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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
 
(Mark One) 
x ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the year ended March 31, 2012
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD FROM __________ to __________ 
 
   TAMM OIL AND GAS CORP 
(Exact name of the Company as specified in its charter)
 
   Nevada  
(State or other jurisdiction of incorporation or organization)
 
333-137174
 
20-3773508
(Commission File Number)
 
(I.R.S. Employer Identification No.)

   Suite 110,  10 Sierra Morena Mews SW, Calgary, AB, Canada T3H 3Ka5  
 (Address of principal executive offices) (Zip Code)
 
   403 513-2663  
(Registrant's telephone number, including zip code)
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
(None)
 
Securities registered pursuant to Section 12(g) of the Exchange Act:
(None)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 13(d) of the Act. Yes oNo  x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. To the best of registrants' knowledge, there are no disclosures of delinquent filers required in response to Item 405 of Regulation S-K. Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "small reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
 
 Large accelerated filer   o  Accelerated filer   o  Non-accelerated filer   o  Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
 
As of March 31, 2012, the aggregate market value of the voting and nonvoting common equity held by non-affiliates of TAMM Oil and Gas Corp. was approximately $12,139,050. This estimate is based on the last sale price per share of $.225 on March 31, 2012 on the OTCBB, and 57,805,000 shares estimated to be held by non-affiliates.
 
Issuer's revenues for its most recent fiscal year: $0

The number of shares of the registrant’s $0.001 par value common stock outstanding as of June 01, 2012 was 92,582,524.
 
 
 
 

 
 

Table of Contents
 
   
Page No.
PART I
     
Item 1.
Business
4
Item 1A.
Risk Factors
6
Item 1B
Unresolved Staff Comments
10
Item 2.
Properties
10
Item 3.
Legal Proceedings
13
Item 4.
Submission of Matters to a Vote of Security Holders
13
     
PART II
     
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
13
Item 6.
Selected Financial Data
16
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operation
16
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
24
Item 8.
Financial Statements and Supplementary Data
F-1
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
25
Item 9A.
Controls and Procedures
25
Item 9B.
Other Information
26
     
PART III
     
Item 10.
Directors and Executive Officers of the Company and Compliance with Section 16(a) of the Exchange Act
26
Item 11.
Executive Compensation
30
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
32
Item 13.
Certain Relationships and Related Transactions
33
Item 14.
Principal Accountant Fees and Services
33
     
PART IV
     
Item 15.
Exhibits, Financial Statement Schedules
33
 
Signatures
37
 
 

 
2

 


Forward-Looking Statements
 
This Annual Report on Form 10-K, including our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 14, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of TAMM Oil and Gas Corp. to differ materially from those expressed or implied by such forward-looking statements. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements.” Our operations are subject to significant risks and uncertainties, including, but not limited to, certain risk factors, which are described in more detail under “Risk Factors” beginning on page 6. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including any revenue projections, gross margin, expenses, earnings or losses from operations, synergies or other financial items, any statements of management’s plans, strategies and objectives for future operations, and any statement concerning developments, plans, or performance. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation to update, any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.
 
TAMM Oil and Gas Corp. is referred to herein as “we”, “our”, or “us”. Information in this filing contains the terms prospective resources. The Company advises investors that although these terms are recognized and required by Canadian securities regulations (under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities), the US Securities and Exchange Commission (SEC) does not recognize these terms. Investors are cautioned not to assume that any part or all of the resources in this category will ever be converted into reserves. In addition, “prospective resources” have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that any part of a prospective resource will ever be upgraded to a higher category. Under Canadian rules, estimates of prospective resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for a “preliminary assessment” as defined under National Instrument 51-101. CAUTIONARY NOTE TO U.S. INVESTORS - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms on this press release, such as prospective resource or Original Oil in Place, that the SECs guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10K. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
 
 



 
 
3

 

PART 1
 
Item 1. Business
 
Organizational

We were originally formed on October 10, 2005 as Hola Communications, Inc. in the State of Nevada. We were formed to provide wireless broadband access in Northern Mexico and Southwestern California. In October 2007, we redirected our business focus to the oil and gas industry. In November 2007, the Company created a wholly owned Nevada subsidiary for the purpose of affecting a name change from Hola Communications, Inc. to TAMM Oil and Gas Corp.

Business Overview

Our corporate headquarters are located in Calgary, Canada.

We are an exploration stage company that has not yet commenced significant operations in the heavy oil exploration business. Our activities have been limited to organizational matters and:
 
 
·
Acquiring oil sands leases;
 
·
Developing our business plan; and
 
· 
Raising capital to conduct our operations.
 
Our heavy oil exploration activities will be conducted on properties located in Alberta Canada.  We have acquired a 100% interest in 24 sections of Oil Sands leases and a 100% interest in 24 sections of Petroleum and Natural Gas (P&NG) which are contiguous to our major block of Oil Sands leases and are situated in the Peace River Oil Sands area of northwestern Alberta.
 
None of our properties are currently in the production stage.
 
For the years ended March 31, 2012 and 2011, and from October 10, 2005 (date of inception) through March 31, 2012, we reported net losses of $388,592, $4,837,401 and $70,595,268 respectively.
 
Description of Business
 
Principal Product.
 
We intend to produce only a single product, heavy oil, which we intend to extract from the above properties depending upon our exploration test results and activities. Any additional Petroleum and Natural Gas production that may be found will be an added byproduct.  To date, we have not engaged in any production activities.
 
Distribution Methods.
 
Should we be successful in producing oil, it will be sold to other companies with downstream processing capabilities.
 
 


 
 
4

 
 
Status of Publicly Announced Products or Services.
 
We have not announced any products or services. Since our business is limited to conducting exploration activities, we do not anticipate any such development.
 
Competitive business conditions.
 
We compete with oil and natural gas companies and other individual producers and operators, many of which have longer operating histories and substantially greater financial and other resources than we do. Additionally, many of our competitors have the following competitive advantages: (a) recruitment of qualified personnel; (b) absorbing changes in laws and regulation in the jurisdictions in which we do business and ability to handle longer periods of reduced prices of gas and oil more easily than we can; and (c) paying more for productive oil and natural gas properties and being able to define, evaluate, bid for and purchase a greater number of properties and prospects than we can. Our ability to compete will be contingent upon our ability to acquire additional properties in the future, conduct efficient operations, evaluate and select suitable properties, and implement advanced technologies and consummate transactions in a highly competitive environment.
 
Sources and Availability of Raw Materials.
 
We do not use significant quantities of raw materials in our operations at this time.

Dependence on one or a few major customers.
 
We do not anticipate becoming dependent upon one or a few customers since there are several companies that conduct business in downstream heavy oil processing – however typically once production starts, it is sold to one marketing company for resale.
 
Patents, trademarks, licenses, franchises and concessions.
 
We have no patents, trademarks, licenses, franchises or concessions.
 
Research and Development Expenditures.
 
We have spent no funds on research and development activities nor do we anticipate any such future expenditure in the next 2-5 years – should an enhanced recovery project be identified, a certain amount of the capital will be assigned to research at the early stages of such a project to identify the most economic technical model.
 
Need for governmental approval.
 
Development and production, and sale of oil and natural gas in Canada are subject to complex laws and regulations, which require government approval, and can adversely affect the cost, manner, or feasibility of doing business. We may be required to make significant expenditures to comply with environmental and other governmental regulations, including the following matters that are subject to regulation:
 
 
·
 location and density of wells;
 
·
 surface access;
 
·
 drilling approvals;
 
·
 wildlife approvals;





 
 
5

 
 
 
·
 native and trapper approvals;
 
·
 handling of drilling fluids and obtaining discharge permits for drilling operations;
 
·
 bonds for ownership, development and production of natural gas and oil properties;
 
·
 transportation of natural gas and oil by pipelines;
 
·
 operation of wells and reports concerning operations; and
 
·
 taxation
 
Effect of existing or probable governmental regulations.
 
We are subject to existing and revisions to governmental regulations, including accounting for and payment of royalties on production from Provincial, Federal and Native lands. We are also subject to Provincial and Federal environmental, health, safety and transportation, and employer regulations.
 
Effect of compliance with federal, state, and local provisions for the protection of the environment.

We are subject to extensive environmental regulations. If we experience any leakage of crude oil and/or gas from the subsurface portions of a well, our gathering system could cause degradation of fresh groundwater resources, as well as surface damage, potentially resulting in suspension of operation of a well, fines and penalties from governmental agencies, expenditures for remediation of the affected resource, and liabilities to third parties for property damages and personal injuries. In addition, any sale of crude oil or gas collected as part of the drilling and recovery process could impose liability in accordance with applicable environmental health, transportation, and safety laws.
 
Employees.
 
We hire geologists, geophysicists, accountants; land management, legal and general management advisory personnel on a contract consulting basis.  There are not permanent or part time employees.
 
Reports to Security Holders and Available Information
 
Our principal executive offices are located at Suite 110, !0 Sierra Morena Mews SW, Calgary AB T3H 3K5. Our telephone number is (403) 513-2663. Our annual, quarterly, and current reports with the Securities and Exchange Commission (SEC), copies of which are available on our website at www.tammoilandgas.com or from the SEC free of charge at www.sec.gov . The public may also read and copy any materials, which we have filed with the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Washington, DC 20549.  Information on the Public Reference Room may be obtained by calling: 1-800-SEC-0330.
 
Item 1A. Risk Factors
 
The following risks and uncertainties, along with other information contained in this Form 10-K, should be carefully considered by anyone considering an investment in our securities. The occurrence of any of the following risks could negatively affect our business, financial condition and operating results.
 
Our financial condition raises substantial doubt about our ability to continue as a going concern.

During the period from our inception of October 10, 2005 to our year end at March 31, 2012, we have an accumulated deficit of $70,595,268. Our auditors have issued a going concern opinion indicating that our significant operating losses, working capital deficit and inability to generate any revenues, cause substantial doubt about our ability to continue as a going concern, and that there is uncertainty as to whether we have the capability to continue our operations without additional funding. Accordingly, we anticipate that we will need additional funding during the next 12 months, which we plan to seek through public or private equity financing, bank debt financing, or from other sources; however, adequate funds may not be available when needed, and even if we raise additional funds through sales of our equity securities, existing stockholder interests will be diluted.

 
 
6

 
 

We lack an operating history in our current business plan, which makes it difficult to evaluate whether we will be able to continue our operations or ever be profitable.

