UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: ~~November~~May 3031, ~~2009~~2010

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

For the transition period from to

Commission file number: 000-52959

Sterling Oil & Gas Company

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

Nevada	20-8999059
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

121 W. Merino St.

PO Box 500

Upton, WY 82730

(Address of principal executive offices)

(307) 468-9368

(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

[ ] Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller reporting company

Non-accelerated filer [X] 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 [ ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 15,925,000 shares of common stock, $.00001 par value and 0 shares of preferred stock, $.00001 par value as of ~~January~~July 815, 2010

STERLING OIL & GAS COMPANY

INDEX

			Page
PART 1.	FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS
		Condensed Balance Sheets as of November 30, 2009 (Unaudited) and February 28, 2009	3
		Condensed Balance Sheets as of May 31, 2010 (Unaudited) and February 28, 2010	3
		Condensed Statements of Operations for the three months ended November 30, 2009 and 2008 and for the nine months ended November 30, 2009 and 2008 and for the cumulative period from May 1, 2007 (inception ) through November 30, 2009 (Unaudited)	4
		Condensed Statements of Operations for the three months ended May 31, 2010 and 2009 and for the cumulative period from May 1, 2007 (inception ) through May 31, 2010 (Unaudited)	4
		Condensed Statements of Cash Flows for the nine months ended November 30, 2009 and 2008, and for the cumulative period from May 1, 2007 (inception) through November 30, 2009 (Unaudited)	5
		Condensed Statements of Cash Flows for the three months ended May 31, 2010 and 2009, and for the cumulative period from May 1, 2007 (inception) through May 31, 2010 (Unaudited)	5
		Condensed Statement of Shareholders’ Equity for the nine months ended November 30, 2009 and the cumulative period from May 1, 2007 (inception) to November 30, 2009 (Unaudited)	6
		Condensed Statement of Shareholders’ Equity for the three months ended May 31, 2010 and the cumulative period from May 1, 2007 (inception) to May 31, 2010 (Unaudited)	6
		Notes to Condensed Financial Statements	7
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1413
	ITEM 4T.	CONTROLS AND PROCEDURES	1816
PART II.	OTHER INFORMATION		1816
	ITEM 1.	Legal Proceedings	1816
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1816
	ITEM 3.	Default Upon Senior Securities	1816
	ITEM 4.	Submission of Matters to a Vote of Security Holders	1816
	ITEM 5.	Other Information	1816
	ITEM 6.	EXHIBITS	1817
	SIGNATURES		1917

-2-

ITEM 1.

FINANCIAL STATEMENTS.

Sterling Oil & Gas Company
(An Exploration Stage Company)
Condensed Balance Sheets
	November 30,
	May 31, 2010			February 28,
	2009			February 28,
Assets	(Unaudited)			2010
Assets	(Unaudited)			2009
Current assets:
Current assets:
Cash and cash equivalents	$	111,650		$	139,267
Cash and cash equivalents	$	160,500		$	66,321
Total current assets		111,650			139,267
Total current assets		160,500			66,321
Oil and Gas Properties-Unproved Properties, full cost method (less $323,824 and $323,824 impairment, respectively)		243,793			242,840
Oil and Gas Properties-Unproved Properties, full cost method
Total Assets	$	355,443		$	382,107
(less $256,424 and $483,855 impairment, respectively)		310,241			713,619
Liabilities and Shareholders’ Equity
Total Assets	$	470,741		$	779,940
Accounts payable	$	8,368		$	2,419
Liabilities and Shareholders’ Equity
Shareholders’ equity:
Accounts payable	$	401		$	2,585
Preferred stock, $.00001 par value; 100,000,000 shares authorized, 0 shares issued and outstanding		--			--
Shareholders’ equity:
Common stock, $.00001 par value; 100,000,000 shares authorized, 15,925,000 shares issued and outstanding at May 31, 2010 and February 28, 2009.		159			159
Preferred stock, $.00001 par value; 100,000,000 shares authorized,
Additional paid-in capital		2,283,632			2,282,582
0 shares issued and outstanding		--			--
Deficit accumulated during development stage		(1,936,716	)		(1,903,053	)
Common stock, $.00001 par value; 100,000,000 shares authorized,
Total shareholders’ equity		347,075			379,688
15,925,000 shares issued and outstanding at November 30, 2009
Total Liabilities and Shareholders’ Equity	$	355,443		$	382,107
and February 28, 2009.		159			159
Additional paid-in capital		2,281,832			2,267,782
Deficit accumulated during development stage		(1,811,651	)		(1,490,586	)
Total shareholders’ equity		470,340			777,355
Total Liabilities and Shareholders’ Equity	$	470,741		$	779,940

See accompanying notes to condensed financial statements.

