold Corp. and formerly Titanium Intelligence, Inc. (“Titanium”). Titanium was incorporated on August 20, 2001 under the laws of the State of Nevada. On February 5, 2004 we commenced operations in the acquisition and exploration of mineral properties business. Big Chunk Corp. (“Big Chunk”) is our wholly owned subsidiary and was incorporated on December 14, 2003 in the State of Alaska. Big Chunk is engaged in the acquisition and exploration of mineral properties business in the State of Alaska. Redwall Drilling Inc. (“Redwall”) was our wholly owned subsidiary and was incorporated on August 31, 2007 in the State of Arizona. Redwall performed drilling services on the Company’s mineral properties. Redwall ceased drilling activities in July 2008 and was dissolved on March 30, 2010. In April 2007, the Company changed its name to Liberty Star Uranium & Metals Corp. to reflect the Company’s current concentrated efforts on uranium exploration. The Company is considered to be an exploration stage company, as it has not generated any revenues from operations.

In December 2006, the Company entered into a joint venture agreement (“Elle Venture”) with XState Resources Limited (“XState”). The Company holds a 50% interest in the Elle Venture, a general partnership with XState that was formed to explore and, if warranted, develop certain US Federal lode mining claims within the North Pipes Super Project area on the Arizona strip, Northern Arizona. The Elle Venture ceased exploration activities in 2008.

These condensed consolidated financial statements include the results of operations and cash flows of Liberty Star Uranium & Metals Corp. and it’s wholly owned subsidiaries, Big Chunk and Redwall, from the dates of acquisition. All significant intercompany accounts and transactions were eliminated upon consolidation.

These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below currently exist which raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The operations of the Company have primarily been funded by the issuance of common stock and debt. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings, joint venture agreements or debt. Such financings may not be available, may not be available on reasonable terms, or the Company may be prevented from obtaining further financings because of restrictions that apply to it pursuant to the Convertible Promissory Notes discussed in Note 5.

NOTE 2 – Interim financial statement disclosure

The condensed consolidated financial statements included herein have been prepared by Liberty Star Uranium & Metals Corp. without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and should be read in conjunction with our annual report on Form 10-K for the year ended January 31, 2010 as filed with the SEC under the Securities and Exchange Act of 1934. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures which are made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at April 30, 2010 and the results of our operations and cash flows for the periods presented.

Interim results are subject to significant seasonal variations and the results of operations for the three months ended April 30, 2010 are not necessarily indicative of the results to be expected for the full year.

8

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

NOTE 3 - Summary of significant accounting policies

The summary of significant accounting policies presented below is designed to assist in understanding the Company's condensed consolidated financial statements. Such condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP") in all material respects, and have been consistently applied in preparing the accompanying condensed consolidated financial statements. The significant accounting policies adopted by the Company are as follows:

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The valuation of stock-based compensation, valuation of common stock purchase warrants, value of embedded conversion options, value of beneficial conversion features, and the determination of useful lives and recoverability of depreciable assets are significant estimates made by management. It is at least reasonably possible that a change in these estimates may occur in the near term.

Principles of consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Big Chunk and Redwall, from their dates of acquisition, February 5, 2004 and August 31, 2007, respectively. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Mineral claim costs

Mineral claim costs of carrying, retaining and developing properties are charged to expense in the period incurred in our geological and geophysical costs.

Property and equipment

Property and equipment is stated at cost. The Company capitalizes all purchased equipment over $500 with a useful life of more than one year. Depreciation is calculated using the straight line method over the estimated useful lives of the assets. Leasehold improvements are stated at cost and are amortized over their estimated useful lives or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized. Property and equipment is reviewed periodically for impairment. The estimated useful lives range from 2 to 7 years.

Convertible promissory notes

The Company reports convertible promissory notes as liabilities at their carrying value less unamortized discounts, which approximates fair value. The Company bifurcates conversion options and detachable common stock purchase warrants and reports them as liabilities at fair value at each reporting period when required in accordance with the applicable accounting guidance. When convertible promissory notes are converted into shares of the Company’s common stock in accordance with the debt’s terms, no gain or loss is recognized. The Company accounts for inducements to convert as an expense in the period incurred, included in debt conversion expense.

9

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

NOTE 3 - Summary of significant accounting policies - continued

Net loss per share

Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. The calculation of basic loss per share gives retroactive effect to an eight for one forward stock split on January 6, 2004 which resulted in 20,000,000 common shares outstanding. The calculation of basic loss per share gives retroactive effect to a one for four reverse stock split on September 1, 2009 which resulted in 67,261,764 common shares outstanding. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock that are not anti-dilutive. At April 30, 2010 and January 31, 2010, there were 61,774,498 and 62,260,338, respectively, potentially dilutive instruments outstanding. Additionally, at April 30, 2010 and January 31, 2010 if settlement of the Convertible Promissory Notes were completed by the issuance of common shares there would be 1,949,625,853 and 2,021,513,000 shares, respectively, required to convert the notes which is in excess of our authorized shares. At April 30, 2010 and January 31, 2010 there are 1,250,000,000 shares authorized. These instruments were not included in the determination of diluted loss per share as their effect was anti-dilutive.

Recently issued accounting standards

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended April 30, 2010, that are of significance, or potential significance, to us.