In October 2007, we began our current business plan of conducting exploration for heavy oil. Our short operating history has consisted of preliminary acquisition and exploration activities and non-income-producing activities. Accordingly, we have no adequate operating history to evaluate our future success or failure.

Because we are an exploration stage company, we currently have no significant operations, and our future operations are subject to substantial risks, we may be unsuccessful in conducting our operations.

We are an early stage oil exploration company and have not commenced oil production. We will be unable to generate revenues or make profits, unless we actually commence significant production.

We are subject to substantial regulation of our business, including requirements to obtain numerous licenses and permits in the operation of our business; if we are denied needed government licenses and permits or otherwise fail to comply with federal and state requirements, we may be subject to increased compliance costs and fines or penalties.

Exploration and Production

Our operations are subject to various types of regulation at federal, state, provincial, territorial and local levels. These types of regulations may include requiring permits for the drilling of wells, drilling bonds and reports concerning operations. Most provinces, states, territories and some municipalities in which we operate also regulate one or more of the following:
 
 
·
the location of wells;
 
·
the method of drilling and casing wells;
 
·
the surface use and restoration of properties upon which wells are drilled;
 
·
the plugging and abandoning of wells; and
 
·
notice to surface owners and other third parties.
 
 Our future exploration activities will require licenses, permits, or compliance with other state and federal requirements, including:

 
·
Acquiring permits before commencing drilling;
 
·
Restricting substances that can be released into the environment with drilling and production activities;
 
·
Limiting or prohibiting drilling activities on protected areas such as wetlands or wilderness areas;
 
·
Requiring that reclamation measures be taken to prevent pollution from former operations;
 
·
Requiring remedial measures to mitigate pollution from former operations, such as plugging abandoned wells and remediation of contaminated soil and groundwater; and
 
·
Requiring remedial measures to be taken with respect to property designated as a contaminated site.

Additionally, we could be liable for personal injury, clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties. Although we maintain limited insurance coverage for sudden and accidental environmental damages as well as environmental damage that occurs over time, we have not obtained coverage for the full potential liability of environmental damages since we do not believe that we can obtain insurance coverage for the full potential liability of environmental damages is available at a reasonable cost. Accordingly, we could be liable, or could be required to cease production on properties, if environmental damage occurs. Delays or failures to acquire required licenses or permits or successfully comply with the pertinent federal and state regulations will negatively impact our operations.

 
 
 
7

 
 
 
Although the regulatory burden on the oil and gas industry increases our cost of doing business and, consequently, affects our profitability, these burdens generally do not affect us any differently or to any greater or lesser extent than they affect other companies in the industry with similar types, quantities and locations of production.
 
The successful implementation of our plan of operations is subject to risks inherent in the oil and gas business.

Our oil and gas operations are subject to the economic risks associated with exploration, development and production activities, including substantial expenditures to locate and acquire properties and to drill exploratory wells. Additionally, the cost and timing of drilling, completing and operating wells may be uncertain. The presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, development and production activities to be delayed or unsuccessful, and may result in the total loss of our investment in a particular property. The technology required to economically produce this prospect is not well developed at this time, and thus additional time, costs may be incurred to fully develop the technology to a economic stage.
 
Trends and Uncertainties

Our ability to produce sufficient quantities of oil and gas from our properties may be adversely affected by factors outside of our control.

We are an early stage oil exploration company and have not commenced significant oil production. We will be unable to generate revenues or make profits, unless we actually commence significant oil production. Drilling, exploring and producing oil and gas involves various substantial risks beyond our control, including:  

 
·
unproductive wells;
 
·
productive wells that are unable to produce oil or gas in economically feasible quantities;
 
·
hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions that may substantially delay or prevent completion of any well;
 
·
adverse weather conditions hindering drilling operations;
 
·
a productive well becoming uneconomic due to pressure depletion, water encroachment, mechanical difficulties, or other factors, which impair or prevent the production of oil and/or gas from the well;
 
·
operations being adversely affected by the proximity and capacity of oil and gas pipelines and processing equipment;
  · market fluctuations of taxes, royalties, land tenure; and
  · allowable production and environmental protection.

Government and Environmental Regulation

Our business is governed by numerous laws and regulations at various levels of government. These laws and regulations govern the operation and maintenance of our facilities, the discharge of materials into the environment and other environmental protection issues. The laws and regulations may, among other potential consequences, require that we acquire permits before commencing drilling, restrict the substances that can be released into the environment with drilling and production activities, limit or prohibit drilling activities on protected areas such as wetlands or wilderness areas, require that reclamation measures be taken to prevent pollution from former operations, require remedial measures to mitigate pollution from former operations, such as plugging abandoned wells and remediation of contaminated soil and groundwater, and require remedial measures to be taken with respect to property designated as a contaminated site.  


 
 
8

 

Under these laws and regulations, we could be liable for personal injury, clean-up costs and other environmental and property damages, as well as administrative, civil and criminal penalties. We maintain limited insurance coverage for sudden and accidental environmental damages as well as environmental damage that occurs over time. However, we do not believe that insurance coverage for the full potential liability of environmental damages is available at a reasonable cost. Accordingly, we could be liable, or could be required to cease production on properties, if environmental damage occurs.

The costs of complying with environmental laws and regulations in the future may harm our business. Furthermore, future changes in environmental laws and regulations could occur that may result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.
  
We rely upon third parties in our business which could adversely affect our business.

We rely upon third parties, including: (a) those that assist us in identifying desirable oil and gas prospects to acquire and to provide us with technical assistance and services; (b) the services of geologists, geophysicists, chemists, engineers and other scientists to explore and analyze oil prospects to determine a method in which the oil prospects may be developed in a cost-effective manner; and (c) owners and operators of oil drilling equipment to drill and develop our prospects to production. Although we have developed relationships with a number of third-party service providers, we cannot assure that we will be able to continue to rely on such persons. If any of these relationships with third-party service providers are terminated or are unavailable on commercially acceptable terms, we may be unable to execute our operational plan.

Market fluctuations in the prices of oil & gas could adversely affect our business.

Prices for oil and natural gas tend to fluctuate significantly in response to factors beyond our control, including:

 
·
actions of the Organization of Petroleum Exporting Countries and its production constraints;
 
·
United States and global economic environment;
 
·
weather conditions;
 
·
availability of alternate fuel sources;
 
·
transportation interruption;
 
·
the impact of drilling levels on crude oil and natural gas supply; and
 
·
the environmental and access issues that could limit future drilling activities industry wide.

Additionally, changes in commodity prices affect our capital resources, liquidity and expected operating results. Price changes directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in charges to earnings due to impairment. Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture, and often cause disruption in the market for oil producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions, development and exploitation of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

Oil and Natural Gas Properties

We believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the oil and natural gas industry and specific to the jurisdiction that the properties reside.

 
 
9

 
 
 
Although title to these properties is subject to encumbrances, in some cases, such as customary interests generally retained in connection with the acquisition of real property, customary royalty interests and contract terms and restrictions, liens under operating agreements, liens related to environmental liabilities associated with historical operations, liens for current taxes and other burdens, easements, restrictions and minor encumbrances customary in the oil and natural gas industry; we believe that none of these liens, restrictions, easements, burdens and encumbrances will materially detract from the value of these properties or from our interest in these properties or will materially interfere with our use in the operation of our business. In some cases, lands over which leases have been obtained may be subject to prior liens that have not been subordinated to the leases. In addition, we believe we have obtained sufficient rights-of-way grants and permits from public authorities and private parties for us to operate our business in all material respects.
 
Our President devotes less than full time to our business, which may negatively impact our operations.

Guido Hilekes, our President, devotes only 2 hours per week to our business. Because our President may be unable to devote the time necessary to our business, we may be unsuccessful in implementing our operational plan.

The services of our President, Chairman of the Board and other Board Members are essential to the success of our business; the loss of any of these personnel will adversely affect our business.

Our business depends upon the continued involvement of our Chairman of the Board, and other board members who collectively have oil related experience of at least 30 years. The loss, individually or cumulatively, of these personnel would adversely affect our business, prospects, and our ability to successfully conduct our exploration activities. Before you decide whether to invest in our common stock, you should carefully consider that the loss of their expertise, may negatively impact your investment in our common stock.
 
Item 1B. Unresolved Staff Comments
 
None
 
Item 2. Properties
 
We rent our principal executive offices from Sicamous Oil and Gas Consultants Ltd. We pay Sicamous $1,000 on a month to month basis for office space, infrastructure and support services. Our space is sufficient for our needs. At the present time, we have no real estate holdings nor are there plans to acquire any real property interests.
 
Oil Sands and Petroleum and Natural Gas (P&NG) Leases

Our leases are situated near Manning in the Peace River area of Northern Alberta, Canada, as follows:
 
 
·
We have a 100% interest in 23 sections of Oil Sands leases, amounting to approximately 14,780 gross  and net acres. Oil Sands leases have a 15 year term for exploration. Our Oil Sands leases expire  in 2023; and
 
·
We have a 100% interest in 24 sections of Petroleum and Natural Gas (P&NG) leases, amounting to approximately gross  and net 15,299 acres . P&NG leases provide that we have 5 years to explore on the leased lands. Our P&NG leases expire in 2013.  Based on successful exploration programs these leases can be then extended as long as production is maintained.

The majority of lands associated with our Oil Sands leases and P&NG leases are contiguous, and situated in the Peace River Oil Sands area of northwestern Alberta. If economic production is proven on our lease parcels, we will automatically be given the right to extend the leases as they expire.


 
 
10

 
 
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.

On May 31, 2012 the Company entered binding letter of intent as combination of Oilsands leases in the Manning area consisting of 23 sections of Oilsand leases with CEC North Star Energy Ltd. 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.

Annual fee rentals of $3.50/ha (CDN) are paid to the government of Alberta to maintain rights to the leases. We acquired the leases in 2008 in mulitple Alberta public offerings of crown Oil Sands rights and crown P&NG rights. And in aquisitions from Asperago, Elestone in third party agreements. The corporation acquired the assets  of Union Oil consisting of 8 sections of oil sands in a corporate transaction.

