Tatonka Oil & Gas (TTKA) 10QSB 2008 Q1 Quarterly report (small business)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended January 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from                    to                    

Commission File Number 000-50190

TATONKA OIL AND GAS, INC.

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

Colorado (State or other jurisdiction of incorporation or organization)		47-0877018 (IRS Employer Identification No.)
950 Seventeenth Street, Suite 2300
Denver, Colorado (Address of principal executive office)	80202 (Postal Code)	(303) 476-4100 (Issuer’s telephone number)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.00025
(Title of class and shares outstanding)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

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

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. (Check one):

Large accelerated filero	Accelerated filero	Non-accelerated filero	Smaller reporting companyþ
		(Do not check if a smaller reporting company)

Number of outstanding shares of the registrant’s par value $0.00025 common stock as of March 20, 2008: 55,000,000.

Traditional Small Business Disclosure Format: Yesþ Noo

	Page
Part I		3
Item 1. Financial Statements		3
Consolidated Balance Sheets
As of January 31, 2008 (Unaudited) and October 31, 2007 (Audited)		3
Consolidated Statements of Operations
For the Three Months Ended January 31, 2008 and 2007 and for the Period from March 5, 2004 (Inception) to January 31, 2008 (Unaudited)		4
Consolidated Statement of Stockholders’ Equity
For the Period from March 5, 2004 (Inception) to January 31, 2008(Unaudited)		5
Consolidated Statements of Cash Flows
For the Three Months Ended January 31, 2008 and 2007 and for the Period from March 5, 2004 (Inception) to January 31, 2008 (Unaudited)		6
Notes to Consolidated Financial Statements (Unaudited)		7
Item 2. Management’s Discussion and Analysis or Plan of Operation		18
Item 3. Controls and Procedures		24
Part II		25
Item 1. Legal Proceedings		25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25
Item 3. Defaults Upon Senior Securities		25
Item 4. Submission of Matters to a Vote of Security Holders		25
Item 5. Other Information		25
Item 6. Exhibits		25
Signatures		26
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

When we use the terms “Tatonka,” “the Company,” “we,” “us,” or “our,” we are referring to Tatonka Oil and Gas, Inc. and its subsidiary, unless the context otherwise requires.

2

PART I

Item 1. Financial Statements

TATONKA OIL AND GAS, INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
January 31, 2008 and October 31, 2007

	January 31,			October 31,
	2008			2007
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,031		$	61,325
Receivable on unproved property sale		203,615			—
Prepaid expenses		88,258			35,400
Inventory held for sale		129,378			133,346
Total current assets		426,282			230,071
Property, plant and equipment:
Oil and gas properties, at cost, using full cost method -
Unevaluated properties		1,798,561			2,500,114
Unevaluated wells, equipment and facilities		1,455,477			1,436,752
Total oil and gas properties		3,254,038			3,936,866
Other assets:
Office equipment, net of depreciation		69,156			82,630
Deposits		30,000			30,000
Deposit on property acquisition		196,000			196,000
Total other assets		295,156			308,630
Total assets	$	3,975,476		$	4,475,567
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	799,567		$	800,879
Due to related parties		120,449			1,392,029
Note payable — related party, net of discount of $41,251 at January 31, 2008		1,302,171			—
Note payable — other		398,226			398,226
Bridge loan, net of discount of $88,486 at January 31, 2008 and $156,657 at October 31, 2007		311,514			143,343
Total current liabilities		2,931,927			2,734,477
Stockholders’ equity:
Preferred stock, $0.001 par value, 25,000,000 shares authorized, none issued		—			—
Common stock, $0.00025 par value, 100,000,000 shares authorized, 55,000,000 issued and outstanding at January 31, 2008 and October 31, 2007, respectively		13,750			13,750
Additional paid-in capital		8,631,808			8,233,300
Deficit accumulated during the exploration stage		(7,602,009	)		(6,505,960	)
Total stockholders’ equity		1,043,549			1,741,090
Total liabilities and stockholders’ equity	$	3,975,476		$	4,475,567

The accompanying notes are an integral part of these financial statements

3

TATONKA OIL AND GAS, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended January 31, 2008, and 2007
and for the period from March 5, 2004 (inception) to January 31, 2008
(Unaudited)

	Three months ended
	January 31,						Inception to
	2008			2007			January 31, 2008
Revenues:
Oil and gas sales	$	—		$	—		$	—
Total Revenue		—			—			—
Costs and expenses:
General and administrative		873,672			1,051,809			6,779,379
Depreciation, depletion and amortization		13,474			6,932			59,532
Research and development		9,534			54,324			437,388
Expired Leases		—			78,038			—
Geological and geophysical expense		—			—			6,980
Total costs and expenses		896,680			1,191,103			7,283,279
Operating loss		(896,680	)		(1,191,103	)		(7,283,279	)
Other income (expense):
Interest income		348			1,770			3,441
Interest expense		(199,717	)		—			(322,171	)
Total other income (expense)		(199,369	)		1,770			(318,730	)
Net loss before income taxes		(1,096,049	)		(1,189,333	)		(7,602,009	)
Income taxes		—			—			—
Net loss	$	(1,096,049	)	$	(1,189,333	)	$	(7,602,009	)
Basic and diluted loss per common share	$	(0.02	)	$	(0.02	)	$	(0.36	)
Weighted average number of shares outstanding		55,000,000			55,000,000			21,076,219

The accompanying notes are an integral part of these financial statements

4

TATONKA OIL AND GAS, INC
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the period from March 5, 2004 (inception) to January 31, 2008
(Unaudited)

							Additional			Common
	Common Stock						Paid-in			Stock to be			Accumulated
	Shares			Amount			Capital			Issued			Deficit
Capital contributions		10,101,138		$	2,525		$	850,475		$	—		$	—
Distributions		(2,972,316	)		(743	)		(250,257	)		—			—
Net loss from March 5, 2004 to December 31, 2005		—			—			—			—			(67,270	)
Balance December 31, 2005		7,128,822			1,782			600,218			—			(67,270	)
Contribution of Company expenses paid by member		7,871,178			1,968			662,721			—			—
Issuance of common stock on October 30, 2006 for the net assets of New Pacific Ventures Inc. at acquisition		30,000,000			7,500			(119,139	)		—			—
Common stock to be issued		—			—			—			4,613,306			—
Net loss for the period		—			—			—			—			(640,337	)
Balance October 31, 2006		45,000,000			11,250			1,143,800			4,613,306			(707,607	)
Issuance of common stock for cash at $0.50 per share subscribed as of October 31, 2006		10,000,000			2,500			4,610,806			(4,613,306	)
Issuance of stock options during year		—			—			2,301,632			—			—
Warrants issued in connection with note payable		—			—			177,062			—			—
Net loss for the year		—			—			—			—			(5,798,353	)
Balance October 31, 2007		55,000,000			13,750			8,233,300			—			(6,505,960	)
Issuance of stock options for the period ended January 31, 2008		—			—			318,983			—			—
Additional warrants issued in connection with note payable		—			—			29,702			—			—
Warrants issued in connection with note payable-related party		—			—			49,823			—			—
Net loss for the period ending January 31, 2008		—			—			—			—			(1,096,049	)
Balance January 31, 2008		55,000,000		$	13,750		$	8,631,808		$	—		$	(7,602,009	)

