##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D. C.
    20549
  Form 10-K
  ANNUAL REPORT
 PURSUANT TO SECTIONS 13 OR
    15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended June
    30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File number 0-14183
  ENERGY WEST,
    INCORPORATED
 (Exact name of registrant as
    specified in its charter)
  Montana

81-0141785(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   1 First Avenue South, Great Falls, Montana 59401
 (Address of principal executive
    offices) (Zip Code)
 Registrants telephone number, including area code
 (406) 791-7500
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon, par value $.15 per share

Nasdaq National Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
    Form 10-K, Form 10-K




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##### 



TABLE OF
    CONTENTS
  PagePart
    I


1Item 1.


Business


1Item 1A.


Risk
    Factors


7Item 1B.


Unresolved Staff
    Comments


11Item 2.


Properties


11Item 3.


Legal
    Proceedings


11Item 4.


Submission of
    Matters to a Vote of Security Holders


11Part II


12Item 5.


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


12Item 6.


Selected Financial
    Data


14Item 7.


Managements
    Discussion and Analysis of Financial Condition and Results of
    Consolidated Operations


15Item 7A.


Quantitative and
    Qualitative Disclosures About Market Risk


29Item 8.


Financial
    Statements and Supplementary Data


30Item 9.


Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


30Item 9A.


Controls and
    Procedures


30Item 9B.


Other
    Information


31Part III


31Item 10.


Directors,
    Executive Officers and Corporate Governance


31Item 11.


Executive
    Compensation


31Item 12.


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


31Item 13.


Certain
    Relationships and Related Transactions and Director
    Independence


31Item 14.


Principal
    Accountant Fees and Services


31Part IV


32Item 15.


Exhibits and
    Financial Statement Schedules


32Signatures


35EX-3.1(C)EX-10.22EX-14EX-21EX-23.1EX-31EX-32    Forward-Looking
    Statements
  Form 10-K
   i




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##### Table of Contents



PART I
  Item 1.
    Business.  Overview
     Natural Gas Operations
    
    Distributes approximately 6.4 billion cubic feet of natural
    gas to approximately 34,000 customers through regulated
    utilities operating in and around Great Falls and West
    Yellowstone, Montana, and Cody, Wyoming. The approximate
    population of the service territories is 94,000. Energy West Resources, Inc. (EWR)
    
    Markets approximately 1.6 billion cubic feet of natural gas
    to commercial and industrial customers in Montana and Wyoming
    and manages midstream supply and production assets for
    transportation customers and utilities. EWR also has an
    ownership interest in 165 natural gas producing wells and gas
    gathering assets. Wholesale propane sold to our affiliated
    utility and the associated expense is now reported in EWR. It
    had previously been reported in Propane Operations. Pipeline Operations (EWD)
    
    Owns the Shoshone interstate and the Glacier gathering natural
    gas pipelines located in Montana and Wyoming. Certain natural
    gas producing wells owned by our Pipeline Operations subsidiary
    are being managed and reported under the operations of EWR. Propane Operations (Discontinued Operations)
    
    Annually distributed approximately 5.4 million gallons of
    propane to approximately 8,000 customers through utilities
    operating underground vapor systems in and around Payson, Pine,
    and Strawberry, Arizona and retail distribution of bulk propane
    to approximately 2,300 customers in the same Arizona
    communities. The Arizona assets were sold during fiscal year
    2007, and are disclosed as discontinued operations in this
    report. See page 4. The small Montana wholesale
    distribution of propane to our affiliated utility that had been
    reported in Propane Operations is now being reported in EWR.  See Note 10 to our Consolidated Financial Statements for
    financial information for each of our segments.
  Recent
    Developments
     1




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Natural
    Gas Operations
    Natural
    Gas  Montana Division
       2




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Gas
    Revenue
  Years Ended June 30,2007


2006


2005(In thousands)Residential

$
19,287


$
22,155


$
18,116Commercial


12,894



14,233



11,437Transportation


2,058



1,961



1,939Total

$
34,239


$
38,349


$
31,492       Gas
    Volumes
  Years Ended June 30,2007


2006


2005(In MMcf)Residential


2,097



1,978



2,136Commercial


1,267



1,210



1,267Transportation


1,526



1,524



1,493Total Gas Sales


4,890



4,712



4,896           Natural
    Gas  Wyoming Division
     3




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Gas
    Revenue
  Years Ended June 30,2007


2006


2005(In thousands)Residential

$
4,657


$
5,883


$
4,805Commercial


2,990



5,771



4,434Industrial


4,348



5,741



4,059Total

$
11,995


$
17,395


$
13,298       Gas
    Volumes
  Years Ended June 30,2007


2006


2005(In MMcf)Residential


526



478



519Commercial


593



567



582Industrial


472



684



643Total Gas Sales


1,591



1,729



1,744         Energy
    West Resources
   4




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##### Table of Contents



Pipeline
    Operations
      Propane
    Operations  (Discontinued Operations)
      and/or
     5




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Assets
    and Liablilities Held for Sale
  June 30, 2006Assets held for sale:Accounts Receivable

$
194,746Unbilled Gas


296,730Propane Inventory


566,179Materials and Supplies


111,701Prepayments


29,096Recoverable cost of gas purchases


1,243,931Property, Plant and Equipment, Net


9,214,187Total Assets held for sale


11,656,570Liablilities held for sale:Accounts Payable


20,203Other Current Liabilities


148,634Contributions in Aid of
    Construction


653,405Total Liabilities held for sale


822,242Net Assets Held for Sale

$
10,834,328   Competition
  and/or
    Governmental
    Regulation
    Seasonality
   6




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##### Table of Contents



Environmental
    Matters
          Employees
    Item 1A.
    Risk
    Factors.    Our results of operations could fluctuate due to a variety of
    factors outside of our control, including the following:
  
    Fluctuating energy commodity prices;
    The possibility that regulators may not permit us to pass
    through all of our increased costs to our customers;
    Changes in general economic conditions in the United States and
    changes in the industries in which we conduct business;
    Our business and that of our subsidiaries in all segments is
    temperature-sensitive. In any given period, sales volumes
    reflect the impact of weather, in addition to other factors;
    Changes in federal or state laws and regulations to which we are
    subject, including tax, environmental, and employment laws and
    regulations;
    The impact of the FERC and state public service commission
    statutes, regulations, and actions, including allowed rates of
    return, and the resolution of other regulatory matters; 7




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
    Our ability to obtain governmental and regulatory approval of
    various expansion or other projects;
    The costs and effects of legal and administrative claims and
    proceedings against us or our subsidiaries;
    Conditions of the capital markets we utilize to access capital;
    The ability to raise capital in a cost-effective way;
    The ability to meet financial covenants imposed by lenders;
    The effect of changes in accounting policies, if any;
    The ability to manage our growth;
    The ability to control costs;
    The ability of each business unit to successfully implement key
    systems, such as service delivery systems;
    Our ability to develop expanded markets and product offerings
    and our ability to maintain existing markets;
    The ability of customers of the energy marketing and trading
    business to obtain financing for various projects;
    The ability of customers of the energy marketing and trading
    business to obtain governmental and regulatory approval of
    various projects;
    Future utilization of pipeline capacity, which can depend on
    energy prices, competition from alternative fuels, the general
    level of natural gas and propane demand, decisions by customers
    not to renew expiring natural gas contracts, and weather
    conditions;
    Global and domestic economic repercussions from terrorist
    activities and the governments response thereto; and
    Disruptions to natural gas supplies or prices caused by man-made
    or natural disasters, such as tropical storms or hurricanes.  We are subject to comprehensive regulation by several
    federal, state, and local regulatory agencies, which
    significantly influence our operating environment and may affect
    our ability to recover costs from utility
    customers.
     8




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Our business and that of our subsidiaries in all segments is
    temperature-sensitive.
  The use of derivative contracts in the normal course of our
    business and changing interest rates and market conditions could
    result in financial losses that negatively impact our results of
    operations.
    We are subject to numerous environmental laws and regulations
    that may increase our cost of operations, impact our business
    plans, or expose us to environmental
    liabilities.
  clean-up clean-up
    We will face a variety of risks associated with acquiring and
    integrating new business operations.
  
