Attached files
file | filename |
---|---|
EX-31.4 - Net Element, Inc. | v189161_ex31-4.htm |
EX-32.1 - Net Element, Inc. | v189161_ex32-1.htm |
EX-32.2 - Net Element, Inc. | v189161_ex32-2.htm |
EX-31.1 - Net Element, Inc. | v189161_ex31-1.htm |
EX-31.3 - Net Element, Inc. | v189161_ex31-3.htm |
EX-31.2 - Net Element, Inc. | v189161_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K/A
(Mark
One)
x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended March 31, 2009
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from ____________ to_________________
Commission
file number 000-51108
TOT
Energy, Inc.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
20-0715816
|
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(IRS
Employer Identification
Number)
|
12100 NE
16th Avenue
Suite
210
North Miami, FL
33161
(Address
of principal executive offices)
(305)
891-2288
(Registrant’s
telephone number, including area code)
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, par value $0.001 per share
|
(Title
of class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
o
YES x NO
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
o
YES x NO
Note – Checking the box above
will not relieve any registrant required to file reports pursuant to Section 13
or 15(d) of the Exchange Act from their obligations under those
Sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
x
YES o NO
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
x YES (None Required)
o NO
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, 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. 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 “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting
company)
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
o
YES x NO
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.
Note. —If a determination as
to whether a particular person or entity is an affiliate cannot be made without
involving unreasonable effort and expense, the aggregate market value of the
common stock held by non-affiliates may be calculated on the basis of
assumptions reasonable under the circumstances, provided that the assumptions
are set forth in this Form.
The aggregate market value
of the voting common equity held by non-affiliates was $1,723,674 based upon the
last traded price of $0.10 per share on June 4, 2009.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.
At June 22, 2009, the number
of shares outstanding of the issuer’s common stock was 301,231,580
shares.
DOCUMENTS
INCORPORATED BY REFERENCE
NONE
EXPLANATORY
NOTE
This
Amended Annual Report on Form 10-K/A dated June 29, 2010 is being filed
to:
|
1.
|
correct typographical errors in
the Report of Independent Registered Public Accounting
Firm;
|
|
2.
|
correct the title of Consolidated
Statement of Operations;
|
|
3.
|
correct the Changes in
Stockholders’ Deficiency in Assets report to include fiscal 2008
information;
|
|
4.
|
include additional disclosure in
Note 1 to the Consolidated Financial Statements relating to our accounting
policy for Inventories;
|
|
5.
|
include addition of Note 5. Joint
Ventures to Notes to the Consolidated Financial
Statements;
|
|
6.
|
include additional disclosure on
pages 6, 11 and 22 relating to Mike Zoi’s controlling interest in TGR
Energy, LLC;
|
|
7.
|
provide additional disclosure on
pages 29 and 30 relating to our disclosure controls and procedures and
internal control over financial reporting, including Management’s Report
on Internal Control Over Financial
Reporting;
|
|
8.
|
provide updated and complete five
year biographical information of directors and executive officers on pages
30 and 31;
|
|
9.
|
clarify on page 33 that Mike
Zoi’s deferred compensation is payable on demand and does not accrue
interest;
|
|
10.
|
clarify on page 33 that Curtis
Wolfe received payments for services rendered to the Company by an
affiliated entity due to the limited financial resources of the
Company;
|
|
11.
|
update Exhibit List pursuant to
Item 601 of Regulation S-K;
and
|
|
12.
|
correct dates of management
certifications.
|
13.
|
correct
allocation of fiscal 2009 net loss between TOT Energy, Inc. and
noncontrolling interest.
|
Other
than the foregoing items and conforming changes related thereto, and the
correction of certain typographical errors, no part of the Annual Report on Form
10-K filed on June 30, 2009 is being amended, and the filing of this Amended
Annual Report on Form 10-K/A should not be understood to mean that any other
statements contained therein are true or complete as of any date subsequent to
June 30, 2009. This Amended Annual Report on Form 10-K/A restates in its
entirety, as amended as aforesaid, the Annual Report on Form 10-K filed on June
30, 2009 for the convenience of the reader.
TOT
ENERGY, INC.
Form
10-KSB
For the
Year Ended March 31, 2009
INDEX
Page
|
|||
No.
|
|||
PART
I
|
|||
Item
1.
|
Business
|
4
|
|
Item
1B.
|
Unresolved
Staff Comments
|
6
|
|
Item
2.
|
Properties
|
6
|
|
Item
3.
|
Legal
Proceedings
|
6
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
6
|
|
PART
II
|
|||
Item
5.
|
Market
for Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
|
7
|
|
Item
6.
|
Selected
Financial Data
|
9
|
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
14
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
14
|
|
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure
|
29
|
|
Item
9A(T).
|
Controls
and Procedures
|
29
|
|
Item
9B.
|
Other
Information
|
30
|
|
.
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
30
|
|
Item
11.
|
Executive
Compensation
|
32
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
35
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
36
|
|
Item
14.
|
Principal
Accounting Fees and Services.
|
37
|
|
PART
IV
|
|||
Item
15.
|
Exhibits,
Financial Statement Schedules
|
38
|
|
Signatures
|
41
|
3
PART
I
Item
1. Business
Overview
TOT
Energy, Inc. (the “Company”), formerly Splinex Technology, Inc., was organized
on February 6, 2004 under the laws of the State of Delaware as a wholly-owned
subsidiary of Splinex, LLC, a Florida limited liability company, and was the
surviving entity pursuant to a merger with Ener1 Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Ener1, Inc., a Florida corporation.
The Company initially intended to develop advanced technologies in the
three-dimensional or 3D computer graphics industry. Since October 28, 2003
(“Inception”), the date of formation of Splinex, LLC, through December 17, 2007,
we operated in a development phase typical of a software company and focused on
developing technologies and products and securing intellectual property rights
while we developed relationships with potential customers and resellers. Under
an agreement effective April 1, 2004 (the “Contribution Agreement”), Splinex,
LLC contributed substantially all of its assets, liabilities and operations to
the Company. Due to lack of significant sales, we substantially reduced our
workforce and overhead costs beginning in September 2005. From September 2005
through July 2007, Ener1 Group, Inc., a related party, loaned us money to fund
our operations. In July 2007, Ener1 Group, Inc. stopped funding our operations,
except that Mr. Wolfe did receive compensation by Ener 1 Group, Inc. for legal
services provided to the Company. For more information, see “Item 11. Executive
Compensation.”
On
December 17, 2007, (1) certain holders, who had received shares in the Company
as distributions from Splinex LLC, transferred their ownership of 35,162,334
shares of common stock of the Company to Splinex LLC for nominal consideration,
and (2) Bzinfin, S.A., a British Virgin Islands limited corporation that is
indirectly owned by an affiliate of Ener1 Group, Inc., a Florida company of
which Mike Zoi is a shareholder and director and which is the majority
shareholder of Ener1, Inc., and Ener1 Group assigned debt obligations of the
Company to Splinex LLC in the amount of $2,805,207 and $845,864, respectively.
Under a Purchase Agreement dated December 17, 2007, TGR Capital, LLC (which
changed its name to Enerfund, LLC in September 2008), a Florida limited
liability company (“Enerfund”), which is wholly-owned by Mike Zoi, acquired all
of the membership interests in Splinex LLC, thereby giving Enerfund control of
Splinex LLC.
Under an
Exchange Agreement dated December 18, 2007, the Company agreed to issue
113,500,000 newly issued shares of the Company to Splinex LLC of which 8,500,000
shares were issued to Bzinfin and 2,125,000 were issued to a former affiliate of
Splinex, LLC. Splinex LLC owned 98,157,334 shares of the Company as of December
17, 2007 and an aggregate of 201,032,334 shares after the completion of the
Exchange Agreement on December 18, 2007. The Company had 100,757,769 shares
outstanding at December 17, 2007 and 214,257,769 shares outstanding after the
completion of the Exchange Agreement. In June 2008, Splinex, LLC changed its
name to TGR Energy, LLC (“TGR”).
On July
16, 2008, we entered into a Joint Venture Agreement (the “JV Agreement”) with
Evgeny Bogorad (“Bogorad”), owner of Sibburnefteservis, Ltd. of Novosibirsk,
Russia, an oil services company (“SIBBNS”). Pursuant to the JV Agreement,
Bogorad has contributed certain of SIBBNS assets and personnel to a joint
venture company named TOT-SIBBNS, Ltd., a Russian corporation (“TOT-SIBBNS”). An
independent appraisal company has appraised the contributed assets at
US$6,221,881.We ended development stage activity on July 16, 2008 when we
acquired a 75% interest in the TOT-SIBBNS joint venture and began operations in
the oil and gas service industry, including the exploration, development,
production, and marketing of crude oil and natural gas in Russia and Kazakhstan,
as well as other markets around the world. TOT Energy will also explore
investments and other opportunities in the renewable energy field.
At the
closing on July 16, 2008, we issued to Bogorad 3,000,000 shares of our common
stock in exchange for a 75% interest in TOT-SIBBNS. We are obligated to issue to
Bogorad 2,000,000 additional shares of common stock upon TOT-SIBBNS obtaining
US$10,000,000 in gross revenue during the three-year period following the
closing. If TOT-SIBBNS achieves this gross revenue target and Bogorad continues
to hold the shares issued pursuant to the JV Agreement on the third anniversary
of the closing and the stock price is less than US$1.00 per share, then we, in
our sole discretion, must either make an additional payment in cash or
additional shares of stock to Bogorad in an amount equal to the difference in
the value per share and US$1.00 multiplied by the total number of shares held by
Bogorad, or, if we decline to make such payment, Bogorad may require us to
return our interest in TOT-SIBBNS in exchange for a payment to us of the fair
market value of any assets acquired directly by TOT-SIBBNS (other than the
assets initially contributed to the Joint Venture by Bogorad pursuant to the JV
Agreement) and 75% of the retained earnings, accounts receivable and cash of
TOT-SIBBNS. Bogorad will act as the manager of TOT-SIBBNS. We have the ability
to appoint a majority of the Board of Directors of TOT-SIBBNS.
4
TOT-SIBBNS
provides oil exploration and consulting services to companies located in and
around Novosibirsk, Russia. TOT-SIBBNS owns and operates four oil drilling rigs
that generate the majority of the revenues of TOT-SIBBNS. TOT-SIBBNS uses this
equipment for drilling exploratory wells for fees. In addition, TOT-SIBBNS
provides engineering services and well remediation services on a contract fee
basis. Given the small number of drilling rigs owned by TOT-SIBBNS, drilling
services will be limited to no more than four customers at any one time.
However, exploration contracts will typically provide for utilization of
multiple drilling rigs per customer, on whom our operations will be largely
dependent. Accordingly, the termination of any exploration contract or loss of a
customer or a material change in the financial stability of a customer would
have a material adverse impact on the financial results of
TOT-SIBBNS.
On April
2, 2009, TOT-SIBBNS determined there would be no further oil drilling operations
under its existing contract for the current drilling season. TOT-SIBBNS has
furloughed most employees (114 field and professional positions) until further
notice. It is uncertain when or if drilling services under the existing contract
will recommence. The contract for drilling services was temporarily suspended in
January 2009 due to the inability of the customer to obtain necessary funding.
TOT-SIBBNS’ equipment remains on-site and is expected to remain on-site through
the summer. TOT-SIBBNS has incurred costs during the fourth quarter ended March
31, 2009 to secure its equipment on the job site and prepare for recommencement
of drilling operations in the event the customer obtains the necessary financing
to maintain the oil field license required to conduct operations.
As
previously disclosed, the oil production business in Russia is seasonal and
cyclical and is currently experiencing a down cycle in large part due to the
recently lower prices relating to sale of a barrel of crude oil. While we are
hopeful that drilling service demand will increase when the price of oil
increases and/or the Russian government adjusts drilling license regulations and
fee structures, we can provide no assurance that this will be the case. We may
not know whether our drilling operations will be able to recommence with our
existing customer or other customers until the end of 2009.
TOT-SIBBNS
and its customers are subject to certain regulations and licensing requirements
imposed by Russian law and government agencies, including regulations and
contractual obligations relating to environmental hazards. The costs of
compliance with these regulations and other obligations can be significant,
particularly as the prices per barrel in the spot oil markets decline, which
decline could have a significant impact on TOT-SIBBNS’ cost structures and those
of its customers. The Russian Governmental Ecological Organization oversees
compliance with regulations relating to the discharge of materials into the
environment or otherwise relating to the protection of the environment. All oil
drilling and exploration projects are submitted to the Governmental Ecological
Organization for approval of material discharge quotas and for determination of
fees to be paid (typically monthly) that are based on the description of
operations and planned discharge of materials into the environment. Governmental
authorities monitor compliance with the approved project plan. Violations can
result in fines and penalties. In addition, we must obtain certain licenses for
explosive and fire protection devices which are used in the drilling process.
Actual drilling activities do not require a license.
KORLEA-TOT
is our 51% joint venture with Korlea Invest Holding AG of Switzerland (“Korlea”)
who is a provider and trader of energy assets in the Czech Republic. The joint
venture, Korlea-TOT, established as of July 17, 2008, was expected to assist in
the marketing of oil assets sourced by other TOT-Energy companies and contacts.
There has been no activity to date with this joint venture.
Despite
the setbacks experienced by TOT-SIBBNS, we are working to build a diversified
portfolio of energy assets. To this end, from time to time, we may be engaged in
various discussions to acquire businesses or formulate joint venture or other
arrangements with energy companies located around the world. Our policy is not
to disclose discussions or potential transactions until definitive agreements
have been executed. Where appropriate, acquisitions will be financed with equity
shares and this may result in substantial dilution to existing
stockholders.