F-3-1

Sterling Oil & Gas Company
(An Exploration Stage Company)
Condensed Statements of Operations
(Unaudited)
													May 1, 2007
	For the Three Months						For the Nine months						(inception)
	ended						ended						Through
	November 30,						November 30,						November 30,
	2009			2008			2009			2008			2009
Revenues	$	--		$	--		$	--		$	--		$	--
Costs and expenses
Personnel costs		--			--			27,278			175,602			268,756
Professional fees		22,324			27,754			59,892			135,942			288,774
Impairment and abandonment of
unproved properties		--			--			228,482			--			1,228,337
Other general and administrative		3,732			1,731			6,960			15,895			36,044
Operating loss		(26,056	)		(29,485	)		(322,612	)		(327,439	)		(1,821,911	)
Other income (expense)
Interest income		1,011			108			1,547			2,773			10,260
Net loss	$	(25,045	)	$	(29,377	)	$	(321,065	)	$	(324,666	)	$	(1,811,651	)
Basic and diluted loss per share	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.02	)
Weighted average common shares
outstanding, basic and diluted		15,925,000			15,549,176			15,925,000			15,205,364

Sterling Oil and Gas Company (An Exploration Stage Company) Condensed Statements of Operations (Unaudited)
	For the Three Months ended May 31,						From Inception (May 1, 2007) through May 31,
	2010			2009			2010
Revenues	$	--		$	--		$	--

Costs and expenses:
Personnel costs		13,454			7,552			281,324
Professional fees		18,863			32,627			328,959
Impairment expense		--			--			1,295,737
Other general and administrative expenses		1,968			866			42,466

Operating Loss		(34,285	)		(41,045	)		(1,948,486	)

Other Income (Expense)
Interest income		622			114			11,770
Net (Loss)	$	(33,663	)	$	(40,931	)	$	(1,936,716	)

Basic and diluted loss per share		(0.00	)		(0.00	)

Weighted average common shares outstanding		15,925,000			15,925,000

See accompanying notes to condensed financial statements.

F-4-2

Sterling Oil & Gas Company
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
							From May 1,
							2007
							(inception )
	For the Nine months ended						through
	November 30,						November 30,
	2009			2008			2009
Cash Flows From Operating Activities:
Net Loss	$	(321,065	)	$	(324,666	)	$	(1,811,651	)
Adjustments to reconcile net loss to net cash used by operating activities:
Contributed services		14,050			4,900			53,550
Impairment and abandonment of
unproved properties		228,482			--			1,228,337
Changes in operating assets and liabilities:
Trading securities		--			282,799			--
Accounts payable		(2,184	)		(14,797	)		401
Net cash (used in)
operating activities		(80,717	)		(51,764	)		(529,363
Cash flows from investing activities:
Unproved oil and gas properties-additions		(8,104	)		(35,803	)		(216,436	)
Refund of purchase deposit		--			--			80,856
Unproved oil and gas properties-sales		183,000			--			391,233
Net cash provided by (used in)
investing activities		174,896			(35,803	)		255,653
Cash flows from financing activities:
Proceeds from the sale of common stock		--			185,000			435,000
Payments for offering costs		--			--			(790	)
Net cash provided by
financing activities		--			185,000			434,210
Net Increase in cash and
cash equivalents		94,179			97,433			160,500
Cash and cash equivalents:
Beginning of period		66,321			6,426			--
End of period	$	160,500		$	103,859		$	160,500
Noncash investing and financing transaction:
Transfer of oil and gas properties
from Big Cat	$	--		$	--		$	1,794,231

Sterling Oil & Gas Company
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(Unaudited)


							From May 1,
							2007 (inception)
	For the three months ended						Through
	May 31,						May 31,
	2010			2009			2010
Cash Flows From Operating Activities:
Net Loss	$	(33,663	)	$	(40,931	)	$	(1,936,716	)
Adjustments to reconcile net loss to net cash used by operating activities:
Contributed services		1,050			12,050			55,350
Impairment and abandonment of unproved properties		--			--			1,295,737
Changes in operating assets and liabilities:
Trading securities		--			--			--
Accounts payable		5,949			9,457			8,368

Net cash (used in)
operating activities		(26,664	)		(19,424	)		(577,261	)

Cash flows from investing activities:
Unproved oil and gas properties-additions		(953	)		(952	)		(217,388	)
Refund of purchase deposit		--			--			80,856
Unproved oil and gas properties-sales		--			183,000			391,233
Net cash provided by (used in)
investing activities		(953	)		182,048			254,701

Cash flows from financing activities:
Proceeds from the sale of common stock		--			--			435,000
Payments for offering costs		--			--			(790	)
Net cash provided by
financing activities		--			--			434,210
Net Increase (decrease) in cash and
cash equivalents		(27,617	)		162,624			111,650
Cash and cash equivalents:
Beginning of period		139,267			66,321			--

End of period	$	111,650		$	228,945			111,650

Noncash investing and financing transaction:
Transfer of oil and gas properties from Big Cat	$	--		$	--		$	1,794,231

See accompanying notes to condensed financial statements.

F-5-3

Sterling Oil & Gas Company
(An Exploration Stage Company)
Condensed Statement of Shareholders’ Equity
(Unaudited)
Balance, at May 1, 2007( Inception)	--	$	--	$	--		$	--		$	--
Stock issued for properties transferred from Big Cat at inception, 5/1/2007, $0.1794 per share	10,000,000		100		1,794,131			–			1,794,231
Private placement June 2007, $0.05 per share	5,000,000		50		249,950			–			250,000
Other-contributed services	–		–		30,800			–			30,800
Other costs-issuance fees					(790	)					(790	)
Net loss	–		–		–			(740,320	)		(740,320	)
Balance, February 29, 2008	15,000,000		150		2,074,091			(740,320	)		1,333,921
Public offering August 2008, $0.20 per share	325,000		3		64,997			–			65,000
Public offering October 2008, $0.20 per share	600,000		6		119,994			--			120,000
Other-contributed services	--		--		8,700			--			8,700
Net loss	–		–		–			(750,266	)		(750,266	)
Balance, February 28, 2009	15,925,000		159		2,267,782			(1,490,586	)		777,355
Other-contributed services	--		--		14,050			--			14,050
Net loss	--		--		--			(321,065	)		(321,065	)
Balance, November 30, 2009	15,925,000	$	159	$	2,281,832		$	(1,811,651	)	$	470,340
See accompanying notes to condensed financial statements