    Identify suitable acquisition candidates or opportunities;
    Acquire assets or business operations on commercially acceptable
    terms;
    Effectively integrate the operations of any acquired assets or
    businesses with our existing operations;
    Manage effectively the combined operations of the acquired
    businesses;
    Achieve our operating and growth strategies with respect to the
    acquired assets or businesses; or
    Reduce our overall selling, general, and administrative expenses
    associated with the acquired assets or businesses. 9




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Our performance depends substantially on the performance of
    our executive officers and other key
    personnel.
  Failure to achieve and maintain effective internal controls
    in accordance with Section 404 of the Sarbanes-Oxley Act
    could have a material adverse effect on our business and stock
    price. Form 10-K Form 10-K
      Our
    actual results of operations could differ from estimates used to
    prepare our financial statements.
    
    Regulatory Accounting  Regulatory accounting
    allows for the actions of regulators to be reflected in the
    financial statements. Their actions may cause us to capitalize
    costs that would otherwise be included as an expense in the
    current period by unregulated companies. If future recovery of
    costs ceases to be probable, the assets will be written off as a
    charge in current period earnings. 10




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
    Derivative Accounting  Derivative accounting
    requires evaluation of rules that are complex and subject to
    varying interpretations. Our evaluation of these rules, as they
    apply to our contracts, will determine whether we use accrual
    accounting or fair value (mark-to-market) accounting.
    Mark-to-market accounting requires us to record changes in fair
    value in earnings or, if certain hedge accounting criteria are
    met, in common stock equity (as a component of other
    comprehensive income (loss)).  Events in the energy markets that are beyond our control may
    have negative impacts on our business.
  Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.  Montana
    Wyoming
    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   11




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PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity
    Securities.  Our
    Common Stock
    Fiscal Year 2007

High


LowFirst Quarter

$
11.94


$
9.02Second Quarter

$
12.00


$
10.78Third Quarter

$
15.00


$
11.10Fourth Quarter

$
16.22


$
13.51   Fiscal Year 2006

High


LowFirst Quarter

$
13.89


$
8.20Second Quarter

$
11.60


$
8.59Third Quarter

$
11.00


$
8.57Fourth Quarter

$
11.00


$
8.70   Holders
    of Record
    Dividend
    Policy
    October 28, 2005

$
0.04January 31, 2006

$
0.05May 31, 2006

$
0.08August 28, 2006

$
0.10November 2, 2006

$
0.12February 13, 2007

$
0.14May 3, 2007

$
0.15September 25, 2007

$
0.16   Recent
    Sales of Unregistered Securities
    Purchases
    of Equity Securities by Our Company and Affiliated
    Purchasers
  Total Number of

Maximum Number ofShares Purchased

Shares that may yet beTotal Shares

Average Price

as Part of Publicly

Purchased Under thePeriod

Purchased

Paid per Share

Announced Plans

Stock Repurchase PlanMay 30, 2007 
    June 30, 2007


146,348


$
15.00



146,348



152,652    12




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Performance
    Graph
  6/30/2002 6/30/2007.
  COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
  Among
    ENERGY WEST Incorporated, The S&P 500 Index
 And The
    S&P Utilities Index
  
  *
    $100 invested on
    6/30/02 in
    stock or index-including reinvestment of dividends. Fiscal year
    ending June 30.  ©
 13




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Item 6.
    Selected
    Financial Data.  Form 10-K.
  2007


2006


2005


2004


2003Operating resultsOperating revenue

$
59,373


$
74,696


$
67,889


$
58,664


$
59,357Operating expensesGas and electric purchases


43,806



60,398



53,510



46,981



47,962General and administrative


6,198



6,389



7,309



8,020



8,986Maintenance


567



505



521



399



411Depreciation and amortization


1,692



1,672



1,790



1,812



1,797Taxes other than income(1)


1,697



1,453



1,479



1,058



701Total operating expenses


53,960



70,417



64,609



58,270



59,857Operating income (loss)


5,413



4,279



3,280



394



(500
)Other
    income-net


241



391



235



204



114Total interest charges(2)


2,124



1,649



2,113



1,933



1,238Income (loss) before taxes


3,530



3,021



1,402



(1,335
)


(1,624
)Income tax expense (benefit)


1,273



1,109



475



(412
)


(618
)Discontinued operations (net of
    tax)


3,955



405



454



367



149Net Income (Loss)

$
6,212


$
2,317


$
1,381


$
(556
)

$
(857
)Basic earnings (loss) per common
    share

$
2.10


$
0.79


$
0.53


$
(0.36
)

$
(0.39
)Diluted earnings (loss) per common
    share

$
2.08


$
0.79


$
0.53


$
(0.21
)

$
(0.33
)Dividends per common share(3)

$
0.51


$
0.17


$
0.00


$
0.00


$
0.41Weighted average common shares
    Outstanding  diluted


2,989,382



2,948,046



2,630,679



2,596,454



2,586,487At year end:Current assets

$
17,768


$
23,669


$
15,423


$
16,739


$
15,790Total assets

$
51,834


$
57,931


$
59,433


$
61,445


$
60,027Current liabilities

$
7,694


$
10,796


$
11,525


$
16,725


$
21,833Total long-term obligations

$
13,000


$
17,605


$
18,677


$
21,697


$
14,834Total stockholders equity

$
22,296


$
19,165


$
17,187


$
13,401


$
13,957Total capitalization

$
35,296


$
36,770


$
35,864


$
35,098


$
28,791     (1)
    
    Taxes other than income include approximately $290,000 increases
    in property tax in fiscal 2004, 2005 and another $250,000 in
    2007 for additional personal property taxes assessed by the
    Montana Department of Revenue.(2)
    
    Total interest charges reflect the costs associated with the
    addition of $6,000,000 of long-term debt and a $2,000,000 bridge
    loan incurred in March 2004. In May 2005, we paid off the
    $2,000,000 bridge loan and during fiscal 2006 we reduced the
    line of credit significantly, thus reducing interest in fiscal
    2006. In fiscal 2007, we refinanced our long-term debt,
    resulting in the $991,000 expensing of debt issue costs related
    to the refinanced debt.(3)
    
    There were no cash dividends paid between April 2003 and
    September 2005. 14




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Consolidated Operations.  page F-1
  Executive
    Overview
          Strategy
    
    Focus on the natural gas distribution and related businesses and
    expanding our operations in small regional and emerging markets;
    Acquire additional gas production, gathering, and pipeline
    assets or operations, which provide higher operating margins
    than our regulated business operations;
    Pursue appropriate regulatory treatment of higher commodity
    prices;
    Seek cost-effective expansion of our customer base by prudently
    managing capital expenditures and ensuring that new customers
    provide sufficient margins for an appropriate return on the
    additional resources and investment required to serve the
    customers;
    Continue to focus on operational efficiencies;
    Manage cash flow to reduce our existing debt; 15




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
    Maintain and improve our positive reputation with regulators and
    customers; and
    Refine our corporate infrastructure to be able to provide a
    platform for additional projects with limited incremental
    expenses.  Opportunities
    and Challenges
    
    We possess many competitive strengths, including:  
    Our demonstrated ability to operate successfully in smaller
    regional and emerging markets;
    Geographic proximity of our regulated natural gas business to
    gas production and our pipelines to active drilling;
    Investment grade financial strength and resources of our natural
    gas suppliers;
    Our positive reputation with regulators and customers; and
    Our corporate infrastructure, which provides a platform for
    additional projects with limited incremental expenses.  
    Prospects for continuing our residential and commercial customer
    growth are excellent. The pace of new home and commercial
    construction remains steady in the communities we serve. We
    believe demand for natural gas will remain strong because it
    provides a clean, easy to use, and efficient source of fuel for
    heating and cooking.
    We carefully analyze the economics of our spending to support
    growth. When justified under our tariffs, we work with
    developers, business owners, and residents to share certain
    construction costs to assure a fair return to us.
    Non-revenue-generating spending is also managed to assure that
    we use the most economically attractive solutions, while
    providing for a safe and reliable system.
    We are analyzing drilling opportunities within our gas
    production property located in north central Montana and
    drilling activities in other gas producing areas near our
    pipeline properties located in southeast Montana and northwest
    Wyoming to increase revenues and margins.    
    Our primary markets in Montana and Wyoming historically have not
    experienced the rapid population growth rates experienced by
    other areas in the United States in recent years.
    Our relatively small size makes us vulnerable to earnings
    variations as a result of a variety of factors, including the
    following:  
    Loss of one of our natural gas suppliers;
    Loss of key personnel; or
    Significant litigation or other one-time expenses.  
    Our overall revenues and margins are negatively affected by
    higher efficiency in new homes and commercial buildings, higher
    efficiency in gas-burning equipment, and customer measures to
    reduce energy usage. The increasing cost of energy in recent
    years, including the wholesale cost of natural gas, continues to
    encourage such measures.
    We earn approximately 5.4% of our operating margin by providing
    gas marketing services to unregulated commercial and
    industrial gas customers. The loss of a major customer, or
    unfavorable conditions affecting an industry segment, could have
    a detrimental impact on our earnings. Many external factors over
    which we have no control can significantly impact the amount of
    gas consumed by industrial and commercial 16