In January 2010, the FASB issued Accounting Standards Update 2010-06 (“ASU 2010-06) on improving disclosure of fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2009 except for disclosures about purchases, sales, issuances, and settlements in the roll forward of activity of Level 3 fair value measurements which is effective for fiscal years beginning after December 15, 2010. This guidance did not have a material impact on the Company’s financial position and results of operations.

NOTE 4 – Property and equipment

The balances of our major classes of depreciable assets are:

NOTE 5 – Convertible promissory notes

The Company issues convertible promissory notes in private placements of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The convertible notes were issued in May 2007, August 2008, May 2009 and August 2009. The Company issued detachable common stock purchase warrants with the May 2007 and August 2009 convertible notes. Detachable common stock purchase warrants were reported at fair value as discounts on the convertible notes. Discounts on the convertible notes were also recorded for the beneficial conversion features. At April 30, 2010 there were 3.4 months of amortization remaining on the discounts.

10

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

NOTE 5 – Convertible promissory notes - continued

On February 25, 2010 the Company entered into an extension and modification of the convertible promissory notes with three of the nine noteholders. The maturity date of each note is extended to February 28, 2011 with two 180 day extensions exercisable at the option of the holder.

On April 20, 2010 the Company received a letter from the collateral agent stating that the Company was in default on all of the convertible promissory notes and the note holders were demanding current payment of all amounts of principal and interest on those notes.

The Company granted a senior security interest over all of the assets of the Company to the holders of the May 2007, August 2008, May 2009 and August 2009 Convertible Notes. In addition, the Company’s wholly owned subsidiary, Big Chunk Corp. was required to provide the subscribers with a guaranty on the repayment of the loans.

The entire principal and interest of the May 2007, August 2008, May 2009 and August 2009 notes will be payable upon the Company’s receipt of the net proceeds of a $3,000,000 offering of the Company’s debt or equity. Provided an event of default is not pending, the Company may prepay unconverted portions of the Note upon 20 days prior notice during which time noteholders may convert the amount of the note noticed for prepayment at the fixed conversion price. Such payment shall be equal to 125% of the principal amount being prepaid and the accrued interest. In the event that commencing on the date that is six months following the closing date and ending two years thereafter, Rule 144 is unavailable for the unrestricted resale of the conversion shares under the Notes, then the Company shall pay to the investor as liquidated damages for each thirty days (or pro rata for periods shorter than thirty days) a sum equal to 1.75% of the purchase price of the outstanding notes.

If settlement of all of the Convertible Notes occurred on April 30, 2010 the Company would have been obligated to pay $3,074,459 principal payments and $376,030 accrued interest for a total of $3,450,489 in cash plus an additional 10% of the principal balance of $307,446 required for cash payments. If the settlement were completed by the issuance of common shares the additional 10% of the principal balance is not due. The conversion price at April 30, 2010 for the May 2007, August 2008 and May 2009 notes would have been $0.0018 per share and the conversion price at April 30, 2010 for the August 2009 notes would have been $0.0017 for a total of 1,949,625,853 shares required to convert the notes.

NOTE 6 – Common stock

The common shares of the Company are all of the same class, are voting and entitle stockholders to receive dividends as defined. Upon liquidation or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets or any dividends that may be declared.

On April 23, 2010 the Company issued 76,400,000 shares of common stock to executives, board members and consultants for services performed.

11

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

NOTE 6– Common stock - continued

As of April 30, 2010, there were 60,694,623 whole share purchase warrants outstanding and exercisable. The warrants have a weighted average remaining life of 5.2 years and a weighted average exercise price of $0.03 per whole warrant for one common share. Whole share purchase warrants outstanding at April 30, 2010 are as follows:

NOTE 7 – Related party transactions

The Company entered into the following transactions with related parties during the period ended April 30, 2010:

Paid or accrued $1,378 in rent. We rented an office from Jim Briscoe, our President and CEO, on a month-to-month basis for $459 per month.

The Company sold a trailer to Jim Briscoe, our President and CEO, for $3,000.

On April 23, 2010 we issued 42,000,000 shares of common stock to Jim Briscoe, our President and CEO, and 32,000,000 shares of common stock to our board members valued at $0.002 per share, the closing trading price on the date of issuance. The shares were issued for compensation for payment of accrued unpaid wages and compensation for services provided.

Accrued $24,500 of unpaid wages to Jim Briscoe, our President and CEO.

The Company entered into the following transactions with related parties during the year ended January 31, 2010:

Paid or accrued $5,512 in rent. We rented an office from Jim Briscoe, our President and CEO, on a month-to-month basis for $459 per month.

Accrued $99,500 of unpaid wages to Jim Briscoe our President and CEO.

NOTE 8 – Commitments

The Company is required to perform annual assessment work in order to maintain the Big Chunk and Bonanza Hills Alaska State mining claims. If annual assessment work is not performed the Company must pay the assessment amount in cash in order to maintain the claims. Completion of annual assessment work in the amount of $400 per ¼ section (160 acre) claim or $100 per ¼ -¼ section (40 acre) claim extends the claims for a one-year period from the staking of claims. Assessment work performed in excess of the required amount may be carried forward for up to four years to satisfy future obligations. The Company estimates that the required annual assessments to maintain the claims will be approximately $298,600.