5
Several
factors raise significant doubt as to our ability to continue operating as a
going concern. These factors include our history of net losses and that we have
recently commenced operations, and have a working capital deficit at March 31,
2009. We are dependent upon TGR or Mike Zoi (as a result of his controlling
interest in TGR and our dependence on the Subscription Agreement with TGR) to
fund our operations. Our independent auditors’ report on our financial
statements for the year ended March 31, 2009 contains an explanatory paragraph
about our ability to continue as a going concern. Management believes that our
current operating strategy, as described in the preceding paragraphs, provides
the opportunity for us to continue as a going concern; however, there is no
assurance this will occur.
The
current market situation is characterized by falling prices for drilling and
exploration services, which has resulted in a general decline in orders as oil
prices have fluctuated greatly during the past year. TOT-SIBBNS faces intense
competition in its targeted markets. TOT-SIBBNS competes with a significant
number of companies ranging in size from large well-known entities to a number
of relatively small and highly specialized service providers, most of which have
several production locations and significantly greater equipment and drilling
capacity than the Company. TOT-SIBBNS’ principal methods of competition are
price, quality of service, performance and speed of service performance.
TOT-SIBBNS believes that it can effectively compete in certain markets based on
its customer-oriented philosophy, highly skilled and professional workforce,
historically low cost structure, high performance quality and reliability, and
cost-effective solutions for its customers. However, as noted above, TOT-SIBBNS
operates four drilling rigs and many larger competitors have significantly
greater financial resources that will enhance their ability to withstand
significant fluctuations in the price per barrel of oil and other economic and
climatic volatility.
Our
principal executive offices are located at 12100 N.E. 16 th Ave;
Suite 210; Miami, FL 33161. Our telephone number is (305) 891-2288.
Employees
At March
31, 2009, the Company employed four people in the United States, including the
Company’s CEO, CFO, a senior accountant and a secretary. In Russia, as of April
2, 2009, we have furloughed 114 people and there were 35 people working to
maintain equipment, security and limited operations. The furloughed workers will
either return to work as drilling resumes or be terminated after we make payment
of salary due up to the date of furlough. None of our employees were represented
by a union or collective bargaining agreement.
Item
1B.Unresolved Staff Comments
None.
Item
2. Description of Property
We
currently lease office space on a month to month basis. We are seeking
approximately 3,600 square feet of office space in Miami on a permanent basis.
We own an office building in Omsk, Russia where we conduct the operations of
TOT-SIBBNS. The building is approximately 3750 square feet.
Item
3. Legal Proceedings
From time
to time, we may be involved in litigation relating to claims arising in the
normal course of operations. We are not currently a party to any such
proceedings.
Item
4. Submission of Matters to a Vote of Security Holders
None.
6
PART
II
Item
5. Market for Common Equity and Related Stockholder Matters and Purchases of
Equity Securities
There
currently is no established public trading market for our common stock. The
number of shareholders of record of our common stock at March 31, 2009 was 202.
The number of shareholders of record does not include beneficial owners of
common stock whose shares are held in the names of various dealers, clearing
agencies, banks, brokers and other fiduciaries. The principal markets for our
stock were the Over The Counter Bulletin Board (OTCBB) and Pink Sheets LLC. On
June 22, 2009, the price of our common stock last traded at $0.22 per share on
the OTCBB.
The
following table sets forth the high and low prices for our common stock for the
quarterly periods indicated as reported by the OTCBB. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.
Fiscal Year
|
Quarter Ended
|
High
|
Low
|
|||||||
2008
|
June
30, 2007
|
$
|
0.14
|
$
|
0.05
|
|||||
September 30, 2007
|
$
|
0.13
|
$
|
0.06
|
||||||
December
31, 2007
|
$
|
0.10
|
$
|
0.08
|
||||||
March
31, 2008
|
$
|
0.14
|
$
|
0.08
|
||||||
2009
|
June
30, 2008
|
$
|
0.12
|
$
|
0.12
|
|||||
September
30, 2008
|
$
|
0.13
|
$
|
0.13
|
||||||
December
31, 2008
|
$
|
0.07
|
$
|
0.07
|
||||||
March
31, 2009
|
$
|
0.30
|
$
|
0.07
|
We have
not paid any cash dividends during the last two fiscal years and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future.
Plan
Shares Outstanding
The
following table sets forth information as of March 31, 2009with respect to the
Company’s 2004 Stock Option Plan, approved by our security holders. The 2004
Stock Option Plan authorizes the issuance of a maximum of 10,000,000 shares
underlying options. The Company previously granted options to purchase a total
of 4,825,000 shares of common stock, of which options to purchase 4,737,500
shares expired unexercised.
Plan Category
|
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
the first column)
|
|||||||||
Equity
compensation plans approved by security holders.
|
1,200,000
|
$
|
0.25
|
3,975,000
|
7
Recent
Sales of Unregistered Securities
On August
7, 2008, our Board of Directors approved a Subscription Agreement dated August
7, 2008 (the “Subscription Agreement”) with TGR, wherein TGR committed to invest
up to $2,000,000 in exchange for up to 100,000,000 shares of the Company's
common stock for $0.02 per share. In addition, we granted TGR warrants to
purchase up to 50,000,000 shares of common stock for $0.05 per share. These
warrants may be exercised within five years from the date of grant. The shares
and warrants are issuable under the Subscription Agreement upon the funding from
time to time by TGR. The valuation date to determine the appropriate
compensation charge is the last day of the quarter then ended.
For the
quarter ended March 31, 2009, TGR was issued 10,697,250 shares of common stock
of the Company and fully vested warrants to purchase 5,348,625 shares of common
stock of the Company for $0.05 per share in exchange for funding of $213,945
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,390,643 was recorded for the quarter ended March 31,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value. This amount is calculated as the difference
between the market price of our common stock at the end of each quarter in which
shares were issued and the subscription price of the common shares ($0.02)
multiplied by the number of shares issued, plus the Black-Scholes valuation of
the warrants issued as calculated at the end of each quarter.
For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These issuances
were in exchange for financings under the Subscription Agreement in the
aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410 related
to refinancing of previously outstanding notes payable. A compensation charge of
$8,827,218 was recorded for the fiscal year ended March 31, 2009. This amount is
calculated as the difference between the market price of our common stock at the
end of each quarter in which shares were issued and the subscription price of
the common shares ($0.02) multiplied by the number of shares issued, plus the
Black-Scholes valuation of the warrants issued as calculated at the end of each
quarter.
On
November 1, 2008, the Company entered into a Letter Agreement with Olympus
Securities LLC (the “Agreement”). Under the Agreement, Olympus was appointed TOT
Energy’s exclusive financial advisor and investment banker (collectively, the
“Services”) for a period of seven (7) months. After expiration of this initial
term, the Agreement is to automatically continue on a month-to-month basis, with
each party having the right to terminate on thirty (30) days notice. The
Agreement included a fee of one thousand dollars ($1,000) per month in return
for the Services, except for the first month, where, instead of the monthly fee,
the Company granted five (5) year warrants to Olympus to purchase one million
(1,000,000) shares of the Company's common stock at ten cents ($.10) per share.
The warrants were valued at $149,999 and were to be amortized over the
seven-month term of the Agreement. The Agreement contains other provisions
relating to payments of cash, stock and warrants in connection with any future
financing or investment transaction completed through Olympus. The Company has
not yet paid a cash fee or provided the abovementioned warrants to Olympus due
to the failure by Olympus to provide meaningful investment banking services
until world financial markets stabilized. Olympus has commenced providing
strategic advice and other services to the Company and we are currently
negotiating an amendment to the Agreement that will clarify payment and other
terms, including issuance of securities, under the Agreement. The Company has
amortized four months of the warrant charge and accrued this amount in the
current period to reflect services provided.
At March
31, 2009, the Company had options to purchase 1,200,000 shares of common stock
outstanding under its stock option plan, of which options to purchase 412,963
shares of common stock are vested, with an exercise price of $0.25 per share and
with a remaining weighted average contractual term of 5.69 years. The Company
also had warrants to purchase 41,362,168 shares of common stock outstanding at
March 31, 2009 with a strike price of $0.05 per share and a remaining
contractual term of 4.74 years pursuant to the Subscription
Agreement.
The
Company entered into a Sponsorship Agreement with American Speed Factory dated
April 22, 2009, whereby the Company would receive certain promotional services
and sponsorship rights to display the Company’s logo in connection with the 2009
Ferrari Challenge racing season in exchange for the issuance of 500,000 shares
of restricted stock of the Company.
8
To
partially offset the reduction in salary, the Company provided Mr. New with
25,000 shares of fully vested common stock in lieu of his March 31, 2009 cash
bonus and 200,000 shares of common stock which vest monthly from April 1, 2009
to September 30, 2009. Other employees receiving salary reductions were granted
a total of 50,000 shares of common stock vesting monthly between April 1, 2009
and September 30, 2009.
We
believe that each of the foregoing securities transactions were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, by virtue of Section 4(2) of the Securities Act which exempts
transactions by an issuer not involving any public offering.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
None
(other than pursuant to the Subscription Agreement as described
above).
Item
6. Selected Financial Data
Not
Applicable.
9
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
This
Annual Report on Form 10-K contains forward -looking statements. These
statements relate to our expectations, hopes, intentions or strategies regarding
future events or future financial performance. Any statements contained in this
report that are not statements of historical fact may be deemed forward-looking
statements. In some cases, forward-looking statements can be identified by
terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“intend,” “believe,” “estimate,” “predict,” “potential” or “continue,” or the
negative of such terms or other comparable terminology. Forward-looking
statements include but are not limited to statements regarding: our future
business plans; future sales of our product and services; introduction of new
products and services; expected hiring levels; marketing plans; increases of
selling, general and administrative costs; financing requirements and capital
raising plans; successful integration and development of acquired businesses;
regulatory and economic factors affecting the oil and gas business and other
factors that may impact our acquisition and development strategy, some of which
are beyond our control and difficult to predict. These statements are only
predictions and are subject to a number of assumptions, risks and uncertainties
that could cause actual results to differ materially from those expressed or
implied in the forward-looking statements. The following important factors, in
addition to those discussed in our other filings with the Securities and
Exchange Commission (the “Commission”) from time to time, and other unforeseen
events or circumstances, could affect our future results and could cause those
results or other outcomes to differ materially from those expressed or implied
in our forward-looking statements: general economic conditions; competition;
weather; our ability to raise capital; our ability to control costs; changes
within our industries; new and upgraded products and services by us or our
competitors; employee retention; sovereign risk; legal and regulatory issues;
changes in accounting policies or practices; currency translation and exchange
risks; and the market price of oil.
All
forward-looking statements are based on information available to us on the date
of this filing, and we assume no obligation to update such statements, although
we will continue to comply with our obligations under the securities
laws.
The
following discussion should be read in conjunction with our other filings with
the Commission and the consolidated financial statements and related notes
included in this Annual Report.
General
We are
working to build a diversified portfolio of energy assets. To this end, from
time to time, we may be engaged in various discussions to acquire businesses or
formulate joint venture or other arrangements with energy companies located
around the world. Our policy is not to disclose discussions or potential
transactions until definitive agreements have been executed. Where appropriate,
acquisitions will be financed with equity shares and this may result in
substantial dilution to existing stockholders.
On July
16, 2008, we entered into a Joint Venture Agreement (the “JV Agreement”) with
Evgeny Bogorad (“Bogorad”), owner of Sibburnefteservis, Ltd. of Novosibirsk,
Russia, an oil services company (“SIBBNS”). Pursuant to the JV Agreement,
Bogorad has contributed certain of SIBBNS assets and personnel to a joint
venture company named TOT-SIBBNS, Ltd., a Russian corporation (“TOT-SIBBNS”). An
independent appraisal company has appraised the contributed assets at
US$6,221,881.
At the
closing on July 16, 2008, we issued to Bogorad 3,000,000 shares of our common
stock in exchange for a 75% interest in TOT-SIBBNS. We are obligated to issue to
Bogorad 2,000,000 additional shares of common stock upon TOT-SIBBNS obtaining
US$10,000,000 in gross revenue during the three-year period following the
closing. If TOT-SIBBNS achieves this gross revenue target and Bogorad continues
to hold the shares issued pursuant to the JV Agreement on the third anniversary
of the closing and the stock price is less than US$1.00 per share, then we, in
our sole discretion, must either make an additional payment in cash or
additional shares of stock to Bogorad in an amount equal to the difference in
the value per share and US$1.00 multiplied by the total number of shares held by
Bogorad, or, if we decline to make such payment, Bogorad may require us to
return our interest in TOT-SIBBNS in exchange for a payment to us of the fair
market value of any assets acquired directly by TOT-SIBBNS (other than the
assets initially contributed to the Joint Venture by Bogorad pursuant to the JV
Agreement) and 75% of the retained earnings, accounts receivable and cash of
TOT-SIBBNS. Bogorad will act as the manager of TOT-SIBBNS. We have the ability
to appoint a majority of the Board of Directors of TOT-SIBBNS.
10
TOT-SIBBNS
provides exploration services to oil exploration and production companies
located in and around Novosibirsk, Russia. TOT-SIBBNS owns and operates four oil
drilling rigs that generate the majority of the revenues of TOT-SIBBNS.
TOT-SIBBNS uses this equipment for drilling exploratory wells for fees. In
addition, TOT-SIBBNS provides engineering services and well remediation services
on a contract fee basis.
On April
2, 2009, TOT-SIBBNS, our joint venture servicing the oil and gas industry in
Russia, determined there would be no further oil drilling operations under its
existing contract for the current drilling season. TOT-SIBBNS has furloughed
most employees (114 field and professional positions) until further notice. It
is uncertain when or if drilling services under the existing contract will
recommence. The contract for drilling services was temporarily suspended in
January 2009 due to the inability of the customer to obtain necessary
funding. TOT-SIBBNS’ equipment remains on-site and is expected to remain
on-site through the summer.
TOT-SIBBNS
has incurred costs during the fourth quarter ended March 31, 2009 to secure its
equipment on the job site and prepare for recommencement of drilling operations
in the event the customer obtains the necessary financing to maintain the oil
field license required to conduct operations.