The accompanying notes are an integral part of these financial statements

5

TATONKA OIL AND GAS, INC
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOW
For the three months ended January 31, 2008, and 2007
and for the period from March 5, 2004 (inception) to January 31, 2008
(Unaudited)

	Three months ended January 31,						Inception to
	2008			2007			January 31, 2008
Cash flows from operating activities:
Net loss	$	(1,096,049	)	$	(1,189,333	)	$	(7,602,009	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		119,919			6,932			186,382
Stock compensation		318,983			383,833			2,620,615
Changes in assets and liabilities:
Inventories		3,968			—			(129,378	)
Prepaid expenses		(52,858	)		—			(88,258	)
Accounts payable and accrued liabilities		(1,312	)		774,772			718,159
Total adjustments		388,700			1,165,537			3,307,520
Net cash used in operating activities		(707,349	)		(23,796	)		(4,294,489	)
Cash flows provided by (used in) investing activities:
Acquisition of oil and gas properties and equipment		(78,683	)		(1,891,614	)		(4,015,549	)
Cash receipt on unproved property sale		557,896			—			557,896
Purchase of office equipment		—			(155,682	)		(128,688	)
Cash receipt on merger		—			—			367,995
Deposits		—			(25,735	)		(226,000	)
Net cash provided by (used in) investing activities		479,213			(2,073,031	)		(3,444,346	)
Cash flows provided by (used in) financing activities:
Sale of common stock		—			(316,694	)		5,879,995
Cash due to related parties		229,635			(525,000	)		1,621,664
Borrowings on loan to related parties		91,272			—			91,272
Repayments on loan due to related parties		(249,065	)		—			(249,065	)
Borrowings on bridge loan		100,000			—			400,000
Net cash provided by (used in) financing activities		171,842			(841,694	)		7,743,866
Increase (decrease) in cash		(56,294	)		(2,938,521	)		5,031
Cash beginning of period		61,325			4,441,467			—
Cash end of period	$	5,031		$	1,502,946		$	5,031
Cash paid for interest	$	—		$	—		$	—
Non-cash investing and financing activities:
Warrants valued at $29,702 were issued in connection with a note payable during the period ended January 31, 2008
Warrants valued at $49,823 were issued in connection with cash advances from related parties during the period ended January 31, 2008
During the period ended January 31, 2008 the company converted cash due to related parties in the amount of $1,501,215 to a note payable

The accompanying notes are an integral part of these financial statements

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial information and with the instructions for Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U. S. generally accepted accounting principles for complete financial statements. In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the company’s results for the periods presented. These consolidated financial statements should be read in conjunction with the company’s Annual Report on Form 10-KSB for the fiscal year ended October 31, 2007.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Presentation

The consolidated financial statements include the accounts of Tatonka Oil and Gas, Inc. “Parent” and its wholly owned subsidiaries Tatonka Oil and Gas Company, Inc. “Tatonka” and Advanced Well Control Systems, Inc. “AWCS” and together referred to herein as the “Company”. The Company engages in oil and gas acquisition, exploration, development and production activities in the United States. All significant intercompany transactions have been eliminated.

The Parent was incorporated under the laws of the State of Colorado on May 22, 2001 under the name New Pacific Ventures, Inc., with authorized common stock of 100,000,000 shares at $0.001 par value and preferred stock of 25,000,000 shares at $0.001 par value. The preferred shares may be issued in one or more series with terms at the discretion of the Board of Directors. Parent commenced operations in the mining exploration business in Canada in 2001. Tatonka commenced operations in the oil and gas business on March 5, 2004. AWCS is developing technology to automate well pumping systems in the petroleum industry.

In the 2006 year, the Company’s outstanding common shares were forward split on a 4-for-1 basis, and 6,000,000 post-split common shares were cancelled. Resulting in a decrease in the stated par value of the common stock to $0.00025. Thereafter, as of October 30, 2006, the Company acquired all the outstanding shares of Tatonka in a stock-for-stock transaction, issuing 15,000,000 post-split shares to the former stockholder of Tatonka, and changed the Parent’s name to Tatonka Oil and Gas, Inc. Concurrently with closing the acquisition, the Company issued 10,000,000 restricted common shares to persons believed to be accredited investors, at $0.50 per share, for gross proceeds of $5,000,000 (net proceeds of $4,613,306, after payment of share issue costs totaling $386,694, of which $70,000 was paid before November 1, 2006).

The acquisition of Tatonka has been accounted for as a recapitalization of Tatonka as the Parent is considered to be a shell company. Tatonka’s prior equity has been restated to reflect the forward split and the capital structure contained in the acquisition as if it had occurred at the earliest period presented. The acquisition is treated as the issuance of 30,000,000 common shares for the net assets of the Parent.

Effective for the 2007 period, the Company has restated 2006 for the accounting of the acquisition of New Pacific as a recapitalization of New Pacific. (See the company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007.)

Going Concern

The accompanying 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. As reflected in the accompanying financial statements, the Company has a net loss of $1,096,049 for the fiscal quarter ended January 31, 2008, a negative working capital deficiency of $2,505,645 and an accumulated deficit of $7,602,009. These factors raise substantial doubt about its ability to continue as a going concern.

The Company’s future financial ability to continue operations and proceed with positive results will depend primarily on (1) our immediate ability to obtain equity and/or debt financing to pay existing trade debt and overhead and to support our current and proposed oil and gas operations and capital expenditures (2) our ability to acquire through purchase or discover through exploration and development commercial quantities of oil and gas; (3) the market price for oil and gas; (4) our ability to continue to source and screen potential projects; and (5) our ability to fully implement our exploitation, exploration and development program with respect to these and other matters. We cannot assure that we will be successful in any of these activities or that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production.

The financial statements do not include any adjustments that might be necessary if the company is unable to continue as a going concern.

7

Exploration Stage Company

The company is in the exploration stage and is in the process of acquiring and exploring oil and gas properties located in the U.S.A. The recoverability of amounts shown for oil and gas properties are dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the properties, the ability of the Company to obtain necessary financing to complete the development and upon future profitable production or proceeds from the disposition thereof.

The Company complies with Financial Accounting Standards Board Statement No. 7 and Securities and Exchange Commission Act Guide 7 for its characterization of us as exploration stage.

Cash, Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less.

Fair Value of Financial Instruments

The company’s financial instruments including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to credit risk consist principally of cash. The Company places its cash with a high quality financial institution. At various times during the periods ended January 31, 2008 and October 31, 2007, the balance exceeded the FDIC limit of $100,000.

Equipment and Depreciation

Equipment is recorded at cost. Depreciation is provided for using the straight-line method as follows:

Computer	Three years
Computer Software	Two years
Furniture / Fixtures	Five years

Accounting Estimates

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

Method of Accounting for Oil and Gas Properties

The Company uses the full cost method of accounting for oil and gas producing activities. Under this method, all property acquisition costs and costs of exploratory and development wells are capitalized when incurred, including costs of unsuccessful exploration, are capitalized within a cost center; subject to a cost ceiling limitation, which basically limits such costs to the present value of future net revenues after tax from proved reserves discounted at 10%. The Company’s oil and gas properties are located within the continental United States, which constitutes one cost center. No gain or loss is recognized upon normal sale or abandonment of oil and gas properties unless the gain or loss significantly alters the relationship between capitalized costs and proved oil and gas reserves of the cost center. Maintenance, repairs, renewals and minor replacements are charged to expense as incurred. Major additions and improvements are capitalized. When assets other than oil and gas properties are sold retired or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and gains or losses are included in the statement of operations.

