---

---

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

---

# FORM 10-Q

| | x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended November 30, 2008
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | o | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------

| | For
the transition period from __________ to __________
| | -------------------------------------------------------

# Commission file
number: 0-50472

|NEW FRONTIER ENERGY, INC.                         
|--------------------------------------------------
|(Exact name of registrant as specified in charter)

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

|1789 W. Littleton Blvd., Littleton, CO 80120
|--------------------------------------------
|(Address of principal executive offices)    

|(303) 730-9994             
|---------------------------
|(Issuer's telephone number)

|                                                                                  
|----------------------------------------------------------------------------------
|(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the
registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    Yes x   
No o

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company.

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

Indicate  by check mark  whether
 the  registrant  is a shell  company  (as  defined in Rule 12b-2) of the Exchange Act.
     Yes o   
No x

As of January 7, 2009, 13,311,903
shares of common stock were outstanding.

---



# NEW FRONTIER ENERGY,
INC.

# Index

Part I  FINANCIAL
INFORMATION

|Item 1 | Financial
Statements | 
|------ | -------------------- | 

| | Consolidated Balance Sheets  at November 30, 2008 (unaudited) and
February 29, 2008 | 1
| | ----------------------------------------------------------------------------------- | -

| | Consolidated Statements of Operations (unaudited) for the three months
ended November 30, 2008 and 2007 | 2
| | ------------------------------------------------------------------------------------------------------- | -

| | Consolidated Statements of Operations (unaudited) for the nine months
ended November 30, 2008 and 2007 | 3
| | ------------------------------------------------------------------------------------------------------ | -

| | Consolidated Statements of Cash Flows (unaudited) for the nine months
ended November 30, 2008 and 2007 | 4
| | ------------------------------------------------------------------------------------------------------ | -

| | Notes to Consolidated Financial Statements (unaudited) | 5
| | ------------------------------------------------------ | -

|Item 2 | Management's Discussion and Analysis or Plan of Operations | 21
|------ | ---------------------------------------------------------- | --

|Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 22
|------ | ---------------------------------------------------------- | --

|Item 4 | Controls and Procedures | 22
|------ | ----------------------- | --

|Item 4T | Controls and Procedures | 22
|------- | ----------------------- | --

Part II OTHER INFORMATION

|Item 1 | Legal Proceedings | 22
|------ | ----------------- | --

|Item 1A | Risk Factors | 22
|------- | ------------ | --

|Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 22
|------ | ----------------------------------------------------------- | --

|Item 3 | Defaults Upon Senior Securities | 22
|------ | ------------------------------- | --

|Item 4 | Submission of Matters of a Vote of Security Holders | 23
|------ | --------------------------------------------------- | --

|Item 5 | Other Information | 23
|------ | ----------------- | --

|Item 6 | Exhibits | 23
|------ | -------- | --

| | Signatures | 24
| | ---------- | --

---



# NEW FRONTIER ENERGY,
INC.                          CONSOLIDATED BALANCE SHEETS

|                                                                | November 30,
2008
(Unaudited) |  | February 29,
2008 |            
|--------------------------------------------------------------- | ----------------------------- |  | ----------------- | -----------
|
|
|ASSETS                                                          |                               |  |                   |            
|CURRENT ASSETS                                                  |                               | 
|Cash                                                            |                               |  | $                 | 1,902,221  
|Accounts receivable, trade                                      |                               |  |                   | 656,041    
|Prepaid expenses                                                |                               |  |                   | 289,702    
|                                                                |                               |  |                   |            
|Total current assets                                            |                               |  |                   | 2,847,964  
|                                                                |                               |  |                   |            
|PROPERTY AND EQUIPMENT,  NET OF ACCUMULATED DEPRECIATION        |                               | 
|AND DEPLETION OF $2,112,598 and $1,342,731 as of                |                               | 
|November 30, 2008 and February 29, 2008 respectively            |                               |  |                   | 22,555,647 
|                                                                |                               |  |                   |            
|OTHER ASSETS                                                    |                               | 
|Deposits                                                        |                               |  |                   | 160,000    
|                                                                |                               |  |                   |            
|                                                                |                               |  | $                 | 25,563,611 
|                                                                |                               |  |                   |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                            |                               | 
|CURRENT LIABILITIES                                             |                               | 
|Accounts payable                                                |                               |  | $                 | 704,348    
|Notes payable, affiliates                                       |                               |  |                   | 604,688    
|Current portion of long term debt                               |                               |  |                   | 40,079     
|Dividends payable                                               |                               |  |                   | 1,838,068  
|Accrued expenses                                                |                               |  |                   | 438,007    
|Accrued interest                                                |                               |  |                   | 2,638      
|Accrued interest, affiliates                                    |                               |  |                   | 5,329      
|Accounts payable, affiliates                                    |                               |  |                   | 38,239     
|                                                                |                               |  |                   |            
|Total current liabilities                                       |                               |  |                   | 3,671,396  
|                                                                |                               |  |                   |            
|LONG TERM LIABILITIES                                           |                               | 
|                                                                |                               | 
|Long term debt                                                  |                               |  |                   | 794,621    
|Asset retirement obligation                                     |                               |  |                   | 290,000    
|                                                                |                               | 
|MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                    |                               |  |                   | 411,287    
|                                                                |                               | 
|STOCKHOLDERS' EQUITY                                            |                               | 
|Preferred stock, $.001 par value, 25,000,000 shares authorized: |                               | 
|Series A Convertible, 100,000 shares authorized                 |                               | 
|none issued and outstanding                                     |                               |  |                   |           
|Series B Convertible, 36,036 shares authorized                  |                               | 
|19,559.6 and 24,675  issued and outstanding as of               |                               | 
|November 30, 2008 and February 29,  2008 respectively           |                               |  |                   | 20         
|Series C Convertible, 230,000 shares authorized                 |                               | 
|217,500 and 219,500 issued and outstanding as of                |                               | 
|November 30, 2008 and February 29, 2008 respectively            |                               |  |                   | 218        
|Common stock, $.001 par value, 500,000,000 shares authorized,   |                               | 
|13,216,665 and 10,178,078 shares issued and outstanding as      |                               | 
|of November 30, 2008 and February 29, 2008 respectively         |                               |  |                   | 13,216     
|Additional paid in capital                                      |                               |  |                   | 43,694,662 
|Accumulated (deficit)                                           |                               |  |                   | (23,311,809
|                                                                |                               |  |                   |            
|                                                                |                               |  |                   | 20,396,307 
|                                                                |                               |  |                   |            
|                                                                |                               |  | $                 | 25,563,611 
|                                                                |                               |  |                   |            

See accompanying notes
to the consolidated financial statements.

1

---



# NEW FRONTIER ENERGY,
INC.            CONSOLIDATED STATEMENTS OF OPERATIONS                         (UNAUDITED)

|                                               | Three Months Ended | 
|---------------------------------------------- | ------------------ | 
|
|
|Operating revenues                             |                    | 
|Oil and gas sales                              |                    | 
|Gathering fees                                 |                    | 
|                                               |                    | 
|                                               |                    | 
|                                               |                    | 
|Operating expenses                             |                    | 
|Exploration costs, including dry holes         |                    | 
|Lease operating expenses                       |                    | 
|Cost of gas gathering                          |                    | 
|General and administrative                     |                    | 
|Issuance of common stock options and warrants  |                    | 
|Depreciation, depletion and amortization       |                    | 
|                                               |                    | 
|Total operating expenses                       |                    | 
|                                               |                    | 
|(Loss) from operations                         |                    | 
|                                               |                    | 
|Other income (expense)                         |                    | 
|Interest income                                |                    | 
|Interest expense                               |                    | 
|Debt issuance costs, non-cash                  |                    | 
|                                               |                    | 
|Other income (expense), net                    |                    | 
|                                               |                    | 
|(Loss) before income taxes                     |                    | 
|                                               |                    | 
|Income taxes                                   |                    | 
|Current                                        |                    | 
|Deferred                                       |                    | 
|                                               |                    | 
|                                               |                    | 
|                                               |                    | 
|Minority interest in net (income) loss of      |                    | 
|consolidated subsidiary                        |                    | 
|                                               |                    | 
|Net (loss)                                     |                    | 
|                                               |                    | 
|Preferred stock dividends and distributions    |                    | 
|to minority interests                          |                    | 
|                                               |                    | 
|Net (loss) attributable to common shareholders |                    | 
|                                               |                    | 
|Net (loss) per common share                    |                    | 
|Basic and diluted                              |                    | 
|                                               |                    | 
|Weighted average shares outstanding            |                    | 
|Basic and diluted                              |                    | 
|                                               |                    | 

See accompanying notes
to the unaudited consolidated financial statements.

