TAMM Oil & Gas (TAMO) 10-Q 2011 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

the quarterly period ended June 30, 2010 

OR

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________to _____________

Commission file number 333-137174

TAMM OIL AND GAS CORP.

(Exact name of small business issuer as specified in its charter)

Nevada	20-3773508
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Suite 1120, 833 4th  Ave  SW, Calgary, AB, Canada T2P 3T5

(Address of principal executive offices)

403-975-9399

(Issuer’s telephone number)

____________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No ¨

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was

required to submit and post such files). Yes [_] No [_]

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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Larger accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

80,780,000 shares outstanding as of July 26, 2010.

TAMM OIL AND GAS CORP.

TABLE OF CONTENTS

		Page
	Cautionary Statement Concerning Forward-Looking Statements	1
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and March 31, 2010	2
	Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2010 and 2009, and from October 10, 2005 (date of inception) through June 30, 2010 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2010 and 2009, and from October 10, 2005 (date of inception) through June 30, 2010 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4T.	Controls and Procedures	16
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 2.	Recent Sales of Unregistered Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
Signatures		19

Cautionary Statement on Forward-Looking Statements.

The discussion in this Report on Form 10-Q, including the discussion in Item 2 of PART I, contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are based on current expectations, estimates and projections about the Company’s business, based on management’s current beliefs and assumptions made by management.  Words such as “expects”, “anticipates”, “intends”, believes”, “plans”, “seeks”, “estimates”, and similar expressions or variations of these words are intended to identify such forward-looking statements.  Additionally, statements that refer to the Company’s estimated or anticipated future results, sales or marketing strategies, new product development or performance or other non-historical facts are forward-looking and reflect the Company’s current perspective based on existing information.  These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict.  Therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.  Such risks and uncertainties include those set forth below in Item 1 as well as previous public filings with the Securities and Exchange Commission.  The discussion of the Company’s financial condition and results of operations included in Item 2 of PART I should also be read in conjunction with the financial statements and related notes included in Item 1 of PART I of this quarterly report.  These quarterly financial statements do not in clude all disclosures provided in the annual financial statements and should be read in conjunction with the “Risk Factors” and annual financial statements and notes thereto included in the Company's Form 10-K/A for the year ended March 31, 2010 as filed with the Commission on June 28, 2010.  The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

1

TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,			March 31,
	2010			2010
	(unaudited)
ASSETS
Current assets:
Cash	$	587		$	8,573
Accounts receivable		4,662			4,187
Total current assets		5,249			12,760
Property, plant and equipment:
Oil sands properties, unevaluated		14,284,657			14,902,483
Furniture and equipment, net		239			276
Total property, plant and equipment		14,284,896			14,902,759
Other assets:
Receivable from affiliated entity		348,500			398,500
Total other assets		348,500			398,500
Total assets	$	14,638,645		$	15,314,019
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	1,002,871		$	973,600
Advances from related party		65,373			68,034
Notes payable from related party		750,000			750,000
Total current liabilities		1,818,244			1,791,634
Commitments and contingencies
Stockholders' equity:
Preferred stock; $0.001 par value; 1,000,000 shares authorized, none issued and outstanding		-			-
Common stock; $0.001 par value; 750,000,000 shares authorized, 80,780,000 shares issued and outstanding as of June 30, 2010 and March 31, 2010		80,780			80,780
Additional paid in capital		78,376,380			78,376,380
(Deficit) accumulated during exploration stage		(65,435,591	)		(65,369,275	)
Accumulated other comprehensive income (loss)		(201,168	)		434,500
Total stockholders' equity		12,820,401			13,522,385
Total liabilities and stockholders' equity	$	14,638,645		$	15,314,019

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

  

