Attached files

file filename
EX-31.2 - SECTION 302 SARBANES-OXLEY CERTIFICATION OF CHIEF FINANCIAL OFFICER - STERLING GROUP VENTURES INCexhibit31-2.htm
EX-32.1 - SECTION 906 SARBANES-OXLEY CERTIFICATION OF CHIEF EXECUTIVE OFFICER - STERLING GROUP VENTURES INCexhibit32-1.htm
EX-32.2 - SECTION 906 SARBANES-OXLEY CERTIFICATION OF CHIEF FINANCIAL OFFICER - STERLING GROUP VENTURES INCexhibit32-2.htm
EX-31.1 - SECTION 302 SARBANES-OXLEY CERTIFICATION OF CHIEF EXECUTIVE OFFICER - STERLING GROUP VENTURES INCexhibit31-1.htm

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 August 31, 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: 000-51775

STERLING GROUP VENTURES, INC.
(Exact name of registrant as specified in its charter)

Nevada 72-1535634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4743 - 350 S. E. Marine Drive, Vancouver, B.C. V5X 2S5
(Address of principal executive offices) (Zip Code)

(604) 689-4407
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changes since last report)

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

Indicate by check mark whether the registrant 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]

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of October 13, 2010.

Title of each class Number of shares
Common Stock, par value $0.001 per share 43,826,175

1


STERLING GROUP VENTURES, INC.
FORM 10-Q
INDEX

  Page
     
PART I - FINANCIAL INFORMATION 3
     
Item 1. Financial Statements (unaudited) 3
     
Interim Consolidated Balance Sheets of Sterling Group Ventures, Inc. at August 31, 2010 (unaudited) and May 31, 2010 3
     
Unaudited Interim Consolidated Statements of Operations for the three months ended August 31, 2010 and 2009 and for the Period from July 27, 1994 (Date of Inception) to August 31, 2010. 4
     
Unaudited Interim Consolidated Statements of Stockholders' Equity (Capital Deficit) for the period from July 27, 1994 (Date of Inception) to August 31, 2010 5
     
Unaudited Interim Consolidated Statements of Cash Flows for the three months ended August 31, 2010 and 2009 and for the Period from July 27, 1994 (Date of Inception) to August 31, 2010 6
     
  Notes to the Interim Consolidated Financial Statements 7-14
     
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations  15
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk   17
     
Item 4. Controls And Procedures 17
     
     
PART II - OTHER INFORMATION 18 
     
Item 1. Legal Proceedings 18
     
Item 1A  Risk Factors 18
     
Item 2. Unregistered Sales of Equity Securities and Use of proceeds 20
     
Item 3. Defaults Upon Senior Securities 20
     
Item 4. (Removed and Reserved) 20
     
Item 5. Other Information 20
     
Item 6. Exhibits 21
     
Signatures 21
     
Index to Exhibits 22

2



PART I. - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

STERLING GROUP VENTURES, INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
August 31, 2010 and May 31, 2010

    August 31,     May 31,  
Stated in U.S. dollars   2010     2010  
    (unaudited)        
ASSETS            
             
Current Assets            
   Cash $  180,903   $  192,502  
   Cash held in trust (note 6)   34     33  
   Taxes receivable   3,592     4,000  
   Prepaid expenses and other   12     12  
Total current assets   184,541     196,547  
             
Equipment   -     47  
             
Total Assets $  184,541   $  196,594  
             
LIABILITIES AND CAPITAL DEFICIT            
             
Current Liabilities            
   Accounts payable and other accrued liabilities (note 4) $  546,610   $  522,516  
             
Capital Deficit            
   Common Stock : $0.001 Par Value
       Authorized : 500,000,000 shares 
       Issued and Outstanding : 43,826,175 shares (note 5)
  43,826     43,826  
   Additional Paid In Capital   2,652,924     2,652,924  
   Warrants (note 5)   636,668     636,668  
   Accumulated Other Comprehensive Loss   (583 )   (583 )
   Deficit accumulated during the exploration stage   (3,694,904 )   (3,658,757 )
Total Capital Deficit   (362,069 )   (325,922 )
             
Total Liabilities and Capital Deficit $  184,541   $  196,594  

See accompanying notes to consolidated financial statements

3


STERLING GROUP VENTURES, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended August 31, 2010 and 2009 and
for the period from July 27, 1994 (date of inception) to August 31, 2010
(unaudited)

                July 27, 1994  
                (Date of  
                inception)  
    Three months ended August 31,     to August 31,  
Stated in U.S. dollars   2010     2009     2010  
                   
Expenses                  
 Accounting, audit and legal fees $  29,058   $  32,449   $  464,082  
 Bank charges   189     131     2,103  
 Consulting fees - Note 4   5,640     5,515     717,268  
 Depreciation   47     266     9,346  
 Filing fees and transfer agent   3,503     1,846     45,123  
 Foreign exchange loss (gain)   (3,978 )   1,192     (27,404 )
 General and administrative - Note 4   1,706     3,549     118,921  
 Mineral property costs - Note 3   -     4,694     1,264,394  
 Printing and mailing   -     -     16,883  
 Shareholder information and investor relations   -     -     61,230  
 Stock-based compensation   -     -     953,722  
 Travel and entertainment   -     -     127,038  
 Recovery of doubtful collection   -     -     (272,358 )
 Allowance for doubtful collection   -     -     246,708  
                   
    (36,165 )   (49,642 )   (3,727,056 )
                   
Other item                  
 Interest income   18     21     32,152  
                   
                   
Net loss for the period $  (36,147 ) $  (49,621 ) $  (3,694,904 )
                   
Basic and diluted loss per share $  (0.00 ) $  (0.00 )      
                   
