Stallion 10QSB 2008 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended FEBRUARY 29, 2008

[ ]

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

For the transition period from _____ to _______

Commission file number: 333-118360

THE STALLION GROUP

(Exact name of small business issuer in its charter)


Nevada		98-0429182
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

604 – 700 West Pender Street Vancouver, British Columbia		V6E 1G8
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number: (604) 662-7901

Securities Registered Under Section 12(b) of the Exchange Act: None

Securities Registered Under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark whether the issuer (1) has 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. Yes [R ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act) Yes [ ] No [R ]

Indicate by check mark whether the registrant is a shell corporation (as defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [R ]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 71,623,508 shares of Common Stock as of February 29, 2008.

Transitional Small Business Format. Yes [ ] No [X]

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements


THE STALLION GROUP
(An Exploration Stage Company)
Balance Sheets
February 29, 2008
				February 29,		May 31,
				2008		2007
				(Unaudited)		(Audited)
ASSETS

Current assets:

	Cash and cash equivalents		$	18,946	$	162,266
	Accounts receivable			25,887		5,808
	Prepaid expense			6,596		4,585

		Total current assets		51,429		172,659

Capital assets, net				6,990		5,438

Other assets

	Oil and gas properties (Note 3)
	Proved properties subject to amortization			423,354		90,679
	Unproved properties			631,614		892,054

		Total Other assets		1,054,968		982,733

		TOTAL ASSETS	$	1,113,387	$	1,160,830


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

	Accounts payable and accrued liabilities		$	17,494	$	45,896
	Due to related party			3,458		277
	Shares subscription received			664,500		-

		Total current liabilities		685,452		46,173

		Total liabilities		685,452		46,173

Commitments

Stockholders' equity (Note 7)

	Common stock, $0.001 par value; 1,200,000,000 shares authorized
		71,623,508, 70,033,508 shares issued and outstanding respectively		71,624		70,034

	Additional paid-in capital			2,713,221		2,315,622

	Cumulative other comprehensive income			12,825		10,889

	Accumulated deficit			(2,369,735)		(1,281,888)

		Total stockholders' equity		427,935		1,114,657

		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,113,387	$	1,160,830


THE STALLION GROUP
(An Exploration Stage Company)
Statements of Operations
(Unaudited)
											January 9, 2004
											(Inception)
			Three Months Ended				Nine Months Ended				Through
			February 29,		February 28,		February 29,		February 28,		February 29,
			2008		2007		2008		2007		2008
Revenue
	Natural gas and oil revenue	$	40,666	$	-	$	57,279	$	-	$	74,500

Cost of revenue
	Natural gas and oil operating costs		24,218		-		27,130		-		28,976
	Depletion		55,745		9,136		86,993		9,136		129,949
	Writedown in carrying value of oil and gas property		310,594		-		537,328		-		711,639

			390,557		9,136		651,451		9,136		870,564

Gross profit			(349,891)		(9,136 )		(594,172)		(9,136 )		(796,064)

Expenses
	Contribute rent		-		-		-		-		2,900
	Contribute administrative support		-		-		-		-		450
	Consulting (Note 8)		172,584		235,195		330,383		274,995		985,359
	Depreciation		656		271		1,783		453		2,614
	Investor relations services		10,956		73,758		66,260		78,829		201,121
	Mineral exploration and filing fees (Note 6)		1,228		1,727		8,385		5,777		45,964
	Legal and accounting		34,958		10,710		67,016		39,195		178,882
	Office and miscellaneous		5,663		7,239		12,986		25,489		68,010
	Organization costs		-		-		-		-		1,160
	Travel		1,728		9,067		4,976		14,658		78,865
	Business promotion		-		-		-		1,865		7,151
	Other		651		274		1,886		1,620		6,852

Total expenses			228,424		338,241		493,675		442,881		1,579,328

Loss from operations			(578,315)		(347,377)		(1,087,847)		(452,017)		(2,375,392)

Other income
	Interest income		-		2,809		-		5,657		5,657

Total other income			-		2,809		-		5,657		5,657

Net loss before Income Tax			(578,315)		(344,568)		(1,087,847)		(446,360)		(2,369,735)
Income Tax			-		-		-		-		-

Net loss		$	(578,315)	$	(344,568)	$	(1,087,847)	$	(446,360)	$	(2,369,735)

Basic and diluted loss per share		$	(0.01)	$	(0.01)	$	(0.02)	$	(0.01)	$	(0.04)

Basic and diluted weighted average
common shares outstanding			71,623,508		62,167,610		71,339,165		62,902,292		57,180,653

Comprehensive Income/(Loss)
Net Loss		$	(578,315)	$	(344,568)	$	(1,087,847)	$	(446,360)	$	(2,369,735)
Other Comprehensive Income/(Loss)
	Foreign Currency translation		659		(2,970)		1,936		(3,894)		12,825

Comprehensive Loss		$	(577,656)	$	(347,538)	$	(1,085,911)	$	(450,254)	$	(2,356,910)


THE STALLION GROUP
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
JANUARY 9, 2004 (inception) TO FEBRUARY 29, 2008
(Unaudited)

		Common Stock				Additional				Cumulative		Total
				Par		Paid-In		Accumulated		Comprehensive		Stockholders'
		Shares		Value		Capital		Deficit		Income (Loss)		Equity

Balance at January 9, 2004 (inception)		-	$	-	$	-	$	-	$	-	$	-

February 2004, common stock sold to an officer
	($0.001/share)	30,000,000		30,000		(25,000)		-		-		5,000
April 2004 through May 2004, common stock
	sold in private placement offering
	($0.01/share) (Note 7)	19,200,000		19,200		12,800						32,000
Office space and administrative support
	contributed by an officer	-		-		550		-		-		550
Net loss, period ended May 31, 2004		-		-		-		(4,859)		-		(4,859)

Balance at May 31, 2004		49,200,000		49,200		(11,650)		(4,859)		-		32,691

June 2004, common stock sold in private
	placement offering ($0.01/share)(Note 7)	4,800,000		4,800		3,200		-		-		8,000
May 2005, common stock sold in public offering,
	net of offering costs of $7,500 ($0.2/share)
	($0.2/share) (Note 7)	1,839,000		1,839		51,961						53,800
Office space and administrative support
	contributed by an officer	-		-		1,400		-		-		1,400
Comprehensive loss:
	Net loss, year ended May 31, 2005	-		-		-		(20,353)		-		(20,353)
	Cumulative translation adjustment	-		-		-		-		(387)		(387)
Comprehensive loss												(20,740)

