##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 _____ 
to
 _____.
 COMMISSION FILE NUMBER: 001-32994
 OILSANDS QUEST INC.
  Colorado
    
    98-0461154(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 800, 326  11th Avenue SW, Calgary, Alberta, Canada T2R 0C5
 (Issuers telephone number)
 Former address: 205, 707  7th Avenue SW, Calgary, Alberta, Canada T2P 3H6
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ




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##### 



OILSANDS QUEST INC.
FORM 10Q FOR THE QUARTER ENDED
JULY 31, 2008
 Part I. Financial InformationItem 1. Financial StatementsUnaudited Consolidated Balance Sheets as of July 31, 2008 and April 30, 2008
    
    
    3Unaudited
Consolidated Statements of Operations for the Three Months Ended
July 31, 2008 and 2007 and for the period from Inception on
April 3, 1998 to July 31, 2008
    
    
    4Unaudited Consolidated Statements of Stockholders Equity and Comprehensive Income for the Three Months Ended July 31, 2008 and 2007
    
    
    5Unaudited Consolidated Statements of Cash Flows for the Three Months Ended July 31, 2008 and 2007 and for the period from Inception on
April 3, 1998 to July 31, 2008
    
    
    6Unaudited Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 4. Controls and Procedures
    
    
    24Part II Other InformationItem 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 6. Exhibits
    
    
    26Signatures
    
    
    27Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Cautionary Statement about Forward-Looking Statements
  
 
 
 




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
 
 Consolidated Balance Sheets
 (Unaudited)
 July 31,
    
    
    April 30,2008
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    46,125,459
    
    
    $
    26,498,038Accounts receivable
    
    
    1,025,305
    
    
    
    3,363,642Short-term investments
    
    
    33,391,829
    
    
    
    19,811,788Prepaid expenses
    
    
    925,526
    
    
    
    562,593Available for sale securities
    
    
    297,931
    
    
    
    390,733Total Current Assets
    
    
    81,766,050
    
    
    
    50,626,794Property and Equipment(note 3)
    
    
    595,276,695
    
    
    
    595,611,114Total Assets
    
    $
    677,042,745
    
    
    $
    646,237,908LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    11,001,637
    
    
    $
    16,400,508Total Current Liabilities
    
    
    11,001,637
    
    
    
    16,400,508Deferred Taxes
    
    
    131,644,267
    
    
    
    137,577,448Asset Retirement Obligation(note 4)
    
    
    808,166
    
    
    
    143,454,070
    
    
    
    153,977,956STOCKHOLDERS EQUITYCapital StockPreferred stock, par value of $0.001 each, 10,000,000 shares authorized,
1 Series B Preferred share outstanding (note 6)
    
    
    1
    
    
    
    1Common stock, par value of $0.001 each, 500,000,000 shares authorized
228,703,969 and 213,861,958 shares outstanding at July 31, 2008 and
April 30, 2008 respectively (notes 5, 6, 7, 8 and 9)
    
    
    228,704
    
    
    
    213,862Additional Paid-in Capital
    
    
    739,290,518
    
    
    
    678,774,284Deficit Accumulated During Exploration Stage
    
    
    (242,679,034
    )
    
    
    (230,306,540
    )Other Comprehensive Income (Loss)
    
    
    36,748,486
    
    
    
    43,578,345Total Stockholders Equity
    
    
    533,588,675
    
    
    
    492,259,952Total Liabilities and Stockholders Equity
    
    $
    677,042,745
    
    
    $
    646,237,908Subsequent events(note 13)
   3




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
 
 Consolidated Statements of Operations
 (Unaudited)
 FromInception onApril 3, 1998Three Months Ended July 31,
    
    
    through to2008
    
    
    2007
    
    
    July 31, 2008ExpendituresExploration costs
    
    $
    10,472,741
    
    
    $
    5,041,518
    
    
    $
    144,742,680General and administrativeCash consideration
    
    
    3,682,834
    
    
    
    1,716,439
    
    
    
    33,190,640Stock-based consideration (note 8)
    
    
    2,119,754
    
    
    
    1,184,207
    
    
    
    106,420,218Depreciation and accretion
    
    
    317,726
    
    
    
    236,229
    
    
    
    1,758,11816,593,055
    
    
    
    8,178,393
    
    
    
    286,111,656Other ItemsInterest income
    
    
    (429,278
    )
    
    
    (567,965
    )
    
    
    (4,701,996
    )Gain on extinguishment of certain liabilities
    
    
    
    
    
    
    
    
    
    
    (936,469
    )Net loss before income tax recovery and
non-controlling shareholder interest
    
    
    16,163,777
    
    
    
    7,610,428
    
    
    
    280,473,191Income tax recovery
    
    
    (3,791,283
    )
    
    
    (1,419,944
    )
    
    
    (29,670,903
    )Net loss before non-controlling
shareholder interest
    
    
    12,372,494
    
    
    
    6,190,484
    
    
    
    250,802,288Non controlling shareholder interest(note 5)
    
    
    
    
    
    
    
    
    
    
    (8,123,254
    )Net Loss
    
    $
    12,372,494
    
    
    $
    6,190,484
    
    
    $
    242,679,034Net Loss Per Share
    
    $
    (0.05
    )
    
    $
    (0.03
    )Weighted Average Number of
Common Shares Outstanding
    
    
    252,061,213
    
    
    
    215,108,422
   4




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
 
 Consolidated Statements of Stockholders Equity and Comprehensive Income
 (Unaudited)
 Accumulated
    
