UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549














xQuarterly Report
      under Section 13 or 15(d) of the Securities Exchange Act of
      1934.


For the
quarterly period ended: March
31, 2008





oTransition Report
      under Section 13 or 15(d) of the Securities Exchange Act of
      1934.


For the
transition period from:  _______  to _______





Commission
file number:  2-76219-NY





VICTORY
ENERGY CORPORATION


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





NEVADA
            
            87-0564472(State
      or other jurisdiction of incorporation or organization)
            
            (I.R.S.
      Employer I.D. Number)





112
N Curry Street, Carson City, Nevada 89703-4934


(Address
of principal executive offices)





(866)
279-9257


(Issuer’s
telephone number)





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:  YESx  NOo


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
 Large
      accelerated filer
               ̈
              
              Accelerated
      filer
               ̈Non-accelerated
      filer
               ̈
              
              Smaller
      Reporting Company
              x


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





State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date: As of March 31, 2008, there were 60,028,124
shares of our common stock outstanding.





Transitional
Small Business Disclosure Format. YESo NO x


-1-





INDEX


Page No.PART
      1. FINANCIAL INFORMATIONItem
      1.                      Financial
      Statements
            3Consolidated
      Balance Sheet, March 31, 2008 (unaudited) and December
      31, 2007 (audited)
            3Consolidated
      Statement of Operations, for the three months ended March 31, 2008 and
      2007, and cumulative from inception to March 31, 2008
      (unaudited)
            4Consolidated
      Statement of Stockholders’ Equity (Deficit) for the period from January
      7, 1982 (inception) through March 31, 2008
      (unaudited)
            5Consolidated
      Statements of Cash Flows, for the three months ended March
      31, 2008 and 2007, and cumulative from inception (Jan. 7, 1982) to
      March 31, 2008 (unaudited)
            9Notes to
      Condensed Financial Statements (unaudited)
            10Item
      2.                      Management’s
      Discussion and Analysis or Plan of Operation
            18Item
      4.                      Controls
      and Procedures
            23PART
      II. OTHER INFORMATIONItem
      1.                      Legal
      Proceedings
            24Item
      2.                      Unregistered
      Sales of Equity Securities and Use of Proceeds
            24Item
      3.                      Defaults
      Upon Senior Securities
            24Item
      4.                      Submission
      of Matters to a Vote of Security Holders
            24Item
      5.                      Other
      Information
            24Item
      6.                      Exhibits
      and Reports on Form 8-K
            24





-2-


Item
1.Financial
Statements




VICTORY
      ENERGY CORPORATION AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Balance SheetsASSETSMarch
      31,
              
              
              December
      31,2008
              
              
              2007(Unaudited)CURRENT
      ASSETSCash
      and Cash Equivalents
              
              $
              -
              
              
              $
              3,251Subscriptions
      Receivable
              
              
              160,000
              
              
              
              160,000Total
      Current Assets
              
              
              160,000
              
              
              
              163,251FIXED
      ASSETS, NET
              
              
              -
              
              
              
              -OTHER
      ASSETSDrilling
      Costs
              
              
              3,036,000
              
              
              
              -Investment
      in Joint Venture
              
              
              50,000
              
              
              
              50,0003,086,000
              
              
              
              50,000TOTAL
      ASSETS
              
              $
              3,246,000
              
              
              $
              213,251LIABILITIES
      & STOCKHOLDERS' DEFICITCURRENT
      LIABILITESBank
      Overdraft
              
              $
              23,773
              
              
              $
              -Accounts
      Payable
              
              
              32,485
              
              
              
              34,803Credit
      Line - WFB Business Line
              
              
              81,860
              
              
              
              81,860Prepaid
      Subscriptions
              
              
              203,500
              
              
              
              203,500Total
      Current Liabilities
              
              
              341,618
              
              
              
              320,163OTHER
      LIABILITIESLoan
      from Officer
              
              
              1,369,339
              
              
              
              1,377,879Total
      Other Liabilities
              
              
              1,369,339
              
              
              
              1,377,879Total
      Liabilities
              
              
              1,710,957
              
              
              
              1,698,042Commitments
      and contingencies (Note 6)STOCKHOLDERS'
      DEFICITPreferred
      Stock, $0.001 par value, 10,000,000 sharesauthorized,  585,690
      and 630,517 issued and outstanding respectively
              
              
              586
              
              
              
              631Common
      Stock, $0.001 par value, 200,000,000 shares authorized,60,028,124
      and 42,395,366 shares issued and outstanding
    respectively
              
              
              60,028
              
              
              
              42,395Additional
      paid-in capital
              
              
              9,110,743
              
              
              
              7,860,331Deficit
      accumulated in the development stage
              
              
              (7,636,314
              )
              
              
              (9,388,148
              )Total
      Stockholders' Equity (Deficit)
              
              
              1,535,043
              
              
              
              (1,484,791
              )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
              
              $
              3,246,000
              
              
              $
              213,251


-3-
 
  VICTORY
      ENERGY CORPORATION AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statement of Operations(Unaudited)For
      the periodof
      Inception,For
      the
                  
                  
                  from
      January 7,Three
      Months Ended
                  
                  
                  1982
      throughMarch
      31,
                  
                  
                  March
      31,2008
                  
                  
                  2007
                  
                  
                  2008Revenues
                  
                  $
                  252,000
                  
                  
                  $
                  -
                  
                  
                  $
                  172,207Costs
      and ExpensesRoyalties
                  
                  
                  103,700
                  
                  
                  
                  
                  
                  
                  
                  103,700Consulting
      Expense
                  
                  
                  1,020,426
                  
                  
                  
                  1,042,988
                  
                  
                  
                  8,554,247Professional
      Fees
                  
                  
                  350,000
                  
                  
                  
                  
                  
                  
                  
                  508,146Land
      Leases
                  
                  
                  
                  
                  
                  
                  4,500
                  
                  
                  
                  25,720Wages
      and Salaries
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  270,500Other
      General & Administrative
                  
                  
                  26,045
                  
                  
                  
                  121,487
                  
                  
                  
                  1,243,502Total
      Expenses
                  
                  
                  1,500,171
                  
                  
                  
                  1,168,975
                  
                  
                  
                  10,705,815Operating
      Loss
                  
                  
                  (1,248,171
                  )
                  
                  
                  (1,168,975
                  )
                  
                  
                  (10,533,608
                  )Other
      Income and (expenses)Sale
      of Working Interest in Wells
                  
                  
                  3,000,000
                  
                  
                  
                  
                  
                  
                  
                  3,000,000Interst
      Income
                  
                  
                  5
                  
                  
                  
                  
                  
                  
                  
                  5Loss
      on abandonment of subsidiary
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (50,900
                  )Loss
      from reduction in debt
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (48,363
                  )Interest
      Expense
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (5,664
                  )Other
      Income
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,216Total
      Other Income and (expenses)
                  
                  
                  3,000,005
                  
                  
                  
                  -
                  
                  
                  
                  2,897,294Net
      Income (Loss)
                  
                  $
                  1,751,834
                  
                  
                  $
                  (1,168,975
                  )
                  
                  $
                  (7,636,314
                  )Basic
      and Dilutive net loss per share
                  
                  $
                  0.02
                  
                  
                  $
                  (0.09
                  )Weighted
      average number of sharesoutstanding,
      basic and diluted
                  
                  
                  106,041,725
                  
                  
                  
                  12,923,505Dilutive
      effect of preferred stock,
                  
                  $
                  58,569,000
                  
                  
                  $
                  -(Note
      2)
  -4-
  VICTORY
      ENERGY CORPORATION AND SUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statement of Stockholders' Equity (Deficit)Unaudited
  AccumulatedAdditional
                
                
                Deficit
      DuringCommon
    Stock
                
                
                Preferred
      Stock
                
                
                Paid-in
                
                
                DevelopmentShares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                Stage
                
                
                TotalBalances
      at January 7, 1982
                
                
                -
                
                
                $
                -
                
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Common
      stock for cash at $7.50/sh
                
                
                6,000
                
                
                
                6
                
                
                
                
                
                
                
                
                
                
                
                45,000
                
                
                
                
                
                
                
                45,006Common
      stock for cash at $0.39/sh.
                