Balance at May 31, 2005		55,839,000		55,839		44,911		(25,212)		(387)		75,151

Office space and administrative support
	contributed by an officer	-		-		1,400		-		-		1,400
Comprehensive loss:
	Net loss, year ended May 31, 2006	-		-		-		(59,304)		-		(59,304)
	Cumulative translation adjustment	-		-		-		-		1,497		1,497
Comprehensive loss												(57,807)

Balance, May 31, 2006		55,839,000	$	55,839	$	46,311	$	(84,516)	$	1,110	$	18,744

Common stock sold to the director at
	$0.1 per share (post forward split)
	on September 14, 2006	360,000		360		17,640		-		-		18,000
Issuance of common stock for cash at
	$0.1 per share (post forward split)
	on October 17, 2006	8,945,160		8,946		438,312		-		-		447,258
Issuance of common stock for cash at
	$0.85 per share on February 28, 2007	2,110,588		2,110		894,890		-		-		897,000
Exercise of option at $0.375 per share
	by the Director	120,000		120		44,880		-		-		45,000
Exercise of warrant at $0.1 per share		2,658,760		2,659		263,217		-		-		265,876
Stock-based compensation on
	options granted	-		-		610,372		-		-		610,372
Comprehensive loss:
	Net loss, year ended May 31, 2007	-		-		-		(1,197,372)		-		(1,197,372)
	Cumulative translation adjustment	-		-		-		-		9,779		9,779
Comprehensive loss												(1,187,593)

Balance, May 31, 2007		70,033,508	$	70,034	$	2,315,622	$	(1,281,888)	$	10,889	$	1,114,657

Exercise of warrant at $0.1 per share		1,590,000		1,590		157,410		-		-		159,000
Stock-based compensation on
	options vested	-		-		240,189		-		-		240,189
Comprehensive loss:
	Net loss, period ended February 29, 2008	-		-		-		(1,087,847)		-		(1,087,847)
	Cumulative translation adjustment	-		-		-		-		1,936		1,936
Comprehensive loss												(1,085,911)

Balance, February 29, 2008		71,623,508	$	71,624	$	2,713,221	$	(2,369,735)	$	12,825	$	427,935

Accompanying notes are an integral part of these financial statements

THE STALLION GROUP

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

(Unaudited)

January 9, 2004

(Inception)

Nine Months Ended

Through

February 29,

February 28,

February 29,

2008

2007

2008

Cash flows provided (used) by operating activities:

Net loss

(1,087,847)

(446,360)

(2,369,735)

Adjustments to reconcile net loss to net cash used in operating activities:

Office space and administrative support contributed by an officer

3,350

Stock based compensation (Note 8)

240,189

246,361

850,561

Depletion

86,993

9,136

129,949

Write down in carrying value of oil and gas properties

537,328

711,639

Depreciation

1,783

453

2,614

Changes in operating assets and liabilities:

Increase in Accounts receivable

(20,079)

(25,887)

Increase in Prepaid expenses

(2,011)

(6,762)

(6,596)

Increase/(Decrease) in Accounts payable

(28,402)

1,721

17,494

Increase/(Decrease) in Accrued liabilities

5,200

Increase in amounts due to related party

3,181

9,371

3,458

Net cash used by operating activities

(268,865)

(180,880)

(683,153)

Cash flows used by investing activities:

Oil and gas properties acquisition (Note 3)

(696,556)

(900,000)

(1,896,556)

Purchase of furniture and computer equipment

(3,335)

(6,269)

(9,604)

Net cash used by investing activities

(699,891)

(906,269)

(1,906,160)

Cash flows provided (used) by financing activities:

Proceeds from sales of common stock

1,362,258

1,468,558

Proceeds from exercise of options and warrants

159,000

469,876

Payment of offering costs

(7,500)

Shares subscription received

664,500

Net cash provided by financing activities

823,500

1,362,258

2,595,434

Effect of exchange rate changes on cash

1,936

(3,894)

12,825

Increase in cash and cash equivalents

(143,320)

271,215

18,946

Cash and cash equivalents, beginning of period

162,266

22,100

Cash and cash equivalents, end of period

18,946

293,315

18,946

Accompanying notes are an integral part of these financial statements

THE STALLION GROUP

(An Exploration Stage Company)

Notes to Financial Statements

February 29, 2008

BASIS OF PRESENTATION

The unaudited financial statements as of February 29, 2008 included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these condensed financial statements be read in conjunction with the May 31, 2007 audited financial statements and notes thereto.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Stallion Group (“the Company”) was incorporated in the state of Nevada on January 9, 2004.

The Company is an exploration stage, independent natural gas and oil company engaged in the exploration, development and acquisition of natural gas and oil properties in the United States.

Development Stage Activities

The Company is a development stage enterprise engaged in the exploration for and production of natural gas and oil in the United States. Since August 2, 2006, the Company agreed to participate in the two proposed drilling programs to be conducted by Griffin & Griffin Exploration, L.L.C.

The Company is subject to several categories of risk associated with its development stage activities. Natural gas and oil exploration and production is a speculative business, and involves a high degree of risk. Among the factors that have a direct bearing on the Company’s prospects are uncertainties inherent estimating natural gas and oil reserves, future hydrocarbon production, and cash flows, particularly with respect to wells that have not been fully tested and with wells having limited production histories; access to additional capital; changes in the price of natural gas and oil; availability and cost of services and equipment; and the presence of competitors with greater financial resources and capacity.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As shown in the accompanying financial statements, the Company has incurred a net loss of $2,369,735 since inception. To achieve profitable operations, the Company requires additional capital for obtaining producing oil and gas properties through either the purchase of producing wells or successful exploration activity. Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of and, if successful, to commence the sale of its products under development. As a result of the foregoing, there exists substantial doubt the Company’s ability to continue as a going concern. These financial statements do not include any adjustments tha t might result from the outcome of this uncertainty.

d) Principles of Accounting

These financials statements are stated in U.S. dollars and have been prepared in accordance with U.S. generally accepted accounting principles.

e) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 periods. Actual results could differ from those estimates. Significant estimates with regard to these financial statements include the estimate of proved natural gas and oil reserve quantities and the related present value of estimated future net cash flows therefrom.

f) Natural Gas and Oil Properties

The Company accounts for its oil and gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (“SEC”). Accordingly, all costs associated with the acquisition of properties and exploration with the intent of finding proved oil and gas reserves contribute to the discovery of proved reserves, including the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized. All general corporate costs are expensed as incurred. In general, sales or other dispositions of oil and gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded. Amortization of evaluated oil and gas

properties is computed on the units of production method based on all proved reserves on a country-by-country basis. Unevaluated oil and gas properties are assessed at least annually for impairment either individually or on an aggregate basis. The net capitalized costs of evaluated oil and gas properties (full cost ceiling limitation) are not to exceed their related estimated future net revenues from proved reserves discounted at 10%, and the lower of cost or estimated fair value of unproved properties, net of tax considerations. These properties are included in the amortization pool immediately upon the determination that the well is dry.

Unproved properties consist of lease acquisition costs and costs on well currently being drilled on the properties. The recorded costs of the investment in unproved properties are not amortized until proved reserves associated with the projects can be determined or until they are impaired.

Revenue Recognition

The Company uses the sales method of accounting for natural gas and oil revenues. Under this method, revenues are recognized upon the passage of title, net of royalties. When sales volumes exceed the Company’s entitled share, an overproduced imbalance occurs. To the extent the overproduced imbalance exceeds the Company’s share of the remaining estimated proved natural gas reserves for a given property, the Company records a liability. At February 29, 2008, the Company had no overproduced imbalances.

Cash and Cash Equivalent

Cash and cash equivalent consists of cash on deposit with high quality major financial institutions, and to date has not experienced losses on any of its balances. The carrying amounts approximated fair market value due to the liquidity of these deposits. For the purpose of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Environmental Protection and Reclamation Costs

The operations of the Company have been, and may be in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restorations costs. Both the likelihood of new regulations and their overall effect upon the Company may vary from region to region and are not predictable.

The Company’s policy is to meet or, if possible, surpass standards set by relevant legislation, by application of technically proven and economically feasible measures. Environmental expenditures that relate to ongoing environmental and reclamation programs will be charged against statements of operations as incurred or capitalized and amortized depending upon their future economic benefits. The Company does not currently anticipate any material capital expenditures for

environmental control facilities because all property holdings are at early stages of exploration. Therefore, estimated future removal and site restoration costs are presently considered minimal.

Foreign Currency Translation

United States funds are considered the Company’s functional currency. Transaction amounts denominated in foreign currencies are translated into their United States dollar equivalents at exchange rates prevailing at the transaction date. Monetary assets and liabilities are adjusted at each balance sheet date to reflect exchange rates prevailing at that date, and non-monetary assets and liabilities are translated at the historical rate of exchange. Gains and losses arising from restatement of foreign currency monetary assets and liabilities at each year-end are included in statements of operations.

Capitalized Assets

Computer equipment and furniture are stated at cost. Provision for depreciation is calculated using the straight-line method over the estimated useful life of three years for computer equipment and five years for furniture.


		For the Periods Ended
		February 29,	February 28,
		2008		2007
Furniture and Equipment	$	9,604	$	6,269
Depreciation		(2,614)		(453)
Total	$	6,990	$	5,816

Impairment of Long-Lived Assets

In the event that facts and circumstances indicate that the costs of long-lived assets, other than oil and gas properties, may be impaired, and evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to market value or discounted cash flow value is required. Impairment of oil and gas properties is evaluated subject to the full cost ceiling as described under Oil and Gas Properties.

Loss Per Share

In February 1997, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“SFAS 128”). Under SFAS 128, basic and diluted earnings per share are to be presented. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares

outstanding in the period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.

Income Taxes

The Company follows the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax bases of assets and liabilities, and their reported amounts in the financial statements, and (ii) operating loss and tax credit carryforwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management’s estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period.

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalent, accounts receivable, accounts payable and accrued liabilities, and promissory note payable.

It is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The fair value of these financial instruments is approximate their carrying values.

Stock-Based Compensation

The Company adopted SFAS No. 123(revised), "Share-Based Payment", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. SFAS No. 123(revised) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

q) Asset Retirement Obligations

The Company accounts for asset retirement obligations in accordance with the provisions of SFAS 143 “Accounting for Asset Retirement Obligations”. SFAS 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company had no asset retirement obligation as of February 29, 2008.

3. OIL AND GAS PROPERTIES

(a) Proved property

Property

May 31, 2007

Addition

Depletion for the period

Write down in carrying value

February 29, 2008

U.S.A. – Proved property

90,679

956,996

(86,993)

(537,328)

423,354

(b) Unproved property

Property

May 31, 2007

Addition

Cost added to capitalized cost

February 29, 2008

U.S.A. – Unproved property

892,054

696,556

(956,996)

631,614

Description

i. Mississippi II, Mississippi, U.S.A.

On August 2, 2006, the Company agreed to participate in the two proposed drilling programs to be conducted by Griffin & Griffin Exploration, L.L.C., thirty percent of which shall be funded by the Company. On August 21, 2006, the Company paid an amount of $300,000 to Griffin & Griffin Exploration, L.L.C. The Memorandum with Griffin & Griffin Exploration L.L.C. provides for the following payments:

On, or before October 1, 2006 the Company shall pay $600,000 for further development of prospects on lands of interest in Mississippi and Louisiana.

On, or before November 1, 2006 the Company shall pay $300,000 for further development of prospects on lands of interest in Mississippi and Louisiana.

Due to delays in drilling and agreement with the operator, the Company paid $600,000 on November 16, 2006 and $300,000 on March 26, 2007.

On January 19, 2007, the well, Dixon#1, was deemed non-commercial and plugged as no show of oil and/or gas. The cost of $121,815 was added to properties subject to depletion.

On June 2, 2007, the well, Randall#1, was deemed non-commercial and plugged as only two feet of gas on water. The cost of $80,754 was added to properties subject to depletion.

During the three month period ended November 30, 2007, the Company paid $96,282 for PP F-111, $67,484 for PP F-90, and $81,484 for PP F-100. These three wells were plugged and the cost was added to properties subject to depletion.