As
previously disclosed, the oil production business in Russia is seasonal and
cyclical and is currently experiencing a down cycle in large part due to the
recently lower prices relating to the selling price for a barrel of crude oil.
While we are hopeful that drilling service demand will increase when the price
of oil increases and/or the Russian government adjusts drilling license
regulations and fee structures, we can provide no assurance that this will be
the case. We may not know whether our drilling operations will be able to
recommence with our existing customer or other customers until the end of
2009.
KORLEA-TOT
is our 51% joint venture with Korlea Invest Holding AG of Switzerland
(“Korlea”), a provider and trader of energy assets in the Czech Republic. The
joint venture, Korlea-TOT, established as of July 17, 2008, was expected to
assist in the marketing of oil assets sourced by other TOT-Energy companies and
contacts. There has been no activity to date with this joint
venture.
Several
factors raise significant doubt as to our ability to continue operating as a
going concern. These factors include our history of net losses and that we have
recently commenced operations, and have a working capital deficit as of March
31, 2009. We are dependent upon TGR or Mike Zoi (as a result of his controlling
interest in TGR and our dependence on the Subscription Agreement with TGR) to
fund our operations. Our independent auditors’ report on our financial
statements for the year ended March 31, 2009 contains an explanatory paragraph
about our ability to continue as a going concern. Management believes that our
current operating strategy, as described in the preceding paragraphs, provides
the opportunity for us to continue as a going concern; however, there is no
assurance this will occur.
As of
March 31, 2009, we leased temporary office space and intend to lease and furnish
approximately 3,600 square feet of permanent office space in Miami, Florida. We
also own a 3750 square foot building in Omsk, Russia where we operate
TOT-SIBBNS.
11
Results
of Operations for the Year Ended March 31, 2009 Compared to the Year Ended March
31, 2008
We had
net income of $215,085, or $0.00 per share, for the year ended March 31, 2008
(“fiscal 2008”) compared to a net loss of $11,017,457, or $0.05 per share,
for the year ended March 31, 2009 (“fiscal 2009”). Our total operating expenses
for fiscal 2008 were $243,111 as compared to operating expenses for fiscal 2009
of $11,231,053. Interest expense in fiscal 2008 was $110,464 compared to
fiscal 2009 interest expense of $0. Income from settlements of outstanding
payables was $568,562 in fiscal 2008 compared to $0 in fiscal 2009.
TOT
Energy, Inc. was not an operating company until the acquisition of TOT-SIBBNS in
July 2008. The fiscal 2008 expenses of TOT Energy, Inc. reflect
non-operating winding down activities, principally creditor settlements and
expenses incurred to remain current in our SEC filing obligations. Our
activity in fiscal 2008 was focused on settling outstanding payables and other
liabilities. Our operating expenses declined significantly during fiscal
2008 as we terminated product development activities and our remaining
workforce.
There
were no operating expenses related to TOT-SIBBNS in fiscal 2008. For fiscal
2009, our operating expenses consisted of $10,378,126 for TOT-Energy, Inc. and
$852,927 relating to operating expenses at TOT-SIBBNS. The operating expenses of
TOT Energy, Inc. of $10,378,126 in fiscal 2009 related primarily to compensation
expense ($8,931,801) in connection with issuances of stock and warrants pursuant
to the Subscription Agreement. Payroll expenses were $656,702,
professional fees for legal, accounting, consulting and tax preparation were
$316,857 and other general and administrative expenses were $486,215 consisting
primarily of travel, rent and investor relations expenses. For fiscal
2008, operating expenses of $243,111 consisted of $47,020 in professional fees,
$37,587 in payroll expenses, $21,140 in transfer agent fees and $137,364 in
other general and administrative expenses.
Outstanding
payables were settled at a discount in late fiscal 2008 and the Company
recognized income of $568,562 and $0 from settlements in fiscal 2008 and fiscal
2009, respectively.
The
non-controlling interest in loss of consolidated subsidiary was $0 in fiscal
2008 and $213,378 in fiscal 2009 as TOT-SIBBNS was purchased on July 16, 2008
and the fiscal 2009 amount relates to the 25% non-controlling interest in
TOT-SIBBNS retained by our joint venture partner.
Liquidity
and capital resources
At March
31, 2009, we had negative working capital of $765,508 and cash of
$99,971.
Short
term financing is provided by TGR Energy, LLC (“TGR”) as we require additional
working capital, pursuant to a Subscription Agreement dated August 7, 2008 (the
“Subscription Agreement”). TGR has agreed to provide up to $2,000,000 (the
“Investment Amount”) in exchange for up to 100,000,000 shares of common stock
and warrants to purchase up to 50,000,000 shares of common stock at an exercise
price of $0.05 per share. Pursuant to the Subscription Agreement, TGR will fund
the Investment Amount as required in our operational budget. TGR’s obligation to
fund the Investment Amount will be reduced by any future third party funding or
investment on terms no less favorable than those contained in the Subscription
Agreement.
For the
quarter ended March 31, 2009, TGR was issued 10,697,250 shares of common stock
of the Company and fully vested warrants to purchase 5,348,625 shares of common
stock of the Company for $0.05 per share in exchange for funding of $213,945
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,390,643 was recorded for the quarter ended March 31,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value. This amount is calculated as the
difference between the market price of our common stock at the end of each
quarter in which shares were issued and the subscription price of the common
shares ($0.02) multiplied by the number of shares issued, plus the Black-Scholes
valuation of the warrants issued as calculated at the end of each
quarter.
12
For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable. A
compensation charge of $8,827,218 was recorded for the fiscal year ended March
31, 2009. This amount is calculated as the difference between the market price
of our common stock at the end of each quarter in which shares were issued and
the subscription price of the common shares ($0.02) multiplied by the number of
shares issued, plus the Black-Scholes valuation of the warrants issued as
calculated at the end of each quarter.
Critical
Accounting Policies and Estimates
Our
significant accounting policies are described more fully in Note 1 to our
consolidated financial statements. Management is required to make certain
estimates and assumptions during the preparation of our financial statements in
accordance with generally accepted accounting principles. These estimates
and assumptions impact the reported amount of assets and liabilities as well as
disclosures regarding any contingencies. Actual results could differ from
estimates and this could impact reported net income or the value of our assets
and liabilities.
In
applying estimates, management uses its judgment to determine the appropriate
assumptions to be used in the determination of certain estimates. Those
estimates are based on our historical experience, terms of existing contracts,
our observance of trends in the industry, information provided by outside
sources, trade journals and other sources, as appropriate.
Deferred
Taxes. Estimates of deferred income taxes and items giving rise to
deferred tax assets and liabilities reflect management’s assessment of actual
future taxes to be paid on items reflected in the financial statements, giving
consideration to both timing and the probability of the realization.
Actual income taxes could vary from these estimates for a variety of reasons
including changes in tax law, operating results that vary from budget or the
review of our tax returns by the IRS.
Valuation
of stock based compensation. Stock based compensation has been provided by
the Company in order to preserve the cash flow necessary to grow our
business. In addition, we entered into the Subscription Agreement
described above to strengthen our available sources of capital. We believe
the estimate of stock based compensation is a “critical accounting estimate”
that significantly affects our results of operations. Management of the
Company has discussed the development and selection of this critical accounting
estimate with our board of directors and the board of directors has reviewed the
Company’s disclosure relating to it in this Report.
Off-balance
sheet arrangements
At March
31, 2009, we did not have any off-balance sheet arrangements, as defined in Item
303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act
of 1934, as amended.
Recently
Issued Accounting Pronouncements
In May
2008, the FASB issued Statement of Financial Accounting Standards No 165 (SFAS
No. 165), Subsequent Events, which establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. The Company does
not expect that this Statement will result in a change in current
practice.
In April
2009, the FASB issued three related FASB Staff Positions (“FSP”): (i) FSP FAS
No. 115-2 and FAS No. 124-2, “Recognition of Presentation of
Other-Than-Temporary Impairments” (“FSP FAS 115-2 and FAS 124-2”), (ii) FSP FAS
No. 107-1 and Accounting Principles Board Opinion (“APB”) No. 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB
28-1”), and (iii) FSP FAS No. 157-4, “Determining the Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4), which are
effective for interim and annual reporting periods ending after June 15, 2009
and will be effective for us beginning in the first quarter of fiscal 2010. FSP
FAS 115-2 and FAS 124-2 amend the other-than-temporary impairment guidance in
U.S. GAAP for debt securities to modify the requirement for recognizing
other-than-temporary impairments, change the existing impairment model, and
modify the presentation and frequency of related disclosures. FSP FAS 107-1 and
APB 28-1 require disclosures about fair value of financial instruments for
interim reporting periods as well as in annual financial statements. FSP FAS
157-4 provides additional guidance for estimating fair value in accordance with
SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). We are currently
evaluating the impact of adopting these Staff Positions, but we do not expect
the adoption to have a material impact on our consolidated financial position,
results of operations or cash flows.
13
In May,
2008, the FASB issued Statement No. 162, Hierarchy of Generally Accepted
Accounting Principles , which simply moves the requirements related to
which authoritative literature to look to first from the audit standards to
GAAP. SFAS 162 is effective 60 days following the SEC's approval of the
PCAOB’s amendments to AU Section 411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles
In March,
2008, the Financial Accounting Standards Board released Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities . This standard
requires enhanced disclosure about a company’s derivatives and hedging to help
investors understand their impact on a company’s financial position, financial
performance and cash flows. SFAS 161 is effective for periods beginning
after November 15, 2008, with early application encouraged. We do not hedge and
we currently do not deal with derivative instruments. Management does not see an
impact from this standard at this time.
In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations” and SFAS No. 160, “Non-controlling Interest in Consolidated
Financial Statements.” These Statements replace FASB Statement No. 141,
“Business Combinations,” and requires an acquirer to recognize the assets
acquired, the liabilities assumed, and any non-controlling interest in the
acquiree at the acquisition date, measured at their fair values as of that date.
SFAS No. 141(R) also makes significant amendments to other Statements and
other authoritative guidance. The Statement is effective for years
beginning on or after December 15, 2008. Adoption of SFAS 141(R) is
not expected to have a significant impact on our existing financial condition
and results of operations.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
We do not
have material exposure to market risks associated with changes in interest rates
related to cash equivalent securities held at March 31, 2009.
Item
8. Financial Statements and Supplementary Data
14
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
TOT
Energy, Inc.
Miami,
Florida
We have
audited the accompanying consolidated balance sheets of TOT Energy, Inc. (the
“Company”) as of March 31, 2008 and 2009, and the related consolidated
statements of operations, changes in stockholders’ deficiency in assets and cash
flows for the years then ended. These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit 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 financial position of TOT Energy, Inc. as of March
31, 2008 and 2009, and the related consolidated statements of operations,
changes in stockholders’ deficiency in assets and cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has experienced recurring losses
and has a working capital deficit at March 31, 2009. This raises substantial
doubt about the Company’s ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/Daszkal
Bolton LLP
Jupiter,
Florida
June 30,
2009
15
TOT
ENERGY, INC.
CONSOLIDATED
BALANCE SHEETS
March 31, 2008
|
March 31, 2009
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$
|
88,007
|
$
|
99,971
|
||||
Deposits
|
-
|
6,000
|
||||||
Inventories
|
-
|
31,174
|
||||||
Prepaid
expenses and other assets
|
20,500
|
2,220
|
||||||
Total
current assets
|
108,507
|
139,365
|
||||||
Fixed
assets
|
||||||||
Building
|
-
|
160,649
|
||||||
Machinery
and equipment
|
-
|
3,053,933
|
||||||
Less:
accumulated depreciation
|
-
|
(308,452
|
)
|
|||||
Total
fixed assets (net)
|
-
|
2,906,130
|
||||||
Other
Assets
|
||||||||
Accounting
software license
|
1,197
|
-
|
||||||
Total
assets
|
$
|
109,704
|
$
|
3,045,495
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY) IN ASSETS
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$
|
15,193
|
$
|
51,130
|
||||
Accrued
expenses
|
32,641
|
853,743
|
||||||
Due
to related parties
|
500,000
|
-
|
||||||
Total
liabilities
|
547,834
|
904,873
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
STOCKHOLDERS'
EQUITY (DEFICIENCY) IN ASSETS
|
||||||||
Preferred
stock ($.001 par value, 100,000,000 shares authorized and no shares issued
and outstanding)
|
-
|
-
|
||||||
Common
stock ($.001 par value, 800,000,000 shares authorized and 214,507,773 and
300,583,108 shares issued and outstanding)
|
214,508
|
300,583
|
||||||
Treasury
stock, at cost; 250,000 shares
|
(62,500
|
)
|
(62,500
|
)
|
||||
Paid
in capital
|
5,115,356
|
19,940,319
|
||||||
Accumulated
other comprehensive income
|
-
|
(1,176,614
|
)
|
|||||
Accumulated
deficit
|
(5,705,494
|
)
|
(16,722,953
|
)
|
||||
Noncontrolling
interest
|
-
|
(138,213)
|
||||||
Total
equity
|
(438,130
|
)
|
2,140,622
|
|||||
Total
liabilities and stockholders' equity (deficiency) in
assets
|
$
|
109,704
|
$
|
3,045,495
|
See
accompanying notes
16
TOT
ENERGY, INC.