                
                168,503
                
                
                
                169
                
                
                
                
                
                
                
                
                
                
                
                65,819
                
                
                
                
                
                
                
                65,988Net
      loss from inception to Dec. 31,'82
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (39,597
                )
                
                
                (39,597
                )Balances
      at Dec. 31, 1982
                
                
                174,503
                
                
                
                175
                
                
                
                
                
                
                
                
                
                
                
                110,819
                
                
                
                (39,597
                )
                
                
                71,397Net
      loss, year ended Dec. 31, 1983
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (71,397
                )
                
                
                (71,397
                )Balances
      at Dec. 31, 1983
                
                
                174,503
                
                
                
                175
                
                
                
                
                
                
                
                
                
                
                
                110,819
                
                
                
                (110,994
                )
                
                
                (0
                )Common
      stock for cash at $25.00/sh.
                
                
                57
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,425
                
                
                
                
                
                
                
                1,425Common
      stock for cash at $25.00/sh. per share
                
                
                3
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                75
                
                
                
                
                
                
                
                75Common
      stock for cash at $0.025/sh. per share
                
                
                1,580,000
                
                
                
                1,580
                
                
                
                
                
                
                
                
                
                
                
                38,373
                
                
                
                
                
                
                
                39,953Net
      loss - year ended Dec. 31, 1984
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1984
                
                
                1,754,563
                
                
                
                1,755
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                41,453Cancellation
      of common stock
                
                
                (1,296,132
                )
                
                
                (1,297
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,297
                )Net
      loss - year ended Dec. 31, 1985
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1985
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1986
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1986
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1987
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1987
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156
  -5-
 Net
      loss - year ended Dec. 31, 1988
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1988
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1989
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1989
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1990
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1990
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1991
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1991
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1992
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1992
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Net
      loss - year ended Dec. 31, 1993
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Balances
      at Dec. 31, 1993
                
                
                458,431
                
                
                
                458
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (110,994
                )
                
                
                40,156Cancellation
      of common stock
                
                
                (316,000
                )
                
                
                (316
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (316
                )Net
      loss - year ended Dec. 31, 1994
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,656
                )
                
                
                (6,656
                )Balances
      at Dec. 31, 1994
                
                
                142,431
                
                
                
                142
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (117,650
                )
                
                
                33,184Common
      stock for cash at $0.001/sh.
                
                
                2,357,895
                
                
                
                2,359
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,359Net
      loss - year ended Dec. 31, 1995
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (49,097
                )
                
                
                (49,097
                )Balances
      at Dec. 31, 1995
                
                
                2,500,326
                
                
                
                2,500
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (166,747
                )
                
                
                (13,555
                )Common
      stock for cash at $0.001/sh.
                
                
                120,000
                
                
                
                120
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                120Net
      loss - year ended Dec. 31, 1996
                
                
                0
                
                
                
                0
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,681
                )
                
                
                (1,681
                )Balances
      at Dec. 31, 1996
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (168,428
                )
                
                
                (15,116
                )Net
      loss - year ended Dec. 31, 1997
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,517
                )
                
                
                (3,517
                )Balances
      at Dec. 31, 1997
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (171,945
                )
                
                
                (18,633
                )Net
      loss - year ended Dec. 31, 1998
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (2,479
                )
                
                
                (2,479
                )Balances
      at Dec. 31, 1998
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (174,424
                )
                
                
                (21,112
                )
  -6-
 Net
      loss - year ended Dec. 31, 1999
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,307
                )
                
                
                (6,307
                )Balances
      at Dec. 31, 1999
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (180,731
                )
                
                
                (27,419
                )Net
      loss - year ended Dec. 31, 2000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (9,011
                )
                
                
                (9,011
                )Balances
      at Dec. 31, 2000
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (189,742
                )
                
                
                (36,430
                )Net
      loss - year ended Dec. 31, 2001
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (19,461
                )
                
                
                (19,461
                )Balances
      at Dec. 31, 2001
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                150,692
                
                
                
                (209,203
                )
                
                
                (55,891
                )Contributed
      capital for rent andother
      compensation
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,950
                
                
                
                
                
                
                
                1,950Net
      loss - year ended Dec. 31, 2002
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (13,960
                )
                
                
                (13,960
                )Balances
      at Dec. 31, 2002
                
                
                2,620,326
                
                
                
                2,620
                
                
                
                
                
                
                
                
                
                
                
                152,642
                
                
                
                (223,163
                )
                
                
                (67,901
                )Contributed
      capital for rent andofficer
      compensation
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                488
                
                
                
                
                
                
                
                488Capital
      contributed by shareholdersvia
      accounts payable and interest
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                77,415
                
                
                
                
                
                
                
                77,415Stock
      issued for services $0.025/sh.
                
                
                13,389,932
                
                
                
                13,390
                
                
                
                
                
                
                
                
                
                
                
                321,358
                
                
                
                
                
                
                
                334,748Stock
      issued for services at $0.61/sh.
                
                
                100,000
                
                
                
                100
                
                
                
                
                
                
                
                
                
                
                
                60,900
                
                
                
                
                
                
                
                61,000Stock
      for consulting at $0.47/share
                
                
                10,000
                
                
                
                10
                
                
                
                
                
                
                
                
                
                
                
                4,690
                
                
                
                
                
                
                
                4,700Net
      loss - year ended Dec. 31, 2003
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (592,962
                )
                
                
                (592,962
                )Balances
      at Dec. 31, 2003
                
                
                16,120,258
                
                
                
                16,120
                
                
                
                
                
                
                
                
                
                
                
                617,493
                
                
                
                (816,125
                )
                
                
                (182,512
                )Stock
      issued for services at $0.16/sh
                
                
                1,000,000
                
                
                
                1,000
                
                
                
                
                
                
                
                
                
                
                
                159,000
                
                
                
                0
                
                
                
                160,000Stock
      issued for services at $0.17/sh.
                
                
                1,800,000
                
                
                
                1,800
                
                
                
                
                
                
                
                
                
                
                
                304,200
                
                
                
                0
                
                
                
                306,000Stock
      issued for services at $0.165/sh
                
                
                800,000
                
                
                
                800
                
                
                
                
                
                
                
                
                
                
                
                131,200
                
                
                
                0
                
                
                
                132,000Stock
      issued for services at $0.215/sh.
                
                
                30,000
                
                
                
                30
                
                
                
                
                
                
                
                
                
                
                
                6,420
                
                
                
                0
                
                
                
                6,450Stock
      issued for debt at $0.45 per sh.
                
                
                150,000
                
                
                
                150
                
                
                
                
                
                
                
                
                
                
                
                67,350
                
                
                
                0
                
                
                
                67,500Stock
      issued for services at $0.40/sh
                
                
                300,000
                
                
                
                300
                
                
                
                
                
                
                
                
                
                
                
                119,700
                
                
                
                0
                
                
                
                120,000Stock
      issued for services at $0.34/sh.
                
                
                700,000
                
                
                
                700
                
                
                
                
                
                
                
                
                
                
                
                237,300
                
                
                
                0
                
                
                
                238,000Stock
      issued for services at $0.41/sh.
                
                
                300,000
                
                
                
                300
                
                
                
                
                
                
                
                
                
                
                
                122,700
                
                
                
                0
                
                
                
                123,000Stock
      issued for services at $0.27/sh.
                
                
                300,000
                
                
                
                300
                
                
                
                
                
                
                
                
                
                
                
                80,700
                
                
                
                0
                
                
                
                81,000Stock
      issued for services at $0.22/sh.
                
                
                600,000
                
                
                
                600
                
                
                
                
                
                
                
                
                
                
                
                131,400
                
                
                
                0
                
                
                
                132,000Net
      loss - year ended Dec. 31, 2004
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,606,057
                )
                
                
                (1,606,057
                )Balances
      at Dec. 31, 2004
                
                
                22,100,258
                
                
                
                22,100
                
                
                
                
                
                
                
                
                
                
                
                1,977,463
                
                
                
                (2,422,182
                )
                
                
                (422,619
                )
  Contributed
      capital for general and administrative expenses
                
                
                
                
                
                
                
                
                
                
                
                138,701
                
                
                
                
                
                
                
                138,701Stock
      issued for services at $0.03/sh.
                
