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EX-32 - CERTIFICATION - Fortem Resources Inc.stbr_ex32.htm
EX-31.1 - CERTIFICATION - Fortem Resources Inc.stbr_ex311.htm
EX-31.2 - CERTIFICATION - Fortem Resources Inc.stbr_ex312.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended: May 31, 2011
 
Or
   
¨
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: 000-52645
 
STRONGBOW RESOURCES INC
(Exact Name of Issuer as specified in its charter)
 
Nevada
 
20-4119257
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
250-777 N. Rainbow Blvd., Las Vegas, NV 89107
(Address of Issuer’s Principal Executive Offices) (Zip Code)
 
(702) 938-3656
Issuer’s telephone number
 
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. þ Yes ¨ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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):
 
Large accelerated filer  o Accelerated filer  o
Non-accelerated filer  o Smaller reporting company  þ
(Do not check if a smaller reporting company)      
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). þ Yes ¨ No

Class of Stock
 
No. Shares Outstanding
 
Date
Common
 
104,323,069
 
July 15, 2011
 


 
 

 
  
FORWARD LOOKING STATEMENTS
 
The information contained in this Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties, including among other things, statements regarding our capital needs, business strategy and expectations. Any statement which does not contain an historical fact may be deemed to be a forward-looking statement. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. In evaluating forward looking statements, you should consider various factors outlined in our latest Form 10-K filed with U.S. Securities Exchange Commission (“SEC”) on May 31, 2011, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements.
 
 
 
 
 
2

 
 
PART I – FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
STRONGBOW RESOURCES INC.
(An Exploration Stage Company)
BALANCE SHEETS
 
   
May 31,
2011
   
February 28,
2011
 
         
(Audited)
 
ASSETS
           
CURRENT ASSETS
           
  Cash   $ 10,301     $ 4,017  
  Prepaid expense     1,964       5,798  
      Total Assets   $ 12,265     $ 9,815  
                 
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
               
                 
CURRENT LIABILITIES
               
  Accounts payable and accrued liabilities   $ 83,485     $ 98,410  
  Due to related parties     10,500       60,500  
    Total Current Assets     93,985       158,910  
                 
STOCKHOLDERS' DEFICIT
               
  Capital Stock                
     Authorized:                
       750,000,000 common shares, par value $0.001 per share                
     Issued and outstanding:                
       104,323,069  common shares (104,323,069 at February 28, 2011)     12,523       12,523  
  Additional paid in capital     708,023       532,752  
  Deficit accumulated during the exploration stage     (802,266 )     (694,370 )
    Total Stockholders' Deficit     (81,720 )     (149,095 )
      Total Liabilities and Stockholders' Deficit   $ 12,265     $ 9,815  
 
The accompanying notes are an integral part of these financial statements
 
 
3

 
 
STRONGBOW RESOURCES INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
 
  Cumulative results              
  from July 9, 2004 to     Three Months Ended  
  May 31, 2011     May 31, 2011     May 31, 2010  
GENERAL AND ADMINISTRATIVE EXPENSES                
  Office, travel and general   $ 373,513     $ 42,816     $ 15,163  
  Consulting     308,336       64,700       18,000  
  Professional fees     144,365       380       -  
    Total General and Adminsitrative     (826,214 )     (107,896 )     (33,163 )
                         
GAIN ON SETTLEMENT OF DEBT
    48,948       -       -  
LOSS ON SETTLEMENT OF DEPOSIT
    (25,000 )     -       -  
    NET LOSS
  $ (802,266 )   $ (107,896 )   $ (33,163 )
                         
BASIC AND DILUTED NET LOSS PER COMMON SHARE
    $ (0.00 )   $ (0.00 )
                         
WEIGHTED AVERAGE NUMBER OF BASIC AND
                 
DILUTED COMMON SHARES OUTSTANDING
      104,323,069       103,189,736  
 
The accompanying notes are an integral part of these financial statements
 
 
4

 
 
 
STRONGBOW RESOURCES INC.
(A Exploration Stage Company)
STATEMENTS OF CASH FLOWS
 
   
Cumulative results
             
   
from July 9, 2004 to
   
Three Months Ended
 
   
May 31, 2011
   
May 31, 2011
   
May 31, 2010
 
                   
OPERATING ACTIVITIES
                 
  Net loss from continuing operations   $ (802,266 )   $ (107,896 )   $ (33,163 )
  Adjustments to reconcile net loss to net cash                        
  used in operating activities:                        
    Gain from Settlement of indebtedness     (48,947 )     -       -  
  Changes in non-cash working capital items                        
    Prepaid expenses     (1,964 )     3,834       8,618  
    Accounts payable and accrued liabilities     83,485       (14,925 )     (8,767 )
    Assignment of accrued expenses     25,271       25,271       -  
  Cash used by continuing operations     (744,421 )     (93,716 )     (33,312 )
                         
