**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




For
      the
      quarterly period ended September 30 ,
      2008




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





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
                No.)





201
      S.
      Biscayne Blvd.


Suite
      2868


Miami,
      FL 33131


(Address
      of principal executive offices)





(305)
      913-1622


(Registrant’s
      telephone number, including area code)







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





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. Yes x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated filer ̈(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
      Exchange Act.) Yes o No x




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date: At September 30, 2008, the number
      of
      shares outstanding of the issuer’s common stock, $0.001 par value, was
      223,015,373 shares.
















**TOT
      ENERGY, INC.**


**Form
      10-QSB**


**For
      the Quarter Ended September 30, 2008**


**INDEX**





PageNo.PART
                I — FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsUNAUDITED
                CONDENSED CONSOLIDATED BALANCE SHEETS – AS OF SEPTEMBER 30, 2008 AND
                MARCH 31, 2008.
            3UNAUDITED
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – FOR THE THREE AND
                SIX MONTHS ENDED SEPTEMBER 30, 2008 AND 2007.
            4UNAUDITED
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – FOR THE SIX MONTHS
                ENDED SEPTEMBER 30, 2008 AND 2007.
            5Notes
                to Unaudited Condensed Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.
            12Item 4T.
            Controls
                and Procedures
            16PART
                II — OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            16Item
                2.
            Unregistered
                Sales of Equity Securities
            16Item
                6.
            Exhibits
            18Signatures
            20*References
                in this Form 10-Q to “we”, “us”, “our”, the “Company” and “TOT Energy”
                refers to TOT Energy, Inc. and its consolidated subsidiaries, unless
                otherwise noted.*


2


PART
      I —
FINANCIAL INFORMATION





Item
      1.
      Financial Statements.





**TOT
      ENERGY, INC.**





**UNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEETS**


March 31, 2008
              
              September 30, 2008**ASSETS**Current
                  assetsCash
              
              $
              88,007
              
              $
              95,343Deposits
              
              
              —
              
              
              6,000Costs
                  in excess of billings
              
              
              —
              
              
              176,869Inventory
                  of raw materials
              
              
              —
              
              
              44,632Prepaid
                  expenses and other assets
              
              
              20,500
              
              
              19,265Total
                  current assets
              
              
              108,507
              
              
              342,109Fixed
                  assetsBuilding
              
              
              —
              
              
              218,103Machinery
                  and equipment
              
              
              —
              
              
              4,134,991Less:
                  accumulated depreciation
              
              
              —
              
              
              (55,755
              )Total
                  fixed assets (net)
              
              
              —
              
              
              4,297,339Other
                  AssetsAccounting
                  software license
              
              
              1,197
              
              
              —Total
                  assets
              
              $
              109,704
              
              $
              4,639,448**LIABILITIES
                  AND STOCKHOLDERS EQUITY (DEFICIT)**Current
                  liabilitiesAccounts
                  payable
              
              $
              15,193
              
              $
              22,759Accrued
                  expenses
              
              
              32,641
              
              
              414,606Due
                  to related parties
              
              
              500,000
              
              
              803,542Other
                  short term liabilities
              
              
              —
              
              
              17,663Total
                  liabilities
              
              
              547,834
              
              
              1,258,570Minority
                  Interest
              
              
              —
              
              
              72,631**COMMITMENTS
                  AND CONTINGENCIES****STOCKHOLDERS
                  EQUITY (DEFICIT)**Preferred
                  stock ($.001 par value, 100,000,000 shares authorized and no shares
                  issued
                  and outstanding)
              
              
              —
              
              
              —Common
                  stock ($.001 par value, 400,000,000 shares authorized and 214,507,773
                  and
                  223,015,373 shares issued and outstanding)
              
              
              214,508
              
              
              223,016Treasury
                  stock, at cost; 250,000 shares
              
              
              (62,500
              )
              
              (62,500
              )Paid
                  in capital
              
              
              5,115,356
              
              
              11,375,080Accumulated
                  other comprehensive income
              
              
              —
              
              
              (79,262
              )Accumulated
                  deficit
              
              
              (5,705,494
              )
              
              (8,148,087
              )Total
                  stockholders equity (deficit)
              
              
              (438,130
              )
              
              3,308,247Total
                  liabilities and stockholders equity (deficit)
              
              $
              109,704
              
              $
              4,639,448





See
      accompanying notes.


