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 |
May 31, 2013 | |||||||||||||||||||
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or | |||||||||||||||||||
[ ] |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||||||||
For the transition period from |
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to |
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Commission File Number |
333-181042 | |||||||||||||||||||
NORSTRA ENERGY INC. | ||||||||||||||||||||
(Exact name of registrant as specified in its charter) | ||||||||||||||||||||
Nevada |
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27-1833279 | ||||||||||||||||||
(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) | ||||||||||||||||||
2860 Exchange Boulevard, Suite 400, South Lake TX |
76092 | |||||||||||||||||||
(Address of principal executive offices) |
(Zip Code) | |||||||||||||||||||
(888) 474-8077 | ||||||||||||||||||||
(Registrant’s telephone number, including area code) | ||||||||||||||||||||
N/A | ||||||||||||||||||||
(Former name, former address and former fiscal year, if changed since last report) | ||||||||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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. | ||||||||||||||||||||
[X] |
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). | ||||||||||||||||||||
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[X] |
YES |
[ ] |
NO | ||||||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small 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 |
[ ] |
(Do not check if a smaller reporting company) |
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 | ||||||||||||||||||||
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[ ] |
YES |
[X] |
NO | ||||||||||||||||
APPLICABLE ONLY TO ISSUERS
INVOLVED IN BANKRUPTCY Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. | ||||||||||||||||||||
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[ ] |
YES |
[ ] |
NO | ||||||||||||||||
APPLICABLE ONLY TO CORPORATE ISSUERS | ||||||||||||||||||||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. | ||||||||||||||||||||
38,250,000 common shares issued and outstanding as of July 10, 2013. | ||||||||||||||||||||
NORSTRA ENERGY INC.
Form 10-Q
PART I - FINANCIAL INFORMATION |
3 | |
Item 1. |
Financial Statements |
3 |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
4 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
12 |
Item 4. |
Controls and Procedures |
12 |
PART II - OTHER INFORMATION |
13 | |
Item 1. |
Legal Proceedings |
13 |
Item 1A. |
Risk Factors |
13 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
13 |
Item 3. |
Defaults Upon Senior Securities |
13 |
Item 4. |
Mining Safety Disclosures |
13 |
Item 5. |
Other Information |
13 |
Item 6. |
Exhibits |
14 |
SIGNATURES |
16 |
2
Our unaudited interim financial statements for the three month period ended May 31, 2013 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.
NORSTRA ENERGY, INC.
(An Exploration Stage Company)
INDEX TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
From Inception on November 12, 2010 through May 31, 2013
|
Page |
|
|
Condensed Balance Sheets |
F-1 |
|
|
Condensed Statements of Operations |
F-2 |
|
|
Condensed Statements of Cash Flows |
F-3 |
|
|
Notes to the Condensed Financial Statements |
F-4 |
_______________________________________
3
Norstra Energy Inc.
(An Exploration Stage Company)
Condensed Balance Sheets
|
|
May 31, 2013 |
|
February 28, 2013 |
ASSETS |
|
(Unaudited) |
|
|
Current Assets |
|
|
|
|
Cash |
$ |
323,055 |
$ |
99,550 |
Deposits and prepaid expenses |
|
27,761 |
|
6,500 |
Total Current Assets |
|
350,816 |
|
106,050 |
|
|
|
|
|
Other Assets |
|
|
|
|
Oil and gas properties, unproved (full cost method) |
|
219,064 |
|
19,064 |
Total Other Assets |
|
219,064 |
|
19,064 |
|
|
|
|
|
TOTAL ASSETS |
$ |
569,880 |
$ |
125,114 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUTIY |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
1,550 |
$ |
1,113 |
Due to shareholder |
|
8,274 |
|
8,274 |
Total Current Liabilities |
|
9,824 |
|
9,387 |
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
Asset retirement obligation |
|
5,226 |
|
5,059 |
Convertible notes payable, net |
|
411,259 |
|
100,000 |
Accrued interest – notes payable |
|
3,819 |
|
27 |
Total Long Term Liabilities |
|
420,304 |
|
105,086 |
|
|
|
|
|
TOTAL LIABILITIES |
|
430,128 |
|
114,473 |
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
Preferred stock, par value $0.001, 50,000,000 preferred shares authorized, 1,000,000 and nil shares issued and outstanding, respectively |
|
1,000 |
|
- |
Common Stock, par value $0.001, 150,000,000 shares authorized, 38,250,000 and 73,763,100 shares issued and outstanding, respectively |
|
38,250 |
|
73,763 |
Additional paid-in capital |
|
220,206 |
|
(19,032) |
Deficit accumulated during the exploration stage |
|
(119,704) |
|
(44,090) |
Total Stockholders’ Equity |
|
139,752 |
|
10,641 |
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
569,880 |
$ |
125,114 |
|
|
|
|
|
The accompanying notes are an integral part of these condensed financial statements.
F-1
Norstra Energy Inc.
(An Exploration Stage Company)
Condensed Statements of Operations
(Unaudited)
|
|
Three Months Ended May 31, |
Cumulative From Inception (November 12, 2010) to May 31, | |||||||
|
|
|
2013 |
2012 |
2013 | |||||
|
|
|
|
|
|
|
|
|
|
|
REVENUES: |
|
|
|
|
$ |
- |
$ |
- |
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
52,787 |
|
1,514 |
|
81,993 |
Accretion expense |
|
|
|
|
|
167 |
|
166 |
|
1,161 |
Professional fees |
|
|
|
|
|
12,884 |
|
5,250 |
|
26,747 |
Total Operating Expenses |
|
|
|
|
|
65,838 |
|
6,930 |
|
109,901 |
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
(9,776) |
|
- |
|
(9,803) |
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
|
|
|
$ |
(75,614) |
$ |
(6,930) |
$ |
(119,704) |
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
|
|
|
|
$ |
(0.00) |
$ |
(0.00) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Number of Common Shares Outstanding |
|
|
|
|
|
42,496,132 |
|
40,513,100 |
|
|
The accompanying notes are an integral part of these condensed financial statements.
F-2
Norstra Energy Inc.
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
|
Three Months Ended May 31, |
Cumulative From Inception (November 12, 2010) to May 31, | ||||
|
2013 |
2012 |
2013 | |||
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
Net loss for the period |
$ |
(75,614) |
$ |
(6,930) |
$ |
(119,704) |
Adjustments to reconcile net income to cash generated by operating activities: |
|
|
|
|
|
|
Expenses paid on the Company’s behalf by a related party |
|
- |
|
6,774 |
|
6,774 |
Accretion expense – oil and gas property |
|
167 |
|
166 |
|
1,162 |
Share based compensation |
|
10,000 |
|
- |
|
10,000 |
Interest on beneficial conversion |
|
5,984 |
|
- |
|
5,984 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Deposits and prepaid expenses |
|
(21,261) |
|
- |
|
(27,761) |
Accounts payable and accrued liabilities |
|
437 |
|
- |
|
1,550 |
Accrued interest - notes payable |
|
3,792 |
|
- |
|
3,819 |
Net cash provided by (used in) operating activities |
|
(76,495) |
|
10 |
|
(118,176) |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
Purchase of oil and gas leases |
|
(200,000) |
|
- |
|
(215,000) |
Net cash provided by (used in) investing activities |
|
(200,000) |
|
- |
|
(215,000) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
Proceeds from notes payable to related party |
|
- |
|
- |
|
6,500 |
Proceeds from subscription receivable |
|
- |
|
- |
|
5,000 |
Issuance of common stock for cash |
|
- |
|
- |
|
44,731 |
Proceeds from convertible notes payable |
|
500,000 |
|
- |
|
600,000 |
Net cash provided by (used in) financing activities |
|
500,000 |
|
- |
|
656,231 |
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
223,505 |
|
10 |
|
323,055 |
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period |
|
99,550 |
|
177 |
|
- |
|
|
|
|
|
|
|
Cash and cash equivalents - end of period |
$ |
323,055 |
$ |
187 |
$ |
323,055 |
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosure: |
|
|
|
|
|
|
Cash paid for interest |
$ |
- |
$ |
- |
$ |
- |
Cash paid for income taxes |
$ |
- |
$ |
- |
$ |
- |
|
|
|
|
|
|
|
Non-Cash Financing and Investing Activities |
|
|
|
|
|
|
Stock issued in exchange for forgiveness of related party debt |
$ |
- |
$ |
- |
$ |
5,000 |
Stock subscription receivable |
$ |
- |
|
- |
|
5,000 |
Capitalized asset retirement obligation |
$ |
- |
$ |
- |
$ |
5,226 |
Cancellation of common stock |
$ |
35,513 |
$ |
- |
$ |
35,513 |
Beneficial conversion features on convertible notes payable |
$ |
194,725 |
$ |
- |
$ |
194,725 |
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed financials. |
F-3
Norstra Energy Inc.
