Item 1. Business.
General Information
Except for statements of historical fact, certain information in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” ‘would,” or similar words. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations, or of our financial position, or state other “forward-looking” information. Tiger Oil and Energy, Inc. (“The Company” or “TGRO”) believes that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control. Further, we urge you to be cautious of the forward-looking statements that are contained in this Form 10-K because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. These factors may cause our actual results to and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. The occurrence of any of these events could have a material adverse effect on our business, results of operations and financial position.
Corporate History
Tiger Oil and Energy, Inc.,( formerly UTEC INC., formerly Lyon Capital Venture Corp., is a Nevada corporation organized on November 8, 1993 as a “For Profit” corporation for the purpose of engaging in any lawful activity. The Company was in the development stage through December 31, 2006. The year ended December 31, 2007, is the first year during which the Company is considered an operating company and was no longer considered in a development stage. On January 10, 2007, the Company purchased 100% of the shares of UTEC Corporation, Inc. from Energetic Systems Inc. LLC, for a total consideration of 22,500,000 of the Company’s par value $0.001 common shares and 20,000 of the Company’s par value $0.001 preferred shares. Each share of our preferred stock entitles the owner to 2,500 votes. Shares of our preferred shares can be converted to two common for one preferred.The Company also issued 2,525,000 common shares in finder’s fees.
Our business was to offer state of the art testing and analysis to clients worldwide. The Company operated a chemical research and development laboratory near Riverton, Kansas, which specialized in commercial explosives development and analysis. The Company also operated a destructive test facility near Hallowell, Kansas, which specializes in determining the detonating characteristics of commercial explosives.
In 2007, we licensed technology covering the use of cold plasma oxidizer technology for the destruction of solid and liquid hazardous chemicals and biological waste. During 2007 and 2008, the Company worked to validate the technology and prepare a business plan for its commercialization.
In April 2009, the Company divested its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) to eliminate the need to inject new capital into the Company to support this business, and concentrate on raising the funds necessary to commercialize its hazardous waste destruction business in exchange for the 22,500,000 shares of its common stock originally issued to Energetic Systems Inc. LLC.
Business of Issuer
For more than 30 years, the predecessor companies to the Company’s subsidiary have been involved in the research and development of commercial explosive products used by the construction, quarrying and mining industries in North America and elsewhere in the world. The legacy business of the company actually had its start in the commercial explosives business of Gulf Oil Limited, and one of the sites currently occupied by the Company is a former coal mine which was mined by a subsidiary of Gulf Oil, and served as Gulf Explosives bulk truck garage, etc.
The Company operated three marketing units, all under the management of Dr. FortunatoVillamagna, Managing Director and CEO.
1. Energetic Materials, which includes the development and testing of commercial explosives.
2. Specialty Chemicals and Raw Materials, which distributes chemicals that are used in commercial explosives; and
3. Hazardous Chemicals and Biological Waste Destruction, a marketing unit that utilizes a new patented technology for the destruction of biological waste and other hazardous chemicals and military munitions. This marketing unit is commercializing the Cold Plasma Oxidizer Technology for the total and complete destruction of solid and liquid hazardous chemicals and biological waste.
In March of 2007, we entered into an agreement with Ceramatec Inc., of Salt Lake City, Utah, and licensed the world-wide exclusive rights to manufacture and market a Waste Destruction System utilizing the Cold Plasma Oxidizer Technology.
A decision was made to sell the legacy business to Energetic Systems, Inc., LLC., and retain within the UTEC consolidated group the Ceramatec license and waste destruction assets developed over the past two years. This will minimize the immediate cash requirements of the company. The sale was completed on April 26, 2009, effective as of April 1, 2009. UTEC, Inc. and its wholly owned subsidiary UTEC Corporation continue as public companies, retaining the assets of the waste destruction business. We abandoned these activities upon changing its business direction and the purchase of Jett Rink Oil LLC.
The Hazardous Chemicals & Biological Waste Destruction business was developmental and we did not sell any units.
On September 2, 2009 the Company received a termination notice from Ceramatec that this agreement was cancelled for non-performance. The Company had issued 850,000 of its $.001 par value common shares to Ceramatec that Ceramatec could sell starting two years from the date of the agreement. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering.
On October 1, 2009 the Company purchased 100% of the outstanding shares of C2R Energy Commodities Inc for the issuance of 4,050,000 of the Company’s $0.001 par value common shares. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering.
On October 1, 2009, the Board of Directors asked Suresh Subramanian to step down as President and J. Curt Stafford to step down as CFO of the Company pursuant to a condition of the Company’s agreement with CR2 Energy Commodities Corp. Effective October 1, 2009, the Board of Directors appointed FortunatoVillamagna as President and CEO; Kenneth B. Liebscher as Secretary and Howard Bouch as CFO.
On May 26, 2010, FortunatoVillamagna and David Taylor resigned from the Board of Directors and Ken Liebscher was appointed President/CEO and Howard Bouch was appointed Secretary and CFO.
On July 29, 2010, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Jett Rink Oil, LLC, a Kansas limited liability company (“Jett Rink”) and Bill Herndon, the sole member of Jett Rink, pursuant to which the Company agreed to acquire from Bill Herndon all of the membership interest in Jett Rink in exchange for 10,000,000 shares of the Company’s Common Stock. Jett Rink is involved in the business relating to the exploration, development and production of oil and gas in the United States. The shares were issued under the exemption provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D.
On August 16, 2010, UTEC, Inc., a Nevada corporation (the “ Company ”), entered into a First Amendment to Exchange Agreement with Jett Rink Oil, LLC, a Kansas limited liability company (“ Jett Rink ”), and Bill Herndon, the sole member of Jett Rink, whereby the Exchange Agreement dated July 29, 2010 (the “ Exchange Agreement ”) was amended by deleting Section 5.03(h) with respect to the Company’s name change to “Tiger Energy, Inc.” as a condition to closing of the Exchange Agreement.
Utec, Inc. formed Tiger Oil and Energy, Inc. as a wholly owned subsidiary on August 20, 2010. Tiger Oil and Energy, Inc. had no operations, business plan or activity of any kind. At the closing of the Exchange Agreement, Jett Rink became a wholly-owned subsidiary of the Company and the Company acquired the business and operations of Jett Rink. The Exchange Agreement contains customary representations, warranties, and conditions to closing.
