UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(mark one)

[X]  Annual report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934.

     For the fiscal year ended February 28, 2007

[_]  Transition report under section 13 or 15(d) of the Securities Exchange Act
     of 1934.
                  For the transition period from ___ to _____.

                         Commission file number: 0-50472

                            New Frontier Energy, Inc.
                            -------------------------
             (Exact name of registrant as specified in its charter)

             Colorado                                       84-1530098
             --------                                       ----------
  (State or other jurisdiction                       (I.R.S. Identification No.)
of incorporation or organization)

               1789 W. Littleton Blvd., Littleton, Colorado 80120
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (303) 730-9994
                                 --------------
              (Registrant's telephone number, including area code)

      Securities registered under Section 12 (b) of the Exchange Act: None

         Securities registered under Section 12 (g) of the Exchange Act:

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of Class)

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [}]

Check whether the issuer (1) has 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.
[X] Yes [_] No


<PAGE>

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [_].

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [_] No [X]

The Registrant's revenues for the fiscal year ended February 28, 2007 were
$361,181.

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of May 4, 2007 was approximately $4,901,295 based upon the last
reported sale on that date.

The number of the Registrant's shares of $0.001 par value common stock
outstanding as of May 4, 2007 was 6,142,618.

Transitional Small Business Disclosure Format:       [   ] Yes  [ X ] No




<PAGE>




TABLE OF CONTENTS
                                                                     Page Number
                                     PART I
Items 1 and 2.  Description of Business and Properties                      1
Item 3.         Legal Proceedings                                          32
Item 4.         Submission of Matters to a Vote of Security Holders        32

                                    PART II
Item 5.         Market for Common Equity and Related Stockholder
                Matters and Small Business Issuer Purchase of
                Equity Securities.                                         33
Item 6.         Management's Discussion and Analysis or Plan of
                Operation                                                  34
Item 7.         Financial Statements                                      F-1
Item 8.         Changes in and Disagreements With Accountants on
                Accounting and Financial Disclosure                        46
Item 8A.        Controls and Procedures                                    47
Item 8B.        Other Information                                          47

                                    PART III
Item 9.         Directors, Executive Officers, Promoters, Control Persons
                and Corporate Governance; Compliance With Section 16(a)
                of the Exchange Act                                        47
Item 10.        Executive Compensation                                     50
Item 11.        Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters                 60
Item 12.        Certain Relationships and Related Transactions             64
Item 13.        Exhibits                                                   66
Item 14.        Principal Accountant Fees and Services                     66
SIGNATURES                                                                 68

Financial Statements                                                      F-1
Notes to Financial Statements                                             F-5


Additional Information

     Descriptions in this Annual Report on Form 10-KSB are qualified in their
entirety by reference to the content of any contract, agreement or other
document described or incorporated herein and are not necessarily complete.
Reference is made to each such contract, agreement or document filed as an
exhibit to this Report or incorporated herein by reference by the Company as
permitted by regulations of the Securities and Exchange Commission (the "SEC" or
the "Commission").


                                       ii
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-KSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and New Frontier Energy, Inc. (the
"Company"), intends that such forward-looking statements be subject to the safe
harbors created thereby. These statements include, among others:

     o    Our business strategy;

     o    exploration and development drilling prospects, inventories, projects
          and programs;

     o    Oil and natural gas reserves;

     o    availability and costs of drilling rigs and field services;

     o    The price of oil and gas and the general state of the economy;

     o    The willingness and ability of third parties to honor their
          contractual commitments;

     o    Our ability to raise additional capital, as it may be affected by
          current conditions in the stock market and competition in the oil and
          gas industry for risk capital;

     o    Environmental and other regulations, as the same presently exist and
          may hereafter be amended;

     o    Our ability to identify, finance and integrate other acquisitions of
          properties;

     o    Volatility of our stock price; and

     o    plans, objectives, expectations and intentions.

     These statements may be made expressly in this document or may be
incorporated by reference to documents that we will file with the SEC. You can
find many of these statements by looking for words such as "believes,"
"expects," "anticipates," "estimates" or similar expressions used in this Annual
Report. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors," that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. We caution you not to put undue
reliance on these statements, which speak only as of the date of this Annual
Report. Further, the information contained in this Annual Report or incorporated
herein by reference is a statement of our present intention and is based on
present facts and assumptions and may change at any time and without notice,
based on changes in such facts or assumptions.


                                      iii

<PAGE>
     While these forward-looking statements, and any assumptions upon which they
are based, are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. We undertake no responsibility or
obligation to update publicly these forward-looking statements but may do so in
the future in written or oral statements. Investors should take note of any
future statements made by or on our behalf.





                [REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]




                                       iv

<PAGE>
                                     PART I

Items 1 and 2.   Description of Business and Properties

Overview

     New Frontier Energy, Inc. (the "Company" or "we" or "us") is a domestic
energy company engaged in the exploration for, and development of, oil and
natural gas reserves in the continental United States. We were originally
organized under the laws of the State of Colorado as Storage Finders.com, Inc.
on January 7, 2000. Shortly following our organization, we executed an agreement
to acquire patented technology relating to an internet-enabled, remote access
technology for the self-storage industry. During this time of the "dot-com"
boom, we envisioned the organization and operation of an internet-enabled
self-storage business. Toward that end, we agreed to acquire the patent and
related technology from the inventor.

     Shortly after we were organized, the dot-com melt down began. We were
unable to obtain financing for this self-storage venture. Consequently, we
agreed to return the technology to the inventor in exchange for cancellation of
the remaining payments. We were essentially dormant during the remainder of
2000.

     In February 2002, we were acquired by Wyoming Oil & Minerals, Inc.
("WYOG"). In mid 2003, we determined to become an independent, but publicly
traded, entity. Accordingly, WYOG transferred certain oil and gas assets and we
assumed certain WYOG liabilities and appointed new management. WYOG declared a
dividend payable by distributing 12,775,616 shares of New Frontier Energy, Inc.
Common Stock to its shareholders. On March 3, 2004, the Board of Directors
authorized a 1 to 4 reverse split of Common Stock to stockholders of record in
order to facilitate the marketability and liquidity of the Common Stock based on
the current market conditions and other relevant factors. The shares were
registered with the Securities and Exchange Commission on Form SB-2 in April
2004, and became quoted on the Over-The- Counter Bulletin Board in May 2004
under the symbol "NFEI.OB." Effective February 28, 2005, we merged Skyline
Resources, Inc. ("Skyline") our wholly owned subsidiary, into the Company in a
tax-free merger.

     The Company owns 82.76% of the limited partnership interests (the "Limited
Partnership Interests") of Slater Dome Gathering, LLLP ("SDG"). SDG owns the
18-mile gas gathering line that transports the Company's natural gas from the
Slater Dome Field to the Questar transportation line in Baggs, Wyoming. SDG is
considered a variable interest entity under FIN 46R, and has been consolidated
into our financial statements, effective March 31, 2005.

     Prior to December 2006, the Company was non-operating partner with a 30%
working interest in the Slater Dome Field. Effective December 14, 2006, the
Company purchased Cedar Ridge, LLC's ("Cedar Ridge") 36.66667% working interest
(29.33336% net revenue interest) in eleven gas and 2 water disposal wells and
33,949 net acres in the Slater Dome Field located along the eastern edge of the
Greater Green River basin in northwest Colorado and south central Wyoming. The
properties are entirely within the Company's existing leasehold at the Slater
Dome Field. The Company now owns a 66.66667% working interest (53.33% net
revenue interest) in the Slater Dome Field. Pursuant to the Purchase and Sale
Agreement for Cedar Ridge's interests, we were responsible for the obligations
attributable to their interests as of November 1, 2006. Following the
consummation of these interests, we became the operator of the Slater Dome
Field.


                                       1
<PAGE>
Our Business

     We explore for, produce and gather oil and natural gas. During the fiscal
year ended February 28, 2007, we had an interest in four principal properties,
(i) the Slater Dome Field, located in northwest Colorado and south central
Wyoming, (ii) the Flattops Prospect located in southwest Wyoming (the "Flattops
Prospect"), (iii) the Nucla Prospect, located in western Colorado (the "Nucla
Prospect") and (iv) the Gibraltar Peaks Prospect ("Gibraltar Peaks"). In
February 2007, we sold our interest in the Nucla Prospect. The Flattops Prospect
is, undeveloped, which means it does not currently produce any oil or natural
gas. Until December 14, 2006, the Slater Dome Field was operated by Cedar Ridge.
The Company is now the operator of the Slater Dome Field, and the Flattops
Prospect. We also own certain royalty interests in certain wells in the state of
Wyoming other than in the Slater Dome Field.

     Subsequent to February 28, 2007, on April 16, 2007, we entered into an
agreement to acquire and take over operations, pursuant to a farmout agreement
with the current operator of the Focus Ranch Unit (the "Focus Ranch Unit") in
northwest Colorado. The Focus Ranch Unit consists of approximately 35,000 acres
adjacent to and southeast of the Slater Dome development area. The terms of the
agreement require us to test the Niobrara and Frontier formations in the Focus
Ranch Federal 12-1 well in order to earn 65% of the farmor's working interest,
which averages 75% in the Focus Ranch Unit. We will acquire the remaining 35%
working interest from the farmor after completing a $2,000,000 production
payment from the Focus Ranch Unit.

     SDG owns the 18-mile gas gathering pipeline (the "Gas Gathering Pipeline")
that transports the Company's natural gas from the Slater Dome Field to the
Questar transportation line in Baggs, Wyoming. The Flattops Prospect is
relatively close to the Gas Gathering Pipeline.


Description of Properties

     All of our properties are located in the States of Colorado and Wyoming. At
February 28, 2007, we had an interest in 84,382 gross, 40,058 net acres of oil
and gas properties. We had a working interest in 11 gross coal bed methane gas
wells and 6.667 net wells as of February 28, 2007.

     The following table summarizes the Company's interest in oil and gas
properties on February 28, 2007:

                                       2
<PAGE>
     Proved developed oil and gas acres:    Gross           Net
     -----------------------------------    -----           ---

     Wyoming                                   80            53
     Colorado                                 800           533
                                              ---           ---
     Total                                    880           586

     Undeveloped oil and gas acres:         Gross           Net
     ------------------------------         -----           ---

     Wyoming                               36,730        14,069
     Colorado                              46,773        25,402
                                           ------        ------
     Total                                 83,503        39,471

     No properties are held in fee, as we hold all properties by leasehold
interests.

     Slater Dome Field

     We acquired our interest in the Slater Dome Field in 2001, when we acquired
Skyline. Skyline in turn, acquired its interest in the Slater Dome Field in
November 1998 from Energy Investments, Inc., a privately held, independent third
party. Skyline drilled an exploratory well to test for gas in 1998 and
participated in drilling six additional wells. During the period from 1998 to
2002, Skyline owned a 33.33% working interest in the Slater Dome Field. In 2002,
Skyline acquired an additional 33.33% interest in the property, following which
it owned a total of approximately 66.67%. In an effort to diversify its holdings
and obtain an operator experienced in coal-bed methane development and
production, Skyline sold a 36.67% undivided working interest in the Slater Dome
Field to Cedar Ridge. That transaction was completed with an effective date of
February 28, 2003. Following this sale, Skyline retained a 30% interest in the
property. The consideration received from the sale was $900,000, which consisted
of $400,000 in cash and the credit by Cedar Ridge of the balance of $500,000
against our working interest for future costs incurred. The $500,000 credit was
fully utilized in July 2004.

     Effective November 3, 2006, the Company entered into a Purchase and Sale
Agreement (the "Cedar Ridge Agreement") with Cedar Ridge, whereby the Company
acquired Cedar Ridge's 36.66667% working interest (29.33336% net revenue
interest) in eleven gas and 2 water disposal wells together with 33,949 net
acres in the Slater Dome Field, which was closed effective December 14, 2006.
The purchase price for Cedar Ridge's interest was $8,000,000.

     Until December 14, 2006, our interest in the Slater Dome Field was subject
to an operating agreement dated February 28, 2003, between us, Cedar Ridge as
the operator and Slaterdome Gas, Inc., the owner of the remaining 33% interest
in the Slater Dome Field (the "Operating Agreement"). As of December 14, 2006,
the Company is the operator of the Slater Dome Field.

     The primary drilling objective in the Slater Dome Field is the lower Iles
coal-bearing formation of the Mesa Verde Group at depths ranging from 700 to
3,200 feet. A secondary objective consists of a group of sands that exist
between the base of the Iles formation and the top of the Mancos shale. The Deep
Creek Sand is the basal sand of this group. The Deep Creek Sand was productive
in the Savery Field just north of the Slater Dome Field. However, there is no
assurance that gas can be produced economically from the Deep Creek Sand or any
other formation in the Slater Dome Field.

                                       3
<PAGE>
     The Company currently has an interest in eleven coal-bed methane wells in
the Slater Dome Field, six of which are producing and five of which are shut in.
Of the shut-in wells, one is waiting on a completion rig, two are waiting on a
pipeline connection to the Gas Gathering Pipeline and three are shut-in awaiting
additional completion work along with drilling two or more additional wells in
order to effectively dewater the Williams Fork Coals in those wells. The Company
completed electrifying the production and water-disposal facilities for nine of
its producing wells during the quarter ended May 31, 2006.

     The Company has also drilled and completed one water-disposal well. We
currently have a temporary surface water discharge permit from the State of
Colorado. The Company is currently working to obtain final approval to begin
using a permanent surface water discharge permit for the Slater Dome Field. This
would allow the Company to discharge water on the surface as opposed to
re-injecting the water or purifying it, which may allow for high production
rates and lower operating costs.

     At February 28, 2007, our estimated proved reserves totals 12,114,000 MCF
of gas to our interest. The Company did not participate in drilling any wells in
fiscal 2007. At February 28, 2006, our estimated proved reserves totaled
6,006,000 MCF of gas to our interest. The Company participated in drilling three
successful coal-bed methane development wells in fiscal 2006 on the Slater Dome
Field with no dry holes.

     Flattops Prospect

     We acquired fee leases in the Flattops Prospect in fiscal 2006 from
approximately 20 mineral interest owners. We own 100% of the working interest in
approximately 5,548 gross acres, 3,852 net acres and are the operator of this
prospect.

     The Flattops Prospect is postulated around the Montgomery #1 well in Carbon
County, Wyoming. Kirby Petroleum drilled this well in 1967 to test the Mesa
Verde sands for oil production. Gas was encountered in the Fort Union, Lance and
Almond sections of the Mesa Verde formation. Gas flowed to the surface on a
drill stem test in the Almond section of the Mesa Verde formation at a rate of
147 MCF per day. This well was plugged and abandoned for lack of a gas
transmission line in the region. We believe that additional gas potential exists
in the Mesa Verde coals and sands (6,000'-6,700'), the Lance coals and sands
(2,650'-3,550') and the Fort Union coals (1,825'-1,910'), as well as the Fort
Union Sands.

     The Company intends to drill the plug out of the Montgomery well and log
and test this well using modern logs and testing in the summer 2008. Further, we
also intend to drill and test these same formations in an up-dip position
approximately 1.5 miles due east of the re-entry well. The Gas Gathering
Pipeline is less than one-half mile from the proposed wells, which would provide
the ability to connect the wells into the Gas Gathering Pipeline.


                                       4
<PAGE>
     Nucla Prospect

     The Nucla Prospect consists of approximately 39,000 gross acres in the
aggregate, of which we own approximately 8,000 net acres. The interests of all
of the owners of this prospect have been combined in an effort to market and
sell the property. The Nucla Prospect is located in Montrose County, Colorado,
which is on the western edge of Colorado.

     WYOG acquired the interest in the Nucla Prospect from NRG Resources, Inc.
("NRG") in April 2002 in an arms-length negotiated transaction in which WYOG
issued 60,000 shares of WYOG's $0.001 par value common stock, valued at $2.00
per share. Paul G. Laird and Les Bates, both officers and directors of the
Company, and Grant Gaeth, a director of the Company, were officers and directors
of NRG and at the time of the transaction had no ownership in WYOG.

     We and the other interest owners in the Nucla Prospect executed an
agreement governing our interests in this property. Pursuant to the agreement,
the interest owners created an area of mutual interest surrounding the property
in which any owner must offer a right to participate to any other owner. The
main purpose of the agreement was to market and sell a majority of the
interests.

     We, together with the other working interest owners, granted a seismic
option for two years to an independent third party in December 2004. In December
2006, the option holder exercised his right to acquire the prospect. We will
receive approximately $185,881 from the sale of this prospect and have
recognized a gain on the sale of $95,127.

     The Gibraltar Peaks Prospect

     Effective July 21, 2006, the Company entered into a Purchase Agreement
(with Infinity Oil & Gas of Wyoming, Inc. ("Infinity"), whereby the Company
acquired a 15% working interest (13.125% net revenue interest) in 15,049 gross
acres in Routt County Colorado. The acreage includes all rights from the surface
of the earth to the base of the Mesa Verde Formation. The purchase price for the
acreage was $35,967. This prospect is southeast of, and directly adjacent to the
Slater Dome Field. We acquired the rights to the minerals from the surface of
the earth to the base of the Mesa Verde Formation. This prospect is included in
the Focus Ranch Unit.

     Focus Ranch Unit

     On April 16, 2007, we entered into an agreement to acquire and take over
operations, pursuant to a farmout agreement with the current operator of the
Focus Ranch Unit (the "Focus Ranch Unit") in northwest Colorado. The Focus Ranch
Unit consists of approximately 35,000 acres adjacent to and southeast of the
Slater Dome development area. The terms of the agreement require us to test the
Niobrara and Frontier formations in the Focus Ranch Federal 12-1 well in order
to earn 65% of the farmor's working interest, which averages 75% in the Focus
Ranch Unit. We will acquire the remaining 35% working interest from the farmor
after completing a production payment in the amount of $2,000,000 from the Focus
Ranch Unit.


                                       5
<PAGE>
     Natural Gas Gathering Pipeline

     Prior to May 2005, there was no operating gathering pipeline available at
the Slater Dome Field to transport our gas. However, SDG, an affiliate of Paul
G. Laird, the Company's President and Chief Executive Officer, completed
construction of the 18-mile Gas Gathering Pipeline to the Slater Dome Field in
May 2005, and we commenced the sale of natural gas in June 2005. The Gas
Gathering Pipeline transports the Company's natural gas from the Slater Dome
Field to a Questar transportation line in Baggs, Wyoming. The Company owns
82.76% of the Limited Partnership Interests of SDG.

     Gas produced from other owners and operators in the area around the Slater
Dome Field may be transported through the Gas Gathering Pipeline for a fee,
assuming the wells are connected to the Gas Gathering Pipeline. We and the other
producers at the Slater Dome Field have entered into a ten-year gathering
agreement and have agreed to pay SDG a fee of $0.50 per MCF, subject to annual
escalations for cost recovery of gas transported through the line, until the
costs of the Gas Gathering Pipeline are recovered and $0.25 thereafter and to
dedicate our gas to the Gas Gathering Pipeline. The construction costs for the
Gas Gathering Pipeline were $2,609,841. The producers have agreed to guarantee
two-thirds of the aggregate construction costs, or $1,739,894 through the
producers' payment of gathering fees. The fees may be increased to cover annual
calculations of shortfalls from the minimum daily quantity ("MDQ"); the fee may
be increased at the end of each of the first four years beginning June 3, 2005.
If the total gathering revenue for the preceding year is less than two-thirds of
the construction costs divided by five, SDG may increase the gathering fee for
the year immediately following the year in which the shortfall occurs by the
dollar amount per million British Thermal Units (MMBtu) necessary to make up the
monetary equivalent of the annual shortfall. In the event that total gas
gathering revenue for the preceding year is greater than two-thirds of the
construction costs divided by five, SDG will credit such excess to the following
year's comparison.

     The following table summarizes the MDQ requirements whereby each producer
agrees to deliver a MDQ/MMBtu of gas during the first ten years following the
date the Gas Gathering Pipeline began transporting gas:

                                           Minimum
                                   Producers' Aggregate
           Year                     MDQ/MMBtu Quantities
           ----                     --------------------
            1                              1,500
            2                              2,000
            3                              4,000
            5                              5,000
            6                              6,000
            7                              7,000
            8                              8,000
            9                              9,000
            10                            10,000

                                       6
<PAGE>
     In March 2005, the Company advanced $1,000,000 to Natural Resource Group
Gathering LLC, the general partner of SDG ("NRGG" or the "General Partner"). In
May 2005, NRGG contributed the Gas Gathering Pipeline and the $1,000,000
obligation to the Company to SDG. Later in May 2005, the Company and SDG agreed
to convert the $1,000,000 advance into Limited Partnership Interests in SDG. In
June 2005, the Company advanced $85,000 to the General Partner for operating
expenses. In July 2005, the Company agreed to convert the advance in the amount
of $85,000 into Limited Partnership Interests and purchased an additional
$515,000 of Limited Partnership Interests. As a result, at February 28, 2006,
the Company owned 59.97% of the Limited Partnership Interests and accordingly,
53.97% of SDG.

     On May 10, 2006, the Company increased its investment in SDG by acquiring
additional Limited Partnership Interests, resulting in an additional 20.51% of
SDG cash distributions until the limited partners in SDG have received cash
distributions equal to their initial capital contributions and 17.10% of cash
distributions thereafter, in exchange for a subordinated convertible debenture
in the amount of $608,194 bearing 2.5% interest and due January 1, 2008. The
debenture is convertible into shares of the Company's $0.001 par value common
stock ("Common Stock") at a conversion price of $1.33 per share, as a result of
certain anti-dilution adjustments. The debenture has customary weighted-average
anti-dilution rights with respect to any subsequent issuance of any shares of
the company's Common Stock or Common Stock equivalents at a price less than
$1.33 per share and otherwise in connection with forward or reverse stock
splits, stock dividends, recapitalizations and the like. The anti-dilution
provisions shall not apply to employee stock options and shares issued in
connection with certain mergers and acquisitions. The $608,194 paid for the
additional interests was the actual cost paid by NRGG for those limited
partnership interests.

     The creditors of SDG do not have recourse to the general credit of the
Company.

     In connection with the conversion of the $1,000,000 loan to Limited
Partnership Interests, the Company executed SDG's limited liability limited
partnership agreement (the "Partnership Agreement"). The Partnership Agreement
provides that distributions will be allocated (i) first, to the General Partner
in the amount of the Out-of-Pocket Costs (as defined in the Partnership
Agreement) to reimburse the General Partner for such costs; (ii) second, 90% to
the Limited Partners of SDG (pro rata in accordance with their respective
Percentage Interests, as defined in the Partnership Agreement) and 10% to the
General Partner until such time as the Unreturned Capital (as defined in
Partnership Agreement) of all of the Limited Partners is reduced to zero; and
(iii) thereafter, 75% to the Limited Partners (pro rata in accordance with their
respective Percentage Interests) and 25% to the General Partner. Distributions
shall be distributed at such time or times as the General Partner shall
determine in its sole discretion.

     Drilling Activity

     The results of our coal-bed methane gas drilling activity during the year
ended February 28, 2007 and 2006 is below:


                                       7

<PAGE>
                             February 28, 2007        February 28, 2006
                             -----------------        -----------------
                             Gross         Net        Gross         Net
                             -----         ---        -----         ---
     Development wells:
     Productive               --            --         3            0.9
     Dry                      --            --         --           --
     Total                    --            --         3            0.9

     Productive wells

     As of February 28, 2007, we had working interests in 11 wells at the Slater
Dome Field. Of the 11 wells, 6 are producing wells (6 gross wells, 4 net), four
non-producing wells (4 gross wells, 2.64 net), three of which were previously
producing wells in the Williams Fork Coals and which were determined to not be
economic because of the ability of the existing equipment to handle the
dewatering and were shut in until additional wells are drilled in the area which
will accelerate the dewatering process and the one remaining non-producing well
currently has a bridge plug which we intend to remove and expect production from
this well. One well (1 gross well, 0.6 net) is shut in awaiting completion.

     During the fiscal year ended February 28, 2007, no new wells were drilled
or recompleted.

     Gas production volumes and average sales price are as follows:

     During the fiscal year ended February 28, 2007, we entered into an
agreement with an independent third party whereby they would market the gas
produced from the Slater Dome Field. The agreement can be terminated at any time
with 30 days' notice. The production from the Slater Dome Field was sold
principally to one purchaser and is being sold on a month-to-month basis. The
following summarizes the gas production in the Slater Dome Field during the
fiscal years ended February 28, 2007 and 2006:

                                               Fiscal Years Ended February 28,
                                                2007                    2006
                                               ------                  ------

      Gas production in MCF                    51,732                  14,731
      Average price per unit:                  $ 5.11                  $ 7.84
      Average production cost per unit:        $12.41                  $45.40

     During the fiscal year February 28, 2007, the Company produced 51,732 MCF
of gas, of which it used 13,593 MCF in operations and sold 38,139 MCF. During
the fiscal year February 28, 2006, the Company produced 25,564 MCF of gas, of
which it used 10,833 MCF in operations and sold 14,731 MCF.

                                       8
<PAGE>
     Oil and gas reserve information

     The estimated oil and gas reserves presented below were derived from
reports prepared by Norwest Questa Engineering, Corp., an independent petroleum
engineering firm, for the fiscal years ended February 28, 2007 and 2006. The
reserve estimates are developed using geological and engineering data and
interests and burdens information developed by the Company. Reserve estimates
are inherently imprecise and are continually subject to revisions based on
production history, results of additional exploration and development, prices of
oil and gas and other factors.

     As of February 28, 2007, the estimated quantities of proved developed and
proved undeveloped reserves net to our interest (all of which are located within
the United States at the Slater Dome Field) are 12,114,000 MCF of gas. The
present value of estimated net revenues before income tax, discounted at 10%, is
$14,319,000, using a price of $5.21 per Mmbtu. The estimated quantities and
estimated net revenues are summarized as follows:

     Estimated Net Proved Reserves                          February 28, 2007
                                                           Net Reserves (MMCF)
                                                           -------------------
     Proved Developed Producing                                   1,248
     Proved Developed Non-Producing                                812
     Proved Undeveloped Behind Pipe                                127
     Proved Undeveloped                                           9,926
     Total Estimated Net Proved Reserves                         12,114


     As of February 28, 2007, the estimated quantities of proved developed and
proved undeveloped reserves (all of which are located within the United States
at the Slater Dome Prospect) was 12,114,000 MCF of gas. As of February 28, 2006,
the estimated quantities of proved developed and proved undeveloped reserves
(all of which are located within the United States at the Slater Dome Prospect)
was 6,006,000 MCF of gas. The present value of estimated net revenues before
income tax, discounted at 10%, was $12,256,100 and $6,873,700, respectively,
using a prices of $5.21 and $5.32 per MCF as of February 28, 2007 and 2006
respectively, is summarized as follows:

                                February 28, 2007            February 28, 2006
                                -----------------            -----------------
     Future cash inflows             $ 63,109,300                 $ 31,953,800
     Deduct:
     Future production costs         (27,077,100)                 (11,496,300)
     Future development costs         (8,411,900)                  (4,502,800)
     Future income taxes              (7,243,800)                  (4,048,000)
                                     (42,732,800)                 (20,047,100)

     Future net cash flows             20,376,500                   11,906,700

     Less 10% discount amount         (8,120,400)                  (5,033,000)
                                     $ 12,256,100                  $ 6,873,700

                                       9
<PAGE>
     During the fiscal year ended February 28, 2007, we revised our proved
reserves downward by 1,916,000. This decrease was primarily the result of three
of our wells which were previously producing wells in the Williams Fork Coals
were determined to not be economic because of the ability of the existing
equipment to handle the dewatering and were shut in until additional wells are
drilled in the area which will accelerate the dewatering process. Further, in
connection with the acquisition of Cedar Ridge's 36.66667% working interest
(29.33336% net revenue interest) effective December 14, 2006,, the Company
acquired an estimated proved reserves of 8,214,000 MCF of natural gas.

     Proved developed reserves are reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods. Proved
undeveloped reserves are proved reserves that are expected to be recovered from
new wells drilled to known reservoirs on undrilled acreage for which the
existence and recoverability of such reserves can be estimated with reasonable
certainty, or from existing wells on which a relatively major expenditure is
required to establish production.

     The data in the tables above represents estimates only. Oil and natural gas
reserve engineering is inherently a subjective process of estimating underground
accumulations of oil and natural gas that cannot be exactly measured. The
accuracy of any reserve estimate is a function of the quality of available data
and engineering and geological interpretation and judgment. Accordingly, reserve
estimates may vary from the quantities of oil and natural gas that are
ultimately recovered. See "Risk Factors."

     Future prices received for production and costs may vary, perhaps
significantly, from the prices and costs assumed for purposes of these
estimates. The net future cash flows should not be construed as the current
market value of the reserves. The 10% discount factor used to calculate present
value is not necessarily the most appropriate discount rate. The present value,
no matter what discount rate is used, is materially affected by assumptions as
to timing of future production, which may prove to be inaccurate.

     Business Strategy

     Maximizing the value of our existing assets and locating new growth
projects are the principle elements of our business strategy. Our primary focus
in the next fiscal year is to increase our cash flow and oil and gas reserves by
further developing the Slater Dome Field and to test the Niobrara and Frontier
formations in the Focus Ranch Federal 12-1 well in the Focus Ranch Unit. The
next objective is to internally develop and/or acquire other natural gas
prospects capable of producing significant reserves. We also intend to work
towards developing and marketing oil and gas prospects by attempting to obtain a
promoted or carried working interest in acreage we plan to acquire in the Denver
Julesberg Basin in northeastern Colorado.

     Effective July 7, 2006, the Company entered into a Purchase Agreement (the
"LRS Agreement") with LRS Group, LLC and R & R Exploration Fund, LLC
(collectively "LRS"), whereby the Company acquired a 2D seismic data license
from LRS identifying over 150 drill site locations in the Denver Julesberg Basin
in Colorado. The purchase price for the 2D seismic data license from LRS is
$650,000, payable $325,000 upon the execution of the LRS Agreement, $162,500 due
on January 7, 2007 and $162,500 due July 7, 2007. The Company also granted LRS
5% of 8/8th overriding royalty interests for each 87.5% net revenue interest the
Company acquires in the Area of Mutual Interest as defined in the LRS Agreement.


                                       10
<PAGE>
     The Company expects to use the seismic data to acquire properties for
potential drill sites within the Area of Mutual Interest. Pursuant to the LRS
Agreement, the Company must drill one initial test well within the first year of
the LRS Agreement and two additional wells within the first three years of the
LRS Agreement. Thereafter, the Company must either drill at least one additional
well per year, shoot additional seismic, or acquire additional acreage within
the Area of Mutual Agreement to keep the LRS Agreement in full force and effect.

     Any additional seismic data acquired in the Area of Mutual Agreement during
the term of the LRS Agreement shall be the sole property of the Company.

