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
      1934For
      the quarterly period ended November 30, 2009o
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from ____________________to
      ____________________


Commission
file number: 0-50472


NEW FRONTIER ENERGY,
      INC.(Exact
      name of small business issuer as specified in its
  charter)





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





1801
      Broadway, Suite 920, Denver, CO 80203(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
            
            Accelerated
      filer oNon-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
March 16, 2010, there were 44,276,306 shares of common stock outstanding (not
including 17,243,059 shares that have not been issued.) See Note 9.


























NEW
FRONTIER ENERGY, INC.





Index





Part I -
FINANCIAL INFORMATION


Item
      1
            Financial
      StatementsConsolidated
      Balance Sheets at November 30, 2009 (unaudited) and February 28,
      2009
            
            
            3Consolidated
      Statements of Operations (unaudited) for the three months
      ended  November 30, 2009 and 2008
            
            
            4Consolidated
      Statements of Operations (unaudited) for the nine months ended November
      30, 2009 and 2008
            
            
            5Consolidated
      Statements of Cash Flows (unaudited) for the nine months ended November
      30, 2009 and 2008
            
            
            6Notes
      to Consolidated Financial Statements (unaudited)
            
            
            7Item
      2
            Management’s
      Discussion and Analysis or Plan of Operations
            
            
            17Item
      3
            Quantitative
      and Qualitative Disclosures About Market Risk
            
            
            23Item
      4
            Controls
      and Procedures
            
            
            23Item
      4T
            Controls
      and Procedures
            
            
            23


Part II -
OTHER INFORMATION


Item
      1
            Legal
      Proceedings
            
            
            24Item
      1A
            Risk
      Factors
            
            
            24Item
      2
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            
            
            25Item
      3
            Defaults
      Upon Senior Securities
            
            
            26Item
      4
            Submission
      of Matters of a Vote of Security Holders
            
            
            26Item
      5
            Other
      Information
            
            
            26Item
      6
            Exhibits
            
            
            26SIGNATURES
            
            
            26EXHIBITS
















NEW
FRONTIER ENERGY, INC.


CONSOLIDATED
BALANCE SHEETS


November
      30,
              2009
            
            
            February
      28,
              2009(Unaudited)ASSETSCURRENT
      ASSETSCash
            
            $
            1,311,902
            
            
            $
            856,475Segregated
      arbitration funds, affiliates
            
            
            500,100
            
            
            
            —Accounts
      receivable, trade, net of allowances
            
            
            2,185,747
            
            
            
            583,628Prepaid
      expenses
            
            
            330,665
            
            
            
            233,423Total
      current assets
            
            
            4,328,414
            
            
            
            1,673,526PROPERTY AND EQUIPMENT, NET OF
      ACCUMULATED DEPRECIATION AND DEPLETIONof
      $2,642,123 and $2,278,466 as of November 30, 2009 and February 28, 2009,
      respectively
            
            
            13,575,697
            
            
            
            14,949,366OTHER
      ASSETSDeposits
            
            
            160,000
            
            
            
            160,000Total
      assets
            
            $
            18,064,111
            
            
            $
            16,782,892LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
            
            $
            2,073,395
            
            
            $
            862,248Segregated
      funds indemnification, affiliates
            
            
            500,000
            
            
            
            —Notes
      payable, current portion, affiliates
            
            
            201,562
            
            
            
            403,125Notes
      payable, current portion
            
            
            636,696
            
            
            
            825,898Dividends
      payable
            
            
            2,559,867
            
            
            
            1,999,083Accrued
      expenses
            
            
            1,300,858
            
            
            
            376,133Accrued
      interest
            
            
            —
            
            
            
            2,459Accounts
      payable, affiliates
            
            
            43,989
            
            
            
            38,142Total
      current liabilities
            
            
            7,316,367
            
            
            
            4,507,088LONG
      TERM LIABILITIESNotes
      payable, affiliates
            
            
            201,563
            
            
            
            —Asset
      retirement obligation
            
            
            290,000
            
            
            
            290,000Total
      liabilities
            
            
            7,807,930
            
            
            
            4,797,088STOCKHOLDERS’
      EQUITYPreferred stock, $.001 par value, 25,000,000 shares authorized: Series A
      Convertible, 100,000shares authorized; none issued and outstanding
            
