Notes
to the Condensed Consolidated Financial Statements
(Unaudited)
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 unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and
Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all
information and footnotes required by accounting principles generally accepted in the United States of America for annual financial
statements.
In
the opinion of the company’s management, the accompanying unaudited interim consolidated financial statements contain all
the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the company as of
September 30, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the nine
months ended September 30, 2019 are not necessarily indicative of the operating results for the full fiscal year or any future
period. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements
and related notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed
with the SEC on April 16, 2019.
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.
Use
of Estimates
The
preparation of consolidated 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 consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Financial
Instruments and Fair Value Measurements
As
defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions
about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated,
or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes
a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable
inputs (level 3 measurement).
The
following table summarizes fair value measurements by level at September 30, 2019 and December 31, 2018, measured at fair value
on a recurring basis:
Fair
Value Measurements as of September 30, 2019 Using:
|
|
Total Carrying Value
|
|
Quoted Market Prices in Active Markets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
As of September 30, 2019
|
|
|
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
353,858
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
353,858
|
|
Fair
Value Measurements as of December 31, 2018 Using:
|
|
Total Carrying Value
|
|
Quoted Market Prices in Active Markets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
As of December 31, 2018
|
|
|
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
199,609
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
199,609
|
|
Basic
and Diluted Loss per Share
Basic
and diluted loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted
average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net
income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt
or equity. The Company had 1,211,002,300 potential dilutive shares as of September 30, 2019 that were excluded as their effect
was anti-dilutive.
Lease
Effective
January 1, 2019, we adopted Accounting Standards Codification 842, Leases ("ASC 842"). Operating lease right-of-use
("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future
minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception
are not recorded on our consolidated balance sheet and are expensed on a straight-line basis over the lease term in our consolidated
statement of income.
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of its consolidated financial statements. The
Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated
financial statements.
NOTE
2 - GOING CONCERN
The
Company's condensed consolidated 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
condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
NOTE
3 – OIL AND GAS PROPERTIES
On
June 27, 2019, the Company signed a purchase agreement with OMR Drilling and Acquisition, LLC. The Company has a 100 percent working
interest and an 87.5 percent net royalty interest in the well. As of September 30, 2019, the Company has capitalized a purchase
price of $20,000 to commence operations development of the well.
NOTE
4 – CONVERTIBLE NOTES PAYABLE
|
|
September 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Convertible Notes - originated in January 3, 2014
|
|
$
|
570,000
|
|
|
$
|
570,000
|
|
Convertible Notes - originated in January 22, 2018
|
|
|
24,736
|
|
|
|
75,775
|
|
Convertible Notes - originated in January 24, 2018
|
|
|
69,000
|
|
|
|
109,655
|
|
Convertible Notes - originated in July 1, 2018
|
|
|
7,800
|
|
|
|
7,800
|
|
Convertible Notes - originated in May 20, 2019
|
|
|
150,000
|
|
|
|
—
|
|
Convertible Notes - originated in July 1, 2019
|
|
|
26,250
|
|
|
|
—
|
|
Total convertible notes payable
|
|
|
847,786
|
|
|
|
763,230
|
|
|
|
|
|
|
|
|
|
|
Less: Unamortized debt discount
|
|
|
(25,544
|
)
|
|
|
(13,599
|
)
|
Total convertible notes
|
|
|
822,242
|
|
|
|
749,631
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of convertible notes
|
|
|
822,242
|
|
|
|
749,631
|
|
Long-term convertible notes
|
|
$
|
—
|
|
|
$
|
—
|
|
During
the nine months ended September 30, 2019, the Company recorded interest expense of $46,189 and amortization of debt discount of
$122,625, included in interest expense. As of September 30, 2019 and December 31, 2018, the Company recorded accrued interest
of $182,072 and $157,020, respectively.
Conversion
During
the nine months ended September 30, 2019, the Company converted notes with principal amounts and accrued interest of $229,092
into 611,844,681 shares of common stock. The corresponding derivative liability at the date of conversion of $579,026 was settled
through additional paid in capital.
Convertible
Notes - originated in January 3, 2014
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 December 31, 2017 the notes were in default.