     Coal-bed Methane Gas

     Natural gas consists primarily of methane, which is produced when organic
material is physically turned into coal under normal geologic conditions.
Methane is generally considered a cleaner form of energy than traditional coal
and oil. When the coal and methane conversion process occurs such that the
resultant coal is saturated with water and methane is trapped within the coal,
the result is coal-bed methane ("CBM"). Water permeates coal beds, and the water
pressure traps the gas within the coal. Because coal has a large and complex
internal surface area, it can store volumes of gas six or seven times as large
as a conventional natural gas reservoir of equal rock volume. CBM is kept in
place usually by the presence of water. Thus, the production of CBM in most
cases requires the dewatering of the coal gas to be extracted. Therefore, in a
CBM well, water is produced in large volumes, especially in the early stages of
production. The extraction of CBM involves pumping water from the coal seam
aquifer in order to release the water pressure that is trapping the gas in the
coal. Methane travels with the ground water being pumped from the coal by a well
drilled and equipped with a water pump that is completed in a coal seam that
contains methane. Since methane has very low solubility in water, it separates
from the water in the well before the water enters the pump. Instead of
dewatering the coal seam, the goal is to decrease the hydrostatic pressure above
the coal seam. Water moving from the coal seam to the well bore encourages gas
migration toward the producing well. As this water pressure is released, the gas
will rise and is separated from the water and can be piped away. New CBM wells
often produce water for six to twelve months, and in some cases for longer
periods and then, as the water production decreases, gas production increases as
the coal seams de-water.

     Since CBM at the Slater Dome Field, and potentially in the Flattops
Prospect, is found at relatively shallow predictable depths, exploration and
development costs are generally much lower than for deeper, more geologically
complex, oil and gas exploration projects. The wells drilled and completed to
extract CBM from these shallower coal seams are therefore much more cost
effective to drill and complete. Operating costs, however, for these wells are
usually higher than for conventional free-flowing gas wells due to the need to
pump and dispose of water during the producing life of the well.

     The United States Geological Survey has estimated coal-bed gas resources of
at least 700 trillion cubic feet. About 100 trillion cubic feet of that appears
to be economically recoverable with existing technology. CBM gas currently
accounts for about 7.5% of total natural gas production in the United States.


                                       11
<PAGE>
                                Glossary of Terms

Bcf:                Billion cubic feet.

Bcfe:               Billion cubic feet equivalent.

Gross acre:         An acre in which a working interest is owned, without regard
                    to the size of the interest.

Gross well:         An oil or gas well in which a working interest is owned,
                    without regard to the size of the interest.

Leases:             Full or partial leasehold interests in oil and gas
                    prospects, authorizing the owner thereof to drill for,
                    reduce to possession and produce and sell oil and gas,
                    subject to the payment of rentals, bonuses and/or royalties.

MCF:                Thousand cubic feet.

MMBtu               One million British Thermal Units. A British Thermal Unit is
                    the amount of heat required to raise the temperature of a
                    one-pound mass of water by one degree Fahrenheit.

MMCF:               One million cubic feet.

Net acres:          One net acre is deemed to exist when the sum of the
                    fractional working interests owned in gross acres equals
                    one. The number of net acres is the sum of the fractional
                    working interests owned in gross acres.

Net well:           One net well is deemed to exist when the sum of fractional
                    working interests owned in gross wells equals one. The
                    number of net wells is the sum of the fractional working
                    interests owned in gross wells.

Proved Developed    Reserves that are expected to be recovered through existing
Reserves:           wells with existing equipment and operating methods.

Proved Oil and      Estimated quantities of crude oil, natural gas and natural
gas Reserves:       gas liquids which geological and engineering data
                    demonstrate with reasonable certainty to be recoverable in
                    future years from known reservoirs under existing economic
                    and operating conditions, (i.e., prices and costs as of the
                    date the estimate is made.) Prices include consideration of
                    changes in existing prices provided only by contractual
                    arrangements but not on escalations based upon future
                    conditions. For a complete definition of proved oil and gas
                    reserves, see Rule 4-10(a)(2)(3)(4) of Regulation S-X,
                    available on the SEC website at
                    (http://www.sec.gov/divisions/corpfin/forms/regsx.htm#gas).

Proved Undeveloped  Proved reserves that are expected to be recovered from new
Reserves:           wells on undrilled acreage or from existing wells where a
                    relatively major expenditure is required for recompletion.

PV-10 Value         The present value of estimated future gross revenue to be
                    generated from the production of estimated net proved
                    reserves, net of estimated production and future development
                    costs, using prices and costs in effect as of the date
                    indicated (unless such prices or costs are subject to change
                    pursuant to contractual provisions), without giving effect
                    to non-property related expenses such as general and
                    administrative expenses, debt service and future income
                    taxes or to depreciation, depletion and amortization,
                    discounted using an annual discount rate of 10%.

                                       12
<PAGE>

     Competition

     The oil and natural gas industry is intensely competitive. Our competition
includes major natural resource companies that operate globally, as well as
independent operators located throughout the world, including North America.
Many of these companies have greater financial resources than we do. These
companies may be able to pay more for productive oil and natural gas properties
and exploratory prospects or to define, evaluate, bid for and purchase a greater
number of properties and prospects than our financial or human resources permit.
In addition, these companies may have a greater ability to continue exploration
activities during periods of low oil and natural gas market prices. Our larger
or integrated competitors may be able to absorb the burden of existing, and any
changes to, federal, state, and local regulations more easily than we can, which
would adversely affect our competitive position. Our ability to acquire
additional properties and to discover reserves in the future will be dependent
upon our ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment. In addition, because we have
fewer financial and human resources than many companies in our industry, we may
be at a disadvantage in bidding for exploratory prospects and producing oil and
natural gas properties.

     The three largest CBM producers in the lower 48 states are BP Amoco,
Burlington Resources and Phillips Petroleum, all of which produce most of their
CBM production from the San Juan Basin in northwest New Mexico and southwest
Colorado.

     Anadarko Petroleum Corporation ("Anadarko") is among the largest
independent oil and gas exploration and production companies in the world, with
3.01 billion barrels of oil equivalent of proved reserves as of December 31,
2006. Anadarko's major areas of operation are located onshore in the United
States, the deepwater of the Gulf of Mexico and Algeria. Anadarko also has
production in China, Venezuela and Qatar, a development project in Brazil and is
executing strategic exploration programs in several other countries. Anadarko
actively markets natural gas, oil and natural gas liquids production and owns
and operates gas-gathering systems in its core producing areas. In addition, it
is engaged in the hard-minerals business through non-operated joint ventures and
royalty arrangements in several coal and industrial mineral mines located on
lands within and adjacent to its properties that include an 8,000,000-acre strip
running through portions of Colorado, Wyoming and Utah. On August 10, 2006,
Anadarko completed the acquisition of Kerr-McGee Corporation ("Kerr-McGee") and
on August 23, 2006, Anadarko completed the acquisition of Western Gas Resources,
Inc. ("Western"). During 2006, Anadarko significantly increased its tight gas
and CBM holdings in the Rocky Mountains area through the acquisitions of
Kerr-McGee and Western. Anadarko's CBM operation is located in Wyoming's Powder
River basin.


                                       13
<PAGE>
     EOG Resources, Inc. ("EOG") explores, develops, produces and markets
natural gas and crude oil primarily in major producing basins in the United
States, as well as in Canada, Trinidad, the United Kingdom and selected other
international areas. EOG's operations are mainly natural gas and crude oil
exploration and production. At December 31, 2006, EOG's total estimated net
proved reserves were 6,802 billion cubic feet equivalent (Bcfe), of which 6,095
billion cubic feet (Bcf) were natural gas reserves and 118 million barrels
(MMBbl), or 707 Bcfe, were crude oil, condensate and natural gas liquids
reserves. At such date, approximately 60% of EOG's reserves (on a natural gas
equivalent basis) were located in the United States, 20% in Canada and 20% in
Trinidad. EOG increased drilling activity within its core areas of the Rocky
Mountain area, drilling 179 net wells during 2006, including 84 net wells in the
Uinta Basin, Utah, 40 net wells in the LaBarge Platform, Wyoming, 34 net wells
in the Moxa Arch area, Wyoming, and seven net wells in the Williston Basin.

     The following is a summary of the regional competitors that are active in
the coal-bed methane segment of the industry:

     As of December 31, 2006, Double Eagle Petroleum Co. ("Double Eagle") owns
interests in a total of 664 producing wells. Double Eagle's Eastern Washakie
coal-bed natural gas project is a 40-mile-long trend located between the town of
Baggs and Rawlins in south-central Wyoming. Double Eagle has acquired interests
in 53,570 gross acres (30,387 net acres) along the Atlantic Rim and owns other
interests in acreage outside of the Atlantic Rim area.

     Galaxy Energy Corporation ("Galaxy") is in the business of acquiring and
developing coal-bed methane and other unconventional and conventional natural
gas properties in Wyoming, Texas, Europe and other areas where shallow coal beds
offer attractive exploitation opportunities for natural gas. Galaxy's properties
in the Powder River Basin consist of about 43,600 net acres in four project
areas in Sheridan, Johnson and Campbell counties, plus working interests in a
total of 212 coal bed methane wells in various stages of completion and
production and 8 water disposal wells. As of March 1, 2007, Galaxy had interests
in 173 completed wells, 57 wells in various stages of completion and eight water
disposal wells. Galaxy has entered into an agreement to sell its interests in
the Powder River Basin to PetroHunter Energy Corporation ("PetroHunter"),
subject to PetroHunter receiving financing to complete the transaction.

     Yates Petroleum Corporation, a private independent oil and gas company,
leases approximately 80,000 acres along the Cherokee Ridge and Fort Union Coal
Fairway adjacent to and southwest of the Slater Dome Prospect.

     Merit Energy Company ("Merit") is a private firm specializing in direct
investments in oil and gas assets. Merit owns an interest in over 11,000 wells
in the United States, Gulf of Mexico and Canada with net daily production in
excess of 100,000 BOEPD. Merit holds acreage in the Fort Union Coal production
at South Baggs/West Side Canal directly west of the Slater Dome Prospect.

     Market for Oil and Gas

     The availability of a ready market for our oil and gas depends upon
numerous factors beyond our control, including the extent of domestic production
and importation of oil and gas, the relative status of the domestic and
international economies, the capacity of the gas transportation systems, the
marketing of other competitive fuels, fluctuations in seasonal demand and
governmental regulation of production, refining, transportation and pricing of
oil, natural gas and other fuels.


                                       14
<PAGE>
     During the fiscal year ended February 28, 2007, we entered into an
agreement with an independent third party whereby they would market the gas
produced from the Slater Dome Field. The agreement can be terminated at any time
with 30 days' notice. The production from the Slater Dome Field was sold
principally to one purchaser and is being sold on a month-to-month basis.

     Based on the current demand for natural gas and oil, and the availability
of other purchasers, we believe that the loss of the major purchaser of our gas
would not have a material adverse effect on the Company's financial condition
and results of operations.

     Seasonality

     Generally, but not always, the demand for natural gas decreases during the
summer months and increases during the winter months. Seasonal weather
conditions can limit our drilling and producing activities and other oil and
natural gas operations. These seasonal anomalies can pose challenges for meeting
our well drilling objectives and can increase competition for equipment,
supplies and personnel during the spring and summer months, which could lead to
shortages and increase costs or delay our operations.

     Government Regulation

     The production and sale of oil and gas are subject to various federal,
state and local governmental regulations, which may be changed from time to time
in response to economic or political conditions and can have a significant
impact upon overall operations. Matters subject to regulation include drilling
permits, discharge permits for drilling operations, drilling bonds, reports
concerning operations, the spacing of wells, unitization and pooling of
properties, taxation, abandonment and restoration and environmental protection.
These laws and regulations are under constant review for amendment or expansion.
From time to time, regulatory agencies have imposed price controls and
limitations on production by restricting the rate of flow of oil and gas wells
below actual production capacity in order to conserve supplies of oil and gas.
Changes in these regulations could require us to expend significant resources to
comply with new laws or regulations or changes to current requirements and could
have a material adverse effect on the company. The regulatory burden on the oil
and gas industry increases the cost of doing business in the industry and
consequently affects profitability.

     Oil & Gas Regulation

     The governmental laws and regulations which could have a material impact on
the oil and gas exploration and production industry are as follows.

     Drilling and Production

     Our operations are subject to various types of regulation at federal, state
and local levels. These types of regulation include requiring permits for the
drilling of wells, drilling bonds and reports concerning operations. Most
states, and some counties and municipalities in which we operate, also regulate
one or more of the following:

                                       15
<PAGE>
     o    The location of wells;

     o    The method of drilling and casing wells;

     o    The rates of production or "allowables";

     o    The surface use and restoration of properties upon which wells are
          drilled; and

     o    The plugging and abandoning of wells; and notice to surface owners and
          other third parties.

     State laws regulate the size and shape of drilling and spacing units, or
proration units, governing the pooling of oil and natural gas properties. Some
states allow forced pooling or integration of tracts to facilitate exploration,
while other states rely on voluntary pooling of lands and leases. In some
instances, forced pooling or unitization may be implemented by third parties and
may reduce our interest in the unitized properties. In addition, state
conservation laws establish maximum rates of production from oil and natural gas
wells, generally prohibit the venting or flaring of natural gas and impose
requirements regarding the ratability of production. These laws and regulations
may limit the amount of natural gas and oil we can produce from our wells or
limit the number of wells or the locations at which we can drill. Moreover, each
state generally imposes a production or severance tax with respect to the
production and sale of oil, natural gas and natural gas liquids within its
jurisdiction.

     Natural Gas Sales Transportation

     Historically, federal legislation and regulatory controls have affected the
price of the natural gas we produce and the manner in which we market our
production. The Federal Energy Regulatory Commission ("FERC") has jurisdiction
over the transportation and sale for resale of natural gas in interstate
commerce by natural gas companies under the Natural Gas Act of 1938 and the
Natural Gas Policy Act of 1978.

     FERC also regulates interstate natural gas transportation rates and service
conditions, which affects the marketing of natural gas that we produce, as well
as the revenues we receive for sales of our natural gas. Commencing in 1985,
FERC promulgated a series of orders, regulations and rule-makings that
significantly fostered competition in the business of transporting and marketing
gas. Today, interstate pipeline companies are required to provide
nondiscriminatory transportation services to producers, marketers and other
shippers, regardless of whether such shippers are affiliated with an interstate
pipeline company. Under FERC's current regulatory regime, transmission services
must be provided on an open-access, non-discriminatory, basis at cost-based
rates or at market-based rates if the transportation market at issue is
sufficiently competitive.

                                       16
<PAGE>
     Mineral Act

     The Mineral Leasing Act of 1920 ("Mineral Act") prohibits direct or
indirect ownership of any interest in federal onshore oil and gas leases by a
foreign citizen of a country that denies "similar or like privileges" to
citizens of the United States. Such restrictions on citizens of a
"non-reciprocal" country include ownership or holding or controlling stock in a
corporation that holds a federal onshore oil and gas lease. If this restriction
is violated, the corporation's lease can be canceled in a proceeding instituted
by the United States Attorney General. Although the regulations of the Bureau of
Land Management (which administers the Mineral Act) provide for agency
designations of non-reciprocal countries, there are presently no such
designations in effect.

     Environmental Regulation

     Our activities will be subject to existing federal, state and local laws
and regulations governing environmental quality and pollution control. Our
operations will be subject to stringent environmental regulation by state and
federal authorities, including the Environmental Protection Agency ("EPA"). Such
regulation can increase the cost of such activities. In most instances, the
regulatory requirements relate to water and air pollution control measures.

     Waste Disposal

     The Resource Conservation and Recovery Act ("RCRA") and comparable state
statutes affect oil and gas exploration and production activities by imposing
regulations on the generation, transportation, treatment, storage, disposal and
cleanup of "hazardous wastes" and on the disposal of non-hazardous wastes. Under
the auspices of the EPA, the individual states administer some or all of the
provisions of RCRA, sometimes in conjunction with their own, more stringent,
requirements. Drilling fluids, produced waters and most of the other wastes
associated with the exploration, development and production of crude oil,
natural gas or geothermal energy constitute "solid wastes," which are regulated
under the less-stringent non-hazardous waste provisions, but there is no
guarantee that the EPA or the individual states will not adopt more stringent
requirements for the handling of non-hazardous wastes or categorize some
non-hazardous wastes as hazardous for future regulation.

     CERCLA

     The federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") imposes joint and several liability for costs of
investigation and remediation and for natural resource damages, without regard
to fault or the legality of the original conduct, on certain classes of persons
with respect to the release into the environment of substances designated under
CERCLA as hazardous substances ("Hazardous Substances"). These classes of
persons or potentially responsible parties include the current and certain past
owners and operators of a facility or property where there is or has been a
release or threat of release of a Hazardous Substance and persons who disposed
of or arranged for the disposal of the Hazardous Substances found at such a
facility. CERCLA also authorizes the EPA and, in some cases, third parties to
take actions in response to threats to the public health or the environment and
to seek to recover the costs of such action. Although CERCLA generally exempts
petroleum from the definition of Hazardous Substances in the course of
operations, we may in the future generate wastes that fall within CERCLA's
definition of Hazardous Substances. We may also in the future become an owner of
facilities or properties on which Hazardous Substances have been released by
previous owners or operators. We may in the future be responsible under CERCLA
for all or part of the costs to clean up facilities or property at which such
substances have been released and for natural resource damages.

                                       17
<PAGE>
     Air Emissions

     Our operations are subject to the Federal Clean Air Act, and associated
state laws and regulations, regulate emissions of various air pollutants through
the issuance of permits and the imposition of other requirements. In addition,
EPA has developed, and continues to develop, stringent regulations governing
emissions of toxic air pollutants at specified sources. Major sources of air
pollutants are subject to more stringent, federally imposed permitting
requirements. Administrative enforcement actions for failure to comply strictly
with air pollution regulations or permits are generally resolved by payment of
monetary fines and correction of any identified deficiencies. Alternatively,
regulatory agencies could require us to forego construction, modification or
operation of certain air emission sources.

     Clean Water Act

     The Clean Water Act ("CWA") imposes restrictions and strict controls
regarding the discharge of wastes, including produced waters and other oil and
natural gas wastes, into waters of the United States, a term broadly defined.
Permits must be obtained to discharge pollutants into federal waters. The CWA
provides for civil, criminal and administrative penalties for unauthorized
discharges of oil, hazardous substances and other pollutants. It imposes
substantial potential liability for the costs of removal or remediation
associated with discharges of oil or hazardous substances. State laws governing
discharges to water also provide varying civil, criminal and administrative
penalties and impose liabilities in the case of a discharge of petroleum or its
derivatives, or other hazardous substances, into state waters. In addition, the
EPA has promulgated regulations that may require us to obtain permits to
discharge storm water runoff. In the event of an unauthorized discharge of
wastes, we may be liable for penalties and costs.

     We believe that we are in substantial compliance with current applicable
environmental laws and regulations.

     As the operator of Slater Dome Field and the Flattops Prospect, the Company
is responsible for obtaining all permits and government permission necessary to
operate these properties and permits to drill wells. Likewise, we, as the
operator of the Flattops Prospect, will be responsible for obtaining all permits
and government permission necessary to operate and drill wells on that prospect.
SDG is responsible for maintaining easements or other arrangements with owners
of the land over which the Gas Gathering Pipeline is built, as well as operating
and maintaining the Gas Gathering Pipeline.

                                       18
<PAGE>
Research and Development Activities

     No research and development expenditures have been incurred, either on our
account or sponsored by customers, during the past two years.

Employees

     We currently have five employees, including Paul G. Laird, our President
and Chief Executive Officer and Les Bates, our Chief Financial Officer,
Principal Accounting and Financial Officer, Secretary and Treasurer. Our
executive officers devote such time, as each officer deems necessary to perform
his duties to the Company and are subject to conflicts of interest.

     From time to time, we use the services of clerical and accounting personnel
on a part-time basis and the services of geologists, engineers, landmen and
other professionals on a contract basis as may be necessary for our oil and gas
operations.

Available Information

     Our Internet website address is www.nfeinc.com. We make available, free of
charge, all filings with the SEC and all press releases on this site.


                                  Risk Factors

Risks Related To Our Business

     We have a limited operating history.

     We were formally organized in January 2000 and did not commence operation
in the oil and gas industry until February 2001. Since that date, our activities
have been limited to organizational efforts, obtaining working capital and
acquiring and developing our properties. We began producing gas in June 2005. As
a result, there is a limited history of production or generating revenue against
which to compare our revenues during the year ended February 28, 2007.

     The Slater Dome Field is the primary oil and gas property where most of our
capital resources have been employed and we are substantially dependent upon
this one property, which causes our risk to be concentrated.


                                       19
<PAGE>
     Our plan of operation includes efforts to further develop the Slater Dome
Field through drilling up to twenty additional producing wells. Further we plan
to test the Niobrara and Frontier formations in the Focus Ranch Federal 12-1
well in the Focus Ranch Unit and acquire acreage in the Denver Julesberg Basin
and drilling two exploratory wells on the Flattops Prospect in the summer/fall
of 2008. If the development of these properties is not successful, we will be
forced to seek additional opportunities. Substantially all of our current
capital investment has been spent on the development of the Slater Dome Field.
During the fiscal year ended February 28, 2007, we acquired Cedar Ridge's
36.66667% working interest (29.33336% net revenue interest) in eleven gas and 2
water disposal wells and 33,949 net acres in the Slater Dome Field. We are
dependent on further development efforts in drilling additional wells at the
Slater Dome Field in order to generate additional cash flow. If we are unable to
further develop the Slater Dome Field, we will be forced to seek additional
investments. Investigating and locating suitable properties for acquisition is
expensive and time-consuming. Even if we are successful in identifying one or
more additional properties for acquisition, there is no assurance that we can
obtain such properties at reasonable prices or that sufficient working capital
will be available to finance the acquisitions. As a result of our dependence on
a single property, we may be disproportionately exposed to the impact of delays
or interruptions of production from these wells or increased expenses caused by
significant governmental regulation, transportation capacity constraints, the
availability and capacity of compression and gas processing facilities,
curtailment of production or interruption of transportation of natural gas
produced from the Slater Dome Field. Our substantial dependence on a single
prospect property for cash flow increases the risk of our future success.

     We have incurred losses from operations and negative cash flow that is
likely to continue until we can economically produce oil or natural gas.

     We have a history of losses from operations and negative cash flow that is
likely to continue until we economically produce oil or natural gas. A
significant portion of our cash flow since inception has come from short-term
loans, equity and debt investments, contributions from our former corporate
parent and the sale of oil and gas properties. Unless we economically produce
oil and gas in the future, these losses will continue. If we continue to
experience losses from operations and negative cash flow as we have in the past,
there can be no assurance that we will be able to continue operations as
anticipated, if at all. Further, the price of our Common Stock may be adversely
affected.

     We will require additional capital and we may be unable to obtain needed
capital or financing on satisfactory terms, if at all.

     The oil and natural gas industry is capital intensive. We make and expect
to continue to make substantial capital expenditures in our business and
operations for the exploration for and development, production and acquisition
of oil and natural gas reserves. To date, we have financed capital expenditures
primarily with sales of our equity securities, debt financing and cash generated
by operations. To accomplish our plan of operations, we will be required to seek
additional financing. There can be no assurance as to the availability or terms
of any additional financing.

     Even if additional capital is needed, we may not be able to obtain debt or
equity financing on terms favorable to us, or at all. The failure to obtain
additional financing could result in a curtailment of our operations relating to
exploration and development of the Slater Dome Field or of our other prospects,
which in turn could lead to a possible loss of properties and a decline in our
natural gas and oil reserves.


                                       20
<PAGE>
     No assurance of the accuracy of the estimates of oil and gas reserves.

     We have obtained a report on the estimated reserves on our leases on the
Slater Dome Field. Reserve estimates are based upon various assumptions,
including assumptions relating to oil and gas prices, drilling and operating
expenses, production levels, capital expenditures, taxes and availability of
funds. No one can measure underground accumulations of oil and natural gas in an
exact way. As a result, estimated quantities of proved reserves, projections of
future production rates and the timing of development expenditures may be
incorrect. Any significant variance from these assumptions to actual figures
could greatly affect our estimates of reserves, the economically recoverable
quantities of oil and natural gas attributable to any particular group of
properties, the classifications of reserves based on risk of recovery and
estimates of the future net cash flows.

     Further, the present value of future net cash flows from our proved
reserves is not necessarily the same as the current market value of our
estimated oil and natural gas reserves. Actual future net cash flows from our
oil and natural gas properties also will be affected by factors such as:

     o    Actual prices we receive for oil and natural gas;

     o    The amount and timing of actual production;

     o    Supply of, and demand for, oil and natural gas; and

     o    Changes in governmental regulations or taxation.

     The timing of both our production and our incurrence of expenses in
connection with the development and production of oil and natural gas properties
will affect the timing of actual future net cash flows from proved reserves and
thus their actual present value. In addition, the 10% discount factor used when
calculating discounted future net cash flows may not be the most appropriate
discount factor based on interest rates in effect from time to time and risks
associated with us or the oil and natural gas industry in general. Actual future
production, oil and gas prices, revenues, taxes, development expenditures,
operating expenses and quantities of recoverable oil and gas reserves will most
likely vary from those estimates, and any significant variance could have a
material adverse effect on our future results from operations.

     Unless we replace our oil and natural gas reserves, our reserves and
production will decline, which would adversely affect our business, financial
condition and results of operations.

     Producing oil and natural gas reservoirs generally are characterized by
declining production rates that vary depending upon reservoir characteristics
and other factors. As we drill additional wells at the Slater Dome Field, the
rate of decline of these reserves may increase substantially. Thus, our future
oil and natural gas reserves and production and, therefore, our cash flow and
income are highly dependent on our success in efficiently developing and
exploiting our current reserves as well as finding or acquiring additional
economically recoverable reserves. We may not be able to develop, find or
acquire additional reserves to replace our current and future production at
acceptable costs.


                                       21
<PAGE>
     Prospects that we acquire may not yield natural gas or oil in commercially
viable quantities.

     We describe some of our current prospects and our plans to explore those
prospects in this Annual Report on Form 10-KSB. A prospect is a property on
which we have identified what we believe, based on available seismic and
geological information, to be indications of natural gas or oil. However, the
use of seismic data and other technologies will not enable us to know
conclusively prior to drilling and testing whether natural gas or oil will be
present or, if present, whether natural gas or oil will be present in sufficient
quantities to recover drilling or completion costs or to be economically viable.
If we drill wells that we identify as dry holes in our current and future
prospects, our drilling success rate may decline and materially harm our
business. In sum, the cost of drilling, completing and operating any well is
often uncertain and new wells may not be productive.

     We are dependent upon the operation of the Gas Gathering Pipeline to
transport our natural gas from the Slater Dome Field to a Questar transportation
line in Baggs, Wyoming.

     We are entirely dependent upon the operation of the Gas Gathering Pipeline
to transport gas produced at the Slater Dome Field to the Questar transportation
line. If the Gas Gathering Pipeline was not available for any reason to
transport gas produced at the Slater Dome Field, it would have an immediate
direct and material adverse effect upon the Company and our results from
operations.

     We are dependent upon transportation and storage services provided by third
parties.

     We are dependent on the transportation and storage services offered by
various interstate and intrastate pipeline companies for the marketing of,
delivery and sale of our gas supplies. Both the performance of transportation
and storage services by interstate pipelines and the rates charged for such
services are subject to the jurisdiction of FERC or state regulatory agencies.
An inability to obtain transportation and/or storage services at competitive
rates can hinder our processing and marketing operations and/or affect our sales
margins, which would have a material adverse effect upon our results from
operations.

     We may be required to take write-downs of the carrying values of our oil
and natural gas properties.

     Accounting rules require that we review periodically the carrying value of
our oil and natural gas properties for possible impairment. Based on specific
market factors and circumstances at the time of the prospective impairment
reviews, and the continuing evaluation of development plans, production data,
economics and other factors, we may be required to write down the carrying value
of our oil and natural gas properties. A write-down constitutes a non-cash
charge to earnings. We may incur impairment charges in the future, which could
have material adverse effect on our results of operations in the periods taken.


                                       22
<PAGE>
     Drilling for and producing natural gas is governed by a number of federal,
state and local laws and regulations, including environmental regulations, which
are beyond our control.

     Many aspects of gathering, processing, marketing and transportation of
natural gas are subject to federal, state and local laws and regulations, which
can have a significant impact upon overall operations. Both transportation and
storage of natural gas by interstate pipelines and the rates charged for such
services are subject to the jurisdiction of FERC or state regulatory agencies.
The construction and operation of gathering lines, plants and other facilities
are subject to environmental laws and regulations that could affect the
financial position or results of operations and may be subject to FERC.

     The production and sale of oil and gas are subject to various federal,
state and local governmental regulations, which may be changed from time to time
in response to economic or political conditions, and we are unable to predict
the ultimate cost of compliance. Matters subject to regulation include discharge
permits for drilling operations, drilling bonds, reports concerning operations,
the spacing of wells, unitization and pooling of properties, taxation and
environmental protection. From time to time, regulatory agencies have imposed
price controls and limitations on production by restricting the rate of flow of
oil and gas wells below actual production capacity in order to conserve supplies
of oil and gas. Changes in these regulations or non-compliance could have a
material adverse effect upon our operations and financial condition.

     Our coalbed methane exploration and production activities does and will
result in the discharge of large volumes of produced groundwater into adjacent
lands and waterways. The ratio of methane gas to produced water varies over the
life of the well. The environmental soundness of discharging produced
groundwater pursuant to water discharge permits has come under increased
scrutiny. Moratoriums on the issuance of additional water discharge permits or
more costly methods of handling these produced waters, may affect future well
development. Compliance with more stringent laws or regulations, more vigorous
enforcement policies of the regulatory agencies, difficulties in negotiating
required surface use agreements with land owners or receiving other governmental
approvals could delay our exploration and production activities in the Slater
Dome Field and in our other prospects and/or require us to make material
expenditures for the installation and operation of systems and equipment for
pollution control and/or remediation, all of which could have a material adverse
effect on our financial condition or results of operations.

     We are responsible for all permits and government permits necessary for our
operations.

     As the operator of Slater Dome Field and the Flattops Prospect, we are
responsible for obtaining all permits and government permission necessary to
operate these properties and to obtain permits for any new wells that are
drilled. SDG is responsible for maintaining easements or other arrangements with
owners of the land over which the Gas Gathering Pipeline is built, as well as
operating and maintaining the Gas Gathering Pipeline. While we do not expect
that such permits or other regulations will be a material impediment to the
operation of our business, there can be no assurance that we or SDG, as
applicable, will obtain the necessary permits and easements. The failure to do
so would have a material adverse effect upon our operations and financial
condition. Our results of operations are dependent upon market prices for oil
and natural gas, which fluctuate widely and are beyond our control.

