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 June 30, 2010





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
16th 
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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes (not required) 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 x   No  o





The
number of outstanding shares of common stock, $.001 par value, of the registrant
as of August 5, 2010 was 330,815,827.





TOT
ENERGY, INC.


Form
10-Q


For
the Quarter Ended June 30, 2010


INDEX




PageNo.PART
      I — FINANCIAL INFORMATIONItem
      1.
                  
                  Financial
      Statements
                  
                  3UNAUDITED
      CONDENSED CONSOLIDATED BALANCE SHEETS – AS OF JUNE 30, 2010 AND MARCH
      31, 2010
                  
                  3UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – FOR THE THREE
      MONTHS ENDED JUNE 30, 2010 and 2009
                  
                  4UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – FOR THE THREE
      MONTHS ENDED JUNE 30, 2010 and 2009
                  
                  5Notes
      to Unaudited Condensed Consolidated Financial Statements
                  
                  6Item
      2.
                  
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                  
                  11Item 4T.
                  
                  Controls
      and Procedures
                  
                  15PART
      II — OTHER INFORMATIONItem
      1.
                  
                  Legal
      Proceedings
                  
                  15Item
      2.
                  
                  Unregistered
      Sales of Equity Securities
                  
                  15Item
      6.
                  
                  Exhibits
                  
                  16Signatures
                  
                  19References
      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




June
      30, 2010
            
            
            March
      31, 2010ASSETSCurrent
      assetsCash
            
            $
            80,358
            
            
            $
            277,830Deposits
            
            
            8,000
            
            
            
            8,000Prepaid
      expenses and other assets
            
            
            1,000
            
            
            
            20,152Total
      current assets
            
            
            89,358
            
            
            
            305,982Fixed
      assetsMachinery
      and equipment
            
            
            12,319
            
            
            
            12,319Less:
      accumulated depreciation
            
            
            (5,785
            )
            
            
            (5,530
            )Total
      fixed assets (net)
            
            
            6,534
            
            
            
            6,789Total
      assets
            
            $
            95,892
            
            
            $
            312,771LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilitiesAccounts
      payable
            
            $
            39,316
            
            
            $
            23,702Accrued
      expenses
            
            
            1,021,691
            
            
            
            920,559Total
      current liabilities
            
            
            1,061,007
            
            
            
            944,261COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS'
      DEFICITPreferred
      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
      330,815,827  and 320,778,512 shares issued and
      outstanding)
            
            
            330,815
            
            
            
            320,778Treasury
      stock, at cost; 6,250,000 and 3,250,000 shares
            
            
            (2,641,640
            )
            
            
            (2,341,640
            )Paid
      in capital
            
            
            26,024,658
            
            
            
            24,671,186Accumulated
      other comprehensive loss
            
            
            1,230
            
            
            
            9,972Accumulated
      deficit
            
            
            (24,708,150
            )
            
            
            (23,319,787
            )Noncontrolling
      interest
            
            
            27,972
            
            
            
            28,001Total
      deficit
            
            
            (965,115
            )
            
            
            (631,490
            )Total
      liabilities and stockholders' deficit
            
            $
            95,892
            
            
            $
            312,771




See
accompanying notes.


3


TOT
ENERGY, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS




Three Months Ended
                June 30, 2010
              
              
              Three Months Ended
                June 30, 2009Sales
              
              $
              -
              
              
              $
              -Cost of sales
              
              
              -
              
              
              
              -Gross
      Profit
              
              
              -
              
              
              
              -Operating
      ExpensesGeneral
      and administrative
              
              
              1,388,333
              
              
              
              1,588,579Loss
      from operations
              
              
              (1,388,333
              )
              
              
              (1,588,579
              )Non-operating
      expenseOther
      income (expense)
              
              
              -
              
              
              
              -Loss
      before income tax provision
              
              
              (1,388,333
              )
              
              
              (1,588,579
              )Income
      tax provision
              
              
              -
              
              
              
              -Net
      Loss from continuing operations
              
              
              (1,388,333
              )
              