2

---



# NEW FRONTIER ENERGY,
INC.             CONSOLIDATED STATEMENTS OF OPERATIONS                         (UNAUDITED)

|                                               | Nine Months Ended | 
|---------------------------------------------- | ----------------- | 
|
|
|Operating revenues                             |                   | 
|Oil and gas sales                              |                   | 
|Gathering fees                                 |                   | 
|                                               |                   | 
|                                               |                   | 
|                                               |                   | 
|Operating expenses                             |                   | 
|Exploration costs, including dry holes         |                   | 
|Lease operating expenses                       |                   | 
|Cost of gas gathering                          |                   | 
|General and administrative                     |                   | 
|Issuance of common stock options and warrants  |                   | 
|Depreciation, depletion and amortization       |                   | 
|                                               |                   | 
|Total operating expenses                       |                   | 
|                                               |                   | 
|(Loss) from operations                         |                   | 
|                                               |                   | 
|Other income (expense)                         |                   | 
|Interest income                                |                   | 
|Interest expense                               |                   | 
|Debt issuance costs, non-cash                  |                   | 
|                                               |                   | 
|Other income (expense), net                    |                   | 
|                                               |                   | 
|(Loss) before income taxes                     |                   | 
|                                               |                   | 
|Income taxes                                   |                   | 
|Current                                        |                   | 
|Deferred                                       |                   | 
|                                               |                   | 
|                                               |                   | 
|                                               |                   | 
|Minority interest in net (income) of           |                   | 
|consolidated subsidiary                        |                   | 
|                                               |                   | 
|Net (loss)                                     |                   | 
|                                               |                   | 
|Preferred stock dividends and distributions    |                   | 
|to minority interests                          |                   | 
|                                               |                   | 
|Net (loss) attributable to common shareholders |                   | 
|                                               |                   | 
|Net (loss) per common share                    |                   | 
|Basic and diluted                              |                   | 
|                                               |                   | 
|Weighted average shares outstanding            |                   | 
|Basic and diluted                              |                   | 
|                                               |                   | 

See accompanying notes
to the consolidated financial statements.

3

---



# NEW FRONTIER ENERGY,
INC.                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

|                                                                          | Nine Months Ended | 
|------------------------------------------------------------------------- | ----------------- | 
|
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |                   | 
|Net (loss)                                                                |                   | 
|Adjustments to reconcile net (loss) to net cash                           |                   | 
|(used in) operating activities:                                           |                   | 
|Depreciation, depletion and amortization                                  |                   | 
|Debt issuance costs, noncash                                              |                   | 
|Minority interest in net income  (loss) of consolidated subsidiary        |                   | 
|Interest expense on convertible debenture                                 |                   | 
|Stock option expenses, amortization and grants                            |                   | 
|Issuance of restricted stock awards                                       |                   | 
|(Increase) decrease in assets:                                            |                   | 
|Accounts receivable, trade                                                |                   | 
|Prepaid expense                                                           |                   | 
|Increase (decrease) in liabilities:                                       |                   | 
|Accounts payable                                                          |                   | 
|Accrued expenses                                                          |                   | 
|                                                                          |                   | 
|Net cash (used in) operating activities                                   |                   | 
|                                                                          |                   | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     |                   | 
|                                                                          |                   | 
|(Increase) decrease in other assets                                       |                   | 
|Purchase of property and equipment                                        |                   | 
|                                                                          |                   | 
|Net cash (used in) investing activities                                   |                   | 
|                                                                          |                   | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     |                   | 
|                                                                          |                   | 
|Payment of  convertible debentures                                        |                   | 
|Payment of  convertible debentures affiliate                              |                   | 
|Payment of notes payable                                                  |                   | 
|Payment of notes payable, affiliate                                       |                   | 
|Proceeds from common stock warrant conversions                            |                   | 
|Proceeds from exercise of placement agent warrants                        |                   | 
|Preferred stock dividends paid                                            |                   | 
|Cost of issuance of equity for cash                                       |                   | 
|Minority interest in subsidiary                                           |                   | 
|Distributions to minority interest holders in consolidated subsidiary     |                   | 
|                                                                          |                   | 
|Net cash provided by financing activities                                 |                   | 
|                                                                          |                   | 
|(DECREASE) IN CASH                                                        |                   | 
|                                                                          |                   | 
|BEGINNING BALANCE                                                         |                   | 
|                                                                          |                   | 
|ENDING BALANCE                                                            |                   | 
|                                                                          |                   | 
|Cash paid for income taxes                                                |                   | 
|                                                                          |                   | 
|Cash paid for interest                                                    |                   | 
|                                                                          |                   | 
|Supplemental schedule of non-cash investing and                           |                   | 
|financing activities:                                                     |                   | 
|                                                                          |                   | 
|Series B  and C preferred stock converted to common stock                 |                   | 
|Conversion of convertible debentures and accrued interest to common stock |                   | 
|Issuance of common stock in connection with a cashless exercise           |                   | 
|Purchase of property and equipment with a note payable                    |                   | 

See accompanying notes
to the consolidated financial statements.

4

---



# NEW FRONTIER ENERGY,
INC.          NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                            November 30, 2008

# 1.    SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of
Business

New Frontier Energy, Inc. (New
Frontier or the Company) was incorporated as Storage Finders.com under
the laws of Colorado on January 7, 2000. In March 2001 the Company changed its name to
New Frontier Energy, Inc. The Company is a domestic energy company engaged in the
exploration for, and development of, oil and natural gas reserves operating primarily in
Colorado and Wyoming.

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

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

The Company owns 82.76% of the
limited partnership interests (the Limited Partnership Interests) of Slater
Dome Gathering, LLLP (SDG). SDG owns the 18-mile gas gathering line that
transports the Companys natural gas from the Slater Dome Field to the Questar
transportation line in Baggs, Wyoming.

On December 26, 2007, the Company
entered into a Partnership Interest Purchase Agreement with Natural Resource Group
Gathering, LLC (NRGG) to acquire NRGGs general partnership interest
(the General Partnership Interest) in SDG effective as of January 1, 2008. In
connection with the purchase of the General Partnership Interest, the Company was
appointed the general partner of SDG. The General Partnership Interest is equal to 25% of
the Percentage Interests (as defined in SDGs Limited Partnership Agreement) in SDG.

5

---



Principles of Consolidation

The November 30, 2008, financial
statements include the accounts of the Company and SDG as of and for the three and nine
months ended September 30, 2008 and 2007. SDG has a fiscal quarter end, September 30, which is
consolidated with the Company effective November 30, 2008 and 2007. All significant
intercompany accounts and transactions in 2008 and 2007 were eliminated.

Unaudited Statements

The financial statements included in
this Form 10-Q have been prepared by the Company without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements prepared in accordance with
accounting principles generally accepted in the United States have been condensed or
omitted as allowed by such rules and regulations, and management believes that the
disclosures are adequate to make the information presented not misleading. These
financials statements include all of the adjustments, which, in the opinion of
management, are necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature only. The results
of operations for the interim periods are not necessarily indicative of the results to be
expected for the full fiscal year. These financial statements should be read in
conjunction with the audited financial statements at February 29, 2008, included in the
Companys annual report on Form 10-KSB filed with the Commission on May 27, 2008.

Reclassifications

Certain amounts reported in the
Companys financial statements for the three and nine months ended November 30,
2007, have been reclassified to conform to the current period presentation.

6

---



# 2.     NOTES PAYABLE,
AFFILIATES

Effective December 31, 2007 the
Company entered into a Purchase and Sale Agreement with Natural Resource Group Gathering,
LLC (NRGG), whereby the Company increased its investment in Slater Dome
Gathering, LLLP (SDG) by acquiring the general partners interest for
$1,075,000 consisting of $268,750 in cash and executing a promissory note in the amount
of $806,250. The Note bears interest at a rate of 2.5% per annum and is payable in
quarterly installments of $201,562 plus interest and was due December 31, 2008. At the
option of the Company, quarterly payments may be deferred until the maturity date. As a
result, the Company owns the 25% general partners interest together with 82.76% of
the Class A limited partnership interests in SDG. The Company will receive 84.487% of SDG
cash distributions until the limited partners have received cash distributions equal to
their initial capital contributions and 87.07% of cash distributions thereafter.

The Companys President and
Chief Executive Officer is a manager and owns 50% of the membership interests of NRGG,
the general partner of SDG, through December 31, 2007.

At November 30, 2008 the balance of
the note payable is $604,688; $201,563 in principal was paid in August 2008 together with
accrued interest in the amount of $12,315. Interest in the amount of $5,329 has been
accrued for the period ended November 30, 2008.

On December 24, 2008, the note was
extended under the same terms and conditions with a maturity date of December 31, 2009,
and in connection with the extension of the maturity date, the Company paid principal in
the amount of $201,563 together with accrued interest of $5,881.