                
                19,860,000
                
                
                
                19,860
                
                
                
                
                
                
                
                
                
                
                
                575,940
                
                
                
                
                
                
                
                595,800Net
      loss - year ended Dec. 31, 2005
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,323,775
                )
                
                
                (1,323,775
                )Balances
      at December 31, 2005
                
                
                41,960,258
                
                
                
                41,960
                
                
                
                
                
                
                
                
                
                
                
                2,692,104
                
                
                
                (3,745,957
                )
                
                
                (1,011,893
                )Stock
      issued for services at $0.027/sh.
                
                
                17,583,334
                
                
                
                17,583
                
                
                
                
                
                
                
                
                
                
                
                459,917
                
                
                
                
                
                
                
                477,500Common
      stock issued in debtrestructuring
      at $0.06 and $0.03
                
                
                10,666,667
                
                
                
                10,667
                
                
                
                
                
                
                
                
                
                
                
                429,333
                
                
                
                
                
                
                
                440,000Stock
      issued for debt at $0.06/ sh.
                
                
                5,000,000
                
                
                
                5,000
                
                
                
                
                
                
                
                
                
                
                
                295,000
                
                
                
                
                
                
                
                300,000Stock
      issued for services at $0.03/sh.
                
                
                2,500,000
                
                
                
                2,500
                
                
                
                
                
                
                
                
                
                
                
                72,500
                
                
                
                
                
                
                
                75,000Stock
      issued for services at $0.05/sh.
                
                
                500,000
                
                
                
                500
                
                
                
                
                
                
                
                
                
                
                
                24,500
                
                
                
                
                
                
                
                25,000Stock
      issued for services at $0.008/sh.
                
                
                10,000,000
                
                
                
                10,000
                
                
                
                
                
                
                
                
                
                
                
                70,000
                
                
                
                
                
                
                
                80,000Stock
      for consulting at $0.008/sh.
                
                
                4,500,000
                
                
                
                4,500
                
                
                
                
                
                
                
                
                
                
                
                31,500
                
                
                
                
                
                
                
                36,000Stock
      for consulting at $0.008/sh.
                
                
                500,000
                
                
                
                500
                
                
                
                
                
                
                
                
                
                
                
                3,500
                
                
                
                
                
                
                
                4,000Stock
      for consulting at $0.008/sh.
                
                
                4,000,000
                
                
                
                4,000
                
                
                
                
                
                
                
                
                
                
                
                28,000
                
                
                
                
                
                
                
                32,000Stock
      for consulting at $0.008/sh.
                
                
                700,000
                
                
                
                700
                
                
                
                
                
                
                
                
                
                
                
                4,900
                
                
                
                
                
                
                
                5,600Stock
      for consulting at $0.008/sh.
                
                
                300,000
                
                
                
                300
                
                
                
                
                
                
                
                
                
                
                
                2,100
                
                
                
                
                
                
                
                2,400Stock
      for consulting at $0.008/sh.
                
                
                3,600,000
                
                
                
                3,600
                
                
                
                
                
                
                
                
                
                
                
                25,200
                
                
                
                
                
                
                
                28,800Stock
      for consulting at $0.008/sh.
                
                
                3,000,000
                
                
                
                3,000
                
                
                
                
                
                
                
                
                
                
                
                21,000
                
                
                
                
                
                
                
                24,000Stock
      for consulting at $0.008/sh.
                
                
                4,000,000
                
                
                
                4,000
                
                
                
                
                
                
                
                
                
                
                
                28,000
                
                
                
                
                
                
                
                32,000Balances
      before reverse split
                
                
                108,810,259
                
                
                
                108,810
                
                
                
                
                
                
                
                
                
                
                
                4,187,554
                
                
                
                (3,745,957
                )
                
                
                550,407Reverse
      split 25 to 1, Oct.26, 2006
                
                
                (104,457,849
                )
                
                
                (104,458
                )
                
                
                
                
                
                
                
                
                
                
                104,458
                
                
                
                
                
                
                
                -New
      Stock issued for rounding
                
                
                890
                
                
                
                1
                
                
                
                
                
                
                
                
                
                
                
                (1
                )
                
                
                
                
                
                
                -Balances
      after reverse split
                
                
                4,353,300
                
                
                
                4,353
                
                
                
                
                
                
                
                
                
                
                
                4,292,011
                
                
                
                (3,745,957
                )
                
                
                550,407Preferred
      stock for cash at $0.467/sh.
                
                
                
                
                
                
                
                
                
                
                715,517
                
                
                
                716
                
                
                
                246,234
                
                
                
                
                
                
                
                246,950Common
      stock for rounding$0.50/sh.
                
                
                1
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
      stock for services $0.20/sh
                
                
                5,200
                
                
                
                5
                
                
                
                
                
                
                
                
                
                
                
                1,035
                
                
                
                
                
                
                
                1,040Common
      stock for rounding$0.20/sh.
                
                
                14
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Common
      stock for services $0.17/sh.
                
                
                160,000
                
                
                
                160
                
                
                
                
                
                
                
                
                
                
                
                27,040
                
                
                
                
                
                
                
                27,200Net
      loss - year ended Dec. 31, 2006
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,745,364
                )
                
                
                (1,745,364
                )Balances
      at December 31, 2006
                
                
                4,518,515
                
                
                
                4,518
                
                
                
                715,517
                
                
                
                716
                
                
                
                4,566,320
                
                
                
                (5,491,321
                )
                
                
                (919,767
                )
  -7-
 Common
      stock for services $0.15/sh
                
                
                6,277,251
                
                
                
                6,277
                
                
                
                
                
                
                
                
                
                
                
                935,310
                
                
                
                
                
                
                
                941,587Common
      stock sold @ $0.21/sh
                
                
                5,662,000
                
                
                
                5,662
                
                
                
                
                
                
                
                
                
                
                
                1,183,358
                
                
                
                
                
                
                
                1,189,020Common
      stock for services $0.21/sh
                
                
                40,000
                
                
                
                40
                
                
                
                
                
                
                
                
                
                
                
                8,360
                
                
                
                
                
                
                
                8,400Common
      stock for services $0.21/sh
                
                
                2,787,600
                
                
                
                2,788
                
                
                
                
                
                
                
                
                
                
                
                582,608
                
                
                
                
                
                
                
                585,396Common
      stock subscribed, issued $0.21
                
                
                3,500,000
                
                
                
                3,500
                
                
                
                
                
                
                
                
                
                
                
                731,500
                
                
                
                
                
                
                
                735,000Preferred
      Stock converted to common
                
                
                8,500,000
                
                
                
                8,500
                
                
                
                (85,000
                )
                
                
                (85
                )
                
                
                (8,415
                )
                
                
                
                
                
                
                -Common
      stock for services $0.05/sh
                
                
                300,000
                
                
                
                300
                
                
                
                
                
                
                
                
                
                
                
                14,700
                
                
                
                
                
                
                
                15,000Common
      stock for services $0.04/sh
                
                
                10,310,000
                
                
                
                10,310
                
                
                
                
                
                
                
                
                
                
                
                402,090
                
                
                
                
                
                
                
                412,400Common
      stock for services $0.04/sh
                
                
                500,000
                
                
                
                500
                
                
                
                
                
                
                
                
                
                
                
                19,500
                
                
                
                
                
                
                
                20,000Revaluation
      of subscriptions receivable
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (575,000
                )
                
                
                
                
                
                
                (575,000
                )Net
      loss - year ended Dec. 31, 2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (3,896,827
                )
                
                
                (3,896,827
                )Balances
      at December 31, 2007
                
                
                42,395,366
                
                
                $
                42,395
                
                
                
                630,517
                
                
                $
                631
                
                
                $
                7,860,331
                
                
                $
                (9,388,148
                )
                
                $
                (1,484,791
                )Common
      stock for services $0.04/sh
                
                
                600,000
                
                
                
                600
                
                
                
                
                
                
                
                
                
                
                
                23,400
                
                
                
                
                
                
                
                24,000Common
      Stock for services $0.08/sh
                
                
                8,550,000
                
                
                
                8,550
                
                
                
                
                
                
                
                
                
                
                
                675,450
                
                
                
                
                
                
                
                684,000Common
      stock for services @ $0.20/sh
                
                
                2,000,000
                
                
                
                2,000
                
                
                
                
                
                
                
                
                
                
                
                98,000
                
                
                
                
                
                
                
                100,000Preferred
      Stock converted to common
                
                
                4,482,758
                
                
                