On September 14, 2010, an addendum to the Exchange Agreement was signed to delete Section 5.03(j) from the Exchange Agreement and the Amendment thereto in its entirety.
On September 28, 2010, Tiger Oil and Energy, Inc. executed an Exchange Agreement with Jet Rink Oil, LLC, making Jet Rink Oil a wholly owned subsidiary of Tiger Oil and Energy. The closing of the Agreement was subject to the satisfaction of certain pre-closing conditions, including (i) changing the name of the Company to “Tiger Oil and Energy, Inc.,” (ii) the cancellation of all of the 4,650,000 outstanding options that have been granted to the Company’s key employees, consultants, officers and directors pursuant to the Company’s non-qualified stock option plan, and (iii) completion of audited financial statements of Jett Rink, among others. These closing conditions were satisfied and the Merger Agreement was consummated on October 29, 2010. Accordingly, the Company changed its corporate name to Tiger Oil and Energy, Inc. (TGRO).
As part of the Jett Rink agreement, the Company owns interests in two oil and gas wells of approximately 50 acres located in Creek County, State of Oklahoma, together with any personal property and lease equipment located thereon. Currently both these wells are shut-in and we will be evaluating these wells as to cost of putting back into production versus the expected revenues to be earned form the wells.
On August 6, 2010 the Board increased its Directors to five with the addition of Mr. Bill Herndon, Mr. Ryan Kerr and Mr. Paul Liebman.Mr. Herndon has been an oil operator in Kansas and Oklahoma for the past five years.
On October 27th, 2010 we entered into a co-development agreement with Black Hawk Exploration, (BHWX), in which we, after an investment of $400,000 by the Company in a new well in Black Hawk’s Cowley County lease, we will earn a 40% working interest in the # 1 Baker well, BHWX will receive a 50% interest in the new well and TGRO will have the right to participate in the nine-well rework program at the Cowley Prospect. BHWX will receive a 20% interest in any other new well TGRO drills on Black Hawk’s current or future Cowley County, Kansas leases and Black Hawk has the option to invest in each additional new well drilled by TGRO on a prorated basis up to an additional 30%.
On October 29, 2010, Tiger Oil and Energy, Inc. (formerly UTEC) closed its Exchange Agreement with Jet Rink Oil, LLC, making Jet Rink Oil a wholly owned subsidiary of Tiger Oil and Energy.
On November 29th the Company expanded its original agreement and entered into a co-development agreement with Black Hawk Exploration covering approximately 2,553 acres of oil and gas leases in Cowley County, Kansas. BHWX owns 100% of the leases within the Prospect Area and has an undivided 81.5% working interest in and to the oil and gas leases and their previous 10 shut-in oil and gas wells.
The joint agreement includes in one shut-in oil/gas well, the #1 Baker, located on the Keith Baker lease. Also subject to joint development is a 100% interest in 9 other oil wells previously shut-in. The Company’s program calls for re-working all 10 locations directly or in joint venture with Black Hawk and returning all of them to cash flow production.
On February 3, 2011, Mr. Paul Liebman tendered his resignation from the Board of Directors.
On Feb. 4th, 2011, we retained International IR Inc. (IRR) to provide media services. IIR is a strategic consulting firm that works primarily with emerging growth companies in the resource sector. IIR will focus on providing multiple information platforms to TGRO’s shareholders and advise as well as negotiate on behalf of the Company, acquisition, exploration and joint venture agreements and strategies.
On February 9th, 2011, - we acquired a 100% interest in three Oil and Gas leases totaling 400 acres in Southern Kansas, comprised of three historically productive properties. Our Geologist has reviewed the Holman #2, #3, #4, and #5; the Adams #1 and the Glasse wells commonly known as the Wise #1 and Roberts #1 and have recommended a seven-well exploration and production study. All the leases acquired by the parties covering lands within the prospect area are owned 100% by TGRO with an undivided eighty-one and one-half percent (81.5%) working interest in the oil and gas leases described. The Company issued a Note and 250,000 shares of its common stock in the acquisition. We will require an investment of $400,000 to initiate putting these wells back into production. Management believes this can be accomplished and is considering various options to acquire this funding, but has not yet entered into an agreement to do so.
On March 31, 2011 we purchased, at auction, two shut-in oil wells in Ness County KS for cash.
The company will continue to evaluate shut in wells in the states of Kansas and Oklahoma with intention of putting historically productive wells back into production at the least cost. We will then need to enter into private placement agreements to fund the programs.
Indemnification of Directors and Officers
Our bylaws contain provisions which require that the company indemnify its officers, directors, employees and agents, in substantially the same language asSection 78.7502 of the Nevada Revised Statutes. Article 12 of the Company’s Articles of Incorporation provides for the Company’s ability to indemnify it’s officers, directors,employees and agents, subject to the limitations provided in Nevada Revised Statutes 78.7502, for expenses actually and reasonably incurred. No indemnification shall bemade if the proposed party has been adjudged to be liable to the company or where the matter was settled without court approval. Indemnification must be made upon adetermination by a majority of the uninterested Board, and if not available, by the shareholders or by a court of competent jurisdiction.
Item 1A.
Item 1A. Risk Factors.
Not Applicable
Item 1B.
Item 1B. Unresolved Staff Comments.
None
Item 2.
Item 2. Properties.
Our offices are located at 7230 Indian Creek Lane, Ste 201, Las Vegas, NV 89149. The facilities are on a month to month basis at a cost of $400 per month. Specific direct expenses incurred such as telephone and secretarial services are charged back to the Company at cost.
Item 3.
Item 3. Legal Proceedings.
None
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock trades on the Over-The-Counter Bulletin Board (OTC:BB) under the symbol TGRO. The following table shows the high and low trading prices for the past two years.
We did not make any dividend payments during the fiscal years ended December 31, 2011 or 2010 and have no plans to pay dividends in the foreseeable future. We did not repurchase any shares of our common stock during the fiscal year ended December 31, 2011 or 2010.
Transfer Agent: Empire Stock Transfer Co., 1859 Whitney Mesa Dr., Henderson, NV 89014
The Company did not make any repurchases of its securities during the year ended December 31, 2011.
Item 6.
Item 6. Selected Financial Data.
