**FORM
                    10-Q**
 
 **SECURITIES
                    AND EXCHANGE COMMISSION**
 
 Washington,
                    D.C. 20549
 
 MARK
                    ONE
 
 x
                          QUARTERLY REPORT PURSUANT
                            TO SECTION 13 OR
                            15(D) OF THE SECURITIES EXCHANGE
                            ACT OF 1934
 
 For
                    the
                    quarterly period ended March 31, 2007
  OR
  o
                          TRANSITION REPORT pursuant
                            to section 13 or
                            15(d) of the Securities Exchange Act of 1934FOR THE TRANSITION PERIOD
                            FROM N/A TO N/A
 
 Commission
                    File Number: 000-16731
 
 **CROFF
                    ENTERPRISES, INC.**
 (Exact
                    Name of Registrant As Specified In Its Charter)
 **Utah**
                          
                          
                          
                          
                          
                          **80209**State
                              of Incorporation
                          
                          **3773
                              Cherry Creek Drive North,
                              Suite 1025**
                          
                          Zip
                              Code**Denver,
                              Colorado**Address
                              of principal executive
                              offices**(303)
                              383-1555**
                          
                          
                          
                          **87-0233535**Registrant’s
                              telephone number, including
                              area
                              code
                          
                          
                          
                          I.R.S.
                              Employer Identification
                              Number
 
 Securities
                    registered pursuant to Section 12(b) of the Act: 0
 Securities
                    registered pursuant to Section 12(g) of the Act: 551,244-Common
  **$0.10
                              Par Value**
                          
                          **None**Title
                              of each class
                          
                          Name
                              of each exchange on which
                              registered
 
 Indicate
                    by check mark whether the Registrant (1) has filed all reports
                    required to be
                    filed by Section 13 or 15(d) of the Securities Exchange Act of
                    1934 during
                    the preceding 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.  Yes x No
o
 
 Indicate
                    by check mark whether the Registrant is an accelerated filer
                    (as defined in Rule
                    12b-2 of the Exchange Act). oYes  x  No
 
 Indicate
                    by check mark whether the registrant is a shell company (as defined
                    in Rule
                    12b-2 of the Exchange Act).  oYesxNo
 
 As
                    of
                    March 31, 2007, the aggregate market value of the common voting
                    stock held by
                    non-affiliates of the Registrant, computed by reference to the
                    average of the
                    bid and ask price on such date was: $635,000.
 
 As
                    of
                    March 31, 2007, the Registrant had outstanding 551,244 shares
                    of common stock
                    (excludes 69,399 common shares held as treasury stock).
 
 
 1
  **INDEX**
  INDEX
                    TO
                    INFORMATION INCLUDED IN THE QUARTERLY REPORT (FORM 10-Q) TO THE
                    SECURITIES AND
                    EXCHANGE COMMISSION FOR THE THREE MONTHS ENDED MARCH 31, 2007
                    (UNAUDITED).
 Page
                                  NumberPART
                                  I. UNAUDITED FINANCIAL INFORMATIONItem
                                  1.
                              
                              Unaudited
                                  Financial Statements
                              
                              3Item
                                  2.
                              
                              Management’s
                                  Discussion and Analysis of Financial
                                  Condition
                                    and Results of Operations
                              
                              8Item
                                  3.
                              
                              Quantitative
                                  and Qualitative Disclosures About
                                  Market
                                    Risk
                              
                              11Item
                                  4.
                              
                              Controls
                                  and Procedures
                              
                              11PART
                                  II. OTHER INFORMATION
                              
                              12Item
                                  6.
                              
                              Exhibits
                                  and Reports on Form 8-K
                              
                              12Signatures
                              
                              
                              