# 3.    NOTES PAYABLE

On June 15, 2007, the Company
acquired a facility (the Steamboat Property) to be used as a field office and
provide lodging while Company personnel are working the Slater Dome Field area. The
purchase price for the Steamboat Property was $1,175,000. In connection with the purchase
of the Steamboat Property, the Company entered into a five-year mortgage in the principal
amount of $881,250 (the Steamboat Mortgage), which bears interest at a rate
of 7.56% per annum. The Steamboat Mortgage requires equal monthly payments during the
term of the mortgage in the amount of $8,256, with the balance of $698,604 due on June
14, 2012. The Steamboat Mortgage can be prepaid at any time without penalty. The
Steamboat Mortgage is collateralized by the Steamboat Property. The current portion of
the Steamboat Mortgage amounts to $40,079 with the balance of $794,621 being long term.
Interest in the amount of $46,167 was paid and $2,638 has been accrued on the Steamboat
Mortgage as of November 30, 2008.

7

---



# 4.     STOCKHOLDERS
 EQUITY

Series B Convertible Preferred
Stock

Effective November 1, 2004, the
board of directors of the Company approved an amendment to the Companys Articles of
Incorporation to provide for the issuance of up to 36,036 shares of Series B 12%
Cumulative Convertible Preferred Stock par value $0.001 (the Series B Preferred).
Between December 23, 2004 and February 28, 2005, the Company sold 32,175 shares of Series
B Preferred. The issue price of the Series B Preferred Stock is $100 per share. Each
share of Series B Preferred is convertible, at the option of the Holder, into that number
of shares of Common Stock determined by dividing the issue price of the aggregate number
of shares of Series B Preferred being converted plus any accrued and unpaid dividends by
$.65 per share, unless otherwise adjusted. The Series B Preferred pays a cumulative,
preferential cash dividend equal to 12% of the $100 issue price per year and is payable
quarterly in arrears. The dividend is payable out of funds legally available for that
purpose and will accumulate during any period when it is not paid.

In connection with the offer and
sale of Series B Preferred Stock, the Company granted a warrant to purchase 24.75 units
of the Series B Preferred Stock offering at a purchase price of $13,000 per Unit (the
Placement Agent Warrant). Each Unit consists of (i) $13,000 of Series B
Preferred Stock, convertible into 20,000 shares of Common Stock at the rate of $0.65 per
Share; and (ii) a three-year warrant to purchase 27,131 shares of Common Stock at an
exercise price of $1.11 per share on the same terms and conditions as the warrants issued
to the Series B Preferred Stock holders. The 18.5625 outstanding Placement Agent Warrants
were exercised on May 1, 2008 and the Company issued 2,697.51 shares of Series B
Preferred Stock and received proceeds of $269,751.

During the nine months ended
November 30, 2008, holders of 7,528.53 shares of Series B Preferred Stock converted the
shares into 1,158,230 shares of common stock in accordance with the terms of the Series B
Preferred. As of November 30, 2008, there were 19,559.60 shares of the Series B Preferred
issued and outstanding.

During the nine months ended
November 30, 2008, the Company paid $291,181 in dividends and accrued $198,242 of
dividends on the Series B Preferred Stock. As of November 30, 2008, the Company had
accrued dividends on the Series B Preferred Stock of $783,081.

8

---



Series C Convertible Preferred
Stock

Effective November 22, 2006, the
board of directors of the Company approved an amendment to the Companys Articles of
Incorporation to provide for the issuance of up to 230,000 shares of Series C 2.5%
Cumulative Convertible Preferred Stock par value $0.001 (the Series C Preferred
Stock). Between December 1, 2006 and January 16, 2007 the Company sold 222,250
shares of Series C Preferred Stock.

The stated value and issue price of
the Series C Preferred Stock is $100 per share. Holders of the Series C Preferred Stock
are entitled to receive cumulative dividends at the rate of 2.5% per annum, payable
quarterly on January 31, April 30, July 31 and October 31, beginning with January 31,
2007. The form of dividend payments may be, at the Companys option, in cash or
shares of the Companys $0.001 par value common stock (the Common Stock),
or a combination thereof. The Series C Preferred Stock is convertible into shares of
Common Stock at the rate of $1.05 per share.

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

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

Upon any liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, the holders of the Series C
Preferred Stock shall be entitled to receive out of the assets of the Company, whether
such assets are capital or surplus, for each share of Series C Preferred Stock an amount
equal to the stated value ($100) of the Series C Preferred Stock per share plus any
accrued and unpaid dividends thereon and any other fees or liquidated damages owing. If
the assets of the Company are insufficient to pay such amounts in full, then the entire
assets to be distributed to the holders of the Series C Preferred Stock shall be
distributed among the holders of the Series C Preferred Stock ratably in accordance with
the respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full.

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

9

---



During the nine months ended
November 30, 2008, there were 2,000 shares of Series C Preferred Stock converted into
190,475 shares of Common Stock. As of November 30, 2008, there were 217,500 shares of the
Series C Preferred Stock issued and outstanding.

The Company paid $7,262 in dividends
on the Series C Preferred Stock and accrued $414,736 on the Series C Preferred Stock
resulting in accrued dividends in the aggregate amount of $1,054,987 as of November 30,
2008.

Warrants

During the nine months ended
November 30, 2008, warrants to purchase 1,542,765 shares stocks at $1.11 were exercised
for cash proceeds of $1,712,469.

During the nine months ended
November 30, 2008, the Company issued 2,697.51 Series B Convertible Preferred shares
receiving gross proceeds in the amount of $269,750 from the exercise of the 18.5625
placement agent warrants, issued in connection with the placement of our Series B
Convertible Preferred stock.

Stock Options

On November 10, 2006, the Company
granted certain employees and agents of the Company an aggregate of 3,950,000 options to
acquire shares of the Companys Common Stock, which are exercisable at a price of
$1.25 (the Non-Qualified Stock Options). The Non-Qualified Stock Options
vested at a rate of 12.5% each fiscal quarter ended November 30, February 28, May 31 and
August 31 through November 30, 2008 and expire on November 30, 2016. The Companys
stock closed at $1.24 on November 10, 2006. The fair value of the Non-Qualified Stock
Options was estimated on the date of the grant utilizing the Black-Scholes option pricing
model with the following assumptions: expected life of the options is 10 years, expected
volatility of 67%, risk free interest rate of 5% and no dividend yield. The fair value
for the Non-Qualified Stock Options granted was approximately $0.96 per share. The value
of the options was recorded at $4,124,400 and $515,550 was amortized quarterly as the
options vested. Amortization was completed as of August 31, 2008.

On July 23, 2008, the Company the
Company granted certain employees and agents of the Company an aggregate of 4,200,000
options to acquire shares of the Companys Common Stock, which are exercisable at a
price of $1.01 (the Non-Qualified Stock Options). The Non-Qualified Stock
Options vest at a rate of 12.5% each fiscal quarter ending August 31, November 30,
February 28, May 31 through November 30, 2010 and expire on July 23, 2018. The Companys
stock closed at $1.01 on July 23, 2008. The fair value of the Non-Qualified Stock Options
was estimated on the date of the grant utilizing the Black-Scholes option pricing model
with the following assumptions: expected life of the options is 10 years, expected
volatility of 65%, risk free interest rate of 4.2% and no dividend yield. The fair value
for the Non-Qualified Stock Options granted was approximately $0.77 per share. The value
of the options was recorded at $3,221,600 and $402,700 is being amortized quarterly as
the options vest.

10

---



The activity for the Non-Qualified
Stock Options during the nine months ended November 30, 2008 is summarized as follows:

|                    | November 30, 2008 | 
|------------------- | ----------------- | 
|
|
|Beginning of period |                   | 
|Vested              |                   | 
|Exercised           |                   | 
|Expired             |                   | 
|                    |                   | 
|End of period       |                   | 
|                    |                   | 

A summary of the incentive stock
option activity during the nine months ended November 30, 2008 is summarized in the
following table:

|                    | November 30, 2008 | 
|------------------- | ----------------- | 
|
|
|Beginning of period |                   | 
|Granted             |                   | 
|Exercised           |                   | 
|Expired             |                   | 
|                    |                   | 
|End of period       |                   | 
|                    |                   | 

The following tables summarize
information about fixed-price stock options and warrants during the nine months ended
November 30, 2008:

|                    | November 30, 2008 | 
|------------------- | ----------------- | 
|
|
|Beginning of period |                   | 
|Granted             |                   | 
|Exercised           |                   | 
|Expired             |                   | 
|                    |                   | 
|End of period       |                   | 
|                    |                   | 

11

---



The following table summarizes the
options and warrants outstanding and exercisable at November 30, 2008:

|Range
of
Exercise
Price |  | Number
of Shares
Outstanding |  | Weighted
Average
Remaining
Contractual
Life in
Years | 
|----------------------- |  | ---------------------------- |  | ---------------------------------------------------- | 
|
|
|$0.75 to $1.50          |  |                              |  | 26,750,991                                           | 
|$1.51 to $2.75          |  |                              |  | 11,933,545                                           | 
|                        |  |                              |  |                                                     
|                        |  |                              |  | 38,684,536                                           | 

In October 2006, the Board of
Directors adopted an incentive stock option plan reserving 10,000,000 shares of the
Companys $0.001 par value common stock for issuance pursuant to the plan. The plan
was adopted by shareholders on June 11, 2007. As of November 30, 2008, no options have
been granted under the plan.