                4,483
                
                
                
                (44,827
                )
                
                
                (45
                )
                
                
                (4,438
                )
                
                
                
                
                
                
                -Common
      Stock for services $0.23/sh
                
                
                2,000,000
                
                
                
                2,000
                
                
                
                
                
                
                
                
                
                
                
                458,000
                
                
                
                
                
                
                
                460,000Net
      income - year ended Mar. 31, 2008
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,751,834
                
                
                
                1,751,834Balances
      at March 31, 2008
                
                
                60,028,124
                
                
                $
                60,028
                
                
                
                585,690
                
                
                $
                586
                
                
                $
                9,110,743
                
                
                $
                (7,636,314
                )
                
                $
                1,535,043
  -8-
 
  VICTORY
      ENERGY CORPORATION ANDSUBSIDIARIES(A
      Development Stage Company)Consolidated
      Statements of Cash Flows(Unaudited)For
      the
                  
                  
                  From
      InceptionThree
      Months Ended
                  
                  
                  Jan.
      7, 1982March
      31,
                  
                  
                  through2008
                  
                  
                  2007
                  
                  
                  Mar.
      31, 2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Loss
                  
                  $
                  1,751,834
                  
                  
                  $
                  (1,168,975
                  )
                  
                  $
                  (7,636,314
                  )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,294`
                  Issuance
      of common stock for services rendered
                  
                  
                  1,268,000
                  
                  
                  
                  2,139,008
                  
                  
                  
                  7,178,023Change
      in operating assets and liabilities:Increase
      in Short Term ReceivablesDecrease
      (Increase) in Prepaid ExpensesIncrease
      (Decrease) in DepositsIncrrease
      (Decrease) in Prepaid Subscriptions
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  203,500(Incrrease)
      Decrease in Subscriptions Receivable
                  
                  
                  
                  
                  
                  
                  (1,189,020
                  )
                  
                  
                  (160,000
                  )Increase
      (Decrease) in accounts payable
                  
                  
                  (2,318
                  )
                  
                  
                  13,276
                  
                  
                  
                  32,485Increase
      (Decrease) in accrued liabilitiesIncrease
      (Decrease ) in Accrued Payroll,P'roll TaxesIncrease
      (Decrease) in Short Term ReceivablesRepayment
      of long term debtIncrease
      (decrease) in Accrued Liabilities-RelatedNon-cash
      contributed capitalNet
      Cash provided by (used by)Operating
      Activities
                  
                  
                  3,017,516
                  
                  
                  
                  (205,711
                  )
                  
                  
                  (380,012
                  )CASH
      FLOWS FROM INVESTING ACTIVITIESDrilling
      costs
                  
                  
                  (3,036,000
                  )
                  
                  
                  
                  
                  
                  
                  (3,036,000
                  )Purchase
      of Fixed Assets
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (2,294
                  )Purchase
      / Sale of Marketable SecuritiesInvestment
      in Joint Venture
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  (50,000
                  )Net
      Cash (used by) Investing Activities
                  
                  
                  (3,036,000
                  )
                  
                  
                  -
                  
                  
                  
                  (3,088,294
                  )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      of Note PayableProceeds
      (Repayment) of LoansIncrease
      (decrease) in Credit Line
                  
                  
                  
                  
                  
                  
                  22,886
                  
                  
                  
                  81,860Proceeds
      (Repayment) of Loan from Officer
                  
                  
                  (8,540
                  )
                  
                  
                  183,496
                  
                  
                  
                  1,369,339Proceeds
      (Repayment) of Note Payable-Related PartyIncrease
      (Decrease) in Other Loans PayableContributed
      capital for rent and officers' compensation
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  2,438Proceeds
      from the sale of Preferred StockProceeds
      from the sale/conversion  of Common Stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1,443,946Stock
      sold for debt
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  300,000Commons
      stock subscribed, revaluedProceeds
      from the sale/conversion  of Preferred Stock
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  246,950Contributed
      Capital by shareholdersNet
      Cash provided by Financing Activities
                  
                  
                  (8,540
                  )
                  
                  
                  206,382
                  
                  
                  
                  3,444,533NET
      INCREASE IN CASH
                  
                  
                  (27,024
                  )
                  
                  
                  671
                  
                  
                  
                  (23,773
                  )CASH
      AT BEGINNING OF PERIOD
                  
                  
                  3,251
                  
                  
                  
                  (79
                  )
                  
                  
                  -CASH
      AT END OF PERIOD
                  
                  $
                  (23,773
                  )
                  
                  $
                  592
                  
                  
                  $
                  (23,773
                  )CASH
      PAID FOR:Interest
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Income
      Taxes
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
 -9-
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NOTE 1 -
BUSINESS AND CONTINUED OPERATIONS
  Victory
Energy Corporation (OTC symbol VTYE), formerly known as Victory Capital Holdings
Corporation (our “Company”) was organized under the laws of the State of Nevada
on January 7, 1982, under the name All Things, Inc. On March 21, 1985 the
Company’s name was changed to New Environmental Technologies Corporation and on
April 28, 2003 to Victory Capital Holdings Corporation.  The name was
changed finally to Victory Energy Corporation on May 3, 2006.
  The
Company was formed for the purpose of engaging in all lawful businesses. The
Company’s initial authorized capital consisted of 100,000,000 shares of $0.001
par value common voting stock and as of the date of this filing the authorized
capital is 200,000,000 shares of $.001 par value common stock.
 
 The
consolidated financial statements presented are those of Victory Energy
Corporation and subsidiaries.   While the information presented
in the accompanying interim nine months financial statements is unaudited, it
includes all adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and cash flows for
the interim periods presented in accordance with the accounting principles
generally accepted in the United States of America. All adjustments are of a
normal recurring nature.
 
 On
October 3, 2001, the Company formed a wholly owned subsidiary named Papadog,
Inc. Papadog has since changed its name to Global Card Services, Inc. and then
to Global Card Incorporated, (“Global”).  As of the date of this
report, there has been no activity for this subsidiary.
 
 On
November 12, 2003, the Company formed a wholly owned subsidiary named On Demand
Communications, Inc., (“On Demand”).  As of the date of this report,
there has been no activity for this subsidiary.
 
 On
November 27, 2006 the company incorporated a
Nevada  subsidiary,  Victory Energy Resources,
Inc.   The name of the subsidiary was changed to Victory Carbon
Solutions, Inc.  There has been no activity in this
company.
 
 Current
Business of the Company
  The
Company had no material business operations from 1989 to 2003. In 2004, the
Company  began the search for the acquisition of assets, property or
businesses.  In 2005 management focused on projects in the oil and gas
industry, intending to drill for oil and gas on leased land.  In 2006
the company entered into a farm-out agreement with the owner of certain oil and
gas leases for a 100% working interest in an acreage in Montana,
 subject to overriding royalties.  These oil and gas leases were
allowed to lapse back to the State of Montana.  The Company is now
working with the State of Montana to re-acquire the leases. The Company also
secured other mineral rights in Montana and Texas, as well as a joint venture in
New Mexico.
 
 In
December 2007 the Corporation established a relationship with a private
institutional investment group contracted to acquire, through a financial
facility, interest ownership in six term assignments containing six existing and
producing gas wells in Crockett County, Texas.  The conclusion of the
transaction and recording of the wells took place in the first quarter of
2008.
 
 Jon
Fullenkamp, the President/C.E.O., is the sole employee and has a great deal of
experience in the oil and gas industry.  The Company retains
independent contractors to assist in operating and managing the prospects and
projects.
 
 -10-
 NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Fair Value of Financial
Instruments
 
 The
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards (“SFAS”) No. 107, “Disclosures About Fair Value of Financial
Instruments.”  SFAS No. 107 requires disclosure of fair value information
about financial instruments when it is practicable to estimate that value. 
The carrying amounts of the Company’s financial instruments as of March 31, 2008
and  2007 approximate their respective fair values because of the
short-term nature of these instruments.  Such instruments consist of cash,
accounts payable and accrued expenses.  The fair value of related party
payables is not determinable.
 
 Income
Taxes
 
 The
Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns.  Under this method, deferred tax assets and liabilities
are determined based on the difference between the tax basis of assets and
liabilities and their financial reporting amounts based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income.  Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The Company generated deferred tax credits through net
operating loss carryforwards.  However, a valuation allowance of 100%
has been established, as the realization of the deferred tax credits is not
reasonably certain, based on going concern considerations outlined
below.
 