Convertible
Notes - originated in January 22, 2018
On
January 22, 2018, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Adar Bays,
a Florida limited liability company (“Adar”), providing for the purchase of seven convertible notes in the aggregate
principal amount of $300,000 (the “Notes”), with the first Note being in the amount of $75,000 (“First Note”)
and the remaining six Notes being in the amount of $37,500 each (the “Back End Notes”). Each Note bears interest at
the rate of 8% per annum and matures on January 22, 2019.
Each
Back-End Note shall be paid for by an offsetting a $37,500 secured promissory note issued to the Company by Adar on January
22, 2018 (each, the “Adar Note” and collectively, the “Adar Notes”), provided that prior to the
conversion of each Back-End Note, Adar must have paid off an Adar Note in cash. The first two Adar Notes are each
secured by the First Note or substitute collateral having an appraisal value of $37,500. The remaining four Adar Notes are
each secured by money placed into escrow equal to the principal amount of such Adar Note. The first Adar Note matures on
January 22, 2019 with all additional notes maturing on January 22, 2019 as well, unless the Company does not meet the
“current public information” requirement pursuant to Rule 144 under the Securities Act of 1933, as amended (the
“Securities Act”), in which case both Back-End Notes and the Adar Notes may be both cancelled.
The
First Note was funded on January 22, 2018, less $3,750 in legal fees. Each of the remaining six notes shall be funded on a monthly
basis from August 22, 2018 to January 22, 2019, each less $2,000 in legal fees.
Adar
or other holder(s) of the Notes (the “Holder”) may, at its option, at any time after 180 days, elect to convert all
or any amount of the principal face amount of each Note then outstanding into shares of the Company’s common stock, par
value $0.0001 per share, at a conversion price for each share of Common Stock equal to fifty percent (50%) of the lowest closing
bid price of the Common Stock as reported on the OTCQB, where the Company’s shares are traded, or any exchange upon which
the Common Stock may be traded in the future, for the lower of (i) twenty (20) prior trading days immediately preceding the issuance
date of the Note or (ii) the twenty (20) prior trading days including the day upon which a Notice of Conversion is received by
the Company or its transfer agent.
During
the nine months ended September 30, 2019, the Company received issued back end note of $37,500 and received cash of $35,000, less
$2,000 in legal fees.
Convertible
Notes - originated in January 24, 2018
On
January 24, 2018, the Company, entered into a Securities Purchase Agreement (“SPA”), with GW Holdings Group, LLC,
a New York limited liability company (the “Buyer” or “GWH”), providing for the purchase of four convertible
promissory notes in the aggregate principal amount of $157,750, with the first Note being in the principal amount of $78,750,
and the second, third and fourth Notes being in the principal amount of $26,000 each.
The
First Note was funded on January 24, 2018, with the Company receiving $75,000, less $3,750 in legal fees.
Each
Note bears interest at the rate of 10% per annum and is due and payable on January 24, 2019. Interest shall be paid by the Company
in common stock.
GWH,
or other permitted holder (“ Holder ”), may convert all or any amount the principal face amount of
the Notes then outstanding and accrued interest into shares of the Company's Common Stock at a price (“ Conversion
Price ”) per share equal to 50% of the lesser of the lowest closing bid or the lowest trading price: (i) twenty prior
trading days, including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion
is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price), or (ii) the twenty prior
trading days immediately preceding the issuance date of the Notes. The number of issuable shares will be rounded to the nearest
whole share, and no fractional shares or scrip representing fractions of shares will be issued on conversion. In
the event the Company experiences a DTC “Chill” on its shares, the conversion price discount shall be increased to
60% while that “Chill” is in effect. Notwithstanding anything to the contrary contained in the Notes, the Notes shall
not be convertible by the holder thereof, and Company shall not effect any conversion of the Notes or otherwise issue any shares
of Common Stock to the extent (but only to the extent) that the holder together with any of its affiliates would beneficially
own in excess of 9.99% (the “ Maximum Percentage ”) of the Company’s outstanding Common
Stock. The Holder may send in a Notice of Conversion to the Company for Interest Shares based on the formula provided above.
During
the nine months ended September 30, 2019, the Company issued back end note of $78,750 and received cash of $75,000, less $3,750
in legal fees.
Convertible
Notes - originated in July 1, 2018
On
July 1, 2018, the Company issued a convertible note of $24,000 to extinguish the various notes payable issued in 2016 and 2017.