              
              (1,588,579
              )Net
      loss attributable to the noncontrolling interest
              
              
              29
              
              
              
              14Net
      loss from discontinued operations
              
              
              -
              
              
              
              (37,274
              )Net
      loss
              
              
              (1,388,304
              )
              
              
              (1,625,839
              )Other
      comprehensive incomeForeign
      currency translation loss
              
              
              (8,742
              )
              
              
              (7,411
              )Comprehensive
      loss
              
              $
              (1,397,046
              )
              
              $
              (1,633,250
              )Net
      loss per share from continuing operations - basic and
    diluted
              
              $
              (0.00
              )
              
              $
              (0.01
              )Net
      loss per share from discontinued operations - basic and
      diluted
              
              $
              -
              
              
              $
              -Net
      loss per share - basic and diluted
              
              $
              (0.00
              )
              
              $
              (0.01
              )Weighted
      average number of common shares outstanding - basic and
      diluted
              
              
              320,890,038
              
              
              
              300,822,957




See
accompanying notes.


4




TOT
ENERGY, INC.


UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS





Three
      Months
                      
                      
                      Three
      MonthsEnded
                      
                      
                      EndedJune 30, 2010
                      
                      
                      June 30, 2009Cash
      flows from operating activities:Net
      loss
                      
                      $
                      (1,388,304
                      )
                      
                      $
                      (1,625,839
                      )Adjustments
      to reconcile net income (loss) to net cash used in operating
      activities:Depreciation
                      
                      
                      256
                      
                      
                      
                      255Decrease
      in noncontrolling interests
                      
                      
                      (29
                      )
                      
                      
                      (14
                      )Share
      based compensation
                      
                      
                      1,162,762
                      
                      
                      
                      1,337,360Loss
      from discontinued operations
                      
                      
                      -
                      
                      
                      
                      37,274Changes
      in assets and liabilities, net of acquistions and the effect of
      consolidation of equity affiliates:Prepaid
      expenses
                      
                      
                      19,152
                      
                      
                      
                      (14,037
                      )Deposits
                      
                      
                      -
                      
                      
                      
                      (2,000
                      )Accounts
      payable
                      
                      
                      15,614
                      
                      
                      
                      4,086Accrued
      expenses
                      
                      
                      101,073
                      
                      
                      
                      160,865Total
      adjustments
                      
                      
                      1,298,828
                      
                      
                      
                      1,523,789Net
      cash used in operating activities of continuing operations
                      
                      
                      (89,476
                      )
                      
                      
                      (102,050
                      )Net
      cash from investing activities of continuing operations
                      
                      
                      -
                      
                      
                      
                      -Cash
      flows from financing activities:Repurchase
      of common stock
                      
                      
                      (300,000
                      )
                      
                      
                      -Contributed
      capital from equity investors
                      
                      
                      200,746
                      
                      
                      
                      81,554Net
      cash (used in) provided by financing  activities of continuing
      operations
                      
                      
                      (99,254
                      )
                      
                      
                      81,554Cash
      Flows from discontinued operationsNet
      cash used in discontinued operations
                      
                      
                      -
                      
                      
                      
                      (11,875
                      )Effect
      of exchange rate changes on cash
                      
                      
                      (8,742
                      )
                      
                      
                      21,353Net
      (decrease) increase in cash
                      
                      
                      (197,472
                      )
                      
                      
                      (11,018
                      )Cash
      at beginning of period
                      
                      
                      277,830
                      
                      
                      
                      99,971Cash
      at end of period
                      
                      $
                      80,358
                      
                      
                      $
                      88,953Supplemental
      Disclosure of Cash Flow InformationCash
      paid during the year for:Interest
                      
                      $
                      -
                      
                      
                      $
                      -Income
      taxes
                      
                      $
                      -
                      
                      
                      $
                      -Non-cash
      investing and financing activities:Common
      stock issued pursuant to subscription agreement
                      
                      $
                      1,345,045
                      
                      
                      $
                      1,264,087





See
accompanying notes.