CONSOLIDATED STATEMENT
OF OPERATIONS
Twelve Months
Ended
March 31,2008
|
Twelve Months
Ended
March 31,2009
|
|||||||
Sales
|
$
|
98
|
$
|
-
|
||||
Cost
of sales
|
-
|
-
|
||||||
Gross
Profit
|
98
|
-
|
||||||
Operating
Expenses
|
||||||||
General
and administrative
|
243
, 111
|
11,231,053
|
||||||
Loss
from operations
|
(243,013
|
)
|
(11,231,053
|
)
|
||||
Non-operating
income (expenses)
|
||||||||
Interest
expense, net
|
(110,464
|
)
|
-
|
|||||
Other
income (expense)
|
-
|
218
|
||||||
Income
from settlements
|
568,
562
|
-
|
||||||
Income
(loss) before income tax provision
|
215,085
|
(11,230,835
|
)
|
|||||
Income
tax provision
|
-
|
-
|
||||||
Net
income (loss)
|
215,085
|
(11,230,835
|
)
|
|||||
Add:
Net loss attributable to the noncontrolling interest
|
-
|
213,378
|
||||||
Net
income (loss) attributable to TOT Energy, Inc.
|
215,085
|
(11,017,457
|
)
|
|||||
Other
comprehensive income (loss)
|
||||||||
Foreign
Currency translation loss
|
-
|
(1,176,614
|
)
|
|||||
Comprehensive
income (loss)
|
||||||||
215,085
|
(12,194,071
|
)
|
||||||
Net
income (loss) per share - basic and diluted
|
$
|
0.00
|
$
|
(0.05
|
)
|
|||
Weighted
average number of common shares outstanding - basic and
diluted
|
104,183,619
|
236,191,569
|
See
accompanying notes.
17
TOT
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN
STOCKHOLDERS’
DEFICIENCY IN ASSETS
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||||||||||
Additional
|
Other
|
Stockholders'
|
||||||||||||||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Treasury
|
Paid
in
|
Comprehensive
|
Non-controlling
|
Accumulated
|
Equity
(Deficiency)
|
|||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Stock
|
Capital
|
Income
|
interest
|
Deficit
|
in Assets
|
|||||||||||||||||||||||||||||||
Balance
at March 31, 2007
|
- | $ | - | 100,757,773 | $ | 100,758 | $ | (62,500 | ) | $ | 1,109,712 | $ | - | $ | - | $ | (5,920,579 | ) | $ | (4,772,609 | ) | |||||||||||||||||||
Stock
options granted
|
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Stock
options vested
|
- | - | - | - | - | 8,000 | - | - | - | 8,000 | ||||||||||||||||||||||||||||||
Shares
issued for debt
|
- | - | 113,500,000 | 113,500 | 3,657,297 | - | - | - | 3,770,797 | |||||||||||||||||||||||||||||||
Related
party debt settlement
|
- | - | - | - | - | 320,597 | - | - | - | 320,597 | ||||||||||||||||||||||||||||||
Shares
issued to former employee
|
- | - | 250,000 | 250 | - | 19,750 | - | - | - | 20,000 | ||||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | - | - | - | 215,085 | 215,085 | ||||||||||||||||||||||||||||||
Balance
at March 31, 2008
|
- | $ | - | 214,507,773 | $ | 214,508 | $ | (62,500 | ) | $ | 5,115,356 | $ | - | $ | - | $ | (5,705,496 | ) | $ | (438,132 | ) | |||||||||||||||||||
Stock
options granted
|
- | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Stock
options vested
|
- | - | - | - | - | 31,296 | - | - | - | 31,296 | ||||||||||||||||||||||||||||||
Shares
issued pursuant to TOT-SIBBNS joint venture
|
- | - | 3,000,000 | 3,000 | - | 4,372,480 | - | 44,190 | - | 4,375,480 | ||||||||||||||||||||||||||||||
Shares
issued for services pursuant to formation of Korlea-TOT
|
- | - | 350,000 | 350 | - | 45,150 | - | 30,975 | - | 45,500 | ||||||||||||||||||||||||||||||
Shares
and warrants to be issued pursuant to subscription
agreement
|
- | - | 82,725,335 | 82,725 | - | 10,376,037 | - | - | - | 10,458,762 | ||||||||||||||||||||||||||||||
Foreign
currency exchange
|
- | - | - | - | - | - | (1,176,614 | ) | - | - | (1,176,614 | ) | ||||||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | - | - | (213,378 | ) | (11,017,457 | ) | (11,155,669 | ) | |||||||||||||||||||||||||||
Balance
March 31, 2009
|
- | $ | - | 300,583,108 | $ | 300,583 | $ | (62,500 | ) | $ | 19,940,319 | $ | (1,176,614 | ) | $ | (138,213 | ) | $ | (16,722,953 | ) | $ | 2,140,622 |
See
accompanying notes.
18
TOT
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
March
31, 2008
|
March 31, 2009
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$
|
215,085
|
$
|
(11,017,457
|
)
|
|||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
Depreciation
|
-
|
304,452
|
||||||
Amortization
of accounting software license
|
-
|
1,197
|
||||||
Decrease
in noncontrolling interests
|
-
|
(213,378
|
)
|
|||||
Share
Based Compensation
|
28,000
|
8,881,
051
|
||||||
Non
cash interest expense
|
110,464
|
-
|
||||||
Settlement
of accounts payable
|
(307,651
|
)
|
-
|
|||||
Settlement
of accrued severance
|
(260,911
|
)
|
-
|
|||||
|
||||||||
Changes
in assets and liabilities, net of acquistions
|
|
|||||||
and
the effect of consolidation of equity affiliates:
|
|
|||||||
Prepaid
expenses
|
(15,367
|
)
|
18,280
|
|||||
Software
license
|
(1,197
|
)
|
-
|
|||||
Inventories
|
-
|
(31,174
|
)
|
|||||
Deposits
|
-
|
(6,000
|
)
|
|||||
Accounts
payable
|
(60,222
|
)
|
35,937
|
|||||
Accrued
expenses
|
(178,445
|
)
|
821,101
|
|||||
Total
adjustments
|
(685,329
|
)
|
9,811,466
|
|||||
Net
cash used in operating activities
|
(470,244
|
)
|
(1,205,991
|
)
|
||||
Cash
flows from investing activities:
|
||||||||
Investment
in joint venture Korlea -TOT
|
-
|
-
|
||||||
Purchase
of equipment
|
-
|
(8,643
|
)
|
|||||
Net
cash used in investing activities
|
-
|
(8,643
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||
Contributed
capital from equity investors
|
-
|
1,
017,097
|
||||||
Contributed
capital for Korlea-TOT joint venture
|
-
|
37,561
|
||||||
Increase
in related party payables
|
-
|
117,865
|
||||||
Decrease
in related party payables
|
-
|
-
|
||||||
Note
payable related party
|
558,000
|
-
|
||||||
Net
cash provided by financing activities
|
558,000
|
1
,172,523
|
||||||
|
||||||||
Eff
ect of exchange rate changes on cash
|
-
|
54,075
|
||||||
Net
increase in cash
|
87,756
|
11,965
|
||||||
Cash
at beginning of period
|
251
|
88,007
|
||||||
Cash
at end of period
|
$
|
88,007
|
$
|
99,972
|
||||
Supplemental
Disclosure of Cash Flow Information
|
||||||||
Cash
paid during the year for:
|
||||||||
Interest
|
$
|
-
|
$
|
-
|
||||
Income
taxes
|
$
|
-
|
$
|
-
|
||||
Non-cash
investing and financing activities:
|
||||||||
Related
party debt and accrued interest to be exchanged for equity
|
$
|
3,771,047
|
$
|
637,410
|
||||
Common
stock issued to form joint venture TOT-SIBBNS
|
$
|
-
|
$
|
4,375,480
|
||||
Common
stock issued for services provided information of joint venture
Korlea-TOT
|
$
|
-
|
$
|
45,500
|
||||
Common
stock issued pursuant to subscription agreement
|
$
|
-
|
$
|
8,858,514
|
See
accompanying notes.
19
TOT
ENERGY, INC.
NOTES TO
FINANCIAL STATEMENTS
NOTE 1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
and Basis of Presentation
TOT
Energy, Inc. (the “Company”), formerly Splinex Technology, Inc., was organized
on February 6, 2004 under the laws of the State of Delaware as a wholly-owned
subsidiary of Splinex, LLC, a Florida limited liability company, and was the
surviving entity pursuant to a merger with Ener1 Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of Ener1, Inc., a Florida corporation.
The Company initially intended to develop advanced technologies in the
three-dimensional or 3D computer graphics industry. Under an agreement effective
April 1, 2004 (the “Contribution Agreement”), Splinex, LLC contributed
substantially all of its assets, liabilities and operations to the Company. The
Company began its development stage activity on October 28, 2003
(“Inception”), the date of formation of Splinex, LLC, and ended development
stage activity on July 16, 2008 when the Company acquired a 75% interest in the
TOT-SIBBNS joint venture and began operations in the oil and gas service
industry.
Basis of
Consolidation
The
interim financial statements include the accounts of TOT Energy, Inc., the
accounts of the Company’s 75% joint venture, TOT- SIBBNS, a limited liability
company formed under the laws of Russia (also known as the Russian Federation)
and the accounts of our 51% joint venture, Korlea-TOT, a limited liability
company formed under the laws of the Czech Republic. All material intercompany
accounts and transactions have been eliminated in this
consolidation.
Business
Activity
The
Company is working to build a diversified portfolio of energy assets. To this
end, from time to time, the Company may be engaged in various discussions to
acquire businesses or formulate joint venture or other arrangements with energy
companies located around the world. Where appropriate, acquisitions will be
financed with equity shares and this may result in substantial dilution to
existing stockholders. Prior to 2008, the Company developed computer software
products.
TOT-SIBBNS
provides exploration services to oil exploration and production companies
located in and around Novosibirsk, Russia. TOT-SIBBNS owns and operates four
oil-drilling rigs that generate the majority of the revenues of TOT-SIBBNS.
TOT-SIBBNS uses this equipment for drilling exploratory wells for fees. In
addition, TOT-SIBBNS provides engineering services and well remediation services
on a contract fee basis.
KORLEA-TOT
is the Company’s 51%-owned joint venture with Korlea Invest Holding AG of
Switzerland (“Korlea”) who is a provider and trader of electricity in the Czech
Republic. Korlea-TOT was expected to assist in the marketing of oil assets
sourced by other TOT-Energy companies and contacts. There has been no
activity to date with this joint venture..
20
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
balance sheet date and the reported amounts of expenses for the period
presented. Actual results could differ from those estimates.
Cash and
Cash Equivalents
Cash and
cash equivalents include highly liquid money market investments purchased with
an original maturity of three months or less. At March 31, 2008 and March 31,
2009, the Company had no cash equivalents. The Company maintains its U.S.
Dollar-denominated cash in a bank deposit account, the balance of which, at
times, may exceed federally insured limits. Bank accounts in the United States
are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to
$250,000. At March 31, 2009, and March 31, 2008, the United States bank
balances did not exceed the FDIC limit. The Company also maintains bank
balances in Russia and the Czech Republic and at March 31, 2009, the balance was
$76,656. At March 31, 2008, there were no overseas bank balances.
The non-United States bank balances are not insured and there is risk of loss in
the event such banks should fail.
Inventories
Inventories
are purchased primarily for the needs of production and used during the normal
operating cycle. Items in inventory include fuel, cables,
lubricants, construction materials and other miscellaneous items recorded at
cost. Costs for freight or other acquisition expenses are charged to
operations in the period they are incurred. Inventory is
reduced using the average cost by item.
Fixed
Assets
The
Company depreciates its building over a term of 20 years. Machinery and
Equipment are depreciated over lives ranging from 3 years to 10 years depending
on the equipment. The Company uses lives of three years for office
equipment, five years for most pieces of drilling equipment and ten years for
our four drills. All of the Company assets are depreciated on a
straight-line basis for financial statement purposes.
Foreign
Currency Transactions
The
Company’s primary operations are conducted outside the United States and we use
foreign currencies to operate our consolidated foreign subsidiaries. Quarterly
income and expense items are translated into U.S. dollars using the average
interbank rate for the three-month period. Assets and liabilities are translated
into U.S. dollars using the interbank rate as of the balance sheet date. Equity
items are translated at their historical rate. The Company does not engage in
any currency hedging activities.
Revenue
Recognition
The
Company recognizes revenues from its contract on the completed contract method
due to uncertainty in counterparty performance and collections under its
terms. Under the completed contract method, revenues and costs are
included in operations when the contract is completed. Any losses expected
to be incurred are charged to operations in the period that such losses are
probable.
Net Loss
Per Share
Basic net
loss per common share is computed by dividing net loss applicable to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the period, adjusted
for the dilutive effect of common stock equivalents, consisting of shares
issuable upon exercise of common stock options or warrants. In periods when
losses are reported, the weighted-average number of common shares outstanding
excludes common stock equivalents because their inclusion would be
anti-dilutive.
At March
31, 2009, the Company had outstanding vested stock options to purchase 412,963
shares of common stock and warrants to purchase 41,363,168 shares of common
stock. For the twelve months ended March 31, 2009, these securities are
excluded from the earnings per share calculation because their inclusion would
be anti-dilutive.
21
At March
31, 2008, the Company had 100,000 options exercisable. The Company
recorded a $8,000 compensation expense for these options in fiscal
2008. During fiscal 2009, the Company issued 1,100,000 options of
which 312,963 were exercisable at March 31, 2009. The Company also
issued 82,725,335 shares of common stock and warrants to purchase 41,362,168
shares of common stock in exchange for $1,654,507 pursuant to the terms of its
subscription agreement with TGR Energy, LLC (see Notes 8, 9 and
11).
Fair
Value of Financial Instruments
The
Company’s financial instruments consist mainly of cash deposits, short-term
payables and borrowings under related party payables. The Company believes that
the carrying amounts of third-party financial instruments approximate fair
value, due to their short-term maturities and the related party payables are
interest bearing and payable on demand.
Impairment
of Long-Lived Assets
The
Company reviews its long-lived assets for impairment whenever events or changes
indicate that the carrying amount of an asset or group of assets may not be
recoverable. No impairment losses were recorded during fiscal 2008 and fiscal
2009.
NOTE 2.
