----

| UNITED      STATES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECURITIES      AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Washington,      D.C. 20549                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ————————                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| FORM      10-Q                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ————————                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|       (Mark      One)     ýQUARTERLY      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| For      the quarterly period ended June 30, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     oTRANSITION      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Commission      file      number                                                      000-52770                                                                                                                                                           |
| PACIFIC      ASIA PETROLEUM, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (Exact      name of issuer as specified in its charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ————————                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Delaware                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 30-0349798 |
| (State      or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | (IRS      Employer Identification No.) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 250      East Hartsdale Ave.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Hartsdale,      New York 10530                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (Address      of principal executive offices)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (914)      472-6070                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (Issuer’s      telephone number)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ————————                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Indicate      by check mark whether the registrant (1) has filed all reports      required to be filed by Section 13 or 15(d) of the Exchange Act of 1934      during the preceding 12 months (or for such shorter period that the      registrant was required to file such reports), and (2) has been      subject to such filing requirements for the past 90 days.Yes ý                      No      o |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and      large accelerated filer” in Rule 12b-2 of the      Exchange Act. (Check one):Large accelerated      filer o   Accelerated      filer o        Non-accelerated filer ý         Smaller reporting company  ̈                                                  |
|       Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Exchange Act).  Yes o                      No      ý      The      Issuer had 39,987,388 shares of its common stock outstanding as      of July      24,      2008.                                           |

----

Table of Contents

| PACIFIC ASIA PETROLEUM,      INC. |       |
|-----------------------------------|------------|
| FORM      10-Q                    |       |
| Table      of Contents            |       |
|                              | Page  |

| CAUTIONARY STATEMENT | 1                                                                                                                                                                                                                                                             |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                          |   |
| PART      I          | FINANCIAL INFORMATION                                                                                                                                                                                                                                         | 2 |
| Item 1.              | Financial Statements                                                                                                                                                                                                                                          | 2 |
|                 | Condensed Consolidated Balance Sheets as of June 30, 2008      (unaudited) and December 31, 2007                                                                                                                                                              | 2 |
|                 | Condensed Consolidated Statements of Income and Comprehensive      Income (unaudited) for the six months and the three months ended      June 30, 2008 and 2007 and for the period from inception      (August 25, 2005) through June 30, 2008 | 3 |
|                 | Condensed Consolidated Statement of Stockholders' Equity      (Deficiency) (unaudited) for the period from inception (August 25, 2005)      through June 30, 2008                                                                                        | 4 |
|                 | Condensed Consolidated Statements of Cash      Flows  (unaudited) for the six months ended June 30, 2008      and 2007 and for the period from inception (August 25, 2005) through      June 30, 2008                                | 5 |
|                 | Notes to Condensed Consolidated Financial Statements      (unaudited)                                                                                                                                                                                         | 6 |
| Item 2.              | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                                                                                                                                                              | 9 |
| Item 3.              | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                                                                                                               | 15 |
| Item 4.              | Controls and Procedures                                                                                                                                                                                                                                       | 15 |
|                 |                                                                                                                                                                                                                                                          |   |
| PART      II         | OTHER INFORMATION                                                                                                                                                                                                                                             | 15 |
| Item 1.              | Legal Proceedings                                                                                                                                                                                                                                             | 15 |
| Item 1A.             | Risk Factors                                                                                                                                                                                                                                                  | 15 |
| Item 2.              | Unregistered Sales of Equity Securities and Use of      Proceeds                                                                                                                                                                                              | 15 |
| Item 3.              | Defaults Upon Senior Securities                                                                                                                                                                                                                               | 15 |
| Item 4.              | Submission of Matters to a Vote of Security      Holders                                                                                                                                                                                                      | 16 |
| Item 5.              | Other Information                                                                                                                                                                                                                                             | 16 |
| Item 6.              | Exhibits                                                                                                                                                                                                                                                      | 16 |
|                 |                                                                                                                                                                                                                                                          |   |
| SIGNATURES           |                                                                                                                                                                                                                                                          | 17 |
|                 |                                                                                                                                                                                                                                                          |   |
|                 |                                                                                                                                                                                                                                                          |   |
|                 |                                                                                                                                                                                                                                                          |   |