    
    DeficitOther
    
    
    Accumulated
    
    
    TotalCommon Stock
    
    
    Preferred Stock
    
    
    Additional Paid
    
    
    Comprehensive
    
    
    During the
    
    
    StockholdersShares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    in Capital
    
    
    Income (Loss)
    
    
    Exploration Stage
    
    
    EquityBalance, April 30, 2008
    
    
    213,861,958
    
    
    $
    213,862
    
    
    
    1
    
    
    $
    1
    
    
    $
    678,774,284
    
    
    $
    43,578,345
    
    
    $
    (230,306,540
    )
    
    $
    492,259,952Common stock issued for:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash
    
    
    12,976,761
    
    
    
    12,977
    
    
    
    
    
    
    
    
    
    
    
    54,489,420
    
    
    
    
    
    
    
    
    
    
    
    54,502,397Property (note 3 d))
    
    
    640,000
    
    
    
    640
    
    
    
    
    
    
    
    
    
    
    
    3,717,760
    
    
    
    
    
    
    
    
    
    
    
    3,718,400Stock option exercises
    
    
    35,000
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    165,115
    
    
    
    
    
    
    
    
    
    
    
    165,150Exchange of Exchangeable Shares
    
    
    1,190,250
    
    
    
    1,190
    
    
    
    
    
    
    
    
    
    
    
    (1,190
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,119,754
    
    
    
    
    
    
    
    
    
    
    
    2,119,754Share issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,225,120
    )
    
    
    
    
    
    
    
    
    
    
    (1,225,120
    )Proceeds from exercise of
subsidiary options (post
reorganization)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,250,495
    
    
    
    
    
    
    
    
    
    
    
    1,250,495Other comprehensive incomeTransfer of unrealized loss
to
net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,970
    
    
    
    
    
    
    
    141,970Exchange loss on translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,971,829
    )
    
    
    
    
    
    
    (6,971,829
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,372,494
    )
    
    
    (12,372,494
    )Balance, July 31, 2008
    
    
    228,703,969
    
    
    $
    228,704
    
    
    
    1
    
    
    $
    1
    
    
    $
    739,290,518
    
    
    $
    36,748,486
    
    
    $
    (242,679,034
    )
    
    $
    533,588,675Balance, April 30, 2007
    
    
    164,624,278
    
    
    $
    164,624
    
    
    
    1
    
    
    $
    1
    
    
    $
    519,265,628
    
    
    $
    (1,161,099
    )
    
    $
    (131,435,609
    )
    
    $
    386,833,545Common stock issued for:Cash
    
    
    16,335,716
    
    
    
    16,336
    
    
    
    
    
    
    
    
    
    
    
    49,678,027
    
    
    
    
    
    
    
    
    
    
    
    49,694,363Premium on flow-through
shares allocated to liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,493,275
    )
    
    
    
    
    
    
    
    
    
    
    (1,493,275
    )Exchange of Exchangeable Shares
    
    
    2,788,569
    
    
    
    2,789
    
    
    
    
    
    
    
    
    
    
    
    (2,789
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,184,207
    
    
    
    
    
    
    
    
    
    
    
    1,184,207Share issue costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,749,940
    )
    
    
    
    
    
    
    
    
    
    
    (2,749,940
    )Proceeds from exercise of
subsidiary warrants and
options (post reorganization)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,829
    
    
    
    
    
    
    
    
    
    
    
    130,829Other comprehensive incomeUnrealized gain on available
for sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,101
    
    
    
    
    
    
    
    39,101Exchange gain on translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,367,292
    
    
    
    
    
    
    
    5,367,292Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,190,484
    )
    
    
    (6,190,484
    )Balance, July 31, 2007
    
    
    183,748,563
    
    
    $
    183,749
    
    
    
    1
    
    
    $
    1
    
    
    $
    566,012,687
    
    
    $
    4,245,294
    
    
    $
    (137,626,093
    )
    
    $
    432,815,638
   5




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 FromInception onApril 3, 1998Three Months Ended July 31,
    
    
    Through to2008
    
    
    2007
    
    
    July 31, 2008Operating ActivitiesNet loss
    
    $
    (12,372,494
    )
    
    $
    (6,190,484
    )
    
    $
    (242,679,034
    )Non-cash adjustments to net lossStock-based compensation expense
    
    
    2,119,754
    
    
    
    1,184,207
    
    
    
    59,572,751Deferred income tax (recovery)
    
    
    (3,791,283
    )
    
    
    (1,257,525
    )
    
    
    (28,749,731
    )Depreciation and accretion
    
    
    317,726
    
    
    
    236,229
    
    
    
    1,758,118Operating expenses paid with shares
    
    
    
    
    
    
    
    
    
    
    11,070,439Flow-through share premium liability
    
    
    
    
    
    
    (162,419
    )
    
    
    Non-controlling shareholder interest
    
    
    
    
    
    
    
    
    
    
    (8,123,254
    )Non-cash financing expense
    
    
    
    
    
    
    
    
    
    
    36,472,143Gain on extinguishment of certain
liabilities
    
    
    
    
    
    
    
    
    
    
    (936,469
    )Write off of exploration property
    
    
    
    
    
    
    
    
    
    
    856,359Other
    
    
    234,772
    
    
    
    
    
    
    
    360,992Changes in Non-Cash Working CapitalAccounts receivable and prepaid expenses
    
    
    1,843,316
    
    
    
    (524,979
    )
    