# 5.    RELATED PARTIES

The Company paid $24,000 during the
nine months ended November 30, 2008 and 2007, respectively, in connection with an office
lease for office space in Littleton, Colorado with Spotswood Properties, LLC, (Spotswood),
a Colorado limited liability company and an affiliate of the Companys president.
The lease provides for the payment of $2,667 per month plus utilities and other
incidentals. The president of the Company owns 50% of Spotswood.

The Company paid a corporation
controlled by one of the directors $50,000 and $45,000 for geological consulting during
the nine months ended November 30, 2008 and 2007, respectively.

SDG paid rent in the amount of
$2,700 during the nine months ended November 30, 2007 to Spotswood and accrued management
fees, to NRGG, the then general partner of SDG, in the amount of $5,759 during the nine
months ended September 30, 2007, The President of the Company is a manager and owns 50%
of the membership interests of NRGG.

# 6.     BUSINESS SEGMENT
INFORMATION

The Company operates in two business
segments: oil and gas exploration and gas gathering. Operating results and other
financial data for the nine months ended November 30, 2008 and 2007 are presented for the
principal business segments as follows:

12

---



|                                         | Oil & Gas |  | Gas Gathering |            | Consolidated |  
|---------------------------------------- | --------- |  | ------------- | ---------- | ------------ | -
|
|
|November 30, 2008                        |           |  |               |            |              |  
|Revenues                                 |           |  | $             | 1,056,964  |              | $
|Income (loss) before taxes               |           |  | $             | (4,030,167 | )            | $
|Total assets                             |           |  | $             | 23,327,889 |              | $
|Property additions                       |           |  | $             | 2,158,476  |              | $
|Interest expense                         |           |  | $             | (62,914    | )            | $
|Depreciation, depletion and amortization |           |  | $             | 639,372    |              | $
|November 30, 2007                        |           | 
|Revenues                                 |           |  | $             | 341,074    |              | $
|Loss before taxes                        |           |  | $             | (4,665,164 | )            | $
|Total assets                             |           |  | $             | 25,541,650 |              | $
|Property additions                       |           |  | $             | 5,117,219  |              | $
|Interest expense                         |           |  | $             | (62,490    | )            | $
|Debt issuance costs, non-cash            |           |  | $             | (363,917   | )            | $
|Depreciation, depletion and amortization |           |  | $             | 442,5077   |              | $

# 7.    SUBSEQUENT EVENTS

In January 2009, the Company issued
an aggregate of 95,238 shares of common stock pursuant to conversion of 1,000 shares of
Series C Preferred Stock.

# Item 2.
Managements Discussion and Analysis or Plan of Operation.

# Forward Looking
Information

Information contained in the
following discussion of results of operations and financial condition and in certain of
the notes to the financial statements included in this document contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995,
which can be identified by the use of words such as may,will, expect, anticipate, estimate, or
continue, or variations thereon or comparable terminology. In addition, all
statements other than statements of historical facts that address activities, events, or
developments the Company expects, believes, or anticipates will or may occur in the
future, and other such matters, are forward-looking statements. The following discussion
should be read in conjunction with the Companys unaudited financial statements and
related notes included elsewhere herein.

The Companys future operating
results may be affected by various trends and factors, which are beyond the Companys
control. The important factors that could prevent us from achieving our stated goals and
objectives include, but are not limited to, those set forth in our Annual Report on Form
10-KSB for the fiscal year ended February 29, 2008 and the following:

13

---



| |  | The
general state of the economy;
| | - | ---------------------------------

| |  | Our
ability to find third parties to implement our plan of operations in drilling additional
wells at the Slater Dome Field (as defined below) and prove reserves at the Focus Ranch
Unit;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Our
ability to successfully implement our plan of operations;
| | - | -------------------------------------------------------------

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

| |  | Environmental
and other regulations, as the same presently exist and may hereafter be amended;
| | - | ----------------------------------------------------------------------------------------------

| |  | Our
ability to identify, finance and integrate other acquisitions;
| | - | ------------------------------------------------------------------

| |  | Volatility
of our stock price; and
| | - | ----------------------------------

| |  | Actions
of overseas producers of oil and natural gas over which we have no control.
| | - | -----------------------------------------------------------------------------------

We undertake no responsibility or
obligation to update publicly these forward-looking statements, but may do so in the
future in written or oral statements. Investors should take note of any future statements
made by or on our behalf.

The Company cautions the reader that
a number of important factors discussed herein, and in other reports filed with the
Securities and Exchange Commission, including its 10-KSB for the year ended February 29,
2008, could affect the Companys actual results and cause actual results to differ
materially from those discussed in forward-looking statements. This information should be
read in conjunction with our Annual Report on Form 10-KSB for the year ended February 29,
2008.

# Overview

We are a natural resource exploration
and production company engaged in the exploration, acquisition and development of oil and
gas properties in the United States. We currently own an interest in five oil and gas
prospects, three of which are undeveloped. The Company owns a 66.66667% working interest
in the Slater Dome Field and is the operator of this field. The Slater Dome Field consists
of 35,480 net acres, held by mineral leases, and is located along the Colorado-Wyoming
border in Moffat County, Colorado, and Carbon County, Wyoming. The Slater Dome Field
targets coal-bed methane gas located at relatively shallow depths by industry drilling
standards. The Flattops Prospect consists of 3,276 net acres, of which we own 100% of the
working interest. The North Slater Dome Field, consists of 1,600 net acres, of which we
own a 100% working interest. The Focus Ranch Unit consists of approximately 36,891 gross
acres, 30,500 net acres adjacent to and southeast of the Slater Dome Field in northwest
Colorado and one gas well, the Focus Ranch Federal 12-1 well (Focus Ranch
Unit) and is subject to a farmout agreement. The agreement provides that the Company
shall become the operator of and acquire the Farmors interest in the Focus Ranch
Unit. The Farmor will retain a 1% working interest in the Unit and the Company will
acquire the balance of Farmors interest ranging between a 74% and a 99% working
interest on a lease by lease basis. As of the date of this Form 10-Q, the Company had
completed testing the Federal 12-1 well and the Focus Ranch Unit acreage under the
farm-out agreement is in the process of being assigned to the Company but has not yet been
completed and the Company is uncertain the specific date that it will be assigned to the
Company. We also own a 15% working interest in 15,049 gross acres in Routt County Colorado
called Gibraltar Peaks Prospect. The acreage includes all rights from the surface of the
earth to the base of the Mesa Verde Formation. The Gibraltar Peaks Prospect is included in
the Focus Ranch Unit. The Weitzel prospect (formerly called Amber Waves prospect) located
in Denver Julesburg Basin prospect consists of 12,400 net acres of which we own 100%.

14

---



Subject to our receipt of the
requisite financing required, our plan of operation is to build a gathering line to the
Focus Ranch Federal 12-1 well in the Unit and re-enter the Federal 3-1 well on the Unit in
the summer of 2009. We also plan to further develop the Slater Dome Field by drilling
additional wells in the summer of 2009; such wells are anticipated to be adjacent or near
our existing wells in the southeast section of this property. We may sell a portion of
both the Focus Ranch acreage and the Weitzel Prospect located in Northeast Colorado and if
we are successful, will attempt to obtain a promoted or carried working interest as well
as a prospect fee. We also plan to evaluate opportunities to acquire other interests in
oil and gas properties.

The following discussion and
analysis covers the consolidated financial condition of the Company at November 30, 2008,
changes in our financial condition since February 29, 2008, the end of the previous
fiscal year, and a comparison of the results of operation for the three and nine months
ended November 30, 2008 to the same period from the previous fiscal year. This
information should be read in conjunction with our Annual Report on Form 10-KSB for the
year ended February 29, 2008.

Results of Operation: Three months
ended November 30, 2008 compared to the three months ended November 30, 2007

For
the three months ended November 30, 2008 we reported a net loss attributable to common
shareholders of $1,361,819 or $0.10 per share, on revenue of $336,302. This compares to a
net loss attributable to common shareholders of $1,768,528, or $0.19 per share, on
revenue of $144,974 for the comparable period of the previous fiscal year. We expect to
incur losses until such time as we complete the dewatering process of our wells and
stabilize production of the coal-bed methane gas.

