UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



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



For the quarterly period ended October 31, 2008

OR

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



For the transition period from __________ to __________



Commission File Number: 333-118138



Nitro Petroleum Incorporated

(Exact name of registrant as specified in its charter)



Nevada
        
        
        98-0488493(State or other jurisdiction of incorporation or organization)
        
        
        (I.R.S. Employer Identification Number)




7250 NW Expressway Suite 260

OKLAHOMA CITY, OK, 73132

(Address of principal executive offices)



(405) 728-3800

(Registrants telephone number, including area code)





(Former name, former address and former fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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.



YesxNoo



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company) in Rule 12b-2 of the Exchange Act.



Large accelerated fileroAccelerated filero



Non-accelerated fileroSmaller reporting companyx



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



YesoNox



At December 19, 2008, 98,265,540 shares of the Registrants Common Stock were outstanding.






ITEM 1. FINANCIAL STATEMENTS

BALANCE SHEETS(Stated in US Dollars)October 31,
        
        January 31,2008
        
        2008(Unaudited)
        
        (Audited)ASSETSCurrentCash
        
        
        
        
        $          37,724
        
        $            242,077Accounts receivable
        
        
        
        407,996
        
        13,001Total Current Assets
        
        445,720
        
        255,078Property and equipment
        
        
        
        56,754
        
        1,390Oil and gas properties - Using full cost accounting
        
        814,239
        
        291,632Other asset
        
        
        
        
        26,152
        
        25,000Total Assets
        
        
        $     1,342,865
        
        $            573,100LIABILITIESCurrent LiabilitiesAccrued interest
        
        
        
        $                  -
        
        $            176,675Accounts payable
        
        
        
        207,520
        
        16,542Escrowed drilling funds
        
        
        376,141
        
        -Promissory notes payable
        
        
        -
        
        2,234,581Due to related party
        
        
        
        16,000
        
        21,199Short-term note payable
        
        
        24,804
        
        -Total Liabilities
        
        
        624,465
        
        2,448,997STOCKHOLDERS' EQUITY (DEFICIT)Capital stockAuthorized:2,000,000,000 common stock, $0.001 par value10,000,000 preferred stock, $0.001 par valueIssued and outstanding:100,049,158 common shares (2008: 48,540,000)
        100,049
        
        48,540Additional paid-in capital
        
        
        
        4,363,676
        
        1,001,193Retained (deficit)
        
        
        
        (3,745,325)
        
        (2,925,630)Total Stockholders' Equity (Deficit)
        
        718,400
        
        (1,875,897)Total Liabilities And Stockholders' Equity (Deficit)
        $     1,342,865
        
        $            573,100




The accompanying notes are an integral part of these financial statements.

F-1








STATEMENTS OF OPERATIONSUnaudited(Stated in US Dollars)Three Months EndedOctober 31
        
        Nine Months EndedOctober 312008
        
        2007
        
        2008
        
        2007RevenuesOil and gas sales
        $       84,695
        
        $          32,676
        
        $        293,911
        
        $         166,582Other
        
        148
        
        -
        
        2,351
        
        -Total Revenues
        84,843
        
        32,676
        
        296,262
        
        166,582ExpensesLease operating
        44,340
        
        31,330
        
        261,986
        
        63,467Production taxes
        5,329
        
        -
        
        20,060
        
        -Depreciation, depletion and amortization
        12,319
        
        4,942
        
        36,958
        
        11,211Interest expense
        114,692
        
        112,648
        
        336,314
        
        334,269General and administrative
        110,970
        
        78,577
        
        460,639
        
        246,061Total Expenses
        287,650
        
        227,497
        
        1,115,957
        
        655,008Loss before provision for income taxes
        (202,807)
        
        (194,821)
        
        (819,695)
        
        (488,426)Provision for income taxes
        -
        
        -
        
        -
        
        -Net Loss
        
        $    (202,807)
        
        $     (194,821)
        
        $      (819,695)
        
        $      (488,426)Basic and diluted loss per share
        $          (0.00)
        
        $           (0.00)
        
        $            (0.02)
        
        $           (0.01)Weighted average number of sharesoutstanding-basicanddiluted
        62,884,330
        
        48,540,000
        
        54,930,759
        
        48,540,000


















The accompanying notes are an integral part of these financial statements.