----

Table of Contents

CAUTIONARY STATEMENT

|   | · | Lack      of operating history, operating revenue or earnings    history. |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Dependence      on key personnel. |
|--------|--------|-----------------------------------|

|   | · | Fluctuation      in quarterly operating results and seasonality in certain of our      markets. |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Possible      significant influence over corporate affairs by significant      shareholders. |
|--------|--------|----------------------------------------------------------------------------------------------|

|   | · | Our      ability to enter into definitive agreements to formalize foreign energy      ventures and secure necessary exploitation  rights. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      ability to raise capital to fund ouroperations. |
|--------|--------|----------------------------------------------------------|

|   | · | Our      ability to successfully integrate and operate acquired or newly formed      entities and multiple foreign energy ventures and      subsidiaries. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      competition from large petroleum and other energy    interests. |
|--------|--------|--------------------------------------------------------------------------|

|   | · | Changes      in laws and regulations that affect our operations and the energy industry      in general. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | Risks      and uncertainties associated with exploration, development and production      of oil and gas, drilling and productionrisks. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Expropriation      and other risks associated with foreign  operations. |
|--------|--------|-------------------------------------------------------------------------|

|   | · | Risks      associated with anticipated and ongoing third party pipeline construction      and transportation of oil and gas. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      lack of availability of oil and gas field goods and    services. |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Environmental      risks, economic conditions, and other risk factors detailed      herein. |
|--------|--------|---------------------------------------------------------------------------------------------|

----

Table of Contents

| PART I                                                                                                                                |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|
| FINANCIAL      INFORMATION                                                                                                            |   |
| Item 1.  Financial Statements                                                                                               |   |   |   |   |   |   |
| Pacific      Asia Petroleum, Inc. and Subsidiaries                                                                                    |   |
| (A      Development Stage Company)                                                                                                    |   |
| Condensed      Consolidated Balance Sheets                                                                                            |   |
|                                                                                                                                  |   | As      of |   |   | As      of |   |
|                                                                                                                                  |   | June      30, |   |   | December      31, |   |
|                                                                                                                                  |   | 2008 |   |   | 2007 |   |
|                                                                                                                                  |   | (Unaudited) |   |   |   |   |
| Assets                                                                                                                                |   |   |   |   |   |   |
| Current      assets                                                                                                                   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                                                                        |   | $ | 11,092,754 |   |   | $ | 2,208,969 |   |
| Short-term      investments                                                                                                           |   |   | 300,000 |   |   |   | 11,200,000 |   |
| Income      tax refunds receivable                                                                                                    |   |   | 28,241 |   |   |   | - |   |
| Prepaid      expenses                                                                                                                 |   |   | 75,046 |   |   |   | 46,247 |   |
| Deposits                                                                                                                              |   |   | 52,278 |   |   |   | 22,954 |   |
| Advances                                                                                                                              |   |   | 368 |   |   |   | 2,758 |   |
|       Total      current assets                                                                         |   |   | 11,548,687 |   |   |   | 13,480,928 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Non-current      assets                                                                                                               |   |   |   |   |   |   |   |   |
| Property,      plant and equipment - at cost (net of accumulated depreciation and      amortization:                                  |   |   |   |   |   |   |   |   |
|        June      30, 2008: $44,501;  December 31, 2007: $20,779)                         |   |   | 493,013 |   |   |   | 285,027 |   |
| Intangible      assets                                                                                                                |   |   | 384 |   |   |   | 384 |   |
| Long-term      advances                                                                                                               |   |   | 626,660 |   |   |   | 534,530 |   |
| Deferred      charges                                                                                                                 |   |   | 3,657,289 |   |   |   | 3,156,058 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Total      Assets                                                                                                                     |   | $ | 16,326,033 |   |   | $ | 17,456,927 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Liabilities and      Stockholders' Equity                                                                                             |   |   |   |   |   |   |   |   |
| Current      liabilities                                                                                                              |   |   |   |   |   |   |   |   |
| Accounts      payable                                                                                                                 |   | $ | 51,917 |   |   | $ | 2,739 |   |
| Income      taxes payable                                                                                                             |   |   | 2,574 |   |   |   | 38,791 |   |
| Accrued      and other liabilities                                                                                                    |   |   | 430,501 |   |   |   | 122,704 |   |
|       Total      current liabilities                                                                    |   |   | 484,992 |   |   |   | 164,234 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Minority      interest in subsidiaries                                                                                                |   |   | 391,084 |   |   |   | 395,094 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Stockholders'      equity                                                                                                             |   |   |   |   |   |   |   |   |
| Common      stock:                                                                                                                    |   |   |   |   |   |   |   |   |
|      Authorized      - 300,000,000 shares at $.001 par value; Issued and outstanding      -                  |   |   |   |   |   |   |   |   |
|      40,006,983      as of June 30, 2008; 39,931,109 as of December 31, 2007                                 |   |   | 40,007 |   |   |   | 39,931 |   |
| Preferred      stock:                                                                                                                 |   |   |   |   |   |   |   |   |
|      Authorized      - 50,000,000 shares at $.001 par value;                                                 |   |   |   |   |   |   |   |   |
|      Issued      - 23,708,952 as of June 30, 2008 and December 31, 2007                                      |   |   |   |   |   |   |   |   |
|      Outstanding      - none as of June 30, 2008 and December 31, 2007                                       |   |   | - |   |   |   | - |   |
| Paid-in      capital                                                                                                                  |   |   | 20,851,615 |   |   |   | 20,251,022 |   |
| Other      comprehensive income - currency translation adjustment                                                                     |   |   | 230,760 |   |   |   | 128,061 |   |
| Deficit      accumulated during the development stage                                                                                 |   |   | (5,672,425 | ) |   |   | (3,521,415 | ) |
| Total      stockholders' equity                                                                                                       |   |   | 15,449,957 |   |   |   | 16,897,599 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| Total      Liabilities and Stockholders' Equity                                                                                       |   | $ | 16,326,033 |   |   | $ | 17,456,927 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |
| The      accompanying notes to the unaudited condensed consolidated financial      statements are an integral part of this statement. |   |