Weighted average number of shares outstanding   43,826,175     43,826,175        

See accompanying notes to consolidated financial statements

4


STERLING GROUP VENTURES, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
For the period from July 27, 1994 (date of inception) to August 31, 2010
(unaudited)

                                  Deficit        
          Stock                 Accumulated     Accumulated        
          Amount     Additional           Other     During The        
    Common     At       Paid-In           Comprehensive     Exploration          
Stated in U.S. dollars   Shares     Par Value     Capital     Warrants     Loss     Stage     Total  
Balance, July 27, 1994 (Date of inception)   -   $  -   $  -   $  -   $  -   $  -   $  -  
Common stock   1     1     -     -     -     -     1  
Amount contributed by director   -     -     1,881     -     -     -     1,881  
Net loss for the periods   -     -     -     -     -     (7,902 )   (7,902 )
Balance, May 31, 2001   1   $  1   $  1,881   $  -   $  -   $  (7,902 ) $  (6,020 )
Net loss of the year   -     -     -     -     -     (1,860 )   (1,860 )
Balance, May 31, 2002   1   $  1   $  1,881   $  -   $  -   $  (9,762 ) $  (7,880 )
Net loss of the year   -     -     -     -     -     (1,360 )   (1,360 )
Balance, May 31, 2003   1   $  1   $  1,881   $  -   $  -   $  (11,122 ) $  (9,240 )
Reverse acquisition   (1 )   (1 )   (1,881 )   -     -     -     (1,882 )
Issuance of common shares for reverse acquisition   25,000,000     25,000     (23,119 )   -     -     -     1,881  
Outstanding common shares of Company prior to acquisition   11,360,000     11,360     (10,883 )   -     (583 )   -     (106 )
Issuance of shares for cash pursuant to a private placement - at $0.50   1,766,000     1,766     881,234     -     -     -     883,000  
Stock-based compensation   -     -     368,641     -     -     -     368,641  
Net loss of the year   -     -     -     -     -     (527,446 )   (527,446 )
Balance, May 31, 2004   38,126,000   $  38,126   $  1,215,873   $  -   $  (583 ) $  (538,568 ) $  714,848  
Issuance of shares for cash pursuant to a private placement - at $0.50   1,950,000     1,950     973,050     -     -     -     975,000  
Issuance of shares for finder's fee of private placement   101,500     102     50,648     -     -     -     50,750  
Finders' fees   -     -     (50,750 )   -     -     -     (50,750 )
Fair value of share purchase warrants (finders' fees)   -     -     (40,110 )   40,110     -     -     -  
Issuance of shares for services rendered   100,000     100     41,900     -     -     -     42,000  
Net loss of the year   -     -     -     -     -     (818,954 )   (818,954 )
Balance, May 31, 2005   40,277,500   $  40,278   $  2,190,611   $  40,110   $  (583 ) $  (1,357,522 ) $  912,894  
Net loss for the year   -     -     -     -     -     (461,201 )   (461,201 )
Balance, May 31, 2006   40,277,500   $  40,278   $  2,190,611   $  40,110   $  (583 ) $  (1,818,723 ) $  451,693  
Issuance of shares for cash pursuant to a private placement - at $0.15   2,750,300     2,750     409,795     -     -     -     412,545  
Issuance of shares for finder's fee of private placement   123,690     124     21,522     -     -     -     21,646  
Finders' fees   -     -     (21,646 )   -     -     -     (21,646 )
Share issuance costs   -     -     (3,687 )   -     -     -     (3,687 )
Fair value of share purchase warrants (finders' fees)   -     -     (9,895 )   9,895     -     -     -  
Revaluation of share purchase warrants   -     -     (1,582 )   1,582     -     -     -  
Issuance of shares for services rendered   350,000     350     48,650     -     -     -     49,000  
Net loss for the year   -     -     -     -     -     (864,485 )   (864,485 )
Balance, May 31, 2007   43,501,490   $  43,502   $  2,633,768   $  51,587   $  (583 ) $  (2,683,208 ) $  45,066  
Issuance of shares for services rendered at $0.06   324,685     324     19,156     -     -     -     19,480  
Revaluation of share purchase warrants   -     -     -     409,525     -     -     409,525  
Net loss for the year   -     -     -     -     -     (516,440 )   (516,440 )
Balance, May 31, 2008   43,826,175   $  43,826   $  2,652,924   $  461,112   $  (583 ) $  (3,199,648 ) $  (42,369 )
Revaluation of share purchase warrants   -     -     -     83,852     -     -     83,852  
Net loss for the year   -     -     -     -     -     (245,405 )   (245,405 )
Balance, May 31, 2009   43,826,175   $  43,826   $  2,652,924   $  544,964   $  (583 ) $  (3,445,053 ) $  (203,922 )
Revaluation of share purchase warrants   -     -     -     91,704     -     -     91,704  
Net loss for the year   -     -     -     -     -     (213,704 )   (213,704 )
Balance, May 31, 2010   43,826,175   $  43,826   $  2,652,924   $  636,668   $  (583 ) $  (3,658,757 ) $  (325,922 )
Net loss for the period   -     -     -     -     -     (36,147 )   (36,147 )
Balance, August 31, 2010   43,826,175   $  43,826   $  2,652,924   $  636,668   $  (583 ) $  (3,694,904 ) $  (362,069 )

See accompanying notes to consolidated financial statements

5


STERLING GROUP VENTURES, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended August 31, 2010 and 2009 and
for the period from July 27, 1994 (date of inception) to August 31, 2010
(unaudited)

                July 27, 1994  
                (Date of  
                inception)  
    Three months ended August 31,     to August 31,  
Stated in U.S. dollars   2010     2009     2010  
Cash flows from operating activities                  
 Net loss for the period $  (36,147 ) $  (49,621 ) $  (3,694,904 )
Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities
           