During the three month ended February 29, 2008, the well, BR F-33 and USA 1-37 started producing gas and Faust #1 was found to be proven. The Company also paid $98,834 for PP F-83 and $98,834 for PP F-6A. These two wells were plugged and the cost was added to proven properties subject to depletion.

ii. Willows Gas Field, California, U.S.A

On October 15, 2007, the Company agreed to participate in the drilling program to be conducted by Production Specialties Company (“PSC”). The Company shall pay for the initial test well, 12.5% of 100% of all costs and expenses of drilling, completing, testing and equipping the Wilson Creek #1-27, to earn 6.25% working interest. As of February 29, 2008, the Company has expended $193,638 for the costs of Wilson Creek #1-27 and $60,000 for 3D seismic in the prospect area.

4. RELATED PARTY TRANSACTIONS

During the three month period ended February 29, 2008, the Company paid $10,584 (February 28, 2007 - $8,275) for accounting and administrative services to a Company controlled by a director.

During the three month period ended February 29, 2008, the Company paid $9,000 (February 28, 2007 - $10,500) as a consulting fee to the Chairman of the Company.

During the three month period ended February 29, 2008, the Company paid $9,048 (February 28, 2007 - $5,409) as a consulting fee to the CFO of the Company.

5. EARNINGS/ (LOSS) PER SHARE

The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements.


		Income/(Loss)	Shares		Per-Share
		(Numerator)	(Denominator)		Amount
For the nine months ended February 29, 2008:
Basic EPS
Income/(Loss) to common stockholders	$	(1,087,847)	71,339,165	$	(0.02)
For the nine months ended February 28, 2007:
Basic EPS
Income/(Loss) to common Stockholders	$	(446,360)	62,902,292	$	(0.01)

The Company excluded 2,230,000 options and 7,166,988 warrants from the Fully Diluted Earnings Per Share calculation as the Company considered the inclusion of these amounts would be anti-dilutive.

6. OPTION ON UNPROVEN MINERAL INTERESTS

Mayan Minerals Ltd. Option Agreement

On May 31, 2004, the Company entered into an option agreement to acquire 100 percent of the right, title and interest in a mineral claim located in the Omineca Mining District, British Columbia, Canada. Under the terms of the Option Agreement, the Company is required to:

Make option exploration expenditures as follows:


Exploration Expenditures			Due Date
CDN	$	35,000.00	August 31, 2005
		85,000.00	August 31, 2006
CDN	$	120,000.00

Make annual payments of CDN$50,000, commencing January 1, 2007, as long as the Company held any interest in the claim.

In addition to the above terms, the optionor is to retain a three percent net smelter royalty.

The Company has decided to abandon this property during the year ended May 31, 2007.

7. STOCKHOLDERS’ EQUITY

(a)

A Forward Stock Split

On September 27, 2006 the Company amended its Articles of Incorporation through the implementation of a forward split of the Company’s Common Stock on the basis of three (3) new shares for each old share, based on a resolution of the Directors dated August 31, 2006 and a consent resolution of the shareholders dated September 8, 2006 signed by the holders of greater than 51% of the issued and outstanding shares of the Company. Prior to the split, the Company had 9,306,500 shares outstanding; post forward split, there will be 27,919,500 shares issued.

On April 18, 2007 the Company amended its Articles of Incorporation and increased its issued ad outstanding shares of common stock on the basis of two (2) new shares for every one (1) old share. Post forward split, the Company has 67,254,748 issued and outstanding shares of common stock.

(b)

Authorized Stock

After a forward split, the amount of the total authorized capital stock of the Company is six hundred thousand dollars ($600,000) consisting of six hundred million (600,000,000) shares of common stock of the par value of $0.001 each.

After a second forward split on April 17, 2007, the Company increased its authorized capital from 600,000,000 shares of common stock to 1,200,000,000 shares of common stock, all of the shares of the Company being of the same class and without preference or distinction.

(c)

Share Issuances

Between April 2004 and June 2004, the Company offered for sale 4,000,000 shares of its common stock at a price of $0.01 per share. The Company closed the offering after selling all 4,000,000 shares for gross proceeds of $40,000. The offering was made in reliance on an exemption from registration of a trade in the United States under Rule 903 of regulation S of the United States Securities Act of 1933, as amended.

Between February and May 2005, the Company offered for sale a minimum of 250,000 shares and a maximum of 500,000 shares of its common stock at a price of $0.20 per share. The Company closed the offering after selling 306,500 shares for gross proceeds of $53,800, net of $7,500 offering costs. The offering was made under an SB-2 offering registered by Regulation S-B under the United States Security Act of 1933, as amended.

The Company has received paid subscriptions for 1,550,860 common shares at $0.30 in August 2006 prior to the split; post forward split on September 27, 2006 and April 17, 2007, there are 9,305,160 shares issued for $465,258 ($0.050/share). The share certificates were issued on October 17, 2006. The warrants price of the share was $0.60 prior to the split and $0.10 post forward split.

On February 28, 2007, the Company issued 1,055,294 common shares pursuant to a private placement for $897,000 at $0.85 per share prior to the split; post forward split on April 17, 2007, there are 2,110,588 shares issued ($0.425/share). The warrants price of the share was $1 prior to the split and $0.50 post forward split.

(d) Common Stock Share Purchase Warrants

Between March and July 2007, the Company has received $424,876 for exercising 4,248,760 share purchase warrants at a price of $0.10 per share. As at February 29, 2008, share purchase warrants outstanding for the purchase of common shares are as follows:


	Warrants Outstanding
Exercise Price	Number of Shares		Expiry Date
$0.10	5,056,400	August 15, 2008
$0.50	2,110,588	September 29, 2008

8. STOCK OPTIONS

Compensation expense related to stock options granted is recorded at their fair value as calculated by the Black-Scholes option pricing model. Compensation expense of $154,536 was recorded during the three month period ended February 29, 2008 related to options vested during the period.