----

Table of Contents

| Pacific Asia Petroleum, Inc. and Subsidiaries                                                                                         |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|
| (A      Development Stage Company)                                                                                                    |   |
| Condensed      Consolidated Statements of Income and Comprehensive Income                                                             |   |
| (Unaudited)                                                                                                                           |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   | For      the period |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   | from      inception |   |
|                                                                                                                                  |   | For      the six months |   |   | For      the three months |   |   | (August      25, 2005) |   |
|                                                                                                                                  |   | ended      June 30, |   |   | ended      June 30, |   |   | through |   |
|                                                                                                                                  |   | 2008 |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |   | 6/30/2008 |   |
| Operating      Expenses                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                                                    |   | $ | 22,792 |   |   | $ | 3,975 |   |   | $ | 13,437 |   |   | $ | 2,250 |   |   | $ | 43,382 |   |
| All      other operating expenses                                                                                                     |   |   | 2,328,686 |   |   |   | 1,435,683 |   |   |   | 1,252,061 |   |   |   | 651,664 |   |   |   | 6,528,700 |   |
|     Total      operating expenses                                                                                 |   |   | 2,351,478 |   |   |   | 1,439,658 |   |   |   | 1,265,498 |   |   |   | 653,914 |   |   |   | 6,572,082 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Loss                                                                                                                   |   |   | (2,351,478 | ) |   |   | (1,439,658 | ) |   |   | (1,265,498 | ) |   |   | (653,914 | ) |   |   | (6,572,082 | ) |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Income      (Expense)                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                                                                                                  |   |   | 193,194 |   |   |   | 177,680 |   |   |   | 67,388 |   |   |   | 140,795 |   |   |   | 910,689 |   |
| Other      Income                                                                                                                     |   |   | - |   |   |   | 12,289 |   |   |   | - |   |   |   | 12,289 |   |   |   | 12,937 |   |
| Other      Expense                                                                                                                    |   |   | (72 | ) |   |   | (42 | ) |   |   | (72 | ) |   |   | (42 | ) |   |   | (786 | ) |
|     Total      Other Income                                                                                       |   |   | 193,122 |   |   |   | 189,927 |   |   |   | 67,316 |   |   |   | 153,042 |   |   |   | 922,840 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss before minority interest                                                                                                |   |   | (2,158,356 | ) |   |   | (1,249,731 | ) |   |   | (1,198,182 | ) |   |   | (500,872 | ) |   |   | (5,649,242 | ) |
| Minority      interest                                                                                                                |   |   | 7,186 |   |   |   | 1,759 |   |   |   | 3,599 |   |   |   | 1,141 |   |   |   | 15,483 |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss before income tax expense                                                                                               |   |   | (2,151,170 | ) |   |   | (1,247,972 | ) |   |   | (1,194,583 | ) |   |   | (499,731 | ) |   |   | (5,633,759 | ) |
| Income      tax (expense) benefit                                                                                                     |   |   | 160 |   |   |   | - |   |   |   | (6,419 | ) |   |   | - |   |   |   | (38,666 | ) |
| Net      Loss                                                                                                                         |   |   | (2,151,010 | ) |   |   | (1,247,972 | ) |   |   | (1,201,002 | ) |   |   | (499,731 | ) |   |   | (5,672,425 | ) |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (Loss),                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net      of Tax:                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Foreign      currency translation adjustment                                                                        |   |   | 102,699 |   |   |   | 26,193 |   |   |   | 34,597 |   |   |   | 21,961 |   |   |   | 230,760 |   |
| Comprehensive      Income (Loss)                                                                                                      |   | $ | (2,048,311 | ) |   | $ | (1,221,779 | ) |   | $ | (1,166,405 | ) |   | $ | (477,770 | ) |   | $ | (5,441,665 | ) |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss per Share of Common Stock:                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      Loss - Basic and Diluted                                                                                               |   | $ | (0.05 | ) |   | $ | (0.05 | ) |   | $ | (0.03 | ) |   | $ | (0.02 | ) |   |   |   |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Number of                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares      Outstanding                                                                                                               |   |   | 39,979,469 |   |   |   | 23,059,974 |   |   |   | 40,006,983 |   |   |   | 30,311,864 |   |   |   |   |   |
|                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes to the unaudited condensed consolidated financial      statements are an integral part of this statement. |   |

