Item 405 of Regulation S-K is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. To the best of registrants' knowledge, there are no disclosures of delinquent filers required in response to Item 405 of Regulation S-K.

 

 

 

 

 

 

 

 

 

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

 

 

Forward-Looking Statements

 

This Annual Report on Form 10-K, including our “Management’s Discussion of Results of Operations” on page 15, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause the results of Tamm Oil and Gas Corp. to differ materially from those expressed or implied by such forward-looking statements. The words or phrases “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements.” Our operations are subject to significant risks and uncertainties, including, but not limited to, certain risk factors, which are described in more detail under “Risk Factors” beginning on page 7. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including any revenue projections, gross margin, expenses, earnings or losses from operations, synergies or other financial items, any statements of management’s plans, strategies and objectives for future operations, and any statement concerning developments, plans, or performance. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim any obligation to update, any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

 

Tamm Oil and Gas Corp. is referred to herein as “we”, “our”, or “us”.

 

 

PART 1

 

Item 1. Business

 

Organizational

 

We were originally formed on October 10, 2005 as Hola Communications, Inc. in the State of Nevada. We were formed to provide wireless broadband access in Northern Mexico and Southwestern California. In October 2007, we redirected our business focus to the oil and gas industry. In November 2007, we created a wholly owned Nevada subsidiary, Tamm Oil and Gas Corp., and conducted a reverse merger between Hola Communications, Inc. and Tamm Oil and Gas Corp., with Tamm Oil and Gas Corp. being the surviving entity. We then changed our name to Tamm Oil and Gas Corp.

Business Overview

Our corporate headquarters are located in Calgary, Canada.

We are an exploration stage company that has not yet commenced significant operations in the heavy oil exploration business. Our activities have been limited to organizational matters and:

 

·

Acquiring oil sands leases;

·

Developing our business plan; and

·

Raising capital to conduct our operations.

 

 

Our heavy oil exploration activities will be conducted on properties located in Alberta Canada. We have acquired a 100% interest in 21 sections of Oil Sands leases and a 100% interest in 14 sections of Petroleum and Natural Gas (P&NG) which are contiguous to the Oil Sands leases and are situated in the Peace River Oil Sands area of northwestern Alberta.

 

None of our properties are currently in the production stage.

 

For the years ended March 31, 2007 and 2008, we reported net losses of $69,346 and $60,737,189, respectively.

 

Description of Business

 

Principal Product

 

We intend to produce only a single product, heavy oil, which we intend to extract from the above properties depending upon our exploration test results and activities. To date, we have not engaged in any production activities.

 

Distribution Methods.

 

Should we be successful in producing oil, it will be sold to other companies with downstream processing capabilities.

 

Status of Publicly Announced Products or Services.

 

We have not announced any products or services. Since our business is limited to conducting exploration activities, we do not anticipate any such development.

 

Competitive business conditions.

 

We compete with oil and natural gas companies and other individual producers and operators, many of which have longer operating histories and substantially greater financial and other resources than we do. Additionally, many of our competitors have the following competitive advantages: (a) recruitment of qualified personnel; (b) absorbing changes in laws and regulation in the jurisdictions in which we do business and ability to handle longer periods of reduced prices of gas and oil more easily than we can; and (c) paying more for productive oil and natural gas properties and being able to define, evaluate, bid for and purchase a greater number of properties and prospects than we can. Our ability to complete will be contingent upon our ability to acquire additional properties in the future, conduct efficient operations, evaluate and select suitable properties, and implement advanced technologies and consummate transactions in a highly competitive environment.

 

Sources and Availability of Raw Materials.

 

We do not use significant quantities of raw materials in our operations.

 

 

Dependence on one or a few major customers.

 

We do not anticipate becoming dependent upon one or a few customers since there are several companies that conduct business in downstream heavy oil processing.

 

Patents, trademarks, licenses, franchises and concessions.

 

We have no patents, trademarks, licenses, franchises or concessions.

 

Research and Development Expenditures.

 

We have spent no funds on research and development activities nor do we anticipate any such future expenditure.

 

Need for governmental approval.

 

Development and production and sale of oil and natural gas in Canada are subject to complex laws and regulations, which require government approval, and can adversely affect the cost, manner, or feasibility of doing business. We may be required to make significant expenditures to comply with environmental and other governmental regulations, including the following matters that are subject to regulation:

 

• location and density of wells;

• surface access;

• drilling approvals;

• wildlife approvals;

• native and trapper approvals;

• handling of drilling fluids and obtaining discharge permits for drilling operations;

• bonds for ownership, development and production of natural gas and oil properties;

• transportation of natural gas and oil by pipelines;

• operation of wells and reports concerning operations; and

• taxation

 

Effect of existing or probable governmental regulations.