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customers and, consequently, affect the margins we earn. To
    mitigate these risks, we endeavor to enter into sales agreements
    through which we can match estimated demand with a supply that
    provides an acceptable margin.  
    Revenues and margins from our residential and small commercial
    customers are highly weather-sensitive. In a cold year, our
    earnings are increased by the effects of the weather.
    Conversely, in a warm year, our earnings are lower. Peak
    requirements also drive the need to reinforce our systems to
    increase capacity, which in turn, increases costs.    Critical
    Accounting Policies and Estimates
    Regulatory
    Accounting
        Accumulated
    Provisions for Doubtful Accounts
   17




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Unbilled
    Revenues and Gas Costs
    Recoverable/Refundable
    Costs of Gas and Propane Purchases
    Derivatives
  Accounting for Derivative Instruments and Hedging
    Activities
  
    There is variability in mark-to-market earnings due
    to changes in the commodity price for gas. Our portfolio is
    valued based on current and expected future gas prices. Changes
    in these prices can cause fluctuations in earnings.
    We discount derivative assets and liabilities using risk-free
    interest rates adjusted for credit standing in accordance with
    SFAS No. 133, which is more fully described in Statement of
    Financial Accounting Concepts No. 7, Using Cash Flow
    Information and Present Value in Accounting Measurement.    Results
    of Consolidated Operations
    Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
  Net Income
 18




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Revenues
  Gross Margin
  Expenses Other Than Costs of Sales
  Other Income
  Interest Expense
  Income Tax Expense
  Discontinued
    Operations
    Income from Discontinued Operations Before Income
    Tax
  Gain from Disposal of Operations
  Income Tax (Expense)
 19




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##### Table of Contents



Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  Net Income
  Revenues
  Gross Margin
  Expenses Other Than Costs of Sales
  Other Income
  Interest Expense
  Income Tax Expense from Continuing Operations
  Discontinued
    Operations
  Income from Discontinued Operations Before Income
    Tax
  Income Tax (Expense)
 20




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Operating
    Results of our Natural Gas Operations
  Years Ended June 302007


2006


2005(In thousands)Natural Gas
    OperationsOperating revenues

$
46,439


$
55,453


$
44,555Gas Purchased


33,542



43,161



32,559Gross Margin


12,897



12,292



11,996Operating expenses


9,307



9,160



9,666Operating income


3,590



3,132



2,330Other (income)


(229
)


(358
)


(166
)Income before interest and taxes


3,819



3,490



2,496Interest expense


1,897



1,425



1,775Income before income taxes


1,922



2,065



721Income tax (expense)


(653
)


(741
)


(216
)Net income

$
1,269


$
1,324


$
505   Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
  Natural Gas Revenues and Gross Margins
      Natural Gas Operating Expenses
  Natural Gas Other Income
  Natural Gas Interest Expense
  Natural Gas Income Tax Benefit (Expense)
  Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  Natural Gas Revenues and Gross Margins
   21




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##### Table of Contents



Natural Gas Operating Expenses
  Natural Gas Other Income
  Natural Gas Interest Expense
  Natural Gas Income Tax Expense
  Operating
    Results of our EWR Operations
  Years Ended June 302007


2006


2005(In thousands)Energy West
    ResourcesOperating revenues

$
12,545


$
18,832


$
22,910Gas Purchased


10,264



17,238



20,951Gross Margin


2,281



1,594



1,959Operating expenses


559



711



1,230Operating income


1,722



883



729Other (income)


(2
)


(33
)


(67
)Income before interest and taxes


1,724



916



796Interest expense


185



182



282Income before income taxes


1,539



734



514Income tax (expense)


(593
)


(284
)


(204
)Net income

$
946


$
450


$
310   Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
    EWR Revenues and Gross Margins
   22




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EWR Operating Expenses
  EWR Other Income
  EWR Interest Expense
  EWR Income Tax Expense
  Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  EWR Revenues and Gross Margins
    EWR Operating Expenses
  EWR Other Income
  EWR Interest Expense
  EWR Income Tax Expense
 23




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Operating
    Results of our Pipeline Operations
  Years Ended June 302007


2006


2005(In thousands)Pipeline OperationsOperating revenues

$
388


$
411


$
424Gas Purchased


0



0



0Gross Margin


388



411



424Operating expenses


289



149



202Operating income


99



262



222Other (income)


(11
)


0



(2
)Income before interest and taxes


110



262



224Interest expense


42



41



56Income before income taxes


68



221



168Income tax (expense)


(26
)


(85
)


(55
)Net income

$
42


$
136


$
113   Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
  Pipeline Revenues and Gross Margins
  Pipeline Operating Expenses
  Pipeline Other Income
  Pipeline Interest Expense
  Pipeline Income Tax (Expense)
  Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  Pipeline Revenues and Gross Margins
  Pipeline Operating Expenses
  Pipeline Other Income
  Pipeline Interest Expense
 24




---



##### Table of Contents



Pipeline Income Tax (Expense)
  Discontinued
    Operations
  Years Ended June 302007


2006


2005(In thousands)Discontinued
    Operations:Income from discontinued
    operations before income tax

$
976


$
671


$
732Gain from disposal of operations


5,479Income tax (expense)


(2,500
)


(266
)


(278
)Income from discontinued operations

$
3,955


$
405


$
454   Fiscal
    Year Ended June 30, 2007 Compared to Fiscal Year Ended
    June 30, 2006
    Income from discontinued operations before income
    tax
  Gain from disposal of operations
  Income Tax (Expense)
  Fiscal
    Year Ended June 30, 2006 Compared to Fiscal Year Ended
    June 30, 2005
  Income from discontinued operations before income
    tax
  Income Tax (Expense)
  Consolidated
    Cash Flow Analysis
  Sources
    and Uses of Cash
     25




---



##### Table of Contents



Years Ended June 30,2007


2006


2005Cash provided by (used in)
    operating activities

$
(1,271,000
)

$
8,529,000


$
737,000Cash used in investing activities


15,819,000



(1,583,000
)


(1,859,000
)Cash provided by (used in)
    financing activities


(9,178,000
)


(5,401,000
)


(107,000
)Increase (decrease) in cash

$
5,370,000


$
1,545,000


$
(1,229,000
)         Governmental
    Regulation
   26




---



##### Table of Contents



Liquidity
    and Capital Resources
      LaSalle Line of Credit
    First


Second


Third


FourthQuarter


Quarter


Quarter


QuarterYear Ended June 30,
    2007Minimum borrowing

$



$
2,900,000


$



$
Maximum borrowing

$
2,900,000


$
6,200,000


$
3,502,000


$
6,700,000Average borrowing

$
282,000


$
4,384,000


$
392,000


$
485,000Year Ended June 30,
    2006Minimum borrowing

$
3,100,000


$
5,200,000


$



$
Maximum borrowing

$
5,200,000


$
12,250,000


$
12,050,000


$
Average borrowing

$
4,167,000


$
9,489,000


$
5,619,000


$
Year Ended June 30,
    2005Minimum borrowing

$
7,729,000


$
12,688,000


$
3,500,000


$
2,700,000Maximum borrowing

$
13,129,000


$
14,629,000


$
13,929,000


$
3,900,000Average borrowing

$
10,196,000


$
13,982,000


$
8,110,000


$
3,167,000   60-month
   27




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##### Table of Contents



Contractual
    Obligations
    1 Year








AfterContractual Obligations

Total


or Less


2-3 Years


4-5 Years


5 YearsInterest payments(a)

$
8,008,000


$
800,800


$
1,601,600


$
1,601,600


$
4,004,000Long Term Debt(b)


13,000,000















13,000,000Operating Lease Obligations


97,224



90,624



6,600







Transportation and Storage
    Obligation(c)

$
11,493,080



4,367,715



7,125,365







Total Obligations

$
32,598,304


$
5,259,139


$
8,733,565


$
1,601,600


$
17,004,000     (a)
    
    Our long-term debt interest payments are projected based on
    actual interest rates on long-term debt until the underlying
    debts mature.(b)
    
    See Note 7 of the Notes to Consolidated Financial
    Statements for a description of this debt.(c)
    