Summary of all Leases

Offering Date
Lease Type
 
Term ( yrs)
   
Area (Sections)
   
Acquisition cost ($)
   
Annual Rental ($)
 
Jan 10 2008
Oil Sands
   
15
     
4
   
$
164,126
   
$
3,584
 
Jan 10 2008
Oil Sands
   
15
     
3
     
108,510
     
2,688
 
Jan 10 2008
Oil Sands
   
15
     
2
     
72,340
     
1,792
 
May 15 2008
P&NG
   
5
     
5
     
161,676
     
4,480
 
May 15 2008
P&NG
   
5
     
5
     
136,051
     
4,480
 
May 29 2008
P&NG
   
5
     
6
     
246,974
     
5,376
 
May 15 2008
Oil Sands
   
15
     
4
     
124,512
     
3,584
 
May 15 2008
Oil Sands
   
15
     
4
     
124,512
     
3,584
 
May 1 2008
Oil Sands
   
15
     
2
     
97,879
     
1,792
 
Jan 10 2008
Oil Sands
   
15
     
4
     
134,430
     
3,584
 
Jan 10 2008
Oil Sands
   
15
     
2
     
17,704
     
1,792
 
May 29 2008
P&NG
   
5
     
8
     
124,497
     
7,168
 
Jan 10 2008
Oil Sands
   
15
     
1
     
6,364
     
896
 
Jan 10 2008
Oil Sands
   
15
     
5
     
206,438
     
4,480
 
Total
             
55
   
$
1,726,013
   
$
49,280
 

On March 15, 2011 the Company reached an agreement for a conventional industry farm in on the Manning properties with Cougar Oil and Gas Canada, Inc. (“Cougar”); a Company under common control.
 
Under the terms of the agreement – Cougar has two work commitments to earn working interest in the Manning properties.  The first work commitment of $2.5 million Cdn for the first year to perform certain activities consisting of drilling, seismic, coring and geologic reviews – including 3rd party engineering reports -  to support an application to convert the P&NG leases to oil sands leases. After the first earning program, Cougar will earn 30% of the overall working interest and be designated operator on the Manning Project. The second work commitment of $6.5 million Cdn for the subsequent 24 months consisting of drilling, seismic, coring, and geologic reviews and updates to the various reports. Post the second earning program, Cougar will earn an additional 20% working interest.

On May 11, 2012, the Court of Queen’s Bench granted an order ceasing Cougar Oil and Gas’s proceedings under the CCAA and an order (the “Appointment Order”) appointing Ernst & Young Inc. as receiver and manger (the “Receiver”) of the property, assets and undertakings (the “Property”) of Cougar . The farm in’s  where Cougar earned rights as operator were  terminated prior to this with no rights earned by Cougar.
 
 
 
11

 
 
On June 12, 2009, we acquired a 100% working interest in 5,120 acres of oil sands leases in the Province of Alberta, in exchange for 1,000,000 shares of our common stock valued at $800,000. During the year ended March 31, 2011, the oil sands leases expired, therefore incurred an impairment charge of $800,000 in prior period operations.
 
On September 27, 2009, we 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 was recorded at $1,626,760. In addition, we 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. The value of these rights was recorded at $9,763,240.
 
During the year ended March 31, 2010, we performed an evaluation of our 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, we 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

Subsequent to this write down, an independent evaluation of the GORR on the Sawn Lake project was completed by Ryder Scott Engineering for August 2010 – that evaluation placed a value of 1.4 million for the GORR as a current market value. This value is $500,000 higher than value currently carried and as a result the Corporation is not considering any further impairment.

Our decision to acquire these undeveloped properties at a combined cost of $11,390,000 was based on the following:
 
June 23, 2008 – Chapman Petroleum Engineering determined that the Mississippian-aged Lower Debolt and Elkton member zones for our 35 sections of land contain 2.33 billion barrels of original total heavy oil in place.

Based on publically available geological information from government records, based on drilling results through the many wells which are also publically available, and the competitive bidding for the lands that occurred in 2008 to 2009, the corporation is confident that after the planned work programs for this winter, that the properties will be shown to have substantially more value than the accounted value as per US GAAP.
 
Subsequent to our acquisition, an updated Chapman report dated November 1, 2009 shows there is an incremental 810 million barrels of heavy oil in place on our newly acquired lands for a combined total of 3.14 billion barrels of original total heavy oil in place.

Subsequent to this a January 1, 2011 effective date, released May 25, 2011 Chapman Petroleum Engineering report evaluated all 47 sections under the new guidelines for Petroleum (heavy oil) Initial – In - Place to identify 2.7 billion barrels PIIP in the combined Elkton and lower Debolt sections.  The report did not evaluate the other structures.  The report also completed a feasibility study on a typical 4 sections of the property for a steam drive project.  That report provided a risked NPV 10% of $130,000,000 for the 4 sections based on the proposed development scheme.

8 sections  which were acquired in the Union transaction were not considered core assets for TAMM – as they are 30 miles from the Manning properties.  The Corporation chose to take a writedown on these properties for year ended March 31, 2011.  There was substantial land auction activity in the area at the time of renewal and Cougar however chose to extend the leases on TAMM’s behalf through the farm in – and thus the leases were extended for another year.  About 7 million dollars of land actions were completed in the area, in April 2011 just before the renewal date.  TAMM management chose to not make any changes to the financials at this time.

Subsequent to this at the April 2011 land sale, extensive bidding resulted in most of the adjacent lands being purchased at higher or equal to prices than the prices TAMM paid.  The majority of the lands were bought in large blocks of a township (36 sections or 23,404 acres) at a time with a range of $15.50 to $171.50 per hectare.
 
 
 
12

 

Our approach to exploiting the properties is as follows:
 
Our geologist has identified target zones which we are presently evaluating with the goal of two drill locations. The goal for these locations is to drill, core and drill stem test the target formations followed by running a 30 day evaluation test for product deliverability and for engineering purposes. Once completed and dependent on the results of the testing, we will evaluate our overall position.
 
We commissioned a prospective resource/feasibility study report to assist us in moving forward in the development of the all the TAMM leases.  An updated report was released May 25, 2011 to reflect new information available on adjacent lands. See subsequent event notes.
 
Property Geology

Well logs, cores and drill cutting sample reports of drilled wells on and around our leased lands suggest that heavy oil enrichment occurs in the Cretaceous Bluesky and Gething Formations, and especially in the Mississippian-aged Debolt Formation which includes the porous Elkton Member. High grade heavy oil intervals predominantly occur in the lower most Elkton Member and Lower Debolt Formation. Porosity in these intervals ranges up to 28%, and the lithology is comprised of both limestones and dolomites which were deposited in a shoaling upward environment.
 
Gross thickness of the Debolt Formation, including the Elkton Member over our leases, averages approximately 90 feet. These carbonates are relatively homogeneous, thinning in an easterly direction. Porosity has been enhanced by dolomitization, particularly in the Elkton Member and Lower Debolt Formation.

Oil analyses of these zones are sparse in the area, but the few measurements available from a local well indicate an API oil gravity of 14 to 18. Gas production occurs in the area from the Cretaceous Bluesky and Gething Formations plus the Mississippian Debolt and Shunda horizons.

Item 3. Legal proceedings  
 
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.
 
Item 4. Submission of matters to a vote of security holders
 
To date, we have not conducted an annual meeting of shareholders.
 
PART II  
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities  

 
 
13

 

Market Information
 
Our common stock is quoted on the Over-the-Counter (“OTC”) Bulletin Board under the Symbol "TAMO". The following table shows the high and low bid for our common stock during the last two years and the current fiscal year. Our common stock was not OTC Bulletin Board quoted until the third quarter of 2007. These prices represent inter-dealer prices, without retail mark-up, markdown, or commission, and may not represent actual transactions, and were derived from Quotestream.

2011
 
Low Bid
   
High Bid
 
First Quarter
 
$
0.15
   
$
0.505
 
Second Quarter
 
$
0.20
   
$
0.64
 
Third Quarter
 
$
0.16
   
$
0.35
 
Fourth Quarter
 
$
0.091
   
$
0.34
 
2012
               
First  Quarter
 
$
0.184
   
$
0.38
 
Second Quarter
 
$
0.18
   
$
0.35
 
Third Quarter
 
$
0.125
   
$
.023
 
Fourth Quarter
 
$
0.128
   
$
0.25
 

 Holders
 
As of March 31, 2012, there were 32 shareholders of record of our common stock.
 
Authorized Shares
 
We are authorized to issue 750,000,000 shares of common stock. We are also authorized to issue 1,000,000 shares of preferred stock.
 
Outstanding shares
 
As of March 31, 2012, we had 92,582,524 common shares issued and outstanding.
 
As of March 31, 2012, we have no shares of preferred stock issued and outstanding.

Dividends
 
We have never paid a cash dividend on our common stock and have no present intention to declare or pay cash dividends on our common stock in the foreseeable future. We intend to retain any earnings that we may realize in the foreseeable future to finance our operations and otherwise develop our business. Our future dividend policy will be determined from time to time by our board of directors.  
 
Securities authorized for issuance under equity compensation plans
 
Equity compensation plans approved by security holders                                                                                                
None                                                                                                  
 
Equity compensation plans not approved by security holders
None                                                                                                                                                                                                                                                                                                                                                                                                     



 
 
14

 

Unregistered sales of equity securities and use of proceeds
 
On November 7, 2007, we completed a 15:1 forward stock split and our outstanding common stock increased from 6,100,000 to 91,500,000 shares of common stock and our authorized capital increased from 50,000,000 to 750,000,000. Accordingly, all share and per share amounts have been restated from inception.
 
In October 2005, we issued 45,000,000 shares of common stock to Carlos Alfonso Bustamante, our then President/Chief Executive Officer/Director, at a price of $0.0001 per share for aggregate proceeds of $3,000. The offer and sale were made pursuant to Regulation D of the Securities Act of 1933.

In October 2005, we sold 15,000,000 shares of common stock to Jose Carlos Davalos Cerda, our then Secretary/Treasurer/Director at a price of $0.0001 per share for aggregate proceeds of $1,000. The offer and sale was made by us in reliance on of Regulation S of the Securities Act of 1933.

In March 2006, we completed a private placement offering of 30,000,000 shares of common stock to thirty five (35) investors at a price of $0.0033 per share, for aggregate proceeds of $100,000. The private placement offering was made to foreign investors in offshore transactions in accordance with Regulation S of the Securities Act of 1933.

In August 2007, we closed a private placement consisting of 1,500,000 shares of our common stocks at a price of $.07 per share for the aggregate proceeds of $100,000. The shares were issued to a non-U.S. person in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On November 23, 2007, we closed the first tranche of a private placement consisting of 800,000 units at a price of $1.25 per unit for aggregate proceeds of $1,000,000. Each unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until November 23, 2009, at which date they expired.