~~-6-~~Sterling Oil & Gas Company (An Exploration Stage Company) Condensed Statement of Shareholders’ Equity (Unaudited)

	Common Stock				Additional			(Deficit) Incurred
	Shares		Par value $.00001		Paid-in Capital			During Exploration Stage			Total
Balance, at May 1, 2007( Inception)		--	$	--	$	--		$	--		$	--
Stock issued for properties transferred from Big Cat at inception, May 1, 2007, $0.1794 per share		10,000,000		100		1,794,131			–			1,794,231
Private placement June 2007, $0.05 per share		5,000,000		50		249,950			–			250,000
Other-contributed services		–		–		30,800			–			30,800
Other costs-issuance fees						(790	)					(790	)
Net loss		–		–		–			(740,320	)		(740,320	)
Balance, February 29, 2008		15,000,000		150		2,074,091			(740,320	)		1,333,921
Public offering August 2008, $0.20 per share		325,000		3		64,997			–			65,000
Public offering October 2008, $0.20 per share		600,000		6		119,994			--			120,000
Other-contributed services		--		--		8,700			--			8,700
Net loss		–		–		–			(750,266	)		(750,266	)
Balance, February 28, 2009		15,925,000		159		2,267,782			(1,490,586	)		777,355
Other-contributed services		--		--		14,800			--			14,800
Net loss		--		--		--			(412,467	)		(412,467	)
Balance, February 28,2010		15,925,000		159		2,282,582			(1,903,053	)		379,688
Other-contributed services		--		--		1,050			--			1,050
Net loss		--		--		--			(33,663	)		(33,663	)
Balance, May 31, 2010		15,925,000	$	159	$	2,283,632		$	(1,936,716	)	$	347,075

See accompanying notes to condensed financial statements.

F-4

Sterling Oil & Gas Company

(An Exploration Stage Company)

Notes to Condensed Financial Statements

1.	Presentation, Organization and Nature of Operations:

Presentation

The accompanying condensed financial statements of Sterling Oil & Gas Company (the “Company”) at ~~November~~May 3031, ~~2009~~2010 and ~~2008~~2009 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements pursuant to instructions to Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended February 28, ~~2009~~2010. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make the Company’s financial statements not misleading have been included. The results of operations presented for the ~~period~~periods ended ~~November~~May 3031, ~~2009~~2010 and ~~2008~~2009 ~~presented~~ are not necessarily indicative of the results to be expected for the full year. The February 28, ~~2009~~2010 balance sheet has been derived from the Company’s audited financial statements included in the Company’s annual report on Form 10-K for the year ended February 28, ~~2009~~2010.

Description of Operations

Sterling Oil & Gas Company (“Sterling”) is an independent energy company engaged in the exploration and acquisition of natural gas and crude oil prospects in the western United States. On May 1, 2007, Big Cat Energy Corporation (“Big Cat”) formed Sterling as a wholly owned subsidiary and transferred its unproved oil and gas properties, consisting of various mineral leases and related costs, to Sterling in return for 10 million shares of Sterling restricted common stock. On April 2, 2008, Big Cat spun off Sterling by distributing the 10 million shares it held pro rata to the Big Cat shareholders.

The Company is in the exploration stage in accordance with FASB Accounting Standard Codification ~~Topic~~(“ASC”) 915, Development Stage Entities. The Company has been in the exploration stage since inception and has yet to enter revenue-producing operations. Activities since its inception have primarily involved organization and development of the Company.

2.	Liquidity:

Going Concern

As of ~~November~~May 3031, ~~2009~~2010, the Company had working capital of $~~160~~103,~~099~~282 and shareholders’ equity of $~~470~~347,~~340~~075. Sterling has relied upon outside investor funds to maintain its operations and develop its business. Sterling’s plan for continuation anticipates continued funding from investors. This funding would be used for operations, for working capital, as well as business expansion during the upcoming fiscal year. The Company can provide no assurance that additional investor funds will be available on terms acceptable to the Company and there is substantial doubt about the ability of the Company to continue as a going concern.

Sterling’s ability to continue as a going concern is dependent upon raising capital through debt or equity financing and ultimately by producing revenue and achieving profitable operations. The Company can offer no assurance that it will be successful in its efforts to raise additional proceeds or achieve profitable operations. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business, and no adjustments have been made as a result of this uncertainty.

F-7-5

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business, and no adjustments have been made as a result of this uncertainty.

3.	Significant Accounting Policies:

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of any oil and gas reserves, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various assumptions it believes to be reasonable under the circumstances. Although actual results may differ from these estimates under different assumptions or conditions, the Company believes that its estimates are reasonable.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts held in banks and highly liquid investments purchased with an original maturity of three months or less.

Concentrations of Credit Risk

The Company’s cash equivalents are exposed to concentrations of credit risk as the Company may have cash in banks in excess of federally insured amounts. The Company manages and controls this risk by investing these funds with major financial institutions.

Oil and Gas Properties

The Company follows the full cost method of accounting whereby all costs related to the acquisition and exploration of oil and gas properties are capitalized into a single cost center (“full cost pool”). Such costs include lease acquisition costs, geological and geophysical expenses, overhead directly related to exploration activities and costs of drilling both productive and non-productive wells. Proceeds from property sales are generally credited to the full cost pool without gain or loss recognition unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool. Generally, any such sale of unproved properties will also be recognized on a cost recovery basis with no gain or loss.