    Transportation and storage obligations represent annual
    commitments with suppliers for periods extending up to four
    years. These costs are recoverable in customer rates.    Capital
    Expenditures
    EstimatedFuture CashActual


Requirements2007


2008(In thousands)Natural Gas Operations

$
2,024


$
2,059Energy West Resources


361



Pipeline Operations


21



Total capital expenditures

$
2,406


$
2,059  28




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##### Table of Contents



New
    Accounting Pronouncements
  Accounting for Certain Hybrid Financial Instruments Accounting for Derivative Instruments
    and Hedging Activities Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities
  Accounting for Servicing of Financial Assets  an
    amendment to FASB Statement No. 140
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
    (FIN 48).
        Off-Balance-Sheet
    Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk   29




---



##### Table of Contents



Commodity
    Price Risk
    Interest
    Rate Risk
    Credit
    Risk
    Item 8.
    Financial
    Statements and Supplementary Data.  page F-1 Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Form 10-K,
   30




---



##### Table of Contents



Form 10-K, Rules 13a-15(e) 15d-15(e)
  Item 9B.
    Other
    Information.    PART III
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.    Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   31




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##### Table of Contents



PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedules.  (a)
    Financial
    Statements:  PageReport of Independent Registered
    Public Accounting Firm  Hein & Associates
    LLP


F-2Consolidated Balance Sheets


F-3Consolidated Statements of Income


F-4Consolidated Statements of
    Stockholders Equity


F-5Consolidated Statements of Cash
    Flows


F-6Notes to Consolidated Financial
    Statements


F-8Schedule II 
    Valuation and Qualifying Accounts


34   (b)
    Exhibit Index.  ExhibitNumber

Description3.1(a)

Restated Articles of
    Incorporation. Exhibit 3.1 to Amendment No. 1 to the
    Registrants Annual Report on
    Form 10-K/A
    for the year ended June 30, 1996, as filed on July 8,
    1997, is incorporated herein by reference.3.1(b)

Articles of Amendment to the
    Articles of Incorporation dated June 3, 2004.
    Exhibit 3.2 to the Registrants Current Report on
    Form 8-K,
    as filed on June 4, 2007, is incorporated herein by
    reference.3.1(c)**

Articles of Amendment to the
    Articles of Incorporation dated October 31, 2005.3.1(d)

Articles of Amendment to the
    Articles of Incorporation dated May 29, 2007.
    Exhibit 3.1 to the Registrants Current Report on
    Form 8-K,
    as filed on June 4, 2007, is incorporated herein by
    reference.3.2

Amended and Restated Bylaws.
    Exhibit 3.2 to the Registrants Current Report on
    Form 8-K,
    as filed on March 5, 2004, is incorporated herein by
    reference.10.1(a)

Satisfaction and Discharge of
    Indenture dated June 22, 2007, between the Registrant and
    HSBC Bank USA, National Association, as Successor Trustee for
    the Series 1997 Notes. Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K,
    as filed July 5, 2007, is incorporated herein by reference.10.1(b)

Satisfaction and Discharge of
    Indenture dated June 22, 2007, between the Registrant and
    US Bank National Association, as Successor Trustee for the
    Series 1993 Notes. Exhibit 10.2 to the
    Registrants Current Report on
    Form 8-K,
    as filed July 5, 2007, is incorporated herein by reference.10.1(c)

Discharge of Obligor under
    Indenture dated June 22, 2007, between the Registrant and
    HSBC Bank USA, National Association, as Successor Trustee for
    the
    Series 1992-B
    Bonds. Exhibit 10.3 to the Registrants Current Report
    on
    Form 8-K,
    as filed July 5, 2007, is incorporated herein by reference.10.1(d)

Note Purchase Agreement dated
    June 29, 2007, between the Registrant and various
    Purchasers relating to 6.16% Senior Unsecured Notes due
    June 29, 2017. Exhibit 10.4 to the Registrants
    Current Report on
    Form 8-K,
    as filed July 5, 2007, is incorporated herein by reference.10.1(e)

Credit Agreement dated as of
    June 29, 2007, by and among the Registrant and various
    financial institutions and LaSalle Bank National Association.
    Exhibit 10.5 to the Registrants Current Report on
    Form 8-K,
    as filed July 5, 2007, is incorporated herein by reference.10.2*

Energy West, Incorporated 2002
    Stock Option Plan. Appendix A to the Registrants
    Proxy Statement on Schedule 14A, as filed on
    October 30, 2002, is incorporated herein by reference.10.3*

Employee Stock Ownership Plan
    Trust Agreement. Exhibit 10.2 to Registration
    Statement on
    Form S-1
    (File
    No. 33-1672)
    is incorporated herein by reference.10.4*

Management Incentive Plan.
    Exhibit 10.12 to the Registrants Annual Report on
    Form 10-K/A
    for the year ended June 30, 1996, filed on July 8,
    1997, is incorporated herein by reference.10.5*

Energy West Senior Management
    Incentive Plan. Exhibit 10.19 to the Registrants
    Annual Report on
    Form 10-K
    for the year ended June 30, 2002, as filed on
    September 30, 2002, is incorporated herein by reference. 32




---



##### Table of Contents



ExhibitNumber

Description10.6*

Energy West Incorporated Deferred
    Compensation Plan for Directors. Exhibit 10.20 to the
    Registrants Annual Report on
    Form 10-K
    for the year ended June 30, 2002, as filed on
    September 30, 2002, is incorporated herein by reference.10.10*

Employment Agreement entered into
    as of June 23, 2004, between the Company and David
    Cerotzke. Exhibit 10.16 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended June 30, 2004, as filed on
    December 17, 2004, is incorporated herein by reference.10.11*

Employment Agreement entered into
    as of June 23, 2004, between the Company and John Allen.
    Exhibit 10.17 to the Registrants Annual Report on
    Form 10-K
    for the year ended June 30, 2004, as filed on
    December 17, 2004, is incorporated herein by reference.10.12*

Form of the agreement used to
    grant options under the 2002 Stock Option Plan.
    Exhibit 10.17 to the Registrants Annual Report on
    Form 10-K
    for the year ended June 30, 2005, as filed on
    September 27, 2005, is incorporated herein by reference.10.13

Propane Supply Agreement dated
    April 1, 2005 between SemStream, L.P. and Energy West
    Propane, Inc. Exhibit 10.18 to the Registrants Annual
    Report on
    Form 10-K
    for the year ended June 30, 2005, as filed on
    September 27, 2005, is incorporated herein by reference.10.14*

First Amendment to Employment
    Agreement between the Company and David Cerotzke entered into as
    of January 5, 2006. Exhibit 10.21 to the
    Registrants Annual Report on
    Form 10-Q
    for the quarter ended March 31, 2006 is incorporated herein
    by reference.10.15

Asset Purchase Agreement, dated as
    of July 17, 2006, by and between the Registrant and Energy
    West Propane, Inc., each entity being a Montana corporation, and
    SemStream, L.P., a Delaware limited partnership.
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated July 17, 2006 is incorporated herein by reference.10.16*

Employment Agreement between the
    Registrant and Kevin J. Degenstein, effective September 18,
    2006. Exhibit 10.2 to the Registrants Current Report
    Form 8-K
    dated September 18, 2006 is incorporated herein by
    reference.10.19*

Separation Agreement dated
    September 18, 2006, between the Registrant and Tim Good.
    Exhibit 10.3 to the Registrants Current Report on
    Form 8-K
    dated September 28, 2006 is incorporated herein by
    reference.10.20*

Separation Agreement dated
    September 27, 2006, between the Registrant and John C.
    Allen. Exhibit 10.4 to the Registrants Current Report
    on
    Form 8-K
    dated September 28, 2006 is incorporated herein by
    reference.10.21

Stock Purchase Agreement dated as
    of May 30, 2007 by and among Mark D. Grossi Living
    Trust U/A DTD. Feb. 17, 2006, Mark D. Grossi, TTEE, Mark D.
    Grossi, a Trustee of Seller and the Registrant.
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    dated June 4, 2007 is incorporated herein by reference.10.22**

Operating Agreement of Kykuit
    Resources, LLC14**

Code of Business Conduct21**

Company Subsidiaries23.1**

Consent of Hein &
    Associates LLP31**

Certifications pursuant to SEC
    Release
    No. 33-8238,
    as adopted pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232**

Certifications pursuant to
    18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002   (c)
    Financial
    Statement Schedules: 33