The convertible note bears interest at %5 per annum and is due on June 30, 2019. The Conversion price is 50% of the lowest closing
bid price for the 25 days prior to the conversion date.
Convertible
Notes - originated in May 20, 2019
On
May 20, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Adar Bays, a Florida
limited liability company (“Adar”), providing for the purchase of seven convertible notes in the aggregate principal
amount of $150,000 (the “Notes”), with the first Note being in the amount of $75,000 (“First Note”) and
the remaining two Notes being in the amount of $37,500 each (the “Back End Notes”). Each Note bears interest at the
rate of 12% per annum and matures on May 20, 2020.
The
holder of the Notes (the “Holder”) is entitled, at its option, at any time after 180 days, to convert all or any amount
of the principal face amount of each Note then outstanding into shares of the Company’s common stock at a conversion price
for each share of Common Stock equal to 50% of the lowest closing bid price of the Common Stock as reported on the OTCQB, where
the Company’s shares are traded, or any exchange upon which the Common Stock may be traded in the future, for the lower
of (i) twenty (20) prior trading days immediately preceding the issuance date of the Note or (ii) the twenty (20) prior trading
days including the day upon which a Notice of Conversion is received by the Company or its transfer agent.
During
the nine months ended September 30, 2019, the Company issued note of $150,000 and received cash of $142,250, less $7,750 in legal
fees.
Convertible
Notes - originated in July 1, 2019
On
July 1, 2019, the Company, entered into a Securities Purchase Agreement (“SPA”), with GW Holdings Group, LLC, a New
York limited liability company (the “Buyer” or “GWH”), providing for the purchase of two convertible promissory
notes in the aggregate principal amount of $52,500, with the first Note being in the principal amount of $26,250, and the second
Notes being in the principal amount of $26,250. Each Note bears interest at the rate of 10% per annum and matures on July 1, 2020.
The holder of this note (“ Holder ”), has option to convert all or any amount the principal face
amount of the Notes then outstanding and accrued interest into shares of the Company's Common Stock at a price equal to 50% of
the lesser of the lowest closing bid or the lowest trading price: (i) twenty prior
trading days, including the day upon which a Notice of Conversion is received by the Company, or (ii) the twenty prior
trading days immediately preceding the issuance date of the Notes.
During
the nine months ended September 30, 2019, the Company issued note of $26,250 and received cash of $25,000, less $1,250 in legal
fees.
NOTE
5 - DERIVATIVE LIABILITIES
The
Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging,
and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance
resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.
Fair
Value Assumptions Used in Accounting for Derivative Liabilities.
ASC
815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change
in the fair market value as other income or expense item.
The
Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model
to calculate the fair value as of September 30, 2019. The Black-Scholes model requires six basic data inputs: the exercise or
strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock
price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.
The fair value of each convertible note is estimated using the Black-Scholes valuation model.
For
the nine months ended September 30, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:
|
|
|
Nine Months Ended
|
|
|
|
Year ended
|
|
|
|
|
September 30,
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
|
|
2018
|
|
Expected term
|
|
|
0.01 - 1.00 years
|
|
|
|
1.26 - 2.01 years
|
|
Expected average volatility
|
|
|
211% - 575%
|
|
|
|
267% - 306%
|
|
Expected dividend yield
|
|
|
—
|
|
|
|
—
|
|
Risk-free interest rate
|
|
|
1.75% - 2.42%
|
|
|
|
2.27% - 2.88%
|
|
The
following table summarizes the changes in the derivative liabilities during the nine months ended September 30, 2019:
Fair Value Measurements Using Significant Observable Inputs (Level 3)
|
|
|
|
Balance - December 31, 2018
|
|
$
|
199,609
|
|
|
|
|
|
|
Addition of new derivatives recognized as debt discounts
|
|
|
119,820
|
|
Addition of new derivatives recognized as options compensation
|
|
|
—
|
|
Addition of new derivatives recognized as loss on derivatives
|
|
|
155,057
|
|
Settled on issuance of common stock
|
|
|
(579,026
|
)
|
Reclassification from APIC to derivative due to tainted instruments
|
|
|
—
|
|
Gain on change in fair value of the derivative
|
|
|
458,398
|
|
Balance - September 30, 2019
|
|
$
|
353,858
|
|
The
aggregate loss on derivatives during the nine months ended September 30, 2019 was $613,455.
