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

                                   FORM 10-KSB

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


                   For the fiscal year ended February 28, 2006

                         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 (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

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 [ ].

The Registrant's revenues for the fiscal year ended February 28, 2006 were
$159,452.


<PAGE>
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of May 15, 2006 was approximately $7,847,766 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 15, 2006 was 4,599,622.

DOCUMENTS INCORPORATED BY REFERENCE:

None

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






<PAGE>




                                TABLE OF CONTENTS

Part I

Items 1 and 2. Description of Business and Properties                         1

Item 1A        Risk Factors                                                  17

Item 1B.       Unresolved Staff Comments                                     28

Item 3.        Legal Proceedings                                             28

Item 4.        Submission of Matters to a Vote of Security Holders           28

PART II

Item 5.        Market for Common Equity and Related Stockholder Matters      28

Item 6.        Management's Discussion and Analysis or Plan of Operation     29

Item 7.        Financial Statements                                          40

Item 8.        Changes in and Disagreements With Accountants on
               Accounting and Financial Disclosure                           40

Item 8A.       Controls and Procedures                                       40

Item 8B.       Other Information                                             41

PART III

Item 9.        Directors, Executive Officers, Promoters and Control
               Persons; Compliance With Section 16(a) of the Exchange Act    41

Item 10.       Executive Compensation                                        43

Item 11.       Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters                    46

Item 12.       Certain Relationships and Related Transactions                49

Item 13.       Exhibits                                                      50

Item 14.       Principal Accountant Fees and Services                        51

SIGNATURES                                                                   52

Financial Statements                                                        F-1

Notes to Consolidated Financial Statements                                  F-8


                                       ii
<PAGE>



Additional Information

     Descriptions in this Report 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").


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 the Company, as defined below,
intends that such forward-looking statements be subject to the safe harbors
created thereby. These statements include, among others:

     o    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    Actions of overseas producers of oil and natural gas over which we
          have no control.

     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

     Background

     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. ("New Frontier" or the "Company") 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 New Frontier.

     In February 2002, we were acquired by Wyoming Oil & Minerals, Inc., a
Wyoming corporation engaged in the oil and gas industry with securities traded
"over-the-counter" and quoted in the OTC Bulletin Board ("WYOG"), in an effort
to obtain additional funding through access to the public market. Subsequently,
WYOG divested itself of our assets and operations and our stock was "spun out"
to the shareholders of WYOG effective June 30, 2003. Following registration of
our stock with the SEC, our stock was distributed to the shareholders of WYOG
beginning April 23, 2004.

     Our executive offices are located at 1789 W. Littleton Blvd., Littleton,
Colorado 80120, and our telephone number is (303) 730-9994.

     Please note that throughout this report, and unless otherwise noted, the
words "we," "our," "us" or the "Company" refer to New Frontier and Slater Dome
Gathering, LLLP ("SDG"), in the fiscal year ended February 28, 2006, and
includes our wholly-owned subsidiary, Skyline, in the fiscal year ended February
28, 2005.

     Our Business

     We explore for, produce and gather oil and natural gas. We have an interest
in three principal properties, the Slater Dome Prospect, located in northwest
Colorado and south central Wyoming (the "Slater Dome Prospect"), the Flattops
Prospect located in southwest Wyoming (the "Flattops Prospect") and the Nucla
Prospect, located in western Colorado (the "Nucla Prospect"). Two of these
properties, the Flattops Prospect and the Nucla Prospect, are undeveloped, which
means they do not currently produce any oil or natural gas. The Slater Dome
Prospect is operated by Cedar Ridge, LLC ("Cedar Ridge"), an independent third
party. We operate the Flattops Prospect, and the Nucla Prospect is essentially
dormant. We also own certain royalty interests in certain wells in the state of
Wyoming other than in the Slater Dome Prospect.


                                       1
<PAGE>
     As of May 10, 2006, the Company owns 82.76% of the limited partnership
interests (the "Limited Partnership Interests") of SDG, and, accordingly, the
Company will be entitled to 74.48% of SDG's distributions until the limited
partners of SDG have received cash distributions equal to their original
contribution and 62.07% of cash distributions thereafter. SDG owns the 18-mile
gas gathering pipeline (the "Gas Gathering Line") that transports the Company's
natural gas from the Slater Dome Prospect to the Questar transportation line in
Baggs, Wyoming. The Flattops Prospect is relatively close to the Gas Gathering
Pipeline. The Nucla Prospect is owned with a number of independent third parties
who have combined their acreage positions in this area in order to share costs
and provide marketing skills in an effort to sell the acreage to one or more
third parties. 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
intends to evaluate the prospect and conduct a seismic program. The
consideration, net of costs, for the option was $15,171 to our interest, and the
grantee will pay all lease rental obligations during the option period.

     Slater Dome/Coal Bank Draw Prospect

     We acquired our interest in the Slater Dome Prospect in 2001, when we
acquired Skyline. Skyline in turn, acquired its interest in the Slater Dome
Prospect in November 1998 from Energy Investments, Inc., a privately held,
independent third party ("EI"). 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
Prospect. In 2002, Skyline acquired an additional 33.33% interest in the
property, following which it owned a total 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 Prospect 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.

     Our interest in the Slater Dome Prospect is 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
Prospect (the "Operating Agreement"). Pursuant to the Operating Agreement, Cedar
Ridge makes substantially all decisions affecting the exploration, development
and operation of the Slater Dome Prospect.

     The primary drilling objective in the Slater Dome Prospect 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 Prospect. However, there is no
assurance that gas can be produced economically from the Deep Creek Sand.

     The Company currently has an interest in eleven coal-bed methane wells,
nine of which are producing and two of which are shut in. Of the shut-in wells,
one is waiting on a completion rig, and the second is waiting on a pipeline
connection to the Gas Gathering Pipeline.

                                       2
<PAGE>
     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.

     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 Prospect
with no dry holes.

     The Company completed electrifying the production and water-disposal
facilities for nine of its producing wells during the quarter ending May 31,
2006.

     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 3,257 gross acres, 2,806 net acres, in this prospect. We operate
the Flattops 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'-6700'), the Lance coals and sands
(2650'-3550') and the Fort Union coals (1825'-1910'), as well as the Fort Union
Sands.

     During the second quarter of 2006, the Company intends to drill the plug
out of the Montgomery well and log and test this well using modern logs and
testing. 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.

     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.

     The Nucla Prospect is essentially an exploration project. As such, we
acquired our interest with the idea of selling a majority to a larger industry
participant. Due to the substantial costs necessarily involved in exploring and
possibly developing the property, we do not believe it is an appropriate
prospect for us to develop. 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.


                                       3
<PAGE>
     We and the other interest owners in the Nucla Prospect have 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 is to market and sell a majority of the interests.
To that end, each owner is attempting to obtain industry partners to further
evaluate the Nucla Prospect by seismic surveying and/or drilling of one or more
test wells. Our objective is to sell the Nucla Prospect for cash, subject to a
retained overriding royalty interest, and possibly a carried or back-in working
interest. In the event of the sale of the Nucla Prospect, each working interest
holder in the Nucla Prospect will be reimbursed for individual lease costs and
other reasonable and necessary expenses connected with the sale. Any remaining
proceeds shall be divided in accordance with the parties' interest in the
property. The parties have agreed that consent to sale of this property shall
not be unreasonably withheld.

     We, together with the other working interest owners, granted a seismic
option for two years to an independent third party in December 2004. The
consideration, net of costs, for the option approximates $15,171 to the
Company's interest, and the grantee will pay all lease rental obligations during
the option period.

     Natural Gas Gathering Pipeline

     Prior to May 2005, there was no operating gathering pipeline available at
the Slater Dome Prospect 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 Prospect
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
Prospect to a Questar transportation line in Baggs, Wyoming.

     Management considers the ownership of the Gas Gathering Pipeline to be a
strategic asset, because in addition to providing a market for gas produced from
the Slater Dome Prospect, the Gas Gathering Pipeline provides an additional
source of revenue from distributions paid to the holders of the Limited
Partnership Interests in SDG. Gas produced from other owners and operators in
the area around the Slater Dome Prospect may be transported through the Gas
Gathering Pipeline for a fee, assuming the wells are connected to the Gas
Gathering Pipeline. The attractiveness of the Gas Gathering Pipeline to other
producers will depend on the amount of the fee and other alternatives for
transporting gas to market.

     We and the other producers at the Slater Dome Prospect 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.


                                       4
<PAGE>
     The following table summarizes the MDQ requirements whereby each producer
agrees to deliver a MDQ/MMBtu of gas during the first five 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

     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. SDG is considered a variable-interest entity under Financial
Accounting Standards Board (the "FASB") Interpretation ("FIN") No. 46R,
"Consolidation of Variable Interest Entities," and has been consolidated
effective March 31, 2005.

     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 $2.00 per share. The Company, as
of May 10, 2006, owns 82.76% of the Limited Partnership Interests and,
accordingly, 74.48% of SDG's cash distributions until the limited partners have
received cash distributions equal to their initial capital contributions and
62.07% of cash distributions thereafter. 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 $2.00 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.



                                       5
<PAGE>
     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.

     Oil and Gas Activities

     All of our properties are located in the states of Colorado and Wyoming. At
May 15, 2006, we had an interest in 80,758 gross acres (73,442 net acres) of
developed and undeveloped oil and gas properties, of which we had a direct
ownership in 22,823 gross acres (20,252 net acres). We had a working interest in
11 gross coal-bed methane gas wells or 3.3 net wells as of February 28, 2006.

     The following table summarizes the oil and gas properties in which we have
an interest at May 15, 2006:

     Proved developed oil and gas acres:                 Gross         Net
     -----------------------------------                 -----        ----
               Wyoming                                      80          24
               Colorado                                    800         240



     Undeveloped oil and gas acres:                      Gross         Net
     ------------------------------                     ------      ------
               Wyoming                                   7,465       7,068
               Colorado                                 14,479      12,920


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

                                       6
<PAGE>

     Drilling Activity

     The results of our coal-bed methane gas drilling activity during the year
ended February 28, 2006, is that we completed three wells of the three drilled
at the Slater Dome Prospect.

                                February 28, 2006        February 28, 2005
                                -----------------        -----------------
                                Gross        Net         Gross        Net
                                -----       -----        -----       -----
         Development wells:
         Productive               3           0.9          1           0.3
         Dry                     --            --         --           --
         Total                    3           0.9          1           0.3

     Productive wells

     As of February 28, 2006, we had working interests in 11 coal-bed methane
wells (3.30 wells, net) and one water-disposal well (0.3 wells, net), each
located at the Slater Dome Prospect. Nine of the coal-bed methane wells are
producing wells (3.0 wells, net), one well (0.3 net) is shut in awaiting a
gathering line connection to the Gas Gathering Pipeline and one well (0.3 net)
is shut in awaiting completion.

     Gas production volumes and average sales price are as follows:

     During the fiscal year ended February 28, 2006, we entered into an
agreement with Cedar Ridge, the operator of the Slater Dome Prospect, whereby
they would market the gas produced from the Slater Dome Prospect and disburse
royalty proceeds, overriding royalty or other interests, pursuant to Title 34 of
the Colorado Revised Statutes, attributable to the Company's share of production
during the term of the agreement. The marketing agreement further specifies that
the price we receive for the gas will be no less than that received by Cedar
Ridge. The agreement can be terminated at any time with 60 days' notice. The
production from the Slater Dome Prospect 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 Prospect during the fiscal years ended February
28, 2006 and 2005:

                                         Fiscal Years Ended February 28,
                                         -------------------------------
                                            2006                  2005
                                         ---------             ---------
       Gas production in MCF               14,731                  --
       Average price per unit:              $7.84                $-0-


     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. The gas
used in operations is expected to decrease, as the nine producing wells have
been converted from gas-driven pumping units to electric pumping units during
the quarter ending May 31, 2006.


                                       7
<PAGE>
     Oil and gas reserve information

     The estimated oil and gas reserves presented below were derived from
reports prepared by Questa Engineering, Corp., an independent petroleum
engineering firm. 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. For further information
concerning the Company's estimated oil and gas reserves, see Note 15 of Notes to
Consolidated Financial Statements.

