Tiger Oil & Energy, Inc. - Quarter Report: 2018 March (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 March 31, 2018

[  ] 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 May 15, 2018, the Company had 102,105,062 issued and outstanding shares of its common stock and 22,013 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, 2017 included in a 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 24, 2018. 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 three months ended March 31, 2018 are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2018.

TIGER OIL AND ENERGY, INC.

FINANCIAL STATEMENTS

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

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 March 31, 2018, 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, 2017 audited financial statements. The results of operations for the period ended March 31, 2017 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.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.

Recent Accounting Pronouncements

Management has considered all 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 March 31, 2018, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis. 

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Oil and Gas Properties (Continued)

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 three months ended March 31, 2018 and 2017, the Company recognized $-0- and $-0-, respectively, of depletion expense related to oil and gas production during the period.

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.  

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.

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 loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. The Company had 1,200,000 potential dilutive shares of common stock as of September 30, 2017 that were excluded as their effect was anti-dilutive.

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. The Company capitalized $213,000 of cash payments made to commence operations development of the well.

NOTE 4 – OIL AND GAS PROPERTIES (Continued)

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. The Company capitalized $189,000 of cash payments made to commence operations development of the well.

On July 23, 2016 the Company received $58,684 from the operator of two of its oil and gas leases. The payment received represented a partial refund of the Company’s previous $404,837 in payments made to the operator pursuant to the terms of an Authorization for Expenditures (“AFE”) Agreement. The Company’s original payments under the AFE were capitalized to oil and gas properties in 2014. All capitalized costs pursuant to the AFE were fully impaired during the year ended December 31, 2015. As the capitalized costs had been previously impaired, the $58,684 was recorded as a gain on property settlement for the period ended December 31, 2016.

Oil and gas properties are stated at cost. As of March 31, 2018 and December 31, 2017, oil and gas properties, net consisted of the following:

NOTE 5 – CONVERTIBLE NOTES PAYABLE

Chancery Lane Notes

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 notes came due on December 12, 2014, and as of March 31, 2018 the notes were in default. At March 31, 2018 accrued interest on the notes totaled $127,013.

Adar Bay Note

On January 22, 2018, the Company received $71,250 from a third-party lender pursuant to a convertible promissory note. The note bears interest at a rate of 8.0 percent per annum, and is due in full on January 22, 2019. The note is convertible into shares of the Company’s common stock at a strike price equal to 50 percent of the lowest bid price of the lower of a) the last 20 days prior to conversion, or b) the 20 days immediately preceding the note closing date. As of March 31, 2018 the Company has recorded $1,288 in accrued interest on the note, a net debt discount totaling $61,027, and a derivative liability totaling $169,781.

NOTE 5 – CONVERTIBLE NOTES PAYABLE (Continued)

Adar Bay Note

On January 24, 2018, the Company received $75,000 from a third-party lender pursuant to a convertible promissory note. The note bears interest at a rate of 10.0 percent per annum, and is due in full on January 24, 2019. The note is convertible into shares of the Company’s common stock at a strike price equal to 50 percent of the lowest bid price of the lower of the last 20 days prior to conversion. As of March 31, 2018 the Company has recorded $1,085 in accrued interest on the note, a net debt discount totaling $62,053, and a derivative liability totaling $171,626.

NOTE 6 – NOTES PAYABLE – RELATED PARTY

On June 11, the Company borrowed $5,000 from a related-party entity. Pursuant to the terms of the note, the principal accrues interest at a rate of five percent per annum, is unsecured, and was due in full on June 11, 2016. Subsequent to the initial borrowing the Company borrowed an additional $57,500 from the same lender under the same terms. On July 25, 2016 the Company paid $40,000 against the outstanding principal of the notes. Accrued interest totaling $1,340 was forgiven at the time of payment, and recorded as additional paid-in capital. At March 3, 2018 the total outstanding principal balance due to the lender was $22,500, and aggregate accrued interest on the notes totaled $1,865.