5


TOT
ENERGY, INC.





NOTES TO
CONDENSED CONSOLIDATED 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.





In
January 2010, the Company altered its business focus and decided to exercise its
option to unwind the joint venture and pursue other development opportunities in
the alternative energy business.  The Company and TOT-SIBBNS executed an
unwind agreement whereby the Company exchanged its 75% interest in TOT-SIBBNS
for the 3,000,000 shares given to Evgeny Borograd in 2008. The unwind of
the joint venture was consummated as of March 31, 2010. The unwind of the
TOT-SIBBNS joint venture has been accounted for using the guidance provided in
ASC 845 (previously APB 29), as a disposal “other than by sale” similar to a
spin-off transaction, with the shares received reflected as treasury stock and
recorded on the Company’s balance sheet at its carrying basis in the net assets
of the joint venture as of March 31, 2010. Operations of TOT-SIBBNS are
included in the Company’s consolidated financial statements until March 31, 2010
as discontinued operations, but are not included in the consolidated financial
statements subsequent to March 31, 2010.





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, 2010.
Operating results for the three months ended June 30, 2010 are not necessarily
indicative of the results that may be expected for any particular quarterly
period or the year ending March 31, 2011. 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, 2010
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. 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. Although
we are not currently engaged in operating activities, we intend to develop or
acquire an alternative energy solar business concentrating on commercial solar
installations and other energy saving/management offerings.





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.


6


Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
balance sheet date and the reported amounts of expenses for the period
presented. Actual results could differ from those estimates.





Cash and
Cash Equivalents





Cash and
cash equivalents include highly liquid money market investments purchased with
an original maturity of three months or less. At June 30, 2010 and March 31,
2010, 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 June 30, 2010 and March 31, 2010, our balances did
not exceed the FDIC limit.





The
Company also maintains a bank account in Czech Republic and at June 30, 2010 and
March 31, 2010, the balances were $75,208 and $84,009, respectively.  The
Czech Republic bank balances are not insured and there is risk of loss in the
event the bank should fail.





Foreign
Currency Transactions





The
Company’s primary operations were formerly conducted outside the United States
and we used 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.





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 three months ended June 30, 2010,
but recorded a compensation expense of $8,426 for previously granted options
that vested during the period.  During the quarter ended June 30, 2010, the
Company issued 10,037,315 shares of common stock and warrants to purchase
5,019,157 shares of common stock in exchange for $200,746 pursuant to the terms
of its Subscription Agreement with TGR Energy, LLC (see Notes 6 and 7).  In
addition, during the quarter ended June 30, 2010, the Company repurchased
3,000,000 shares of common stock from an unrelated third party in exchange for
$300,000 (see Note 6).





At June
30, 2010, the Company had outstanding vested stock options to purchase 835,185
shares of common stock and warrants to purchase 54,475,082 shares of common
stock.  For the three months ended June 30, 2010, 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.





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 was in the
development stage until the second quarter of 2008 and has had minimal revenues
since Inception. Since the unwind of the TOT-SIBBNS joint venture effective
March 31, 2010, the Company has had no operations and may again be considered a
development stage company. The Company intends to focus on developing or
acquiring an alternative energy solar business concentrating on commercial solar
installations.  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, of which there can be no assurance.


7


The
Company is dependent upon TGR Energy, LLC or Mike Zoi (as a result of his
controlling interest in TGR and the Company’s dependence on the Subscription
Agreement with TGR) to fund its operations. 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.  In January 2009, the Company and TGR amended the Subscription
Agreement to increase the Investment Amount to $4,000,000.





The
Company’s independent auditors’ report on the Company’s financial statements for
the year ended March 31, 2010 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 was the oil and gas service sector
until the Company decided to unwind the TOT-SIBBNS joint venture effective March
31, 2010. The Company’s accounting policies for segments are the same as those
described in the summary of significant accounting policies.