     Estimated quantities of proved developed and proved undeveloped reserves
(all of which are located within the United States at the Slater Dome Prospect)
are 6,006,000 MCF of gas.

     The present value of estimated net revenues before income tax, discounted
at 10%, is $6,873,700, using a current price of $5.32 per MCF, as summarized as
follows:


                                                       February 28,
                                                   2006           2005
                                              --------------------------

        Future cash inflows                     $ 31,953,800       $  --
                                              --------------------------
        Deduct:
        Future production costs                  (11,496,300)         --
        Future development costs                  (4,502,800)         --
        Future income taxes                       (4,048,000)         --
                                              --------------------------
                                                 (20,047,100)         --
                                              --------------------------

        Future net cash flows                     11,906,700          --


        Less 10% discount amount                  (5,033,000)         --
                                              --------------------------

                                                $  6,873,700       $  --
                                              ==========================

     The data in the table 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, which is required by SFAS No. 69, "Disclosures about Oil and Gas
Producing Activities," 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.

                                       8
<PAGE>
     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
developing the Slater Dome Prospect and to commence exploratory drilling at the
Flattops Prospect. 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 the wells we plan
to drill on the Flattops Prospect.

     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
coal-bed gas well, water is produced in large volumes, especially in the early
stages of production. Since CBM at the Slater Dome Prospect, 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.


                                       9
<PAGE>


     Facilities

     Effective January 1, 2006, 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.

     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.

MMCF:          One million 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.

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

Proved Oil     Estimated quantities of crude oil, natural gas and natural gas
and Gas        liquids which geological and engineering data demonstrate with
Reserves:      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's website at
               (http://www.sec.gov/divisions/corpfin/forms/regsx.htm#gas).


                                       10
<PAGE>
Proved         Proved reserves that are expected to be recovered from new wells
Undeveloped    on undrilled acreage or from existing wells where a relatively
Reserves:      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%.

     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.

     Devon Energy ranks fourth in production and is aggressively expanding CBM
production in the Powder River Basin in Wyoming and Montana and the Raton Basin
in south-central Colorado and northeastern New Mexico and has CBM production in
the San Juan Basin and Wind River Basin in central Wyoming. Devon Energy has
also acquired what is considered a "dominant" 250,000-acre position in the
Powder River Basin in addition to 53,000 acres in the Wind River Basin and
150,000 acres in the Forest City/Cherokee Basin in Kansas.


                                       11
<PAGE>

     Anadarko Petroleum Corporation ("Anadarko") is an independent oil and gas
exploration and production company with 1.5 billion barrels of oil equivalent of
proved developed reserves and .925 billion barrels of oil equivalent proved
undeveloped reserves as of December 31, 2005. Its major areas of operation in
the United States are located primarily in Texas, Louisiana, the mid-continent
region and the western states, Alaska and the Gulf of Mexico. It also has
operations in Canada, Algeria and several other international markets. 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.

     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 and selected other international areas.
EOG's operations are mainly natural gas and crude oil exploration and
production. At December 31, 2005, EOG's total estimated net proved reserves were
6,194 Bcfe, of which 5,557 Bcf were natural gas reserves and 106 million barrels
MMBbl, or 637 Bcfe, were crude oil, condensate and natural gas liquids reserves.
As of December 31, 2005, approximately 56% of EOG's reserves (on a natural gas
equivalent basis) were located in the United States, 22% in Canada, 21% in
Trinidad and 1% in the United Kingdom North Sea.

     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, 2005, Double Eagle Petroleum Co. ("Double Eagle") owns
interests in a total of 626 producing wells, with natural gas constituting
approximately 82% of its production and oil constituting approximately 18%.
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) and
controls operations on over 260 undrilled locations on 80-acre spacing. Double
Eagle 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 has an
interest in 235 completed wells, 71 of which are in various stages of completion
and 77 of which are shut in as of March 9, 2006. Galaxy owns an interest in
294,367 gross acres and 85,828 net acres in the Powder River Basin in Wyoming
and Montana.

     Clayton Williams Energy, Inc. ("Clayton Williams") is a private independent
exploration and production company that develops and produces oil and natural
gas. Clayton Williams has leased approximately 70,000 undeveloped acres adjacent
to the southeast of the Slater Dome Prospect. Clayton Williams has indicated it
intends to conduct tests in the exploration for natural gas on its leases during
calendar 2006.

     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.


                                       12
<PAGE>
     Merit Energy Company ("Merit") is a private firm specializing in direct
investments in oil and gas assets. 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.

     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 and 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:

     o    The location of wells;

     o    The method of drilling and casing wells;

     o    The rates of production or "allowables;"


                                       13
<PAGE>
     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.

     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.


                                       14
<PAGE>
     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 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.

     Air Emissions

     Our operations are subject to local, state and federal regulations for the
control of emissions of air pollution. 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.


                                       15
<PAGE>
     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 Prospect, Cedar Ridge will be responsible
for obtaining all permits and government permission necessary to operate the
property and permits to drill wells. Likewise, we as 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.

     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 four employees, including Paul G. Laird, our President
and Chief Executive Officer, Les Bates, our Chief Financial Officer, Principal
Accounting and Financial Officer, Secretary and Treasurer and Jubal S. Terry,
our Manager of Exploration. 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.


                                       16
<PAGE>
     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.

Item 1A.  Risk Factors

     Risks Related To Our Business

     We are a new entrant into the oil and gas industry, without any proven
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 a very limited number of properties. As a result, there
is no history of production or generating revenue against which to compare our
revenues during the year ended February 28, 2006.

     The Slater Dome Prospect is the primary oil and gas property where most of
our capital resources have been employed.

     Our plan of operation includes efforts to further develop the Slater Dome
Prospect through drilling additional producing wells, drilling two exploratory
wells on the Flattops Prospect and selling a majority of our interest in the
Nucla Prospect. As such, it is not our desire to expend funds, which we believe
necessary, to properly explore the Nucla Prospect. If the development of the
Slater Dome Prospect 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 Prospect. We are dependent on
further development efforts to prove additional reserves at the Slater Dome
Prospect in order to generate additional cash flow and to achieve economies of
scale when dewatering the existing and future wells. If we are unable to further
develop this prospect, 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. Our substantial dependence on a single
prospect property for cash flow increases the risk of our future success.

     We have a history of losses from operations and negative cash flow that is
likely to continue unless we economically produce oil or natural gas.

     We have a history of losses from operations and negative cash flow that is
likely to continue unless we economically produce oil or natural gas. A
significant portion of our cash flow since inception has come from short-term
loans, equity 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, the price of our
Common Stock may be adversely affected.


                                       17
<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 Prospect. 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.


                                       18
<PAGE>
     Producing oil and natural gas reservoirs generally are characterized by
declining production rates that vary depending upon reservoir characteristics
and other factors. 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 and economically
finding or acquiring additional recoverable reserves. We may not be able to
develop, find or acquire additional reserves to replace our current and future
production at acceptable costs.

     We are dependent upon the operation of the Gas Gathering Pipeline to
transport our natural gas from the Slater Dome Prospect 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 Prospect to the Questar
transportation line. If a Gas Gathering Pipeline is not available for any reason
to transport gas produced at the Slater Dome Prospect, it would have a 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 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.

     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 transporting 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.


                                       19
<PAGE>
     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.

     As the operator of Slater Dome Prospect, Cedar Ridge will be responsible
for obtaining all permits and government permission necessary to operate the
property and to obtain permits for any new wells that are drilled. SDG will be
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 Cedar Ridge 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.

     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 constructed 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;


                                       20
<PAGE>
     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

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

     The oil and natural gas business involves a variety of operating risks,
including:

     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 formations; and

     o    Environmental hazards such as natural gas leaks, oil spills, pipeline
          ruptures or discharges of toxic gases.

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


                                       21
<PAGE>
     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.

     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

     We are substantially dependent upon only one property, which causes our
risk to be concentrated.

     Substantially all of our investment is in the Slater Dome Prospect and SDG,
which owns the Gas Gathering Pipeline that services the Slater Dome Prospect.
Our plan of operation includes efforts to sell a majority of our interest in the
Nucla Prospect, and this prospect is primarily exploratory in nature. As such,
it is not our desire to expend funds, which we believe necessary, to properly
explore the Nucla Prospect. If the Slater Dome Prospect is not productive of oil
or natural gas, 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 Prospect. Since this prospect is under
development, we are dependent on further drilling efforts to prove additional
reserves at the Slater Dome Prospect for additional cash flow. If we are unable
to prove that this prospect can be economically productive of oil and natural
gas, 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. Our substantial dependence on a single prospect
property for cash flow increases the risk of our future success.


                                       22
<PAGE>
     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. 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.

     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 rely on Cedar Ridge, a third party, to operate the Slater Dome Prospect.

     Decisions by Cedar Ridge, the operator of the Slater Dome Prospect, may
affect our capital requirements and subject us to financial penalties for
failure to comply. The Slater Dome Prospect is subject to an operating agreement
with Cedar Ridge, the owner of a 36.67% interest in the field. As the operator
of that property, Cedar Ridge has control over the management of operations on
the prospect and makes decisions regarding development of the field. These
decisions may affect our capital requirements. Under the terms of the operating
agreement, we have the option to participate in drilling on a well-by-well
basis, for up to as many as 13 wells at one time. If we elect to participate in
drilling, we are obligated to contribute 30% of the costs, and if we are unable
to make such payments, we will be subject to a 450% penalty for our pro rata
share of the costs. Failure to make such payments may result in our losing
revenues from the wells drilled, if successful, until the 450% of costs are
recouped by the operator, which would have an adverse effect upon the Company
and its shareholders.

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

     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 any of
our employees resign or depart for any reason. Due to our limited operating
history and financial resources, we are entirely dependent on the continued
service of our existing officers, Paul G. Laird and Les Bates. Each of these
individuals has significant experience in the oil and gas industry. 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.


                                       23
<PAGE>
     Our officers may be subject to conflicts of interest.

     Our officers devote such time as each officer deems necessary to perform
his duties to the Company and are subject to conflicts of interest. Each officer
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. He is a general
partner of NRGG, the general partner in SDG. And he is an officer and director
of New Frontier. All of which creates a potential conflict with regard to his
duties to each entity. SDG is the partnership organized for the construction and
operation of the Gas Gathering Pipeline from the Slater Dome Prospect, and we
hold 82.76% of SDG's Limited Partnership Interests. 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.

     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 15, 2006, we had 4,599,622 shares of Common Stock issued and outstanding.
Further, the issued and outstanding shares of our 12% Series B Cumulative
Convertible Preferred Stock, par value $0.001 ("Series B Preferred Stock") may
be converted into 4,664,615 shares of our Common Stock, and 495,000 shares of
our Common Stock may be issued upon the exercise of a warrant (the "Placement
Agent Warrant") issued to Westminster Securities Corp. (the "Placement Agent")
or its affiliates in connection with the Placement Agent Agreement with
Westminster Securities Corp. dated September 14, 2004, and the subsequent
conversion of the shares of the Series B Preferred Stock underlying this warrant
into shares of our Common Stock.


                                       24
<PAGE>
     Further, to the extent any of the shares of Common Stock underlying the (i)
81,522 warrants issued to the holders of the Series A Preferred Stock (that was
converted into 384,615 shares of our Common Stock on March 1, 2006) and the
5,115,430 Series B Preferred Stock Warrants (the "Series A Warrants" and "Series
B Warrants," respectively), (ii) the 495,000 shares of Common Stock that may be
acquired by the Placement Agent upon exercise of the Placement Agent Warrant,
(iii) the 81,522 shares of Common Stock that may be acquired upon the exercise
of warrants issued to the lender pursuant to a Bridge Loan Agreement with the
Company for resale ("Bridge Loan Warrants") or (iv) 200,000 warrants to acquire
shares of our Common Stock issued to a shareholder in connection with the
settlement of a contractual dispute, are issued, and the holder then resells the
shares of Common Stock issued to them upon such exercise (subject to applicable
securities law restrictions), the price of our Common Stock may decrease due to
the additional shares of Common Stock in the market.