                              12
 
 ***Forward-Looking
                    Statements & Engineering Reports***
  Certain
                    information included in this report, other materials filed or
                    to be filed by the
                    Company with the Securities and Exchange Commission (“SEC”), as well as
                    information included in oral statements or other written statements
                    made or to
                    be made by the Company contain or incorporate by reference certain
                    forward
                    looking statements (other than statements of historical or present
                    fact) within
                    the meaning of Section 27A of the Securities Act of 1933 and
                    Section 21E of the
                    Securities Exchange Act of 1934.
  All
                    statements, other than statements of historical or present facts,
                    that address
                    activities, events, outcomes or developments that the Company
                    plans, expects,
                    believes, assumes, budgets, predicts, forecasts, estimates, projects,
                    intends or
                    anticipates (and other similar expressions) will or may o ccur
                    in
                    the future are forward looking statements. These forward-looking
                    statements are
                    based on management’s current belief, based on currently available information,
                    as to the outcome and timing of future events. When considering
                    forward-looking
                    statements, you should keep in mind the cautionary statements
                    in this Form 10-Q
                    and the Company’s Annual Report on Form 10-K for the year ended December 31,
                    2006. Such forward-looking statements appear in a number of places
                    and include
                    statements with respect to, among other things, such matters
                    as: future capital,
                    development and exploration expenditures (including the amount
                    and nature
                    thereof), drilling, deepening or refracing of wells, oil and
                    natural gas reserve
                    estimates (including estimates of future net revenues associated
                    with such
                    reserves and the present value of such future net revenues),
                    estimates of future
                    production of oil and natural gas, business strategies, expansion
                    and growth of
                    the Company’s operations, cash flow and anticipated liquidity, prospects
                    and
                    development and property acquisitions, obtaining financial or
                    industry partners
                    for prospect or program development, or marketing of oil and
                    natural gas. We
                    caution you that these forward-looking statements are subject
                    to risks and
                    uncertainties. These risks include but are not limited to: general
                    economic
                    conditions, the Company’s
  2
  ability
                    to finance acquisitions and drilling, the market price of oil
                    and natural gas,
                    the risks associated with exploration, the Company’s ability to find, acquire,
                    market, develop and produce new properties, operating hazards
                    attendant to the
                    oil and natural gas business, uncertainties in the estimation
                    of proved reserves
                    and in the projection of future rates of production and timing
                    of development
                    expenditures, the strength and financial resources of the Company’s competitors,
                    the Company’s ability to find and retain skilled personnel, climatic conditions,
                    labor relations, availability and cost of material and equipment,
                    environmental
                    risks, the results of financing efforts, regulatory developments
                    and the other
                    risks described in the Company’s Annual Report on Form 10-K for the year ended
                    December 31, 2006.
 
 Reserve
                    engineering is a subjective process of estimating underground
                    accumulations of
                    oil and natural gas that cannot be measured in an exact way.
                    The accuracy of any
                    reserve estimate depends on the quality of available data and
                    the interpretation
                    of that data by reserve engineers. In addition, the results of
                    drilling, testing
                    and production activities may justify revisions of estimates
                    that were made
                    previously. If significant, these revisions could change the
                    schedule of any
                    further production and/or development drilling. Accordingly,
                    reserve estimates
                    are generally different from the quantities of oil and natural
                    gas that are
                    ultimately recovered.
 
 Should
                    one or more of the risks or uncertainties described above or
                    elsewhere in this
                    Form 10-Q or presented in the Company’s Annual Report on Form 10-K for the year
                    ended December 31, 2006 occur, or should underlying assumptions
                    prove incorrect,
                    actual results and plans could differ materially from those expressed
                    in any
                    forward-looking statements. We specifically disclaim all responsibility
                    to
                    publicly update any information contained in a forward-looking
                    statement or any
                    forward-looking statement in its entirety and therefore disclaim
                    any resulting
                    liability for potentially related damages.
  All
                    forward-looking statements attributable to us are expressly qualified
                    in their
                    entirety by this cautionary statement.
 
 **PART
                    I. UNAUDITED FINANCIAL INFORMATION**
  **ITEM
                    1. UNAUDITED FINANCIAL STATEMENTS**
 
 The
                    financial statements included herein have been prepared in conformity
                    with
                    generally accepted accounting principles. The statements are
                    unaudited but
                    reflect all adjustments, which, in the opinion of management,
                    are necessary to
                    fairly present the Company’s financial position and results of operations. All
                    such adjustments are of a normal recurring nature.
 
 3
  **CROFF
                    ENTERPRISES, INC.**
 BALANCE
                    SHEETS
 (Unaudited)
 
 December
                                  31,
                              
                              March
                                  31,2006
                              
                              2007ASSETSCurrent
                                  assets:Cash
                                  and cash equivalents
                              
                              $
                              985,729
                              
                              $
                              1,020,420Accounts
                                  receivable
                              
                              
                              124,900
                              
                              
                              137,4401,110,629
                              
                              
                              1,157,860Oil
                                  and natural gas properties, at cost, successful
                                  efforts
                                  method:
                              
                              
                              1,074,188
                              
                              
                              1,097,033Unproved
                                  Properties
                              
                              
                              266,174
                              
                              
                              266,174Accumulated
                                  depletion and depreciation
                              
                              
                              (583,830
                              )
                              