As of ~~November~~May 3031, ~~2009~~2010, the Company does not have any proven oil and gas reserves and all of its properties are unproved. The costs of unproved properties will be withheld from the depletion base until such time as they are either developed or abandoned. Unproved properties are assessed at least annually by the Company for impairment. Impairment is estimated by the Company by applying factors based on historical experience and other data such as primary lease terms of the properties, average holding periods of unproved properties, and geographic and geologic data of groupings of individually insignificant properties and projects. Therefore, any impairment of said unproved properties would result in an expense to the Company.

Depletion of exploration and development costs and depreciation of production equipment is computed using the units of production method based upon estimated proved oil and gas reserves. Total well costs, if and when drilled, will be transferred to the depletable pool even when multiple targeted zones have not been fully evaluated. For depletion and depreciation purposes, relative volumes of oil and gas production and reserves are converted at the energy equivalent rate of six thousand cubic feet of natural gas to one barrel of crude oil.

F-8-6

Under the full cost method of accounting, capitalized oil and gas property costs, less accumulated depletion and net of deferred income taxes (full cost pool), may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves less the future cash outflows associated with the asset retirement obligations that have been accrued in the balance sheet plus the cost, or estimated fair value, if lower of unproved properties and the costs of any properties not being amortized. Should the full cost pool exceed this ceiling, an impairment is recognized. The present value of estimated future net revenues is computed by applying current oil and gas prices to estimated future production of proved oil and gas reserves as of period end, less estimated future expenditures to be incurred in developing and producing the proved reserves assuming the continuation of existing economic conditions. 8

~~Asset~~Under ~~Retirement~~the ~~Obligations~~full cost method of accounting, capitalized oil and gas property costs, less accumulated depletion and net of deferred income taxes (full cost pool), may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves less the future cash outflows associated with the asset retirement obligations that have been accrued in the balance sheet plus the cost, or estimated fair value, if lower of unproved properties and the costs of any properties not being amortized. Should the full cost pool exceed this ceiling, impairment is recognized. The present value of estimated future net revenues is computed by applying current oil and gas prices to estimated future production of proved oil and gas reserves as of period end, less estimated future expenditures to be incurred in developing and producing the proved reserves assuming the continuation of existing economic conditions.

The Company will follow the provisions of Codification Topic 410 Asset Retirement and Environmental Obligations (ARO); at such time as it acquires or drills oil and gas wells. The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties will be recorded when incurred, generally upon acquisition or completion of a well. The net estimated costs will be discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs will be capitalized as part of the related asset. The asset will be depleted on the units-of-production method. The associated liability will be classified in other long-term liabilities in the accompanying balance sheets. The liability will be periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense, and (4) revisions to estimated future cash flow requirements. The accretion expense will be recorded as a component of depreciation, depletion and amortization expense in the accompanying statements of operations. As of November 30, 2009, the Company has no ARO obligation.

Income Taxes

Income taxes are accounted for by recognizing deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax basis of assets, liabilities and carryforwards. Deferred tax assets are recognized for the expected future effects of all deductible temporary differences, loss carryforwards and tax credit carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a valuation allowance for the amount of any tax benefit which, more likely than not, are not expected to be realized.

We adopted ~~Codification~~ASC ~~Topic~~ 740, Income Taxes as of March 1, 2008. This topic provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a "more-likely-than-not" recognition threshold at the effective date to be recognized upon the adoption of ~~Codification~~ASC ~~Topic~~ 740 and in subsequent periods. We have identified no significant uncertain tax positions as of February 28, ~~2009~~2010 or at ~~November~~May 3031, ~~2009~~2010. The cumulative effect of adopting ~~Codification~~ASC ~~Topic~~ 740 has not resulted in a liability on the balance sheet. The total amount of unrecognized tax benefits as of the date of adoption was zero.

We recognize interest and penalties related to uncertain tax positions in income tax expense. No interest and penalties related to uncertain tax positions were accrued as of February 28, ~~2009~~2010 or at ~~November~~May 3031, ~~2009~~2010.

Risks and Uncertainties

Historically, oil and gas prices have experienced significant fluctuations and have been particularly volatile in recent years. Price fluctuations can result from variations in weather, levels of regional or national production and demand, availability of transportation capacity to other regions of the country and various other factors. Increases or decreases in prices received could have a significant impact on future results.

-9-

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and accounts payable. The fair market value of these financial instruments approximates or is equal to the book value.

In the first quarter of fiscal year 2009, the Company adopted ~~Codification~~ASC ~~Topic~~ 820 Fair Market Measurement and Disclosures including the application of the statement to non-recurring, non-financial assets and liabilities. The adoption of ~~Codification~~ASC ~~Topic~~ 820 did not have a material impact on the Company’s fair value measurements. ~~Codification~~ASC ~~Topic~~ 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ~~Codification~~ASC ~~Topic~~ 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:

Level 1- Quoted prices in active markets for identical assets or liabilities.

Level 2- Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

F-7

Level 3- Unobservable inputs based on the Company’s assumptions,

~~Codification~~ASC ~~Topic~~ 820 requires the use of observable market data if such data is available without undue cost and effect.

Due to the impairment of the unproved properties, the amount recorded in the financial statements is considered fair value and as such, requires presentation in accordance with ASC 820.