12

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

NOTE 8 – Commitments - continued

The annual state rentals for the Big Chunk and Bonanza Hills Alaska State mining claims vary from $70 to $280 per mineral claim. The rental period begins at noon September 1^st through the following September 1^st and annual rental payments are due on November 30^th of each year. Annual rent is due in full within 45 days of staking a new claim and covers the period from staking until the next September 1^st. Claims that are staked in accordance with AS 38.05.195(b)(1) meridian, township, range, section and claim system location “MTRSC” receive a one-time only credit of 50% of the second year’s rent payment. Our Alaska claims are all MTRSC claims eligible for the 50% rental credit in the second rental year. Rentals for the period from September 1, 2009 through September 1, 2010 of $202,440 have been paid. The estimated state rentals due by November 30, 2010 for the period from September 1, 2010 through September 1, 2011 are $202,440. Alaska State production royalty is three percent of net income. State law prescribes that after a 3.5 -year exemption from state taxes a metal mine is liable for a 15% state licensing tax on net income from the mine.

The Company is required to pay annual rentals for its Federal lode mining claims for the North Pipes project in the State of Arizona. The rental period begins at noon on September 1^st through the following September 1^st and rental payments are due by the first day of the rental period. The annual rental was $125 per claim and increased to $140 per claim beginning September 1, 2009. Additional fees of $45 per claim are due in the first year of filing a Federal lode mining claim along with the first year’s rent. Rentals due for the period from September 1, 2009 to September 1, 2010 of $250,460 have been paid. The estimated rentals due by September 1, 2010 for the period from September 1, 2010 through September 1, 2011 are $250,460.

In November 2006, the Company began renting its previous office space. The lease requires monthly payments of $3,825. In September 2008 the Company exercised its option to renew the lease for an additional two years. During the years ended January 31, 2010 and 2009 the Company recognized rent expense of $29,424 and $45,468, respectively, related to this lease. In January 2009 the Company vacated the premises. The landlord has not released the Company from its obligations related to the two year renewal and the Company is responsible for any shortage in rent received from a new tenant and the $3,825 that the Company would have paid per month during the renewal period. At April 30, 2010 the landlord has asserted a claim against the Company for damages of $48,909 related to this lease and a judgement has been issued against the Company for the full amount of damages asserted by the landlord. The Company has included $48,909 in accounts payable at April 30, 2010 related to the lawsuit.

NOTE 9 – Supplemental disclosures with respect to cash flows

The significant non-cash investing and financing transactions for the three month period ended April 30, 2010 were as follows:

Issued 109,370,577 shares of common stock as repayment of $131,562 principal portion and $20,607 interest portion of the monthly payments on the convertible notes.

Issued 76,400,000 shares of common stock to executives, board members, and consultants as compensation for services.

NOTE 10 – Fair value of financial instruments

The Company's financial instruments consist of cash and cash equivalents, accounts payable, accrued liabilities, convertible notes payable, notes payable, and warrant liability. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values. Gains and losses recognized on changes in fair value of financial instruments are reported in other income (expense) as gain (loss) on change in fair value.

The Company estimates the fair value of level 3 inputs using the Black-Scholes valuation model. The Company uses historical volatility as its method to estimate expected volatility. The Company used the following assumptions to estimate the fair value of warrant liability at April 30, 2010:

13

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – continued

NOTE 10 – Fair value of financial instruments – continued

NOTE 11 – Subsequent events

The Company issued 77,757,101 shares of common stock for conversions of principal and accrued interest on the Convertible Notes. We fully paid out our secured lenders under convertible notes issued on May 11, 2007, August 28, 2008, May 21, 2009 and August 14, 2009. All security held by the secured lenders has been surrendered and is in the process of being released.

The Company entered into an amendment to a mining venture agreement with NPX Metals Inc. (“NPX”) on June 22, 2010. The Company conveyed to NPX any and all rights, interest and options to the mineral claims that encompass the Beatty project in Nye County, Nevada in exchange for a one-time payment of $125,000 received on June 23, 2010.

On June 29, 2010, we entered into a letter agreement with Northern Dynasty Minerals Ltd. (“Northern Dynasty”), whereby Northern Dynasty agreed to advance to our company funds in order to discharge all of our secured notes issued on May 11, 2007, August 28, 2008, May 21, 2009 and August 14, 2009. The Company has sold 60.7 square kilometers (23.4 square miles out of the Company’s original 177 square miles, or 13% of its Big Chunk and Bonanza Hills acreage) in consideration for both a $1,000,000 cash payment and a convertible loan from Northern Dynasty in the amount of $3,000,000. The purchase of the claims and the loan are interdependent. The loan is secured by the Company’s Big Chunk and Bonanza Hills properties in Alaska.

As part of the transaction noted above, subject to negotiating and signing a definitive earn-in option and joint venture agreement, Northern Dynasty can earn a 60% interest in the Company’s Big Chunk and Bonanza Hills projects in Alaska (the “Joint Venture Claims”) by spending $10,000,000 on those properties over six years. The borrowings from Northern Dynasty may be applied as part of Northern Dynasty’s earn-in requirements. Northern Dynasty’s minimum annual expenditures under the earn-in would be the minimum level necessary to keep the Joint Venture Claims in good standing. Northern Dynasty may elect to abandon the earn-in at any time on 30 days’ notice, so long as sufficient annual labor is performed, or a cash payment in lieu of labor is made, in order to fulfil the annual labor requirements for the Joint Venture Claims for a minimum of 12 months after termination of the earn-in.