On December 20, 2007, we closed the second tranche of a private placement consisting of 400,000 units at a price of $1.25 per Unit for aggregate proceeds of $500,000. Each Unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until December 20, 2009, at which date they expired.
 
On November 26, 2007, the Company entered into an agreement to purchase interests in certain royalty agreements in exchange for 4,000,000 shares of common stock.  The market price of the common stock on the date of the agreement was $2.55 per share.  Accordingly, the purchase was recorded at $10,200,000 for the value of the shares issued.  However, subsequent information obtained yielded an estimated recoverable value of $4,000,000, which resulted in a charge to impairment expense of $6,200,000.
 
On December 27, 2007, we exchanged 21,533,000 shares of our common stock with 3 shareholders of Deep Well and we received 21,533,000 shares of Deep Well Oil & Gas Corp., a publicly traded company, in that exchange. As more fully disclosed in our Form 8-K filed with the Securities and Exchange Commission on July 2, 2008, on July 1, 2008 we rescinded the December 27, 2007 issuance of 21,533,000 shares of our common stock with those 3 Deep Well shareholders. We have affected the necessary acts to cancel the 21,533,000 shares that were issued to the 3 Deep Well shareholders.

On March 5, 2008, we closed the third tranche of a private placement to nine individuals consisting of 80,000 units at a price of $1.25 per Unit for aggregate proceeds of $100,000. Each Unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until March 5, 2010, at which date they expired.
 

 
 
15

 


On June 5, 2008 we acquired 100 percent ownership of an additional 14 sections of Crown leases in the Peace River region of Northern Alberta. This acquisition of Petroleum and Natural Gas leases, which are contiguous to previously acquired lands, expands TAMM's holdings in the region to a land base of approximately 22,400 acres.

In July 2008, 34,000,000 shares of the Company’s common stock previously issued to founders in October 2005 were returned for cancellation.

In September 2008, 21,533,000 shares of the Company’s common stock previously issued in exchange for common shares of Deep Well Oil & Gas, Inc were returned to the Company and cancelled.

In June 2009, we issued 1,000,000 shares of its common stock to acquire Union Energy, LLC, valued at $800,000.
  
In September 2009, we issued an aggregate of 17,000,000 shares of its common stock to acquire working interests in oil sands and petroleum and gas properties, valued at $11,390,000.

In May 26, 2011 we completed a series of 7 agreements to issue 11,667,282 shares in settlement of debt agreements. A portion of this was completed prior to year end March 31, 2011 and thus are reflected in this filing.   As of The total value of the agreements including interest was $1,750,093.  The settlement was based on the 30 day weighted average of the stock prior at the date of the agreements and board approval of March 25, 2011. The shares are being issued restricted under the 144 rule.

During the year ended March 31, 2012, the Company issued an aggregate of 10,602,524 shares of its common stock in settlement of outstanding notes and other obligations previously recorded as to be issued at March 31, 2011 (see above).

In June 2011, the Company issued 1,200,000 shares of common stock for $50,000 cash and $100,000 of accrued liabilities.

Use of Proceeds

Not applicable. Although we received proceeds from the sale of units or shares of our common stock in 2007, as described above, we did not file a Registration Statement during our Fiscal Year 2007, whereby we would receive proceeds from the sale of our securities by us to the public.
 
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 
Not applicable. We made no repurchases of our equity securities during our Fiscal Year 2012.

Item 6. Selected Financial Data
 
Not applicable.
 
Item 7. Management’s discussion and analysis of financial condition and results of operations  
 
Overview
We are a petroleum exploration company in the development stage 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.
  
 
 
 
16

 

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 – 2012 and 2011
 
(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.
 
   
2012
   
2011
 
Current Assets
 
$
15,202
   
$
12,696
 
Current Liabilities
   
578,958
     
717,275
 
                 
Working Capital (Deficit)
 
$
(563,756
)
 
$
(704,579

Our current assets increased by $2,506 from $12,696 as of March 31, 2011 to $15,202 at March 31, 2012.  The increase was primarily from an increase in GST receivables, net with a decrease in cash.
 
Our working capital deficit decreased by $140,823 to a $563,756 as of March 31, 2012, from $704,579 at March 31, 2011. Accounts payable and accrued expenses decreased from $546,476 as of March 31, 2011 to $519,461 as of March 31, 2012 primarily due cancellation of debt due to creditor bankruptcy and debt forgiveness.  In addition, we settled an outstanding deposit of $100,000 with the issuance of common stock during the year ended March 31, 2012.
 
Related party advances decreased to $59,497 as of March 31, 2012 from $70,799 as of March 31, 2011 solely due to foreign currency translations.

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 2012 and 2011.

During 2012, there were no material changes to our property and equipment.
 

 
 
17

 
March 31
 
2012
   
2011
 
Office equipment
 
$
77
   
$
184
 
Fixed assets net
 
$
77
   
$
184
 

 (a) (3) Capital commitments
 
We do not have any long term debt, capital lease obligations, operating or purchase obligations at March 31, 2012.

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

(a) (5) Equity
 
Stockholders’ equity decreased to $13,789,702 as of March 31, 2012, from $14,436,369 as of March 31, 2011. The primary reasons for the decrease our net incurred loss of $388,592 combined with a foreign currency translation loss of $408,076, net with sale of our common stock of $150,000.
 
(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.
  
(a) (7) Results of operations. The following sets forth certain information regarding our results of operations as of March 31, 2012 and 2011.

Years ended March 31
 
2012
   
2011
 
General and administrative
 
$
(148,154
 
$
(636,273
Asset impairments
   
(372,721
)
   
(800,000
)
Operating loss
   
(520,874
   
(1,436,273
Gain (loss) on settlement of debt
   
134,932
     
(3,340,183
)
Other income (loss)
   
(2,650
)
   
(60,955
 )
Net loss
   
(388,592
)
   
(4,837,401
)
Net loss per share - basic and diluted
   
(0.00
   
(0.06
)
Weighted average shares - basic and diluted
   
90,915,522
     
80,780,000
 

 
 
 
 
18

 

Our operations have resulted in significant losses and negative cash flow as we have invested in our property lease interests.
 
Revenue.  During both 2012 and 2011, our revenues were $0.
 
Production costs. Production costs remained $0 during 2012 and 2011.
 
Exploration & development.  Exploration and mine development costs was $0 during 2012 and 2011.
 
General and administrative expenses. Our general and administrative expenses decreased by $488,121, or 76.7%, to $148,052 during 2012 from $636,173 during 2011. We attribute the decrease in our general and administrative expenses to professional and legal fees.  During the year ended March 31, 2011, we reimbursed other parties incurred costs associated with the Company's legal activities dated to prior years.
 
Depreciation.  Depreciation was $102 in 2012, $100 in 2011.
 
Impairment.  During the year ended March 31, 2012, we impaired 14 sections of our Peace River P&NG leases.  As such, we incurred an impairment of our investment of $372,721 during the year ended March 31, 2012.

During the year ended March 31, 2011, our oil sand leases we previously acquired with issuance of common stock expired.  As such, we incurred an impairment of our investment of $800,000 during the year ended March 31, 2011.

Gain (loss) on settlement of debt. During the year ended March 31, 2012, we recorded a gain on settlement of debt of $134,932 primarily from a related party bankruptcy proceedings and secondarily forgiveness of credit balance due.  During the year ended March 31, 2011, we agreed to issue 11,667,282 shares of our common stock and three year warrants to purchase our common stock at an exercise price of $0.30 for settlement of an aggregate of $1,750,093  of outstanding obligations.  The excess of fair value of the stock and warrants to be issued over the carrying value of the debt of $3,340,173 was charged to prior  period operations.

Net loss. Our net loss in 2012 was ($388,592) compared to ($4,837,401) in 2011, resulting in a basic per-share loss of $(0.00) in 2012 and $(0.06) in 2011 based on weighted average shares outstanding.
 
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 collection of our receivable from related party, net of repayments of related party notes. Net cash flows provided by our financing activities totaled $40,613 in 2012, primarily from the sale of our common stock, net with repayments of related party loans and compared to $Nil provided in 2011. Cash decreased to $2,871 as of March 31, 2012 from $3,150 at March 31, 2011.
 


 
 
19

 
 
 
Net cash flows for the years ended
 
2012
   
2011
 
Net (loss)
 
$
(388,592
)
 
$
(4,837,401
)
Net cash flows used in operating activities
   
(31,458
)
   
(26,013
)
Cash flows used in investing activities
           
(825
)
Net cash flows provided (used in)by financing activities
   
40,613
     
-
 
Effect of currency change on cash
   
(9,434
   
21,415
 
Net decrease in cash
   
(279
   
(5,423
)
Cash beginning of year
   
3,150
     
8,573
 
Cash end of year
   
2,871
     
3,150
 
 
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.

(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.
  
Closing of the transactions in the letter agreement was subject to the following conditions:

 
 
 
20

 
 
(i)
our completion of a private placement financing of up to 2,600,000 units at a price of $1.25 per unit. The transaction was completed on November 26, 2007;
(ii)
our affecting a 15:1 forward stock split, which occurred in November 2007. This transaction closed and the shares were issued.

During the year ended March 31, 2008, we completed the sale of 1,280,000 shares of our common stock for net proceeds of $1,600,000 and therefore met the requirement to complete a private placement financing of up to 2,600,000 units at a price of $1.25 per unit.

The royalty agreement is applicable to 32 sections of oil sands leases on the Sawn lake property in Northern Alberta operated by Deep Well Oil and Gas, Inc.  There are approximately 10 years remaining on these leases if not developed, however 6 wells have been drilled to date which will convert upon the expiry date or before the core areas of these leases to long term leased for production. This will typically convert 1-6 sections per well depending upon depth, under current regulations, however as the operator has responsibility in this matter; there are no firm guarantees that the properties will be fully converted.

The royalties are 3% of gross revenue prior to any expenses from oil sands production on these properties.

Costs associated with the Company’s acquired royalty agreement are amortized from the date of production over the estimated total expected recovery, not to exceed the term of the agreement.

In accordance with Accounting Standards Codification subtopic 360-10, Property, plant and equipment (“ASC 360-10”), the Company tests its intangible assets for impairment on an annual basis and when there is reason to suspect that their values have been diminished or impaired.  Any write-downs will be included in results from operations.
 