F-2






STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)Nine months ended October 31, 2008Unaudited(Stated in US Dollars)AdditionalCommon Shares
        
        Paid-in
        
        DeficitNumber
        
        Par Value
        
        Capital
        
        Accumulated
        
        TotalBalance, as of January 31, 2008
        
        148,540,000
        
        $148,540
        
        $901,193
        
        $(2,925,630)
        
        $(1,875,897)Return of Company stock
        
        
        (100,000,000)
        
        (100,000)
        
        100,000
        
        -
        
        -Restated Balance as of January 31, 2008
        
        48,540,000
        
        48,540
        
        1,001,193
        
        (2,925,630)
        
        (1,875,897)Donated interest
        
        
        
        -
        
        -
        
        267,415
        
        -
        
        267,415Common stock issued for oil andgas properties
        
        
        
        1,306,054
        
        1,306
        
        521,116
        
        -
        
        522,422Stock incentive plan
        
        
        600,001
        
        600
        
        143,400
        
        -
        
        144,000Common stock issued for settlement ofnotes payable and accrued interest
        
        49,603,103
        
        49,603
        
        2,430,552
        
        -
        
        2,480,155Net loss
        
        
        
        -
        
        -
        
        -
        
        (819,695)
        
        (819,695)Balance, as of October 31, 2008
        
        100,049,158
        
        $100,049
        
        $4,363,676
        
        $(3,745,325)
        
        $718,400








The accompanying notes are an integral part of these financial statements.

F-3








STATEMENTS OF CASH FLOWSUnaudited(Stated in US Dollars)Nine Months EndedOctober 31,2008
        
        2007Operating ActivitiesNet loss for the period
        
        
        
        
        $           (819,695)
        
        $           (488,426)Adjustments for items not effecting cash:Depletion, depreciation and amortization
        
        
        36,958
        
        11,472Donated interest
        
        
        
        
        267,415
        
        267,415Share based compensation
        
        
        
        144,000
        
        -Change in non-cash working capital balances related to operationsAccounts receivable
        
        
        
        
        (394,993)
        
        16,559Accounts payable and accrued liabilities
        
        
        630,818
        
        177,945Other assets
        
        
        
        
        (1,152)
        
        -Cash provided by (used in) operating activities
        
        
        (136,649)
        
        (15,035)Investing ActivitiesAcquisition of oil and gas properties
        
        
        
        (36,935)
        
        (159,197)Acquisition of property and equipment
        
        
        (55,573)
        
        -Proceeds from sale of oil and gas properties
        
        
        -
        
        475,000Cash used in investing activities
        
        
        
        (92,508)
        
        315,803Financing ActivitiesProceeds from short term note payable
        
        
        24,804
        
        -Cash provided by financing activities
        
        
        
        24,804
        
        -Increase (decrease) in cash during the year
        
        
        (204,353)
        
        300,768Cash, beginning of the year
        
        
        
        
        242,077
        
        65,642Cash, end of the year
        
        
        
        
        $              37,724
        
        $            366,410Supplemental disclosure of cash flow information:Cash paid during the year for income taxes
        
        
        $                    -
        
        $                    -Cash paid during the year for interest
        
        
        
        $                    -
        
        $                    -Non-cash investing and financing activitiesAcquisition of oil and gas properties
        
        
        
        $           (522,422)
        
        $                    -Issuance of common stock
        
        
        
        1,306
        
        -Additional paid-in capital
        
        
        
        
        521,116
        
        -Settlement of promissory notes payable includingaccrued interest
        
        
        
        
        (2,480,155)
        
        -Issuance of common stock
        
        
        
        49,603
        
        -Additional paid-in capital
        
        
        
        
        2,430,552
        
        -$                    -
        
        $                    -




The accompanying notes are an integral part of these financial statements.

F-4






NITRO PETROLEUM INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS October 31, 2008 (Stated in US Dollars) (Unaudited)






Note 1
        Interim Reporting




The accompanying financial statements of Nitro Petroleum, Inc. have not been audited by independent public accountants.  In the opinion of management, the accompanying financial statements reflect all adjustments necessary to present fairly our financial position at October 31, 2008 and our income and cash flows for the nine months ended October 31, 2008 and 2007. All such adjustments are of a normal recurring nature.  In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies.  Actual results may differ from those estimates.  The results for interim periods are not necessarily indicative of annual results.