Level 3 assets are comprised of unproved oil and gas properties. The Company has classified the fair value of the properties as a Level 3 due to the lack of available data to obtain market values for the unevaluated properties. The Company considered current gas prices and the remaining lease term as a basis for determining the reserve amount.

Net Loss Per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Contingently issuable shares are included in the computation of basic net income (loss) per share when the related conditions are satisfied. Diluted net income (loss) per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during the period. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive.

As of ~~November~~May 3031, 2010 and 2009 the Company had 15,925,000 shares of common stock outstanding and warrants for the purchase of 3,425,000 shares. ~~As of November 30, 2008 the Company had 15,325,000 shares of common stock outstanding and warrants for the purchase of 2,825,000 shares.~~ The warrants were excluded from the calculation of diluted earnings per share for both years, due to the fact that they were anti-dilutive.

Reclassifications

Certain amounts for the period May 1, 2007 (Inception) to ~~November~~May 3031, ~~2009~~2010 have been reclassified to conform to the ~~November~~May 3031, ~~2009~~2010 presentation. Such reclassifications had no effect on net loss.

Other Comprehensive Income

The Company does not have any material items of other comprehensive income for the ~~nine~~three months ended ~~November~~May 3031, ~~2009~~2010 orand ~~2008~~2009. Therefore, total comprehensive income (loss) is the same as net income (loss) for these periods.

~~Recent~~Recently Issued Accounting ~~Developments~~Standards

In ~~June~~January ~~2009~~2010, the FASB ~~approved~~issued ~~the~~an ~~FASB~~update ~~Accounting~~(ASU ~~Standards~~No. ~~Codification (ASC~~2010-06), ~~which~~to ~~after~~ASC ~~its~~820, ~~effective~~“Fair ~~date~~Value ofMeasurement ~~July~~and 1,Disclosures ~~2009~~to isimprove ~~the~~disclosure ~~single~~requirements ~~source~~regarding ~~of authoritative~~transfers, ~~nongovernmental~~classes ~~U.S.~~of ~~Generally~~assets ~~Accepted~~and ~~Accounting~~liabilities, ~~Principles~~and ~~(GAAP).~~inputs ~~The~~and ~~Codification~~valuation ~~reorganizes all previous U~~techniques.S. ~~GAAP~~This ~~pronouncements~~Update ~~into~~is ~~roughly~~effective 90for ~~accounting~~interim ~~topics~~ and ~~displays~~annual ~~all~~periods ~~topics~~ending ~~using~~on ~~consistent~~or ~~structure.~~after ~~All~~December ~~existing~~15, ~~standards~~2009, ~~that~~The ~~were~~company ~~used~~adopted tothis ~~create~~ASC ~~the~~update ~~Codification~~on ~~are~~January ~~now superseded~~1, ~~replacing~~2010 ~~the~~and ~~previous~~it ~~references~~had tono ~~specific Statements of Financial Accounting Standards (SFAS) with numbers used in the Codification’s structural organization. The adoption of this guidance did not have a~~ material impact onthe ~~our~~consolidated financial statements. ~~We have updated our disclosures accordingly.~~

In February 2010, the FASB issued an update (ASU No.2010-~~10-~~09) to ASC 855, Subsequent Events by removing the requirement for an SEC filer to disclose the date through which that filer had evaluated subsequent events. The Company has adopted this change and therefore has removed the related disclosure from the “Basis of Presentation”.

Recent changes to SEC Regulation S-K and S-X pertaining to Modernization of Oil and Gas Reporting include changes to the price used to compute reserves, the definition of reserves, the use of technology and the optional disclosure of probable and possible reserves. The new regulations are effective for years ending after December 15, 2009. As the Company currently has no reserves, we do not expect the adoption to have any significant effect on our financial statements.

4.	Oil and Gas Property Acquisitions and Dispositions:

During the ~~nine~~three months ended ~~November~~May 3031, 2010 and 2009, the Company ~~completed~~paid ~~a review of its oil and gas leaseholds and elected not to pay~~ delay rentals on ~~certain~~its ~~leases in the Powder River Basin of~~ Montana ~~and therefore abandoned the~~ leases. ~~The effect of abandonment of these leases was a reduction of 9,991net mineral acres leaving the Company with 11,701 net mineral acres, which is considered a significant reduction~~ in ~~our oil and gas properties. As a result,~~ the ~~Company~~amount ~~wrote~~of ~~off~~ $~~152,321~~953 ~~against its impairment reserve~~ and ~~recorded an abandonment of unproved properties expense of~~ $~~228,482~~952 ~~to reflect the reduction in acreage~~respectively.

During the nine months ended November 30, 2008, the Company completed a review of its oil and gas leaseholds and elected not to pay delay rentals on leases in Rosebud and Custer counties of Montana and therefore abandoned the leases. The effect of abandonment of these leases was a reduction in our net mineral acreage of 54,614 to 22,511. The Company wrote off $516,000 against its impairment reserve to reflect the reduction in acreage.F-8

During the year ended February 28, 2009, the Company reviewed its oil and gas leaseholds and based on the sale of its interest in Cedar Resources and additional information, the Company recorded an impairment of $428,855 on its leasehold interests.10

During the ~~nine~~three months ended ~~November~~May 3031, 2009, the Company ~~paid~~sold ~~joint~~its ~~venture~~interest ~~title~~in ~~work~~certain ~~costs,~~undeveloped ~~and~~properties ~~delay~~for ~~rentals of~~ $8183,~~104~~000. The ~~compared~~effect toof ~~$35,803~~this ~~for~~sale reduced the ~~nine~~Company’s ~~months~~leasehold ~~ended~~net ~~November~~mineral 30acres from 22,511 ~~2008~~to 21,047.