---



##### Table of Contents



Schedule II
  Valuation
    and Qualifying Accounts
    Energy West, Incorporated
    June 30, 2007
  Balance at


Charged to


Write-Offs


BalanceBeginning


Costs &


Net of


at End ofDescription

of Period


Expenses


Recoveries


PeriodAllowance for bad
    debtsYear Ended June 30, 2005

$
272,093


$
132,249


$
(137,638
)

$
266,704Year Ended June 30, 2006

$
266,704


$
225,856


$
(371,107
)

$
121,453Year Ended June 30, 2007

$
121,453


$
210,956


$
(268,355
)

$
64,054       *
    
    Indicates management contract or compensatory plan or
    arrangement.**
    
    Filed herewith. 34




---



##### Table of Contents



SIGNATURES
      /s/  Thomas
    J. Smith        Form 10-K,
    /s/  Thomas
    J.
    SmithThomas
    J. Smith

Interim President and Director
    (Principal Executive Officer)

September 27, 2007/s/  Wade
    F.
    BrooksbyWade
    F. Brooksby

Chief Financial Officer and
    Secretary (Principal Financial Officer and Principal Accounting
    Officer)

September 27, 2007/s/  David
    A.
    CerotzkeDavid
    A. Cerotzke

Director

September 27, 2007/s/  W.E.
    ArgoW.E.
    Argo

Director

September 27, 2007/s/  Mark
    D.
    GrossiMark
    D. Grossi

Director

September 27, 2007/s/  Richard
    M.
    OsborneRichard
    M. Osborne

Chairman of the Board

September 27, 2007/s/  Steven
    A.
    CalabreseSteven
    A. Calabrese

Director

September 27, 2007/s/  James
    E.
    SpragueJames
    E. Sprague

Director

September 27, 2007/s/  James
    R.
    SmailJames
    R. Smail

Director

September 27, 2007  35




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##### Table of Contents



CONSOLIDATED
    FINANCIAL STATEMENTS
    OF
  ENERGY WEST, INCORPORATED AND SUBSIDIARIES
  TABLE OF
    CONTENTS
  PageReport of
    Independent Registered Public Accounting Firm 
    Hein & Associates LLP


F-2Consolidated
    Balance Sheets as of June 30, 2007 and 2006


F-3Consolidated
    Statements of Income for the Years Ended June 30, 2007,
    2006, and 2005


F-4Consolidated
    Statements of Changes in Stockholders Equity for the Years
    Ended June 30, 2007, 2006, and 2005


F-5Consolidated
    Statements of Cash Flows for the Years Ended June 30, 2007,
    2006, and 2005


F-6Notes to
    Consolidated Financial Statements


F-8  F-1




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             /s/ HEIN & ASSOCIATES LLP
    F-2




---



##### Table of Contents



ENERGY
    WEST INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS,
 June 30, 2007 and 2006
  2007


2006ASSETSCurrent Assets:Cash

$
7,010,020


$
1,639,578Accounts receivable less $64,054
    and $121,453 respectively, allowance for bad debt


3,532,083



3,968,105Unbilled gas


649,939



723,810Derivative assets


57,847



137,865Natural gas and propane inventories


5,474,309



4,858,599Materials and supplies


377,296



343,527Prepayment and other


142,964



261,764Income tax receivable


162,432



Recoverable cost of gas purchases


307,899



79,511Deferred tax asset


53,370



Assets held for sale






11,656,570Total current assets


17,768,159



23,669,329Property, Plant and Equipment,
    Net


30,473,991



29,889,873Deferred Charges


3,031,425



4,108,173Other Assets


560,463



263,370TOTAL ASSETS

$
51,834,038


$
57,930,745LIABILITIES AND
    CAPITALIZATIONCurrent Liabilities:Accounts payable

$
4,543,525


$
3,572,055Current portion of long-term debt






1,058,213Derivative liabilities


58,018



42,664Accrued income taxes






1,320,431Deferred income taxes






269,163Accrued and other current
    liabilities


3,092,726



3,711,669Liabilities held for sale






822,242Total current liabilities


7,694,269



10,796,437Other Obligations:Deferred income taxes


4,585,170



5,835,886Deferred investment tax credits


271,158



292,220Other long-term liabilities


3,987,731



4,236,089Total


8,844,059



10,364,195Long-Term Debt


13,000,000



17,605,000Commitments and Contingencies
    (note 12)Stockholders
    Equity:Preferred stock; $.15 par
    value, 1,500,000 shares authorized, no shares outstanding






Common stock; $.15 par value,
    5,000,000 shares authorized, 2,859,104 and
    2,934,177 shares outstanding at June 30, 2007 and
    2006, respectively


428,866



440,127Capital in excess of par value


6,082,159



7,634,337Retained earnings


15,784,685



11,090,649Total stockholders equity


22,295,710



19,165,113TOTAL CAPITALIZATION


35,295,710



36,770,113TOTAL LIABILITIES AND
    CAPITALIZATION

$
51,834,038


$
57,930,745    F-3




---



##### Table of Contents



ENERGY
    WEST INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 For the
    Years Ended June 30, 2007, 2006, and 2005
  2007


2006


2005REVENUES:Natural gas operations

$
46,439,506


$
55,452,395


$
44,554,815Gas and electric 
    wholesale


12,545,359



18,831,929



22,910,131Pipeline operations


388,175



411,237



424,038Total revenues


59,373,040



74,695,561



67,888,984COST OF SALES:Gas purchased


33,541,993



43,160,830



32,558,716Gas and electric 
    wholesale


10,264,633



17,237,396



20,951,529Total cost of sales


43,806,626



60,398,226



53,510,245GROSS MARGIN


15,566,414



14,297,335



14,378,739Distribution, general, and
    administrative


6,197,529



6,389,130



7,308,697Maintenance


566,683



504,671



520,997Depreciation and amortization


1,692,486



1,671,647



1,789,700Taxes other than income


1,696,936



1,453,375



1,478,848Total expenses


10,153,634



10,018,823



11,098,242OPERATING INCOME


5,412,780



4,278,512



3,280,497OTHER INCOME


241,519



390,677



234,708INTEREST (EXPENSE)


(2,124,155
)


(1,648,897
)


(2,112,757
)INCOME FROM CONTINUING OPERATIONS
    BEFORE INCOME TAX EXPENSE


3,530,144



3,020,292



1,402,448INCOME TAX (EXPENSE)


(1,272,664
)


(1,109,043
)


(474,735
)INCOME FROM CONTINUING OPERATIONS


2,257,480



1,911,249



927,713DISCONTINUED OPERATIONS:Gain from disposal of operations


5,479,166







Income from discontinued operations


975,484



671,084



731,893Income tax (expense)


(2,499,875
)


(265,663
)


(278,137
)INCOME FROM DISCONTINUED OPERATIONS


3,954,775



405,421



453,756NET INCOME

$
6,212,255


$
2,316,670


$
1,381,469BASIC INCOME PER COMMON SHARE:Income from continuing operations

$
0.76


$
0.65


$
0.35Income from discontinued operations


1.34



0.14



0.17$
2.10


$
0.79


$
0.53DILUTED INCOME PER COMMON SHARE:Income from continuing operations

$
0.76


$
0.65


$
0.35Income from discontinued operations


1.32



0.14



0.17$
2.08


$
0.79


$
0.53WEIGHTED AVERAGE COMMON SHARES
    OUTSTANDING:Basic


2,958,538



2,924,512



2,630,679Diluted


2,989,382



2,948,046



2,630,679    F-4




---



##### Table of Contents



ENERGY
    WEST INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS
    EQUITY
 For the
    Years Ended June 30, 2007, 2006, and 2005
  Capital inCommon


Common


Excess of


RetainedShares


Stock


Par Value


Earnings


TotalBALANCE AT JUNE 30,
    2004


2,598,506


$
389,783


$
5,077,687


$
7,932,955


$
13,400,425Stock contributions to
    401(k) plan and deferred board stock compensation at $6.10
    to $8.58 per share


26,558



3,984



197,791







201,775Sale of common stock at $8.00 per
    share, net of issuance costs


287,500



43,125



2,159,831







2,202,956Net income














1,381,469



1,381,469BALANCE AT JUNE 30,
    2005


2,912,564


$
436,892


$
7,435,309


$
9,314,424


$
17,186,625Sales of common stock at $9.05 to
    $11.51 per share under the Companys dividend reinvestment
    plan


640



96



6,068



(10,780
)


(4,616
)Stock contributions at $9.05 to
    $11.51 to the 401(k) plan


1,943



284



39,337



(39,621
)