    
    (894,622
    )Accounts payable
    
    
    (5,180,826
    )
    
    
    (654,131
    )
    
    
    12,979,594Cash Used in Operating Activities
    
    
    (16,829,035
    )
    
    
    (7,369,102
    )
    
    
    (158,312,714
    )Investing ActivitiesCapital expenditures
    
    
    (4,582,176
    )
    
    
    (88,654
    )
    
    
    (76,577,408
    )Short-term investment
    
    
    (13,580,041
    )
    
    
    
    
    
    
    (33,391,829
    )Other investments
    
    
    
    
    
    
    
    
    
    
    (664,872
    )Cash used in Investing Activities
    
    
    (18,162,217
    )
    
    
    (88,654
    )
    
    
    (110,634,109
    )Financing ActivitiesIssuance of shares for cash
    
    
    53,442,427
    
    
    
    46,944,423
    
    
    
    293,179,343Bank loan
    
    
    
    
    
    
    (21,207,500
    )
    
    
    Shares issued on exercise of subsidiary options
and warrants post reorganization
    
    
    1,250,495
    
    
    
    130,829
    
    
    
    3,903,906Shares issued by subsidiary to non-controlling
interest
    
    
    
    
    
    
    
    
    
    
    7,663,666Convertible debentures
    
    
    
    
    
    
    
    
    
    
    8,384,496Cash Provided by Financing Activities
    
    
    54,692,922
    
    
    
    25,867,752
    
    
    
    313,131,411Inflow of Cash
    
    
    19,701,670
    
    
    
    18,409,996
    
    
    
    44,184,588Effects of exchange rate changes on cash
    
    
    (74,249
    )
    
    
    229,799
    
    
    
    1,940,871Cash and cash equivalents, Beginning of Period
    
    
    26,498,038
    
    
    
    32,393,871
    
    
    
    Cash and cash equivalents, End of Period
    
    $
    46,125,459
    
    
    $
    51,033,666
    
    
    $
    46,125,459Non-Cash Financing ActivitiesCommon stock issued for properties
    
    $
    3,718,400
    
    
    $
    
    
    
    $
    10,848,342Warrants granted on purchase of properties
    
    $
    
    
    
    $
    
    
    
    $
    1,763,929Common stock issued for services
    
    $
    
    
    
    $
    
    
    
    $
    10,504,594Common stock issued for debt settlement
    
    $
    
    
    
    $
    
    
    
    $
    28,401,029
   6




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
 
 Notes to Consolidated Financial Statements
 (Unaudited)
 1.
    
    DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONSOn October 31, 2006 CanWest Petroleum Corporation changed its name to Oilsands Quest Inc.
(OQI). At the same time the name of the Companys main operating subsidiary was changed from
Oilsands Quest Inc. to Oilsands Quest Sask Inc. (OQI Sask).OQI together with its subsidiaries (collectively referred to as the Company) is in the
exploration stage and follows the guidance for a development stage company as defined in
Statement No. 7 of the Financial Accounting Standards Board. The principal business activity
is the exploration and development of natural resource properties in Canada.2.
    
    BASIS OF PRESENTATIONThese consolidated financial statements have been prepared in accordance with United States of
America Generally Accepted Accounting Principles (US GAAP) and reflect all adjustments (all
of which are normal and recurring in nature) that, in the opinion of management, are necessary
for fair presentation of the interim financial information. The results of operations for the
interim periods presented are not necessarily indicative of the results to be expected for any
subsequent quarter or for the entire year ending April 30, 2009. Certain information and
footnote disclosures normally included in annual financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted. These unaudited
consolidated financial statements and notes included herein have been prepared on a basis
consistent with and should be read in conjunction with the Companys audited consolidated
financial statements and notes for the year ended April 30, 2008 as filed in its annual report
on Form 10-K, however, certain comparative figures have been reclassified to conform to
current financial statement presentation.The U.S. dollar is the functional currency for OQI (the parent company). The CDN dollar is the
functional currency for OQIs Canadian subsidiaries. The assets and liabilities of OQIs
Canadian subsidiaries are translated into U.S. dollars based on the current exchange rate in
effect at the balance sheet dates. Canadian income and expenses are translated at average
rates for the periods presented. Translation adjustments have no effect on net income and are
included in other comprehensive income in stockholders equity. Gains and losses arising from
transactions denominated in currencies other than the functional currency are included in the
results of operations of the period in which they occur. Deferred taxes are not provided on
translation gains and losses where OQI expects earnings of a foreign operation to be
permanently reinvested.Recently Adopted Accounting StandardsEffective May 1, 2008, the Company adopted Statement of Financial Accounting Standard No. 157,
Fair Value Measures (SFAS No. 157). SFAS No. 157 does not require any new fair value
measurements but establishes a framework for measuring fair value when required and expands
required disclosures about fair value measurements. The application of SFAS No. 157 does not
change the Companys current practice for measuring fair values under other accounting
pronouncements that require fair value measurements. In February 2008, FASB issued FASB Staff
Position (FSP) No. 157-2, which delays the effective date of SFAS No. 157 for one year for
non-financial assets and liabilities, except for items that are recognized or disclosed at fair
value in the financial statements on a recurring basis. The adoption of SFAS No. 157 had no
material impact on the Companys financial statements.Effective May 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 159
(SFAS No. 159), which permits entities to elect to measure many financial instruments and
certain other items at fair value. OQI does not currently have any financial assets or
financial liabilities for which the provisions of SFAS No. 159 have been elected. However, in
the future the Company may elect to measure certain financial instruments at fair value in
accordance with this standard.
  7




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 3.
    