2

TAMM OIL AND GAS CORP
(An Exploration Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
							For the period
							October 10, 2005
							(date of inception)
	For the three months ended June 30,						through
	2010			2009			June 30, 2010
REVENUE	$	-		$	-		$	-
OPERATING EXPENSES:
Selling, general and administrative		51,160			47,807			1,885,261
Depreciation		24			23			911
Total operating expenses		51,184			47,830			1,886,172
(Loss) from operations		(51,184	)		(47,830	)		(1,886,172	)
OTHER INCOME (EXPENSE)
Foreign exchange (expense) gain		-			-			(115	)
Interest (expense)		(15,131	)		(12,778	)		(116,734	)
(Loss) on impairment of fixed assets		-			-			(37,032	)
(Loss) on impairment of investments		-			-			(63,393,028	)
(Loss) before provision for income taxes		(66,316	)		(60,608	)		(65,433,082	)
Provision for income taxes:
Current		-			-			2,509
Deferred		-			-			-
Total income taxes		-			-			2,509
NET (LOSS)	$	(66,316	)	$	(60,608	)	$	(65,435,591	)
Net (loss) per common share (basic and fully diluted)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding, basic and fully diluted		80,780,000			62,988,791
Comprehensive income (loss):
Net (loss)	$	(66,316	)	$	(60,608	)	$	(65,435,591	)
Foreign currency translation gain (loss)		(635,668	)		326,136			(201,168	)
Comprehensive income (loss)	$	(701,984	)	$	265,528		$	(65,636,759	)

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

  

3

TAMM OIL AND GAS CORP.
(An Exploration Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
							For the period
							October 31, 2005
	For the three months ended June 30,						(Inception of Inception)
	2010			2009			through June 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)	$	(66,316	)	$	(60,608	)	$	(65,435,591	)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depreciation		24			23			911
Impairment of property and equipment		-			-			37,032
Impairment of investments in stock and royalty agreements		-			-			63,393,028
(Increase) decrease  in accounts receivable		(690	)		11,895			(1,860	)
Increase in prepaid expenses		-			2,925			1,064
Increase in accounts payable and accrued liabilities		37,249			85,566			847,695
Net cash provided by (used in) operating activities		(29,733	)		39,801			(1,157,721	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of oil and gas properties		(27,183	)		-			(1,177,797	)
Decrease in receivable from affiliated entity		50,000			3,997			228,570
Purchase of investment		-			-			(576,252	)
Purchases of property and equipment		-			-			(38,223	)
Net cash provided by (used in) investing activities		22,817			3,997			(1,563,702	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock		-			-			1,804,000
Proceeds from notes payable		-			-			1,307,295
Repayments of notes payable		-			-			(525,989	)
Net cash provided by financing activities		-			-			2,585,306
Effect of currency rate change on cash		(1,070	)		(40,461	)		136,704
Net increase (decrease) in cash and cash equivalents		(7,986	)		3,337			587
Cash and cash equivalents at beginning of period		8,573			1,461			-
Cash and cash equivalents at end of period	$	587		$	4,798		$	587
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	-		$	-		$	-
Cash paid during the period for taxes	$	-		$	-		$	2,509
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for royalty agreements	$	-		$	-		$	10,200,000
Issuance of common stock for undeveloped property	$	-		$	-		$	11,390,000
Issuance of common stock in exchange for common stock of an unaffiliated entity	$	-		$	-		$	54,263,160
Issuance of common stock in exchange for acquisition of Union Energy, LLC.	$	-		$	800,000		$	800,000

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

     

4

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

Tamm Oil and Gas Corp. is referred to in these notes as “the Company” or “TAMM”.

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

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

General

The interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) as promulgated in Item 210 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The results from operations for the three month period ended June 30, 2010, are not necessarily indicative of the results that may be expected for the year ended March 31, 2011.  The unaudited consolidated condensed financial statements should be read in conjunction with the financial statements and footnotes thereto for the year ended March 31, 2010, included in the Company’s Form 10-K/A filed with the SEC on June 28, 2010.

Basis and Business Presentation

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

The Company is in the development stage with its efforts principally devoted to developing oil and gas reserves. To date, the Company, has not generated sales revenues, has incurred expenses and has sustained losses.  Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise.  For the period from inception through June 30, 2010, the Company has accumulated losses of $65,435,591.