Certain disclosures have been condensed or omitted from these financial statements.  Accordingly, these financial statements should be read with the financial statements included in our 2007 Annual Report on Form 10-K.



Note 2
        Nature and Continuance of Operations




Nitro Petroleum, Inc. (the Company), is a natural gas and crude oil company with its principal focus on exploration, development and production.  The  recoverability of amounts shown for oil and gas properties are dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the properties, the ability of the Company to obtain necessary finances to complete the development and upon future profitable production or proceeds from the disposition thereof.



These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next twelve months.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  As of October 31, 2008, the Company had not yet achieved profitable operations, has accumulated losses of $3,745,325 since its inception, has a working capital deficiency of $178,745 and expects to incur further losses in the development of its business, all of which casts substantial doubt about the Companys ability to continue as a
going concern.  The Companys ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.





F-5






NITRO PETROLEUM INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS October 31, 2008 (Stated in US Dollars) (Unaudited)




Note 2
        Nature and Continuance of Operations (contd)




The Company was incorporated in the State of Nevada on October 27, 2003.  On February 27, 2006, the Company changed its name from Ingenium Capital Corp. to Nitro Petroleum, Inc.



Note 3
        Oil and Gas Properties




a)
        By an asset purchase and sale agreement dated December 18, 2006, the Company acquired a 100% ownership interest, equal to a 78% net revenue interest in three oil and gas properties located in Nowata County, Oklahoma in consideration for $250,000.  The Company also paid $22,500 for property related expenses.




b)
        Effective July 1 2007, the Company acquired a 6.375% working interest of a 79.125% net revenue interest in an oil and gas lease located in Garvin County, Oklahoma.




c)
        On February 1, 2008, the Company purchased producing properties located in Garvin County and Pottawatomie County, Oklahoma in a transaction that resulted in the distribution of 1,306,054 shares in exchange for a 25% gross working interest in producing wells and in undeveloped proved properties.  The shares exchanged have restrictions to sell such shares, varying from six months to one year.  Management has assigned a value of said properties at 40 cents per share for a total purchase price of $522,422.




Note 4
        Subsequent Event




On December 5, 2008, the Company entered into separate Promissory Note Settlement Agreements with the holders of certain of the Companys outstanding demand promissory notes.  Pursuant to the terms of the Settlement Agreements, which have an effective date of October 31, 2008, the Company is issuing shares of its common stock to the holders of the Demand Notes in full payment of all principal and accrued and unpaid interest due on the Demand Notes as of the effective date.  For purposes of the Settlement Agreements, the Companys common stock was valued at $0.05 per share.  The total unpaid principal amount of the promissory notes payable at October 31, 2008 was $2,234,581 and total accrued and unpaid interest due on the promissory notes payable at October 31, 2008 was $245,574, equalling total principal and interest due on the promissory notes payable of $2,480,155.  The number
of shares of the Companys common stock issued in the settlement of the promissory notes payable, at $0.05 per share, was 49,603,103.  The value of the Companys common stock in the settlement of the promissory notes payable was $0.001 par value per share issued or $49,603, leaving $2,430,552 in additional paid-in capital.  Additionally pursuant to the terms of the Settlement Agreement, all Demand Notes were terminated and cancelled.







F-6






NITRO PETROLEUM INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS October 31, 2008 (Stated in US Dollars) (Unaudited)




Note 5Property and Equipment



October 31, 2008Cost
        
        AccumulatedDepreciation
        
        Net
        
        January 31, 2008Office furniture
        
        $    1,930
        
        $     749
        
        $    1,181
        
        $   1,390Automobile
        
        24,804
        
        -
        
        24,804
        
        -Total
        
        $  26,734
        
        $     749
        
        $  25,985
        
        $   1,390




The Company has acquired property in Shawnee, Oklahoma in anticipation of building offices and a warehouse/yard facility.