 Going
Concern
 
 The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business.  The Company has
suffered recurring losses.  The Company incurred an operating loss of
$1,248,171 but a positive cash flow from operations of $3,017,516, primarily
from the sale of a working interest in wells, for the three months ended March
31, 2008.  The company has a shareholders’ equity of $1,535,043 at
March 31,2008.  The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and to allow it to continue
as a going concern.  The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable.  If the Company is unable to
obtain adequate capital, it could be forced to cease development of
operations.
 
 In order
to continue as a going concern, develop a reliable source of revenues, and
achieve a profitable level of operations the Company will need, among other
things, additional capital resources.  Management’s plans to continue
as a going concern include raising additional capital through sales of common
stock.  In the interim, shareholders of the Company are committed to
meeting its minimal operating expenses.  However, management cannot
provide any assurances that the Company will be successful in accomplishing any
of its plans.
 
 The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations.  The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
 
 -11-
 Development-Stage
Company
 
 The
Company is considered a development-stage company, with limited operating
revenues during the periods presented, as defined by Statement of Financial
Accounting Standards (“SFAS”) No. 7.  SFAS No. 7 requires companies to
report their operations, shareholders deficit and cash flows since inception
through the date that revenues are generated from management’s intended
operations, among other things.  Management has defined inception as
January 7, 1982.  Since inception, the Company has incurred operating
losses totaling $7,636,314, much of which relates to stock-based compensation to
officers, directors and consultants as a means to preserve working
capital.  The Company’s working capital has been generated through the
sales of common stock, loans made by officers of the Company and a bank line of
credit. Management has provided financial data since January 7, 1982 “Inception”
in the financial statements, as a means to provide readers of the Company’s
financial information to make informed investment decisions.
 
 Use of
Estimates
 
 The
preparation of the 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 liabilities at the date of the financial statements and
the reported amounts of expenses during the reporting period.  Actual
results could differ from those estimates.
 
 Principles of
Consolidation
 
 The
consolidated financial statements include those of Victory Energy Corporation
and its wholly owned subsidiaries, Global Card Incorporated, On Demand
Communications, Inc. and Victory Energy Resources, Inc. All material
inter-company items and transactions have been eliminated.  There has
been no activity in the subsidiaries.
 
 Earnings (Loss) Per
Share
 
 Statement
of Financial Accounting Standards No. 128 “Earnings Per Share” requires
presentation of basic earnings per share and diluted earnings per
share.  Basic income (loss) per share (“Basic EPS”) is computed by
dividing net loss available to common stockholders by the weighted average
number of common shares outstanding during the period.  Diluted
earnings per share (“Diluted EPS”) is similarly calculated using the treasury
stock method except that the denominator is increased to reflect the potential
dilution that would occur if preferred stock at the end of the applicable period
were exercised. These potential dilutive securities were included in the
calculation of loss per share for the three months ended March 31,
2008.   They were not included in the calculation for March 31,
2007 because the Company incurred a loss in the period, and thus their effect
would have been anti-dilutive.  At March 31, 2008 potentially dilutive
securities consisted of 585,690 shares of preferred stock, convertible at the
rate of 1 preferred share to 100 common shares.
 
 On
October 26, 2006 a reverse stock split of Common Stock occurred on a 25 to 1
basis.
 The loss
per share for the year ended December 31, 2006 was calculated accordingly,
giving retroactive effect to the reverse stock split at the beginning of the
year.
 
 The
following is a reconciliation of the numerators and denominators of the basic
and diluted earnings per share computations for the years ended December 31,
2007 and 2006.
 -12-
 
 2007
                  
                  
                  2006Numerator:Basic and diluted net loss per
      share:Net
      Income (Loss)
                  
                  $
                  ( 1,751,834
                  )
                  
                  $
                  (1,168,975
                  )DenominatorBasic and diluted weighted
      averagenumber of shares
      outstanding
                  
                  
                  106,041,725
                  
                  
                  
                  2,923,505Basic and Diluted Net
      Loss Per Share
                  
                  $
                  0.02
                  
                  
                  $
                  (0.09
                  )Dilutive effect of
      Preferred Stock
                  
                  
                  58,569,000
                  
                  
                  Nil
 
 Equipment and
Fixtures
 
 Equipment
and fixtures are recorded at cost.  Depreciation is provided using
accelerated and straight-line methods over the estimated useful lives of the
related assets as follows.
 
 Description
                  YearsFurniture
      and fixtures
                  7Computer
      hardware and software
                  3-5
 
 Equipment
and fixtures have been fully depreciated.
 
 NOTE 3 –
RELATED PARTY TRANSACTIONS
 
 Five
ledger accounts in the books of the Company relating to loans, salaries and
out-of-pocket expenses payable to the President/C.E.O., Jon Fullenkamp, were
combined into one account “Loan from Officer”, which totaled $1,369,339 at March
31, 2008 The loan is non-interest bearing and payable on
demand.  Under the terms of the employment agreement, the employee may
at his election convert any and all funds due to him into shares of the
Company’s common stock at a conversion price of $0.01 per share. In practice, in
prior years, funds due to him were converted at a discounted market
value.
 -13-
 
 In March
2006 the company issued a promissory note to a group of stockholders for
consideration of $141,458 in cash. The terms were to be repayable in one year at
an interest rate of 10%, payable quarterly.  Interest was deferred. In
December, 2006 the note was reclassified to prepaid subscriptions, reflecting an
accommodation with the stockholders. In December 2007, the subscription was
eliminated in further negotiations.
  NOTE 4 –
INVESTMENT IN OIL AND GAS PROPERTIES
 
 In May,
2006 the Company paid $50,000 to Geosurveys, Inc, a geophysical survey company
of oil and gas prospects.  This was part of an agreement with Eldorado
Exploration, Inc. whereby the Company obtained a 2 1⁄2 percent working interest in
a prospective oil well called the Mesa #1 well on leased land in New
Mexico.   The agreement provides for cost sharing of drilling
costs.
 
 In the
first quarter of 2008 the Corporation acquired, with private institutional
investors, through a financial facility, 50% of  50% of 74% net
revenue interest in six term assignments containing six existing and producing
gas wells in Crockett County, Texas.  The lease is known as the
Adams-Baggett Canyon Sandstone gas field.    A geologists
report dated January 26, 2007 from Joe C. Neal & Associates indicates the
following oil and gas reserves, reported in accordance with Financial Accounting
Standards Board pronouncement 69 (FAS-69):
 
 PROVEDUNDEVELOPEDNet
      Reserves toEvaluated
      Interests:Oil, MBBL
                  
                  
                  0Gas, MMCF
                  
                  
                  11,519Future  Cash
      Inflows
                  
                  $
                  74,877,000Ad
      Valorem Taxes &Severance
      Taxes
                  
                  $
                  7,694,000Operating
      Costs
                  
                  $
                  18,768,000Capital
      Costs
                  
                  $
                  12,000,000Future
      Net Cash Flows,Undiscounted
                  
                  $
                  36,415,000Standardized
      measure ofPer
      Annum DiscountedFuture
      net cash flowsrelating
      to provedOil
      and gas reserves,Discounted
      at 10%
                  
                  $
                  11,434,000Victory
      Energy Corporation share50% x 74%
                  
                  $
                  4,231,000
  In the
first quarter of 2008 the company sold 59%  of its net
revenue  interest for $3,000,000.   The percentage
reduces to 49% when the purchase price is recovered.  Funds were used
for drilling in the same prospect.
 -14-
 NOTE 5 -
COMMITMENTS AND CONTINGENCIES
 
 There
were no additional commitments and contingencies in the three months ended March
31, 2008.
 
 NOTE 6 –
CAPITAL STOCK TRANSACTIONS
 
 Reverse Common Stock
Split
 
 The
Common Stock issued and outstanding at October 26, 2006 was
108,810,259.   On this date the Board of Directors declared a
reverse stock split of the Company’s Common Stock, converting the common stock
on a 25 to 1 basis.    Common shares outstanding were
reduced by 104,457,849.  New stock outstanding after the split and
after issuing 890 shares for rounding was 4,353,300.   The effect
on the balance sheet was to increase Paid-in Capital by $104,458 and to reduce
Common Stock by $104,458, a neutral effect on stockholders’ equity.
 