5. ~~RELATED~~Related ~~PARTY~~Party ~~TRANSACTIONS:~~transactions

During the three months ended ~~November~~May 3031, ~~2009~~2010, certain officers of Big Cat Energy Corporation, an affiliated public company, performed part time management duties for the Company. The Company did not pay cash for these services; however, the Company recorded the services at a fair market value as consulting fees and additional paid-in capital. Contributed services were $~~900~~1,050 for the three months ended ~~November~~May 3031, ~~2009~~2010 compared to $412,~~900~~050 for contributed services for the same period in ~~2008~~2009.

~~The~~In ~~amount~~September of2009, ~~contributed~~the Company contracted with RGS Resources LLC to provide CFO services ~~for~~to the ~~nine months~~company ~~ended~~on ~~November~~a ~~30,~~monthly ~~2009~~basis. ~~were~~RGS ~~$14~~Resources LLC’s Manager is Richard G. Stifel,~~050~~ ~~compared~~the toChief $4Financial Officer,~~900~~ Principal Financial Officer and Secretary for the Company. ~~contributed~~The ~~services~~Company paid consulting fees of $5,208 to RGS Resources LLC during the ~~same~~three ~~period~~months inended ~~2008~~May 31, 2010.

In September 2009, the Company contracted with RGS Resources LLC to provide CFO services to the company on a monthly basis. RGS Resources LLC’s Manager is Richard G. Stifel, the Chief Financial Officer, Principal Financial Officer and Secretary for the Company. The Company paid consulting fees of $15,625 to RGS Resources LLC during the three months ended November 30, 2009.

6.	Shareholders’ Equity:

There were no ~~cash-based~~ equity transactions during the ~~nine~~periods ~~months~~ ended ~~November~~May 3031, 2010 and May 31, 2009.

-11-

During the nine months ended November 30, 2008 the Company sold 925,000 units for $.20 per unit, each unit consisting of one free trading share of its common stock and one warrant to purchase one share of free trading common stock exercisable at $.50 per share. The Company received proceeds of $185,000 from the sale of units. The offering was made as part of the Form S-1 Post Effective Amendment 3 which became effective on July 14, 2008. Following the above sale, the Company’s outstanding common stock increased to 15,925,000 shares.

In accordance with Codification Topic 815, Derivatives and Hedging, and the terms of the warrants and the transaction documents, the warrants were determined to represent an equity transaction and therefore the fair value of the warrants are contained within the equity section and not separately recorded apart from the common shares issued as part of the private placement.

7.	Income Taxes:

The federal net operating loss (NOL) carryforward of approximately $1,~~493~~549,000 as of ~~November~~May 3031, ~~2009~~2010 expires on various dates through 2029. Internal Revenue Code Section 382 places a limitation on the amount of taxable income which can be offset by NOL carryforwards incurred before a change in control. “Change in control” for these purposes generally means greater than a 50% change in ownership of the corporation. After a change in control, a loss corporation cannot deduct NOL carryforwards existing at the time of the change in control in excess of the Section 382 limitations. Due to these “change in ownership” provisions, utilization of NOL carryforwards may be subject to an annual limitation in future periods. We have not performed a Section 382 analysis, however approximately ninety percent of the present NOL was incurred during the fiscal years beginning March 1, 2007, and thereafter.

We have established a full valuation allowance against the deferred tax assets because, based on the weight of available evidence including our continued operating losses, it is more likely than not that all of the deferred tax assets will not be realized. Because of the full valuation allowance, no income tax expense or benefit is reflected on the statement of operations.

No interest and penalties related to uncertain tax positions were accrued as ~~November~~May 3031, ~~2009~~2010.

F-9

8.	Commitments and Contingencies:

Environmental Issues– The Company is or may be engaged in oil and gas exploration and production and may become subject to certain liabilities as they relate to environmental clean up of well sites or other environmental restoration procedures as they relate to the drilling of oil and gas wells and the operation thereof. If the Company acquires existing or previously drilled well bores, the Company may not be aware of what environmental safeguards were taken at the time such wells were drilled or during such time the wells were operated. Should it be determined that a liability exists with respect to any environmental clean up or restoration, the liability to cure such a violation could fall upon the Company. Management believes its properties, all of which are currently unproved, are operated in conformity with local, state and federal regulations. No claim has been made, nor is the Company aware of any uninsured liability which the Company may have, as it relates to any environmental clean up, restoration or the violation of any rules or regulations relating thereto.

-12-

9.	Subsequent Events:

~~The~~Management ~~Company~~ has evaluated ~~subsequent~~all ~~events~~activity ~~through~~of ~~January~~the 4,Company ~~2010,~~and ~~the~~concluded ~~date~~that ~~which~~no ~~the~~subsequent ~~financial~~events ~~statements~~have ~~are~~occurred ~~available~~that towould berequire ~~issued~~disclosure.

F-~~13-~~10

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report includes certain statements that may be deemed to be “forward-looking statements” that reflect our current views with respect to future events and financial performance. All statements include in this Quarterly Report, other than statements of historical facts, address matters that we reasonably expect, believe or anticipate will or may occur in the future. Forward-looking statements may relate to, among other things:

§	our future financial position, including working capital and anticipated cash flow;

§	the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas;

§	market demand;

§	risks and uncertainties involving geology of oil and gas deposits;

§ the uncertainty of any reserve estimates and ~~reserves~~reserve life;

§	the uncertainty of estimates and projections relating to any production, costs and expenses;

§	potential delays or changes in plans with respect to exploration or development projects or capital expenditures;

§	fluctuations in oil and gas prices;

§	health, safety and environmental risks;

§	uncertainties as to the availability and cost of financing; and

·§ the possibility that government policies or laws may change or governmental approvals may be delayed or withheld.