3


**TOT
      ENERGY, INC.**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**


Three Months Ended
              
              Three Months Ended
              
              Six Months Ended
              
              Six Months EndedSeptember 30,
                  2007
              
              September 30,
                  2008
              
              September 30,
                  2007
              
              September 30,
                  2008Sales
              
              $
              —
              
              $
              309,028
              
              $
              98
              
              $
              309,028Cost
                  of sales
              
              
              —
              
              
              281,087
              
              
              —
              
              
              281,087Gross
                  Profit
              
              
              —
              
              
              27,941
              
              
              98
              
              
              27,941Operating
                  ExpensesGeneral
                  and administrative
              
              
              6,850
              
              
              2,185,744
              
              
              39,060
              
              
              2,489,032Loss
                  from operations
              
              
              (6,850
              )
              
              (2,157,803
              )
              
              (38,962
              )
              
              (2,461,091
              )Other
                  expensesInterest
                  expense, net
              
              
              41,376
              
              
              —
              
              
              82,730
              
              
              —Other
                  Expenses
              
              
              —
              
              
              309
              
              
              —
              
              
              309Loss
                  before minority interest
              
              
              (48,226
              )
              
              (2,158,112
              )
              
              (121,692
              )
              
              (2,461,400
              )Minority
                  interest
              
              
              —
              
              
              18,807
              
              
              —
              
              
              18,807Income
                  taxes
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  loss
              
              
              (48,226
              )
              
              (2,139,305
              )
              
              (121,692
              )
              
              (2,442,593
              )Other
                  comprehensive incomeForeign
                  currency translation
              
              
              —
              
              
              (15,920
              )
              
              —
              
              
              (15,920
              )Comprehensive
                  loss
              
              $
              (48,226
              )
              $
              (2,155,225
              )
              $
              (121,692
              )
              $
              (2,458,513
              )Net
                  loss per share - basic and diluted
              
              $
              —
              
              $
              (0.01
              )
              $
              —
              
              $
              (0.01
              )Weighted
                  average shares outstanding - basic and diluted
              
              
              100,757,770
              
              
              217,238,413
              
              
              100,757,770
              
              
              215,873,093




See
      accompanying notes.


4


**TOT
      ENERGY, INC.**


**UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**


Six Months
              
              Six MonthsEnded
              
              EndedSeptember 30, 2007
              
              September 30, 2008Cash flows from operating
                  activities:Net
                  loss
              
              $
              (121,692
              )
              $
              (2,458,513
              )Adjustments
                  to reconcile net loss to net cash used in operating activities:Depreciation
              
              
              —
              
              
              51,755Amortization
                  of accounting software license
              
              
              —
              
              
              1,197Minority
                  interest
              
              
              —
              
              
              (18,807
              )Share
                  Based Compensation
              
              
              —
              
              
              1,789,600Non
                  cash interest expense
              
              
              82,730
              
              
              —Changes
                  in assets and liabilities, net of acquistions and the effect of
                  consolidation of equity affiliates:Prepaid
                  expenses
              
              
              5,133
              
              
              1,235Costs
                  in excess of billings
              
              
              —
              
              
              (176,869
              )Inventory
                  of raw materials
              
              
              —
              
              
              (44,631
              )Deposits
              
              
              —
              
              
              (6,000
              )Accounts
                  payable
              
              
              —
              
              
              7,566Accrued
                  expenses
              
              
              10,244
              
              
              399,629Related
                  party payables
              
              
              —
              
              
              303,542Total
                  adjustments
              
              
              98,107
              
              
              2,308,217Net
                  cash used in operating activities
              
              
              (23,585
              )
              
              (150,296
              )Cash
                  flows from investing activities:Purchase
                  of equipment
              
              
              —
              
              
              (2,010
              )Net
                  cash used in investing activities
              
              
              —
              
              
              (2,010
              )Cash
                  flows from financing activities:Issuance
                  of Common stock
              
              
              —
              
              
              103,152Contributed
                  capital for Korlea-TOT joint venture
              
              
              —
              
              
              37,926Note
                  payable related party
              
              
              23,400
              
              
              —Net
                  cash provided by financing activities
              
              
              23,400
              
              
              141,078Effect
                  of exchange rate changes on cash
              
              
              —
              
              
              18,564Net
                  (decrease) increase in cash
              
              
              (185
              )
              
              7,336Cash
                  at beginning of period
              
              
              251
              
              
              88,007Cash
                  at end of period
              
              $
              66
              
              $
              95,343Supplemental
                  Disclosure of Cash Flow InformationCash
                  paid during the year for:Interest
              
              $
              —
              
              $
              —Income
                  taxes
              
              $
              —
              
              $
              —Non-cash
                  investing and financing activities:Non-cash
                  interest expense
              
              $
              82,730
              
              $
              —Common
                  stock issued to form joint venture TOT-SIBBNS
              
              $
              —
              
              $
              4,375,480Common
                  stock issued for services provided in formation of joint venture
                  Korlea-TOT
              
              $
              —
              
              $
              45,500




See
      accompanying notes.


5


TOT
      ENERGY, INC.