                              (596,330
                              )756,532
                              
                              
                              766,877Total
                                  assets
                              
                              $
                              1,867,161
                              
                              $
                              1,924,737LIABILITIES
                                  AND STOCKHOLDERS’ EQUITYCurrent
                                  liabilities:Accounts
                                  payable
                              
                              $
                              58,756
                              
                              $
                              58,346Current
                                  portion of ARO liability
                              
                              
                              23,000
                              
                              
                              23,000Accrued
                                  liabilities
                              
                              
                              33,375
                              
                              
                              35,375115,131
                              
                              
                              116,721Long-term
                                  portion of ARO liability
                              
                              
                              64,695
                              
                              
                              66,309Stockholders’
                                  equity:Class
                                  A Preferred stock, no par value5,000,000
                                  shares authorized, none issued
                              
                              
                              **-**
                              
                              
                              **-**Class
                                  B Preferred stock, no par value; 1,000,000 shares
                                  authorized,540,659
                                  shares issued and outstanding
                              
                              
                              1,380,387
                              
                              
                              1,431,278Common
                                  stock, $.10 par value; 20,000,000 shares authorized,620,643
                                  shares issued and outstanding
                              
                              
                              62,064
                              
                              
                              62,064Capital
                                  in excess of par value
                              
                              
                              155,715
                              
                              
                              155,715Treasury
                                  stock, at cost, 69,399 sharesissued
                                  and outstanding in 2005 and 2006
                              
                              
                              (107,794
                              )
                              
                              (107,794
                              )Retained
                                  earnings
                              
                              
                              196,963
                              
                              
                              200,4441,687,335
                              
                              
                              1,741,707Total
                                  liabilities and stockholders’ equity
                              
                              $
                              1,867,161
                              
                              $
                              1,924,737
  See
                    accompanying notes to unaudited condensed financial statements.
 
 4
  **CROFF
                    ENTERPRISES, INC.**
 STATEMENTS
                    OF OPERATIONS
 For
                    the
                    three months ended March 31, 2006 and 2007
 (Unaudited)
 
 2006
                              
                              2007RevenuesOil
                                  and natural gas sales
                              
                              $
                              226,074
                              
                              $
                              210,329Interest
                                  Income
                              
                              
                              6,658
                              
                              
                              11,149232,732
                              
                              
                              221,478ExpensesLease
                                  operating expense including     production
                                  taxes
                              
                              
                              65,689
                              
                              
                              75,086General
                                  and administrative
                              
                              
                              62,952
                              
                              
                              43,372Overhead
                                  expense, related party
                              
                              
                              16,318
                              
                              
                              12,125Accretion
                                  expense
                              
                              
                              1,467
                              
                              
                              1,613Depletion
                                  and depreciation
                              
                              
                              12,500
                              
                              
                              12,500158,926
                              
                              
                              145,106Pretax
                                  income
                              
                              
                              73,806
                              
                              
                              76,372Provision
                                  for income taxes
                              
                              
                              16,000
                              
                              
                              22,000Net
                                  income
                              
                              $
                              57,806
                              
                              $
                              54,372Net
                                  income applicable topreferred
                                  B shares
                              
                              $
                              55,408
                              
                              $
                              50,891Net
                                  income applicable to     common shares
                              
                              $
                              2,398
                              
                              $
                              3,481Basic
                                    and diluted net income
                                per
                                  common share
                              
                              $
                              *
                              
                              $
                              **
                                  Less than $.01 per shareWeighted
                                  average common shares outstanding
                              
                              
                              551,244
                              
                              
                              551,244
 See
                    accompanying notes to unaudited condensed financial statements.
 
 5
  **CROFF
                    ENTERPRISES, INC.**
 STATEMENTS
                    OF STOCKHOLDERS’ EQUITY
 For
                    the
                    year ended December 31, 2006 and the three months ended March
                    31,
                    2007
 (Unaudited)
  Capital
                                  inPreferred
                                  B stock
                              
                              Common
                                  stock
                              
                              excess
                                  of
                              
                              Treasury
                              
                              AcumulatedShares
                              
                              Amount
                              
                              Shares
                              
                              Amount
                              
                              par
                                  value
                              
                              stock
                              
                              earningsBalance
                                  at December 31, 2006
                              
                              
                              540,659
                              
                              $
                              1,380,387
                              
                              
                              620,643
                              
                              $
                              62,064
                              
                              $
                              155,715
                              
                              $
                              (107,794
                              )
                              $
                              196,963Net
                                  income for the three monthsended
                                  March 31, 2007
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              54,372Preferred
                                  stock reallocation
                              