            
            —
            
            
            
            —Series B Convertible, 36,036 shares authorized; 19,000 and 19,040 shares
      issued and outstanding asof November 30, 2009 and February 28, 2009, respectively
            
            
            19
            
            
            
            20Series C Convertible, 230,000 shares authorized; 216,000 shares issued and
      outstanding asof November 30, 2009 and February 28, 2009
            
            
            216
            
            
            
            216Common stock, $.001 par value, 500,000,000 shares authorized; 25,504,537
      and 13,441,884shares issued and outstanding as of November 30, 2009 and February 28,
      2009, respectively
            
            
            25,504
            
            
            
            13,441Additional
      paid in capital
            
            
            46,563,568
            
            
            
            43,460,402Accumulated
      deficit
            
            
            (36,730,629
            )
            
            
            (31,904,791
            )Total New
      Frontier Energy, Inc stockholders’ equity
            
            
            9,858,678
            
            
            
            11,569,288Noncontrolling
      interest
            
            
            397,503
            
            
            
            416,516Total stockholders’
      equity
            
            
            10,256,181
            
            
            
            11,985,804Total
      liabilities and stockholders’ equity
            
            $
            18,064,111
            
            
            $
            16,782,892


See
accompanying notes to the condensed consolidated financial
statements.











NEW
FRONTIER ENERGY, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)


Three
      Months EndedNovember
      30,
              2009
            
            
            November
      30,
              2008Operating
      revenues:Oil
      and gas sales
            
            $
            44,511
            
            
            $
            306,152Gathering
      and operating fees
            
            
            25,200
            
            
            
            30,150Total
      revenue
            
            
            69,711
            
            
            
            336,302Operating
      expenses:Exploration
      costs, including dry holes
            
            
            4,128
            
            
            
            82,334Lease
      operating expenses
            
            
            28,811
            
            
            
            351,320Cost
      of gas gathering
            
            
            1,584
            
            
            
            —General
      and administrative
            
            
            233,579
            
            
            
            401,481Stock-based
      compensation
            
            
            566,057
            
            
            
            402,700Depreciation,
      depletion and amortization
            
            
            61,866
            
            
            
            226,464Total
      operating expenses
            
            
            896,025
            
            
            
            1,464,299Loss
      from operations
            
            
            (826,314
            )
            
            
            (1,127,997
            )Other
      income (expense):Other
      income
            
            
            103,294
            
            
            
            —Interest
      income
            
            
            3
            
            
            
            12,490Interest
      expense
            
            
            (25,155
            )
            
            
            (19,854
            )Total
      other income (expense)
            
            
            78,142
            
            
            
            (7,364
            )Loss
      before income taxes
            
            
            (748,172
            )
            
            
            (1,135,361
            )Income
      tax benefit (expense)
            
            
            —
            
            
            
            —Net
      loss
            
            
            (748,172
            )
            
            
            (1,135,361
            )Less:
      net income attributable to noncontrolling interest
            
            
            (13,933
            )
            
            
            (7,479
            )Net
      loss
            
            
            (762,105
            )
            
            
            (1,142,840
            )Preferred
      stock dividends and distributions to noncontrolling
    interest
            
            
            (191,638
            )
            
            
            (218,979
            )Net
      loss attributable to common shareholders
            
            $
            (953,743
            )
            
            $
            (1,361,819
            )Net
      loss per common share
              Basic
      and diluted
            
            $
            (0.07
            )
            
            $
            (0.10
            )Weighted
      average shares outstanding
              Basic
      and diluted
            
            
            17,592,449
            
            
            
            13,204,945





See
accompanying notes to the condensed consolidated financial
statements.

