Not Applicable
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This 10K 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 bematerially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers arecautioned 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 anyrevisions 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 ourwebsites. Management has plans to seek additional capital through a private placement and public offering of its common stock, if necessary. Our auditors have expressed agoing concern opinion because uncertainties raise doubts about the Issuers ability to continue as a going concern.
Background
On October 29, 2010, the Company consummated a voluntary share exchange transaction between the Company on one hand and Jett Rink Oil, LLC, a Kansas limited liability company(“Jett Rink”) and Bill Herndon, the sole member of Jett Rink, on the other hand, pursuant to which the Company has acquired from Bill Herndon all of the membership interestin Jett Rink in exchange for approximately 10,000,000 shares of the Company’s Common Stock and Jett Rink has become a wholly-owned subsidiary of the Company.
Corporate Overview
Unless otherwise indicated, in this 10K, references to “we,” “our,” “us,” the “Company,” “TGRO” refer to Tiger Oil and Energy, Inc., a Nevada corporation (formerly UTEC, Inc.)and Jett Rink which became a wholly owned subsidiary October 29, 2010 after the closing of the voluntary share exchange transaction described above.. Future plans include the exploration, development and production of oil and gas in the United States.Our current focus is to secure $1,400,000 in financing to increase our holdings and develop our current oil and gas assets over the next twelve months.
2007 was the first year of operation for the Company after it acquired the UTEC Corporation from Energetic Systems Inc, LLC. In 2007, the Company was organized into three marketing units, Energetic Materials, Specialty Chemicals and Raw Materials and Hazardous Chemicals and Biological Waste Destruction. The Company’s historical legacy business was primarily constituted by the first two marketing units and almost exclusively within the commercial explosives market. The new marketing unit, Hazardous Chemicals and Biological Waste Destruction was in a development stage through June of 2009, and had no commercial revenues. This business unit was structured in order to pursue commercialization of Cold Plasma Oxidizer waste destruction systems during 2009. During the latter part of 2008, the Directors and Management conducted a review of the Company’s business prospects and concluded that the legacy activities of UTEC Corporation were not sufficient to fund development and commercialization of the waste destruction business. Consequently, the Directors and Management began exploring various means to continue the growth of the business and fund the final development and commercialization of the waste destruction technology licensed from Ceramatec. A decision was made to sell the legacy business to Energetic Systems, Inc., LLC., and retain within the UTEC consolidated group the Ceramatec license and waste destruction assets developed over the past two years. The effect of this would be to simplify and focus the activities of the Company on the waste destruction business, eliminate the need to inject additional cash required to fund the legacy business, and thereby make the Company more attractive to potential lenders and investors. The sale was completed on April 26, 2009, with effect from April 1, 2009. On September 2, 2009 the Company received a termination notice from Ceramatec that this agreement was cancelled for non-performance. The Company had issued 850,000 of its $.001 par value common shares to Ceramatec that Ceramatec could sell starting two years from the date of the agreement. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering.
On October 1, 2009 the Company purchased 100% of the outstanding shares of C2R Energy Commodities Inc for the issuance of 4,050,000 of the Company’s $0.001 par value common shares. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering.
On July 29, 2010, UTEC, Inc., a Nevada corporation (the “Company”), entered into an Exchange Agreement (the “Exchange Agreement”) with Jett Rink Oil, LLC, a Kansas limited liability company (“Jett Rink”) and Bill Herndon, the sole member of Jett Rink, pursuant to which the Company agreed to acquire from Bill Herndon all of the membership interest in Jett Rink in exchange for 10,000,000 shares of the Company’s Common Stock. Jett Rink is involved in the business relating to the exploration, development and production of oil and gas in the United States.
The Company consummated a voluntary share exchange transaction between the Company on one hand and Jett Rink Oil, LLC, a Kansas limited liability company(“Jett Rink”) and Bill Herndon, the sole member of Jett Rink, on the other hand, pursuant to which the Company has acquired from Bill Herndon all of the membership interestin Jett Rink in exchange for approximately 10,000,000 shares of the Company’s Common Stock and Jett Rink has become a wholly-owned subsidiary of the Company.
The closing of the Merger Agreement was subject to the satisfaction of certain pre-closing conditions, including (i) changing the name of the Company to “Tiger Oil and Energy, Inc.,” (ii) the cancellation of all of the 4,650,000 outstanding options that had been granted to the Company’s key employees, consultants, officers and directors pursuant to the Company’s non-qualified stock option plan, and (iii) completion of audited financial statements of Jett Rink, among others. These closing conditions were satisfied and the Exchange Agreement was consummated on October 29, 2010. Accordingly, the Company changed its corporate name to Tiger Oil and Energy, Inc.
On October 27th, 2010 Tiger Oil and Energy, Inc. (TGRO) entered into a co-development agreement with Black Hawk Exploration, in which the Company, after an investment of $400,000 by TGRO in a new well in Black Hawk’s Cowley County lease, the Company will earn a 40% working interest in the # 1 Baker well, BHWX will receive a 50% interest in the new well and TGRO will have the right to participate in the 9 well rework program at the Cowley Prospect. BHWX will receive a 20% interest in any other new well TGRO drills on Black Hawk’s current or future Cowley County, Kansas leases and Black Hawk has the option to invest in each additional new well drilled by TGRO on a prorated basis up to an additional 30%.
On November 29th the Company expanded its original agreement and entered into a joint venture agreement with Black Hawk Exploration covering approximately 2,553 acres of oil and gas leases in Cowley County, Kansas. BHWX owns 100% of the leases within the Prospect Area and has an undivided 81.5% working interest in and to the oil and gas leases and their previous 10 shut-in oil and gas wells.
The joint agreement includes in one shut-in oil/gas well, the #1 Baker, located on the Keith Baker lease. Also subject to joint development is a 100% interest in 9 other oil wells previously shut-in. The Company’s program calls for re-working all 10 locations directly or in joint venture with Black Hawk and returning all of them to cash flow production.
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 withany personal property and lease equipment located thereon. These two wells are shut-in and produce no revenue.
Our current focus is to secure $1,400,000 in financing to increase our holdings and develop our current oil and gas assets over the next twelve months.
Revenues
Revenues from continuing operations for the year ended December 31, 2011 were $-0-. The Company divested all assets that generated revenue in the period ended June 30, 2009 as part of the sale of the legacy business.