NOTE
4.  JOINT VENTURES





On July
18, 2008, the Company executed an agreement to acquire a 75% controlling
interest in TOT-SIBBNS, a limited liability company organized under the laws of
the Russian Federation. Pursuant to the Joint Venture Agreement, the owner (the
“JV Partner”) of Sibburnefteservis, Ltd. of Novosibirsk, Russia (“SIBBNS”)
contributed certain assets of SIBBNS to TOT SIBBNS in exchange for 3,000,000
shares of the Company’s common stock. The assets were appraised at more than $6
million at the time of contribution and the Company was obligated to issue an
additional 2,000,000 shares to the JV Partner if TOT SIBBNS achieved $10,000,000
in cumulative revenues. If on the third anniversary of the joint venture
agreement, the Company’s stock price is not at least $1.00 per share, the
Company had the option of making an additional payment to the JV Partner
or returning the Company’s interest in the joint venture to the JV
Partner.





On or
about January 27, 2010, the Company determined to unwind the TOT-SIBBNS joint
venture.  The Company and TOT-SIBBNS executed an unwind agreement whereby
the Company exchanged its 75% interest in TOT-SIBBNS for the 3,000,000 shares
given to Evgeny Borograd in 2008. The unwind of the joint venture was
consummated as of March 31, 2010. The unwind of the TOT-SIBBNS joint
venture has been accounted for using the guidance provided in ASC 845
(previously APB 29), as a disposal “other than by sale” similar to a spin-off
transaction, with the shares received reflected as treasury stock and recorded
on the Company’s balance sheet at its carrying basis in the net assets of the
joint venture as of March 31, 2010.





The
Company formed a joint venture, Korlea-TOT Energy s.r.o., in July 2008 with its
Czech Republic partner Korlea Invest. The Company invested $56,000 to provide
the 51% of share capital that the Company owns for this limited liability
company in the Czech Republic. The Company financed this investment through a
related party note with Kazo, LLC. Korlea-TOT Energy s.r.o. was expected to
engage in marketing and trading of oil and natural gas in Eastern Europe. The
Company issued Alexander Kaplan 350,000 newly issued shares of Company stock for
his assistance in completing this transaction.  To date, the joint venture
has no activity.





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 June
30, 2010 and March 31, 2010, accrued expenses consisted of the
following:




June 30, 2010
                    
                    
                    March 31, 2010Accrued
      professional fees
                    
                    
                    33,068
                    
                    
                    
                    31,468Accrued
      payroll
                    
                    
                    838,625
                    
                    
                    
                    723,428Other
      accrued expenses
                    
                    
                    149,998
                    
                    
                    
                    165,663$
                    1,021,691
                    
                    
                    $
                    920,559


8


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 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
fiscal year ended March 31, 2009, TGR was issued an aggregate of 82,725,335
shares of common stock of the Company and fully vested warrants to purchase
41,362,168 shares of common stock of the Company at an exercise price of $0.05
per share pursuant to the terms of the Subscription Agreement.  These
issuances were in exchange for financings under the Subscription Agreement in
the aggregate amount of $1,654,507 of which $1,017,097 was cash and $637,410
related to refinancing of previously outstanding notes payable.  A
compensation charge of $8,827,218 was recorded for the fiscal year ended March
31, 2009.  This amount is calculated as the difference between the market
price of our common stock at the end of each quarter in which shares were issued
and the subscription price of the common shares ($0.02) multiplied by the number
of shares issued, plus the Black-Scholes valuation of the warrants issued as
calculated at the end of each quarter.





For the
fiscal year ended March 31, 2010, TGR was issued an aggregate of 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 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 $323,730.  A compensation charge of $4,717,677 was
recorded for the fiscal year ended March 31, 2010. 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, 2010, TGR was issued 10,037,315 shares of common stock of
the Company and fully vested warrants to purchase 5,019,157 shares of common
stock of the Company for $0.05 per share in exchange for funding of $200,746
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,154,336 was recorded for the quarter ended June 30,
2010 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 June 30, 2010, the Company recorded compensation expense of $0.10
per share or $8,426 for options of Mr. New issued on August 13, 2008 that vested
during the quarter ended June 30, 2010.