                              
                              -
                              
                              
                              50,891
                              
                              
                              -
                              
                              
                              -
                              
                              
                              -
                              
                              
                              
                              
                              
                              (50,891
                              )Balance
                                  at March 31, 2007
                              
                              
                              540,659
                              
                              $
                              1,431,278
                              
                              
                              620,643
                              
                              $
                              62,064
                              
                              $
                              155,715
                              
                              $
                              (107,794
                              )
                              $
                              200,444
 See accompanying notes to unaudited condensed financial statements.
  6
 **CROFF
                      ENTERPRISES, INC.**
 STATEMENTS
                    OF CASH FLOWS
 For
                    the
                    three months ended March 31, 2006 and 2007
 (Unaudited)
 
 2006
                              
                              2007Cash
                                  flows from operating activities:Net
                                  income
                              
                              $
                              57,806
                              
                              $
                              54,372Adjustments
                                  to reconcile net income tonet
                                  cash provided by operating activities:Depletion,
                                  depreciation, and accretion
                              
                              
                              13,967
                              
                              
                              14,114Changes
                                  in operating assets and liabilities:Accounts
                                  receivable
                              
                              
                              25,900
                              
                              
                              (12,540
                              )Accounts
                                  payable
                              
                              
                              8,310
                              
                              
                              (410
                              )Accrued
                                  liabilities
                              
                              
                              (25,929
                              )
                              
                              2,000Net
                                  cash provided by operating activities
                              
                              
                              80,054
                              
                              
                              57,536Cash
                                  flows from investing activities:Proceeds
                                  from sale of equipment
                              
                              
                              -
                              
                              
                              -Acquisition
                                  of property leases and improvements
                              
                              
                              (10,454
                              )
                              
                              (22,845
                              )Net
                                  cash provided (used) by investing activities
                              
                              
                              (10,454
                              )
                              
                              (22,845
                              )Cash
                                  flows from financing activities:Costs
                                  incurred for the benefit of farmout agreement
                              
                              
                              (300,621
                              )Net
                                  cash (used) by financing activities
                              
                              
                              (300,621
                              )Net
                                  increase (decrease) in cash and cash equivalents
                              
                              
                              (231,021
                              )
                              
                              34,691Cash
                                  and cash equivalents at beginning of period
                              
                              
                              902,257
                              
                              
                              985,729Cash
                                  and cash equivalents at end of period
                              
                              $
                              671,236
                              
                              $
                              1,020,420
 
 
 See
                    accompanying notes to unaudited condensed financial statements.
 
 7
 **CROFF
                    ENTERPRISES, INC** .
 **NOTES
                    TO UNAUDITED CONDENSED FINANCIAL STATEMENTS**
 
 Basis
                    of
                    Preparation
 
 The
                    condensed financial statements for the three month periods ended
                    March 31, 2006
                    and 2007 in this report have been prepared by the Company without
                    audit pursuant
                    to the rules and regulations of the Securities and Exchange Commission
                    and
                    reflect, in the opinion of the management, all adjustments necessary
                    to present
                    fairly the results of the operations of the interim periods presented
                    herein.
                    Certain information in footnote disclosures normally included
                    in financial
                    statements prepared in accordance with accounting principles
                    generally accepted
                    in the United States of America have been omitted pursuant to
                    such rules and
                    regulations, although the Company believes the disclosures presented
                    herein are
                    adequate to make the information presented not misleading. It
                    is suggested that
                    these condensed financial statements be read in conjunction with
                    the financial
                    statements and notes thereto included in the Company’s Annual Report on Form
                    10-K for the year ended December 31, 2006, which report has been
                    filed with the
                    Securities and Exchange Commission. The Annual Report is available
                    from the
                    Company’s website at www.croff.com ,
                    and
                    online at the Securities and Exchange Commission website at www.sec.gov/edgar .
 
 **ITEM
                    2.**  **MANAGEMENT’S
                    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                    OPERATIONS**
 
 Overview
  Croff
                    Enterprises, Inc. (“Croff’
or the “Company”) was incorporated in Utah in 1907. Croff is an independent
                    energy company engaged in the business of oil and natural gas
                    exploration and
                    production, primarily through the acquisition of producing oil
                    and natural gas
                    leases as well as the ownership of perpetual mineral interests.
                    Other companies
                    operate almost all of the wells from which Croff receives revenues
                    and Croff has
                    no control over the factors which determine royalty or working
                    interest
                    revenues, such as markets, prices and rates of production. Today,
                    Croff
                    participates as a working interest owner in approximately 40
                    wells or units of
                    several wells. Croff holds small royalty interests in approximately
                    212 wells.
 