(An Exploration Stage Company)
Notes to Condensed Financial Statements
May 31, 2013
(Unaudited)
NOTE 1. ORGANIZATION AND BUSINESS OPERATIONS
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.
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 May 31, 2013 the Company has accumulated losses of $118,204.
On March 30, 2012, the Company approved a 2:1 forward split of the Company’s stock. Following this split, the Company’s authorized capital increased to 150,000,000 common shares with a par value of $0.001 per share and the outstanding shares of the Company’s capital stock has since increased to 38,250,000. The effect of this forward split has been retroactively applied to the common stock balances at February 29, 2012, and reflected in all common stock activity reflected in these financial statements since that time.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The Company's fiscal year end is February 28.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company had $323,055 and $99,550 of cash and cash equivalents at May 31, 2013 and February 28, 2013, respectively.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments
The carrying value of the Company’s financial instruments approximates their fair value because of the short maturity of these instruments.
F-4
Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718). To date, the Company has not adopted a stock option plan and has not granted any stock options.
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260,"Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement.
Basic 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 May 31, 2013 and 2012, 6,511,837 and 0 potentially dilutive shares, respectively, were issued or outstanding.
Recent Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.
Oil and Gas Properties
The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized.
Capitalized costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs, and asset retirement costs under ASC 410 “Asset Retirement and Environmental Obligations”, are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties.
F-5
There are many factors, including global events that may influence the production, processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs associated with properties that have not been evaluated through drilling or seismic analysis, including exploration wells in progress at May 31, 2013, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis.
Revenue recognition: Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations. Costs of oil and gas properties are amortized using the units of production method.
Ceiling test: Under the full-cost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for cash flow hedges. Estimated future net cash flows exclude future cash outflows associated with settling accrued asset retirement obligations. The Company has adopted U.S. Securities and Exchange Commission (“SEC”) Release 33-8995 and the amendments to ASC 932, “Extractive Industries — Oil and Gas” (the Modernization Rules). Under the Modernization Rules, estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements.
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional depletion, depreciation and amortization expense (“DD&A”) in the accompanying statement of operations. Such limitations are tested quarterly. As of May 31, 2013 and February 28, 2013, capitalized costs did not exceed the ceiling limitation, and no write-down was indicated.
The Company periodically assesses for impairment and no indication of impairment existed at May 31, 2013 and May 31, 2012.
The amount of capitalized costs for the Reno County, Kansas lease at May 31, 2013 and February 28, 2013 is $19,064, respectively. The amount of capitalized costs for the South Sun River Bakken Prospect at May 31, 2013 and February 28, 2013 is $200,000 and nil, respectively.
Asset Retirement Obligations
The Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.
NOTE 3. GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As at May 31, 2013, the Company had a loss from operations, for the three months ended of $75,614, an accumulated deficit of $119,704, and working capital of $340,992 and has earned no revenues since inception. 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.
F-6
The Company depends upon capital to be derived from future financing activities such as subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital and are not limited to, acceptance of the Company's business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire key employees to provide services. There may be other risks and circumstances that management may be unable to predict.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
NOTE 4. CAPITAL STOCK
Authorized Stock
The Company has authorized 150,000,000 common shares and 50,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
Share Issuance
Preferred Shares
On March 12, 2013 the Company issued 1,000,000 shares of preferred stock to an officer and director of the Company at a price of $0.01 as part of a consulting agreement.
There were 1,000,000 and nil preferred shares issued and outstanding at May 31, 2013 and February 28, 2013, respectively.
Common Shares
In March 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 retroactive to inception.
In February 2012, the Company issued 20,513,000 shares of common stock for cash proceeds of $10,257. During the same month, the Company also issued 10,000,000 shares of common stock for debt of $5,000 and 10,000,000 shares of common stock 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 shares were issued at a price of $0.001 for cash proceeds of $31,250. In September of 2012, 2,000,000 shares were issued at a price of $0.001 for cash proceeds of $2,000.
On March 12, 2013, the Company cancelled 35,513,100 common shares of a current officer and a former director of the Company.
There were 38,250,000 and 73,763,100 common shares issued and outstanding at May 31, 2013 and February 28, 2013, respectively.
F-7
NOTE 5. DUE TO RELATED PARTY
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 $0.001 per share.
During the year ended February 28, 2013, 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 balance of $8,274 at May 31, 2013 and February 28, 2013 respectively is unsecured, due on demand and is non-interest bearing.
NOTE 6. CONVERTIBLE NOTES PAYABLE
Effective February 27, 2013, the company entered into a secured promissory note in an aggregate principal amount of $100,000 pursuant to the terms of a subscription. The Note bears interest at an annual rate of 10%, which is to be paid with principal in full on the maturity date of February 27, 2015. The principal amount of the Note together with interest may be converted into shares of our common stock, at the option of the holder, at a conversion price of $0.25 per share.
Effective April 5, 2013, the company entered into a secured promissory note in an aggregate principal amount of $50,000 pursuant to the terms of a subscription. The Note bears interest at an annual rate of 10%, which is to be paid with principal in full on the maturity date of April 5, 2015. The principal amount of the Note together with interest may be converted into shares of our common stock, at the option of the holder, at a conversion price of $0.30 per share. The amount of the discount upon issuance of the note was 36,667 and the amount amortized during the period ended May 31, 2013 was $2,813.
Effective April 25, 2013, the company entered into a secured promissory note in an aggregate principal amount of $180,000 pursuant to the terms of a subscription. The Note bears interest at an annual rate of 10%, which is to be paid with principal in full on the maturity date of April 25, 2015. The principal amount of the Note together with interest may be converted into shares of our common stock, at the option of the holder, at a conversion price of $0.50 per share. The amount of the discount upon issuance of the note was 49,800 and the amount amortized during the period ended May 31, 2013 was $2,308.
Effective May 15, 2013, the company entered into a secured promissory note in an aggregate principal amount of $100,000 pursuant to the terms of a subscription. The Note bears interest at an annual rate of 10%, which is to be paid with principal in full on the maturity date of May 15, 2015. The principal amount of the Note together with interest may be converted into shares of our common stock, at the option of the holder, at a conversion price of $0.55 per share. The amount of the discount upon issuance of the note was 49,800 and the amount amortized during the period ended May 31, 2013 was $2,308.
Effective May 29, 2013, the company entered into a secured promissory note in an aggregate principal amount of $170,000 pursuant to the terms of a subscription. The Note bears interest at an annual rate of 10%, which is to be paid with principal in full on the maturity date of May 29, 2015. The principal amount of the Note together with interest may be converted into shares of our common stock, at the option of the holder, at a conversion price of $0.60 per share. The amount of the discount upon issuance of the note was 29,091 and the amount amortized during the period ended May 31, 2013 was $638.
NOTE 7. OIL AND MINERAL LEASES
On February 1, 2011, the Company entered into an agreement with an unrelated third-party entity to purchase a 100% interest and an 80% net revenue interest in an oil and mineral 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.
F-8
On March 12, 2013, we entered into a farmout agreement with Summit West Oil, LLC for approximately 10,000 acres of oil and gas exploration property in northwest Montana known as the South Sun River Bakken Prospect. The Company shall have the opportunity to earn a 100% working interest and an 80% net revenue interest. This property has since become our main focus. Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the property:
NOTE 8. ENVIROMENTAL AND OTHER CONTINGENCIES
The Company’s operations and earnings may be affected by various forms of governmental action in the United States. Examples of such governmental action include, but are by no means limited to: tax increases and retroactive tax claims; royalty and revenue sharing increases; import and export controls; price controls; currency controls; allocation of supplies of crude oil and petroleum products and other goods; expropriation of property; restrictions and preferences affecting the issuance of oil and gas or mineral leases; restrictions on drilling and/or production; laws and regulations intended for the promotion of safety and the protection and/or remediation of the environment; governmental support for other forms of energy; and laws and regulations affecting the Company’s relationships with employees, suppliers, customers, stockholders and others. Because governmental actions are often motivated by political considerations and may be taken without full consideration of their consequences, and may be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company.
Companies in the oil and gas industry are subject to numerous federal, state, local and regulations dealing with the environment. Violation of federal or state environmental laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and construction bans or delays. A discharge of hazardous substances into the environment could, to the extent such event is not insured, subject the Company to substantial expense, including both the cost to comply with applicable regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result.
The Company currently leases a property at which hazardous substances could have been or are being handled. In addition, many of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes were not under the Company’s control. Under existing laws the Company could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including contaminated groundwater) or to perform remedial plugging operations to prevent future contamination. The Company is investigating the extent of any such liability and the availability of applicable defenses and believes costs related to these sites will not have a material adverse effect on the Company’s net income, financial condition or liquidity in a future period.