----

Table of Contents

| Pacific Asia Petroleum, Inc. and Subsidiaries                                                                                         |                 |
|---------------------------------------------------------------------------------------------------------------------------------------|----------------------|
| (A      Development Stage Company)                                                                                                    |                 |
| Condensed      Statement of Stockholders' Equity (Deficiency)                                                                         |                 |
| For      the period from inception (August 25, 2005) to June 30,    2008                                                              |                 |
| (Unaudited)                                                                                                                           |                 |
|                                                                                                                                  |                 |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |   |
|                                                                                                                                  |                 |   |   |   |   |   |   |   |   |   |   |   | Comprehensive |   | Deficit |   |   |   |
|                                                                                                                                  | No.      of          |   |   |   |   |   | No.      of |   |   |   |   |   | Income      (Loss)- |   | Accumulated |   | Total |   |
|                                                                                                                                  | Common               |   |   |   |   |   | Preferred |   |   |   |   |   | Foreign |   | During      the |   | Stockholders' |   |
|                                                                                                                                  | Shares               |   | Common |   | Subscriptions |   | Shares |   | Preferred |   | Paid-in |   | Currency |   | Development |   | Equity |   |
|                                                                                                                                  | $.001      par value |   | Stock |   | Receivable |   | $.001      par value |   | Stock |   | Capital |   | Translation |   | Stage |   | (Deficiency) |   |
| Balance      - August 25, 2005                                                                                                        | -                    |   | $ | - |   | $ | - |   | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
| Issued      for cash                                                                                                                  | 1,852,320            |   |   | 1,852 |   |   | - |   | - |   |   | - |   |   | 10,148 |   |   | - |   |   | - |   |   | 12,000 |   |
| Subscriptions                                                                                                                         | 3,451,680            |   |   | 3,452 |   |   | (28,000 | ) | - |   |   | - |   |   | 24,548 |   |   | - |   |   | - |   |   | - |   |
| Net      loss                                                                                                                         | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | - |   |   | (51,344 | ) |   | (51,344 | ) |
| Balance      - December 31, 2005                                                                                                      | 5,304,000            |   |   | 5,304 |   |   | (28,000 | ) | - |   |   | - |   |   | 34,696 |   |   | - |   |   | (51,344 | ) |   | (39,344 | ) |
| Subscriptions      paid                                                                                                               | -                    |   |   | - |   |   | 28,000 |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 28,000 |   |
| Issued      for fees and services                                                                                                     | -                    |   |   | - |   |   | - |   | 1,829,421 |   |   | 1,829 |   |   | 195,776 |   |   | - |   |   | - |   |   | 197,605 |   |
| Issued      for cash                                                                                                                  | -                    |   |   | - |   |   | - |   | 8,161,802 |   |   | 8,162 |   |   | 4,215,262 |   |   | - |   |   | - |   |   | 4,223,424 |   |
| Amortization      of options fair value                                                                                               | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | 29,065 |   |   | - |   |   | - |   |   | 29,065 |   |
| Currency      translation                                                                                                             | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | 19,228 |   |   | - |   |   | 19,228 |   |
