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| Utah                                                                        | 87-0233535                                |
|-----------------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization)         | (I.R.S.      Employer Identification No.) |
|                                                                        |                                      |
| 9903 Santa      Monica Blvd, Suite 287, Beverly Hills,      California | 90212                                     |
| (Address      of principal executive offices)                               | (Zip      Code)                           |

|   |   Large      accelerated filer o       Accelerated      filer o      Non-accelerated      filer o      Smaller      reporting company  x |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                         | Page             |
|----------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                                                         | Number           |
|                                                                                                                                         |             |
| PART      I - FINANCIAL INFORMATION                                                                                                          |             |
|                                                                                                                                         |             |
|      Item      1. Financial Statements.                                                                             | 3 –      8 |
|                                                                                                                                         |             |
|      Item      2. Management’s Discussion and Analysis of Financial Condition and Results      of Operations. | 9                |
|                                                                                                                                         |             |
|      Item      3. Quantitative and Qualitative Disclosures About Market    Risk.                                    | 11               |
|                                                                                                                                         |             |
|      Item      4. Controls and Procedures.                                                                          | 12               |
|                                                                                                                                         |             |
| PART      II - OTHER INFORMATION                                                                                                             |             |
|                                                                                                                                         |             |
|      Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds.                                 |  12         |
|                                                                                                                                         |             |
|      Item      5.  Other Information.                                                                     | 12               |
|                                                                                                                                         |             |
|      Item      6. Exhibits.                                                                                         | 12               |
|                                                                                                                                         |             |
|      Signatures                                                                                                     | 13               |
|                                                                                                                                         |             |
|      Certifications                                                                                                 | Attached         |

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|                                                                         |   | June      30, 2008 (Unaudited) |     |   | December      31, 2007 |   |
|------------------------------------------------------------------------------|--------|--------------------------------|----------|--------|------------------------|--------|
|                                                                         |   |                           |     |   |                   |   |
| ASSETS                                                                       |   |
|                                                                         |   |                           |     |   |                   |   |
| CURRENT      ASSETS                                                          |   |                           |     |   |                   |   |
|                                                                         |   |                           |     |   |                   |   |
| Cash      and cash equivalents                                               |   | $                              | 121,603  |   |                   | $      | 408,634 |   |
| Accounts      receivable                                                     |   |                           | -        |   |                   |   | 86,730 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| TOTAL      CURRENT ASSETS                                                    |   |                           | 121,613  |   |                   |   | 495,364 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| TOTAL      ASSETS                                                            |   | $                              | 121,613  |   |                   | $      | 495,364 |   |
|                                                                         |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                              |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| LIABILITIES                                                                  |   |                           |     |   |                   |   |   |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| Accounts      payable                                                        |   | $                              | 12,433   |   |                   | $      | 7,159 |   |
| Dividends      payable                                                       |   |                           | 32,076   |   |                   |   | - |   |
| Accrued      liabilities                                                     |   |                           | -        |   |                   |   | 70,667 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| TOTAL      LIABILITIES                                                       |   | $                              | 44,509   |   |                   | $      | 77,826 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| STOCKHOLDERS’      EQUITY                                              |   |                           |     |   |                   |   |   |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| Class      A Preferred stock; no par value                                   |   |                           |     |   |                   |   |   |   |
| Authorized      – 10,000,000 shares                                    |   |                           |     |   |                   |   |   |   |
| Issued      and outstanding – 0 shares                                 |   | $                              | -        |   |                   | $      | - |   |
| Common      stock, par value $0.10 per share                                 |   |                           |     |   |                   |   |   |   |
| Authorized      – 50,000,000 shares                                    |   |                           |     |   |                   |   |   |   |
| Issued      and outstanding – 1,120,743 and 620,743, respectively      |   |                           | 112,064  |   |                   |   | 62,064 |   |
| Additional      paid-in capital                                              |   |                           | 639,615  |   |                   |   | 439,615 |   |
| Treasury      stock, at cost – 102,644 and 69,399 shares, respectively |   |                           | (154,364 | )      |                   |   | (107,794 | ) |
| Retained      (deficit) earnings                                             |   |                           | (520,211 | )      |                   |   | 23,653 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| TOTAL      STOCKHOLDERS’ EQUITY                                        |   |                           | 77,104   |   |                   |   | 417,538 |   |
|                                                                         |   |                           |     |   |                   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                        |   | $                              | 121,613  |   |                   | $      | 495,364 |   |