    PROPERTY AND EQUIPMENT
 Canadian DollarsJuly 31,
    
    
    April 30,
    
    
    July 31,
    
    
    April 30,2008
    
    
    2008
    
    
    2008
    
    
    2008Saskatchewan Oil Sands RightsPermits
    
    $
    538,701,749
    
    
    $
    546,074,183
    
    
    $
    554,416,505
    
    
    $
    553,464,258Licenses
    
    
    2,269,849
    
    
    
    2,306,274
    
    
    
    2,328,184
    
    
    
    2,328,184Alberta Oil Sands RightsPermits
    
    
    34,835,772
    
    
    
    35,394,800
    
    
    
    35,731,051
    
    
    
    35,731,051Leases
    
    
    7,708,494
    
    
    
    2,426,940
    
    
    
    7,906,602
    
    
    
    2,449,996Oil Shale Rights (Permits)
    
    
    4,553,691
    
    
    
    4,621,245
    
    
    
    4,766,815
    
    
    
    4,766,815Equipment
    
    
    8,992,144
    
    
    
    6,297,687
    
    
    
    9,198,782
    
    
    
    6,357,630Less: Accumulated Depreciation
    
    
    (1,785,004
    )
    
    
    (1,510,015
    )
    
    
    (1,830,879
    )
    
    
    (1,524,360
    )Net Book Value
    
    $
    595,276,695
    
    
    $
    595,611,114
    
    
    $
    612,517,060
    
    
    $
    603,573,574
  a)
    
    Saskatchewan Oil Sands PermitsAs at April 30, 2008 and July 31, 2008, the Saskatchewan oil sands permits comprised an
area of approximately 508,080 acres. The oil sands permits were granted by the Province of
Saskatchewan in 2004 under The Oil Shale Regulations, 1964as amended, revised or
substituted from time to time, for a term of five years. The oil sands permits provide for
the right to explore and work the permit lands but not to remove, produce or recover,
except for test purposes, oil sands or oil shale until a lease, pursuant to these
regulations, has been granted. The term of the permits may be extended for up to three
one-year extensions subject to regulatory approvals, as required. The permits, when
granted, were subject to annual rental payments and certain levels of expenditures
annually pursuant to the terms of the permits and government regulations. The annual
rentals are payable in advance as to $0.10 ($0.10 CDN) per acre for the remaining term of
the permits. The required exploration expenditures to hold the permits are $0.79 ($0.81
CDN) per acre for each of the remaining years of the permits and $1.18 ($1.21 CDN) per
acre for each year that the permits are extended. The permits are also subject to a $0.04
per barrel royalty.The Saskatchewan permit lands constitute a single asset for accounting purposes and the
carrying value of the Saskatchewan permit lands is supported by the estimated fair value
of the 508,080 acres. The Company has paid all required annual rental payments and has
complied with the annual exploration expenditure requirements to maintain the permits in
good standing.b)
    
    Saskatchewan Oil Sands LicensesAs at April 30, 2008
and July 31, 2008, the Saskatchewan oil sands licenses comprised an
area totaling 109,920 acres. The licenses were granted by the Province of Saskatchewan on
August 13, 2007, under The Petroleum and Natural Gas Regulations, 1969, as amended revised
or substituted from time to time, for a term of five years for an aggregate cost of
$2,140,233 ($2,249,089 CDN). The licenses provide for the exclusive right to search for
oil sands on the lands granted and to win, recover, extract, carry off, dispose of and
sell the oil sands products found on the license lands.The oil sands licenses were acquired in a public offering of Crown Oil Sands Rights and
provide the opportunity to convert up to 100% of the licenses to a production lease on the
basis of one section of land (640 acres) for every well that intersects an oil sands zone.
Licenses require annual rental payments of $0.69 ($0.71 CDN) per acre. The Company has
paid all required rental payments for the licenses granted.
  8




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 3.
    
    PROPERTY AND EQUIPMENT (continued)
 c)
    
    Alberta Oil Sands PermitsAs at April 30, 2008
and July 31, 2008, the Alberta oil sands permits comprised an area of
112,599 acres. The permits were granted by the Province of Alberta under the terms of the
Mines and Minerals Act, Alberta. The permits provide the exclusive right to drill for, win
and work for oil sands on the permit lands and the opportunity to convert up to 100% of
the permits to an oil sands production lease following the completion of specified work
requirements. Permits are granted for a five year primary term and require annual rental
payments of $1.38 ($1.42 CDN) per acre.The permits are comprised of six permits, four of the permits totaling 67,053 acres
comprise the Raven Ridge Prospect and the remaining two permits totaling 45,546 acres
comprise the Wallace Creek Prospect.The Alberta permit lands constitute two assets (Raven Ridge Prospect and Wallace Creek
Prospect) for accounting purposes and the carrying value of each is supported by the
estimated fair value of the each prospect. The Company has paid all required annual rental
payments to maintain the permits
in good standing.d)
    