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 23 sections of Oilsand leases with CEC North Star Energy Ltd. 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.

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

As previously reported, on September 5, 2008, we entered into an agreement with two corporations formed according to the laws of Alberta Canada: (a) 1384482 Alberta Ltd (“138 Alberta”); and (b) 1132559 Alberta Ltd. (“113 Alberta”). The Agreement provided that 113 Alberta’s shareholders would sell their respective common shares to 138 Alberta, which would equal in the aggregate 108 common shares. Further, the Agreement provided that we would issue one (1) share of our preferred stock (the “Preferred Share”) to 138 Alberta and fifteen million restricted shares of our common stock ("15,000,000 shares") to all of the shareholders of 113 Alberta, ten million eight hundred thirty three thousand three hundred and thirty three (10,833,333) restricted shares of which were issued to certain shareholders of 113 Alberta on September 5, 2008. The remaining 4,166,667 shares (15,000,000 - 10,833,333) were to be issued upon conversion of the Preferred Share.



 
 
21

 
 
The 15,000,000 shares and the Preferred Share were to be held in an escrow account until such time that certain remaining conditions were met as provided for in the Agreement.

Certain of the conditions precedent set out in the Share Exchange Agreement have not been satisfied, and the Parties have rescinded the Agreement due to the failure to meet such conditions. The related escrowed shares were cancelled in June 2009.

Additionally, we are continuing to shift our focus and business objectives away from the Sawn Lake Region to pursue other valuable oil and gas projects.
 
Accordingly, as of March 31, 2009, we entered into a termination and rescission agreement with the 113 Alberta Stockholders (collectively the “Termination and Rescission Agreements”) pursuant to which we and the 113 Alberta Stockholders have agreed to rescind the transactions consummated under the Exchange Agreements with the same effect as if the Exchange Agreements had never been executed and delivered and such transactions had never been consummated. TAMM shares issued pending the transaction have been cancelled effective April 17, 2009 and returned to Treasury.  The rescission was undertaken voluntarily by both parties. As a result of the Termination and Rescission Agreements, our entire ownership interest in the Sawn Lake Region now consists of (1) a gross overriding royalty right on 36.5 sections of Sawn Lake Oil Sands leases providing us with 2% of the revenue of oil sold from those sections.  We currently have no other interest in or right to any asset in the Sawn Lake Region.

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.

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.  
 
 
 
 
22

 
 
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.

Farm Out agreement

The Company reached an Joint Venture agreement for a conventional industry farm in on the Manning properties with a private UK based Company with 61 sections of oil sands lease holdings in the Manning prospect area adjacent to the Company holdings. The agreements were ratified by the Board of Directors of TAMM on November 28, 2011.

The Company and Cougar Oil and Gas Canada, Inc. ("Cougar") terminated their previously announced farm-in agreement to negotiate a new agreement with the private Corporation.  The private corporation has signed a multi-phase farm-in agreement with the Company to define and develop the Company's 47 section Manning area heavy oil prospect in parallel with the development of the private corporations 61 sections of land in the Manning area.
 .
The first phase of the farm-in consists of the private corporation performing a $2.5million work program to earn a 30% working interest in the Company's heavy oil prospect. Subsequent year programs of $6.5 million dollars will earn an additional 20% working interest.
  
The private corporation has a related party relationship to the Company due to family members serving on the board of directors of each company and a common director was added to both Board of Directors. See subsequent event notes.

Cougar was the designated operator in this agreement, however due to the Cougar receivership, Cougar has ceased operations and will not earn under this agreement.

(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.
 

 
 
23

 
 
 
Item 7A. Quantitative and Qualitative disclosures about Market Risk  
 
Not applicable. We do not presently or otherwise engage in market risk sensitive instruments.
 

 
 
24

 

 
  Item 8. Financial Statements and Supplementary Data  
 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)

Index to Financial Statements
 

   
Page
Report of Independent Registered Public Accounting Firm 
 
F-2
Consolidated Balance Sheets as of March 31, 2012 and 2011
 
F-3
Consolidated Statements of Operations For The Years Ended March 31, 2012 and 2011 and For the Period from October 10, 2005 (date of inception) Through March 31, 2012
 
F-4
Consolidated Statement of Stockholders’ Equity For The Period From October 10, 2005 (date of inception) Through March 31, 2012
 
F-5
Consolidated Statements of Cash Flows For The Years Ended March 31, 2012 and 2011 and For the Period From October 10, 2005 (date of inception) Through March 31, 2012
 
F-6
Notes To Consolidated Financial Statements 
 
F-7 ~ F-20
 
 

 
 
 
F - 1

 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
Board of Directors and Stockholders of
Tamm Oil and Gas Corp.
Calgary, Canada


We have audited the accompanying consolidated balance sheets of Tamm Oil and Gas Corp. and its subsidiary (the “Company”) an exploration stage company, as of March 31, 2012 and 2011, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended March 31, 2012 and for the period from October 10, 2005 (date of inception) through March 31, 2012. 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 have conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 consolidated financial position of Tamm Oil and Gas Corp. and its subsidiary as of March 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the two years in the period ended March 31, 2012 and for the period from October 10, 2005 (date of inception) through March 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the accompanying consolidated financial statements, the Company has not commenced its planned principal operations and has suffered recurring losses since inception, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 

/s/ RBSM LLP
 
New York, New York
June 26, 2012
 


 
 
F - 2

 
 
 
TAMM OIL AND GAS CORP.
 
(An Exploration Stage Company)
 
CONSOLIDATED BALANCE SHEETS
 
MARCH 31, 2012 AND 2011
 
             
   
2012
   
2011
 
ASSETS
           
Current assets:
           
Cash
  $ 2,871     $ 3,150  
Accounts receivable
    11,522       8,737  
Other current assets
    809       809  
  Total current assets
    15,202       12,696  
                 
Property, plant and equipment:
               
Oil sands properties, unevaluated
    14,037,887       14,825,270  
Furniture and equipment, net
    77       184  
  Total property, plant and equipment
    14,037,964       14,825,454  
                 
Other assets:
               
Investment in affiliated entity
    315,494       -  
Receivable from affiliated entity
    -       315,494  
  Total other assets
    315,494       315,494  
                 
  Total assets
  $ 14,368,660     $ 15,153,644  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable and accrued liabilities
  $ 519,461     $ 546,476  
Deposits
    -       100,000  
Advances from related parties
    59,497       70,799  
  Total current liabilities
    578,958       717,275  
                 
Commitments and contingencies
               
                 
Stockholders' equity:
               
Preferred stock; $0.001 par value; 1,000,000 shares authorized, none issued and outstanding
    -       -  
Common stock; $0.001 par value; 750,000,000 shares authorized, 92,582,524 and 80,780,000 shares issued and outstanding as of March 31, 2012 and 2011, respectively
    92,583       80,780  
Common stock to be issued
    330,075       3,616,857  
Additional paid in capital
    83,288,291       79,863,311  
Deficit accumulated during exploration stage
    (70,595,268 )     (70,206,676 )
Accumulated other comprehensive income
    674,021       1,082,097  
  Total stockholders' equity
    13,789,702       14,436,369  
                 
  Total liabilities and stockholders' equity
  $ 14,368,660     $ 15,153,644  
 
The accompanying notes are an integral part of these consolidated financial statements
 

 
 
F - 3

 
 
 
TAMM OIL AND GAS CORP
 
(An Exploration Stage Company)
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
                   
               
For the period
 
               
October 10, 2005
 
               
(date of inception)
 
   
Year ended March 31,
   
through
 
   
2012
   
2011
   
March 31, 2012
 
OPERATING EXPENSES:
                 
Selling, general and administrative
  $ 148,051     $ 636,173     $ 2,618,325  
Loss on impairment of oil and gas properties
    372,721       800,000       64,565,749  
Depreciation
    102       100       1,089  
  Total operating expenses
    520,874       1,436,273       67,185,163  
                         
Loss from operations
    (520,874 )     (1,436,273 )     (67,185,163 )
                         
OTHER INCOME (EXPENSE)
                       
Foreign exchange expense
    -       -       (115 )
Interest expense
    (2,650 )     (60,955 )     (165,208 )
Gain (loss) on forgiveness & settlement of debt
    134,932       (3,340,173 )     (3,205,241 )
Loss on impairment of fixed assets
    -       -       (37,032 )
                         
Loss before provision for income taxes
    (388,592 )     (4,837,401 )     (70,592,759 )
                         
Provision for income taxes:
                       
Current
    -       -       2,509  
Deferred
    -       -       -  
  Total income taxes
    -       -       2,509  
                         
NET LOSS
  $ (388,592 )   $ (4,837,401 )   $ (70,595,268 )
                         
Net loss per common share (basic and diluted)
  $ (0.00 )   $ (0.06 )        
                         
Weighted average number of common shares outstanding, basic and diluted
    90,915,522       80,780,000          
                         
Comprehensive (loss) income:
                       
Net loss
  $ (388,592 )   $ (4,837,401 )   $ (70,595,268 )
Foreign currency translation (loss) gain
    (408,076 )     647,597       674,021  
                         
Comprehensive loss:
  $ (796,668 )   $ (4,189,804 )   $ (69,921,247 )
 

The accompanying notes are an integral part of these consolidated financial statements

 

 
 
F - 4

 
 
 
TAMM OIL AND GAS CORP.
 