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|                                                       |   | Three      MonthsEnded      June      30, 2008 |     |   | Three      MonthsEndedJune      30, 2007 |   |    | Six      MonthsEndedJune      30, 2008 |   |   | Six      MonthsEndedJune      30, 2007 |   |
|------------------------------------------------------------|--------|------------------------------------------------|----------|--------|------------------------------------------|--------|---------|----------------------------------------|--------|--------|----------------------------------------|--------|
|                                                       |   |                                           |     |   | (as      restated)                       |   |    |                                   |   |   | (as      restated)                     |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |
| EXPENSES                                                   |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |
| General      and administrative                            |   | $                                              | 55,453   |   |                                     | $      | 21,030  |                                   |   | $      | 90,575                                 |   |   | $ | 40,773 |   |
| Consulting      fees, non-cash compensation                |   |                                           | 250,000  |   |                                     |   | -       |                                   |   |   | 250,000                                |   |   |   | - |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| TOTAL      EXPENSES                                        |   |                                           | 305,453  |   |                                     |   | 21,030  |                                   |   |   | 340,575                                |   |   |   | 40,773 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| (LOSS)      FROM OPERATIONS                                |   |                                           | (305,453 | )      |                                     |   | (21,030 | )                                      |   |   | (340,575                               | )      |   |   | (40,773 | ) |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| Interest      income                                       |   |                                           | 988      |   |                                     |   | 11,279  |                                   |   |   | 3,429                                  |   |   |   | 22,428 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| OTHER      INCOME (EXPENSE)                                |   |                                           | 988      |   |                                     |   | 11,279  |                                   |   |   | 3,429                                  |   |   |   | 22,428 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| (LOSS)      FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |   |                                           | (304,465 | )      |                                     |   | (9,751  | )                                      |   |   | (337,146                               | )      |   |   | (18,345 | ) |
| Provision      for income taxes                            |   |                                           | -        |   |                                     |   | -       |                                   |   |   | -                                      |   |   |   | - |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| (LOSS)      FROM CONTINUING OPERATIONS                     |   |                                           | (304,465 | )      |                                     |   | (9,571  | )                                      |   |   | (337,146                               | )      |   |   | (18,345 | ) |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| DISCONTINUED      OPERATIONS                               |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| Income      discontinued operations                        |   |                                           | -        |   |                                     |   | 105,197 |                                   |   |   | -                                      |   |   |   | 190,163 |   |
| Provision      for income taxes                            |   |                                           | -        |   |                                     |   | 30,000  |                                   |   |   | -                                      |   |   |   | 52,000 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| INCOME      FROM DISCONTINUED OPERATIONS                   |   |                                           | -        |   |                                     |   | 75,197  |                                   |   |   | -                                      |   |   |   | 138,163 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| NET      (LOSS)                                            |   | $                                              | (304,465 | )      |                                     | $      | 65,626  |                                   |   | $      | (337,146                               | )      |   | $ | 119,818 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| NET      (LOSS) INCOME PER COMMON SHARE                    |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| Basic      and diluted:                                    |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| Continuing      operations                                 |   | $                                              | (1.54    | )      |                                     | $      | (0.02   | )                                      |   | $      | (1.66                                  | )      |   | $ | (0.03 | ) |
| Discontinued      operations                               |   |                                           | -        |   |                                     |   | 0.14    |                                   |   |   | -                                      |   |   |   | 0.25 |   |
| Net      (loss) income                                     |   | $                                              | (1.54    | )      |                                     | $      | 0.12    |                                   |   | $      | (1.66                                  | )      |   | $ | 0.22 |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| WEIGHTED      AVERAGE NUMBER OF                            |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| COMMON      SHARES OUTSTANDING                             |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
|                                                       |   |                                           |     |   |                                     |   |    |                                   |   |   |                                   |   |   |   |   |   |
| Basic      and diluted                                     |   |                                           | 686,677  |   |                                     |   | 551,224 |                                   |   |   | 653,710                                |   |   |   | 551,224 |   |