    Alberta Oil Sands LeaseOn June 1, 2005, a
subsidiary, Township Petroleum Corporation (Township), entered into an
agreement with three third parties (collectively the Triple 7 Joint Venture) to post,
acquire, develop and produce oil sands deposits located in the Athabasca Region of
Alberta, Canada (the Triple 7 Joint Venture Agreement). As a result of this agreement,
Township acquired one lease consisting of approximately 22,800 acres (the Eagles Nest
Prospect) at a cost of $727,187. Pursuant to the terms of this agreement, OQI issued the
Triple 7 Joint Venture 114,015 shares of its common stock with a fair value of $127,432,
which was determined using the market price at the date of the transaction.Township has also agreed to pay the Triple 7 Joint Venture partners, as ongoing fees,
$146,242 ($150,000 CDN) in cash or common shares of OQI (at the discretion of the Company)
on the first and second anniversary dates of the agreement. Any shares issued under the
agreement are subject to piggyback registration rights. On the third anniversary date
and each subsequent anniversary date of the agreement, Township agreed to pay the Triple 7
Joint Venture $438,725 ($450,000 CDN) until such time as the lease is surrendered or a
commercial project has been identified.In the event that Township receives a feasibility study, conducted by an independent third
party, that indicates that a commercial project is economic and wishes to construct a
commercial project, Township is required to notify the Triple 7 Joint Venture. Upon
commencement of construction of such a commercial project Township agreed to pay the
Triple 7 Joint Venture the sum of $5,849,664 ($6,000,000 CDN).In addition to such payments Township has granted each of the three Triple 7 Joint Venture
partners a royalty in the acquired leases of $0.03 ($0.03 CDN) on each barrel of crude
bitumen produced, saved and sold or $146,242 ($150,000 CDN) per Joint Venture Partner, per
year, whichever is greater. Such royalty is governed by the royalty procedure, which
stipulates, among other things, that the royalty will be secured by a lien, first charge
or security interest on the royalty lands, and that the royalty is assignable or
transferable subject to a right of first offer to Township.
  9




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 3.
    
    PROPERTY AND EQUIPMENT (continued)
 d)
    
    Alberta Oil Sands Lease   (continued)On September 21, 2007, the Company acquired all of the rights of one of the three external
joint venture partners for consideration of $49,939 ($50,000 CDN) plus the issuance of
250,000 shares of the Companys common stock valued at $1,097,500 based on the September
20, 2007 closing market price of the shares. On June 17, 2008, the Company acquired the
rights of the remaining external joint venture partners for aggregate consideration of
$1,632,000 CDN and 640,000 shares of the Companys common stock valued at $3,718,400 based
on the June 17, 2008, closing market price. The Companys obligation under the Triple 7
Joint Venture Agreement has therefore been eliminated.As part of the acquisition of the lease, Township granted royalties as to $0.0057 ($0.0058
CDN) (net after a buy back) on each barrel of crude bitumen produced, saved and sold from
the Eagles Nest Prospect.The annual lease rental payable to the Province of Alberta for the Eagles Nest Prospect is
$31,448 ($32,256 CDN) per year. The Company has paid the required lease rentals to
maintain the lease in good standing.e)
    
    Oil Shale RightsAs at April 30, 2008 and July 31, 2008, the Company held seven oil shale exploration
permits near Hudson Bay, Saskatchewan covering approximately 406,000 acres granted under
The Oil Shale Regulations, 1964 (Saskatchewan)as amended, revised or substituted from
time to time for a term of five years. The permits provide for the right to explore and
work the permit lands but not to remove, produce or recover, except for test purposes, oil
products until a lease, pursuant to these regulations has been granted. The term of the
permits may be extended for up to three one-year extensions subject to regulatory
approvals, as required.Annual rentals are payable in advance as to $0.10 ($0.10 CDN) per acre during the term of
the permit. Required exploration expenditures to hold the permits are $0.39 ($0.40 CDN)
per acre for the current year, $0.79 ($0.81 CDN) per acre for the remaining years of the
permits and $1.18 ($1.21 CDN) per acre for each year that the permit is extended, as
required.As at April 30, 2008 and July 31, 2008, the Company held one oil shale exploration permit
granted under The Petroleum and Natural Gas Regulations, 1969 (Saskatchewan)as amended,
revised or substituted from time to time for a term of five years totaling 83,769 acres in
the same area near Hudson Bay, Saskatchewan. The permit provides for the right, license,
privilege and authority to explore for oil shale within the permit lands.The term of the permits may be extended for up to three one-year extensions subject to
regulatory approvals, if required. This oil shale permit was acquired under a land sale
work commitment bid for the first two years of the permit. The Company bid a total work
commitment of $294,012 ($301,568 CDN) to be incurred during the first two years of the
permit and the permit requires a further work commitment of $0.79 ($0.81 CDN) per acre for
the last three years and $1.18 ($1.21 CDN) for each extension year plus annual rental
payments of $0.10 ($0.10 CDN) per acre.The Company has paid the required annual rental payments to maintain the permits in good
standing.f)
    
    During the three months ended July 31, 2008 the Company had $2,814,179 in additions
to equipment.
  10




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 4.
    
    ASSET RETIREMENT OBLIGATIONThe Companys obligations with respect to asset retirement relate to reclamation of an
airstrip, camp site, access roads and reservoir test wells. The obligation is recognized when
incurred at the present value of the estimated future reclamation cost using a discount rate of
7 percent and an inflation rate of 2.5 percent. The total undiscounted future obligation is
estimated at approximately $6 million.
 Continuity of Asset Retirement ObligationPresent value of obligation at April 30, 2008
    
    $
    Liabilities incurred
    
    
    794,267Accretion expense
    
    
    13,899Present value of obligation at July 31, 2008
    
    $
    808,166
 5.
    
