Notes
to Condensed Consolidated Financial Statements
June
30, 2014 and December 31, 2013
(Unaudited)
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and
cash flows at June 30, 2014, and for all periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2013
audited financial statements. The results of operations for the periods ended June 30, 2014 and 2013 are not necessarily indicative
of the operating results for the full year.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable
to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue
as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital
to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced
to cease operations.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan
is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet
its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
June
30, 2014 and December 31, 2013
(Unaudited)
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Consolidation
The
accompanying consolidated financial statements included all of the accounts of the Company and its wholly-owned subsidiaries,
C2R, Inc., a Nevada Corporation, and Jett Rink Oil, LLC, a Kansas Limited Liability Company. All intercompany transactions have
been eliminated.
Recent
Accounting Pronouncements
Management
has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in banks and financial instruments which mature within six months of the date of purchase.
Oil
and Gas Properties
The
Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration
and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the
purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable
to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead
or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred.
Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties
unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain
or loss is recognized.
Capitalized
costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated
future development costs, and asset retirement costs under Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations” (FASB
ASC 410), are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas
properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows
from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties. Under
certain specific conditions, companies could elect to use subsequent prices for determining the estimated future net cash flows.
The use of subsequent pricing is no longer allowed. There are many factors, including global events that may influence the production,
processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting
from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs
associated with properties that have not been evaluated through drilling or seismic analysis, including exploration wells in progress
at June 30, 2014, are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results
and interpretative analysis.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
June
30, 2014 and December 31, 2013
(Unaudited)
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Oil
and Gas Properties (Continued)
Sales
of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized,
unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined
that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.
Costs
of oil and gas properties are depleted using the unit-of-production method. For the six months ended June 30, 2014, the Company
recognized $-0- of depletion expense related to oil and gas production during the period.
Ceiling
Test
In
applying the full cost method, the Company performs an impairment test (ceiling test) at each reporting date, whereby the carrying
value of property and equipment is compared to the value of its proved reserves discounted at a ten percent interest rate of future
net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower
of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to
book and tax basis differences of the properties. During the six months ended June 30, 2014 and the twelve months ended
December 31, 2013, the Company had recorded $-0- of impairment expense in connection with the full cost ceiling test calculation.
Revenue
Recognition
Revenues
from the sale of oil and natural gas are recognized when the product is delivered at a fixed or determinable price, title has
transferred, and collectability is reasonably assured. For oil sales, this occurs when the customer takes delivery of oil
from the operators’ storage tanks.
Earnings
(Loss) per Share
The
Company has adopted ASC 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted
EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the
accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average
number of shares of common stock outstanding during the period. The Company has no potentially dilutive securities, such as options
or warrants, currently issued and outstanding.
Reclassification
of Financial Statement Accounts
Certain
amounts in the December 31, 2013 financial statements have been reclassified to conform to the presentation in the June 30, 2014
financial statements.
TIGER
OIL AND ENERGY, INC.
(An
Exploration Stage Company)
Notes
to Condensed Consolidated Financial Statements
June
30, 2014 and December 31, 2013
(Unaudited)
NOTE
4 – OIL AND GAS PROPERTIES
On
April 3, 2014, the Company signed an election to participate in the first of three wells with Toto Energy, LLC in Cowley County,
Kansas. The Company will earn a 30 percent working interest and a 24.45 percent net royalty interest in the well. As of June 30,
2014, the Company has capitalized $213,000 of cash payments made to commence operations development of the well.
On
May 10, 2014, the Company signed an election to participate in the second of three wells with Toto Energy, LLC in Cowley County,
Kansas. The Company will earn a 30 percent working interest and a 24.45 percent net royalty interest in the well. As of June 30,
2014, the Company has capitalized $189,000 of cash payments made to commence operations development of the well.
Oil
and gas properties are stated at cost. The Company recognized impairment expense totaling $65,540 during the year ended December
31, 2013. As of June 30, 2014 and December 31, 2013, oil and gas properties, net consisted of the following:
|
|
June 30,
2014
|
|
December 31,
2013
|
|
|
|
|
|
Unproved properties
|
|
$
|
467,540
|
|
|
$
|
65,540
|
|
Impairment of oil and gas leases
|
|
|
(65,540
|
)
|
|
|
(65,540
|
)
|
|
|
|
|
|
|
|
|
|
Oil and gas properties, net
|
|
$
|
402,000
|
|
|
$
|
—
|
|
NOTE
5 – CONVERTIBLE NOTES PAYABLE
On
January 3, 2014, the Company received $600,000 in connection with a convertible note financing commitment, the terms of which
call for the Company to receive three tranches of $200,000 each on a callable convertible note wherein the Company borrows the
sum at five percent interest for one year and the investor can elect to continue to receive the interest on the note or have the
Company issue the investor shares of common stock of the Company at $0.50 per share to retire the debt.
The
Company analyzed the convertible debts under ASC 470-20 and determined that a beneficial conversion feature existed at execution.
The intrinsic value of the beneficial conversion feature was determined to be $400,000 and was recorded as additional paid-in
capital with an offset to debt discounts. During the six months ended June 30, 2013, $195,068 of the debt discount was amortized
to interest expense, leaving an ending balance of $204,932.
NOTE
6 – SUBSEQUENT EVENTS
In
accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no other
material subsequent events to report.