Note 6
        Capital Stock




On March 17, 2008, Ted Kozub, the majority stockholder of the Company transferred 100,000,000 shares (the Shares) of the Companys common stock to Paradisus International Investments Corp. (Paradisus).  Mr. Kozub transferred the Shares to Paradisus in repayment of a loan in the principal amount of $467,180 (the Loan) made by Paradisus to Mr. Kozub on December 8, 2005 to finance Mr. Kozubs acquisition of the Shares.  The Shares were not pledged as collateral to secure the Loan.  The full principal balance of the Loan remained outstanding and Paradisus agreed to accept the transfer of the shares in full satisfaction of the Loan.



Paradisus owned no shares of the Companys common stock prior to the transfer.  The 100,000,000 Shares it owned following the transfer represented approximately 67% of the 148,540,000 total outstanding common stock of the Company.  On March 17, 2008, following the transfer of the Shares, Paradisus sent the Company a letter pursuant to which it surrendered ownership of the Shares.  The letter authorized and instructed the Company to cancel the Certificate and to take the necessary steps to have the shares returned to the Company.  No consideration was paid to Paradisus for surrendering the Shares.  The January 31, 2008 balances were restated to reflect the cancellation of common shares and the net loss per share has also been restated at April 30, 2007.



As discussed in Note 3, the Company exchanged 1,306,054 shares of common stock to various working interest owners for a 25% gross working interest ownership in 7 producing wells in Oklahoma.  Management has valued this acquisition at 40 cent per share for a total purchase price of $522,422.





F-7






NITRO PETROLEUM INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS October 31, 2008 (Stated in US Dollars) (Unaudited)




Note 7Stock Incentive Plan



The Board of Directors adopted the Nitro Petroleum Incorporated 2008 Stock Incentive Plan (the Plan) on July 10, 2008.  The Plan will be administered by the Board of Directors, or a committee of the Board of Directors and all officers, employees, directors and individual consultants of the Corporation will be allowed to participate in the Plan.  The Plan has a term of ten years.  Accordingly, no grants may be made under the Plan after July 10, 2018, but the Plan will continue thereafter while previous grants remain subject to the Plan.



The aggregate number of shares of common stock available under the Plan is 2,500,000 shares. The Plan authorizes the Board of Directors to grant restricted stock award and stock options. The Board of Directors may not grant incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended under the Plan until such time that the Plan is approved by the Corporations stockholders. Until such time, the Board may only grant nonstatutory stock options (any stock option that is not an incentive stock option), and restricted stock under the Plan. All grants under the Plan will be made in the discretion of the Board of Directors.



On July 10, 2008, the Corporation granted shares of restricted stock to the following officers and directors and in the amounts and subject to the vesting schedule set forth below:



Plan Participant
        
        RestrictedShares Granted
        
        Vesting ScheduleLarry Wise
        
        1,500,000
        
        1/3 vested on grant date1/3 vesting on first anniversary of grant date1/3 vesting on second anniversary of grant dateSharon Farris
        
        150,000
        
        1/3 vested on grant date1/3 vesting on first anniversary of grant date1/3 vesting on second anniversary of grant dateJames Kirby
        
        50,000
        
        1/3 vested on grant date1/3 vesting on first anniversary of grant date1/3 vesting on second anniversary of grant dateWilliam Thomas
        
        50,000
        
        1/3 vested on grant date1/3 vesting on first anniversary of grant date1/3 vesting on second anniversary of grant dateGunther Weisbrich
        
        50,000
        
        1/3 vested on grant date1/3 vesting on first anniversary of grant date1/3 vesting on second anniversary of grant date






F-8






NITRO PETROLEUM INC. NOTES TO THE INTERIM FINANCIAL STATEMENTS October 31, 2008 (Stated in US Dollars) (Unaudited)




Note 7Stock Incentive Plan (contd)



The Company has accounted for the cost of the Plan utilizing the Black-Scholes option pricing formula, which includes a computed volatility rate of 133.72% obtained through the historical price data of the Companys stock beginning July 11, 2006 and ending July 10, 2008, the date this Plan was adopted.  A risk-free rate of return of 2.57% was also used in the compensation expense as provided by the U.S. Treasury constant maturities.  Other factors in computing the Plans valuation include a per option price of $0.18 per share, as this was the closing price of the Companys stock on the date this Plan was adopted.  Also, a 0% forfeiture rate has been assumed for all periods up to June 30, 2011, the final month of vesting.