Stock Compensation


16,530



2,480



132,770







135,250Exercise of stock options @ $8.49


2,500



375



20,853







21,228Net income














2,316,670



2,316,670Dividends @ $.17














(490,044
)


(490,044
)BALANCE AT JUNE 30,
    2006


2,934,177


$
440,127


$
7,634,337


$
11,090,649


$
19,165,113Stock Compensation


8,775



1,316



83,769







85,085Repurchase of Stock 
    stock buyback program


(146,348
)


(21,952
)


(2,173,109
)






(2,195,061
)Costs associated with stock buyback










(81,280
)






(81,280
)Stock option liability










115,603







115,603Exercise of stock options @ $6.47
    to 10.51


62,500



9,375



502,839







512,214Net income














6,212,255



6,212,255Dividends paid @ $.51














(1,518,219
)


(1,518,219
)BALANCE AT JUNE 30,
    2007


2,859,104


$
428,866


$
6,082,159


$
15,784,685


$
22,295,710    F-5




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##### Table of Contents



ENERGY
    WEST INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the
    Years Ended June 30, 2007, 2006, and 2005
  2007


2006


2005CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

$
6,212,255


$
2,316,670


$
1,381,469Adjustments to reconcile net
    income to net cash provided by (used in) operating activities:Depreciation and amortization,
    including deferred charges and financing costs


3,011,727



2,356,448



2,493,177Derivative assets


80,018



(18,796
)


80,179Derivative liabilities


15,354



(71,573
)


(331,674
)Deferred gain


(325,582
)


(643,280
)


(269,903
)Gain on sale of assets


(5,479,166
)






(9,201
)Investment tax credit


(21,062
)


(21,062
)


(21,062
)Deferred gain on sale of assets






(23,639
)


(23,628
)Deferred income taxes


(1,573,249
)


(259,022
)


2,361,589Changes in assets and liabilities:Accounts and notes receivable


509,893



1,450,570



65,083Natural gas and propane inventories


(615,710
)


(1,615,395
)


800,254Accounts payable


971,466



549,217



(337,825
)Recoverable/refundable cost of gas
    purchases


(228,388
)


1,034,494



(514,288
)Prepayments and other


118,800



(37,572
)


(19,490
)Net assets held for sale


(1,585,772
)


(367,023
)


(189,016
)Other assets


(275,609
)


1,895,776



(498,408
)Other liabilities


(2,086,253
)


1,983,484



(4,230,788
)Net cash provided by (used in)
    operating activities


(1,271,278
)


8,529,297



736,468CASH FLOWS FROM INVESTING
    ACTIVITIES:Construction expenditures


(2,406,910
)


(1,865,594
)


(2,187,614
)Collection of note receivable






174,561



Proceeds from sale of assets


17,899,266







32,605Customer advances received for
    construction


327,376



115,305



74,348Increase (decrease) from
    contributions in aid of construction






(7,093
)


221,909Net cash provided by (used in)
    investing activities


15,819,732



(1,582,821
)


(1,858,752
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Repayments of long-term debt


(18,663,213
)


(1,027,073
)


(2,979,706
)Proceeds from lines of credit


11,012,000



14,850,000



10,100,000Repayments of lines of credit


(11,012,000
)


(18,750,000
)


(12,930,062
)Proceeds from long-term debt


13,000,000







Repurchase of common stock


(2,276,192
)






Proceeds from other short-term
    borrowing










3,500,000Debt issuance cost


(317,539
)






Sale of common stock


597,151



21,229



2,202,956Dividends paid


(1,518,219
)


(494,660
)


Net cash (used in) financing
    activities


(9,178,012
)


(5,400,504
)


(106,812
)NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS


5,370,442



1,545,972



(1,229,096
)CASH AND CASH EQUIVALENTS:Beginning of year


1,639,578



93,606



1,322,702End of year

$
7,010,020


$
1,639,578


$
93,606    F-6




---



##### Table of Contents



ENERGY
    WEST INCORPORATED AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 For the
    Years Ended June 30, 2006, 2005, and 2004
  2007


2006


2005SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION:Cash paid during the period for
    interest

$
1,410,114


$
1,047,633


$
2,290,133Cash paid during the period for
    income taxes

$
5,474,500


$
8,000


$
447,000SUPPLEMENTAL SCHEDULE OF
    NONCASH INVESTING AND FINANCING ACTIVITIES:Shares issued to satisify deferred
    board compensation

$
84,046


$
135,242


$
201,775Reclass of derivative liability to
    deferred gain










1,238,765Shares issued under the
    Companys 401k reinvestment plan






19,436



20,185Capitalized interest

$
21,414


$
18,855


$
34,160    F-7




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 For the years ended June 30, 2007, 2006, and 2005
  1.
    Summary
    of Business and Significant Accounting Policies  Nature of Business
    Basis of Presentation
  Principles of Consolidation
  Segments
  Use of Estimates in Preparing Financial
    Statements
  Natural Gas Inventories
  Accumulated Provisions for Doubtful Accounts
 F-8




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recoverable/Refundable Costs of Gas and Propane
    Purchases
  Property, Plant, and Equipment
  Contributions in Aid and Advances Received for
    Construction
  Natural Gas Reserves
  Impairment of Long-Lived Assets
  Stock-Based Compensation Share-Based
    Payment
 F-9




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Pro-Forma Disclosures Accounting for Stock Issued to Employees Accounting for Stock-Based
    Compensation, Accounting for Stock-Based Compensation 
    Transition and Disclosure, an Amendment of
    SFAS No. 123,
  2006


2005Net income, as reported for the
    year ended June 30,

$
2,316,670


$
1,381,469Add: stock-based employee
    compensation expense included in reported net income, net of
    related tax effects


35,308Deduct: Total stock-based employee
    compensation expense determined under fair value based method
    for all awards, net of related tax effects


(35,308
)


(51,450
)Pro forma net income

$
2,316,670


$
1,330,019Earnings per share:Basic  as reported

$
0.79


$
0.53Basic  pro forma

$
0.79


$
0.51Diluted  as reported

$
0.79


$
0.53Diluted  pro forma

$
0.79


$
0.51     2007


2006


2005Expected dividend rate


4.00
%


2.00
%


0.00
%Risk free interest rate


5.10



4.87



3.90Weighted average expected lives,
    in years


2.26



3.40



4.26Price volatility


30.00
%


39.00
%


54.00
%Total intrinsic value of options
    exercised

$
218,609


$
4,087


$
0Total cash received from options
    exercised

$
512,175


$
21,228


$
0   Comprehensive Income
  Revenue Recognition
 F-10




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Derivatives Accounting for
    Derivative Instruments and Hedging Activities Accounting for Certain Derivative
    Instruments and Certain Hedging Activities Amendment of Statement 133 on Derivatives and Hedging
    Activities
  Debt Issuance and Reacquisition Costs
  Cash and Cash Equivalents
  Earnings Per Share
  Credit Risk
  Effects of Regulation Accounting for the Effects of Certain
    Types of Regulation
  Income Taxes
 F-11




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Financial Instruments
  Asset Retirement Obligations
    (ARO) Accounting for Asset Retirement
    Obligation
      Balance  July 1,
    2005

$
618,473Accretion


32,244Balance  June 30,
    2006


650,717Accretion


37,654Balance  June 30,
    2007

$
688,371   New Accounting Pronouncements Accounting for
    Certain Hybrid Financial Instruments Accounting for Derivative Instruments
    and Hedging Activities Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities
  Accounting for Servicing of Financial Assets  an
    amendment to FASB Statement No. 140
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
    (FIN 48).
 F-12




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          2.
    Discontinued
    Operations      and/or
   F-13




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended June 302007


2006


2005(In thousands)Propane Operations 
    (Discontinued operations)Operating revenues

$
10,266


$
9,583


$
8,820Propane purchased


6,906



5,971



4,822Gross Margin


3,360



3,612



3,998Operating expenses


2,104



2,623



2,912Operating income


1,256



989



1,086Other (income)


(51
)


(114
)


(210
)Income before interest and taxes


1,307



1,103



1,296Interest expense


333



431



564Income before income taxes


974



672



732Income tax (expense)


(378
)


(266
)


(278
)Income from discontinued operations


596



406



454Gain from disposal of operations


5,479







Income tax (expense)


(2,120
)






Net Income

$
3,955


$
406


$
454    F-14




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Assets
    and Liabilities Held for Sale
  June 30, 2006Assets held for sale:Accounts Receivable