    SUBSIDIARY OPTIONS OUTSTANDINGOQI acquired the non-controlling shareholder interest in OQI Sask in August 2006 (the
reorganization). Certain stock options issued by OQI Sask remained outstanding after the
reorganization. On exercise, each OQI Sask option may be exchanged into 8.23 Exchangeable
Shares which are exchangeable into OQI common shares. Transactions in OQI Sask options during
the three months ended July 31, 2008 and OQI Sask options outstanding at July 31, 2008 are
detailed below.
 WeightedAverageNumber
    
    

ExercisePrice (CDN)Issued and outstanding, April 30, 2008
    
    
    1,640,000
    
    
    $
    16.96Exercised and exchanged into shares of
OQI common stock (note 6)
    
    
    75,000
    
    
    $
    16.83Issued and outstanding, July 31, 2008
    
    
    1,565,000
    
    
    $
    16.97
 Number
    
    
    Number
    
    
    Weighted AverageExercise
    
    Outstanding at
    
    
    Exercisable at
    
    
    RemainingPrice (CDN)
    
    July 31, 2008
    
    
    July 31, 2008
    
    
    Contractual Life$0.50
    
    
    75,000
    
    
    
    75,000
    
    
    1.28 years$3.00
    
    
    100,000
    
    
    
    100,000
    
    
    2.00 years$6.00
    
    
    515,000
    
    
    
    515,000
    
    
    2.53 years$25.00
    
    
    825,000
    
    
    
    725,000
    
    
    2.55 years$50.00
    
    
    50,000
    
    
    
    25,000
    
    
    3.00 years1,565,000
    
    
    
    1,440,000
    
    
    2.46 years
   11




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 6.
    
    PREFERRED SHARESAs detailed in the Companys 2008 10-K filing, OQI acquired the non-controlling shareholder
interest in OQI Sask in August 2006. Holders of OQI Sask common shares received Exchangeable
Shares which can be exchanged into shares of OQI common stock at each holders option.
Transactions in Exchangeable Shares during the three months ended July 31, 2008 are detailed
below. For voting purposes holders of Exchangeable Shares are represented by one outstanding
Series B preferred share which carries a number of votes equal to the number of Exchangeable
Shares then outstanding.
 OQI SaskExchangeableOQI Sask
    
    
    Shares issuable on
    
    
    TotalExchangeable
    
    
    exercise of OQI
    
    
    ExchangeableShares
    
    
    Sask options
    
    
    SharesBalance, April 30, 2008
    
    
    27,952,840
    
    
    
    13,497,200
    
    
    
    41,450,040OQI Sask options exercised (note 5)
    
    
    617,250
    
    
    
    (617,250
    )
    
    
    Exchangeable Shares exchanged into
shares of OQI common stock
    
    
    (1,190,250
    )
    
    
    
    
    
    
    (1,190,250
    )Balance, July 31, 2008
    
    
    27,379,840
    
    
    
    12,879,950
    
    
    
    40,259,790
 7.
    
    COMMON STOCKOn May 23, 2008, the Company issued 12,976,761 shares of common stock at a price of $4.20 per
share for gross proceeds of $54,502,397 pursuant to a private placement. The Company paid an
aggregate of $1,225,120 in fees to a syndicate of agents under the terms of an agency
agreement.On June 17, 2008, the Company issued 640,000 shares of the Companys common stock as part of
the consideration provided for the purchase of remaining rights of the external partners under
the Triple 7 Joint Venture Agreement in the Eagles Nest Prospect (Note 3 d)).
  12




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 8.
    
    STOCK OPTIONSAt July 31, 2008, OQI had outstanding options under the Companys 2006 Stock Option Plan (SOP
2006) to purchase that same number of shares as follows:
 Stock option
    
    Exercise
    
    
    NumberExpiry Date
    
    Price
    
    
    of OptionsFebruary 17, 2009
    
    $
    4.57
    
    
    
    250,000May 1, 2011
    
    $
    6.75
    
    
    
    1,000,000August 14, 2011
    
    $
    6.75
    
    
    
    1,000,000May 1, 2012
    
    $
    6.75
    
    
    
    1,000,000May 1, 2013
    
    $
    6.75
    
    
    
    1,000,000May 18, 2009
    
    $
    6.00
    
    
    
    30,000August 23, 2008
    
    $
    5.05
    
    
    
    50,000August 23, 2011
    
    $
    5.05
    
    
    
    2,860,000October 2, 2011
    
    $
    3.89
    
    
    
    390,000December 1, 2011
    
    $
    5.25
    
    
    
    50,000June 29, 2012
    
    $
    2.47
    
    
    
    100,000August 1, 2012
    
    $
    4.27
    
    
    
    4,067,000August 31, 2012
    
    $
    5.04
    
    
    
    30,000October 11, 2012
    
    $
    4.60
    
    
    
    150,000January 11, 2013
    
    $
    4.59
    
    
    
    115,000February 1, 2013
    
    $
    3.37
    
    
    
    200,000March 14, 2013
    
    $
    4.00
    
    
    
    320,000April 1, 2013
    
    $
    3.97
    
    
    
    10,000April 16, 2013
    
    $
    4.25
    
    
    
    40,000May 20, 2013
    
    $
    4.79
    
    
    
    200,000May 23, 2013
    
    $
    4.63
    
    
    
    15,000June 1, 2013
    
    $
    4.57
    
    
    
    60,000July 15, 2013
    
    $
    5.45
    
    
    
    2,000,00014,937,000
  13




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 8.
    