Due to the first third of shares vesting immediately, $144,000 has been recorded as stock-based compensation.  The Company will continue to record a stock-based compensation expense for each quarter until June 30, 2011.



Note 8
        Related Party Transactions




By a management agreement dated January 1, 2008, the Company agreed to pay a director of the company management fees of $4,000 per month for management services for a term of one year.  The term may be renewed for further one year terms at the option of the Company.



During the nine months ended October 31, 2008, the Company incurred management fees charged by a director of the Company totalling $41,000 (2007: $9,700).



Included in accounts payable at July 31, 2008 is $16,000 (January 31, 2008: $16,000) due to a former director of the Company for management services.



Note 9
        Comparative Figures




Certain of the comparative figures have been reclassified to conform with the current periods presentation.













F-9






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Introduction



Unless the context otherwise requires, all preferences to Nitro, our, us, we and the Company refer to Nitro Petroleum Incorporated.



The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources.  This discussion and analysis should be read in conjunction with our financial statements and the accompanying notes included in this report, as well as our audited financial statements and the accompanying notes included in our annual report on Form 10-K for the year ended January 31, 2008 (the 2007 Form 10-K).  The following discussion contains forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control.  Our actual results could differ materially from those discussed in these forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, market prices for natural gas and crude oil, economic and competitive conditions,
regulatory changes, estimates of proved reserves, potential failure to achieve production from development projects, capital expenditures and other uncertainties, as well as those factors discussed below and elsewhere in this report and in our Form 10-K, all of which are difficult to predict.  In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.



The financial information with respect to the nine month periods ended October 31, 2008 and October 31, 2007 that is discussed below is unaudited.  In the opinion of management, this information contains all adjustments, consisting only of normal recurring accruals, necessary to state fairly the unaudited financial statements.  The results of operations for the interim periods are not necessarily indicative of the results of operations for the full fiscal year.



We intend to continue to acquire high quality oil and gas properties, primarily proved producing and proved undeveloped reserves in the United States.  We see significant opportunities in acquiring properties with proven producing reserves and undeveloped acreage in fields that have a long history of production.  We will also explore low-risk development drilling and work-over opportunities with experienced, strong operators.  We will attempt to finance oil and gas operations through a combination of privately placed debt and/or equity.  There can be no assurance that we will be successful in finding financing, or even if financing is found, that we will be successful in acquiring oil and/or gas assets that result in profitable operations.



We are continuing our efforts to identify and assess investment opportunities in oil and natural gas properties, utilizing free labor of its directors and stockholders until such time as funding is sourced from the capital markets.  It is anticipated that funding for the next twelve months will be required to maintain our operations.  Attempts are ongoing to raise funds through private placements and said attempts will continue throughout 2009.  We may also use various debt instruments as well as public offerings to raise needed capital during 2009.



As oil and gas properties become available and appear attractive to our management, funds, when they become available, will be spent on due diligence and research to determine if said prospects could be purchased to provide income for us.  Established oil companies continue to strive to reduce costs and debt.  This causes significant market opportunities for us to possibly position ourself with sellers that wish to divest themselves of production or proven undeveloped properties in order to provide liquidity.



1







Our management believes that current market conditions are creating situations that could result in the opportunity for such production acquisitions.



We may also finance acquisition of proven producing reserves with predictable production levels and cash flow by offering the secure investors with the mineral interests acquired.  We may also hedge price risk by selling forward a portion of future production acquired under fixed-price contracts to minimize risk associated with commodity prices.  In some cases the future value of such fixed-price contracts may be greater that the initial investments, thereby hedging the inherent acquisition risk, without limiting the upside available the stockholders and investors.  There can be no assurance, however, that any of these methods of financing will be successful in helping fund our operations.



The operating expenses will increase as we undertake our plan of operations.  The increase will be attributable to the continuing geological exploration and acquisition programs and continued professional fees that will be incurred.



We acquired a 25% working interest in several leases owned by HOCO Oil, Inc., a private corporation, Buccaneer Energy Corporation, located in Texas and other various owners.  The leases are located in Oklahoma and include 7 producing wells.  We issued 1,306,054 shares of common stock for these interests.  We will be the operator of these wells.  Net cash flow from production will enable us to join in the future development of these leases and to pursue other oil and gas opportunities.



