Fortem Resources Inc. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Fortem Resources Inc.	Financial_Report.xls
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: August 31, 2012

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)

(281) 260-1034

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). þ 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). o Yes þ No

Class of Stock		No. Shares Outstanding		Date
Common		108,486,705		October 10, 2012

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 29, 2012, 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.

PART I – FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

STRONGBOW RESOURCES INC.

(An Exploration Stage Company)

BALANCE SHEETS

	August 31, 2012			February 29, 2012
	(Unaudited)
ASSETS

ASSETS
Cash	$	203,326		$	78,196
Prepaid expense and other		68,916			4,069
Current Assets		272,242			82,265

Oil and gas properties, full cost method, unproven		1,701,249			26,658
Total Assets	$	1,973,491		$	108,923


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,041,374		$	173,361
Due to related parties		10,500			10,500
Notes payable		559,940			-
Total Current Liabilities		1,611,814			183,861

STOCKHOLDERS' EQUITY (DEFICIT)
Capital Stock
Authorized:
750,000,000 common shares, par value $0.001 per share
Issued and outstanding:
108,486,705 common shares (105,656,402 at February 29, 2012)		16,687			13,856
Additional paid in capital		1,640,484			899,690
Obligation to issue shares		49,527			-
Accumulated other Comprehensive loss		(15,380	)		-
Deficit accumulated during the exploration stage		(1,329,641	)		(988,484	)
Total Stockholders' Equity (Deficit)		361,677			(74,938	)
Total Liabilities and Stockholders' Equity (Deficit)	$	1,973,491		$	108,923

The accompanying notes are an integral part of these financial statements

STRONGBOW RESOURCES INC.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

(Unaudited)

	Cumulative results
	from July 9, 2004 to			Three Months Ended						Six Months Ended
	August 31, 2012			August 31, 2012			August 31, 2011			August 31, 2012			August 31, 2011

GENERAL AND ADMINISTRATIVE EXPENSES
Office, travel and general	$	296,826		$	39,785		$	6,258		$	95,990		$	40,074
Management fees		344,378			38,643			9,000			77,689			18,000
Consulting		514,336			38,400			18,000			149,000			82,700
Professional fees		198,049			12,955			1,450			18,478			1,830
Total General and Adminsitrative		(1,353,589	)		(129,783	)		(34,708	)		(341,157	)		(142,604	)

GAIN ON SETTLEMENT OF DEBT		48,948			-			-			-			-
LOSS ON SETTLEMENT OF DEPOSIT		(25,000	)		-			-			-			-
NET LOSS	$	(1,329,641	)	$	(129,783	)	$	(34,708	)	$	(341,157	)	$	(142,604	)

Foreign Currency Translation		(15,380	)		(15,380	)		-			(15,380	)		-

COMPREHENSIVE LOSS	$	(1,345,021	)	$	(145,163	)	$	(34,708	)	$	(356,537	)	$	(142,604	)

BASIC AND DILUTED NET LOSS PER COMMON SHARE				$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF BASIC AND
DILUTED COMMON SHARES OUTSTANDING					108,182,357			104,323,069			107,448,793			104,323,069

The accompanying notes are an integral part of these financial statements

STRONGBOW RESOURCES INC.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

	Cumulative results
	from July 9, 2004 to			Six Months Ended
	August 31, 2012			August 31, 2012			August 31, 2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations	$	(1,329,641	)	$	(341,157	)	$	(142,604	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain from settlement of indebtedness		(48,949	)		-			-
Service fees paid in stock		44,000			44,000			-
Unrealized foreign exchange losses		9,275			9,275			-
Changes in non-cash working capital items
Prepaid expenses		(68,916	)		(64,847	)		1,860
Accounts payable and accrued liabilities		92,605			(64,101	)		12,401
Assignment of accrued expenses		25,271			-			25,271
Cash used by continuing operations		(1,276,355	)		(416,830	)		(103,072	)

CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures on oil and gas properties		(752,477	)		(742,477	)		-
Cash used by investing activities		(752,477	)		(742,477	)		-

CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash		1,419,900			699,625			-
Obligation to issue shares		49,527			49,527			-
Proceeds from notes payable		535,285			535,285			-
Payments to related parties		(11,350	)		-			-
Proceeds from related parties		238,797			-			100,000
Cash provided by financing activities		2,232,158			1,284,437			100,000

CHANGE IN CASH		203,326			125,130			(3,072	)
CASH, BEGINNING		-			78,196			4,017
CASH, ENDING	$	203,326		$	203,326		$	945

SUPPLEMENTAL DISCLOSURE:
Cash paid for Interest	$	900		$	-		$	295
Cash paid for Income taxes	$	-		$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Note Payable forgiven in assignment transaction	$	150,000		$	-		$	-
Common stock issued as repayment of note payable	$	18,000		$	-		$	-
Common stock issued for services	$	44,000		$	44,000		$	-
Accrued expenditures on oil and gas properties	$	905,453		$	932,114		$	-

The accompanying notes are an integral part of these financial statements

STRONGBOW RESOURCES INC.

(An Exploration Stage Company)

NOTE TO THE FINANCIAL STATEMENTS

(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 29, 2012 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 the 10-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 and six months ended August 31, 2012 are not necessarily indicative of the results that may be expected for the year ending February 28, 2013.

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.	OIL AND GAS PROPERTIES

Effective February 21, 2012, the Company entered into a Farmout Agreement (the “Agreement”) with Harvest Operations Corp. (“Harvest”). The Agreement provided for the Company’s acquisition of an undivided 100% working interest (“Working Interest”) in a petroleum and natural gas license covering eight (8) sections of land located in the Compeer Area in the Province of Alberta, Canada (the “Farmout Lands”) subject to a non-convertible overriding royalty payable to Harvest. The Farmout Lands have no proven reserves or current production.

To earn the Working Interest the Company was required to drill, complete, equip or abandon a test well on the Farmout Lands (“Test Well”). Spudding of the Test Well was to occur on or before June 1, 2012, subject to rig availability, surface accessibility and regulatory approval. The Test Well could be completed laterally in either the Bakken or Viking formation and was required to run a minimum measured depth of 1,950 meters. The Company was also subject to a non-performance penalty in the amount of CAD$350,000 (USD$344,000) payable to the Harvest in the event the Company was unable to obtain operator status in Alberta on or before March 30, 2012, or was unable to meet the Test Well commitment under the Agreement. On March 14, 2012, the Company obtained operator status in the Province of Alberta. On April 4, 2012, the Alberta Energy Resources Conservation Board approved the transfer of the well license relating to the Test Well from Harvest to the Company.

The Test Well was spudded on May 27, 2012, and the total depth drilled in the Test Well met the contract depth requirements under the Agreement.

During July and August, 2012, the Company completed its earning obligations by fracturing and equipping the Test Well as an oil producer.

As of August 31, 2012, the Company had incurred approximately $1,701,000 in exploration costs which include substantially all of costs estimated to drill, complete and equip the Test Well.

3.	NOTES PAYABLE

At August 31, 2012, the Company had CAD$555,000 (USD$559,940) in short term note obligations to an unrelated party. The notes payable are unsecured, non-interest bearing, payable upon demand, and may be used by the payee, in whole or in part, to offset any funding obligations incurred by the payee in connection with any existing or future farm-in/farm-out agreements with the Company.

4.	CAPITAL STOCK

On March 14, 2012, the Company issued 1,200,000 common shares at a price of $0.25 per share. Gross proceeds from the private placement totaled $300,000. The Company paid $10,500 in finder’s fees in connection with the issuance of the shares.

On May 24, 2012, the Company issued 530,303 common shares at a price of $0.33 per share. Gross proceeds from the private placement totaled $175,000. The Company paid $6,125 in finder’s fees in connection with the issuance of the shares.