 Stock-based compensation   -     -     953,722  
 Depreciation   47     266     9,346  
 Permit and engineering studies   -     -     150,000  
 Shareholder information and investor relations   -     -     20,447  
 Accounting, audit and legal fees   -     -     49,000  
 Translation adjustment   -     -     (106 )
 Unrealized FV adjustment on cash   (162 )   -     (162 )
Changes in non-cash working capital items
    related to operations
           
 Taxes receivable   408     (3,506 )   (3,592 )
 Prepaid expenses and other receivable   -     (68 )   21,541  
 Advance receivable   -     1,307     -  
 Accounts payable and accrued liabilities   24,094     17,766     566,090  
Net cash provided by (used in) operating activities   (11,760 )   (33,856 )   (1,928,618 )
                   
Cash flows from investing activities                  
 Advance on investment   -     -     (150,000 )
 Additions to equipment   -     -     (9,346 )
 Net change in cash held in trust   (1 )   55,287     (34 )
Net cash flows provided by (used in) investing activities   (1 )   55,287     (159,380 )
                   
Cash flows from financing activities                  
 Net proceeds on issuance of common stock   -     -     2,266,858  
 Amounts contributed by director   -     -     1,881  
Net cash flows provided by financing activities   -     -     2,268,739  
                   
Foreign Exchange Effect on Cash   162           162  
Foreign currency translation effect on cash   -     25,459     -  
                   
Net increase (decrease) in cash   (11,599 )   21,431     180,903  
Cash - beginning of period   192,502     192,002     -  
Cash - end of period $  180,903   $  238,892   $  180,903  
                   
Supplemental Information :                  
Cash paid for :                  
 Interest $  -   $  -   $  -  
 Income taxes $  -   $  -   $  -  
Non-cash Transactions :                  
  Issuance of shares for commission paid to broker for
     private placement
$  -   $  -   $  72,396  
 Issuance of shares for services rendered $  -   $  -   $  91,000  
   Issuance of shares for settlement of accounts payable $  -   $  -   $  19,480  
     paid to broker for private placement $  -   $  -   $  11,477  

See accompanying notes to consolidated financial statements

6


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 1 Nature of Operations and Ability to Continue as a Going Concern
   

While the information presented in the accompanying interim three-month consolidated financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, result of operations and cash flows for the interim periods presented. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the Company’s May 31, 2010 annual consolidated financial statements.

 

Operating results for the three-month period ended August 31, 2010 are not necessarily indicative of the results that can be expected for the year ending May 31, 2011.

 

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applicable in the United States to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At August 31, 2010, the Company had a working capital deficiency of $362,069, has not yet achieved profitable operations, has accumulated losses of $3,694,904 since its inception and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

 

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Micro Express Holdings Inc., Micro Express Ltd., Huyana Ventures Limited, Makaelo Holdings Inc. and Makaelo Limited. All inter-company transactions and account balances have been eliminated.

 

Note 2

Recent Accounting Pronouncements

 

The Company has evaluated all the recent accounting pronouncements and believes that none of them will have a material effect on the Company’s consolidated financial statements.

 

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13, “Multiple- Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force”, (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements and requires that the overall arrangement consideration be allocated to each deliverable in a revenue arrangement based on an estimated selling price when vendor specific objective evidence or third-party evidence of fair value is not available. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated to all deliverables using the relative selling price method. This will result in more revenue arrangements being separated into separate units of accounting. ASU 2009-13 is effective for fiscal years beginning on or after June 15, 2010. Companies can elect to apply this guidance (1) prospectively to new or materially modified arrangements after the effective date or (2) retrospectively for all periods presented. The Company is currently assessing the impact of adoption of ASU 2009-13 and does not currently plan to early adopt.

7


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 2 Recent Accounting Pronouncements – (cont’d)
   

In October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements That Include Software Elements”, (“ASU 2009-14”). ASU 2009-14 changes the accounting model for revenue arrangements that include both tangible products and software elements. Tangible products containing both software and non-software components that function together to deliver the product’s essential functionality will no longer be within the scope of ASC 985-605 “Software Revenue Recognition” (“ASC 985-605”). The entire product (including the software and non-software deliverables) will therefore be accounted for under accounting literature found in ASC 605. ASU 2009-14 is effective for fiscal years beginning on or after June 15, 2010. Companies can elect to apply this guidance (1) prospectively to new or materially modified arrangements after the effective date or (2) retrospectively for all periods presented. The Company is currently assessing the impact of adoption of ASU 2009-14 and does not currently plan to early adopt.

 

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which is included in the ASC in Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements. ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of ASU 2010-06 did not have a material impact on the Company’s financial statements.

 

Note 3

Mineral Properties

 

Summary of mineral properties expenses for the three months ended August 31, 2010 and 2009 and for the cumulative period from date of inception (July 27, 1994) to August 31, 2010:


    DXC  
    Salt Lake  
    Property  
       
Three months ended August 31, 2010 $  -  
       
Three months ended August 31, 2009      
Administrative $  88  
Travel   4,606  
  $  4,694  

8


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 3 Mineral Properties –– (cont’d)

    DXC  
    Salt Lake  
Summary of mineral property expenditures   Property  
       
From Date of Inception (July 27, 1994) to August 31, 2010  
       
       
Balance, May 31, 2003 $  -  
       
Balance, May 31, 2004   -  
       
Balance, May 31, 2005   -  
Administrative   5,560  
Consulting fees   46,629  
Engineering studies   26,933  
Feasibility study   29,080  
Geophysical study   31,114  
Legal fees   623  
Topography measurement   32,266  
Travel   30,953  
Wages and benefits   33,601  
Cost recovery   -  
Balance, May 31, 2006   236,759  
Administrative   5,200  
Consulting fees   134,580  
Engineering studies   38,063  
Mining permit   382,920  
Topography measurement   15,001  
Legal fees   9,695  
Travel   53,262  
Wages and benefits   35,687  
Balance, May 31, 2007   911,167  
Administrative   706  
Consulting fees   60,548  
Travel   5,456  
Legal fees   11,566  
Balance, May 31, 2008   989,443  
Administrative   867  
Consulting fees   27,890  
Travel   16,959  
Legal fees   7,008  
Balance, May 31, 2009 and 2010, and August 31, 2010   1,042,167  

Not included in the table above was a total of $222,227 of costs incurred on other properties which were abandoned during the years ended May 31, 2006, 2007 and 2009.