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.  At March 31, 2010, the Company provided Mr. New with
250,000 shares of fully vested common stock for services provided to the company
under a salary reduction.  A compensation charge of $37,500 was recorded
for the quarter ended March 31, 2010, which reflects the market value per share
($0.15) on the first trading day after the date of grant.


9


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.





On
November 1, 2008, the Company entered into a Letter Agreement with Olympus
Securities LLC (the “Agreement”). Under the Agreement, Olympus was appointed TOT
Energy’s exclusive financial advisor and investment banker (collectively, the
“Services”) for a period of seven (7) months. After expiration of this
initial term, the Agreement is to automatically continue on a month-to-month
basis, with each party having the right to terminate on thirty (30) days notice.
The Agreement included a fee of one thousand dollars ($1,000) per month in
return for the Services, except for the first month, where, instead of the
monthly fee, the Company granted five (5) year warrants to Olympus to purchase
one million (1,000,000) shares of the Company's common stock at
ten cents ($0.10) per share. The warrants were valued at $149,998 and were to be
amortized over the seven-month term of the Agreement. The Agreement
contains other provisions relating to payments of cash, stock and warrants in
connection with any future financing or investment transaction completed through
Olympus. The Company has not yet paid a cash fee or provided the abovementioned
warrants to Olympus due to the failure by Olympus to provide meaningful
investment banking services until world financial markets stabilized and, more
recently, due to the unwind of the TOT-SIBBNS joint venture. The Company has
amortized the warrant charge of $149,999 during fiscal 2010 and accrued this
amount in the financial statements.





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.





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.  On April 28,
2010, the Company agreed to terminate the Stock Purchase Agreement with
Dune and rescind the prior issuance of common stock. The Company repurchased the
3,000,000 shares of common stock previously issued to Dune for $300,000. 
The redeemed shares were accounted for as treasury stock.





At June
30, 2010, the Company had options to purchase 1,200,000 shares of common stock
outstanding under its stock option plan, of which options to purchase 835,185
shares of common stock are vested, with an exercise price of $0.25 per share and
with a remaining weighted average contractual term of 4.74 years. The Company
also had warrants to purchase 54,475,082 shares of common stock outstanding at
June 30, 2010 with a strike price of $0.05 per share and a remaining average
contractual term of 3.75 years.





NOTE 7.
RELATED PARTY TRANSACTIONS





On August
7, 2008, the Company and TGR, which held 97% 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 $4,000,000 (the “Investment Amount”)
in exchange for up to 200,000,000 shares of the Company’s common stock and
warrants to purchase up to 100,000,000 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 investment in the company on terms no less
favorable than those contained in the Subscription Agreement.  See Note
6 – Stockholders ’ Equity, for more information relating to
equity securities issued to TGR Energy, LLC under the terms of the Subscription
Agreement.





NOTE
8.  DISCONTINUED OPERATIONS





Effective
March 31, 2010, the Company entered into a Joint Venture Dissolution Agreement,
which dissolved the TOT-SIBBNS joint venture.  The Company received the
3,000,000 shares of common stock issued in 2008 in connection with the
establishment of the joint venture and the assets of the joint venture were
returned to the non-controlling interest holder (JV Partner).  For
comparative purposes, the discontinued operations results are taken out of
operations and detailed as discontinued operations in the Consolidated Condensed
Balance Sheets and Income Statements as of March 31, 2010.  The following
table provides additional details on the results from discontinued operations
for the quarter ended June 30, 2009. There was no effect on results for the
quarter ended June 30, 2010 as the unwind was consummated as of March 31,
2010.


10





Quarter endedJune 30, 2009Revenues
                        
                        $
                        -Cost
      of Sales
                        
                        
                        -Operating
      Expenses
                        
                        
                        (337,900
                        )Other
      (Income) Expenses
                        
                        
                        (55
                        )Foreign
      currency gain
                        
                        
                        300,681Net
      loss from discontinued operations
                        
                        
                        (37,274
                        )





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 alternative energy 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 acceptance of alternative energy products and
services.