                                       23
<PAGE>
     Our operations are affected by future oil and natural gas prices that
fluctuate widely, and low prices could have a material adverse effect on our
operations. Our success is dependent largely on the prices received for natural
gas and oil production. Prices received also affect the amount of future cash
flow available for capital expenditures and may affect the ability to raise
additional capital. Lower prices may also affect the amount of natural gas and
oil that can be economically produced from reserves either discovered or
acquired. Further, it could affect the amount of natural gas that is transported
through the Gas Gathering Pipeline owned by SDG, in which we own 82.76% of the
Limited Partnership Interests.

     Prices for natural gas and oil fluctuate widely. For example, natural gas
and oil prices declined significantly in 1998 and 2001, and, for an extended
period of time, remained below prices obtained in previous years.

     Factors that can cause price fluctuations include, but are not limited to:

     o    The level of consumer product demand;

     o    Weather conditions;

     o    Domestic and foreign governmental regulations;

     o    The price and availability of alternative fuels;

     o    Political conditions in natural gas and oil-producing regions;

     o    The domestic and foreign supply of natural gas and oil;

     o    The price of foreign imports; and

     o    Overall economic conditions.

     The availability of a ready market for our oil and gas depends upon
numerous factors beyond our control, including the extent of domestic production
and importation of oil and gas, the relative status of the domestic and
international economies, the capacity of the gas transportation systems, the
marketing of other competitive fuels, fluctuations in seasonal demand and
governmental regulation of production, refining, transportation and pricing of
oil, natural gas and other fuels, each of which could have a material adverse
effect upon our results of operations.


                                       24
<PAGE>
     The oil and gas industry in which we operate involves many operating risks
that can cause substantial losses.

     Drilling and production of oil and natural gas involves a variety of
operating risks, including but not limited to:

     o    Fires;

     o    Explosions;

     o    Blow-outs and surface cratering;

     o    Uncontrollable flows of underground natural gas, oil or formation
          water;

     o    Natural disasters;

     o    Pipe and cement failures;

     o    Casing collapses;

     o    Embedded oilfield drilling and service tools;

     o    Abnormal pressure and geological formations;

     o    Environmental hazards such as natural gas leaks, oil spills, pipeline
          ruptures; and

     o    discharges of toxic gases.

If any of these events occur, we could incur substantial losses as a result of:

     o    Injury or loss of life;

     o    Severe damage to and destruction of property, natural resources or
          equipment;

     o    Pollution and other environmental damage;

     o    Clean-up responsibilities;

     o    Regulatory investigation and penalties;

     o    Suspension of our operations; and

     o    Repairs necessary to resume operations.


                                       25
<PAGE>
     Further, the occurence of any of these events may impact third parties,
including our employees or employees of our contractors, and lead to injury or
death or property damage. If we were to experience any of these problems, it
could affect well bores, gathering systems and processing facilities, any one of
which could adversely affect our ability to conduct operations. We may be
affected by any of these events more than larger companies, since we have
limited working capital. We currently maintain $1 million of liability
insurance. However, for some risks, we may not obtain insurance if we believe
the cost of available insurance is excessive relative to the risks presented. In
addition, pollution and environmental risks generally are not fully insurable.
If a significant accident or other event occurs and is not fully covered by
insurance, it could adversely affect operations. Moreover, we cannot provide
assurance that we will be able to maintain adequate insurance in the future at
rates considered reasonable.

     Any of these risks can cause substantial losses, including personal injury
or loss of life, damage to or destruction of property, natural resources and
equipment, pollution, environmental contamination or loss of wells and other
regulatory penalties.

     Seasonal weather conditions adversely affect our ability to conduct
drilling activities.

     Oil and natural gas operations in the Rocky Mountains are adversely
affected by seasonal weather conditions. In the Slater Dome Field, certain
drilling and other oil and natural gas activities can only be conducted during
limited times of the year, typically during the summer months. This limits our
ability to operate in this area and can intensify competition during those times
for drilling rigs, oil field equipment, services, supplies and qualified
personnel, which may lead to periodic shortages. These constraints and the
resulting shortages or high costs could delay our operations and materially
increase our operating and capital costs, which could have a material adverse
effect upon the Company and its results of operations.

     There can be no assurance that any of our wells will become profitable.

     Our wells may become uneconomic in the event water or other deleterious
substances are encountered which impair or prevent the production of oil and/or
gas from the wells. The production of CBM requires dewatering for the coal gas
to be extracted, which results in water being produced in large volumes,
especially in the early stages of production. Our ability to remove and
economically dispose of sufficient quantities of water from the coal seam will
determine whether or not we can produce coalbed methane in commercial
quantities. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. The failure of our wells
as a result of these or other events that impair the production of gas will have
a material adverse effect upon our results of operations.

     Our competitors may have greater resources than we have, and we may not
have the resources necessary to successfully compete with them.


                                       26
<PAGE>
     Our competitors include major oil companies and other independent
operators, most of which have financial resources, staffs and facilities
substantially greater than ours. Competition in the oil and gas industry is
intense. We also face intense competition in obtaining capital for drilling and
acquisitions and are at a competitive disadvantage compared with larger
companies.

     We may be unable to retain key employees or recruit additional qualified
personnel.

     Due to the current demand for employees in the oil and gas industry, our
remote location in Colorado and our extremely limited number of employees means
that we could be required to spend significant sums of money to locate and train
new employees if we require additional employees in the future or if any of our
existing employees resign or depart for any reason. Due to our limited operating
history, financial resources and familiarity with our operations, we have a
significant dependence on the continued service of our existing officers, Paul
G. Laird and Les Bates. We do not carry key man life insurance on either Mr.
Laird or Mr. Bates. We may not have the financial resources to hire a
replacement if one or both of our officers were unavailable for any reason. The
loss of service of either of these individuals could, therefore, significantly
and adversely affect our operations.

     Our officers may be subject to conflicts of interest.

     Mr. Laird and Mr. Bates, the Company's executive officers, devote such time
as each officer deems necessary to perform his duties to the Company and are
subject to conflicts of interest. Generally, Messrs Laird and Bates each
dedicate approximately 40 to 50 hours per week for Company business. However,
each officer also devotes other time to other business endeavors, including
consulting relationships with other oil and gas entities, and has
responsibilities to these other entities. Because of these relationships, such
individuals will be subject to conflicts of interest. Such conflicts include
deciding how much time to devote to our affairs, as well as what business
opportunities should be presented to the Company. As an example of these
potential conflicts, our President, Paul G. Laird, is affiliated with a company
called NRG. His position as an officer, director and principal shareholder of
NRG, a general partner of NRGG, the general partner in SDG, and officer and
director of the Company creates a potential conflict with regard to his duties
to each entity. Each of our officers and directors has agreed that any business
opportunity that comes to their attention in the future shall first be presented
to the Company. Nonetheless, these relationships present conflicts, which may
exist for the foreseeable future.

     Colorado law and our Articles of Incorporation may protect our directors
from certain types of lawsuits.

     Colorado law provides that our directors will not be liable to us or our
stockholders for monetary damages for all but certain types of conduct as
directors. Our Articles of Incorporation permit us to indemnify our directors
and officers against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
directors caused by their negligence, poor judgment or other circumstances. The
indemnification provisions may require us to use our limited assets to defend
our directors and officers against claims, including claims arising out of their
negligence, poor judgment or other circumstances.


                                       27
<PAGE>
Risks Related to our Common Stock.

     Sales of a substantial number of shares of our Common Stock into the public
market may result in significant downward pressure on the price of our Common
Stock and could affect the ability of our stockholders to realize the current
trading price of our Common Stock.

     Sales of a substantial number of shares of our Common Stock in the public
market could cause a reduction in the market price of our Common Stock. As of
May 4, 2007, there were 6,142,618 shares of our Common Stock issued and
outstanding, 28,050 shares of our $0.001 par value Series B 12% Cumulative
Convertible Preferred Stock ("Series B") issued and outstanding and 222,250
shares of our 2.5% Series C Cumulative Convertible Preferred Stock ("Series C
Preferred Stock") issued and outstanding. If the Series C Preferred Stock are
converted into shares of our Common Stock (21,166,658), interest on the Series C
Preferred Stock is paid in shares of our Common Stock (1,587,500), all of the
remaining Series B Preferred Stock are converted into shares of our Common Stock
(4,315,385), the remaining unconverted principal amount of the Debentures are
converted into shares of our Common Stock (2,404,444) and interest is paid in
shares of Common Stock (107,212 through May 4, 2007) and the remaining
unexercised Series B Warrants, are fully exercised (5,180,399), the AC Warrants
are fully exercised (21,166,658), the BC Warrants are fully exercised
(10,583,545), the Placement Agent exercises the Placement Agent Warrant and
converts the Series B and exercises the warrant underlying the Placement Agent
Warrant into shares of our Common Stock (1,166,493), the holders of the
Debenture Warrants are fully exercised (1,716,466) and the holder of warrants
granted to a placement agent in connection with the sale of our debentures (the
"Debenture Warrant Coverage Warrants") (255,040) and (173,532), the holder of
warrants granted to a placement agent in connection with the sale of our Series
C Preferred Stock (the "Series C Preferred Stock Warrants") (492,857), (492,857)
and (246,432), the holder of a 2.5% Convertible Debenture converts the principal
amount and interest due on this debenture into shares of Common Stock (237,447)
and the exercise of a warrant issued to the former holder of our Series A
Preferred Stock (the "Series A Warrants")(101,509), and an investor who provided
the Company a bridge loan (the "Bridge Loan Warrant") (101,509), the remaining
unexercised warrants issued to a consultant (the "Consultant Warrants")
(50,006), and unexercised stock options issued to the officers and directors,
employees, consultants and agents of the Company vest and are exercised
(559,333) and (3,950,000), an entity granted a warrant exercises its warrant
(100,000), an individual exercises a warrant granted to him (500,000), a
shareholder granted a warrant exercises his warrant (200,000) there will be
82,997,900 shares of our Common Stock issued and outstanding.

     As of May 4, 2007, there were 143,063 outstanding shares of our Common
Stock, not held by our officers, directors, or their affiliates, by the Apollo
Trust, Echos Voice, LLC, Aviel Faliks, John McKey and Candace McKey, that are
restricted securities, as that term is defined in Rule 144 under the Securities
Act, and that have not been included on a registration statement pursuant to
which the securities may be resold. Although the Securities Act and Rule 144
place certain prohibitions on the sale of restricted securities, restricted
securities may be sold into the public market under certain conditions.


                                       28
<PAGE>
     Further, as of May 4, 2007 there was an aggregate of 559,333 options to
purchase shares of our Common Stock (included in the paragraph set forth above),
and another 25,000 shares of Common Stock reserved for issuance under our 2003
Stock Option and Stock Grant Plan but not yet granted that may be issued in the
future. Further, on June 11, 2007, the Company intends to hold a special meeting
of shareholder to approve and ratify, among other things, the Company's 2007
Omnibus Long Term Incentive Plan (the "2007 Plan"), which authorizes the
issuance of up to 10,000,000 shares of the Company's Common Stock that may be
issued under the 2007 Plan.

     As a result, a substantial number of our shares of Common Stock may be
issued and may be available for immediate resale, which could have an adverse
effect on the price of our Common Stock.

     The trading price of our Common Stock on the Over-The-Counter Bulletin
Board has fluctuated, and may continue to fluctuate significantly.

     Since June 4, 2004, our Common Stock has traded as low as $0.47 and as high
as $3.25. In addition, the trading volume in our common stock may fluctuate and
cause significant price variations to occur. In addition to the volatility
associated with Over-The-Counter Bulletin Board securities in general, the value
of your investment could decline due to the impact of any of the following
factors upon the market price of our Common Stock:

     o    Changes in the world wide price for oil or natural gas;

     o    Disappointing results from our discovery or development efforts;

     o    Failure to meet our revenue or profit goals or operating budget;

     o    Decline in demand for our Common Stock;

     o    Downward revisions in securities analysts' estimates or changes in
          general market conditions;

     o    Technological innovations by competitors or in competing technologies;

     o    Lack of funding generated for operations;

     o    Investor perception of our industry or our prospects; or

     o    General economic trends.

     In addition, stock markets have experienced extreme price and volume
fluctuations, and the market prices of securities have been highly volatile.
These fluctuations are often unrelated to operating performance and may
adversely affect the market price of our Common Stock.

     We may require additional capital in the future which may result in
substantial dilution to your stock holdings.


                                       29
<PAGE>
     We have historically needed to raise capital to fund our operating losses
and may continue to incur operating losses until there are sufficient wells at
the Slater Dome Field and our other prospects to provide economies of scale in
production of the coal-bed methane gas. If capital requirements vary materially
from those currently planned, we may require additional capital sooner than
expected. There can be no assurance that such capital will be available in
sufficient amounts or on terms acceptable to us, if at all. Any sale of a
substantial number of additional shares will cause dilution to your investment
and could also cause the market price of our Common Stock to decline.

     Issuances of additional shares of our stock in the future could dilute
existing shareholders' holdings and may adversely affect the market price of our
Common Stock. As of May 4, 2007, we have the authority to issue, without
stockholder approval, up to 50,000,000, shares of Common Stock (of which, as of
May 4, 2007), 6,142,618 shares were outstanding) and 25,000,000 shares of
preferred stock (of which, as of May 4, 2007, 28,050 shares of our Series B
Preferred Stock and 222,250 shares of our Series C Preferred Stock were
outstanding) and to issue options and warrants to purchase shares of our Common
Stock. Further, on June 11, 2007, we intend to hold a special meeting of
shareholder in which we have proposed an increase in the number of shares
available for issuance from 50,000,000 to 500,000,000. Because our Common Stock
is traded on the Over-The-Counter Bulletin Board and is not listed on an
exchange, we are not required to solicit shareholder approval prior to issuing
large blocks of our stock. Any such future issuances could be at values
substantially below the price paid for our Common Stock by our current
shareholders. In addition, we could issue large blocks of our Common Stock to
fend off unwanted tender offers or hostile takeovers without further stockholder
approval. The issuance of our stock may have a disproportionately large impact
on its price compared to larger companies.

     Our Common Stock is classified as a "penny stock" under SEC rules which
limits the market for our Common Stock.

     Since inception of trading in June 2004, our Common Stock has not traded at
$5 or more per share. Because our stock is not traded on a stock exchange or on
the NASDAQ National Market or the NASDAQ Small Cap Market, if the market price
of the Common Stock is less than $5 per share, the Common Stock is classified as
a "penny stock." SEC Rule 15g-9 under the Exchange Act imposes additional sales
practice requirements on broker-dealers that recommend the purchase or sale of
penny stocks to persons other than those who qualify as an "established
customer" or an "accredited investor." This includes the requirement that a
broker-dealer must make a determination that investments in penny stocks are
suitable for the customer and must make special disclosures to the customers
concerning the risk of penny stocks. Many broker-dealers decline to participate
in penny-stock transactions because of the extra requirements imposed on those
transactions. Application of the penny-stock rules to our Common Stock reduces
the market liquidity of our shares, which in turn affects the ability of holders
of our Common Stock to resell the shares they purchase, and they may not be able
to resell at prices at or above the prices they paid.

     In addition to the shares of our Common Stock underlying shares of our
Series C Preferred Stock, Series B Preferred Stock and Convertible Debentures,
as well as warrants and options that have been issued by the Company, we have a
large number of shares eligible for future sale.


                                       30
<PAGE>
     As of May 4, 2007, we had reserved 625,000 shares of Common Stock for
issuance upon the exercise of options which have been, or may be, granted
pursuant to the Plan, of which options to purchase 559,333 shares were
outstanding (the "Plan Options"). On November 10, 2006, the Company granted an
aggregate of 3,950,000 options to purchase shares of the Company's common stock
to certain officers, directors, employees, agents and Affiliates, which shares
are subject to a vesting schedule. Further, on June 11, 2007, the Company
intends to hold a special meeting of shareholder to approve and ratify, among
other things, the Company's 2007 Omnibus Long Term Incentive Plan (the "2007
Plan"), which authorizes the issuance of up to 10,000,000 shares of the
Company's Common Stock that may be issued under the 2007 Plan. As of May 4, 2007
our officers and directors own 266,218 shares of our Common Stock, or 4.3% of
our currently outstanding shares of Common Stock, which may be sold pursuant to
Rule 144. Sales of Common Stock underlying Plan Options or by the certain
directors may adversely affect the price of the Common Stock.

     The Series B and Series C Convertible Preferred Stock that we have issued
adversely affects the right of the Common Stockholders.

     Our Series B Preferred Stock pays cumulative preferred dividends equal to
12% per year, provides a preference in payment of dividends, redemption and
liquidation over the Common Stock and Series C Preferred Stock and will, upon
conversion, have all of the rights of our Common Stock. Our Series C Preferred
Stock pays cumulative preferred dividends equal to 2.5% per year, provides a
preference in payment of dividends, redemption and liquidation over the Common
Stock and will, upon conversion, have all of the rights of our Common Stock. Our
Board of Directors has the authority to issue additional preferred stock, which
could discourage potential takeover attempts or could delay or prevent a change
in control through a merger, tender offer, proxy contest or otherwise by making
these attempts more difficult or costly to achieve.

     Two of our shareholders own 12.91% of our outstanding Common Stock
collectively and two of our shareholders that are controlled by the same
individual collectively have beneficial ownership of approximately 31%% of our
Common Stock.

     As of May 4, 2007, the Apollo Trust and Echo's Voice LLC had beneficial
ownership of our common stock of 19.32% and 13.63%, respectively. Helen De Bove,
Trustee of the Apollo Trust and manager of Echo's Voice LLC exercises voting and
dispositive power of the securities owned by these entities and has beneficial
ownership of approximately 31.03%. Further, John McKey and his wife Candace
McKey collectively own 781,618 shares of our Common Stock, or 12.91% of shares
outstanding. Further, Mr. and Mrs. McKey collectively hold warrants to acquire
363,044 additional shares of our Common Stock. Mr. and Mrs. McKey, and the
Apollo Trust and Echo's Voice LLC and Ms. De Bove, if they convert and exercise
the securities they own or over which they have voting and dispositive power
into shares of our Common Stock, may be able to influence the outcome of all
matters submitted to our shareholders for approval, regardless of the
preferences of the minority shareholders.


                                       31
<PAGE>
     Two of Our Series C Shareholders May Acquire a Significant Number of Shares
of Our Common Stock in the Future.

     On December 1, 2006 and in a subsequent closing on January 16, 2007, the
Company held a closing on the sale of an aggregate of 260 investment units (the
"Units") to Iris Energy Holding Corp. and 100 Units to the Vision Opportunity
Master Fund, LP. Each Unit consists of: (i) $50,000 of 2.5% Series C Cumulative
Convertible Preferred Stock, par value $0.001 (the "Series C Preferred"),
convertible into 47,619 shares of the Company's $0.001 par value common stock
(the "Common Stock") at a price of $1.05 per share (the "Conversion Price");
(ii) a three-year warrant to purchase 47,319 shares of Common Stock at an
exercise price of $1.50 per share (the "AC Warrants"); and (iii) a three year
warrant to purchase 23,810 shares of Common Stock at an exercise price of $2.00
per share (the "BC Warrants"). Subject to certain conversion cap limitations,
Iris Energy Holding Corp. and Vision Opportunity Master Fund, LP may acquire a
significant number of shares of our common stock (30,796,480) and (11,844,800),
respectively and may, in the future, be in a position to influence the outcome
of all matters submitted to our shareholders for approval, regardless of the
preferences of the minority shareholders and may lead to a change of control of
the Company.

     Iris Energy Holding Corp. May Appoint Directors to the Board, which may
lead to a Change in Control.

     The Company intends to enter into an agreement (the "Iris Energy Directors
Agreement") to grant to Iris Energy Holding Corp. the right to appoint up to an
equal number of members to the Board that have not been previously appointed by
Iris Energy Holding Corp. as are present on the board of directors at any time.
Accordingly, pursuant to the anticipated terms of the Iris Energy Directors
Agreement, Iris Energy may appoint an equal number of members to the Board of
Directors, which may lead to a change in control of the Company.

Unresolved Staff Comments

     The Company has no unresolved comments from the SEC Staff regarding
periodic or current reports under the Exchange Act.

Item 3.   Legal Proceedings

     We are not currently subject to any legal proceedings, the results of which
would have a material impact on our properties, results of operation or
financial condition. Neither, to the best of our knowledge, are any of our
officers or directors involved in any legal proceedings in which we are an
adverse party.

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

     No matters were submitted to the security holders, through solicitation of
proxies or otherwise, during the fourth quarter of the fiscal year covered by
this Annual Report. On May 8, 2007 we filed a definitive proxy statement with
the Commission for a special meeting of shareholders for the following purposes:


                                       32
<PAGE>
     1.   To adopt an amendment to the Company's Articles of Incorporation, as
amended, which would effect an increase in the number of authorized shares of
the Company's $0.001 par value common stock from 50,000,000 shares to
500,000,000 shares.

     2.   To approve and ratify the Company's 2007 Omnibus Long Term Incentive
Plan (the "2007 Plan"), which authorizes the issuance of up to 10,000,000 shares
of the Company's Common Stock that may be issued under the 2007 Plan.

     3.   To consider and act upon such other business as may properly come
before the Special Meeting or any adjournments thereof.

     The special meeting is scheduled to be held on June 11, 2007.


                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters

     Shares of our Common Stock are traded on the Over-the-Counter Bulletin
Board under the symbol "NFEI.OB." Our Common Stock was accepted for quotation on
the "Bulletin Board" maintained by the National Association of Securities
Dealers on May 26, 2004, and quotations began on June 4, 2004.

     The market for our Common Stock is limited, volatile and sporadic. The
following table sets forth the high and low sales prices relating to our Common
Stock for the last two fiscal years on a quarterly basis, as quoted by NASDAQ.
These quotations reflect inter-dealer prices without retail mark-up, markdown or
commissions and may not reflect actual transactions.

     Quarter Ended             High Bid           Low Bid
     -------------             --------           -------
     February 28, 2007         $   1.50           $  0.93
     November 30, 2006         $   1.75           $  1.11
     August 31, 2006           $   2.25           $  1.20
     May 31, 2006              $   2.52           $  1.85
     February 28, 2006         $   2.64           $  2.27
     November 30, 2005         $   2.86           $  2.40
     August 31, 2005           $   1.80           $  1.42
     May 31, 2005              $   1.28           $  1.01
     February 28, 2005         $   1.20           $  0.75

Holders

     On May 21, 2007, the closing bid price of our Common Stock was $1.24. As of
May 4, 2007, we had approximately 1,895 shareholders of record, which does not
include shareholders whose shares are held in street or nominee names. We
believe that as of May 4, 2007, there are approximately 2,372 beneficial owners
of our Common Stock.


                                       33
<PAGE>
Dividend Policy

     We have not declared or paid cash dividends on our Common Stock in the
preceding two fiscal years. We currently intend to retain all future earnings,
if any, to fund the operation of our business, and, therefore, do not anticipate
paying dividends in the foreseeable future. Future cash dividends, if any, will
be determined by our board of directors.

Recent Sales of Unregistered Securities

     On December 28, 2006, the Company issued a three-year nonqualified stock
option for 500,000 shares of Common Stock at an exercise price of $2.00 per
share to an unrelated party for shareholder relations services rendered. The
warrant was issued in reliance of exemptions from registration under Section
4(2) of the Securities Act.

Item 6.    Management's Discussion and Analysis or Plan of Operation

Introduction

     The following discussion contains forward-looking statements that reflect
our plans, estimates and beliefs. Our actual results could differ materially
from those discussed in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to, those
discussed below and elsewhere in this Annual Report, particularly in the section
entitled "Risk Factors." Our consolidated audited financial statements are
stated in United States Dollars and are prepared in accordance with United
States Generally Accepted Accounting Principles.

     The following discussion and analysis covers our plan of operation for the
next twelve months. It discusses our financial condition at February 28, 2007,
and changes in our financial condition since February 28, 2006, the end of the
prior fiscal year. It also covers our results of operation for the fiscal years
ended February 28, 2007, and February 28, 2006. The following discussion and
analysis should be read in conjunction with the audited financial statements and
the related notes included elsewhere in this Form 10-KSB.

     We were incorporated as Storagefinders.com under the laws of the State of
Colorado on January 7, 2000. In March 2001, we changed our name to New Frontier
Energy, Inc. and commenced operations in the oil and gas industry through the
acquisition of all of the outstanding shares of Skyline Resources, Inc.
("Skyline"). Skyline was operated as our subsidiary through the close of
business on February 28, 2005, at which time it was merged into the Company.

     In February 2002, we were acquired by Wyoming Oil & Minerals, Inc.
("WYOG"). In mid 2003, we determined to become an independent, but publicly
traded, entity. Accordingly, WYOG transferred certain oil and gas assets and we
assumed certain WYOG liabilities and appointed new management. WYOG declared a
dividend payable by distributing 12,775,616 shares of the Company's Common Stock
to its shareholders. On March 3, 2004, the Board of Directors authorized a 1 to
4 reverse split of Common Stock to stockholders of record in order to facilitate
the marketability and liquidity of the Common Stock based on the current market
conditions and other relevant factors. The shares were registered with the
Securities and Exchange Commission on Form SB-2 in April 2004, and became quoted
on the Over-The- Counter Bulletin Board in May 2004 under the symbol "NFEI.OB."


                                       34
<PAGE>
     The notable items that occurred during the fiscal year ended February 28,
2007, were that we acquired Cedar Ridge's 36.66667% working interest (29.33336%
net revenue interest) in eleven gas and 2 water disposal wells and 33,949 net
acres in the Slater Dome Field located along the eastern edge of the Greater
Green River basin in northwest Colorado and south central Wyoming. The
properties are entirely within the Company's existing leasehold at the Slater
Dome Field. The Company now owns a 66.66667% working interest in the Slater Dome
Field and is the operator of this field. Pursuant to the Purchase and Sale
Agreement for Cedar Ridge's Interests, we were responsible for the obligations
attributable to their interests as of November 1, 2006.

Plan of Operation

     We currently own an interest in four oil and gas prospects, three of which
are undeveloped. The Slater Dome Field, in which we own a 66.7% working
interest, consists of 33,948 net acres, held by mineral leases, and is located
along the Colorado-Wyoming border in Moffat County, Colorado, and Carbon County,
Wyoming. The Slater Dome Field targets coal-bed methane gas located at
relatively shallow depths by industry drilling standards. The Flattops Prospect
consists of 3,852 net acres, of which we own 100% of the working interest. In
December 2004, we and the other working interest owners in the Nucla Prospect
granted a two-year option to an independent third party who planned to evaluate
the prospect and conduct a seismic program. In December 2006, the option holder
exercised his right to acquire the prospect and as a result, the Company will
receive $185,881 in gross proceeds from the sale. The Gibraltar Peaks Prospect
consists of 15,000 gross acres, of which we own a 15% working interest.
Subsequent to February 28, 2007 we acquired two properties, a 100% working
interest in 1,600 acres called the North Slater Dome Prospect in March 2007 and
on April 16, 2007, we entered into an agreement to acquire and take over
operations, pursuant to a farmout agreement with the current operator of the
Focus Ranch Unit (the "Focus Ranch Unit") in northwest Colorado. The Focus Ranch
Unit consists of approximately 35,000 acres adjacent to and southeast of the
Slater Dome development area. The terms of the agreement require us to test the
Niobrara and Frontier formations in the Focus Ranch Federal 12-1 well in order
to earn 65% of the farmor's working interest, which averages 75% in the Focus
Ranch Unit. The Company will acquire the remaining 35% working interest from the
farmor after completing a $2,000,000 production payment from the Focus Ranch
Unit. For a complete description of our properties and our business operations,
see "Items 1 and 2. Description of Business and Properties."

     SDG owns the 18-mile gas gathering pipeline (the "Gas Gathering Pipeline")
that transports the Company's natural gas from the Slater Dome Field to the
Questar transportation line in Baggs, Wyoming.

     Our plan of operation is to further develop the Slater Dome Field by
drilling up to twenty wells adjacent or near our existing wells in the southeast
section of the property and to develop the Flattops Prospect by drilling two
wells in the summer/fall of 2008 on that prospect. We plan to test the Niobrara
and Frontier formations in the Focus Ranch Federal 12-1 well. We intend to
acquire acreage in the Denver Julesberg Basin located in Northeast Colorado and
we will attempt to obtain a promoted or carried working interest as well as a
prospect fee. We also plan to evaluate opportunities to acquire other interests
in oil and gas properties.


                                       35
<PAGE>
Prospect Acquisition Philosophy

     We anticipate undertaking investigation to acquire other interests in oil
and gas properties in the fiscal year ending February 28, 2008. Our objective
will be to acquire properties with immediate development potential or existing
producing properties. Due to our relatively small size and competitive position
in the industry, we do not anticipate acquiring a large inventory of properties
to hold for future development. Rather, one or a small number of properties will
be targeted with immediate development potential.

Selected Financial Data

     The following selected financial data should be read in conjunction with
the financial statements and related notes thereto appearing elsewhere in this
Form 10-KSB. The selected financial data as of February 28, 2007, and February
28, 2006, and for each of the fiscal years ended February 28, 2007, and February
28, 2006, have been derived from our financial statements which have been
audited by our independent auditors and included elsewhere in this Form 10-KSB.
The selected financial data provided below is not necessarily indicative of our
future results of operations or financial performance.
<TABLE>
<CAPTION>

                                                       Year Ended February 28,
                                                       2007              2006
Statement of Operations Data:
<S>                                              <C>                  <C>
Revenue                                          $      361,181       $     159,452
(Loss) from operations                           $   (3,745,600)      $  (2,438,109)
Other income (expense), net                      $     (812,162)      $    (602,006)
Net loss attributable to common shareholders     $   (5,079,469)      $  (3,430,136)
Basic and diluted net loss per share             $        (0.92)      $       (0.94)
Weighted average shares outstanding                   5,526,142           3,667,947

                                                          As of February 28,
Balance Sheet Data:                                    2007                2006

Working capital                                  $    8,982,439       $    (109,622)
Current assets                                   $   13,673,152       $     828,384
Total assets                                     $   29,047,723       $   7,324,927
Current liabilities                              $    4,690,713       $     938,006
Long-term liabilities                            $      140,000       $   1,502,999
Total liabilities                                $    4,830,713       $   2,441,005
Minority Interests in Consolidated Subsidiary    $      421,091       $     999,344
Total Shareholders' equity                       $   23,795,919       $   3,884,578
</TABLE>


                                       36
<PAGE>
Results of Operation

Year Ended February 28, 2007 Compared to the Year Ended February 28, 2006

     For the year ended February 28, 2007, we realized a net loss attributable
to common shareholders of $5,079,469, or $0.92 per share, on revenue of
$361,181. This compares with a net loss attributable to common shareholders of
$3,430,136, or $0.94 per share on $159,452 of revenue for the fiscal year ended
February 28, 2006. The loss increased by $1,649,333 or 48.1%.