| Net      loss                                                                                                                         | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | - |   |   | (1,086,387 | ) |   | (1,086,387 | ) |
| Balance      - December 31, 2006                                                                                                      | 5,304,000            |   |   | 5,304 |   |   | - |   | 9,991,223 |   |   | 9,991 |   |   | 4,474,799 |   |   | 19,228 |   |   | (1,137,731 | ) |   | 3,371,591 |   |
| Issued      for services - pre-merger                                                                                                 | 600,032              |   |   | 600 |   |   | - |   | 117,729 |   |   | 118 |   |   | 334,594 |   |   | - |   |   | - |   |   | 335,312 |   |
| Shares      retained by Pacific Asia Petroleum original                                                                               |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     stockholders      in merger - 5/7/07                                                                          | 468,125              |   |   | 468 |   |   | - |   | - |   |   | - |   |   | 83,323 |   |   | - |   |   | - |   |   | 83,791 |   |
| Shares      issued to ADS members in merger - 5/7/07                                                                                  | 9,850,000            |   |   | 9,850 |   |   | - |   | 13,600,000 |   |   | 13,600 |   |   | 15,453,957 |   |   | - |   |   | - |   |   | 15,477,407 |   |
| Post-merger      acquisition costs and adjustments                                                                                    | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | (291,093 | ) |   | - |   |   | - |   |   | (291,093 | ) |
| Automatic      conversion of Preferred Shares - 6/5/07                                                                                | 23,708,952           |   |   | 23,709 |   |   | - |   | (23,708,952 | ) |   | (23,709 | ) |   | - |   |   | - |   |   | - |   |   | - |   |
| Issued      for services, compensation cost of stock options                                                                          |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      and      restricted stock                                                                               | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | 195,442 |   |   | - |   |   | - |   |   | 195,442 |   |
| Currency      translation                                                                                                             | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | 108,833 |   |   | - |   |   | 108,833 |   |
| Net      loss                                                                                                                         | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | - |   |   | (2,383,684 | ) |   | (2,383,684 | ) |
| Balance      - December 31, 2007                                                                                                      | 39,931,109           |   |   | 39,931 |   |   | - |   | - |   |   | - |   |   | 20,251,022 |   |   | 128,061 |   |   | (3,521,415 | ) |   | 16,897,599 |   |
| Issued      on exercise of warrants                                                                                                   | 75,874               |   |   | 76 |   |   | - |   | - |   |   | - |   |   | (80 | ) |   | - |   |   | - |   |   | (4 | ) |
| Compensation      cost of stock options and restricted stock                                                                          | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | 600,673 |   |   | - |   |   | - |   |   | 600,673 |   |
| Currency      translation                                                                                                             | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | 102,699 |   |   | - |   |   | 102,699 |   |
| Net      loss                                                                                                                         | -                    |   |   | - |   |   | - |   | - |   |   | - |   |   | - |   |   | - |   |   | (2,151,010 | ) |   | (2,151,010 | ) |
| Balance      - June 30, 2008                                                                                                          | 40,006,983           |   | $ | 40,007 |   | $ | - |   | - |   | $ | - |   | $ | 20,851,615 |   | $ | 230,760 |   | $ | (5,672,425 | ) | $ | 15,449,957 |   |
|                                                                                                                                  |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes to the unaudited condensed consolidated financial      statements are an integral part of this statement. |                 |   |   |   |   |   |   |