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, 2010 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 renewable 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. Since the
unwind of the TOT-SIBBNS joint venture effective March 31, 2010, the Company has
had no operations. The Company intends to focus on developing or acquiring an
alternative energy business concentrating on commercial solar
installations.  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, of which there can be no assurance.





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 acted as the manager of TOT-SIBBNS although we had the ability to
appoint a majority of the Board of Directors of TOT-SIBBNS.


11


TOT-SIBBNS
provided exploration services to oil exploration and production companies
located in and around Novosibirsk, Russia. TOT-SIBBNS owned and operated four
oil-drilling rigs that have generated the majority of the revenues of TOT-SIBBNS
prior to March 31, 2010. TOT-SIBBNS used this equipment for drilling exploratory
wells for fees. In addition, TOT-SIBBNS provided 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 executed an unwind agreement whereby
the Company exchanged its 75% interest in TOT-SIBBNS for the 3,000,000 shares
given to Evgeny Borograd. The unwind of the joint venture was consummated
as of March 31, 2010.The unwind of the
TOT-SIBBNS joint venture was accounted for using the guidance provided in ASC
845 (previously APB 29). In this regard, the unwind will be accounted for as a
spin-off, with the shares received reflected as treasury stock and recorded on
the Company’s balance sheet at its carrying basis in the net assets of the joint
venture as of March 31, 2010.  For more information relating to the unwind
of the TOT-SIBBNS joint venture, see Note 4 – Joint Ventures, of the Notes to
Condensed Financial Statements, which information is incorporated herein by
reference.





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”), an entity controlled by
our president, 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 $8,827,218 was recorded for the fiscal year ended March
31, 2009.  This amount is calculated as the difference between the market
price of our common stock at the end of each quarter in which shares were issued
and the subscription price of the common shares ($0.02) multiplied by the number
of shares issued, plus the Black-Scholes valuation of the warrants issued as
calculated at the end of each quarter.





For the
fiscal year ended March 31, 2010, TGR was issued an aggregate of 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 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 $323,730.  A compensation charge of $4,717,677 was
recorded for the fiscal year ended March 31, 2010. 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, 2010, TGR was issued 10,037,315 shares of common stock of
the Company and fully vested warrants to purchase 5,019,157 shares of common
stock of the Company for $0.05 per share in exchange for funding of $200,746
provided during the quarter under the terms of the Subscription Agreement. A
compensation charge of $1,154,336 was recorded for the quarter ended June 30,
2010 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.


12


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.  At March 31, 2010, the Company provided Mr. New with
250,000 shares of fully vested common stock for services provided to the company
under a salary reduction.  A compensation charge of $37,500 was recorded
for the quarter ended March 31, 2010, which reflects the market value per share
($0.15) 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.





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.  On April 28,
2010, the Company agreed to terminate the Stock Purchase Agreement with
Dune and rescind the prior issuance of common stock. The Company repurchased the
3,000,000 shares of common stock previously issued to Dune for $300,000. 
The redeemed shares were accounted for as treasury stock.





At June
30, 2010, the Company had options to purchase 1,200,000 shares of common stock
outstanding under its stock option plan, of which options to purchase 835,185
shares of common stock are vested, with an exercise price of $0.25 per share and
with a remaining weighted average contractual term of 4.74 years. The Company
also had warrants to purchase 54,475,082 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 3.75 years.





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. Since the unwind of the
TOT-SIBBNS joint venture effective March 31, 2010, the Company has had no
operations. The Company intends to focus on developing or acquiring an
alternative energy business concentrating on commercial solar
installations.  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, of which there can be no assurance. We are dependent upon
TGR Energy, LLC or Mike Zoi (as a result of his controlling interest in TGR and
the Company’s dependence on the Subscription Agreement with TGR) to fund our
operations. Our independent auditors’ report on our financial statements for the
year ended March 31, 2010 contains an explanatory paragraph about our
ability to continue as a going concern.   The Company intends to
develop or acquire a downstream solar business that will provide
complete solar solutions (design, installation, maintenance and finance) to
commercial customers.  This is intended to 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 or acquire
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 June 30, 2010 and
2009





We
reported a net loss of  $1,388,304 or $(0.00) per share for the three
months ended June 30, 2010, compared to a net loss of $1,625,839 or $(0.01) per
share for the quarter ended June 30, 2009. Weighted average shares outstanding
were 320,890,038 and 300,822,957 for the quarters ended June 30, 2010 and 2009,
respectively.