     On July 22, 2005, the Company closed on the sale of an aggregate of 92
investment units (the "Units") at a purchase price of $30,000 per Unit for gross
proceeds of $2,760,000. Each Unit consists of: (i) $30,000 of 2.5% two-year
Convertible Debentures ("Convertible Debentures"), convertible into 25,000
shares of Common Stock at the rate of $1.20 per share and (ii) a three-year
warrant to purchase 12,500 shares of Common Stock at an exercise price of $2.00
per share (the "Debenture Warrants"). The holders of the outstanding Convertible
Debentures will be able to resell 2,262,500 shares of Common Stock upon the
conversion of the Convertible Debentures into shares of the Common Stock and
1,150,00 shares of Common Stock upon the exercise of the Debenture Warrants,
respectively The Placement Agent received warrants, in connection with the
debenture offering, for 230,000 shares of Common Stock at $1.20 per share and
115,000 shares of Common Stock at $2.00 per share which, if exercised, will be
available for resale.

     As of May 15, 2006, there were 93,613 outstanding shares of our Common
Stock, not held by our officers, directors, or by 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.

     Further, as of May 15, 2006, there was an aggregate of 588,000 options to
purchase shares of our Common Stock, and another 25,000 shares of Common Stock
reserved for issuance under our Stock Option and Stock Grant Plan but not yet
granted.

     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 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:


                                       25
<PAGE>
     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 and we cannot assure you
that capital will be available on reasonable terms, if at all, or on terms that
would not cause substantial dilution to your stock holdings.

     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 Prospect to provide economies of scale in production of the
coal-bed methane gas at this prospect. 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. We have the authority to issue, without stockholder approval, up
to 50,000,000, shares of Common Stock (of which, as of May 15, 2006, 4,599,622
shares were outstanding) and 25,000,000 shares of preferred stock (of which, as
of May 15, 2006, 30,320 shares of our Series B Preferred Stock were outstanding)
and to issue options and warrants to purchase shares of our Common Stock.
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. These 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.


                                       26
<PAGE>
     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 B Preferred Stock and Convertible Debentures, as well as warrants that
have been issued by the Company, we have a large number of shares eligible for
future sale.

     As of May 15, 2006, 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 588,000 shares were
outstanding (the "Plan Options"). Our officers and directors beneficially own
725,551 shares of our Common Stock, or 14.26% 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 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 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.


                                       27
<PAGE>
     Two of our shareholders collectively exercise voting power of more than 17%
of our Common Stock.

     As of May 15, 2006, John McKey and his wife, Candace McKey, collectively
own 782,116 shares of our Common Stock, or 17% of the shares outstanding. Of
these, Mr. McKey owns 439,807 shares, and Mrs. McKey owns 342,309 shares. In
addition, Mr. and Mrs. McKey hold warrants to purchase an additional 163,044 and
200,000 shares of our Common Stock at an exercise price of $1.38 and $2.00 per
share, respectively. While Mr. and Mrs. McKey each disclaim beneficial ownership
of the shares held by the other, collectively they may be able to influence the
outcome of all matters submitted to our shareholders for approval, regardless of
the preferences of the minority shareholders.

Item 1B.   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 Form 10-KSB.


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. Accordingly, no
pricing information is available prior to this date.


                                       28
<PAGE>
     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 on a quarterly basis for the year ended February 28, 2006 and the three
quarters ended February 28, 2005, 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, 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
November 20, 2004                $       0.81       $      0.43
August 31, 2004                  $       1.15       $      0.60


     On May 24, 2006, the closing bid price of our Common Stock was $2.05. As of
May 15, 2006, we had 1,729 shareholders of record, which does not include
shareholders whose shares are held in street or nominee names. We believe that
as of May 15, 2006, there are approximately 2,183 beneficial owners of our
Common Stock.

     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.

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

     Introduction

     The following discussion should be read in conjunction with our
consolidated audited financial statements and the related notes that appear
elsewhere in this Form 10-KSB. 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 Form 10-KSB,
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, 2006,
and changes in our financial condition since February 28, 2005, the end of the
prior fiscal year. It also covers our results of operation for the fiscal years
ended February 28, 2006, and February 28, 2005. The following discussion and
analysis should be read in conjunction with the financial statements and the
related notes included elsewhere in this Form 10-KSB.


                                       29
<PAGE>
     The notable items that occurred during the fiscal year ended February 28,
2006, were that SDG completed the construction of an 18-mile Gas Gathering
Pipeline from the Slater Dome Prospect to the Questar transmission hub in Baggs,
Wyoming, that allowed us to start producing and dewatering the existing wells in
the Slater Dome Prospect. We acquired 82.76% of the Limited Partnership
Interests in SDG, and we successfully drilled and completed three coal-bed
methane wells in the Slater Dome Prospect.

     Plan of Operation

     We are a natural resource exploration and production company engaged in the
exploration, acquisition and development of oil and gas properties in the United
States. We currently own an interest in three oil and gas prospects, two of
which are undeveloped. The Slater Dome Prospect, in which we own a 30% working
interest, consists of 61,488 gross acres, 31,638 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 Prospect targets coal-bed
methane gas located at relatively shallow depths by industry drilling standards.
The Flattops Prospect consists of 3,258 gross acres, 2,806 net acres, of which
we own 100% of the working interest. The Nucla Prospect consists of
approximately 38,997 gross acres on 25 different oil and gas leases in Montrose
County, Colorado. We own varying interests in this property (20% to 30% on a
lease-by-lease basis), subject to a marketing agreement with several third
parties. For a complete description of our properties and our business
operations, see "Items 1 and 2. Description of Business and Properties."

     Our plan of operation is to develop the Slater Dome Prospect by drilling 12
wells adjacent or near our existing wells in the southeast section of the
prospect and to develop the Flattops Prospect by drilling two wells in the
summer/fall of 2006 on that prospect. We also plan to evaluate opportunities to
acquire other interests in oil and gas properties. We do not intend to develop
the Nucla Prospect and have granted a two-year seismic option to an independent
third party, which expires in December 2006.

     Prospect Acquisition Philosophy

     We anticipate undertaking investigation to acquire other interests in oil
and gas properties in the fiscal year ending February 28, 2007. 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, 2006, and February
28, 2005, and for each of the fiscal years ended February 28, 2006, and February
28, 2005, 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.


                                       30
<PAGE>
                                                       Year Ended February 28,
                                                    ----------------------------
                                                       2006              2005
                                                    -----------     ------------
Statement of Operations Data:

Revenue                                             $   159,452     $    28,132
(Loss) from operations                              $(2,438,109)    $  (678,869)
Other income (expense), net                         $  (602,018)    $   (41,917)
Net loss attributable to common shareholders        $(3,430,136)    $  (783,807)
Basic and diluted net loss per share                $     (0.94)    $     (0.24)
Weighted average shares outstanding                   3,667,947       3,215,163


                                                       Year Ended February 28,
                                                    ----------------------------
                                                       2006              2005
                                                    -----------     ------------
Balance Sheet Data:

Working capital                                    $  (109,622)      $ 1,276,776
Current assets                                     $   828,384       $ 2,317,206
Total assets                                       $ 7,324,927       $ 5,611,954
Current liabilities                                $   938,006       $ 1,040,430
Long-term liabilities                              $ 1,502,999       $        --
Total liabilities                                  $ 2,441,005       $ 1,040,430
Total Shareholders' equity                         $ 3,884,578       $ 4,571,524


                              Results of Operation

   Year Ended February 28, 2006, Compared to the Year Ended February 28, 2005.

     For the year ended February 28, 2006, we realized a net loss attributable
to Common Stockholders of $3,430,136, or $0.94 per share, on revenue of
$159,452. This compares with a net loss attributable to common shareholders of
$783,807, or $0.24 per share, on $28,132 of revenue for the fiscal year ended
February 28, 2005. The loss increased by $2,646,329 ($0.70 per share) or 337%.

     Our revenues increased from $28,132 during the fiscal year ended February
28, 2005, to $159,452 during the fiscal year ended February 28, 2006, a net
increase of $131,320 or 467%. The increase in oil and gas revenues is primarily
attributable to commencing the sale of gas from the Slater Dome Prospect on June
3, 2005; prior to that date, the wells were shut in awaiting a gathering line to
transport the gas to market. The second component of the increase is that our
royalty interests revenue increased as a result of the increase in price of
crude oil and natural gas. The following table summarizes the increases:

                                       31
<PAGE>
                                                                  Increase
                                          2006         2005      (Decrease)
                                       ------------------------------------
     Slater Dome Prospect              $108,973      $     --      $108,973
     Royalty interests                   35,880        28,132         7,748
                                       ------------------------------------
                                       $144,853      $ 28,132      $116,721
                                       ====================================


     During the fiscal year ended February 28, 2006, SDG's gathering fees from
the Gas Gathering Pipeline were $14,599. The Company did not have gathering fees
during the fiscal year ended February 28, 2005, because the Gas Gathering
Pipeline was not placed in service until June of 2005.

     Exploration costs were $132,551 during the fiscal year ended February 28,
2006, compared with $50,546 in the fiscal year ended February 28, 2005, an
increase of $82,095, or 163%. The primary reason for the increase is the
increased geologic consulting and geophysical consulting and map costs
associated with the development of the Slater Dome Prospect, offset by decreased
delay rental costs. The major components and the changes in exploration expenses
are summarized as follows:

                                                                  Increase
                                           2006         2005     (Decrease)
                                        -----------------------------------
     Geological consulting              $ 93,448     $ 12,000     $ 81,448
     Geophysical and maps                 30,599        8,599       22,000
     Delay rentals                         8,504       29,482      (20,978)
     Miscellaneous                            --          375         (375)
                                        ----------------------------------
                                        $132,551     $ 50,456     $ 82,095
                                        ==================================

     Lease operating expenses were $668,788 during the fiscal year ended
February 28, 2006, as compared to $180,105 during the fiscal year ended February
28, 2005, an increase of $488,683, or 271%. The operating costs increased as a
result of the commencement of production at the Slater Dome Prospect, the
dewatering of the wells at Slater Dome and the reworking of two existing wells.
The major components and the changes in lease operating expenses are summarized
as follows:

                                                                  Increase
                                               2006       2005   (Decrease)
                                             ------------------------------
     Slater Dome operating expenses          $251,210   $153,468   $ 97,741
     Rework costs                             216,507         --    216,507
     Compression and water disposal           196,957     23,798    173,159
     Other costs                                4,114      2,838      1,276
                                             ------------------------------
                                             $668,788   $180,105   $488,683
                                             ==============================

     Gas gathering costs amounted to $2,427 during the fiscal year ended
February 28, 2006. Such costs were not present during the fiscal year ended
February 28, 2005, because the Gas Gathering Pipeline was not placed into
service until June of 2005.


                                       32
<PAGE>
     General and administrative expenses were $892,338 during the fiscal year
ended February 28, 2006 as compared to $458,941 during the fiscal year ended
February 28, 2005, an increase of $433,397 or 94%. The major components and the
changes in general and administrative expenses are summarized as follows:

                                                                   Increase
                                              2006        2005    (Decrease)
                                           ---------------------------------
     Financial public relations            $172,966    $ 46,446    $126,519
     Insurance and benefits                  79,023       2,634      76,389
     Professional fees                      132,847      61,909      70,938
     Salaries                               333,481     254,988      78,493
     Travel                                  66,920      25,973      40,947
     Landman expenses                        42,253       2,400      39,853
     Other                                   64,848      64,590         258
                                           --------------------------------
                                           $892,338    $458,941    $433,397
                                           ================================

     The costs associated with increased financial relations are the 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. Insurance and benefits increased because the Company obtained
directors' and officers' liability insurance. The Company adopted an employee
health plan in June 2005, and liability, workmen's compensation and other
miscellaneous insurance costs increased. The principal reason for the increase
in professional fees was the result of increased legal and accounting fees
associated with the acquisition of our interest in SDG and general increases
attributable to the increase in corporate activities. Salaries increased because
bonuses in the aggregate amount of $60,000 was granted to the officers, together
with adding a clerical position during the fiscal year ended February 28, 2006.
Travel increased because of the increased costs associated with our financing
efforts and the increased production activity at the Slater Dome Prospect.
Landman expenses increased because we engaged a contract landman to evaluate and
acquire oil and gas properties. The increase in other expenses in the amount of
$258 in the aggregate is considered normal in the ordinary course of business.