----

Table of Contents

| Pacific Asia Petroleum, Inc. and Subsidiaries                                                                                          |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|
| (A      Development Stage Company)                                                                                                     |   |
| Condensed      Consolidated Statement of Cash Flows                                                                                    |   |
| For      the six months ended June 30, 2008 and 2007,                                                                                  |   |
| and for the period from inception (August 25, 2005) to      June 30, 2008                                                         |   |
| (Unaudited)                                                                                                                            |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                   |   |   |   |   |   |   |   | For      the period |   |
|                                                                                                                                   |   | Six      months |   |   | Six      months |   |   | from      inception |   |
|                                                                                                                                   |   | ended |   |   | ended |   |   | (August      25, 2005) |   |
|                                                                                                                                   |   | June      30, |   |   | June      30, |   |   | through |   |
|                                                                                                                                   |   | 2008 |   |   | 2007 |   |   | June      30, 2008 |   |
| Cash flows from      operating activities                                                                                              |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                          |   | $ | (2,151,010 | ) |   | $ | (1,247,972 | ) |   | $ | (5,672,425 | ) |
| Adjustments      to reconcile net loss to cash                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| used      in operating activities:                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|      Interest      income on long-term advances                                                               |   |   | (56,644 | ) |   |   | (41,779 | ) |   |   | (157,191 | ) |
|      Currency      transaction loss                                                                           |   |   | 52,822 |   |   |   | - |   |   |   | 96,266 |   |
|      Stock-related      compensation                                                                          |   |   | 715,173 |   |   |   | 386,366 |   |   |   | 1,472,597 |   |
|      Minority      interest in net loss                                                                       |   |   | (7,186 | ) |   |   | (1,759 | ) |   |   | (15,483 | ) |
|      Depreciation      and amortization expense                                                               |   |   | 22,792 |   |   |   | 3,975 |   |   |   | 43,382 |   |
|      Changes      in current assets and current                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|         liabilities:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|             (Increase)      in accrued interest and other receivables      |   |   | (28,241 | ) |   |   | (13,280 | ) |   |   | (28,241 | ) |
|             (Increase)      decrease in advances                           |   |   | 2,390 |   |   |   | - |   |   |   | (368 | ) |
|             (Increase)      decrease in deposits                           |   |   | (29,324 | ) |   |   | 1,080 |   |   |   | (52,278 | ) |
|             (Increase)      in prepaid expenses                            |   |   | (20,294 | ) |   |   | (16,819 | ) |   |   | (66,541 | ) |
|             Increase      in accounts payable                              |   |   | 47,947 |   |   |   | 81,846 |   |   |   | 35,535 |   |
|             Increase      (decrease) in income tax and accrued liabilities |   |   | 153,112 |   |   |   | (109,458 | ) |   |   | 161,302 |   |
| Net      cash used in operating activities                                                                                             |   |   | (1,298,463 | ) |   |   | (957,800 | ) |   |   | (4,183,445 | ) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from      investing activities                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales (purchases ) of available for sale short-term    securities                                                             |   |   | 10,900,000 |   |   |   | (13,825,000 | ) |   |   | (300,000 | ) |
| (Increase)      in deferred charges                                                                                                    |   |   | (500,000 | ) |   |   | - |   |   |   | (3,656,058 | ) |
| Additions      to property, plant and equipment                                                                                        |   |   | (219,009 | ) |   |   | (18,559 | ) |   |   | (502,994 | ) |
| Net      cash provided by (used in) investing activities                                                                               |   |   | 10,180,991 |   |   |   | (13,843,559 | ) |   |   | (4,459,052 | ) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash flows from      financing activities                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Payment      of notes payable                                                                                                          |   |   | - |   |   |   | - |   |   |   | (5,000 | ) |
| Increase      in minority interest investment                                                                                          |   |   | - |   |   |   | 40,020 |   |   |   | 399,430 |   |
| (Increase)      in long-term advances to minority shareholder                                                                          |   |   | - |   |   |   | - |   |   |   | (400,507 | ) |
| Decrease      in subscriptions receivable                                                                                              |   |   | - |   |   |   | - |   |   |   | 28,000 |   |
| Issuance      of common stock net of issuance costs                                                                                    |   |   | - |   |   |   | 15,385,982 |   |   |   | 19,673,605 |   |
| Net      cash provided by (used in) financing activities                                                                               |   |   | - |   |   |   | 15,426,002 |   |   |   | 19,695,528 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash                                                                                           |   |   | 1,257 |   |   |   | 1,445 |   |   |   | 39,723 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase in cash and cash equivalents                                                                                         |   |   | 8,883,785 |   |   |   | 626,088 |   |   |   | 11,092,754 |   |
| Cash      and cash equivalents at beginning of period                                                                                  |   |   | 2,208,969 |   |   |   | 1,867,374 |   |   |   | - |   |
| Cash      and cash equivalents at end of period                                                                                        |   | $ | 11,092,754 |   |   | $ | 2,493,462 |   |   | $ | 11,092,754 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures of cash flow information                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      paid                                                                                                                     |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Income      taxes paid                                                                                                                 |   | $ | 38,536 |   |   | $ | - |   |   | $ | 38,571 |   |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      schedule of non-cash investing and financing activities                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Common      and preferred stock issued for services and fees                                                                           |   | $ | - |   |   | $ | 335,312 |   |   | $ | 532,917 |   |
| Stock      issuance costs paid as warrants issued                                                                                      |   | $ | - |   |   | $ | - |   |   | $ | 929,477 |   |
| Warrants      exercised for common stock                                                                                               |   | $ | (4 | ) |   | $ | - |   |   | $ | (4 | ) |
|                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes to the unaudited condensed consolidated financial      statements are an integral part of this statement.  |   |