                         
FINANCING ACTIVITIES
                       
    Common stock issued for cash     527,275       -       -  
    Due to related parties     227,447       100,000       -  
    Cash providedby financing activities     754,722       100,000       -  
                         
CHANGE IN CASH
    10,301       6,284       (33,312 )
CASH, BEGINNING
    -       4,017       98,178  
CASH, ENDING
  $ 10,301     $ 10,301     $ 64,866  
                         
SUPPLEMENTAL DISCLOSURE:
                       
    Cash paid for Interest   $ 654     $ 148     $ -  
    Cash paid for Income taxes   $ -     $ -     $ -  
                         
NON-CASH INVESTING AND FINANCING ACTIVITIES:
                 
    Common stock issued as repayment of note payable   $ 18,000     $ -     $ -  
 
The accompanying notes are an integral part of these financial statements
 
 
5

 
 
STRONGBOW RESOURCES INC.
(An Exploration Stage Company)
NOTE TO THE FINANCIAL STATEMENTS
May 31, 2011
(Unaudited)
 
1.
BASIS OF PRESENTATION
 
Unaudited Interim Financial Statements
 
The unaudited interim financial statements of Strongbow Resources Inc. (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the year ended February 28, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC. The interim unaudited financial statements should be read in conjunction with those financial statements included in the10-K report. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three month period ended May 31, 2011 are not necessarily indicative of the results that may be expected for the year ending February 28, 2012.
 
Recent Accounting Pronouncements
 
The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.
 
2. 
RELATED PARTY TRANSACTIONS
 
In November 2010, the Company began cooperative efforts with the parent company of its largest shareholder (the “Shareholder”) to pursue a working interest position in certain gold resources in the Kyrgyz Republic (the ‘Kyrgyz Gold Project”). In total, the Company incurred approximately $327,000 in costs in connection with these efforts, including $150,000 in notes payable to the Shareholder. During May 2011, the Company determined that further investment in the Kyrgyz Gold Project was unwarranted. Accordingly, the Company agreed to withdraw from the Kyrgyz Gold Project and assign its rights and interests in the project to the Shareholder. In exchange, the Shareholder agreed to forgive $150,000 of the Company’s indebtedness payable to it, and absorb approximately $121,000 in future obligations (including $25,271 in net liabilities) related to three consulting contracts the Company had executed in connection with the Kyrgyz Gold Project.
 
Non-interest bearing notes and advances, unsecured and payable upon demand to the Shareholder and a former officer consist of the following:
 
 
 
May 31,
2011
   
February 28,
2011
 
 Notes and Advances from Former Officer and the Shareholder
 
$
10,500
   
$
60,500
 

During the three months ended May 31, 2011, the Company increased notes payable to its largest shareholder by $100,000 and was granted forgiveness of $150,000 of notes payable by the Shareholder in connection with its withdrawal from the Kyrgyz Gold Project.
 
 
6

 
 
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our unaudited financial statements and related notes included as part of this report and our Form 10-K for the year ended February 28, 2011 filed with the SEC on May 31, 2011.
 
General
 
Strongbow Resources Inc. (“Strongbow” or the “Company”) is an exploration stage company incorporated in the State of Nevada on July 9, 2004. We have been relatively inactive since inception. We originally intended to import and market plush toys and related products under our former name, “Plush Mall Inc.” We were unable, however, to identify a sufficient number of products for redistribution. Accordingly, we determined to focus our business efforts on the acquisition, exploration and development of mineral properties.
 
In-keeping with our change of focus, we amended our articles of incorporation in January 2008 to change our name from Plush Mall, Inc. to Strongbow Resources Inc. During October 2007 we amended our articles of incorporation to increase the number of our authorized common shares from 75,000,000 to 750,000,000 and to forward stock split our common stock on a 10-for-1 basis. The stock split was based on market conditions and upon a determination by our Board of Directors that the stock split was in our best interests and that of our shareholders.
 
On November 28, 2007 we entered into a term sheet agreement with Holloman Minerals which provided the basis for a joint venture through which we could earn an 80% interest in seven (7) Australian uranium mineral exploration leases. We paid a deposit of $300,000 in connection with the Agreement. The Agreement was contingent upon completion of a comprehensive joint venture agreement acceptable to both parties.
 
In May 2009, we mutually agreed with Holloman Minerals not to pursue creation of the joint venture contemplated by the Agreement. Effective May 29, 2009, we executed a Deposit Settlement Agreement with Holloman Minerals to amicably terminate all commitments related to the joint venture. As part of the settlement, Holloman Minerals agreed to refund $275,000 of the deposit we paid in connection with the Agreement. Holloman Minerals retained $25,000 to offset direct lease expenses which it incurred. On July 6, 2009, we received payment of the $275,000 refund from Holloman Minerals.
 
