Tiger Oil & Energy, Inc. - Quarter Report: 2014 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from                 to

Commission file number 333-141875

TIGER OIL AND ENERGY, INC.

(Exact name of Registrant as specified in its charter)

7230 Indian Creek Ln., Ste 201

Las Vegas, NV 89149

(Address of principal executive offices)

(702) 839-4029

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by checkmark 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes [  ] No (Not Required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 13, 2014, the Company had 42,728,159 issued and outstanding shares of its common stock and 42,013 issued shares of preferred stock.

TIGER OIL AND ENERGY, INC.

INDEX

PART I — FINANCIAL INFORMATION

The accompanying interim unaudited financial statements of Tiger Oil and Energy, Inc. (a Nevada corporation) are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company’s most recent annual financial statements for the year ended December 31, 2013 included in a 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 27, 2014. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying interim financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying interim financial statements for the nine months ended September 30, 2014 are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2014.

TIGER OIL AND ENERGY, INC.

FINANCIAL STATEMENTS

September 30, 2014

TIGER OIL AND ENERGY, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2014 and December 31, 2013

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2014, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013 audited financial statements. The results of operations for the periods ended September 30, 2014 and 2013 are not necessarily indicative of the operating results for the full year.

NOTE 2 - GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

The accompanying consolidated financial statements included all of the accounts of the Company and its wholly-owned subsidiaries, C2R, Inc., a Nevada Corporation, and Jett Rink Oil, LLC, a Kansas Limited Liability Company. All intercompany transactions have been eliminated.

TIGER OIL AND ENERGY, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2014 and December 31, 2013

(Unaudited)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. However, early adoption is permitted. Accordingly, the Company has adopted this standard as of September 30, 2014.

Management has considered all other recent accounting pronouncements issued since the last audit of the Company’s financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and financial instruments which mature within six months of the date of purchase.

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 Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations” (FASB ASC 410), 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.  Under certain specific conditions, companies could elect to use subsequent prices for determining the estimated future net cash flows. The use of subsequent pricing is no longer allowed. 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 September 30, 2014, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis. 

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 depleted using the unit-of-production method. For the nine months ended September 30, 2014, the Company recognized $-0- of depletion expense related to oil and gas production during the period.

TIGER OIL AND ENERGY, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2014 and December 31, 2013

(Unaudited)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Ceiling Test

In applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the value of its proved reserves discounted at a ten percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties.  During the nine months ended September 30, 2014 and the twelve months ended December 31, 2013, the Company had recorded $-0- of impairment expense in connection with the full cost ceiling test calculation.

Revenue Recognition

Revenues from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has transferred, and collectability is reasonably assured.  For oil sales, this occurs when the customer takes delivery of oil from the operators’ storage tanks.

Earnings (Loss) per Share

The Company has adopted ASC 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The Company has 1,200,000 potentially dilutive securities, such as options or warrants and convertible debt, currently issued and outstanding.

Reclassification of Financial Statement Accounts

Certain amounts in the December 31, 2013 financial statements have been reclassified to conform to the presentation in the September 30, 2014 financial statements.

NOTE 4 – OIL AND GAS PROPERTIES

On April 3, 2014, the Company signed an election to participate in the first of three wells with Toto Energy, LLC in Cowley County, Kansas. The Company will earn a 30 percent working interest and a 24.45 percent net royalty interest in the well. As of September 30, 2014, the Company has capitalized $213,000 of cash payments made to commence operations development of the well.

On May 10, 2014, the Company signed an election to participate in the second of three wells with Toto Energy, LLC in Cowley County, Kansas. The Company will earn a 30 percent working interest and a 24.45 percent net royalty interest in the well. As of September 30, 2014, the Company has capitalized $189,000 of cash payments made to commence operations development of the well.

TIGER OIL AND ENERGY, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2014 and December 31, 2013

(Unaudited)

NOTE 4 – OIL AND GAS PROPERTIES (CONTINUED)

Oil and gas properties are stated at cost. The Company recognized impairment expense totaling $65,540 during the year ended December 31, 2013. As of September 30, 2014 and December 31, 2013, oil and gas properties, net consisted of the following:

NOTE 5 – CONVERTIBLE NOTES PAYABLE

On January 3, 2014, the Company received $600,000 in connection with a convertible note financing commitment, the terms of which call for the Company to receive three tranches of $200,000 each on a callable convertible note wherein the Company borrows the sum at five percent interest for one year and the investor can elect to continue to receive the interest on the note or have the Company issue the investor shares of common stock of the Company at $0.50 per share to retire the debt.

The Company analyzed the convertible debts under ASC 470-20 and determined that a beneficial conversion feature existed at execution. The intrinsic value of the beneficial conversion feature was determined to be $400,000 and was recorded as additional paid-in capital with an offset to debt discounts. During the nine months ended September 30, 2013, $295,890 of the debt discount was amortized to interest expense, leaving an ending balance of $104,110.

NOTE 6 – SUBSEQUENT EVENTS

In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no other material subsequent events to report.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This 10Q contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained herein to reflect future events or developments.

Going Concern

The future of our company is dependent upon its ability to obtain financing and upon future profitable operations from the sale of products and services through our websites. Management has plans to seek additional capital through a private placement and public offering of its common stock, if necessary. Our auditors have expressed a going concern opinion because uncertainties raise doubts about the Issuers ability to continue as a going concern.

Corporate Overview

Unless otherwise indicated, in this 10Q, references to “we,” “our,” “us,” the “Company,” “TGRO” refer to Tiger Oil and Energy, Inc., a Nevada corporation (formerly UTEC, Inc.). Future plans include the exploration, development and production of oil and gas in the United States. Our current focus is to secure financing to increase our holdings and develop our current oil and gas assets over the next twelve months.

The Company through its acquisition of Jett Rink LLC owns interests in two oil and gas wells for approximately 50 acres located in Creek County, State of Oklahoma, together with any personal property and lease equipment located thereon. These two wells are shut-in and produce no revenue.

On June 1, 2013 the Company sold its 30% interest in three oil leases in Cowley County, KS valued at approximately $35,000 to a related party in consideration of the retirement of debt of $36,454.

On August 9, 2013 Ryan Kerr submitted his resignation to the Board of Directors with no disagreements with the Company.

On September 13, 2013 we received written notice from Brent Whitley, owner of the Whitley #1 and Whitley #2 oil leases advising us that the lease held by the Company was being terminated for non-production. Whereas the Company had an asset on the lease consisting of oil tank batteries and infrastructure valued at approximately $32,000 net, after transportation costs; and whereas The State of Kansas (KCC) had determined that the responsibility for plugging the Whitley #1 and #2 is the Company’s and the cost for plugging has been estimated to be a total of $32,000; then the Board of Directors believed that it was in the best interest of the Corporation to transfer the Company’s interest in the Whitley #1 and Whitley #2 surface battery tanks and infrastructure to DK Operating Inc. for $32,000 in full satisfaction of the Company’s plugging responsibilities to KCC.

On December 8, 2013 we purchased a 30% Working Interest (WI) in three leases in Cowley County KS from a related party and agreed to participate in the drilling of up to three wells with TOTO Energy LLC. of Spring, TX which owns 70% of the said leases.

On December 12, 2013 The Company enter into a Callable Convertible Note agreement with an unrelated lender wherein the Company borrows the sum of $600,000 and promises to pay the sum of $600,000.00, on December 12, 2014 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of five percent (5%) (the “Interest Rate”) per annum from December 12, 2013 (the “Issue Date”) until the same becomes due and payable. The Holder shall have the right from time to time, and at any time on or prior to the Maturity Date to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”). The Conversion Price shall be at a price of $0.50 per share in each Tranche.

On April 9, 2014 we elected to partner with TOTO Energy LLC and drill our first well on the Cowley County leases. The Company paid $24,000 for a 30% WI in the Stalnaker lease and agreed to spend $213,000 for our share of drilling costs of the Stalnaker 17-1 well. (paid).

On May 10, 2014 we elected to partner with TOTO Energy LLC and drill our second well on the Cowley County leases. The Company holds a 30% WI in the DeFore lease and agreed to spend $189,000 for our share of drilling costs of the DeFore 19-1 well. (paid).

Our current focus is to secure financing to increase our holdings and develop our current oil and gas assets over the next twelve months.

For the Three Months Ended September 30, 2014 and 2013

Revenues

Revenues from continuing operations for the three-month period ended September 30, 2014 were $-0.

Operating Expenses

Operating expenses for the three months ended September 30, 2014 and 2013 were $8,115 and $4,801, respectively. The majority of these expenses related to general and administrative expenses totaling $7,950 and $4,650 for the three months ended September 30, 2014 and 2013, respectively. The Company also recognized accretion expense of $165 and $151 during the three months ended September 30, 2014 and 2013, respectively.

Other Income (Expenses)

During the three months ended September 30, 2014 and 2013 the Company recognized interest expense in the amount of $108,609 and $268, respectively. Interest expense increased primarily due to the Company amortizing the debt discount of convertible debt to interest expense during 2014. The Company also recognized a gain on sale of oil and gas leases totaling $-0- and $31,866, respectively.