     Our oil and gas sales increased from $144,853 during the fiscal year ended
February 28, 2006 to $238,385 during the fiscal year ended February 28, 2007, an
increase of $93,532 or 64.6%. The increase in oil and gas revenues is primarily
attributable to the Company producing gas from the Slater Dome Field for 12
months during the fiscal year ended February 28, 2007 versus 8 months for the
fiscal year ended February 28, 2006 together with acquiring 36.66667% working
interest effective November 1, 2006. We sold 38,139 MCF in the fiscal year ended
February 28, 2007 compared to 14,731 MCF in the fiscal year ended February 28,
2006.

     The following table summarizes the value of the increase:

                                                            Increase
                                2007           2006        (Decrease)
                              ---------------------------------------
     Slater Dome Prospect     $206,204       $108,973      $ 97,231
     Royalty interests          32,181         35,880        (3,699)
                              ---------------------------------------
                              $238,385       $144,853      $ 93,532
                              =======================================

     During the fiscal year ended February 28, 2007, SDG's gathering fees from
the Gas Gathering Pipeline were $122,796 as compared to $14,599 during the
fiscal year ended February 28, 2007, an increase of $108,197 or 741.1%. The
increase in the gas gathering fees is primarily the result of the increase
production amounting to $12,255 together with an increase in guaranteed
gathering fees of $95,942.

     Exploration costs were $205,713 during the fiscal year ended February 28,
2007 as compared to $132,551 during the fiscal year ended February 28, 2006, an
increase of $73,162 or 55.2%. The primary reason for the increase is related to
increased seismic costs associated with exploration efforts at Slater Dome Field
and in the Denver Julesberg Basin. The major components and the changes in
exploration expenses are summarized as follows.

                                                           Increase
                                 2007           2006      (Decrease)
                              --------------------------------------
     Geological consulting    $ 128,057      $ 93,448      $ 34,609
     Geophysical and maps        56,495        30,599        25,896
     Delay rentals               19,481         8,504        10,977
     Miscellaneous                1,681            --         1,681
                              --------------------------------------
                              $ 205,713      $132,551      $ 73,162
                              ======================================


                                       37
<PAGE>
     Lease operating expenses were $642,253 during the fiscal year ended
February 28, 2007 as compared to $668,788 during the fiscal year ended February
28, 2006, a decrease of $26,535 or 4.0%. Operating costs increased by $201,110,
of which $146,888 was the result of the 4 wells drilled in the year ended
February 28, 2006 were being dewatered; the balance of $54,922 arises from our
increased ownership in the Slater Dome Field for 4 months of fiscal 2007 as
compared to fiscal 2006. Workover costs and compression and water disposal costs
decreased by $108,927 and $125,067 respectively, because the work associated
with bringing the wells into production principally occurred during the fiscal
year ended February 28, 2006. Other costs increased $6,349 and are considered
nominal in the ordinary course of business. The major components and the changes
in lease operating expenses are summarized as follows:

                                                                      Increase
                                           2007           2006       (Decrease)
                                        ----------------------------------------
     Slater Dome operating expenses     $ 452,320      $ 251,210     $  201,110
     Rework costs                         107,580        216,507       (108,927)
     Compression and water                 71,890        196,957       (125,067)
     Other costs                           10,463          4,114          6,349
                                        ----------------------------------------
                                        $ 642,253      $ 668,788     $  (26,534)
                                        ========================================

     Gas gathering costs amounted to $2,578 during the fiscal year ended
February 28, 2007 as compared to $2,427 during the fiscal year ended February
28, 2006, an increase of $151 or 6.2%. The fluctuation is considered normal in
the ordinary course of business.

     General and administrative expenses were $1,554,917 during the fiscal year
ended February 28, 2007 as compared to $892,338 during the fiscal year ended
February 28, 2006, an increase of $662,578 or 74.3%. The major components and
the changes in general and administrative expenses are summarized as follows.

                                                                      Increase
                                           2007           2006       (Decrease)
                                        ----------------------------------------
     Financial public relations         $  313,449      $ 118,324    $  195,125
     Insurance and benefits                137,950         79,023        58,927
     Professional fees                     176,732        182,235        (5,504)
     Salaries                              727,781        333,481       394,300
     Other                                 199,004        179,275        19,729
                                        ----------------------------------------
                                        $1,554,916      $ 892,338    $  662,578
                                        ========================================


                                       38
<PAGE>
     Financial public relations increased by $195,125 as a result of the
Company's retaining a financial public relations firm, together with the related
travel and associated costs of presenting the Company to the financial community
during the full twelve months ended February 28, 2007 versus the previous twelve
months ended February 28, 2006, when the Company employed a financial public
relations for only seven months. Insurance and benefits increased by $58,927;
paid employee health insurance increased $28,867 because the coverage was for
twelve months for the year ended February 28, 2007 versus nine months for the
year ended February 28, 2006 and liability insurance increased $30,060 because
of rate increases and SDG's liability insurance was for a full twelve months
versus six in the previous fiscal year. Professional fees decreased by $5,504
for the year ended February 28, 2007 compared with the year ended February 28,
2006 and such fluctuation is considered normal in the ordinary course of
business. Employee compensation increased $394,300 in the year ended February
28,2007 compared with the year ended February 28, 2006 because executive
compensation increased by $82,925, employee compensation increased by $81,875
because we increased our staff, and bonuses increased by $229,500. Other
non-categorized expenses increased $19,729 for the year ended February 28, 2007
compared with the year ended February 28, 2006 and such fluctuation is
considered normal in the ordinary course of business.

     There was no restricted stock award compensation during the fiscal year
ended February 28, 2007 as compared to $234,000 during the fiscal year ended
February 28, 2006. The restricted stock award compensation was the result of the
issuance of 200,000 shares of common stock issued to our executive officers
during the fiscal year ended February 28, 2006.

     Issuance of common stock warrants resulting in stock compensation expense
was $1,381,417 during the fiscal year ended February 28, 2007 as compared with
$478,542 during the fiscal year ended February 28, 2006, an increase of $902,875
or 188.7%. The following table summarizes the changes.
<TABLE>
<CAPTION>

                                                                           Increase
                                                  2007         2006       (Decrease)
                                               ---------------------------------------
<S>                                            <C>          <C>            <C>
Financial public relations firms               $  350,317   $ 172,842      $  177,475
Settlement of a contractual dispute                    --     305,700        (305,700)
Amortization of non-qualified stock options     1,031,100          --       1,031,100
                                               ---------------------------------------
                                               $1,381,417   $ 478,542      $  902,875
                                               =======================================
</TABLE>

     The primary reasons for the increase in issuance of common stock warrants
was the amortization of the stock options granted in November 2006 in the amount
of $1,031,100 together with a net increase in the value of stock options granted
to public relations firms of $177,475 offset by a decrease in the value of
options granted in settlement of a contractual disputes in the amount of
$(305,700). The value of all the awards was calculated using the Black Scholes
model (see footnote 7 to the financial statements).


                                       39
<PAGE>
     Depreciation, depletion and amortization was $319,904 during the fiscal
year ended February 27, 2007 as compared to $188,915 during the fiscal year
ended February 28, 2006, an increase of $130,989 or 53.6%. The increase in
depreciation, depletion and amortization was primarily the result of increased
depreciation associated with producing oil and gas properties in the amount of
$26,523 together with increased depreciation of the SDG assets of $65,246
because the SDG assets were depreciated for a full twelve months in the year
ended February 28, 2007 versus six months in the year ended February 28, 2006
with the balance of $39,220 arising from the increase in other depreciable
assets when comparing the year ended February 28, 2007 to February 28, 2006.

     Interest income was $88,882 during the fiscal year ended February 28, 2007
as compared to $8,779 during the fiscal year ended February 28, 2006, an
increase of $80,103 or 912.5%. The increase is the result of a larger cash
balance held in our bank account as a result of the offering of Series C
Preferred Shares in December 2006 to January 2007.

     Gain or loss from sale of assets was $95,127 during the fiscal year ended
February 28, 2007 as compared to $0 during the fiscal year ended February 28,
2006. The sale of assets during the fiscal year ended February 28, 2007 arose
from the sale of the Nucla Prospect in the amount of $185,888 net of its cost in
the amount of $94,540 together with miscellaneous equipment sale proceeds of
$3,786.

     Interest expense during the fiscal year ended February 28, 2007 was $90,214
as compared to $68,767 during the fiscal year ended February 28, 2006, an
increase of $21,447 or 31.2%. The increase in interest expense is primarily the
result of the expense associated with the convertible debentures for a full
twelve months in the year ended February 28, 2007 compared with the six months
in the year ended February 28, 2006.

     Debt issuance costs during the fiscal year ended February 28, 2007 was
$905,957 as compared to $542,018 during the fiscal year ended February 28, 2006,
an increase of $363,939 or 67.1%. The debt issuance costs is primarily the
result of the expense associated with the convertible debentures for a full
twelve months in the year ended February 28, 2007 compared with the six months
in the year ended February 28, 2006.

     The minority interest in net income of the consolidated subsidiary during
the fiscal year ended February 28, 2007 was $16,007, compared to a loss of
$28,560 during the fiscal year ended February 28, 2006, a increase of $44,567 or
156%. The increase is principally a result of our increasing our investment in
SDG and is directly related to SDG's operations.

     As a result of the above, we generated a net loss of $5,079,469 during the
fiscal year ended February 28, 2007 as compared to a net loss of $3,430,136
during the fiscal year ended February 28, 2006.

                                       40
<PAGE>
Liquidity and Capital Resources.

     We have not generated positive cash flows from operating activities. The
primary sources of capital have been from sales and other issuances of equity
and debt securities. Our primary use of capital has been for the acquisition,
development and exploration of oil and gas properties. Our working capital
requirements are expected to increase in line with the growth of our business.
We have no lines of credit or other bank financing arrangements. We believe our
capital requirements will continue to be met with additional issuance of equity
or debt securities as well as traditional bank financing. Additional issuances
of equity or convertible debt securities will result in dilution to our current
Common Stockholders' holdings.

     Our plan of operations for the fiscal year ending February 28, 2008 call
for us to participate in the drilling of 20 additional wells at Slater Dome
Field and testing the Niobrara formation at the Focus Ranch Unit and (ii) to
provide capital for other lease acquisitions. We believe that the plan of
operations for the fiscal year ending February 28, 2008 will require capital of
approximately $5,700,000. To the extent that additional opportunities present
themselves to the Company, the Company may require additional sources of capital
to participate in these opportunities.

     We expect that working capital requirements will be funded through a
combination of our existing funds, cash flow from operations, issuance of equity
and debt securities. Further, the Company could receive proceeds from the
exercise of outstanding warrants issued to the holders of the Company's Series B
Preferred Stock and Convertible Debentures which are exercisable at a price of
$1.11 and $1.33, respectively. The warrants issued to the holders of the
Company's Series B Preferred Stock expire on February 1, 2008 and the warrants
issued to the holders of the Company's Convertible Debentures expire on July 22,
2008. If all of the warrants issued to the holders of the Company's Series B
Preferred Stock were exercised, it would result in proceeds to the Company of
$5,750,640. If all of the warrants issued to the holders of the Company's
Convertible Debentures were exercised, it would result in proceeds to the
Company of $2,276,142. However, there can be no assurance that any of the
warrant holders will exercise these warrants. Management believes that current
cash balances plus cash flow from operations will be sufficient to fund our
capital and liquidity needs for at least the next twelve months.

     The following summarizes the Company's capital resources at February 28,
2007, compared with February 28, 2006:
<TABLE>
<CAPTION>
                                                                                     Increase      Increase
                                          February 28, 2007    February 28, 2006    (Decrease)    (Decrease)
------------------------------------------------------------------------------------------------------------
<S>                                        <C>                 <C>                 <C>               <C>
Cash                                       $    12,724,234     $        746,018    $ 11,978,216      1606%
Current assets                             $    13,673,152     $        828,384    $ 12,844,768      1551%
Total Assets                               $    29,047,723     $      7,324,927    $ 21,722,796       297%
Current liabilities                        $     4,690,713     $        938,006    $  3,752,707       400%
Working capital                            $     8,982,439     $       (109,622)   $  9,092,061      8294%
Net cash (used) in operating activities    $    (2,520,065)    $     (1,441,338)   $ (1,078,727)       75%
Net cash used in investing activities      $    (8,957,215)    $     (3,376,825)   $ (5,580,390)      165%
Net cash provided by financing activities  $    23,455,496     $      3,264,441    $ 20,191,055       619%
</TABLE>

     The increase in cash, current assets, total assets and working capital
principally arises from the placement of $22,225,000 in Series C Convertible
Preferred Stock. The changes in cash are summarized as follows:

                                       41
<PAGE>

     Proceeds from warrants exercised                $     1,656,930
     Proceeds from notes payable                             600,000
     Proceeds from production revenues                        46,292
     Proceeds from Series C Preferred stock, net          21,223,674
     Purchase of property and equipment                   (8,923,915)
     Deposits on production purchase                         (33,300)
     Preferred stock dividends                               (37,983)
     Distributions to SDG minority interests                 (44,117)
     Operating expenses                                   (2,509,368)
                                                     ---------------
                                                     $    11,978,216
                                                     ===============

     Cash Flow from Operating Activities

     As of February 28, 2007, we had a cash balance of $12,724,234. We used
$2,520,065 in operating activities during the fiscal year ended February 28,
2007 as compared to $1,441,338 during the fiscal year ended February 28, 2006.
The increase in cash used in operating activities in the amount of $1,078,727 in
the year ended February 28, 2007 when compared to the year ended February 28,
2006 is discussed in "Results of Operations" above.

     Capital Expenditures

     Cash flows from investing activities consisted primarily of the purchase of
property and equipment. During the fiscal year ended February 28, 2007, the
Company used $8,957,215 in investing activities as compared to $3,376,825 during
the fiscal year ended February 28, 2006. Effective December 14, 2006, the
Company purchased Cedar Ridge, LLC's ("Cedar Ridge") 36.66667% working interest
(29.33336% net revenue interest) in eleven gas and 2 water disposal wells and
33,949 net acres in the Slater Dome Field located along the eastern edge of the
Greater Green River basin in northwest Colorado and south central Wyoming. The
purchase price for Cedar Ridge's interest was $8,000,000. Additionally, the
Company expended $81,571 to increase its undeveloped acreage position along the
Gas Gathering Line. The Company spent $487,500 to acquire approximately 353
miles of seismic lines in the Denver Julesberg Basin with approximate 150
drilling locations.

     Financing Activities

     During the fiscal year ended February 28, 2007, the holders of 1,159,914
warrants to purchase share of the Company's common stock exercised warrants for
gross proceeds to the Company of $1,600,680.

     Between December 1, 2006 and January 16, 2007, the Company sold in an
offering (the "Offering") to accredited investors an aggregate of 444.5
investment units (the "Units") at a purchase price of $50,000 per Unit for
aggregate gross proceeds of $21,615,500 in cash and the conversion of principal
and interest on a promissory note in the amount of $612,500 into Units, which
amount represents the principal amount and all accrued and unpaid interest on a
promissory note issued on October 30, 2006. Each Unit consists of: (i) $50,000
of 2.5% Series C Cumulative Convertible Preferred Stock, convertible into 47,619
shares of the Company's Common Stock at a price of $1.05 per share; (ii) a
three-year warrant to purchase 47,619 shares of Common Stock at an exercise
price of $1.50 per share (the "AC Warrants"); and (iii) a three year warrant to
purchase 23,810 shares of Common Stock at an exercise price of $2.00 per share
(the "BC Warrants").


                                       42
<PAGE>
Purchase of Properties and Equipment

     Subsequent to February 28, 2007, we acquired 1,600 acres in the North
Slater Dome Field in March 2007 and acquired the Focus Ranch Unit in April 2007
which is located in northwest Colorado and consists of approximately 35,000
acres adjacent to and southeast of the Slater Dome Field. During the fiscal year
ending February 28, 2008, we intend to participate in drilling 20 additional
wells in the Slater Dome Field and testing the Niobrara and Frontier formations
in the Focus Ranch Federal 12-1 well in the Focus Ranch Unit. While we do not
have any definitive plans to purchase of any additional properties or equipment
during the fiscal year ending February 28, 2008, we intend to remain active in
seeking to acquire acreage in the Denver Julesberg Basin area located in
Northeast Colorado and in other properties.

Recent Accounting Pronouncements

     In September 2006, the SEC issued Staff Accounting Bulletin no. 108 ("SAB
108") to address diversity in practice in quantifying financial statement
misstatements. SAB 108 requires registrants to quantify errors using both a
balance sheet and an income statement approach and to evaluate whether either
approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered is material. SAB 108 is
effective for fiscal years ending after November 15, 2006, allowing a one-time
transitional cumulative effect adjustment to retained earnings as of March 1,
2006 for errors that were not previously deemed material, but are material under
the guidance in SAB 108. The Company has applied the guidance in SAB 108 and
there are no material effects on the Company's financial position, results of
operations or cash flows.

     In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157 ("SFAS 157"). The Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles ("GAAP"), and expands disclosures about
fair value measurements. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and interim periods within
those fiscal years. The adoption of SFAS 157 is not expected to have a material
effect on the Company's financial position, results of operations or cash flows.

     The FASB has also issued SFAS No. 158, "Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 123(R)", but it will not have any relationship to the
operations of the Company at this time.

     In July 2006, the FASB released FASB Interpretation No. 48--Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No 109 ("FIN
48"). Fin 48 clarifies the accounting and reporting for uncertainties in income
taxes recognized in an enterprise's financial statements in accordance with
Statement of Financial Accounting Standards No 109--Accounting for Income Taxes
("SFAS 109") and prescribes a recognition threshold and measurement attribute
for financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 is effective for fiscal years
beginning after December 15, 2006 with the impact of adoption to be reported as
a cumulative effect of an accounting change. The adoption of FIN 48 is not
expected to have a material effect on the Company's financial position, results
of operations or cash flows.

                                       43

<PAGE>
Critical Accounting Policies and Estimates.

     We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our financial
statements.

     Reserve Estimates.

     Estimates of oil and natural gas reserves, by necessity, are projections
based on geological and engineering data, and there are uncertainties inherent
in the interpretation of such data, as well as the projection of future rates of
production and the timing of development expenditures. Reserve engineering is a
subjective process of estimating underground accumulations of oil and natural
gas that are difficult to measure. The accuracy of any reserve estimate is a
function of the quality of available data, engineering and geological
interpretation and judgment. Estimates of economically recoverable oil and
natural gas reserves and future net cash flows necessarily depend upon a number
of variable factors and assumptions, such as historical production from the area
compared with production from other producing areas, the assumed effects of
regulations by governmental agencies and assumptions governing future oil and
natural gas prices, future operating costs, severance and excise taxes,
development costs and work-over and remedial costs, all of which may in fact
vary considerably from actual results. For these reasons, estimates of the
economically recoverable quantities of oil and natural gas attributable to any
particular group of properties, classifications of such reserves based on risk
of recovery, and estimates of the future net cash flows expected there from may
vary substantially. Any significant variance in the assumptions could materially
affect the estimated quantity and value of the reserves, which could affect the
carrying value of our oil and gas properties and/or the rate of depletion of the
oil and gas properties. Actual production, revenues and expenditures with
respect to our reserves will likely vary from estimates, and such variances may
be material. Many factors will affect actual net cash flows, including:

     o    The amount and timing of actual production;

     o    Supply and demand for natural gas;

     o    Curtailments or increases in consumptions by natural gas purchasers;
          and

     o    Changes in governmental regulation or taxation.

     Revenue Recognition

     We record revenues from the sales of natural gas and oil when in the month
that delivery to the customer has occurred and title has transferred. This
occurs when natural gas or oil has been delivered to a pipeline or a tank
lifting has occurred. We receive payment from one to three months after
delivery. At the end of each month, we estimate the amount of production
delivered to purchasers and the price we will receive. Variances between our
estimated revenue and actual payment are recorded in the month the payment is
received. However, differences have been insignificant.


                                       44
<PAGE>
     Oil and Gas Properties, Equipment, and Depreciation.

     We follow the successful-efforts method of accounting for oil and gas
properties. Under this method, all productive costs incurred in connection with
the exploration for, and development of, oil and gas reserves are capitalized.
These capitalized costs include lease acquisition, geological and geophysical
work, delay rentals, and drilling, completing and equipping oil and gas wells,
including salaries, benefits and other internal salary related costs directly
attributable to these activities. Costs associated with production and general
corporate activities are expensed in the period incurred. Interest costs related
to unproved properties and properties under development also are capitalized to
oil and gas properties. If the net investment in oil and gas properties exceeds
an amount equal to the sum of (1) the standardized measure of discounted future
net cash flows from proved reserves and (2) the lower of cost or fair market
value of properties in process of development and unexplored acreage, the excess
is charged to expense as additional depletion. Normal dispositions of oil and
gas properties are accounted for as adjustments of capitalized costs, with no
gain or loss recognized. As a result, we are required to estimate our proved
reserves at the end of each quarter, which is subject to the uncertainties
described above.

Quantitative and Qualitative Disclosure About Market Risk

     Oil and Gas Price Risk

     Our major market risk exposure is in the pricing applicable to our natural
gas and oil production. Realized pricing is primarily driven by the prevailing
worldwide price for crude oil and spot market prices applicable to our U.S.
natural gas production. Pricing for natural gas and oil production has been
volatile and unpredictable for several years, and we expect this volatility to
continue in the future. The prices we receive for production depend on many
factors outside of our control including volatility in the differences between
product prices at sales points and the applicable index price. These factors
include, but are not limited to: changes in market demands, the general state of
the economy, weather, pipeline activity and capacity and inventory storage
levels.

Contractual Obligations

     The following table sets forth information with respect to our contractual
obligations as of February 28, 2007.
<TABLE>
<CAPTION>

     Payments Due By Period                                                                    More than
                                                      Total     1 to 3 years    4 to 5 years    5 years
                                                   ----------   ------------    ------------    -------
<S>                                                <C>           <C>            <C>   <C>      <C>   <C>
     Paul G. Laird Employment Contract(1)          $  426,250    $  426,250     $    -0-       $    -0-
     Les Bates Employment Contract(1)              $  412,500    $  412,500     $    -0-       $    -0-

     Spotswood Properties, LLC, office lease (2)   $   58,674    $   58,674     $    -0-       $    -0-
     Convertible Debentures (3)                    $2,265,127    $2,265,127     $    -0-       $    -0-
     Convertible Debentures - affiliates (4)       $  592,350    $  592,350     $    -0-       $    -0-
</TABLE>

(1)    Calculated as of February 28, 2007. Messrs. Laird and Bates' employment
agreements expire on October 31, 2009. See "Item 10-Executive Compensation."
(2)    We lease approximately 1,600 square feet of office space located at
1789 W. Littleton Blvd., Littleton, Colorado 80120, for approximately $2,667 per
month. The lease expires on December 31, 2008. The lease is with Spotswood
Properties, LLC, ("Spotswood") a Colorado limited liability company and an
affiliate of Paul G. Laird, President and Chief Executive Officer of the
Company. The Lease is on terms that the Board of Directors, which includes Mr.
Laird, believe are no less favorable than those that may be obtained from third
parties.
(3)     On July 22, 2005, the Company issued $2,760,000 of 2.5% two-year
Convertible Debentures which are due on July 22, 2007.
(4)     On May 10, 2006, the Company increased its investment in SDG by
acquiring additional Limited Partnership Interests from NRGG, resulting in an
additional 20.51% of SDG cash distributions until the limited partners in SDG
have received cash distributions equal to their initial capital contributions
and 17.10% of cash distributions thereafter, in exchange for a subordinated
convertible debenture in the amount of $608,194 bearing 2.5% interest and due
January 1, 2008. Paul Laird, our President and Chief Executive Officer is a
manager of NRGG, the general partner of SDG. In March 2007, the Company repaid
$306,072 of the convertible debenture issued to NRGG.

Item 7.  Financial Statements

     The response to this item is submitted as a separate section of this report
beginning on page F-1.

Item 8.     Changes In and Disagreements With Accountants On Accounting and
            Financial Disclosure

     Not applicable.


                                       46
<PAGE>
Item 8A.  Controls and Procedures

     Disclosure controls and procedures are controls and other procedures that
are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 (the "Exchange
Act") is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our principal executive officer and our principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.

     Based on an evaluation carried out under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, as of the end of the period covered by this report, our Chief
Executive Officer and Chief Financial Officer believe that our disclosure
controls and procedures, as defined in Exchange Act Rules 13a-15(d) and
15d-15(e), were, as of the end of the period covered by this report, effective.
There has been no change in our internal control over financial reporting during
the quarter ended February 28, 2007, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

Item 8B.  Other Information

     Not applicable.

                                    PART III

Item 9:  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

     All of our directors hold office until the next annual general meeting of
the shareholders or until their successors are elected and qualified. Our
officers are appointed by our board of directors and hold office until their
earlier death, retirement, resignation or removal.

Our directors and executive officers, their ages, positions held are as follows:

     Name                 Age      Position with the Company
     ----                 ---      -------------------------

     Paul G. Laird         50      President, CEO and Director

     Les Bates             63      Chief Financial Officer, Principal Accounting
                                   & Financial Officer, Secretary/Treasurer,
                                   and Director

     Grant I. Gaeth        75      Director

     The following information summarizes the business experience of our
officers and directors:

                                       47
<PAGE>
     Paul G. Laird has been the President, Chief Executive Officer and a
director of the Company since April 2003. Mr. Laird was previously a director of
Skyline from June 2003 to February 2005. He is currently the president of NRG, a
privately-held oil and gas exploration and development company, a position he
has held since 1997. Prior to that, he was the vice president of land operations
for Western Alliance Petroleum Corporation and land manager for Canterra
Petroleum, Inc., both private oil and gas companies. During this time, he was
active in oil and gas exploration and development in the states of Montana,
North Dakota, Colorado, Nebraska, Wyoming and Utah. Mr. Laird was a founder of
International Marketing Corporation of Colorado, a private company engaged in
the restaurant business. Mr. Laird is also a manager of NRGG, the general
partner of SDG. He received a Bachelor of Science in business with an emphasis
in petroleum, land and real estate management from the University of Colorado in
1980.

     Les Bates has been the Chief Financial Officer, Principal Accounting and
Financial Officer, Secretary, Treasurer and a director of the Company since
April 2003. Mr. Bates was previously the Secretary and a director of Skyline
from June 2003 to February 2005. Mr. Bates established Les Bates & Associates,
Inc. in 1974 after five years of working with two of what were then known as
"Big 10" accounting firms. Les Bates & Associates, Inc. has provided a broad
range of auditing, accounting and tax services to public and private
corporations, consisting of oil and gas companies, oil and gas drilling and
development programs, mining and mineral exploration entities, light
manufacturing companies, real estate developers, contractors, alternative energy
companies and private individuals. Mr. Bates has taught oil and gas accounting
classes as an adjunct professor at the University of Colorado - Denver and for
the American Institute of Bankers, Denver chapter.

     Grant I. Gaeth has been a director since April 2003 and has been involved
in exploring for oil and gas since his graduation from Utah State University in
1953. He began his career with The Carter Oil Company and Humble Oil and
Refining Company (Exxon), working as a field geologist in the Colorado Plateau,
Basin and Range geological provinces. He worked on Exxon's geological efforts
along the Colorado River, mapping structural leads throughout the Southern half
of Utah. Mr. Gaeth has been self-employed as an independent consulting geologist
for the last 37 years.

     There are no family relationships among directors or executive officers,
nor any arrangements or understandings between any director and any other person
pursuant to which any director was elected as such. The present term of office
of each director will expire at the next annual meeting of stockholders.

     Our executive officers are elected annually at the first meeting of our
Board of Directors held after each annual meeting of stockholders. Each
executive officer holds office until his successor is duly elected and
qualified, until his resignation or until removed in the manner provided by our
bylaws.

     Currently, we do not have an audit committee and, as such, do not have a
financial expert on our audit committee. We do not have a compensation or
nominating committee of the Board of Directors.

                                       47
<PAGE>
     On December 1, 2006 and in a subsequent closing on January 16, 2007, the
Company held a closing on the sale of an aggregate of 260 investment units to
Iris Energy Holding Corp. (the "Units"). Each Unit consists of: (i) $50,000 of
2.5% Series C Cumulative Convertible Preferred Stock, par value $0.001 (the
"Series C Preferred"), convertible into 47,619 shares of the Company's $0.001
par value common stock (the "Common Stock") at a price of $1.05 per share (the
"Conversion Price"); (ii) a three-year warrant to purchase 47,319 shares of
Common Stock at an exercise price of $1.50 per share (the "AC Warrants"); and
(iii) a three year warrant to purchase 23,810 shares of Common Stock at an
exercise price of $2.00 per share (the "BC Warrants").

     The Company intends to enter into an agreement (the "Iris Energy Directors
Agreement") to grant to Iris Energy Holding Corp. the right to appoint up to an
equal number of members to the Board that have not been previously appointed by
Iris Energy Holding Corp. as are present on the board of directors at any time.
For example, if at the time of exercise of the Right to Appoint there are three
members of the Board, none of which were appointed by Iris Energy Holding Corp.,
then Iris Energy Holding Corp. shall have the right to appoint up to three
additional members to the Board. The anticipated terms of the Iris Energy
Directors Agreement will provide that the Iris Energy Directors Agreement
terminates immediately on the earlier to occur of the following: (i) at such
time as Iris Energy Holding Corp. owns fewer than 35,000 shares of the Series C
Preferred Stock and fewer than 3,500,000 shares of common stock of New Frontier
Energy Inc. (ii) if at any time prior to December 1, 2009 the Company conducts
private or public offerings that aggregate $20,000,000 or more of the Company's
common stock or securities that are convertible into shares of the Company's
common stock; or (iii) December 1, 2009.

Website and Code of Business Conduct and Ethics

     Our website address is http://www.nfeinc.com. Our website includes a link
to access our forms filed with the Commission. Upon written request, we will
make available free of charge our annual report on Form 10-KSB, quarterly
reports on Form 10-QSB, current reports on Form 8-K, and all amendments to those
reports as soon as reasonably practicable after such material is electronically
filed with or furnished to the SEC.

     On May 17, 2007, the Board of Directors adopted a Code of Ethics that
applies to its principal executive officer, principal financial officer and
principal accounting officer. A copy of the code of ethics applicable to our
principal executive officer, principal financial officer and principal
accounting officer is attached to this Annual Report on Form 10-KSB as exhibit
14.1. Additionally, our Code of Ethics will be posted on our website and will be
available in print free of charge to any stockholder who requests them. Requests
should be sent by mail to our corporate secretary at our principal office at
1789 W. Littleton Blvd., Littleton, Colorado 80120.