The net
loss for the three month period ended June 30, 2010 was negatively impacted by
the non-cash compensation expense of $1,162,762 related primarily to shares and
warrants issued pursuant to the Subscription Agreement with TGR. The non-cash
compensation expense for the three months ended June 30, 2009 was
$1,264,087.





General
and administrative expenses for the three months ended June 30, 2010 were
$1,388,333 of which $1,162,762 was attributable to non-cash compensation
expenses as compared to general and administrative expenses for the three months
ended June 30, 2009 of $1,588,579 that includes non-cash compensation expenses
of $1,264,087.


13


Primarily
due to a reduction in investor relations expenses of $71,285, the remaining
general and administrative expenses of $225,571 for the three months ended June
30, 2010 were slightly lower than the general and administrative expenses
(excluding non-cash compensation) of $251,254 for the three months ended June
30, 2009.  The savings in investor relations was partially offset by higher
professional fees.





During
the three months ended June 30, 2010, we obtained funding of an aggregate of
$200,746 under the Subscription Agreement with TGR and recognized a non-cash
compensation expense of $1,154,336. 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 $702,612. Additionally,
the warrants to purchase 5,019,157 shares of common stock issued in connection
with these fundings resulted in a corresponding compensation expense of $451,724
based on a Black-Scholes valuation model.





The
non-controlling interest relating to the Korlea-TOT joint venture was $29 for
the three months ended June 30, 2010 as compared with $14 for the three months
ended June 30, 2009. The joint venture non-controlling interest reflects the
joint venture partner’s ownership of the joint venture.





Liquidity
and capital resources





At June
30, 2010, we had an accumulated deficit of $24,708,150 and cash of $80,358. 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 $4,000,000 to fund
short term working capital requirements in exchange for up to 200,000,000 shares
of our common stock and warrants to purchase up to 100,000,000 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 June 30, 2010, the remaining investment obligation
was $1,821,017.





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.  On April 28,
2010, the Company agreed to terminate the Stock Purchase Agreement with
Dune and rescind the prior issuance of common stock. The Company repurchased the
3,000,000 shares of common stock previously issued to Dune for $300,000. 
The redeemed shares were accounted for as treasury stock.





Off-balance
sheet arrangements





At June
30, 2010, 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 an amendment to ASC 810-10. This amendment requires an
enterprise to qualitatively assess the determination of the primary beneficiary
of a VIE based on whether the enterprise: (1) has the power to direct the
activities of a VIE that most significantly effect the entity’s economic
performance; and (2) has the obligation to absorb losses of the entity or the
right to receive benefits from the entity that could potentially be significant
to the VIE. ASC 810-10, as amended, requires an ongoing reconsideration of the
primary beneficiary, and amends the events that trigger a reassessment of
whether an entity is a VIE. This statement is effective as of the beginning of a
reporting entity’s first annual reporting period that begins after November 15,
2009. Earlier application is prohibited. Retrospective application is optional.
Adoption of this standard is not expected to have a significant impact on our
financial condition and results of operations.




In
September 2009 the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue
Arrangements.” ASU 2009-13 addresses the unit of accounting for multiple-element
arrangements. In addition, ASU 2009-13 revises the method by which consideration
is allocated among the units of accounting. Specifically, the overall
consideration is allocated to each deliverable by establishing a selling price
for individual deliverables based on a hierarchy of evidence, involving
vendor-specific objective evidence, other third party evidence of the selling
price, or the reporting entity’s best estimate of the selling price of
individual deliverables in the arrangement. ASU 2009-13 will be effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Adoption of this standard is
not expected to have a significant impact on our financial condition and results
of operations.