9


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 3 Mineral Properties – (cont’d)

  a)

Dangxiongcuo Salt Lake Project

     
 

On September 16, 2005, the Company, through its wholly owned subsidiary, Micro Express Holdings Inc. (“Micro”), signed an agreement (the “Mianping Agreement”) for the development of Dangxiongcuo salt lake property (“DXC Salt Lake”) in Nima county of Naqu district in Tibet, China.

     
 

Pursuant to the Mianping Agreement, the parties agreed to set up a Cooperative Company, (the “Cooperative”) to develop the DXC Salt Lake. The objective of the Cooperative was to use the funds provided by the Company and the skills and technology provided by the other party to produce lithium carbonate and borate from brine. The Company, through Micro, was to own 65% of the Cooperative. It was anticipated that the total investment in the Cooperative would be approximately 240 million RMB (or approximately US$35 million). The Cooperative Company was never set up. On July 3, 2007, Micro received a letter from the other party to the Mianping Agreement stating that the agreement between Micro and the other party should be deemed terminated as a result of lack of progress in the approval for the establishment of the joint venture company and is considering a lawsuit against the Company and Micro. Micro has responded that the other party’s claim has no legal grounds as the lack of progress is not caused by Micro. There has been no legal action to date and none is expected. By letter dated August 25, 2008, Beijing Mianping Salt Lake Research Institute (“Mianping”) has confirmed that the agreement dated September 16, 2005 was terminated effective July 8, 2008. This agreement was replaced by the agreement with Zhong Chuan International Mining Holdings Co. Ltd. dated July 8, 2008.

     
 

On July 8, 2008, the Company signed an agreement (the "Agreement") with the shareholders of Monte Sea Holdings Ltd. ("Monte Sea Shareholders") and a third party to restructure the transactions contemplated under the September 16, 2005 agreement. The parties wish to jointly develop the DXC Salt Lake property and lithium resources in Tibet including an exploration license, and elsewhere (the “Property”), by way of a cooperative joint venture. Monte Sea Shareholders and the third party are to provide RMB100,000,000 ($14,584,000) to finance the DXC property to production.

     
 

Pursuant to the Agreement, the parties wish to establish a Sino-foreign cooperative joint venture company ("CJV") for the purpose of applying for and holding required approvals, permits and licenses with respect to the development of the Property.

     
 

The Parties agree that an operating company ("Opco") will be established in Tibet prior to the establishment of the CJV for the purpose of applying for and holding required approvals, permits and licenses with respect to the development of the Property. The Opco shall hold all such approvals, permits and licenses in trust for the CJV.

     
 

Under the Agreement, the CJV will be established within 90 days from date of this Agreement, subject to required regulatory approval and based on a joint venture agreement by way of acquisition of interest in the Opco by Monte Sea Holdings Ltd. (“Monte Sea”), or by way of incorporation under the Chinese laws. Monte Sea shall hold up to 65% but no less than 51% of shares in the CJV. CJV shall own and hold all the Property.

     
 

If for any Chinese regulatory or policy reasons, Monte Sea is not permitted to have more than fifty-one percent (51%) interest in the CJV, then the CJV agreement will be revised such that:

10


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 3 Mineral Properties – (cont’d)

  a)

Dangxiongcuo Salt Lake Project – (cont’d)

       
  (i)

Monte Sea shall have a forty-nine percent (49%) interest in the CJV;

       
  (ii)

Monte Sea shall be entitled to receive returns on its investment in the CJV on a priority and accelerated basis until its investment in the CJV and the Property is fully recovered; and

       
  (iii)

Monte Sea shall be permitted to manage the daily operation of the CJV pursuant to a management agreement to be entered into on terms and conditions satisfactory to the Company.

Upon the Agreement being effective and termination of the agreement dated September 16, 2005, the Company will be repaid RMB6,000,000 (approximately $875,000). As of August 31, 2010, the Company has received $nil in regards to this agreement.

Upon signing of this Agreement and subject to applicable regulatory approval, Monte Sea Shareholders shall subscribe for 5,000,000 units (the "Units") to be issued by the Company at $0.15 per Unit. Each Unit shall consist of one common share in the stock of the Company, and one warrant which shall entitle the Monte Sea shareholders to purchase one common share in the stock of the Company at $0.16 per share within two years from the date of the issuance of the Units.

Subject to applicable regulatory approval, the Company shall cause 200,000,000 shares to be issued to the Monte Sea Shareholders within ten working days from the date transfer of the exploration license to the CJV is approved by the Chinese regulators, in exchange for all the shares then issued and outstanding in the stock of Monte Sea and held by Monte Sea Shareholders (the "Share Exchange"). The Share Exchange may be conducted and completed at an earlier date as long as the Company and Monte Sea Shareholders may agree in writing. This transaction would be accounted for as a reverse acquisition.