The Loan is a secured convertible loan, secured against our company’s assets. The Loan is due for repayment 45 days after the earlier to occur of: (i) Northern Dynasty’s completion if its earn-in to the Joint Venture Claims unless it has elected to deem the entire outstanding balance of the Loan (including interest thereon) to be part of the earn-in expenditure requirements and (ii) termination of Northern Dynasty’s earn-in right by voluntary abandonment provided that $1,000,000 in expenditures has been made; or (iii) termination of Northern Dynasty’s earn-in right on account of a superior third party joint venture offer. The Loan bears interest at 10% per year calculated monthly, until it is repaid or deemed repaid.

14

LIBERTY STAR URANIUM & METALS CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) – continued

NOTE 11 – Subsequent events – continued

Provided a minimum of $1,000,000 has been expended by Northern Dynasty on earn in expenses, the Loan will be convertible until repaid or deemed repaid, into common shares of our company at the 5 day volume weighted average trading price immediately prior to Northern Dynasty giving a notice of conversion less the maximum allowable discount applicable as if our company’s shares were listed on the TSX Venture Exchange.

The Loan may be pre-paid by our company without penalty at any time on 10 days prior notice during which time Northern Dynasty’s conversion rights are unaffected.

NOTE 12 – Going concern

The Company is in the exploration stage, has incurred losses from operations, requires additional funds for further exploratory activity and to maintain its claims prior to attaining a revenue generating status, and is in default on its convertible promissory notes. There are no assurances that a commercially viable mineral deposit exists on any of our properties. In addition, the Company may not find sufficient ore reserves to be commercially mined. As such, the Company's auditors have expressed an uncertainty about the Company's ability to continue as a going concern in their opinion attached to our audited financial statements for the fiscal year ended January 31, 2010.

Management is working to secure additional funds through the exercise of stock warrants already outstanding, equity financings or joint venture agreements. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

15

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

Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

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

Overview

The following Management’s Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of Liberty Star Uranium & Metals Corp. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements.

Liberty Star Uranium & Metals Corp. (the “Company” or “We”) is in the acquisition and exploration of mineral properties business. Big Chunk Corp. (“Big Chunk”) is our wholly owned subsidiary and is engaged in the acquisition and exploration of mineral properties business in the State of Alaska. Redwall Drilling Inc. (“Redwall”) was our wholly owned subsidiary and was a drilling contractor. Redwall was dissolved on March 30, 2010. We are an exploration stage company, as we have not generated revenues from operations. Our significant projects are:

North Pipes Super Project (“NPSP”): Located in Northern Arizona on the Arizona Strip, we plan to ascertain whether the North Pipes Super Project claims possess commercially viable deposits of uranium. We have approximately 300 potential breccia pipe targets. We have not identified any ore reserves to date.

Big Chunk Super Project (“Big Chunk”): Located in the Iliamna region of Southwestern Alaska, we plan to ascertain whether the Big Chunk claims possess commercially viable deposits of copper, gold, molybdenum, silver and zinc. We have not identified any ore reserves to date.

Bonanza Hills Project (“Bonanza Hills”): Located in the Iliamna region of Southwestern Alaska, we plan to ascertain whether the Bonanza Hills claims possess commercially viable deposits of gold and silver. We have not identified any ore reserves to date.

East Silver Bell: We hold an option to explore 26 standard Federal lode mining claims located at the East Silver Bell region of Arizona. The mineral claims are owned by JABA US Inc in which two of our directors are owners. We have not identified any ore reserves to date.

Walnut Creek: We hold an option to explore 33 standard Federal lode mining claims located due east and southeast of the town of Tombstone, Arizona. The mineral claims are owned by JABA US Inc in which two of our directors are owners. We have not identified any ore reserves to date.

Elle Venture: On September 11, 2008, we announced that we and XState Resources have agreed that XState will maintain a 50% interest in three potential uranium breccia pipe exploration targets at North Pipes Super Project. Both parties entered into a formal 50/50 contributing joint venture in relation to the three breccia pipe targets. The previous "earn-in" agreement is terminated.

There is no assurance that a commercially viable mineral deposit exists on any of our properties, and further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically feasible to develop or exploit those resources. Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will constitute a reserve (a reserve is a commercially viable mineral deposit). Please refer to the section entitled "Risk Factors" in this Form 10-Q and in our Form 10-K for the year ended January 31, 2010 for additional information about the risks of mineral exploration.

16

To date, we have not generated any revenues and we remain in the exploration stage. Our ability to pursue our business plan and generate revenues is subject to our ability to obtain additional financing, and we cannot give any assurance that we will be able to do so.

Letter Agreement and Secured Convertible Note with Northern Dynasty Minerals Ltd.