NEW
FRONTIER ENERGY, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(UNAUDITED)


Nine
      Months EndedNovember
      30,
              2009
            
            
            November
      30,
              2008Operating
      revenues:Oil
      and gas sales
            
            $
            146,893
            
            
            $
            1,056,964Gathering
      and operating fees
            
            
            113,139
            
            
            
            108,068Total
      revenue
            
            
            260,032
            
            
            
            1,165,032Operating
      expenses:Exploration
      costs, including dry holes
            
            
            76,411
            
            
            
            179,044Lease
      operating expenses
            
            
            302,706
            
            
            
            948,215Cost
      of gas gathering
            
            
            2,235
            
            
            
            1,139General
      and administrative
            
            
            1,587,374
            
            
            
            1,504,473Stock-based
      compensation
            
            
            1,405,304
            
            
            
            1,836,500Impairments
      and abandonments
            
            
            809,721
            
            
            
            —Depreciation,
      depletion and amortization
            
            
            363,657
            
            
            
            737,241Total
      operating expenses
            
            
            4,547,408
            
            
            
            5,206,612Loss
      from operations
            
            
            (4,287,376
            )
            
            
            (4,041,580
            )Other
      income (expense):Other
      income
            
            
            103,294
            
            
            
            —Interest
      income
            
            
            1,358
            
            
            
            62,437Interest
      expense
            
            
            (53,313
            )
            
            
            (62,914
            )Total
      other income (expense)
            
            
            51,339
            
            
            
            (477
            )Loss
      before income taxes
            
            
            (4,236,037
            )
            
            
            (4,042,057
            )Income
      tax benefit (expense)
            
            
            —
            
            
            
            —Net
      loss
            
            
            (4,236,037
            )
            
            
            (4,042,057
            )Less:
      net income attributable to noncontrolling interest
            
            
            (26,977
            )
            
            
            (31,767
            )Net
      loss
            
            $
            (4,263,014
            )
            
            $
            (4,073,824
            )Preferred
      stock dividends and distributions
            
            
            (562,825
            )
            
            
            (681,111
            )Net
      loss
            
            $
            (4,825,839
            )
            
            $
            (4,754,935
            )Net
      loss per common share
              Basic
      and diluted
            
            $
            (0.32
            )
            
            $
            (0.39
            )Weighted
      average shares outstanding
              Basic
      and diluted
            
            
            14,921,425
            
            
            
            12,246,778





See
accompanying notes to the condensed consolidated financial
statements.

















NEW
FRONTIER ENERGY, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)


Nine
      Months EndedNovember
      30,
              2009
            
            
            November
      30,
              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net loss
            
            $
            (4,236,037
            )
            
            $
            (4,042,057
            )Adjustments to reconcile net loss to net cash used in operating
      activities:Depreciation, depletion and amortization
            
            
            363,657
            
            
            
            737,241Impairment and abandonment of oil and gas properties
            
            
            809,721
            
            
            
            —Stock-based compensation
            
            
            2,042,820
            
            
            
            1,937,500Changes in current assets and liabilities:Accounts receivable, trade
            
            
            (1,602,119
            )
            
            
            316,251Prepaid expense
            
            
            (97,242
            )
            
            
            16,978Accounts payable and accrued expenses
            
            
            1,431,668
            
            
            
            16,436Other
            
            
            (100
            )
            
            
            —Net cash used in operating activities
            
            
            (1,287,632
            )
            
            
            (1,017,651
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Decrease in other assets
            
            
            —
            
            
            
            33,300Proceeds from sale of assets per the Participation Agreement with
      Entek
            
            
            1,000,000
            
            
            
            —Purchase of property and equipment
            
            
            (19,708
            )
            
            
            (2,158,476
            )Net cash provided by (used in) investing activities
            
            
            980,292
            
            
            
            (2,125,176
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Payment of notes payable
            
            
            (200,898
            )
            
            
            (227,031
            )Proceeds from sale of common stock
            
            
            1,000,000
            
            
            
            —Proceeds from common stock warrant conversions
            
            
            —
            
            
            
            1,712,469Proceeds from exercise of placement agent warrants
            
            
            —
            
            
            
            269,747Preferred stock dividends paid
            
            
            —
            
            
            
            (298,443
            )Cost of issuance of equity for cash
            
            
            —
            
            
            
            (24,450
            )Noncontrolling interest in subsidiary
            
            
            (45,991
            )
            
            
            77,950Distributions to noncontrolling interest holders in consolidated
      subsidiary
            
            
            —
            
            
            
            (68,133
            )Other
            
            
            9,656
            
            
            
            —Net cash provided by (used in) financing activities
            
            
            762,767
            
            
            
            1,442,109INCREASE
      (DECREASE) IN CASH
            
            
            455,427
            
            
            
            (1,700,718
            )BEGINNING
      BALANCE
            
            
            856,475
            
            
            