     Restricted stock award compensation was $234,000 during the fiscal year
ended February 28, 2006, as compared with $0 during the fiscal year ended
February 28, 2005. The restricted stock award compensation is the result of the
issuance of 200,000 shares of Common Stock to our executive officers during the
fiscal year ended February 28, 2006.

     Issuance of Common Stock warrants was $478,452 during the fiscal year ended
February 28, 2006, as compared with $0 during the fiscal year ended February 28,
2005. The value of the awards was calculated using the Black-Scholes model (see
footnote 7 to the Consolidated Financial Statements). The amounts charged to
operations were $172,842 in connection with the issuance of warrants for
investor relations services and $305,700 in connection with the issuance of a
warrant in settlement of a contractual dispute.



                                       33
<PAGE>
     Depreciation, depletion and amortization was $188,915 during the fiscal
year ended February 28, 2006, as compared with $17,499 during the fiscal year
ended February 28, 2005, an increase of $171,416, or 980%. Of the increase in
depreciation, depletion and amortization. $65,246 is attributable to depletion
associated with the Gas Gathering Pipeline, which entered service in June 2005,
$109,445 is attributable to depletion associated with the increased production
from the Slater Dome Prospect, and $4,269 is attributed to increased office
equipment, all of which is offset by a decrease of $7,541 in depletion
associated with our royalty interests.

     Interest income was $8,779 during the fiscal year ended February 28, 2006,
as compared with $3,624 during the fiscal year ended February 28, 2005, an
increase of $5,155, or 142%. The increase is the result of a larger cash balance
held in our bank account.

     Gain or loss from sale of assets was $0 during the fiscal year ended
February 28, 2006, as compared with a loss of $1,606 during the fiscal year
ended February 28, 2005. The Company incurred a loss of $1,606 from the sale of
the production payment receivable during the fiscal year ended February 28,
2005.

     Interest expense during the fiscal year ended February 28, 2006, was
$68,767, as compared with $43,935 during the fiscal year ended February 28,
2005, an increase of $24,832, or 57%. The increase in interest expense is
primarily the result of interest arising from the interest payable on the
Convertible Debentures issued by the Company in July 2005 in the amount of
$42,549, offset by a decrease in interest paid on a loan from a shareholder and
a bank loan in the amount of $17,717.

     Debt issuance costs during the fiscal year ended February 28, 2006, were
$542,018, as compared with $0 during the fiscal year ended February 28, 2005,
and arose from the issuance of shares to the Placement Agent in connection with
the issuance of the Convertible Debentures in July 2005.

     The minority interest in net loss of the consolidated subsidiary during the
fiscal year ended February 28, 2006, was $28,560. The Company did not acquire
the initial Limited Partnership Interests in SDG until May 2005, and,
accordingly, there was no net loss of the consolidated subsidiary during the
fiscal year ended February 28, 2005.

     Dividends on the Series A Preferred Stock and Series B Preferred Stock
during the fiscal year ended February 28, 2006, were $418,580, as compared with
$63,021 during the fiscal year ended February 28, 2005, an increase of $355,559,
or 564%. The Series B Preferred Stock was issued in February 2005, and,
accordingly, the increase is attributable to dividends paid on the Series B
Preferred Stock during the fiscal year ended February 28, 2006, which were not
present during the fiscal year ended February 28, 2005.

     As a result of the above, we generated a net loss of $3,011,556 during the
fiscal year ended February 28, 2006, as compared to a net loss of $720,786
during the fiscal year ended February 28, 2005.



                                       34
<PAGE>
     We expect to incur losses from operations until we can establish sufficient
production from our oil and gas properties to generate revenue sufficient to
cover our operating, general and administrative expenses. That objective, in
turn, is dependent upon receipt of additional working capital. (See "Liquidity
and Capital Resources").

     Liquidity and Capital Resources.

     We have not generated positive cash flows from operating activities and
used $1,484,374 in operating activities. The following summarizes the Company's
capital resources at February 28, 2006, compared with February 28, 2005,

                             February 28,   February 28,   Increase    Increase
                                2006          2005        (Decrease)  (Decrease)
                                  $             $              $             %
                             ---------------------------------------------------
     Cash                     746,018       2,299,740     (1,553,722)      (29%)
     Current assets           828,384       2,317,206     (1,488,822)      (27%)
     Current liabilities      938,006       1,040,430       (102,424)      (77%)
     Working capital         (109,622)      1,276,776     (1,386,398)     (113%)


     The changes in working capital are summarized as follows:


      Proceeds from convertible debt                        $    2,760,000
      Proceeds from warrants exercised                             107,992
      Investment in SDG, net of distributions                   (1,594,334)
      Purchase of property and equipment                          (701,427)
      Payment of bank debt                                        (250,027)
      Payment of note payable, shareholder                        (250,000)
      Preferred stock dividends                                   (102,917)
      Cost of issuing equity securities                            (37,511)
      Operating expenses, net                                   (1,318,174)
                                                            --------------
                                                            $   (1,386,398)
                                                            ==============


     We expect that working capital requirements will be funded through a
combination of our existing funds, cash flow from operations, issuance of debt,
proceeds from the exercise of warrants and further issuances of securities. The
warrants issued to the holders of our Series B Preferred stock expire on
February 1, 2008 and are exercisable at a price of $1.38 per share. As of June
1, 2006 three Series B Warrant holders exercised their warrants for a total of
1,130,436 shares, thereby providing the Company with $1,560,000 in cash. If the
holders of the Series B Warrants exercise the remaining 3,984,994 Warrants and
the Convertible Debenture Warrant holders exercise their 1,137,500 Warrants, the
proceeds to the Company would amount to $5,499,292 and $2,275,000, respectively.
However, unless those Warrant holders exercise their warrants, the existing
working capital and anticipated cash flow are not expected to be adequate to
fund our capital requirements, and we intend to solicit additional capital in
the form of equity or debt to finance: (i) our share of the drilling of 12 wells
anticipated at Slater Dome Prospect and two wells at the Flattops Prospect and
(ii) to provide capital for other lease acquisitions. We believe that we will be
an attractive investment in the near future based upon our ownership interest in
the Slater Dome Prospect and upon trends in natural gas prices and the domestic
supply of natural gas. 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.



                                       35
<PAGE>
     Additional issuances of equity or convertible debt securities will result
in dilution to our current Common Stockholders' holdings. Further, such
securities might have rights, preferences or privileges senior to our Common
Stock. Additional financing may not be available upon acceptable terms, or at
all. If adequate funds are not available or are not available on acceptable
terms, we may not be able to take advantage of prospective new business
endeavors or opportunities, which could significantly and materially restrict
our business operations. In the event we are unable to obtain such financing, we
may be forced to non-consent in drilling the proposed wells at the Slater Dome
Prospect or to enter into farm-out or joint venture arrangements within the
industry.

     In addition to capital necessary to pay our proportionate share of costs
and expenses relating to drilling and development of the Slater Dome and
Flattops Prospects, it will be necessary for us to acquire capital for
administrative expenses. However, due to our status as a small, independent
explorer, we expect these expenses to be generally small in relation to our
drilling and development costs. We currently have four employees, two of whom
are our executive officers. We also maintain a small office space as our
executive and administrative headquarters. We expect that the rent associated
with our office space, together with salary and benefits for our employees, will
constitute the majority of our administrative expenses for the foreseeable
future.

     Purchase of Significant Equipment

     We do not intend to purchase any significant equipment during the next
twelve months other than that required to participate in drilling 12 additional
wells on the Slater Dome Prospect and two wells on the Flattops Prospect.

     Recent Accounting Pronouncements.

     In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
which is a revision of SFAS No. 123, "Accounting for Stock-Based Compensation."
SFAS No. 123(R) is effective for public companies for interim or annual periods
beginning after December 15, 2005, supersedes APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and amends SFAS No. 95, "Statement of Cash
Flows."


                                       36
<PAGE>
     SFAS No. 123(R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement based
on their fair values. Pro-forma disclosure is no longer an alternative. The new
standard was effective and adopted by the Company beginning with the first
quarter Form 10-QSB (May 31, 2006). SFAS No. 123(R) permits companies to adopt
its requirements using either a "modified prospective" method or a "modified
retrospective" method. 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,
"Accounting for Stock-Based Compensation," for all unvested awards granted prior
to the effective date of SFAS No. 123(R). Under the "modified retrospective"
method, the requirements are the same as under the "modified prospective" method
but also permits entities to restate financial statements of previous periods,
either for all prior periods presented or to the beginning of the fiscal year in
which the statement is adopted, based on previous pro forma disclosures made in
accordance with SFAS No. 123. The Company plans to adopt the "modified
prospective" method.

     In April 2005, the FASB issued staff position 19-1 ("FSP No. 19-1") on
accounting for suspended well costs. FSP 19-1 amends FASB Statement No. 19,
"Financial Accounting and Reporting by Oil and Gas Producing Companies," for
companies using the successful-efforts method of accounting. FSP 19-1 concludes
that exploratory well costs should continue to be capitalized when a well has
found a sufficient quantity of reserves to justify its completion as a producing
well, and the company is making sufficient progress assessing the reserves and
the economic and operating viability of the well. FSP 19-1 also requires certain
disclosures with respect to capitalized exploratory well costs. FSP 19-1 was
effective for the first reporting period beginning after April 4, 2005, and is
to be applied prospectively to existing and newly capitalized exploratory well
costs. The adoption of FSP 19-1 had no material impact on our financial
statements.

     In June 2005, the FASB issued Statement 154, "Accounting Changes and Error
Corrections," which replaces APB Opinion 20 and FASB Statement 3. Statement 154
changes the requirements for the accounting and reporting of a change in
accounting principle. APB Opinion 20 previously required that most voluntary
changes in accounting principle be recognized by including the cumulative effect
of the new accounting principle in net income of the period of the change.
Statement 154 now requires retrospective application of changes in accounting
principle to prior period financial statements, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. Statement 154 is effective for fiscal years beginning after December 15,
2005. We do not expect the adoption of this statement to have a material impact
on our results of operations or financial position.


                                       37
<PAGE>
     In March 2005, the FASB issued FASB Interpretation (FIN) No. 47,
"Accounting for Conditional Asset Retirement Obligations." FIN No. 47 clarifies
the definition and treatment of conditional asset retirement obligations as
discussed in FASB Statement No. 143, "Accounting for Asset Retirement
Obligations." A conditional asset retirement obligation is defined as an asset
retirement activity in which the timing and/or method of settlement are
dependent on future events that may be outside the control of a company. FIN No.
47 states that a company must record a liability when incurred for conditional
asset retirement obligations if the fair value of the obligation is reasonably
estimable. FIN No. 47 is intended to provide more information about long-lived
assets, more information about future cash outflows for these obligations and
more consistent recognition of these liabilities. FIN No. 47 is effective for
fiscal years ending after December 15, 2005. We do not believe that our
financial position, results of operations or cash flows will be impacted by FIN
No. 47.

     In January 2006, the Financial Accounting Standards Board published FASB
Statement of Financial Accounting Standard (SFAS) No. 155, "Accounting for
Certain Hybrid Financial Instruments--an Amendment of FASB Statements No. 133
and 140," to simplify and make more consistent the accounting for certain
financial instruments. Specifically, SFAS No. 155 permits fair value
remeasurement for any hybrid financial instrument with an embedded derivative
that otherwise would require bifurcation, provided that the whole instrument is
accounted for on a fair value basis. SFAS No. 155 applies to all financial
instruments acquired or issued after the beginning of an entity's first fiscal
year that begins after September 15, 2006, with earlier application allowed. We
do not expect that the adoption of SFAS No. 155 will have a material impact on
our results of operations or financial position.



                                       38
<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.

     Property, 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 in the previous section.