NOTES
      TO
      CONDENSED 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 we acquired a 75% interest in the
      TOT-SIBBNS joint venture and began operations in the oil and gas service
      industry.





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial information and pursuant to the rules and regulations of the
      Securities and Exchange Commission for reporting on Form 10-Q. Accordingly,
      certain information and footnotes required for complete financial statements
      are
      not included herein. In the opinion of management, all adjustments (consisting
      of normal recurring adjustments) considered necessary for a fair presentation
      of
      the results for the interim periods presented have been included. These results
      have been determined on the basis of generally accepted accounting principles
      and practices applied consistently with those used in the preparation of the
      Company's Annual Financial Statements for the year ended March 31, 2008.
      Operating results for the three and six months ended September 30, 2008 are
      not
      necessarily indicative of the results that may be expected for the year ending
      March 31, 2009. It is recommended that the accompanying condensed consolidated
      financial statements be read in conjunction with the financial statements and
      notes for the year ended March 31, 2008 included in the
      Company’s Form 10-KSB filed with the Securities and Exchange
      Commission.





Reclassifications





Certain
      prior period amounts have been reclassified to conform to the current year
      presentation.





Basis
      of
      Consolidation




The
      interim financial statements include the accounts of TOT Energy, Inc. and the
      accounts of our new 75% joint venture, TOT- SIBBNS, a limited liability company
      formed under the laws of Russia (also known as the Russian Federation) and
      our
      new 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





TOT
      Energy, Inc. is working to acquire a portfolio of energy related assets in
      Eastern Europe and Central Asia using the Company’s stock, where appropriate, to
      fund the majority of acquisition costs. The Company’s activities are expected to
      include the exploration, development and marketing of crude oil and natural
      gas.
      Prior to 2008, the Company developed computer software products (the “Prior
      Business”).





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 our 51% joint venture with Korlea Invest Holding AG of Switzerland (“Korlea”)
      which is a provider and trader of electricity in the Czech Republic. The new
      joint venture, Korlea-TOT is expected to assist in the marketing of oil assets
      sourced by other TOT-Energy companies and contacts.


6


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 September 30, 2008, 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. Accounts are guaranteed by the Federal Deposit Insurance
      Corporation (FDIC) up to $100,000. For the quarters-ended September 30,
      2008, and 2007, the bank balance did not exceed the FDIC limit.





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 contracts on the percentage-of-completion
      method. Under this method, the completion percentage is measured by the
      percentage that costs incurred to date bear to total estimated final costs
      for
      each contract. For financial statement purposes, income is determined by
      applying the percentage of completion, determined at the financial statement
      date to the estimated final gross profit for each contract.





The
      Company utilizes this method because management believes that it is the best
      available measure of progress on contracts. Because of inherent uncertainties
      in
      estimating costs, it is reasonable to assume that estimates will change in
      the
      future. Changes in job performance, job conditions and estimated job
      profitability, including those arising from contract penalty provisions and
      final contract settlements, may result in revisions to final estimated revenue,
      costs and income and are recognized in the period in which the revisions are
      determined. Provisions for estimated losses on uncompleted contracts are made
      in
      the period in which such losses are determined.





Contract
      costs include all direct labor, labor burden, material, subcontract, equipment
      costs, and other indirect costs associated with the contracts. General and
      administrative expenses are charged to expense as incurred. Costs and estimated
      earnings in excess of billings on uncompleted contracts and billings in excess
      of costs and estimated earnings on uncompleted contracts are included in current
      assets and current liabilities, respectively, and will be absorbed in the normal
      course of contract completion.





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 September 30, 2007, the Company had 262,500 stock options
      outstanding. The Company did not issue any options or warrants for the three
      and
      six months ended September 30, 2007. For the three and six month periods ended
      September 30, 2007, the Company had 262,500 vested stock options that were
      not
      included in the calculation of earnings per share as they were anti-dilutive.
      For 2008, the Company had 244,444 vested stock options and 2,578,800 warrants
      outstanding. For the three and six months ended September 30, 2008, these
      instruments were excluded from the earnings per share calculation because they
      are anti-dilutive.


7


Fair
      Value of Financial Instruments





The
      Company’s financial instruments consist mainly of cash, 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 non-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 the three month and
      six
      month periods ended September 30, 2008 and 2007.





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. The realization of assets and satisfaction of liabilities
      in the normal course of business is dependent upon the Company achieving these
      goals.





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
      earned minimal revenues to date. We are dependent upon TGR Energy, LLC or Mike
      Zoi to fund our operations. Our independent auditors’ report on our financial
      statements for the year ended March 31, 2008 contains an explanatory
      paragraph about our ability to continue as a going concern. Management believes
      that our current operating strategy, as described herein, provides the
      opportunity for us to continue as a going concern; however, there is no
      assurance this will occur.