                                       49
<PAGE>
Involvement in Certain Legal Proceedings

     During the past five years, none of our directors, executive officers or
persons that may be deemed promoters is or has been involved in any legal
proceeding concerning (i) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; (ii) any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); (iii) been
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) been found by a court, the SEC
or the Commodity Futures Trading Commission to have violated a federal or state
securities or commodities law (and the judgment has not been reversed, suspended
or vacated).

Compliance With Section 16(a) of the Exchange Act

     Section 16(a) of the Exchange Act generally requires the Company's
directors and executive officers and persons who own more than 10% of a
registered class of the Company's equity securities ("10% owners") to file with
the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors and executive
officers and 10% owners are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on review of copies of such reports furnished to us and verbal
representations that no other reports were required to be filed during the
fiscal year ended February 28, 2007, all Section 16(a) filing requirements were
met except that Grant Gaeth failed to timely file two Form 4's in March 2006 and
February 2007 each reporting one transaction. Mr. Gaeth filed Form 4s on March
15, 2006 and March 12, 2007 disclosing these transactions.

Corporate Governance

     Committees

     The Company does not have an audit committee, compensation committee,
nominating committee, or other committee of the board that performs similar
functions. The entire board of directors of the Company perform the roles of
these committees. Consequently the Company has not designated an audit committee
financial expert.

Item 10. Executive Compensation

Compensation Discussion and Analysis

     Our executive compensation program for the named executive officers (NEOs)
is administered by the Company's Board of Directors. We do not have a
compensation committee.

Compensation Objectives

     We believe that the compensation programs for our NEOs should reflect our
performance and the value created for the Company's stockholders. In addition,
the compensation programs should support the short-term and long-term strategic
goals and values of the Company, and should reward individual contributions to
the Company's success. We believe that the structure of the compensation
programs for our executives reflects these objectives. Our compensation programs
consist of three basic components: base salary, short-term compensation and
long-term compensation.

                                       50
<PAGE>
Elements of Compensation

     The elements of our compensation program include: (1) base salary, (2)
short term compensation, and (3) long term compensation.

     Base Salary.    Each of the Company's NEO are paid a base salary. Base
salaries for the NEO's are established based on the scope of their
responsibilities, professional qualifications and the other elements of the
executive's compensation.

     Short-term Compensation.    Short-term compensation consists primarily of
cash bonuses. The short-term components are designed to reward the contributions
of the NEOs toward the Company's annual financial, operational and strategic
goals and reward individual performance.

     Long-term Compensation.    Long-term compensation is comprised of various
forms of equity compensation. The long-term elements are designed to assist the
Company in long-term retention of key personnel and further align the interests
of our NEOs with our shareholders.

     The determination of each element of compensation to the NEOs are entirely
in the discretion of the Board. We do not currently use any specific benchmarks
or performance goals in determining the elements of and the size of awards and
compensation.

Equity Award Practices

     All equity awards are approved before or on the date of grant. The exercise
price of at-the-money stock options and the grant price of all full-value awards
is the closing price on the date of grant.

     Our equity award approval process specifies the individual receiving the
grant, the number of units or the value of the award, the exercise price or
formula for determining the exercise price and the date of grant. The Company
has no program, plan or practice to the timing of its option grants.

Summary Compensation Table

     The following table summarizes the compensation of Paul G. Laird and Les
Bates, the Company's NEOs for the fiscal years ended February 28, 2007 and 2006.



                                       51
<PAGE>
<TABLE>
<CAPTION>


Name and Principal       Fiscal Year  Salary    Bonus     Stock Awards  Option Awards  All other    Total ($)
Position                                                                               Compensation
-------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>       <C>       <C>           <C>            <C>     <C>  <C>
Paul G. Laird            2007         $115,000  $110,000  $0            $325,000(2)    $28,254 (4)  $578,254
Chief Executive          2006         $84,996   $ 30,000  $117,000(1)   $46,962 (3)    $ 0          $278,958
Officer and President

Les Bates                2007         $112,500  $110,000  $0            $260,000(2)    $0           $482,500
Principal Accounting     2006         $84,996   $ 30,000  $117,000 (1)  $46,962 (3)    $0           $278,958
and Financial Officer
</TABLE>

(1)     On May 19, 2005, the Company granted restricted stock awards, which
vested on that date, of 100,000 shares of its Common Stock to its two executive
officers as compensation for services. The Company's Common Stock closed at
$1.17 on that day.
(2)     Awards to Messrs. Laird and Bates were made on November 10, 2006. The
aggregate number of options granted to Mr. Laird was 1,250,000 which had a SFAS
No. 123(R) value of $1,300,000 or $1.04 per share and the aggregate number of
options granted to Mr. Bates was 1,000,000 and had a SFAS No. 123(R) of
$1,040,000 or $1.04 per share. The amounts recorded in this table are based upon
the number of vested options as of February 28, 2007 multiplied by the SFAS No.
123(R) value per share. The options are exercisable at an exercise price of
$1.25 per share. The fair value of the options was estimated on the date of the
grant utilizing the Black-Scholes option pricing model with the following
assumptions: expected life of the options is 10 years, expected volatility of
81%, risk free interest rate of 4.73% and no dividend yield. The amounts in this
column reflect the compensation cost recognized by the Company for the fiscal
year ended February 28, 2007. The Company accounts for employee stock options
under the "modified-prospective." Under the "modified-prospective" method,
compensation cost is recognized in the financial statements beginning with the
effective date, based on the requirements of SFAS No. 123(R) for all share-based
payments granted after that date, and based on the requirements of SFAS No. 123
for all unvested awards granted prior to the effective date of SFAS No. 123(R).
(3)     Awards to Messrs. Laird and Bates were made on May 13, 2005 and valued
at $1.02 per share. The awards represent options to acquire 75,000 shares of
Common Stock at an exercise price of $1.15 per share, exercisable until May 13,
2015. The value of the awards were calculated using the Black-Scholes model. For
a discussion of valuation assumptions, see Note 8 -- Equity Incentive Plan Stock
Option Plan of the Notes to Consolidated Financial Statements included in our
annual report on Form 10-KSB for year ended February 28, 2006. The compensation
cost was not recognized as in fiscal 2006 because the Company accounted for
stock-based compensation in accordance with Statement of Financial Accounting
Standards No. 123, "Accounting for Stock Based Compensation," which provided for
the pro-forma presentation of compensation expense related to employee option
grants.
(4)    Represents accrued management fees in the amount of $28,254 to be paid to
Natural Resource Group Gathering LLC, the general partner of SDG ("NRGG"). Paul
G. Laird is a Manager of NRGG.



                                       52
<PAGE>
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based
Awards Table

Individual Arrangements and Employment Agreements

     The following is a description of the individual arrangements that we have
made with Messrs. Laird and Bates with respect to their compensation. Messrs.
Laird and Bates were each paid during the fiscal year ended February 28, 2007 in
accordance with his employment agreements with us, which is described. In
addition, Messrs. Laird and Bates also have a Change-in-Control payment that is
described in the "Potential Payments Upon Termination" below.

Paul G. Laird - Chief Executive Officer and President

     Paul G. Laird has been the President, Chief Executive Officer and a
director of the Company since April 2003. Effective August 1, 2006, Mr. Laird's
employment agreement was modified to provide that Mr. Laird would receive base
salary compensation in the amount of $155,000 per annum. Mr. Laird's base salary
compensation is adjusted annually at the rate of inflation as measured by the
federal Consumer Price Index, or $6,000, whichever is greater. The compensation
is subject to annual escalations based on cost-of-living and merit increases
approved by the Board. Mr. Laird is also eligible for bonuses, to be determined
by the Board in it sole discretion. Effective October 31, 2006, Mr. Laird's
employment agreement was modified to expire October 31, 2009; however, it is
automatically renewable on an annual basis for additional one-year increments.

     During the fiscal year ended February 28, 2007, Mr. Laird was granted an
aggregate of $110,000 in cash bonuses. On June 6, 2006, Mr. Laird was granted a
$30,000 cash bonus and on December 20, 2006, Mr. Laird was granted an additional
$80,000 cash bonus. The short-term components of compensation for the Company's
NEOs are designed to reward the contributions of the NEOs toward the Company's
annual financial, operational and strategic goals and reward individual
performance. The bonus amounts were determined arbitrarily by the board of
directors of the Company based upon their analysis of Mr. Laird's performance
during the fiscal year ended February 28, 2007. During the fiscal year ended
February 28, 2007, the board of directors considered the significance of Mr.
Laird's contributions in the Company's acquisition of Cedar Ridge, LLC's ("Cedar
Ridge") 36.66667% working interest (29.33336% net revenue interest) in eleven
gas and 2 water disposal wells and 33,949 net acres in the Slater Dome Field
located along the eastern edge of the Greater Green River basin in northwest
Colorado and south central Wyoming which was consummated effective December 14,
2006, in determining that Mr. Laird should be awarded a greater bonus amount
than that awarded during the fiscal year ended February 28, 2006. The board of
directors does not currently have a formula in place to determine the amount of
bonus compensation to be paid to Mr. Laird.

                                       53
<PAGE>
     In his position as President and Chief Executive Officer, Mr. Laird
exercises detailed supervision over the operations of the Company and is
ultimately responsible for the operations of the Company, including but not
limited to land acquisitions and exploration and development of the Company's
properties. Mr. Laird further performs all duties incident to the title of Chief
Executive Officer and President and such other duties as from time to time may
be assigned to him by the Board of Directors. Mr. Bates' is responsible for all
duties incident to the title of Principal Accounting and Financial Officer,
Secretary and Treasurer. The board of directors has considered these factors and
Mr. Laird's increased responsibilities as the President and Chief Executive
Officer of the Company in compensating Mr. Laird as compared to Mr. Bates.
During the fiscal year ended February 28, 2007, Mr. Laird was compensated $2,500
more and was awarded an additional 250,000 options to purchase shares of the
Company's common stock as compared to Mr. Bates.

Les Bates - Principal Accounting and Financial Officer and Secretary and
Treasurer

     Les Bates has been the Chief Financial Officer, Principal Accounting and
Financial Officer, Secretary, Treasurer and a director of the Company since
April 2003. Effective August 1, 2006, Mr. Bates' employment agreement was
modified to provided that Mr. Bates would receive base salary compensation in
the amount of $150,000 per annum. Mr. Bates' base salary compensation is
adjusted annually at the rate of inflation as measured by the federal Consumer
Price Index, or $6,000, whichever is greater. The compensation is subject to
annual escalations based on cost-of-living and merit increases approved by the
Board. Mr. Bates is also eligible for bonuses, to be determined by the Board, in
its sole discretion. Effective October 31, 2006, Mr. Bates' employment agreement
was modified to expire October 31, 2009; however, it is automatically renewable
on an annual basis for additional one-year increments.

     During the fiscal year ended February 28, 2007, Mr. Bates was granted an
aggregate of $110,000 in cash bonuses. On June 6, 2006, Mr. Bates was granted a
$30,000 cash bonus and on December 20, 2006, Mr. Bates was granted an additional
$80,000 cash bonus. The bonus amounts were determined arbitrarily by the board
of directors of the Company based upon their analysis of Mr. Bates' performance
during the fiscal year ended February 28, 2007. During the fiscal year ended
February 28, 2007, the board of directors considered the significance of Mr.
Bates' contributions in the Company's acquisition of Cedar Ridge's 36.66667%
working interest (29.33336% net revenue interest) in eleven gas and 2 water
disposal wells and 33,949 net acres in the Slater Dome Field located along the
eastern edge of the Greater Green River basin in northwest Colorado and south
central Wyoming which was consummated effective December 14, 2006, in
determining that Mr. Bates should be awarded a greater bonus amount than that
awarded during the fiscal year ended February 28, 2006. The board of directors
does not currently have a formula in place to determine the amount of bonus
compensation to be paid to Mr. Bates.

     Messrs. Laird and Bates are also officers, directors and principal
shareholders of Natural Resources Group, Inc., a Colorado corporation ("NRGI").
NRGI is an inactive company that was previously engaged in the business of the
acquisition and sale of oil and gas prospects. Due to the inactive status of
NRGI, Messrs. Laird and Bates do not believe that there is any conflict of
interest in connection with their positions with NRGI. The Company's Board of
Directors intend to adopt board resolutions that will set forth the policies and
procedures for dealing with potential conflicts of interest between the Company
and its officers and directors. Messrs Laird and Bates each dedicate
approximately 40 to 50 hours per week for Company business.


                                       54
<PAGE>
Outstanding Equity Awards at Fiscal Year End

The following table sets forth information concerning options awards to Messrs.
Laird and Bates at the fiscal year ended February 28, 2007. The Company did not
grant any stock awards during the fiscal year ended February 28, 2007.
<TABLE>
<CAPTION>

                                             Option Awards
---------------------------------------------------------------------------------------------------
                    Grant Date          Number of         Number of     Option        Option
                                        Securities        Securities   Exercise     Expiration
Name                                    Underlying        Underlying    Price          Date
                                       Unexercised       Unexercised
                                        Options (#)      Options (#)
                                       Exercisable      Unexercisable
---------------- ------------------ ------------------ --------------- --------- ------------------
<S>                    <C> <C>           <C>                   <C>      <C>            <C> <C>
Paul G. Laird      May 13, 2005          75,000                0        $1.15      May 13, 2015
                 November 10, 2006       312,500          937,500 (1)   $1.25    November 10, 2016
                   June 1, 2004          25,000                0        $1.00      June 1, 2014
                 October 25, 2004        100,000               0        $0.75    October 25, 2014
---------------- ------------------ ------------------ --------------- --------- ------------------
Les Bates          May 13, 2005          75,000                0        $1.15      May 13, 2015
                 November 10, 2006       250,000          750,000 (2)   $1.25    November 10, 2016
                   June 1, 2004          25,000                0        $1.00      June 1, 2014
                 October 25, 2004        100,000               0        $0.75    October 25, 2014
---------------- ------------------ ------------------ --------------- --------- ------------------
</TABLE>


(1)     On November 10, 2006, the Company granted Paul G. Laird 1,250,000
options to acquire shares of the Company's Common Stock which are exercisable at
a price of $1.25. The Stock Options vest at a rate of 156,250 shares each fiscal
quarter ending November 30, February 28, May 31 and August 31 through November
30, 2008.
(2)     On November 10, 2006, the Company granted Les Bates 1,000,000 options to
acquire shares of the Company's Common Stock which are exercisable at a price of
$1.25. The Stock Options vest at a rate of 125,000 shares each fiscal quarter
ending November 30, February 28, May 31 and August 31 through November 30, 2008.

     On May 19, 2005, the Company granted 100,000 shares of its restricted stock
to Messrs Laird and Bates, which vested immediately on that date as compensation
for services. The Company's Common Stock closed at $1.17 on that day.

Option Exercises During Fiscal Year

     There were no options exercised by the NEO's during the year ended February
28, 2007.


                                       55
<PAGE>
Potential Payments Upon Termination

Cash Compensation.

     Messrs. Laird and Bates' employment agreements contain provisions under
which the Company will be obligated to pay Mr. Laird and Mr. Bates certain
compensation upon their termination. The following tables set forth the details
of the estimated payments and benefits that would be provided to Mr. Laird and
Mr. Bates in the event that their employment with us is terminated for any
reason, including a termination for cause, resignation or retirement, a
constructive termination, a without cause termination, death, long term
disability, and termination in connection with a change in control.
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------
Paul G. Laird      Termination by   Illness or   With cause  Without cause   Resignation/   Termination in
                   Mutual           incapacity                               retirement       Connection
                   Agreement                                                                 with a Change
                                                                                             in Control
-----------------------------------------------------------------------------------------------------------
<S>                       <C>             <C>         <C>     <C>                  <C>        <C>      <C>
Cash Compensation         0               0           0       $ 426,250            0          $889,700 (2)
                                                                (1)(2)
-----------------------------------------------------------------------------------------------------------
Unvested Stock            0               0 (3)       0         0 (3)              0              0 (3)
Options
-----------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Upon termination without cause, the Company shall (i) make a lump sum cash
payment to Mr. Bates within 10 days after termination is effective of an amount
equal to (1) Mr. Laird's base salary accrued to the date of termination; (2)
unreimbursed expenses accrued to the date of termination; (3) an amount equal to
the greater of (a) Mr. Laird's annual base salary (i.e., 12 months of base
salary), or (b) amounts remaining due to Mr. Laird as base salary (assuming that
payments under his employment agreement were made until expiration of the
initial term or if applicable the renewal term), and (4) any other amounts due
to Mr. Laird under his employment agreement. This amount represents amounts
remaining due to Mr. Laird as base salary for the remaining term of his
employment agreement.
(2)   For purposes of this table, we have assumed Mr. Laird's termination on
February 28, 2007.
(3)   Mr. Laird's unvested stock options granted on November 10, 2006 are
exercisable at a price of $1.25 per share, which exceeded the closing price of
the Company's common stock on February 28, 2007, which was $1.23 per share.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Les Bates          Termination by   Illness or  With cause  Without cause   Resignation/  Termination in
                   Mutual           incapacity                              retirement      Connection
                   Agreement                                                               with a Change
                                                                                            in Control
------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>         <C>     <C>                  <C>        <C>      <C>
Cash Compensation         0              0           0       $ 400,000            0          $848,500 (2)
                                                               (1)(2)
------------------------------------------------------------------------------------------------------------
Unvested    Stock         0              0 (3)       0         0 (3)              0              0 (3)
Options
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       56
<PAGE>
(1)   Upon termination without cause, the Company shall (i) make a lump sum cash
payment to Mr. Bates within 10 days after termination is effective of an amount
equal to (1) Mr. Bates' base salary accrued to the date of termination; (2)
unreimbursed expenses accrued to the date of termination; (3) an amount equal to
the greater of (a) Mr. Bates' annual base salary (i.e., 12 months of base
salary), or (b) amounts remaining due to Mr. Bates as base salary (assuming that
payments under his employment agreement were made until expiration of the
initial term or if applicable the renewal term), and (4) any other amounts due
to Mr. Bates under his employment agreement. This amount represents amounts
remaining due to Mr. Bates as base salary for the remaining term of his
employment agreement.
(2)   For purposes of this table, we have assumed Mr. Bates' termination on
February 28, 2007.
(3)   Mr. Bates' unvested stock options granted on November 10, 2006 are
exercisable at a price of $1.25 per share, which exceeded the closing price of
the Company's common stock on February 28, 2007, which was $1.23 per share.

     If, at any time during the term of Mr. Laird and/or Mr. Bates' employment
agreements there is a change of control of the Company and Mr. Laird and/or Mr.
Bates' employment is terminated by the Company, upon the mutual agreement of the
parties, for illness or incapacity, without cause, or by resignation or
retirement (each as more specifically set forth in the respective employment
agreements) within the greater of one (1) year following the change of control
or the remaining term of the employment agreements (the "Change of Control
Date"), the Company shall pay to Mr. Laird and/or Mr. Bates (a) the balance of
all amounts due from the Change of Control Date until the end of the term of the
employment agreement plus (b) an amount equal to 2.99 times the sum of (i) his
respective annual Base Salary (as defined in the employment agreements) as in
effect on the date of termination plus (ii) the amount of bonus paid in the
prior year to Mr. Laird and/or Mr. Bates', and (c) any other amounts due to Mr.
Laird and/or Mr. Bates' under any other provision of their employment
agreements. This amount shall be paid to Mr. Laird and/or Mr. Bates' in one lump
sum as soon as practicable, but in no event later than one hundred twenty (120)
days, after the date that employment is terminated. In addition to the lump sum
payment referenced in the preceding sentence, the Company shall pay to Mr. Laird
and/or Mr. Bates' any accrued and unpaid bonuses at the same time as the lump
sum payment is made.

     A change of control is defined in the employment agreements to mean the
occurrence of one or more of the following three events:

     (1)  Any person becomes a beneficial owner (as such term is defined in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended)
directly or indirectly of securities representing 33% or more of the total
number of votes that may be cast for the election of directors of the Company;

     (2)  Within two years after a merger, consolidation, liquidation or sale of
assets involving the Company, or a contested election of a Company director, or
any combination of the foregoing, the individuals who were directors of the
Company immediately prior thereto shall cease to constitute a majority of the
Board of Directors; or


                                       57
<PAGE>
     (3)  Within two years after a tender offer or exchange offer for voting
securities of the Company, the individuals who were directors of the Company
immediately prior thereto shall cease to constitute a majority of the Board of
Directors.

     Further, if any payment or distribution by the Company to Mr. Laird and/or
Mr. Bates is determined to be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code, Mr. Laird and/or Mr. Bates shall be entitled to
receive a payment on an after-tax basis equal to the excise tax imposed.

Effects of Termination Events or Change in Control on Unvested Equity Awards

     All unvested stock option awards granted to Messrs. Laird and Bates provide
that upon a change of control, the unvested stock options shall immediately vest
and be exercisable immediately.

Compensation of Non-Management Directors

The following table provides certain information concerning the compensation of
the Company's non-management director, Grant Gaeth for the fiscal year ended
February 28, 2007.
<TABLE>
<CAPTION>
                                   Director Compensation
----------------------------------------------------------------------------------------
Name             Fees Earned   Stock Awards  Option Awards  All other            Total
                 or Paid in                                Compensation
                 Cash
----------------------------------------------------------------------------------------
<S>              <C>           <C>            <C>           <C>     <C>        <C>
Grant Gaeth      $ 0           $0             $130,000(1)    $77,250 (2)        $ 207,250
---------------- ------------- ------------- -------------- ------------------ ---------
</TABLE>

(1)   On November 10, 2006, the Company granted Grant Gaeth 500,000 options to
acquire shares of the Company's Common Stock which are exercisable at a price of
$1.25. The stock options vest at a rate of 62,500 shares each fiscal quarter
ending November 30, February 28, May 31 and August 31 through November 30, 2008.
These stock options have a strike price of $1.25 per share and a SFAS No. 123(R)
value of $1.04 per share. As of February 28, 2007, 125,000 of these options had
vested and were exercisable and 375,000 of these options remained unvested. The
amounts in this column reflect the compensation cost recognized by the Company
for the fiscal year ended February 28, 2007.
(2)   Reflects consulting fees paid to GeoEx, Ltd, an entity controlled by Grant
Gaeth, that provides geological consulting services.

Cash Compensation.

         We have not paid any cash compensation to our directors for their
service on our Board of Directors. However, we intend to pay $100 per meeting to
our directors for the foreseeable future.

Liability Insurance.

     The Company has provided liability insurance for its directors and officers
since April 13, 2005. American International Specialty Lines Insurance Company
is the underwriter of the current coverage, which extends until April 13, 2007.
The annual cost of this coverage is approximately $25,000.


                                       58
<PAGE>
Stock Option and Stock Grant Plan

     On June 6, 2003, we adopted the New Frontier Energy, Inc. Stock Option and
Stock Grant Plan (the "2003 Plan"). The 2003 Plan allows for the issuance of
incentive (qualified) options, non-qualified options and the grant of stock or
other equity incentives to our employees, consultants, directors and others
providing service of special significance to our company. The 2003 Plan is
administered by a committee to be appointed by our Board of Directors, or in the
absence of that appointment, by the Board itself. The 2003 Plan provides for the
issuance of up to 625,000 shares or options.

     Incentive stock options may be granted only to statutory employees.
Non-qualified options and stock grants may be made to employees, consultants,
directors and other individuals or entities determined by the committee.
Incentive and non-qualified options may be granted to the same individual, in
the discretion of the committee. The terms of the options or the grants,
including the number of shares covered by the option or award, the exercise
price, vesting schedule, and term, are determined in the sole discretion of the
committee, except that incentive options must satisfy the requirements of the
Internal Revenue Code applicable to incentive options. No option may be
exercised more than ten years from the date of grant. The 2003 Plan expires in
2013.

     As of May 4, 2007, we had granted 600,000 options to acquire shares of our
common stock pursuant to the 2003 Plan and have 25,000 options to acquire shares
of our common stock available for grant under the 2003 Plan.

2007 Omnibus Long Term Incentive Plan

     In August 2006, the Board of Directors adopted the Company's 2007 Omnibus
Long Term Incentive Plan (the "2007 Plan"), which authorizes the issuance of up
to 10,000,000 shares of the Company's Common Stock that may be issued under the
2007 Plan. The 2007 Plan requires submission to the shareholders for
ratification and accordingly, no options have been granted under the 2007 Plan.
On May 8, 2007 we filed a definitive proxy statement with the Commission for a
special meeting of shareholders to approve and ratify the 2007 Plan, among other
matters. The special meeting is scheduled to be held on June 11, 2007.

Royalty and Working Interest Plan

     Effective October 31, 2006, the Board of Directors adopted the Company's
Royalty and Working Interest Plan. Pursuant to the Royalty and Working Interest
Plan, a committee consisting of members of the board of directors (the
"Committee") shall administer the Plan and may select an overriding royalty or
similar interest of an exploratory or development property or property for
distribution to the participants of the Plan. The selection of properties is to
be determined by the Board of Directors or a committee thereof, and it will be
based upon all relevant factors such as sound corporate management and existing
royalty burdens on the properties. The participants in the plan and the total
overriding royalty or similar interest set aside for distribution to the
participants in a property shall be determined by the Committee. As of May 21,
2007, the Commitee had not granted any awards under the Royalty and Working
Interest Plan.


                                       59
<PAGE>
Item 11:  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters.

     The following table sets forth, as of May 4, 2007, certain information with
respect to the beneficial ownership of our Common Stock by each stockholder
known by us to be the beneficial owner of more than 5% of our Common Stock and
by each of our current directors and executive officers. Each person has sole
voting and investment power with respect to the shares of Common Stock, except
as otherwise indicated. Beneficial ownership consists of a direct interest in
the shares of Common Stock, except as otherwise indicated.





                [REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]







                                       60
<PAGE>

<TABLE>
<CAPTION>
              Name and Address of               Amount of Beneficial      Percent of Beneficial
                Beneficial Owner                     Ownership                  Ownership
----------------------------------------        --------------------      ---------------------
<S>           <C>                                      <C>                        <C>
Paul G. Laird (1)                                      632,051                    9.50%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

Les Bates (2)                                          569,551                    8.63%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

Grant I. Gaeth (3)                                     250,551                    3.96%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

John D. McKey, Jr. (4)                                 893,307                   14.31%
7737 S.E. Loblolly Bay Dr.
Hobe Sound, FL 33455

Candace McKey (5)                                    1,096,325                   17.00%
7737 S.E. Loblolly Bay Dr.
Hobe Sound, FL 33455

Echo's Voice LLC (6)                                   900,663                   13.63%
1535 Falmouth Ave.
New Hyde Park, NY 16040

Apollo Trust (7)                                     1,366,459                   19.32%
1535 Falmouth Ave.
New Hyde Park, NY 16040

Aviel Faliks (8)                                       959,628                   14.03%
24 Rozmus Ct.
Allendale, NJ 07401

John O'Shea (9)                                        406,489                    6.23%
100 Wall Street
New York, New York 10005

Wellington Management Company, LLP (10)                465,840                    7.05%
75 State Street
Boston, MA 02109


                                       61
<PAGE>
Helen De Bove (11)                                   2,267,121                   31.03%
1535 Falmouth Ave.
New Hyde Park, NY  16040

Iris Energy Holding Corp. (12)                         675,000                    9.99%
L/2 Maxkar Bldg. PO Box 1225
Apia, Samoa

Vision Opportunity Master Fund, LP (13)                675,000                    9.99%
20 West 55th Street 5th Floor
New York, NY 10019

Roger May
12970 West 20th Ave., Unit D (14)                      500,000                    7.53%
Golden, Colorado 80403

Officers & Directors as a Group                      1,413,051                   19.38%
</TABLE>

(1)      Includes (i) 100,000 shares of Common Stock, (ii) options to acquire
         25,000 shares of Common Stock from the Company at a price of $1.00,
         expiring in 2013, (iii) options to acquire 100,000 shares of Common
         Stock from the Company at a price of $0.75, expiring in 2014, (iv)
         options to acquire 75,000 shares of Common Stock from the Company at a
         price of $1.15, expiring in 2015, that were granted on May 13, 2005,
         (v) options to acquire 312,500 shares of Common Stock from the Company
         at a price of $1.25, on November 10, 2016, and (vi) 19,551 shares owned
         by Natural Resources Group, Inc., of which Mr. Laird is an officer,
         director and principal shareholder.
(2)      Includes (i) 100,000 shares of Common Stock, (ii) options to acquire
         25,000 shares of Common Stock from the Company at a price of $1.00,
         expiring in 2013, (iii) options to acquire 100,000 shares of Common
         Stock from the Company at a price of $0.75, expiring in 2014, (iv)
         options to acquire 75,000 shares of Common Stock from the Company at a
         price of $1.15, expiring in 2015 that were granted on May 13, 2005, (v)
         options to acquire 250,000 shares of Common Stock from the Company at a
         price of $1.25, on November 10, 2016, and (vi) 19,551 shares owned by
         Natural Resources Group, Inc., of which Mr. Bates is an officer.
(3)      Includes (i) 28,667 shares of Common Stock owned directly by Mr. Gaeth,
         16,000 shares owned by GeoEx, Ltd., an entity in which Mr. Gaeth is an
         affiliate, (ii) options to acquire 59,333 shares of Common Stock from
         the Company at a price of $0.75, expiring in 2014, (iii) options to
         acquire 125,000 shares of Common Stock from the Company at a price of
         $1.25, on November 10, 2016, and (iv) 19,551 shares owned by Natural
         Resources Group, Inc., of which Mr. Gaeth is an officer.
(4)      Includes (i) 439,807 shares owned directly by Mr. McKey and (ii)
         100,000 warrants to acquire shares of our Common Stock at a price of
         $2.00 per share. Also includes 353,500 shares owned directly by Mr.
         McKey's wife, Candace McKey, of which he disclaims beneficial
         ownership. Does not include 100,000 warrants to acquire shares of our
         Common Stock held by Candace McKey at a price of $2.00 per share or
         203,018 warrants to acquire shares of our Common Stock held by Candace
         McKey at a price of $1.38 per share.
(5)      Includes (i) 353,500 shares owned directly by Ms. McKey, (ii) 203,018
         shares underlying warrants exercisable at $1.38 per share, expiring in
         2007 and (iii) 100,000 warrants to acquire shares of our Common Stock
         at a price of $2.00 per share. Also includes 439,807 shares owned by
         Ms. McKey's husband, John D. McKey, Jr., of which she disclaims
         beneficial ownership. Does not include 100,000 warrants to acquire
         shares of our Common Stock held by Mr. McKey.
(6)      Includes (i) 277,217 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 188,662 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures, and (iii) 434,783 shares of Common Stock held by Echo's
         Voice, LLC. Helen Del Bove, manager of Echo's Voice LLC, exercises
         dispositive and voting power with respect to the shares of Common Stock
         owned by Echo's Voice LLC.
(7)      Includes (i) 554,434 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 377,242 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures, and (iii) 434,783 shares of Common Stock held by Apollo
         Trust. Helen Del Bove, Trustee of the Apollo Trust, exercises
         dispositive and voting power with respect to the shares of Common Stock
         owned by the Apollo Trust.