In November 2010, we began cooperative efforts with Holloman Corporation (“Holloman”), to pursue a working interest position in certain gold resources in the Kyrgyz Republic (the ‘Kyrgyz Gold Project”). In total, we incurred approximately $327,000 in expenses and liabilities in connection with these efforts, including $150,000 in notes payable to Holloman. During May 2011, we determined that further investment in the Kyrgyz Gold Project was unwarranted. Accordingly, we agreed to withdraw from the Kyrgyz Gold Project and assign our rights and interests in the project to Holloman. In exchange, Holloman agreed to forgive $150,000 of our indebtedness payable to them, and absorb approximately $121,000 in future obligations (including $25,271 in net liabilities) related to three consulting contracts we had executed in connection with the Kyrgyz Gold Project. As a result of this agreement, we recognized an increase to our additional paid in capital of $175,271. Our largest shareholder, Holloman Value Holdings, LLC, is a wholly-owned subsidiary of Holloman.
 
We did not participate in any mineral exploration during the three months ended May 31, 2011. As of July 15, 2011 we did not have any proven mineral reserves and we did not have any revenue.
 
During the remainder of fiscal 2012 we plan to identify and complete asset acquisition(s) and pursue joint venture agreements with third parties to explore for minerals in Australia, Central Asia or other parts of the world.
 
Results of Operations
 
As of July 15, 2011 we did not own any mineral properties and had not generated any revenues.
 
At May 31, 2011, our current liabilities exceed current assets by approximately $82,000. In largest part, our liabilities consist of deferred compensation ($66,000 or 70%) payable to our officers and consultants. General and administrative expense for the three months ended May 31, 2011 averaged $36,000 per month which is substantially more than in the prior fiscal year. This increase related almost entirely to the expenditures we incurred in connection with our investigation of the Kyrgyz Gold Project
 
 
7

 
 
Liquidity and Capital Resources
 
The mineral exploration and extraction industry is cyclical in nature and tends to reflect general economic conditions. Though mineral prices are trending higher, the pattern of historic price fluctuations has resulted in additional uncertainty in capital markets. Our access to capital, as well as that of our partners and contractors, could be limited due to tighter credit markets and may inhibit the formation of exploration ventures and partnerships. As a result, our future operations may be delayed due to financial constraints.
 
After adjustment for the obligations and liabilities absorbed by Holloman, our future contractual obligations as of May 31, 2011 consist of the following:
 
 
Payments due by period
 
Contractual Obligations
Total
 
Less than
1 Year
   
1-3 Years
   
3-5 Years
   
More than
5 Years
 
                               
Loans and Advances
  $ 10,500     $ 10,500                    

Our operations have been financed from the sale of our common stock and advances from our current and former shareholders, officers, directors and their affiliates.
 
If we are unable to raise the financing required to sustain operations, our stockholders could lose their investment. There can be no assurance that we will be successful in raising the capital we require, or that if the capital is offered, it will be subject to terms we consider acceptable. Investors should be aware that even in the event we are able to raise the funds we require, there can be no assurance that we will succeed in our acquisition, exploration or production plans and we may never be profitable.
 
As of July 10, 2011 we did not have any off balance sheet arrangements
 
Critical Accounting Policies and Estimates
 
Measurement Uncertainty
 
The process of preparing financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements; accordingly, actual results may differ from estimated amounts. Significant items subject to such estimates and assumptions include the carrying value of assets and certain income tax exposure. These estimates and assumptions are reviewed periodically and, as adjustments become necessary they are reported in earnings in the periods in which they become known.
 
Fair Value of Financial instruments
 
The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of prepaid expenses, other receivables, accounts payable and amounts due to related parties approximates their carrying value due to their short-term nature.
 
Loss per share
 
We present both basic and diluted earnings (loss) per share (EPS) on the face of the statements of operations. Basic EPS is computed by dividing net earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Diluted EPS figures are equal to those of basic EPS for each period since we have no dilutive stock options and warrants.
 
 
8

 
 
ITEM 4.
CONTROLS AND PROCEDURES
 
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of May 31, 2011, our disclosure controls and procedures are effective to satisfy the objectives for which they are intended.
 
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
 
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
 
 
9

 
 
PART II – OTHER INFORMATION
 
ITEM 6.
EXHIBITS
 
Exhibit  Number
 
Description of Exhibits
     
31.1
  
Rule 13a-14(a) Certifications
31.2
 
Rule 13a-14(a) Certifications
32
 
Section 1350 Certifications

 
10

 
 
SIGNATURES
 
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
  STRONGBOW RESOURCES INC.  
       
Date: July 15, 2011
By:
/s/ Grant Petersen  
    Grant Petersen,  
    Principal Executive Officer  
       
 
     
       
 
By:
/s/ Herbert Schmidt  
    Herbert Schmidt,  
    Principal Financial and Accounting Officer  
       
 
 
11