Summary of XTREME OIL & GAS, INC.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q (the "Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Discussions containing such forward-looking statements may be found in Part I. Items 2 and 3 hereof, as well as within this Report generally. All statements, other than statements of historical facts, concerning, among other things, planned capital expenditures, potential increases in oil and natural gas production, the number and location of wells to be drilled in the future, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as "may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "will," "continue," "potential," "should," "could" and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. One should consider carefully the statements under the "Risk Factors" section of our Annual Report on Form 10-K filed with the SEC (the "Form-10K"), which describe factors that could cause our actual results to differ from those anticipated in the forward-looking statements, including, but not limited to, the following factors:

· our ability to successfully develop our undeveloped acreage primarily held in Texas;

· volatility in commodity prices for oil and natural gas;

· the possibility that the industry may be subject to future regulatory or legislative actions (including any additional taxes and changes in environmental regulation);

· the presence or recoverability of estimated oil and natural gas reserves and the actual future production rates and associated costs;

· the potential for production decline rates for our wells to be greater than we expect;

· our ability to generate sufficient cash flow from operations, borrowings or other sources to enable us to fully develop our undeveloped acreage positions;

· our ability to replace oil and natural gas reserves;

· environmental risks;

· drilling and operating risks;

· exploration and development risks;

· competition, including competition for acreage in resource-style areas;

· management's ability to execute our plans to meet our goals;

· our ability to retain key members of senior management and key technical employees;

· our ability to obtain goods and services, such as drilling rigs and tubulars, and access to adequate gathering systems and pipeline take-away capacity, necessary to execute our drilling program;

· our ability to secure firm transportation for natural gas we produce and to sell natural gas at market prices;

· general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business, may be less favorable than expected, including the possibility that the economic recession and credit crisis in the United States will be prolonged, which could adversely affect demand for oil and natural gas and make it difficult to access financial markets;

· continued hostilities in the Middle East and other sustained military campaigns or acts of terrorism or sabotage; and

· other economic, competitive, governmental, legislative, regulatory, geopolitical and technological factors that may negatively impact our business, operations or pricing.

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in the section entitled "Risk Factors" included in the Form 10-Q. All forward-looking statements are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this document. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. - continued

Overview

Xtreme Oil & Gas, Inc. is a growing independent energy company focused on the acquisition, development, ownership, operation and investment in energy-related businesses and assets, including, without limitation, the acquisition, exploration and development of natural gas and crude oil, and other related businesses which management believes have potential for improved production rates and resulting income by application of both conventional and non-conventional improvement and enhancement techniques. As of March 31, 2012 we own working interests in over 10,000 acres of oil and gas leases in Kansas, Texas and Oklahoma that now include 10 gross producing wells and 55 gross non-producing wells. Xtreme plans to pursue an ongoing reworking and drilling program to increase production from its properties.

During the first quarter 2012 work was completed on the Saltwater Disposal well project and we received final approval to inject fluids from the Oklahoma Corporation Commission in September 2011.

Our revenues are derived from the sale of oil and gas products and sale of interests, principally in drilling programs. In 2008 we derived a small amount of revenue from contract drilling on one project, the Oil Creek, but have no plans to engage in contract drilling in the future.

We have been an operating company since 2006 with the acquisition of Emerald Energy and have had revenues from operations for more than four years.

Results of Operations.

For the Three Months Ended March 31, 2012 compared to 2011

Revenues

For the three months ended March 31, 2012, revenue was $891,850 a decrease of $125,405 from $1,017,255 for the three months ended March 31, 2011. The decrease was principally due to a reduction in income from working interest sales. Revenue for oil sales for the three months ended March 31, 2012 was $21,125.

Currently, most of our revenues have come from the sale of working interest in our oil and gas properties, such sales reflecting approximately 98% of our revenues in the first quarter of 2012 and approximately 99% of our revenues in the first quarter of 2011. Accordingly, the decline in revenue reflects a decline in our sales of working interests, sales which declined to $870,725 in 2012 from $1,004,161 in 2011. This decline was modestly offset by an increase in sales of oil and gas, sales which totaled $13,094 in the earlier period compared to $21,125 in the later period.