            3,602,939ENDING
      BALANCE
            
            $
            1,311,902
            
            
            $
            1,902,221Cash
      paid for income taxes
            
            $
            —
            
            
            $
            —Cash
      paid for interest
            
            $
            13,181
            
            
            $
            44,912Supplemental
      schedule of non-cash investing and financing activities:Series
      B and C preferred stock converted to common stock
            
            $
            2,063
            
            
            $
            1,348Issuance
      of common stock – cashless exercise
            
            $
            —
            
            
            $
            3Accrued
      settlement payable
            
            $
            780,000
            
            
            $
            —Segregated
      arbitration funds and related indemnification agreement,
      affiliates
            
            $
            500,000
            
            
            $
            —





See
accompanying notes to the condensed consolidated financial
statements.














NEW
FRONTIER ENERGY, INC.


NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


November
30, 2009





Note
1 - Summary of Significant Accounting Policies





The
Company and Business





New
Frontier Energy, Inc. (“NFEI” or the “Company”) is an independent energy company
engaged in the exploration, development, acquisition, and production of natural
gas and crude oil.  The Company’s operations are conducted entirely in
the continental United States.





Note
2 - Basis of Presentation and Significant Accounting Policies





Basis
of Presentation




The
unaudited condensed consolidated financial statements include the accounts of
NFEI and Slater Dome Gathering, LLLP (“SDG”) and have been prepared in
accordance with accounting principles generally accepted in the United States
(“GAAP”) for interim financial information. Pursuant to the rules and
regulations of the Securities and Exchange Commission (“SEC”), they do not
include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements include all adjustments (consisting
of normal and recurring accruals) considered necessary to present fairly in all
mutual respect the Company’s financial position as of November 30, 2009, the
Company’s results of operations for the three and nine months ended November 30,
2009 and 2008 and cash flows for the nine months ended November 30, 2009 and
2008. Operating results for the three and nine months ended November 30, 2009
are not necessarily indicative of the results that may be expected for the
fiscal year ending February 28, 2010, because of the impact of fluctuations in
prices received for natural gas and crude oil, natural production declines, the
uncertainty of exploration and development drilling results and other
factors.
 
 In
connection with the preparation of the condensed consolidated financial
statements of NFEI and in accordance with Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent
Events” (“ASC Topic 855”) the Company evaluated subsequent events after the
balance sheet date of November 30, 2009, through the filing of this
report.
 Certain
prior period amounts have been reclassified to conform to the current period
presentation.





The
accounting policies followed by the Company are set forth in Note 1 to the
Company’s consolidated financial statements in the Form 10-K for the year ended
February 28, 2009, and are supplemented throughout the notes to this quarterly
report on Form 10-Q.





The
interim condensed consolidated financial statements presented herein should be
read in conjunction with the audited consolidated financial statements and notes
thereto for the year ended February 28, 2009 included in the Form 10-K filed
with the SEC.





Principles
of Consolidation





The
November 30, 2009 condensed consolidated financial statements include the
accounts of NFEI as of and for the reporting periods ended November 30, and
include the accounts of Slater Dome Gathering, LLLP (“SDG”) as of and for the
reporting periods ended September 30. SDG has a calendar quarter end, September
30, which is consolidated with the Company effective November 30. All
significant intercompany accounts and transactions were eliminated. The
creditors of SDG do not have recourse to the general credit of the
Company.





New
Accounting Pronouncements





In
January 2010, the FASB issued Accounting Standards Update No. 2010-06, Improving
Disclosures about Fair Value Measurements (“ASU 2010-06”), which provides
amendments to FASB ASC topic Fair Value Measurements and Disclosures that will
provide more robust disclosures about (i) the different classes of assets and
liabilities measured at fair value, (ii) the valuation techniques and inputs
used, (iii) the activity in Level 3 fair value measurements, and (iv) the
transfers between Levels 1, 2 and 3.  ASU 2010-06 is effective for
fiscal years and interim periods beginning after December 15,
2009.  The Company is currently assessing the impact that the adoption
will have on its disclosures.