The changes in stock options are as follows:

Number

Weighted Average Exercise Price

Balance outstanding, May 31, 2007

2,230,000

0.571

Granted

Exercised

Balance outstanding, February 29, 2008

2,230,000

0.571

The following table summarized information about the stock options outstanding as at February 29, 2008:


		Options Outstanding		Options Exercisable
Range of Exercise Price	Weighted Average Exercise Price	Number of Shares	Remaining Contractual Life (Years)		Number of Shares
$0.375	$0.375	280,000	1.55		280,000
$0.375	$0.375	200,000	1.95		200,000
$0.600 $0.685 $0.950	$0.600 $0.685 $0.950	1,400,000 300,000 50,000	1.95 2.08 2.21		1,400,000 300,000 50,000
Total	$0.571	2,230,000			2,230,000

9. COMMITMENTS

On March 18, 2007, The Company has entered into a consulting agreement with Beerenbaum Media GmbH, to provide investor relations services to the Company for $7,500 per month commencing February 1, 2007. This agreement was amended to reflect a reduction in fees charged at $3,500 per month commencing December 1, 2007.

Item 2.

Management’s Discussion and Analysis or Plan of Operation.

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. Some discussions in this report may contain forward-looking statements that involve risk and uncertainty. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report. Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions or words which, by their nature, refer to future events.

In some cases, you can also identify forward-looking statements by terminology such as “may”, “will”, “should”, “plans”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", and "Stallion" mean The Stallion Group, unless otherwise indicated.

Stallion is an exploration stage company. There is no assurance that commercially viable mineral and/or oil and natural gas deposits exist on the claim that we have under option. Further exploration will be required before a final evaluation as to the economic and legal feasibility of the claim is determined.

Glossary of Exploration Terms

The following terms, when used in this report, have the respective meanings specified below:


Development	Preparation of a mineral deposit for commercial production, including installation of plant and machinery and the construction of all related facilities. The development of a mineral depositcan only be made after a commercially viable mineral deposit, a reserve, has been appropriately evaluated as economically and legally feasible.
Diamond drill	A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock, which is recovered in long cylindrical sections an inch or more in diameter.
Exploration	The prospecting, trenching, mapping, sampling, geochemistry, geophysics, diamond drilling and other work involved in searching for mineral bodies.


Geochemistry	Broadly defined as all parts of geology that involve chemical changes or narrowly defined as the distribution of the elements in the earth’s crust; the distribution and migration of the individual elements in the various parts of the earth.
Geology	The science that deals with the history of the earth and its life especially as recorded in the rocks; a chronological account of the events in the earth’s history.
Geophysics	The science of the earth with respect to its structure, components and development.
Mineral	A naturally occurring inorganic element or compound having an orderly internal structure and characteristic chemical composition, crystal form and physical properties.
Mineral Reserve	A mineral reserve is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
Mineralization	Rock containing an undetermined amount of minerals or metals.
Oxide	Mineralized rock in which some of the original minerals, usually sulphide, have been oxidized. Oxidation tends to make the mineral more porous and permits a more complete permeation of cyanide solutions so that minute particles of gold in the interior of the minerals will be more readily dissolved.

Foreign Currency and Exchange Rates

Dollar costs of Stallion’s property acquisition and planned exploration costs are in Canadian Dollars. For purposes of consistency and to express United States Dollars throughout this report, Canadian Dollars have been converted into United States currency at the rate of US $1.00 being approximately equal to CA $1.00 or CA $1.00 being approximately equal to US $1.00 which is the approximate average exchange rate during recent months and which is consistent with the incorporated financial statements.

THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE CORPORATION FOR THE PERIOD ENDING FEBRUARY 28, 2006 SHOULD BE READ IN CONJUNCTION WITH THE CORPORATION’S CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO CONTAINED ELSEWHERE IN THIS FORM 10-QSB.

Overview

We were incorporated in the State of Nevada on January 09, 2004 as The Stallion Group and established a fiscal year end of May 31. Our statutory registered agent's office is located at 251 Jeanell Drive, No. 3, Carson City, Nevada 89703 and our business office is located at 604 – 700 West Pender Street, Vancouver, British Columbia V6C 1G8. Our telephone number is (604) 662-7901. There have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation. We are a start-up, exploration stage company engaged in the search for minerals including natural gas, oil and gold. There is no assurance that a commercially viable mineral deposit, a reserve, exists in our claim or can be shown to exist until sufficient and appropriate exploration is done and a comprehensive evaluation of such work concludes economic and legal feasibility.

On May 31, 2004, we optioned a mineral property containing four mining claims in British Columbia, Canada by entering into an Option To Purchase And Royalty Agreement with Mayan Minerals Ltd. on behalf of Angel Jade Mines Ltd., the beneficial owner of the claims, each arms-length British Columbia corporations, to acquire the claims by making certain expenditures and carrying out certain exploration work on the claims. We can acquire a 100% interest in the claim subject to the expenditure of a total of $116,000 through a three-phase exploration program. In addition, the vendors retain a 3% net smelter royalty. After January 1, 2007 payments of $40,000 per year are to be made as advance royalty to Angel Jade so long as Stallion retains an interest in the claim.

Under the terms of the agreement, Mayan granted to Stallion the sole and exclusive right to acquire 100 percent of the right, title and interest of Angel Jade in the Bell Claims, subject to Mayan receiving annual payments and a royalty, in accordance with the terms of the agreement, as follows:

Stallion must incur exploration expenditures on the claims of a minimum of $35,000, by February 28, 2006 (completed and awaiting engineering report);

Stallion must incur exploration expenditures on the claims of a further $85,000, for an aggregate minimum exploration expense of $120,000, by November 30, 2006; and

Upon exercise of the option, Stallion is required to pay to Mayan, commencing January 1, 2007, the sum of $40,000 per annum, as prepayment of the royalty.

The claims are located approximately 25 miles south west of Telkwa, B.C., at 54º 37' north latitude and 127º 40' west longitude at an approximate median elevation of six thousand feet. The property consists of four mineral claims which in total measure 1,000 metres (3,240 feet) by 1,000 metres (3,240 feet) and covers an area of approximately 160 acres or 64 hectares.

The Company has terminated the agreement to pursue this property as it focuses on oil and natural gas exploration.

Mississippi Prospect

On August 2^nd, 2006 the Company entered into a Memorandum between Griffin & Griffin Exploration LLC (G&G) that proposes two drilling programs that will be conducted by G&G. The company’s share of all costs will be 30%, which will entitle the Company to share in the following royalty arrangement;

Wilcox wells.

G&G will be entitled to receive 25% of all net revenues

II.