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

Acquisition of Union Energy, LLC

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

 

5

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

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

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

Revenue Recognition

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

Estimates

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

Cash and Cash Equivalents

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

Property and Equipment

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

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

Unconventional Oil Sands Properties

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

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

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

6

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

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

Depletion and Amortization of Oil and Gas Properties

The Company follows the full cost method of accounting for oil and gas properties.  Under this method, all direct costs and certain indirect costs associated with acquisition of properties and successful as well as unsuccessful exploration and development activities are capitalized. Depreciation, depletion, and amortization of capitalized oil and gas properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves.  

The Company periodically evaluates the carrying value of long-lived assets, including unproved properties, to be held and used. Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

During the year ended March 31, 2010, the Company management performed an evaluation of its royalty agreement for purposes of determining the implied fair value of the assets at March 31, 2010. The test indicated that the recorded remaining book value of its royalty agreement exceeded its fair value for the year ended March 31, 2010.  As a result, upon completion of the assessment, management recorded a non-cash impairment charge of $2,929,868, net of tax, or $0.04 per share during the year ended March 31, 2010 to reduce the carrying value of the royalty agreement to $945,068. As of June 30, 2010, management of the Company has determined that no further impairment is deemed necessary. Considerable management judgment is necessary to estimate the fair value.  Accordingly, actual results could var y significantly from management’s estimates.

Foreign Currency Translation

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

Functional Currency

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

7

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive Income (Loss)

Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. Other comprehensive income (loss) includes foreign currency translation adjustments and unrealized gains and losses on available for sale securities.

Income Taxes

The Company recognizes in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position.  

 Net Income (Loss) per Share

Net earnings (losses) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon the exercise of the Company's outstanding warrants (calculated using the treasury stock method). During the three months ended June 30, 2009, outstanding warrants were not considered because the exercise prices exceeded the weighted average common stock price of the Company for the period because they have been anti-dilutive, thereby decreasing the net loss per common share.  There were no outstanding common stock equivalents outstanding as of June 30, 2010.

Fair Value of Financial Instruments

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

Stock Based Compensation

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values.

As of June 30, 2010, there were no outstanding employee stock options.

Reclassifications

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

  

8

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in this Update are effective as of the announcement date of March 18, 2010. The Company does not expect the provisions of ASU 2010-19 to have a material effect on the financial position, results of operations or cash flows of the Company.

In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-17 (ASU 2010-17), Revenue Recognition-Milestone Method (Topic 605): Milestone Method of Revenue Recognition. The amendments in this Update are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Early adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity’s fiscal year, the entity should apply the amendments retrospectively from the beginning of the year of adoption. The Company does not expect the provisions of ASU 2010-17 to have a material effect on the financial position, results of operations or cash flows of the Company.

In April 2010, the FASB issued ASU 2010-14, "Accounting for Extractive Activities — Oil & Gas."  ASU 2010-14 amends paragraph 932-10-S99-1 due to SEC Release No. 33-8995, "Modernization of Oil and Gas Reporting."  The amendments to the guidance on oil and gas accounting are effective August 31, 2010, and are not expected to have a significant impact on the Company's financial position

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

 NOTE 2 – GOING CONCERN MATTERS

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements for the three month ended and inception to date periods ended June 30, 2010, the Company has incurred losses of $66,316 and $65,435,591, respectively.  In addition, as of June 30, 2010, the Company had a working capital deficit of $1,812,995, and no revenue generating operations. These factors, among others, indicate that the Company may be unable to continue as a going concern.

The Company's existence is dependent upon management's ability to generate business opportunities, evaluate existing properties and surrounding lands, and initiate commercial production to develop profitable operations which will resolve its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern.

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

NOTE 3 – RECEIVABLE FROM AN AFFILIATED ENTITY

In connection with the October 2007 Letter of Intent to acquire all of the issued and outstanding shares of 1132559 Alberta Ltd. (“Alberta”), the Company purchased advances due to shareholders of Alberta, directly from the shareholders for $548,500 (net of cumulative repayments of $223,570). The amount is recorded as receivable from an affiliated entity, as Alberta and TAMM have officers and/or directors in common. These advances were purchased for their face amounts, and they have no terms of repayment. During the three months ended June 30, 2010, the Company received a payment of $50,000 against this advance.