Subject to applicable regulatory approval, the Company shall cause 87,910,000 shares in the capital of the Company to be issued to the Monte Sea Shareholders at no additional cost, upon receipt by the CJV of a mining license and such other permits or approvals for the Property, permitting the full exploitation and development of the Property.

The Company intends to, when and as required by the CJV, arrange and complete financing for the operation of the CJV.

Zhong Chuan shall, together with Monte Sea Shareholders, provide funds no less than RMB 100,000,000 (or US dollar equivalent thereof) for the purpose of meeting registered capital payment requirements in the registration and operation of the CJV. Zhong Chuan shall keep other Parties informed of any development in the registration of the CJV and transfer of the exploration license.

The application to establish a joint venture has not yet been approved by the regulators in Tibet, China.

As of August 31, 2010, the Company has incurred a total of $1,042,167 in mineral property costs on this property.

11


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 3 Mineral Properties – (cont’d)

  a)

Dangxiongcuo Salt Lake Project – (cont’d)

     
 

The Company received verbal termination of the Agreement with Zhong Chuan in July 2009, as advised by third party legal counsel, at a meeting in Beijing, China. The Agreement, in effect, allows Zhong Chuan to terminate the Agreement if it pays the Company double the amount of funds paid by the Company to date to secure and develop the DXC Project. Zhong Chuan has not paid the required amount anticipated by the Agreement to date. The delay in payment has delayed the termination process and the Company is pursuing Zhong Chuan to complete the termination, as the Company deems, is mandated by the Agreement.


Note 4 Related Party Transactions
   

The Company was charged consulting fees for administrative, corporate, financial, engineering, and management services during the three months ended August 31, 2010 totalling $5,640 (2009: $5,515) by companies controlled by two directors of the Company.

 

The Company was charged rental fees included in general and administrative expense during the three months ended August 31, 2010 totalling $1,091 (2009: $3,069) by a company controlled by a director of the Company.

 

Cash held in trust at August 31, 2010 includes $34 (May 31, 2010: $33) held in trust by a director of the Company.

 

Included in accounts payable and accrued liabilities is $511,223 (May 31, 2010: $509,990) which was due to companies controlled by the directors of the Company for their services provided.

 

These transactions were in the normal course of operations and were measured at the exchange amount which represented the amount of consideration established and agreed to by the related parties.

 

Note 5

Capital Stock


  a)

Stock Options

     
 

On February 3, 2004, the Board of Directors of the Company approved the 2004 Stock Option Plan which allows the Company to grant up to 3,636,000 stock options as an incentive to directors, officers, employees and consultants.

     
 

During the three months ended August 31, 2010 and 2009, no stock options were granted or exercised. On February 3, 2009, 3,636,000 stock options with an exercise price of $0.50 per share expired unexercised.

     
 

At August 31, 2010, there were no outstanding stock options (May 31, 2010 - nil).

12


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 5 Capital Stock - (cont’d)

  b)

Share Purchase Warrants

     
 

Share purchase warrants outstanding at August 31, 2010 were as follows:


Number Price Expiry
     
3,817,500 $ 0.50 February 16, 2011
2,873,990 $ 0.18 February 16, 2011
6,691,490    

During the three months ended August 31, 2010 and 2009, no warrants were exercised, cancelled or expired.

Each Series “A” warrant entitles the holder thereof the right to purchase one common share at $0.50 per share expiring on the earlier of:

  1)

February 16, 2008; or

  2)

The 90th day after the day on which the weighted average trading price of the Company's shares exceeds $0.85 per share for 30 consecutive trading days.

Upon exercise of the Series "A" Share Purchase Warrant at $0.50 each, the holder will receive one Common Share of the Company and a Series "B" Share Purchase Warrant exercisable at $1.00 expiring one year after the occurrence of either (1) or (2) as described above. The Series "A" Share Purchase Warrants were originally issued in 2004 pursuant to a private placement commenced in February 2004.

On February 7, 2008, the Company extended the expiry date of the 3,817,500 Series “A” Share Purchase Warrants from February 16, 2008 to February 16, 2009. The exercise price of the warrants remains unchanged at $0.50 per share. The additional fair value of the 3,817,500 extended life Series “A” Share Purchase Warrants was estimated at $252,989, by using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 218.52%, risk free interest rates of 2.08% and expected life of one year.

On February 6, 2009, the Company re-extended the expiry date of 3,817,500 Share Purchase Warrants (the Series "A" Share Purchase Warrants) from February 16, 2009 to February 16, 2010. The exercise price of the warrants remains unchanged at $0.50 per share. The additional fair value of the 3,817,500 extended life Series “A” Share Purchase Warrants was estimated at $35,593 using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 223.36%, risk free interest rates of 0.82% and expected life of one year.

13


Sterling Group Ventures, Inc.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
Three months ended August 31, 2010 and 2009
(Stated in US Dollars)
(Unaudited)

Note 5 Capital Stock - (cont’d)

  b)

Share Purchase Warrants - (cont’d)

     
 

On February 12, 2010, the Company re-extended the expiry date of 3,817,500 Share Purchase Warrants (the Series "A" Share Purchase Warrants) from February 16, 2010 to February 16, 2011. The exercise price of the warrants remains unchanged at $0.50 per share. The additional fair value of the 3,817,500 extended life Series “A” Share Purchase Warrants was estimated at $44,283 using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 244%, risk free interest rates of 0.56% and expected life of one year.

     
 

On February 7, 2008, the Company extended the expiry date of the 2,873,990 Series “C” Share Purchase Warrants from February 29, 2008 to February 27, 2009. The exercise price of the warrants remained unchanged at $0.18 per share. The additional fair value of the 2,873,990 extended life Series “C” Share Purchase Warrants was estimated at $156,536, by using the Black- Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0% expected volatility of 222.09%, risk-free interest rates of 2.08% and expected life of one year.