Revenues
for the three months ended November 30, 2008 were $336,302 compared with $144,974 for the
three months ended November 30, 2007, an increase of $191,328 or 131.97%. Oil and gas
revenues during the three months ended November 30, 2008 were $306,152 compared with
$112,619 during the three months ended November 30, 2007, an increase of $193,533 or
171.85%. The reason for the change is threefold and is a function of production, the
sales price of the gas and recording revenues for production held in suspense. Production
to our interest decreased approximately 907 MCF (2.230%) compared to the same three-month
period ended November 30, 2007. The decrease in production is considered normal in the
ordinary course of business. Average gas sales prices increased by $0.10 per MCF or 4.17%
from $2.40 to $2.50 during the three months ended November 30, 2008 as compared to the
three months ended November 30, 2007. The combination of the price/volume change amounted
to an increase in revenue of $2,019. Revenues also increased by $214,135 from production
held in suspense and recognized in the three months ended November 30, 2008. SDG revenues
from the gathering pipeline were $30,150 for the three months ended September 30, 2008
compared with $32,355 for the three months ended September 30, 2007, a decrease of $2,205
or 6.82%. The decrease relates principally to the decreased gathering fees associated
with the decreased production.

15

---



Exploration
costs for the three months ended November 30, 2008 were $82,334 compared with $25,200 in
the three months ended November 30, 2007, an increase of $57,134 or 226.72%. The
principal reason for the increase is the result of increases in geological consulting,
seismic consulting, seismic lines, miscellaneous costs and offset by a decrease in delay
rentals.

|                    | 2008 |  | 2007 |        | Increase
(Decrease) |  
|------------------- | ---- |  | ---- | ------ | ------------------- | -
|
|
|Geologic consulting |      |  | $    | 18,750 |                     | $
|Seismic consulting  |      |  |      | 51,218 |                     |  
|Seismic lines       |      |  |      | 6,390  |                     |  
|Misc other costs    |      |  |      | 4,651  |                     |  
|Delay rentals       |      |  |      | 1,325  |                     |  
|                    |      |  |      |        |                     |  
|                    |      |  | $    | 82,334 |                     | $
|                    |      |  |      |        |                     |  

The
increase in geologic and seismic consulting is a result of increased exploration activity
and reprocessing seismic lines at the Slater Dome Field and the Focus Ranch Unit compared
with the prior period together with increased consulting activity associated with
packaging and presenting the Weitzel prospect for sale. The increase in miscellaneous
other costs is for maps and supplies associated with the packaging and sales effort. The
decrease in delay rentals is considered normal in the ordinary course of business.

Lease
operating expenses for the three months ended November 30, 2008 were $351,320 compared
with $311,876 in the three months ended November 30, 2007, an increase of $39,444 or
12.64%. The changes are summarized as follows:

|                         | 2008 |  | 2007 |         | Increase
(Decrease) |  
|------------------------ | ---- |  | ---- | ------- | ------------------- | -
|
|
|Lease Operating Expenses |      |  | $    | 275,422 |                     | $
|Rework expenses          |      |  |      | 41,763  |                     |  
|Gas sales costs          |      |  |      | 6,000   |                     |  
|Production taxes         |      |  |      | 28,135  |                     |  
|                         |      |  |      |         |                     |  
|                         |      |  | $    | 351,320 |                     | $
|                         |      |  |      |         |                     |  

16

---



Lease
operating expenses increased $47,952 when compared with the previous period ending in
2007 because the Company was operating 6 additional wells. The production tax fluctuation
is considered normal in the ordinary course of business.

General
and administrative expenses for the three months ended November 30, 2008 were $401,481
compared with $488,589 in the three months ended November 30, 2007, a decrease of $87,108
or 17.83%. The following table summarizes the major components of the fluctuations:

|                                    | 2008 |  | 2007 |         | Increase
(Decrease) |  
|----------------------------------- | ---- |  | ---- | ------- | ------------------- | -
|
|
|Employee compensation               |      |  | $    | 191,600 |                     | $
|Financial public relations          |      |  |      | 44,560  |                     |  
|Professional fees                   |      |  |      | 59,060  |                     |  
|Insurance                           |      |  |      | 8,654   |                     |  
|Payroll taxes and employee benefits |      |  |      | 34,867  |                     |  
|Travel                              |      |  |      | 9,608   |                     |  
|Office, utilities, etc.             |      |  |      | 11,839  |                     |  
|Rent                                |      |  |      | 11,000  |                     |  
|Repairs and maintenance             |      |  |      | 14,010  |                     |  
|Miscellaneous other costs           |      |  |      | 16,283  |                     |  
|Management fees  SDG                |      |  |      |        |                     |  
|                                    |      |  |      |         |                     |  
|                                    |      |  | $    | 401,481 |                     | $
|                                    |      |  |      |         |                     |  

Employee compensation increased
$55,188 in the quarter ended November 30, 2008 compared with the quarter ended November
30, 2007 because, officer compensation increased $32,249, and field and office employee
compensation increased $22,939 because the Company added additional employees in 2008 not
present in 2007. The decrease in financial public relations in the amount of $163,697 in
the three months ended November 30, 2008 compared with the three months ended November 30,
2007 arises from decreased fees paid to consultants for financial public relations and
shareholder relations, advertising and presentation fees. Professional fees decreased by
$2,035 in the three months ended November 30, 2008, compared with the three months ended
in 2007 and is considered normal in the ordinary course of business. Insurance decreased
by $2,114 in the three months ended November 30, 2008 compared to the three months ended
in 2007 and is principally a function of rate changes. The increase in payroll taxes and
employee benefits in the amount of $6,554 directly relates to the increase in compensation
expenses .and the increase in the number of employees covered under the Companys
health insurance plan; such fluctuations are considered normal in the ordinary course of
business. Travel expenses increased by $1,425; such fluctuation is considered normal in
the ordinary course of business. Office expense decreased by $5,634, and is considered
normal in the ordinary course of business. Repairs and maintenance increased $10,493, of
which $6,770 was incurred by SDG for summer weed control along the gathering line and the
balance of $3,723 was incurred by the Company for normal recurring activities.
Miscellaneous other expenses increased $8,986 and such decrease is considered normal in
the ordinary course of business. Management fees incurred by SDG decreased by $1,941
because the Company took over as the general partner on December 31, 2007 and accordingly,
the fees are eliminated in the consolidation.

17

---



Amortization
of the non-qualified common stock options issued in July 2008 was $402,700 for the three
months ended November 30, 2008. The amortization of the non-qualified stock options in
the three months ended November 30, 2007 in the amount of $659,450 consisted of the
amortization of common stock options granted in November 2006 was $515,550 together with a
charge to earnings in the amount of $143,900 for an option granted in October 2007. The
decrease of $256,750 in the quarter ended November 30, 2008 compared to 2007 is
attributable the difference between the $515,550 charge where the underlying options
fully vested in the period ended August 31, 2008 and the current option vesting of the
options issued July 23, 2008 in the amount of $402,700 together with the decrease of
$143,900 associated with a fully vested grant in the three months ended November 30,
2007.

Depreciation,
depletion and amortization for the three months ended November 30, 2008 was $226,464
compared with $216,938 during the three months ended November 30, 2007, an increase of
$9,526 or 4.39%. The components of the increase are summarized in the following table:

|                               | 2008 |  | 2007 |         | Increase
(Decrease) |   |        
|------------------------------ | ---- |  | ---- | ------- | ------------------- | - | -------
|
|
|Producing oil & gas properties |      |  | $    | 159,500 |                     | $ | 153,800
|Slater Dome Gathering LLLP     |      |  |      | 32,623  |                     |   | 32,623 
|Other depreciable assets       |      |  |      | 34,341  |                     |   | 30,515 
|                               |      |  |      |         |                     |  
|                               |      |  | $    | 226,464 |                     | $ | 216,938
|                               |      |  |      |         |                     |  

The
increase in depletion on producing properties is attributable to the increased basis in
the assets at the Slater Dome Field. Other depreciation increased $3,826 for the three
months ended November 30, 2008 as compared with the three months ended November 30, 2007
because of depreciation associated with additional non oil and gas property and equipment
the Company placed into service.

Interest
income for the three months ended November 30, 2008 was $12,490 compared with $78,548 in
the three months ended November 30, 2007, a decrease of $66,058 or 84.10%. The decrease is
a result of smaller interest bearing cash balances held in 2008 and lower interest rates on such balances
 as compared with 2007.