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|                               |   |  Common      Stock |      |   | AdditionalPaid-in |   |    |  Treasury |   |   |  Retained |   |   |          |     |   |
|------------------------------------|--------|-------------------------|-----------|--------|-------------------|--------|---------|----------------|--------|--------|----------------|--------|--------|---------------|----------|--------|
|                               |   | Shares                  |      |   | Amount            |   |    | Capital        |   |   | Stock          |   |   |  Deficit |     |   | Total |   |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Balance,      December 31, 2007    |   |                    | 620,743   |   |              | $      | 62,064  |           |   | $      | 439,615        |   |   | $             | (107,794 | )      |   | $ | 23,653 |   |   | $ | 417,538 |   |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock for  |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| deferred      consulting fees      |   |                    | 500,000   |   |              |   | 50,000  |           |   |   | 200,000        |   |   |          | -        |   |   |   | - |   |   |   | 250,000 |   |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Purchase      of treasury stock    |   |                    | -         |   |              |   | -       |           |   |   | -              |   |   |          | (46,570  | )      |   |   | - |   |   |   | (46,570 | ) |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Dividend                           |   |                    | -         |   |              |   | -       |           |   |   | -              |   |   |          | -        |   |   |   | (206,718 | ) |   |   | (206,718 | ) |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Net      (loss) for the six months |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Ended      June 30, 2008           |   |                    | -         |   |              |   | -       |           |   |   | -              |   |   |          | -        |   |   |   | (337,146 | ) |   |   | (337,146 | ) |
|                               |   |                    |      |   |              |   |    |           |   |   |           |   |   |          |     |   |   |   |   |   |   |   |   |   |
| Balance,      June 30, 2008        |   |                    | 1,120,743 |   |              | $      | 112,064 |           |   | $      | 639,615        |   |   | $             | (154,364 | )      |   | $ | (520,211 | ) |   | $ | 77,104 |   |