F-9
The Company’s liability for remedial obligations includes certain amounts that are based on anticipated regulatory approval for proposed remediation of former refinery waste sites. Although regulatory authorities may require more costly alternatives than the proposed processes, the cost of such potential alternative processes is not expected to be a material amount. Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states. Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries.
There is the possibility that environmental expenditures could be required at currently unidentified sites, and new or revised regulations could require additional expenditures at known sites. However, based on information currently available to the Company, the amount of future remediation costs incurred at known or currently unidentified sites is not expected to have a material adverse effect on the Company’s future net income, cash flows or liquidity. The Company has recorded $5,226 and $5,059 for its estimated asset retirement obligations as of May 31, 2013 and February 28, 2013, respectively. The Company also recorded $167 and $667 of accretion expense related to its asset retirement obligations as of May 31, 2013 and February 28, 2013, respectively.
Changes to the asset retirement obligation were as follows:
|
|
May 31, 2013 |
|
|
February 28, 2013 |
| ||
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
5059 |
|
|
$ |
4,392 |
|
Liabilities incurred |
|
|
--- |
|
|
|
--- |
|
Disposal |
|
|
--- |
|
|
|
--- |
|
Accretion expense |
|
|
167 |
|
|
|
667 |
|
Balance, end of year |
|
$ |
5,226 |
|
|
$ |
5,059 |
|
NOTE 9. SUBSEQUENT EVENTS
On June 6, 2013, we entered into a farmout agreement with Summit West Oil, LLC, related to additional property which is an extension of and located to the west of the South Sun River where the drill site is located.
Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the property:
· Exercise the lease renewal option by December 20, 2013 with full payment of all leases;
· Drilling of horizontal well at an estimated expenditure of $5,000,000 by June 30, 2014 (no expenditures have occurred to date);
· Drilling of a second horizontal well at an estimated expenditure of $5,000,000 by December 31, 2014 (no expenditures have occurred to date);
· Drilling of an additional horizontal well at an estimated expenditure of $5,000,000 by June 30, 2016 (no expenditures have occurred to date).
In accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material subsequent events to report.
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common stock" refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Norstra Energy Inc., unless otherwise indicated.
Corporate Overview
We are an exploration stage company, incorporated in the State of Nevada on November 12, 2010 under the name Norstra Inc., as a for-profit company. Our fiscal year end is February 28. Our office is located at 2860 Exchange Boulevard, Suite 400, South Lake TX 76092. Our telephone number is 1-888-474-8077. Our website and further information about our company can be found at http://www.norstraenergy.com.
On November 18, 2011, we filed a certificate of amendment with the Nevada Secretary of State to change our name from Norstra Inc. to Norstra Energy Inc.
On March 28, 2012, we filed a certificate of change with the Nevada Secretary of State to effect a 2 new for 1 old forward split of our authorized and issued and outstanding shares of common stock such that our authorized capital increased from 75,000,000 shares of common stock with a par value of $0.001 to 150,000,000 shares of common stock with a par value of $0.001.
Effective February 27, 2013, the Nevada Secretary of State accepted for filing a Certificate of Amendment, wherein our company amended our Articles of Incorporation to create 50,000,000 shares of preferred stock, $0.001 par value for which our board of directors may fix and determine the designations, rights, preferences or other variations of each class or series within each class of preferred stock of our company. The creation of the preferred stock was approved on February 26, 2013 by written consent by our board of directors and the holders of 54.94% of our voting securities. Our company’s authorized capital now consists of 150,000,000 shares of common stock and 50,000,000 shares of preferred stock, all with a par value of $0.001.
4
Current Business
We are engaged in the exploration and development of oil and gas properties.
On February 1, 2011, we entered into an agreement with an unrelated third-party entity to purchase a 100% interest and an 80% net revenue interest in an oil and mineral lease in Reno County, Kansas. As consideration for the purchase, our company paid $15,000 in cash. Our company has not incurred any exploration or development costs in connection with this lease. We have had limited operations and have been issued a "going concern" opinion by our auditor, based upon our reliance on the sale of our common stock as the sole source of funds for our future operations.
Effective February 27, 2013, we entered into a secured promissory note in an aggregate principal amount of $100,000 pursuant to the terms of a subscription agreement between our company and Jackson Bennett, LLC. The note bears interest at an annual rate of 10% which is to be paid with principal in full on the maturity date of February 27, 2015. The principal amount of the note together with interest may be converted into shares of our common stock, at the option of Jackson Bennett, LLC, at a conversion price of $0.25 per share.
Additionally, on March 1, 2013, we entered into consulting agreements with Mr. Glen Landry, our president, chief executive officer, secretary, treasurer and director, and Mr. Dallas Kerkenezov, our chief financial officer. Mr. Landry will receive a consulting fee of $5,000 per month and shall be issued 1,000,000 shares of our preferred stock, which will be convertible into 10,000,000 shares of our common stock upon achievement of production from the South Sun River Bakken Prospect. Mr. Kerkenezov shall receive $500 a month for performing duties as our chief financial officer. Both agreements have a term of 12 months.
Also on March 1, 2013, Mr. Kerkenezov, our chief financial officer and Ms. Heredia, our former director, cancelled a total of 35,513,100 shares of our common stock held by them. Mr. Kerkenezov cancelled 27,013,100 and Ms. Heredia cancelled 8,500,000. These shares were cancelled in order to make our company more attractive for financing, given the capital requirements of the South Sun River Bakken Prospect.
On March 12, 2013, we entered into a farmout agreement with Summit West Oil, LLC for approximately 10,000 acres of oil and gas exploration property in northwest Montana known as the South Sun River Bakken Prospect. This property has since become our main focus. Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the property:
Once we complete the above obligations, we will hold a 100% interest in the property, subject to an underlying 20% burden to Summit West Oil, LLC and the State of Montana.
Effective April 5, 2013, we entered into a secured promissory note in an aggregate principal amount of $50,000 pursuant to the terms of a subscription agreement between our company and Jackson Bennett, LLC. The note bears interest at an annual rate of 10% which is to be paid with principal in full on the maturity date of April 5, 2015. The principal amount of the note together with interest may be converted into shares of our common stock at the option of the holder, at a conversion price of $0.30 per share.
5
Effective April 25, 2013, we entered into a secured promissory note in an aggregate principal amount of $180,000 pursuant to the terms of a subscription agreement between our company and Jackson Bennett, LLC. The note bears interest at an annual rate of 10% which is to be paid with principal in full on the maturity date of April 25, 2015. The principal amount of the note together with interest may be converted into shares of our common stock at the option of the holder, at a conversion price of $0.50 per share.
Effective May 15, 2013, we entered into a secured promissory note in an aggregate principal amount of $100,000 pursuant to the terms of a subscription agreement between our company and Jackson Bennett, LLC. The note bears interest at an annual rate of 10% which is to be paid with principal in full on the maturity date of May 15, 2015. The principal amount of the note together with interest may be converted into shares of our common stock at the option of the holder, at a conversion price of $0.55 per share.
Effective May 29, 2013, we entered into a secured promissory note in an aggregate principal amount of $170,000 pursuant to the terms of a subscription agreement between our company and Jackson Bennett, LLC. The note bears interest at an annual rate of 10% which is to be paid with principal in full on the maturity date of May 29, 2015. The principal amount of the note together with interest may be converted into shares of our common stock at the option of the holder, at a conversion price of $0.60 per share. We have had limited operations and have been issued a "going concern" opinion by our auditor, based upon our reliance on the sale of our common stock as the sole source of funds for our future operations.
On June 6, 2013, we entered into a second farmout agreement with Summit West Oil, LLC, related to additional property which is an extension of and located to the east of the first South Sun River lease block where the drillsite is located.
Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the property:
· Exercise the lease renewal option by December 20, 2013 with full payment of all or some of the lease tracts;
· Drilling of horizontal well at an estimated expenditure of $5,000,000 by June 30, 2014 2014 (no expenditures have occurred to date);
· Drilling of a second horizontal well at an estimated expenditure of $5,000,000 by December 31, 2014 2014 (no expenditures have occurred to date);
· Drilling of an additional horizontal well at an estimated expenditure of $5,000,000 by June 30, 2016 2014 (no expenditures have occurred to date).
Once we complete the above obligations, we will hold a 100% interest in the property, subject to an underlying 20% royalty burden to Summit West, Teton Resources, and the Milford Hutterite Colony. Our company also has the option to purchase the property for 10,000,000 shares of our common stock until December 31, 2013. Upon exercising the option all of the above drilling obligations under the farmout agreement shall be null and void.
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.
We have generated no revenues and have incurred $119,704 in expenses since inception through May 31, 2013.