GOING CONCERN CONSIDERATIONS
The
Company’s financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Company had been in the
development stage until the second quarter of 2008 and has had minimal revenues
since Inception. Management recognizes that the Company must raise capital
sufficient to fund business activities until such time as it can generate
sufficient revenues and net cash flows in amounts necessary to enable it to
continue in existence. These factors include our history of net losses and that
minimal revenues have been earned to date. The Company is dependent upon TGR
Energy, LLC or Mike Zoi (as a result of his controlling interest in TGR and the
Company’s dependence on the Subscription Agreement with TGR) to fund its
operations. The Company’s independent auditors’ report on its financial
statements for the year ended March 31, 2009 contains an explanatory paragraph
about our ability to continue as a going concern. Management believes that its
current operating strategy, as described herein, provides the opportunity for
the Company to continue as a going concern; however, there is no assurance this
will occur.
NOTE 3.
SEGMENT INFORMATION
The
Company’s sole reportable business segment is the oil and gas services sector.
The Company’s accounting policies for segments are the same as those described
in the summary of significant accounting policies.
NOTE 4.
CONTRACT ACCOUNTING
The
Company accounts for its long-term contracts using the completed contract method
of revenue recognition due to increasing uncertainties relating to its sole
customer’s ability to continue to finance the existing contract to
completion. The completed contract method recognizes income only when the
contract is substantially complete. Project costs and related revenues are
accumulated and are reflected in operations only when an estimated loss is
probable. The contract will be deemed complete when our customer agrees
that each milestone contained in the contract has been met.
Billed
contract receivables consist of amounts due under our sole contract for fiscal
2009, which has been stopped due to lack of financing by our customer.
We have fully reserved for uncollected billings and for costs in excess of
billings in the amount of $270,582. There are no revenues or costs charged
to operations for the fiscal year ended March 31, 2008 or 2009 under the
completed contract method. For more information, see Note 1 – “Summary of
Significant Accounting Policies – Revenue Recognition” above.
22
NOTE
5. JOINT VENTURES
On July
18, 2008, the Company executed an agreement to acquire a 75% controlling
interest in TOT-SIBBNS, a limited liability company organized under the laws of
the Russian Federation. Pursuant to the Joint Venture Agreement, the owner (the
“JV Partner”) of Sibburnefteservis, Ltd. of Novosibirsk, Russia (“SIBBNS”)
contributed certain assets of SIBBNS to TOT SIBBNS in exchange for 3,000,000
shares of the Company’s common stock. The assets were appraised at more than $6
million at the time of contribution and the Company is obligated to issue an
additional 2,000,000 shares to the JV Partner when TOT SIBBNS achieves
$10,000,000 in cumulative revenues. If on the third anniversary of the joint
venture agreement, the Company’s stock price is not at least $1.00 per share,
the Company will have the option of making an additional payment to the JV
Partner or returning the Company’s interest in the joint venture to the JV
Partner.
The
Company formed a joint venture, Korlea-TOT Energy s.r.o., in July 2008 with its
Czech Republic partner Korlea Invest. The Company invested $56,000 to provide
the 51% of share capital that the Company owns for this limited liability
company in the Czech Republic. The Company financed this investment through a
related party note with Kazo, LLC. Korlea-TOT Energy s.r.o. will engage in
marketing and trading of oil and natural gas in Eastern Europe. The Company
issued Alexander Kaplan 350,000 newly issued shares of Company stock for his
assistance in completing this transaction.
NOTE 6.
BUILDING, MACHINERY AND EQUIPMENT
Building,
machinery and equipment consisted of the following at March 31, 2008 and
2009:
2008
|
2009
|
|||||||
Building
|
$
|
-
|
$
|
160,649
|
||||
Machinery
and Equipment
|
4,000
|
3,053,933
|
||||||
4,000
|
3,214,582
|
|||||||
Less
accumulated depreciation
|
(4,000
|
)
|
(308,452
|
)
|
||||
$
|
-
|
$
|
2,906,130
|
Depreciation
expense was $0 and $304,452 for 2008 and 2009 respectively.
23
NOTE 7.
ACCRUED EXPENSES
Accrued
expenses represent expenses that are owed at the end of the period and either
have not been billed by the provider or are expenses that are estimated for
services provided. At March 31, 2009 and March 31, 2008, accrued expenses
consisted of the following:
March 31, 2008
|
March 31, 2009
|
|||||||
Professional
Fees
|
$
|
30,000
|
$
|
39,968
|
||||
Taxes
payable
|
—
|
104,535
|
||||||
Accrued
cost of software license
|
2,392
|
—
|
||||||
Accrued
wages
|
—
|
509,090
|
||||||
Other
accrued expenses
|
249
|
200,150
|
||||||
$
|
32,641
|
$
|
853,743
|
NOTE 8.
STOCKHOLDERS’ EQUITY
The
Company is authorized to issue 800,000,000 shares of common stock, par value of
$0.001 per share. Each holder of common stock is entitled to one vote for each
share held. The Company is authorized to issue 100,000,000 shares of preferred
stock, par value $0.001 per share, which may be divided into series with the
designations, powers, preferences, and relative rights and any qualifications,
limitations or restrictions as determined by the Company’s board of
directors.
Under an
Exchange Agreement dated December 18, 2007, the Company agreed to issue
113,500,000 newly issued shares of common stock of the Company to TGR Energy,
LLC, of which 8,500,000 shares were issued to Bzinfin, S.A., a British Virgin
Islands limited corporation that is indirectly owned by an affiliate of the
Ener1 Group, and 2,125,000 shares were issued to Alexander Malovik, a principal
of Splinex, LLC, in exchange for the Bzinfin and Ener1 Group notes totaling
$3,688,132. TGR Energy, LLC owned 98,157,334 shares of common stock of the
Company as of December 17, 2007, and after the completion of the Exchange
Agreement transactions owned an aggregate of 201,032,334 shares of common stock
of the Company as of December 18, 2007. The Company had a total of 100,757,773
shares of common stock outstanding at December 17, 2007 and 214,507,773 shares
of common stock outstanding at December 18, 2007.
On August
7, 2008, the Board of Directors approved a Subscription Agreement dated August
7, 2008 (the “ Subscription Agreement”) with TGR Energy, LLC (“TGR”), wherein
TGR committed to invest up to $2,000,000 in exchange for up to 100,000,000
shares of the Company's common stock for $0.02 per share. In addition, the
Company granted TGR warrants to purchase up to 50,000,000 shares of common stock
for $0.05 per share. These warrants may be exercised within five years from the
date of grant. The shares and warrants are issuable under the Subscription
Agreement upon the funding from time to time by TGR. The valuation date to
determine the appropriate compensation charge is the last day of the quarter
then ended.
On August
13, 2008, the Board of Directors approved (i) the issuance of fully vested
options to purchase 100,000 shares of common stock to Curtis Wolfe for his
services as a board member of the Company and (ii) the issuance of options to
purchase 1,000,000 shares of common stock to Jonathan New for his services as
Chief Financial Officer. Mr. Wolfe abstained from discussion of his option
grants. Mr. New’s stock options will vest ratably over three years. Both sets of
options have a life of 7 years from the date of grant and a strike price of
$0.25 per share. Utilizing a Black-Scholes valuation model, at September 30,
2008, the Company recorded compensation expense of $0.10 per share or $10,000
for options granted to Mr. Wolfe and $4,444 for vested options of Mr. New.
For the quarter and year ended March 31, 2009, the Company recorded compensation
expense of $0.10 per share or $8,333 and $21,296, respectively, for vested
options of Mr. New.
24
On August
25, 2008, in consideration for activities that resulted in the successful joint
venture with Korlea-TOT, the Company issued 350,000 shares of restricted
TOT-Energy, Inc. common stock to Kaplan Capital, LLC. The stock provided for
services was valued based on the market price per share on date of issuance
($0.13 per share) and the Company recorded compensation expense of
$45,500.
On
November 1, 2008, the Company entered into a Letter Agreement with Olympus
Securities LLC (the “Agreement”). Under the Agreement, Olympus was appointed TOT
Energy’s exclusive financial advisor and investment banker (collectively, the
“Services”) for a period of seven (7) months. After expiration of this
initial term, the Agreement is to automatically continue on a month-to-month
basis, with each party having the right to terminate on thirty (30) days notice.
The Agreement included a fee of one thousand dollars ($1,000) per month in
return for the Services, except for the first month, where, instead of the
monthly fee, the Company granted five (5) year warrants to Olympus to purchase
one million (1,000,000) shares of the Company's common stock at
ten cents ($.10) per share. The warrants were valued at $149,999 and were to be
amortized over the seven-month term of the Agreement. The Agreement
contains other provisions relating to payments of cash, stock and warrants in
connection with any future financing or investment transaction completed through
Olympus. The Company has not yet paid a cash fee or provided the abovementioned
warrants to Olympus due to the failure by Olympus to provide meaningful
investment banking services until world financial markets stabilized.
Olympus has commenced providing strategic advice and other services to the
Company and we are currently negotiating an amendment to the Agreement that will
clarify payment and other terms, including issuance of securities, under the
Agreement. The Company has amortized four months of the warrant charge and
accrued this amount in the current period to reflect services
provided.
For the
quarter ended March 31, 2009, TGR was issued 10,697,250 shares of common stock
of the Company and fully vested warrants to purchase 5,348,625 shares of common
stock of the Company for $0.05 per share in exchange for funding of $213,945
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,390,643 was recorded for the quarter ending March 31,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value.
For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable. A
compensation charge of $8,827,218 was recorded for the fiscal year ended March
31, 2009. This amount is calculated as the difference between the market price
of our common stock at the end of each quarter in which shares were issued and
the subscription price of the common shares ($0.02) multiplied by the number of
shares issued, plus the Black-Scholes valuation of the warrants issued as
calculated at the end of each quarter.
At March
31, 2009, the Company had options to purchase 1,200,000 shares of common stock
outstanding under its stock option plan, of which options to purchase 412,963
shares of common stock are vested, with an exercise price of $0.25 per share and
with a remaining weighted average contractual term of 5.69 years. The Company
also had warrants to purchase 41,362,168 shares of common stock outstanding at
March 31, 2009 with a strike price of $0.05 per share and a remaining
contractual term of 4.74 years pursuant to the Subscription
Agreement.
25
NOTE 9.
STOCK OPTIONS AND STOCK GRANTS
For
fiscal 2008, options to purchase 100,000 shares of common stock were granted
under the Company’s stock option plan to a director as compensation as a member
of the board of directors.
For
fiscal 2009, options to purchase 1,100,000 shares of common stock were granted
under the Company’s stock option plan. Options to purchase 100,000 shares
were granted to a director as compensation as a member of the board of directors
and options to purchase 1,000,000 shares were granted to the Chief Financial
Officer as part of his incentive compensation. The options to purchase
1,000,000 shares vest monthly over three years and compensation charges for
these shares are amortized over the three year period. The following table
details the charges to income and assumptions used to derive these
charges:
ITEM
|
2008
|
2009
|
||||||
Charge
to income (compensation expense)
|
$
|
8,000
|
$
|
31,296
|
||||
Volatility
|
250
|
%
|
323
|
%
|
||||
Stock
price
|
$
|
0.08
|
$
|
0.12
|
||||
Strike
Price
|
$
|
0.25
|
$
|
0.25
|
||||
Option
life
|
5
years
|
7
years
|
||||||
Risk
free rate
|
5.0
|
%
|
3.5
|
%
|
||||
Vesting
|
100%
at grant
|
Options to purchase
100,000 shares are
vested 100% at grant
date. Options to
purchase 1,000,000
shares vest monthly
over 3 years
|
NOTE 10.
INCOME TAXES
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts of assets and liabilities used for income tax purposes. At
March 31, 2008 and 2009, the Company had cumulative federal net operating loss
carry forwards (NOL) of approximately $5.5 million and $5.5 million,
respectively. Of these amounts, $0 and approximately $640,000 relates to
our Russian subsidiary, TOT-SIBBNS for fiscal 2008 and 2009 respectively.
The Company estimates that 24% is the proper tax rate for the Russian foreign
loss and we estimate this loss will expire in 10 years (2019). The Company
has determined that the net operating loss may not be realized and a valuation
allowance has been recorded for the full amount of the tax loss
carryforward.
The
Company is deliquent in filing its federal tax returns for several years.
However, since the Company did not record profits, it owes no tax, but may be
subject to certain fines and penalties. The NOL expire beginning in December
2025. Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use
of any of the Company's net operation loss and credit carry forwards will be
limited.
The net
provision (benefit) for income taxes consisted of the following at March 31,
2008 and 2009:
2008
|
2009
|
|||||||
Current
Federal income taxes
|
$
|
-
|
$
|
-
|
||||
Deferred
income tax benefit
|
||||||||
Domestic
|
(215,000
|
)
|
(494,976
|
)
|
||||
Foreign
|
-
|
(153,632
|
)
|
|||||
Valuation
allowance
|
215,000
|
648,608
|
||||||
Total
income tax provision
|
$
|
-
|
$
|
-
|
26
Significant
components of the Company's deferred tax assets at March 31, 2008 and 2009 are
as follows:
2008
|
2009
|
|||||||
Net
operating loss carryforwards
|
$
|
1,930,000
|
$
|
2,758,608
|
||||
Accrued
compensation and other
|
180,000
|
509,090
|
||||||
2,110,000
|
3,267,698
|
|||||||
Valuation
allowance for deferred tax assets
|
(2,110,000
|
)
|
(3,267,698
|
)
|
||||
Net
deferred tax asset
|
$
|
-
|
$
|
-
|
Reconciliation
between actual income taxes and amounts at March 31, 2008 and 2009 computed by
applying the federal statutory rate of 34% to pre-tax loss is summarized as
follows:
2008
|
2009
|
|||||||
U.
S. Federal statutory rate on loss before income taxes
|
34.0
|
%
|
34.0
|
%
|
||||
Benefit
of lower foreign tax rates
|
0.0
|
%
|
-3.0
|
%
|
||||
State
income tax, net of federal tax benefit
|
3.6
|
%
|
3.6
|
%
|
||||
Increase
in valuation allowance
|
-37.6
|
%
|
-34.6
|
%
|
||||
Total
income tax provision
|
0.0
|
%
|
0.0
|
%
|
NOTE 11.