                                       39
<PAGE>
     Contractual Obligations

     The following table sets forth information with respect to our contractual
obligations as of February 28, 2006.

<TABLE>
<CAPTION>

Payments Due By Period
----------------------------------  ---------  ------------   ------------    ---------
                                      Total    1 to 3 years   4 to 5 years    More than
                                                                               5 years
----------------------------------  ---------  ------------   ------------    ---------
<S>                                 <C>        <C>            <C>      <C>   <C>    <C>
Paul G. Laird employment            $180,000   $    180,000   $       -0-    $     -0-
contract(1)

Les Bates employment contract(1)    $180,000   $    180,000   $       -0-    $     -0-

Spotswood Properties, LLC, office   $ 90,678   $     90,678   $       -0-    $     -0-
lease

</TABLE>

(1)  Calculated as of February 28, 2006. Messrs. Laird and Bates' employment
     agreements expire on February 29, 2008. See "Item 10-Executive
     Compensation."



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.

Item 8A.  Controls and Procedures

     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, to the best
of their knowledge, effective. There has been no change in our internal control
over financial reporting during the quarter ended February 28, 2006, that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.


                                       40
<PAGE>

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            49      President, CEO and Director

      Les Bates                62      Chief Financial Officer, Principal
                                       Accounting & Financial Officer,
                                       Secretary/Treasurer, and Director

      Grant I. Gaeth           74      Director


     The following information summarizes the business experience of our
officers and directors, as well as the officers, directors and key employees:

     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. 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.




                                       41
<PAGE>
     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, 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.

     Code of Ethics

     At this time, the Company has not adopted a formal Code of Ethics that
applies to the Chief Executive Officer and Chief Financial Officer. The Company
expects to adopt a formal Code of Ethics during the current fiscal year.

                                       42
<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).

     Director 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.

     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, 2006, all Section 16(a) filing requirements
applicable to its directors, executive officers and 10% owners were met, except
that (i) Paul G. Laird and Les Bates each filed two delinquent Form 4s
disclosing one transaction on each form, (ii) Grant Gaeth filed one delinquent
report on Form 4 disclosing one transaction and (iii) John D. McKey, Candace
McKey, the Appolo Trust, Aviel Faliks and Helen De Bove have each failed to
timely file a Form 3.

Item 10. Executive Compensation

     The following table sets forth the annual and long-term compensation for
services in all capacities to the Company in the fiscal years ended February 28,
2006 and 2005 and February 29, 2004, of Paul G. Laird and Les Bates, the
Company's most highly compensated executive officers. Messrs. Laird and Bates
were appointed in April 2003.

                                       43
<PAGE>
<TABLE>
<CAPTION>

                                   Annual Compensation                  Long Term Compensation
                   ------------------------------------------------   ---------------------------
Name and                                                                Restricted    Securities
Principal                                                                 Stock       Underlying
Position           Fiscal Year      Salary       Bonuses      Other       Award        Options
-----------------  -----------     -------       --------     -----   -------------   -----------
<S>                   <C>          <C>           <C>            <C>     <C>            <C>
Paul G. Laird         2006         $84,996       $30,000        $0      $117,000(5)    75,000(4)
Chief Executive       2005         $84,996       $    --        $0      $     --      100,000(1)
Officer and           2004(2)      $63,747       $    --        $0      $     --       25,000(3)
President
-----------------  -----------     -------       --------     -----   -------------   -----------
Les Bates
Chief Financial
Officer,
Principal             2006         $84,996       $ 30,000       $0      $117,000(5)    75,000(4)
Accounting and        2005         $84,996       $     --       $0      $     --      100,000(1)
Financial             2004(2)      $63,747       $     --       $0      $     --       25,000(3)
Officer
</TABLE>


(1)  Includes options to acquire 100,000 shares of Common Stock at an exercise
     price of $0.75 per share, exercisable until October 24, 2014.
(2)  From June 1, 2003, to February 29, 2004.
(3)  Includes options to acquire 25,000 shares of Common Stock at an exercise
     price of $1.00 per share, exercisable until June 6, 2013.
(4)  Includes options to acquire 75,000 shares of Common Stock at an exercise
     price of $1.15 per share, exercisable until May 13, 2015.
(5)  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.

     Option/SAR Grants in Last Fiscal Year

     The following table sets forth information concerning options granted
during the fiscal year ended February 28, 2006 to Messrs. Laird and Bates.
<TABLE>
<CAPTION>

                     Number of         % of Total Options
                     Securities            Granted to        Exercise   Expiration
         Name    Underlying Options   Employees in Fiscal     Price        Date
                      Granted                 Year
--------------- --------------------- --------------------- ---------- ------------
<S>                    <C>                    <C>             <C>          <C> <C>
Paul G. Laird          75,000                 50%             $1.15    May 13, 2015
Les Bates              75,000                 50%             $1.15    May 13, 2015

</TABLE>

     Option Values

     The following table provides certain information concerning the fiscal year
end value of unexercised options held by Messrs. Laird and Bates.

                 Aggregated Option Exercises in 2006 Fiscal Year
                        and Fiscal Year End Option Values

                                       44
<PAGE>
<TABLE>
<CAPTION>
                      Shares
                      on                               Number of                  Value of Unexercised
                      acquired   Value             Unexercised Options                In-the-Money
        Name          exercise   realized          at Fiscal Year End           Options fiscal year end (1)
        ------------- ---------- -----------   -----------------------------   ----------- -----------------
                                               Exercisable    Unexerciseable   Exercisable    Unexerciseable
        ------------- ---------- -----------   -----------    --------------   -----------    --------------
<S>                        <C>            <C>    <C>                 <C>       <C>                    <C>
        Paul G. Laird      0              0      200,000             0         $251,750               0
        Les Bates          0              0      200,000             0         $271,750               0
        ------------- ---------- -----------   -----------    -------------    -----------    --------------
</TABLE>

(1)  Value calculated by determining the difference between the closing sales
     price on May 15, 2006, of $2.19 per share and the exercise price of the
     options. Fair market value was not discounted for restricted nature of any
     stock purchased on exercise of these options.

     Employment Agreements

     We have written employment agreements with our executive officers, Paul G.
Laird and Les Bates. Pursuant to their employment agreements, Messrs. Laird and
Bates each devotes such time as he deems necessary to perform his duties to the
Company and is subject to conflicts of interest. The employment agreements
expire on February 29, 2008; however, they are automatically renewable on an
annual basis for additional one-year increments. Pursuant to Messrs. Laird and
Bates' employment agreements, they each receive base salary compensation in the
amount of $85,000 per annum, adjusted annually at the rate of inflation as
measured by the federal Consumer Price Index, or $5,000, 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 we will be
obligated to pay Mr. Laird and Mr. Bates all compensation for the remainder of
their employment agreements and 2.99 times their annual salary if a change of
control, as defined in their employment agreements, occurs. We have not obtained
any key man life insurance on any of our executive officers.

     Stock Option and Stock Grant Plan

     On June 6, 2003, we adopted the New Frontier Energy, Inc. Stock Option and
Stock Grant Plan (defined above as the "Plan"). The 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 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 Plan provides for the
issuance of up to 625,000 shares of Common Stock 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 Plan expires in 2013.


                                       45
<PAGE>
     As of May 15, 2006, we had granted 600,000 options to acquire shares of our
Common Stock pursuant to the Plan and 12,000 options to acquire shares of our
Common Stock had been exercised. We have 25,000 options to acquire shares of our
Common Stock available for grant under the Plan.

     Securities Authorized For Issuance Under Compensation Plans

     The table set forth below presents the securities authorized for issuance
with respect to the Plan under which equity securities are authorized for
issuance as of February 28, 2006.
<TABLE>
<CAPTION>

                                  Equity Compensation Plan Information

                                                                           Number of securities
                                                                          remaining available for
                       Number of securities                                 future issuance under
                         to be issued upon         Weighted-average      equity compensation plans
                            exercise of           exercise price of        (excluding securities
                       outstanding options,     outstanding options,        reflected in first
Plan Category           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              0                        0                          0
     Plans not
    approved by
 security holders
-------------------    ---------------------   ----------------------   --------------------------
       Total                  588,000                   $0.87                     25,000
-------------------    ---------------------   ----------------------   --------------------------
</TABLE>

Item 11:  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth, as of May 15, 2006, 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]





                                       46
<PAGE>




                                              Amount of        Percent of
  Name and Address of                         Beneficial       Beneficial
    Beneficial Owner                          Ownership        Ownership
---------------------------                 -------------      ----------
Paul G. Laird (1)                              319,551            6.66%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

Les Bates (2)                                  319,551            6.66%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

Grant I. Gaeth (3)                             125,551            2.69%
1789 W. Littleton Blvd.
Littleton, Colorado 80120

John D. McKey, Jr. (4)                         882,116           18.77%
7737 S.E. Loblolly Bay Dr.
Hobe Sound, FL 33455

Candace McKey (5)                            1,045,160           21.49%
7737 S.E. Loblolly Bay Dr.
Hobe Sound, FL 33455

Echo's Voice LLC (6)                           809,783           14.97%
1535 Falmouth Ave.
New Hyde Park, NY 16040

Apollo Trust (7)                             1,184,783           20.48%
1535 Falmouth Ave.
New Hyde Park, NY 16040

Aviel Faliks (8)                               823,370           15.18%
24 Rozmus Ct.
Allendale, NJ 07401

John O'Shea (10)                               383,778            7.89%
100 Wall Street
New York, New York 10005

Wellington Management Company, LLP (11)        375,000            7.54%
75 State Street
Boston, MA 02109

Helen De Bove (12)                           1,903,566           29.27%
1535 Falmouth Ave.
New Hyde Park, NY  16040

Officers and Directors as a Group              725,551           14.26%


(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 and
         (v) 19,551 shares owned by Natural Resources Group, Inc., of which the
         Mr. Laird is an officer, director and principal shareholder.


                                       47
<PAGE>
(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, and
         (v) 19,551 shares owned by Natural Resources Group, Inc., of which Mr.
         Bates is an officer.
(3)      Includes (i) 12,000 shares of Common Stock owned directly by Mr. Gaeth,
         6,000 shares owned by GeoEx, Inc., an entity in which Mr. Gaeth is an
         affiliate, (ii) options to acquire 88,000 shares of Common Stock from
         the Company at a price of $0.75, expiring in 2014 and (iii) 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 342,309 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 Candance McKey at a price of $2.00 per share or
         163,044 warrants to acquire shares of our Common Stock held by Candance
         McKey at a price of $1.38 per share.
(5)      Includes (i) 342,309 shares owned directly by Ms. McKey, (ii) 163,044
         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 247,500 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) 250,000 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 125,000 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 underlying a
         warrant issued to Echo's Voice, LLC in connection with its purchase of
         the Company's Series B Preferred Stock. Helen Del Bove, manager of
         Echo's Voice LLC, exercises
(7)      Includes (i) 500,000 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 250,000 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 underlying a
         warrant issued to the Apollo Trust in connection with its purchase of
         the Company's Series B Preferred Stock. 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.
(8)      Includes (i) 375,000 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 187,500 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 underlying a
         warrant issued to Mr. Faliks in connection with his purchase of the
         Company's Series B Preferred Stock.
(9)      Includes (i) 150,000 shares of Common Stock to be offered upon
         conversion of the Debenture and (ii) 75,000 shares of Common Stock to
         be offered upon the exercise of warrants issued to the holders of our
         Debentures.
(10)     Includes (i) 62,500 shares of Common Stock to be offered upon
         conversion of the Debenture, (ii) 31,250 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 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.
(11)     Includes: (i) 100,000 shares of Common Stock to be offered upon
         conversion of the Debenture and 50,000 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) 100,000 shares of Common
         Stock to be offered upon conversion of the Debenture and 50,000 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) 25,000
         shares of Common Stock to be offered upon conversion of the Debenture
         and 12,500 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) 25,000 shares of Common Stock to be
         offered upon conversion of the Debenture and 12,500 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 375,000
         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.