Revenue Recognition and Gas Balancing

The Company has had no revenues since inception. The Company will recognize oil and gas revenues from our interest in producing wells when production is delivered to, and title has transferred to the purchaser and to the extent the selling price is reasonably determinable. The Company will use the sales method of accounting for gas balancing of gas production and will recognize a liability if the existing proven reserves were not adequate to cover the current imbalance situation.

8

Asset Retirement Obligations

The Company has no asset retirement obligations inasmuch as it has no producing assets as of January 31, 2008.

The Company estimates the future cost of asset retirement obligations, discounts that cost to its present value, and records a corresponding assets and liability in its Consolidated Balance Sheets. The values ultimately derived are based on many significant estimates, including future abandonment costs, inflation, market risk premiums, useful life, and cost of capital. The nature of these estimates requires the company to make judgments based on historical experience and future expectations. Revisions to the estimates may be required based on such things as changes to cost estimates or the timing of future cash outlays. Any such changes that result in upward or downward revisions in the estimated obligation will result in an adjustment to the related capitalized asset and corresponding liability on a prospective basis.

Environmental Matters

Environmental costs are expensed or capitalized depending on their future economic benefit. Costs that relate to an existing condition caused by past operations with no future economic benefit are expensed. Liabilities for future expenditures of a non-capital nature are recorded when future environmental expenditures and/or remediation are deemed probable and the costs can be reasonably estimated. Costs of future expenditures for environmental remediation obligations are not discounted to their present value.

Inventory

Inventories are carried at the lower of cost (first-in, first-out) or market. Inventories consist primarily of well equipment.

Long-Lived Assets

The company applies SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, to long-lived assets not included in oil and gas properties. Under SFAS No. 144, all long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from its use and eventual disposition. An impairment loss is recognized when the carrying value of a long-lived asset is not recoverable and exceeds its fair value.

Research and Development

Company funded research and development costs are charged to expense as incurred.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”, which requires the use of the asset and liability method of computing deferred income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for the temporary differences between the book basis and the tax basis of the company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled.

Stock-based Compensation

In December 2004, the Financial Accounting Standards Board issued FAS 123R “Share-Based Payment”, a revision to FAS 123. FAS 123R replaces existing requirements under FAS 123 and APB 25, and requires public companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions. FAS 123R also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions. The Company adopted FAS 123R on November 1, 2006.

Basic and Diluted Loss Per Share

The Company computes net loss per share in accordance with SFAS No. 128, “Earnings Per Share”. SFAS No. 128 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common stockholder by the weighted average number of common shares outstanding during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing the diluted EPS, the average stock price for the year is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti dilutive.

Reclassifications

Certain 2007 amounts have been reclassified to conform to the current year presentation. Such reclassification had no effect on net income or stockholders’ equity.

9

Recent Accounting Pronouncements

In July 2006, the FASB issued Interpretation No. 48,Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”).This interpretation clarifies the application of SFAS 109 by defining the criterion that an individual tax position must meet for any part of the benefit of that position to be recognized in an enterprise’s financial statements and also provides guidance on measurement, de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. The company adopted FIN 48 November 1, 2007.

In November 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combination(FAS 141(R)) and SFAS No. 160,Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51(FAS 160). FAS 141(R) will change how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in subsequent periods. FAS 160 will change the accounting and reporting for minority interests, which will be recharacterized as non-controlling interests and classified as a component of equity. FAS 141(R) and FAS 160 are effective for both public and private companies for fiscal years beginning on or after December 15, 2008 (fiscal 2010 for the Company). FAS 141(R) will be applied prospectively. FAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of FAS 160 will be applied prospectively. Early adoption is prohibited for both standards. Management is currently evaluating the requirements of FAS 141(R) and FAS 160 and has not yet determined the impact on its financial statements.

In December, 2007 the FASB issued FSAS No. 157,Fair Value Measurements. This Statement does not require any new fair value measurements, but rather, it provides enhanced guidance to other pronouncements that require or permit assets or liabilities to be measured at fair value. However, the application of this Statement may change how fair value is determined. The Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. As of December 1, 2007 the FASB has proposed a one-year deferral for the implementation of the Statement for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. Management is currently evaluating the requirements of FAS 157 and has not yet determined the impact on its financial statements.

In December, 2007 the FASB issued FSAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendmen t of FASB Statement No. 115. This Statement provides all entities with an option to report selected financial assets and liabilities at fair value. The Statement is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007, with early adoption available in certain circumstances. Management is currently evaluating the requirements of FAS 159 and has not yet determined the impact on its financial statements.

(2) RESTATEMENT OF 2006 AND QUARTERY 2007 FINANCIAL STATEMENTS

On January 25, 2008, the Company’s board of directors concluded that the Company’s consolidated financial statements for the fiscal year end on October 31, 2006, and the consolidated financial statements for the three fiscal periods ended January 31, April 30, and July 31, 2007, should be restated.

The balance sheets as of the above dates show total assets as including $6,940,918 of goodwill, equal to the excess the value of stock, at $0.50 per share, issued to acquire the subsidiary Tatonka, over the subsidiary’s historical cost of its oil and gas properties. This acquisition was completed on October 30, 2006.

The Company has determined that because the Company, at the date the subsidiary was acquired in October 2006 was a “shell company” under SEC rules, the acquisition transaction should be accounted for as a recapitalization, without recognition of goodwill.

10

TATONKA OIL AND GAS, INC
(An Exploration Stage Company)
BALANCE SHEETS FOR CONSOLIDATED RESTATEMENT
January 31, 2008
(Unaudited)

	Form 10-QSB			Adjustments for			Restated
	Consolidated			October 31,			Consolidated
	January 31,			2006			January 31,
	2007			Restatement			2007
ASSETS
Current assets:
Cash and cash equivalents	$	1,502,946		$	—		$	1,502,946
Inventory		158,109			—			158,109
Total current assets		1,661,055			—			1,661,055
Property, plant and equipment:
Oil and gas properties, at cost, using full cost method -
Unevaluated properties		2,592,755			—			2,592,755
Unevaluated wells, equipment and facilities		1,090,876			—			1,090,876
Total oil and gas properties		3,683,631			—			3,683,631
Other assets:
Office equipment, net of depreciation		176,118			—			176,118
Deposits		55,735			—			55,735
Goodwill		6,940,918			(6,940,918	)		—
Total other assets		7,172,771			(6,940,918	)		231,853
Total assets	$	12,517,457		$	(6,940,918	)	$	5,576,539
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		948,429		$	—		$	948,429
Due to related parties		372,861			—			372,861
Total current liabilities		1,321,290			—			1,321,290
Stockholders’ equity:
Preferred stock, $0.001 par value, 25,000,000 shares authorized, none issued		—			—			—
Common stock, $0.00025 par value, 100,000,000 shares authorized, 55,000,000 shares issued and outstanding		13,750			—			13,750
Additional paid-in capital		12,492,389			(6,353,950	)		6,138,439
Common stock to be issued		—			—			—
Deficit accumulated during the exploration stage		(1,309,972	)		(586,968	)		(1,896,940	)
Total stockholders’ equity		11,196,167			(6,940,918	)		4,255,249
Total liabilities and stockholders’ equity	$	12,517,457		$	(6,940,918	)	$	5,576,539

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(3) FIXED ASSETS

							October 31,
	January 31, 2008						2007
			Accumulated
Asset Class	Cost		Depreciation		Net		Net
Computer hardware	$	53,827	$	19,943	$	33,883	$	38,292
Computer software		71,473		38,676		32,798		47,702
Office furniture and fixtures		3,388		913		2,475		2,636
Total	$	128,688	$	59,532	$	69,156	$	82,630

(4) DEPOSIT ON PROPERTY ACQUISITION

On January 28, 2007, the Company had signed a letter of intent to purchase a net revenue interest of approximately 80% in leases totaling 6,847 acres in the United States for $1,960,000 from Seer Energy, Inc. The agreement required a deposit of $196,000 within 30 days and the remaining $1,764,000 by July 25, 2007. The Company paid the deposit of $196,000 on February 27, 2007. On December 14, 2007, the Company and Seer Energy, Inc. agreed to extend the closing until January 15, 2008, decreased the acreage offered, and changed the purchase price to $1,396,000 ($1,200,000 will be due at closing). The Company has a verbal agreement extending the closing date until additional funding is received.