 On
October 20, 2005 one share was issued at $0.50, valued de minimus, for rounding
following the reverse split.
 
 On
November 11, 2006 5,200 shares were issued for services valued at $1,040 at
market value of $0.20 per share.
 
 On
December 5, 2006, 14 shares valued de minimus were issued for
rounding.
 
 On
December 27, 2006, 160,000 shares were issued for services, valued at $27,200,
at market value of $0.17.
 
 2007
 
 On
January 22, 2007, 6,277,251 shares of common stock were issued for services at
$0.15 per share, reflecting market value.  $941,588 was recorded as
consulting fees.
 
 On
February 1, 2007, 5,662,000 shares of common stock were issued at $0.21
reflecting market value for subscriptions receivable
of  $1,189,020.
 
 On March
1, 2007, 40,000 shares of common stock were issued to a Director for services
rendered at $0.21 per share reflecting market
value.    $8,400 was recorded as consulting
fees.
 
 On May 7,
2007, 1,710,000 shares of common stock were issued for services at $0.21 per
share,    reflecting market value.  $359,100 was
recorded as consulting fees.
 
 On June
5, 2007,  1,077,600 shares of common stock were issued for services at
$0.21 per share reflecting market value. $226,296 was recorded as consulting
fees.
 -15-
 
 On June
13, 2007, 850,000 shares of common stock were issued to preferred stockholders
in a conversion of 85,000 shares of preferred stock to common, converted at the
rate of one share of preferred stock to 100 shares of common stock.
 
 On June
15, 3,500,000 shares of common stock were issued at $0.21 per share reflecting
market value, for subscriptions receivable of $735,000.
 
 On
December 12, 2007,  300,000 shares of common stock were issued for
services at $0.05 per share reflecting market value. $15,000 was recorded as
consulting fees.
 
 On
December 31, 2007,  10,310,000 shares of common stock were issued for
services at $0.04 per share reflecting market value. $412,400 was recorded as
consulting fees.
 
 On
December 31, 2007,  500,000 shares of common stock were issued for
services at $0.04 per share reflecting market value. $20,000 was recorded as
consulting fees.
 
 On
December 31, subscriptions receivable was reduced by $575,000 to $160,000
following an agreement with the subscribers concerned.  Additional
paid-in capital was reduced accordingly.
 
 The total
of issued and outstanding common shares at December 31, 2007  was
42,395,366.
 
 2008
 
 In
January, 2008 600,000 shares of common stock were issued for services $0.04 per
share reflecting market value.   $24,000 was recorded as legal
fees.
 
 From
February 1 to 21, 2008 8,550,000 shares of common stock were issued for services
$0.08 per share reflecting market value.   $684,000 was recorded
as consulting fees.
 
 On
February 22, 2008 2,000,000 shares of common stock were issued for services
$0.20 per share reflecting market value.   $100,000 was recorded
as consulting fees.
 
 In March,
2008 2,000,000 shares of common stock were issued for services $0.23 per share
reflecting market value.   $322,000 was recoded as legal
fees.  $138,000 was recorded as consulting fees.
 
 The total
of issued and outstanding common shares at March 31, 2008 and 2007 was
60,028,124 and 42,395,366 respectively.
 -16-
  Preferred
Stock
 
 On August
22, 2006 the Board of Directors resolved to amend the Articles of Incorporation,
to authorize 10,000,000 shares of preferred stock, having a par value of
$0.001.  The stock is convertible to common stock at will in a ratio
of 1 preferred to 100 common.  Preferred stockholders may vote as
common stockholders on any matter on which common stockholders can vote, and in
accordance with the underlying common stock held.  Preferred stock
dividends may be declared by the Board of Directors.
 
 On
October 20, 2006, 715,512.23 preferred shares were issued for cash at $0.467
each pursuant to Regulation “S”, realizing $246,950.
 
 On June
13, 2007 85,000 shares of preferred stock were converted, at the rate of one
share of preferred stock to 100 shares of common stock, to 850,000 shares common
stock.
 
 On March
13, 2008 44,827.58 shares of preferred stock were converted, at the rate of one
share of preferred stock to 100 shares of common stock, to 4,482,758 shares
common stock.
 
 The total
of issued and outstanding preferred shares at March 31, 2008 and  2007
was 585,690 and 630,517 respectively.
 
 NOTE 7 –
LITIGATION
 During
the second quarter of 2007, a former consultant solicited the courts for the
shortfall between the original settlement amount and the amount realized in a
court action.  On June 6, 2007, the Corporation delivered final
settlement and the issue is completely resolved.
  Neither
the Company nor any of its officers or directors is involved in any other
litigation either as plaintiffs or defendants, and have no knowledge of any
threatened or pending litigation against them or any of the officers or
directors.


-17-


Item
2.                    
Management's Discussion and Analysis or Plan of
Operation





The
following discussion includes certain forward-looking statements within the
meaning of the safe harbor protections of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Statements that include words such as “believe,” “expect,” “should,”
“intend,” “may,” “anticipate,” “likely,” “contingent,” “could,” “may,” or other
future-oriented statements, are forward-looking statements. Such forward-looking
statements include, but are not limited to, statements regarding our business
plans, strategies and objectives, and, in particular, statements referring to
our expectations regarding our ability to continue as a going concern, generate
increased market awareness of, and demand for, our current products, realize
profitability and positive cash flow, and timely obtain required financing.
These forward-looking statements involve risks and uncertainties that could
cause actual results to differ from anticipated results. The forward-looking
statements are based on our current expectations and what we believe are
reasonable assumptions given our knowledge of the markets; however, our actual
performance, results and achievements could differ materially from those
expressed in, or implied by, these forward-looking statements. Factors within
and beyond our control that could cause or contribute to such differences
include, among others, the following: those associated with drilling and
subsequent sale of oil and gas, our critical capital raising efforts in an
uncertain and volatile economical environment, our ability to maintain
relationship with strategic companies, our cash preservation and cost
containment efforts, our ability to retain key management personnel, our
relative inexperience with advertising, our competition and the potential impact
of technological advancements thereon, the impact of changing economic,
political, and geo-political environments on our business, as well as those
factors discussed elsewhere in this Form 10-QSB and in “Item 1 - Our Business,”
“Item 6 - Management’s Discussion and Analysis,” and elsewhere in our most
recent Form 10-KSB, filed with the United States Securities and Exchange
Commission.





Readers
are urged to carefully review and consider the various disclosures made by us in
this report and those detailed from time to time in our reports and filings with
the United States Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that are likely to affect our
business.





Our
Business





Victory
Energy Corporation (OTC symbol VYEY), formerly known as Victory Capital Holdings
Corporation (our “Company”) was organized under the laws of the State of Nevada
on January 7, 1982, under the name All Things, Inc. On March 21, 1985, our
Company’s name was changed to New Environmental Technologies Corporation; on
April 28, 2003, our name was changed to Victory Capital Holdings Corporation and
on May 3, 2006, it was changed to Victory Energy Corporation. Our Company was
formed for the purpose of engaging in all lawful businesses. Our Company’s
initial authorized capital consisted of 100,000,000 shares of $0.001 par value
common voting stock and as of the date of this filing our authorized capital is
200,000,000 shares of $.001 par value common stock.





Our
Company has had no material business operations since 1989. In 2004, we began
the search for the acquisition of assets, property or businesses that may
benefit our Company and our shareholders. Our goal has been to bring value to
the Company and to our shareholders through such acquisitions. Each merger and
acquisition we approach is done with the intention to position us in markets and
sectors where excellent growth is anticipated. We plan to retain a percentage of
stock ownership in each subsidiary while spinning them out as their own new
public company if such transaction is economically feasible. The balance of the
stock will be distributed to the Company’s shareholders at the time of spin out
of the new public company. This is a non-dilutive method to increase shareholder
value as we grow and maintain a position in the market segments
selected.





Current
Business of the Company





Management
determined that the Company should focus on projects in the oil and gas
industry. This is based upon a belief that this industry is an economically
viable sector in which to conduct business operations. The Company has targeted
specific prospects and intends to engage in the drilling for oil and gas. Jon
Fullenkamp, the Company’s President, has a great deal of experience in the oil
and gas industry and has already recruited additional experience with new
directors and advisory board members.