     
 

The Company also re-extended the expiry date of 2,873,990 Share Purchase Warrants (the Series "C" share purchase Warrants) from February 27, 2009 to February 26, 2010. The exercise price of the warrants remains unchanged at $0.18 per share. The Series "C" Share Purchase Warrants were originally issued in September 2006 pursuant to a private placement commenced in August 2006. The additional fair value of the 2,873,990 extended life Series “C” Share Purchase Warrants was estimated at $48,259 using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0% expected volatility of 244.01%, risk-free interest rates of 0.82% and expected life of one year.

     
 

The Company also re-extended the expiry date of 2,873,990 Share Purchase Warrants (the Series "C" share purchase Warrants) from February 26, 2010 to February 16, 2011. The exercise price of the warrants remains unchanged at $0.18 per share. The additional fair value of the 2,873,990 extended life Series “C” Share Purchase Warrants was estimated at $47,421 using the Black- Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0% expected volatility of 244%, risk-free interest rates of 0.56% and expected life of one year.

     
 

As at August 31, 2010, the Company has a total of 3,817,500 Series “A” and 2,873,990 Series “C” share purchase warrants outstanding, respectively.


Note 6 Foreign Currency Risk
   
  The Company is exposed to fluctuations in foreign currencies through amounts held in China in RMB:

-      Cash held in trust $34 (May 31, 2010 - $33)

The Company is exposed to fluctuations in foreign currencies through amounts held in Canada in CAD:

-      Cash $100,994 (May 31, 2010 - $105,544)

14


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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes for the year ended May 31, 2010, the financial statements and related notes in this Quarterly Report, the risk factors in our 10K for the year ended May 31, 2010, and all of the other information contained elsewhere in this report.

As used in this quarterly report, the terms “we”, “us”, “our”, “our company”, “Company” and “Sterling” refer to Sterling Group Ventures, Inc. and its subsidiaries, unless otherwise indicated.

Forward-Looking Statements. When used in this Form 10-Q, the words “believe”, “may”, “will”, “plan”, “estimate”, “continue”, “anticipate”, “intend”, “expect”, “project”, “estimates”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties, including those set forth below under "Risks and Uncertainties," that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

Overview

On July 8, 2008, the Company signed an agreement (the "Agreement") with Zhong Chuan International Mining Holding Co., Ltd. ("Zhong Chuan"), Ximing Sun and Charles Yan - shareholders of Monte Sea Holdings Ltd. (collectively hereinafter "Monte Sea Shareholders") to complete an equity financing, to accelerate the development of the DXC salt lake deposits in China and to restructure the transactions contemplated under the initial agreement signed by Beijing Mianping Salt Lake Research Institute ("Mianping") and Micro Express Holdings Inc. ("MEH") on September 16, 2005. Pursuant to the Agreement, the parties wish to establish a Sino-foreign cooperative joint venture company ("CJV") for the purpose of applying for and holding required approvals, permits and licenses with respect to the development of the DXC Salt Lake property (the "Property") located in Tibet of China. In July 2009, the Company received verbal termination of the Agreement with Zhong Chuan, as advised by third party legal counsel, at a meeting in Beijing, China. Formal written notice has not been received from Zhong Chuan. The Agreement in effect, allows Zhong Chuan to terminate the Agreement if it pays the Company doubles the amount of funds paid by the Company to date to secure and develop the DXC Project. Zhong Chuan has not repaid the required amount as anticipated by the Agreement to date. This unfortunate delay on the part of Zhong Chuan places the termination it gave the Company in dispute as the termination is conditional upon repayment of the required funds. At this point then, the termination is incomplete. The Company is pursuing Zhong Chuan to complete the termination, as the Company deems, is mandated by the Agreement.

Business of Sterling Group Ventures Inc.

Sterling is an exploration stage company, and its objective is to become a recognized leader in mineral property acquisition, exploration, development and production. The Company has DXC Salt Lake Project for the exploration of lithium and lithium Carbonate.

Application of Critical Accounting Policies and Use of Estimates

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires that we 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 revenue and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ significantly from these estimates under different assumptions or conditions. There have been no material changes to these estimates for the periods presented in this quarterly report.

15


Interim Reporting

The information presented in the accompanying interim consolidated financial statements is without audit pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the interim consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. Except where noted, the interim consolidated financial statements follow the same accounting policies and methods of their application as our May 31, 2010 annual consolidated financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim consolidated financial statements be read in conjunction with our May 31, 2010 annual consolidated financial statements.

Operating results for the three months ended August 31, 2010 are not necessarily indicative of the results that can be expected for the year ending May 31, 2011.

Results Of Operations

The operating loss decreased to $36,165 for the quarter ended August 31, 2010, as compared to $49,642 for the quarter ended August 31, 2009 mainly due to the decrease of accounting, audit and legal fees, general and administrative, and mineral property cost , as well, incurring a foreign exchange gain of $3,978 in the quarter ended August 31, 2010 compared to a loss of $1,192 in the quarter ended August 31, 2009

Accounting, audit and legal fees decreased by $3,391 for the three months ended August 31, 2010 when compared to the same period in 2009.

General and administrative decreased by $1,843 for the three months ended August 31, 2010 when compared to the same period in 2009.

Mineral property costs decreased by $4,694 for the three months ended August 31, 2010 when compared to the same period in 2009.

The Company expects the trend of losses to continue.

Liquidity And Working Capital

As of August 31, 2010, the Company had total current assets of $184,541 and total liabilities of $546,610. As of August 31, 2010, the Company had cash totaling $180,937, which includes cash held in trust, and negative working capital of $362,069.