In
December 2008, the SEC issued Modernization of Oil and Gas Reporting: Final
Rule, which published the final rules and interpretations updating its oil and
gas reporting requirements.  The final rule includes updates to
definitions in the existing oil and gas rules to make them consistent with the
petroleum resource management system, which is a widely accepted standard for
the management of petroleum resources that was developed by several industry
organizations.  Key revisions include the ability to include
nontraditional resources in reserves, the use of new technology for determining
reserves, permitting disclosure of probable and possible reserves, and changes
to the pricing used to determine reserves in that companies must use a 12-month
average price.  The average is calculated using the
first-day-of-the-month price for each of the 12 months that make up the
reporting period. The Company is in the process of evaluating the effect of
these new requirements, and has not yet determined the impact that it will have
on its financial statements upon full adoption on February 28,
2010.


In
January 2010, the FASB issued Accounting Standards Update No. 2010-03, Oil and
Gas Reserve Estimation and Disclosures (“ASU 2010-03”), which provides
amendments to FASB ASC topic Extractive Activities-Oil and Gas. The objective of
ASU 2010-03 is to align the oil and gas reserve estimation and disclosure
requirements of the FASB ASC with the requirements in the SEC’s Modernization of
Oil and Gas Reporting: Final Rule. The Company is in the process of evaluating
the effect of these new requirements, and has not yet determined the impact that
it will have on its financial statements upon full adoption on February 28,
2010.











In June
2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles, as codified in
FASB ASC topic Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162.  This standard establishes only two levels of GAAP,
authoritative and nonauthoritative.  The FASB ASC was not intended to
change or alter existing GAAP, and the Company’s adoption effective September 1,
2009 did not therefore have any impact on its consolidated financial statements
other than to modify certain existing disclosures.  The FASB ASC will
become the source of authoritative, nongovernmental GAAP, except for rules and
interpretive releases of the SEC, which are sources of authoritative GAAP for
SEC registrants.  All other nongrandfathered, non-SEC accounting
literature not included in the FASB ASC will become
nonauthoritative.  FASB ASC is effective for financial statements for
interim or annual reporting periods ending after September 15,
2009.  Upon adoption, the Company began to use the new guidelines and
numbering system prescribed by the FASB ASC when referring to GAAP in the third
quarter of fiscal 2009.





In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”), as codified
in FASB ASC topic Subsequent Events.  The Company adopted SFAS 165
effective June 1, 2009, which did not have an impact on its consolidated
financial statements, other than additional disclosures.  This
standard is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be
issued.  Specifically, this standard sets forth the period after the
balance sheet date during which management of a reporting entity should evaluate
events or transactions that may occur for potential recognition or disclosure in
the financial statements, the circumstances under which an entity should
recognize events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet
date.  SFAS 165 was effective for fiscal years and interim periods
ended after June 15, 2009.





In April
2009, the FASB issued two FASB Staff Positions (“FSP”) intended to provide
additional application guidance and enhanced disclosures regarding fair value
measurements and impairments of securities.  FSP No. FAS 157-4,
Determining Fair Value When the Volume or Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly, as codified in FASB ASC topic Fair Value Measurement and Disclosure,
provides additional guidelines for estimating fair value in accordance with FASB
SFAS No. 157, Fair Value Measurements (“SFAS 157”).  The Company
adopted these FSPs effective June 1, 2009, which did not have an impact on its
consolidated financial statements, other than additional
disclosures.  FSP No. 107-1 and APB 28-1, Interim Disclosures about
Fair Value of Financial Instruments, increases the frequency of fair value
disclosures.  These FSPs were effective for fiscal years and interim
periods ended after June 15, 2009.
  The
Company elected to implement SFAS 157 with the one-year deferral permitted by
FSP No. FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”),
issued February 2008 and codified in FASB ASC topic Fair Value Measurement and
Disclosure.  FSP 157-2 deferred the effective date of SFAS 157 for one
year for certain non-financial assets and non-financial liabilities measured at
fair value.  Accordingly, the Company adopted SFAS 157 on March 1,
2009 for its non-financial assets and non-financial liabilities measured at fair
value on a non-recurring basis.  This deferred adoption of SFAS 157,
however, did not have an impact on the Company’s consolidated financial
statements. As it relates to the Company, this delayed adoption applies to
certain non-financial assets and liabilities as may be acquired in a business
combination and thereby measured at fair value; impaired oil and gas property
assessments; and the initial recognition of asset retirement obligations for
which fair value is used.