In
      December 2007, a related party structured a transaction that provided funding
      to
      settle existing debts of the Company at a discount to the face amount of the
      obligations, restructured certain notes payable in exchange for newly issued
      common shares of the Company, and gave TGR Energy, LLC substantial majority
      of
      the outstanding common shares (the “TGR Restructuring”).





The
      Company has borrowed $573,527 from TGR Energy, LLC, and $230,076 from Kazo,
      LLC.
      These companies are managed and controlled by Mike Zoi, the Company’s president
      (see note 8). The related party loans are non-interest bearing, demand notes
      and
      there is no interest accrued at September 30, 2008.





NOTE
      3.
      SEGMENT INFORMATION





The
      Company’s sole reportable business segment is the oil and gas service sector.
      The Company’s accounting policies for segments are the same as those described
      in the summary of significant accounting policies.





NOTE
      4.
      COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS





Costs
      and
      estimated earnings on uncompleted contracts were determined as
      follows:


8





**September
                30****2007**
            
            **2008**Costs
                incurred on uncompleted contracts
            
            $
            —
            
            $
            268,725Estimated
                earnings
            
            
            —
            
            
            33,863—
            
            
            302,588Less
                billed to date
            
            
            —
            
            
            125,719$
            —
            
            $
            176,869





These
      items have been included in the accompanying balance sheets under the following
      options:





Cost
                in excess of billings
            
            $
            —
            
            $
            176,869





NOTE
      5.
      ACCRUED EXPENSES





Accrued
      expenses represent expenses that are owed at the end of the period and have
      either not been billed by the provider or are expenses that are estimated for
      services provided. At March 31, 2008 and September 30, 2008, accrued expenses
      consisted of the following:


**March 31, 2008**
              
              **September 30, 2008**Professional
                  Fees
              
              $
              30,000
              
              $
              19,468Taxes
                  payable
              
              
              —
              
              
              89,931Accrued
                  cost of software license
              
              
              2,392
              
              
              —Accrued
                  wages
              
              
              —
              
              
              301,296Other
                  accrued expenses
              
              
              249
              
              
              3,911$
              32,641
              
              $
              414,606





NOTE
      6.
      STOCKHOLDERS’ EQUITY





The
      Company is authorized to issue 400,000,000 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.





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.





Pursuant
      to the terms of the Subscription Agreement, TGR Energy, LLC was issued fully
      vested warrants to purchase 2,578,800 shares of common stock of the Company
      for
      $0.05 per share. TGR Energy, LLC was also issued 5,157,600 shares of common
      stock of the Company in exchange for funding of $103,152 provided throughout
      the
      quarter. A compensation charge of $1,729,656 was recorded as an officer of
      the
      Company is also a principal of TGR Energy, LLC and the securities issued were
      below market value.


9


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.





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.





At
      September 30, 2008, the Company had options to purchase 1,200,000 shares of
      common stock outstanding under its stock option plan, of which options to
      purchase 244,444 shares of common stock are vested, with an exercise price
      of
      $0.25 per share and with a remaining weighted average contractual term of 5.86
      years. The Company also had warrants to purchase 2,578,800 shares of common
      stock outstanding at September 30, 2008 with a strike price of $0.05 per share
      and a remaining contractual term of 5 years.





NOTE
      7.
      RELATED PARTY TRANSACTIONS





On
      August
      7, 2008, the Company and TGR Energy, LLC, which holds 94% of the Company’s
      outstanding common stock, entered into a Subscription Agreement pursuant to
      which TGR Energy 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 Energy will fund the Investment Amount as required
      in the Company’s operational budget. TGR Energy’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.





TGR
      Energy, LLC provided an aggregate of $103,153 for the period from August 7,
      2008
      through September 30, 2008 under the Subscription Agreement and was granted
      5,157,600 shares of the Company's common stock and fully vested warrants to
      purchase 2,578,800 shares of common stock for $0.05 per share. These warrants
      have a life of five years. The Company recognized $1,729,656 of compensation
      expense related to this issuance of securities for the quarter. This amount
      is
      calculated as the difference between the market price of our common stock at
      the
      quarter end ($0.24 at September 30, 2008) and the subscription price of the
      common shares ($0.02) multiplied by the number of securities issued plus the
      Black-Scholes valuation of the 2,578,800 warrants issued.





NOTE
      8.
      DEBT DUE TO RELATED PARTIES





The
      Company borrowed $573,527 from TGR Energy, LLC, and $230,076 from Kazo, LLC.
      These companies are managed and controlled by Mike Zoi, the Company’s president.
      The related party loans are non-interest bearing, demand notes and there is
      no
      interest accrued at September 30, 2008. As of September 30, 2007, the Company
      had outstanding borrowings of $500,000 from TGR Energy, LLC, which amount is
      included in the total outstanding borrowings from TGR Energy at September 30,
      2008.





NOTE
      9.
      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 Energy, LLC substantial
      majority of the outstanding common shares. The actions taken to restructure
      the
      company are described below:


10


Under
      an
      Exchange Agreement dated December 18, 2007, the Company agreed to issue
      113,500,000 newly issued shares 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. TGR Energy, LLC owned
      98,157,334 shares of the Company as of December 17, 2007, and after the
      completion of the Exchange Agreement transactions owns an aggregate of
      201,032,334 shares of the Company. The Company had 100,757,773 shares
      outstanding at December 17, 2007, and had 214,507,773 shares outstanding after
      the completion of the Exchange Agreement transactions.





NOTE
      10.
      SUBSEQUENT EVENTS





On
      November 1, 2008, the Company entered into a Letter Agreement with Olympus
      Securities LLC (the “Agreement”). Under the Agreement, Olympus shall be 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 automatically continues on a month-to-month basis,
      with each party having the right to terminate on thirty (30) days notice. The
      Company will pay Olympus 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 $468,210, and will
      be
      amortized over the seven (7) 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.


11







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





*This
      Quarterly* *Report on Form 10-Q contains forward -looking statements within the meaning
      of
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. 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 the Company’s 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* *audited
      financial statements and notes contained in our annual report on Form 10-KSB
      for
      the fiscal year ended March 31, 2008 filed with the Securities and Exchange
      Commission and the* *consolidated* *interim* *financial
      statements and related notes included in this* *Quarterly
      Report.*




**Plan
      of Operation**




In
      December 2007, the Company’s president structured a loan transaction that
      provided funds for the Company to settle its then existing debts at a discount
      to the face amount of the obligations, restructured certain notes payable in
      exchange for newly issued common shares of the company, and gave TGR Energy,
      LLC
      substantial majority of the outstanding common shares of the Company (the “TGR
      Restructuring”). For more information, see Notes 6, 7 and 9 to the
      Unaudited Condensed Consolidated Financial Statements.





We
      are
      working to build a diversified portfolio of energy assets through acquisition,
      joint venture and other business arrangements. The Company’s activities are
      expected to include the exploration, development, production and marketing
      of
      crude oil and natural gas in Russia and other oil producing regions primarily
      in
      Eastern Europe and Central Asia. Short term financing of $2,000,000 is being
      provided by TGR Energy, LLC as the Company requires additional working capital,
      pursuant to a Subscription Agreement dated August 7, 2008 (the “Subscription
      Agreement”). TGR Energy has agreed to provide 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 Energy will fund the Investment Amount as required in the Company’s
      operational budget. TGR Energy’s obligation to fund the Investment Amount will
      be reduced by any future third party funding or investment in the Company on
      terms no less favorable than those contained in the Subscription
      Agreement.





TGR
      Energy, LLC provided an aggregate of $103,152 for the period from August 7,
      2008
      through September 30, 2008 under the Subscription Agreement and was issued
      5,157,600 shares of the Company's common stock and fully vested warrants to
      purchase 2,578,800 shares of common stock for $0.05 per share. These warrants
      have a life of five years. The Company recognized $1,729,656 of compensation
      expense related to this issuance of securities to a related party. Compensation
      expense was recorded based on a Black-Scholes valuation of the warrants and
      the
      difference between the issue price of $0.02 per share of common stock and the
      market price of the common stock ($0.24 per share) quoted as of September 30,
      2008.


12




On
      July
      16, 2008, the Company 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, the Company issued to Bogorad 3,000,000 shares of
      the
      Company’s common stock in exchange for a 75% interest in TOT-SIBBNS. The Company
      is obligated to issue to Bogorad 2,000,000 additional shares of the Company’s
      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 the Company, in its 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 the Company declines
      to
      make such payment, Bogorad may require the Company to return the Company’s
      interest in TOT-SIBBNS in exchange for a payment to the Company 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. The Company has
      the
      ability to appoint a majority of the Board of Directors of TOT-SIBBNS.




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 our 51% joint venture with Korlea Invest Holding AG of Switzerland (“Korlea”)
      which is a provider and trader of energy assets in the Czech Republic. The
      new
      joint venture, Korlea-TOT is expected to assist in the marketing of oil assets
      sourced by other TOT-Energy companies and contacts.





As
      of
      September 30, 2008, we were working to lease and furnish approximately 5,600
      square feet of permanent office space in Miami, Florida. Our lease on existing
      temporary space terminates in November 2008 and we expect to move to other
      temporary space in Aventura, Florida for approximately six months while we
      find
      and renovate permanent space.





From
      time
      to time, we may be engaged in various discussions to acquire businesses or
      formulate joint venture 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 new shares of the Company and this may result in
      substantial dilution to existing stockholders.





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, until the second quarter of 2008, have earned
      minimal revenues. We are dependent upon TGR Energy, LLC or Mike Zoi to fund
      our
      operations. Our independent auditors’ report on our financial statements for the
      year ended March 31, 2008 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.




**Results
      of Operations for the Three Month Period Ended September 30, 2008 and
      2007**





We
      reported a net loss of $2,139,305 or $(0.01) per share for the three months
      ended September 30, 2008, compared to a loss of $48,226 or $(0.00) per share
      for
      the quarter ended September 30, 2007. Weighted average shares outstanding were
      217,238,413 and 100,757,770 for the quarters ending September 30, 2008, and
      2007
      respectively. The net loss for the three month period ended September 30, 2008
      was negatively impacted by the compensation expense of $1,729,656 related to
      the
      TGR Energy, LLC funding described above.





TOT-SIBBNS,
      our 75%-owned joint venture, acquired its first contract in July and operations
      reported for the quarter include the revenue and expense associated with the
      first phase of this contract. We reported revenues of $309,028, primarily
      from our first contract at TOT-SIBBNS as compared with $0 for the three months
      ended September 30, 2007. Costs related to this contract totaled $268,725 for
      the quarter ended September 30, 2008. Cost of sales were $281,087 and $0 for
      quarter ended September 30, 2008 and 2007, respectively, as there was no revenue
      generating activities during the second quarter of 2007. Our gross margin for
      the quarter ended September 30, 2008 was $27,941 compared with $0 for the
      quarter ended September 30, 2007 when we had no operations.




13


General
      and administrative expenses for the three months ended September 30, 2008,
      were
      $2,185,744 consisting of TOT Energy, Inc. expenses for $2,082,885 and TOT-SIBBNS
      expenses for $102,859. There was no activity in the Korlea-TOT joint venture
      for
      the period. General and administrative expenses for the three months ended
      September 30, 2007 were $6,850 as the Company had no business and minimal
      administrative expenses during this time.





TOT
      Energy, Inc. general and administrative expenses of $2,082,885 for the three
      months ended September 30, 2008 consisted of $1,729,656 in non-cash compensation
      expense relating to the issuance of stock and warrants pursuant to the 
Subscription Agreement. Additional non-cash expenses included $45,500 in
      consulting fees paid in connection with the successful joint venture Korlea-TOT
      and $14,444 in compensation expense for options that vested during the period.
      Additionally, we incurred $159,855 of payroll related expenses, $139,235 of
      professional fees and $100,112 of other general and administrative expenses.
      The
      $100,112 of other general and administrative expenses consisted primarily of
      travel related expenses ($16,893), fees and licenses ($15,398), investor
      relations expenses ($12,507), filing fees ($9,934) and rent expense ($8,116).





Other
      expenses were $309 for the three months ended September 30, 2008 as compared
      with $41,376 for the three months ended September 30, 2007. The 2007 amount
      related to interest expense from borrowings under related party
      agreements.





Interest
      expense was $0 for the three months ended September 30, 2008 and $41,376 for
      the
      three months ended September 30, 2007. During the three months ended September
      30, 2008, the Company obtained $103,152 from the Subscription Agreement and
      recognized $1,729,656 of compensation expense recorded as general and
      administrative expense. This charge is the result of an intrinsic value
      calculation that measures the difference between fair value on date
      of issuance ($0.24 at September 30, 2008) and the purchase price per
      share under the Subscription Agreement ($0.02) which amounts to $1,134,672
      of compensation expense for the stock issued. Additionally, the warrants to
      purchase 2,578,800 shares issued in connection with this funding resulted in
      a
      corresponding compensation expense of $594,984 based on a Black-Scholes
      valuation model.





The
      minority interest on the joint venture TOT-SIBBNS was $18,807 for the three
      months ended September 30, 2008 as compared with $0 for the three months ended
      September 30, 2007. The joint venture minority interest reflects twenty-five
      percent of the TOT-SIBBNS net loss of $75,227 for the quarter ended September
      30, 2008. Contract work for TOT-SIBBNS is seasonal. The seasonal work starts
      in
      October and ends in April. Contracts for the season are generally secured
      between October and December. Contract work occurs between November and April.
      The seasonal nature of this business will result in greater revenue and expense
      generation in the third and fourth quarters of our fiscal year and therefore,
      results during the latter half of our fiscal year are not indicative of full
      year results. It is also likely that our cash needs will increase during the
      first and second quarters of our fiscal year as a result of decreased revenue
      generation during these periods.





**Results
      of Operations for the Six Month Period Ended September 30,
      2008**





We
      reported a net loss of $2,442,593 or $(0.01) per share for the six months ended
      September 30, 2008, compared to a loss of $121,692 or $(0.00) per share for
      the six months ended September 30, 2007. Weighted average shares
      outstanding were 215,873,093 and 100,757,770 for the six months ended September
      30, 2008, and 2007 respectively. There were no stock, options or warrants issued
      in the three months ended June 30, 2008. During the three months ended September
      30, 2008, the Company issued 3,000,000 shares in forming the TOT-SIBBNS joint
      venture. The Company issued an additional 350,000 shares for services leading
      to
      the formation of the Korlea-TOT joint venture and recorded an expense for
      services of $45,500 based on $0.13 per share which was the fair value of the
      stock on the date of issuance (August 25, 2008). Pursuant to the Subscription
      Agreement, the Company issued 5,157,600 shares of TOT Energy, Inc. common stock
      to TGR Energy, LLC in exchange for $103,152. Additionally, TGR Energy, LLC
      received five-year, fully vested, warrants to purchase 2,578,800 shares of
      common stock at an exercise price of $0.05 per share.





Revenues
      for the six months ended September 30, 2008 were $309,028 as
      compared with $0 for the six months ended September 30, 2007.
      During 2007, the Company was not engaged in revenue generating activities.
      The
      six month revenues are the same as reported for the quarter ended September
      30,
      2008 because they were derived solely from our 75%-owned TOT-SIBBNS joint
      venture which was formed on July 16, 2008.





Cost
      of
      sales was $281,087 for the six months ended September 30, 2008, which
      is primarily attributable to TOT-SIBBNS’ first
      contract.
      As noted above, the Company was not engaged in any revenue generating activities
      during 2007.


14





General
      and administrative expenses were $2,489,032 for the six months ended September
      30, 2008 as compared with $39,060 for the six months ended September 30, 2007
      when the Company had minimal administrative services and no revenue generating
      operations. The following details the components of general administrative
      expense for the six months ended September 30, 2008:





Compensation
                expense for TGR Energy, LLC Subscription Agreement
                (non-cash)
            
            $
            1,729,656Salaries
                and benefits (USA)
            
            
            289,888Professional
                Fees (accounting, legal, consulting and other)
            
            
            120,662Consulting
                fees paid in stock re Korlea-TOT formation (non-cash)
            
            
            45,500TOT-SIBBNS
                general and administrative (Russia)
            
            
            102,859Travel
            
            
            42,019Investor
                relations
            
            
            36,268Rent
            
            
            34,393Compensation
                expense recorded for options issued (non-cash)
            
            
            14,444Costs
                associated with public filings
            
            
            11,905Directors
              and officers insurance
            
            
            7,792All
                other general and administrative costs
            
            
            53,646Total
                General and Administrative Expenses
            
            $
            2,489,032





Other
      expenses were $309 for the six months ended September 30, 2008 as compared
      with
      $82,730 in other expenses for the six months ended September 30, 2007. The
      2007
      expenses relate to interest charged on related party obligations.





The
      minority interest on the joint venture TOT-SIBBN was $18,807 for the six months
      ended September 30, 2008 as compared with $0 for the six months ended September
      30, 2007. The joint venture minority interest reflects twenty-five percent
      of
      the TOT-SIBBNS net loss of $75,227 for the six months ended September 30, 2008.





**Liquidity
      and capital resources**





At
      September 30, 2008, we had an accumulated deficit of $8,148,087 and cash of
      $95,343. The Company is dependent upon receiving funds from its controlling
      stockholder, TGR Energy, LLC, which is controlled by Mike Zoi, president of
      the
      Company. Pursuant to the Subscription Agreement, TGR Energy, LLC is obligated
      to
      invest up to $2,000,000 to fund short term working capital requirements 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 with an
      exercise price of $0.05. The shares and warrants will be issued quarterly and
      the Company will record an appropriate compensation expense based on
      the fair value of the securities on the last day of each fiscal quarter
      (the date of issuance). For the six months ended September 30, 2008, TGR
      Energy, LLC provided $103,152 to the Company and was issued 5,157,600 shares
      of
      common stock and five-year warrants to purchase 2,578,800 shares of common
      stock
      at an exercise price of $0.05. The Company recorded a compensation
      charge of $1,729,656 in connection with this related party transaction as
      below market securities were issued to an entity controlled by an officer of
      the
      Company.




The
      Company borrowed $573,527 from TGR Energy, LLC, and
      $230,076 from Kazo, LLC. These companies are managed and controlled by Mike
      Zoi,
      the Company’s president. The related party loans are non-interest bearing,
      demand notes and there is no interest accrued at September 30, 2008. As of
      September 30, 2007, the Company had outstanding borrowings of $500,000 from
      TGR
      Energy, which amount is included in the total outstanding borrowings from TGR
      Energy at September 30, 2008.




Our
      goal
      is to acquire energy related companies or create joint ventures using the stock
      of the Company, where appropriate, to fund a majority of the acquisition costs
      with common stock of TOT Energy, Inc.