Cash used in operating activities for the three months ended August 31, 2010 was $11,598 as compared to cash used in operating activities for the same period in 2009 of $33,856. The decrease in cash used in operating activities was primarily due to the decrease in cash expenditures for accounting, audit and legal fees, and mineral property costs, as well as the increase of account payable and accrued liability.

16


According to the agreement signed with Zhongchuan on July 8, 2008, Mianping will repay the Company RMB 6,000,000 ($875,000) and Monte Sea Shareholders shall subscribe for 5,000,000 units (the "Units") to be issued by the Company at $0.15 per unit. As a result, the Company expects to raise working capital in the amount of $750,000 and a total of $1,625,000 including the repayment of approximately RMB 6,000,000 described earlier to meet its short term working capital requirements.

However, in July 2009, the Company received verbal termination of the Agreement with Zhong Chuan, as advised by third party legal counsel, at a meeting in Beijing, China. Formal written notice has not been received from Zhong Chuan. The Agreement in effect, allows Zhong Chuan to terminate the Agreement if it pays the Company double the amount of funds paid by the Company to date to secure and develop the DXC Project. Zhong Chuan has not repaid the required amount as anticipated by the Agreement to date. This unfortunate delay on the part of Zhong Chuan places the termination it gave the Company in dispute as the termination is conditional upon repayment of the required funds. At this point then, the termination is incomplete. The Company is pursuing Zhong Chuan to complete the termination, as the Company deems, is mandated by the Agreement.

The Company has no other capital resources other than the ability to use its common stock to raise additional capital or the exercise of the warrants by the unit holders. The Company's current cash can provide the Company with working capital for over one year since consulting fees are being reduced and accrued. Estimated cash needed for next 12 months is about $80,000. The cash will be mainly used for general administrative, corporate (legal, accounting and audit), financing and management.

No commitments to provide additional funds have been made by management or other stockholders except as set forth above. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover operation expenses. This raises substantial doubt that the Company will be able to continue as a going concern unless additional capital is raised

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to the U.S. Dollar, we conduct our business in Chinese Yuan (RMB) and Canadian Dollar and, therefore, are subject to foreign currency exchange risk on cash flows related to expenses and investing transactions. In July 2005, the Chinese government began to permit the Chinese Yuan to float against the U.S. Dollar. All of our costs to operate our Chinese project are paid in Chinese Yuan and all of our costs to operate our principal executive office in Canada are paid in Canadian dollar. Our exploration costs in China may be incurred under contracts denominated in Chinese Yuan or U.S. Dollars. If the Chinese Yuan continues to appreciate with respect to the U.S. Dollar, our costs in China may increase. If the Canadian Dollar continues to appreciate with respect to the U.S. Dollar, our costs in Canada may increase. To date we have not engaged in hedging activities to hedge our foreign currency exposure. In the future, we may enter into hedging instruments to manage our foreign currency exchange risk or continue to be subject to exchange rate risk.

Although inflation has not materially impacted our operations in the recent past, increased inflation in China or Canada could have a negative impact on our operating and general and administrative expenses, as these costs could increase. China has recently experienced inflationary pressures, which could increase our costs associated with our operations in China. If there are material changes in our costs, we may seek to raise additional funds earlier than anticipated.

ITEM 4. CONTROLS AND PROCEDURES

a.        Evaluation of Disclosure Controls and Procedures:

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report..

17


b.        Changes in Internal Control over Financial Reporting:

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 1A. RISK FACTORS

We have sought to identify what we believe to be the most significant risks to our business. However, we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to our Common Stock. We provide the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could adversely affect us.

Factors That May Affect Future Results and Market Price of Stock

The business of the Company involves a number of risks and uncertainties that could cause actual results to differ materially from results projected in any forward-looking statement, or statements, made in this report. These risks and uncertainties include, but are not necessarily limited to the risks set forth below. The Company's securities are speculative and investment in the Company's securities involves a high degree of risk and the possibility that the investor will suffer the loss of the entire amount invested.

Limited Operating History; Anticipated Losses; Uncertainty of Future Results (Risk of Going Concern)

Sterling is in the exploration stage. The Company has entered into joint venture agreements to explore and develop mineral properties located in China and has not yet determined whether these properties contain reserves that are economically recoverable. The Company has not yet achieved profitable operations and is dependent on its ability to raise capital from shareholders or other sources to meet its obligations and repay its liabilities arising from normal business operations when they come due. These factors raise substantial doubt that the Company will be able to continue as a going concern.

Lack of Technical Training of Management

The Management of our Company has academic and scientific experience related to mining issues but lacks technical training and experience exploring for, commissioning and operating a mine. With no direct training or experience in these areas, management may not be fully aware of many of the specific requirements related to working within this industry. The decisions and choices may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently, operations, earnings and the ultimate financial success of the Company could suffer irreparable harm due to management’s lack of experience in this industry.

Exploration Risk

Development of mineral properties is contingent upon obtaining satisfactory exploration results. Mineral exploration and development involves substantial expenses and a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate.

18


The company’s exploration properties have not been examined in the field by professional geologists or mining engineers. There is no assurance that commercial quantities of ore will be discovered on any of the Company’s exploration properties. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. The discovery of mineral deposits is dependent upon a number of factors not the least of which is the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit, once discovered, is also dependent upon a number of factors, some of which are the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection. In addition, assuming discovery of a commercial ore body, depending on the type of mining operation involved, several years can elapse from the initial phase of drilling until commercial operations are commenced. Most of the above factors are beyond the control of the Company.

The exploration process is conducted in phases. When each phase of a project is completed, and upon analysis of the results of that phase, the Company will make a decision whether to proceed with each successive phase of the exploration program. There is no assurance that projects will be carried to completion.