On June 28, 2012, the Company issued 1,000,000 common shares at a price of $0.25 per share. Gross proceeds from the private placement totaled $250,000. The Company paid $8,750 in finder’s fees in connection with the issuance of the shares.

During August, 2012, the Company received $49,527 as partial payment of proceeds on a subscription agreement providing for the issuance of 400,000 common shares at a price of $0.25 per share. At August 31, 2012, these proceeds were recorded in the Company’s stockholder’s equity (deficit) as an obligation to issue shares.

On March 15, 2012 the Company entered into a consulting agreement for investor relations services. The agreement has a twelve month term, but may be cancelled with thirty days notice after three months. Compensation to the consultant is $7,000 per month and 100,000 of the Company’s restricted common shares for each 3 months of this engagement. Effective May 31, 2012, the consultant received 100,000 shares of the Company’s restricted common stock with a fair market value of $44,000. The agreement was canceled, at the Company’s option, effective June 14, 2012.

5.	RELATED PARTY TRANSACTIONS

At August 31, 2012, the Company also had $10,500 in advances payable to a related party. Those advances are unsecured, non-interest bearing, and payable upon demand by the payee.

At August 31, 2012, accounts payable included $28,665 in amounts payable to the Company's executive officers and directors.

During the six months ended August 31, 2012, the Company incurred management fees of $77,689 to directors of the Company.

6.	SUBSEQUENT EVENTS

Compeer Operations

On September 5, 2012, the Company received an earning notice from Harvest granting the Company a 100% working interest in the Farmout Lands.

Issuance of Capital Stock

On September 7, 2012, the Company issued 400,000 common shares at a price of $0.25 per share. Gross proceeds from the private placement totaled $100,000. The Company paid $3,500 in finder’s fees in connection with the issuance of the shares.

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 29, 2012 filed with the SEC on May 29, 2012.

General

We are an exploration stage company incorporated in the State of Nevada on July 9, 2004. Until February 2012 we had been relatively inactive. We are focused on the acquisition, exploration, and development of oil and gas properties in the United States and Canada. As of October 10, 2012 we did not have any proven reserves and have not generated any revenue.

Initiation of Oil and Gas Operations

Effective February 21, 2012, we entered into a Farmout Agreement (the “Agreement”) with Harvest Operations Corp. (“Harvest”). The Agreement provided for our acquisition of an undivided 100% working interest (“Working Interest”) in a petroleum and natural gas license covering eight (8) sections of land (5,120 acres, more or less) located in the Compeer Area in the Province of Alberta, Canada (the “Farmout Lands”). We initiated oil and gas operations on the date of the Agreement. The Farmout Lands have no proven reserves or current production.

To earn the Working Interest we were required to drill, complete, equip or abandon a test well on the Farmout Lands (“Test Well”). On March 14, 2012, we obtained operator status in the Province of Alberta. On April 4, 2012, the Alberta Energy Resources Conservation Board approved the transfer of the well license relating to the Test Well from Harvest to us.

The Test Well was spudded on May 27, 2012 and was drilled vertically 905 meters (2,977 feet) through the Viking and into the Bakken formations. We cut two full bore cores, one from each of the Viking and Bakken formations, and also ran a drill stem test in the Viking formation. The plug samples taken from the Viking formation exhibited strong oil fluorescence indicating light oil and had between 16% and 23% porosity in the samples. We estimate the net sand pay in the well is approximately 5 meters (16.45 feet). The Bakken formation was found to be uneconomic and was abandoned. Based on our evaluation, we elected to drill a horizontal leg to the Test Well running 1,045 meters (3,435 feet) into the Viking formation. The total depth drilled in the Test Well met the contract depth requirements under the Agreement.