Operating Expenses
Operating expenses for the year ended December 31, 2011 and 2010 were $66,781and $$1,433,869, respectively. The majority of these expenses related to general and administrative expenses totaling $56,462 and $49,045 for the 2011 and 2010 fiscal years, respectively, and $2,491 and $540,933 in management fees for the years ended December 31,2011 and 2010.In addition, the Company incurred $-0- and $843,891 in impairment expenses for 2011 and 2010, respectively. The Company also recognized accretion expense of $7,828 during 2011.
Other Income (Expenses)
During the years ended December 31, 2011 and 2010 the Company recognized interest expense in the amount of $1,560 and $361, respectively. The Company also recognized a loss on sale of oil and gas leases totaling $11,824 in 2011. Additionally, the Company recognized a gain on derivative liability of $8,928 in 2011 and a loss on derivative liability of $11,911 in 2011. The Company recognized a gain on forgiveness of debt in the amount of $111,674, a loss on derivative liability in the amount of $11,911, and other income relating to cash received for finder’s fees totaling $40,000 in 2010.
Discontinued Operations
In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to a related party in exchange for stock in the Company totaling 22,500,000 shares. The stock was cancelled in July of 2009. For the year ended December 31, 2009 the Company recognized income from discontinued operations in the amount of $309,650, and a loss on the disposal of discontinued operations in the amount of $1,730,742.
Net Loss
For the years ended December 31, 2011 and 2010, the Company recognized net losses in the amounts of $71,237 and $1,294,467, respectively.
Liabilities
The Company’s liabilities primarily consist of current amounts payable or accrued to trade creditors, and amounts owing to related parties for management fees, expenses, and shared services. At December 31, 2011 the Company also holds a note payable in the amount of $15,240 and a related derivative liability of $2,983 relating to the note.
Liquidity and Capital Resources
As of December 31, 2011, we had $44,752 in current assets, consisting of $2,742 in cash and notes receivable totaling $42,000, compared to $14,752 in current assets at December 31, 2010, which consisted of cash of $14,352 and prepaid expenses of $400. Current liabilities at December 31, 2011, totaled $130,238 compared to $50,318 at December 31, 2010. The current liabilities at December 31, 2011 consisted of accounts payable and accrued expenses of $17,615, accounts payable to related parties in the amount of $94,400, loans payable of $15,240 and a derivative liability of$2,983. At December 31, 2010 the current liabilities consisted of accounts payable and accrued expenses of $4,103, accounts payable to related parties in the amount of $19,064, loans payable of $15,240, and a derivative liability of $11,911.
During 2009 and 2010, cash flows from the legacy business, supplemented with short-term borrowings from related parties, was used to support the waste destruction business development program. Following a general business review at the end of 2008, management determined that the legacy business could support both its ongoing operations as well as the development of the waste destruction business on its operations alone. Consequently, the board of directors, in consultation with management and major shareholders, took the following step. In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to a related party in exchange for stock in the Company totaling 22,500,000 shares. The stock was cancelled in July of 2009.
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.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data.
The Financial Statements are included at the end of the signature page.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A(T).
Item 9A(T). Controls and Procedures.
As of December 31, 2011, 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 have been found to be ineffective.
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 Dec. 31, 2011. 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 Annual Report on Form 10-K 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 Dec. 31, 2011:
i)Lack of segregation of duties. At this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management will periodically reevaluate this situation.
ii)Lack of an independent audit committee. Although we have an audit committee it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.
iii)Insufficient number of independent directors. At the present time, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate governance practices as set forth by the rules of various stock exchanges.
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 Control over Financial Reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, that has materially affected, or is reasonable likely to materially affect, our internal controls 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, 2012.
Item 9B.
Item 9B. Other Information.
None
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
The names, ages, and respective positions of the directors, officers, and significant employees of the Company are set forth below.
Name
Position Held with the
Company
Age
Date First Elected
or Appointed
Kenneth Liebscher
President and Director
July 1, 2006 to present
Howard Bouch
Chief Financial Officer and Director Secretary Treasurer
January 12, 2007 to present
Bill Herndon
Director
August 6, 2010 to present
Ryan Kerr
Director
August 6, 2010 to present
Kenneth B. Liebscher, President, CEO, Director and Chairman.
Ken Liebscher is a 69-year-old international businessman with 39 years of securities and executive management experience. Mr. Liebscher is a graduate of St. George’s School, Vancouver, B.C. and also attended the University of British Columbia. In 22 years with the world’s largest dental products manufacturer, Dentsply International Inc., Mr. Liebscher held several positions culminating as the Manager of their West Coast Division, headquartered in San Francisco California. Mr. Liebscher was recruited by a major Europe based competitor, Ivoclar Liechtenstein to lead their entry into the North American market and, within two years, became Executive Vice President of Sales and Marketing and helped expand this company’s sales to $300,000,000 US before retiring.
Mr. Liebscher became a director of a publicly held company called E.T.C. Industries Ltd. in 1992 and became President of its wholly owned subsidiary, THE ELECTRIC CAR COMPANY and, in 1994, led a team that developed the MI 6 prototype electric car from the ground up. Mr. Liebscher has served on the Board of Directors of Belmont Resources Inc., listed on the TSX Venture Exchange (BEA.V) from 1992 to October, 2009. Mr. Liebscher also serves on the Board of directors of Lucky Boy Silver Corp. (OTC BB SRVS).
Howard Bouch, Director
Howard Bouch, age 67, is a Private Practice Chartered Accountant with over 36 years of Public and Private international experience. Mr. Bouch originally qualified as a Chartered Accountant (English and Wales Institute) in 1968. Mr. Bouch joined Deloitte & Co, Lusaka, Zambia from 1970 - 1972. Mr. Bouch joined Anglo American Corp, Zambia working as Head Office Chief Accountant for Nchanga Consolidated Copper Mines (world’s 2nd largest) from 1972 - 1976. In 1976 Mr. Bouch returned to the UK and joined Babcock and Wilcox, Engineers, Nottinghamshire, England as Chief Accountant for one of their subsidiaries. Mr. Bouch was Chief Accountant of a private building firm in Cumbria, England from 1978 - 1984. In 1984 Mr. Howard Bouch established a Private Practice as a Chartered Accountant and continues to provide professional services to Cumbrian firms to the present. Mr. Bouch is a Director of Viavid Broadcasting Inc., a fully reporting, US Public Company, trading on the Pink Sheets under the symbol (VVDB) and Director and CFO of Universal Potash Corp. (UPCO). He is also as Director and CFO of Black Hawk Exploration Inc., (BHWX) and Director and CFO of Convenientcast, Inc. (CVCT).