On May 6, 2015 the Company borrowed $5,000 from an unrelated third-party entity. The note, accrued interest at a rate of five percent per annum, was unsecured, and was due in full on May 6, 2016. On July 25, 2015 the note, inclusive of all unpaid principal and interest, was transferred to and assumed by a different related party entity. On July 25, 2016 the Company repaid the full $5,000 principal balance due under the terms of the note. Accrued interest on the note totaling $305 was forgiven at the time of payment, and recorded as additional paid-in capital. During the year ended December 31, 2017, the Company borrowed an additional $10,000 from the same entity. The outstanding principal balance on the note as of March 31, 2018 totaled $10,000 This note accrues interest at a rate of five percent per annum, and is due twelve months from the note date. As of March 31, 2018, accrued interest on the note totaled $214.

On March 7, 2016 the Company borrowed $10,000 from a related-party. Pursuant to the terms of the note the principal accrues interest at a rate of five percent per annum, is unsecured, and is due in full on May 6, 2017. On May 2, 2016 the Company borrowed an additional $4,000 under the same terms. On October 4, 2016 the Company borrowed an additional $25,000 under the same terms. During the year ended December 31, 2017, the Company borrowed an additional $10,000 under the same terms. During the three months ended March 3, 2018, the Company paid $25,000 against note principal. At March 31, 2018, the aggregate principal balance of the notes totaled $24,000 and aggregate accrued interest on the notes totaled $3,607.

NOTE 7 – ASSET RETIREMENT OBLIGATIONS

The total future asset retirement obligation is estimated by management based on the Company’s net working interests in all wells and facilities, estimated costs to reclaim and abandon wells and facilities and the estimated timing of the costs to be incurred in future periods. At March 31, 2018 the Company estimated the undiscounted cash flows related to asset retirement obligation to total approximately $105,500. The actual costs to settle the obligation are expected to occur in approximately 25 years. Through March 31, 2018, the Company established an asset retirement obligation of $9,860 for the wells

acquired by the Company, which was capitalized to the value of the oil and gas properties. The fair value of the liability at March 31, 2018 and December 31, 2017 is estimated to be $13,394 and $13,178, respectively, using a risk free rate of 9.31 percent and inflation rates between 3.87 and 4.81 percent. Total accretion expense on the asset retirement obligation was $216 and $198 for the three-month periods ended March 31, 2018 and 2017, respectively.

NOTE 8 – STOCKHOLDERS’ DEFICIT

The Company has 25,000,000 preferred shares authorized at a par value of $0.001 and 625,000,000 common shares authorized at par value of $0.001.  As of March 31, 2018 the Company has 22,013 shares of preferred stock and 37,105,062 shares of common stock issued and outstanding.  

On July 29, 2016 the Company repaid in full the principal balance of multiple related-party notes payable. Pursuant to this transaction, the note holders agreed to forgive an aggregate of $1,645 in accrued interest related to the notes. The Company recorded this forgiveness as a credit to additional paid-in capital, as the note holders were related parties.

During the year ended December 31, 2017, the Company cancelled 20,000 shares of preferred stock, and 5,623,097 shares of common stock.

NOTE 9 – SUBSEQUENT EVENTS

On April 23, 2018 the Company resolved to issue 65,000,000 common shares to the Company’s president upon conversion of $6,500 in notes payable, at a rate of $0.0001 per share.

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

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 included a going concern paragraph in their audit report dated April 23, 2018 included in our annual report on Form 10-K because uncertainties raise doubts about the Issuer’s 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 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 $239,000 for our share of drilling costs of the Stalnaker 17-1 well.

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. This well was fracked and is producing oil and revenue to the Company, although due in part to low oil prices the DeFore well did not produce or earn revenues during the three months ended March 31, 2017.

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 March 31, 2018 and 2017

Revenues

Revenues for the three-month period ended March 31, 2018 were $10,216, compared to $-0- for the comparable period of 2017. This increase in revenues resulted primarily from the Company’s decision to operate its current wells an begin production after a long period of inactivity. During the previous year, management had made a conscious decision to slow oil and gas production due to low oil and gas prices. As oil prices increase the Company anticipates continued increased production and revenues will be derived from the DeFore and Stalnacker wells.

