Attached files
U.S. 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 November 30, 2012
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to _____________
Commission File No. 333-181042
NORSTRA ENERGY, INC.
(Name of registrant in its charter)
Nevada 27-1833279
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
414 Manor Road
Laredo Texas, 78041
1-888-474-8077 (TEL)
Indicate by checkmark whether the issuer: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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 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-1 (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 [X] No[ ]
Indicate by check mark whether the registrant is a large accelerated filed, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
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]
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the
Preceding Five Years. N/A
Indicate by checkmark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 and 15(d) of the Securities Exchange Act
of 1934 after the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
Applicable Only to Corporate Registrants
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the most practicable date:
Class Outstanding as of November 30, 2012
----- -----------------------------------
Common Stock, $0.001 73,763,100
NORSTRA ENERGY INC.
Form 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
Item 4. Controls and Procedures 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
Item 3 Defaults Upon Senior Securities 12
Item 4. Mine Safety Disclosures 12
Item 5. Other Information 12
Item 6. Exhibits 12
2
NORSTRA ENERGY, INC.
(An Exploration Stage Company)
Condensed Balance Sheets
November 30, February 29,
2012 2012
-------- --------
(unaudited)
CURRENT ASSETS
Cash $ 8,373 $ 177
-------- --------
TOTAL CURRENT ASSETS 8,373 177
-------- --------
OTHER ASSETS
Oil and gas properties, unproved (full cost method) 19,064 19,064
-------- --------
TOTAL OTHER ASSETS 19,064 19,064
-------- --------
TOTAL ASSETS $ 27,437 $ 19,241
======== ========
CURRENT LIABILITIES
Shareholder Loans $ 8,274 $ --
-------- --------
TOTAL CURRENT LIABILITIES 8,274 --
-------- --------
LONG TERM LIABILITIES
Asset retirement obligation 4,892 4,392
-------- --------
TOTAL LIABILITIES 13,166 4,392
-------- --------
STOCKHOLDERS' EQUITY
Common stock; 150,000,000 shares authorized at $0.001 par value,
73,763,100 shares issued and outstanding 73,763 40,513
Stock subscriptions receivable -- (5,000)
Additional paid-in capital (19,032) (19,032)
Deficit accumulated during the exploration stage (40,460) (1,632)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 14,271 14,850
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,437 $ 19,241
======== ========
The accompanying notes are an integral part of
the condensed financial statements.
3
NORSTRA ENERGY, INC.
(An Exploration Stage Company)
Condensed Statements of Operations
(Unaudited)
For the For the Period from
Three Months Nine Months November 12, 2010
ended ended (Date of Inception) to
November 30, November 30, November 30,
2012 2012 2012
------------ ------------ ------------
REVENUE $ -- $ -- $ --
OPERATING EXPENSES
General and administrative 15,071 26,828 28,053
Professional fees 5,000 11,500 11,500
Accretion expense 167 500 827
------------ ------------ ------------
Total Operating Expense 20,238 38,828 40,380
------------ ------------ ------------
LOSS FROM OPERATIONS (20,238) (38,828) (40,380)
OTHER EXPENSES
Interest Expense -- -- 80
------------ ------------ ------------
Total Other Expense -- -- 80
------------ ------------ ------------
NET LOSS BEFORE INCOME TAXES (20,238) (38,828) (40,460)
PROVISION FOR INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (20,238) $ (38,828) $ (40,460)
============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -
BASIC AND DILUTED 73,741,122 54,945,827
------------ ------------
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
------------ ------------
The accompanying notes are an integral part of
the condensed financial statements.
4
NORSTRA ENERGY, INC.