$
194,746Unbilled Gas


296,730Propane Inventory


566,179Materials and Supplies


111,701Prepayments


29,096Recoverable cost of gas purchases


1,243,931Property, Plant and Equipment, Net


9,214,187Total Assets held for sale


11,656,570Liablilities held for sale:Accounts Payable


20,203Other Current Liabilities


148,634Contributions in Aid of
    Construction


653,405Total Liabilities held for sale


822,242Net Assets Held for Sale

$
10,834,328   3.
    Natural
    Gas Wells           F-15




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Disclosures About the Oil and Gas Producing
    Properties
  3.
    Property,
    Plant and Equipment    2007


2006Gas transmission and distribution
    facilities

$
45,980,012


$
43,841,527Land


139,132



139,132Buildings and leasehold
    improvements


2,907,975



2,894,975Transportation equipment


1,581,196



1,522,452Computer equipment


4,481,310



4,969,189Other equipment


3,752,790



3,686,676Construction
    work-in-progress


258,029



70,127Producing natural gas properties


2,381,883



2,082,90361,482,327



59,206,981Accumulated depreciation,
    depletion, and amortization


(31,008,336
)


(29,317,108
)Total

$
30,473,991


$
29,889,873   4.
    Deferred
    Charges    2007


2006Regulatory asset for property tax

$
2,013,623


$
2,303,015Regulatory asset for income taxes


452,646



458,753Regulatory assets for deferred
    environmental remediation costs


247,617



334,996Other regulatory assets






20,258Unamortized debt issue costs


317,539



991,151Total

$
3,031,425


$
4,108,173      F-16




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    Accrued
    and Other Current Liabilities    2007


2006Property tax
    settlement  current portion

$
243,000


$
243,000Payable to employee benefit plans


132,131



275,377Accrued vacation


224,588



258,831Customer deposits


394,128



381,713Accrued interest


9,069



140,648Accrued taxes other than income


506,448



402,819Deferred short-term gain


243,519



243,519Deferred payments from levelized
    billing


605,031



844,344Other


734,812



921,448Total

$
3,092,726


$
3,711,699   6.
    Other
    Long-Term Liabilities    2007


2006Asset retirement obligation

$
688,371


$
650,718Contribution in aid of construction


1,313,907



1,301,575Customer advances for construction


605,221



277,845Accumulated postretirement
    obligation






139,200Deferred gain 
    long-term*


82,063



325,582Regulatory liability for income
    taxes


83,161



83,161Property tax settlement


1,215,008



1,458,008Total

$
3,987,731


$
4,236,089     *
    
    In January 2005, two long-term contracts were designated as
    normal purchases and sales. The derivative liability
    as of January 2005 is being amortized over the remaining monthly
    volumes of the contract at a rate of $1.21 per Million British
    thermal unit (MMBtu).  7.
    Credit
    Facility and Long-Term Debt    LaSalle Line of Credit
 F-17




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-term Debt
  2007


20066.16% Senior Unsecured Notes

$
13,000,000


$
Series 1997 notes payable






7,840,000Series 1993 notes payable






4,840,000Series 1992B industrial
    development revenue obligations






880,000Term loan






5,100,000Capital lease






3,213Total long-term debt


13,000,000



18,663,213Less current portion of long-term
    debt






(1,058,213
)Long-term debt

$
13,000,000


$
17,605,000   $13,000,000 6.16% Senior Unsecured Notes
  Series 1997 Notes Payable
  Series 1993 Notes Payable
  Series 1992B Industrial Development Revenue
    Obligations
  Term Loan
 F-18




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Aggregate Annual Maturities
  Series 2007Year ending June 30:2007

$
2008


2009


2010


2011


Thereafter


13,000,000Total

$
13,000,000     Debt Covenants 60-month
  8.
    Employee
    Benefit Plans       F-19




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Income
    Taxes    2007


2006Current


Long-Term


Current


Long-TermDeferred tax asset:Allowances for doubtful accounts

$
23,827


$



$
52,340


$
Unamortized investment tax credit






10,907







18,533Contributions in aid of
    construction






318,455







539,395Other nondeductible accruals


77,445







100,591



Recoverable purchase gas costs










322,428



Derivatives


93,657







177,713



Deferred incentive and pension
    accrual






14,997







65,420Other






533,298







326,870Total


194,929



877,657



653,072



950,218Deferred tax liabilities:Recoverable purchase gas costs


189,294







912,969



Property, plant, and equipment






5,110,398







6,281,038Debt issue costs














69,453Property tax liability






214,028







263,373Covenant not to compete






42,374







46,616Other


(47,735
)


96,027



9,266



125,624Total


141,559



5,462,827



922,235



6,786,104Net deferred tax asset
    (liabilities)

$
53,370


$
(4,585,170
)

$
(269,163
)

$
(5,835,886
)     2007


2006


2005Current income taxes:Federal

$
957,135


$
1,281,537


$
(1,198,224
)State


164,240



131,331



(322,221
)Total current income taxes


1,121,375



1,412,868



(1,520,445
)Deferred income taxes:Federal


137,881



(240,349
)


1,814,618State


34,470



(42,414
)


201,624Total deferred income taxes


172,351



(282,763
)


2,016,242Total income taxes before credits


1,293,726



1,130,105



495,797Investment tax credit, net


(21,062
)


(21,062
)


(21,062
)Total income tax expense

$
1,272,664


$
1,109,043


$
474,735  F-20




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005Tax expense at statutory rate of
    34%

$
1,200,249


$
1,026,763


$
476,833State income tax, net of federal
    tax benefit


154,620



132,271



61,427Amortization of deferred
    investment tax credits


(21,062
)


(21,062
)


(21,061
)Other


(61,143
)


(28,929
)


(42,464
)Total

$
1,272,664


$
1,109,043


$
474,735     10.
    Segments
    of Operations     F-21




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Natural Gas





Pipeline


DiscontinuedYear Ended June 30, 2007

Operations


EWR


Operations


Operations


Eliminations


ConsolidatedOperating revenue:Natural gas operations

$
47,074,560


$



$



$



$
(635,054
)

$
46,439,506Marketing and wholesale






22,466,030











(9,920,671
)


12,545,359Pipeline operations










388,175











388,175Total operating revenue


47,074,560



22,466,030



388,175







(10,555,725
)


59,373,040Gas purchased


34,177,047















(635,054
)


33,541,993Gas and electric 
    wholesale






20,185,304











(9,920,671
)


10,264,633Distribution, general, and
    administrative


5,676,195



315,279



206,055











6,197,529Maintenance


563,912



297



2,474











566,683Depreciation and amortization


1,414,003



222,110



56,373











1,692,486Taxes other than income


1,652,661



20,529



23,746











1,696,936Operating expenses


43,483,818



20,743,519



288,648







(10,555,725
)


53,960,260Operating income


3,590,742



1,722,511



99,527











5,412,780Other income


228,515



1,592



11,412











241,519Interest (expense)


(1,896,650
)


(185,365
)


(42,140
)










(2,124,155
)Income from continuing operations
    before income taxes


1,922,607



1,538,738



68,799











3,530,144Income taxes (expense)


(653,130
)


(593,078
)


(26,456
)










(1,272,664
)Income from continuing operations


1,269,477



945,660



42,343











2,257,480Dincontinued operations:Gain from disposal of operations














5,479,166







5,479,166Income from discontinued operations














975,484







975,484Income tax (expense)














(2,499,875
)






(2,499,875
)Income from discontinued operations














3,954,775







3,954,775Net income

$
1,269,477


$
945,660


$
42,343


$
3,954,775


$



$
6,212,255Capital expenditures and natural
    gas properties

$
2,024,443


$
361,379


$
21,088


$



$



$
2,406,910Total assets

$
38,512,502


$
5,882,390


$
1,003,145


$



$
6,436,001


$
51,834,038   F-22




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Natural Gas





Pipeline


DiscontinuedYear Ended June 30, 2006

Operations


EWR


Operations


Operations


Eliminations


ConsolidatedOperating revenue:Natural gas operations

$
56,044,531


$



$



$



$
(592,136
)

$
55,452,395Marketing and wholesale






32,879,779











(14,047,850
)


18,831,929Pipeline operations










411,237











411,237Total operating revenue


56,044,531



32,879,779



411,237







(14,639,986
)


74,695,561Gas purchased


43,752,966















(592,136
)


43,160,830Gas and electric 
    wholesale






31,285,246











(14,047,850
)