6
Three Month Period Ended May 31, 2013 Compared to the Three Months Ended May 31, 2012 and the Period From Inception (November 12, 2010) to May 31, 2012.
|
|
Three Months Ended May 31, |
| ||||
|
2013 |
|
|
|
2012 |
| |
General and administrative expenses |
$ |
52,787 |
|
|
$ |
1,514 |
|
Accretion expense |
|
167 |
|
|
|
166 |
|
Professional fees |
|
12,884 |
|
|
|
5,250 |
|
Interest expense |
|
9,776 |
|
|
|
Nil |
|
Net Loss |
$ |
75,614 |
|
|
$ |
6,930 |
|
Our net loss for the three months ended May 31, 2013 was approximately $75,614 compared to a net loss of $6,930 during the three months ended May 31, 2012. During the three months ended May 31, 2013 and 2012, we did not generate any revenue. Net loss during the period from inception (November 12, 2010) to May 31, 2013 was $119,704.
During the three months ended May 31, 2013, we incurred general and administrative and professional expenses of approximately $65,671 compared to $6,764 during the three months ended May 31, 2012. General and administrative expenses and professional fees incurred during the three month period ended May 31, 2013 and 2012 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 May 31, 2013, we incurred general and administrative and professional expenses of approximately $108,740.
Our net loss during the three months ended May 31, 2013 and 2012 was $0.00 per share and $0.00, respectively. The weighted average number of shares outstanding was 42,496,132 for the three month period ended May 31, 2013.
Liquidity and Capital Resources
Working Capital
|
|
May 31, |
|
|
|
February 28, |
|
|
|
|
|
|
|
|
|
Current Assets |
$ |
350,816 |
|
|
$ |
106,050 |
|
Current Liabilities |
$ |
9,824 |
|
|
$ |
9,387 |
|
Working Capital |
$ |
340,992 |
|
|
$ |
96,663 |
|
Cash Flows
|
|
May 31, |
|
|
|
May 31, |
|
|
|
|
|
|
|
|
|
Cash Flows from (used in) Operating Activities |
$ |
(76,495 |
) |
|
$ |
10 |
|
Cash Flows from (used in) Investing Activities |
$ |
(200,000 |
) |
|
|
Nil |
|
Cash Flows from (used in) Financing Activities |
$ |
500,000 |
|
|
$ |
Nil |
|
Net Increase (decrease) in Cash During Period |
$ |
223,505 |
|
|
$ |
10 |
|
7
As at the three months ended May 31, 2013, our current assets were $350,816 and our current liabilities were $9,824 which resulted in working capital of $340,992. As at the three months ended May 31, 2013, current assets were comprised of $323,055 in cash compared to $99,550 in cash at February 28, 2013. At the three months ended May 31, 2013, current liabilities were comprised of $8,274 in advances from a director. Long term liabilities were comprised of $5,226 in asset retirement obligations and $411,259 in convertible notes payable, net.
Stockholders' equity increased 129,111 from $10,641 as of February 28, 2013 to $139,752 as of May 31, 2013.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the three month period ended May 31, 2013, net cash flows used in operating activities was $76,495 consisting of a net loss of $75,614 and was offset by an accretion expense of $167, expenses paid on behalf of the company by a related party of $Nil. Net cash flows provided by operating activities was $10 for the three month period ended May 31, 2012 consisting of a net loss of $6,930 which was offset by accretion expenses of $166, and expenses paid on behalf of the company by a related party of $6,774.
Net cash flows used in operating activities was $118,176 for the period from inception (November 12, 2010) to May 31, 2013 consisting of a net loss of $119,704 which was offset by accretion expenses of $1,162, and expenses paid on behalf of the company by a related party of $6,774.
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 three months ended May 31, 2013, we generated $500,000 from financing activities. For the three months ended May 31, 2012, we did not generate cash flows from financing activities. For the period from inception on November 12, 2010 through May 31, 2013, net cash provided by financing activities was $656,231 primarily due to the issuance of 33,250,000 common shares for cash of $33,250 pursuant to our company's S-1 offering and proceeds from convertible notes payable of $600,000.
Cash Flows from Investing Activities
For the three months ended May 31, 2013, we used $200,000 in investing activities. For the three month ended May 31, 2013 we did not use any cash flows for investing activities. For the period from inception on November 12, 2010 through May 31, 2013, net cash used in investing activities was $215,000.
Plan of Operation
We are a start-up, exploration-stage company and have not yet generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion on our audited financial statements for the year ended February 28, 2013. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. There is no assurance we will ever reach this point. Accordingly, we must raise cash from sources from other sources. Our only other source for cash at this time is investments by others. We must raise cash to implement our project and stay in business. As of May 31, 2013, our company had $323,055 in cash on hand.
On March 12, 2013 our company entered into a farmout agreement with Summit West Oil, LLC for approximately 10,000 acres of oil and gas exploration property in northwest Montana. Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the property:
8
· $60,000 by April 5, 2013 for the acquisition of seismic and other exploration data (requirement met);
· $140,000 by April 30, 2013 for the reinterpretation of the seismic data as well as delineation and surveying of potential drill locations (requirement met);
· Drilling of an additional horizontal well at an estimated expenditure of $5,000,000 by December 31, 2013 2014 (no expenditures have occurred to date);
· Drilling of a horizontal well at an estimated expenditure of $5,000,000 by June 30, 2014 2014 (no expenditures have occurred to date); and
· Drilling of an additional horizontal well at an estimated expenditure of $5,000,000 by December 31, 2014 2014 (no expenditures have occurred to date).
On June 6, 2013, we entered into a farmout agreement with Summit West Oil, LLC, related to additional property which is an extension of the first South Sun River lease block and is located to the east where the drillsite is located. Under the terms of the farmout agreement, we are required to carry out the following expenditures in order to earn ownership of the tracts we elect to retain:
· Exercise the lease renewal option by December 20, 2013 with full payment of all leases;
· Drilling of horizontal well at an estimated expenditure of $5,000,000 by June 30, 2014 (no expenditures have occurred to date);
· Drilling of a second horizontal well at an estimated expenditure of $5,000,000 by December 31, 2014 (no expenditures have occurred to date); and
· Drilling of an additional horizontal well at an estimated expenditure of $5,000,000 by June 30, 2016 (no expenditures have occurred to date).
If we are unable to complete any phase of exploration because we do not have sufficient capital, we will cease operations until we raise more money. If we cannot or do not raise additional capital, we will cease retaining that acreage which was earned with drilling or assignment of stock. If we cease operations, we do not have any additional plans at this time.
Limited Operating History; Need for Additional Capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are an exploration stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we must conduct the research and exploration of our properties before we start production of any minerals we may find. We sought equity financing to provide for the capital required to implement our research and exploration phases. We believe that the funds raised from our offering will allow us to operate for one year.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment during the next twelve months.
9
Off-Balance Sheet Arrangements
We have no 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 is material to stockholders.
Going Concern
The financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of May 31, 2013, our company has accumulated losses of $119,704 since inception. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months.
Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above in their report on the financial statements for the year ended February 28, 2013, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
Critical Accounting Policies
Basis of Presentation
The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. Our company's fiscal year end is February 28.
Cash and Cash Equivalents
Our company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. Our company had $323,055 and $99,550 of cash and cash equivalents at May 31, 2013 and February 28, 2013, respectively.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial Instruments
The carrying value of our company’s financial instruments approximates their fair value because of the short maturity of these instruments.
10
Stock-based Compensation
Stock-based compensation is accounted for at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718). To date, our company has not adopted a stock option plan and has not granted any stock options.
Income Taxes
Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Basic and Diluted Net Loss per Share
Our company computes net loss per share in accordance with ASC 260,"Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement.
Basic 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 May 31, 2013 and 2012, no potentially dilutive shares were issued or outstanding.
Oil and Gas Properties
Our company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized.
Capitalized costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs, and asset retirement costs under ASC 410 “Asset Retirement and Environmental Obligations”, are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties.
There are many factors, including global events that may influence the production, processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs associated with properties that have not been evaluated through drilling or seismic analysis, including exploration wells in progress at May 31, 2013, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis.
11
Revenue recognition: Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations. Costs of oil and gas properties are amortized using the units of production method.
Ceiling test: Under the full-cost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for cash flow hedges. Estimated future net cash flows exclude future cash outflows associated with settling accrued asset retirement obligations. Our company has adopted U.S. Securities and Exchange Commission (“SEC”) Release 33-8995 and the amendments to ASC 932, “Extractive Industries — Oil and Gas” (the Modernization Rules). Under the Modernization Rules, estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of the production, except where prices are defined by contractual arrangements.
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional depletion, depreciation and amortization expense (“DD&A”) in the accompanying statement of operations. Such limitations are tested quarterly. As of May 31, 2013 and February 28, 2013, capitalized costs did not exceed the ceiling limitation, and no write-down was indicated.