----

|                                                              |   | Six      Months EndedJune      30, 2008 |     |   | Six      Months EndedJune      30, 2007 |   |
|-------------------------------------------------------------------|--------|-----------------------------------------|----------|--------|-----------------------------------------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                        |   |                                    |     |   |                                    |   |
| Net      (loss) from continuing operations                        |   | $                                       | (337,146 | )      |                                    | $      | (18,345 | ) |
| Adjustments      to reconcile net (loss) to net cash              |   |                                    |     |   |                                    |   |   |   |
|   (used)      by operating activities:                  |   |                                    |     |   |                                    |   |   |   |
| Income      from discontinued operations                          |   |                                    | -        |   |                                    |   | 138,163 |   |
| Depletion,      depreciation and accretion                        |   |                                    | -        |   |                                    |   | 28,227 |   |
| Consulting      fees, non-cash compensation                       |   |                                    | 250,000  |   |                                    |   | - |   |
| Changes      in operating assets and liabilities:                 |   |                                    |     |   |                                    |   |   |   |
|      Accounts      receivable            |   |                                    | 86,730   |   |                                    |   | 5,711 |   |
|      Accounts      payable               |   |                                    | 5,274    |   |                                    |   | (24,617 | ) |
|      Accrued      liabilities            |   |                                    | (70,667  | )      |                                    |   | (41,094 | ) |
|   NET      CASH (USED) PROVIDED BY OPERATING ACTIVITIES |   |                                    | (65,809  | )      |                                    |   | 88,045 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                        |   |                                    |     |   |                                    |   |   |   |
| Acquisition      of property leases and improvements              |   |                                    | -        |   |                                    |   | (22,845 | ) |
|   NET      CASH (USED) PROVIDED BY INVESTING ACTIVITIES |   |                                    | -        |   |                                    |   | (22,845 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                        |   |                                    |     |   |                                    |   |   |   |
| Dividends      paid                                               |   |                                    | (174,642 | )      |                                    |   | - |   |
| Purchase      of treasury stock                                   |   |                                    | (46,570  | )      |                                    |   | - |   |
|   NET      CASH (USED) BY FINANCING ACTIVITIES          |   |                                    | (221,212 | )      |                                    |   | - |   |
|                                                              |   |                                    |     |   |                                    |   |   |   |
| NET      INCREASE (DECREASE) IN CASH                              |   |                                    |     |   |                                    |   |   |   |
| AND      CASH EQUIVALENTS                                         |   |                                    | (287,021 | )      |                                    |   | 65,200 |   |
| CASH      AND CASH EQUIVALENTS                                    |   |                                    |     |   |                                    |   |   |   |
| AT      THE BEGINNING OFTHE      PERIOD                           |   |                                    | 408,634  |   |                                    |   | 985,729 |   |
| CASH      AND CASH EQUIVALENTS                                    |   |                                    |     |   |                                    |   |   |   |
| AT      THE END OF THE PERIOD                                     |   | $                                       | 121,613  |   |                                    | $      | 1,050,929 |   |

----

| Revenues:                                               |   |   |    |
|---------------------------------------------------------|--------|--------|---------|
| Oil      and natural gas sales                          |   | $      | 422,121 |   |
| Other      income                                       |   |   | 2,760   |   |
|                                                    |   | $      | 424,881 |   |
| Expenses:                                               |   |   |    |   |
| Lease      operating expense including production taxes |   |   | 138,423 |   |
| General      and administrative                         |   |   | 68,068  |   |
| Accretion      expense                                  |   |   | 3,227   |   |
| Depletion      and depreciation                         |   |   | 25,000  |   |
|                                                    |   |   | 234,718 |   |
| Income      from discontinued operations                |   |   | 190,163 |   |
| Provision      for income taxes                         |   |   | 52,000  |   |
| Net      income from discontinued operations            |   | $      | 138,163 |   |

----

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|   | 10 | Share      Issuance Agreement between the Company and Terrace Lane LLC dated as of      June 18, 2008. |
|--------|----|--------------------------------------------------------------------------------------------------------|

|   | 31 | Rule      13a-14(a)/15d-14(a) Certification. |
|--------|----|----------------------------------------------|

|   | 32 | Section      1350 Certification. |
|--------|----|----------------------------------|

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| Dated:      August 8, 2008 | CROFF      ENTERPRISES, INC.                                                                                                                                                                                                                                            |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |                                                                                                                                                                                                                                                                    |
|                       | By:/s/  GREGORY      R.      WOODHILL                                     |
|                       |            Gregory R. Woodhill, President and                                                                                                                                                                                                  |
|                       |            Chief Financial Officer                                                                                                                                                                                                             |

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|   | Exhibit      Number | Description                                                                                            |
|--------|---------------------|--------------------------------------------------------------------------------------------------------|
|   |                |                                                                                                   |
|   | 10                  | Share      Issuance Agreement between the Company and Terrace Lane LLC dated as of      June 18, 2008. |
|   |                |                                                                                                   |
|   | 31                  | Rule      13a-14(a)/15d-14(a) Certification.                                                           |
|   |                |                                                                                                   |
|   | 32             | Section      1350 Certification.                                                                       |

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