Mr. Bill Herndon, Director
Mr. Bill Herndon, age 47 has over 20 years of experience in all phases of the oil and gas industry including capital investment and analysis, project management and structuring, acquisition and development of oil and gas wells, exploration and drilling and completion management. His family has been in the oil and gas industry since the 1930’s, mainly operating in Oklahoma, Kansas and Texas. Since December 2005 Mr. Herndon has been the President and sole member of Tiger Oil and Gas, LLC. In 1990 Mr. Herndon participated in the wildcat play called State Line Field in Kansas. The field has produced over one million barrels of oil to date. He has raised over $25 million since 2007 from hedge funds and industry partners for various production acquisitions, in-field drilling programs, and new oil and gas development projects. Mr. Herndon has also managed the leasing of over 100,000 acres in the last two years for 12 different projects and conducted seismic programs for approximately 80,000 acres on these projects in addition to managing the initial drilling programs on these projects. Mr. Herndon successfully funded the acquisition of a field with industry groups and working interest partners that has produced out of multiple zones with total cumulative production of 3,500,00 barrels of oil and 40 billion cubic feet of gas. The field is currently producing 40 barrels of oil per day and 300,000 mcf per day. Mr. Herndon received a Bachelors Degree in Business from Wichita State University. Mr. Herndon’s extensive experience in the oil and gas industry will provide valuable experience to our Board of Directors.
Ryan Kerr, Director
Mr. Kerr, age 42 currently manages Inland Oil Corp., his family-owned business. Mr. Kerr has over 15 years experience in locating, producing, completing and general operations in the oil and gas industry. Mr. Kerr has successfully drilled and completed hundreds of wells throughout the Mid-continent region and is actively involved with development and operations of fields in this region. Mr. Kerr’s extensive experience in oil and gas exploration and production is furthered as an exploration geologist where he has consulted on several water-flood and infill drilling projects throughout Oklahoma, Kansas, North Dakota, Wyoming, New Mexico, Texas, and California. Currently, Mr. Kerr has been heading drilling programs for several operators in Oklahoma, as well as design and implementation of a Nitrogen gas flood in Wagoner County Oklahoma in the Stone Bluff Field. This project consisted of flooding 1,200+ - acres with the producing interval from the Dutcher Sand zone at a depth of 1250’feet. Production since the start of the nitrogen injection flood has been increased from the formation at a rate of 1 MMCF per day.
The Officers and Directors have not been involved in legal proceedings that impair their ability to perform their duties as Officers and Directors.
Code of Ethics
Effective April 1, 2008, our company’s Board of Directors adopted a Code of Business Conduct and Ethics that applies to existing and all new, among other persons, our company’s CEO, CFO and secretary (being our principal executive officer, principal financial officer and principal accounting officer), as well as persons performing similar functions. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1.Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2.Full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
3.Compliance with applicable governmental laws, rules and regulations;
4.The prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5.Accountability for adherence to the Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics requires, among other things, that all of our company’s Senior Officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly Senior Officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any Senior Officer who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company’s Code of Business Conduct and Ethics by another.
Our Code of Business Conduct and Ethics was filed with the Securities and Exchange Commission on May 15, 2008 as an Exhibit to our Form10. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Tiger Oil and Energy, Inc, 7230 Indian Creek Ln., Ste 201, Las Vegas, NV 89149
Item 11.
Item 11. Executive Compensation.
The following charts include compensation and options received by all Officers and Directors of the Company.
Officers and Directors
(1) Directors Liebscher, Bouch, Herndon and Kerr were awarded 2,000,000 common shares of the Company, each valued at $0.02, as Directors compensation.
OPTIONS
There are no options granted.
For the year ended December 31, 2011 and 2010 share-based compensation expense of $-0- and $457,600 was recognized, respectively.
There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the corporation or any of its subsidiaries.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The owners of 5% or more of the Shares, as well as the officers and directors who own Shares as of December 31, 2011, are set forth in the following chart:
(1)The Excalibur Group A.G. is owned by Lionel R. Welch, 51A Dean St., Belize City, Belize C.A.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Other than as set forth in this Item 7, there are no relationships, transactions, or proposed transactions to which the registrant was or is to be a party, in which any of the named persons set forth in Item 404 of Regulation SK had or is to have a direct or indirect material interest.
As indicated under Description of Business, the Company, on January 10, 2007, entered into a purchase agreement with Energetic Systems Inc., LLC. to purchase 100% of the shares of UTEC Corporation LLC (“Energetic Purchase Agreement”). Under the terms of the Energetic Purchase Agreement, Energetic Systems Inc. LLC.(ESI) was paid 22,500,000 Common Shares and 20,000 Preferred Shares of the Company. In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to ESI in exchange for stock in the Company totaling 22,500,000 common shares. The common stock was cancelled in July of 2009.
On January 11, 2007, the Company entered into an agreement with Redstone Management Services, a company owned by Dr. FortunatoVillamagna, former CEO of our company. In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to a related party in exchange for stock in the Company totaling 22,500,000 shares. The stock was cancelled in July of 2009.
From time to time the Company enters into arrangements for the provision of services from one or more of its Directors, or companies in which its Directors have a financial interest.
The company has chosen to adopt NASD’s definition of independent director. Under such definition, Howard Bouch qualifies as an independent director.
Item 14.
Item 14. Principal Accounting Fees and Services.
On Nov. 2, 2009, the accounting firm of Sadler, Gibb & Associates, LLC was engaged as the Registrant’s independent registered public account firm.
Services rendered by Sadler Gibb & Associates for the year ended December 31, 2011 in connection with fees presented above were as follows:
● Audit fees consist of fees for professional services provided in connection with the audit of our consolidated financial statements, the review of our quarterly consolidated financial statements and the audit of the effectiveness of our internal control over financial reporting.
●All Other Fees. For fiscal 2011, all Other Fees related to professional services provided in conjunction with reviewing the Form 10Q, the selling of a subsidiary of the Company or issues related to consolidation and restructuring.
