News Column

TAMM OIL & GAS CORP. - 10-K - Management's discussion and analysis of financial condition and results of operations

July 10, 2014

Overview

We are a petroleum exploration company that seeks to identify, acquire and develop working interests in Canada based oil sands prospects. Oil sands properties are characterized by deposits of bitumen, a form of viscous (relatively high resistance to flow) crude oil. We have generated no revenues since our inception and from our inception, we have not been profitable. We have financed our operations to date through equity placements to accredited investors and borrowings from related parties.

Uncertainties and Trends

Our revenues are dependent in the future, upon the following factors:

price volatility in worldwide oil prices, which is affected by: (a) interest rates; (b)currency exchange rates (c) inflation or deflation; (d) speculation and (e) production levels; global and regional supply and demand for oil; political and economic conditions; changes in the regulatory environment, which may lead to increased costs of doing business; our ability to raise adequate working capital; success of our development and exploration; level of our competition; our ability to attract and maintain key management and employees; and our ability to efficiently explore, develop and produce sufficient quantities of marketable natural gas or oil in a highly competitive and speculative environment while maintaining quality and controlling costs.



The following discussion and analysis should be read in conjunction with our Financial Statements and notes thereto.

(a) Liquidity and capital resources - 2014 and 2013

(a) (1) Continuing working capital deficit

Our working capital deficit has limited our ability to expand our operations and pursue our business plan. The following table sets forth our continuing working capital at March 31.

2014 2013 Current Assets $ 794$ 64,114 Current Liabilities 458,051 430,026 Working Capital (Deficit) $ (457,257 )$ (365,912 ) 13



--------------------------------------------------------------------------------

Table of Contents

Our current assets decreased by $63,320 from $64,114 as of March 31, 2013 to $794 at March 31, 2014. The decrease was primarily from in accounts receivable, related party, which represented funds held on the Company's behalf from the proceeds of the sale of our 113 assets in Sawn Lake.

Our working capital deficit increased by $91,345 to a $457,257 as of March 31, 2014, from $365,912 at March 31, 2013. Accounts payable and accrued expenses increased from $430,026 as of March 31, 2013 to $436,697 as of March 31, 2014 primarily reduced costs of service providers.

Related party advances increased to $21,354 as of March 31, 2014 from nil as of March 31, 2013 due to expensed paid by related party on the Company's behalf.

We continue to focus on conserving cash, setting priorities for our most important obligations and seeking other means to pay or defer any obligations as necessary.

(a) (2) Property and equipment 2014 and 2013.

During 2014, there were no material changes to our property and equipment.

(a) (3) Capital commitments

We do not have any long term debt, capital lease obligations, operating or purchase obligations at March 31, 2014.

(a) (4) Derivative liability - Not applicable.

(a) (5) Equity

Stockholders' equity decreased to $2,077,226 as of March 31, 2014, from $2,304,596 as of March 31, 2013. The primary reasons for the decrease our net incurred loss of $57,772 and our foreign currency translation loss of $169,598.

(a) (6) Off-balance sheet arrangements.

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have;

loan obligation under a guarantee contract, loan retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets, loan obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, or loan obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.



We do not have any off-balance sheet arrangements or commitments that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material, other than those which may be disclosed in this Management's Discussion and Analysis of Financial Condition and the audited Consolidated Financial Statements and related notes.

14



--------------------------------------------------------------------------------

Table of Contents

(a) (7) Results of operations. The following sets forth certain information regarding our results of operations as of March 31, 2014 and 2013.

Years ended March 31 2014 2013 General and administrative $ (89,315 )$ (88,390 ) Asset impairments - (10,259,918 ) Operating loss (89,315 ) (10,348,308 ) Gain (loss) on settlement of debt 31,543 (545,338 ) Other income (loss) - (67,583 ) Net loss (57,772 ) (10,961,229 ) Net loss per share - basic and diluted (0.00 ) (0.12 ) Weighted average shares - basic and diluted 92,582,523 92,582,523



Our operations have resulted in significant losses and negative cash flow as we have invested in our property lease interests.

Revenue. During both 2014 and 2013, our revenues were $0.

Production costs. Production costs remained $0 during 2014 and 2013.

Exploration & development. Exploration and mine development costs was $0 during 2014 and 2013.

General and administrative expenses. Our general and administrative expenses increased by $1,002, or 1.1%, to $89,315 during 2014 from $88,313 during 2013. We attribute the increase in our general and administrative expenses to professional and legal fees.

Depreciation. Depreciation was nil in 2014, $77 in 2013.

Impairment.