Operating Expenses

Operating expenses for the three months ended March 31, 2018 were $76,747 and $14,433, respectively. Of these operating expenses, professional fees totaled $66,395 and $1,500, respectively; general and administrative expenses totaled $7,504 and $7,363, respectively; lease operating expenses totaled $2,632 and $5,372, respectively; and accretion expense totaled $216 and $198, respectively, for the three months ended March 31, 2018 and 2017. Professional fees increased during the current period primarily due increased audit and consulting fees. General and administrative and accretion expenses increased negligibly during the current period, while lease operating expenses decreased during 2017.

Other Income (Expenses)

During the three months ended March 31, 2018 and 2017, the Company recognized interest expense in the amount of $411,144 and $8,186, respectively. Interest expense increased significantly in the 2018 period, due primarily to the recognition of a derivative liability pertaining to the Company’s 2018 convertible notes payable. Furthermore, the Company recognized a gain on derivative liability totaling $182,305 during the 2018 period. This gain resulted from the Company’s March 31, 2018 revaluation of its derivative liabilities initially calculated in January, 2018. Additionally, the Company recognized a gain on settlement of debt in the amount of $800 during the 2017 period.

Net Loss

For the three months ended March 31, 2018 and 2017, the Company recognized a net loss in the amounts of $295,370 and $21,819, respectively. The significant increase in net loss was largely the result of the increased interest expense and professional fees, partially offset by an increase in revenues earned during the 2018 period.

Liquidity and Capital Resources

As of March 31, 2018, the Company had $45,065 in current assets, consisting of $32,201 in cash, prepaid expenses and deposits totaling $5,200, and accounts receivable of $7,664. At December 31, 2017, the Company had $15,254 in current assets, consisting of $627 in cash, $200 in prepaid expenses and deposits, and $14,427 in accounts receivable. Total current liabilities at March 31, 2018 totaled $1,232,494 compared to $907,529 at December 31, 2017. At September 30, 2017 the Company had a current ratio of 0.04.

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 $84,676 and $4,820 for the three months ended March 31, 2018 and 2017, respectively. The increase in cash used in operations results primarily from an increased net loss for the period. Cash used in investing activities totaled $5,000 and $-0-, respectively, and cash provided by financing activities totaled $121,2580 and $5,000 for the three months ended March 31, 2018 and 2017, 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 March 31, 2018 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.

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 expects to formulate a plan before fiscal year ending December 31, 2018.

PART II - Other Information.

Item 1. Legal Proceedings

During the year ended December 31, 2015 the Company became party to a legal action brought about by an unrelated third-party individual, wherein the plaintiff alleges the Company “participated and/or conspired in a scheme to disseminate spam emails” which were misleading in order to encourage individuals to purchase shares of the Company’s common stock at an artificial and/or inflated stock price. On October 10, 2016, the Company reached a settlement agreement whereby the Company agreed to pay $11,000 in exchange for a general release of all claims against the Company. As of October 10, 2016 the case was considered fully resolved and closed.

Item 1A. Risk Factors

None. 

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

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

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

On March 1, 2018, Ken Liebscher resigned from the Board and as the Company’s President, Chief Executive Officer, Secretary and Treasurer, effective immediately. Mr. Liebscher had been serving as the President, Chief Executive Officer, Secretary and Treasurer of the Company since July 7, 2006. His departure was not related to any issues regarding financial disclosures or accounting or legal matters. After Mr. Liebscher’s resignation, the Board reduced the size of the Board to one person, Mr. Harold Bouch. Directors serve for a period of one year until the next stockholders’ meeting and until their respective successors are elected and qualify.

Immediately upon Mr. Liebscher’s resignation, the Board appointed Mr. Bouch as the President, Chief Executive Officer, Secretary and Treasurer of the Company, effective immediately.

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.

May 15, 2018