(5) RELATED PARTY TRANSACTIONS

Amounts due to related parties of $897,861 at October 31, 2006 consisted of advances from LMA Hughes LLLP “LMA”, which is affiliated with Brian Hughes, a director, and a stockholder of the Company which are unsecured, non-interest bearing and without specific terms for repayment.

During 2007 the Company borrowed from LMA $1,440,582 for working capital purposes. During 2007, the Company repaid $1,169,581 resulting in a balance payable of $1,266,488 (including accrued interest of $97,626). Effective as of December 5, 2007, the Company signed a lending agreement with LMA. The Company issued a promissory note to LMA for $1,501,215, due February 15, 2008 (extended for 60 days). Interest will accrue at 15% per annum, increasing to 25% if the note is extended. The amount of the note includes $122,000 as a recent advance to us by LMA. The balance of the note represents LMA’s net advances to us from our inception through December 4, 2007, plus 15% annual interest on the outstanding total monthly net amount of advances, through December 4, 2007. Additional amounts may be loaned to us by LMA, on the same terms. Repayment of the note is secured by a lien on our assets, which lien is junior to the lien in favor of Energy Capital Solutions, L.P., “ECS” (granted in connection with the ECS loan in early October 2007). The lending agreement provides that the Company will issue, on January 15, 2008, warrants (exercisable for 10 years) to purchase common stock of the registrant at an exercise price to be determined on or prior to issue date. The total number of shares underlying the warrant to be issued to LMA shall be equal to (x) 616,667 multiplied by (y) that fractional number which results from dividing (i) $122,000, by (ii) $200,000. The warrants issued through January 31, 2008 were valued at $49,823 and recorded as a discount on the note payable-related party. The Company paid on January 2, 2008 $200,000 of its secured obligation to LMA, which is affiliated with Brian Hughes, a director of the registrant. After payment, the amount due at January 31, 2008, including interest of $31,166, to LMA is $1,343,422.

In the first fiscal quarter of 2008, Brian Hughes, current director and former CEO, submitted an expense report for fiscal 2007 for $120,449 for travel, meals, lodging, cell phone usage and several other items. These amounts are reflected as a due to a related party and is not a part of the above note payable.

(6) NOTES PAYABLE

Lending Agreement — October 2007 — The Company entered into a loan agreement on October 5, 2007 with ECS, Dallas, Texas. ECS is the Company’s financial advisor.

Through January 31, 2008 the Company has borrowed $400,000 for working capital purposes from ECS, in an initial tranche of $200,000, and then two additional tranches of $100,000. The loan is a senior obligation, bears annual interest at 15%, and matures on the earlier of the sale of any equity or debt or February 2, 2008; the loan may be extended for up to 60 more days but the interest rate on the extended period would be 25% and the lender would be entitled to an additional warrant (see below). Payment is secured by all of our properties and assets.

12

In connection with the initial borrowing tranche of $200,000, the Company issued a warrant, exercisable at $0.20 per share, until October 4, 2017 to purchase 616,667 shares of common stock (equal to 1% of the registrant’s fully diluted outstanding shares). In connection with the subsequent $200,000 borrowed from ECS, the Company issued to ECS warrants to purchase an additional 616,668 shares at $0.20 per share exercisable until October 18, 2017 and December 23, 2017 respectively (equal to an additional 0.5% of the Company’s fully diluted outstanding shares). ECS has piggy-back registration rights if the Company files any registration statement to raise cash during the warrant term. The Company elected to extend the loan for an additional 60 days past February 2, 2008. The Company will issue an additional warrant to ECS to purchase additional shares of the registrant equal to another 2% of its fully diluted outstanding shares. In the event the note is not paid by April 2, 2008, the Company will issue an additional warrant to ECS to purchase more shares equal to another 4% of the Company’s fully diluted outstanding shares. These additional warrants would be for the same term and will be exercisable at $0.20 per share. The warrants issued to January 31, 2008 were valued at $206,765 and recorded as a discount on the related note payable.

The Company had a $398,226 accounts payable for drilling expenses to a vendor at the end of its 2006 fiscal year end. Pursuant a legal action the Company entered into an agreement with this vendor on September 24, 2007 by executing a note payable for two equal installments of $199,113 payable on November 15, 2007 and December 15, 2007. The vendor has agreed not to pursue any further legal action pending the outcome of the Company’s fund raising efforts.

(7) INCOME TAXES

Prior to August 31, 2006, Tatonka was a limited liability company which was a partnership for tax purposes, and thus no income tax expense was recorded in the financial statements.

No provision for income taxes is required for the first fiscal quarter of fiscal year 2008 and for the year ended October 31, 2007, respectively, because the Company had a net operating loss. The adoption of FIN 48 did not have a material effect on the financial statements.

At October 31, 2007 and January 31, 2008, the Company had net operating loss carry-forwards of approximately $4,863,000 and $5,549,000, respectively. The net operating losses expire in the years 2021 to 2022. Other book to tax timing differences consist of stock compensation and intangible drilling costs.

As of January 31, 2008 and October 31, 2007, total deferred tax assets (liabilities) and the related valuation allowance is as follows:

	January 31,			October 31,
	2008			2007
Deferred Tax assets	$	2,691,000		$	2,217,000
Deferred tax liabilities		(478,000	)		(472,000	)
Valuation allowance		(2,213,000	)		(1,745,000	)
	$	—		$	—

(8) COMMON STOCK AND PREFERRED STOCK

The company has authorized 100,000,000 shares of $0.00025 par value common stock and as of January 31, 2008, common shares issued are 55,000,000. In addition, the company has authorized 25,000,000 shares of preferred stock which may be issued in series and with preferences as determined by the company’s Board of Directors.

In fiscal 2006, the Company declared a 4-for-1 forward stock split.

Warrants and Stock Options

Compensation expense related to stock options included in General and Administrative Expense for the quarter ended January 31, 2008, and the quarter ended January 31, 2007 is $318,983 and $383,833, respectively. No tax benefit is associated with these expenditures as the Company is in a loss position for 2008 and 2007, respectively.

On November 2, 2006, the Company approved an employee incentive stock option program for the issuance of up to 5,500,000 stock options, which plan was amended and restated on March 20, 2007. As at January 31, 2008, the Company had 4,750,000 stock options outstanding. The plan has not been approved by the stockholders.