-18-




The
Corporation has established a relationship with a private institutional
investment group who are providing drilling funds to the Company for the further
development of oil and gas properties. This group provides for direct
participation by the investors in the production of completed
wells.  The Corporation receives a 15% carried interest in the gas
wells and shares in the same value of the production revenue on a monthly
basis.  Once initial invested cost to acquire or drill  each
well is returned  to the private institutional investment group, the
Corporations participation will increase to 25%.  The Corporation will
receive the same level of participation in the revenues on a monthly basis at
that time.





During
the fourth quarter of 2007, the Corporation negotiated the terms to acquire
ownership in six term assignments containing six producing gas
wells.  The term assignments and gas wells are located in Crockett
County Texas located in the Permian Basin.





In the
first quarter of 2008, the Corporation acquired the ownership in six term
assignments containing six producing gas wells.   Victory’s
acquired ownership in the six term assignments is 50% working interest and 50%
of 74% net revenue interest in six existing and producing gas wells on the six
term assignments in the Canyon Sandstone gas zone, in the Texas Permian Basin.
26% of the interest is set aside for royalty interest owners of each term
assignment.The recording
of ownership of the term lease assignments is schedule to be recorded at the
Crockett County Court house during the second quarter of
2008.  Additionally during the first quarter of 2008, the Corporation
drilled two additional Canyon Sandstone gas wells in Crockett County
Texas.





Funds for
the transaction were provided by a private institutional investment group in
exchange for a portion of Victory’s interest ownership in each term
assignment.  Currently Victory maintains 15% of the interest ownership
until such time the revenues have paid back the original acquisition investment,
then Victory’s interest ownership will increase to 25%.





The
Corporation has targeted the prolific Canyon Sandstone gas field in the Texas
Permian Basin, with the intent to focus on the drilling and completion of
natural gas wells in this existing field.  The opportunity is of
reduced risk due to the extensive historical information available from this
specific natural gas field.  The commercial success of this field is
over 97%, indicating that 97% of the wells drilled here are commercially
productive.




The
Canyon Sandstone gas play is located in the Texas Permian Basin as part of the
large prolific Adams-Baggett Canyon Sandstone gas field. The Canyon Sandstone
formation is found at a depth of 4,300 feet to 4,900 feet. Initial production
for these wells is approximately 250,000 cubic feet of gas per day per well. The
average life span of a Canyon Sandstone gas well is approximately 30
years.





Natural
gas from the Canyon Sandstone gas zone receives a 20% premium in price above the
standard price due to its higher BTU content per cubic foot of natural
gas.





Within
this existing gas field are two deeper zones, Strawn Limestone and the
Ellenburger Dolomite. The Strawn Limestone gas zone will produce approximately
1.5 BCF and the Ellenburger Dolomite gas zone will produce approximately 5.0
BCF, over an average life span of approximately 30 years. The Strawn zone is
usually found at 9,000 to 9,800 feet, while the depth of the Ellenburger zone is
between 10,500 and 11,500 feet.





To reduce
risk in the field, each well drilled has the opportunity to have the Canyon
Sandstone gas zone available to produce from.  For each of the deeper
gas wells drilled in this field, the Corporation will always have the Canyon
Sandstone zone available as a fall back opportunity to produce from and recover
any additional drilling expenses incurred from drilling a deeper
well.





The
underlying opportunity in drilling a deeper gas well is to first produce the
deepest zone, Ellenburger Dolomite, until it is depleted.  The next
step is then to produce the shallower Strawn Limestone until depletion and
finally to produce the Canyon Sandstone zone to depletion.  Offsets of
deeper gas wells in this field are producing average of 2.5 million cubic feet
of gas per day.


-19-





The
Corporation received its first revenue from production sales from this field in
March of 2008.





We also
hold an interest as a joint venture partner in the Mesa Gas Prospect located in
Roosevelt County New Mexico.  The Company had held 1,960 acres in a
prospective oilfield identified as N.E. Glasgow Prospect located in Montana
where plans were to incorporate this prospect into the Company’s developments in
Valley County Montana.  The acreage was allowed to lapse back to the
State of Montana.  The Company now is currently working with the State
of Montana to reacquire the acreage.  We had taken on the evaluation
of a prospect in Oklahoma identified as the Skedee Prospect. As we progressed
into the due diligence of these prospects and the potential production,
management determined that the development of the prospect was not worth the
required investment capital. Even with the potential reduction in investment
dollars, the prospects had an unacceptable pay back time for the initial
investment. Management felt the shareholders would be better served by seeking
other prospects.





Other
than our President, we have no other employees at this time and we will seek to
retain independent contractors to assist in operating and managing the prospects
as well as to carry out the principal and necessary functions incidental to the
oil and gas business. With the intended acquisition of oil and natural gas, we
intend to establish ourselves as an industry partner within the industry. With
our established revenue base with cash flow, we will seek opportunities more
aggressive in nature.




Plan
of Operation





Management
determined that the Company should focus on projects in the oil and gas
industry. This is based upon a belief that this industry is an economically
viable sector in which to conduct business operations. The Company has targeted
specific prospects and intends to engage in the drilling for oil and gas. Jon
Fullenkamp, the Company’s President, has a great deal of experience in the oil
and gas industry and has already recruited additional experience with new
directors and advisory board members.




The
Corporation has established a relationship with a private institutional
investment group who are providing drilling funds to the Company for the further
development of oil and gas properties. This group provides for direct
participation by the investors in the production of completed
wells.  The Corporation receives a 15% carried interest in the gas
wells and shares in the same value of the production revenue on a monthly
basis.  Once initial invested cost to acquire or drill  each
well is returned  to the private institutional investment group, the
Corporations participation will increase to 25%.  The Corporation will
receive the same level of participation in the revenues on a monthly basis at
that time.





During
the fourth quarter of 2007, the Corporation negotiated the terms to acquire
ownership in six term assignments containing six producing gas
wells.  The term assignments and gas wells are located in Crockett
County Texas located in the Permian Basin.





In the
first quarter of 2008, the Corporation acquired the ownership in six term
assignments containing six producing gas wells.   Victory’s
acquired ownership in the six term assignments is 50% working interest and 50%
of 74% net revenue interest in six existing and producing gas wells on the six
term assignments in the Canyon Sandstone gas zone, in the Texas Permian Basin.
26% of the interest is set aside for royalty interest owners of each term
assignment.The recording
of ownership of the term lease assignments is schedule to be recorded at the
Crockett County Court house during the second quarter of
2008.  Additionally during the first quarter of 2008, the Corporation
drilled two additional Canyon Sandstone gas wells in Crockett County
Texas.


-20-





Funds for
the transaction were provided by a private institutional investment group in
exchange for a portion of Victory’s interest ownership in each term
assignment.  Currently Victory maintains 15% of the interest ownership
until such time the revenues have paid back the original acquisition investment,
then Victory’s interest ownership will increase to 25%.





The
Corporation has targeted the prolific Canyon Sandstone gas field in the Texas
Permian Basin, with the intent to focus on the drilling and completion of
natural gas wells in this existing field.  The opportunity is of
reduced risk due to the extensive historical information available from this
specific natural gas field.  The commercial success of this field is
over 97%, indicating that 97% of the wells drilled here are commercially
productive.




The
Canyon Sandstone gas play is located in the Texas Permian Basin as part of the
large prolific Adams-Baggett Canyon Sandstone gas field. The Canyon Sandstone
formation is found at a depth of 4,300 feet to 4,900 feet. Initial production
for these wells is approximately 250,000 cubic feet of gas per day per well. The
average life span of a Canyon Sandstone gas well is approximately 30
years.





Natural
gas from the Canyon Sandstone gas zone receives a 20% premium in price above the
standard price due to its higher BTU content per cubic foot of natural
gas.





Within
this existing gas field are two deeper zones, Strawn Limestone and the
Ellenburger Dolomite. The Strawn Limestone gas zone will produce approximately
1.5 BCF and the Ellenburger Dolomite gas zone will produce approximately 5.0
BCF, over an average life span of approximately 30 years. The Strawn zone is
usually found at 9,000 to 9,800 feet, while the depth of the Ellenburger zone is
between 10,500 and 11,500 feet.