(An Exploration Stage Company)
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 
For the period October 10, 2005 (date of Inception) through March 31, 2012
 
                                           
                           
Other
   
(Deficit)
 Accumulated
       
   
Common stock
   
Additional
   
Common Stock
   
Comprehensive
   
During Exploration
       
   
Shares
   
Amount
   
Paid in Capital
   
To be issued
   
Income (loss)
   
Stage
   
Total
 
Balance, October 10, 2005
  $ -     $ -     $ -           $ -     $ -     $ -  
Sale of common stock in October 2005 to founders at $0.0001 per share
    60,000,000       60,000       (56,000 )     -       -       -       4,000  
Sale of common stock in March 2006 at $0.003 per share
    30,000,000       30,000       70,000       -       -       -       100,000  
Net (loss)
    -       -       -       -       -       (2,134 )     (2,134 )
Balance, March 31, 2006
    90,000,000       90,000       14,000       -       -       (2,134 )     101,866  
Net (loss)
    -       -       -       -       -       (69,346 )     (69,346 )
Balance, March 31, 2007
    90,000,000       90,000       14,000       -       -       (71,480 )     32,520  
Sale of common stock in August 2007 at $0.07 per share
    1,500,000       1,500       98,500       -       -       -       100,000  
Sale of common stock at various dates during the year at $1.25  per share
    1,280,000       1,280       1,598,720       -       -       -       1,600,000  
Common stock issued in exchange for investment
    21,533,000       21,533       54,241,627       -       -       -       54,263,160  
Common stock issued in exchange for royalty agreement
    4,000,000       4,000       10,196,000       -       -       -       10,200,000  
Net (loss)
    -       -       -       -       -       (60,737,189 )     (60,737,189 )
Balance, March 31, 2008
    118,313,000       118,313       66,148,847       -       -       (60,808,669 )     5,458,491  
Cancellation of common stock previously issued as investment
    (21,533,000 )     (21,533 )     21,533       -       -       -       -  
Cancellation of common stock previously issued to founders
    (34,000,000 )     (34,000 )     34,000       -       -       -       -  
Foreign currency translation loss
    -       -       -       -       (1,086,645 )     -       (1,086,645 )
Net loss
    -       -       -       -       -       (1,232,139 )     (1,232,139 )
                                                         
Balance, March 31, 2009
    62,780,000       62,780       66,204,380       -       (1,086,645 )     (62,040,808 )     3,139,707  
Common stock issued in exchange for Union Energy, LLC
    1,000,000       1,000       799,000       -       -       -       800,000  
Common stock issued in exchange for investments
    17,000,000       17,000       11,373,000       -       -       -       11,390,000  
Foreign currency translation gain
    -       -       -       -       1,521,145       -       1,521,145  
Net loss
    -       -       -       -       -       (3,328,467 )     (3,328,467 )
Balance, March 31, 2010
    80,780,000       80,780       78,376,380       -       434,500       (65,369,275 )     13,522,385  
Common stock to be issued in settlement of debt
    -       -       -       3,616,857       -       -       3,616,857  
Fair value of warrants issued in settlement of debt
    -       -       1,486,931       -       -       -       1,486,931  
Foreign currency translation gain
    -       -       -       -       647,597       -       647,597  
Net loss
    -       -       -       -       -       (4,837,401 )     (4,837,401 )
Balance, March 31, 2011
    80,780,000       80,780       79,863,311       3,616,857       1,082,097       (70,206,676 )     14,436,369  
Common stock issued in settlement of debt
    10,602,524       10,603       3,276,180       (3,286,783 )     -       -       -  
Sale of common stock
    1,200,000       1,200       148,800       -       -       -       150,000  
Foreign currency translation loss
    -       -       -       -       (408,076 )     -       (408,076 )
Net loss
    -       -       -       -       -       (388,592 )     (388,592 )
Balance, March 31, 2012
    92,582,524     $ 92,583     $ 83,288,291     $ 330,075     $ 674,021     $ (70,595,268 )   $ 13,789,702  
 
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
 
 
F - 5

 
 

TAMM OIL AND GAS CORP.
 
(An Exploration Stage Company)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                   
               
For the period
 
               
October 10, 2005
 
   
For the year ended March 31,
   
(date of inception)
 
   
2012
   
2011
   
through March 31, 2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (388,592 )   $ (4,837,401 )   $ (70,595,268 )
Adjustments to reconcile net loss to net cash (used in) operating activities:
                       
Depreciation
    102       100       1,089  
Impairment of property and equipment
    -       -       37,032  
Impairment of investments in stock and royalty agreements
    372,721       800,000       64,565,749  
Common stock to be issued in settlement of assumed debt
    -       433,164       433,164  
(Gain) loss on forgiveness & settlement of debt
    (134,932 )     3,340,173       3,205,241  
Increase in accounts receivable
    (3,051 )     (4,350 )     (8,571 )
(Increase) Decrease  in prepaid expenses
    (23 )     (809 )     232  
Decrease in accounts payable
    122,317       243,110       1,175,873  
  Net cash used in operating activities
    (31,458 )     (26,013 )     (1,185,459 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Purchase of oil and gas properties
    -       (50,825 )     (1,201,439 )
Decrease in receivables, affiliates
    -       50,000       228,570  
Purchase of investment
    -       -       (576,252 )
Purchases of property and equipment
    -       -       (38,223 )
  Net cash used in investing activities
    -       (825 )     (1,587,344 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from sale of common stock
    50,000       -       1,854,000  
Proceeds from notes payable
    -       -       1,307,295  
Repayments of notes payable
    (9,387 )     -       (535,376 )
  Net cash provided by financing activities
    40,613       -       2,625,919  
                         
Effect of currency rate change on cash
    (9,434 )     21,415       149,755  
                         
Net (decrease) increase in cash and cash equivalents
    (279 )     (5,423 )     2,871  
Cash and cash equivalents at beginning of period
    3,150       8,573       -  
Cash and cash equivalents at end of period
  $ 2,871     $ 3,150     $ 2,871  
                         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
                 
Cash paid during the period for interest
  $ -     $ -     $ -  
Cash paid during the period for taxes
  $ -     $ -     $ 2,509  
                         
NONCASH INVESTING AND FINANCING ACTIVITIES:
                       
Issuance of common stock for royalty agreements
  $ -     $ -     $ 10,200,000  
Issuance of common stock for undeveloped property
  $ -     $ -     $ 11,390,000  
Issuance of common stock in exchange for common stock of an unaffiliated entity
  $ -     $ -     $ 54,263,160  
Issuance of common stock in exchange for acquisition of Union Energy, LLC.
  $ -     $ -     $ 800,000  
Fair value of warrants issued in settlement of debt
  $ -     $ 1,486,931     $ 1,486,931  
Common stock issued in settlement of debt
  $ -     $ 3,616,857     $ 3,616,857  
 
 
The accompanying notes are an integral part of these consolidated financial statements



 
 
F - 6

 
 

TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows:

Business and Basis of Presentation

TAMM Oil and Gas Corp., formerly Hola Communications, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on October 10, 2005. The Company was formed to provide wireless broadband access. In October 2007, the Company decided to discontinue its efforts to develop its original business plan in the telecom industry and to re-direct its focus to the oil and gas Industry. In November 2007, the Company created a wholly owned Nevada subsidiary for the purpose of affecting a name change from Hola Communications, Inc. to TAMM Oil and Gas Corporation. To implement its current business plan, significant additional financing will be required and the Company will need to be successful in its efforts to identify, acquire and develop oil and gas reserves that are economically recoverable.

The Company is in the development (exploration) stage as defined by Accounting Standards Codification subtopic 915-10 Development Stage Entities (“ASC 915-10”) with its efforts principally devoted to developing oil and gas reserves. To date, the Company, has not generated sales revenues, has incurred expenses and has sustained losses.  Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise.  For the period from inception through March 31, 2012, the Company has accumulated losses of $70,595,268.

The consolidated financial statements include the accounts of the Company, including TAMM Oil and Gas Corp., its wholly-owned subsidiary, Union Energy, LLC (see below). All significant intercompany balances and transactions have been eliminated in consolidation.

Acquisition of Union Energy, LLC
  
On June 12, 2009, the Company acquired Union Energy LLC, a Colorado limited liability corporation, in exchange for 1,000,000 shares of the Company’s common stock valued at $.80 per share, the fair market value of the stock on that date, for a total investment of $800,000.  As part of the acquisition, the Company acquired a 100% working interest in 5,120 acres of oil sands leases in the Province of Alberta.   

The total consideration paid was $800,000 and the significant components of the transaction are as follows:

Assets acquired:
     
Undeveloped oil sands property lease
 
$
800,000
 
Liabilities assumed:
   
( -
)
  Net:
 
$
800,000
 

During the year ended March 31, 2011, the acquired leases expired, therefore the Company recorded an impairment loss of $800,000 in prior period operations.


 
 
F - 7

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

Revenues from the sale of petroleum and natural gas are recorded when title passes from the Company to its petroleum and/or natural gas purchaser and collectability is reasonably assured. The Company will begin recording revenue once it is determined there are proved reserves and production commences.

Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Property and Equipment

Property and equipment is recorded at cost. Depreciation of assets is provided by use of a declining balance method over the estimated useful lives of the related assets. Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred.

The Company evaluates the carrying value of items of property, plant and equipment to be held and used whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  The carrying value of an item of property, plant and equipment is considered impaired when the projected undiscounted future cash flows related to the asset are less than its carrying value.  The Company measures impairment based on the amount by which the carrying value of the respective asset exceeds its fair value.  Fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved.

Unconventional Oil Sands Properties

Acquisition, exploration and development of oil sands mining activities are capitalized when costs are recoverable and directly result in an identifiable future benefit, following the full cost method of accounting. Improvements that increase capacity or extend the useful lives of assets are capitalized. Maintenance and turnaround costs are expensed as incurred.

Oil sands properties are assessed, at minimum annually, or as economic events dictate, for potential impairment. Impairment is assessed by comparing the estimated net undiscounted future cash flows to the carrying value of the asset. If required, the impairment recorded is the amount by which the carrying value of the asset exceeds its fair value.

Capitalized costs are depleted and depreciated on the unit-of-production method based on the estimated gross proved reserves once determined by the independent petroleum engineers. Depletion and depreciation is calculated using the capitalized costs, including estimated asset retirement costs, plus the estimated future costs to be incurred in developing proved reserves, net of estimated salvage value.
 
 
 
F - 8

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Costs of acquiring and evaluating unproved properties and major development projects are excluded from the depletion and depreciation calculation if and until it is determined whether or not proved reserves can be assigned to such properties. Costs of unproved properties and major development projects are transferred to depletable costs based on the percentage of reserves assigned to each project over the expected total reserves when the project was initiated. These costs are assessed periodically to ascertain whether impairment has occurred.

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.

Depletion and Amortization of Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas properties.  Under this method, all direct costs and certain indirect costs associated with acquisition of properties and successful as well as unsuccessful exploration and development activities are capitalized. Depreciation, depletion, and amortization of capitalized oil and gas properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves.  
 
The Company periodically evaluates the carrying value of long-lived assets, including unproved properties, to be held and used in accordance with Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

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.


 

 
 
F - 9

 
 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency Translation

The Company translates the foreign currency financial statements into US Dollars using the year or reporting period end or average exchange rates in accordance with the requirements of Accounting Standards Codification subtopic 830-10, Foreign Currency Matters (“ASC 830-10”). Assets and liabilities of these subsidiaries were translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates in effect for the periods presented. The cumulative translation adjustment is included in the accumulated other comprehensive gain (loss) within shareholders’ equity (deficit). Foreign currency transaction gains and losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the consolidated results of operations.