RELATED PARTY TRANSACTIONS
On August
7, 2008, the Company and TGR, which held 94% of the Company’s outstanding common
stock, entered into the Subscription Agreement described above pursuant to which
TGR has agreed to provide funding of up to $2,000,000 (the “Investment Amount”)
in exchange for up to 100,000,000 shares of the Company’s common stock and
warrants to purchase up to 50,000,000 shares of the Company’s common stock at an
exercise price of $0.05 per share. Pursuant to the Subscription Agreement, TGR
will fund the Investment Amount as required in the Company’s operational budget.
TGR’s obligation to fund the Investment Amount will be reduced by any future
third party funding or investments in the Company on terms no less favorable
than those contained in the Subscription Agreement.
For the
quarter ended March 31, 2009, TGR was issued 10,697,250 shares of common stock
of the Company and fully vested warrants to purchase 5,348,625 shares of common
stock of the Company for $0.05 per share in exchange for funding of $213,945
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,390,643 was recorded for the quarter ending March 31,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value.
For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable. A
compensation charge of $8,827,218 was recorded for the fiscal year ended March
31, 2009. This amount is calculated as the difference between the market price
of our common stock at the end of each quarter in which shares were issued and
the subscription price of the common shares ($0.02) multiplied by the number of
shares issued, plus the Black-Scholes valuation of the warrants issued as
calculated at the end of each quarter.
NOTE 12.
DEBT DUE TO RELATED PARTIES
During
the quarter ended December 31, 2008, using the proceeds from the Subscription
Agreement described above, the Company repaid $637,410 in related party
loans. As of March 31, 2009, the Company had no outstanding related party
obligations.
27
NOTE 13.
TGR RESTRUCTURING
In
December 2007, a related party structured a transaction that provided funds to
the Company to settle its existing debts at a discount to the face amount of the
obligations, restructured certain notes payable which was exchanged for newly
issued common shares of the Company, and gave TGR substantial majority of the
outstanding common shares (see Note 8 for more information).
NOTE 14.
SUBSEQUENT EVENTS
Up until
May 15, 2009, Mr. New’s base salary was $140,000 with a $30,000 bonus payable
quarterly for meeting agreed upon objectives. On May 15, 2009, Mr. New’s
base salary was reduced from $140,000 to 91,000 and his bonus was reduced from
$30,000 to $19,500 annually.
To
partially offset the reduction in salary, the Company provided Mr. New with
25,000 shares of fully vested common stock in lieu of his March 31, 2009 cash
bonus and 200,000 shares of common stock which vest monthly from April 1, 2009
to September 30, 2009. A compensation charge of $11,000 will be recorded
in the first quarter of fiscal 2010 (June 30, 2009) and a compensation charge of
$11,000 will be recorded in the second quarter of 2010 (September 30, 2009)
which reflects the market value per share ($0.11) on the first trading day after
the date of grant.
Other
employees (other than officers and directors) receiving salary reductions were
granted a total of 50,000 shares of common stock vesting monthly between April
1, 2009 and September 30, 2009. The Company expects to record compensation
expense of $2,582 in the first quarter of fiscal 2010 and $1,375 in the second
quarter of 2010 to reflect the market value of stock provided in lieu of cash
compensation. Both of these charges were calculated using the price per
share of common stock ($0.11) on the first trade after the date of
grant.
On April
2, 2009, TOT-SIBBNS determined there would be no further oil drilling operations
under its existing contract for the current drilling season. TOT-SIBBNS has
furloughed most employees (114 field and professional positions) until further
notice. It is uncertain when or if drilling services under the existing contract
will recommence. The contract for drilling services was temporarily suspended in
January 2009 due to the inability of the customer to obtain necessary
funding. TOT-SIBBNS’ equipment remains on-site and is expected to remain
on-site through the summer.
TOT-SIBBNS
has incurred costs during the fourth quarter ended March 31, 2009 to secure its
equipment on the job site and prepare for recommencement of drilling operations
in the event the customer obtains the necessary financing to maintain the oil
field license required to conduct operations.
The oil
production business in Russia is seasonal and cyclical and is currently
experiencing a down cycle in large part due to the recently lower prices
relating to the sales price for a barrel of crude oil. While we are hopeful that
drilling service demand will increase when the price of oil increases and/or the
Russian government adjusts drilling license regulations and fee structures, we
can provide no assurance that this will be the case. We may not know whether our
drilling operations will be able to recommence with our existing customer or
other customers until the end of 2009.
The
Company entered into a Sponsorship Agreement with American Speed Factory dated
April 22, 2009, whereby the Company would receive certain promotional services
and sponsorship rights to display the Company’s logo in connection with the 2009
Ferrari Challenge racing season in exchange for the issuance of 500,000 shares
of restricted stock of the Company. This arrangement is valued at $55,000,
which will be recorded as an advertising expense in the first quarter financial
results.
28
Item
9. Changes and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
Item
9A(T). Controls and Procedures
Our
disclosure controls and procedures are designed to provide reasonable assurance
that information required to be disclosed in our reports filed or submitted
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms, and
that such information is accumulated and communicated to our management,
including our chief executive officer and chief financial officer, as
appropriate, to allow for timely decisions regarding required disclosure . In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
As of
March 31, 2009, we continue to develop our core activities and focus our
resources on the acquisition of assets in the energy sector. Our disclosure
controls and procedures are currently not effective because there are a limited
number of personnel employed and we cannot have an adequate segregation of
duties, and due to material weaknesses in internal control over financial
reporting as discussed below. Accordingly, management cannot provide reasonable
assurance of achieving the desired control objectives. Management works to
mitigate these risks by being personally involved in all substantive
transactions and attempts to obtain verification of transactions and accounting
policies and treatments involving our overseas operations. We are in the process
of reviewing and, where necessary, modifying controls and procedures throughout
the Company. We expect this process to continue through 2010.
Management’s
Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) under the Securities Exchange
Act of 1934, as amended. Internal control over financial reporting is designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles in the United States of America
(“GAAP”). We recognize that because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may
deteriorate.
Management
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of March 31, 2009. Our management’s evaluation
of our internal control was based on the framework in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the “COSO Framework”). Based on this evaluation
under the COSO Framework, our management concluded that our internal control
over financial reporting was not effective as of March 31, 2009.
Management
is aware of the following material weaknesses (a material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the Company's annual or interim financial statements will not be
prevented or detected on a timely basis) in our internal control over financial
reporting:
Control
Environment
·
|
Inadequate
Written Policies and Procedures: Based on our management’s review of key
accounting policies and procedures, our management determined that such
policies and procedures were inadequate as of March 31, 2009. Management
identified certain policies and procedures as inadequate and others as
lacking in appropriate documentation. Management is in the process of
enhancing existing policies and procedures and preparing formal written
documentation as appropriate.
|
·
|
Segregation
of Duties: We did not maintain adequate segregation of duties related to
job responsibilities for initiating, authorizing, and recording of certain
transactions as of March 31, 2009. Although we believe that we have
established appropriate transaction approval criteria, we do not have
sufficient personnel to provide an independent review of journal entries,
account analyses, monitoring or adequate risk assessment functions. Due to
this material weakness, there is a reasonable possibility that a material
misstatement in the financial statements would not be prevented or
detected on a timely basis. The Company has attempted to mitigate certain
of these risks by enhancing management’s oversight of various procedures
for initiating, authorizing, and recording of various transactions and
establishing more formal and rigorous written guidelines, policies and
procedures. However, additional measures and personnel are required
primarily with respect to our overseas
operations.
|
·
|
Board
of Directors and Audit Committee: We did not have a functioning
audit committee as of March 31, 2009 due to the lack of a sufficient
number of independent members on our board of directors and that no member
qualifies as a “financial expert” as defined by regulations of the SEC.
Our entire board of directors acted in place of an audit committee.
However, since we do not have a financial expert on our board, the
oversight and monitoring of internal controls and procedures are not
effective.
|
29
Control
Activities
·
|
Testing
of Internal Controls: We have identified deficiencies in our testing of
internal controls within our key business processes, particularly with
respect to our overseas operations. This was primarily due to insufficient
financial and personnel resources during fiscal
2009. Management believes there are control procedures that are
effective in design and implementation within our key business processes.
However, certain of these processes were not formally tested or adequately
documented.
|
Information
and Communication
·
|
Timeliness
and Adequacy of Financial Reporting Disclosures: Our Chief Executive
Officer and our Chief Financial Officer concluded that the Company's
controls were not effective as of March 31, 2009 due to inherent
weaknesses present in the preparation of financial statements and related
disclosures as a result of the limited financial personnel, information
technology infrastructure and other resources. However, management
believes that given the size and scope of the Company’s business that all
material information was communicated to management within a
time-frame that was adequate for management to make informed business and
reporting decisions.
|
Monitoring
·
|
Internal
Control Monitoring: As a result of the lack of financial and personnel
resources, management’s ability to monitor the design and operating
effectiveness of internal controls is limited. Accordingly,
management’s ability to timely detect, prevent and remediate deficiencies
and potential fraud risks is
inadequate.
|
Management
intends to focus its remediation efforts in the near term on developing
additional formal policies and procedures surrounding transaction processing,
period-end account analyses and providing for additional review and monitoring
procedures and periodically assess the need for additional accounting resources
as the business develops and resources permit. Management also intends to
formally evaluate and test the effectiveness of our disclosure controls and
procedures and our internal control over financial reporting on an ongoing basis
and is committed to taking further action and implementing enhancements or
improvements as resources permit. Additionally, the Company intends to appoint a
financial expert and additional independent members to the board of directors as
soon as such persons can be identified and incentivized to join the
Company.
Notwithstanding
the material weaknesses discussed above, our management has concluded that the
financial statements included in this Annual Report on Form 10-K fairly present
in all material respects our financial condition, results of operations and cash
flows for the periods presented in conformity with generally accepted accounting
principles.
Attestation
Report of the Independent Registered Public Accounting Firm
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
Other
than as described above, there were no changes in internal controls over
financial reporting that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item
9B. Other Information
None.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
The
names, ages and offices held of all of the Company’s directors and executive
officers are set forth in the table below:
Name
|
Age
|
Position
|
Year
Appointed
|
|||
Mike
Zoi
|
42
|
CEO,
Director
|
2007
|
|||
Curtis
Wolfe
|
45
|
Secretary,
Director
|
2007
|
|||
Stuart
Murdoch
|
42
|
Director
|
2008
|
|||
Jonathan
New
|
49
|
Chief
Financial Officer
|
2008
|
Each of
our directors will hold office until our next annual meeting of stockholders at
which directors are elected or until his successor is duly elected and
qualified.
Mr.
Zoi has been the CEO and a Director of the Company since 2007. Mr. Zoi has also
been a director and president
of Ener1 Group since
2001, a privately held investment firm which he co-founded in 2001. Mr. Zoi
indirectly holds a minority interest in Ener1 Group. Ener1 Group
owns approximately 52% of Ener1, Inc., a public company engaged primarily in the
business of designing, developing and manufacturing high-performance,
rechargeable, lithium-ion batteries and battery systems for energy
storage. Mr.
Zoi served as a Director of Ener1, Inc. (NASDAQ: HEV) from February
2002 to August
2008 and a vice
president from February 2007 to August 2008. Since 2007, Mr. Zoi has been
the managing member of TGR Energy LLC, a Florida investment company, which owns
approximately 94% of the Company. Mr. Zoi is responsible for strategy and
directly manages all senior executives of the Company. Mr. Zoi also directs all
merger and acquisition activities of the Company. His expertise includes
strategic development, branding, corporate alliances, corporate websites and
investor relations. Earlier in his career, Mr. Zoi worked in various capacities
relating to international finance and business development.
30
Mr. Wolfe
has been a director of TOT Energy, Inc. since 2004 except for the period
beginning August 31, 2007 and ending December 18, 2007. Mr. Wolfe served as
Chief Operating Officer, Executive Vice President and General Counsel of Ener1
Group, Inc., the largest shareholder of alternative energy company Ener1, Inc.,
from 2004 to 2007. Prior to his involvement with Ener1 Group, he was
a partner in an international law firm based in Miami where he focused on
mergers and acquisitions, start-up company financing, franchising and
intellectual property. His experience also includes equity and debt offerings
and compliance with reporting requirements for publicly traded companies. Since
2007, Mr. Wolfe has been the president of a private business consulting company,
Lobos Advisors, assisting start-up businesses in defining their business
objectives, strategic goals, and expanding business
opportunities. Mr. Wolfe is the founder of WCIS Media, LLC, a company
that launched www.whocanisue.com, an online legal portal where he served as an
executive officer from 2007 until 2009. Mr. Wolfe continues to serve
as a director of WCIS Media. Mr. Wolfe served 11 years in the United States Air
Force from 1981 to 1992. Mr. Wolfe has a BIS in English, Mathematics and Latin
American Studies from Weber State University and a JD from the University of
Iowa College of Law, where he graduated with distinction. He is also a
screenwriter and author.
On February
8, 2008, the Board of Directors named Stuart Spence Murdoch to the Board of
Directors effective February 15, 2008. Mr. Murdoch is a British citizen and
resident who is presently a Partner and CEO of Ceema Capital LLP,
a London-based FSA regulated Investment Advisory Firm. Prior
to his involvement with Ceema Capital LLP, Mr. Murdoch was director of
local market foreign exchange and interest rate trading at ABM Amro from 2004 to
2007. Prior to his employment with ABM Amro, Mr. Murdoch worked for AIG
International (UK) Limited as director of foreign exchange and forward contracts
for emerging market currencies from 2002 to 2003. Prior thereto, Mr. Murdoch
held various senior investment management and financial analyst
positions at Bank of America International (London), Goldman Sachs,
Barclays Capital and Chase Manhattan Bank. Mr. Murdoch is a graduate
of Exeter University in England.