To reduce
risk in the field, each well drilled has the opportunity to have the Canyon
Sandstone gas zone available to produce from.  For each of the deeper
gas wells drilled in this field, the Corporation will always have the Canyon
Sandstone zone available as a fall back opportunity to produce from and recover
any additional drilling expenses incurred from drilling a deeper
well.





The
underlying opportunity in drilling a deeper gas well is to first produce the
deepest zone, Ellenburger Dolomite, until it is depleted.  The next
step is then to produce the shallower Strawn Limestone until depletion and
finally to produce the Canyon Sandstone zone to depletion.  Offsets of
deeper gas wells in this field are producing average of 2.5 million cubic feet
of gas per day.





The
Corporation received its first revenue from production sales from this field in
March of 2008.





We also
hold an interest as a joint venture partner in the Mesa Gas Prospect located in
Roosevelt County New Mexico.  The Company had held 1,960 acres in a
prospective oilfield identified as N.E. Glasgow Prospect located in Montana
where plans were to incorporate this prospect into the Company’s developments in
Valley County Montana.  The acreage was allowed to lapse back to the
State of Montana.  The Company now is currently working with the State
of Montana to reacquire the acreage.  We had taken on the evaluation
of a prospect in Oklahoma identified as the Skedee Prospect. As we progressed
into the due diligence of these prospects and the potential production,
management determined that the development of the prospect was not worth the
required investment capital. Even with the potential reduction in investment
dollars, the prospects had an unacceptable pay back time for the initial
investment. Management felt the shareholders would be better served by seeking
other prospects.





Other
than our President, we have no other employees at this time and we will seek to
retain independent contractors to assist in operating and managing the prospects
as well as to carry out the principal and necessary functions incidental to the
oil and gas business. With the intended acquisition of oil and natural gas, we
intend to establish ourselves as an industry partner within the industry. With
our established revenue base with cash flow, we will seek opportunities more
aggressive in nature.


-21-







Results
of Operations for Period Ended March 31, 2008


As of
March 31, 2008, the Company has earned revenues of $252,000 and has incurred a
net loss to date of $1,751,834. Operations have been primarily seeking potential
opportunities in the oil and gas industry through the location of commercially
economical prospects, and raising capital and developing revenue generating
opportunities and strategic relationships.
 
 During
the three month period ended March 31, 2008, we incurred operating expenses in
the amount of $1,248,171. These operating expenses included due diligence
expenses, consulting fees, professional fees, land leases, oil and gas leases,
and office and general expenses.


Liquidity
and Capital Resources




To date,
we have financed our operations from funds put into the Company by our CEO. We
intend to raise future capital from the sale of a percentage of our prospects to
fund development and production or through the sale of our common stock to
finance the prospects in their entirety.




Recent
Accounting Pronouncements




In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities –
Including an Amendment of FASB Statement No. 115”.  This statement
permits entities to choose to measure many financial instruments and certain
other items at fair value. Most of the provisions of SFAS No. 159 apply only to
entities that elect the fair value option. However, the amendment to SFAS No.
115 “Accounting for Certain Investments in Debt and Equity Securities” applies
to all entities with available-for-sale and trading securities. SFAS No. 159 is
effective as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
year that begins on or before November 15, 2007, provided the entity also elects
to apply the provision of SFAS No. 157, “Fair Value Measurements”. In February
2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, “The
Fair Value Option for Financial Assets and Financial Liabilities – Including an
Amendment of FASB Statement No. 115”.  This statement permits entities
to choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. However, the amendment to SFAS No. 115 “Accounting for
Certain Investments in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this
statement is not expected to have a material effect on our financial
statements.




In
September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for period ending after November
15, 2006. We are currently evaluating the impact of adopting SAB No. 108 but
does not expect that it will have a material effect on its financial
statements




In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132®”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit
organization.  This statement also requires an employer to measure the
funded status of a plan as of the date of its year-end statement of financial
position, with limited exceptions. The provisions of SFAS No. 158 are effective
for employers with publicly traded equity securities as of the end of the fiscal
year ending after December 15, 2006. The adoption of this statement did not have
a material effect on our reported financial position or results of
operations.


-22-


In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
is not expected to have a material effect on our future reported financial
position or results of operations.




In June
2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statements No. 109”. FIN 48 clarifies
the accounting for uncertainty in income taxes by prescribing a two-step method
of first evaluating whether a tax position has met a more likely than not
recognition threshold and second, measuring that tax position to determine the
amount of benefit to be recognized in the financial statements. FIN 48 provides
guidance on the presentation of such positions within a classified statement of
financial position as well as on derecognition, interest and penalties,
accounting in interim periods, disclosure, and transition. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The adoption of this
statement is not expected to have a material effect on our future reported
financial position or results of operations.




In
September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108,
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements.” SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for period ending after November
15, 2006. We are currently evaluating the impact of adopting SAB No. 108 but do
not expect that it will have a material effect on our financial
statements.




In
September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements
No. 87, 88, 106, and 132®”. This statement requires employers to recognize the
overfunded or underfunded status of a defined benefit postretirement plan (other
than a multiemployer plan) as an asset or liability in its statement of
financial position and to recognize changes in that funded status in the year in
which the changes occur through comprehensive income of a business entity or
changes in unrestricted net assets of a not-for-profit
organization.  This statement also requires an employer to measure the
funded status of a plan as of the date of its year-end statement of financial
position, with limited exceptions. The provisions of SFAS No. 158 are effective
for employers with publicly traded equity securities as of the end of the fiscal
year ending after December 15, 2006. The adoption of this statement did not have
a material effect on our reported financial position or results of
operations.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements.  SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
is not expected to have a material effect on our future reported.





Item
4.  Controls andProcedures




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Under the supervision and with
the participation of our management, including the Principal Executive Officer
and Principal Financial Officer, we have evaluated the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rules 13a-15 and 15d-15 as of the end of the period covered by this
report. Based on that evaluation, the Principal Executive Officer and Principal
Financial Officer have concluded that these disclosure controls and procedures
were effective such that the material information required to be filed in our
SEC reports is recorded, processed, summarized and reported within the required
time periods specified in the SEC rules and forms. There were no changes in our
internal control over financial reporting during the quarter ended March 31,
2008 that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting. Potential investors
should be aware that the design of any system of controls and procedures is
based in part upon certain assumptions about the likelihood of future events.
 There can be no assurance that any system of controls and procedures will
succeed in achieving its stated goals under all potential future conditions,
regardless of how remote.


-23-




PART
II - OTHER INFORMATION




Item
1.  Legal Proceedings




During
the second quarter of 2007, the former consultant solicited the courts for the
shortfall between the original settlement amount and the amount
realized.  On June 6, 2007, the Corporation delivered final settlement
and the issue is completely resolved.




On July
24, 2006, all litigation was settled between the Company and a former
consultant. The Company settled the case for an estimated value of $280,000 to
be realized over a 10-month period ending in May of 2007.




In May
2006, we settled a past debt with Treetop Investments for 5,000,000 shares of
our restricted common stock in a transaction combining settlement of debt and
purchase of stock.




Neither
the Company nor any of our officers or directors is involved in any other
litigation either as plaintiffs or defendants and we have no knowledge of any
threatened or pending litigation against us or any of our officers or
directors.




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




During
the three months ended March 31, 2008, we issued 13,150,000 shares of common
stock.




Item
3.  Defaults Upon Senior Securities




During
the three months ended March 31, 2008, we were not in default on any of our
indebtedness.




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




There
were no matters submitted to a vote of our shareholders.




Item
5.  Other Information.




None




Item
6.  Exhibits




Exhibit
      No.
            Description
      of Exhibit31
            Certification of Chief Executive/Financial Officer
      pursuant to Section 302 of the Sarbanes-Oxley Act of
    200232
            Certification of Chief Executive/Financial Officer
      pursuant to Section 906







-24-


SIGNATURE







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




Victory Energy
      CorporationDate:  May
      20, 2008
              By:
              /s/ Jon
      FullenkampJon
      FullenkampPrincipal
      Executive Officer
                Principal
      Financial Officer
                Principal
      Accounting Officer
                and
      Director


Date:  May
      20, 2008
                By:
                /s/ Rick
      MayRick
      MayDirector
  Date:  May
      20, 2008
                  By:
                  /s/  Perry
      MansellPerry
      MansellDirector
  -25-