                                       62
<PAGE>
(8)      Includes (i) 415,826 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 282,932 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures, and (iii) 260,870 shares of Common Stock held by Mr.
         Faliks.
(9)      Includes (i) 69,305 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 47,156 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures, (iii) 5,063 shares of Common Stock issued to Mr. O'Shea as
         compensation to Westminster Securities Corp. pursuant to the Placement
         Agent Agreement dated June 28, 2005, (iv) 115,665 shares of Common
         Stock issued to Westminster Securities Corp. as compensation pursuant
         to the Placement Agent Agreement dated June 28, 2005, (v) 84,650 shares
         of Common Stock underlying a warrant issued to Mr. O'Shea in connection
         with his purchase of the Company's 12% Series B Cumulative Convertible
         Preferred Stock ("Series B Preferred Stock") and (vi) 84,650 shares of
         Common Stock underlying a warrant issued to Securities Westminster
         Corp. pursuant to the Placement Agent Agreement dated September 14,
         2004. John P. O'Shea, as an officer of Westminster Securities Corp.,
         exercise dispositive and voting power with respect to the shares of
         Common Stock owned by Westminster Securities Corp.
(10)     Includes: (i) 110,887 shares of Common Stock to be offered upon
         conversion of the Debenture and 75,449 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures owned by J. Caird Partners, (ii) 110,887 shares of Common
         Stock to be offered upon conversion of the Debenture and 75,449 shares
         of Common Stock to be offered upon the exercise of warrants issued to
         the holders of our Debentures owned by J. Caird Investors, (iii) 27,722
         shares of Common Stock to be offered upon conversion of the Debenture
         and 18,862 shares of Common Stock to be offered upon the exercise of
         warrants issued to the holders of our Debentures owned by the WTC-CIF
         Unconventional Fund and (iv) 27,722 shares of Common Stock to be
         offered upon conversion of the Debenture and 18,862 shares of Common
         Stock to be offered upon the exercise of warrants issued to the holders
         of our Debentures owned by the WTC-CTF Unconventional Fund. The 465,840
         shares represent the amount of shares Wellington Management Company,
         LLP ("WMC") may be deemed to beneficially own as investment advisor,
         which are held of record by clients of WMC. No such client of WMC is
         known to have beneficial ownership to more than 5% of this class of
         securities.
(11)     Includes (i) 277,217 shares of Common Stock to be offered upon
         conversion of the Debenture and 188,662 shares of Common Stock to be
         offered upon the exercise of warrants issued to the holders of our
         Debentures owned by Echo's Voice LLC and 434,783 shares of Common Stock
         held by Echo's Voice, (ii) 554,434 shares of Common Stock to be offered
         upon conversion of the Debenture and 377,242 shares of Common Stock to
         be offered upon the exercise of warrants issued to the holders of our
         Debentures owned by the Apollo Trust, and 434,783 shares of Common
         Stock held by the Apollo Trust. Helen Del Bove, as manager of Echo's
         Voice LLC and Trustee of the Apollo Trust, exercises dispositive and
         voting power over these shares of Common Stock.
(12)     Includes 675,000 shares of Common Stock to be offered upon conversion
         of the shares of Series C Preferred Stock. Dectra (Samoa) Limited,
         director of Iris Energy Holding Corp. exercises dispositive and voting
         power with respect to the shares of Common Stock owned by Iris Energy
         Holding Corp.
(13)     Includes 675,000 shares of Common Stock to be offered upon conversion
         of the shares of Series C Preferred Stock. Adam Benewitz exercises
         dispositive and voting power with respect to the shares of Common Stock
         owned by the Vision Opportunity Master Fund, LP.
(14)     Represents 500,000 options to acquire shares of Common Stock from the
         Company.

Changes In Control

     We know of no arrangements, including the pledge of our securities by any
person, that might result in a change in control, other than the Iris Energy
Directors Agreement, the conversion of our outstanding Preferred Stock, 2.5%
Series C Cumulative Convertible Preferred Stock or Convertible Debentures or
exercise of outstanding warrants in certain circumstances.

Securities Authorized For Issuance Under Compensation Plans

     The table set forth below presents the securities authorized for issuance
with respect to the 2003 Plan under which equity securities are authorized for
issuance as of May 4, 2007.

                                       63
<PAGE>
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------
Equity Compensation Plan Information
------------------------------------------------------------------------------------------------
Plan Category                                                            Number of securities
                                                                         remaining available for
                       Number of securities                              future issuance under
                       to be issued upon        Weighted-average         equity  compensation
                       exercise of exercise     price of (excluding      plans securities
                       outstanding options,     outstanding options,     reflected in the 1st
                       warrants and rights      warrants and rights      column)
---------------------- ------------------------ ------------------------ -----------------------
<S>                          <C>                       <C>                       <C>
Equity Compensation          588,000                   $0.87                     25,000
Plans approved by
security holders
---------------------- ------------------------ ------------------------ -----------------------
Equity Compensation        3,950,000 (1)               $1.25                        0
Plans not approved
by security holders
---------------------- ------------------------ ------------------------ -----------------------
Total                      4,538,000                     --                      25,000
---------------------- ------------------------ ------------------------ -----------------------
</TABLE>

     (1)  On November 10, 2006, the Company granted certain officers, directors,
employees and agents of the Company an aggregate of 3,950,000 options to acquire
shares of the Company's Common Stock which are exercisable at a price of $1.25.
These stock options vest at a rate of 12.5% each fiscal quarter ending November
30, February 28, May 31 and August 31 through November 30, 2008 and expire on
November 30, 2016. For additional details on options granted to the Company's
officers and directors, see "Item 10. Executive Compensation."

     On June 11, 2007, the Company intends to hold a special meeting of
shareholder to approve and ratify, among other things, the Company's 2007
Omnibus Long Term Incentive Plan (the "2007 Plan"), which authorizes the
issuance of up to 10,000,000 shares of the Company's Common Stock that may be
issued under the 2007 Plan.

Item 12.   Certain Relationships and Related Party Transactions

     Raymond McElhaney and Bill M. Conrad, directors of the Company who resigned
on February 25, 2005, and Ronald R. McGinnis, a director who resigned on April
3, 2003, are considered "promoters," and took initiative in organizing the
business of our Company. In connection with our initial capitalization, each of
Messrs. McElhaney, Conrad and McGinnis received shares of our Common Stock at a
price of $0.001 per share; Messrs. McElhaney and Conrad received 312,500 shares
in exchange for cash of $1,250 and Mr. McGinnis received 250,000 shares in
exchange for $1,000, each share amount adjusted for subsequent stock splits.
Messrs. McElhaney, Conrad and McGinnis were the only members of the Board of
Directors approving those transactions. Since the Company had only recently been
formed and had no prior sales of stock to compare, the price at which the shares
were issued to the foregoing individuals was determined with reference to the
par value of our Common Stock.


                                       64
<PAGE>
     We lease approximately 1,600 square feet of office space located at 1789 W.
Littleton Blvd., Littleton, Colorado 80120, for approximately $2,667 per month.
The lease expires on December 31, 2008. The lease is with Spotswood Properties,
LLC, ("Spotswood") a Colorado limited liability company and an affiliate of Paul
G. Laird, President and Chief Executive Officer of the Company. The Lease is on
terms that the Board of Directors, which includes Mr. Laird, believe are no less
favorable than those that may be obtained from third parties. The aggregate
amount of payments due to Spotswood from February 28, 2007 during the remaining
term of the lease is $58,674. Spotswood was paid $32,004 and $24,953 during the
fiscal years ended February 28, 2007 and 2006, respectively. During the year
ended February 28, 2006, the Company paid $51,005 for leasehold improvements at
the office space.

     The Company paid GeoEx, Ltd., a corporation in which Grant Gaeth, a
director of the Company, is an officer, directors and principal shareholder for
geologic consulting $77,250 and $36,000 during the fiscal years ended February
28, 2007 and 2006, respectively.

     During the fiscal year ended February 28, 2005, the Company issued 60,000
shares of its Common Stock to two of its former directors Raymond McElhaney and
Bill M. Conrad, in consideration for cancellation of accrued compensation in the
amount of $45,000. Such compensation was accrued in the fiscal year ended
February 28, 2003, when the directors were also the Company's operating
officers. Market value of the Company's Common Stock on the date of issue was
$0.47 per share. The difference between the market value of the stock and the
accrued compensation was credited to additional paid-in capital.

     During the year ended February 28, 2006, SDG paid a corporation controlled
by Paul G. Laird, President and Chief Executive Officer of the Company, a
construction management fee of $100,000 in connection with SDG's service as the
general contractor when building the Gas Gathering Pipeline.

     During the year ended February 28, 2007 and 2006, SDG accrued management
fees in the amount of $15,192 and $13,062, respectively to NRGG, an entity
partially controlled by Paul G. Laird, President and Chief Executive Officer of
the Company.

     Paul Laird, President and Chief Executive Officer of the Company, is an
officer, director and principal shareholder of NRG and a manager of the General
Partner, as defined above, of SDG, the partnership organized for the
construction of the Gas Gathering Pipeline from the Company's Slater Dome
Prospect, in which the Company owns 82.76% of the limited partnership interests
in SDG. The Company will receive 74.48% of SDG cash distributions until the
limited partners have received cash distributions equal to their initial capital
contributions and 62.07% of cash distributions thereafter (see Item 1 -
Description of Business for a description of the distributions to be allocated
according to the Partnership Agreement). The General Partner will have a 10%
carried interest in the Gas Gathering Pipeline from the Company's Slater Dome
Prospect until the limited partners have received cash distributions equal to
their original contribution and 25% of cash distributions thereafter. Further,
we have agreed to pay NRG a fee of $0.50 per MCF of gas transported through the
Gas Gathering Pipeline until the costs of the Gas Gathering Pipeline are
recovered and $0.25 thereafter and to dedicate our gas to the Gas Gathering
Pipeline.

     On May 10, 2006, the Company increased its investment in SDG by acquiring
additional Limited Partnership Interests from NRGG, resulting in an additional
20.51% of SDG cash distributions until the limited partners in SDG have received
cash distributions equal to their initial capital contributions and 17.10% of
cash distributions thereafter, in exchange for a subordinated convertible
debenture in the amount of $608,194 bearing 2.5% interest and due January 1,
2008. Paul Laird, our President and Chief Executive Officer is a manager of
NRGG, the general partner of SDG. In March 2007, the Company repaid $306,072 of
the convertible debenture issued to NRGG.

     Effective October 30, 2006, the Company issued a convertible promissory
note in the principal amount of $600,000 (the "Note") to Aviel Faliks. On
January 16, 2007, Mr. Aviel converted the principal amount of the Note and all
accrued and unpaid interest in the aggregate amount of $612,500 into Units (as
defined above) in the Company's offering of our Class C Preferred Stock.


                                       65
<PAGE>
Item 13.  Exhibits

     (a)  Exhibits

     The following is a list of exhibits filed or incorporated by reference into
this Report:

     Exhibit No.    Description
     -----------    -----------
     14.1           Code of Ethics for principal executive officer and senior
                    financial officers

     31.1           Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under
                    the Securities Exchange Act of 1934, as amended.

     31.2           Certifications pursuant to Rule 13a-14(a) or 15d-14(a)
                    under the Securities Exchange Act of 1934, as amended.

     32.1           Certifications pursuant to 18 U.S.C. Section 1350, as
                    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                    of 2002.

     23.1           Consent of Questa Engineering Corp.


     (b)  Financial Statements

     See "Item 7. Financial Statements" table of contents on Page F-2

Item 14.  Principal Accountant Fees and Services

     The Company currently has no audit committee of the Board of Directors and
is not required to maintain such a committee since its stock is not quoted on
NASDAQ or traded on any national securities exchange. Accordingly, all material
decisions affecting the Company's audited financial statements, periodic
disclosure with the SEC and its relationship with its auditors are addressed by
the entire Board. The Board currently has no policies and procedures relating to
the pre-approval of audit and audit related services.

Audit Fees

     The Company estimates that it will pay Stark Winter Schenkein & Co., LLP,
an aggregate of $35,000 for an audit of its 2007 financial statements. During
the fiscal year ended February 28, 2006, Stark Winter Schenkein & Co., LLP
billed the Company an aggregate of $35,200 for an audit of its 2006 financial
statements. Stark, Winter, Shenkein, & Co., LLP billed the Company $13,750 for
an audit of the 36.66667% working interest acquired from the operator of the
Slater Dome Field.


                                       66
<PAGE>
Audit-Related Fees

     During the fiscal year ended February 28, 2007, Stark Winter Schenkein &
Co., LLP billed the Company an aggregate of $17,550 in fees for review of its
quarterly financial statements. During the fiscal year ended February 28, 2006,
Stark Winter Schenkein & Co., LLP billed the Company an aggregate of $17,550 in
fees for review of its quarterly financial statements.

All Other Fees

     During the fiscal year ended February 28, 2007, Stark Winter Schenkein &
Co., LLP billed the Company an aggregate of $7,400 in fees in connection with
Registration Statements on Form SB-2 filed with the SEC during fiscal 2007.
During the fiscal year ended February 28, 2006, Stark Winter Schenkein & Co.,
LLP billed the Company an aggregate of $4,000 in connection with its review of a
Registration Statement on Form SB-2 filed with the SEC during fiscal 2006.







                                       67
<PAGE>




                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          NEW FRONTIER ENERGY, INC.


                                          By: /s/ Paul G. Laird
                                              ------------------------
                                              Paul G. Laird, President

     In accordance with the requirements of the Exchange Act, this report has
been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.


Date: May 24, 2007                          /s/ Paul G. Laird
                                            ------------------
                                            Paul G. Laird, President, CEO and
                                            Director

Date: May 24, 2007                          /s/ Les Bates
                                            -------------------
                                            Les Bates, Secretary/Treasurer,
                                            Principal Accounting and Financial
                                            Officer and Director

Date: May 24, 2007                          /s/ Grant I. Gaeth
                                            --------------------
                                            Grant I. Gaeth, Director





                                       68
<PAGE>




                            NEW FRONTIER ENERGY, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                     FOR THE PERIOD ENDED FEBRUARY 28, 2007








                                TABLE OF CONTENTS
                                                                        Page
                                                                        ----

Report of Independent Registered Public Accounting Firm                  F-1

Consolidated Financial Statements
     Balance Sheet                                                       F-2
     Statements of Operations                                            F-3
     Statements of Changes in Stockholders' Equity                       F-4
     Statements of Cash Flows                                            F-5

Notes to Consolidated Financial Statements                               F-6





<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



Shareholders and Board of Directors

New Frontier Energy, Inc.

We have audited the accompanying consolidated balance sheet of New Frontier
Energy, Inc. as of February 28, 2007, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years ended February
28, 2007 and 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of New Frontier Energy,
Inc. as of February 28, 2007, and the results of its operations, and its cash
flows for the years ended February 28, 2007 and 2006, in conformity with
accounting principles generally accepted in the United States of America.



/s/ Stark Winter Schenkein & Co., LLP
-------------------------------------
Denver, Colorado

May 20, 2007


                                       F-1

<PAGE>
<TABLE>
<CAPTION>


                            NEW FRONTIER ENERGY, INC.
                           CONSOLIDATED BALANCE SHEET
                                February 28, 2007



                                     ASSETS
CURRENT ASSETS
<S>                                                                      <C>
   Cash                                                                  $ 12,724,234
   Accounts receivable, trade                                                 368,944
   Prepaid expenses                                                           579,974
                                                                         ------------
           Total current assets                                            13,673,152
                                                                         ------------

PROPERTY AND EQUIPMENT,  NET OF ACCUMULATED DEPRECIATION
  AND DEPLETION OF $610,899                                                15,341,271
                                                                         ------------

OTHER ASSETS
   Deposits                                                                    33,300
                                                                         ------------

                                                                         $ 29,047,723
                                                                         ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                      $    648,501
   Convertible debenture, affiliates, net of debt discount of $15, 844        592,350
   Accrued interest, affiliates                                                12,309
   Dividends payable                                                          756,155
   Accrued expenses                                                           388,017
   Accounts payable, affiliates                                                28,254
   Convertible debenture, net of debt discount of $349,673                  2,265,127
                                                                         ------------
           Total current liabilities                                        4,690,713
                                                                         ------------

LONG TERM LIABILITIES

   Asset retirement obligation                                                140,000
                                                                         ------------

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                  421,091
                                                                         ------------

STOCKHOLDERS' EQUITY
   Preferred stock, $.001 par value, 25,000,000 shares authorized:
       Series A Convertible, 100,000 shares authorized
       none issued and outstanding                                                 --
       Series B Convertible, 36,036 shares authorized
       28,490 issued and outstanding                                               28
       Series C Convertible, 230,000 shares authorized
       222,250 issued and outstanding                                             222
   Common stock, $.001 par value, 50,000,000 shares authorized,
         6,057,193 shares issued and outstanding                                6,057
   Additional paid in capital                                              34,983,107
   Accumulated (deficit)                                                  (11,193,495)
                                                                         ------------
                                                                           23,795,919
                                                                         ------------

                                                                         $ 29,047,723
                                                                         ============
</TABLE>

        See accompanying notes to the consolidated financial statements.
                                       F-1



<PAGE>

                            NEW FRONTIER ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           Years Ended
                                                     February 28,   February 28,
                                                        2007            2006
                                                     -----------    -----------
Operating revenues
   Oil and gas sales                                 $   238,385    $   144,853
   Gathering fees                                        122,796         14,599
                                                     -----------    -----------
                                                         361,181        159,452
                                                     -----------    -----------

Operating expenses
   Exploration costs, including dry holes                205,713        132,551
   Lease operating expenses                              642,253        668,788
   Cost of gas gathering                                   2,578          2,427
   General and administrative                          1,554,916        892,338
   General and administrative:
   Restricted stock award                                     --        234,000
   Issuance of common stock warrants                   1,381,417        478,542
   Depreciation, depletion and amortization              319,904        188,915
                                                     -----------    -----------
          Total operating expenses                     4,106,781      2,597,561
                                                     -----------    -----------

(Loss) from operations                                (3,745,600)    (2,438,109)
                                                     -----------    -----------

Other income (expense)
   Interest income                                        88,882          8,779
   Gain (loss) on sale of assets                          95,127             --
   Interest expense                                      (90,214)       (68,767)
   Debt issuance costs, non-cash                        (905,957)      (542,018)
                                                     -----------    -----------
          Other income (expense), net                   (812,162)      (602,006)
                                                     -----------    -----------

(Loss) before income taxes                            (4,557,761)    (3,040,116)
                                                     -----------    -----------

Income taxes
   Current                                                    --             --
   Deferred                                                   --             --
                                                     -----------    -----------
                                                              --             --
                                                     -----------    -----------

Minority interest in net (income) loss of
        consolidated subsidiary                          (16,008)        28,560
                                                     -----------    -----------

Net (loss)                                            (4,573,769)    (3,011,556)
Preferred stock dividends and distributions
   to minority interests                                (505,700)      (418,580)
                                                     -----------    -----------

Net (loss) attributable to common shareholders       $(5,079,469)   $(3,430,136)
                                                     ===========    ===========

Net (loss) per common share
   Basic and diluted                                 $     (0.92)   $     (0.94)
                                                     ===========    ===========

Weighted average shares outstanding
   Basic and diluted                                   5,526,142      3,667,947
                                                     ===========    ===========



        See accompanying notes to the consolidated financial statements.
                                       F-2

<PAGE>
<TABLE>
<CAPTION>

                            NEW FRONTIER ENERGY, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                                                      Series A Preferred    Series B Preferred    Series C Preferred
                                                        $.001 Par Value      $.001 Par Value       $.001 Par Value
                                                       Shares     Amount    Shares      Amount    Shares      Amount
                                                     ---------    -------  ----------   ------   --------   --------
<S>                                                     <C>       <C>       <C>         <C>      <C>        <C>
Balance February 28, 2005                               50,000    $    50   32,175.00   $  32          --   $     --

   Issuance of common stock pursuant
     to a stock award                                       --         --       --         --          --         --
   Issuance of common stock for services                    --         --       --         --          --         --
   Conversion of preferred stock to common stock            --         --   (1,517.75)     (1)         --         --
   Exercise of common stock warrants                        --         --       --         --          --         --
   Less Series B preferred stock issuance costs             --         --       --         --          --         --
   Issuance of common stock warrants                        --         --       --         --          --         --
   Issuance of common stock in connection with
   convertible debentures                                   --         --       --         --          --         --
   Warrants issued in connection with convertible
   debentures                                               --         --       --         --          --         --
   Preferred stock dividends                                --         --                  --          --         --
   Conversion of convertible debt to common stock           --         --       --         --          --         --
   Distribution from consolidated entity                    --         --       --         --          --         --
   Net (loss) for the year                                  --         --       --         --          --         --
                                                     ---------    -------  ----------   ------   --------   --------
Balance February 28, 2006                               50,000         50   30,657.25      31          --         --

   Issuance of common stock for services                    --         --       --         --          --         --
   Conversion of Series A Preferred Stock
   and accrued dividends to common stock               (50,000)       (50)      --         --          --         --
   Conversion of Series B Preferred to common stock         --         --   (2,167.25)     (3)         --         --
   Exercise Series B Common Stock warrants                  --         --       --         --          --         --
   Exercise of common stock warrants                        --         --       --         --          --         --
   Exercise of common stock options                         --         --       --         --          --         --
   Intrinsic value of convertible debt                      --         --       --         --          --         --
   Issuance  of common stock warrants                       --         --       --         --          --         --
   Conversion of convertible debt and interest
     to common stock                                        --         --       --         --          --         --
   Issuance of Series C Preferred Stock                     --         --       --         --     222,250        222
   Less Series C preferred stock issuance costs             --         --       --         --          --         --
   Timing differences due to subsidiary year end            --         --       --         --          --         --
   Preferred stock dividends                                --         --       --         --          --         --
   Distribution from consolidated entity (Note 1)           --         --       --         --          --         --
   Net (loss) for the year                                  --         --       --         --          --         --
                                                     ---------    -------  ----------   ------   --------   --------
Balance February 28, 2007                                   --    $    --   28,490.00   $  28     222,250   $    222
                                                     =========    =======  ==========   ======   ========   ========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                            NEW FRONTIER ENERGY, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   CONTINUED


                                                           Common Stock       Additional
                                                           $.001 Par Value     Paid-in     Accumulated
                                                       Shares         Amount   Capital      (Deficit)          Total
                                                      -----------    ------- ------------  ------------    ------------
<S>                                                   <C>           <C>     <C>           <C>             <C>
Balance February 28, 2005                              3,254,451     $ 3,254 $  7,252,076  $ (2,683,888)   $  4,571,524

   Issuance of common stock pursuant
     to a stock award                                    200,000         200      233,800            --         234,000
   Issuance of common stock for services                  33,502          33       49,709            --          49,742
   Conversion of preferred stock to common stock         233,500         233         (232)           --              --
   Exercise of common stock warrants                      84,639          85      116,907            --         116,992
   Less Series B preferred stock issuance costs               --          --      (11,127)           --         (11,127)
   Issuance of common stock warrants                          --          --      478,542            --         478,542
   Issuance of common stock in connection with
   convertible debentures                                170,000         170      236,130            --         236,300
   Warrants issued in connection with convertible
   debentures                                                 --          --    1,509,798            --       1,509,798
   Preferred stock dividends                                  --          --           --      (418,580)       (418,580)
   Conversion of convertible debt to common stock        102,727         103      123,167            --         123,270
   Distribution from consolidated entity                      --          --        5,672            --           5,672
   Net (loss) for the year                                    --          --           --    (3,011,556)     (3,011,556)
                                                      -----------    -------  -----------  ------------    ------------
Balance February 28, 2006                              4,078,819       4,078    9,994,442    (6,114,024)      3,884,577

   Issuance of common stock for services                   4,000           4        8,196            --           8,200
   Conversion of Series A Preferred Stock
   and accrued dividends to common stock                 395,806         396        6,928            --           7,274
   Conversion of Series B Preferred to common stock      333,423         334         (331)           --              --
   Exercise Series B Common Stock warrants             1,159,914       1,160    1,599,520            --       1,600,680
   Exercise of common stock warrants                      37,500          37       56,213            --          56,250
   Exercise of common stock options                       28,667          29       21,471            --          21,500
   Intrinsic value of convertible debt                        --          --       33,451            --          33,451
   Issuance  of common stock warrants                         --          --    1,381,417            --       1,381,417
   Conversion of convertible debt and interest
     to common stock                                      19,064          19       22,856            --          22,875
   Issuance of Series C Preferred Stock                       --          --   22,224,778            --      22,225,000
   Less Series C preferred stock issuance costs               --          --     (401,326)           --        (401,326)
   Timing differences due to subsidiary year end              --          --       35,492            --          35,492
   Preferred stock dividends                                  --          --           --      (461,585)       (461,585)
   Distribution from consolidated entity (Note 1)             --          --           --       (44,117)        (44,117)
   Net (loss) for the year                                    --          --           --    (4,573,769)     (4,573,769)
                                                      -----------    -------  -----------  ------------    ------------
Balance February 28, 2007                              6,057,193     $ 6,057  $34,983,107  $(11,193,495)   $ 23,795,919
                                                      ===========     ======  ===========  ============    ============
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                      F-3

<PAGE>
<TABLE>
<CAPTION>


                            NEW FRONTIER ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                         Years Ended
                                                                                 February 28,    February 28,
                                                                                     2007            2006
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss)                                                                    $ (4,573,769)   $ (3,011,556)
   Adjustments to reconcile net (loss) to net cash
      (used in) operating activities:
         Depreciation, depletion and amortization                                     319,904         188,915
         Debt issuance costs, noncash                                                 905,957         542,018
         Minority interest in net income  (loss) of consolidated subsidiary            16,007         (28,560)
         Issuance of restricted stock award                                                --         234,000
         Issuance of common stock for services                                          8,200          49,743
         Interest on convertible debenture                                            (15,838)         41,592
         Issuance of common stock warrant to consultant                               350,317         478,542
         Amortization of stock option expenses                                      1,031,100              --
         (Increase) decrease in assets:
            Accounts receivable, trade                                               (314,889)        (44,538)
            Prepaid expenses                                                         (551,663)        (22,247)
         Increase (decrease) in liabilities:
            Accounts payable                                                          (90,550)        167,038
            Accrued expenses                                                          395,159         (36,285)
                                                                                 ------------    ------------

      Net cash (used in) operating activities                                      (2,520,065)     (1,441,338)
                                                                                 ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Increase in other assets                                                           (33,300)            420
   Purchase of property and equipment                                              (8,923,915)     (3,377,245)
                                                                                 ------------    ------------

      Net cash (used in) investing activities                                      (8,957,215)     (3,376,825)
                                                                                 ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Payment of notes payable                                                                --        (500,027)
   Proceeds from notes payable                                                        600,000              --
   Proceeds from common stock warrant conversions                                   1,678,430         116,992
   Proceeds from convertible debt issue                                                    --       2,760,000
   Proceeds from issuance of preferred stock                                       21,625,000              --
   Cost of issuance of equity for cash                                               (401,326)        (37,511)
   Preferred stock dividends paid                                                     (37,983)       (102,917)
   Timing differences due to subsidiary year end                                       35,492           5,672
   Minority interest in subsidiary                                                         --       1,022,232
   Distributions to minority interest holders in consolidated subsidiary              (44,117)             --
                                                                                 ------------    ------------

      Net cash provided by financing activities                                    23,455,496       3,264,441
                                                                                 ------------    ------------

INCREASE (DECREASE) IN CASH                                                        11,978,216      (1,553,722)

BEGINNING BALANCE                                                                     746,018       2,299,740
                                                                                 ------------    ------------

ENDING BALANCE                                                                   $ 12,724,234    $    746,018
                                                                                 ============    ============

Cash paid for income taxes                                                       $         --    $         --
                                                                                 ============    ============
Cash paid for interest                                                           $         --    $     34,466
                                                                                 ============    ============

Supplemental schedule of non-cash investing and financing activities:

   Series B preferred stock converted to common stock                            $        333    $        224
   Seroes A preferred stock dividends converted to common stock                  $      7,274    $         --
   Intrinsic value of conversion feature of convertible debt                     $     33,451    $         --
   Conversion of convertible debentures to common stock                          $     22,875    $    123,270
   Reduction of property and equipment arising from a decrease in accounts
      payable for oil and gas leases that were not issued                        $         --    $     48,813
   Issuance of common stock warrants in connection with convertible debentures   $         --    $  1,509,798
   Common stock issued with convertible debentures                               $         --    $    236,300
   Asset retirement obligation                                                   $     77,300    $     62,700
   Convertible debt conversion to Series C Preferred stock                       $    600,000    $         --
   Purchase of interest in subsidiary with convertible debt                      $    608,194    $         --

</TABLE>

        See accompanying notes to the consolidated financial statements.
                                       F-4


<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION
   -------------------------------------------------------

New Frontier Energy, Inc. (or the "Company") was incorporated as Storage
Finders.com under the laws of Colorado on January 7, 2000. In March 2001 the
Company changed its name to New Frontier Energy, Inc. The Company is an oil and
gas exploration company operating primarily in Colorado and Wyoming.

Effective February 6, 2002, Wyoming Oil & Minerals, Inc. ("Wyoming") completed a
share exchange with the Company. Under the terms of the share exchange, the
shareholders of the Company surrendered their shares in exchange for shares of
Wyoming. The Company's shareholders became shareholders in Wyoming, and the
Company became a wholly owned subsidiary of Wyoming until June 30, 2003.

On June 30, 2003, Wyoming's Board of Directors approved a dividend in the form
of the common stock of its subsidiary, New Frontier. The dividend was paid in
the form of one share of New Frontier common stock for every four shares of
common stock of Wyoming. Shareholders of record of Wyoming as of the close of
business on June 30, 2003, the record date, were issued a certificate
representing one share of New Frontier for each four shares of Wyoming they held
at that date.

During the year ended February 28, 2006, the Company invested $1,600,000 in
limited partnership interests in Slater Dome Gathering, LLLP ("SDG"). SDG was
organized to construct a natural gas gathering line from the Company's Slater
Dome/Coal Creek Draw Prospect, located in northwest Colorado and southwest
Wyoming (the "Slater Dome Prospect") that transports the gas from the Slater
Dome Prospect to the Questar transmission line at Baggs, Wyoming. The gathering
line was completed on June 3, 2005. The Company began selling gas in June 2005.
SDG, a calendar year-end company, was formed on September 1, 2004, and was
inactive until it received its initial funding on May 18, 2005.

PRINCIPLES OF CONSOLIDATION
---------------------------

The consolidated financial statements include the accounts of the Company and
those of SDG. All significant inter-company accounts and transactions have been
eliminated.