    STOCK OPTIONS (continued)Included in the number of options outstanding at July 31, 2008 are 8,410,250 options that have
not yet vested:
 715,000
    
    
    options at $5.05 which vest as to 357,500 in each of 2008 and 2009 on August 23;100,000
    
    
    options at $3.89 which vest as to 50,000 in each of 2008 and 2009 on October 2;12,500
    
    
    options at $5.25 which vest as to 6,250 in each of 2008 and 2009 on December 1;50,000
    
    
    options at $2.47 which vest as to 25,000 in each of 2009 and 2010 on June 29;3,042,750
    
    
    options at $4.27 which vest as to 1,014,250 in each of 2008, 2009 and 2010 on August 1;15,000
    
    
    options at $5.04 which vest as to 15,000 on August 31, 2008;112,500
    
    
    options at $4.60 which vest as to 37,500 in each of 2008, 2009, and 2010 on October 11;86,250
    
    
    options at $4.59 which vest as to 28,750 in each of 2009, 2010, and 2011 on January 11;150,000
    
    
    options at $3.37 which vest as to 50,000 in each of 2009, 2010, and 2011 on February 1;240,000
    
    
    options at $4.00 which vest as to 80,000 in each of 2009, 2010, and 2011 on March 14;7,500
    
    
    options at $3.97 which vest as to 2,500 in each of 2009, 2010, and 2011 on April 1;30,000
    
    
    options at $4.25 which vest as to 5,000 in each of 2009, 2010, and 2011 on April 16;150,000
    
    
    options at $4.79 which vest as to 50,000 in each of 2009, 2010 and 2011 on May 20;11,250
    
    
    options at $4.63 which vest as to 3,750 in each of 2009, 2010 and 2011 on May 23;7,500
    
    
    options at $4.57 which vest as to 2,500 in each of 2009, 2010 and 2011 on June 1;25,000
    
    
    options at $4.57 which vest as to 25,000 on June 1, 2009;2,000,000
    
    
    options at $5.45 which vest as to 500,000 on September 16, 2008 and 500,000 in each of
2008, 2009, 2010 and 2011 on July 15;1,655,000
    
    
    options at $5.05 (1,455,000) and $3.89 (200,000) which vest on or after dates between
August 23 and December 1, 2009 as to 413,750 upon achieving a 750 million bitumen in
place (BIP) barrel count defined as the high resource (P10) estimate of bitumen in
place (as determined in accordance with National Instrument 51-101 Standard of
Disclosure for Oil and Gas Activities issued by the securities regulatory authorities
in Canada) and 413,750 options thereafter for each 250 million increase in the BIP
barrel count.8,410,250
  WeightedNumber of
    
    
    AverageOptions
    
    
    Exercise PriceBalance, April 30, 2008
    
    
    13,027,000
    
    
    $
    5.22Granted
    
    
    2,275,000
    
    
    $
    5.36Exercised
    
    
    (35,000
    )
    
    $
    4.72Expired
    
    
    (330,000
    )
    
    $
    5.84Balance, July 31, 2008
    
    
    14,937,000
    
    
    $
    5.23
  Black-Scholes
 Expected life (years)
    
    
    5Risk free interest rate
    
    
    3.66
    %Expected volatility
    
    
    71
    %Dividend yield
    
    
    0
    %
   14




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 9.
    
    WARRANTSOQI had the following warrants outstanding to purchase that same number of common shares at
July 31, 2008:
 Expiry
    
    Exercise
    
    
    Number ofDate
    
    Price
    
    
    WarrantsDecember 5, 2009
    
    $
    6.75
    
    
    
    6,325,000
  WeightedNumber
    
    
    AverageOf Warrants
    
    
    Exercise PriceBalance, April 30, 2008
    
    
    6,325,000
    
    
    $
    6.75Exercised
    
    
    
    
    
    
    Warrants issued
    
    
    
    
    
    
    Balance, July 31, 2008
    
    
    6,325,000
    
    
    $
    6.75
 10.
    
    FAIR VALUE MEASUREMENTSCertain of the Companys assets and liabilities are reported at fair value in the accompanying
balance sheet. The following tables provide fair value measurement information for such assets
and liabilities as of July 31, 2008 and April 30, 2008. Following the tables, additional
information is provided for those liabilities in which the Company uses significant
unobservable inputs (Level 3) to measure fair value.
 As of July 31, 2008Fair Value Measures Using:Quoted
    
    
    SignificantPrices In
    
    
    Other
    
    
    SignificantActive
    
    
    Observable
    
    
    UnobservableCarrying
    
    
    Total Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsAmount
    
    
    Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial Assets (Liabilities):Securities Held for Sale
    
    
    297,931
    
    
    
    297,931
    
    
    
    297,931
    
    
    
    
    
    
    
    Asset Retirement Obligation
    
    
    (808,166
    )
    
    
    (808,166
    )
    
    
    
    
    
    
    
    
    
    
    (808,166
    )
  15




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 10.
    
    FAIR VALUE MEASUREMENTS (continued)
 As of April 30, 2008Fair Value Measures Using:Quoted
    
    
    SignificantPrices In
    
    
    Other
    
    
    SignificantActive
    
    
    Observable
    
    
    UnobservableCarrying
    
    
    Total Fair
    
    
    Markets
    
    
    Inputs
    
    
    InputsAmount
    
    
    Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Financial Assets (Liabilities):Securities Held for Sale
    
    
    390,733
    
    
    
    390,733
    
    
    
    390,733
    
    
    
    
    
    
    
    Asset Retirement Obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Level 3 Fair Value Measurements
 Asset retirement obligation
 11.
    
