TGRO Tiger Oil and Energy Inc (CE)

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 March 31, 2019 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 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 March 31, 2019 and December 31, 2018, measured at fair value on a recurring basis:

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 222,037,644 potential dilutive shares as of March 31, 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.

During the three months ended March 31, 2019, the Company recorded interest expense of $8,064 and amortization of debt discount of $59,719, included in interest expense. As of March 31, 2019 and December 31, 2018, the Company recorded accrued interest of $158,384 and $163,101, respectively.

Conversion

During the three months ended March 31, 2019, the Company converted notes with principal amounts and accrued interest of $168,418 into 233,558,384 shares of common stock. The corresponding derivative liability at the date of conversion of $429,759 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 three months ended March 31, 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 three months ended March 31, 2019, the Company received issued back end note of $26,250 and received cash of $25,000, less $1,250 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.

NOTE 4 - 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 March 31, 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 three months ended March 31, 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:

The following table summarizes the changes in the derivative liabilities during the three months ended March 31, 2019:

The aggregate loss on derivatives during the three months ended March 31, 2019 was $364,081

NOTE 5 – NOTES PAYABLE

On May 3, 2018, the Company borrowed $10,000 from a 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 three months ended March 31, 2019m the Company recorded interest expense of $59. At March 31, 2019 and December 31, 2018, the outstanding principal balance due to the lender was $3,000 and the Company recorded accrued interest of $307 and $248, respectively.

Note payable - related party

During the three months ended March 31, 2019, the Company recorded interest expense of $402. As of March 31, 2019 and December 31, 2018, the Company recorded accrued interest of $3,767 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 March 31, 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 March 31, 2019 and December 31, 2018 the outstanding principal balance due to the lender was $10,000.

NOTE 6 – 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 March 31, 2019 and December 31, 2018 is estimated to be $14,349 and $14,112, respectively. The accretion expense on the asset retirement obligation was $237 for the three months ended March 31, 2019.

NOTE 7 – 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 March 31, 2019, the Company has 102,013 and 22,013 shares of preferred stock and 362,788,219 shares of common stock issued and outstanding.  

During the three months ended March 31, 2019, the Company issued 80,000 shares of preferred stock for the settlement of debt of $8,950 (Note 8).

During the three months ended March 31, 2019, the Company issued 233,558,384 shares of common stock for the conversion of debt of $168,418.

During the three months ended March 31, 2019, the Company recorded debt forgives of $2,783 as additional paid in capital.

NOTE 8 – RELATED-PARTY TRANSACTIONS

During the three months ended March 31, 2019, the Company issued 80,000 shares of preferred stock for the settlement of debt of $8,950. As a result, the Company recorded a loss on settlement of debt of $183,550.

At March 31, 2019 and December 31, 2018, the Company was owed its directors an aggregate of $57,814 and $66,764, respectively, in accrued director fees.