 Summary
                    of Current and Subsequent Material Events - Change of Control
& Sale of Assets
  Croff
                    Enterprises, Inc. announced
                    on December 14, 2006, a Stock Equivalent Exchange Agreement providing
                    for the
                    majority acquisition of the Taiyun Rongan Business Trading Company
                    Limited,
                    hereafter “TRBT”, a Chinese company located in the city of Taiyun, Shanxi
                    Province, in the People’s Republic of China. The stock equivalent Exchange
                    Agreement (hereafter “exchange agreement”) provides for a change in control of
                    Croff, a change in the business of Croff, and a new management
                    team.
  The
                    essential provisions of the
                    exchange agreement provide for Croff to issue over 11 million
                    new common shares
                    (92.5%) of its common stock to the owners of TRBT in exchange
                    for the
                    acquisition of 80% of the outstanding equity and ownership interest
                    in TRBT by
                    Croff. In the event of the majority shareholder vote and the
                    completion and
                    closing of the Exchange Agreement, Croff would own eighty percent
                    (80%) of all
                    of the issued and outstanding equity interest of TRBT. TRBT owns
                    a seventy-six
                    percent (76%) interest in six shopping malls located in or around
                    the city of
                    Taiyun, China which is located approximately 400 kilometers west
                    of Beijing,
                    China. As a result, Croff would own approximately sixty-one percent
                    (61%) net
                    interest in the shopping malls. At closing, TRBT shareholders
                    will receive and
                    own approximately 92.5% of the common shares of Croff and the
                    current Croff
                    shareholders will continue to hold approximately 7.5% of the
                    then issued and
                    outstanding common shares of Croff.
  As
                    a
                    provision of the exchange agreement, Mr. Gerald L. Jensen, Croff’s President,
                    and his affiliated companies, the current principal shareholders
                    of Croff,
                    hereafter the “Croff Principals,” will, subject to shareholder vote, acquire
                    67.2% of all of the Preferred B Oil and Gas assets from Croff
                    in exchange for
                    the conveyance to Croff of the 67.2% of the
   8
  Class
                    B Preferred Shares
                    currently held by these Croff Principals. The Croff Principals
                    will exchange
                    three hundred sixty three thousand five hundred thirty five (363,535)
                    shares, or
                    67.2% of the class “B” shares outstanding, in exchange for 67.2% of the shares
                    of a new subsidiary to which all of the oil and gas assets and
                    liabilities
                    including related bank accounts of the Company will be transferred.
                    These class
“B” preferred shares will be cancelled by the Company upon assignment.
                    The Croff
                    Principals will, concurrently, tender the sum of six hundred
                    thousand dollars
                    ($600,000) in cash to the Company, in exchange for the remaining
                    32.8% of the
                    shares of the new subsidiary holding all of the Croff oil and
                    gas assets.
  Croff
                      will
                      then, prior
                      to
                      the exchange closing, convert all remaining preferred “B” shares as held by the
                      Croff shareholders other than the principal shareholders, being
                      approximately
                      32.8% of the issued and outstanding preferred “B” shares, to common shares on a
                      ratio of two common shares for each “B” preferred share cancelled. Prior to the
                      closing of the exchange transaction, all “B” preferred shares will be cancelled
                      and terminated of record, and all non-principal holders of
                      Croff Preferred “B”
shares will receive two common shares in exchange. All non-principal
                      preferred
“B” shareholders subsequent to the exchange will hold only common
                      shares. The
                      foregoing exchange transaction would not apply to Croff’s shareholders
                      exercising their dissenting shareholders rights, whereby their
                      Preferred B
                      shares would be re-acquired by Croff for cancellation at $4.20
                      per Preferred B
                      share and $1.25 per common share, or as otherwise appraised.
                      As provided in the
                      exchange agreement, the Company will have outstanding only
                      common shares after
                      the exchange. The Company is authorized to pay a dividend of
                      twenty cents per
                      share to all non-principal common shareholders of record prior
                      to closing. The
                      dividend would not be paid on the new common shares to be issued
                      to the
                      preferred shareholders prior to closing, or to the Croff principals.
                      The
                      exchange agreement also provides that the sum of $530,000 must
                      remain in Croff
                      at closing, after payment of all proxy and closing expenses,
                      dissenting
                      shareholder rights, and the dividend.
 If
                    the
                    transaction is closed, the shareholders will have elected a new
                    Board of
                    Directors nominated and designated by TRBT. The new Board will
                    appoint new
                    officers for the company. As a net result, the business of the
                    company will be
                    changed from oil and gas production to primarily the acquisition,
                    development,
                    and management of retail properties in Taiyuan, China, including
                    the initial six
                    properties as identified. It is expected that the Company’s offices in the
                    United States will be moved to the Salt Lake City area from Denver,
                    CO.
  Critical
                    Accounting Policies and Estimates
 