The Company will be entitled to receive it pro-rata share (23%) of seventy-five percent (75%) of all net revenues.

III.

In the event that the first exploration well establishes commercial production, then any offsetting well within the limits of the same reservoir, at the option of G&G, will be at the cost of G&G; or, provide the Company an opportunity to participate at its pro-rata share in 100% of all net revenues until all costs, including costs associated to establish commercial production, before payout (BPO), after which G&G will be entitled to its 25% working interest after payout (APO).

Frio wells.

G&G will be entitled to 20% of all net revenues;

II.

The Company will be entitled to receive its pro-rata share (24%) of eighty percent of all net revenues.

The total costs associated with the above program are $1,200,000 and are described below;

The Company’s pro-rata share of $1,000,000 paid by August 15, 2006 which amounted to $300,000.

On or before November 16, 2006 the company’s pro-rata share of $2,000,000 amounting to $600,000 which will be used to further the development of prospects on lands of interest in Mississippi and Louisiana.

On or before March 31, 2007 the Company pro-rata share of $1,000,000 amounting to $300,000 which will be used to further the development of prospects on lands of interest in Mississippi and Louisiana.

The CMR-USA-39-14 (Redbug #1) well, was drilled to a depth of 3,200 feet and encountered 24 feet of pay. The well is now connected to a nearby pipeline and has begun producing natural gas on December 23, 2006. The Company is anticipating the receipt of royalty revenues shortly. The costs of this well are $105,376.

The second well in this program was the Dixon #1 well, which reached total depth of 8,650 feet, and reached the Wilcox formation. However, after testing, the well showed no hydrocarbons and therefore it was plugged and abandoned. The costs transferred to Proving properties amounted to $73,369.

TEC-1 closure (known as the Faust #1 well) has encountered the Frio gas formation and has been completed as a gas well. The well encountered significant gas reserves. The Operator has now completed gas flow testing and the production test rate was approximately 283 mcf/day using a 6/64 choke. This well encountered pressures exceeding 800 psi. Stallion expects the production rate to normalize at 200 mcf/day. The total costs for this well amounted to $121,815.

The CMR-USA-37-1 (Redbug #2) well was drilled to a depth of 3,220 feet. The well encountered 10 feet of net pay at a depth between 2,630 and 2,640 feet. The Net Reserves of natural gas is 0.341 BCF. The Company expects the production rate to normalize between 225,000 and 250,000 cubic feet of sweet natural gas per day. This well has been completed and will be is currently being tied into our existing pipeline system.

During the period subsequent to the quarter ended November 30, 2007, the Company drilled two prospective holes, PP F-6A & PP F-83. Both holes were not to have economic quantities of hydrocarbons and hence were plugged and abandoned.

The Company is anticipating that the remaining three wells that are proved will be tied in and producing by the end of the third quarter ended February 28, 2008.

The following table indicate the Net Reserves for those wells producing and estimated reserves for those wells awaiting connection to the nearby gas gathering system.


Well name	Total Net	Suggested	Proved, Awaiting
	Reserves @ WI	Daily Flow Rate	Tie-in or Producing
	BCF	Cubic Feet

CMR USA 39-14	0.230	140,000	Proved &
Redbug #1			Producing

TEC 1 Closure			Proved &
Faust #1	0.319	175,000	Awaiting Tie

BR F-24	0.196	150,000	Abandoned

USA 37-1	0.341	200,000	Proved &
Redbug #2			Awaiting Tie-in

BR F-33	0.226	194,000	Proved &
			Awaiting Tie-in
PP F-100			Abandoned
PP F-111			Abandoned
PP F-6A			Abandoned
PP F-83			Abandoned
Total	1.312	859,000

North Sacramento Valley Prospect

During the quarter, the Company entered into a Farm Out Agreement with Production Specialties Company for a natural gas prospect area located in the North Sacramento Valley, California. Stallion has participated in the drilling of the first well on the prospect area and encountered a number of prospective pay zones. Testing has been completed and stabilized flow rates exceeded a combined 1.5 million cubic feet per day of sweet high quality gas, the well currently being connected to the nearby delivery system and revenues are expected to be received within the next quarter.

Under the Farm Out Agreement, Stallion will pay 12.5% of the costs of the first well to earn a 6.5% interest. Thereafter, Stallion will pay 6.5% of the costs of future wells to earn 6.5%. Total costs for this prospect for the end of the quarter ended February 29, 2008 is $253,638

Risks

At present we do not know whether or not the exploration wells contain commercially exploitable reserves of oil and/or natural gas or any other valuable mineral. Additionally, the proposed expenditures to be made by us in the exploration of the claim may not result in the discovery of commercial quantities of oil and/or natural gas. Problems such as unusual or unexpected formations and other unanticipated conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.

However, in order to complete future phases of our proposed exploration program we will need to raise additional funding. Even if the first phase of our exploration program is deemed to be successful there is no guarantee that we will be able to raise any additional capital in order to finance the second or third phases. Should we be unable to raise additional funding to complete our exploration plan, we would have to cease operations.

Finally, even if our exploration program is successful we may not be able to obtain commercial production. If our exploration is successful and commercial quantities of minerals are discovered we will require a significant amount of additional funds to ensure commercial production. Should we be unable to raise the additional funds required, we would be unable to continue economic operations and may have to either sell our working interest to a third party or would have to cease operations.

Employees

Initially, we intend to use the services of subcontractors for manual labour exploration work on our claims and an engineer or geologist to manage the exploration program. Our only employees are Christopher Paton-Gay, Chairman/CEO and director and Kulwant Sandher, Chief Financial Officer and director.

At present, we have no other employees, other than our officers and directors. Neither Mr. Paton-Gay or Mr. Sandher has an employment agreement with us. We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to employees.

We intend to hire geologists, engineers, operators and excavation subcontractors on an as needed basis. We have entered into an operating agreement with Griffin & Griffin LLC to provide drilling and exploration services for the Company’s Mississippi’s play and it is our intention to retain Mr. Heard as senior geological consultant. We do not intend to initiate negotiations or hire anyone until we receive proceeds from our offering.

Offices

Our offices are located at 604 – 700 West Pender Street, B.C. Canada V6C 1G8. Currently, these facilities are provided to the Company by Hurricane Corporate Services Ltd., a company owned by two directors. The costs regarding accounting, office, secretarial and consulting services are paid on a fixed amount per month.