On June 29, 2010, we entered into a letter agreement with Northern Dynasty Minerals Ltd. (“Northern Dynasty”), whereby Northern Dynasty agreed to advance to our company funds in order to discharge all of our secured notes issued on May 11, 2007, August 28, 2008, May 21, 2009 and August 14, 2009. The Company has sold 60.7 square kilometers (23.4 square miles out of the Company’s original 177 square miles, or 13% of its Big Chunk and Bonanza Hills acreage) in consideration for both a $1,000,000 cash payment and a convertible loan from Northern Dynasty in the amount of $3,000,000. The purchase of the claims and the loan are interdependent. The loan is secured by the Company’s Big Chunk and Bonanza Hills properties in Alaska.

As part of the transaction noted above, subject to negotiating and signing a definitive earn-in option and joint venture agreement, Northern Dynasty can earn a 60% interest in the Company’s Big Chunk and Bonanza Hills projects in Alaska (the “Joint Venture Claims”) by spending $10,000,000 on those properties over six years. The borrowings from Northern Dynasty may be applied as part of Northern Dynasty’s earn-in requirements. Northern Dynasty’s minimum annual expenditures under the earn-in would be the minimum level necessary to keep the Joint Venture Claims in good standing. Northern Dynasty may elect to abandon the earn-in at any time on 30 days’ notice, so long as sufficient annual labor is performed, or a cash payment in lieu of labor is made, in order to fulfil the annual labor requirements for the Joint Venture Claims for a minimum of 12 months after termination of the earn-in.

The Loan is a secured convertible loan, secured against our company’s assets. The Loan is due for repayment 45 days after the earlier to occur of: (i) Northern Dynasty’s completion if its earn-in to the Joint Venture Claims unless it has elected to deem the entire outstanding balance of the Loan (including interest thereon) to be part of the earn-in expenditure requirements and (ii) termination of Northern Dynasty’s earn-in right by voluntary abandonment provided that $1,000,000 in expenditures has been made; or (iii) termination of Northern Dynasty’s earn-in right on account of a superior third party joint venture offer. The Loan bears interest at 10% per year calculated monthly, until it is repaid or deemed repaid.

Provided a minimum of $1,000,000 has been expended by Northern Dynasty on earn in expenses, the Loan will be convertible until repaid or deemed repaid, into common shares of our company at the 5 day volume weighted average trading price immediately prior to Northern Dynasty giving a notice of conversion less the maximum allowable discount applicable as if our company’s shares were listed on the TSX Venture Exchange.

The Loan may be pre-paid by our company without penalty at any time on 10 days prior notice during which time Northern Dynasty’s conversion rights are unaffected.

Material Changes in Financial Condition from January 31, 2010 to April 30, 2010

We had cash and cash equivalents in the amount of $22,130 as of April 30, 2010 compared to $20,522 as of January 31, 2010. We had negative working capital of $(3,452,591) as of April 30, 2010 compared to $(3,625,627) as of January 31, 2010. We had cash outflows from financing activities of $(108,229) during the three months ended April 30, 2010. During the three months ended April 30, 2010 the Company sold vehicles and equipment to generate cash inflows from investing activities of $252,368. We utilized these funds to pay down our accounts payable and our debt.

The Company is in default on the May 2007, August 2008, May 2009 and August 209 Convertible Notes and as such the entire obligation is reported as a current liability. On April 20, 2010 we received notice from the noteholders demanding payment of all principal and interest due on the convertible notes and notifying us that they will proceed against the collateral if payment is not made. The note holders have a security interest in all assets and mineral properties and as a result the Company is unable to sell any assets without prior approval from the note holders. The Convertible Promissory Notes entered into in May 2007 contain restrictions on raising new capital from the sale of registered stock to other investors. We are also limited to raising up to $7,000,000 in private placement funds during the 2 year term of the Unsecured Convertible Promissory Notes. The August 2008 Convertible Notes and May 2009 Convertible Notes contain restrictions that require that the August 2008, May 2007 and May 2009 convertible notes be repaid in full from the first $3,000,000 of financings completed by the Company. These restrictions may make it difficult for us to raise the cash required to proceed with our planned exploration activities. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable. The company does not plan to make any capital expenditures for new mineral claims or equipment during the next twelve months.

17

In addition to the restrictions placed on us by our various financing agreements, the recent weakening of economic conditions in the U.S. and around the world could have harmful effects on our ability to raise money to fund our planned operations. If this happens, we would likely go out of business and our investors will lose their entire investment in our company.

We believe that recent decreases in value of the common shares of many companies worldwide will make selling shares of our common stock increasingly difficult. If we are not able to sell enough of our shares to meet our financial needs, we will have to consider borrowing the money we need. A tightening of credit conditions has also been experienced in the economy recently. Because of the recent credit crisis, it is possible that we would not be able to borrow adequate amounts to fund our operations on terms and at rates of interest we find acceptable and in the best interests of our company. If we are unable to obtain the amount of money that we need to fund our operations, then we will likely go out of business and investors will lose their entire investment in our company.

We do not expect that the difficult economic conditions are likely to improve significantly in the near future. Further deterioration of the economy, and even consumer fear that the economy will deteriorate further could intensify the adverse effects of these difficult market conditions.

Material Changes in Results of Operations from April 30, 2010 to April 30, 2009

We had a net loss of $(397,948) for the three months ended April 30, 2010 compared to a net loss of $(748,168) for the three months ended April 30, 2009. The change in net loss was largely due to the reduction in interest expense of approximately $350,000 because the discounts on the May 2007 convertible promissory notes were being amortized last year and no amortization of those discounts was recognized in interest expense this year as they were fully amortized in May 2009.