                                       48
<PAGE>
(12)     Includes (i) 250,000 shares of Common Stock to be offered upon
         conversion of the Debenture, 125,000 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 underlying a warrant issued to Echo's Voice, LLC in connection
         with its purchase of the Company's Series B Preferred Stock and (ii)
         500,000 shares of Common Stock to be offered upon conversion of the
         Debenture, 250,000 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 (iii) 434,783 shares of Common Stock underlying
         a warrant issued to the Apollo Trust in connection with its purchase
         of the Company's Series B Preferred Stock. Helen Del Bove, as manager
         of Echo's Voice LLC and Trustee of the Apollo Trust, exercises
         dispositive and voting 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.

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.

     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 new office space in Littleton, Colorado with Spotswood, as
defined above, an affiliate of Paul G. Laird, President and Chief Executive
Officer of the Company, 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. Mr. Laird
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 $24,953 and $18,000 during the fiscal years ended February
28, 2006 and 2005, respectively. During the 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 Grant Gaeth, a director of the
Company, for geologic consulting $36,000 and $12,000 during the fiscal years
ended February 28, 2006 and 2005, respectively.



                                       49
<PAGE>
     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.

     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.

     SDG accrued management fees in the amount of $13,062 to 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.

Item 13.   Exhibits

     (a) Exhibits

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

Exhibit
  No.     Description
-------   ----------------------------------------------------------------------
 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.


                                       50
<PAGE>

 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 $30,000 for an audit of its 2006 financial statements and has
paid $7,500 as a retainer for such services. During the fiscal year ended
February 28, 2005, the Company paid Stark Winter Schenkein & Co., LLP, an
aggregate of $21,950 for an audit of its 2005 financial statements.

     Audit-Related Fees

     The Company estimates it will pay Stark Winter Schenkein & Co., LLP, an
aggregate of $12,000 in fees for review of its quarterly financial statements
the fiscal year ended February 28, 2006. During the fiscal year ended February
28, 2005, the Company paid Stark Winter Schenkein & Co., LLP, an aggregate of
$13,517 in fees for review of its quarterly financial statements.

     All Other Fees

     During the fiscal year ended February 28, 2006, the Company paid Stark
Winter Schenkein & Co., LLP, an aggregate of $4,000 in fees in connection with a
Registration Statement on Form SB-2 filed with the SEC during fiscal 2006.
During the fiscal year ended February 28, 2005, the Company paid Stark Winter
Schenkein & Co., LLP, an aggregate of $1,500 in fees in connection with a
document review.



                                       51

<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:  June 6, 2006                         /s/ Paul G. Laird
                                            ---------------------------------
                                            Paul G. Laird, President, CEO and
                                            Director

Date:  June 6, 2006                         /s/ Les Bates
                                            ---------------------------------
                                            Les Bates, Financial Officer,
                                            Principal Accounting & Financial
                                            Officer, Secretary/Treasurer,
                                            Principal Accounting & Financial
                                            Officer and Director


Date:  June 6, 2006                         /s/ Grant I. Gaeth
                                            ---------------------------------
                                            Grant I. Gaeth, Director




                                       52
<PAGE>
                            NEW FRONTIER ENERGY, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS


                     FOR THE YEAR ENDED FEBRUARY 28, 2006




                                TABLE OF CONTENTS
                                                                       Page
                                                                      ------

Report of Independent Registered Public Accounting Firm                F-2

Consolidated Financial Statements
     Balance Sheet                                                     F-3
     Statements of Operations                                          F-4
     Statements of Changes in Stockholders' Equity                     F-5
     Statements of Cash Flows                                          F-7

Notes to Consolidated Financial Statements                             F-8









                                      F-1
<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, 2006, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years ended February
28, 2006 and 2005. 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, 2006, and the results of its operations, and its cash
flows for the years ended February 28, 2006 and 2005, in conformity with
accounting principles generally accepted in the United States of America.



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

Denver, Colorado
June 1, 2006



                                       F-2


<PAGE>
<TABLE>
<CAPTION>
                            NEW FRONTIER ENERGY, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 28, 2006



<S>                                                                     <C>
                                     ASSETS
CURRENT ASSETS
      Cash                                                              $   746,018
      Accounts receivable, trade                                             54,055
      Prepaid expenses                                                       28,311
                                                                        -----------
            Total current assets                                            828,384
                                                                        -----------

PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
  AND DEPLETION OF $290,995                                               6,496,543
                                                                        -----------

                                                                        $ 7,324,927
                                                                        ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                                  $   576,553
      Dividends payable                                                     340,342
      Accrued expenses                                                        8,049
      Accounts payable, affiliates                                           13,062
                                                                        -----------
            Total current liabilities                                       938,006
                                                                        -----------

LONG TERM LIABILITIES
      Convertible debentures                                               1,399,277
      Accrued interest                                                       41,022
      Asset retirement obligation                                            62,700

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                999,344

STOCKHOLDERS' EQUITY
      Preferred stock, $.001 par value, 25,000,000 shares authorized:
         Series A Convertible, 100,000 shares authorized
         50,000 shares issued and outstanding                                   50
         Series B Convertible, 36,036 shares authorized
         30,657.25 issued and outstanding                                        31
      Common stock, $.001 par value, 50,000,000 shares authorized,
           4,078,819 shares issued and outstanding                            4,078
      Additional paid in capital                                          9,994,443
      Accumulated (deficit)                                              (6,114,024)
                                                                        -----------
                                                                          3,884,578
                                                                        -----------

                                                                        $ 7,324,927
                                                                        ===========
</TABLE>


        See accompanying notes to the consolidated financial statements.

                                      F-3
<PAGE>
                            NEW FRONTIER ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                         Fiscal Year Ended
                                                            February 28,
                                                         2006          2005
                                                     -----------    -----------
Operating revenues
       Oil and gas sales                             $   144,853    $    28,132
       Gathering fees                                     14,599             --
                                                     -----------    -----------
                                                         159,452         28,132
Operating expenses
       Exploration costs, including dry holes            132,551         50,456
       Lease operating expenses                          668,788        180,105
       Cost of gas gathering                               2,427             --
       General and administrative                        892,338        458,941
       General and administrative non-cash stock
         based compensation                              478,542             --
       Restricted stock award                            234,000             --
       Depreciation, depletion and amortization          188,915         17,499
                                                     -----------    -----------
            Total operating expenses                   2,597,561        707,001
                                                     -----------    -----------

(Loss) from operations                                (2,438,109)      (678,869)
                                                     -----------    -----------
Other income (expense)
       Interest income                                     8,779          3,624
       (Loss) on sale of assets                               --         (1,606)
       Interest expense                                  (68,767)       (43,935)
       Debt issuance costs, non-cash                    (542,018)            --
                                                     -----------    -----------
            Other income (expense), net                 (602,018)       (41,917)
                                                     -----------    -----------

(Loss) before income taxes                            (3,040,116)      (720,786)
                                                     -----------    -----------
Income taxes
       Current                                                --             --
       Deferred                                               --             --
                                                     -----------    -----------
                                                              --             --
                                                     -----------    -----------
Minority interest in net loss of consolidated
       subsidiary                                         28,560             --
                                                     -----------    -----------

Net (loss)                                           (3,011,556)     (720,786)

Preferred stock dividends                               (418,580)       (63,021)
                                                     -----------    -----------

Net (loss) attributable to common shareholders       $(3,430,136)   $  (783,807)
                                                     ===========    ===========
Net (loss) per common share
       Basic and diluted                             $     (0.94)   $     (0.24)
                                                     ===========    ===========
Weighted average shares outstanding
       Basic and diluted                               3,667,947      3,215,163
                                                     ===========    ===========

        See accompanying notes to the consolidated financial statements.

                                      F-4
<PAGE>

<TABLE>
<CAPTION>

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


                                             Series A Preferred     Series B Preferred       Common Stock
                                              $.001 Par Value        $.001 Par Value        $.001 Par Value
                                              Shares    Amount       Shares     Amount     Shares       Amount
                                            --------    ------      --------    ------     ------       ------
<S>                                         <C>        <C>         <C>         <C>     <C>              <C>
Balance February 29, 2004                        -    $     -            -    $      -  $3,194,451    $3,194

  Series A preferred stock                  50,000         50            -          -          -            -

  Series A preferred stock dividends             -          -            -          -          -            -
  Issuance of common stock for
  accrued compensation                           -          -            -          -     60,000           60

  Issuance of common stock warrants              -          -            -          -          -            -

  Series B preferred stock                       -          -    32,175.00         32          -            -
  Less Series B preferred stock issuance
   costs                                         -          -            -          -          -            -

  Series B preferred stock dividends             -          -            -          -          -            -

  Net (loss) for the year                        -          -            -          -          -            -
                                           -------   --------    ----------    ------  ---------     --------
Balance February 28, 2005                   50,000         50     32,175.00        32  3,254,451        3,254

  Issuance of common stock pursuant
    to a stock award                                                                     200,000          200
  Issuance of common stock for services                                                   33,502           34
  Conversion of preferred stock to common
    stock                                                        (1,517.75)        (1)   233,500          234
  Exercise of common stock warrants                                                       84,639           85
  Less Series B preferred stock issuance
    costs
  Issuance of common stock warrants
  Issuance of common stock in connection
   with convertible debentures                                                           170,000          170
  Warrants issued in connection with
   convertible debentures
  Preferred stock dividends
  Conversion of convertible debt to common
    stock                                                                                102,727          103
  Distribution from consolidated
   entity (Note 1)
  Net (loss) for the year
                                           -------   --------    ----------    ------  ---------     --------
Balance February 28, 2006                   50,000       $ 50    30,657.25       $ 31  4,078,819      $ 4,078
                                           =======   ========    ==========    ======  =========     ========
</TABLE>
        See accompanying notes to the consolidated financial statements.

                                      F-5
                            (CONTINUED ON NEXT PAGE)

<PAGE>

<TABLE>
<CAPTION>

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

                                             Additional
                                               Paid-in      Accumulated
                                               Capital        Deficit        Total
                                              ---------     -----------    ---------
<S>                                            <C>          <C>            <C>
Balance February 29, 2004                     $4,188,242   $(1,900,081)   $2,291,355

  Series A preferred stock                       249,950             -       250,000

  Series A preferred stock dividends                   -       (43,027)      (43,027)
  Issuance of common stock for
  accrued compensation                            44,940             -        45,000

  Issuance of common stock warrants                8,000             -         8,000

  Series B preferred stock                     3,217,468             -     3,217,500
  Less Series B preferred stock issuance
   costs                                        (456,524)            -      (456,524)

  Series B preferred stock dividends                   -       (19,994)      (19,994)

  Net (loss) for the year                              -      (720,786)     (720,786)
                                             -----------   -----------   -----------
Balance February 28, 2005                      7,252,076    (2,683,888)    4,571,524

  Issuance of common stock pursuant
    to a stock award                             233,800                     234,000
  Issuance of common stock for services           49,709                      49,743
  Conversion of preferred stock to common
    stock                                           (232)                          -
  Exercise of common stock warrants              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                   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                                        123,167                     123,270
  Distribution from consolidated
   entity (Note 1)                                 5,672                       5,672
  Net (loss) for the year                                   (3,011,556)   (3,011,556)
                                             -----------   -----------   -----------
Balance February 28, 2006                     $9,994,443   $(6,114,024)  $ 3,884,578
                                             ===========   ===========   ===========
</TABLE>




        See accompanying notes to the consolidated financial statements.