In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS
141(R)”), which replaces SFAS No. 141, as codified in FASB ASC topic Business
Combinations.  SFAS 141(R) is effective for business combinations with
acquisition dates on or after fiscal years beginning after December 15, 2008,
and the Company adopted SFAS 141(R) effective February 1, 2009. SFAS 141(R)
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any noncontrolling interest in the acquiree and the
goodwill acquired.  SFAS 141(R) also establishes disclosure
requirements that will enable users to evaluate the nature and financial effects
of the business combination. The adoption of SFAS 141® did not have an impact on
the consolidated financial statements.





Note
3 – Going Concern





The
condensed consolidated financial statements have been prepared on the basis of a
going concern which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has incurred significant operating losses. As
of November 30, 2009, the Company has limited financial resources and has not
been able to generate positive cash flow from operations. The Company had a
working capital deficiency of $2,987,953 at November 30, 2009 and $2,833,562 at
February 28, 2009. These factors raise substantial doubt about our ability to
continue as a going concern. Our ability to achieve and maintain profitability
and positive cash flow is dependent upon our ability to generate revenue from
our planned business operations and control exploration costs.





Note
4 - Entek Participation Agreement





On August
10, 2009, the Company entered into a Participation Agreement (the “Participation
Agreement”) with Entek GRB LLC (“Entek”) under which Entek agreed to purchase
certain assets of the Company and spend up to an additional approximately $11.5
million over three years on exploration and development within approximately
66,000 gross acres (the “Underlying Leases”) to earn up to 55% of the Company’s
interest in the Underlying Leases and certain of its other assets, including its
partnership interests in Slater Dome Gathering, LLLP (collectively the
“Assets”). The Company and Entek also created an area of mutual interest (the
“Area of Mutual Interest”) in all lands located in Routt County, Colorado,
Moffatt County, Colorado, Sweetwater County, Wyoming, and Carbon County Wyoming.
Pursuant to the Area of Mutual Interest, Entek shall be entitled to participate
for up to 55% in any additional interest acquired within the Area of Mutual
Interest by the Company and the Company shall be entitled to participate for up
to 45% in any additional interest acquired within the Area of Mutual
Interest.
 
 Pursuant
to the Participation Agreement, on August 10, 2009, Entek purchased 4.0625%
interest in the Assets for $1,000,000 (the “Initial Asset Purchase”). Further,
Entek has the option to purchase an additional 8.125% interest in the Assets for
$1,000,000, if, within 180 days, Entek reasonably believes that there exists a
danger of NFEI Insolvency (as defined in the Participation Agreement). Entek did
not exercise this option, which has subsequently lapsed.


Pursuant
to the Participation Agreement, Entek has the right to participate in the
exploration and development of the Underlying Leases, and the right to earn
assignments of interests in the Assets in three phases. On August 10, 2009,
Entek irrevocably committed to expend $3.0 million (the “Phase 1 Funds”) to earn
16.25% (the “Phase 1 Interests”) of the Company’s interest in the Assets.
Between the first anniversary date and the second anniversary date of the
Participation Agreement, Entek has the right but not the obligation to expend
$4.0 million (the “Phase 2 Funds”) and earn an additional 16.25% (the “Phase 2
Interests”) of the Company’s interest in the Assets. Between the second
anniversary date and the third anniversary date of the Participation Agreement,
Entek has the right but not the obligation to expend approximately $4.5 million
(the “Phase 3 Funds”) and earn an additional 18.4375% (the “Phase 3 Interests”)
of the Company’s interest in the Assets. Entek will have the right to become the
operator after the completion of Phase 1 and the commencement of Phase 2,
subject to certain regulatory and other approvals.





Pursuant
to the Participation Agreement, the Company and Entek have established an
operating committee that is responsible for the annual Work Program (as defined
in the Participation Agreement) for each phase and the determination of a budget
for each phase. The Phase 1 Funds, Phase 2 Funds and the Phase 3 Funds are to be
used solely for the Work Program.





In the
event that Entek elects not to participate in Phase 2, the Participation
Agreement shall terminate after the expenditure of the Phase 1 Funds paid by
Entek, the Company shall have no further obligation to assign to Entek any
further interests in the Assets and the Area of Mutual Interest shall terminate
immediately.