13

On November 2, 2006, the Company granted 4,162,500 employee incentive stock options exercisable until November 2, 2011. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested. These options are exercisable at the following prices:

Number of		Exercise
Options		Price
	2,081,250	$	0.50
	1,040,625	$	1.00
	1,040,625	$	1.25
	4,162,500

Of the above mentioned options, a total of 562,500 options were cancelled during the quarter ended April 30, 2007 and 1,700,000 options were cancelled during the quarter ended October 31, 2007.

On December 12, 2006, the Company granted 550,000 employee incentive stock options exercisable at $1.25 until December 12, 2011. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested.

On January 30, 2007, the Company granted 300,000 employee incentive stock options exercisable at $1.40 until January 30, 2012. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested.

On February 10, 2007 the Company granted 75,000 employee incentive stock options exercisable at $1.50 until February 10, 2012. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested. Of the above mentioned options, a total of 75,000 options were cancelled during the quarter ended January 31, 2008.

On February 26, 2007, the Company granted 350,000 employee incentive stock options exercisable at $1.40 until February 26, 2012. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested.

On March 3, 2007, the Company granted 150,000 employee incentive stock options exercisable at $1.50 until March 3, 2012. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested.

On June 4, 2007, the Company granted 1,000,000 employee incentive stock options exercisable until June 3, 2011. These options vest 25% per year until fully vested. These options are exercisable at the following prices:

Number of		Exercise
Options		Price
	500,000	$	0.85
	250,000	$	1.00
	250,000	$	1.25
	1,000,000

On June 5, 2007, the Company granted 25,000 employee incentive stock options exercisable at $0.85 until June 5, 2012. These options vest 25% on the date of the grant and 12.5% every six months thereafter until fully vested. Of the above mentioned options, a total of 25,000 options were cancelled during the quarter ended January 31, 2008.

On July 9, 2007, the Company granted 500,000 employee incentive stock options exercisable until July 8, 2011. These options vest 25% per year until fully vested. These options are exercisable at the following prices:

Number of		Exercise
Options		Price
	250,000	$	0.85
	125,000	$	1.00
	125,000	$	1.25
	500,000

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The fair value of these share purchase options which were granted during the prior years was determined using the Company’s historical stock prices and the Black-Scholes option-pricing model with the following assumptions:

Risk free rate		4.54% - 4.85	%
Dividend yield		0	%
Weighted average expected volatility		71	%
Weighted average expected option life	3.16 yrs
Weighted average fair value of options	$	0.93
Total options outstanding		4,750,000
Total fair value of options outstanding	$	3,159,322

Plan activity for the quarter ended January 31, 2008 and year ended October 31, 2007 is set forth below.

	Quarter Ended 2008					Year Ended 2007
				Weighted					Weighted
	Number of			Average		Number of			Average
	Options			Price		Options			Price
Outstanding at beginning of period		4,850,000		$	0.93		—			—
Granted		—			—		7,112,500		$	0.92
Exercised		—			—		—			—
Cancelled or forfeited		(100,000	)	$	1.34		(2,262,500	)	$	0.91
Outstanding at end of period		4,750,000		$	0.93		4,850,000		$	0.93
Exercisable at end of period		1,600,000		$	0.96		1,253,125		$	0.98

The company has issued shares from its treasury stock whenever stock options have been exercised during the three months ended January 31, 2008 and fiscal year 2007.

The following table summarizes information about stock options outstanding at January 31, 2008:

		Outstanding						Exercisable
				Weighted
		Number		Average		Weighted		Number		Weighted
Range of		Outstanding		Remaining		Average		Exercisable at		Average		Aggregate
Exercise		at January 31,		Contractual		Outstanding		January 31,		Exercise		Intrinsic
Prices		2008		Life in Year		Price		2008		Price		Value
$	0.50 - $1.00		2,875,000		3.60	$	0.69		909,375	$	0.67		—
$	1.25 - $1.50		1,875,000		3.78	$	1.35		690,625	$	1.34		—
$	0.50 - $1.50		4,750,000		3.69	$	0.93		1,600,000	$	0.96		—

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based on the Company’s closing stock price of $0.14 as of January 31, 2008, which would have been received by the option holders had all option holders exercised their options as of that date.

15

WARRANTS

In October 2007, we issued investor warrants to purchase a total of 925,001 shares of common stock exercisable at $0.20 per share and vesting immediately. The warrants expire on October 4, 2017 and October 18, 2017 respectively. In December 2007, we issued investor warrants to purchase a total of 308,334 shares of common stock exercisable at $0.20 per share and vesting immediately. The warrants expire on December 23, 2017. In January 2008, we issued related party warrants to purchase a total of 376,167 shares of common stock exercisable at $0.20 per share and vesting immediately. The warrants expire on January 14, 2018. The table below reflects the status of warrants outstanding at January 31, 2008 held by others to acquire our common stock:

	Common		Exercise
Issue Date	Shares		Price		Expiration Date
October 5, 2007		616,667	$	0.20	October 4, 2017
October 19, 2007		308,334	$	0.20	October 18, 2017
December 24, 2007		308,334	$	0.20	December 23, 2017
January 15, 2008		367,167	$	0.20	January 14, 2018
Balance, January 31, 2008		1,609,502	$	0.20

At January 31, 2008, the per-share weighted average exercise price of outstanding warrants was $0.20 per share and the weighted average remaining contractual life was 9.84 years.

(9) COMMITMENTS

Office Leases

The company leases office facilities under an operating sub lease agreement entered into September 18, 2007 which expires July 14, 2008. The lease agreement required advance payments of $63,396 during year ending October 31, 2007. Of the lease agreement payment due, $23,356 was unpaid as of January 31, 2008. Total rental expense was $52,550 in the first fiscal quarter of 2008 and $33,021 in the first fiscal quarter of 2007.

Oil and Gas Properties

The Company has acquired leases in unproved oil and gas properties located in Colorado and Wyoming, USA. Under the terms of the lease agreements the Company is required to pay its share of royalties and other obligations.

Pursuant to such contracts the Company is obligated to pay $212,137 to maintain the leases as follows:

Year ended October 31, 2008	$	32,060
2009		77,497
2010		65,371
2011		11,770
2012		12,167
2013		7,687
2014		1,995
2015		1,995
2016		1,995
	$	212,137

This amount does not contemplate funds required for exploration.

(10) BENEFIT PLANS

Profit Sharing401(k) Plan

Effective January 1, 2007, the company has established a 401(k) plan for the benefit of its employees. Eligible employees may make voluntary contributions not exceeding statutory limitations to the plan. The Company has chosen a Safe Harbor Plan whereby the Company matches eligible participants elective deferrals 100% of the first 3% of compensation plus 50% of elective deferrals that exceed 3% but does not exceed 5% of compensation. Matching contributions recorded in the first fiscal quarter of 2008 and 2007 were $9,779 and $2,277, respectively.

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(11) LEGAL PROCEEDINGS

As of the date this Report is filed, we are party to the following legal proceedings:

Sothi Thillairajah v. Tatonka Oil and Gas, Inc. (District Court, City and County of Denver), Case No. 07CV12353. Plaintiff’s employment with the Company was terminated September 7, 2007, and he filed a lawsuit against the Company. The Company has paid to or on behalf of the plaintiff $17,307.69 in connection with the dispute. On February 12, 2008, the parties agreed to settle the dispute. If on or before March 31, 2008 the Company pays to or contributes for the benefit of the plaintiff (i) $74,887.86 (less taxes and 401(k) contributions) plus interest, and (ii) $7,645.51 of the plaintiff’s legal expenses, the lawsuit will be dismissed with prejudice. If payment is not made by the deadline, plaintiff will be entitled to seek entry of judgment against the Company for $82,533.37.