On March
10, 2008, Jonathan New joined TOT Energy as Chief Financial
Officer. Mr. New served as Chief Operating Officer of Ener1, Inc.
from 2001 to 2003. From 2004 to 2006, Mr New owned and operated Wholesale Salon
Furniture Corp.com. The Florida company imported and distributed
salon equipment. The business was sold in
2006. Thereafter, until joining the Company, Mr. New provided counsel
to public companies on a variety of corporate accounting, reporting and audit
related issues. Prior to joining Ener1 in 2001, Mr. New held controller and
chief financial officer positions with companies including Haagen-Dazs, RAI
Credit Corporation and Prudential of Florida. Mr. New obtained his BS in
Accounting from Florida State University and began his career with Accenture. He
is a member of the Florida Institute of Certified Public Accountants and the
American Institute of Certified Public Accountants.
Board
composition
Effective
February 2008, our board of directors consisted of three members. The number of
directors may change from time to time, as determined by resolution adopted by a
majority of the board of directors. Our by-laws require a minimum of one
director and allow a maximum of nine directors.
Currently,
there is no one serving on the board who is a “financial expert” or
“independent” under the Commission’s standards (Rule 10A-3 of the Exchange Act)
as the Company’s limited financial resources are not adequate to attract and
retain qualified candidates.
Committees
of the board of directors
In
December 2004, our board of directors established a Nominating and Compensation
Committee and an Audit Committee. Currently, there are no members of
these committees, which did not meet during fiscal 2009.
Audit
Committee
Our audit
committee’s main function is to oversee our accounting and financial reporting
processes, internal systems of control, independent auditor relationships and
the audits of our financial statements. This committee’s responsibilities
include:
|
·
|
Selecting and hiring our
independent auditors.
|
|
·
|
Evaluating the qualifications,
independence and performance of our independent
auditors.
|
|
·
|
Approving the audit and non-audit
services to be performed by our independent
auditors.
|
|
·
|
Reviewing the design,
implementation, adequacy and effectiveness of our internal controls and
our critical accounting
policies.
|
|
·
|
Overseeing and monitoring the
integrity of our financial statements and our compliance with legal and
regulatory requirements as they relate to financial statements or
accounting matters.
|
|
·
|
Reviewing with management and our
auditors any earnings announcements and other public announcements
regarding our results of
operations.
|
31
|
·
|
Preparing the audit committee
report we are required to include in filings with the
Commission.
|
Currently,
the entire board of directors is serving as the audit committee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors, executive officers and holders of more than 10% of our outstanding
common stock to file with the Securities and Exchange Commission reports
regarding their ownership and changes in ownership of the common stock. Based
solely upon a review of copies of forms furnished to our Company, the following
officers and directors and holders of more than 10% of our common stock did not
timely filed the statement of changes in beneficial ownership on Form 4 or the
statement of beneficial ownership on Form 3 pursuant to Section 16(a) during
fiscal 2009 or before as follows:
Mike Zoi:
Initial Statement of Beneficial Ownership of Securities on Form 3 due 12/27/07
filed 3/12/09.
Curtis
Wolfe: Initial Statement of Beneficial Ownership of Securities on Form 3 due
8/23/08 filed 3/12/09.
Stuart
Murdoch: Initial Statement of Beneficial Ownership of Securities on Form 3 due
2/18/08 filed 3/12/09.
Jonathan
New: Initial Statement of Beneficial Ownership of Securities on Form 3 due
8/23/08 filed 3/12/09.
Code
of Ethics
We have a
Code of Ethics that applies to our officers and directors. The code provides
written standards that are reasonably designed to deter wrongdoing and promote:
(1) honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interests between personal and professional relationships;
(2) full, fair, accurate, timely and understandable disclosure in reports and
documents that we file with or submit to the SEC or in other public
communications we make; (3) compliance with applicable laws, rules and
regulations; (4) prompt reporting of internal violations of the code; and (5)
accountability for the adherence to the code. Our Code of Ethics can be found on
our Company website at http://totenergy.com/company.php?n=codeofethics
. We will provide a copy of our Code of Ethics to any person without
charge, upon written request to the Company.
Item
11. Executive Compensation
The
following table sets forth all compensation awarded, earned or paid by us for
services rendered in all capacities to us for fiscal 2009 to our Chief Executive
Officer and President and our other executive officers who earn more than
$100,000 annually in salary and bonus. We refer to these individuals as the
“named executive officers.”
32
Summary
Compensation Table
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards
($)
|
Option
Awards ($)
|
All Other
Compen-
sation ($)
|
Total ($)
|
|||||||||||||||||||
Mike
Zoi, Chief Executive Officer
|
2009
|
$
|
59,391
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
59,391
|
|||||||||||||
2008
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Jonathan
New, Chief Financial Officer
|
2009
|
$
|
140,000
|
$
|
20,426
|
$
|
-
|
$
|
21,296
|
$
|
-
|
$
|
181,722
|
|||||||||||||
2008
|
$
|
8,167
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
8,167
|
||||||||||||||
Curtis
Wolfe, Executive Vice President, General Counsel (Resigned
09/30/08)
|
2009
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
10,000
|
$
|
60,500
|
$
|
70,500
|
|||||||||||||
2008
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
15,000
|
$
|
15,000
|
Mike Zoi
became Chief Executive Officer on December 17, 2008 effective with his purchase
of member interests in Splinex, LLC. For fiscal 2009, Mr. Zoi was
entitled to receive a salary of $350,000, the majority of which has been
deferred at Mr. Zoi’s election. Mr. Zoi’s salary deferral is payable on demand
and does not accrue interest.
Jonathan
New joined us on March 10, 2008. Up until May 15, 2009, Mr. New’s
base salary was $140,000 with a $30,000 bonus payable quarterly for meeting
agreed upon objectives. On May 15, 2009, Mr. New’s base salary was reduced
from $140,000 to 91,000 and his bonus was reduced from $30,000 to $19,500
annually. To partially offset the reduction in salary, the Company provided Mr.
New with 25,000 shares of fully vested common stock in lieu of his March 31,
2009 cash bonus and 200,000 shares of common stock which vest monthly from April
1, 2009 to September 30, 2009. A compensation charge of $11,000 will be
recorded in the first quarter of fiscal 2010 (June 30, 2009) and a compensation
charge of $11,000 will be recorded in the second quarter of 2010 (September 30,
2009) which reflects the market value per share ($0.11) on the first trading day
after the date of grant. Mr. New also participates in the Company’s equity
incentive compensation plan.
Curtis
Wolfe serves as Secretary and a Director of the Company. Mr.
Wolfe served as Executive Vice President and General Counsel of the
Company from December 17, 2007 to September 30, 2008. Mr. Wolfe has
received no compensation during fiscal 2008 from the Company due to the limited
financial resources of the Company. However, although there were no formal
agreements in place, Mr. Wolfe was compensated by Ener1 Group, Inc., a company
controlled by Mike Zoi, in fiscal 2008 for services provided to the
Company. For fiscal 2009, Mr. Wolfe received an aggregate of $60,500
for legal services provided to the Company and this amount was expensed to legal
fees in the combined statement of operations. Mr. Wolfe also participates in the
Company’s equity incentive compensation plan.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2009
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option Expiration
Date
|
||||||||||||
Stuart
Murdoch
|
100,000
|
-
|
-
|
$
|
0.25
|
February
7, 2013
|
|||||||||||
Curtis
Wolfe
|
100,000
|
-
|
-
|
$
|
0.25
|
July
8, 2015
|
|||||||||||
Jonathan
New
|
212,963
|
787,037
|
787,037
|
$
|
0.25
|
July
8,
2015
|
33
On August
13, 2008, the Board of Directors approved (i) the issuance of fully vested
options to purchase 100,000 shares of common stock to Curtis Wolfe for his
services as a board member and (ii) the issuance of options to purchase
1,000,000 shares of common stock to Jonathan New for his services as Chief
Financial Officer. Mr. New’s stock options will vest ratably over three years.
Both sets of options will have a term of 7 years from date of grant and a strike
price of $0.25 per share.
2009
DIRECTOR COMPENSATION
Director
Compensation Table
Board Member
|
Fees
Earned or
Paid in
Cash ($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compen-
sation ($)
|
Total ($)
|
|||||||||||||||||||||
Mike
Zoi
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Stuart Murdoch
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||
Curtis
Wolfe
|
$
|
-
|
$
|
-
|
$
|
10,000
|
$
|
-
|
$
|
-
|
$
|
60,500
|
$
|
70,500
|
Mr. Wolfe
has received no compensation for 2008 from TOT Energy. However, Mr. Wolfe was
compensated by Ener1 Group, Inc. in 2008 (through August 31, 2007) for services
provided to TOT Energy. Between December 17, 2007 and March 31, 2008, Mr. Wolfe
was paid $60,000 for services provided to TOT Energy by related companies
controlled by Mike Zoi. For fiscal 2009, Mr. Wolfe received an aggregate
of $60,500 for legal services provided to the Company.
During
fiscal 2009, Curtis Wolfe received options to purchase up to 100,000 shares of
company stock with a strike price of $0.25. These options vested
immediately upon grant. The Company has valued these options at $10,000. Mr.
Wolfe’s options were granted on August 13, 2008 and have a life of seven (7)
years from date of grant.
On
February 6, 2008, the Board of Directors approved the issuance of fully vested
options to purchase 100,000 shares of common stock to Stuart Murdoch for his
services as a board member. The options have a term of five years from the date
of grant and a strike price of $0.25 per share.
Employment
Agreements
None.
See Executive Compensation above.
34
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
The table
below contains information as of March 31, 2009 about stockholders whom we
believe are the beneficial owners of more than five percent (5%) of our
outstanding common stock, as well as information regarding stock ownership by
our directors and our Chief Executive Officer, our named executive officers, and
our directors and named executive officers as a group. Except as described
below, we know of no person that beneficially owns more than 5% of our
outstanding common stock. As of March 31, 2009 there were 300,583,108 shares of
common stock outstanding. We believe, based on information supplied by the
following persons that, except as noted, the persons named in this table have
sole voting and investment power with respect to all shares of common stock
which they beneficially own. The amount and percentage of common stock
beneficially owned are reported on the basis of regulations of the SEC governing
the determination of beneficial ownership of securities. Under the rules of the
SEC, a person is deemed to be a “beneficial owner” of a security if that person
has or shares “voting power,” which includes the power to vote or to direct the
voting of such security, or “investment power,” which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. The address of each
person or entity named in the following table is c/o TOT Energy, Inc., 12100 NE
16 Avenue, Suite 210, North Miami, FL 33161.
Name and Address of Beneficial Owner
|
Amount and
Nature of
Beneficial
owner
(number of
common
shares)
|
Percent of
Class
|
||||||
Mike
Zoi (1)
|
325,357,006
|
95.1
|
%
|
|||||
Stuart
Murdoch (2)
|
100,000
|
*
|
||||||
Curtis
Wolfe (3)
|
100,000
|
*
|
||||||
Jonathan
New (4)
|
212,963
|
*
|
||||||
Directors
and named exec. Officers as as group
|
325,769,969
|
95.1
|
%
|
* Less
than one percent (1%)
(1)
|
Includes 283,989,084 shares of
common stock and warrants to purchase 41,362,168 shares of common stock
that are held by TGR over which Mr. Zoi has dispositive and voting
power
|
(2)
|
Reflects shares underlying the
grant of stock options expiring on February 5, 2013 and a strike price of
$0.25 per share.
|
(3)
|
Reflects shares underlying the
grant of stock options expiring on August 12, 2013 and a strike price of
$0.25 per share.
|
(4)
|
Reflects shares underlying stock
options that are currently exercisable. Stock options to purchase
1,000,000 shares of common stock were granted on August 13, 2008 and vest
ratably over 36 months from the date of grant. These options expire
on August 13, 2013 and have a strike price of $0.25. Does not include
grant of common stock subsequent to March 31,
2009.
|
Equity Compensation Plan Information
|
||||||||||||
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
|
Weighted-
aver age exercise
pric e of
outstanding
options, warrants
and rights
|
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a))
|
||||||||||
Plan category
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
1,200,000
|
$
|
0.25
|
3,975,000
|
35
Item
13. Certain Relationships and Related Transactions, and Director
Independence
Certain
Relationships and Related Transactions
On
December 17, 2007, (1) certain holders, who had received shares in the Company
as distributions from Splinex LLC, transferred their ownership of 35,162,334
shares of common stock of the Company to Splinex LLC for nominal consideration,
and (2) Bzinfin, S.A., a British Virgin Islands limited corporation that is
indirectly owned by an affiliate of Ener1 Group, Inc., a Florida company of
which Mike Zoi is a shareholder and director and which is the majority
shareholder of Ener1, Inc., and Ener1 Group assigned debt obligations of the
Company to Splinex LLC in the amount of $2,805,207 and $845,864, respectively.
Under a Purchase Agreement dated December 17, 2007, TGR Capital, LLC (which
changed its name to Enerfund, LLC in September 2008), a Florida limited
liability company (“Enerfund”), which is wholly-owned by Mike Zoi, acquired all
of the membership interests in Splinex LLC, thereby giving Enerfund control of
Splinex LLC.
Under an
Exchange Agreement dated December 18, 2007, the Company agreed to issue
113,500,000 newly issued shares of the Company to Splinex LLC of which 8,500,000
shares were issued to Bzinfin and 2,125,000 were issued to a former affiliate of
Splinex, LLC. Splinex LLC owned 98,157,334 shares of the Company as of December
17, 2007 and an aggregate of 201,032,334 shares after the completion of the
Exchange Agreement on December 18, 2007. The Company had 100,757,769 shares
outstanding at December 17, 2007 and 214,257,769 shares outstanding after the
completion of the Exchange Agreement. In June 2008, Splinex, LLC changed its
name to TGR Energy, LLC (“TGR”).