----

Table of Contents

|                                                                                   |
|----------------------------------------------------------------------------------------|
| Pacific Asia Petroleum, Inc. and Subsidiaries(A      Development Stage Company)        |
| Notes      to Condensed Consolidated Financial StatementsJune      30, 2008(Unaudited) |

----

Table of Contents

----

Table of Contents

----

Table of Contents

Item 2.  

----

Table of Contents

----

Table of Contents

|   | • | Focusing      on projects that play to the expertise of our management    team; |
|--------|---------|---------------------------------------------------------------------------------|

|   | • | Leveraging      our productive asset base and capabilities to develop    value; |
|--------|---------|---------------------------------------------------------------------------------|

|   | • | Actively      managing our assets and ongoing operations while attempting to limit      capital exposure; |
|--------|---------|-----------------------------------------------------------------------------------------------------------|

|   | • | Enlisting      external resources and talent as necessary to operate/manage our      properties during peak operations;and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------|

|   | • | Implementing      an exit strategy with respect to each project with a view to maximizing      asset values and returns. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

----

Table of Contents

| Expenses |                              |   |                  |   |                    |   |      |   |    |
|----------|-----------------------------------|--------|-----------------------|--------|-------------------------|--------|-----------|--------|---------|
|     |                              |   | Six      months ended |   | Three      months ended |
|     |                              |   | June      30,         |   | June      30,           |
|     |                              |   | 2008                  |   | 2007                    |   | 2008      |   | 2007    |
|     | Description                       |   |                  |   |                    |   |      |   |    |
|     | Salaries                          | $      | 620,620               | $      | 318,411                 | $      | 389,556   | $      | 253,411 |
|     | Consulting      fees              |   | 178,827               |   | 602,667                 |   | 52,444    |   | 56,818  |
|     | Stock-based      compensation     |   | 600,672               |   | 51,054                  |   | 306,641   |   | 25,527  |
|     | Legal      and professional fees  |   | 233,877               |   | 66,387                  |   | 129,754   |   | 59,276  |
|     | Travel                            |   | 114,751               |   | 100,154                 |   | 68,404    |   | 51,477  |
|     | Auditing                          |   | 116,483               |   | 70,578                  |   | 58,284    |   | 62,904  |
|     | All      other operating expenses |   | 486,248               |   | 230,407                 |   | 260,415   |   | 144,501 |
|     | Total Operating      Expenses     | $      | 2,351,478             | $      | 1,439,658               | $      | 1,265,498 | $      | 653,914 |