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
For the Period from
Nine Months November 12, 2010
ended (Date of Inception) to
November 30, November 30,
2012 2012
-------- --------
OPERATING ACTIVITIES
Net loss for the period $(38,828) $(40,460)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Expenses paid on the Company's behalf by a related party 6,774 7,999
Accretion expense - oil and gas property 500 827
-------- --------
Net Cash Provided by Operating Activities (31,554) (31,364)
-------- --------
INVESTING ACTIVITIES
Purchase of oil and gas leases -- (15,000)
-------- --------
Net Cash Used in Investing Activities -- (15,000)
-------- --------
FINANCING ACTIVITIES
Proceeds from subscriptions receivable 5,000 5,000
Proceeds from related party loans 1,500 6,500
Proceeds from the sale of common stock 33,250 43,507
-------- --------
Net Cash Provided by Financing Activities 39,750 55,007
-------- --------
Net Increase in Cash and Cash Equivalents 8,196 8,373
Cash and Cash Equivalents - Beginning 177 --
-------- --------
Cash and Cash Equivalents - Ending $ 8,373 $ 8,373
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ -- $ --
Cash paid for income taxes $ -- $ --
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Capitalized asset retirement obligations $ -- $ 4,064
Common stock issued for debt $ -- $ 5,000
Stock subscription receivable $ -- $ 5,000
The accompanying notes are an integral part of
the condensed financial statements.
5
NORSTRA ENERGY INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
November 30, 2012 and February 29, 2012
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NORSTRA ENERGY INC. ("the Company") was incorporated under the laws of the State
of Nevada, U.S. on November 12, 2010. The Company is in the exploration stage as
defined under Accounting Standards Codification ("ASC 915") and it intends to
engage in the exploration and development of oil and gas properties.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
Earnings per Share
Basic and Diluted Net Earnings per Share (EPS) is computed by dividing net loss
available to common shareholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period. Diluted EPS gives effect to
all potentially dilutive common shares outstanding during the period. Diluted
EPS excludes all potentially dilutive shares if their effect is anti-dilutive.
At November 30, 2012 and 2011, no such potentially dilutive shares were issued
or outstanding.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the
last audit of our financial statements. The Company's management believes that
these recent pronouncements will not have a material effect on the Company's
financial statements.
2. GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and significant
shareholders sufficient to meet its minimal operating expenses and seeking
equity and/or debt financing. However management cannot provide any assurances
that the Company will be successful in accomplishing any of its plans.
6
NORSTRA ENERGY INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
November 30, 2012 and February 29, 2012
2. GOING CONCERN (CONTINUED)
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
3. STOCKHOLDERS' EQUITY
During the period ended November 30, 2012, the Company increased its authorized
capital from 75,000,000 common shares to 150,000,000 common shares with a par
value of $0.001 per share. The Company also authorized a stock split on a one
(1) old for two (2) new basis, leaving a total of shares issued and outstanding
as of November 30, 2012 of 73,763,100 shares.
In February 2012, the Company issued 20,513,000 post-split shares of common
stock (10,256,500 pre-split) for cash proceeds of $10,257. During the same
month, the Company also issued 10,000,000 post-split shares of common stock
(5,000,000 pre-split) for debt of $5,000 and 10,000,000 shares of post-split
common stock (5,000,000 pre-split) for stock subscriptions receivable of $5,000.
In August 2012 the payment was received for the subscriptions receivable. In
July and August of 2012 31,250,000 post-split shares were issued at a price of
$0.001 for cash proceeds of $31,250. In September of 2012 2,000,000 post-split
shares were issued at a price of $0.001 for cash proceeds of $2,000.
4. RELATED PARTY TRANSACTIONS
On February 23, 2012, an officer and director loaned the Company $5,000. On
February 25, 2012 the company issued 10,000,000 shares of common stock in
extinguishment of the shareholder liability at $0.01 per share.
During the nine months ended November 30, 2012, an officer and director of the
Company paid operating expenses on behalf of the Company amounting to $6,774.
The same officer and director also loaned the Company $1,500. The resulting
shareholder payable is unsecured, due on demand and is non-interest bearing.
5. OIL AND GAS LEASES
On February 1, 2011, the Company entered into an agreement with an unrelated
third-party entity to purchase a 100% working interest and an 80% net revenue
interest in an oil and gas lease in Reno County, Kansas. As consideration for
the purchase, the Company paid $15,000 in cash. The Company has not incurred any
exploration or development costs in connection with this lease.
6. SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company's management has reviewed all
material events and there are no additional material subsequent events to
report.