During July and August, 2012, we completed our earning obligations by fracturing and equipping the Test Well as an oil producer. Initial production from the Test Well has been limited by a higher than expected gas solution content. It is expected the oil ratio will increase as the gas component lessens. Oil recovered to date is light, sweet crude. As of October 10, 2012, it was too early to provide stabilized production forecasts.

As of October 10, 2012, we have incurred approximately $1,701,000 in exploration costs which include substantially all of costs estimated to drill, complete and equip the Test Well.

On September 5, 2012, we received an earning notice from Harvest granting us a 100% working interest in the Farmout Lands.

The Viking Formation oil prospect is part of an emerging large oil resource play in Eastern and Central Alberta as well as in the Dodsland area of Saskatchewan. The Viking Formation in the Compeer play will be developed by up to four (4) horizontal wells per section per zone.

Our Working Interest in the Farmout Lands will be held subject to a non-convertible overriding royalty payable to the Harvest (“Harvest’s Royalty”). Harvest’s Royalty on net crude oil revenues will be measured on a sliding scale from 5% to 15% over a range of production volumes from 1 to 150 barrels per day. Harvest’s Royalty on net gas and other petroleum product revenues is 15%.

Other

Our general and administrative expense for the three and six months ended August 31, 2012 increased by $95,075 (274%) from $34,708 to $129,783, and 198,553 (139%) from $142,604 to $341,157, respectively, when compared to the same periods during the prior fiscal year. These expenditures reflect an increase in travel expense and, consulting and administrative personnel required to support our initiation of oil and gas operations. We have increased the number of our executive officers and engineering professionals. We believe it’s likely we will also require additional staff and accounting support to service our operating efforts. As a result, we estimate our general and administrative expense will continue to increase during the next six months.

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.

Liquidity and Capital Resources

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. We regularly review the market to identify opportunities for capital formation.

As of October 10, 2012, we have incurred approximately $1,701,000 in exploration costs which include substantially all of costs estimated to drill, complete and equip the Test Well. As of October 10, 2012, our cash resources totaled $67,868. We need to raise additional funds to cover the well costs we've incurred. During the period from February 20, 2012 to October 10, 2012, we raised gross proceeds of $1,584,967 through a loan ($559,940) and sales of our common stock ($1,025,027).

At August 31, 2012, our current liabilities exceeded current assets by approximately $1,339,572. In largest part, our liabilities consisted of accrued well costs ($932,114 or 58%) and notes payable ($559,940 or 35%) to a potential farm-in partner.

Other than the obligations associated with the Farmout Lands, our future contractual obligations as of August 31, 2012 consisted 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	$	570,440	$	570,440		—		—		—

During the remainder of fiscal 2013 we plan to pursue exploration of the Farmout Lands, identify and complete additional asset acquisition(s), and pursue joint venture agreements with third parties to explore for oil and gas in Canada and the United States. Early estimates indicate the costs to perform the work outlined in our business plan would range from $7 million to $10 million.

The oil and gas industry is cyclical in nature and tends to reflect general economic conditions. The US and other world economies are recovering from a recession which continues to inhibit investment liquidity. Though oil 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, may be limited due to tightened credit markets. In addition, the results of our operations will be significantly impacted by a variety of trends and factors including; (i) our exploration success and ability to raise capital, (ii) increasing competition from larger companies and the marketability of future production, if any, (iii) future fluctuations in the prices of oil and gas, and (iv) our ability to maintain or increase oil and gas production through exploration and development activities.

We believe our plan of operations may require up to $11 million for exploration costs and administrative expenses during the twelve-month period ending November 30, 2013. We are attempting to raise investment capital to cover our portion of anticipated costs. If we are unable to raise the financing we need, our business plan may fail and 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 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 drilling or production plans and we may never be profitable.

As of October 10, 2012 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. The most significant estimates with regard to the financial statements included with this report relate to carrying values of oil and gas properties, determination of fair values of stock based transactions, and deferred income tax rates and timing of the reversal of income tax differences.

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.