    COMPREHENSIVE LOSS
  Three months ended July 31,2008
    
    
    2007Net Loss
    
    $
    12,372,494
    
    
    $
    6,190,484Other comprehensive incomeUnrealized (gain) loss on available for sale securities
    
    
    
    
    
    
    (39,101
    )Transfer of unrealized loss on available for sale
securities to net loss
    
    
    (141,970
    )
    
    
    Foreign exchange (gain) loss on translation
    
    
    6,971,829
    
    
    
    (5,367,292
    )Total Comprehensive Loss
    
    $
    19,202,353
    
    
    $
    784,091
  16




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##### Table of Contents



OILSANDS QUEST INC.
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(Unaudited)
 12.
    
    RELATED PARTY TRANSACTIONS
     13.
    
    SUBSEQUENT EVENTS
 On August 1, 2008, the Board of Directors granted 5,226,000 stock options to
directors, officers and employees. The exercise price of the options granted was $4.51 and
was based on the closing price of the Companys stock on the day immediately prior to the
grant.
  17




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
 Three Months Ended July 31, 2008
 
    
    We named our project and prospect areas of interest to more clearly reference and
communicate our operations and activities.
    
    We announced independent third party resource estimates for our Axe Lake Discovery and
Raven Ridge Discovery which have been disclosed in our Form 10-K.
    
    We completed a private placement of 12.98 million shares of common stock at a price of
$4.20 per share for total gross proceeds of $54.5 million.
    
    We signed an exploration agreement establishing a formal economic relationship with the
Northern Village of La Loche in Saskatchewan through which the environmental, social and
economic aspects of our exploration activities related to the Northern Village of La Loche and
certain other local communities will be managed.
    
    We resumed our field activities following the shut down for spring break-up focusing on
the installation and construction of the reservoir test program facilities, drilling of
injection and observation wells for the reservoir test program and continued planning for
our exploration programs for 2008-2009 as further described below.
    
    We reported positive results of advanced laboratory and computer simulation studies by
selected industry-leading experts specializing in reservoir structural analysis,
petro-physical characteristics and reservoir production simulation testing to support our
planned reservoir field test program using steam-based production methods and continued
with our ongoing laboratory and reservoir simulation activities related to the Axe Lake
Discovery.
    
    We announced the appointment of our President & Chief Operating Officer and other
executives as part of our growing management team along with increasing the size of our
operations, reservoir and facilities engineering groups and relocating our corporate office
in Calgary.
  Exploration Programs
   18




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##### Table of Contents



Axe Lake Discovery  Reservoir Development Activities
       19




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##### Table of Contents



Pasquia Hills Oil Shale Prospect
  Outlook
    20




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##### Table of Contents



Liquidity and Capital Resources
      Results of Operations
  Three Months ended July 31, 2008 as compared to three months ended July 31, 2007.
  21




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##### Table of Contents



Three months July 31, 2008 as compared to three months ended July 31, 2007.
   Cash consideration
 Three months ended July 31, 2008 as compared to three months ended July 31, 2007.
 Stock-based consideration
 Three months ended July 31, 2008 as compared to three months ended July 31, 2007
  22




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##### Table of Contents



Three months ended July 31, 2008 as compared to three months ended July 31, 2007.
  Three months ended July 31, 2008 as compared to three months ended July 31, 2007.
  Three months ended July 31, 2008 as compared to three months ended July 31, 2007
 Recently Issued Accounting Standards Not Yet Adopted
 Business Combinations
  23




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##### Table of Contents



Consolidated Financial
Statements
 Accounting for
Derivative Instruments and Hedging Activities
 
 Item 4. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   24




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities
     25




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##### Table of Contents



Item 6. Exhibits
 3.1
    
    
    Articles of Incorporation,as amended. (1), (2), (3), (4), (5)3.2
    
    
    By laws, as amended.(6)(7)10.1
    
    
    Employment Agreement with Jamey Fitzgibbon, filed herewith.31.1
    
    
    Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.31.2
    
    
    Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.32.1
    
    
    Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.32.2
    
    
    Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
 
 (1)
    
    Incorporated by reference from Form 10-SB, filed October 14, 1999; and Form 8-K,
filed November 29, 2004.(2)
    
    Incorporated by reference from Form 10-QSB dated December 14, 2005.(3)
    
    Incorporated by reference from Form 8-K dated March 13, 2006.(4)
    
    Incorporated by reference from Form 8-K dated August 14, 2006.(5)
    
    Incorporated by reference herein from Form 10-QSB filed December 15, 2006.(6)
    
    Incorporated by reference herein from Form 8-K filed July 26, 2007.(7)
    
    Incorporated by reference herein from Form 8-K filed November 23, 2007. 
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##### Table of Contents



SIGNATURES
  OILSANDS QUEST INC.Date: September 9, 2008
    
    By:
    
    /s/ Christopher H. HopkinsChristopher H. Hopkins, President,Chief Executive Officer and DirectorDate: September 9, 2008
    
    By:
    
    /s/ Karim HirjiKarim Hirji, Chief Financial Officer and Chief
Accounting Officer
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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description10.1
    
    
    Employment Agreement with Jamey Fitzgibbon, filed herewith.31.1
    
    
    Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.31.2
    
    
    Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed
herewith.32.1
    
    
    Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.32.2
    
    
    Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
  28