During the year ended March 31, 2013, our oil sand leases we previously acquired with issuance of common stock expired. As such, we incurred an impairment of our investment of $10,259,918 during the year ended March 31, 2013.

Gain (loss) on settlement of debt.

During the year ended March 31, 2014, we settled debt for less than the recorded obligations realizing a gain on settlement of debt of $31,543.

During the year ended March 31, 2013, we exchanged our interest in Sawn Lake for the outstanding debt we owed Asperago Holdings SA and accordingly recorded a loss on settlement of debt of $612,514, net with cancellation of debt due to vendor bankruptcies of $67,176.

Net loss.

Our net loss in 2014 was ($57,772) compared to ($10,961,229) in 2013, resulting in a basic per-share loss of $(0.00) in 2014 and $(0.12) in 2013 based on weighted average shares outstanding.

15



--------------------------------------------------------------------------------

Table of Contents

Since inception we have not generated any revenues, therefore our general, administrative and other costs have exceeded the resources we have generated through operations. As described above in "Liquidity and Capital Resources," we have been dependent on debt/equity financing, to meet our working capital obligations and to finance our continuing operating losses. Our current lack of production further complicates our ability to raise cash from these sources. There can be no assurance that we will be able to continue to finance our operating losses in such a manner. We have, however, been able to raise additional funds in the past and we believe that we will be able to do so in the future.

(a) (8) Cash flow

We have been able to meet our working capital obligations and cover our net loss through the proceeds from the sale of our Shawn Lake leases, net of repayments of related party notes. Net cash flows provided by our financing activities totaled nil in 2014 and in 2013. Cash remained to nil as of March 31, 2014 and 2013.

Net cash flows for the years ended 2014 2013 Net (loss) $ (57,772 )$ (10,961,229 ) Net cash flows used in operating activities - (2,871 ) Cash flows used in investing activities - - Net cash flows provided by financing activities - - Effect of currency change on cash - Net decrease in cash - (2,871 ) Cash beginning of year - 2,871 Cash end of year - -



We have used our equity to raise cash necessary to acquire property leases, expenses, and for payment of services. Our ability to continue to use our equity for those purposes is dependent on the price and trading volume of our common stock, both of which are volatile, and our ability to comply with federal and applicable state securities laws.

Although we have been successful in obtaining funds to date, there can be no assurance that we will be able to continue to be successful in doing so. Our ability to finance our operations will, in the end, be dependent on our ability to generate cash flow from operations, of which there can be no assurance.

(b) Special non-cash impact due to options

No options have been issued during the past three years. No options are currently outstanding.

(c) PLAN OF OPERATION

Our Plan of Operations to Date

To date, we have accomplished the following in our Plan of Operations:

(a) Peace River Oil Sands Area - Manning, Alberta, Canada

On January 9, 2008, we acquired a 100% interest in 21 sections of oil sands leases in the Peace River Oil Sands Area at an Alberta Crown Land Sale for $718,903. On May 28, 2008, we acquired a 100% interest in 14 sections of the P&NG leases in the Peace River Oil Sands Area at an Alberta Crown Land Sale for $372,721.

During the year ended March 31, 2012, the Company management performed an evaluation of its unproved properties for purposes of determining the implied fair value of the assets at March 31, 2012. The test indicated that the recorded remaining book value of its royalty agreement exceeded its fair value for the year ended March 31, 2012. As a result, upon completion of the assessment, management recorded a non-cash impairment charge of $372,721, net of tax, or $0.0 per share during the year ended March 31, 2012 to reduce the carrying value of 14 sections of Peace River leases to $-0-. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from management's estimates.

16



--------------------------------------------------------------------------------

Table of Contents

(b) Sawn Lake Oil Sands Area - Alberta, Canada

We entered into a letter agreement with Vendors, 1004731 Alberta Ltd. and Muzz Investments Inc., dated November 7, 2007, whereby the Vendors agreed to sell, assign and transfer to us, their entire right, title and interest in a royalty agreement made between Mikwec Energy Canada Ltd. and Nearshore Petroleum Corporation dated December 12, 2003 in consideration of the issuance of 4,000,000 shares of our common stock.

During the year ended March 31, 2010, the Company management performed an evaluation of its royalty agreement for purposes of determining the implied fair value of the assets at March 31, 2010. The test indicated that the recorded remaining book value of its royalty agreement exceeded its fair value for the year ended March 31, 2010. As a result, upon completion of the assessment, management recorded a non-cash impairment charge of $2,929,868, net of tax, or $0.04 per share during the year ended March 31, 2010 to reduce the carrying value of the royalty agreement to $945,068. Considerable management judgment is necessary to estimate the fair value. Accordingly, actual results could vary significantly from management's estimates.