Grey Wolf Drilling Company, L.P. v. Tatonka Oil and Gas, Inc ., (281st District Court of Harris County, Texas), Case No. 2007-40763, dismissed without prejudice. The plaintiff seeks collection of $398,226 owed under a contract for field services related to a well we drilled on the Sand Wash prospect in fiscal 2006. We agreed to settle the matter by giving the plaintiff a promissory note in August 2007 paying the claim in two equal installments of $199,113 payable on October 15, 2007 and November 15, 2007. Upon issuance of the promissory note, the plaintiff agreed to nonsuit all claims against the Company without prejudice to refiling. These payment dates have been extended to be the date when the Company receives financing.

James T. Priestley d/b/a Black Diamond Mud v. Tatonka Oil and Gas, Inc . (District Court, Moffat County, Colorado), Case No. 07 CV 45. The plaintiff seeks collection of $31,387.20 owed in connection with the drilling of the Eldon Gerber Well, Number 07-24-07-92, located in Moffat County, Colorado. On January 31, 2008, the parties entered into a settlement agreement the terms of which provide that if on or before March 31, 2008 the Company pays to plaintiff $31,387.20, the parties will file a joint motion to dismiss the lawsuit with prejudice. If, however, the Company fails to pay the plaintiff, the Company shall confess judgment for all amounts due under the invoice in the principal amount of $31,387.20 plus pre-judgment interest accrued at the statutory rate from February 1, 2008 to the date judgment is entered and, no later than April 10, 2008, the parties are to file a Stipulated Entry of Judgment and Foreclosure of Oil and Gas Lien with the District Court of Moffat County in favor of Priestley. Said Entry of Judgment shall also award the plaintiff post judgment interest at the statutory rate.

17

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.

The following information should be read in conjunction with the consolidated financial statements and the notes thereto contained elsewhere in this report. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Information in this Item 2, “Management’s Discussion and Analysis or Plan of Operation,” and elsewhere in this 10-QSB that does not consist of historical facts, are “forward-looking statements.” Statements accompanied or qualified by, or containing words such as “may,” “will,” “should,” “believes,” “expects,” “intends,” “plans,” “projects,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume,” “continue,” and “assume” constitute forward-looking statements, and as such, are not a guarantee of future performance. Furthermore, we undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, changes worldwide supply and demand for oil and gas which affect their prices, competing supplies of oil and gas, the timing and extent of our success in discovering, acquiring, developing and producing oil and natural gas reserves, risks inherent in the drilling and operation of oil and natural gas wells, future production and development costs, our ability to obtain financing for proposed activities, the effect of existing and future laws, governmental regulations and the political and economic climate of the United States, conditions in the capital markets, as well as our ability to obtain oil and gas sales contracts. For a discussion of these and other risks related to the forward-looking statements contained herein, please see “Risk Factors” in Form 10-KSB for the year ended October 31, 2007.

The Company will be unable to continue ongoing operations, without selling existing assets, if funding for accounts payable and debt service and for ongoing overhead is not received soon. There are no agreements in place for funding at the date this Report is filed. At March 20, 2008, we had a working capital deficit of approximately $2,596,905. The audit report on our financial statements for the year ended October 31, 2007 has a going concern qualification. In their report dated March 3, 2008, our independent auditors stated that those financial statements were prepared assuming that we would continue as a going concern, due to recurring operating losses and lack of capital. Continued losses will increase the difficulty in raising capital.

Since October 31, 2007 the Company borrowed an additional $272,570 and made payments totaling $243,973 to, an affiliate, LMA Hughes LLLP. Additional interest of $48,337 has been incurred.

On December 4, 2007, we signed an agreement to sell to an unrelated party all of the Company’s working leasehold interest in 8,917.51 net acres within our non-strategic portion of Mowry Shale Prospect, located in the Powder River Basin, and deep drilling rights to a portion of the remaining acreage. The agreement was closed in January 2008. The total purchase price was $1,100,000. In addition, we assigned to buyer the deep drilling rights on approximately 7,050 gross acres located in a 15 mile radius of the 8,917.51 net acres sold to buyer. Deep drilling rights are defined as being the rights to drill and produce oil and gas below 8,558 feet (the top of the Minnelusa formation as found at that depth for the Four Horse Federal #5-10 well in Weston County, Wyoming).

In connection with the sale, and in order to have sufficient working and net revenue interests to sell the acreage in the Mowry Shale Prospect, on January 2, 2008 we bought out Clarion Finance Pte Ltd.’s participation agreement on the Mowry shale prospect for $368,659 (the initial acquisition fee paid by Clarion, plus interest at 15%, and legal fees Clarion’s related legal fees). Clarion now has no rights in the acreage and no drilling or completion payment obligations. For further information on the participation agreement, please see the Form 8-K filed on August 1, 2007 and note 4 to the financial statements in the Form 10-QSB filed on September 14, 2007.

Under the loan agreement dated October 5, 2007 with Energy Capital Solutions, L.P., “ECS” since October 31, 2007 the Company borrowed a final tranche of $100,000 on December 24, 2007. Additional interest of $12,945 was incurred. We issued a warrant, exercisable at $0.20 per share, until December 23, 2017 to purchase 308,334 shares of common stock (equal to 0.5% of the registrant’s fully diluted outstanding shares). ECS has piggy-back registration rights if we file any registration statement to raise cash during the warrant term.

18

During the first fiscal quarter of 2008, we used $707,349 of cash in operating activities and invested $78,683 in capital expenditures. Our operating activities and capital investments were funded with $171,842 in net proceeds from debt financing and $557,896 (gross proceeds) from the sale of unproved properties, we had $5,031 in available cash on January 31, 2008.

In the first quarter of fiscal 2007 one test well in our Sand Wash prospect was drilled. Additional work will be required to ascertain gas saturation and permeability. Operational problems were encountered during drilling and substantive cost over-runs caused the well to be shut-in awaiting future completion attempts. The well will require completion and further testing to define the resource due to failure by the operational and exploration management to secure mud logging data through the critical areas of potential production. Due to our inability to presently fund additional completion costs, the well has been temporarily shut-in until further funding for re-entry and further testing and completion can be attempted. This is not anticipated until the later portion if fiscal 2008 or later.

The table below provides an analysis of our capital expenditures of $78,683 during the quarter ended January 31, 2008.

Capital Expenditures Activity in the first fiscal quarter of 2008

Domestic:
Leasehold acquisitions
Lay Creek	$	45,354
Mowry		14,604
Divide Creek		—
Drilling of Lay Creek -Eldon Gerber well — Sand Wash — incomplete, temporarily shut-in		18,725
Purchase of office equipment		—
Total	$	78,683

Debt financing during the first fiscal quarter of 2008 consisted of approximately $272,570 received from LMA Hughes LLLP, (“LMA”) an affiliate of a director, and $100,000 from our financial advisor ECS, senior credit facility, respectively. These funds were primarily used for operating expenses. The loans are due in April 2008 and bear an interest rate of 15% effective through January 31, 2008.