We consider all highly liquid instruments with an original maturity of three months or less at the time of issuance to be cash equivalents. Cash and cash equivalents totaled $203,326 and $78,196 at August 31, 2012 and February 29, 2012, respectively.

Oil and Gas Properties

We utilize the full cost method to account for our investment in oil and gas properties. Accordingly, all costs associated with acquisition, exploration and development of oil and gas reserves, including such costs as leasehold acquisition costs, interest costs relating to unproved properties, geological expenditures, tangible and intangible development costs including direct internal costs are capitalized to the full cost pool. When we commence production from established proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. Costs of unproved properties are not amortized until the proved reserves associated with the projects can be determined or until impairment occurs. If an assessment of such properties indicates that properties are impaired, the amount of impairment is added to the capitalized cost base to be amortized.

The capitalized costs included in the full cost pool are subject to a "ceiling test" (based on 12-month average of first-day-of-the-month pricing), which limits such costs to the aggregate of the (i) estimated present value, using a ten percent discount rate, of the future net revenues from proved reserves, based on current economic and operating conditions, (ii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, (iii) the cost of properties not being amortized, less (iv) income tax effects related to differences between the book and tax basis of the cost of properties not being amortized and the cost or estimated fair value of unproved properties included in the costs being amortized. At August 31, 2012, all of our oil and gas interests were classified as unproven properties and were not being amortized.

Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations.

Income Taxes

Income taxes are determined using the liability method. Deferred tax assets and liabilities, if any, are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes that date of enactment. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

We account for uncertainty in income taxes by applying a two-step method. First, we evaluate whether a tax position has met a more likely than not recognition threshold, and second, it measures that tax position to determine the amount of benefit, if any, to be recognized in the financial statements. The application of this method did not have a material effect on our financial statements.

Stock Based Compensation

We record compensation expense for stock based payments using the fair value method. The fair value of stock based compensation to directors and employees is determined using the Black-Scholes option valuation model at the time of grant. Fair value for common shares issued for goods or services rendered by non-employees is measured based on the fair value of the goods and services received. Share-based compensation is expensed with a corresponding increase to share capital. Upon the exercise of stock options, the consideration paid is recorded as an increase in share capital.

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 and are in a net loss position.

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 August 31, 2012, our disclosure controls and procedures are effective.

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.

PART II – OTHER INFORMATION

ITEM 2.

UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS.

On June 28, 2012, we sold 1,000,000 common shares at a price of $0.25 per share. Gross proceeds from the private placement totaled $250,000. We paid $8,750 in finder’s fees in connection with the sale of the shares.

We relied upon the exemption provided by Section 4(2) of the Securities Act of 1933 with respect to the sale of these shares. The purchasers of the common shares were sophisticated investors who were provided full information regarding our business and operations. There was no general solicitation in connection with the offer or sale of these shares. The purchasers acquired the shares for their own accounts. The certificates representing the shares will bear a restricted legend providing that they cannot be sold unless pursuant to an effective registration statement or an exemption from registration.

ITEM 6.

EXHIBITS

Exhibit Number		Description of Exhibits

3.1		Articles of Incorporation(1)
3.2		Corporate Bylaws(1)
10.1		Farmout Agreement, Compeer Area with Harvest Operations Corp. effective February 21, 2012(2)
31.1		Rule 13a-14(a) Certifications
31.2		Rule 13a-14(a) Certifications
32		Section 1350 Certifications

101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

(1)	Previously filed with our Form SB-2 on December 1, 2006 and incorporated by reference.
(2)	Previously filed with our Form 10-K on May 29, 2012 and incorporated by reference.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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.

	STRONGBOW RESOURCES INC.

Date: October 15, 2012	By:	/s/ Robert Martin
		Robert Martin,
		Principal Executive Officer

	By:	/s/ Herbert Schmidt
		Herbert Schmidt,
		Principal Financial and Accounting Officer

Attached files

Fortem Resources Inc. Reports

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