Asset Retirement Obligations
Our company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.
Recent Accounting Pronouncements
Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB ASC is the sole source of authoritative GAAP literature recognized by the FASB and applicable to our company. Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on our company's present or future consolidated financial statements.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
12
As the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were not effective in providing reasonable assurance in the reliability of our reports as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
As a “smaller reporting company”, we are not required to provide the information required by this Item.
None.
None.
Not applicable.
None.
13
Exhibit Number |
|
Description of Exhibit |
(3) |
|
Articles of Incorporation and Bylaws |
3.01 |
|
Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2012) |
3.02 |
|
Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2012) |
3.03 |
|
Certificate of Amendment (incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2012) |
3.04 |
|
Certificate of Change (incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2012) |
3.05 |
|
Certificate of Amendment (incorporated by reference to our Current Report on Form 8-K filed on March 5, 2013) |
(10) |
|
Material Contracts |
10.1 |
|
Oil and Gas Lease Assignment dated February 15, 2012 between our company and Keta Oil and Gas Inc. (incorporated by reference to our Registration Statement on Form S-1 filed on April 30, 2012) |
10.2 |
|
Oil and Gas Lease dated January 15, 2012 between Harry Mark Milford and Keta Oil and Gas Inc. (incorporated by reference to our Registration Statement on Form S-1/A filed on June 28, 2012) |
10.3 |
|
Subscription Agreement dated February 27, 2013 between our company and Jackson Bennett LLC (incorporated by reference to our Current Report on Form 8-K filed on March 5, 2013) |
10.4 |
|
Farmout Agreement dated March 12, 2013 between our company and Summit West Oil, LLC (incorporated by reference to our Current Report on Form 8-K filed on March 18, 2013) |
10.5 |
|
Consulting Agreement dated March 1, 2013 between our company and Glen Landry (incorporated by reference to our Current Report on Form 8-K filed on March 18, 2013) |
10.6 |
|
Consulting Agreement dated March 1, 2013 between our company and Dallas Kerkenezov (incorporated by reference to our Current Report on Form 8-K filed on March 18, 2013) |
10.7* |
|
Subscription Agreement dated April 5, 2013 between our company and Jackson Bennett LLC |
10.8 |
|
Subscription Agreement dated April 25, 2013 between our company and Jackson Bennett LLC (incorporated by reference to our Current Report on Form 8-K filed on May 7, 2013) |
10.9* |
|
Subscription Agreement dated May 15, 2013 between our company and Jackson Bennett LLC |
10.10* |
|
Subscription Agreement dated May 29, 2013 between our company and Jackson Bennett LLC |
10.11* |
|
Farmout Agreement dated June 6, 2013 between our company and Summit West Oil, LLC |
(14) |
|
Code of Ethics |
14.1 |
|
Code of Ethics (incorporated by reference to our Annual Report on Form 10-K filed on June 7, 2013) |
(31) |
|
Rule 13a-14(a) / 15d-14(a) Certifications |
31.1* |
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer |
31.2* |
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer. |
(32) |
|
Section 1350 Certifications |
32.1* |
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer |
32.2* |
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer |
101 |
|
Interactive Data File |
101** |
|
Interactive Data File (Form 10-K for the year ended February 28, 2013 furnished in XBRL). |
101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE |
|
XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document |
14
* Filed herewith.
** |
Furnished herewith. 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, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections. |
15
Pursuant to the requirements of Section 13 or 15(d) 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. |
|
|
|
|
Date: July 22, 2013 |
/s/ Glen Landry |
|
Glen Landry |
|
President, Chief Executive Officer, Secretary, Treasurer |
|
and Director |
|
(Principal Executive Officer) |
|
|
|
|
Date: July 22, 2013 |
/s/ Dallas Kerkenezov |
|
Dallas Kerkenezov |
|
Chief Financial Officer |
|
(Principal Financial Officer and Principal Accounting |
|
Officer) |
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION
AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
SUBSCRIPTION AGREEMENT
(Offshore Subscribers)
TO: Norstra Energy Inc. (the "Company")
Purchase ofConvertible Note
1. Subscription and Use ofProceeds
1.1 On the basis ofthe representations and warranties and subject to the terms and conditions set forth herein, Jackson Bennett, LLC, (the "Subscriber") hereby irrevocably subscribes for and agrees to purchase one convertible note (the "Note") from the Company for an aggregate purchase price of $100,000 (the "Subscription Proceeds"), substantially in the form attached to this Subscription Agreement as Exhibit "A" (the subscription and agreement to purchase being the "Subscription").
1.2 On the basis ofthe representations and warranties and subject to the terms and conditions set forth herein, the Company hereby irrevocably agrees to sell the Note to the Subscriber.
1.3 Subject to the terms hereof, the Subscription will be effective upon its acceptance by the Company.
1.4 Unless otherwise provided, all dollar amounts referred to in this Subscription Agreement are in lawful money ofthe United States ofAmerica.
2. Payment
2.1 the Subscription Proceeds pertaining to the purchase of the Note shall be paid on or before the Closing Date (as defined in Section 4.1, below) by cheque or wire transfer to the Company.
3. Documents Required from Subscriber 3.1 The Subscriber must:
(a) |
complete, sign and return to the Company an executed copy of this Subscription Agreement prior to the Closing Date; and, |
(b) |
complete, sign and return to the Company an executed copy ofthe Investor Questionnaire attached as Annex B; and |
(c) |
complete, sign and return to the Company as soon as possible, on request by the Company, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities and applicable law |
(collectively the "Transaction Documents.")
4. Closing
4.1 There shall be no formal closing ceremony with respect to the transactions contemplated by this Agreement. Instead, the parties shall execute and exchange the Transaction Documents by facsimile and email and the closing ofthe transactions contemplated by this Agreement shall be deemed to have occurred (the "Closing") on the date (the "Closing Date") that the Company receives the Subscription Proceeds in full. There may be multiple Closings
5. Acknowledgements ofSubscriber
5.1 The Subscriber acknowledges and agrees that:
(a) |
Neither the Note nor the shares of common stock ("Sbares") that may be issued upon a conversion of the Note (the Note and the Shares may be hereinafter referred to collectively as the "Securities") have been or will be registered under the 1933 Act, or under any state securities or "blue sky" laws of any state of the United States, and, unless so registered, none of them may be offered or sold in the United States or, directly or indirectly, to a U.S. Person, as that term is defmed in Regulation S under the 1933 Act ("Regulation S"), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case in accordance with applicable state securities laws; |
(b) |
the Company has not undertaken to, and will have no obligation to, register the Securities, or any ofthem, under the 1933 Act; |
(c) |
it has received and carefully read this Subscription Agreement; |
(d) |
the decision to execute this Subscription Agreement and acquire the Note hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the adequacy of which is hereby acknowledged) about the Company that is available to any member of the public on the EDGAR database maintained by the U.S. Securities and Exchange Commission (the "SEC") at www.sec.gov; |
(e) |
there are risks associated with an investment in the Company including, by way of example and not in limitation, the specific risks identified in the Company's most recent periodic reports filed with the SEC and available for viewing at the SEC's website at www.SEC.gov; |
(f) |
it and its advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the sale of the Note hereunder, and to obtain additional information, to the extent possessed or obtainable by the Company without unreasonable effort or expense; |
(g) |
all information which the Subscriber has provided to the Company is correct and complete as of the date the Subscription Agreement is signed, and if there should be any change in such information prior to this Subscription Agreement being executed by the Company, the Subscriber |
will |
immediately provide the Company with such information; |
(h) |
the Company is entitled to rely on the representations and warranties of the Subscriber contained |
in |
this Subscription Agreement and the Subscriber will hold the Company harmless from any loss |
or |
damage it may suffer as a result of the Subscriber's failure to correctly complete this |
Subscription |
Agreement; |
(i) |
the Subscriber has been advised to consult the Subscriber's own legal, tax and other advisors with |
|
respect |
to the merits and risks of an investment in the Securities and with respect to applicable |
|
resale |
restrictions, and it is solely responsible (and the Company is not in any way responsible) for |
|
compliance |
with: |
|
(i) |
any applicable laws of the jurisdiction in which the Subscriber is resident in connection with the distribution ofthe Securities hereunder, and |
|
(ii) |
applicable resale restrictions; |
|
(j) |
none of the Securities are listed on any stock exchange or automated dealer quotation system and |
|
no |
representation has been made to the Subscriber that any of the Securities will become listed on |
|
any |
stock exchange or automated dealer quotation system, except that currently certain market |
|
makers |
make market in the Shares of the Company on the OTC Bulletin Board operated by the |
|
Financial |
Industry Regulatory Authority ("FINRA"); |
|
(k) |
none of the Securities may be offered or sold by the Subscriber to a U.s. Person (as defined in |
|
Section |
6.2, below, or for the account or benefit of a U.S. Person (other than a distributor) prior to |
|
the |
end of the Distribution Compliance Period (as defmed herein); |
|
(I) |
the Subscriber is not acquiring the Note as a result of, and will not itself engage in, any "directed |
|
selling |