|   | · | Salaries: For six      months ended June 30, 2008, salaries totaled      $620,620.   For six months ended June 30, 2007, salaries      totaled $318,411.   The increase of $302,209 was      principally due to additional personnel in 2008 and the change in the      status of an officer of the Company from      a consultant in the 2007 period to an employee in  2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Consulting      fees:  For six months ended June 30, 2008, consulting      fees payable in cash totaled $64,327. Consulting fees recorded as vested      equity compensation in this period totaled $114,500.  For six      months ended June 30, 2007, consulting fees payable in cash were      $267,355.  Consulting fees recorded as vested equity      compensation in this period were $335,312. The total decrease of $423,840      in consulting fees in 2008 was principally due to non-recurring amounts in      2007 relative to merger negotiation assistance and contractual obligations      for assistance in the raising of equity funds prior to the      Mergers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Stock-based      compensation:  For six months ended June 30, 2008,      expense was $600,672 for stock options and restricted stock      compensation.   For six months ended June 30, 2007, expense      was $51,054.  The increase of $549,618 in 2008 was due to option      and restricted stock awards existing during 2008 that were not existing in      the 2007 period. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | · | Legal and professional      fees:  For six months ended June 30, 2008, these fees      totaled $233,877.  For six months ended June 30, 2007, these      fees totaled $66,387.   The increase in these      fees of $167,490 was due to the increase in the Company’s activities, the      legal requirements to prepare SEC filings, and assistance in compliance      with Sarbanes-Oxley Act requirements. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Travel:  For      six months ended June 30, 2008, travel expense totaled      $114,751.   For six months ended June 30, 2007, travel      expense totaled $100,154.  The increase of $14,597 was due to      increased travel in 2008 related to acquisition and possible financing      activity. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Auditing:  For      six months ended June 30, 2008, audit and review fees totaled      $116,483.  For six months ended June 30, 2007, these fees      totaled $70,578.   The increase of $45,905 resulted      principally from increased auditor involvement in the first quarter ended      March 31, 2008 as a result of the change to a public company through the      Mergers in May 2007. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Salaries: For three      months ended June 30, 2008, salaries totaled $389,556 versus $253,411 for      three months ended June 30, 2007.  The total increase of      $136,145 includes $65,973 in the 2008 period due to reclassification of      prior period 2008 consulting expense to salaries in the current period,      reflecting the change in status of certain personnel from consultant to      employee.  The remaining increase of $70,172 is principally due      to current period expense for additional personnel in the 2008 period and      the change in status of an officer of the Company from a consultant to an      employee in 2008. |
|--------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Consulting      fees:  For three months ended June 30, 2008, consulting      fees payable in cash were negative due to a reclassification of two      persons from consultant status to employee status.  For the      three months ended June 30, 2007, consulting fees payable in cash totaled      $56,818. Consulting fees      recorded as vested equity compensation were $114,500 for three months      ended June 30, 2008, versus none for three months ended June 30, 2007,      reflecting activity only in the 2008 period.  The      decrease in cash consulting fees of $118,874 was principally due to a      reclassification of prior 2008 consulting fees of $65,973 to salaries      expense in the 2008 period (as noted above in discussion of salaries      expense).  The remaining decrease of $52,901 in cash consulting      fees was due to current period expense for the change in status an officer      of the Company and reclassification of other personnel from consultants to      employees in 2008.  The consulting fees recorded as vested      equity compensation in 2008 were related to review and consultation on      possible asset acquisitions. |
|--------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Stock-based      compensation:  For three months ended June 30, 2008,      expense was $306,641 for stock options and restricted stock compensation,      versus $25,527 for three months ended June 30, 2007.  The      increase of $281,114 was due to option and restricted stock awards      existing during 2008 that were not existing in the 2007      period. |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Legal and professional      fees:  For three months ended June 30, 2008, these fees      totaled  $129,754 versus $59,276 for three months ended June 30,      2007.  The increase of $70,478 was due      to the increase in the Company’s activities, the legal requirements to      prepare SEC filings, and assistance in compliance with Sarbanes-Oxley Act      requirements. |
|--------|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·   | Travel:  For      three months ended June 30, 2008, travel expense totaled $68,404      versus   $51,477 for three months ended June 30,      2007.  The increase of $16,927 was due to increased travel      activity in 2008 related to acquisition and possible financing      activity. |
|--------|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|   | ·   | Auditing: For three      months ended June 30, 2008, auditing expense totaled $58,284, versus      $62,904 for three months ended June 30, 2007.  The decrease of      $4,620 was due to greater activity in 2007 related to the Mergers in May      2007, which was non-recurring in2008. |
|--------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 3. 

Item 4.  

PART II 

Item 1

Item 1A.  

Item 2

Item 3.

----

Table of Contents

Item 4

Item 5

Item 6. 

|  ExhibitNumber |   Description                                                                                    |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1                | Certification of the Registrant’s Principal Executive      Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section      302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                    |
| 31.2                | Certification of the Registrant’s Principal Financial      Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section      302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                    |
| 32.1                | Certification of the Registrant’s Principal Executive      Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906      of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                         |
| 32.2                | Certification of the Registrant’s Principal Financial      Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906      of the Sarbanes-Oxley Act of2002.                                                                                                                                                                                                                                                                                                                                                          |

----

Table of Contents

| SIGNATURES |
|------------|

| Dated:  July      24,      2008  | Pacific      Asia Petroleum, Inc.  |
|-------------------------------------------------|-----------------------------------------|
|                                            | By:                                     | /s/ Frank C.      Ingriselli                                                                                                  Frank      C. IngriselliPresident      and Chief Executive Officer |

----

Table of Contents