7
FORWARD-LOOKING STATEMENTS
Statements made in this Form 10-Q that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions of
Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the
Securities Exchange Act of 1934. These statements often can be identified by the
use of terms such as "August," "will," "expect," "believe," "anticipate,"
"estimate," "approximate" or "continue," or the negative thereof. We intend that
such forward-looking statements be subject to the safe harbors for such
statements. We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made. Any
forward-looking statements represent management's best judgment as to what
August occur in the future. However, forward-looking statements are subject to
risks, uncertainties and important factors beyond our control that could cause
actual results and events to differ materially from historical results of
operations and events and those presently anticipated or projected. We disclaim
any obligation subsequently to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
We were incorporated under the name Norstra Energy, Inc. in the State of Nevada
on November 12, 2010. We are a development-stage company and we have no revenues
and minimal assets. As a result we have incurred losses since inception.
We have not implemented our business plan as of this date. We are pursuing
sources of financing as well as additional acquisitions in the oil and gas
sector at this time.
Please note that throughout this Quarterly Report, and unless otherwise noted,
the words "we," "our," "us," the "Company," refers to NORSTRA ENERGY INC.
CURRENT BUSINESS OPERATIONS
As of the date of this Quarterly Report, we have not started operations. The
Company is in the development stage as defined under Statement on Financial
Accounting Standards No. 7, Development Stage Enterprises ("SFAS No.7") (ASC
915-10). As of November 30, 2012 we have no revenues, have minimal assets and
have incurred losses since inception.
We plan on engaging in the exploration and development of oil and gas
properties. We have acquired a 100% working interest in and an 80% revenue
interest to approximately 40 acres of oil and gas exploration land in Reno
County, Kansas which we plan to explore for oil and gas.
The Company has not generated any revenue to date and consequently its
operations are subject to all risks inherent in the establishment of a new
business enterprise. For the period from inception (November 12, 2010) through
November 30, 2012, the Company has accumulated losses of $40,460.
8
RESULTS OF OPERATIONS
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, do not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation. We expect we
will require additional capital to meet our long term operating requirements. We
expect to raise additional capital through, among other things, the sale of
equity or debt securities.
NINE MONTH PERIOD ENDED NOVEMBER 30, 2012 COMPARED TO THE NINE MONTHS ENDED
NOVEMBER 31, 2011 AND THE PERIOD FROM INCEPTION (NOVEMBER 12, 2010) TO NOVEMBER
30, 2012.
Our net loss for the nine months ended November 30, 2012 was approximately
$38,828 compared to a net loss of $-0- during the nine months ended November 31,
2012. During the nine months ended November 30, 2012 and 2011, we did not
generate any revenue. Net loss during the period from inception (November 12,
2010) to November 30, 2012 was $40,460.
During the nine months ended November 30, 2012, we incurred general and
administrative and professional expenses of approximately $38,328 compared to
$-0- during the nine months ended November 31, 2011. General and administrative
expenses and professional fees incurred during the nine month period ended
November 30, 2012 and 2011 were generally related to corporate overhead,
financial and administrative contracted services, such as legal and accounting
and developmental costs. During the period from inception (November 12, 2010) to
November 30, 2012, we incurred general and administrative and professional
expenses of approximately $39,553.
Our net loss during the nine months ended November 30, 2012 and 2011 was $38,828
or a negative $0.00 per share and $-0- or a negative $0.00, respectively. The
weighted average number of shares outstanding was 54,945,827 for the nine month
period ended November 30, 2012.
LIQUIDITY AND CAPITAL RESOURCES
NINE MONTH PERIOD ENDED NOVEMBER 30, 2012
As at the nine months ended November 30, 2012, our current assets were $8,373
and our total current liabilities were $8,274 which resulted in a working
capital of $99. As at the nine months ended November 30, 2012, current assets
were comprised of $8,373 in cash compared to $177 in current assets at February
29, 2012. At the nine-months ended November 30, 2012, current liabilities were
comprised of $8,274 in advances from a director. Long term liabilities were
comprised of $4,892 in asset retirement obligations.
Stockholders' equity decreased from $14,850 as of February 29, 2012 to $14,271
as of November 30, 2012.
CASH FLOWS FROM OPERATING ACTIVITIES
We have not generated positive cash flows from operating activities. For the
nine month period ended November 30, 2012, net cash flows used in operating
activities was $31,554 consisting of a net loss of $38,828 and was offset by an
accretion expense of $500, expenses paid on behalf of the company by a related
party of $6,774. Net cash flows used in operating activities was $31,634 for the
period from inception (November 12, 2010) to November 30, 2012 consisting of a
net loss of $40,460 which was offset by accretion expenses of $827, expenses
paid on behalf of the company by a related party of $7,999.