efforts" (as that term is defined in Regulation S under the 1933 Act) in the United States in |
|
respect |
of the Securities which would include any activities undertaken for the purpose of, or that |
|
could |
reasonably be expected to have the effect of, conditioning the market in the United States |
|
for |
the resale of any ofthe Securities; provided, however, that the Subscriber may sell or otherwise |
|
dispose |
of the Securities pursuant to registration thereof under the 1933 Act and any applicable |
|
state |
securities laws or under an exemption from such registration requirements; |
|
(m) |
the Company will refuse to register any transfer of the Securities not made in accordance with the |
|
provisions |
of Regulation S, pursuant to an effective registration statement under the 1933 Act or |
|
pursuant |
to an available exemption from the registration requirements of the 1933 Act and in each |
|
case |
in accordance with applicable state securities laws; |
|
(n) |
neither the SEC nor any other securities commission or similar regulatory authority has reviewed |
|
or |
passed on the merits of the Securities; |
|
(0) |
no documents in connection with the sale of the Note hereunder have been reviewed by the SEC |
|
or |
any state securities administrators; |
|
(P) |
there is no government or other insurance covering any ofthe Securities; |
|
(q) |
the issuance and sale of the Securities to the Subscriber will not be completed if it would be |
|
unlawful |
or if, in the discretion of the Company acting reasonably, it is not in the best interests of |
|
the |
Company; |
|
(r) |
the Subscriber is purchasing the Securities pursuant to an exemption from the registration and the |
|
prospectus |
requirements of applicable securities legislation on the basis that the Subscriber is not a |
|
resident |
of either the United States or Canada and, as a consequence: |
|
(i) |
is restricted from using most ofthe civil remedies available under securities legislation, |
|
(ii) |
may not receive information that would otherwise be required to be provided under securities legislation, and |
(iii) |
the Company is relieved from certain obligations that would otherwise apply under securities legislation; and |
|
(s) |
the statutory and regulatory basis for the exemption from U.S. registration requirements claimed |
|
for |
the offer of the Note, although in technical compliance with Regulation S, would not be |
|
available |
if the offering is part of a plan or scheme to evade the registration provisions of the 1933 |
|
Act |
or any applicable state securities laws; . |
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall survive the Closing), and acknowledges that the Company is relying thereon, that:
(a) |
the Subscriber is not a U.S. Person as that term is defined in Regulation S; |
|
(b) |
the Subscriber is not acquiring the Note for the account or benefit of, directly or indirectly, any |
|
U. |
S. Person as that term is defmed in Regulation S; |
|
(c) |
the Subscriber is resident in the jurisdiction set out under the heading "Name and Address of |
|
Subscriber" |
on the signature page of this Subscription Agreement and the sale of the Securities to |
|
the |
Subscriber as contemplated in this Subscription Agreement complies with or is exempt from |
|
the |
applicable securities legislation of the jurisdiction of residence of the Subscriber; |
|
(d) |
the Subscriber has the legal capacity and competence to enter into and execute this Subscription |
|
Agreement |
and to take all actions required pursuant hereto and, if the Subscriber is a corporation, |
|
it |
is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and |
|
all |
necessary approvals by its directors, shareholders and others have been obtained to authorize |
|
execution |
and performance of this Subscription Agreement on behalf ofthe Subscriber; |
|
(e) |
ifthe Subscriber is a corporation or other entity, the entering into of this Subscription Agreement |
|
and |
the transactions contemplated hereby do not and will not result in the violation of any of the |
|
terms |
and provisions of any law applicable to, or the constating documents of, the Subscriber or of |
|
any |
agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber |
|
is |
or may be bound; |
|
(f) |
the Subscriber has duly executed and delivered this Subscription Agreement and upon acceptance |
|
thereof |
by the Company it will constitutes a valid and binding agreement of the Subscriber |
|
enforceable |
against the Subscriber in accordance with its terms; |
|
(g) |
the Subscriber is acquiring the Securities as principal for its own account for investment purposes |
|
only |
and not for the account of any other person and not for distribution, assignment or resale to |
|
others, |
and no other person has a direct or indirect beneficial interest in such Securities, and it has |
|
not |
subdivided its interest in the Securities with any other person; |
|
(h) |
the Subscriber is outside the United States when receiving and executing this Subscription |
|
Agreement |
and is acquiring the Note as principal for the Subscriber's own account for investment |
|
purposes |
only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in |
|
whole |
or in part, and no other person has a direct or indirect beneficial interest in the Securities; |
|
(i) |
the Subscriber is aware that an investment in the Company is speculative and involves certain |
|
risks, |
including the possible loss of the entire investment and it has carefully read and considered |
|
the |
matters set forth under the heading "Risk Factors" appearing in the Company's Forms lOoK, |
|
lO-Q, |
8-K and any other filings filed with the SEC; |
the Subscriber has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in any way whatsoever for the Subscriber's decision to invest in the Securities and the Company; |
|
(k) |
the Subscriber (i) has adequate net worth and means of providing for its current fmancial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time; |
(1) |
the Subscriber understands and agrees that the Company and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Company; |
(m) |
the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto; |
(n) |
the Subscriber has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber in accordance with its terms; |
(0) |
the Subscriber is not an underwriter of, or dealer in, the Company's Shares, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of any of the Shares; |
(P) |
the Subscriber is not an underwriter of, or dealer in, the Company's Shares, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of any of the Securities; |
(q) |
the Subscriber understands and agrees that offers and sales of any of the Securities prior to the expiration of restricted period after the date of original issuance of the Securities (the six month period hereinafter referred to as the "Distribution Compliance Period") shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions |
of |
the 1933 Act or an exemption therefrom and in each case only in accordance with applicable |
state |
securities laws; |
(r) |
the Subscriber agrees not to engage in any hedging transactions involving any of the Securities |
unless |
such transactions are in compliance with the provisions of the 1933 Act and in each case |
only |
in accordance with applicable state securities laws; |
(s) |
the Subscriber (i) is able to fend for itself in the Subscription; (ii) has such knowledge and |
experience |
in fmancial and business matters as to be capable of evaluating the merits and risks of |
its |
investment in the Securities and the Company; and (iii) has the ability to bear the economic |
risks |
of its prospective investment and can afford the complete loss of such investment; |
(t) |
the Subscriber will indemnify the Company against, and will hold the Company and, where |
applicable, |
its respective directors, officers, employees, agents, advisors and shareholders |
harmless |
from, any and all loss, liability, claim, damage and expense whatsoever (including, but |
not |
limited to, any and all fees, costs and expenses whatsoever reasonably incurred in |
investigating, |
preparing or defending against any claim, lawsuit, administrative proceeding or |
investigation |
whether commenced or threatened) arising out of or based upon any representation |
or |
warranty of the Subscriber contained herein or in any document furnished by the Subscriber to |
the |
Company in connection herewith being untrue in any material respect or any breach or failure |
by |
the Subscriber to comply with any covenant or agreement made by the Subscriber to the |
|
Company |
in connection therewith; |
|
(u) |
the Subscriber is not aware of any advertisement of any of the Securities and is not acquiring the |
|
Securities |
as a result of any form of general solicitation or general advertising including |
|
advertisements, |
articles, notices or other communications published in any newspaper, magazine |
|
or |
similar media or broadcast over radio or television, or any seminar or meeting whose attendees |
|
have |
been invited by general solicitation or general advertising; and |
|
(v) |
no person has made to the Subscriber any written or oral representations: |
|
(i) |
that any person will resell or repurchase any of the Securities, |
|
(ii) |
that any person will refund the purchase price of any ofthe Securities, |
|
(iii) |
as to the future price or value of any ofthe Securities, or |
|
(iv) |
that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Company on any stock exchange or automated dealer quotation system, except that currently the Company's common shares are quoted on the over-the- counter market operated by the Over-The-Counter Bulletin Board operated by FINRA. |
6.2 In this Subscription Agreement, the term "U.S. Person" shall have the meaning ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the Securities was solely made on the basis of information available to the Subscriber on the EDGAR database maintained by the SEC at www.sec.gov. The Subscriber hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Subscriber might be entitled in connection with the distribution ofthe Securities.
8. Legending ofSubject Securities
8.1 The Subscriber hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Securities will bear a legend in substantially the following form:
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT (THE "SUBSCRIPTION AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The Subscriber hereby acknowledges and agrees to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements ofany special counsel retained by the Subscriber) relating to the purchase of the Note or to the conversion ofthe Note or the Conversion Shares shall be borne by the Subscriber.