Critical Accounting Policies

The condensed consolidated financial statements of Liberty Star Uranium & Metals Corp. have been prepared in conformity with accounting principles generally accepted in the United States of America. Our significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 in our Form 10-K for the year ended January 31, 2010. The critical accounting policies adopted by our company are as follows:

Going Concern

Since we have not generated any revenue, we have negative cash flows from operations, and negative working capital we have included a reference to our ability to continue as a going concern in connection with our consolidated financial statements for the period ended January 31, 2010. Our total stockholders’ deficit at April 30, 2010 was $(3,339,457).

These condensed consolidated financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business. Accordingly, these condensed consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Mineral claims

The Company accounts for costs incurred to acquire, maintain and explore mineral properties as charged to expense in the period incurred until the time that a proven mineral resource is established at which point development of the mineral property would be capitalized. Currently, the company does not have any proven mineral resources on any of its mineral properties.

Convertible promissory notes

We reviewed the convertible promissory notes and the related subscription agreements to determine the appropriate reporting within the financial statements. We report convertible promissory notes as liabilities at their carrying value less unamortized discounts in accordance with the applicable accounting guidance. We bifurcate conversion options and detachable common stock purchase warrants and report them as liabilities at fair value at each reporting period when required in accordance with the applicable accounting guidance. We determined that reporting the notes as equity would not be appropriate as the conversion of the notes into common stock was not guaranteed. No gain or loss is reported when the notes are converted into shares of our common stock in accordance with the note’s terms.

18

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures at April 30, 2010, which is the end of the fiscal quarter covered by this report. This evaluation was carried out by our principal executive officer and principal financial officer, Mr. James Briscoe. Based on this evaluation, Mr. Briscoe has concluded that the design and operation of our disclosure controls and procedures are effective as at the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended April 30, 2010 there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

On January 26, 2010 we were named in a lawsuit filed with the clerk of the Superior Court of Arizona in the County of Pima by our former landlord B&D Ventures LLC. The former landlord is seeking to obtain damages in the amount of $48,909 from our termination of our lease obligation before the end of the lease term. We vacated the premises in January 2009 and the lease end date was November 30, 2010. On May 13, 2010 a judgment was issued in this case in favor of B&D Ventures LLC for $48,909 plus interest accruing at 10% until paid.

Item 1A.           RISK FACTORS

Much of the information included in this quarterly report includes or is based upon estimates, projections or other "forward looking statements". Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

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

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2010, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We are in default on the May 2007 Convertible Notes, August 2008 Convertible Notes, May 2009 Convertible Notes and the August 2009 Convertible Notes and the note holders have called the notes.

We are in default on the May 2007 Convertible Notes, August 2008 Convertible Notes, May 2009 Convertible Notes, and the August 2009 Convertible Notes and as such the entire obligation is reported as a current liability. In February 2010 we modified the terms of these notes with three of the nine note holders to extend their maturity dates to February 28, 2011 with two 180 day

19

extensions exercisable by the holder. The three note holders who signed the extension and modification agreement hold a majority of the outstanding balance of all notes. On April 20, 2010 we received a demand notice from the note holders. The note holders have a security interest in all assets and mineral properties and as a result we are unable to sell any assets without prior approval from the note holders. If we are unable to satisfy the obligation the note holders could proceed against the assets and mineral claims that collateralize the notes. These restrictions may make it difficult for us to raise the cash required to perform exploration activities.

If we do not obtain additional financing, our business will fail and our investors could lose their investment.

We had cash in the amount of $22,130 and negative working capital of $(3,452,591) as of April 30, 2010. We currently do not generate revenues from our operations. Our business plan calls for substantial investment and cost in connection with the acquisition and exploration of our mineral properties currently under lease and option. Any direct acquisition of any of the claims under lease or option is subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs on the subject properties. The requirements are substantial. We do not currently have any arrangements for financing in addition to the May 2007 Convertible Notes, August 2008 Convertible Notes, May 2009 Convertible Notes and August 2009 Convertible Notes, further described in Note 5 to the condensed consolidated financial statements included in Item 1 of Part I of this form, and we can provide no assurance to investors that we will be able to find such financing when required. The Convertible Promissory Notes contain restrictions on raising new capital from the sale of registered stock to other investors. We are also limited to raising up to $7,000,000 in private placement funds during the term of the Convertible Notes, during the Exclusion Period as defined in the notes, and during the pendency of any Event of Default as defined in the notes. The August 2008 Convertible Notes, May 2009 Convertible Notes, and August 2009 Convertible Notes contain restrictions that require that the August 2008, May 2007, May 2009, and August 2009 convertible notes be repaid in full from the first $3,000,000 of financings we complete. These restrictions may make it difficult for us to raise the cash required to proceed with our planned exploration activities. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable. In addition to the restrictions placed on us by our various financing agreements, obtaining additional financing would be subject to a number of factors, including market prices for minerals, investor acceptance of our properties, contractual restrictions on our ability to enter into further financing arrangements, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us and our business could fail.

Because there is no assurance that we will generate revenues, we face a high risk of business failure.