POLICY ON AUDIT COMMITTEE
Among its other duties, the Audit Committee is solely responsible for the appointment, compensation and oversight of the audit and permissible non-audit services provided by our independent registered public accounting firm. Pursuant to the Audit Committee’s charter, the Chairman of the Audit Committee has been delegated responsibility to review and pre-approve audit and permissible non-audit services to be provided by our independent registered public accounting firm. The Chairman of the Audit Committee then reports such pre-approvals to the full Audit Committee at its next regularly scheduled meeting. In accordance with this pre-approval policy, management communicates, on an ongoing basis, specific projects and categories of service for which the advance approval of the Audit Committee is requested. The Audit Committee Chairman reviews these requests and advises management whether the engagement of the independent registered public accounting firm is approved. On a periodic basis, management subsequently reports to the Audit Committee regarding the actual spending for particular projects and in connection with categories of services.
Management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. The Company’s independent registered public accounting firm is responsible for auditing those financial statements. The members of the Audit Committee are not professionally engaged in the practice of accounting or auditing and their functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm. Rather, the members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and the independent registered public accounting firm.
Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate filings made by the Company, including this proxy statement, in whole or in part, the following Audit Committee Report shall not be deemed to be “soliciting material” or to be incorporated by reference into any prior or future filings made by the Company.
We have reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the year ended December 31, 2011.
Based on the reviews and discussions with the audit group, we have recommended to the Board that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
Audit Chairman
Howard Bouch
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
Exhibits:
Exhibit
No. Document Location
3.1 Articles of Incorporation Previously filed*
3.2 Articles of Amendment - Allwest Previously filed*
3.3 Articles of Amendment - Lyons Capital Previously filed*
3.4 Articles of Amendment - UTEC Previously filed*
3.5 Articles of Amendment - Share Increase Previously filed**
3.6 Bylaws Previously filed* (As Exhibit 3.5)
14.1 Code of Business Conduct and Ethics Previously filed*
31.1 Rule 13a-41(a)/15d-14(a) Certificates Filed herewith
31.2 Rule 13a-41(a)/15d-14(a) Certificates Filed herewith
32.1 Section 1350 Certifications Filed herewith
32.2 Section 1350 Certifications Filed herewith
101.INS XBRL Instance Document Filed herewith
101.SCH XBRL Taxonomy Extension Schema Filed herewith
101.CAL XBRL Taxonomy Extension Calculation Linkbase Filed herewith
101.DEF XBRL Taxonomy Extension Definition Linkbase Filed herewith
101.LAB XBRL Taxonomy Extension Label Linkbase Filed herewith
101.PRE XBRL Taxonomy Presentation Linkbase Filed herewith
*Previously filed on May 14, 2008 as exhibits to Form 10-12G.
SIGNATURES
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.
Tiger Oil and Energy, Inc
/s/ Kenneth B Liebscher
/s/ Howard Bouch
Kenneth B. Liebscher, Director & CEO Howard Bouch, CFO
Date March 29, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Kenneth Liebscher
March 29, 2012
/s/ Bill Herndon
March 29, 2012
Kenneth Liebscher,
Date
Bill Herndon, Director
Date
President, CEO, Director
/s/ Howard Bouch
March 29, 2012
/s/ Ryan Kerr
March 29, 2012
Secretary, Treasurer, CFO Director
Date
Ryan Kerr Director
Date
TIGER OIL AND ENERGY, INC.
AUDIT REPORT OF INDEPENDENT ACCOUNTANTS
AND
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2011 and 2010 (Restated)
and From Inception on April 30, 2009 through December 31, 2011
TIGER OIL AND ENERGY, INC.
SADLER, GIBB& ASSOCIATES, L.L.C.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Tiger Oil and Energy, Inc.
(An Exploration Stage Company)
We have audited the accompanying consolidated balance sheets of Tiger Oil and Energy, Inc.as of December 31, 2011 and 2010 (restated), and from inception on April 30, 2009 through December 31, 2011 and the related consolidated statements of operations, stockholders’ deficitand cash flows for the periodsthen ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tiger Oil and Energy, Inc.as of December 31, 2011 and 2010 (restated) and from inception on April 30, 2009 through December 31, 2011, and the results of their operations and their cash flows for the periods then ended, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not yet established an ongoing source of revenue sufficient to cover its operating costs which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Sadler, Gibb & Associates, LLC
Salt Lake City, UT
March 27, 2012
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Balance Sheets
The accompanying notes are an integral part of these consolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Operations
The accompanying notes are a integral part of these consolidated financials statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Deficit
The accompanying notes are an integral part of these consolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Deficit
The accompanying notes are an integral part of these consolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Deficit
The accompanying notes are an integral part of these condolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these consolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these consolidated financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity
Tiger Oil and Energy, Inc., formerly UTeC, Inc., is a Nevada corporation organized on November 8, 1993 as a “For Profit” corporation for the purpose of engaging in any lawful activity. On January 10, 2007, the Company purchased 100% of the shares of UTeC Corporation, Inc. In 2007, the Company licensed technology covering the use of cold plasma oxidizer technology for the destruction of solid and liquid hazardous chemicals and biologicals. During 2007 and 2008, the Company worked to validate the technology and prepare a business plan for its commercialization.
In April 2009, the Company divested its commercial explosives development, analysis, testing and manufacturing business to eliminate the need to inject new capital into the Company to support this business, and concentrate on raising the funds necessary to commercialize its hazardous waste destruction business. At this time, the Company re-entered the development stage.
Prior to the divestiture, the Company’s business was to offer state of the art testing and analysis to clients worldwide. The Company operated a chemical research and development laboratory near Riverton, Kansas, which specialized in commercial explosives development and analysis. The Company also operated a destructive test facility near Hallowell, Kansas, which specialized in determining the detonating characteristics of commercial explosives.
On October 1, 2009 the Company entered into an agreement to purchase 100% of the outstanding shares of C2R Energy Commodities, Inc., a Nevada corporation, in exchange for 4,050,000 shares of the Company’s restricted common stock. The Company entered into this agreement due primarily to the fact that C2R owned certain intellectual property that the Company wished to acquire.
On October 29, 2010, the Company acquired all of the membership interest in Jett Rink Oil, LLC (“Jett Rink”) in exchange for 10,000,000 shares of the Company’s Common Stock. Jett Rink is involved in the business relating to the exploration, development and production of oil and gas in the United States. At the closing of the Exchange Agreement, Jett Rink became a wholly-owned subsidiary of the Company and the Company acquired the business and operations of Jett Rink.