On or about June 30, 2012, the Company exchanged this agreement for the outstanding debt owed to Asperago Holdings SA and recorded a loss on settlement of debt of $612,514. The Company no longer has any interests in the Sawn Lake area.

Alberta Crown

On September 24, 2009, the Company acquired a 100% working interest in 1,280 acres of oil sands leases with a 2% gross overriding royalty retained by the seller in exchange for 2,428,000 shares of the Company's common stock. The value of these rights is recorded at $1,626,760. In addition, the Company acquired 100% working interest in 6,400 acres of petroleum and natural gas leases with a 2% gross overriding royalty retained by the seller in exchange for 14,572,000 shares of the Company's common stock. These rights are recorded at $9,763,240.

On May 31, 2012 the Company entered binding letter of intent as combination of Oilsands leases in the Manning area consisting of 24 sections of Oilsand leases with CEC North Star Energy Ltd. As no material event or documentation was completed prior to March 31, 2014, the Company reached an agreement to unwind the transaction between CEC North Star Energy Ltd and Company previously announced May 31, 2012. The Board of Directors of the Company approved the agreement to unwind via resolution on March 31, 2014.

The remaining 10 sections of P&NG leases part of the farm in with CEC North Star Energy Ltd. Tamm will transfer in escrow the tittle and leases to the Manning area properties it holds and the escrow forms part of the put and call agreement issued to Tamm by North Star and will be concluded within one year.

On or about August 1, 2012 the Company in review of the development plans decided to release 10 sections of P&NG leases back to the Province of Alberta. Those leases were then terminated by the Province of Alberta on September 4, 2012 and accordingly, the Company recorded an impairment of $10,259,918 to current period operations.

Our Plan of Operations Going Forward

Our primary operational focus is the Manning project. On May 28, 2008, we purchased 14 sections of the P&NG leases at an Alberta Crown land sale that are adjacent to our existing 21 sections of oil sands leases in the Peace River region of northern Alberta. With this latest acquisition, we now have a 100% working interest in 35 sections, or approximately 22,400 acres. An independent engineering report by Chapman Engineering of Calgary Alberta was completed and filed on SEDAR in 2008 on the newly acquired adjacent 14 sections of leases for the determination of heavy oil in place for the 35 sections.

We intend to further expand our interests in oil sands properties through Alberta Crown Land Sales and/or purchasing interests from other companies that currently hold interests in oil sands properties. To assess our prospects and acquisitions, we will contractually engage geologists and geophysicists to provide geological evaluations.

17



--------------------------------------------------------------------------------

Table of Contents

Presently, our costs are uncertain because they are contingent upon the results of our information and data/collection to confirm whether we have a viable prospect, which will be determined by: (a) our contracted geologists and geophysicists that provide geological evaluations; (b) geological data results and related information/data that we obtain through: (i) the public domain; (ii) our acquisition of data from private firms; and (c) field activities, for example, seismic surveys and a core drilling program, that we may execute to gather specific information, for the purpose of modeling the underlying geological structure.

We will continually adjust our Plan of Operations based on this comprehensive analysis, the extent and quality of the available data, additions to our land base, and other factors, such as applying risk assessment and cost analyses, to determine which of the following activities we will engage in:

Geological Studies

Geological study of the earth's crust in search for structural features or the age, deposition and distribution of underground sedimentary rocks that are favorable for the accumulation of hydrocarbons and ultimately determine locations for drilling.

Geophysical Surveys

The accurate measurement and recording of certain physical quantities of the Earth's crust and buried layers of rock, using geophysical methods such as seismic, is necessary to locate probable reservoir structures capable of producing commercial quantities of natural gas and/or crude oil.

Seismic Surveys

Surveys to gather and record the patterns of induced shock wave reflections from underground layers of rock. Seismic surveys are used to create detailed models of the underlying geological structure used in the exploration and development of hydrocarbons.

Core Drilling Programs

A drilling operation to obtain continuous cylinders of rock, usually from two to four inches in diameter, cut from the bottom of a wellbore; cores are cut during the drilling of a well and are used in the study of underground formations.

Exploratory Well Drilling

A well drilled either in search of new and yet undiscovered accumulations of oil and gas, or in an attempt to significantly extend the limits of a known reservoir.

(e) Accounting policies

(e) (1) Critical accounting policies

A summary of our significant accounting policies is contained in Note 1 to our Notes to consolidated financial statements.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters