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 December 31, 2009





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.)





12100 NE
16 Ave


Suite
210


Miami, FL
33161


(Address
of principal executive offices)





(305)
891-2288


(Registrant’s
telephone number, including area code)


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 o
            Accelerated
      filer oNon-accelerated filer 
      o    (Do not check if a smaller reporting company)
            Smaller reporting company 
      x





Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.) Yes  o  No 
x





The
number of outstanding shares of common stock, $.001 par value, of the registrant
as of February 15, 2010 was 320,528,512.







TOT
ENERGY, INC.


Form
10-Q


For
the Quarter Ended December 31, 2009


INDEX




PageNo.PART
      I — FINANCIAL INFORMATIONItem
      1.
                
                Financial
      Statements
                
                3UNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEETS – AS OF DECEMBER 31, 2009 AND
      MARCH 31, 2009
                
                3UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – FOR THE THREE AND
      NINE MONTHS ENDED DECEMBER 31, 2009 AND 2008
                
                4UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – FOR THE NINE MONTHS
      ENDED DECEMBER 31, 2009 AND 2008
                
                5Notes
      to Unaudited Condensed Consolidated Financial Statements
                
                6Item
      2.
                
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                
                14Item 4T.
                
                Controls
      and Procedures
                
                19PART
      II — OTHER INFORMATIONItem
      1.
                
                Legal
      Proceedings
                
                20Item
      2.
                
                Unregistered
      Sales of Equity Securities
                
                20Item
      6.
                
                Exhibits
                
                21Signatures
                
                24References
      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





December 31, 2009
                                      
                                      
                                      March 31, 2009ASSETSCurrent
      assetsCash
                                      
                                      $
                                      453,334
                                      
                                      
                                      $
                                      99,971Deposits
                                      
                                      
                                      8,000
                                      
                                      
                                      
                                      6,000Contract
      receivable, net
                                      
                                      
                                      67,824
                                      
                                      
                                      
                                      -Cost
      in excess of related billings on uncompleted contract
                                      
                                      
                                      182,512
                                      
                                      
                                      
                                      -Inventory
      of raw materials
                                      
                                      
                                      42,876
                                      
                                      
                                      
                                      31,174Prepaid
      expenses and other assets
                                      
                                      
                                      7,202
                                      
                                      
                                      
                                      2,220Total
      current assets
                                      
                                      
                                      761,748
                                      
                                      
                                      
                                      139,365Fixed
      assetsBuilding
                                      
                                      
                                      181,209
                                      
                                      
                                      
                                      160,649Machinery
      and equipment
                                      
                                      
                                      3,444,507
                                      
                                      
                                      
                                      3,053,933Less:
      accumulated depreciation
                                      
                                      
                                      (898,751
                                      )
                                      
                                      
                                      (308,452
                                      )Total
      fixed assets (net)
                                      
                                      
                                      2,726,965
                                      
                                      
                                      
                                      2,906,130Total
      assets
                                      
                                      $
                                      3,488,713
                                      
                                      
                                      $
                                      3,045,495LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                      
                                      $
                                      209,476
                                      
                                      
                                      $
                                      51,130Accrued
      expenses
                                      
                                      
                                      1,723,879
                                      
                                      
                                      
                                      853,743Total
      liabilities
                                      
                                      
                                      1,933,355
                                      
                                      
                                      
                                      904,873COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITYPreferred
      stock ($.001 par value, 100,000,000 shares authorized and no shares issued
      and outstanding)
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock ($.001 par value, 800,000,000 shares authorized and 320,528,512 and
      300,583,108 shares issued and outstanding)
                                      
                                      
                                      320,528
                                      
                                      
                                      
                                      300,583Treasury
      stock, at cost; 250,000 shares
                                      
                                      
                                      (62,500
                                      )
                                      
                                      
                                      (62,500
                                      )Paid
      in capital
                                      
                                      
                                      25,363,130
                                      
                                      
                                      
                                      19,940,319Accumulated
      other comprehensive loss
                                      
                                      
                                      (828,217
                                      )
                                      
                                      
                                      (1,176,614
                                      )Accumulated
      deficit
                                      
                                      
                                      (22,887,627
                                      )
                                      
                                      
                                      (16,949,780
                                      )Noncontrolling
      interest
                                      
                                      
                                      (349,956
                                      )
                                      
                                      
                                      88,614Total
      equity
                                      
                                      
                                      1,555,358
                                      
                                      
                                      
                                      2,140,622Total
      liabilities and stockholders' equity
                                      
                                      $
                                      3,488,713
                                      
                                      
                                      $
                                      3,045,495




See
accompanying notes.


3


TOT
ENERGY, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS





Three Months Ended
                            December 31, 2009
                          
                          
                          Three Months Ended
                            December 31, 2008
                          
                          
                          Nine Months Ended
                            December 31, 2009
                          
                          
                          Nine Months Ended
                            December 31, 2008Sales
                          
                          $
                          116,424
                          
                          
                          $
                          -
                          
                          
                          $
                          116,424
                          
                          
                          $
                          -Cost
      of sales
                          
                          
                          98,960
                          
                          
                          
                          -
                          
                          
                          
                          98,960
                          
                          
                          
                          -Gross
      Profit
                          
                          
                          17,464
                          
                          
                          
                          -
                          
                          
                          
                          17,464
                          
                          
                          
                          -Operating
      ExpensesGeneral
      and administrative
                          
                          
                          1,814,741
                          
                          
                          
                          6,390,505
                          
                          
                          
                          6,380,380
                          
                          
                          
                          8,879,536Loss
      from operations
                          
                          
                          (1,797,277
                          )
                          
                          
                          (6,390,505
                          )
                          
                          
                          (6,362,916
                          )
                          
                          
                          (8,879,536
                          )Non-operating
      expenseOther
      income (expense)
                          
                          
                          -
                          
                          
                          
                          841
                          
                          
                          
                          (55
                          )
                          
                          
                          532Loss
      before income tax provision
                          
                          
                          (1,797,277
                          )
                          
                          
                          (6,389,664
                          )
                          
                          
                          (6,362,971
                          )
                          
                          
                          (8,879,004
                          )Income
      tax provision
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      Loss
                          
                          
                          (1,797,277
                          )
                          
                          
                          (6,389,664
                          )
                          
                          
                          (6,362,971
                          )
                          
                          
                          (8,879,004
                          )Add:
      Net loss attributable to the noncontrolling interest
                          
                          
                          45,825
                          
                          
                          
                          61,076
                          
                          
                          
                          211,746
                          
                          
                          
                          86,868Net
      loss attributable to TOT Energy, Inc.
                          
                          
                          (1,751,452
                          )
                          
                          
                          (6,328,588
                          )
                          
                          
                          (6,151,225
                          )
                          
                          
                          (8,792,136
                          )Other
      comprehensive incomeForeign
      currency translation gain (loss)
                          
                          
                          20,397
                          
                          
                          
                          (681,285
                          )
                          
                          
                          327,862
                          
                          
                          
                          (697,205
                          )Comprehensive
      loss
                          
                          $
                          (1,731,055
                          )
                          
                          $
                          (7,009,873
                          )
                          
                          $
                          (5,823,363
                          )
                          
                          $
                          (9,489,341
                          )Net
      loss per share - basic and diluted
                          
                          $
                          (0.01
                          )
                          
                          $
                          (0.03
                          )
                          
                          $
                          (0.02
                          )
                          
                          $
                          (0.04
                          )Weighted
      average number of common shares outstanding - basic and
      diluted
                          
                          
                          312,156,555
                          
                          
                          
                          223,758,378
                          
                          
                          
                          306,108,759
                          
                          
                          
                          218,501,521





See
accompanying notes.




4


TOT
ENERGY, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS





Nine Months
                    
                    
                    Nine MonthsEnded
                    
                    
                    EndedDecember 31, 2009
                    
                    
                    December 31, 2008Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (6,151,225
                    )
                    
                    $
                    (8,792,136
                    )Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:Depreciation
                    
                    
                    551,400
                    
                    
                    
                    176,895Amortization
      of Software license
                    
                    
                    -
                    
                    
                    
                    1,197Decrease
      in noncontrolling interests
                    
                    
                    211,746
                    
                    
                    
                    (35,815
                    )Share
      Based Compensation
                    
                    
                    4,819,026
                    
                    
                    
                    7,482,075Changes
      in assets and liabilities, net of acquistions and the effect of
      consolidation of equity affiliates:Prepaid
      expenses
                    
                    
                    (4,978
                    )
                    
                    
                    (10,084
                    )Contract
      receivable
                    
                    
                    (67,824
                    )
                    
                    
                    (161,836
                    )Costs
      in excess of billings
                    
                    
                    (182,512
                    )
                    
                    
                    (136,116
                    )Deposits
                    
                    
                    (2,000
                    )
                    
                    
                    (6,000
                    )Inventory
      of raw materials
                    
                    
                    (7,712
                    )
                    
                    
                    (35,371
                    )Accounts
      payable
                    
                    
                    153,599
                    
                    
                    
                    32,915Accrued
      expenses
                    
                    
                    820,537
                    
                    
                    
                    643,792Total
      adjustments
                    
                    
                    6,291,281
                    
                    
                    
                    7,951,652Net
      cash provided (used) in operating activities
                    
                    
                    140,056
                    
                    
                    
                    (840,484
                    )Cash
      flows from investing activities:Purchase
      of equipment
                    
                    
                    (1,157
                    )
                    
                    
                    (8,877
                    )Net
      cash used in investing activities
                    
                    
                    (1,157
                    )
                    
                    
                    (8,877
                    )Cash
      flows from financing activities:Contributed
      capital from equity investors
                    
                    
                    623,730
                    
                    
                    
                    803,152Contributed
      capital for Korlea-TOT joint venture
                    
                    
                    -
                    
                    
                    
                    41,709Increase
      in related party payables
                    
                    
                    -
                    
                    
                    
                    1,472,442Decrease
      in related party payables
                    
                    
                    -
                    
                    
                    
                    (1,343,615
                    )Net
      cash provided by financing activities
                    
                    
                    623,730
                    
                    
                    
                    973,688Effect
      of exchange rate changes on cash
                    
                    
                    (409,265
                    )
                    
                    
                    (22,292
                    )Net
      (decrease) increase in cash
                    
                    
                    353,363
                    
                    
                    
                    102,035Cash
      at beginning of period
                    
                    
                    99,971
                    
                    
                    
                    88,007Cash
      at end of period
                    
                    $
                    453,334
                    
                    
                    $
                    190,042Supplemental
      Disclosure of Cash Flow InformationCash
      paid during the year for:Interest
                    
                    $
                    -
                    
                    
                    $
                    -Income
      taxes
                    
                    $
                    -
                    
                    
                    $
                    -Non-cash
      investing and financing activities:Related
      party debt and accrued interest exchanged for equity
                    
                    $
                    -
                    
                    
                    $
                    637,410Common
      stock issued pursuant to subscription agreement
                    
                    $
                    4,717,677
                    
                    
                    $
                    8,877,137Common
      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, 2009.
Operating results for the three and nine months ended December 31, 2009 are not
necessarily indicative of the results that may be expected for any particular
quarterly period or the year ending March 31, 2010. 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, 2009
included in the Company’s Annual Report on Form 10-K filed with the Securities
and Exchange Commission.





Basis of
Consolidation





The
interim financial statements include the accounts of TOT Energy, Inc., the
accounts of our 75% joint venture, TOT- SIBBNS, a limited liability company
formed under the laws of Russia (also known as the Russian Federation) and the
accounts of our 51% joint venture, Korlea-TOT, a limited liability company
formed under the laws of the Czech Republic. All material intercompany accounts
and transactions have been eliminated in this consolidation.





Business
Activity





TOT
Energy, Inc. is working to acquire a portfolio of energy related assets. To this
end, from time to time, the Company may be engaged in various discussions to
acquire businesses or formulate joint venture or other arrangements with energy
companies located around the world.   Where appropriate,
acquisitions will be financed with equity shares and this may result in
substantial dilution to existing stockholders.  Prior to 2008, the
Company developed computer software products.





TOT-SIBBNS
provides exploration services to oil exploration and production companies
located in and around Novosibirsk, Russia. TOT-SIBBNS owns and operates four
oil-drilling rigs that generate the majority of the revenues of TOT-SIBBNS.
TOT-SIBBNS uses this equipment for drilling exploratory wells for fees. In
addition, TOT-SIBBNS provides engineering services and well remediation services
on a contract fee basis. The Company has determined to unwind the TOT-SIBBNS
joint venture (See Note 8 – Subsequent Events).





KORLEA-TOT
is our 51% joint venture with Korlea Invest Holding AG of Switzerland (“Korlea”)
who is a provider and trader of electricity in the Czech Republic. Korlea-TOT
was expected to assist in the marketing of oil assets sourced by other
TOT-Energy companies and contacts. There has been no activity to date with this
joint venture.





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.


6


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 December 31, 2009 and March 31,
2009, the Company had no cash equivalents. The Company maintains its U.S.
Dollar-denominated cash in a bank deposit account, the balance of which, at
times, may exceed federally insured limits. Bank accounts in the United States
are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to a
limit of $250,000.  At December 31, 2009, we had $330,183 in one
account at Bank of America and the rest of our balances did not exceed the
$250,000 FDIC limit at December 31, 2009.  At March 31, 2009, the
Company did not have any balances in USA in excess of $250,000.





The
Company also maintains bank balances in Russia and the Czech Republic and at
December 31, 2009, the balances were $17,179 and $105,972
respectively.  At March 31, 2009, bank balances in Russia and the
Czech Republic were $0 and $76,656, respectively.  The non-United
States bank balances are not insured and there is risk of loss in the event such
banks should fail.





Foreign
Currency Transactions





The
Company’s primary operations are conducted outside the United States and we use
foreign currencies to operate our consolidated foreign subsidiaries. Quarterly
income and expense items are translated into U.S. dollars using the average
interbank rate for the three-month period. Assets and liabilities are translated
into U.S. dollars using the interbank rate as of the balance sheet date. Equity
items are translated at their historical rate. The Company does not engage in
any currency hedging activities.





Revenue
Recognition





The
Company recognizes revenues from its contract on the completed contract method
due to uncertainty in counterparty performance and collections under its
terms.  Under the completed contract method, revenues and costs are
included in operations when the contract or contractually agreed upon milestone
is completed.  Any losses expected are charged to operations in the
period that such losses are probable.





Net Loss
Per Share





Basic net
loss per common share is computed by dividing net loss applicable to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the period, adjusted
for the dilutive effect of common stock equivalents, consisting of shares
issuable upon exercise of common stock options or warrants. In periods when
losses are reported, the weighted-average number of common shares outstanding
excludes common stock equivalents because their inclusion would be
anti-dilutive.





The
Company did not issue any new options for the nine months ended December 31,
2009, but recorded a compensation expense of $8,519 for options that vested
during the period.  During the quarter ended December 31, 2009, the
Company issued 6,713,215 shares of common stock and warrants to purchase
3,357,107 shares of common stock in exchange for $134,264 pursuant to the terms
of its Subscription Agreement with TGR Energy, LLC (see Notes 6 and
7).  In addition, the Company issued 3,000,000 shares of common stock
to an unrelated third party, pursuant to the terms of an agreement assigned to
the Company by TGR Energy, in exchange for $300,000 (see Note 8 – Subsequent
Events).





At
December 31, 2009, the Company had outstanding vested stock options to purchase
667,593 shares of common stock and warrants to purchase 49,455,925 shares of
common stock.  For the three and nine months ended December 31, 2009,
these securities are excluded from the earnings per share calculation because
their inclusion would be anti-dilutive.





Fair
Value of Financial Instruments





The
Company’s financial instruments consist mainly of cash deposits, short-term
payables and related party payables. The Company believes that the carrying
amounts of third-party financial instruments approximate fair value, due to
their short-term maturities and the related party payables are interest bearing
and payable on demand.





Impairment
of Long-Lived Assets





The
Company reviews its long-lived assets for impairment whenever events or changes
indicate that the carrying amount of an asset or group of assets may not be
recoverable. No impairment losses were recorded during the three and nine-month
periods ended December 31, 2009 and 2008.


7


Subsequent
Events





For the
purposes of determining whether a post-balance sheet event should be evaluated
to determine whether it has an effect on the financial statements for the period
ending December 31, 2009, subsequent events were evaluated by the Company as of
February 15, 2010, the date on which the unaudited consolidated financial
statements at and for the period ended December 31, 2009, were available to be
issued.





NOTE 2.
GOING CONCERN CONSIDERATIONS





The
Company’s financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement of liabilities
and commitments in the normal course of business. The Company had been in the
development stage until the second quarter of 2008 and has had minimal revenues
since Inception. Management recognizes that the Company must raise capital
sufficient to fund business activities until such time as it can generate
sufficient revenues and net cash flows in amounts necessary to enable it to
continue in existence. These factors include our history of net losses and that
minimal revenues have been earned to date.





The
Company is dependent upon TGR Energy, LLC or Mike Zoi to fund its operations. On
August 7, 2008, the Board of Directors of the Company approved a Subscription
Agreement dated August 7, 2008 (the “Subscription Agreement”) with TGR, wherein
TGR committed to invest up to $2,000,000 in exchange for up to 100,000,000
shares of the Company's common stock for $0.02 per share. In addition, 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 Subscription Agreement, TGR will fund the Investment
Amount as required in the Company’s operational budget. TGR’s obligation to fund
the Investment Amount will be reduced by any future third party funding or
investments in the Company on terms no less favorable than those contained in
the Subscription Agreement.  TGR remains obligated to invest up to
$21,763 remaining under the Subscription Agreement.  In January, the
Company and TGR amended the Subscription Agreement to increase the Investment
Amount to $4,000,000 (See Note 8 – Subsequent Events).





The
Company’s independent auditors’ report on its financial statements for the year
ended March 31, 2009 contains an explanatory paragraph about our ability to
continue as a going concern. Management believes that its current operating
strategy, as described herein, provides the opportunity for the Company to
continue as a going concern; however, there is no assurance this will
occur.





NOTE 3.
SEGMENT INFORMATION





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





NOTE 4.
CONTRACT ACCOUNTING





The
Company accounts for its long-term contracts using the completed contract method
of revenue recognition due to increasing uncertainties relating to its sole
customer’s ability to continue to finance the existing contract to
completion.  The completed contract method recognizes income only when
the contract, or milestone in the contract, is substantially
complete.  Project costs and related revenues are accumulated and are
reflected in operations only when an estimated loss is probable.  The
contract will be deemed complete when our customer agrees that each milestone
contained in the contract has been met.





Billed
contract receivables consist of amounts due under our second
contract.  Our initial contract has been suspended due to lack of
financing by our customer.   We have fully reserved for
uncollected billings and for costs in excess of billings for this contract in
the amount of $427,783.   There are no revenues or costs charged to
operations for the periods ended December 31, 2009 or December 31, 2008 under
the completed contract method relating to our initial contract.





Our
second drilling contract is a two-phase contract for an aggregate consideration
of approximately $419,000. Phase one of the contract was completed during the
quarter ended December 31, 2009 and contributed $116,424 to revenues during the
quarter.  Our contractual and actual gross margin on this project is
15% and we recognized $98,960 in cost of sales for the first phase of this
contract.  We incurred additional costs for the second contract of
$182,512, which have been capitalized as Project Costs on our balance
sheet.  We expect to bill approximately $302,576 and achieve a gross
margin of 15%.  The second phase should be completed by March 31,
2010.  However, in the event that the unwind of the joint venture with
TOT-SIBBNS occurs prior to the completion of this contract, revenues and costs
associated with this contract will be allocated through the date of
unwind.





For more
information, see Note 1 –  “Summary of Significant Accounting Policies
– Revenue Recognition” above.


8


NOTE 5.
ACCRUED EXPENSES





Accrued
expenses represent expenses that are owed at the end of the period and have not
been billed by the provider or are estimates of services provided.





At
December 31, 2009 and March 31, 2009, accrued expenses consisted of the
following:





December 31, 2009
                      
                      
                      March 31, 2009Accrued
      accouting fees
                      
                      
                      19,468
                      
                      
                      
                      29,968Accrued
      legal fees
                      
                      
                      11,135
                      
                      
                      
                      10,000Accrued
      Taxes
                      
                      
                      244,002
                      
                      
                      
                      104,535Accrued
      payroll
                      
                      
                      849,758
                      
                      
                      
                      509,090Other
      accrued expenses
                      
                      
                      599,516
                      
                      
                      
                      200,150$
                      1,723,879
                      
                      
                      $
                      853,743





NOTE 6.
STOCKHOLDERS’ EQUITY





The
Company is authorized to issue 800,000,000 shares of common stock, par value of
$0.001 per share. Each holder of common stock is entitled to one vote for each
share held. The Company is authorized to issue 100,000,000 shares of preferred
stock, par value $0.001 per share, which may be divided into series with the
designations, powers, preferences, and relative rights and any qualifications,
limitations or restrictions as determined by the Company’s board of
directors.





Under an
Exchange Agreement dated December 18, 2007, the Company agreed to issue
113,500,000 newly issued shares of common stock of the Company to TGR Energy,
LLC, of which 8,500,000 shares were issued to Bzinfin, S.A., a British Virgin
Islands limited corporation that is indirectly owned by an affiliate of the
Ener1 Group, and 2,125,000 shares were issued to Alexander Malovik, a principal
of Splinex, LLC, in exchange for the Bzinfin and Ener1 Group notes totaling
$3,688,132.  TGR Energy, LLC owned 98,157,334 shares of common stock
of the Company as of December 17, 2007, and after the completion of the Exchange
Agreement transactions owned an aggregate of 201,032,334 shares of common stock
of the Company as of December 18, 2007. The Company had a total of 100,757,773
shares of common stock outstanding at December 17, 2007 and 214,507,773 shares
of common stock outstanding at December 18, 2007.





On August
7, 2008, the Board of Directors approved a Subscription Agreement dated August
7, 2008 (the “ Subscription Agreement”) with TGR Energy, LLC (“TGR”), wherein
TGR committed to invest up to $2,000,000 in exchange for up to 100,000,000
shares of the Company's common stock for $0.02 per share. In addition, the
Company granted TGR warrants to purchase up to 50,000,000 shares of common stock
for $0.05 per share. These warrants may be exercised within five years from the
date of grant. The shares and warrants are issuable under the Subscription
Agreement upon the funding from time to time by TGR. The valuation date to
determine the appropriate compensation charge is the last day of the quarter
then ended.  The Subscription Agreement was amended on January 12,
2010 (See Note 8 – Subsequent Events) to increase the Investment Amount by an
additional $2,000,000 to $4,000,000 in exchange for up to an additional
100,000,000 common shares and 50,000,000 warrants to purchase the Company’s
common stock for $0.05 per share for a period of 5 years from date of
issuance.





For the
quarter and nine months ended December 31, 2009, the Company recorded
compensation expense of $0.10 per share or $8,519 and  $25,464,
respectively for options of Mr. New issued on August 13, 2008 that vested during
the quarter and the nine month period ended December 31, 2009.





Up until
May 15, 2009, Mr. New’s base salary was $140,000 with a $30,000 bonus payable
quarterly for meeting agreed upon objectives.  On May 15, 2009, Mr.
New’s base salary was reduced from $140,000 to $91,000 and his bonus was reduced
from $30,000 to $19,500 annually. To partially offset the reduction in salary,
the Company provided Mr. New with 25,000 shares of fully vested common stock in
lieu of his March 31, 2009 cash bonus and 200,000 shares of common stock which
vest monthly from April 1, 2009 to September 30, 2009.  A compensation
charge of $12,500 was recorded for the quarter ended June 30, 2009 and a
compensation charge of $10,000 was recorded for the quarter ended September 30,
2009, which reflects the market value per share ($0.10) on the first trading day
after the date of grant.





Other
employees (other than officers and directors) receiving salary reductions were
granted a total of 50,000 shares of common stock vesting monthly between April
1, 2009 and September 30, 2009.  The Company recorded a compensation
charge of $2,347 for the quarter ended June 30, 2009 and a compensation expense
of $1,042 for the quarter ended September 30, 2009, to reflect the market value
of stock provided in lieu of cash compensation.  Both of these charges
were calculated using the price per share of common stock ($0.10) on the first
trading date after the date of grant.


9


For the
quarter ended June 30, 2009, the Company accrued an expense of $64,285 relating
to stock expected to be issued in exchange for services to be provided by
Olympus Securities.  The Company is currently negotiating a revised
contract for such services.  Given the unstable equity markets last
year, the Company and Olympus are working together to find a solution that
provides value for both parties going forward.  There were no charges
for this agreement for the three months ended December 31, 2009.





For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement.  These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable.  A
compensation charge of $8,812,774 was recorded for the fiscal year ended March
31, 2009.  This amount is calculated as the difference between the
market price of our common stock at the end of each quarter in which shares were
issued and the subscription price of the common shares ($0.02) multiplied by the
number of shares issued, plus the Black-Scholes valuation of the warrants issued
as calculated at the end of each quarter.





For the
quarter ended June 30, 2009, TGR was issued 4,077,700 shares of common stock of
the Company and fully vested warrants to purchase 2,038,850 shares of common
stock of the Company for $0.05 per share in exchange for funding of $81,554
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,264,087 was recorded for the quarter ended June 30,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value as of the issue date.





For the
quarter ended September 30, 2009, TGR was issued 5,395,600 shares of common
stock of the Company and fully vested warrants to purchase 2,697,800 shares of
common stock of the Company for $0.05 per share in exchange for funding of
$107,912 provided during the quarter under the terms of the Subscription
Agreement. A compensation charge of $2,077,306 was recorded for the quarter
ended September 30, 2009 as an officer of the Company is also a principal of TGR
and the securities issued were below market value as of the issue
date.





For the
quarter ended December 31, 2009, TGR was issued 6,713,215 shares of common stock
of the Company and fully vested warrants to purchase 3,357,107 shares of common
stock of the Company for $0.05 per share in exchange for funding of $134,264
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,376,284 was recorded for the quarter ended December
31, 2009 as an officer of the Company is also a principal of TGR and the
securities issued were below market value as of the issue date.  In
addition, TGR and the Company executed an amendment to the Subscription
Agreement that increases the Investment Amount from $2,000,000 to $4,000,000
with a corresponding increase in stock and warrants to be provided (See Note 8 –
Subsequent Events).  All other terms of the Subscription Agreement
remain the same.





The
Company entered into a Sponsorship Agreement with American Speed Factory dated
April 22, 2009, whereby the Company receives certain promotional services and
sponsorship rights to display the Company’s logo in connection with the 2009
Ferrari Challenge racing season in exchange for the issuance of 500,000 shares
of restricted stock of the Company.  This arrangement is valued at
$50,000, which amount was recorded as an advertising expense for the quarter
ended June 30, 2009.





At
December 31, 2009, the Company had options to purchase 1,200,000 shares of
common stock outstanding under its stock option plan, of which options to
purchase 667,593 shares of common stock are vested, with an exercise price of
$0.25 per share and with a remaining weighted average contractual term of 5.16
years. The Company also had warrants to purchase 49,455,925 shares of common
stock outstanding at December 31, 2009 with a strike price of $0.05 per share
and a remaining average contractual term of 4.01 years.





Pursuant
to a Stock Purchase Agreement dated November 23, 2009, TGR agreed to sell to
Dune Capital Group ("Dune") an aggregate of 5,000,000 shares of common stock of
TOT Energy, Inc. held by TGR for a purchase price of $0.10 per share or an
aggregate of $500,000. The purchase price is required to be paid on or
before April 1, 2010. Dune paid $300,000 on November 23, 2009. In order to
ensure compliance with obligations under Section 16 of the Securities Exchange
Act of 1934, prior to the issuance of shares to Dune by TGR, TGR assigned this
Purchase Agreement to the Company. Accordingly, the Company received $300,000
pursuant to this agreement and issued an aggregate of 3,000,000 shares of common
stock of the Company to Dune on January 12, 2010.





NOTE 7.
RELATED PARTY TRANSACTIONS





On August
7, 2008, the Company and TGR, which holds 95% of the Company’s outstanding
common stock, entered into the Subscription Agreement described above pursuant
to which TGR has agreed to provide funding of up to $2,000,000 (the “Investment
Amount”) in exchange for up to 100,000,000 shares of the Company’s common stock
and warrants to purchase up to 50,000,000 shares of the Company’s common stock
at an exercise price of $0.05 per share. Pursuant to the Subscription Agreement,
TGR will fund the Investment Amount as required in the Company’s operational
budget. TGR’s obligation to fund the Investment Amount will be reduced by any
future third party funding or investments in the Company on terms no less
favorable than those contained in the Subscription Agreement.





Subsequent
to December 31, 2009, TGR agreed to increase its funding commitment from
$2,000,000 to $4,000,000 in exchange for up to an additional 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 for a
period of five years from date of issuance.


10


See Note
6 – Stockholders’ Equity, for
more information relating to equity securities issued to TGR Energy, LLC under
the terms of the Subscription Agreement and Note 8 – Subsequent Events, for
information relating to the amendment to the Subscription
Agreement.





NOTE 8.
SUBSEQUENT EVENTS





On
January 12, 2010, TGR and the Company amended the Subscription Agreement to
increase the Investment Amount from $2,000,000 to up to $4,000,000 in exchange
for up to an additional 100,000,000 common shares and 50,000,000 warrants to
purchase common stock for $0.05 with a life of five years from date of
issuance.  The remaining terms of the Subscription Agreement are
unchanged.





On or
about January 27, 2010, the Company determined to unwind the TOT-SIBBNS joint
venture.  The Company and TOT-SIBBNS are currently discussing the
terms of an unwind agreement whereby the Company will exchange its 75% interest
in TOT-SIBBNS for the 3,000,000 shares given to Evgeny Borograd.  We
expect to finalize the unwind agreement by March 31, 2010.  In the
event that the unwind of the joint venture with TOT_SIBBNS occurs prior to the
completion of the second drilling contract described in Note 4, revenues and
costs associated with this contract will be allocated through the date of
unwind.





The
following pro-forma presents an unaudited condensed consolidated balance sheet
at December 31, 2009 and an unaudited condensed income statement for the nine
months ended December 31, 2009 with pro-forma adjustments to show the effects of
the unwind of the TOT-SIBBNS joint venture that we assumed for this
presentation to have occurred on December 31, 2009.  The actual date
for the unwind transaction is expected to be on or about March 31,
2010.





11


TOT
ENERGY, INC


UNAUDITED
CONDENSED PRO-FORMA BALANCE SHEET




December 31, 2009
                                          
                                          
                                          Proforma
                                            Adjustments
                                          
                                          Ref.
                                          
                                          Proforma
                                            December 31, 2009ASSETSCurrent
      assetsCash
                                          
                                          $
                                          453,334
                                          
                                          
                                          $
                                          (17,179
                                          )
                                          (A)
                                          
                                          $
                                          436,155Deposits
                                          
                                          
                                          8,000
                                          
                                          
                                          
                                          -
                                          
                                          (A)
                                          
                                          
                                          8,000Contract
      receivable, net
                                          
                                          
                                          67,824
                                          
                                          
                                          
                                          (67,824
                                          )
                                          (A)
                                          
                                          
                                          -Cost
      in excess of related billings on uncompleted
                                          
                                          
                                          182,512
                                          
                                          
                                          
                                          (182,512
                                          )
                                          (A)
                                          
                                          
                                          -Inventory
      of raw materials
                                          
                                          
                                          42,876
                                          
                                          
                                          
                                          (42,876
                                          )
                                          (A)
                                          
                                          
                                          -Prepaid
      expenses and other assets
                                          
                                          
                                          7,202
                                          
                                          
                                          
                                          (5
                                          )
                                          (A)
                                          
                                          
                                          7,197Total
      current assets
                                          
                                          
                                          761,748
                                          
                                          
                                          
                                          (310,396
                                          )
                                          
                                          
                                          
                                          451,352Fixed
      assetsBuilding
                                          
                                          
                                          181,209
                                          
                                          
                                          
                                          (181,209
                                          )
                                          (A)
                                          
                                          
                                          -Machinery
      and equipment
                                          
                                          
                                          3,444,507
                                          
                                          
                                          
                                          (3,432,188
                                          )
                                          (A)
                                          
                                          
                                          12,319Less:
      accumulated depreciation
                                          
                                          
                                          (898,751
                                          )
                                          
                                          
                                          893,476
                                          
                                          (A)
                                          
                                          
                                          (5,275
                                          )Total
      fixed assets (net)
                                          
                                          
                                          2,726,965
                                          
                                          
                                          
                                          (2,719,921
                                          )
                                          
                                          
                                          
                                          7,044Total
      assets
                                          
                                          $
                                          3,488,713
                                          
                                          
                                          $
                                          (3,030,317
                                          )
                                          
                                          
                                          $
                                          458,396LIABILITIES
      AND STOCKHOLDERS' DEFICIENCY IN ASSETSCurrent
      liabilitiesAccounts
      payable
                                          
                                          $
                                          209,476
                                          
                                          
                                          
                                          (180,042
                                          )
                                          (A)
                                          
                                          $
                                          29,434Accrued
      expenses
                                          
                                          
                                          1,723,879
                                          
                                          
                                          
                                          (888,236
                                          )
                                          (A)
                                          
                                          
                                          835,643Total
      liabilities
                                          
                                          
                                          1,933,355
                                          
                                          
                                          
                                          (1,068,278
                                          )
                                          
                                          
                                          
                                          865,077COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      EQUITYPreferred
      stock ($.001 par value, 100,000,000 shares authorized and no shares issued
      and outstanding
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          -Common
      stock ($.001 par value, 800,000,000 shares authorized and 320,528,512 and
      300,583,108 shares issued and outstanding)
                                          
                                          
                                          320,528
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          320,528Treasury
      stock, at cost; 3,250,000 shares
                                          
                                          
                                          (62,500
                                          )
                                          
                                          
                                          (450,000
                                          )
                                          (B)
                                          
                                          
                                          (512,500
                                          )Paid
      in capital
                                          
                                          
                                          25,363,130
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          
                                          25,363,130Accumulated
      other comprehensive income (loss)
                                          
                                          
                                          (828,217
                                          )
                                          
                                          
                                          840,742
                                          
                                          (A)
                                          
                                          
                                          12,525Accumulated
      deficit
                                          
                                          
                                          (22,887,627
                                          )
                                          
                                          
                                          (2,740,249
                                          )
                                          (C)
                                          
                                          
                                          (25,627,876
                                          )Noncontrolling
      interest
                                          
                                          
                                          (349,956
                                          )
                                          
                                          
                                          387,468
                                          
                                          (A)
                                          
                                          
                                          37,512Total
      equity
                                          
                                          
                                          1,555,358
                                          
                                          
                                          
                                          (1,962,039
                                          )
                                          
                                          
                                          
                                          (406,681
                                          )Total
      liabilities and stockholders' equity
                                          
                                          $
                                          3,488,713
                                          
                                          
                                          $
                                          (3,030,317
                                          )
                                          
                                          
                                          $
                                          458,396




NOTES:




(A)
Adjustment to eliminate TOT-SIBBNS Assets, Liabilities and Equity
amounts.




(B) Cost
of Treasury Stock calculated as fair value on 12/31/09.




(C) Loss
from disposal of discontinued operations.


12





TOT
ENERGY, INC.


UNAUDITED
CONDENSED CONSOLIDATED PRO-FORMA INCOME STATEMENT


FOR
THE NINE MONTHS ENDED DECEMBER 31, 2009





FISCAL
                          
                          
                          
                          
                          
                          FISCALYEAR TO DATE
                          
                          
                          PRO-FORMA
                          
                          
                          YEAR TO DATEACTUAL
                          
                          
                          ADJUSTMENTS
                          
                          
                          PROFORMASales
                          
                          $
                          116,424
                          
                          
                          $
                          (116,424
                          )
                          
                          $
                          -Cost
      of sales
                          
                          
                          98,960
                          
                          
                          
                          (98,960
                          )
                          
                          
                          -Gross
      Profit
                          
                          
                          17,464
                          
                          
                          
                          (17,464
                          )
                          
                          
                          -Operating
      ExpensesGeneral
      and administrative
                          
                          
                          6,380,380
                          
                          
                          
                          (844,859
                          )
                          
                          
                          5,535,521Total
      operating expenses
                          
                          
                          6,380,380
                          
                          
                          
                          (844,859
                          )
                          
                          
                          5,535,521Loss
      from operations
                          
                          
                          (6,362,916
                          )
                          
                          
                          827,395
                          
                          
                          
                          (5,535,521
                          )Non-operating
      income (expense)Other
      Income (expense)
                          
                          
                          (55
                          )
                          
                          
                          19,330
                          
                          
                          
                          19,275Loss
      before income tax provision
                          
                          
                          (6,362,971
                          )
                          
                          
                          846,725
                          
                          
                          
                          (5,516,246
                          )Income
      tax provision
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Net
      loss from continuing operations
                          
                          
                          (6,362,971
                          )
                          
                          
                          846,725
                          
                          
                          
                          (5,516,246
                          )Net
      loss attributable to non-controlling interest
                          
                          
                          211,746
                          
                          
                          
                          (211,642
                          )
                          
                          
                          104Net
      loss from discontinued operations
                          
                          
                          -
                          
                          
                          
                          (635,083
                          )
                          
                          
                          (635,043
                          )Loss
      from disposal of discontinued operations
                          
                          
                          -
                          
                          
                          
                          (2,740,249
                          )
                          
                          
                          (2,740,249
                          )Net
      loss before income taxes
                          
                          $
                          (6,151,225
                          )
                          
                          $
                          (2,740,249
                          )
                          
                          $
                          (8,891,434
                          )


13


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. These statements relate to our expectations, hopes,
beliefs, 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
products and services; introduction of new products and services; expected
hiring levels; marketing plans; increases of selling, general and administrative
costs; financing requirements and capital raising plans; successful integration
and development of acquired businesses; regulatory and economic factors
affecting the oil and gas business and other factors that may impact our
acquisition and development strategy, some of which are beyond our control and
difficult to predict.  These statements are only predictions and are
subject to a number of assumptions, risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in the
forward-looking statements. The following important factors, in addition to
those discussed in our other filings with the Securities and Exchange Commission
(the “Commission”) from time to time, and other unforeseen events or
circumstances, could affect our future results and could cause those results or
other outcomes to differ materially from those expressed or implied in our
forward-looking statements: general economic conditions; competition; weather;
our ability to raise capital; our ability to control costs; changes within our
industries; new and upgraded products and services by us or our competitors;
employee retention; sovereign risk; legal and regulatory issues; changes in
accounting policies or practices; currency translation and exchange risks; and
the market price of oil.





All forward-looking
statements are based on
information available to us on the date of this filing, and we assume no obligation to update such statements, although we will
continue to comply with our obligations under the securities
laws.





The following discussion should be
read in conjunction with our audited financial statements and
notes contained in our Annual Report on Form 10-K for the fiscal year ended
March 31, 2009 filed with the Commission and the consolidated interim financial statements and related
notes included in this Report.





General





We are
working to build a diversified portfolio of energy assets.   To
this end, from time to time, we may be engaged in various discussions to acquire
businesses or formulate joint venture or other arrangements with energy
companies located around the world. Our policy is not to disclose discussions or
potential transactions until definitive agreements have been executed. Where
appropriate, acquisitions will be financed with equity shares and this may
result in substantial dilution to existing stockholders.





On July
16, 2008, we entered into a Joint Venture Agreement (the “JV
Agreement”) with Evgeny Bogorad (“Bogorad”), owner of Sibburnefteservis, Ltd. of
Novosibirsk, Russia, an oil service 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 $6,221,881.





At the
closing on July 16, 2008, we issued to Bogorad 3,000,000 shares of our common
stock in exchange for a 75% interest in TOT-SIBBNS. We are obligated to issue to
Bogorad 2,000,000 additional shares of common stock upon TOT-SIBBNS obtaining
$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 $1.00 per share, then we, in our sole
discretion, must either make an additional payment in cash or additional shares
of stock to Bogorad in an amount equal to the difference in the value per share
and $1.00 multiplied by the total number of shares held by Bogorad, or, if we
decline to make such payment, Bogorad may require us to return our interest in
TOT-SIBBNS in exchange for a payment to us of the fair market value of any
assets acquired directly by TOT-SIBBNS (other than the assets initially
contributed to the Joint Venture by Bogorad pursuant to the JV Agreement) and
75% of the retained earnings, accounts receivable and cash of TOT-SIBBNS.
Bogorad will act as the manager of TOT-SIBBNS. We have the ability to appoint a
majority of the Board of Directors of TOT-SIBBNS.





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 have generated the majority of the revenues of
TOT-SIBBNS. TOT-SIBBNS uses this equipment for drilling exploratory wells for
fees. In addition, TOT-SIBBNS provides engineering services and well remediation
services on a contract fee basis.





On or
about January 27, 2010, the Company determined to unwind the TOT-SIBBNS joint
venture.  The Company and TOT-SIBBNS are currently discussing the
terms of an unwind agreement whereby the Company will exchange its 75% interest
in TOT-SIBBNS for the 3,000,000 shares given to Evgeny Borograd.  We
expect to finalize the unwind agreement by March 31, 2010. For more
information relating to the unwind of the TOT-SIBBNS joint venture including pro
forma presentation as if the unwind occurred on December 31, 2009, see Note 8 –
Subsequent Events of the Notes to Condensed Financial Statements, which
information is incorporated herein by reference.


14




Our
second contract for drilling services was entered into in November 2009 for an
aggregate of approximately $419,000 in billings over the two phases of the
contract. The first phase was completed during the quarter ended December 31,
2009 and we received payments in December and January aggregating
$116,424.  Our contractual and actual gross margin on this project is 15%
and we recognized $98,960 in cost of sales for the first phase of this
contract.  Costs incurred for the second phase
was  $182,512, and these costs are capitalized as project costs on our
balance sheet.  These costs represent activities and associated costs
for the final phase of the second contract for which we expect to bill
approximately $302,576 and achieve a gross margin of 15%.  The second
phase should be completed by March 31, 2010.  However, in the event
that the unwind of the joint venture with TOT-SIBBNS occurs prior to the
completion of this contract, revenues and costs associated with this contract
will be allocated through the date of unwind.





KORLEA-TOT
is our 51% joint venture with Korlea Invest Holding AG of Switzerland (“Korlea”)
who is a provider and trader of energy assets in the Czech Republic. The new
joint venture, Korlea-TOT, established as of July 17, 2008, is expected to
assist in the marketing of oil assets sourced by other TOT-Energy companies and
contacts.  There has been no activity to date with this joint
venture.





Short
term financing is provided by TGR Energy, LLC (“TGR”) as we require additional
working capital, pursuant to a Subscription Agreement dated August 7, 2008 (the
“Subscription Agreement”). TGR has agreed to provide up to $2,000,000 (the
“Investment Amount”) in exchange for up to 100,000,000 shares of common stock
and warrants to purchase up to 50,000,000 shares of common stock at an exercise
price of $0.05 per share. Pursuant to the Subscription Agreement, TGR will fund
the Investment Amount as required in our operational budget. TGR’s obligation to
fund the Investment Amount will be reduced by any future third party funding or
investment on terms no less favorable than those contained in the Subscription
Agreement.  On January 12, 2010, TGR agreed to increase its funding
commitment from $2,000,000 to $4,000,000 in exchange for up to an additional
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 for a period of five years from date of issuance.





For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement.  These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable.  A
compensation charge of $8,812,774 was recorded for the fiscal year ended March
31, 2009.  This amount is calculated as the difference between the
market price of our common stock at the end of each quarter in which shares were
issued and the subscription price of the common shares ($0.02) multiplied by the
number of shares issued, plus the Black-Scholes valuation of the warrants issued
as calculated at the end of each quarter.





For the
quarter ended June 30, 2009, TGR was issued 4,077,700 shares of common stock of
the Company and fully vested warrants to purchase 2,038,850 shares of common
stock of the Company for $0.05 per share in exchange for funding of $81,554
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,264,087 was recorded for the quarter ended June 30,
2009 as an officer of the Company is also a principal of TGR and the securities
issued were below market value as of the issue date.





For the
quarter ended September 30, 2009, TGR was issued 5,395,600 shares of common
stock of the Company and fully vested warrants to purchase 2,697,800 shares of
common stock of the Company for $0.05 per share in exchange for funding of
$107,912 provided during the quarter under the terms of the Subscription
Agreement. A compensation charge of $2,077,306 was recorded for the quarter
ended September 30, 2009 as an officer of the Company is also a principal of TGR
and the securities issued were below market value as of the issue
date.





For the
quarter ended December 31, 2009, TGR was issued 6,713,215 shares of common stock
of the Company and fully vested warrants to purchase 3,357,107 shares of common
stock of the Company for $0.05 per share in exchange for funding of $134,264
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,376,284 was recorded for the quarter ended December
31, 2009 as an officer of the Company is also a principal of TGR and the
securities issued were below market value as of the issue date.





The
Company entered into a Sponsorship Agreement with American Speed Factory dated
April 22, 2009, whereby the Company would receive certain promotional services
and sponsorship rights to display the Company’s logo in connection with the 2009
Ferrari Challenge racing season in exchange for the issuance of 500,000 shares
of restricted stock of the Company.  This arrangement is valued at
$50,000, which amount was recorded as an advertising expense for the quarter
ended June 30, 2009.





Up until
May 15, 2009, Mr. New’s base salary was $140,000 with a $30,000 bonus payable
quarterly for meeting agreed upon objectives.  On May 15, 2009, Mr.
New’s base salary was reduced from $140,000 to 91,000 and his bonus was reduced
from $30,000 to $19,500 annually. To partially offset the reduction in salary,
the Company provided Mr. New with 25,000 shares of fully vested common stock in
lieu of his March 31, 2009 cash bonus and 200,000 shares of common stock which
vest monthly from April 1, 2009 to September 30, 2009.  A compensation
charge of $12,500 was recorded for the quarter ended June 30, 2009 and a
compensation charge of $10,000 was recorded for the quarter ended September 30,
2009, which reflects the market value per share ($0.10) on the first trading day
after the date of grant.





Other
employees (other than officers and directors) receiving salary reductions were
granted a total of 50,000 shares of common stock vesting monthly between April
1, 2009 and September 30, 2009.  The Company recorded a compensation
expense of $2,347 for the quarter ended June 30, 2009 and a compensation expense
of $1,042 for the quarter ended September 30, 2009, to reflect the market
value of stock provided in lieu of cash compensation.  Both of these
charges were calculated using the price per share of common stock ($0.10) on the
first trading date after the date of grant.





For the
quarter ended June 30, 2009, the Company accrued an expense of $64,285 relating
to stock expected to be issued in exchange for services to be provided by
Olympus Securities.  The Company is currently negotiating a revised
contract for such services.  Given the unstable equity markets over
the last year, the Company and Olympus are working together to find a solution
that provides value for both parties.  There were no charges relating
to this agreement for subsequent quarters.


15


Pursuant
to a Stock Purchase Agreement dated November 23, 2009, TGR agreed to sell to
Dune Capital Group ("Dune") an aggregate of 5,000,000 shares of common stock of
TOT Energy, Inc. held by TGR for a purchase price of $0.10 per share or an
aggregate of $500,000. The purchase price is required to be paid on or
before April 1, 2010. Dune paid $300,000 on November 23, 2009. In order to
ensure compliance with obligations under Section 16 of the Securities Exchange
Act of 1934, prior to the issuance of shares to Dune by TGR, TGR assigned this
Purchase Agreement to the Company. Accordingly, the Company received $300,000
pursuant to this agreement and issued an aggregate of 3,000,000 shares of common
stock of the Company to Dune on January 12, 2010.





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, as well as the termination of TOT-SIBBNS first contract and
the decision to unwind the TOT-SIBBNS joint venture. 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, 2009 contains an
explanatory paragraph about our ability to continue as a going
concern.   The Company is currently developing a downstream solar
business that will provide complete  solar solutions (design,
installation, maintenance and finance) to commercial customers.  This
will be accomplished through acquisitions and hiring of key
personnel.  We expect to utilize existing commercial real estate
industry relationships of our management to generate opportunities for solar
installation proposals in the United States.   Management
believes that our current operating plans to develop a downstream solar
business, 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 Periods Ended December 31, 2009 and
2008





We
reported a net loss of  $1,751,452 or $(0.01) per share for the three
months ended December 31, 2009, compared to a net loss of $6,328,588 or $(0.03)
per share for the quarter ended December 31, 2008. Weighted average shares
outstanding were 312,156,555 and 223,758,378 for the quarters ended December 31,
2009 and 2008, respectively.





The net
loss for the three month period ended December 31, 2009 was negatively impacted
by the non-cash compensation expense of $1,376,284 related to shares and
warrants issued pursuant to the Subscription Agreement with TGR, which was
substantially less that the non-cash compensation expense of $5,683,956 for the
three months ended December 31, 2008.





TOT-SIBBNS
accounts for projects using the completed contract method where all costs are
capitalized on the balance sheet as project costs.  Contract billings
are recorded as a reduction to project costs and revenue will only be recognized
once amounts collected exceed costs incurred.  We reported $116,424
in revenue from the first phase of our second drilling contract, obtained
in November 2009, during the three months ended December 31, 2009 and we had no
revenue for the three months ended December 31, 2008. Additionally, pursuant to
the completed contract method, costs incurred for our second oil drilling
contract were $98,960 for the quarter ended December 31, 2009.  In
addition, project costs for the second phase of the contract were
$182,512.  Project costs for our first contract were $124 for the
quarter ended December 31, 2009 and this amount was reserved for as
uncollectible.





General
and administrative expenses for the three months ended December 31, 2009 were
$1,814,741 of which $200,662 was attributable to TOT-SIBBNS and $1,614,079 was
attributable to TOT Energy (primarily relating to non-cash compensation
expense).  All general and administrative expenses relating to
domestic operations were lower than reported in the comparable three month
period ended December 31, 2008.  Travel, rent and investor relations
expenses were all lower in the quarter ended December 31, 2009 versus December
31, 2008 as the Company worked to reduce operating expenses.  Salaries
and benefits are also lower due to lower headcount and salary
reductions.  Professional fees were also lower due to reduced
accounting and legal fees.


16





TOT
-SIBBNS general and administrative expenses were lower than the comparable
quarter one year ago as a result of less activity relating to contract
performance during the quarter ended December 31, 2009.  The following
table details the major expense items by category for the Company for the three
months ended December 31, 2009 compared to the three months ended December 31,
2008:





December 31, 2009
                    
                    
                    December 31, 2008
                    
                    
                    VariancesCompensation
      expense for TGR Energy, LLC Subscription Agreement
                    
                    $
                    1,376,284
                    
                    
                    $
                    5,683,956
                    
                    
                    $
                    (4,307,672
                    )TOT-SIBBNS
      General and Administrative
                    
                    
                    200,662
                    
                    
                    
                    244,343
                    
                    
                    
                    (43,681
                    )Travel
                    
                    
                    1,117
                    
                    
                    
                    61,056
                    
                    
                    
                    (59,939
                    )Rent
                    
                    
                    3,000
                    
                    
                    
                    23,448
                    
                    
                    
                    (20,448
                    )Investor
      Relations
                    
                    
                    -
                    
                    
                    
                    18,765
                    
                    
                    
                    (18,765
                    )Salaries
      and Benefits
                    
                    
                    171,659
                    
                    
                    
                    235,659
                    
                    
                    
                    (64,000
                    )Professional
      Fees
                    
                    
                    33,096
                    
                    
                    
                    88,580
                    
                    
                    
                    (55,484
                    )Other
                    
                    
                    28,923
                    
                    
                    
                    34,698
                    
                    
                    
                    (5,775
                    )TOTAL
                    
                    $
                    1,814,741
                    
                    
                    $
                    6,390,505
                    
                    
                    $
                    (4,575,764
                    )





During
the three months ended December 31, 2009, we obtained funding of an aggregate of
$134,264 under the Subscription Agreement with TGR and recognized a non-cash
compensation expense of $1,376,284. This charge is the result of an intrinsic
value calculation that measures the difference between fair value on date of
issuance of the shares and the purchase price per share under the Subscription
Agreement, which amounted to a compensation expense of $872,718. Additionally,
the warrants to purchase 3,357,107 shares of common stock issued in connection
with these fundings resulted in a corresponding compensation expense of $503,566
based on a Black-Scholes valuation model.





The
non-controlling interest relating to the TOT-SIBBNS and Korlea-TOT joint
ventures were $45,800 and $25, respectively, for the three months ended December
31, 2009 as compared with $61,076 and $0, respectively, for the three months
ended December 31, 2008. The joint venture non-controlling interest reflects the
joint venture partner’s ownership of each joint venture.





Results
of Operations for the Nine-Month Periods Ended December 31, 2009 and
2008





We
reported a net loss of $6,151,225 or $(0.02) per share for the nine months ended
December 31, 2009, compared to a net loss of $8,792,136 or $(0.04) per share for
the nine months ended December 31, 2008. Weighted average shares outstanding
were 306,108,759 and 218,501,521 for the quarters ended December 31, 2009 and
2008, respectively.





During
the nine months ended December 31, 2009, we obtained funding of an aggregate of
$323,730 under the Subscription Agreement with TGR and recognized a non-cash
compensation expense of $4,717,677. This charge is the result of an intrinsic
value calculation that measures the difference between fair value on date of
issuance of the shares and the purchase price per share under the Subscription
Agreement, which amounted to a compensation expense of $3,037,158. Additionally,
the warrants to purchase 8,093,757 shares of common stock issued in connection
with these fundings resulted in a corresponding compensation expense of
$1,680,519 based on a Black-Scholes valuation model.





TOT-SIBBNS
general and administrative expenses were $864,134 for the nine months ended
December 31, 2009 as compared with $347,202 reported for the nine months ended
December 31, 2008. We formed the TOT-SIBBNS joint venture on July 16, 2008 and
therefore the 2008 period presented includes 165 days of expenses while the 2009
period has the full fiscal year (270 days) beginning April 1,
2009.  In addition, costs for the second quarter ended September 30,
2009 were $222,713 higher than the comparable quarter ended September 30, 2008
due to increased business activities and 15 less business days of expenses,
which negatively impacted the year to date general and administrative expenses
for the period ended December 31, 2009.





The
following table summarizes general and administrative expenses for the nine
months ended December 31, 2009 and 2008:


17





December 31, 2009
                  
                  
                  December 31, 2008
                  
                  
                  VariancesCompensation
      expense for TGR Energy, LLC Subscription Agreement
                  
                  $
                  4,717,677
                  
                  
                  $
                  7,422,131
                  
                  
                  $
                  (2,704,454
                  )TOT-SIBBNS
      general and administrative (Russia)
                  
                  
                  864,134
                  
                  
                  
                  347,202
                  
                  
                  
                  516,932Investor
      relations
                  
                  
                  83,535
                  
                  
                  
                  55,033
                  
                  
                  
                  28,502All
      other general and administrative expenses for TOT USA
                  
                  
                  38,540
                  
                  
                  
                  64,885
                  
                  
                  
                  (26,345
                  )Salaries
      and benefits (USA)
                  
                  
                  456,048
                  
                  
                  
                  527,812
                  
                  
                  
                  (71,764
                  )Compensation
      expense recorded for options issued
                  
                  
                  25,464
                  
                  
                  
                  22,963
                  
                  
                  
                  2,501Compensation
      expense for stock in lieu of salary
                  
                  
                  75,889
                  
                  
                  
                  -
                  
                  
                  
                  75,889Insurance
      - Directors and Officers
                  
                  
                  11,875
                  
                  
                  
                  11,388
                  
                  
                  
                  487Travel
                  
                  
                  22,373
                  
                  
                  
                  103,075
                  
                  
                  
                  (80,702
                  )Rent
                  
                  
                  7,000
                  
                  
                  
                  57,841
                  
                  
                  
                  (50,841
                  )Consulting
      fees (non-cash) paid in stock re Korlea-TOT formation
                  
                  
                  -
                  
                  
                  
                  45,500
                  
                  
                  
                  (45,500
                  )Professional
      Fees (accounting, legal, Consulting and other)
                  
                  
                  77,845
                  
                  
                  
                  221,706
                  
                  
                  
                  (143,861
                  )Total
      General and Administrative Expenses
                  
                  $
                  6,380,380
                  
                  
                  $
                  8,879,536
                  
                  
                  $
                  (2,499,156
                  )





Compensation
expense for the quarter ended December 31, 2009 was favorable as compared to the
same period last year primarilydue to the funding
differences under the Subscription Agreement.  At December 31, 2009,
funding under the Subscription Agreement totaled $323,730 as compared with
$1,440,562 for the nine-month period ended December 31, 2008.





Investor
relations expense increased year on year due to a non-cash charge of $64,285
relating to services expected from Olympus Securities.





Salaries
and benefits were decreased for the nine months ended December 31, 2009 as
compared with the nine months ended December 31, 2008 due to headcount
reductions and reductions in salaries of remaining staff.  This
decrease was substantially offset by a non-cash charge of $75,889 relating to
compensation expense in lieu of salary.  This amount represents the
value of stock provided to employees to partially offset salary
reductions.





Travel
expenses decreased during the nine months ended December 31, 2009 as compared
with December 31, 2008.  Travel has been reduced and Mike Zoi has not
been charging the Company for some of his travel expenses.





Rent
expense is decreased for the nine months ended December 31, 2009 as compared
with the nine months ended December 31, 2008.  This decrease is due to
moving to less expensive office space.





Professional
fees also decreased for the nine months ended December 31, 2009 as compared with
the nine months ended December 31, 2008.  Professional fees in 2008
included transaction costs for the TOT-SIBBNS joint venture that did not recur
in 2009.  In addition, our accounting and legal fees have been reduced
as we manage such costs more efficiently.





Liquidity
and capital resources





At
December 31, 2009, we had an accumulated deficit of $22,887,627 and cash of
$453,334. We are dependent upon receiving funds from our controlling
stockholder, TGR Energy, LLC, which is controlled by our president, Mike Zoi.
Pursuant to the Subscription Agreement, TGR 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 our common stock and warrants to purchase up to 50,000,000
shares of common stock with an exercise price of $0.05. The shares and warrants
will be issued quarterly and we will record an appropriate compensation expense
as necessary based on the fair value of the securities on the last day of each
fiscal quarter (the date of issuance). At December 31, 2009, the remaining
investment obligation was $21,763.  On January 12, 2010, TGR agreed to
increase its funding commitment under the Subscription Agreement from $2,000,000
to $4,000,000 in exchange for up to an additional 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 for a period of
five years from date of issuance.





For the
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement. These issuances
were in exchange for financings under the Subscription Agreement in the
aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410 related
to refinancing of previously outstanding notes payable. A compensation charge of
$8,812,774 was recorded for the fiscal year ended March 31, 2009. This amount is
calculated as the difference between the market price of our common stock at the
end of each quarter in which shares were issued and the subscription price of
the common shares ($0.02) multiplied by the number of shares issued, plus the
Black-Scholes valuation of the warrants issued as calculated at the end of each
quarter.


18


For the
nine months ended December 31, 2009, TGR was issued 16,186,515 shares of common
stock of the Company and fully vested warrants to purchase 8,093,757 shares of
common stock of the Company for $0.05 per share in exchange for funding of
$323,730 provided during the nine months ended December 31, 2009 under the terms
of the Subscription Agreement. A compensation charge of $4,717,677 was recorded
for the nine months ended December 31, 2009 as an officer of the Company is also
a principal of TGR and the securities issued were below market value as of the
issue date.





Pursuant
to a Stock Purchase Agreement dated November 23, 2009, TGR agreed to sell to
Dune Capital Group ("Dune") an aggregate of 5,000,000 shares of common stock of
TOT Energy, Inc. held by TGR for a purchase price of $0.10 per share or an
aggregate of $500,000. The purchase price is required to be paid on or
before April 1, 2010. Dune paid $300,000 on November 23, 2009. In order to
ensure compliance with obligations under Section 16 of the Securities Exchange
Act of 1934, prior to the issuance of shares to Dune by TGR, TGR assigned this
Purchase Agreement to the Company. Accordingly, the Company received $300,000
pursuant to this agreement and issued an aggregate of 3,000,000 shares of common
stock of the Company to Dune on January 12, 2010.





Off-balance
sheet arrangements





At
December 31, 2009, we did not have any off-balance sheet arrangements as defined
in item 303(a)(4) of Regulation S-K.





Recently
Issued Accounting Pronouncements





In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of
FASB Statement No. 162.” SFAS No. 168 sets forth the FASB Accounting Standards
Codification (the “Codification”) as the single source of authoritative
nongovernmental GAAP. The Codification became effective on July 1, 2009 and is
the official source of authoritative, nongovernmental U.S. GAAP, superseding
existing FASB, American Institute of Certified Public Accountants (AICPA), EITF,
and related literature. After the Codification became effective on July 1, 2009,
only one level of authoritative U.S. GAAP exists, other than guidance issued by
the Securities and Exchange Commission. All other accounting literature excluded
from the Codification will be considered non-authoritative. The Codification is
effective for interim and annual periods ending after September 15, 2009 and was
first adopted by the Company for the three month period ended September 30,
2009. The adoption of this statement did not have a material impact on the
Company’s consolidated financial statements.





In May
2008, the FASB issued Accounting Standards Codification (“ASC”) 855, “Subsequent
Events” (formerly SFAS No. 165), which establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be issued.
Adoption of this Statement did not result in a change in current
practice.





In
September 2006, the FASB issued FASB ASC 820, “Fair Value Measurements and
Disclosures” which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. The Company adopted FASB ASC 820, “Fair Value
Measurements and Disclosures” (formerly SFAS 157) effective April 1, 2008 for
all financial assets and liabilities and any other assets and liabilities that
are recognized or disclosed at fair value on a recurring basis (see “NOTE 10 —
Fair Value Measurement”). The adoption of this statement on April 1, 2008, did
not have a significant impact on the Company’s consolidated financial position,
results of operations or cash flows.





Item
4. 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
December 31, 2009, we continue to develop our core activities and focus our
resources on the acquisition of assets in the energy sector. Our disclosure
controls and procedures are currently 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 as resources
permit. We expect this process to continue through the fiscal year
2011.





During
the quarter ended December 31, 2009, 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.


19


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 financial condition or results of
operations.





Item
2. Unregistered Sales of Equity Securities





For the
quarter ended December 31, 2009, TGR was issued 6,713,215 shares of common stock
of the Company and fully vested warrants to purchase 3,357,107 shares of common
stock of the Company for $0.05 per share in exchange for funding of $134,264
provided during the quarter under the terms of the Subscription
Agreement.





Pursuant
to a Stock Purchase Agreement dated November 23, 2009, TGR agreed to sell to
Dune Capital Group ("Dune") an aggregate of 5,000,000 shares of common stock of
TOT Energy, Inc. held by TGR for a purchase price of $0.10 per share or an
aggregate of $500,000. The purchase price is required to be paid on or
before April 1, 2010. Dune paid $300,000 on November 23, 2009. In order to
ensure compliance with obligations under Section 16 of the Securities Exchange
Act of 1934, prior to the issuance of shares to Dune by TGR, TGR assigned this
Purchase Agreement to the Company. Accordingly, the Company received $300,000
pursuant to this agreement and issued an aggregate of 3,000,000 shares of common
stock of the Company to Dune on January 12, 2010.





We
believe that each of the foregoing securities transactions were exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, by virtue of Section 4(2) of the Securities Act which exempts
transactions by an issuer not involving any public offering.


20


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 of Splinex, incorporated herein by reference to Exhibit
      3.1 to Splinex’s Registration Statement on Form S-1 filed with the
      Commission on June 24, 2004 (Registration No.
  333-116817)3.2
            
            Certificate
      of Merger of Splinex, incorporated herein by reference to Exhibit 3.2 to
      Amendment No. 3 to Splinex’s Registration Statement on Form S-1 filed with
      the Commission on December 27, 2004 (Registration No.
      333-116817)3.3
            
            Bylaws
      of Splinex, incorporated herein by reference to Exhibit 3.3 to Splinex’s
      Registration Statement on Form S-1 filed with the Commission on June 24,
      2004 (Registration No. 333-116817)3.4
            
            Certificate
      of Amendment of Articles of Incorporation, incorporated herein by
      reference to Appendix A to Schedule 14C filed with the Commission on
      February 11, 2009.10.1
            
            Bridge
      Loan Agreement between Registrant and Ener1 Group, Inc. dated November 2,
      2004 incorporated herein by reference to Exhibit 10.13 to Amendment No. 2
      to Splinex’s Registration Statement on Form S-1 filed with the Commission
      on December 3, 2004 (Registration No. 333-116817)3.4
            
            Certificate
      of Amendment of Articles of Incorporation herin filed by reference to
      Appendix A to Schedule 14C filed with the Commission on February 11,
      2009.10.1
            
            Bridge
      Loan Agreement between Registrant and Ener1 Group, Inc. dated November 2,
      2004 incorporated herein by reference to Exhibit 10.13 to Amendment No. 2
      to Splinex’s Registration Statement on Form S-1 filed with the Commission
      on December 3, 2004 (Registration No. 333-116817)10.2
            
            Amendment
      to Bridge Loan Agreement between Registrant and Ener1 Group, Inc. dated
      November 17, 2004 incorporated herein by reference to Exhibit 10.14 to
      Amendment No. 2 to Splinex’s Registration Statement on Form S-1 filed with
      the Commission on December 3, 2004 (Registration No.
      333-116817)10.3
            
            Employment
      Agreement between Christian Schormann and Splinex dated January 12, 2005,
      incorporated herein by reference to Exhibit 10.15 of the Current Report on
      Form 8-K filed with the Commission on January 25, 2005.10.4
            
            Revolving
      Debt Funding Commitment Agreement between Bzinfin, S.A. and Registrant,
      dated as of June 9, 2004, incorporated herein by reference to Exhibit
      10.1 to Splinex’s Registration Statement on Form S-1 filed with the
      Commission on June 24, 2004 (Registration No.
  333-116817)10.5
            
            2004
      Stock Option Plan of Registrant, incorporated herein by reference to
      Exhibit 10.2 to Splinex’s Registration Statement on Form S-1 filed with
      the Commission on June 24, 2004 (Registration No.
    333-116817)10.6
            
            Form of
      Stock Option Agreement of Registrant, incorporated herein by reference to
      Exhibit 10.3 to Splinex’s Registration Statement on Form S-1 filed with
      the Commission on June 24, 2004 (Registration No.
    333-116817)10.7
            
            Sublease
      Agreement between Ener1 Group, Inc. and Splinex, LLC, dated as of
      November 1, 2003, assigned to Registrant as of April 1, 2004,
      incorporated herein by reference to Exhibit 10.4 to Splinex’s Registration
      Statement on Form S-1 filed with the Commission on June 24, 2004
      (Registration No. 333-116817)


21





10.8
              
              Contribution
      Agreement between Splinex, LLC and Registrant, dated as of April 1,
      2004, incorporated herein by reference to Exhibit 10.5 to Splinex’s
      Registration Statement on Form S-1 filed with the Commission on June 24,
      2004 (Registration No. 333-116817)10.9
              
              Assignment
      and Assumption of Employment Agreements between Splinex, LLC and
      Registrant, dated as of April 1, 2004, incorporated herein by
      reference to Exhibit 10.6 to Splinex’s Registration Statement on Form S-1
      filed with the Commission on June 24, 2004 (Registration No.
      333-116817)10.10
              
              Global
      Bill of Sale and Assignment and Assumption Agreement between Splinex, LLC
      and Registrant, dated as of April 1, 2004, incorporated herein by
      reference to Exhibit 10.7 to Splinex’s Registration Statement on Form S-1
      filed with the Commission on June 24, 2004 (Registration No.
      333-116817)10.11
              
              Employment
      letter between Gerard Herlihy and Registrant, dated May 20, 2004,
      incorporated herein by reference to Exhibit 10.8 to Splinex’s Registration
      Statement on Form S-1 filed with the Commission on June 24, 2004
      (Registration No. 333-116817)10.12
              
              Consulting
      Agreement between Dr. Peter Novak and Registrant, dated
      January 1, 2004, incorporated herein by reference to Exhibit 10.9 to
      Splinex’s Registration Statement on Form S-1 filed with the Commission on
      June 24, 2004 (Registration No. 333-116817)10.13
              
              Form
      of Employee Innovations and Proprietary Rights Assignment Agreement,
      incorporated herein by reference to Exhibit 10.10 to Splinex’s
      Registration Statement on Form S-1 filed with the Commission on June 24,
      2004 (Registration No. 333-116817)10.14
              
              Form
      of Indemnification Agreement, incorporated herein by reference to Exhibit
      10.11 to Amendment No. 3 to Splinex’s Registration Statement on Form S-1
      filed with the Commission on December 27, 2004 (Registration No.
      333-116817)10.15
              
              Employment
      Agreement between Michael Stojda and Registrant, dated September 1,
      2004, incorporated herein by reference to Exhibit 10.12 to Amendment No. 1
      to Splinex’s Registration Statement on Form S-1 filed with the Commission
      on October 15, 2004 (Registration No. 333-116817)10.16
              
              Reseller
      Agreement between Waterloo Maple Inc. and TOT Energy, Inc. dated May 27,
      2005., incorporated herein by reference to Exhibit 10.1 to Splinex’s
      Current Report on Form 8-K, filed with the Commission on June 3,
      200510.17
              
              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
              
              Termination
      Agreement dated October 17, 2005 by and between Splinex and Christian
      Schormann, incorporated by reference to Exhibit 10.2 to Splinex’s Current
      Report on Form 8-K, filed with the Commission on November 21,
      200510.19
              
              First
      Amendment to Splinex Technology, Inc. 2004 Stock Option Plan incorporated
      by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K,
      filed with the Commission on June 30, 200910.20
      *
              
              Amendment
      to the Subscription Agreement between TGR Energy, LLC and TOT Energy, Inc.
      dated January 12, 201010.21
      *
              
              Assignment
      between TGR Energy, LLC and TOT Energy, Inc. dated January 12,
      201014
              
              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
      Section 906 of the Sarbanes-Oxley Act of
2002





* Filed
herewith.


23


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:
      February 15, 2010
              By:
              /s/
      Jonathan NewName:
      Jonathan NewTitle:
      Chief Financial Officer


24