We
      do not
      have material exposure to market risks associated with changes in interest
      rates
      related to cash equivalent securities held at September 30, 2008.





**Off-balance
      sheet arrangements**





At
      September 30, 2008, we did not have any off-balance sheet arrangements as
      defined in item 303(a)(4) of Regulation S-K.





**Recently
      Issued Accounting Pronouncements**




On
      March
      19, 2008, the Financial Accounting Standards Board released *Statement
      No. 161, Disclosures about Derivative Instruments and Hedging
      Activities* . 
      The new 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.
      The Company does not hedge and we currently do not deal with derivative
      instruments. Management does not see an impact from this standard at this
      time.


15




On
      May 9,
      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
      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.





Item
      4T.
      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
      September 30, 2008,
      the Company continues to develop its core activities and focus its resources
      on
      the acquisition of assets in the energy sector. Our disclosure controls and
      procedures are
      currently inadequate because there are a limited number of personnel employed
      and we cannot have an adequate segregation of duties. Management works to mitigate this risk by being personally involved in all
      substantive transactions. We are in the process of reviewing and, where
      necessary, modifying controls and procedures throughout the Company. We expect
      this process to continue through the remainder of fiscal 2009.




During
      the quarter ended September 30, 2008, 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.





PART
      II —
OTHER INFORMATION





Item
      1.
      Legal proceedings





We
      are
      not currently a party to any such proceedings the outcome of which would have
      a
      material effect on our company.





Item
      2.
      Unregistered Sales of Equity Securities





Pursuant
      to the Subscription Agreement, TGR Energy, LLC is obligated to invest up to
      $2,000,000 to fund short term working capital requirements 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 with an exercise price of $0.05.
      The shares and warrants will be issued quarterly and the Company will record
      an
      appropriate compensation expense based on the intrinsic value of the instruments
      on the last day of each fiscal quarter (the date of issuance). For the three
      months ended September 30, 2008, TGR Energy, LLC provided $103,152 to the
      Company and was issued 5,157,600 shares of common stock and five-year, fully
      vested warrants to purchase 2,578,800 shares of common stock at an exercise
      price of $0.05.




During
      the six months ended September 30, 2008, the Company issued 3,000,000
      shares in forming the TOT-SIBBNS joint venture. At the closing on July 16,
      2008,
      the Company issued to Bogorad 3,000,000 shares of the Company’s common stock in
      exchange for a 75% interest in TOT-SIBBNS. The Company is obligated to issue
      to
      Bogorad 2,000,000 additional shares of the Company’s 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 the Company, in its 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 the Company declines to make such payment,
      Bogorad may require the Company to return the Company’s interest in TOT-SIBBNS
      in exchange for a payment to the Company 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.


16


In
      consideration for activities that resulted in the successful joint venture
      with
      Korlea-TOT, Kaplan Capital, LLC was issued 350,000 shares of restricted
      TOT-Energy, Inc. common stock on August 25, 2008 and a compensation charge
      of
      $45,500 was recorded to consulting fees based on the intrinsic value,
      based on a market price of $0.13 per share.




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 of the Company. The options have a term of five
      years
      from the date of grant and a strike price of $0.25 per share. A compensation
      charge of $8,000 was recorded at that time.





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 will have a term of 7 years from date of grant and a strike price of
      $0.25 per share. A compensation charge of $14,444 was recorded for the period
      based on a Black-Scholes valuation of the vested options.





The
      Company believes 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.


17





Item
      6.
      Exhibits





Exhibit
              Number
            
            Description2.1
            
            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 ofSplinex,
                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 Mergerof
                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
                ofSplinex,
                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 Exhibit 3.4 to the Company’s Annual Report on Form 10-KSB
                filed with the Commission on June 19, 200810.5
            
            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)10.13
            
            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)


18





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)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,
                200510.18
            
            Joint
                Venture Agreement with Evgeny Bogorad and TOT Energy, Inc dated July
                16,
                2008, incorporated herein by reference to Exhibit 10.1 to the Company’s
                Current Report on Form 8-K filed with the Commission on July 23,
                200810.19
            
            Notarial
                Deed dated July 17, 2008 by and between TOT Energy, Inc. and Korlea
                Invest
                Holding10.20
            
            Subscription
                Agreement, dated August 7, 2008 by and between TOT Energy, Inc. and
                TGR
                Energy, LLC14
            
            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, 200531.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                of Principal Executive Officer and Principal Financial Officer pursuant
                to
                18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002


19


**SIGNATURES**





Pursuant
      to the requirements 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.RegistrantDate:
                November 18, 2008
            By:
            /s/
                Jonathan NewName:
                Jonathan NewTitle:
                Chief Financial Officer


20