Net Loss

For the three months ended September 30, 2014 and 2013, the Company recognized a net loss and net income in the amounts of $(116,724) and $26,797, respectively. The increased net loss was largely the result of a gain on sale of oil and gas leases in 2013, and a significant increase in interest expense in 2014.

For the Nine Months Ended September 30, 2014 and 2013

Revenues

Revenues from continuing operations for the nine-month period ended September 30, 2014 were $-0.

Operating Expenses

Operating expenses for the nine months ended September 30, 2014 and 2013 were $57,689 and 30,550, respectively. The majority of these expenses related to general and administrative expenses totaling $57,204 and $28,213 for the nine months ended September 30, 2014 and 2013, respectively. The Company also recognized accretion expense of $485 and $2,337 during the nine months ended September 30, 2014 and 2013, respectively.

Other Income (Expenses)

During the nine months ended September 30, 2014 and 2013 the Company recognized interest expense in the amount of $318,229 and $1,757, respectively. Interest expense increased primarily due to the Company amortizing the debt discount of convertible debt to interest expense during 2014. The Company also recognized a gain on forgiveness of debt in the amount of $2,450 and $-0- in the nine months ended September 30, 2014 and 2013, respectively. Additionally, the Company recognized a gain on derivative liability of $-0- and $2,635 in nine months ended September 30, 2014 and 2013, respectively, and a gain on sale of oil and gas leases totaling $-0- and $31,866, respectively.

Net Loss

For the nine months ended September 30, 2014 and 2013, the Company recognized a net loss and net income in the amounts of $(373,468) and $2,194, respectively. The increased net loss was largely the result of a gain on sale of oil and gas leases in 2013, and a significant increase in interest expense in 2014.

Liabilities

The Company’s liabilities primarily consist of current amounts payable or accrued to trade creditors. At September 30, 2014 and December 31, 2013 the Company holds a note payable with an outstanding balance of $200 and $110,200, respectively. The Company also has a convertible note payable with a net balance of $495,890 and $-0- at September 30, 2014, and December 31, 2013, respectively. Additionally, the Company has a long-term asset retirement obligation with a balance of $7,508 and $7,023 at September 30, 2014 and December 31, 2013, respectively.

Liquidity and Capital Resources

As of September 30, 2014, the Company had $25,804 in current assets, consisting of $23,884 in cash, and deposits of $1,200, compared to $269 in current assets at December 31, 2013, which consisted of cash of $69 and deposits of $200. Total liabilities at September 30, 2014, totaled $539,919 compared to $139,637 at December 31, 2013. At September 30, 2014 the Company had a current ratio of 0.05.

The Company estimates that it will require $400,000 to accomplish its short-term goal of bringing shut-in wells back into production and the company's sole source of liquidity to this point has been through the sale of common stock. Such funding that is required to maintain liquidity will come in the form of equity sales of common stock.

Cash used in operations totaled $64,185 and $31,109 for the nine months ended September 30, 2014 and 2013, respectively. Cash used in investing activities totaled $402,000 and $-0- respectively, and cash provided by financing activities totaled $490,000 and $32,500 for the nine months ended September 30, 2014 and 2013, respectively.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of June 30, 2014 under the direction of the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a — 15(e) under the Securities Exchange Act of 1934, as amended. Based on the evaluation of these controls and procedures required by paragraph (b) of Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures are not effective.

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Internal Control Over Financial Reporting

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2014. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication, and (v) monitoring. In management’s assessment of the effectiveness of internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) as required by Exchange Act Rule 13a-15(c), our management concluded as of the end of the fiscal year covered by this Quarterly Report on Form 10-Q that our internal control over financial reporting has not been effective.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of June 30, 2014:

Our management determined that these deficiencies constituted material weaknesses. Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing to do so. We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

CHANGES IN INTERNAL CONTROLS.

There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

The Company has not taken any steps at this time to address these weaknesses but will formulate a plan before fiscal year ending December 31, 2014.

PART II - Other Information.

Item 1. Legal Proceedings

None. 

Item 1A. Risk Factors

None. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 12, 2012, the Company cancelled 10,000,000 shares of common stock held by a corporate officer, due to his resignation from his position with the Company.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

On May 26, 2010 the Board of Directors elected Kenneth B. Liebscher as President/CEO and Howard Bouch as Secretary/CFO.

On August 6, 2010 the Board of Directors appointed Ryan Kerr to serve on the Board of Directors of the Company.

On August 12, 2013, Ryan Kerr submitted his resignation to the Board of Directors.

On January 1, 2014 the Board of Directors agreed to compensate its two directors at $1,000 per month each.

Item 6. Exhibits

Exhibits:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TIGER OIL AND ENERGY, INC.

November 13, 2014