In the
event that Entek elects not to participate in Phase 3, the Participation
Agreement shall immediately terminate, the Company shall have no further
obligation to assign to Entek any further interests in the Assets, provided that
Entek shall retain any interest in the Assets from the Initial Asset Purchase,
the Phase 1 Interest, the Phase 2 Interest and any portion of the Phase 3
Interests earned by it and the Area of Mutual Interest shall terminate
immediately.





The above
description of the Participation Agreement is qualified in its entirety by the
full text of the Participation Agreement, attached as Exhibit 10.1 to the
Company’s Form 8-K filed with the SEC on August 21, 2009 and is incorporated
herein by this reference.
 
 Subsequent
to November 30, 2009, Entek completed its obligation for Phase I and earned an
additional 16.25% of the Company’s interest in the Assets for an aggregate of
20.3125% of the Company’s interest in the Assets.




Note
5 - Segregated Arbitration Funds and Segregated Funds
Indemnification
 
 Pursuant
to the Entek Participation Agreement, Samyak Veera, a director of the Company,
agreed to deposit $500,000 into a segregated account (the “Segregated
Arbitration Funds”).  In the event the Company has insufficient funds
available to satisfy the Company’s share of the arbitrator’s award in the
arbitration conducted pursuant to the Stull Ranch Settlement Agreement (the
“Arbitrator’s Award”), then the Company shall draw upon the funds in the Stull
Ranch Account to satisfy the balance of the Arbitrator’s Award, unless earlier
released to Mr. Veera pursuant to terms and conditions set forth in the
Participation Agreement.


The
Company and Mr. Veera also entered into an Indemnification Agreement dated
August 7, 2009 (the “Veera Indemnification Agreement”), whereby the Company
agreed to indemnify and reimburse Mr. Veera if any of the Segregated Arbitration
Funds are released from the segregated account.


On
December 18, 2009, the Segregated Arbitration Funds were returned to Mr. Veera
after the satisfaction of the terms and conditions set forth in the
Participation Agreement for the release of the Segregated Arbitration
Funds.
 
 The
Arbitrator’s Award of $779,599 in the Stull Ranch Arbitration (as defined below)
was issued on February 4, 2010 and the Company satisfied the Arbitration Award
on February 17, 2010. See Note 10 – Stull Ranch Litigation for additional
discussion of this litigation and the Stull Ranch Arbitration (as defined
below).


Note
6 - 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 (the “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. 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
$201,562 together with accrued interest of $5,881. Effective July 29, 2009, the
Company and NRGG entered into a Modification of Partnership Purchase Agreement
whereby the Note was modified to extend the date and payment terms, whereby
principal in the amount of $201,566 is due on December 31, 2009, and the
principal balance together with all accrued and unpaid interest will be due
December 31, 2010. The Note may be prepaid at any time without penalty. At the
option of the Company, quarterly payments may be deferred until the maturity
date. At November 30, 2009, the balance of the note payable was $403,125. On
December 31, 2009 the Company made a payment on the principal together with all
accrued and unpaid interest in the amount of $211,641.





Note
7 - Notes Payable





On June
15, 2007, the Company acquired a facility (the “Steamboat Property”). 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
had an interest rate of 7.56% per annum. The Steamboat Mortgage required 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 terms were
modified on February 26, 2009 whereby the maturity date was changed to September
1, 2009.
 
   
 Effective
July 7, 2009, the Company transferred legal title to the Steamboat Property to
the Company’s former President and Chief Executive Officer, as nominee, to
facilitate the refinancing of the Steamboat Property; however, the Company
retains equitable ownership of the Steamboat Property and the accompanying
financial statements reflect the rights and responsibilities of ownership,
including an obligation under the New Steamboat Mortgage described in the
following paragraph. The Company’s former President and Chief Executive Officer
and the Company anticipate entering into a nominee agreement to reflect this
transaction.
  On July
7, 2009, the Company completed refinancing (the “New Steamboat Mortgage”) the
Steamboat Property. The New Steamboat Mortgage, in the amount of $635,000, is
collateralized by the Steamboat Property with a one term due July 7, 2010,
bearing interest at the rate of 10%. As a condition of the New Steamboat
Mortgage, interest in the amount of $63,500 has been prepaid. The Company has
the option to prepay the New Steamboat Mortgage in full, or in part, without
penalty and should the Company prepay the New Steamboat Mortgage, the
unamortized prepaid interest will be returned to the Company. Cash in the amount
of $400,000 subject to an assignment security agreement collateralizing the
original steamboat mortgage was released.