 The
                    Company’s discussion and analysis of its financial condition and results
                    of
                    operation are based upon financial statements, which have been
                    prepared in
                    accordance with accounting principles generally accepted in the
                    United States of
                    America. The preparation of these financial statements requires
                    the Company to
                    make estimates and judgments that affect the reported amounts
                    of assets and
                    liabilities and disclosures of contingent assets and liabilities
                    at the date of
                    the financial statements and the reported amounts of revenues
                    and expenses
                    during the year. The Company analyzes its estimates, including
                    those related to
                    oil and natural
                    gas revenues, oil and natural gas properties, marketable securities,
                    income
                    taxes and contingencies.
 
 The
                    Company bases its estimates on historical experience and various
                    other
                    assumptions that are believed to be reasonable under the circumstances.
                    Actual
                    results may differ from these estimates under different assumptions
                    or
                    conditions. The Company believes the following critical accounting
                    policies
                    affect its more significant judgments and estimates used in the
                    preparation of
                    its financial statements and the uncertainties that it could
                    impact results of
                    operations, financial conditions and cash flows. The Company
                    accounts for its
                    oil and natural gas properties under the successful efforts method
                    of
                    accounting. Depletion, depreciation and amortization of oil and
                    natural gas
                    properties and the periodic assessments for impairment are based
                    on underlying
                    oil and natural gas reserve estimates and future cash flows using
                    then current
                    oil and natural gas prices combined with operating and capital
                    development
                    costs. There are numerous uncertainties inherent in estimating
                    quantities of
                    proved oil and natural gas reserves and in projecting future
                    rates of production
                    and timing of development expenditures. Historically, oil and
                    natural gas prices
                    have experienced significant fluctuations and have been particularly
                    volatile in
                    recent years. Price fluctuations can result from variations in
                    weather, levels
                    of regional or national production and demand, availability of
                    transportation
                    capacity to other regions of the country and various other factors.
                    Increases or
                    decreases in oil and natural gas prices received could have a
                    significant impact
                    on future results.
  9
  Liquidity
                    and Capital Resources
 
 At
                    March
                    31, 2007, the Company had assets of $1,924,737 and current assets
                    totaled
                    $1,157,860 compared to current liabilities of $116,721. Working
                    capital at March
                    31, 2007 totaled $1,041,139, an increase of approximately 5%
                    compared to
                    $995,498 at December 31, 2006. The Company had a current ratio
                    at March 31, 2007
                    of approximately 10:1 . During
                    the three month period ended March 31, 2007, net cash provided
                    by operations
                    totaled $57,536, as compared to $80,054 for the same period in
                    2006. This
                    decrease was due to higher lease operating expenses and payment
                    accrued of
                    liabilities in the first quarter of 2007. The Company’s cash flow from
                    operations is highly dependent on oil and natural gas prices.
                    The Company had no
                    short-term or long-term debt outstanding at March 31, 2007. In
                    December, 2005,
                    the Company purchased 16,156 shares of its common stock at a
                    cost of $24,643,
                    which is included in the treasury at December 31, 2006. Capital
                    expenditures for the first quarter of 2007, totaled $22,845,
                    primarily incurred
                    for the costs of the Shriners II well located in Duchesne County,
                    Utah.
 