At January 31, 2008, we owed LMA and ECS, $1,343,422 and $400,000, respectively. We have various commitments in addition to the short-term debt. The following summarizes contractual obligations at January 31, 2008:

Contractual Obligation	Total		2008		2009		2010		Thereafter
Short-term debt	$	1,995,684	$	1,995,684	$	—	$	—	$	—
Interest (1)	$	173,837	$	173,837	$	—	$	—	$	—
Operating leases for office space	$	36,703	$	36,703	$	—	$	—	$	—
Operating leases for equipment	$	—	$	—	$	—	$	—	$	—

(1) Based on January 31, 2008 weighted average interest rate of 15.0% and anticipated debt repayment.

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Operations Plans

Producing Property Acquisition, Exploration and Development Drilling, and Workover Plans

In executing our business plan, we attempt to focus our resources in selected domestic basins where we believe our expertise in geology, geophysics, and drilling and completion techniques provide us with competitive advantages. Our initial operations are focused on two core operating areas in the Rocky Mountain states of Colorado and Wyoming:

The Company has over 14,000 gross and net acres in the Powder River Basin of Wyoming for the purpose of developing an oil project in the fractured Mowry shale. Located in the eastern area of the Powder River Basin, the Mowry shale is an oil play analog to the Bakken Shale play. Historically known as an prolific petroleum source rock, the Mowry has a record of conventional production. The Mowry Shale encompasses the entire Powder River Basin, which includes parts of northeastern Wyoming and Southeastern Montana. It is has been a productive oil and gas resource for over 60 years. The fractured Mowry shale project has excellent potential to add significant reserves at moderate costs and risks. This project is 3-D seismic driven with well depths of approximately 7,500 feet. Our exploration team for this project specializes in analogous geographic areas and has been highly successful finding new reserves using 3-D seismic. Pending our ability to obtain additional financing, Tatonka will acquire an additional 3,400 acres in the Mowry Shale upon close of their pending asset acquisition from Seer Energy, LLC. We cannot assure that additional funding will be available.

The Sand Wash Basin is located in northwestern Colorado and southwestern Wyoming. It is part of the Greater Green River Basin, which includes the Washakie Basin, the Great Divide (Red Desert) Basin, and the Green River Basin. The Sand Wash Basin covers approximately 5,600 square miles, primarily in Moffat and Routt Counties of Colorado. Coalbed methane resources in the Sand Wash Basin have been estimated by the Colorado Geological Survey at 101 trillion cubic feet (Tcf) and 24 TCF at shallow drilling depths of 6,000 feet or less. Approximately 90% of this resource is within the Williams Fork Formation. Of all the coal-bearing formations, the Upper Cretaceous Williams Fork is the most significant unit because it contains the thickest and most extensive coal beds. Our current prospects include over 15,000 net acres of undeveloped Coalbed Methane acreage in northwestern Colorado’s Sand Wash Basin, of which the company has approximately 77% net revenue interest. The company intends to generate prospects and drilling on this acreage concentrating on medium depth properties generally ranging from 1,000 to 4,000 feet.

Our anticipated capital expenditures during the remaining three quarters of fiscal 2008 total approximately $4.9 million. On the pending $1.2 million Seer acquisition, we expect to incur capital costs of $3.75 million of which $3 million would be for development drilling and the remaining amount would be for workover activities on 5 wells.

Of the $4.9 million described above, we plan to fund the $1.2 million estimated for the Seer acquisition and Mowry capital expenditure with a new senior credit facility. We anticipate funding operations and capital expenditures in the United States over the long-term using (a) net oil and gas revenues, (b) reserve-based debt financing and (c) other debt or equity instruments. In the event sufficient long-term operating and capital funding cannot be obtained, we will be required to curtail planned expenditures and may have to sell additional acreage and/or relinquish acreage.

We anticipate funding operations and capital for during the remaining three quarters of fiscal 2008 using (a) future Seer property acquisition net gas revenues, and (b) proceeds from a senior credit financing. which we are presently negotiating (but have not finalized). If these negotiations are successful, funding would enable us to start drilling and exploration, but significant additional funding may be needed to continue work, even if the initial funding yields promising wells. We do not know what 2008 additional alternative financing or equity investments will be available. Any alternative financing we may could have terms less favorable than current terms provided by our pending lender/investor.

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Results of operations for the three months ended January 31, 2008 compared to the three months ended January 31, 2007

Revenues. For the three months ended January 31, 2008 and January 31, 2007 there were no revenues from oil and gas production activities. For the three months ended January 31, 2008 and January 31, 2007, revenues of $348 and of $1,770 respectively, consisted solely from interest income from funds deposited at financial institutions.

Operating Expenses. During the three months ended January 31, 2008, we did not undertake any further drilling activities. For the three months ended January 31, 2008 operating expenses of $896,680 consisted primarily of wages and benefits of $378,539, consulting and professional fees of $88,911, occupancy expenses of $52,550 and other general and administrative expenses of $34,688. There were non-cash expenses of $318,983 for stock based compensation. We are currently seeking a purchaser for AWCS, advanced well pumping control systems. We incurred $21,635 in salaries and $9,534 in software and product development expenses relating to AWCS during the three months ended January 31, 2008.

During the three months ended January 31, 2007, we incurred $1,090,876 for drilling activities. For the three months ended January 31, 2007 operating expenses of $1,191,103 consisted primarily of wages and benefits of $330,006, consulting and professional fees of $188,132, occupancy expenses of $33,021 and other general and administrative expenses of $116,815. There were non-cash expenses of $383,833 for stock based compensation. We incurred $119,995 in consulting fees, $43,615 in salaries and $54,324 in software and product development expenses relating to AWCS during the three months ended January 31, 2007.

Our overall investments in oil and gas properties decreased by $682,828 during the three months ended January 31, 2008. There was a $13,474 change in fixed assets during the three months ended January 31, 2008. During the three months ended January 31, 2008 we sold interests in leasehold property pursuant to an exploration and development agreement for $1,100,964. The final closing will occur during this second quarter of 2008.

Investments in oil and gas properties during the three months ended January 31, 2008 mainly consisted of $59,958 spent towards additional leasehold costs and $18,725 spent towards intangible exploration and drilling costs. Out of the leasehold costs of $59,958, we spent $51,025 towards lease rentals and $8,933 towards brokerage fees.

Investments in oil and gas properties during the three months ended January 31, 2007 mainly consisted of $642,626 spent towards additional leasehold costs and $1,066,421 spent towards intangible exploration and drilling costs. Out of the leasehold costs of $642,626, we spent $25,795 towards lease rentals, $583,516 towards bonus considerations and $33,315 towards brokerage fees.

Fiscal 2007 and First Quarter 2008

General

By the end of the second fiscal quarter of 2007, we had spent the proceeds from the equity financing of October, 2006 plus additional funds advanced by LMA Hughes LLLP, and had a working capital deficit of $1,237,000 with minimal cash on hand.

In June and July, 2007, a new Chief Executive Officer and a new Chief Financial Officer were appointed to lead a turnaround of the Company. New management’s plans were to stabilize the Company and develop and implement a strategy to fund ongoing operations, reduce overhead and staff, and pay past due trade liabilities, by additional borrowings from affiliate LMA Hughes LLLP and sales of assets, until outside financing could be arranged. At the end of fiscal 2007, we had a working capital deficit of $2,504,406.