14


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
March 31, 2010, we have discontinued operations and unwound the TOT-SIBBINS
joint venture. Accordingly, during the quarter ended June 30 2010, we have not
engaged in an operating business, but continue to focus our resources on the
development or acquisition of an alternative energy solar business concentrating
on commercial solar installations. Our disclosure controls and procedures are
currently not effective because there are a limited number of personnel employed
and we cannot have an adequate segregation of duties,and due to
material weaknesses in internal control over financial reporting as discussed in
our annual report on Form 10-K previously filed with the SEC. Accordingly,
management cannot provide reasonable assurance of achieving the desired control
objective. Management works to mitigate these risks by being personally involved
in all substantive transactions and attempts to obtain verification of
transactions and accounting policies and treatments involving our operations. 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 at least the fiscal year 2011.





During
the quarter ended June 30, 2010, 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, except that we
have unwound the TOT-SIBBINS joint venture and therefore certain former material
weaknesses in our internal control over financial reporting primarily affecting
overseas operations are no longer relevant.





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 June 30, 2010, TGR was issued 10,037,315 shares of common stock of
the Company and fully vested warrants to purchase 5,019,157 shares of common
stock of the Company for $0.05 per share in exchange for funding of $200,794
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.  On April 28,
2010, the Company agreed to terminate the Stock Purchase Agreement with
Dune and rescind the prior issuance of common stock. The Company repurchased the
3,000,000 shares of common stock previously issued to Dune for $300,000. 
The redeemed shares were accounted for as treasury stock.





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.


15


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)


16





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
              
              Joint
      Venture Agreement dated July 16, 2008 by and between the Company and
      Evgeni Bogarad, incorporated by reference to Exhibit 10.1 to the Current
      Report on Form 8-K, filed with the Commission on July 23,
    200810.21
              
              Notarial
      Deed dated July 17, 2008 by and between the Company and Korlea Invest
      Holding AG, incorporated by reference to Exhibit 10.20 to the Quarterly
      Report on Form 10-Q, filed with the Commission on November18,
      200810.22
              
              Subscription
      Agreement dated August 7, 2008 by and between the Company and TGR Energy,
      LLC, incorporated by reference to Exhibit 10.20 to the Quarterly Report on
      Form 10-Q, filed with the Commission on November 18,
  200810.23
              
              Amendment
      to the Subscription Agreement between TGR Energy, LLC and TOT Energy, Inc.
      dated January 12, 2010, incorporated by reference to Exhibit 10.20 to the
      Quarterly Report on Form 10-Q filed with the Commission on February 16,
      201010.24
              
              Assignment
      between TGR Energy, LLC and TOT Energy, Inc. dated January 12, 2010,
      incorporated by reference to Exhibit 10.21 to the Quarterly Report on Form
      10-Q filed with the Commission on February 16, 2010, incorporated by
      reference to Exhibit 10.24 to the Annual Report on Form 10-K, filed with
      the Commission on July 13, 2010.10.25
              
              Joint
      Venture Dissolution Agreement dated March 31, 2010 between TOT Energy, Inc
      and Sibburnefteservis, LTD., TOT-SIBBNS, LTD and Evgeni Bogorad,
      incorporated by reference to Exhibit 10.25 to the Annual Report on Form
      10-K, filed with the Commission on July 13,
  2010.


17





10.26
              
              Stock
      Repurchase Agreement dated April 28, 2010 between TOT Energy, Inc., TGR
      Energy, LLC and Dune Capital Group LLC, incorporated by reference to
      Exhibit 10.26 to the Annual Report on Form 10-K, filed with the Commission
      on July 13, 2010.14
              
              Code
      of Ethics incorporated by reference to Exhibit 10.2 to Splinex’s Annual
      Report on Form 10-K for the year ended March 31, 2005, filed with the
      Commission on June 30, 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.


18


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: August
      10, 2010
              By:
              /s/ Jonathan NewName:
      Jonathan NewTitle:
      Chief Financial Officer


19