Results of Operations

Stallion was incorporated on January 09, 2004; comparative periods for the three months ended February 29, 2008, February 28, 2007 and January 09, 2004 (inception) through February 29, 2008 are presented in the following discussion.

Since inception, we have used our common stock to raise money for our optioned acquisition and for corporate expenses. Net cash provided by financing activities (less offering costs) from inception on January 09, 2004 to February 29, 2008 was $2,595,434 as a result of proceeds received from sales of our common stock.

The Corporation generated $40,666 in revenues from operations for the quarter ended February 29, 2008, and $57,279 for the nine months ended February 29, 2008. There were no revenues for the comparative periods during the previous year. These revenues were received from the Company’s exploration and development activities in the oil and natural gas industry.

REVENUES

REVENUE – Gross revenue for the quarter ended February 29, 2008 was $40,666 ($0 for the quarter ended February 29, 2007 and $74,500 for the period from inception to February 29, 2008). For the nine months ended February 29, 2008 gross revenue was $57,279 while the gross revenue for the comparative period for February 29, 2007, was $0.

COMMON STOCK – Since inception, we have used our common stock to raise money for our optioned acquisition and for corporate expenses. Net cash provided by financing activities during the quarter ended November 30, 2007 was $574,000 as compared to $1,362,538 for the quarter ended November 30, 2006 and $2,345,934 received for the period from inception on January 09, 2004 through to and including November 30, 2007.

EXPENSES

SUMMARY – Total expenses increased to $618,981 for the quarter ended February 29, 2008 from $347,377 in the corresponding quarter ended February 29, 2007. A total of $2,449,892 in expenses has been incurred since inception on January 09, 2004 through February 29, 2008. The increase in operating costs was caused by the following;

Depletion Costs. The depletion cost for the quarter ending February 29, 2008 was $24,218. (February 29, 2007: $0). There was also a write down in the carrying value of properties of $310,594.

Production Costs. Production costs associated with producing wells was $55,745 for the period. (February 29, 2008: $9,136). The increase was caused by an increase in the number of producing wells as well as the costs associated therein.

Consulting Fees. An increase in consulting fees was caused by the following;

Company’s contract with the Chairman of the Company for professional services.

Company’s contract with a non-arms length Company for CFO services.

Stock based compensation charge of $155,536 resulting from the stock options vested to officers of the Company during the quarter.

Office and Miscellaneous. These costs decreased when compared to the same period last year. The decrease was caused by the Company not expending funds on website development.

Investor relations costs decreased to $10,956 (February 29, 2007: $73,758) caused by a contract with an investor relations firm in Germany.

During the current quarter under review, Stallion has 71,623,508 common shares issued and outstanding.

Stallion continues to carefully control its expenses and overall costs as it moves forward with the development of its business plan. Stallion does not have any employees and engages personnel through outside consulting contracts or agreements or other such arrangements, including for legal, accounting and technical consultants.

Other Income

During the quarter ended February 29, 2008, the Company earned $0 in interest income from the funds on deposit during the period. (February 29, 2007: $2,809). The Company has earned $5,657 from inception on January 9, 2004 through February 29, 2008.

For the quarter ended February 29, 2008, the net loss was $(578,315) ($0.01 per share). The loss per share was based on a weighted average of 71,623,508 common shares outstanding. For the same period ended February 29, 2007, the corresponding number was a loss of $(344,568) ($0.01 per share) based on 62,167,610 shares outstanding.

Plan of Operation

Stallion believes it can satisfy its cash requirements for the current fiscal year end of May 31, 2008, only by raising additional capital through private placements, equity financing, loans or the like. As of February 29, 2008, we had $30,477 in unallocated working capital, excluding share subscriptions received of $664,500.

The Company has changed its focus from a gold exploration company to a Company that is targeting natural gas and oil exploration. For the remainder of the current fiscal year to May 31, 2008, the Company will pursue its working interest obligations in the Mississippi and investigate other oil and gas exploration and development opportunities. The Company will fund its obligations through issuing equity capital by way of private placements.

If it turns out that we have not raised enough money to complete our natural gas and oil exploration program, we will try to raise the funds from a second public offering, a private placement, loans or the establishment of a joint venture whereby a third party would pay the costs associated with the exploration and we would retain a carried interest. At the present time, there is no assurance that we would be able to raise money in the future. If we need additional money and can't raise it, we will have to suspend operations.

We do not expect any changes or more hiring of employees since contracts are given on an as needed basis to consultants and sub-contractor specialists in specific fields of expertise for the exploration works.

Presently, our revenues are not sufficient to meet operating and capital expenses. We have incurred operating losses since inception, and this is likely to continue through fiscal 2007 – 2008.

As at February 29, 2008, we had a working capital surplus of $30,477, excluding share subscription received of $664,500. We do not anticipate that we will be able to satisfy any of these funding requirements internally until we significantly increase our revenues.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ended May 31, 2007, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due.

Liquidity and Capital Resources

As of the end of the last quarter on February 29, 2008, we generated $40,666 in oil and gas revenues from our business operations.

Since inception, we have used our common stock to raise money for our optioned acquisition and for corporate expenses. Net cash provided by financing activities from inception on January 09, 2004 to February 29, 2008 was $2,595,434 as a result of gross proceeds received from sales of our common stock (less offering costs). We issued 5,000,000 shares of common stock through a Section 4(2) offering in February, 2004 for cash consideration of $5,000. We issued 4,000,000 shares of common stock through a Regulation S offering in May and June, 2004 for cash consideration of $40,000 to a total of 10 placees. During the last quarter of the last fiscal year we raised $69,300 through the sale of 306,500 shares at a price of $0.20 under a Regulation SB-2 prospectus offering to a total of 43 placees. During the quarter ending August 31, 2006, the Company raised $447,520 via an issuance of shares at $0.60. During the quarter ended November 30, 2006, the Company raised $897,280 via an issuance of shares at $0.85. During the quarter ended August 31, 2007, the Company realised proceeds of $159,000 from the exercise of outstanding warrants of 1,590,000 at an exercise price of $0.10. During the none months ended February 29, 2008, we had received $664,500 in share subscriptions.