When we sell working interests in our leases, we accrue a deposits payable liability and recognize revenue as the property related to the working interest is drilled. In the 2011 period, the revenues from the sale of working interests related to the West Thrifty prospect, and our oil and gas sales in 2012 relate to that activity. We are currently engaged in further development of that property to assure the success of 2011's drilling activity. The revenue from sale of working interests in 2012 relate to our development of the salt water well and drilling on the Smoky Hills prospect, the saltwater well now fully operational in the second quarter of 2012 and drilling completed on the Smoky Hill prospect.

Expenses

Oil production costs for the three months ended March 31, 2012 totaled $11,683, a decrease of $48,858 from $60,541 for the three months ended March 31, 2011. The decrease is due to reduced maintenance activities on all of our properties.

General and administrative expenses totaled $410,250, for the three months ended March 31, 2012, a decrease of $81,573, from $491,823 for the three months ended March 31, 2011. This reduction in general and administrative expense is largely driven by reduction in expenses for services delivered. These expenses, incurred in 2012, included salaries, utilities and rent, consulting fees, and presentation fees.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations. - continued

Other Income/(Expenses)

Net cost recovery after expenses for litigation and repairs incurred by the Company from the damages to the Lionheart well totaled $478,865 for the three months ended March 31, 2012, an increase of $478,865 from the three months ended March 31, 2011. We expect to use the remaining proceeds of these settlements to redevelop the property and attempt to produce oil from other depths in an undamaged part of the wellbore.

Other income and expense are largely driven by our debt offering in September 2011. Amortization of debt discount and interest expense totaled almost $360,000. Derivative expense related to the convertible debt and warrants issued in the offering was $1,083,368 for the quarter. This expense, a non-cash charge, is particularly volatile as we incurred, for example, derivative income of almost $3,000,000 in the fourth quarter of 2011.

These debt related expenses were offset by income that arose out of our settlement of litigation relating to the Lionheart prospect.

Other expenses totaled $595,040 for the three months ended March 31, 2012 compared to $0 for the period ended March 31, 2011, an increase of $595,040. The increase was due primarily to accounting charges taken for derivative instruments during the period ended March 31, 2012. Other income includes settlements with vendors totaling $425,240 and the settlement from damages to the Lionheart well totaling $478,865.

Net loss

For the three months ended March 31, 2012, we had net loss of $254,962 compared to a profit of $454,559 for the three months ended March 31, 2011. This change in net loss was primarily due to accounting charges taken for derivative instruments during the period ended March 31, 2012. Our operating profit declined in the first quarter of 2012 to $340,078 from $454,599, the decline in operating profit essentially reflecting the decline in revenue, $1,017,255 in the 2011 period to $891,850 in 2012. Other expenses, none in the 2011 quarter, were $595,040 in the 2012's first quarter.

For the three months ended March 31, 2012 our net loss per share on a basic and diluted basis was $0.01 compared to a net income of $0.01 per share for the three months ended March 31, 2011.

Liquidity and Capital Resources

Cash flow provided by operations was $316,941 for the three months ending March 31, 2012. Cash flow used in investing activities was ($216,425) for the three months ended March 31, 2012. Cash flow used by financing activities was ($320,115) for the three months ended March 31, 2012. As of March 31, 2012, we are unable to determine whether we will generate sufficient cash from our oil and gas operations to fund our operations for the next twelve months. Although we expect cash flow from operations to rise as our operations improve and the number of projects we successfully develop grows, we believe that we will raise, probably through the private placement of equity securities, additional capital to assure we have the necessary liquidity for 2012.

Our cash requirements, mostly for corporate expenses, are projected to be approximately $80,000 per month or $960,000 for the next 12 months, and our drilling activity has been funded from drilling programs. Revenue from existing oil production is not yet consistent on a monthly basis, and we cannot predict whether our cash flows from the future completion of our current drilling operations and pending Saltwater Disposal Well will be sufficient to meet our monthly cash requirements.

To continue with our business plan including the funding of operations, we may require additional capital to develop properties and believe that we will continue to raise capital and generate revenue by selling interest in prospects to investors through drilling programs and through future offerings of equities.

If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for business growth. The necessary additional financing may not be available or may be available only on terms that would result in excessive further dilution to the current owners of our common stock or at unreasonable costs of capital.