9
CASH FLOWS FROM FINANCING ACTIVITIES
We have financed our operations primarily from either advances from directors or
the issuance of equity and debt instruments. For the nine months ended November
30, 2012, we generated $39,750 from financing activities. For the period from
inception on November 12, 2010 through November 30, 2012, net cash provided by
financing activities was $55,007 due to the issuance of 63,763,100 common shares
for cash pursuant to the Company's S-1 offering.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a
combination of our existing funds and further issuances of securities. Our
working capital requirements are expected to increase in line with the growth of
our business.
Existing working capital, further advances, equity and debt instruments, and
anticipated cash flow are expected to be adequate to fund our operations over
the next nine months. We have no lines of credit or other bank financing
arrangements. Generally, we have financed operations to date through the
proceeds of the private placement of equity and debt instruments. In connection
with our business plan, management anticipates additional increases in operating
expenses and capital expenditures relating to: (i) acquisition of inventory;
(ii) developmental expenses associated with a start-up business; and (iii)
marketing expenses. We intend to finance these expenses with further issuances
of securities and debt issuances. Thereafter, we expect we will need to raise
additional capital and generate revenues to meet long-term operating
requirements. Additional issuances of equity or convertible debt securities will
result in dilution to our current shareholders. Further, such securities might
have rights, preferences or privileges senior to our common stock. Additional
financing May not be available upon acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms, we May not be
able to take advantage of prospective new business endeavors or opportunities,
which could significantly and materially restrict our business operations.
MATERIAL COMMITMENTS
As of the date of this Quarterly Report, we have a material commitment. During
the period from inception (November 12, 2010) to November 30, 2012, Dallas
Kerkenezov our Chief Executive Officer and a director, advanced us $6,500, and
paid $7,999 in expenses on the Company's behalf. The amounts payable are
non-interest bearing, unsecured and due on demand.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase any significant equipment during the next twelve
months.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this Quarterly Report, we do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors.
10
GOING CONCERN
The independent auditors' report accompanying our February 29, 2012 financial
statements contained an explanatory paragraph expressing substantial doubt about
our ability to continue as a going concern. The financial statements have been
prepared "assuming that we will continue as a going concern," which contemplates
that we will realize our assets and satisfy our liabilities and commitments in
the ordinary course of business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that August impact our financial
position, results of operations or cash flows due to adverse change in foreign
currency and interest rates.
EXCHANGE RATE
Our reporting currency is United States Dollars ("USD").
INTEREST RATE
Any future loans will relate mainly to trade payables and will be mainly
short-term. However our debt may be likely to rise in connection with expansion
and if interest rates were to rise at the same time, this could become a
significant impact on our operating and financing activities. We have not
entered into derivative contracts either to hedge existing risks of for
speculative purposes.
ITEM 4. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act) that is designed to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.
An evaluation was conducted under the supervision and with the participation of
our management of the effectiveness of the design and operation of our
disclosure controls and procedures as of November 30, 2012. Based on that
evaluation, our management concluded that our disclosure controls and procedures
were not effective as of such date to ensure that information required to be
disclosed in the reports that we file or submit under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. Such officer also confirmed that there was no change in
our internal control over financial reporting during the nine-months ended
November 30, 2012 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Management is not aware of any legal proceedings contemplated by any
governmental authority or any other party involving us or our properties. As of
the date of this Quarterly Report, no director, officer or affiliate is (i) a
party adverse to us in any legal proceeding, or (ii) has an adverse interest to
us in any legal proceedings. Management is not aware of any other legal
proceedings pending or that have been threatened against us or our properties.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On July 12 2012, our registration statement on Form S-1 for 60,000,000 became
effective.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No report required.
ITEM 4. MINE SAFETY DISCLOSURES
No report required.
ITEM 5. OTHER INFORMATION
No report required.
ITEM 6. EXHIBITS
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange
Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange
Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1 Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b)
or 15d- 14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
101 Interactive Data Files pursuant to Rule 405 of Regulation S-T.
12
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.
NORSTRA ENERGY INC.
Dated: January 14, 2013
By: /s/ Dallas Kerkenezov
-------------------------------------
Dallas Kerkenezov, President,
Chief Financial Officer, Director
1