As of February 29, 2008, our total assets which consist of cash, prepaid expenses and the Working Interest in the Mississippi Prospect amounted to $1,113,387 (May 31, 2007 $1,160,830) and our total liabilities were $685,452 (May 31, 2007 $46,173). The increase in liabilities was caused by the timing difference in receiving share subscriptions of $664,500 and issuing the shares from Treasury.

Inflation / Currency Fluctuations

Inflation has not been a factor during the recent quarter ended February 29, 2008. Inflation is moderately higher than it was during 2007 but the actual rate of inflation is not material and is not considered a factor in our contemplated capital expenditure program.

Item 3.

Controls and Procedures

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of February 29, 2008. Based on that evaluation, our principal executive officer and principal financial officer have concluded that as of February 29, 2008, we have maintained effective disclosure controls and procedures in all material respects, including those necessary to ensure that information required to be disclosed in reports filed or submitted with the SEC (i) is recorded, processed, and reported within the time periods specified by the SEC, and (ii) is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow for timely decision regarding required disclosure.

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

The Corporation is and has not been party to any legal proceedings in the preceeding quarter.

Item 2.

Changes in Securities

Stallion had 71,970,748 shares of common stock issued and outstanding as of April 7, 2008. Of these shares, approximately 30,000,000 shares are held by an affiliate of the Corporation; some of those shares can be resold in compliance with the limitations of Rule 144 as adopted by the Securities Act of 1933, as amended (the “Securities Act”).

In general, under Rule 144, a person who has beneficially owned shares privately acquired directly or indirectly from us or from one of our affiliates, for at least one year, or who is an affiliate, is entitled to sell, within any three-month period, a number of shares that do not exceed the greater of 1% of the then outstanding shares or the average weekly trading volume in our shares during the four calendar weeks immediately preceding such sale. Sales under Rule 144 are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us. A person who is not deemed to have been an affiliate at any time during the 90 days preceding the sale, and who has beneficially owned restricted shares for at least two years, is entitled to sell all such shares under Rule 144 without regard to the volume limitations, current public information requirements, manner of sale provisions or notice requiremen ts.

The issuances discussed under this section are exempted from registration under Rule 903 of Regulation S of the Securities Act (“Reg. S”) or Section 4(2) of the Securities Act (“Section 4(2)”), as provided. All purchasers of our securities acquired the shares for investment purposes only and all stock certificates reflect the appropriate legends as appropriate. No underwriters were involved in connection with the sale of securities referred to in this report.

Item 4.

Submission of Matters to a Vote of Security Holders

The majority of the security holders approved the forward stock split which was completed by the Company during the quarter.

Item 5.

Other Information

Common Stock

During the three - month period ended August 31, 2007, 1,590,000 shares of common stock were issued upon exercise of warrants at $0.10 per share. $159,000 was raised via the exercise of warrants. As of April 7, 2008, there were 71,970,748 shares issued and outstanding.

Options

No options were granted to officers of the Company during the three-month period ending February 29, 2008.

Item 6. Exhibits and Reports on Form 8-K

Reports on Form 8-K filed during the quarter ended February 29, 2008: NONE

Exhibits

31.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

The following Exhibits are filed as part of this report pursuant to Item 601 of Regulation K. All Exhibits have been previously filed unless otherwise noted.


Exhibit No.	Document Description
3.1	Articles of Incorporation
3.2	Bylaws of The Stallion Group

Incorporated by reference to SB-2 Registration Statement filed on August 19, 2004

Description of Exhibits Incorporated by Reference

Exhibit 3.1

Articles of Incorporation of The Stallion Group dated January 09, 2004.

Exhibit 3.2

Bylaws of The Stallion Group dated January 28, 2004.

Exhibit 10.1

* Incorporated by reference to SB-2 Registration Statement filed on October 1, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

The Stallion Group

(Registrant)

Date: APRIL 14, 2008

BY:

/s/

“Christopher Paton-Gay”

Christopher Paton-Gay, Chairman, CEO and a Member of the Board of Directors

CERTIFICATION PURSUANT TO SECTION 302


		I, Christopher Paton-Gay, certify that:

1. I have reviewed this Quarterly report on Form 10-QSB of The Stallion Group;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of circumstances under which such statements were made, nor misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods represented in this report;

4. The small business issuer's registrant's sole certifying officer, I, am responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-14 and 15d-14 13a-15(f) and 15d-15(f)] for the small business issuer and have:


	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;


	(b) Designed such internal control over financial reporting, or causes such internal control over financial reporting to be designed under our supervision, 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;


	(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an quarterly report) that has materially affected or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and

5. The small business issuer's sole certifying officer, I, have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions):


	(a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and identified for the registrant's auditors any material weaknesses in internal controls; and


	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated: April 14, 2008

By:

/s/Christopher Paton-Gay

Christopher Paton-Gay

Chairman & CEO

CERTIFICATION PURSUANT TO SECTION 302


		I, Kulwant Sandher, certify that:

1. I have reviewed this Quarterly report on Form 10-QSB of The Stallion Group;


	(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;


	(b) Designed such internal control over financial reporting, or causes such internal control over financial reporting to be designed under our supervision, 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;


	(c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


	(a) all significant deficiencies in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and identified for the registrant's auditors any material weaknesses in internal controls; and


	(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.

Dated:April 14, 2008

By:

/s/”Kulwant Sandher”

Kulwant Sandher

CFO

Exhibit 32

CERTIFICATION PURSUANT TO 18 USC SECTION 1350

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Stallion Group a Nevada corporation (the "Company"), on Form 10-QSB for the quarter ended February 29, 2008 as filed with the Securities and Exchange Commission (the "Report"), I, Kulwant Sandher, Director/CFO of the Company, certify, pursuant to 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 14, 2008

/s/ Kulwant Sandher

Kulwant Sandher

Director/ CFO

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Stallion Group a Nevada corporation (the "Company"), on Form 10-QSB for the quarter ended February 29, 2008 as filed with the Securities and Exchange Commission (the "Report"), I, Christopher Paton-Gay, CEO of the Company, certify, pursuant to 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 14, 2008

/s/ Christopher Paton-Gay

Christopher Paton-Gay

Chairman /CEO

Stallion (SLGR) Inactive 10QSB2008 Q3 Quarterly report (small business)