                                      F-6

<PAGE>
<TABLE>
<CAPTION>

                            NEW FRONTIER ENERGY, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                     Fiscal Year Ended
                                                                                         February 28,
                                                                                     2006          2005
                                                                                 -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                              <C>            <C>
    Net (loss)                                                                   $(3,011,556)   $  (720,786)
    Adjustments to reconcile net (loss) to net cash
        (used in) operating activities:
         Depreciation, depletion and amortization                                    188,915         17,499
         Loss on disposition of assets                                                    --          1,606
         Financing issuance costs, noncash                                           542,018             --
         Minority interest in net loss of consolidated subsidiary                    (28,560)            --
         Issuance of restricted stock award                                          234,000             --
         Issuance of common stock warrants                                           478,542             --
         Issuance of common stock for services                                        49,743             --
         Accretion of interest on production payment                                      --         (3,381)
         Interest on convertible debenture                                            41,592             --
         (Increase) decrease in assets:
            Accounts receivable, trade                                               (44,538)        (4,913)
            Prepaid expense                                                          (22,247)         1,851
         Increase (decrease) in liabilities:
            Accounts payable                                                         167,038        444,199
            Accrued expenses                                                         (36,285)        (7,340)
                                                                                 -----------    -----------

       Net cash (used in) operating activities                                    (1,441,338)      (271,265)
                                                                                 -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sale of property and equipment                                          --         15,171
    Other assets                                                                         420          2,707
    Proceeds from disposition of production payment receivable                            --         30,000
    Purchase of property and equipment                                            (3,377,245)      (649,140)
                                                                                 -----------    -----------

       Net cash (used in) investing activities                                    (3,376,825)      (601,262)
                                                                                 -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Payment of notes payable                                                        (500,027)      (102,050)
    Proceeds from notes payable                                                           --        250,000
    Proceeds from convertible debt issue                                           2,760,000             --
    Proceeds from exercising common stock warrants                                   116,992             --
    Issuance of preferred stock and warrants for cash                                     --      3,467,500
    Equity and debt issuance costs for cash                                          (37,511)      (456,524)
    Preferred stock dividends paid                                                  (102,917)       (38,343)
    Minority interest investment in consolidated subsidiary                        1,027,904             --
    Repayment of employee advances                                                        --         10,000
                                                                                 -----------    -----------

       Net cash provided by financing activities                                   3,264,441      3,130,583
                                                                                 -----------    -----------

INCREASE (DECREASE) IN CASH                                                       (1,553,722)     2,258,056

BEGINNING BALANCE                                                                  2,299,740         41,684
                                                                                 -----------    -----------

ENDING BALANCE                                                                   $   746,018    $ 2,299,740
                                                                                 ===========    ===========

Cash paid for income taxes                                                       $        --    $        --
                                                                                 ===========    ===========

Cash paid for interest                                                           $    34,466    $    37,275
                                                                                 ===========    ===========

Supplemental schedule of non-cash investing and financing activities:
       Series B preferred stock converted to common stock                        $       234    $        --
       Warrants issued in connection with convertible debentures                 $ 1,509,798    $     8,000
       Common stock issued with convertible debentures                           $   236,300    $        --
       Conversion of convertible debentures into common stock                    $   123,270    $        --
       Reduction of property and equipment arising from a decrease
        in accounts payable                                                      $    48,813    $        --
       Issuance of common stock for accrued compensation                         $        --    $    45,000
       Asset retirement obligation                                               $    62,700    $        --


</TABLE>



        See accompanying notes to the consolidated financial statements.

                                      F-7

<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006


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. The fiscal 2005 financial statements include the
     accounts of the Company and its former wholly-owned subsidiary, Skyline
     Resources, Inc. ("Skyline"), which was merged into New Frontier effective
     the close of business on February 28, 2005.

     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, 2005, which is consolidated
     with the Company effective February 28, 2006. Subsequent to December 31,
     2005 and prior to February 28, 2006, SDG made a cash distribution to the
     Company in the amount of $5,672. 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
     ----------------------------------


                                      F-8
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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.

     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, 2006, the Company's uninsured
     cash balance was $646,018.

     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, 2006. 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. The fair value of
     the convertible debentures approximates its carrying value based on current
     market conditions for similar debt instruments.

     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
     equipping 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
     ----------------------------


                                      F-9
<PAGE>


                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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 2006 or 2005.

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

     MAJOR CUSTOMERS
     ---------------
     Sales to one major unaffiliated customer for years ended February 28, 2006
     and 2005, were $138,300 and $0, 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 sixty 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.

                                      F-10
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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.

     The implementation of SFAS No. 143 during fiscal 2006 resulted in an
     increase of $62,700 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 December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
     which is a revision of SFAS No. 123, "Accounting for Stock-Based
     Compensation". SFAS No. 123(R) is effective for public companies for
     interim or annual periods beginning after December 15, 2005, supersedes APB
     Opinion No. 25, "Accounting for Stock Issued to Employees", and amends SFAS
     No. 95, "Statement of Cash Flows".

     SFAS No. 123(R) requires all share-based payments to employees, including
     grants of employee stock options, to be recognized in the income statement
     based on their fair values. Pro-forma disclosure is no longer an
     alternative. The new standard was effective and adopted by the Company
     beginning with the first quarter Form 10-QSB (May 31, 2006). SFAS No.
     123(R) permits companies to adopt its requirements using either a
     "modified-prospective" method or a "modified-retrospective" method. 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). Under the
     "modified-retrospective" method, the requirements are the same as under the
     "modified-prospective" method, but also permit entities to restate
     financial statements of previous periods, either for all prior periods
     presented or to the beginning of the fiscal year in which the statement is
     adopted, based on previous pro-forma disclosures made in accordance with
     SFAS No. 123. The Company plans to adopt the "modified-prospective"
     method.

     In April 2005, the FASB issued staff position No. 19-1 (FSP 1 No. 9-1) on
     accounting for suspended well costs. FSP No. 19-1 amends FASB Statement No.
     19, "Financial Accounting and Reporting by Oil and Gas Producing
     Companies," for companies using the successful-efforts method of
     accounting. FSP No. 19-1 concludes that exploratory well costs should
     continue to be capitalized when a well has found a sufficient quantity of
     reserves to justify its completion as a producing well and the company is
     making sufficient progress assessing the reserves and the economic and
     operating viability of the well. FSP No. 19-1 also requires certain
     disclosures with respect to capitalized exploratory well costs. FSP 1 No.
     9-1 was effective for the first reporting period beginning after April 4,
     2005, and is to be applied prospectively to existing and newly-capitalized
     exploratory well costs. The adoption of FSP 19-1 had no material impact on
     the Company's financial statements.

     In June 2005, the FASB issued Statement No. 154, "Accounting Changes and
     Error Corrections," which replaces APB Opinion No. 20 and FASB Statement
     No. 3. FASB Statement No. 154 changes the requirements for the accounting
     and reporting of a change in accounting principle. APB Opinion No. 20
     previously required that most voluntary changes in accounting principle be
     recognized by including the cumulative effect of the new accounting
     principle in net income of the period of the change. FASB Statement No. 154
     now requires retrospective application of changes in accounting principle
     to prior period financial statements, unless it is impracticable to
     determine either the period-specific effects or the cumulative effect of
     the change. FASB Statement No. 154 is effective for fiscal years beginning
     after December 15, 2005. The Company does not expect the adoption of this
     statement will have a material impact on its results of operations or
     financial position.

     In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
     Conditional Asset Retirement Obligations." FIN No. 47 clarifies the
     definition and treatment of conditional asset retirement obligations as
     discussed in FASB Statement No. 143, "Accounting for Asset Retirement
     Obligations." A conditional asset retirement obligation is defined as an
     asset retirement activity in which the timing and/or method of settlement
     are dependent on future events that may be outside the control of a
     company. FIN 47 states that a company must record a liability when incurred
     for conditional asset retirement obligations if the fair value of the
     obligation is reasonably estimable. FIN No. 47 is intended to provide more
     information about long-lived assets, more information about future cash
     outflows for these obligations and more consistent recognition of these
     liabilities. FIN 47 is effective for fiscal years ending after December 15,
     2005. The Company does not believe that its financial position, results of
     operations, or cash flows will be impacted by this Interpretation .


                                      F-11
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     In January 2006, the Financial Accounting Standards Board published FASB
     Statement of Financial Accounting Standard No. 155, "Accounting for Certain
     Hybrid Financial Instruments--An amendment of FASB Statements No. 133 and
     140," to simplify and make more consistent the accounting for certain
     financial instruments. Specifically, SFAS No. 155 permits fair-value
     remeasurement for any hybrid financial instrument with an embedded
     derivative that otherwise would require bifurcation, provided that the
     whole instrument is accounted for on a fair-value basis. SFAS No. 155
     applies to all financial instruments acquired or issued after the beginning
     of an entity's first fiscal year that begins after September 15, 2006, with
     earlier application allowed. The Company does not expect the adoption of
     this statement will have a material impact on its results of operations or
     financial position.

     RECLASSIFICATIONS
     -----------------
     Certain amounts reported in the Company's financial statements for the year
     ended February 28, 2005, may have been reclassified to conform to the
     current year presentation.

2.   SLATER DOME GATHERING, LLC
     --------------------------
     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 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 Class A 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 and purchased an additional $515,000
     of Class A limited partnership interests. As a result, at February 28,
     2006, the Company owned 59.972% of the Class A limited partnership
     interests and, accordingly, 53.97% of SDG before payout. 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.

     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 is convertible into common shares at
     a conversion price of $2.00 per share. 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.

     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 $2.00 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.


                                      F-12
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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
                     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

     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:



     Natural gas gathering line                                $ 2,609,841
     Proved oil and gas properties                               3,132,453
     Unproved oil and gas properties                               955,698
     Office furniture and equipment                                 89,546
                                                               -----------
                                                                 6,787,538
     Less accumulated depreciation and depletion                  (290,995)
                                                               -----------

     Net property and equipment                                $ 6,496,543
                                                               ===========

     Total depreciation and depletion of property and equipment amounted to
     $188,915 and $17,499 for the years ended February 28, 2006, and February
     28, 2005, respectively.

     In December 2004, the Company, together with the other working interest
     owners in the Nucla prospect, granted an option for two years for the
     purpose of evaluating the prospect and conducting a seismic program. The
     consideration, net of costs, for the option amounted to $15,171 to the
     Company's interest, and the grantee will pay all lease rental obligations
     during the option period.

                                      F-13
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006


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. 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 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 $1.20 in interest due.
     The Warrants are exercisable at $2.00 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 $1.20 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. As such,
     $1,509,798 was credited to additional paid-in capital. The total allocation
     of $1,778,156 will be amortized over 24 months. Amortization expense during
     fiscal year 2006 was $540,133, and is included in Debt issuance costs,
     non-cash in the accompanying financial statements.



                                      F-14
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     At February 28, 2006, the balance of the convertible debt was as follows:



     Convertible debt                                          $ 2,637,300
     Debt discount, net of amortization of $540,133             (1,238,023)
                                                               -----------
                                                               $ 1,399,277
                                                               ===========

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


     The implementation of SFAS No. 143 during fiscal 2006 resulted in an
     increase of $62,700 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, 2006 is as follows:

     Beginning asset retirement obligation          $    --
     Liabilities incurred                            62,700
     Changes in estimates                                --
     Accretion expense                                   --
                                                    -------
     Ending asset retirement obligation             $62,700
                                                    =======

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.

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


                                      F-15
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

                                            February 28,
                                        ---------------------
                                          2006        2005
                                        ---------   ---------
                          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,
                                               ---------------------------------
                                                    2006              2005
                                               --------------  -----------------
         Deferred tax assets:
          Net operating loss carryforwards     $    2,605,400  $      1,788,800
         Deferred tax liabilities:
           Property and equipment                   (656,800)          (527,100)
                                               --------------  -----------------
                                                   1,948,600          1,261,700
         Less valuation allowance                 (1,948,600)        (1,261,700)
                                               --------------  -----------------
                                               $          --   $             --
                                               ==============  =================

     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 $6,689,200, which
     expires through 2024. 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, the Board of Directors authorized the designation of
     100,000 shares of Series A Preferred Stock, $.001 par value (the "Series A
     Preferred Stock"), ( the "Series A Preferred Stock Certificate of
     Designation"). The issue price of the Series A Convertible Preferred Stock
     is $5.00 per share (the "Series A Issue Price"). Effective November 8,
     2004, the Series A Preferred Stock Certificate of Designation was amended
     to provide that the Series A Preferred Stock shall rank in pari passu to
     the Series B Preferred Stock for payment of dividends, redemption, and
     liquidation. The Series A Preferred Stock pays a cumulative, preferential
     cash dividend at the rate of 18% of the $5.00 issue price per year that is
     payable monthly 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. The holders of the Series A Preferred Stock may convert any or
     all of the shares into shares of Common Stock by dividing the Series A
     Issue Price of the aggregate number of shares of Preferred Stock being
     converted plus any accrued but unpaid dividends by an amount equal to
     $0.65. If not sooner converted, all of the Series A Preferred Stock
     automatically converts into Common Stock on the two-year anniversary of the
     issue date, or March 1, 2006. The outstanding shares of Series A Preferred
     Stock may be redeemed by the Company for an amount equal to the Series A
     Issue Price and any accrued and unpaid dividends upon not less than 15 days
     advance notice to the holders of the Series A Preferred Stock.