We have not earned any revenues as of the date of this filing and have never been profitable. We do not have an interest in any revenue generating properties. We were incorporated on August 20, 2001 and took over our current business on February 5, 2004. To date we have been involved primarily in organizational and exploration activities. We will incur substantial operating and exploration expenditures without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We have limited operating history upon which an evaluation of our future success or failure can be made. Our net loss from inception to April 30, 2010 is $(39,502,331). We recognize that if we are unable to generate significant revenues from our activities, we will not be able to earn profits or continue operations. Based upon current plans, we also expect to incur significant operating losses in the future. We cannot guarantee that we will be successful in raising capital to fund these operating losses or generate revenues in the future. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail and our investors could lose their investment.

Our independent registered public accounting firm’s report states that there is a substantial doubt that we will be able to continue as a going concern.

Our independent registered public accounting firm, Semple, Marchal & Cooper, LLP, state in their audit report attached to our audited financial statements for the fiscal year ended January 31, 2010 that since we are an exploration stage company, have no established source of revenue and are dependent on our ability to raise capital from shareholders or other sources to sustain operations, there is a substantial doubt that we will be able to continue as a going concern.

The existence of our mining claims depends on our ability to fund exploratory activity or to pay fees.

Our mining claims, which are the central part of our business, require that we either pay fees, or incur certain minimum development costs annually, or the claims will be forfeited. Due to our current financial situation we may not be able to meet these obligations and we could therefore lose our claims. This would impair our ability to raise capital and would negatively impact the value of the Company.

20

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

We issued 76,400,000 shares of unregistered shares of common stock to our executives, directors and consultants on April 23, 2010 as compensation for services performed.

We issue convertible promissory notes in private placements of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The convertible notes were issued in May 2007, August 2008, May 2009 and August 2009. In February 2010 we modified the terms of these notes with three of the nine note holders to extend their maturity dates to February 28, 2011 with two 180 day extensions exercisable by the holder. The three note holders who signed the extension and modification agreement hold a majority of the outstanding balance of all notes. We issued detachable common stock purchase warrants with the May 2007 and August 2009 convertible notes. We are currently in default on the convertible notes.

We issued 109,370,577 shares of common stock for conversions of $131,562 of principal and $20,607 of accrued interest on the Convertible Notes during the three months ended April 30, 2010.

We issued 77,757,101 shares of common stock for conversions of principal and interest on the convertible notes in May 2010.

May 2007 Convertible Notes:

On May 11, 2007, we issued senior unsecured convertible two year promissory notes (“May 2007 Convertible Notes”) for gross proceeds of $4,400,000 in a private placement of our securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The net proceeds received after placement agent fee, due diligence fee and legal fees was $4,010,238. The May 2007 Convertible Notes bear interest at 12% and 15% when in default.

We may elect to make repayments of the May 2007 Convertible Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of shares of our common stock. The holders may elect to convert amounts owed on the notes at a conversion price which is the lesser of the fixed conversion price of $0.005 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the conversion date.

August 2008 Convertible Notes:

On August 27, 2008 we issued Secured Convertible Promissory one year notes (“August 2008 Convertible Notes”) for gross proceeds of $414,184 to the holders of the May 2007 Convertible Notes in a private placement of our securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The net proceeds received were $372,434. The August 2008 Convertible Notes bear interest at 12% and 15% when in default.

We may elect to make repayments of the August 2008 Convertible Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of shares of our common stock. The holders may elect to convert amounts owed on the notes at a conversion price which is the lesser of the fixed conversion price of $0.005 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the conversion date.

May 2009 Convertible Notes:

On May 21, 2009, we completed the sale of $170,668 principal amount of 12% Secured Convertible Promissory Notes (“May 2009 Convertible Notes”) in a private placement of our securities to subscribers pursuant to the exemption from registration under the United States Securities Act of 1933 provided by Section 4(2), Section 4(6) and/or Rule 506 of Regulation D promulgated under the 1933 Act, each of which represented that they are “accredited investors” within the respective meanings ascribed to that term in Rule 501(a) under the Securities Act of 1933 and pursuant to the terms of a subscription agreement between the parties dated May 21, 2009. The net proceeds received were $157,468.

21

Pursuant to the terms of the convertible secured notes and the Subscription Agreement, interest accrues on the Notes at a rate of 12% per annum commencing on the date of the issuance of the May 2009 Convertible Notes. The May 2009 Convertible Notes principal must be repaid commencing October 15, 2009 in monthly amounts equal to 14.28% of the principal amount of the notes together with interest, accrued to each monthly payment date on the outstanding note principal. In the event a registration statement is effective or Common Stock may be immediately resold by the noteholders without volume or other restrictions, and an event of default is not pending then we may pay the monthly amount with registered or unregistered common stock valued at the lesser of the fixed conversion price of $0.005 (subject to certain adjustments), or 80% of the average of the closing bid prices of our common stock for the five trading days prior to the monthly payment date. We may, in any event, elect to pay the monthly amount in cash at 110% of the principal amount due and 100% of all other amounts then due. We must provide 10 days notice of whether payment will be made in cash or with stock. If the notice is not timely given, the noteholders shall have the option to elect to be paid in cash or common stock. Each monthly payment in kind will be limited to not more than 33% of the aggregate daily trading volume of the common stock for the 7 trading days preceding the relevant monthly payment date. We agreed to reserve for issuance to the subscribers not less than 175% of the amount of shares of common stock necessary to allow conversion of all notes at the conversion price in effect from time to time.