Interest
expense for the three months ended November 30, 2008 was $19,854 compared with $18,550 in
the three months ended November 30, 2007, an increase of $1,304 or 7.03%. The components
of the change are summarized as follows:

18

---



|                                 | 2008 |  | 2007 |        | Increase
(Decrease) |   |       
|-------------------------------- | ---- |  | ---- | ------ | ------------------- | - | ------
|
|Notes payable, affiliates        |      |  | $    | 3,728  |                     | $ |      
|Notes payable                    |      |  |      | 16,126 |                     |   | 16,624
|Convertible debenture, affiliate |      |  |      |       |                     |   | 1,926 
|                                 |      |  |      |        |                     |  
|                                 |      |  | $    | 19,854 |                     | $ | 18,550
|                                 |      |  |      |        |                     |  

Notes
payable, affiliates increased $3,728 in the three months ended November 30, 2008 compared
with $0 in the quarter ended November 30, 2007 because the note to NRGG was issued in
December 2007 and accordingly, not present in the three months ended November 30, 2007.
Notes payable interest decreased by $498 because of reductions in principal. The
convertible debenture to affiliates interest decreased because the Company paid the
convertible debenture in full in December 2007.

Debt
issuance costs for the three months ended November 30, 2008 was $0 as compared with $4,748
for the three months ended November 30, 2007, a decrease of $4,748. The change in debt
issuance cost arises because the debentures matured on July 23, 2007 and the completion of
the amortization period occurred in 2007.

The
minority interest in the income of the consolidated subsidiary for the three months ended
November 30, 2008 was $7,479 as compared to $14,820 for the three months ended November
30, 2007 resulting in a decrease of $7,341 or 49.53%. This fluctuation principally relates
to the acquisition of the general partners interest in December 2007 and
accordingly, the minority interest decreased.

During
the three months ended November 30, 2008, the Company charged dividends on the Series B
and C Convertible Preferred Stock in the amount of $218,979 and $247,972 respectively,
together with distributions to the SDG minority interests in the amount of $23,275 to the
loss attributable to common shares compared with $247,972 during the three months ended
November 30, 2007, a decrease of $28,993 or 11.69%. The changes in the dividends on the
Series B and C Preferred Stock arise from changes in computational balances. The decrease
in distributions to the SDG minority interests in the amount of $9,835 is because SDG made
a smaller distribution to minority interest owners during the three months ended June 30,
2008 as compared with the same period in 2007 and the minority interest decreased.

|                    | 2008 |  | 2007 |         | Increase
(Decrease) |   |        
|------------------- | ---- |  | ---- | ------- | ------------------- | - | -------
|
|
|Dividends, Series B |      |  | $    | 58,005  |                     | $ | 76,609 
|Dividends, Series C |      |  |      | 137,699 |                     |   | 138,253
|Distributions, SDG  |      |  |      | 23,275  |                     |   | 33,110 
|                    |      |  |      |         |                     |  
|                    |      |  | $    | 218,979 |                     | $ | 247,972
|                    |      |  |      |         |                     |  

As
a result of the above, we generated a net loss attributable to common shareholders of
$1,361,819 or $0.10 per share during the three months ended November 30, 2008 as compared
to a net loss attributable to common shareholders of $1,768,528 or $0.19 per share during
the three months ended November 30, 2007.

19

---



Results of Operation: nine months
ended November 30, 2008 compared to the nine months ended November 30, 2007.

For
the nine months ended November 30, 2008 we reported a net loss attributable to common
shareholders of $4,754,935 or $0.39 per share, on revenue of $1,165,032. This compares to
a net loss attributable to common shareholders of $5,472,718, or $0.71 per share, on
revenue of $435,358, for the comparable period of the previous fiscal year. We expect to
incur losses until such time as we complete the dewatering process of our wells and
stabilize production of the coal-bed methane gas from the Slater Dome Field.

Revenues
for the nine months ended November 30, 2008 were $1,165,032 compared with $435,358 for
the nine months ended November 30, 2007, an increase of $729,674 or 167.60%. Oil and gas
revenues were $1,056,964 for the period ended November 30, 2008 compared with $341,074,
an increase of $715,890 or 209.89%. The reason for the change is twofold and is a
function of production and the sales price of the gas. Production to our interest in the
nine months ended November 30, 2008 was 150,634 MCF compared to 80,588 in the comparable
period in 2007, an increase of 70,073 MCF (86.98%). The second element of the change is
price; average gas sales prices increased by $3.04 per MCF or 95.5% from $3.18 to $6.25
in this period as compared to the nine months ended November 30, 2007. SDG revenues from
the gathering pipeline were $108,068 for the nine months ended September 30, 2008
compared with $94,284 for its nine months ended September 30, 2007, an increase of
$13,784 or 14.62%. The increase relates the increase in gas transported during the nine
months ended June 30, 2008 as compared with the same period in the nine months ended June
30, 2007.

Exploration costs for the nine months
ended November 30, 2008 were $179,044 compared with $141,795 in the nine months ended
November 30, 2007, an increase of $37,249 or 26.26%. The increase in geologic and seismic
consulting is a result of increased exploration activity at the Slater Dome Field and the
Focus Ranch Unit compared with the prior period together with increased consulting
activity associated with packaging and presenting the Weitzel prospect for sale. The
decrease in seismic lines arises because we purchased fewer seismic lines in the nine
months ended November 30, 2008. The increase in miscellaneous other costs is for maps and
supplies associated with the packaging and sales effort. The increase in delay rentals is
considered normal in the ordinary course of business. The following summarizes the
components of the fluctuations:

|                    | 2008 |  | 2007 |         | Increase
(Decrease) |   |        
|------------------- | ---- |  | ---- | ------- | ------------------- | - | -------
|
|
|Geologic consulting |      |  | $    | 50,000  |                     | $ | 45,000 
|Seismic consulting  |      |  |      | 86,081  |                     |   | 45,122 
|Seismic lines       |      |  |      | 6,390   |                     |   | 35,587 
|Misc other costs    |      |  |      | 20,753  |                     |   | 3,349  
|Delay rentals       |      |  |      | 15,820  |                     |   | 12,737 
|                    |      |  |      |         |                     |  
|                    |      |  | $    | 179,044 |                     | $ | 141,795
|                    |      |  |      |         |                     |  

20

---



Lease
operating expenses for the nine months ended November 30, 2008 were $948,215 compared with
$1,133,491 in the nine months ended November 30, 2007, a decrease of $185,276 or 16.35%.
The principal reason for the decrease is that in the nine months ended November 30, 2007
expenditures associated with rehabilitation of the property and reworking the existing
wells after taking over operations in the winter of 2007 were not present in 2008. The
changes are summarized as follows.

|                         | 2008 |  | 2007 |         | Increase
(Decrease) |   |          
|------------------------ | ---- |  | ---- | ------- | ------------------- | - | ---------
|
|
|Lease Operating Expenses |      |  | $    | 796,333 |                     | $ | 683,827  
|Rework expenses          |      |  |      | 55,941  |                     |   | 423,416  
|Gas sales costs          |      |  |      | 18,000  |                     |   | 8,000    
|Production taxes         |      |  |      | 77,942  |                     |   | 18,248   
|                         |      |  |      |         |                     |  
|                         |      |  | $    | 948,215 |                     | $ | 1,133,491
|                         |      |  |      |         |                     |  

Gas
sales costs increased because there were 9 months of costs in the period ended November
30, 2008 compared with 4 months in the comparable period in 2007. Production taxes
increased as a result of increased revenues.

The
costs of gas gathering amounted to $1,139 during the nine months ended September 30, 2008
as compared to $4,739 for the nine months ended September 30, 2007, a decrease of $3,600
or 75.96%. The decrease is considered normal in the ordinary course of business.