Limited Management Resource Development Experience

The Company does not have a track record of exploration and mining operation history. The Company's management has limited experience in mineral resource development and exploitation, and has relied on and may continue to rely upon consultants and others for development and operation expertise.

Limited Financial Resources

Furthermore, the Company has limited financial resources with no assurance that sufficient funding will be available to it for future exploration and development or to fulfill its obligations under current agreements. There is no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its projects.

Limited Public Market, Possible Volatility of Share Price

The Company's Common Stock is currently quoted on the NASD OTC Bulletin Board under the ticker symbol SGGV and is listed on Berlin Bremen Stock Exchange under the symbol GD7. As of August 31, 2010, there were 43,826,175 shares of common stock outstanding. There can be no assurance that a trading market will be sustained in the future.

Dependence on Executive Officers and Technical Personnel

The success of our business plan depends on attracting qualified personnel, and failure to attract and retain the necessary personnel could adversely affect our business. Competition for qualified personnel is intense, and we may need to pay premium wages to attract and retain personnel. Attracting and retaining qualified personnel is critical to our business. Inability to attract and retain the qualified personnel necessary would limit our ability to implement our business plan successfully.

Need for Additional Financing

The Company believes it has sufficient capital to meet its short-term cash needs, including the costs of compliance with the continuing reporting requirements of the Securities Exchange Act of 1934. However, the Company has to seek loans or equity placements to cover longer-term cash needs to continue operations and expansion.

19


No commitments to provide additional funds have been made by management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover operation expenses.

If future operations are unprofitable, it will be forced to develop another line of business, or to finance its operations through the sale of assets it has, or enter into the sale of stock for additional capital, none of which may be feasible when needed. The Company has no specific management ability or financial resources or plans to enter any other business as of this date.

Dilution to the Existing Shareholders

The Company has no other capital resources other than the ability to use its common stock to raise additional capital or the exercise of the warrants by the unit holders. Pursuant to the agreement signed on July 8, 2008 with Zhongchuan, the Company shall cause 292,910,000 shares to be issued to Monte Sea Shareholders for the DXC Salt Lake project, which will significantly dilute the Company's stockholders.

Political Risks

The market in China is monitored by the government, which could impose taxes or restrictions at any time which would make operations unprofitable and infeasible and cause a write-off of investment in the mineral properties. Other factors include political policy on foreign ownership, political policy to open the doors to foreign investors, and political policy on mineral claims and metal prices.

Circumstances related to Tibet political activities and resulting political upheaval are beyond the control of the Company and constitute a risk to investors.

Other Risks and Uncertainties

The business of mineral deposit exploration and development involves a high degree of risk. Few properties that are explored are ultimately developed into production. Other risks facing the Company include competition, reliance on third parties and joint-venture partners, environmental and insurance risks, political and environmental instability, statutory and regulatory requirements, fluctuations in mineral prices and foreign currency, share price volatility, title risks, and uncertainty of additional financing.

Since October 2008, a severe general downturn in the U. S. economy and global economy slowdown which already affected the securities markets took place. Such a deleterious turn of events has made it much more difficult for the Company to access financing should it be required to do so.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. (REMOVED AND RESERVED)

None

ITEM 5. OTHER INFORMATION

None

20


ITEM 6. EXHIBITS

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits beginning on page 22 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

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.

  Sterling Group Ventures Inc.
   
   
  /s/ Raoul Tsakok
  Raoul Tsakok, Chairman and Chief Executive Officer
Date: October 13, 2010
   
  /s/ Richard Shao
  Richard Shao, President and Chief Financial Officer
Date: October 13, 2010

21


INDEX OF EXHIBITS

Exhibit  
Number Description
   
3.1

Articles of Incorporation of the Company, (filed as Exhibit 3.1 to the Company's Registration Statement on Form SB-2 filed on July 26, 2002, and incorporated herein by reference).

3.2

Bylaws of the Company (filed as Exhibit 3.2 to the Company's Registration Statement on Form SB-2 filed on July 26, 2002, and incorporated herein by reference).

4.1

Specimen stock certificate (filed as Exhibit 4.1 to the Company's Registration Statement on Form SB-2 filed on July 26, 2002, and incorporated herein by reference).

10.1

Acquisition Agreement between the Company and Micro Express Ltd., dated January 20, 2004. (Filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on January 29, 2004, and incorporated herein by reference).

10.2

Joint Venture Contract between Micro Express Ltd. .(the Company’s wholly subsidiary) and Sichuan Province Mining Ltd., dated April 5, 2005 (Filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on April 11, 2005, and incorporated herein by reference).

10.3

Agreement for Development of DXC Salt Lake Property between Micro Express Holdings Inc. .(the Company’s wholly subsidiary) and Beijing Mianping Salt Lake Research Institute, dated September 16, 2005 (Filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on September 21, 2005, and incorporated herein by reference).

10.4

Agreement for Termination of Joint Venture between Micro Express Ltd. and Sichuan Province Mining Ltd., dated March 3, 2006 (Filed as Exhibit 10.1 to the Company's current report on Form 8- K filed on March 6, 2006, and incorporated herein by reference).

10.5

Agreement between the Company, Zhong Chuan International Mining Holding Co., Ltd. , and shareholders of Monte Sea Holdings Ltd., dated July 8, 2008 (Filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on July 15, 2008, and incorporated herein by reference).

14.1

Code of Ethics. ( Filed as Exhibit 14.1 to the Company's Annual report on Form 10-K filed on August 28, 2009, and incorporated herein by reference)

31.1

Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

31.2

Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.

99.1

Audit Committee Charter. (Filed as Exhibit 99.1 to the Company's Annual report on Form 10-K filed on August 28, 2009, and incorporated herein by reference)

22