 

We are subject to existing and revisions to governmental regulations, including accounting for and payment of royalties on production from Provincial, Federal and Native lands. We are also subject to Provincial and Federal environmental, health, safety and transportation, and employer regulations.

 

 

Effect of compliance with federal, state, and local provisions for the protection of the environment. 

We are subject to extensive environmental regulations. If we experience any leakage of crude oil and/or gas from the subsurface portions of a well, our gathering system could cause degradation of fresh groundwater resources, as well as surface damage, potentially resulting in suspension of operation of a well, fines and penalties from governmental agencies, expenditures for remediation of the affected resource, and liabilities to third parties for property damages and personal injuries. In addition, any sale of crude oil or gas collected as part of the drilling and recovery process could impose liability in accordance with applicable environmental health, transportation, and safety laws.

 

Employees.

 

We have the following contract employees: (a) our President, Wiktor Musial; and (b) our Vice President of Operations, Gerald Vikse. Additionally, we hire geologists, geophysicists, accountants, and land management personnel on a contract consulting basis.

 

Reports to Security Holders and Available Information

 

Our principal executive offices are located at 460-730 7^th Avenue SW, Calgary AO T2P 3P8. Our telephone number is (403) 975-9399. Our annual, quarterly, and current reports with the Securities and Exchange Commission (SEC), copies of which are available on our website at www.tammoilandgas.com or from the SEC free of charge at www.sec.gov. The public may also read and copy any materials, which we have filed with the SEC at the SEC’s Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Information on the Public Reference Room may be obtained by calling: 1-800-SEC-0330.

 

Item 1A. Risk Factors

 

The following risks and uncertainties, along with other information contained in this Form 10-K, should be carefully considered by anyone considering an investment in our securities. The occurrence of any of the following risks could negatively affect our business, financial condition and operating results.

 

Our financial condition raises substantial doubt about our ability to continue as a going concern.

During the period from our inception of October 10, 2005 to our year end at March 31, 2008, we have an accumulated deficit of $60,808,669. Our auditors have issued a going concern opinion indicating that our significant operating losses and working capital deficit and inability to generate any revenues cause substantial doubt about our ability to continue as a going concern, and that there is uncertainty as to whether we have the capability to continue our operations without additional funding. Accordingly, we anticipate that we will need additional funding during the next 12 months, which we plan to seek through public or private equity financing, bank debt financing, or from other sources; however, adequate funds may not be available when needed, and even if we raise additional funds through sales of our equity securities, existing stockholder interests will be diluted.

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

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

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

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

 

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

Our future exploration activities will require licenses, permits, or compliance with other state and federal requirements, including:

·

Acquiring permits before commencing drilling;

·

Restricting substances that can be released into the environment with drilling and production activities;

·

Limiting or prohibiting drilling activities on protected areas such as wetlands or wilderness areas;

·

Requiring that reclamation measures be taken to prevent pollution from former operations;

·

Requiring remedial measures to mitigate pollution from former operations, such as plugging abandoned wells and remediation of contaminated soil and groundwater; and

·

Requiring remedial measures to be taken with respect to property designated as a contaminated site.

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

The successful implementation of our plan of operations is subject to risks inherent in the oil and gas business.

Our oil and gas operations are subject to the economic risks associated with exploration, development and production activities, including substantial expenditures to locate and acquire properties and to drill exploratory wells. Additionally, the cost and timing of drilling, completing and operating wells may be uncertain. The presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, development and production activities to be delayed or unsuccessful, and may result in the total loss of our investment in a particular property.

 

 

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

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

·

unproductive wells

·

productive wells that are unable to produce oil or gas in economically feasible quantities;

·

hazards, such as unusual or unexpected geological formations, pressures, fires, blowouts, loss of circulation of drilling fluids or other conditions that may substantially delay or prevent completion of any well;

·

adverse weather conditions hindering drilling operations;

·

a productive well becoming uneconomic due to pressure depletion, water encroachment, mechanical difficulties, or other factors, which impair or prevent the production of oil and/or gas from the well;

·

operations being adversely affected by the proximity and capacity of oil and gas pipelines and processing equipment;

·

market fluctuations of taxes, royalties, land tenure; and

·

allowable production and environmental protection.

 

We rely upon third parties in our business which could adversely affect our business.