General
and administrative expenses for the nine months ended November 30, 2008 were $1,504,473
compared with $1,516,117 in the nine months ended November 30, 2007, a decrease of $11,644
or 0.77%. The following table summarizes the major components of the fluctuations.

|                                    | 2008 |  | 2007 |           | Increase
(Decrease) |   |           | 
|----------------------------------- | ---- |  | ---- | --------- | ------------------- | - | --------- | 
|
|
|Employee compensation               |      |  | $    | 566,565   |                     | $ | 541,661   | 
|Restricted stock awards             |      |  |      | 101,000   |                     |   |          | 
|Financial public relations          |      |  |      | 224,768   |                     |   | 507,458   | 
|Professional fees                   |      |  |      | 264,133   |                     |   | 206,074   | 
|Insurance                           |      |  |      | 31,476    |                     |   | 32,664    | 
|Payroll taxes and employee benefits |      |  |      | 114,881   |                     |   | 91,077    | 
|Travel                              |      |  |      | 26,352    |                     |   | 30,257    | 
|Office and utilities                |      |  |      | 88,227    |                     |   | 37,891    | 
|Rent                                |      |  |      | 33,300    |                     |   | 24,000    | 
|Repairs and maintenance             |      |  |      | 16,024    |                     |   | 15,315    | 
|Miscellaneous                       |      |  |      | 37,746    |                     |   | 23,961    | 
|Management fees  SDG                |      |  |      |          |                     |   | 5,759     | 
|                                    |      |  |      |           |                     |  
|                                    |      |  | $    | 1,504,473 |                     | $ | 1,516,117 | 
|                                    |      |  |      |           |                     |  

21

---



Employee
compensation increased $24,904 in the nine months ended November 30, 2008 compared with
the nine months ended November 30, 2007 because officer salaries increased by $60,416
offset by decreased bonuses to officers of $122,000, together with increased additional
staff compensation in the amount of $86,488 resulting from annual salary increases and
additional personnel in the field. Restricted stock awards increased by $101,000 in the
nine months ended November 30, 2008 because there were no awards in the comparable period
in 2007. The decrease in financial public relations in the amount of $282,690 is
principally as a result of a decrease in financial public relations fees in the amount of
$260,340 and other related costs of $22,349. Professional fees increased by $58,059 as a
result of increased legal, accounting and engineering fees associated with the increasing
corporate activity in the amount of $25,555 and increased fees associated with contract
land personnel and other professionals in the amount of $32,504. Payroll taxes and
employee benefits increased by $23,804 and which is directly related to compensation
changes and the addition of additional field employees not present in 2007. Travel
decreased $3,905 in the nine months ended November 30, 2008 compared with the same period
in 2007 and the fluctuation is considered normal in the ordinary course of business.
Office and utilities expense increased $50,336 in the nine months ended November 30, 2008
compared with the same period in 2007; the increase is primarily due to increased
corporate activity. Rent increased $9,300 in the nine months ended November 30, 2008
compared with the same period in 2007 and is a result of increased costs associated with
the field office. Repairs and maintenance decreased $709 is considered normal in the
ordinary course of business. Management fees incurred by SDG decreased by $5,759 because
the Company acquired the general partnership interest in December 2007 and accordingly,
management fees are eliminated in the nine months ended November 30, 2008 consolidated
financial statements.

Issuance
of non-qualified common stock option expense was $1,836,500 during the nine months ended
November 30, 2008, as compared with $1,690,550 during the nine months ended November 30,
2007. The non-qualified common stock option expense is the result of the vesting
associated with the issuance of 3,950,000 and 4,200,000 non-qualified common stock options
to employees and certain employees and agents of the Company. The increase of $145,950 is
comprised of $805,400 for the options granted in July 2008 vesting quarterly through May
2010 offset by a decrease of $515,550 from options granted in November 2006 which fully
vested in August 2008, together with the decrease of $143,900 associated with a fully
vested grant in the nine months ended November 30, 2007.

Depreciation,
depletion and amortization for the nine months ended November 30, 2008 was $737,241
compared with $540,376 during the nine months ended November 30, 2007, an increase of
$196,865 or 36.43%. The components of the increase are summarized in the following table:

|                               | 2008 |  | 2007 |         | Increase
(Decrease) |   |         | 
|------------------------------ | ---- |  | ---- | ------- | ------------------- | - | ------- | 
|
|
|Producing oil & gas properties |      |  | $    | 537,400 |                     | $ | 370,700 | 
|Slater Dome Gathering LLLP     |      |  |      | 97,869  |                     |   | 97,869  | 
|Other depreciable assets       |      |  |      | 101,972 |                     |   | 71,807  | 
|                               |      |  |      |         |                     |  
|                               |      |  | $    | 737,241 |                     | $ | 540,376 | 
|                               |      |  |      |         |                     |  

22

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The
increase in depletion on producing properties in the amount of $166,700 is attributable to
the increased production from the Slater Dome Field for the nine months ended November 30,
2008 as compared with the corresponding nine months ended November 30, 2007. Other
depreciation increased $30,165 for the nine months ended November 30, 2008 as compared
with the nine months ended November 30, 2007 because the Company added additional property
and equipment and accordingly, depreciation increased.

Interest
income for the nine months ended November 30, 2008 was $62,437 compared with $317,537 in
the nine months ended November 30, 2007, a decrease of $255,100 or 80.34%. Such decrease
is a result of smaller cash balances invested in 2008 compared with 2007 together with
decreased interest rates.

Interest
expense for the nine months ended November 30, 2008 was $62,914 compared with $62,490 in
the nine months ended November 30, 2007, an increase of $424 or 0.68%, the components of
which are summarized as follows.

|                                 | 2008 |  | 2007 |        | Increase
(Decrease) |   |        | 
|-------------------------------- | ---- |  | ---- | ------ | ------------------- | - | ------ | 
|
|
|Notes payable, affiliates        |      |  | $    | 14,108 |                     | $ |       | 
|Notes payable                    |      |  |      | 48,806 |                     |   | 31,082 | 
|Convertible debenture, affiliate |      |  |      |       |                     |   | 3,852  | 
|Convertible dentures             |      |  |      |       |                     |   | 27,556 | 
|                                 |      |  |      |        |                     |  
|                                 |      |  | $    | 62,912 |                     | $ | 62,490 | 
|                                 |      |  |      |        |                     |  

Notes
payable affiliates, increased because the Company acquired the general partners interest
in SDG in December 2007. Notes payable interest increased because an obligation for the
field facility was incurred in June 2007 and accordingly, only five months of interest
was incurred in the nine months ended November 30, 2007. The convertible debentures
interest decreased because the debentures were converted to common stock or paid on July
23, 2007. The convertible debenture to affiliates interest decreased because the Company
paid the convertible debenture in full in December 2007.

Debt
issuance costs for the nine months ended November 30, 2008 and 2007 was $0 and $363,917
respectively. The change in debt issuance cost arises because the underlying instruments
matured on July 23, 2007 and the amortization period was completed in 2007.

The
minority interest in the income of the subsidiary for the nine months ended November 30,
2008 was $31,767 as compared with a $39,994 for the nine months ended November 30, 2007
resulting in a net change of $8,227 or 20.57%. This fluctuation relates to the change in
activity in SDG for the respective periods together with a decrease in the minority
interest in 2008 because the Company acquired the general partnership interest in December
2007; such fluctuation is considered normal in the ordinary course of business.

23

---



During
the nine months ended November 30, 2008, the Company charged dividends on the Series B
and C Convertible Preferred Stock in the amount of $681,111 and $732,144 respectively,
together with distributions to the SDG minority interests in the amount of $68,133 to the
loss attributable to common shares compared with Series B dividends of $248,385, Series C
dividends of $418,049 together with distributions to the SDG minority interest of $65,710
during the nine months ended November 30, 2007, a decrease of $51,033 or 6.97%. The
decrease in dividends on the Series B Preferred is because of conversions of outstanding
shares of the Series B and C Preferred in the nine months ended November 30, 2008 as
compared to the nine months ended November 30, 2007. The increase in distributions to the
SDG minority interests in the amount of $2,423 is because SDG made a smaller distribution
to minority interest owners during the nine months ended September 30, 2007 and the
Company acquired the general partners interest in December 2007. The following
summarizes the components of the change.

|                                          | 2008 |  | 2007 |         | Increase
(Decrease) |   |         | 
|----------------------------------------- | ---- |  | ---- | ------- | ------------------- | - | ------- | 
|
|
|Dividends, series B convertible preferred |      |  | $    | 198,242 |                     | $ | 248,385 | 
|Dividends, series C convertible preferred |      |  |      | 414,736 |                     |   | 418,049 | 
|Distributions, SDG                        |      |  |      | 68,133  |                     |   | 65,710  | 
|                                          |      |  |      |         |                     |  
|                                          |      |  | $    | 681,111 |                     | $ | 732,144 | 
|                                          |      |  |      |         |                     |  

As
a result of the above, we generated a net loss attributable to common shareholders of
$4,754,935 during the nine months ended November 30, 2008 as compared to a net loss
attributable to common shareholders of $5,472,715 during the nine months ended November
30, 2007.

Liquidity and Capital Resources

We
have not generated positive cash flows from operating activities and used $1,017,651 in
operating activities during the nine months ended November 30, 2008. The primary sources
of capital have been from sales of gas and issuances of equity securities during the nine
months ended November 30, 2008. Our primary use of capital has been for the acquisition,
development and exploration of oil and gas properties. Our working capital requirements
are expected to increase in line with the growth of our business. We have no lines of
credit or other bank or off balance sheet financing arrangements. We believe our capital
requirements will continue to be met with cash from operations, additional issuance of
equity or debt securities as well as traditional bank financing. Additional issuances of
equity or convertible debt securities will result in dilution to our current Common
Stockholders.