Other sections of this Quarterly Report may include reference to additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Our forward looking statements contained in this Quarterly Report are made as of the respective dates set forth in this Quarterly Report. Such forward-looking statements are based on the beliefs, expectations and opinions of management as of the date the statements are made. We do not intend to update these forward-looking statements, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

-14-

Plan of Operations

For the fiscal ~~years~~year ending February 28, ~~2010 and~~ 2011, the Company’s plan of operation is to evaluate new oil and gas projects that are available to the Company and evaluate utilization of the Company’s existing Montana leasehold interests. The Company presently has 11,701 leasehold net mineral acres. Our ability to explore and develop our acreage or to acquire other acreage for development and to maintain existing acreage depends upon our ability to raise additional capital through equity fundraising and/or borrowing. Depending upon available funds, we may conduct our own field tests or exploration on one or more of our properties in Montana to determine the appropriate structure for possible development. There is limited historical financial information about our current operations upon which to base an evaluation of our performance. We are in development stage operations and have not generated any revenues from current operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, the current lack of production, and possible cost overruns due to price and cost increases in services and operations. Further, we have no assurance that future financing will be available to us on acceptable terms to enable us to develop the business of the Company. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

acreage or to acquire other acreage for development and to maintain existing acreage depends upon our ability to raise additional capital through equity fundraising and/or borrowing. Depending upon available funds, we may conduct our own field tests or exploration on one or more of our properties in Montana to determine the appropriate structure for possible development. We are in development stage operations and have not generated any revenues from current operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, the current lack of production, and possible cost overruns due to price and cost increases in services and operations. Further, we have no assurance that future financing will be available to us on acceptable terms to enable us to develop the business of the Company. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

Results of Operations

Three Months Ended ~~November~~May 3031, ~~2009~~2010 compared to the Three Months Ended ~~November~~May 3031, ~~2008~~2009

We reported a net loss for the three months ended ~~November~~May 3031, ~~2009~~2010 of $2533,~~045~~663 as compared to a net loss of $2940,~~377~~931 for the same period in ~~2008~~2009.

Our other general and administrative costs were $31,~~732~~968 during the three month period ended ~~November~~May 3031, ~~2009~~2010 as compared to $~~1,731~~866 for the same period in ~~2008~~2009.

We had $2218,~~324~~863 of professional fees, of which $~~900~~1,050 were non-cash, during the three month period ended ~~November~~May 3031, ~~2009~~2010, compared to $2732,~~754~~627, $412,~~900~~050 of which were non-cash, for the same period in ~~2008~~2009. The professional fees in 2009 were paid to consultants for CFO services and ~~legal~~ fees associated with SEC compliance. The professional fees in ~~2008~~2010 were for ~~consultants paid to locate future lease opportunities and for legal fees associated with Company stock offerings and~~ required SEC compliance.

Nine Months Ended November 30, 2009 compared to the Nine Months Ended November 30, 2008

We reported a net loss for the nine months ended November 30, 2009 of $321,065 compared to net loss of $324,666 for the same period in 2008. The net loss for the nine months ended November 30, 2009 included a non-cash loss on abandonment of leaseholds of $228,482 and non-cash professional fees of $14,050.

We had personnel expense of $27,278 for the nine months ended November 30, 2009 compared to $175,602 for the nine months ended November 30, 2008. The payroll in 2009 was for one paid employee as compared to four paid employees in 2008.

Our other general and administrative costs were $6,960 for the nine months ended November 30, 2009, compared to $15,895 for the nine month period ended November 30, 2008.

We had $59,892 of professional fees, of which $14,050 is non-cash, for the nine months ended November 30, 2009 compared to $135,942 of professional fess, $4,900 of which were non-cash, during the nine months ended November 30, 2008. The professional fees are for consultants paid to locate future lease opportunities and provide CFO services and legal fees for required SEC filings and fees associated with a Company stock offering.

-15-

Liquidity and Capital Resources

As of ~~November~~May 3031, ~~2009~~2010, we had working capital of $~~160~~103,~~099~~282, and it is uncertain whether this amount will be sufficient to fund operations. Therefore, we may seek additional sources of capital for the coming year.

For the ~~nine~~three months ended ~~November~~May 3031, ~~2009~~2010 cash used in operating activities was $8026,~~717~~664. Cash used in operating activities was primarily our net loss ~~offset by non-cash loss on leaseholds of $228,482~~. Cash used in operating activities for the ~~nine~~three months ended ~~November~~May 3031, ~~2008~~2009, was $5119,~~764. Cash~~424 ~~used in operations~~ and was primarily a result of our net loss offset by ~~$282,799~~non-cash ~~from~~consulting ~~the~~fees ~~liquidation~~ of ~~trading securities~~$12,050.

Cash ~~provided~~used byin investing activities was $~~174,896~~953 for the ~~nine~~three months ended ~~November~~May 3031, ~~2009~~2010, ~~primarily~~for ~~from~~payment ~~the sale~~ of ~~unproved~~delay ~~properties~~rentals. Cash ~~used~~provided inby investing activities was $35182,~~803~~048 for the ~~nine~~three months ended ~~November~~May 3031, ~~2008~~2009, ~~for~~primarily from the ~~payment~~sale of ~~delay~~the ~~rentals~~Company’s interest in certain undeveloped pproperties.