Functional Currency

The functional currency of the Companies is the Canadian dollar and the financial statements are reported as US dollar.  When a transaction is executed in a foreign currency, it is re-measured into Canadian dollars based on appropriate rates of exchange in effect at the time of the transaction.  At each balance sheet date, recorded balances that are denominated in a currency other than the functional currency of the Companies are adjusted to reflect the current exchange rate.  The resulting foreign currency transactions gains (losses) are included in general and administrative expenses in the accompanying consolidated statements of operations.

Comprehensive Income (Loss)

The Company adopted Accounting Standards Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”) which establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. ASC 220-10 requires other comprehensive income (loss) to include foreign currency translation adjustments and unrealized gains and losses on available for sale securities.
 
Income Taxes
 
Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) clarifies the accounting for uncertainty in tax positions and requires that a Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position.  The adoption of this standard did not have a material impact on the Company's financial position, results of operations, or cash flows.

 
 
F - 10

 
 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

 Net Income (Loss) per Share

The Company computes earnings per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net earnings (losses) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon the exercise of the Company's outstanding warrants (calculated using the treasury stock method). During the years ended March 31, 2012 and 2011, outstanding warrants were not considered because the exercise prices exceeded the weighted average common stock price of the Company for the period because they would be anti-dilutive, thereby decreasing the net loss per common share.

Fair Value of Financial Instruments

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.  All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the consolidated financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

Stock Based Compensation

Effective for the year beginning January 1, 2006, the Company has adopted Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”)  This requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.

As of March 31, 2012, there were no outstanding employee stock options.

Reclassifications
 
Certain amounts reported in the Company’s financial statements for the prior periods may have been reclassified to conform to the current period presentation.

Reliance on Key Personnel and Consultants

The Company has no full-time employees and no part-time employees.  There are approximately 3 consultants performing various specialized services.  The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.
 
 
 
 
F - 11

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 
 
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows.
 
 NOTE 2 – GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements for the year and inception to date periods ended March 31, 2012, the Company has incurred losses of $388,592 and $70,595,268, respectively.  In addition, as of March 31, 2012, the Company had a working capital deficit of $563,756, and no revenue generating operations. These factors, among others, indicate that the Company may be unable to continue as a going concern.
 
The Company's existence is dependent upon management's ability to generate business opportunities, evaluate existing properties and surrounding lands, and initiate commercial production to develop profitable operations which will resolve its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

The Company is attempting to obtain financing for its operations. There can be no assurance that the Company will be successful in its effort to secure additional equity financing. If operations and cash flows continue to improve through these efforts, management believes that the Company can continue to successfully maintain operations. However, no assurance can be given that management's actions will result in profitable operations or the resolution of its liquidity problems.

NOTE 3 – RECEIVABLE FROM AN AFFILIATED ENTITY

In connection with the October 2007 Letter of Intent to acquire all of the issued and outstanding shares of 1132559 Alberta Ltd. (“Alberta”), the Company purchased advances due to shareholders of Alberta, directly from the shareholders for $548,500 (during the year ended March 31, 2011, there were repayments of $88,905). The amount is recorded was receivable from an affiliated entity, as Alberta and TAMM have officers and/or directors in common. These advances were purchased for their face amounts, and they have no terms of repayment. As of March 31, 2011 the balance outstanding was $315,494.

On December 5, 2011, the Company exchanged the outstanding receivable from Alberta for 16 shares (10.46% interest) of Alberta and a non interest bearing obligation of $315,494.  (see Note 4 below)

NOTE 4 – INVESTMENT IN AFFILIATED ENTITY

As described Note 3, above, the Company exchanged an outstanding receivable from an affiliated entity (Alberta) for 16 shares of Alberta and a non interest bearing obligation of $315,494. The obligation is payable only upon the dissolution of Alberta. Alberta and the Company have officers and/or directors in common.

The 16 shares of Alberta, representing a 10.46% interest, are recorded at cost.  From December 5, 2011 to March 31, 2012, the Company did not evaluate for impairment the fair value of the above cost-method investment, since there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value.
 

 
 
F - 12

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 
  
NOTE 5 – OIL SANDS PROPERTIES

Union Energy, LLC

On June 12, 2009, the Company acquired Union Energy, LLC, a Colorado limited liability corporation, the sole asset of which was a 100% working interest in 5,120 acres of Oil Sands leases in the Province of Alberta in exchange for 1,000,000 shares of the Company’s common stock valued at $.80 per share, the fair market value on the date of acquisition, for a total investment of $800,000.

During the year ended March 31, 2011, the Company recorded an impairment loss of $800,000.

Peace River

The Company leases 21 sections of oil sands leases in the Peace River region held at $718,903.
 
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.

Sawn Lake

The Company has a royalty agreement applicable to 32 sections of oil sands leases. The subject royalties are 2% of gross revenue prior to any expenses from oil sand production.  The value of these rights is recorded at $945,068, net of impairment adjustment of $2,929,868, as discussed below.
 
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.

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.



 
 
F - 13

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 
  
NOTE 5 – OIL SANDS PROPERTIES (continued)

On May 31, 2012 the Company entered binding letter of intent as combination of Oilsands leases in the Manning area consisting of 23 sections of Oilsand leases with CEC North Star Energy Ltd. 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.

Farm In Agreement

The Company reached an Joint Venture agreement for a conventional industry farm in on the Manning properties with a private UK based Company with 61 sections of oil sands lease holdings in the Manning prospect area adjacent to the Company holdings. The agreements were ratified by the Board of Directors of TAMM on November 28, 2011.

The Company and Cougar Oil and Gas Canada, Inc. ("Cougar") terminated their previously announced farm-in agreement to negotiate a new agreement with the private Corporation.  The private corporation has signed a multi-phase farm-in agreement with the Company to define and develop the Company's 47 section Manning area heavy oil prospect in parallel with the development of the private corporations 61 sections of land in the Manning area.
  
The first phase of the farm-in consists of the private corporation performing a $2.5million work program to earn a 30% working interest in the Company's heavy oil prospect. Subsequent year programs of $6.5 million dollars will earn an additional 20% working interest.

Cougar was the designated operator in this agreement, however due to the Cougar receivership, Cougar has ceased operations and will not earn under this agreement.
  
The private corporation has a related party relationship to the Company due to family members serving on the board of directors of each company and a common director was added to both Board of Directors.

NOTE 6 – NOTES PAYABLE TO AFFILIATED ENTITY

During the year ended March 31, 2009, the Company issued $1,250,000 of demand notes payable with an interest rate of prime plus 2% per annum. The Company repaid $500,000 of these demand notes during the year ended March 31, 2009. As of March 31, 2010, outstanding notes payable on the demand notes totaled $750,000.

The note holder is a shareholder of 1132559 Alberta, Ltd., an affiliated entity, as Alberta and TAMM have officers and/or directors in common.
 
In March, 2011, the Company entered into a subscription agreement whereby the Company agreed to issue an aggregate of 11,667,282 shares of the Company's common stock and 5,833,643 warrants to purchase the Company's common stock at an exercise price of $0.30 for three years from the date of issuance in settlement of an aggregate of $1,750,093 in outstanding related party advances, expense reimbursements, notes payable and related accrued interest.  In connection with the transaction, the Company recorded a loss on settlement of debt of $3,340,173 in prior period operations.  As of March 31, 2012, the 10,602,524 common shares has been issued with 1,064,758 remaining as unissued and are therefore shown as to be issued in the Company's balance sheet.


 
 
F - 14

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 6 – NOTES PAYABLE TO AFFILIATED ENTITY   (continued)

During the year ended March 31, 2011 and 2012, the Company did not receive advances from related parties.  Total advances at March 31, 2012 amount to $59,497.  Changes in the balance from March 31, 2011 represent payments in aggregate of  $9,387 during the year ended March 31, 2012.

NOTE 7 – CAPITAL STOCK
 
Preferred Stock

The Company has authorized the issuance of 1,000,000 shares of preferred stock, with a par value of $.001 per share. The Company’s Board of Directors has broad discretion to create one or more series of preferred stock and to determine the rights, preferences, and privileges of any such series.

Common stock

The Company initially authorized the issuance of 50,000,000 shares of common stock, par value $.001. On November 13, 2007, the Company declared a 15:1 forward split, and concurrently increased its authorized shares to 750,000,000 shares of common stock, par value $.001 per share. All share amounts have been restated as if the split had occurred October 10, 2005.

As of March 31, 2012 and 2011, there were 92,582,524 and 80,780,000 shares of common stock issued and outstanding, respectively.

In October 2005, the Company issued an aggregate of 60,000,000 shares of common stock, at a price of $.0067 per share to the founding shareholders for aggregate proceeds to the Company of $4,000 cash. In March 2006, the Company completed a private placement offering of 30,000,000 shares of common stock to private investors at a price of $.003 per share, for aggregate proceeds to the Company of $100,000 cash.

In August 2007, the Company closed a private placement consisting of 1,500,000 shares of the Company’s common stock at a price of $.067 per share, for the aggregate proceeds of $100,000 cash.

On November 23, 2007, the Company closed the first tranche of a private placement consisting of 800,000 units at a price of $1.25 per unit for aggregate proceeds of $1,000,000. Each unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until November 23, 2009, at which date they expired.
 
On November 26, 2007, the Company entered into an agreement to purchase interests in certain royalty agreements in exchange for 4,000,000 shares of common stock. The market price of the common stock on the date of the agreement was $2.55 per share. Accordingly, the purchase was recorded at $10,200,000 for the value of shares issued. However, subsequent information obtained yielded an estimated recoverable value of $4,000,000, which resulted in a charge to impairment expense of $6,200,000.

On December 20, 2007, the Company closed the second tranche of a private placement consisting of 400,000 units at a price of $1.25 per Unit for aggregate proceeds of $500,000. Each Unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until December 20, 2009, at which date they expired.


 
 
F - 15

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 7 – CAPITAL STOCK (continued)

Common stock (continued)

During the year ended March 31, 2008, the Company sold a total of 1,280,000 units, at the rate of $1.25 per unit, in private placement transactions for $1,600,000. Each unit consists of one common share of the Company and one warrant. Each warrant entitles the warrant holder to exchange one warrant for one common share at a price of $1.75 per share for a period of two years.