In December 2003, the Financial Accounting Standards Board issued FASB
Interpretation No. 46-R, "Consolidation of Variable Interest Entities." FIN No.
46-R, which modifies certain provisions and effective dates of FIN No. 46, sets
forth the criteria to be used in determining whether an investment in a variable
interest entity should be consolidated. These provisions are based on the
general premise that if a company controls another entity through interests
other than voting interests, that company should consolidate the controlled
entity. The Company currently consolidates SDG under the provisions of FIN No.
46-R (see Note 2).

SDG has a calendar year end of December 31, 2006, which is consolidated with the
Company effective February 28, 2007. Subsequent to December 31, 2006 and prior
to February 28, 2007, SDG made a net cash distribution to the Company in the
amount of $35,492. This timing difference is recorded as additional paid-in
capital in the accompanying financial statements.

REVENUE RECOGNITION
-------------------

The Company recognizes oil and gas revenue from its interests in producing wells
as oil and gas is produced and sold from those wells. The Company recognizes gas
gathering revenue at the time when the service is rendered.

ACCOUNTS RECEIVABLE
-------------------

The Company uses the direct write-off method for bad debts; this method expenses
uncollectible accounts in the year they become uncollectible. Any difference
between this method and the allowance method is not material.

CASH AND CASH EQUIVALENTS
-------------------------

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

NET INCOME (LOSS) PER COMMON SHARE
----------------------------------

The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." Basic
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares outstanding for the period. Diluted
earnings (loss) per share is calculated by dividing net income (loss) by the
weighted average number of common shares and dilutive common stock equivalents
outstanding. During the periods when they are anti-dilutive, common stock
equivalents, if any, are not considered in the computation.


                                      F-5
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

USE OF ESTIMATES
----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

CONCENTRATION OF CREDIT RISK
----------------------------

Financial instruments that potentially subject the Company to concentrations of
credit risk consist primarily of cash equivalents. The Company places its cash
equivalents with a high credit quality financial institution. The Company
periodically maintains cash balances at a commercial bank in excess of the
Federal Deposit Insurance Corporation insurance limit of $100,000. At February
28, 2007, the Company's uninsured cash balance was $623,832.

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------

Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of February 28, 2007. The
respective carrying values of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
accounts receivable, accounts payable, accrued expenses and convertible
debentures. Fair values were assumed to approximate carrying values for these
financial instruments because they are short term in nature, their carrying
amounts approximate fair values, or they are receivable or payable on demand.

ACCOUNTING FOR OIL AND GAS ACTIVITIES
-------------------------------------

The Company uses the successful efforts method of accounting for oil and gas
producing activities. Under this method, acquisition costs for proved and
unproved properties are capitalized when incurred. Exploration costs, including
geological and geophysical costs, the costs of carrying and retaining unproved
properties, and exploratory dry hole drilling costs are expensed. Development
costs, including the costs to drill and equip development wells, and successful
exploratory drilling costs that locate proved reserves are capitalized. In
addition, the Company limits the total amount of unamortized capitalized costs
to the value of future net revenues, based on current prices and costs.

Unproved oil and gas properties are periodically assessed for impairment of
value, and a loss is recognized at the time of impairment by providing an
impairment allowance together with a charge to operations.

Revenues from the sale of oil and gas production are recognized when title
passes, net of royalties.

DEPRECIATION AND DEPLETION
--------------------------

Depreciation and depletion of the capitalized costs for producing oil and gas
properties are provided by the unit-of-production method based on proved oil and
gas reserves. Uncompleted wells and equipment are reflected at the Company's
incurred cost and represent costs of drilling and quipping oil and gas wells
that are not completed as of the balance sheet date. The costs of unproved
leases, which become productive, are reclassified to proved properties when
proved reserves are discovered in the property. Unproved oil and gas interests
are carried at original acquisition costs, including filing and title fees.

OTHER PROPERTY AND EQUIPMENT
----------------------------

Other property and equipment consists of furniture, fixtures and equipment and
are recorded at cost and depreciated using the straight-line method over the
estimated useful lives of five to seven years.

The gas gathering line is recorded at cost and is being depreciated on a
straight-line basis over an estimated 20 year useful life. The useful life may
be limited to the useful life of current and future recoverable reserves
serviced by the pipeline.

Maintenance and repairs are charged to expense as incurred.

IMPAIRMENT OF LONG LIVED ASSETS
-------------------------------

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
requires that an asset be evaluated for impairment when the carrying amount of
an asset exceeds the sum of the undiscounted estimated future cash flows of the
asset. In accordance with the provisions of SFAS No. 144, the Company reviews
the carrying values of its long-lived assets whenever events or changes in
circumstances indicate that such carrying values may not be recoverable. If,
upon review, the sum of the undiscounted pretax cash flows is less than the
carrying value of the asset group, the carrying value is written down to
estimated fair value. Individual assets are grouped for impairment purposes at
the lowest level for which there are identifiable cash flows that are largely
independent of the cash flows of other groups of assets, generally on a
field-by-field basis. The fair value of impaired assets is determined based on
quoted market prices in active markets, if available, or upon the present values
of expected future cash flows using discount rates commensurate with the risks
involved in the asset group. The long-lived assets of the Company, which are
subject to evaluation, consist primarily of oil and gas properties. The
Company's evaluation has not resulted in a charge to operations for impairment
in either fiscal 2007 or 2006.


                                      F-6
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

INCOME TAXES
------------

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the liability method of accounting
for income taxes. The liability method requires the recognition of deferred tax
assets and liabilities for future tax consequences of temporary differences
between the financial statement basis and the tax basis of assets and
liabilities.

STOCK-BASED COMPENSATION
------------------------

The Company accounted for stock-based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation." This standard required the Company to adopt "fair-value" method
with respect to stock-based compensation. The Company accounted for employee
stock options under the "modified-prospective" method, and furnished the
proforma disclosures required by SFAS No. 123 for periods prior to the adoption
of the "modified-prospective method."

In December 2004, FASB issued SFAS No. 123(R), "Share-based Payment" ("SFAS No.
123R") and requires companies to measure all stock compensation awards using a
fair value method and recognize the related compensation cost in its financial
statements. This statement replaces SFAS No. 123 "Accounting for Stock Based
Compensation," and supersedes ABP Opinion No. 25, "Accounting for Stock Issued
to Employees." Beginning with the Company's quarterly period that began on March
1, 2006, the Company adopted the provisions of SFAS No. 123R and is required to
expense the fair value of employee stock options and similar awards in the
financial statements. The Company had no compensation cost relating to unvested
portion of awards granted prior to the date of adoption to recognize at the time
of adoption.

MAJOR CUSTOMERS
---------------

Sales to one major unaffiliated customer for years ended February 28, 2007 and
2006, were $198,872 (83 % of sales) and $108,193 (75% of sales), respectively.
Accounts receivable from one major unaffiliated custome for the years ended
February 28, 2007 and 2006 were $19,783 (5% of accounts receivable) and $44,074
(82% of accounts receivable) respectively. The Company, however, believes that
it is not dependent upon this customer due to the nature, of its product, and
the gas sales contract provides that the Company may terminate the contract with
thirty days notice.

DEBT WITH DETACHABLE WARRANT AND/OR BENEFICIAL CONVERSION FEATURE
-----------------------------------------------------------------

The Company accounts for the issuance of detachable stock purchase warrants in
accordance with Accounting Principles Board Opinion No. 14 ("APB No. 14"),
whereby the fair value of the debt and the detachable warrants are separately
measured and the proceeds from the debt are allocated on a pro-rata basis to
both the debt and the detachable warrants. The resulting discount from the fair
value of the debt allocated to the warrants, which is accounted for as paid-in
capital, is amortized over the estimated life of the debt.

In accordance with the provisions of Emerging Issues Task Force ("EITF") Issue
No. 98-5 and EITF No. 00-27, a portion of the proceeds received are allocated to
any embedded beneficial conversion feature, based on the difference between the
effective conversion price of the proceeds allocated to the convertible debt and
the fair value of the underlying common stock on the date the debt is issued. In
addition, the detachable stock purchase warrants proceeds are first allocated to
the stock purchase warrants and the debt, and then the resulting debt proceeds
are allocated between the beneficial conversion feature, which is accounted for
as paid-in capital, and the initial carrying amount of the debt. The discount
resulting from the beneficial conversion feature is amortized over the estimated
life of the debt.

ASSET RETIREMENT OBLIGATIONS
----------------------------

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition,
construction, development, and normal use of the asset. The Company's asset
retirement obligations relate primarily to the retirement of oil and gas
properties and related production facilities, lines, and other equipment used in
the field operations, together with the gas gathering pipeline. SFAS No. 143
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred, if a reasonable estimate of
fair value can be made. The fair value of the liability is added to the carrying
amount of the associated asset. This additional carrying amount is then
depreciated over the life of the asset. The liability increases due to the
passage of time based on the time value of money until the obligation is
settled.

                                      F-7
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


The implementation of SFAS No. 143 during fiscal 2007 resulted in an increase of
$77,300 in oil and gas properties reflected in the present value of the future
asset retirement obligation, and an offsetting increase in liabilities
represents the establishment of an asset retirement obligation liability.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

In September 2006, The SEC issued Staff Accounting Bulletin no. 108 ("SAB 108")
to address diversity in practice in quantifying financial statement
misstatements. SAB 108 requires registrants to quantify errors using both a
balance sheet and an income statement approach and to evaluate whether either
approach results in quantifying a misstatement that, when all relevant
quantitative and qualitative factors are considered is material. SAB 108 is
effective for fiscal years ending after November 15, 2006, allowing a one-time
transitional cumulative effect adjustment to retained earnings as of March 1,
2006 for errors that were not previously deemed material, but are material under
the guidance in SAB 108. The Company has applied the guidance in SAB 108 and
there are no material effects on the Company's financial position, results of
operations or cash flows.

In September 2006. the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 157 ("SFAS 157"). The Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles ("GAAP"), and expands disclosures about
fair value measurements. This Statement is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. The adoption of SFAS 157 is not expected to have a
material effect on the Company's financial position, results of operations or
cash flows.

The FASB has also issued SFAS No.. 158, "Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 123(R)", but it will not have any relationship to the
operations of the Company at this time.

In July 2006, the FASB released FASB Interpretation No. 48--Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement No 109 ("FIN
48"). Fin 48 clarifies the accounting and reporting for uncertainties in income
taxes recognized in an enterprise's financial statements in accordance with
Statement of Financial Accounting Standards No 109--Accounting for Income Taxes
("SFAS 109") and prescribes a recognition threshold and measurement attribute
for financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 is effective for fiscal years
beginning after December 15, 2006 with the impact of adoption to be reported as
a cumulative effect of an accounting change. The adoption of FIN 48 is not
expected to have a material effect on the Company's financial position, results
of operations or cash flows.

RECLASSIFICATIONS
-----------------

Certain amounts reported in the Company's financial statements for the year
ended February 28, 2006, may have been reclassified to conform to the current
year presentation.

2. SLATER DOME GATHERING, LLLP
   ---------------------------

At February 28, 2006, the Company owned 59.972% of the Class A limited
partnership interests and, accordingly, 53.97% of SDG before payout. Effective
May 10, 2006, New Frontier Energy, Inc. (the "Corporation") entered into a
Purchase and Sale Agreement (the "Acquisition") with Natural Resource Group
Gathering, LLC, whereby the Corporation increased its investment in Slater Dome
Gathering, LLLP ("SDG") by acquiring an additional 12.16 Class A limited
partnership interests, in exchange for a subordinated convertible debenture in
the amount of $608,194 (the "Debenture"). The Debenture bears interest at a rate
of 2.5% per annum and is due January 1, 2008. The Debenture and unpaid interest
is convertible into common shares at a conversion price of $1.33 per share. The
Debenture originally provided the holder the right to convert into shares of the
Company's Common Stock at an exercise price of $2.00, which was adjusted to
$1.33 on January 16, 2007 pursuant to anti-dilution rights. Following the
acquisition of the 12.16 Class A limited partnership interests the Corporation
owns 82.76% of the limited partnership interests in SDG. The Corporation will
receive 74.48% of SDG cash distributions until the limited partners have
received cash distributions equal to their initial capital contributions and
62.07% of cash distributions thereafter.


                                      F-8
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

SDG is considered a variable-interest entity under FIN No. 46R and has been
consolidated effective March 31, 2005. The creditors of SDG do not have recourse
to the general credit of the Company.

The Debenture has customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.33 per share, and otherwise in connection with forward or
reverse stock splits, stock dividends, recapitalizations, and the like. The
anti-dilution provisions shall not apply to employee stock options and shares
issued in connection with certain mergers and acquisitions.

As a holder of SDG's Class A limited partnership interests, the Corporation
executed SDG's limited liability limited partnership agreement (the "Partnership
Agreement"). A copy of the Partnership Agreement was filed with the Commission
on Form 8-K on May 20, 2005, as Exhibit 10.1. The Partnership Agreement provides
that distributions will be allocated (i) first, to the General Partner in the
amount of the Out-of-Pocket Costs (as defined in the Partnership Agreement) to
reimburse the General Partner for such costs; (ii) second, 90% shall be
distributed to the Limited Partners of SDG (pro rata in accordance with their
respective Percentage Interests), as defined in the Partnership Agreement and
10% shall be distributed to the General Partner until such time as the
Unreturned Capital (as defined in Partnership Agreement") of all of the Limited
Partners is reduced to zero; and (iii) thereafter, 75% to the Limited Partners
(pro rata in accordance with their respective Percentage Interests) and 25% to
the General Partner. Distributions shall be distributed at such time or times as
the General Partner shall determine in its sole discretion. NRGG has a 10% and
25% carried interest before and after payout respectively. NRGG will receive a
project management fee of $200,000 and will receive an operating management fee
of 1% of the invested capital for the first 12 months the pipeline is in
operation and 2% of gross receipts thereafter. Further, the Company, along with
the other working interest owners at the property located at the Slater Dome
Prospect, have agreed to pay SDG a fee of $0.50 per million British Thermal
Units ("MMBtu") of gas transported through the line until the costs of the
gathering pipeline are recovered and $0.25 thereafter and to dedicate their gas
to the gathering pipeline. The Company's president is a 50% equity owner of
NRGG, the General Partner in SDG.

The producers at the Slater Dome Prospect have entered into a ten year agreement
with SDG whereby each producer agrees to deliver a minimum daily quantity
("MDQ") of gas during the first five years following the date the line starts
transporting gas. The following table summarizes the MDQ requirements:

                              Minimum Producers' Aggregate MDQ/MMBtu
        Year                                Quantities
          1                                    1,500
          2                                    2,000
          3                                    4,000
          5                                    5,000
          6                                    6,000
          7                                    7,000
          8                                    8,000
          9                                    9,000
         10                                   10,000


The producers have agreed to guarantee two-thirds of the constructions costs
amounting to $2,609,841 through producers' payment of gathering fees. The fees
may be increased to cover annual calculations of shortfalls from the MDQ; the
fee may be increased at the end of each of the first four years beginning June
3, 2005. If the total gathering revenue for the preceding year is less than
two-thirds of the construction costs divided by five, SDG may increase the
gathering fee for the year immediately following the year in which the shortfall
occurs by the dollar amount per MMBtu necessary to make up the monetary
equivalent of the annual shortfall. In the event the total gathering revenue for
the proceeding year is greater than two-thirds of the construction costs divided
by five, SDG will credit such excess to the following year's comparison.

3. PROPERTY AND EQUIPMENT
   ----------------------

Property and equipment consists of the following:

                                      F-9
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007



     Natural gas gathering line                    $  2,609,841
     Proved oil and gas properties                    5,402,888
     Unproved oil and gas properties                  7,809,204
     Office furniture and equipment                     130,237
                                                   ------------
                                                     15,952,970
     Less accumulated depreciation and depletion       (610,899)
                                                   ------------

     Net property and equipment                    $ 15,341,271
                                                   ============

Effective November 3, 2006, the Company entered into a Purchase and Sale
Agreement (the "Cedar Ridge Agreement") with Cedar Ridge, LLC. ("Cedar Ridge"),
whereby the Company acquired Cedar Ridge's 36.66667% working interest (29.33336%
net revenue interest) in eleven gas and 2 water disposal wells together with
33,949 net acres in the Slater Dome Field, which was closed effective December
14, 2006. The purchase price for Cedar Ridge's interest was $8,000,000. In the
transaction, The Company acquiree an estimated proved reserves of 8,214,000 MCF
of natural gas, according to an independent reservoir engineering firm. After
the transaction was completed the Company owned a 66.66667% working interest in
the Slater Dome field and became the operator.

Total depreciation and depletion of property and equipment amounted to $319,904
and $188,915 for the years ended February 28, 2007, and February 28, 2006,
respectively.

4. CONVERTIBLE DEBENTURES
   ----------------------

On July 22, 2005, the Company closed on the sale (the "Offering") to accredited
investors of 92 investment units (the "Units") at a purchase price of $30,000
per Unit for gross and net proceeds of $2,760,000, of which $145,200 have been
converted into shares of common stock. Each Unit consists of: (i) $30,000 of
2.5% two-year Convertible Debentures, convertible into 25,000 shares of Common
Stock, $0.001 par value common stock (the "Common Stock") of the Company at the
rate of $1.20 per share, the market value of the shares at the date the Company
entered into the Placement Agent Agreement described below (the "Debentures")
and (ii) a three-year warrant to purchase 12,500 shares of New Frontier Energy
Common Stock at an exercise price of $2.00 per share (the "Warrants"). The
original Debenture conversion rate of $1.20 was adjusted to $1.08 and the
original Warrant exercise price was adjusted from $2.00 to $1.33 on January 16,
2007 along with an increase in the number of warrant shares to 13,861 per unit
pursuant to anti-dilution rights.

The interest on the Debentures accrues daily and compounds quarterly and is
payable upon the earlier of conversion or maturity of the Debentures (or portion
thereof), in cash or in stock, at the Company's option. If the Company elects to
make payment in stock, such shares ("Interest Shares") shall be payable at the
rate of 1 Interest Share per $1.08 in interest due. The Warrants are exercisable
at $1.33 per Share of Common Stock and have a call feature provided that the
Company's Common Stock has been trading at not less than $4.50 per share for
twenty consecutive trading days and the underlying shares are subject to an
effective registration statement that has been continuously effective for a
minimum of 30 days.

The Debentures have customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.08 per share, and otherwise in connection with forward or
reverse stock splits, stock dividends, recapitalizations, and the like. The
anti-dilution provisions shall not apply to employee stock options and shares
issued in connection with certain mergers and acquisitions.

Effective June 28, 2005, the Company entered into a Placement Agent Agreement
with Westminster Securities Corporation ("Westminster" or the "Placement
Agent"), pursuant to which Westminster would act as the exclusive placement
agent for the Company with respect to the Offering. For acting as Placement
Agent, Westminster or its designees received 170,000 shares of Common Stock, or
8% of the number of Shares of Common Stock underlying the Debentures sold by
Westminster (the "Placement Agent Shares"). The Placement Agent Shares were
valued at $236,300, based on an average closing price of $1.39 during the period
of services. Further, Westminster or its designees received Warrants to purchase
10% of (i) the number of Shares of Common Stock underlying the Debentures sold
by Westminster (assuming the initial conversion price of $1.20) and (ii) the
number of shares of Common Stock underlying the Warrants issued (assuming the
initial exercise price of $2.00).

The Warrants were valued using the Black-Scholes option pricing model based on
the market price of the Common Stock at the commitment date. The Warrant
valuation of $1,509,798 has been allocated to additional paid-in capital. After
allocating value to the Warrants, the Company used the intrinsic value method to
determine that all of the remaining proceeds should be allocated to the embedded
beneficial conversion feature which amounted to $268,358. The total cost
associated with the offering in the amount of $1,778,156 is being amortized over
24 months commencing July 22, 2006. Amortization expense amounted to $888,350
and $540,133 for the years ended February 28, 2007, and February 28, 2006
respectively, and is included in Debt issuance costs, non-cash in the
accompanying financial statements.


                                      F-10
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007



     Convertible debt                     $ 2,614,800
     Debt discount, net of amortization      (349,673)
                                          -----------
                                          $ 2,265,127
                                          ===========

On May 10, 2006, the Company issued convertible subordinated debt in the amount
of $608,194. The debenture bears 2.5% interest and is due January 1, 2008,
convertible into 304,097 shares of the $0.001 par value common stock (the
"Common Stock") of New Frontier Energy at the rate of $2.00 per share. The
market value of the shares in the date the Company entered into the Agreement
was $2.11 per share. The debenture is subordinated to payment of principal and
interest to The Company's outstanding Convertible Debentures due July 22, 2007.
The Debenture conversion rate of $2.00 originally was adjusted to $1.33 on
January 16, 2007 pursuant to anti-dilution rights.

The interest on the Debentures accrues daily and compounds quarterly and is
payable upon the earlier of conversion or maturity of the Debentures (or portion
thereof), in cash or in stock, at the Company's option. If the Company elects to
make payment in stock, such shares ("Interest Shares") shall be payable at the
rate of 1 Interest Share per $1.33 in interest due.

The Debenture has customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.33 per share, and otherwise in connection with forward or
reverse stock splits, stock dividends, recapitalizations, and the like. The
anti-dilution provisions shall not apply to employee stock options and shares
issued in connection with certain mergers and acquisitions.

Company used the intrinsic value method to determine allocation to the embedded
beneficial conversion feature. As such, $33,451 was credited to additional
paid-in capital. The total allocation of $33,451 will be amortized over 19
months. Amortization expense during year ended February 28, 2007 was $17,607,
and is included in Debt issuance costs, non-cash in the accompanying financial
statements.

At February 28, 2007 the balance of the convertible debt, affiliates is as
follows:


     Convertible debt, affiliates         $ 608,194
     Debt discount, net of amortization     (15,844)
                                          ---------
                                          $ 592,350
                                          =========

In March 2007, the Company repaid $306,072 of the convertible debenture,
affiliates.


5. ASSET RETIREMENT OBLIGATIONS
   ----------------------------

The implementation of SFAS No. 143 during fiscal 2007 resulted in an increase of
$77,300 in oil and gas properties reflected in the present value of the future
asset retirement obligation, and an offsetting increase in liabilities
represents the establishment of an asset retirement obligation liability.

A reconciliation of the Company's asset retirement obligation liability as of
February 28, 2007 and 2006 is as follows:

                                                 February 28,
                                               2007       2006
                                             --------   --------
     Beginning asset retirement obligation   $ 62,700   $     --
     Liabilities incurred                      77,300     62,700
     Changes in estimates                          --         --
     Accretion expense                             --         --
                                             --------   --------
     Ending asset retirement obligation      $140,000   $ 62,700
                                             ========   ========

                                      F-11
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

6. INCOME TAXES
   ------------

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes," which requires, use of the liability method. SFAS No. 109 provides that
deferred tax assets and liabilities are recorded based on the differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes, referred to as temporary differences. Deferred tax
assets and liabilities at the end of each period are determined using the
currently-enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The Company's estimated effective tax rate of 38.95% is offset by a reserve due
to the uncertainty regarding the realization of the deferred tax asset. It is
more likely than not that the net tax deferred benefits will not be realized. A
reconciliation of the Company's asset retirement obligation liability is as
follows:

The provision (benefit) for income taxes consists of the following components:

                                       February 28,
                                ---------------------------
                                     2007           2006
                                ------------   ------------
     Current                    $         --   $        --
     Deferred                   $         --   $        --

The tax effects of temporary differences and carry forwards that give rise to
significant portions of deferred tax assets and liabilities consist of the
following:

                                                  February 28,
                                          --------------------------
                                              2007           2006
                                          -----------    -----------
     Deferred tax assets:
      Net operating loss carry forwards   $ 3,514,300      2,605,400
     Deferred tax liabilities:
       Property and equipment                (707,100)      (656,800)
                                          -----------    -----------
                                            2,807,200      1,948,600
     Less valuation allowance              (2,807,200)    (1,948,600)
                                          -----------    -----------
                                          $        --    $        --
                                          ===========    ===========


A reconciliation of the statutory U.S. federal rate and effective rates is as
follows:

     Statutory U.S. federal rate           34.00%
     State income taxes                     4.95%
                                          -------
     Total                                 38.95%
                                          =======

The Company's provision for income taxes differs from applying the statutory
United States federal income tax rate to income before income taxes. The primary
differences result from net operating losses.

The Company has a consolidated tax loss carry forward of $9,022,500, which
expires through 2027. However, because of the Section 382 limitation, the
portion of the Company's total net operating loss carry forward which may be
utilized through expiration is not currently known, but it is more likely than
not that the tax loss carry forwards will not be utilized before expiration.

7. STOCKHOLDERS' EQUITY
   --------------------

SERIES A CONVERTIBLE PREFERRED STOCK
------------------------------------

On March 1, 2004, we issued 50,000 shares of Series A Preferred Stock. Effective
November 8, 2004, the Series A Preferred Stock Certificate of Designation was
amended to provide that the Series A Preferred Stock would rank in pari passu to
the Series B Preferred Stock for payment of dividends, redemption, and
liquidation. The Series A Preferred Stock paid a cumulative, preferential cash
dividend at the rate of 18% of the $5.00 issue price per year, payable monthly
in arrears. Pursuant to the terms of the Series A Preferred Stock, the holders
of the Series A Preferred Stock could convert any or all of the shares into
shares of our Common Stock at the rate of $0.65 per share and unless previously
concerted, all of the Series A Preferred Stock will automatically convert into
Common Stock on the two-year anniversary of the issue date, or March 1, 2006. On
March 1, 2006, the Series A Preferred Stock automatically converted into 384,615
shares of the Company's Common Stock.


                                      F-12
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

During the year ended February 28, 2007, the holder converted the accrued
dividends on the Series A Preferred Stock in the amount of $7,274 to 11,191
shares of Common Stock.

As of February 28, 2007, there are no shares of the Series A Preferred Stock
outstanding.

SERIES B CONVERTIBLE PREFERRED STOCK
------------------------------------

Effective November 1, 2004, the board of directors of the Company approved an
amendment to the Company's Articles of Incorporation to provide for the issuance
of up to 36,036 shares of Series B 12% Cumulative Convertible Preferred Stock,
$0.001 par value (the "Series B Preferred Stock"). The issue price of the Series
B Preferred Stock is $100.00 per share (the "Series B Issue Price"). The Series
B Preferred Stock ranks in pari passu with the Series A Preferred for payment of
dividends, redemption, and liquidation. Each share of Series B Preferred Stock
shall be convertible, at the option of the Holder, into that number of shares of
Common Stock determined by dividing the Series B Issue Price of the aggregate
number of shares of Series B Preferred Stock being converted plus any accrued
and unpaid dividends by $.65 per share, unless otherwise adjusted. The Series B
Preferred Stock pays a cumulative, preferential cash dividend equal to 12% of
the Series B Issue Price per year and is payable quarterly in arrears. The
dividend is payable out of funds legally available for that purpose and will
accumulate during any period when it is not paid.

During the year ended February 28, 2005, the Company issued 32,175 shares of
Series B Preferred Stock in connection with a private placement, realizing gross
proceeds of $3,217,500 offset by offering expenses in the amount of $456,524
resulting in proceeds to the Company of $2,760,976.

The Series B Preferred Stock has customary weighted-average anti-dilution rights
with respect to any subsequent issuance of Common Stock or Common Stock
equivalents at a price less than $0.65 per share, and otherwise in connection
with forward or reverse stock splits, stock dividends, recapitalizations, and
the like. The anti-dilution provisions shall not apply to employee stock options
and shares issued in connection with certain mergers and acquisitions.

Except as otherwise provided in the Series B Preferred Stock Certificate of
Designation with respect to matters that adversely affect the rights of the
holders of the Series B Preferred Stock, and as otherwise required by law, the
Series B Preferred Stock has no voting rights.

Upon any liquidation, dissolution, or winding-up of the Company, whether
voluntary or involuntary, the holders of the Series B Preferred Stock shall be
entitled to receive out of the assets of the Company, whether such assets are
capital or surplus, for each share of Series B Preferred Stock an amount equal
to the stated value ($100.00) of the Series B Preferred Stock per share plus any
accrued and unpaid dividends thereon and any other fees or liquidated damages
owing. If the assets of the Company are insufficient to pay such amounts in
full, then the entire assets to be distributed to the holders of the Series B
Preferred Stock shall be distributed among the holders of the Series B Preferred
Stock and the holders of the Series A Preferred Stock ratably in accordance with
the respective amounts that would be payable on such shares if all amounts
payable thereon were paid in full.

On or after February 1, 2007, and in the event the closing bid price of the
Company's Common Stock has closed for 20 consecutive trading days at a price not
less than $1.30 (subject to adjustment), the Company may deliver notice to
holders of the Series B Preferred Stock of the Company's irrevocable election to
redeem all or part of the Series B Preferred Stock. The redemption price is to
be an amount equal to the stated value ($100.00) of the Series B Preferred Stock
per share plus any accrued and unpaid dividends thereon and any other fees or
liquidated damages owing. The Company must provide 30 days' written notice to
the holders of the Series B Preferred Stock.

As of February 28, 2007, there are 28,490 shares of Series B Preferred Stock
issued and outstanding.

During the year ended February 28, 2007, the Company paid cash dividends on the
Series B Preferred Stock in the amount of $37,983. The Company recorded accrued
dividends of $357,741 as of and for the year ended February 28, 2007. The
Company reported dividends of $ 377,402 on the Series B Preferred Stock for the
year ended February 28, 2006.

Series C Convertible Preferred Stock
------------------------------------

Effective November 22, 2006, the board of directors of New Frontier Energy, Inc.
approved an amendment to the Company's Articles of Incorporation to provide for
the issuance of up to 230,000 shares of Series C 2.5% Cumulative Convertible
Preferred Stock par value $0.001 (the "Series C Preferred Stock")


                                      F-13
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

During the year ended February 28, 2007 the Company issued an aggregate of
444.50 investment units (the "Units"). Each Unit consists of: (i) $50,000 of
2.5% Series C Cumulative Convertible Preferred Stock, par value $0.001, $100
stated value, (the "Series C Preferred"), convertible into 47,619 shares of the
Company's $0.001 par value common stock (the "Common Stock") at a price of $1.05
per share (the "Conversion Price"); (ii) a three-year warrant to purchase 47,619
shares of Common Stock at an exercise price of $1.50 per share (the "AC
Warrants"); and (iii) a three year warrant to purchase 23,810 shares of Common
Stock at an exercise price of $2.00 per share (the "BC Warrants"). In connection
with the purchase of a 200 Unit block, the Company agreed to grant that
purchaser the right to appoint an equal number of members of the board of
directors that have not been appointed by that entity as are present on the
Board at any time. The Company issued 222,250 shares of Series C Preferred Stock
(444.5 units) realizing gross proceeds of $22,225,000, of which $600,000 was
received in advance on a note payable that was subsequently converted to Series
C Preferred Stock, offset by offering expenses in the amount of $401,326
resulting in proceeds to the Company of $21,823,674.