Pursuant to the terms of the Subscription Agreement, James Briscoe, our CEO, agreed not to sell or otherwise dispose of his shares of our common stock owned by him or which he has the right to acquire for a period of two years from the date of the Subscription Agreement, unless sold in the open market for over $0.90 per share.

August 2009 Convertible Notes:

On August 14, 2009, we completed the sale of $589,177 principal amount of 12% Secured Convertible Promissory Notes (“August 2009 Convertible Notes”) to five subscribers pursuant to the exemption from registration under the United States Securities Act of 1933 provided by Section 4(2), Section 4(6) and/or Rule 506 of Regulation D promulgated under the 1933 Act, each of which represented that they are “accredited investors” within the respective meanings ascribed to that term in Rule 501(a) under the Securities Act of 1933 and pursuant to the terms of a subscription agreement between the parties dated August 14, 2009. On November 27, 2009, we modified the August 2009 Convertible Notes so as to increase five such notes by an aggregate total of $206,075. Other aspects of the August 14, 2009 notes remain unchanged. The net proceeds received were $766,015. The notes mature on August 14, 2010.

Pursuant to the terms of the convertible secured notes and the Subscription Agreement, interest accrues on the Notes at a rate of 12% per annum commencing on the date of the issuance of the August 2009 Convertible Notes. The August 2009 Convertible Notes principal must be repaid commencing February 15, 2010 in monthly amounts equal to 20% of the principal amount of the notes together with interest, accrued to each monthly payment date on the outstanding note principal. In the event a registration statement is effective or Common Stock may be immediately resold by the noteholders without volume or other restrictions, and an event of default is not pending then we may pay the monthly amount with registered or unregistered common stock valued at the lesser of the fixed conversion price of $0.0025 (subject to certain adjustments), or 75% of the average of the closing bid prices of our common stock for the five trading days prior to the monthly payment date. We may, in any event, elect to pay the monthly amount in cash at 110% of the principal amount due and 100% of all other amounts then due. We must provide 10 days notice of whether payment will be made in cash or with stock. If the notice is not timely given, the noteholders shall have the option to elect to be paid in cash or common stock. Each monthly payment in kind will be limited to not more than 40% of the aggregate daily trading volume of the common stock for the 5 trading days preceding the relevant monthly payment date. We agreed to reserve for issuance to the subscribers not less than 175% of the amount of our shares of common stock necessary to allow conversion of all notes at the conversion price in effect from time to time.

The holders of the August 2009 Convertible Notes were issued 58,917,700 detachable common stock purchase warrants with an exercise price of $0.00125 and a life of 6 years. The exercise price may be adjusted if we issue other shares, warrants or stock options before the expiration of the warrants at a price less than $0.005 per share.

We agreed to include at the option of each noteholder of the May 2009 and August 2009 notes the number of shares that may be converted pursuant to any note in any registration statement it files during such period, ahead of the rights granted to the subscribers in the May 2007 Convertible Notes and the subscribers in the August 2008 Convertible Notes. Noteholders are subject to certain limitations on their rights to convert the notes. The principal limitation is that unless waived, the holder may not, with certain limited exceptions, convert into a number of our shares that would, together with other shares held by the holder, exceed 4.99% of the then outstanding shares of our common stock after such conversion.

22

Provisions applicable to all convertible notes:

The entire principal and interest of the May 2007, August 2008, May 2009 and August 2009 notes will be payable upon our receipt of the net proceeds of a $3,000,000 offering of our debt or equity. Provided an event of default is not pending, we may prepay unconverted portions of the Note upon 20 days prior notice during which time noteholders may convert the amount of the note noticed for prepayment at the fixed conversion price. Such payment shall be equal to 125% of the principal amount being prepaid and the accrued interest. In the event that commencing on the date that is six months following the closing date and ending two years thereafter, Rule 144 is unavailable for the unrestricted resale of the conversion shares under the Notes, then we shall pay to the investor as liquidated damages for each thirty days (or pro rata for periods shorter than thirty days) a sum equal to 1.75% of the purchase price of the outstanding notes.

We granted a senior security interest over all of our assets to the holders of the May 2007, August 2008, May 2009 and August 2009 Convertible Notes. In addition, our wholly owned subsidiary, Big Chunk Corp., was required to provide the subscribers with a guaranty on the repayment of the loans.

All proceeds received have been and will be used for exploration of our mineral properties and working capital.

Item 3. Defaults Upon Senior Securities.

On April 20, 2010 the Company received a letter from the collateral agent stating that the Company was in default on all of the convertible promissory notes and the note holders were demanding current payment of all amounts of principal and interest on those notes. Total principal and accrued interest due at April 30, 2010 is $3,450,489.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits

23

24

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY STAR URANIUM & METALS CORP.

By: /s/ James Briscoe
James Briscoe, President,
Chairman, Chief Executive Officer,
Chief Financial Officer, and Director
(Principal Executive Officer) and (Principal Financial Officer)

Date: July 12, 2010