9

TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 4 – OIL SANDS PROPERTIES

Union Energy, LLC

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

Peace River

The Company holdings include 14 sections of petroleum and natural gas (“P&NG”) leases in the Peace River region of northern Alberta that have a carrying value of $374,883.  In addition the Company leases 21 sections of oil sands leases in the Peace River region held at $718,903 adjacent to the above-mentioned sections.

Sawn Lake

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

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

Alberta Crown

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

NOTE 5 – NOTES PAYABLE TO AFFILIATED ENTITY

During the year ended March 31, 2009, the Company issued $1,250,000 of demand notes payable with an interest rate of prime plus 2% per annum. The Company repaid $500,000 of these demand notes during the year ended March 31, 2009. As of June 30, 2010, outstanding notes payable on the demand notes totaled $750,000.

The note holder is a shareholder of 1132559 Alberta, Ltd., an affiliated entity, as Alberta and TAMM have officers and/or directors in common.

 

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TAMM OIL AND GAS CORP.

(An Exploration Stage Company)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 6 – CAPITAL STOCK

Preferred Stock

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

Common stock

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

As of June 30, 2010 and March 31, 2010, there were 80,780,000 shares of common stock issued and outstanding.

NOTE 8 - CONTINGENCIES

Consulting agreements

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

Litigation

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

NOTE 9 – RELATED PARTY TRANSACTIONS

The Company leases office space under an operating lease for its corporate use at $3,000 per month on a month to month basis from an entity with common senior management.

NOTE 10 – SUBSEQUENT EVENTS

The  Company has evaluated all subsequent transactions that have occurred through the date of issuance of these financial statements and has determined that there were no subsequent events which required recognition or disclosure.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

General and Background

Overview

We are a petroleum exploration company that seeks to identify, acquire and develop working interests in Canada based oil sands prospects. Oil sands properties are characterized by deposits of bitumen, a form of viscous (relatively high resistance to flow) crude oil.

We lease our principal executive offices from Kodiak Energy Inc. We pay Kodiak Energy $3,000 on a month to month basis for office space, infrastructure and support services. Our space is sufficient for our needs. At the present time, we have no real estate holdings nor are there plans to acquire any real property interests.

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

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

· We have a 100% interest in 21 sections of Oil Sands leases, amounting to approximately 19,840 gross acres and approximately 19,610 net acres. Oil Sands leases have a 15 year term for exploration. Our Oil Sands leases expire  in 2023; and   

· We have a 100% interest in 14 sections of Petroleum and Natural Gas (P&NG) leases, amounting to approximately gross 15,360 acres and approximately 15,182 net acres. P&NG leases provide that we have 5 years to explore on the leased lands. Our P&NG leases expire in 2013.  Based on successful exploration programs these leases can be then extended as long as production is maintained.

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

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		15	21 Sections	$	718,903	$	18,816
5/28/2008	P&NG		5	14 Sections	$	372,721	$	12,544

On June 12, 2009, we acquired a 100% working interest in 5,120 acres of oil sands leases in the Province of Alberta, in exchange for 1,000,000 shares of our common stock valued at $800,000.

On September 27, 2009, we acquired a 100% working interest in 1,280 acres of oil sands leases with a 2% gross overriding royalty retained by the seller in exchange for 2,428,000 shares of the Company’s common stock. The value of these rights was recorded at $1,626,760. In addition, we acquired 100% working interest in 6,400 acres of petroleum and natural gas leases with a 2% gross overriding royalty retained by the seller in exchange for 14,572,000 shares of the Company’s common stock. The value of these rights was recorded at $9,763,240.