10. |
Governing Law |
10.1 |
This Subscription Agreement is governed by the laws of the State of Nevada and the federal laws |
applicable thereto. The Subscriber, in its personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably attorns to the jurisdiction of the courts ofthe State ofNevada.
11. |
Survival |
11.1 |
This Subscription Agreement, including without limitation the representations, warranties and |
covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase ofthe Note by the Subscriber pursuant hereto.
12. |
Assignment |
12.1 |
This Subscription Agreement is assignable. |
13. |
Severability |
13.1 |
The invalidity or unenforceability of any particular provision of this Subscription Agreement shall |
not affect or limit the validity or enforceability ofthe remaining provisions of this Subscription Agreement.
14. |
Entire Agreement |
14.1 |
Except as expressly provided in this Subscription Agreement and in the agreements, instruments |
and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Securities and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else. This subscription may only be amended by instrument in writing signed by the parties hereto.
15. |
Notices |
15.1 |
All notices and other communications hereunder shall be in writing and shall be deemed to have |
been duly given ifmailed or transmitted by any standard form of telecommunication. Notices to the Subscriber shall be directed to the address on the signature page ofthis Subscription Agreement and notices to the Company shall be directed to it at Norstra Energy Inc., 2860 Exchange Blvd, Suite 400, Southlake TX.
16. |
Counterparts and Electronic Means |
16.1 |
This Subscription Agreement may be executed in any number of counterparts, each of which, |
when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument. Delivery of an executed copy of this Subscription Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery ofthis Subscription Agreement as of the date hereinafter set forth.
17. |
Registration Instructions |
17.1 |
The Subscriber hereby directs the Company to cause any Note issued pursuant to this Subscription |
Agreement to be registered on the books of the Company as directed on the signature page of this Agreement.
IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement as of the date of acceptance by the Company.
JACKSON BENNETT LLC
lcable, Office)
Registration Information (if different from above)
(Name ofSubscriber - Please type or print)
(Signature and, if applicable, Office)
(Address ofSubscriber)
(City, State or Province, Postal Code of Subscriber)
(Country of Subscriber)
(Fax and/or E-mail Address of Subscriber)
ACCEPTANCE
The above-mentioned Subscription Agreement in respect ofthe Note is hereby accepted by Norstra Energy Inc.
DATED at Southlake, Texas, the 15th day of May, 2013.
NORSTRA ENERGY INC.
Per: lsi Glen Landry
Glen Landry
EXHIBIT "A"
Form ofConvertible Note
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.
Dated: May 15,2013
U. |
S. $100,000 |
CONVERTIBLE NOTE
FOR VALUE RECEIVED, NORSTRA ENERGY INC. (the "Company") promises to pay to JACKSON
BENNETT LLC, or its registered assigns (the "Holder"), the principal sum of One Hundred Thousand Dollars ($100,000) in lawful currency ofthe United States (the "Principal Amount") on May 15,2015 or such earlier date as the Note may be permitted to be repaid as provided hereunder (the "Maturity Date"), with 10% annual interest, to the Holder on the earlier of(i) the Conversion Date (as hereafter defined) and (ii) the Maturity Date (except that, if any such date is not a Business Day, then such payment shall be due on the next succeeding Business Day) in cash. The Company may prepay any portion of the Principal Amount without the prior written consent of the Holder.
This Note is subject to the following additional provisions:
1. Other Agreements.
1.1 This Note has been issued pursuant to a subscription agreement between the Company and the Holder dated May 15, 2013 (the "Subscription Agreement") pursuant to which the Holder purchased this Note, and this Note is subject in all respects to the terms of the Subscription Agreement and incorporates the terms of the Subscription Agreement to the extent that they do not conflict with the terms of this Note. This Note may be transferred or assigned.
2. Events of Default.
2.1 "Event of Default", wherever used herein, means anyone of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation oflaw or pursuant to any judgment, decree or order of any court, or any order, rule or regulation ofany administrative or governmental body):
(a) |
any default in the payment of the Principal Amount of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise); |
(b) |
the Company shall fail to observe or perform any other covenant or agreement contained in this Note or the Subscription Agreement which failure is not cured, if possible to cure, within 30 calendar days after notice ofsuch default is sent by the Holder to the Company; or |
(c) |
the Company or any of its subsidiaries (each a "Subsidiary") shall commence, or there shall be commenced against the Company or any Subsidiary a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any Subsidiary or there is commenced against the Company or any Subsidiary any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 60 days; or the Company or any Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Company or any Subsidiary makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any Subsidiary shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any Subsidiary shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any Subsidiary for the purpose of effecting |
any |
ofthe foregoing. |
2.2 Ifany Event ofDefault occurs, the full Principal Amount, together with interest and other amounts owing in respect thereof to the date of acceleration shall become, at the Holder's election, immediately due and payable in cash. Upon payment of the full Principal Amount, together with interest and other amounts owing in respect thereof, in accordance herewith, this Note shall promptly be surrendered to or as directed by the Company. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, ifany, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event ofDefault or impair any right consequent thereon.
3. Conversion.
3.1 At any time after the Financing Date until this Note is no longer outstanding, this Note may be converted into Conversion Shares at any time and from time-to-time, in whole or in part, at the option ofthe Holder. The Holder shall effect conversions by delivering to the Company the form ofNotice ofConversion attached hereto as Annex A (a "Notice of Conversion"), specifying therein the amount ofprincipal to be converted and the date on which such conversion is to be effected (a "Conversion Date"); provided that the date upon which any such conversion may be effected may not be less than 5 calendar days following the date of delivery of the Notice of Conversion. If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that is 5 calendar days after such Notice of Conversion is delivered to the Company. To effect conversions hereunder, the Holder shall not be required to physically surrender the Note to the Company unless the entire principal amount of this Note has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions. The Company shall deliver any objection to any Notice ofConversion within 10 business days of receipt of such notice. The Holder, by acceptance ofthis Note, acknowledges and agrees that, by reason ofthe provisions ofthis paragraph,
following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.
3.2 The number of Conversion Shares issuable upon a conversion of any outstanding principal under the Note shall be determined by the quotient obtained by dividing (x) by (y) where (x) is equal to the amount of outstanding principal to be converted and (y) is the Conversion Price (as hereinafter defmed).
3.3 Not later than five Trading Days after any Conversion Date, the Company will deliver to the Holder a certificate or certificates representing the Conversion Shares (bearing such legends as may be required by applicable law and those required by the Subscription Agreement) representing the number of Conversion Shares being acquired upon the conversion ofNote.
3.4 The conversion price (the "Conversion Price") in effect on any Conversion Date shall be shall mean $0.55 per share.
3.5 At any time after the Financing Date until this Note is no longer outstanding, this Note may be converted into Conversion Shares at any time and from time-to-time, in whole or in part, at the option of the Company. The Company shall effect conversions by delivering to the Holder written notice of conversion specifying therein the amount ofprincipal to be converted and the date on which such conversion is to be effected (a "Conversion Date");
3.6 The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock such number of shares as is necessary in order to ensure that a sufficient number are available for the purpose ofissuance ofConversion Shares upon conversion ofthis Note, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder. The Company covenants that all Conversion Shares shall, upon issue, be duly and validly authorized, issued and fully paid and non-assessable.
3.7 Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions ofany Conversion Shares, and the number ofConversion Shares shall be rounded up or down to the nearest whole number.
3.8 Ifthe Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions in shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way ofreverse stock split) outstanding shares ofCommon Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case ofa subdivision, combination or re-classification.
4. Repayment
4.1 Repayment of this Note, including all interest, shall be due on the Maturity Date, unless earlier converted into common shares.
5 | . | Interest |
5 | .l | Interest on the Principal Amount shall be calculated at 10%, per annum, and be payable on the |
Maturity Date. |
6. Notices
6.1 Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other address or facsimile number as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile telephone number or address of such Holder appearing on the books of the Company, or ifno such facsimile telephone number or address appears, at the address of the Holder to which this Note was delivered. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (Eastern Standard Time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (Eastern Standard Time) on any date and earlier than 11:59 p.m. (Eastern Standard Time) on such date, (iii) the second business day following the date ofmailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
7. Definitions.
7.1 For the purposes hereof, in addition to the terms defmed elsewhere in this Note: (i) capitalized terms not otherwise defined herein have the meanings given to such terms in the Subscription Agreement, and (ii) the following terms shall have the following meanings:
(a) |
"Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of Texas are authorized or required by law or other government action to close. |
(b) |
"Common Stock" means the common stock, par value $0.001 per share, of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed. |
(c) |
"Conversion Date" has the meaning set forth in Section 3.5 hereof. |
(d) |
"Conversion Price" has the meaning set forth in Section 3.4 hereof. |
(e) |
"Conversion Share" means shares of the Company's Common Stock into which principal and Interest due pursuant to this Note may be converted. |
(f) |
"Exchange Act" means the Securities Exchange Act of 1934, as amended. |
(g) |
"Financing Date" means the date on which the Principal Amount is delivered to the Company by the Investor. |
(h) |
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. |
(i) |
"Trading Day" means a day on which the shares of Common Stock are traded on a trading market on which the shares of Common Stock are then listed or quoted, provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day. |
8. Replacement of Note if lost or destroyed.
If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt ofevidence ofsuch loss, theft or destruction ofsuch Note, and ofthe ownership hereof, and indemnity, ifrequested, all reasonably satisfactory to the Company.