 The
                    Company’s plans for ongoing oil and gas development, acquisition and
                    exploration
                    expenditures, and possible equity repurchases over and beyond
                    the Company’s
                    operating cash flows, will depend entirely upon the completion
                    of the proposed
                    exchange agreement. If the exchange agreement is not completed,
                    then the Company
                    will utilize the Company’s capital budget and internal operating cash flows to
                    attempt to secure reasonably priced opportunities. Future cash
                    flows are subject
                    to a number of variables, including the level of production and
                    oil and natural
                    gas prices. There can be no assurance that operations and other
                    capital
                    resources will provide cash in sufficient amounts to maintain
                    planned levels of
                    capital expenditures or that increased capital expenditures will
                    not be
                    undertaken.
  The
                    Company believes that borrowings from financial institutions,
                    projected
                    operating cash flows and the cash on hand will be sufficient
                    to cover its
                    working capital requirements for the next 12 months. In connection
                    with
                    consummating any significant acquisition or funding an exploratory
                    or
                    development drilling program, additional debt or equity financing
                    will be
                    required, which may or may not be available on terms that are
                    acceptable to the
                    Company.
 
 While
                    certain costs are affected by the general level of inflation,
                    factors unique to
                    the oil and natural gas industry result in independent price
                    fluctuations. Over
                    the past five years, significant fluctuations have occurred in
                    oil and natural
                    gas prices. Although it is particularly difficult to estimate
                    future prices of
                    oil and natural gas, price fluctuations have had, and will continue
                    to have, a
                    material effect on the Company. Overall, it is management’s belief that
                    inflation is generally favorable to the Company since it does
                    not have
                    significant operating expenses.
 
 Results
                    of Operations
 
 Three
                    months ended March 31, 200 7
                    compared to three months ended March 31, 2006.
 
 The
                    Company had a net income for the first quarter of 2007 which
                    totaled $54,372
                    compared to a net income of $57,806 for the same period in 2006.
                    Revenues were
                    lower in 2007, and lease operating expenses were higher. This
                    decrease in net
                    income was partially offset by higher interest income and lower
                    general and
                    administrative expenses resulting in a small decrease in net
                    income.
 
 Revenues
                    for the first quarter of 2007 totaled $221,478 compared to $232,732
                    for the
                    period ending March 31, 2006, a slight decrease. Interest income
                    increased from
                    $6,658 in 2006 to $11,149 in the first quarter of 2007. Decreased
                    oil and
                    natural gas prices during the first quarter of 2007, were the
                    primary factors in
                    oil and gas revenues decreasing from $226,074 in the first quarter
                    of 2006 to
                    $210,329 in the first quarter of 2007.
 
 For
                    the
                    first quarter of 2007, lease operation expenses, which includes
                    all production
                    related taxes, totaled $75,086 compared to $65,689 incurred for
                    the same period
                    in 2006. This increase was due to more workover expenses, non
                    capitalized costs
                    with new wells, and timing of lease expenses. Estimated depreciation
                    and
                    depletion expense for the first quarter of 2007 and for 2006
                    was unchanged at
                    $12,500.
   10
  General
                    and administrative expense, including overhead expense paid to
                    a related party,
                    for the first quarter of 2007, totaled $43,372 compared to $62,952
                    for the same
                    period in 2006. This decrease related to more general and administrative
                    expenses incurred in the first quarter of 2006. Overhead expense
                    paid to a
                    related party for the first quarter of 2007 totaled $12,125 compared
                    to $16,318
                    in 2006 which related to one time extra costs in 2006. Provision
                    for income
                    taxes for the first quarter of 2007 totaled $22,000 compared
                    to $16,000 from the
                    same period in 2006. This increase is primarily attributable
                    to a higher
                    estimate taxable income for taxes due in 2007.
 