The stated value and issue price of the Series C Preferred stock is $100.00 per
share. Holders of the Series C Preferred Stock are entitled to receive
cumulative dividends at the rate of 2.5% per annum, payable quarterly on January
31, April 30, July 31 and October 31, beginning with January 31, 2007. The form
of dividend payments may be, at the Company's option, in cash or shares of the
Company's $0.001 par value common stock (the "Common Stock"), or a combination
thereof. The Series C Preferred is convertible into shares of Common Stock at
the rate of $1.05 per share.

The Series C Preferred Stock has customary weighted-average anti-dilution rights
with respect to any subsequent issuance of Common Stock or Common Stock
equivalents at a price less than $1.05 per share, and otherwise in connection
with forward or reverse stock splits, stock dividends, recapitalizations, and
the like. The anti-dilution provisions shall not apply to employee stock options
and shares issued in connection with certain mergers and acquisitions.

Except as otherwise provided in the Series C Preferred Stock Certificate of
Designation with respect to matters that adversely affect the rights of the
holders of the Series C Preferred Stock, and as otherwise required by law, the
Series C Preferred Stock shall have no voting rights.

Upon any liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, the holders of the Series C Preferred Stock shall be
entitled to receive out of the assets of the Company, whether such assets are
capital or surplus, for each share of Series C Preferred Stock an amount equal
to the stated value ($100.00) of the Series C Preferred Stock per share plus any
accrued and unpaid dividends thereon and any other fees or liquidated damages
owing. If the assets of the Company are insufficient to pay such amounts in
full, then the entire assets to be distributed to the holders of the Series C
Preferred Stock shall be distributed among the holders of the Series C Preferred
Stock ratably in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full.

The Company has the right to redeem the Series C Preferred commencing six months
from a final closing date in the event the closing bid price of the Company's
Common Stock has closed for 20 consecutive trading days at a price not less than
$3.00 (subject to adjustment) by delivering notice to holders of the Series C
Preferred Stock. The maximum aggregate number of Series C Preferred Stock which
may be redeemed pursuant to any such redemption notice in any given week shall
be that number of shares of Series C Preferred Stock for which the underlying
Common Stock (together with any accrued dividends payable in Common Stock
thereon) are less than or equal to 25% of the average daily trading volume of
the Common Stock for the 20 Trading Days preceding each such redemption notice
date.

During the year ended February 28, 2007, the Company recorded accrued dividends
on the Series C Preferred Convertible in the amount of $99,633.

WARRANTS
--------

During the year ended February 28, 2007, the board of directors approved the
issuance of Warrants (the "Warrants") to purchase common stock in connection
with the issuance of Series C 2.5% Cumulative Convertible Preferred Stock and
Warrants and Stock Options to investor relations firms, employees and others.

During the year ended February 28, 2006, the board of directors approved the
issuance of Warrants (the "Warrants") to purchase common stock in connection
with the issuance of 2.5% convertible debentures and Warrants and Stock Options
to investor relations firms

                                      F-14
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


SERIES A CONVERTIBLE PREFERRED STOCK AND NOTE PAYABLE WARRANTS
--------------------------------------------------------------

The Company issued Warrants to purchase 150,000 shares of Common Stock adjusted
to 203,072 on January 16, 2007 because of the anti-dilution rights. The Warrants
originally provided the holder Warrant the right to purchase shares of the
Company's Common Stock at an exercise price of $1.50, which was adjusted to
$1.11 on January 16, 2007. The Warrants expire February 1, 2008. The estimated
fair value of these Warrants was recorded at $8,000 and was determined using the
Black - Scholes Model. Each Warrant expires February 1, 2008.

SERIES B CONVERTIBLE PREFERRED STOCK WARRANTS
---------------------------------------------

The Company issued 4,950,000 Warrants in connection with the Series B Preferred
Stock placement, adjusted to 5,180,391 on January 16, 2007 because of the
anti-dilution rights. The Warrants originally provided the holder Warrant the
right to purchase shares of the Company's Common Stock at an exercise price of
$1.50, which was adjusted to $1.11 on January 16, 2007 pursuant to anti-dilution
rights. Each Warrant expires February 1, 2008.

The Warrants have customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.11 per share (subject to adjustment), and otherwise in
connection with forward or reverse stock splits, stock dividends,
recapitalizations, and the like. The anti-dilution provisions shall not apply to
employee stock options and shares issued in connection with certain mergers and
acquisitions.

In the event the shares of Common Stock underlying the Warrants are subject to
an effective registration statement that has been continuously effective for a
minimum of 30 days and the closing bid price of the Company's Common Stock has
closed for 20 consecutive trading days at a price not less than $3.50 (subject
to adjustment), the Company may redeem the Warrants upon 30 days' written notice
to the holders of the Warrants at a redemption price of $0.01 per Warrant Share.

PLACEMENT AGENT WARRANT SERIES B PREFERRED STOCK
------------------------------------------------

In connection with the offer and sale of our Series B Preferred Stock, the
Company granted a warrant to purchase 24.75 units of the Series B Preferred
Stock offering at a purchase price of $13,000 per Unit (the "Placement Agent
Warrant"). Each Unit consists of (i) $13,000 of Series B Preferred Stock,
convertible into 20,000 shares of Common Stock at the rate of $0.65 per Share;
and (ii) a three-year Warrant to purchase 27,131 shares of Common Stock at an
exercise price of $1.11 per share. The Placement Agent Warrant expires on
February 1, 2008. As the Placement Agent has not exercised its right to purchase
the units, the Placement Agent Warrants are not included in the table.

2.5% CONVERTIBLE DEBENTURE WARRANTS
-----------------------------------

The Company issued 1,150,000 Warrants adjusted to 1,716,451 on January 16, 2007
pursuant to anti-dilution rights. The Warrants provide the holder Warrant the
right to purchase shares of the Company's Common Stock at an exercise price of
$1.33 after adjusting for anti-dilution. The estimated fair value of these
Warrants was recorded as debt issuance costs in the amount of $966,000 and was
determined using the Black - Scholes Model. Each Warrant expires July 22, 2008.
The fair value has been recorded as debt issuance costs.

The Warrants have customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.33 per share (subject to adjustment), and otherwise in
connection with forward or reverse stock splits, stock dividends,
recapitalizations, and the like. The anti-dilution provisions shall not apply to
employee stock options and shares issued in connection with certain mergers and
acquisitions. In the event the shares of Common Stock underlying the Warrants
are subject to an effective registration statement that has been continuously
effective for a minimum of 30 days and the closing bid price of the Company's
Common Stock has closed for 20 consecutive trading days at a price not less than
$4.00 (subject to adjustment), the Company may redeem the Warrants upon 30 days'
written notice to the holders of the Warrants at a redemption price of $0.01 per
Warrant Share.

PLACEMENT AGENT WARRANT 2.5% CONVERTIBLE DEBENTURE
--------------------------------------------------

In connection with the placement of the Series B Preferred Stock issue on July
22, 2005, the Placement Agent or its designees received three-year Warrants to
purchase 230,000 shares adjusted to 255,040 on January 16, 2007 pursuant to
anti-dilution rights and 115,000 shares adjusted to 173,533 at $1.08 and $1.33
per share, respectively after adjusting for anti-dilution. Using the Black
Scholes Model, the fair values of these warrants were estimated at $143,000 and
$96,600, respectively. The fair value has been recorded as debt issuance costs.

The Warrants have customary weighted-average anti-dilution rights with respect
to any subsequent issuance of Common Stock or Common Stock equivalents at a
price less than $1.33 per share (subject to adjustment), and otherwise in
connection with forward or reverse stock splits, stock dividends,
recapitalizations, and the like. The anti-dilution provisions shall not apply to
employee stock options and shares issued in connection with certain mergers and
acquisitions.

                                      F-15
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


NONQUALIFIED STOCK OPTIONS
--------------------------

On November 10, 2006, the Company granted certain employees and agents of the
Company an aggregate of 3,950,000 options to acquire shares of the Company's
Common Stock, which are exercisable at a price of $1.25. These stock options
vest at a rate of 12.5% each fiscal quarter ending November 30, February 28, May
31 and August 31 through November 30, 2008 and expire on November 30, 2014. The
Company's stock closed at $1.24 on November 10, 2006. The fair value of the
options was estimated on the date of the grant utilizing the Black-Scholes
option pricing model with the following assumptions: expected life of the
options is 10 years, expected volatility of 81%, risk free interest rate of 5%
and no dividend yield. The fair value for the options granted was approximately
$1.04 per share. The value of the options was recorded at $4,124,400 and
$515,550 is being amortized quarterly as the options vest. During the fiscal
year ended February 28, 2007, $1,031,100 was charged to general and
administrative expenses.

On July 6, 2005, the Company issued a three-year nonqualified stock option for
75,000 shares of Common Stock at an exercise price of $1.50 per share to an
unrelated party for shareholder relations services rendered. The closing price
of the stock on July 6, 2005, was $1.26 per share. Using the Black-Scholes model
with estimated volatility of 94.8%, risk-free interest rate of 4.2%, and a life
of three years, the estimated fair value of the grant is $54,642, which was
recorded as general and administrative expense. During the fiscal year ended
February 28, 2007, the holder exercised 37,500 of the options at $1.50 per
share. The option to purchase the remaining 37,500 shares adjusted to 50,006
with an exercise price of $1.13 on January 16, 2007 pursuant to anti-dilution
rights.

STOCK PURCHASE WARRANT TO INVESTOR RELATIONS FIRM
-------------------------------------------------

On December 28, 2006, the Company issued a three-year nonqualified stock option
for 500,000 shares of Common Stock at an exercise price of $2.00 per share to an
unrelated party for shareholder relations services rendered. The closing price
of the stock on December 28, 2006, was $1.45 per share. Using the Black-Scholes
model with estimated volatility of 82.75%, risk-free interest rate of 4.73%, and
a life of three years, the estimated fair value of the grant is $350,317, which
was recorded as general and administrative expense.

On February 22, 2006, the Company issued a three-year stock purchase Warrant for
100,000 shares of Common Stock at an exercise price of $2.75 per share to an
unrelated party for shareholder relations services rendered. The closing price
of the stock on February 22, 2006, was $2.52 per share. Using the Black-Scholes
model with estimated volatility of 70.2%, risk-free interest rate of 4.5%, and a
life of three years, the estimated fair value of the grant is $118,200, which
was recorded as general and administrative expense.

STOCK PURCHASE WARRANT TO SHAREHOLDER
-------------------------------------

On February 28, 2006, the Company issued a four-year stock purchase warrant for
200,000 shares of Common Stock at an exercise price of $2.00 per share to a
shareholder in settlement of a contractual dispute. The closing price of the
stock on February 28, 2006, was $2.50 per share. Using the Black-Scholes model
with estimated volatility of 70.2%, risk-free interest rate of 4.5% and a life
of four years, the estimated fair value of the grant is $305,700, which was
recorded as general and administrative expense.

The following table summarizes information about fixed-price stock options and
warrants outside of the plans at February 28, 2007 and 2006.

                                February 28, 2007        February 28, 2006

                                               Weighted               Weighted
                                               Average                Average
                                               Exercise               Exercise
                                Shares         Price     Shares       Price
                                ----------------------------------------------
Beginning of period               7,340,838    $   1.35  5,137,083    $   4.00
Granted                          32,250,203    $   1.34  2,313,477    $   1.50
Anti-dilution warrants issued     1,735,030    $   1.19         --    $  --
Exercised                        (1,197,414)   $   1.38    (72,639)   $   1.38
Expired                                  --    $     --    (37,083)   $   4.00
                                -----------              ---------
End of period                    40,128,657    $   1.61  7,340,838    $   1.35
                                ===========              =========


                                      F-16
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


On November 10, 2006, 3,950,000 non-incentive options were granted which vest
493,750 shares each fiscal quarter over two years. The remaining contractual
life for the $1.25 non-incentive stock options is 9.70 years.

Non-incentive Stock Option Plan Shares Exercisable

                                February 28, 2007        February 28, 2006

                                               Weighted               Weighted
                                               Average                Average
                                               Exercise               Exercise
                                Shares         Price     Shares       Price
                                ----------------------------------------------
Beginning of period                      --   $      --     --      $     --
Granted                             987,500   $    1.25     --      $     --
Exercised                                --   $      --     --      $     --
Expired                                  --   $      --     --      $     --
                                -----------              -----
End of period                       987,500   $    1.25     --      $     --
                                ===========              =====

As a result of the grant of stock options to certain officers, directors,
employees and agents on November 10, 2006 and the issuance of the Series C
Preferred Convertible Stock together with the warrants associated with that
issue, the anti-dilution provisions of certain options and warrants were
triggered resulting in the following increase in options and warrants summarized
as follows:

                                                 Number            New
                                                of Shares        Exercise
                                               Exercisable        Price
         ----------------------------------------------------------------
         Warrants exercisable at $1.38            1,059,985      $   1.11
         Warrants exercisable at $2.00              637,499      $   1.33
         Warrants exercisable at $1.20               25,040      $   1.08
         Warrants exercisable at $1.50               12,506      $   1.13
                                              -------------
                                                  1,735,030      $   1.19
                                              =============


Options and Warrants Outstanding and Exercisable
                                                      Weighted
                                                      Average
Range                                                 Remaining     Weighted
of                            Number                  Contractual   Average
Exercise                      of Shares Outstanding   Life in       Exercise
Price                         And Exercisable         Years         Price
-----------------------------------------------------------------------------
$1.00 to $1.50               26,855,113               2.46          $   1.46
$1.51 to $2.75               13,273,544               2.25          $   1.91
                             ----------
                             40,128,657
                             ==========


                                      F-17
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

COMMON STOCK
------------

During the year ended February 28, 2006, the Company issued 27,502 restricted
common shares in the aggregate for geological and geophysical consulting
services rendered during the period to an unrelated third party. The total of
$40,743 has been recorded as exploration costs. In addition, 4,000 restricted
common shares were issued to an unrelated third party for general and
administrative services of $8,200.

8. EQUITY INCENTIVE PLAN STOCK OPTION PLAN
   ---------------------------------------

In August 2006, the Board of Directors adopted an incentive stock option plan
reserving 10,000,000 shares of the Company's $0.001 par value common stock for
issuance pursuant to the plan. The plan requires submission to the shareholders
for ratification; and accordingly, no options have been granted under the plan.

On June 6, 2003, the Board of Directors adopted the New Frontier Energy, Inc.
Stock Option and Stock Grant Plan ("The Plan"). The Plan allows for the issuance
of incentive (qualified) options and non-qualified options and the grant of
stock or other equity incentives to employees, consultants, directors, and
others providing service of special significance to our company. The Plan is
administered by a committee to be appointed by the Board of Directors, or in the
absence of that appointment, by the Board itself. The Plan provides for the
issuance of up to 625,000 shares or options. No option may be exercised more
than ten years from the date of grant. The Plan expires in 2013. As of February
29, 2003, options to purchase a total of 50,000 shares of Common Stock at an
exercise price of $1.00 per share have been granted to two officers pursuant to
the Plan. In October 2004, the Company granted 100,000 share options to each of
three employees and a director exercisable at $0.75 per share pursuant to the
plan. The Company's Common Stock was trading at $0.47 per share on the date of
the grant. On May 13, 2005, the Company issued 10-year stock options in the
aggregate of 150,000 shares under the Plan to its executive officers at an
exercise price of $1.15. The Company's Common Stock closed at $1.15 on May 13,
2005. The fair value of the options was estimated on the date of the grant
utilizing the Black-Scholes option pricing model with the following weighted
average assumptions: expected life of the options of 10-years, expected
volatility of 74%, risk-free interest rate of 4.2%, and no dividend yield. The
weighted average fair value for the options granted was approximately $1.02 per
share.

The changes in the outstanding stock options during the years ended February 28,
2007 and February 28, 2006 are summarized as follows:

                                February 28, 2007        February 28, 2006

                                               Weighted               Weighted
                                               Average                Average
                                               Exercise               Exercise
                                Shares         Price     Shares       Price
                                ----------------------------------------------
Beginning of period               588,000      $0.78      450,000       $0.78
Granted                              -                    150,000       $1.15
  Exercised                      (28,667)      $0.75      (12,000)      $0.75
  Expired                            -                         --
                                ---------               ---------
End of period                     559,333      $0.87      588,000       $0.87
                                =========               =========


At February 28, 2007, the weighted average remaining contractual life for the
$1.00 options is 6.27 years, the weighted average remaining contractual life for
the $0.75 options is 7.66 years, and the remaining weighted average remaining
contractual life for the $1.15 options is 8.20 years.

The Company had accounted for the stock options granted to employees and the
director using the intrinsic value method. No stock-based employee compensation
cost is reflected in the net loss, as all options granted under the plan had an
exercise price greater than the market value of the underlying common stock on
the date of grant. All were vested prior to the year ended February 28, 2006.
The following table illustrates the effect on net loss, had the Company adopted
the fair value based method of accounting for stock options (using the
Black-Scholes pricing model) provided under SFAS No. 123, to stock-based
employee compensation. The fair-value of the options was estimated on the date
of the grant utilizing the Black-Scholes option pricing model with the following
weighted average assumptions: expected life of the options of 10-years, expected
volatility of 93%, risk-free interest rate of 4.2% and no dividend yield. The
weighted average fair value for the options granted in fiscal 2006, was
approximately $1.02.


                                      F-18
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

                                                            Fiscal Year Ended
                                                                February 28,
                                                                   2006
                                                               -----------
     Net (loss) as reported                                    $(3,011,556)
     Preferred stock dividends                                    (418,580)
                                                               -----------
     Net (loss) attributable to common shareholders             (3,430,136)
     Deduct:
     Total stock-based compensation determined
     under fair value based methods net of related
     tax effects                                                  (152,591)
                                                               -----------
     Pro forma net (loss)                                      $(3,582,727)
                                                               ===========

     Earnings per share:
     Basic and diluted as reported                             $     (0.94)
                                                               ===========
     Basic and diluted  pro forma                              $     (0.98)
                                                               ===========


9. COMMITMENTS LAWS AND REGULATIONS
   --------------------------------

The Company is subject to extensive federal, state, and local environmental laws
and regulations. These requirements, which change frequently, regulate the
discharge of materials into the environment. The Company believes it is in
compliance with existing laws and regulations.

EMPLOYMENT AGREEMENTS
---------------------

The Company has written employment agreements with its two executive officers.
Pursuant to their employment agreements, said officers devote such time as each
deems necessary to perform their duties to the Company and are subject to
conflicts of interest. The employment agreements expire on October 31, 2009;
however, they are automatically renewable on an annual basis for additional
one-year increments. Pursuant to the employment agreements, the Officers receive
base salary compensation in the aggregate amount of $305,004 per annum, adjusted
annually at the rate of inflation as measured under the federal Consumer Price
Index or ($6,000), whichever is greater. The compensation is subject to annual
escalations based on cost of living and merit increases approved by the Board.

The employment agreements contain provisions under which the Company will be
obligated to pay the executive officers all compensation for the remainder of
their employment agreements and 2.99 times their annual salary if a change of
control, as defined in the employment agreements occurs.

OFFICE LEASES
-------------

The Company is obligated for $2,667 per month under a lease for office space
expiring December 31, 2008, or a total of $58,674 remaining on the lease at the
rate of $32,000 per annum.

The Company is obligated for quarterly lease payments of $1,950 under a lease
for its field office at the Slater Dome Field expiring December 31, 2007, or a
total of $5,850 remaining on the lease.

DRILLING COMMITMENT
-------------------

On February 23, 2007, the Company entered into an agreement with a drilling
contractor that provides minimum payments of $435,000, of which $217,500 was
paid prior to year end and the balance due 5 days prior to the commencement of
drilling, expected to be June 15, 2007, under certain conditions.

10. BUSINESS SEGMENT INFORMATION
    ----------------------------

The Company operates in two business segments: oil and gas exploration and gas
gathering. Operating results and other financial data for the years ended
February 28, 2007 and 2006 is presented for the principal business segments as
follows:
                                      F-19
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007
<TABLE>
<CAPTION>
                                             Oil & Gas     Gas Gathering   Consolidated
                                           --------------------------------------------
<S>                                        <C>             <C>             <C>
February 28, 2007
Revenues                                   $    238,385    $    122,796    $    361,181
Income (loss) before taxes                 $ (4,505,936)   $    (51,827)   $ (4,557,762)
Total assets                               $ 26,498,297    $  2,549,426    $ 29,047,723
Property additions                         $  8,923,915    $  8,923,915
Interest expense                           $    (90,214)   $         --    $    (90,214)
Debt issuance costs, non-cash              $   (905,957)   $         --    $   (905,957)
Depreciation, depletion and amortization   $    189,412    $    130,492    $    319,904

February 28, 2006
Revenues                                   $    144,853    $     14,599    $    159,452
Income (loss) before taxes                 $ (2,967,600)   $    (72,516)   $ (3,040,116)
Total assets                               $  4,672,671    $  2,652,256    $  7,324,927
Property additions                         $    767,404    $  2,609,841    $  3,377,245
Interest expense                           $    (68,767)   $         --    $    (68,767)
Debt issuance costs, non-cash              $   (542,018)   $         --    $   (542,018)
Depreciation, depletion and amortization   $    123,669    $     65,246    $    188,915
</TABLE>


11. RELATED PARTIES
    ---------------

The Company terminated the previous lease in fiscal 2006, which provided for
monthly rent of $1,500 plus utilities and incidentals and executed a new office
lease for office space in Littleton, Colorado, with Spotswood Properties, LLC, a
Colorado limited liability company ("Spotswood"), and an affiliate of the
president, effective January 1, 2006, for a three-year term, which is renewable
under terms and conditions to be negotiated. The lease provides for the payment
of $2,667 per month plus utilities and other incidentals. The president of New
Frontier owns 50% of Spotswood. The Company is of the opinion that the terms of
both leases are no less favorable than could be obtained from an unaffiliated
party. Spotswood was paid $32,004 and $24,953 in fiscal 2007, and 2006,
respectively. In the fiscal year ended February 28, 2006, the Company paid
$51,005 for leasehold improvements at its new office space.

The Company paid a corporation controlled by one of the directors for geologic
consulting $77,250 and $36,000 in fiscal 2007, and 2006, respectively. During
the year ended February 28, 2006 these payments were partially made with 6,000
shares of common stock with a fair value of $9,000.

During fiscal 2006 SDG paid a corporation controlled by the president a
construction management fee of $100,000 in connection with acting as the general
contractor when building the gas gathering pipeline.

SDG accrued management fees in the amounts of $15,192 and $13,062 in fiscal
2007, and 2006, respectively to an entity partially controlled by the president
of the Company.

12. SALE OF OIL AND GAS PROPERTIES
    ------------------------------

In December 2006, the Nucla prospect option holder, exercised the option to
acquire the prospect. The Company will realize $185,881 in gross proceeds and
recognized a gain on the sale of the prospect of $95,127.

13. MARKET RISK
    -----------

The Company's major market risk exposure is in the pricing applicable to its oil
and gas production. Realized pricing is primarily driven by the prevailing
worldwide price for crude oil and spot prices applicable to its natural gas
production. Historically, prices received for oil and gas production have been
volatile and unpredictable and price volatility is expected to continue.

14. DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES
    --------------------------------------------------

The Company has incurred the following costs, both capitalized and expensed, in
respect to its oil and gas property acquisition. Exploration and development
activities are summarized as follows for the year ended February 28, 2007 (all
in the United States):

   Property Acquisition Costs:
   Proved properties                         $1,041,000
   Unproved properties                      $ 7,467,727
   Exploration costs                          $205,713
   Development costs                          $709,753

                                      F-20
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007

Results of operations for oil and gas producing activities

The results of operations for oil and gas producing activities, excluding
capital expenditures and corporate overhead and interest costs, are as follows
for the years ended February 28, 2007 and 2006 (all in the United States):

                                                           As of February 28,
                                                           2007         2006
                                                        ---------     ---------
Operating revenues                                      $ 238,385     $ 144,853
                                                        ---------     ---------

Costs and expenses:

      Production                                          642,253       668,788

      Exploration                                         205,713       132,551

      Depletion, depreciation and amortization            143,791       109,445
                                                        ---------     ---------

             Total costs and expenses                     991,757       910,784

(Loss) from oil and gas producing activities            $(753,372)    $(765,931)
                                                        =========     =========

15. SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)
    -------------------------------------------------

At February 28, 2007 and 2006, the estimated oil and gas reserves presented
herein were derived from reports prepared by Questa Engineering, Corp., an
independent petroleum engineering firm. The Company cautions that there are many
inherent uncertainties in estimating proved reserve quantities and in projecting
future production rates and the timing of development expenditures. Accordingly,
these estimates are likely to change as future information becomes available,
and these changes could be material. The properties included in the oil and gas
reserve estimates are those properties at the Slater Dome Prospect that are
connected to the gas gathering pipeline at February 28, 2007 and 2006.

Proved oil and gas reserves are the estimated quantities of crude oil,
condensate natural gas, and natural gas liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions. Proved
developed reserves are reserves expected to be recovered through existing wells
with existing equipment and operating methods.

Proved undeveloped reserves are reserves that are expected to be recovered from
new wells on undrilled acreage. Reserves on undrilled acreage shall be limited
to those drilling units offsetting productive units that are reasonably certain
of production when drilled.

Estimated Oil and Gas Reserve Quantities.

Estimated quantities of proved developed and proved undeveloped reserves (all of
which are located within the United States), as well as the changes in proved
developed reserves during the periods indicated, are presented in the following
tables:

                                                       Natural Gas in MCF
                                                      2007            2006
                                                   -------------------------
Beginning balance at March 1                        6,006,000             --
Extensions and discoveries                         (1,916,000)            --
Sales of reserves in place                                 --      6,006,000
Improved recovery                                          --             --
Purchase of reserves                                8,214,000             --
Production                                           (190,000)            --
                                                   -------------------------
Proved developed net reserves at February 28       12,114,000      6,006,000
                                                   =========================

All of the Company's oil and gas reserves are classified as proved developed or
proved undeveloped.



                                      F-21
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2007


Standardized Measure of Discounted Future Net Cash Flow

The table below has been developed utilizing procedures prescribed by SFAS 69
"Disclosures about Oil and Gas Producing Activities" and based on natural gas
reserves and production volumes estimated by the Company. It may be useful for
certain comparison purposes, but should not be solely relied upon in evaluating
the Company or its performance. Further, information contained in the following
tables should not be considered as representative or realistic assessments of
future cash flows, nor should the Standardized Measure of Discounted Future Net
Cash Flows be viewed as representative of the current value of the Company.

The Company is of the opinion that the following factors should be taken into
account in reviewing the following information:

     a.   Future costs and selling prices will probably differ from these
          required to be used in these calculations;

     b.   Due to future market conditions and governmental regulations, actual
          rates of production achieved in future years may vary significantly
          from the rate of production assumed in these calculations;

     c.   Selection of a 10% discount rate, as required by SFAS 69, is arbitrary
          and may not be reasonable as a measure of risk inherent in realizing
          future net oil and gas revenues; and

     d.   Future net revenues may be subject to different rates of income
          taxation.

sets forth a standardized measure of the estimated discounted future net cash
flow attributable to the Company's proved oil and gas reserves. Estimated future
cash inflows were computed by applying prices of $5.21 and $5.32 per MCF of
natural gas to the estimated future production of proved oil and gas reserves at
February 28, 2007 and 2006 respectively. There were no extensions, discoveries
or improved recoveries for the year ended February 28, 2007. The future
production and development costs represent the estimated future expenditures to
be incurred in developing and producing the proved reserves, assuming
continuation of existing economic conditions. Discounting the annual net cash
flows at 10% illustrates the impact of timing on these future cash flows.

Standardized Measure of Estimated Discounted Future Net Cash Flows

                                                             February 28,
                                                          2007          2006
                                                       -----------   -----------
Future cash inflows                                    $63,109,300   $31,953,800
                                                       -----------   -----------
Deduct:
 Future production costs                                27,077,100    11,496,300
 Future development costs                                8,411,900     4,502,800
 Future income taxes                                     7,243,800     4,048,000
                                                       -----------   -----------
                                                        42,732,800    20,047,100
                                                       -----------   -----------

Future net cash flows                                   20,376,500    11,906,700

Less 10% discount amount                                 8,120,400     5,033,000
                                                       -----------   -----------
Standardized measure of discounted future net cash
   flows relating to proved oil and gas reserves       $12,256,100   $ 6,873,700
                                                       ===========   ===========

Principal changes in the Standardized Measure for the years ended February 28,
2007 and 2006 are summarized as follows:

                                                              February 28,
                                                            2007         2006
                                                       ------------   ----------
Standard measure as of March 1                         $  6,873,700   $       --
                                                       ------------   ----------
Sales of gas produced, net of production costs             (403,868)          --
Extensions and discoveries                                       --    6,873,700
Net change in prices and production costs related to
 future production                                      (16,241,460)          --
Development costs incurred during the year                       --           --
Changes in estimated future development costs            (3,909,100)          --
Purchases of reserves in place                           43,698,480           --
Revisions of quantity estimates                         (10,193,120)          --
Changes in discount                                      (3,087,400)          --
Net change in income taxes                               (3,195,800)          --
Changes in timing and other                              (1,285,332)          --
                                                       ------------   ----------
Aggregate change                                          5,382,400    6,873,700
                                                       ------------   ----------
Standardized measure, as of February 28,               $ 12,256,100   $6,873,700
                                                       ============   ==========


There were no reserves at February 28, 2005; therefore there are no revisions of
quantity estimates. There were no extensions, discoveries or improved recoveries
for the year ended February 28, 2006.

16. SUBSEQUENT EVENTS
    -----------------

Focus Ranch Unit

The Company entered into an agreement in April 2007, to acquire and take over
operations, pursuant to a farm out agreement with the current operator of the
Focus Ranch Unit (the "Unit") in northwest Colorado. The Unit consists of
approximately 35,000 acres adjacent to and southeast of the Slater Dome
development area.

The agreement increases New Frontier Energy's total acreage in and adjacent to
the Slater Dome Field to approximately 70,000 acres. The terms of the agreement
require New Frontier Energy to test the Niobrara and Frontier formations in the
Focus Ranch Federal 12-1 well in order to earn 65% of the farmor's working
interest, which averages 75% in the Focus Ranch Unit. New Frontier Energy will
acquire the remaining 35% working interest from the farmor after completing a
production payment from the Unit.

Acquisition of Additional Acreage

In April 2007, the Company acquired a 100% working interest in an additional
1,600 acres in the north Slater Dome Area.

Issuance of Common Stock

Subsequent to February 28, 2007, the Company issued an aggregate of 67,693
shares of common stock arising from the conversion of 440 shares of Series B
Convertible Preferred Stock and 17,732 shares of common stock arising from
conversions of convertible debentures and accrued interest in the amount of
$36,628.

                                      F-23
<PAGE>