We have drilled the Quinlan #4 well and have converted it to a salt water disposal well.  This will allow us to dispose of more water in hopes of increasing the Quinlan #3 well oil production by co-mingling the Simpson Dolomite and the Hunton Lime.  Also, we have converted the Quinlan #2 salt water disposal well into a producing well.  We will be installing three gas compressors on the Teresa, Mason Burns and Ward wells to capitalize on high gas prices through the winter months.



We intend to arrange a public financing in the fourth quarter to raise 3 to 5 million dollars. The funds will be used to acquire additional oil and gas leases and to carry out exploration and development work on these leases.



On December 5, 2008, we entered into separate Promissory Note Settlement Agreements (the Settlement Agreements) with the holders of certain of our outstanding demand promissory notes (the Demand Notes). Pursuant to the terms of the Settlement Agreements, which have an effective date of October 31, 2008 (the Effective Date), we are issuing shares of our common stock to the holders of the Demand Notes in full payment of all principal and accrued and unpaid interest due on the Demand Notes as of the Effective Date.



Additionally, pursuant to the terms of the Settlement Agreement, all Demand Notes were terminated and cancelled. As part of the Settlement Agreement, we and each party to each Settlement Agreement provided each other with mutual releases of all claims and liabilities related to or arising out of the Demand Notes.



On December 5, 2008, pursuant to the terms of the Settlement Agreements, we issued a total of 49,725,540 shares of our common stock to the holders of the Demand Notes in full payment of an aggregate of $2,486,277 of unpaid principal and accrued and unpaid interest due on all the Demand Notes as of the Effective Date. For purposes of the Settlement Agreement, our common stock was valued at $0.05 per share.



2







Financial Condition and Results of Operations



For the nine months ended October 31, 2008, we had revenue of $293,911 from production of oil and gas, as compared to $166,582 for the nine months ended October 31, 2007.



Cost of continued operations for the nine months ended October 31, 2008 was $1,115,957, resulting in a net loss for the period of $819,695.



Cost of continued operations for the three months ended July 31, 2007 was $655,008, resulting in a net loss for the period of $488,426.



We expect to continue to receive revenues from the properties on the Oklahoma properties and we expect that planned exploration ventures should increase revenues for the fiscal year ending January 31, 2009.



Liquidity and Capital Resources



We had cash of $37,724 as of October 31, 2008, compared to cash of $242,077 as of January 31, 2008.  We had a working capital deficiency of $178,745 as of October 31, 2008, compared to working capital deficiency of $2,193,919 as of January 31, 2008.



We will continue to utilize the free labor of our directors and stockholder until such time as funding is sourced from the capital markets.  It is anticipated that funding for the next twelve months will be required to maintain our operations.



Going Concern



We have not attained profitable operations and is dependent upon obtaining financing to pursue any extensive acquisitions and exploration activities.  For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.



Future Financings



We will continue to rely on equity sales of our common shares in order to continue to fund our business operations.  Issuances of additional shares will result in dilution to existing stockholders.  There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.



Off-Balance Sheet Arrangements



We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



Not applicable.



3







ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commissions rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officer, the effectiveness of our disclosure controls and procedures as of October 31, 2008, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that
evaluation, our Certifying Officer concluded that, as of October 31, 2008, our disclosure controls and procedures were effective.

Changes in Internal Controls

There were no changes in our internal control over financial reporting that occurred during the quarter ended October 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II

Item 1. Legal Proceedings.

We are not currently a party to any legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.

Item 1.A. Risk Factors

Not applicable.

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

None.

Item 3.  Defaults upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits

******Exhibit No.******
        ******Description of Exhibit******31.1
        Rule 13a-14 Certification of Chief Executive Officer and Chief Financial Officer32.1
        Section 1350 Certification of Chief Executive Officer  and Chief Financial Officer






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SIGNATURES

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

NITRO PETROLEUM INCORPORATED

By:
        /s/ Larry WiseLarry Wise, President and Chief Financial Officer


Date:  December 19, 2008





EXHIBIT INDEXExhibit No.
        Description
        Method of Filing31.1
        Rule 13a-14 Certification of Chief Executive Officer and Chief Financial Officer
        Filed herewith electronically32.1
        Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
        Filed herewith electronically






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