NOTE
6 – NOTES PAYABLE
On
May 3, 2018, the Company borrowed $10,000 from an unrelated third entity. Pursuant to the terms of the note, the principal accrues
interest at a rate of 8 percent per annum, is unsecured, and was due on demand. During the nine months ended September 30, 2019,
the Company recorded interest expense of $180. At September 30, 2019 and December 31, 2018, the outstanding principal balance
due to the lender was $3,000 and the Company recorded accrued interest of $428 and $248, respectively.
Note
payable - related party
|
|
September 30,
|
|
December 31,
|
|
|
2019
|
|
2018
|
Convertible Notes - originated in July 18, 2016
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
Convertible Notes - originated in July 13, 2017
|
|
|
22,500
|
|
|
|
22,500
|
|
Total convertible notes payable
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of notes payable - related party
|
|
|
32,500
|
|
|
|
32,500
|
|
Long-term notes payable - related party
|
|
$
|
—
|
|
|
$
|
—
|
|
During
the nine months ended September 30, 2019, the Company recorded interest expense of $1,217. As of September 30, 2019 and December
31, 2018, the Company recorded accrued interest of $4,582 and $3,365, respectively.
On
July 18, 2016, the Company borrowed $22,500 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 July 17, 2017. At September 30, 2019 and December
31, 2018 the outstanding principal balance due to the lender was $22,500.
On
July 13, 2017, 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 July 12, 2018. At September 30, 2019 and December 31,
2018 the outstanding principal balance due to the lender was $10,000.
NOTE
7 – ASSET RETIREMENT OBLIGATIONS
The
asset retirement obligation is estimated by management based on the Company’s net working interests in all wells, estimated
costs to reclaim and abandon wells and facilities and the estimated timing of the costs to be incurred in future periods. The
fair value of the liability at September 30, 2019 and December 31, 2018 is estimated to be $14,859 and $14,112, respectively.
The accretion expense on the asset retirement obligation was $747 for the nine months ended September 30, 2019.
NOTE
8 – STOCKHOLDERS’ DEFICIT
Amendment
to Articles of Incorporation or Bylaws
On
April 23, 2019, the Company filed a Certificate of Amendment with the state of Nevada, to the Company’s Articles of Incorporation,
to increase in the number of authorized shares of its common stock from 625,000,000 to 5,000,000,000, par value $0.0001.
The
Company has 25,000,000 preferred shares authorized at a par value of $0.001 and 5,000,000,000 common shares authorized at par
value of $0.001. As of September 30, 2019, the Company has 102,013 and 22,013 shares of preferred stock and 848,074,516
shares of common stock issued and outstanding.
During
the nine months ended September 30, 2019, the Company issued 80,000 shares of preferred stock for the settlement of debt of $8,950
(Note 9).
During
the nine months ended September 30, 2019, the Company issued 107,000,000 shares of common stock for the settlement of debt of
$10,700 (Note 9).
During
the nine months ended September 30, 2019, the Company issued 611,844,681 shares of common stock for the conversion of debt of
$229,092.
During
the nine months ended September 30, 2019, the Company recorded debt forgives of $2,783 as additional paid in capital.
NOTE
9 – RELATED-PARTY TRANSACTIONS
During
the nine months ended September 30, 2019, the Company issued 80,000 shares of preferred stock and 107,000,000 shares of common
stock for the settlement of debt of $19,650. As a result, the Company recorded a loss on settlement of debt of $194,250.
During
the nine months ended September 30, 2019, the Company recorded director fee of $6,000.
During
the nine months ended September 30, 2019, the Company repaid $12,400.
At
September 30, 2019 and December 31, 2018, the Company was owed its directors an aggregate of $40,714 and $66,764, respectively,
in accrued director fees.
NOTE
10 – SUBSEQUENT EVENTS
In
accordance with ASC 855-10, Management has evaluated subsequent events through the date these consolidated financial statements
were available to be issued. Based on our evaluation no material events have occurred that require disclosure except the following,
Subsequent
to September 30, 2019, the Company issued 398,926,296 shares of common stock for the conversion of debt of $26,830.