During the year ended March 31, 2010, we performed an evaluation of our royalty agreement for purposes of determining the implied fair value of the assets at March 31, 2010. The test indicated that the recorded remaining book value of its royalty agreement exceeded its fair value for the year ended March 31, 2010.  As a result, upon completion of the assessment, we recorded a non-cash impairment charge of $2,929,868, net of tax, or $0.04 per share during the year ended March 31, 2010 to reduce the carrying value of the royalty agreement to $945,068. As of June 30, 2010, management of the Company has determined that no further impairment is deemed necessary. Considerable management judgment is necessary to estimate the fair value.  Accordingly, actual results could vary significantly from managem ent’s estimates.

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Our decision to acquire these undeveloped properties at a combined cost of $11,390,000 was based on the following:

June 23, 2008 – Chapman Petroleum Engineering determined that the Mississippian-aged Lower Debolt and Elkton member zones for our 35 sections of land contain 2.33 billion barrels of original total heavy oil in place.

Based on publicly available geological information from government records, based on drilling results through the many wells which are also publicly available, and the competitive bidding for the lands that occurred in 2008 to 2009, the corporation is confident that after the planned work programs for this winter, that the properties will be shown to have substantially more value than the accounted value as per US GAAP.

Subsequent to our acquisition, an updated Chapman report dated November 1, 2009 shows there is an incremental 810 million barrels of heavy oil in place on our newly acquired lands for a combined total of 3.14 billion barrels of original total heavy oil in place.

Our approach to exploiting the properties is as follows:

Our geologist has identified target zones which we are presently evaluating with the goal of two drill locations. The goal for these locations is to drill, core and drill stem test the target formations followed by running a 30 day evaluation test for product deliverability and for engineering purposes. Once completed and dependent on the results of the testing, we will evaluate our overall position.

Dependent on the licensing process and financing, we expect to commence drilling within 3 months of the required funds being available.  Fundraising is ongoing in North America and Europe, and upon firm commitment, the licensing process will be initiated to shorten the time frame.

Based on results, we intend to commission a prospective resource report to assist us in moving forward in the development of the all the TAMM leases.  An updated report is underway to reflect new information available on adjacent lands.

Results of Operations

Three month period ended June 30, 2010 Summary

	Three month period ended
	June 30,
		2010			2009
Revenue		$	-		$	-
Operating Expenses			(51,184	)		(47,830	)
Interest expense and other			(15,131	)		(12,778	)
Net (Loss)		$	(66,316	)	$	(60,608	)

Revenue

We are currently a development stage company conducting exploration activities and we have not earned any revenues since our inception. We do not anticipate earning revenues until such time as we have entered into commercial production of our oil and gas projects, if ever. Even if we discover such commercially exploitable resources, we will have to determine whether the project is economically feasible.

Capital Expenditures and Requirements

At the present time, we have no capital commitments or expenditures, although we anticipate that we will have both expenditures at certain stages of our operational plan.

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Expenses

Selling, general and administrative expenses for the three month period ended June 30, 2010 increased by $3,353 or 7.0% to $51,160 from $47,807 for the comparable 2009 three-month period. This increase is primarily a result of increased professional and consulting fees for the current period.  

Interest expense and other

Our interest and other expenses for the three month period ended June 30, 2010 increased by $2,353 or 18.4% to $15,131 from $12,778 for the comparable 2009 three-month period. This increase is primarily a result of increased cost of borrowing for the current period.  

Net Loss

Our net loss for the three month period ended June 30, 2010 increased by $5,708 or 9.4% to $66,316 from $60,608 for the comparable 2009 period. This increase is primarily a result of the increased professional and service fees incurred during the three months ended June 30, 2010 as compared to the same period last year.

Trends and Uncertainties

We are subject to the following trends and uncertainties:

· Adverse weather conditions that may affect our ability to conduct our exploration activities;

· General economic conditions, including supply and demand for petroleum based products in Canada, the United States, and remaining parts of the world;

· Political instability in the Middle East and other major oil and gas producing regions;

· Domestic and foreign tax policy;

· Price of oil and gas foreign imports;

· Cost of exploring for, producing, and delivering oil and gas;

· Overall supply and demand for oil and gas;

· Availability of alternative fuel sources;

· Discovery rate of new oil and gas reserves; and

· Pace adopted by foreign governments for the exploration, development and production of their national reserves.