17,237,396Distribution, general, and
    administrative


5,830,719



473,341



85,070











6,389,130Maintenance


504,473



198















504,671Depreciation and amortization


1,394,169



221,814



56,064











1,672,047Taxes other than income


1,430,101



15,672



7,602











1,453,375Operating expenses


52,912,428



31,996,271



148,736







(14,639,986
)


70,417,449Operating income


3,132,103



883,508



262,501











4,278,112Other income


358,213



32,464















390,677Interest (expense)


(1,425,186
)


(182,422
)


(41,290
)










(1,648,898
)Income from continuing operations
    before income taxes


2,065,130



733,550



221,211











3,019,891Income taxes (expense)


(740,624
)


(283,339
)


(85,080
)










(1,109,043Income from continuing operations


1,324,506



450,211



136,131











1,910,848Dincontinued operations:Income from discontinued operations














671,485







671,485Income tax (expense)














(265,663
)






(265,663
)Income from discontinued operations














405,822







405,822Net income

$
1,324,506


$
450,211


$
136,131


$
405,822


$



$
2,316,670Capital expenditures and natural
    gas properties

$
1,744,046


$
114,747


$
6,801


$



$



$
1,865,594Total assets

$
38,887,681


$
5,424,107


$
1,044,214


$
12,199,782


$
525,278


$
58,081,062   F-23




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Natural Gas





Pipeline


DiscontinuedYear Ended June 30, 2005

Operations


EWR


Operations


Operations


Eliminations


ConsolidatedOperating revenue:Natural gas operations

$
45,091,564


$



$



$



$
(536,749
)

$
44,554,815Marketing and wholesale






38,588,875











(15,678,744
)


22,910,131Pipeline operations










424,038











424,038Total operating revenue


45,091,564



38,588,875



424,038







(16,215,493



67,888,984Gas purchased


33,095,465















(536,749
)


32,558,716Gas and electric 
    wholesale






36,630,273











(15,678,744
)


20,951,529Distribution, general, and
    administrative


6,242,841



952,313



113,542











7,308,696Maintenance


518,686



2,311















520,997Depreciation and amortization


1,488,353



247,759



53,588











1,789,700Taxes other than income


1,416,037



28,176



34,635











1,478,848Operating expenses


42,761,382



37,860,832



201,765







(16,215,493
)


64,608,486Operating income


2,330,182



728,043



222,273











3,280,498Other income


165,806



67,042



1,860











234,708Interest (expense)


(1,774,989
)


(281,665
)


(56,103
)










(2,112,757
)Income from continuing operations
    before income taxes


720,999



513,420



168,030











1,402,449Income taxes (expense)


(216,073
)


(203,227
)


(55,436
)










(474,736
)Income from continuing operations


504,926



310,193



112,594











927,713Dincontinued operations:Income from discontinued operations














731,893







731,893Income tax (expense)














(278,137
)






(278,137
)Income from discontinued operations














453,756







453,756Net income

$
504,926


$
310,193


$
112,594


$
453,756


$



$
1,381,469Capital expenditures and natural
    gas properties

$
2,024,938


$
125,646


$
37,030


$



$



$
2,187,614Total assets

$
40,041,269


$
6,182,487


$
1,098,165


$
11,900,502


$
210,970


$
59,433,393   11.
    Stock
    Option and Shareholder Rights Plans  2002 Stock Option Plan
 F-24




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    SFAS No. 123 Disclosures Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation 
    Transition and Disclosure
    Weighted


AggregateNumber of


Average


IntrinsicShares


Exercise Price


ValueOutstanding June 30, 2004


77,000


$
8.49Granted


70,000


$
7.02Exercised






Expired


(21,000
)

$
8.49Outstanding June 30, 2005


126,000


$
8.35Granted


48,500


$
10.11Exercised


(2,500
)

$
8.49Expired


(26,500
)

$
8.37Outstanding June 30, 2006


145,500


$
8.34Granted


30,000


$
10.55Exercised


(62,500
)

$
8.20Expired


(3,000
)

$
0.00Outstanding June 30, 2007


110,000


$
8.97


$
663,020Exerciseable June 30, 2007


51,000


$
8.37


$
337,785    F-25




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageWeighted


Remaining





WeightedAverage


Contractual





AverageExercise


Number


Exercise


Life


Number


ExerciseGrant Date

Price


Outstanding


Price


(Years)


Exercisable


Price11/21/2002

$
8.49



8,500


$
8.49



0.4



8,500


$
8.497/1/2004

$
6.47



15,000


$
6.47



7.0



7,500


$
6.474/1/2005

$
6.62



20,000


$
6.62



7.8



15,000


$
6.627/1/2005

$
9.85



15,000


$
9.85



8.0



5,000


$
9.8510/4/2005

$
10.51



16,500


$
10.51



8.3



7,500


$
10.511/6/2006

$
9.52



5,000


$
9.52



3.5



0


$
9.527/1/2006

$
9.02



10,000


$
9.02



9.0



2,500


$
9.0212/4/2006

$
11.32



20,000


$
11.32



9.6



5,000


$
11.32110,000











51,000     Termination of Preferred Stock Rights Agreement by Amendment
    of Final Expiration Date  Expiration of the Preferred
    Stock Purchase Rights
   F-26




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Commitments
    and Contingencies  Commitments
  Year Ending June 30:2008

$
4,258,8962009


4,258,8962010


2,839,2642011


Total

$
11,357,056   Environmental Contingency
          Derivative Contingencies
  Litigation
  1997-2002.
 F-27




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Operating Leases
  Year Ended June 30:2008

$
90,6242009


6,600Total

$
97,224     13.
    Financial
    Instruments and Risk Management  Management of Risks Related to Derivatives
       F-28




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Derivative
    Assets and Liabilities
  Assets


LiabilitiesContracts maturing during fiscal
    year 2008

$
57,847


$
58,018Contracts maturing during fiscal
    years 2009 and beyond






Total

$
57,847


$
58,018   14.
    Subsequent
    Events  Stock Purchase Agreement
         F-29




---



##### Table of Contents



ENERGY
    WEST, INCORPORATED AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Quarterly
    Information (Unaudited)    First


Second


Third


FourthYear Ended June 30, 2007

Quarter


Quarter


Quarter


QuarterRevenues

$
8,456


$
18,041


$
21,516


$
11,360Operating income

$
326


$
2,121


$
2,358


$
606Income (loss) from continuing
    operations

$
4


$
1,113


$
1,293


$
(152
)Discontinued operations

$
(199
)

$
157


$
636


$
3,360Net income (loss)

$
(195
)

$
1,270


$
1,929


$
3,208Basic earnings (loss) per common
    share  continuing operations

$
0.00


$
0.38


$
0.43


$
(0.05
)Basic earnings (loss) per common
    share  discontinued operations

$
(0.07
)

$
0.05


$
0.21


$
1.15Basic earnings (loss) per common
    share  net income

$
(0.07
)

$
0.43


$
0.64


$
1.10Diluted earnings (loss) per
    share  continuing operations

$
0.00


$
0.38


$
0.43


$
(0.05
)Diluted earnings (loss) per
    share  discontinued operations

$
(0.07
)

$
0.05


$
0.21


$
1.13Diluted earnings (loss) per
    share  net income

$
(0.07
)

$
0.43


$
0.64


$
1.08   First


Second


Third


FourthYear Ended June 30, 2006

Quarter


Quarter


Quarter


QuarterRevenues

$
9,296


$
26,409


$
27,575


$
11,416Operating income (loss)

$
(399
)

$
1,759


$
2,230


$
689Income (loss) from continuing
    operations

$
(433
)

$
923


$
1,156


$
264Discontinued Operations

$
(189
)

$
194


$
490


$
(89
)Net income (loss)

$
(622
)

$
1,117


$
1,646


$
175Basic earnings (loss) per common
    share  continuing operations

$
(0.15
)

$
0.31


$
0.39


$
0.09Basic earnings (loss) per common
    share  discontinued operations

$
(0.06
)

$
0.07


$
0.17


$
(0.03
)Basic earnings (loss) per common
    share  net income

$
(0.21
)

$
0.38


$
0.56


$
0.06Diluted earnings (loss) per
    share  continuing operations

$
(0.15
)

$
0.31


$
0.38


$
0.09Diluted earnings (loss) per
    share  discontinued operations

$
(0.06
)

$
0.07


$
0.16


$
(0.03
)Diluted earnings (loss) per
    share  net income

$
(0.21
)

$
0.38


$
0.55


$
0.06    F-30