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

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

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

 

 

·

actions of the Organization of Petroleum Exporting Countries and its production constraints;

·

United States economic environment;

·

weather conditions;

·

availability of alternate fuel sources;

·

transportation interruption;

·

the impact of drilling levels on crude oil and natural gas supply; and

·

the environmental and access issues that could limit future drilling activities industry wide.

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

Our President devotes less than full time to our business, which may negatively impact our operations.

Wiktor Musial, our President, devotes only 10 hours per week to our business. Because our President may be unable to devote the time necessary to our business, we may be unsuccessful in implementing our operational plan.

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

Our business depends upon the continued involvement of our President, Vice President of Operations, and Chairman of the Board, who collectively have oil related experience of at least 60 years. The loss, individually or cumulatively, of these personnel would adversely affect our business, prospects, and our ability to successfully conduct our exploration activities. Before you decide whether to invest in our common stock, you should carefully consider that the loss of their expertise, may negatively impact your investment in our common stock.

 

Item 1B. Unresolved Staff Comments

 

We are neither a large accelerated filer or well seasoned issuer in which case such item is inapplicable. Nonetheless, we have no unresolved staff comments.

 

Item 2. Our Properties

 

We lease our principal executive offices of approximately 1200 square feet at Suite 460, 734 7 Ave SW, Calgary, AB, Canada T2P 3P8 from Kodiak Energy Inc. We share our offices with Kodiak Energy Inc. We have no written lease agreement but rather operate on a verbal agreement whereby we pay Kodiak Energy $2,700 on a month to month basis. Our space is sufficient for our needs. At the present time, we have no real estate holdings nor are there plans to acquire any real property interests.

 

 

Oil Sands and Petroleum and Natural Gas (P&NG) Leases

Our leases are situated near Manning in the Peace River area of Northern Alberta, Canada, as follows:

 

·

We have a 100% interest in 21 sections of Oil Sands leases, amounting to approximately 13,440 gross acres and approximately 13,284 net acres. Oil Sands leases have a 15 year term for exploration. Our Oil Sands leases expire on January 9, 2023; and

·

We have a 100% interest in 14 sections of Petroleum and Natural Gas (P&NG) leases, amounting to approximately gross 8,960 acres and approximately 8,856 net acres. P&NG leases provide that we have 5 years to explore on the leased lands. Our P&NG leases expire on May 28, 2013.

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

 

Annual fee rentals of $3.50/ha (CDN) are paid to the government of Alberta to maintain rights to the leases. We acquired the leases in 2008 in two separate Alberta public offerings of crown Oil Sands rights and crown P&NG rights.

 

Offering Date

Lease Type

Term (yrs)

Land Area

Acquisition ($)

Total Rental ($)

1/09/2008

Oil Sands

21 Sections

718,903

$

18,816

5/28/2008

P&NG

14 Sections

372,721

$

12,544

Property Geology

Well logs, cores and drill cutting sample reports of drilled wells on and around our leased lands suggest that heavy oil enrichment occurs in the Cretaceous Bluesky and Gething Formations, and especially in the Mississippian-aged Debolt Formation which includes the porous Elkton Member. High grade heavy oil intervals predominantly occur in the lower most

Elkton Member and Lower Debolt Formation. Porosity in these intervals ranges up to 28%, and the lithology is comprised of both limestones and dolomites which were deposited in a shoaling upward environment.

Gross thickness of the Debolt Formation, including the Elkton Member, over our leases average approximately 90 feet. These carbonates are relatively homogeneous, thinning in an easterly direction. Porosity has been enhanced by dolomitization, particularly in the Elkton Member and Lower Debolt Formation.

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

 

 

Item 3. Legal proceedings 

 

On April 4, 2008, Deep Well Oil & Gas, Inc. (“Deep Well”), a Nevada corporation with its principal place of business located in Edmonton, Alberta, Canada, and a [delinquent] SEC reporting company, filed a complaint against us in the United States District Court, District of Nevada alleging: (a) violations of Sections 13(d), 14(d), and 14(e) of the Securities and Exchange Act of 1934, as amended; (b) defamation; (c) violation of the Lanham Act; and (d) consumer fraud under Nevada Revised Statute 41.600 (Deep Well Oil and Gas, Inc. v. Tamm Oil and Gas Corp., USDC, Nevada, Civil Action No. 3:03-cv-00173-ECR-RAM). 

 

Along with the complaint, Deep Well filed a Motion for Preliminary Injunction and request for expedited discovery.  The discovery has been accomplished and we have filed our opposition to Deep Well’s motion for a Pr