On August
7, 2008, the Company and TGR, which held 94% of the Company’s outstanding common
stock, entered into the Subscription Agreement described above pursuant to which
TGR has agreed to provide funding of up to $2,000,000 (the “Investment Amount”)
in exchange for up to 100,000,000 shares of the Company’s common stock and
warrants to purchase up to 50,000,000 shares of the Company’s common stock at an
exercise price of $0.05 per share. Pursuant to the Subscription Agreement, TGR
will fund the Investment Amount as required in the Company’s operational budget.
TGR’s obligation to fund the Investment Amount will be reduced by any future
third party funding or investments in the Company on terms no less favorable
than those contained in the Subscription Agreement.
For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable to a related
party. A compensation charge of $8,827,218 was recorded for the fiscal
year ended March 31, 2009. This amount is calculated as the difference between
the market price of our common stock at the end of each quarter in which shares
were issued and the subscription price of the common shares ($0.02) multiplied
by the number of shares issued, plus the Black-Scholes valuation of the warrants
issued as calculated at the end of each quarter.
Director
Independence
Currently,
there is no one serving on the board or any committee thereof who is a
“financial expert” or “independent” under the Commission’s standards (Rule 10A-3
of the Exchange Act) as the Company’s limited financial resources are not
adequate to attract and retain qualified candidates. For more information
regarding the Board and committees thereof, see “Item 10. Directors, Executive
Officers and Corporate Governance” of this Report.
36
Board
meetings and committees; annual meeting attendance
During
fiscal 2009, the board held six meetings by telephonic conference or unanimous
written consent in lieu of a meeting that were attended or signed by all board
members, except that Mr. Zoi did not participate in a meeting held on August 7,
2009 relating to approval of the Subscription Agreement due to a conflict of
interest.
The
Company does not have a formal policy regarding attendance by directors at
annual meetings of security holders. However, if any board members do attend the
annual meeting of security holders, their expenses will be
reimbursed.
Shareholder
communications
The
Company does not have a formal process for shareholders to send communications
directly to the board, which given the Company’s financial situation and limited
resources, the board deems appropriate at this time.
Item
14. Principal Accounting Fees and Services
Audit
Fees. The aggregate fees, including expenses, billed by our current
principal accountants in connection with the audit of our annual financial
statements and review of regulatory filings including the financial statements
included in our Annual and Quarterly Reports on Forms 10-Kand 10-Q was $113,063
for fiscal 2009 and $57,499 for fiscal 2008.
Audit
Related Fees. The aggregate fees, including expenses, billed by our
current principal accountants for services reasonably related to the performance
of the audit or review of financial statements not reported under “Audit Fees”
above for the years ended March 31, 2009 and 2008 were $0.
Tax
Fees. The aggregate fees, including expenses, billed by our former and
current principal accountants for services rendered for tax compliance, tax
advice, and tax planning during the fiscal years ended March 31, 2009 and 2008
were $0.
All Other
Fees. The aggregate fees, including expenses, billed for all other
services rendered to us by our current principal accountants during fiscal 2009
and 2008 were $0.
Audit
Committee Pre-Approval Policy
Our Audit
Committee’s responsibilities (which in our case is the full Board of Directors)
include selecting and hiring our independent auditors and approving the audit
and non-audit services to be performed by our independent auditors. The Audit
Committee’s policy is that all audit and non-audit services provided by our
independent auditor shall be approved before the independent auditor is engaged
for the particular services. These services may include audit services and
permissible audit-related services, tax services and other services. The Audit
Committee may in the future establish pre-approval procedures pursuant to which
our independent auditor may provide certain audit and non-audit services to us
without first obtaining the Audit Committee's approval. All fees paid to the
independent auditors in fiscal 200 9 were pre-approved by the Audit Committee
(which in our case is the full Board of Directors) , and therefore no
services were approved after the services were rendered .
37
PART
IV
Item
15. Exhibits, Financial Statement Schedules
Exhibit
Number
|
Description
|
|
2.1
|
Agreement
and Plan of Merger among Ener1 Acquisition Corp., Registrant and Ener1,
Inc., dated as of June 9, 2004, incorporated herein by reference to
Exhibit 2.1 to Splinex’s Registration Statement on Form S-1 filed with the
Commission on June 24, 2004 (Registration No.
333-116817)
|
|
2.2
|
First
Amendment to Agreement and Plan of Merger among Ener1 Acquisition Corp.,
Registrant and Ener1, Inc., dated as of October 13, 2004,
incorporated herein by reference to Exhibit 2.2 to Amendment No, 1 to
Splinex’s Registration Statement on Form S-1 filed with the Commission on
October 15, 2004 (Registration No. 333-116817)
|
|
2.3
|
Second
Amendment to Agreement and Plan of Merger among Ener1 Acquisition Corp.,
Splinex and Ener1, Inc., dated as of December 23, 2004, incorporated
herein by reference to Exhibit 2.3 to Amendment No. 3 to Splinex’s
Registration Statement on Form S-1 filed with the Commission on December
27, 2004 (Registration No. 333-116817)
|
|
3.1
|
Certificate
of Incorporation of Splinex, incorporated herein by reference to Exhibit
3.1 to Splinex’s Registration Statement on Form S-1 filed with the
Commission on June 24, 2004 (Registration No.
333-116817)
|
|
3.2
|
Certificate
of Merger of Splinex, incorporated herein by reference to Exhibit 3.2 to
Amendment No. 3 to Splinex’s Registration Statement on Form S-1 filed with
the Commission on December 27, 2004 (Registration No.
333-116817)
|
|
3.3
|
Bylaws
of Splinex, incorporated herein by reference to Exhibit 3.3 to Splinex’s
Registration Statement on Form S-1 filed with the Commission on June 24,
2004 (Registration No. 333-116817)
|
|
3.4
|
Certificate
of Amendment of Articles of Incorporation, incorporated herein by
reference to Appendix A to Schedule 14C filed with the Commission on
February 11, 2009.
|
|
10.1
|
Bridge
Loan Agreement between Registrant and Ener1 Group, Inc. dated November 2,
2004 incorporated herein by reference to Exhibit 10.13 to Amendment No. 2
to Splinex’s Registration Statement on Form S-1 filed with the Commission
on December 3, 2004 (Registration No. 333-116817)
|
|
3.4
|
Certificate
of Amendment of Articles of Incorporation herin filed by reference to
Appendix A to Schedule 14C filed with the Commission on February 11,
2009.
|
|
10.1
|
Bridge
Loan Agreement between Registrant and Ener1 Group, Inc. dated November 2,
2004 incorporated herein by reference to Exhibit 10.13 to Amendment No. 2
to Splinex’s Registration Statement on Form S-1 filed with the Commission
on December 3, 2004 (Registration No. 333-116817)
|
|
10.2
|
Amendment
to Bridge Loan Agreement between Registrant and Ener1 Group, Inc. dated
November 17, 2004 incorporated herein by reference to Exhibit 10.14 to
Amendment No. 2 to Splinex’s Registration Statement on Form S-1 filed with
the Commission on December 3, 2004 (Registration No.
333-116817)
|
|
10.3
|
Employment
Agreement between Christian Schormann and Splinex dated January 12, 2005,
incorporated herein by reference to Exhibit 10.15 of the Current Report on
Form 8-K filed with the Commission on January 25,
2005.
|
38
10.4
|
Revolving
Debt Funding Commitment Agreement between Bzinfin, S.A. and Registrant,
dated as of June 9, 2004, incorporated herein by reference to Exhibit
10.1 to Splinex’s Registration Statement on Form S-1 filed with the
Commission on June 24, 2004 (Registration No.
333-116817)
|
|
10.5
|
2004
Stock Option Plan of Registrant, incorporated herein by reference to
Exhibit 10.2 to Splinex’s Registration Statement on Form S-1 filed with
the Commission on June 24, 2004 (Registration No.
333-116817)
|
|
10.6
|
Form of
Stock Option Agreement of Registrant, incorporated herein by reference to
Exhibit 10.3 to Splinex’s Registration Statement on Form S-1 filed with
the Commission on June 24, 2004 (Registration No.
333-116817)
|
|
10.7
|
Sublease
Agreement between Ener1 Group, Inc. and Splinex, LLC, dated as of
November 1, 2003, assigned to Registrant as of April 1, 2004,
incorporated herein by reference to Exhibit 10.4 to Splinex’s Registration
Statement on Form S-1 filed with the Commission on June 24, 2004
(Registration No. 333-116817)
|
|
10.8
|
Contribution
Agreement between Splinex, LLC and Registrant, dated as of April 1,
2004, incorporated herein by reference to Exhibit 10.5 to Splinex’s
Registration Statement on Form S-1 filed with the Commission on June 24,
2004 (Registration No. 333-116817)
|
|
10.9
|
Assignment
and Assumption of Employment Agreements between Splinex, LLC and
Registrant, dated as of April 1, 2004, incorporated herein by
reference to Exhibit 10.6 to Splinex’s Registration Statement on Form S-1
filed with the Commission on June 24, 2004 (Registration No.
333-116817)
|
|
10.10
|
Global
Bill of Sale and Assignment and Assumption Agreement between Splinex, LLC
and Registrant, dated as of April 1, 2004, incorporated herein by
reference to Exhibit 10.7 to Splinex’s Registration Statement on Form S-1
filed with the Commission on June 24, 2004 (Registration No.
333-116817)
|
|
10.11
|
Employment
letter between Gerard Herlihy and Registrant, dated May 20, 2004,
incorporated herein by reference to Exhibit 10.8 to Splinex’s Registration
Statement on Form S-1 filed with the Commission on June 24, 2004
(Registration No. 333-116817)
|
|
10.12
|
Consulting
Agreement between Dr. Peter Novak and Registrant, dated
January 1, 2004, incorporated herein by reference to Exhibit 10.9 to
Splinex’s Registration Statement on Form S-1 filed with the Commission on
June 24, 2004 (Registration No. 333-116817)
|
|
10.13
|
Form
of Employee Innovations and Proprietary Rights Assignment Agreement,
incorporated herein by reference to Exhibit 10.10 to Splinex’s
Registration Statement on Form S-1 filed with the Commission on June 24,
2004 (Registration No. 333-116817)
|
|
10.14
|
Form
of Indemnification Agreement, incorporated herein by reference to Exhibit
10.11 to Amendment No. 3 to Splinex’s Registration Statement on Form S-1
filed with the Commission on December 27, 2004 (Registration No.
333-116817)
|
39
10.15
|
Employment
Agreement between Michael Stojda and Registrant, dated September 1,
2004, incorporated herein by reference to Exhibit 10.12 to Amendment No. 1
to Splinex’s Registration Statement on Form S-1 filed with the Commission
on October 15, 2004 (Registration No. 333-116817)
|
|
10.16
|
Reseller
Agreement between Waterloo Maple Inc. and TOT Energy, Inc. dated May 27,
2005., incorporated herein by reference to Exhibit 10.1 to Splinex’s
Current Report on Form 8-K, filed with the Commission on June 3,
2005
|
|
10.17
|
Severance
Agreement dated November 21, 2005 by and between Splinex and Michael
Stojda, incorporated by reference to Exhibit 10.1 to Splinex’s Current
Report on Form 8-K, filed with the Commission on November 21,
2005
|
|
10.18
|
Termination
Agreement dated October 17, 2005 by and between Splinex and Christian
Schormann, incorporated by reference to Exhibit 10.2 to Splinex’s Current
Report on Form 8-K, filed with the Commission on November 21,
2005
|
|
10.19
|
First
Amendment to Splinex Technology, Inc. 2004 Stock Option Plan, incorporated
by reference to Exhibit 10.19 to the Annual Report on Form 10-K for the
year ended March 31, 2009, filed with the Commission on June 30,
2009
|
|
10.20
|
Joint
Venture Agreement dated July 16, 2008 by and between the Company and
Evgeni Bogarad, incorporated by reference to Exhibit 10.1 to the Current
Report on Form 8-K, filed with the Commission on July 23,
2008
|
|
10.21
|
Notarial
Deed dated July 17, 2008 by and between the Company and Korlea Invest
Holding AG, incorporated by reference to Exhibit 10.20 to the Quarterly
Report on Form 10-Q, filed with the Commission on November 18,
2008
|
|
10.22
|
Subscription
Agreement dated August 7, 2008 by and between the Company and TGR Energy,
LLC, incorporated by reference to Exhibit 10.20 to the Quarterly Report on
Form 10-Q, filed with the Commission on November 18,
2008
|
|
14
|
Code
of Ethics, incorporated by reference to Exhibit 10.2 to Splinex’s Annual
Report on Form 10-K for the year ended March 31, 2005, filed with the
Commission on June 30, 2005
|
|
31.1*
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (June 30, 2009)
|
|
31.2*
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (June 30, 2009)
|
|
31.3*
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (June 29, 2010)
|
|
31.4*
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (June 29, 2010)
|
|
32.1*
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (June 30,
2009)
|
|
32.2*
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (June 29,
2010)
|
* Filed
herewith.
40
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TOT
Energy, Inc.
|
||
June
29, 2010
|
by:
/S/ Mike Zoi
|
|
Mike
Zoi
|
||
President
and Chief Executive Officer
|
||
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated
|
||
June
29, 2010
|
/S/
Mike Zoi
|
|
Mike
Zoi
|
||
President,
Chief Executive Officer and Director
|
||
(Principal
Executive Officer)
|
||
June
29, 2010
|
/S/
Jonathan New
|
|
Jonathan
New
|
||
Chief
Financial Officer
|
||
(Principal
Financial Officer and Principal Accounting Officer)
|
||
June
29, 2010
|
|
|
Stuart
Murdoch
|
||
Director
|
||
June
29, 2010
|
/S/
Curtis Wolfe
|
|
Curtis
Wolfe
|
||
Director
|
41