                                      F-16
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     Except as otherwise provided in the Series A Preferred Stock Certificate of
     Designation with respect to matters that adversely affect the rights of the
     holders of the Series A Preferred Stock, and as otherwise required by law,
     the Series A 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 A 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 A Preferred Stock
     an amount equal to the stated value ($5.00) of the Series A 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 in full such amounts,
     then the entire assets to be distributed to the holders of the Series A
     Preferred Stock shall be distributed among the holders of the Series A
     Preferred Stock and the holders of the Series B 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.

     During the year ended February 28, 2006, the Company paid cash dividends on
     the Series A Preferred Stock in the amount of $42,410 which included
     $4,684, accrued at February 28, 2005, and accrued $3,575 as of February 28,
     2006.

     On March 1, 2004, The Company received $250,000 in proceeds for 10,000
     shares of Series A Convertible Preferred Stock and a warrant to purchase
     75,000 shares of the Company's Common Stock at exercise price of $0.65 per
     share. Each warrant is exercisable for a period of two years from the date
     the subscription is accepted by the company. The Series A Preferred Stock
     was converted into 384,615 shares of Common Stock on March 1, 2006.

     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 accumulated 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.



                                      F-17
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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 28, 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, 2006, there are 30,657.25 shares of Series B Preferred
     Stock issued and outstanding.

     During the year ended February 28, 2006, the Company paid cash dividends on
     the Series B Preferred Stock in the amount of $60,506, which included
     $19,994 accrued as of February 28, 2005. The Company recorded accrued
     dividends of $377,402 as of and for the year ended February 28, 2006.


     WARRANTS
     --------
     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. During the year ended
     February 28, 2005, the board of directors approved the issuance of Warrants
     to purchase Common Stock in connection with the note payable to
     shareholder, the Series A Preferred Stock and the Series B Preferred Stock.

     SERIES A CONVERTIBLE PREFERRED STOCK AND NOTE PAYABLE WARRANTS
     --------------------------------------------------------------
     The Company issued Warrants to purchase 150,000 shares of Common Stock at
     $1.50 per share, which was adjusted to $1.38 on July 22, 2005, in
     connection with the note payable to shareholder and the issuance of the
     Series A Convertible Preferred Stock. The estimated fair value of these
     Warrants is 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 5,249,999 on July 22, 2005 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 $1.38 on July 22, 2005.

     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 $1.38 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-18
<PAGE>

                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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 21,740 shares of
     Common Stock at an exercise price of $1.38 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 in connection with the Convertible
     Debenture placement. The Warrants provide the holder Warrant the right to
     purchase shares of the Company's Common Stock at an exercise price of
     $2.00. The estimated fair value of these Warrants is recorded at $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 $2.00 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 and 115,000 shares at $1.20 and $2.00
     per share, respectively. 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 $2.00 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.

     NONQUALIFIED STOCK OPTION
     -------------------------
     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.

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



                                      F-19
<PAGE>


                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     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 changes in the outstanding Warrants during the years ended February 28,
     2006, and February 28, 2005, are summarized as follows:

                              February 28, 2006          February 28, 2005
                          -----------------------   --------------------------
                                        Weighted                     Weighted
                                        Average                       Average
                                        Exercise                     Exercise
                            Shares       Price       Shares            Price
                          -----------------------  ---------------------------
     Beginning of year    5,137,083      $1.52         37,083         $4.00
     Granted              2,300,433      $1.31      5,100,000         $1.50
     Exercised             (72,639)      $1.49          -
     Expired               (37,083)                     -
                          ---------                ----------
     End of year          7,327,794      $1.48      5,137,083         $1.52
                          =========                ==========


                Options and Warrants Outstanding and Exercisable

                                             Weighted
                                             Average
                Range                       Remaining      Weighted
                 of           Number       Contractual      Average
              Exercise       of Shares       Life in       Exercise
                Price       Outstanding       Years          Price
          ---------------------------------------------------------
           $1.00 to $1.50    5,775,294         2.04          $1.37
           $1.51 to $2.75    1,552,500         2.64          $2.05
                            ----------
                             7,327,794
                            ==========

     COMMON STOCK
     ------------
     On May 19, 2005, the Company granted restricted stock awards of $234,000,
     which vested on that date, of 100,000 shares of Common Stock to its two
     executive officers as compensation for services. The Common Stock closed at
     $1.17 on that day.

       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.


8.   EQUITY INCENTIVE PLAN STOCK OPTION 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.



                                      F-20
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

     The changes in the outstanding stock options during the years ended
     February 28, 2006 and February 28, 2005 are summarized as follows:

                               February 28, 2006            February 28, 2005
                            -----------------------       --------------------
                                          Weighted                   Weighted
                                           Average                   Average
                                          Exercise                   Exercise
                             Shares         Price          Shares     Price
                            -----------------------       --------------------
     Beginning of year      450,000         $0.78                     $1.00
                                                           50,000

     Granted                150,000         $1.15         400,000     $0.75
       Exercised            (12,000)        $0.75            -
       Expired                 -                             -
                            --------                      -------

     End of year             588,000        $0.87         450,000     $0.78
                            ========                      =======


     At February 28, 2006, the weighted average remaining contractual life for
     the $1.00 options is 7.27 years, the weighted average remaining contractual
     life for the $0.75 options is 8.66 years, and the remaining weighted
     average remaining contractual life for the $1.15 options is 9.20 years.

     The Company has 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. 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.
<TABLE>
<CAPTION>

                                                                Fiscal Year Ended
                                                                    February 28,
                                                           ---------------------------
                                                                2006          2005
                                                           ------------   ------------
<S>                                                        <C>            <C>
     Net (loss) as reported                                $(3,011,556)   $  (720,786)
     Preferred stock dividends                                (418,580)       (63,021)
                                                           -----------    -----------
     Net (loss) attributable to common shareholders         (3,430,136)      (783,807)
     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)   $  (783,807)
                                                           ===========    ===========

     Earnings per share:
     Basic and diluted as reported                         $     (0.94)   $     (0.24)
                                                           ===========    ===========
     Basic and diluted  pro forma                          $     (0.98)   $     (0.24)
                                                           ===========    ===========
</TABLE>


                                      F-21
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006


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 February 29, 2008; however, they are automatically renewable on an
     annual basis for additional one-year increments. Pursuant to the employment
     agreements, the Officers each receive base salary compensation in the
     amount of $85,000 per annum, adjusted annually at the rate of inflation as
     measured under the federal Consumer Price Index or ($5,000), 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 occur.

     OFFICE LEASE
     ------------
     The Company is obligated for $2,667 per month under a lease for office
     space expiring December 31, 2008, or a total of $90,678 remaining on the
     lease at the rate of $32,000 per annum.

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, 2006 and 2005 is presented for the principal business
     segments as follows:
<TABLE>
<CAPTION>
                                            Oil & Gas   Gas Gathering     Consolidated
                                           --------------------------------------------
<S>                                          <C>            <C>              <C>
        February 28, 2006
        Revenues                             $144,853       $14,599          $159,452
        Loss before taxes                  $(2,967,600)    $(72,515)       $(3,040,115)
        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       $(542,015)        $-            $(542,018)
        Depreciation, depletion and
        amortization                         $123,669       $65,246          $188,915

           February 28, 2005
        Revenues                              $28,132         $-              $28,132
        Loss before taxes                   $(720,786)        $-            $(720,786)
        Total assets                        $3,239,357        $-            $3,239,357
        Property additions                   $649,140         $-             $649,140
        Interest expense                      $43,935         $-              $43,935
        Debt issuance costs, non-cash           $-            $-                $-
        Depreciation, depletion and
        amortization                          $17,499         $-              $17,499

</TABLE>

                                      F-22

<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006

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 $24,953 and $18,000 in fiscal 2006, and 2005, 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 $36,000 and $12,000 in fiscal 2006, and 2005,
     respectively. These payments were partially made with 6,000 shares of
     common stock with a fair value of $9,000 during the year ended February 28,
     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 amount of $13,062 to an entity partially
     controlled by the president of the Company.

     During fiscal 2005, the Company issued 60,000 shares of Common Stock to two
     of its directors 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 Common Stock and the accrued compensation was credited to additional
     paid-in capital.

12.  SALE OF OIL AND GAS PROPERTIES AND PRODUCTION PAYMENT RECEIVABLE
     ----------------------------------------------------------------
     In September 2004, the Company entered into an agreement with an unrelated
     party to sell a production payment receivable carried at $31,606 for
     $30,000, incurring a loss of $1,606 in the year ended February 28, 2005.

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.



                                      F-23
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006


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, 2006 (all in the United States):

     Property Acquisition Costs:
     Proved properties                                             $     --
     Unproved properties                                           $ 57,147
     Exploration costs                                             $132,551
     Development costs                                             $585,530


     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, 2006 and 2005 (all in the United
     States):

                                                       As of February 28,
                                                    ----------------------
                                                       2006         2005
                                                    ---------    ---------
     Operating revenues                             $ 144,853    $  28,132
                                                    ---------    ---------
     Costs and expenses:

         Production                                   668,788      108,105

         Exploration                                  132,551       50,546

         Depletion, depreciation and amortization     109,445       17,329
                                                    ---------    ---------

                  Total costs and expenses            910,784      175,980
                                                    ---------    ---------

     (Loss) from oil and gas producing activities   $(765,931)   $(147,848)
                                                    =========    =========

15.  SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)
     ------------------------------------------------
     At February 28, 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, 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 two tables:


                                      F-24
<PAGE>
                            NEW FRONTIER ENERGY, INC.

                   Notes to Consolidated Financial Statements

                                February 28, 2006


     Proven Net Reserves
                                                                   Natural
                                                                  Gas (mcf)
                                                                 ----------
     Proved net reserves at February 28, 2005                            --
     Revisions of previous estimates                                     --
     Extensions and discoveries                                   6,006,000
     Sales of reserves in place                                          --
     Improved recovery                                                   --
     Purchase of reserves                                                --
     Production                                                          --
                                                                  ---------
     Proved developed net reserves at February 28, 2006           6,006,000
                                                                  =========

     Since this was the first year that the Company had reserves, there was no
     revision of previous estimates of reserves. All of the Company's oil and
     gas reserves are classified as proved developed or proved undeveloped.

     Standardized Measure of Discounted Future Net Cash Flow

     The table below 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 $5.32 per mcf of natural gas to the estimated future production
     of proved oil and gas reserves at February 28,2006. 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. 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,
                                                       ------------------------
                                                          2006          2005
                                                       -----------   ----------

          Future cash inflows                          $31,953,800   $       --
                                                       -----------   ----------
          Deduct:
          Future production costs                       11,496,300           --
          Future development costs                       4,502,800           --
          Future income taxes                            4,048,000           --
                                                       -----------   ----------

                                                        20,047,100           --
                                                       -----------   ----------


          Future net cash flows                         11,906,700           --


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

16.  SUBSEQUENT EVENTS
     -----------------
     Subsequent to February 28, 2006, the Company issued an aggregate of
     1,662,430 shares of common stock. The Company received proceeds of
     $1,654,530 for the exercise of 1,195,675 warrants. Conversions of Series B
     Preferred Stock resulted in the issuance of 51,885 shares of common stock
     and the conversion of Series A Preferred Stock resulted in the issuance of
     384,615 shares of common stock. In addition, conversions of convertible
     debt and interest resulted in the issuance of 19,064 shares of common stock
     and 11,191 shares of common stock were issued for the payment of dividends.




                                      F-25
<PAGE>