Basis of Presentation
The accompanying audited consolidated financial statements and related notes include the activity of the Company and its two wholly-owned subsidiaries, C2R Energy Commodities, Inc. and Jett Rink Oil, LLC and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-K. All inter-company balances and transactions have been eliminated.
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.
Exploration Stage Company Classification
Effective April 30, 2009, the Company has re-entered the exploration stage. The Company divested its main revenue producing operations and since that date has not achieved significant revenue from its principle operations. The Company is a therefore currently an exploration stage company as defined by ASC 915.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end.
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 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.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. The Company at times may maintain a cash balance in excess of insured limits.
Property, Plant and Equipment
Property and equipment are stated at cost. Major additions and improvements are capitalized in the month following the month in which the assets or improvement are deemed to be placed in service. Maintenance and repairs are expensed as incurred. Upon disposition, the net book value is eliminated from the accounts, with the resultant gain or loss reflected in operations. Depreciation expense is computed on a straight-line basis over the estimate useful lives of the assets as follows:
Building and leasehold improvements 10-25 years
Machinery and equipment 5 years
Furniture and fixtures 3-7 years
The Company periodically assesses the recoverability of property, plant and equipment and evaluates such assets for impairment whenever events or changes in circumstances indicate that the net carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the net carrying amount.
Impairment of Long-Lived Assets
The Company follows the provisions of ASC 360 for its long-lived assets. The Company’s long-lived assets, which include test equipment and purchased intellectual property rights, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company determined
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets (Continued)
that purchased oil and gas property rights, equipment and machinery, and construction in process were deemed to be fully impaired and written-off during the year ended December 31, 2010. As such, the Company recognized impairment expense of $515,878 in connection with its ownership of oil and gas property rights, and $328,013 in connection with its ownership of various machinery, equipment, and other assets categorized as construction in progress for a total impairment expense recognized during the year ended December 31, 2010 of $843,891.
Fair Value of Financial Instruments
The Company follows ASC 825 in accounting for its financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amounts of financial assets and liabilities, such as accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at December 31, 2011 and 2010, respectively.
Revenue Recognition
The Company follows the guidance of ASC 605 for revenue recognition. The Company will recognize revenues when it is realized or realizable and earned less estimated future doubtful accounts. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. The Company will derive majority of its revenue from sales of oil produced by its wells.
The Company uses the sales method to account for sales of crude oil and natural gas. Under this method, revenues are recognized based on actual volumes of oil and gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on the interest in the properties. These differences create imbalances which are recognized as a liability only when the imbalance exceeds the estimate of remaining reserves. Costs associated with production are expensed in the period incurred.
Stock-based Compensation
The Company adopted ASC 718 effective January 1, 2006 using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of ASC 718.
Provision for Taxes
The Company applies ASC 740, which requires the asset and liability method of accounting for income taxes. This method requires that the current or deferred tax consequences of all events recognized in the financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Provision for Taxes (Continued)
The Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax positions. The adoption of ASC 740 had no material impact on the Company’s financial statements.
Basic Loss per Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive common shares outstanding as of December 31, 2011 or 2010.
Reporting Segments
ASC 280 establishes standards for the way that public enterprises report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances. Currently, ASC 280 has no effect on the Company’s consolidated financial statements as substantially all of the Company’s operations are conducted in one industry segment.
Oil and Gas Properties
The Company follows the full cost method of accounting for its oil and natural gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income. Depletion and depreciation of proved oil and gas properties is calculated on the units-of-production method based upon estimates of proved reserves. Such calculations include the estimated future costs to develop proved reserves. Oil and gas reserves are converted to a common unit of measure based on the energy content of 6,000 cubic feet of gas to one barrel of oil. Costs of unevaluated properties are not included in the costs subject to depletion. These costs are assessed periodically for impairment.
Ceiling Test
In applying the full cost method, the Company performed an impairment test (ceiling test) at each reporting date, whereby the carrying value of oil and gas property and equipment is limited to the “estimated present value” of the future net revenues from its proved reserves, discounted at a 10-percent interest rate and 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 any book and tax basis differences of the properties. As of December 31, 2011 and 2010 the Company recorded impairment of oil and gas properties in the amounts of $-0- and $515,878, respectively.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Asset Retirement Obligation
The Company follows ASC 410, Asset Retirement and Environmental Obligations which requires entities to record the fair value of a liability for asset retirement obligations (“ARO”) and recorded a corresponding increase in the carrying amount of the related long-lived asset. The asset retirement obligation primarily relates to the abandonment of oil and gas properties. The present value of the estimated asset retirement cost is capitalized as part of the carrying amount of oil and gas properties and is depleted over the useful life of the asset. The settlement date fair value is discounted at our credit adjusted risk-free rate in determining the abandonment liability. The abandonment liability is accreted with the passage of time to its expected settlement fair value. Revisions to such estimates are recorded as adjustments to ARO are charged to operations in the period in which they become known. At the time the abandonment cost is incurred, the Company is required to recognize a gain or loss if the actual costs do not equal the estimated costs included in ARO.
The ARO is based upon numerous estimates and assumptions, including future abandonment costs, future recoverable quantities of oil and gas, future inflation rates, and the credit adjusted risk free interest rate.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
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.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 3 - ACQUISITION OF SUBSIDIARIES
Jett Rink Oil, LLC - On October 29, 2010, the Company, entered into an Exchange Agreement (the “Exchange Agreement”) with Jett Rink Oil, LLC, a Kansas limited liability company (“Jett Rink”) and Bill Herndon, the sole member of Jett Rink, pursuant to which the Company agreed to acquire from Bill Herndon all of the membership interest in Jett Rink in exchange for 10,000,000 shares of the Company’s Common Stock. Jett Rink is involved in the business relating to the exploration, development and production of oil and gas in the United States. At the closing of the Exchange Agreement, Jett Rink became a wholly-owned subsidiary of the Company and the Company acquired the business and operations of Jett Rink. The 10,000,000 shares issued were valued at the market value of $0.051 per share, resulting in $510,000 in total consideration paid for Jett Rink. The acquisition was accounted for as a purchase transaction.