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In September, 2007, we retained Energy Capital Solutions, LP (“ECS”), based in Dallas, Texas, as our advisor to raise financing from institutional investors. As of the date this Report is filed, we are working with ECS on a possible financing opportunity. While we hope this opportunity will result in enough funding for the Company to continue operations and begin significant exploration work on the properties, we don’t now have any agreement in place. In October, we signed a loan agreement with ECS and borrowed $300,000 (see below).

During first quarter 2008, ongoing operations were sustained with proceeds from sales of assets, an additional amount loaned by LMA Hughes LLLP, and an additional loan from ECS. However, at January 31, 2008 we had a working capital deficit of approximately $2,505,645. As of the date this Report is filed, we are in a severely distressed financial position; without a financing in the immediate future, it is likely that we will not be able to stay in business.

Also in first quarter 2008, we determined that our audited financial statements for the 2006 fiscal year, and the unaudited financial statements for the first three quarterly periods in fiscal 2007, were unreliable due to $6,940,918 of goodwill which was booked in connection with the October 30, 2006 transaction with New Pacific Ventures, Inc. Accordingly, the financial statements for 2006 included in our recently filed Form 10-KSB were restated to eliminate goodwill, and a note to the year end 2007 financial statements in the Form 10-KSB discusses the impact of such elimination on subsequent periods.

Events in First Quarter 2008 and to the Date This Report is Filed

Loan from ECS

On October 5, 2007 we entered into a loan agreement with Energy Capital Solutions, L.P. To date we have borrowed $400,000 for working capital purposes. The loan is a senior obligation, bears annual interest at 15%, and matures on the earlier of the sale of any equity or debt, or February 2, 2008. The maturity date has been extended to April 2, 2008. The interest rate on the extended period is 25% and the lender is entitled to an additional warrant (see below). Payment is secured by all of our properties and assets.

In connection with the initial borrowing of $200,000 in October 2007, we issued a warrant, exercisable at $0.20 per share through October 4, 2017, to purchase 616,667 shares of common stock. We borrowed another $100,000 prior to October 31, 2007. In December 2007, we borrowed the remaining $100,000 available under the agreement, and we issued another warrant, with the same terms, to purchase an additional 616,667 shares. ECS has piggy-back registration rights if we file any registration statement to raise cash during the warrant term. If we elect to extend the loan, or if we have not repaid the loan by the extended due date, we will issue an additional warrant to ECS to purchase additional shares of the registrant equal to another 2% of the Company’s fully diluted outstanding shares. In the event the note is not paid by April 2, 2008, we will issue yet another warrant to ECS to purchase more shares equal to another 4% of our fully diluted outstanding shares. All these additional warrants would be for the same term and will be exercisable at $0.20 per share.

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Lending Agreement with Affiliate

Effective as of December 5, 2007, the Company and our wholly-owned subsidiary Tatonka Oil and Gas Company, Inc. signed a lending agreement with LMA Hughes LLLP (“LMA”), an affiliate of Brian Hughes, a director. Pursuant to the lending agreement:

We issued a promissory note to LMA for $1,501,214.60, due February 15, 2008, extended for 60 days. Interest accrues at 15% per annum, increasing to 25% for the period of the extension until paid. The amount of the note includes $122,000 advanced after December 5, 2007. The balance represents LMA’s net advances to the subsidiary from its inception through December 4, 2007, plus 15% annual interest on the outstanding total monthly net amount of advances, also calculated through December 4, 2007. Additional amounts may be loaned to the subsidiary by LMA, on the same terms. Repayment of the note is secured by a lien on the subsidiary’s and the Company’s assets, which lien is junior to the October 2007 lien in favor of ECS. The Company has guaranteed repayment of the note, and will guarantee repayment of such additional amounts as LMA loans to the subsidiary. Subsequent to October 31, 2007, LMA advanced additional funds to the Company. In connection with the lending agreement in December 2007, we issued a warrant, exercisable at $0.20 per share through January 14, 2018, to purchase 376,167 shares of common stock. In January 2008, we paid LMA $200,000 of the note payable.

Pursuant to the lending agreement, we issued warrants to LMA. For information on the warrants and additional information on the amounts outstanding to LMA at the date this Report is filed, please see Note 5 to the financial statements.

The lending agreement was approved by our independent directors.

Sale of Undeveloped Acreage in Wyoming

On December 4, 2007, we signed an agreement to sell to an unrelated party, for $1,100,000, all of our working interest in 8,917.51 net acres (including deep drilling rights) in our Mowry Shale prospect in the Powder River Basin, and deep drilling rights to the remaining acreage. The 8,917.51 parcel is not an integral part of what we believe is the real value of the prospect, and the deep drilling rights are not within our scope of business. The deep drilling rights (which underlie approximately 7,050 gross acres in a 15 mile radius of the 8,917.51 parcel) represent the right to drill and produce oil and gas below 8,558 feet (the top of the Minnelusa formation as found at that depth for the Four Horse Federal #5-10 well in Weston County, Wyoming).

This transaction was closed in tranches, and was completed before this Report was filed. Our core acreage now is comprised of approximately 14,000 gross and net acres in the Mowry Shale prospect.

In connection with the sale, and in order to have the working and net revenue interests required by the buyer, on January 2, 2008 we bought out Clarion Finance Pte Ltd.’s participation agreement on the Mowry shale prospect for $368,658.83 (the initial acquisition fee paid by Clarion, plus interest at 15%, and Clarion’s legal expenses incurred in connection with the participation agreement). Clarion now has no rights in the acreage and no financial obligation to us. This buy-back related to the Company’s July 12, 2007 participation agreement with Clarion, by which Clarion paid $339,454 to us for the right to earn 50% of our interest in the prospect by paying $9,000,000 of drilling and completion costs for wells to be drilled.

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ITEM 3. Controls and Procedures

Management’s Report on Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting by using the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control—Integrated Framework. Based on our evaluation under the framework inInternal Control—Integrated Framework, our management identified a material weakness in the company’s internal controls over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected by the company’s internal control over financial reporting.

This material weakness resulted in a material misstatement of the company’s October 31, 2006 financial statements and the company’s three interim quarterly reports for fiscal 2007 and required changes to those financial statements. Management concluded that the possibility of a material misstatement due to the significant internal control deficiency was more than remote resulting in it being a material weakness. As a result, management concluded that the company’s disclosure controls and procedures were not operating effectively as of January 31, 2008, due to the material weakness described below.

For the fiscal year 2007 and the first quarter of fiscal year 2008, the company did not have the technical resources to review highly complex and non-recurring transactions.

Management intends to address this material weakness by providing additional training for its senior accounting staff in certain highly technical and complex accounting areas involving new rules and pronouncements and new interpretations of rules and pronouncements, and will retain experts to advise it regarding these areas.

Limitations of the Effectiveness of Internal Control

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

No Attestation Report

This quarterly report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.

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PART II

Item 1. Legal Proceedings

As of the date this Report is filed, there are no legal proceedings which commenced since those which were reported in the Form 10-KSB for the year ended October 31, 2007, and there have been no material developments in such proceedings from that date through the date this Form 10-QSB is filed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

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

No matters were submitted to stockholder vote in the first quarter of fiscal 2008.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

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SIGNATURES

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

	TATONKA OIL AND GAS, INC.
Date: March 24, 2008	By:	/s/ DIRCK TROMP
		Dirck Tromp
		Chief Executive Officer (Principal Executive Officer)
Date: March 24, 2008	By:	/s/ PAUL C. SLEVIN
		Paul C. Slevin
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit
No.	Description
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)

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