9. Governing law.
All questions concerning the construction, validity, enforcement and interpretation ofthis Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles ofconflicts oflaw thereof.
10. Waivers
Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver ofany other breach ofsuch provision or of any breach of any other provision ofthis Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party ofthe right thereafter to insist upon strict adherence to that term or any other term ofthis Note. Any waiver must be in writing.
11. Usury
Ifany provision of this Note is invalid, illegal or unenforceable, the balance ofthis Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion ofthe principal ofor interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.
12. Next business day
Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.
IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as ofthe date first above indicated.
NORSTRA ENERGY INC.
By:/s/ Glen Landry
title: President
ANNEXA
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Note of Norstra Energy Inc., a Nevada corporation (the "Company"), due on May 15,2015, into shares ofthe Company's common stock (each a "Share") as of the date written below. The undersigned will pay all transfer taxes, intangible or other taxes payable with respect hereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer ofthe aforesaid Shares.
Conversion calculations:
Date to Effect Conversion:
Principal Amount ofNote to be Converted: Accrued Interest to be Converted: Number of Shares to be issued: Signature:
Name:
Address:
SCHEDULE B | |||||||
ESTIMATED DRILLING COST / | |||||||
SOUTH SUN RIVER | AFE | DATE | 6/30/2013 | ||||
FIELD / | |||||||
WELL NAME | Norstra #1 | AREA | Development | ||||
WELL LOCATION | TARGET | Bakken Shale | |||||
COUNTY | Lewis & Clark | EST DEPTH | 8,500 TVD,12,500' MD | ||||
STATE | MT | COMMENT | |||||
INTANGIBLE COSTS: | DAYS | $ / DAY | DRY | CASED | COMPLETED | ||
Permits | 400.00 | 400.00 | 400.00 | ||||
Legal & Title | 2500.00 | 2500.00 | 2500.00 | ||||
Survey Location | 2000.00 | 2000.00 | 2000.00 | ||||
Land Damages / right of way | 5000.00 | 5000.00 | 5000.00 | ||||
Rig Daywork (7-9 Set 7" / 3-5 HZ) | 25 | $ | 16,500.00 | 412500.00 | 412500.00 | 412500.00 | |
Limited Turnkey | |||||||
Footage | |||||||
Rig mobilization -de mobilization | 190000.00 | 190000.00 | 190000.00 | ||||
Location/pits | 60000.00 | 60000.00 | 60000.00 | ||||
Roads & Maintenance | |||||||
Rig fuel / boilers | 14 | $ | 1,500.00 | 21000.00 | 21000.00 | 21000.00 | |
Compressor | |||||||
Water | 25 | $ | 1,500.00 | 37500.00 | 37500.00 | 37500.00 | |
Mud / Chem | 190000.00 | 190000.00 | 190000.00 | ||||
Salt | |||||||
Cement surface | 25000.00 | 25000.00 | 25000.00 | ||||
Cement Intermediate Casing / P&A | 7000 | @25.00 | 175000.00 | 175000.00 | |||
Floating equipment | 1400.00 | 3000.00 | 3000.00 | ||||
Bits / downhole assembly | 80000.00 | 80000.00 | 80000.00 | ||||
DST | |||||||
Core | 65000.00 | 65000.00 | 65000.00 | ||||
Mud logger / Pason | 15 | $ | 22,000.00 | 330000.00 | 330000.00 | 330000.00 | |
Electric logging | 70000.00 | 100000.00 | 100000.00 | ||||
Inspect collars & casing | |||||||
Equipment rental | 26000.00 | 26000.00 | 26000.00 | ||||
Trucking drilling | 10000.00 | 10000.00 | 10000.00 | ||||
Trucking completion | 10000.00 | 10000.00 | 15000.00 | ||||
Completion rig | 75000.00 | ||||||
Perforate & Cased Hole Log (slotting | |||||||
casing) | 15000.00 | 15000.00 | |||||
Bonding | 10000.00 | 10000.00 | 10000.00 | ||||
Overhead | 14 | $ | 900.00 | 12600.00 | 12600.00 | 12600.00 | |
Insurance | 2500.00 | 2500.00 | 2500.00 | ||||
Welder / backhoe | 2500.00 | 2500.00 | 4000.00 | ||||
Flowline Construction & ROW | 20000.00 | ||||||
Tank Battery Construction | 60000.00 | ||||||
Professional Services Engineer | 19000.00 | 19000.00 | 25000.00 | ||||
Professional Services Geologist | 10500.00 | 10500.00 | 10500.00 |
Directional Services | 12 | $ | 11,000.00 | 132000.00 | 132000.00 | 132000.00 | |
Cleanup and restoration | 7500.00 | 7500.00 | 7500.00 | ||||
Multi stage frac | 1300000.00 | ||||||
Miscellaneous/contingency | 5 | % | 86745.00 | 97825.00 | 171200.00 | ||
TOTAL INTANGIBLE COSTS | 1,821,645.00 | 2,054,325.00 | 3,595,200.00 |
EQUIPMENT COSTS | DRY | CASED | COMPLETED | ||||||
DIA | FEET | $/FT | |||||||
PIPE / Conductor | |||||||||
Surface | 9 5/8 | 500 | $ | 26.62 | 13310.00 | 13310.00 | 13310.00 | ||
Production | 7 | 7000 | $ | 25.00 | 175000.00 | 175000.00 | |||
Liner | 4.5 | 5000 | $ | 10.79 | 53950.00 | 53950.00 | |||
Tubing | 2 7/8 | 7200 | $ | 8.00 | 57600.00 | ||||
Wellheads | 500.00 | 50000.00 | 50000.00 | ||||||
Packer/anchors | 24000.00 | 24000.00 | |||||||
Downhole pump | 2500.00 | ||||||||
Rods | 6000.00 | ||||||||
Pumping Unit & Motor | 45000.00 | ||||||||
Tanks | 55000.00 | ||||||||
Treator | 45000.00 | ||||||||
Separator | |||||||||
Gas shack & meter run | |||||||||
Flow & gatering lines | 22000.00 | ||||||||
Risers, reducers | 10000.00 | ||||||||
Valves, pipes & fittings | 10000.00 | ||||||||
Buildings | 5000.00 | ||||||||
Miscellaneous/contingency | 6 | % | 828.60 | 18975.60 | 34161.60 | ||||
TOTAL TANGIBLE COSTS | 14,638.60 | 335,235.60 | 608,521.60 | ||||||
TOTAL WELL COSTS | 1,836,283.60 | 2,389,560.60 | 4,203,721.60 | ||||||
PARTCIPATION | |||||||||
WORKING INTEREST PARTNER | % | Cost Dry Hole | |||||||
$ | |||||||||
1,836,283.60 | |||||||||
100.00 | % | Cost / Cased Hole | |||||||
$ | |||||||||
2,389,560.60 | |||||||||
Cost / Completed | |||||||||
Well | |||||||||
$ | |||||||||
Partner Signature | 4,203,721.60 |
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Glen Landry, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Norstra Energy Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: July 22, 2013
/s/ Glen Landry |
Glen Landry |
President, Chief Executive Officer, Secretary,
Treasurer and Director |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dallas Kerkenezov, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Norstra Energy Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: July 22, 2013
/s/ Dallas Kerkenezov |
Dallas Kerkenezov |
Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Glen Landry, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q of Norstra Energy Inc. for the period ended May 31, 2013 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Norstra Energy Inc.
Dated: July 22, 2013 |
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/s/ Glen Landry |
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Glen Landry |
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President,
Chief Executive Officer, Secretary, Treasurer and Director |
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Norstra Energy Inc. |
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A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Norstra Energy Inc. and will be retained by Norstra Energy Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Dallas Kerkenezov, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Quarterly Report on Form 10-Q of Norstra Energy Inc. for the period ended May 31, 2013 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Norstra Energy Inc.
Dated: July 22, 2013 |
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/s/ Dallas Kerkenezov |
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Dallas Kerkenezov | ||
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Chief Financial Officer | ||
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Norstra Energy Inc. | ||
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A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Norstra Energy Inc. and will be retained by Norstra Energy Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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