NOTE 4 - RELATED PARTY TRANSACTIONS
Officer and Director Compensation
On June 1, 2009 the Company entered into an employment agreement with its CEO. Under the agreement, the Company has agreed to pay $200,000 per year and a bonus of up to 50% of the annual pretax earnings before depreciation and amortization, subject to a maximum of $100,000. As of May 21, 2010 and December 31, 2009, the Company had accrued $283,333, and $200,000 of salary in conjunction with this agreement. On May 21, 2010 the Company’s CEO resigned and forgave all accrued salary due to him, resulting in an increase in additional paid-in capital in the amount of $283,333. The CEO also had other outstanding liabilities owed to him by the Company of $80,602 at the time of resignation, resulting in a total increase in additional paid-in capital of $363,935. On the same date, another related party forgave $215,099 in outstanding debts, resulting in a total contribution to capital in the amount of $579,034.
Related-Party Payables
During the year ended December 31, 2010, the Company borrowed $19,064 from related parties in order to fund its cash requirements. This amount is unsecured, non-interest bearing, and is due on demand. During the year ended December 31, 2011 the Company borrowed an additional $41,000 from related parties. These liabilities are also unsecured, non-interest bearing, and due on demand. As of December 31, 2011 the Company had made no payments on these notes, and had received no demand for payment.
During the year ended December 31, 2011 the Company elected to purchase a 100% working interest in certain oil and gas properties from a related party. As consideration for the purchase, the Company issued to the seller 250,000 shares of its common stock, valued at $0.18 per share, for an aggregate amount of $45,000. In addition, the Company executed a note payable to the seller in the amount of $35,000. This note is unsecured, non-interest bearing, and due on January 31, 2012. As of January 31, 2012 the Company has made no payments on this note and has received no demand for payment.
Note Receivable - Related Party
During the year ended December 31, 2011 the Company elected to sell and 70% working interest in certain oil and gas properties to a related party for $42,000. The consideration for the sale was received by the Company in the form of a promissory note. The note is unsecured, non-interest bearing, and due on demand. As of December 31, 2011 the Company has received no payments on this note, and has made no demands for payment.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 5 - NOTES PAYABLE
On September 20, 2010 the Company borrowed a total of $15,000 from an unrelated third-party entity. The note bears interest at a rate of 6.0% per annum and is convertible at the option of the lender into common shares of the Company at the average bid quote for a period of five days prior to conversion. The note has no formal payment terms or due date, other than being due one demand. Under ASC 815, due to the unknown quantity of shares to be issued pursuant to the future conversion of the note, the Company recorded a derivative liability in the amount of $2,983 relating to the conversion feature of the note, and a related loss on derivative liability in the same amount.
NOTE 6 - 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 in three oil and mineral leases in Cowley, County, Kansas. As consideration for the purchase, the Company paid $3,109 in cash, issued a non-interest bearing note for $35,000, and 250,000 shares of its common stock valued at the market rate of $0.18 per share. The total consideration paid for the leases was $80,000. Subsequent to the purchase of these leases the Company incurred $2,236 in exploration costs relating to these properties. These costs have been capitalized and added to the basis of the properties.
On October 20, 2011 the Company sold a 70% working interest in certain of its oil and gas leases in Cowley County, Kansas. As consideration for this purchase, the Company received a note receivable in the amount of $42,000. Pursuant to this transaction the Company recorded a 70% decrease in its cost basis on these properties, totaling $56,000. The $14,000 difference between the $56,000 decrease in cost basis and the $42,000 consideration received in the sale has been recorded as a loss on sale of oil and gas leases.
NOTE 7 - ENVIRONMENTAL 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.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 7 - ENVIRONMENTAL AND OTHER CONTINGENCIES (CONTINUED)
The Company currently leases properties 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 affect on the Company’s net income, financial condition or liquidity in a future period.
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 $42,367 and $5,878 for its estimated asset retirement obligations as of December 31, 2011 and 2010, respectively. The Company also recorded $7,828 and $-0- of accretion expense related to its asset retirement obligations as of December 31, 2011 and 2010, respectively.
NOTE 8 - STOCKHOLDERS’ DEFICIT
The Company has 1,000,000 preferred shares authorized at a par value of $0.001 and 74,000,000 common shares authorized at par value of $0.001. As of December 31, 2011 the Company has 42,013 shares of preferred stock and 52,728,159 shares of common stock issued and outstanding. The following is a list of the Company’s common stock issueances for the years ended December 31, 2011 and 2010:
On February 1, 2011 the Company issued 250,000 common shares as part of a lease purchase agreement. (See Note 6 above) The shares were valued at $0.18 per share based upon the closing share price on the date of issuance, resulting in an aggregate share value of $45,000.
In October 2010, the Company issued an aggregate of 8,000,000 shares of common stock to four individuals, at $0.05 per share, in exchange for directors’ services totaling $400,000.
On October 28, 2010, the Company issued 10,000,000 shares of restricted common stock in exchange for all the shares issued and outstanding of Jett Rink Oil, LLC valued at $0.051 per share.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 8 - STOCKHOLDERS’ DEFICIT (Continued)
December 30 2010, the Company issued 360,000 shares of common stock at $0.16 per share, in exchange for services totaling $57,600.
NOTE 9 - INCOME TAXES
No provision has been made in the financial statements for income taxes because the Company has accumulated losses from operations since inception. Any deferred tax benefit arising from the operating loss carried forward is offset entirely by a valuation allowance since it is currently not likely that the Company will be significantly profitable in the near future to take advantage of the losses. The provision for income taxes consists of the following:
The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 34% to pretax income from continuing operations for the years ended December 31, 2011 and 2010 due to the following:
At December 31, 2011, the Company had net operating loss carry forwards of approximately $1,365,982 that may be offset against future taxable income through 2031. The Company adopted the provisions of ASC 740 at the beginning of fiscal year 2008. As a result of this adoption, the Company has not made any adjustments to deferred tax assets or liabilities. The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed. The Company has not had operations resulting in net income and is carrying a large Net Operating Loss as disclosed above. Since it is not thought that this Net Operating Loss will ever produce a tax benefit, even if examined by taxing authorities and disallowed entirely, there would be no effect on the financial statements.
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 10 - RESTATED FINANCIAL STATEMENTS
The Company restated its balance sheet as of December 31, 2010 to record an impairment of certain oil and gas properties. The following table presents a comparison of the restated balance sheet to the original balance sheet:
TIGER OIL AND ENERGY, INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2011 and 2010
NOTE 11 - SUBSEQUENT EVENTS
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.