Liquidity and Capital Resources

Current Assets, Current Liabilities, and Working Capital

Our working capital deficit increased by 1.9% for the three month period ended June 30, 2010. The details are as follows:

	As of  June 30, 2010			As of March 31, 2010			Percentage Increase (decrease)
Current Assets	$	5,249		$	12,760			(58.7	)%
Current Liabilities		1,818,244			1,791,634			14.8	%
Working Capital (Deficit)	$	(1,812,995	)	$	(1,778,874	)		(1.9	)%

Our working capital deficit increased primarily because we incurred increased accounts payable, primarily due to professional fees.

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Cash Flows

	Three Months Ended			Three Months Ended
	June 30, 2010			June 30, 2010
Cash Flows (used in) provided by Operating Activities	$	(29,733	)	$	39,801
Cash Flows provided by Investing Activities		22,817			3,997
Cash Flows provided by Financing Activities		-			-
Effect of currency rate change on cash		(1,070	)		(40,461	)
Net (Decrease) increase in Cash During Period	$	(7,986	)	$	3,337

Exploitation of potential revenue sources will be financed primarily through the sale of securities and convertible debt, issuance of notes payable and other debt or a combination thereof, depending upon the transaction size, market conditions and other factors.

While we have raised capital to meet our working capital and financing needs in the past, additional financing is required within the next three months in order to meet our current and projected cash flow deficits from operations and development. We have sufficient funds to conduct our operations until approximately March 2010.  There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

By adjusting our operations and development to the level of capitalization, we believe we have sufficient capital resources to meet projected cash flow deficits. However, if during that period or thereafter, we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources, on terms acceptable to us, this could have a material adverse effect on our business, results of operations liquidity and financial condition.

Our registered independent certified public accountants have stated in their report dated June 11, 2010, that we have incurred operating losses in the last two years, and that we are dependent upon management’s ability to develop profitable operations and raise additional capital. These factors among others may raise substantial doubt about our ability to continue as a going concern.

Future Financings

We will have to secure additional financing of $3,000,000 in the next 12 months in order to complete our Plan of Operations, which we may be unable to secure. We presently do not have any arrangements for additional financing and we have no potential lines of credit or sources of financing currently available for the purpose of proceeding with our plan of operations. We will likely rely on equity sales of our common stock to fund our operations, resulting in dilution to our existing stockholders.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Going Concern

During the period October 10, 2005 (inception) to June 30, 2010, we generated no revenue and we had an accumulated deficit of $65,435,591. We will need significant financing to implement our business plan. Our financial statements have been prepared assuming that we will continue as a going concern.

The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from our possible inability to continue as a going concern.

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Item 3. - Quantitative and Qualitative Disclosures About Market Risk.

The Company is a smaller reporting company as defined by Rule 12b-2 under the Exchange Act and is not required to provide the information required under this item.

 Item 4T.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

(a)           Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information  required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disc losed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of June 30, 2010.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b)          Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our management team will continue to evaluate our internal control over financial reporting throughout 2010.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

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

Item 2 - Recent Sales of Unregistered Securities and Use of Proceeds

None.

Item 3 - Defaults on Senior Securities

None.

Item 4 - Submission of Matters to a Vote of Security Holders

None.

Item 5 - Other Information

None.  

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Item 6 Exhibits

The following exhibits, required by Item 601 of Regulation S-K, are being filed as part of this quarterly report, or are incorporated by reference where indicated:

Exhibit No.	Description
31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Wiktor Musial (Principal Executive Officer and Principal Financial Officer) dated July 26, 2010.
32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Wiktor Musial (Principal Executive Officer and Principal Financial Officer) dated July 26, 2010.

* filed herewith

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, in the capacities and the dates indicated, thereunto duly authorized.

	TAMM OIL AND GAS CORP.
Date:  July 27, 2010	By:	/s/ Wiktor Musial
		Name:  Wiktor Musial Title:     President/Principal Executive Officer/Principal Financial

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