There were no financing activities for the ~~nine~~three months ended ~~November~~May 3031, ~~2009. Cash~~2010 ~~flow~~and ~~provided by financing activities was $185,000 for the nine months ended November 30, 2008, from a private placement of Company stock~~2009.

During the nine months ended November 30, 2008 the Company sold 925,000 units, each unit consisting of one free trading share of its common stock and one warrant to purchase one share of free trading common stock exercisable at $.50 per share. The Company received proceeds of $185,000 from the sale of the units. The offering was made as part of the Form S-1 Post Effective Amendment 3 which became effective on July 14, 2008. Following the above sale, the Company’s outstanding common stock increased to 15,925,000 shares.

Financial Instruments and Other Information

As of ~~November~~May 3031, ~~2009~~2010 we had cash and cash equivalents, accounts payable and accrued liabilities, which are each carried at approximate fair value due to the short maturity date of those instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Critical Accounting Polices and Estimates

Use of Estimates in the Preparation of Financial Statements

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of any oil and gas reserves, assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various assumptions it believes to be reasonable under the circumstances. Although actual results may differ from these estimates under different assumptions or conditions, the Company believes that its estimates are reasonable.

-16-

Oil and Gas Properties

Risks and Uncertainties

Recently Issued Accounting ~~Pronouncements~~Standards:

In ~~June~~January ~~2009~~2010, the FASB ~~approved~~issued ~~the~~an ~~FASB~~update ~~Accounting~~(ASU ~~Standards~~No. ~~Codification (ASC~~2010-06), ~~which~~to ~~after~~ASC ~~its~~820, ~~effective~~“Fair ~~date~~Value ofMeasurement ~~July~~and 1,Disclosures ~~2009~~to isimprove ~~the~~disclosure ~~single~~requirements ~~source~~regarding ~~of authoritative~~transfers, ~~nongovernmental~~classes ~~U.S.~~of ~~Generally~~assets ~~Accepted~~and ~~Accounting~~liabilities, ~~Principles~~and ~~(GAAP).~~inputs ~~The~~and ~~Codification reorganizes~~valuation ~~all previous U~~techniques.S. ~~GAAP~~This ~~pronouncements~~Update ~~into~~is ~~roughly~~effective 90for ~~accounting~~interim ~~topics~~ and ~~displays~~annual ~~all~~periods ~~topics~~ending ~~using~~on ~~consistent~~or ~~structure.~~after ~~All~~December ~~existing~~15, ~~standards~~2009, ~~that~~The ~~were~~company ~~used~~adopted tothis ~~create~~ASC ~~the~~update ~~Codification~~on ~~are~~January ~~now superseded~~1, ~~replacing~~2010 ~~the~~and ~~previous~~it ~~references~~had tono ~~specific Statements of Financial Accounting Standards (SFAS) with numbers used in the Codification’s structural organization. The adoption of this guidance did not have a~~ material impact onthe ~~our~~consolidated financial statements. ~~We have updated our disclosures accordingly.~~

In February 2010, the FASB issued an update (ASU No.2010-~~17-~~09) to ASC 855, Subsequent Events by removing the requirement for an SEC filer to disclose the date through which that filer had evaluated subsequent events. The Company has adopted this change and therefore has removed the related disclosure from the “Basis of Presentation”.

Off-Balance Sheet Arrangements

From time-to-time, we may enter into off-balance sheet arrangements and transactions that can give rise to off-balance sheet obligations. As of ~~November~~May 3031, ~~2009~~2010 and ~~November 30~~2009, ~~2008,~~ there were no off –balance sheet arrangements.

ITEM 4T.

CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and the Principal Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~November~~May 3031, ~~2009~~2010. Based on this evaluation, the Chief Executive Officer and Principal Financial Officer concluded that, as of ~~November~~May 3031, ~~2009~~2010, the Company’s disclosure controls and procedures ~~were~~are effective.

There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended ~~November~~May 3031, ~~2009~~2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting,

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings None ITEM 2. Unregistered Sales of Equity Securities. None ITEM 3. Default Upon Senior Securities None ITEM 4. Submission of Matters to a Vote of Security Holders None ITEM 5. Other Information None EXHIBITS.

Exhibits	Document Description
31.1	Section 302 Certification of Principal Executive Officer.
31.2	Section 302 Certification of Principal Financial Officer.
32.1	Section 906 Certification of Chief Executive Officer.
32.2	Section 906 Certification of Chief Financial Officer.

ITEM 2. Unregistered Sales of Equity Securities. None

~~-18-~~ITEM 3. Default Upon Senior Securities None

ITEM 4. Submission of Matters to a Vote of Security Holders None

ITEM 5. Other Information None

ITEM 6.	EXHIBITS.

Exhibits	Document Description
31.1	Section 302 Certification of Principal Executive Officer.
31.2	Section 302 Certification of Principal Financial Officer.
32.1	Section 906 Certification of Chief Executive Officer.
32.2	Section 906 Certification of Chief Financial Officer.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this ~~5th~~8th day of ~~January~~July, 2010.

Sterling Oil & Gas Company BY: TIMOTHY BARRITT Timothy Barritt, President and Principal Executive Officer BY: RICHARD G. STIFEL Richard G. Stifel, Principal Accounting Officer and Principal Financial Officer

~~-19-~~17

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