On December 27, 2007, the Company issued 21,533,000 shares of common stock to individual shareholders of Deep Well Oil & Gas, Inc. (DWOG) in exchange for 21,533,000 shares of DWOG common stock. The trading price of TAMM common stock on the date of the transaction was $2.52 per share, resulting in a value of $54,263,160 for the shares issued. Under the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” an impairment reserve of $54,263,160 was recorded as it was determined the shares of DWOG had nominal value. During the year ended March 31, 2009, the common stock issued was returned to the Company in exchange for the return of the shares of DWOG. The shares were retired at par value. Accordingly, the impairment reserve has been recognized as a permanent difference for income tax purposes.

On March 5, 2008, we closed the third tranche of a private placement to nine individuals consisting of 80,000 units at a price of $1.25 per Unit for aggregate proceeds of $100,000. Each Unit consists of one common share and one share purchase warrant. Each Warrant was exercisable into one common share at a price of $1.75 per Warrant Share until March 5, 2010, at which date they expired.

In July 2008, 34,000,000 shares of the Company’s common stock previously issued to founders in October 2005 were returned for cancellation.

In September 2008, 21,533,000 shares of the Company’s common stock previously issued in exchange for common shares of Deep Well Oil & Gas, Inc were returned to the Company and cancelled.

In June 2009, the Company issued 1,000,000 shares of its common stock to acquire Union Energy, LLC (see Note 4).

In September 2009, the Company issued an aggregate of 17,000,000 shares of its common stock to acquire working interests in oil sands and petroleum and gas properties (see Note 4).
 
 During the year ended March 31, 2012, the Company issued an aggregate of 10,602,524 shares of its common stock in settlement of outstanding notes and other obligations previously recorded as to be issued at March 31, 2011. Also, company issued 1,200,000 common stock at fair value of $150,000.

NOTE 8 – OPTIONS AND WARRANTS

Warrants
 
The following table summarizes the changes in warrants outstanding and related prices for the shares of the Company’s common stock issued to shareholders at March 31, 2012:



 
 
F - 16

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 
 
NOTE 8 – OPTIONS AND WARRANTS (continued)

Exercise
Price
 
Number
Outstanding
 
Warrants Outstanding
Weighted Average
Remaining Contractual
Life (years)
 
Weighted
Average
Exercise 
price
 
Number
Exercisable
 
Warrants
 Exercisable
Weighted
Average
Exercise Price
 
$
0.25
 
1,200,000
 
2.15
 
$
0.25
 
1,200,000
 
$
0.25
 
$
0.30
 
5,833,643
 
1.98
 
$
0.30
 
5,833,643
 
$
0.30
 
     
7,033,643
 
2.01
       
7,033,643
 
$
0.29
 

Transactions involving the Company’s warrant issuance are summarized as follows:
 
  
 
Stock Warrants
 
         
Weighted
 
         
Exercise
 
   
Shares
   
Price
 
Outstanding at March 31, 2010
   
   
$
 
Granted
   
5,833,643
     
0.30
 
Canceled
   
     
 
Expired
   
     
 
Exercised
   
     
 
Outstanding at March 31, 2011
   
5,833,643
     
0.30
 
Granted
   
1,200,000
     
0.25
 
Canceled
   
     
 
Expired
   
     
 
Exercised
   
     
 
Outstanding at March 31, 2012
   
7,033,643
   
 $
0.29
 

In connection with the sale of common stock, the Company issued warrants to purchase 1,200,000 of the Company's common stock at $0.25 per share expiring three years from the date of issuance.

Options

As of March 31, 2012 and  2011, the Company had no outstanding options.

NOTE 9 - CONTINGENCIES

Operating leases

The Company is provided operating facilities from an affiliated entity at no cost.

Consulting agreements

The Company has consulting agreements with outside contractors, certain of whom are also Company stockholders. The Agreements are generally month to month.


 
 
F - 17

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 9 - CONTINGENCIES (continued)

Litigation

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Except as described below, we are currently not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.

NOTE 10 – RELATED PARTY TRANSACTIONS
 
The Company leases office space under an operating lease for its corporate use at $1,000 per month on a month to month basis from an entity with common senior management.

During the year ended March 31, 2012, the Company paid back $9,387 in advances from related parties.  Total advances at March 31, 2012 amounted to $59,497 excluding discussion below. The advances are due on demand with interest of 5% per annum.  The Company incurred $2,650 as interest for the year ended March 31, 2012.

During the year ended March 31, 2011, the Company agreed to issue 1,770,511 shares of its common stock to reimburse a related party for legal expenses and other costs incurred on the Company's behalf  totally $265,577.  The Common stock was issued during the year ended March 31, 2012.
 
Farm In Agreement

The Company reached an Joint Venture agreement for a conventional industry farm in on the Manning properties with a private UK based Company with 61 sections of oil sands lease holdings in the Manning prospect area adjacent to the Company holdings. The agreements were ratified by the Board of Directors of TAMM on November 28, 2011.

The Company and Cougar Oil and Gas Canada, Inc. ("Cougar"), a Company under common control, terminated their previously announced farm-in agreement to negotiate a new agreement with the private Corporation.  The private corporation has signed a multi-phase farm-in agreement with the Company to define and develop the Company's 47 section Manning area heavy oil prospect in parallel with the development of the private corporations 61 sections of land in the Manning area.
  
The first phase of the farm-in consists of the private corporation performing a $2.5million work program to earn a 30% working interest in the Company's heavy oil prospect. Subsequent year programs of $6.5 million dollars will earn an additional 20% working interest.
  
The private corporation has a related party relationship to the Company due to family members serving on the board of directors of each company and a common director was added to both Board of Directors.
 

 
 
F - 18

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 10 – RELATED PARTY TRANSACTIONS (continued)

Investment

 As described Note 4, above, the Company exchanged an outstanding receivable from an affiliated entity, 1132559 Alberta Ltd. ("Alberta") for 16 shares of Alberta and a non interest bearing demand obligation of $308,868. Alberta and the Company have officers and/or directors in common.

The 16 shares of Alberta, representing a 10.46% interest, are recorded at cost.

NOTE 11 – INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. Significant components of the Company’s deferred tax assets as of March 31, 2012 and 2011 are as follows:

   
2012
   
2011
 
Deferred tax assets:
           
Net operating losses
 
$
1,295,694
   
$
1,163,573
 
Total gross deferred tax assets
   
1,295,694
     
1,163,573
 
Less valuation allowance
   
(1,295,694
)
   
(1,163,573
)
Net deferred tax asset
 
$
   
$
 
 

The ultimate realization of deferred tax assets depends upon the generation of future taxable income during the periods in which those temporary differences become deductible. At March 31, 2012, the Company has available net operating loss carry forwards of approximately $5,153,000 for federal and state income tax purposes. The net operating losses will expire through 2032 and 2022 for federal and state income tax purposes, respectively. The ultimate realization of the net operating losses may be limited if an ownership change occurs under Internal Revenue Code section 382. The Company has fully reserved the tax benefit of the temporary differences as the likelihood of realization of the benefit cannot be established.

At March 31, 2012 and 2011, the Company’s tax provision consists of:

   
2012
   
2011
 
Current
           
Federal
 
$
   
$
 
State
   
     
 
     
   
     
 
Deferred
               
Federal
   
     
 
State
   
     
 
     
   
     
 
Total
 
$
   
$
 

For the years ended March 31, 2012 and 2011, the provision (benefit) for income taxes reconciles to the amount computed by applying the federal statutory rate to (loss) before provision for income taxes as follows:
 
 
 
F - 19

 
 
TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
 

NOTE 11 – INCOME TAXES (continued)

   
2012
   
2011
 
Computed expected federal tax benefits
 
$
(25,596,114
)
 
$
(23,843,290
)
Permanent difference, impairment of certain investments
   
24,305,319
     
22,821,784
 
State and local income taxes, net of federal benefit
   
     
-
 
Change in valuation reserve
   
1,290,795
     
1,021,505
 
Provision for income taxes
 
$
-0-
   
$
-0-
 
  
NOTE 12 – SUBSEQUENT EVENTS

Effective April 17, 2012 - The Company announced that Mr. Stephen Andrew Fogle has been nominated and elected to the Board of Directors of the Corporation effective April 17, 2012. Mr. Fogle brings investment management experience from USA, Europe, Africa and South America with specific expertise in Mining and Natural resources. He has Operational and Management experiences at the CEO and board level.

On May 31, 2012, the Company reached a binding agreement with CEC North Star Energy Ltd (ÇEC North Star”) of Calgary Alberta to transfer the oilsands leases it holds in the Manning Area in escrow pending a series of events being completed.  CEC North Star will issue shares in escrow North Star common voting shares at the agreed value per shares issued from Treasury of Thirty Two Dollars ($32.00) Cdn. for a total of 5,062,500 shares.  Due to family relationships between CEC North Star Energy and the Company, Mr. Tighe abstained from voting on the transaction. Due to a common board position on both companies, Mr. Hilekes abstained from voting on the transaction.  North Star will be responsible for rental costs of the Manning lands going forward.  Tamm acknowledges and consents to CEC transferring the balance of the farm in agreement that would apply to the P&NG leases, to North Star.  The GORR in place on the Tamm leases will remain the obligation of Tamm under this arrangement

The transaction has two key requirements to close – the put/call – 1. TAMM is to re-domicile to Alberta based on a shareholder vote at the next AGM and required documentation, regulatory requirements being completed.  2. Post the re-domicile, approval of the majority of the TAMM shareholders of the transaction at the same AGM would be required.  Upon signing this agreement, Mr. Hilekes is appointed to the Board of Directors of CEC North Star  and Mr. Tighe is appointed as COO of CEC North Star. The agreement is attached as an exhibit.

Management evaluated all activities of the Company through the issuance date of the Company’s consolidated financial statements and concluded that no subsequent events have occurred that would require adjustments or disclosures into the consolidated financial statements.
 
 
 
 
F - 20

 


Item 9.   Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None

Item 9A.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed under the Securities Exchange Act of 1934, as amended, or 1934 Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our chief executive officer/chief financial officer (principal financial officer) as appropriate, to allow timely decisions regarding required disclosure. During the year ended March 31, 2012 we carried out an evaluation, under the supervision and with the participation of our management, including the principal executive officer and the principal financial officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13(a)-15(e) under the 1934 Act. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of March 31, 2012.
 
Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of the financial statements of the Company in accordance with U.S. generally accepted accounting