 Accounting
                    Pronouncements Regarding Interim Financial Statements
  In
                    May 2005, the
                    FASB issued SFAS No. 154, "Accounting Changes and Error Corrections
                    - a
                    replacement of APB Opinion No. 20 and FASB Statement No. 3."
                    SFAS No. 154
                    replaces APB Opinion ("APB") No. 20, "Accounting Changes", and
                    SFAS No. 3,
                    "Reporting Accounting Changes in Interim Financial Statements,"
                    and changed the
                    requirements for the accounting for and reporting of a change
                    in accounting
                    principle. SFAS No. 154 will apply to all voluntary changes in
                    accounting
                    principle as well as to changes required by an accounting pronouncement
                    in the
                    unusual instance that the pronouncement does not include specific
                    transition
                    provisions. APB No. 20 previously required that most voluntary
                    changes in
                    accounting principle be recognized by including in net income
                    of the period of
                    the change the cumulative effect of changing to the new accounting
                    principle.
                    SFAS No. 154 requires retrospective application to prior periods'
                    financial
                    statements of changes in accounting principle, unless it is impracticable
                    to
                    determine either the period-specific effects or the cumulative
                    effect of the
                    change. When it is impracticable to determine the period-specific
                    effects of an
                    accounting change on one or more individual prior periods presented,
                    SFAS No.
                    154 requires that the new accounting principle be applied to
                    the balances of
                    assets and liabilities as of the beginning of the earliest period
                    for which
                    retrospective application is practicable and that a corresponding
                    adjustment be
                    made to the opening balance of retained earnings (or other appropriate
                    components of equity or net assets in the statement of financial
                    condition).
  **ITEM** **3.
                    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
  The
                    Company’s major market risk exposure is in crude oil and natural gas
                    prices.
                    Realized pricing is primarily driven by the prevailing domestic
                    price for oil
                    and natural gas. Historically, prices received for oil and natural
                    gas
                    production have been volatile and unpredictable. Pricing volatility
                    is expected
                    to continue. Natural gas price realizations for
                    the
                    three months ended March 31, 2007, ranged from a monthly low
                    of approximately
                    $5.00 per Mcf to a monthly high of approximately $7.50 per Mcf.
                    Oil prices
                    ranged from a monthly low of approximately $48 per barrel to
                    a monthly high of
                    approximately $62 per barrel. A decline in prices of oil or natural
                    gas could
                    have a material adverse effect on the Company’s financial condition and results
                    of operations. For the three months ended March 31, 2007, a 10%
                    reduction in oil
                    and natural gas prices would have reduced revenues by approximately
                    $20,000. If
                    the exchange agreement is completed, then the company will incur
                    entirely new
                    and distinct risk factors as a real estate company as more fully
                    disclosed in
                    its pending proxy materials.
  **ITEM
                    4. CONTROLS AND PROCEDURES**
 
 Evaluation
                    of Disclosure Controls and Procedures
 
 The
                    Company maintains controls and procedures designed to ensure
                    that information
                    required to be disclosed by the Company in the reports it files
                    or submits under
                    the Securities Exchange Act of 1934 is recorded, processed, summarized
                    and
                    reported within the time periods specified in the rules and forms
                    of the
                    Securities and Exchange Commission. At the end of the period
                    covered by this
                    Quarterly Report on Form 10-Q, the Company’s management, under the supervision
                    and with the participation of the Company’s Chief Executive Officer, and the
                    Company’s Chief Accounting Officer, evaluated the effectiveness of the
                    design
                    and operation of the Company’s disclosure controls and procedures. Based on that
                    evaluation, the Company’s Chief Executive Officer, and the Chief Accounting
                    Officer concluded that as of the end of such period, the Company’s disclosure
                    control and procedures are effective in alerting them to material
                    information
                    that is required to be included in the reports the Company files
                    or submits
                    under the Securities Exchange Act of 1934.
  11
  Changes
                    in Internal Controls Over Financials Reporting
 
 There
                    have been no changes in the Company’s internal control over financial reporting
                    during the most recent fiscal quarter that have materially affected,
                    or are
                    reasonably likely to materially affect, the Company’s internal control over
                    financial reporting.
 
 
 **PART
                    II.**  **OTHER
                    INFORMATION**
 
 **ITEM
                    6. EXHIBITS AND REPORTS ON FORM 8-K**
 
 (a)
                        Exhibits
                            - The following documents are filed as exhibits to this
                            Quarterly Report
                            on Form 10-Q: 
 31.1
                    Certification of Chief Executive Officer pursuant to Section
                    302 of the
                    Sarbanes-Oxley Act of 2002. *
 31.2
                    Certification of Acting Chief Financial Officer pursuant to Section
                    302 of the
                    Sarbanes-Oxley Act of 2002. *
 32.1
                    Certification of Chief Executive Officer, dated May 12, 2006,
                    pursuant to 18
                    U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley
                    Act of
                    2002. *
 32.2
                    Certification of Acting Chief Financial Officer, dated May 12,
                    2006, pursuant to
                    18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley
                    Act of
                    2002. *
 ***  *Filed
                    herewit*
  SIGNATURES
 
 Pursuant
                      to the requirements of the Securities Exchange Act of 1934,
                      Registrant has duly
                      caused this report to be signed on its behalf by the undersigned
                      thereunto duly
                      authorized.
  CROFF ENTERPRISES, INC.Date: May 15, 2006By/s/ Gerald L. JensenGerald L. Jensen, President,Chief Executive OfficerDate: May 15, 2006By/s/ Jennifer A. MillerJennifer A. Miller,Chief Accounting Officer
 12