24

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Subject to available capital
resources, our plan of operation is to build a gathering line to the Focus Ranch Federal
12-1 well in the Unit and re-enter the Federal 3-1 well on the  Focus Ranch Unit in the
summer of 2009. We also plan to further develop the Slater Dome Field by drilling
additional wells in the summer of 2009; such wells are anticipated to be adjacent or near
our existing wells in the southeast section of this property. We may sell a portion of
both the Focus Ranch Unit and the Weitzel Prospect located in Northeast Colorado and if we
are successful, will attempt to obtain a promoted or carried working interest as well as a
prospect fee. We also plan to evaluate opportunities to acquire other interests in oil and
gas properties. We believe that the plan of operations for the next twelve months will
require capital of approximately $15,000,000. To the extent that additional opportunities
present themselves to the Company, the Company will require additional sources of capital
to participate in these opportunities. We expect that working capital requirements will be
funded through a combination of our existing funds, cash flow from operations and issuance
of equity and debt securities. In the event that existing funds and cash flows from
operations are insufficient to meet our cash requirements, we may be required to reduce
planned capital expenditures or seek additional financing. There can be no assurance that
our existing funds, cash flow from operations or the issuance of equity and debt
securities will be sufficient to allow us to continue our current operations and we may be
required to modify our operating plans to the extent of available funding, which would
harm our ability to conduct our operations. We cannot assure you that any capital will be
available to use from financings, or that, if available, any such financing will be on
favorable terms. Additional issuances of equity or securities convertible into our common
stock will result in dilution to our current common stockholders. Management believes that
current cash balances plus cash flow from operations will not be sufficient to fund our
capital and liquidity needs for the next twelve months.

As
of November 30, 2008, we had a cash balance of $1,902,221. We used $1,017,651 in cash for
operating activities during the nine months ended November 30, 2008 as compared to
$2,340,189 during the nine months ended November 30, 2007.

The
following summarizes the Companys capital resources at November 30, 2008 compared
with February 29, 2008:

|                                                     | November 30, 2008 |  | February 29, 2008 |            | Increase
(Decrease) |   | Increase
(Decrease) |  
|---------------------------------------------------- | ----------------- |  | ----------------- | ---------- | ------------------- | - | ------------------- | -
|
|
|Cash                                                 |                   |  | $                 | 1,902,221  |                     | $ | 3,602,939           |  
|                                                     |                   | 
|Current assets                                       |                   |  | $                 | 2,847,964  |                     | $ | 4,881,911           |  
|                                                     |                   | 
|Total Assets                                         |                   |  | $                 | 25,563,611 |                     | $ | 26,209,623          |  
|                                                     |                   | 
|Current liabilities                                  |                   |  | $                 | 3,671,396  |                     | $ | 3,535,934           |  
|                                                     |                   | 
|Working capital                                      |                   |  | $                 | (823,432   | )                   | $ | 1,345,977           |  
|                                                     |                   | 
|Net cash  (used) in operating activities             |                   |  | $                 | (1,017,651 | )                   | $ | (3,048,539          | )
|                                                     |                   | 
|Net  cash used in investing activities               |                   |  | $                 | (2,125,176 | )                   | $ | (5,653,729          | )
|                                                     |                   | 
|Net cash  provided by (used in) financing activities |                   |  | $                 | 1,442,109  |                     | $ | (419,027            | )

The principal components of the
changes in cash are summarized as follows:

|                                                  | 
|------------------------------------------------- | 
|
|
|Proceeds from revenues                            | 
|Proceeds from exercising warrants                 | 
|Proceeds from exercising placement agent warrants | 
|Operating costs billed to non-affiliates          | 
|Purchase of property and equipment                | 
|Deposits                                          | 
|Principal payments on notes payable               | 
|Preferred stock dividends                         | 
|Distributions to SDG minority interests           | 
|Operating expenses and other                      | 
|                                                  | 
|                                                  | 
|                                                  | 

25

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The
principal cause of the increase in current liabilities in the amount of $135,462 was
payment of $105,049 for accounts payable, payment of note payable principal of $201,562
offset by a $314,532 increase in dividends payable, and $129,941 increase in accrued
expenses. The Company increased the current portion of the long-term debt by $6,059 as a
normal course of the loan amortization. The remaining changes are considered normal in the
ordinary course of business.

|                                  | 11/30/2008 |  | 2/29/2008 |           | Increase
(Decrease) |  
|--------------------------------- | ---------- |  | --------- | --------- | ------------------- | -
|
|
|Accounts payable                  |            |  | $         | 742,587   |                     | $
|Convertible debenture, affiliates |            |  |           | 604,688   |                     |  
|Dividends payable                 |            |  |           | 1,838,068 |                     |  
|Accrued expenses                  |            |  |           | 438,007   |                     |  
|Accrued interest                  |            |  |           | 7,967     |                     |  
|Current portion of long term debt |            |  |           | 40,079    |                     |  
|                                  |            |  |           |           |                     |  
|                                  |            |  | $         | 3,671,396 |                     | $
|                                  |            |  |           |           |                     |  

The
decrease in working capital of $2,169,409 or 161% is principally due to acquisition of oil
and gas leases and well completion activities.

# Item 3.     Quantitative and
Qualitative Disclosures About Market Risk

Interest Rate Risks

The
Company pays a fixed rate of interest on its outstanding debt and accordingly, there is no
interest rate market risk.

Commodity Price Risks

Our
major market risk exposure is in the pricing applicable to our natural gas production.
Pricing is primarily driven by the prevailing spot market prices applicable to our U.S.
natural gas production. Pricing for natural gas has been volatile and unpredictable for
several years. The prices we receive for production depend on many factors outside of our
control. In the nine months ended August 31, 2008, our income before income taxes
would have changed by $75,300 for each $0.50 change per Mcf in natural gas prices. We have
not entered into natural gas derivative contracts to manage our exposure to natural gas
price volatility.

# Item 4.     Controls and
Procedures

As
of the end of the period covered by this report, an evaluation was carried out by New
Frontier Energy, Inc., with the participation of our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these
disclosure controls and procedures were effective as of the end of the period covered by
this report.

In
addition, no change in our internal control over financial reporting (as defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our most
recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

26

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# PART II  OTHER
INFORMATION

# Item 1.     Legal Proceedings

Not
Applicable.

# Item 1A.     Risk Factors

There
have been no material changes to the Risk Factors discussed in our Annual Report on Form
10-KSB/A for the fiscal year ended February 29, 2008 filed with the Securities and
Exchange Commission on June 24, 2008 and investors are encouraged to review those risk
factors in detail before making any investment in the Companys securities.

# Item 2.     Unregistered
Sales of Equity Securities and Use of Proceeds.

None.

# Item 3.     Defaults Upon
Senior Securities.

Not
Applicable.

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

Not
Applicable.

# Item 5.     Other Information

On July 31, 2008, the Company and
Paul G. Laird and Les Bates agreed to cancel their respective employment agreements and
enter into new employment agreements (the New Employment Agreements),
effective July 1, 2008. The Company disclosed the New Employment Agreements under Item
5.02 on Form 8-K filed with the Securities and Exchange Commission on August 5, 2008.
However, incorrect copies of the New Employment Agreement for Mr. Laird were attached to
the Form 10Q filed October 14, 2008. The Company has attached the correct New Employment
Agreements to this Form 10-Q as Exhibits 10.1 and are incorporated herein by this
reference. There are no changes in the base salary or the term of the New Employment
Agreements incorrectly filed on the Form 8-K filed with the SEC on August 5, 2008 and the
correct copies of the New Employment Agreement attached hereto.

27

---



# Item 6.     Exhibits

Exhibits:
The following exhibits are filed with this report:

| | 10.1 | Amended
 and  restated   employment   agreement  with  Paul  G.  Laird effective July 1, 2008
| | ---- | ---------------------------------------------------------------------------------------------

| | 31.1 | Certification
pursuant to Rule 13a-14(a) or 15d-14(a)         under
The Securities Exchange Act of 1934 as amended.
| | ---- | -------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as
amended.
| | ---- | -----------------------------------------------------------------------------------------------------------

| | 32. | Certifications
pursuant to 18 U.S.C section 1350, as adopted pursuant to           Section 906 of the
Sarbanes-Oxley Act of 2002.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

28

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# SIGNATURES

In
accordance with the requirements of the Securities Exchange Act of 1934, as amended, the
registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

|                       | New Frontier Energy, Inc. |                                                     
|---------------------- | ------------------------- | ----------------------------------------------------
|Date: January 14, 2009 | By:                       | /s/ Paul G. Laird                                   
|                       |                           | Paul G. Laird, President and Chief Executive Officer
|                       |                           |                                                     
|                       | By:                       | /s/ Les Bates                                       
|                       |                           | Les Bates, Chief Financial Officer                  
|                       |                           |                                                     

29

---