Note
8 – Impairment of long-lived assets





The
Company reviews the carrying values of its long-lived assets whenever events or
changes in circumstances indicate that such carrying values may not be
recoverable. If, upon review, the sum of the undiscounted pretax cash flows is
less than the carrying value of the asset group, the carrying value is written
down to the estimated fair value. Individual assets are grouped for impairment
purposes at the lowest level for which there are identifiable cash flows that
are largely independent of the cash flows of other groups of assets, generally
on a field-by-field basis. The fair value of impaired assets is determined based
on quoted market prices in active markets, if available, or upon the present
values of expected future cash flows using discount rates commensurate with the
risks involved in the asset group. The long-lived assets of the Company, which
are subject to periodic evaluation, consist primarily of oil and gas properties
and undeveloped leaseholds. The Company’s evaluation has resulted in a charge to
operations for impairment in the amount of $809,721 and $0 during the nine
months ended November 30, 2009 and 2008, respectively.





Note
9 - Stockholders’ Equity





Series
A Convertible Preferred Stock





There
were no shares of Series A convertible preferred stock, par value $0.001 issued
or outstanding as of November 30, 2009 and February 28, 2009.





Series
B Convertible Preferred Stock





The
Company is authorized to issue up to 36,036 shares of Series B 12% cumulative
convertible preferred stock par value $0.001 (the “Series B Preferred”). The
stated value and issue price of the series B preferred stock is $100.00 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 $0.65 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 stockholders. The 18,562 outstanding
Placement Agent Warrants were exercised on May 1, 2008 and the Company issued
2,698 shares of series B preferred stock and received proceeds of
$269,749.





In June
2009, the Company issued an aggregate of 6,153 shares of common stock pursuant
to the conversion of 40 shares of series B preferred stock. As of November 30,
2009 and February 28, 2009 there were 19,000 and 19,040 shares of Series B
convertible preferred stock issued and outstanding. During the nine months ended
November 30, 2009, dividends of $155,976 were accrued and no cash dividends were
paid. Aggregate accrued and unpaid dividends totaled $976,458 as of November 30,
2009.





On or
about November 19, 2009, the conversion price of the Series B Preferred Stock
was adjusted from $0.65 to $0.43 pursuant to anti-dilution rights contained in
the Series B Preferred Stock due to the issuance of shares of Common Stock. On
or about February 16, 2010, the conversion price of the Series B Preferred Stock
was adjusted from $0.43 to $0.39 pursuant to anti-dilution rights contained in
the Series B Preferred Stock due to the issuance of shares of Common
Stock.
 
 In
December 2009, the company issued an aggregate 11,860 shares of common stock
pursuant to conversion of 51 shares of series B preferred stock.
 
 In March
2010, the company issued an aggregate 28,717 shares of common stock pursuant to
conversion of 112 shares of series B preferred stock.
 
 In
December 2009, $2,856 of dividends were paid on the Series B Preferred
Stock.


Series
C Convertible Preferred Stock





The
Company is authorized to issue up to 230,000 shares of series C 2.5% cumulative
convertible preferred stock par value $0.001 (the “Series C Preferred Stock”).
The stated value and issue price of the Series C Preferred Stock is $100.00 per
share and holders are entitled to receive cumulative dividends at the rate of
2.5% per annum, payable quarterly, beginning 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, subject to adjustment.





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. On or
about November 19, 2009, the conversion price of the Series C Preferred Stock
was adjusted from $1.05 to $0.68 pursuant to anti-dilution rights contained in
the Series C Preferred Stock due to the issuance of shares of Common
Stock.




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 ($100.00) of the series C preferred stock per share plus any
accrued and unpaid dividends thereon and any other fees or liquidated damages
owing. If the assets of the Company are insufficient to pay such amounts in
full, then the entire assets to be distributed to the holders of the series C
preferred stock shall be distributed among the holders of the series C preferred
stock ratably in accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full.





The
Company has the right to redeem the series C preferred 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.





As of
November 30, 2009, there were 216,000 shares of the series C preferred stock
issued and outstanding. During the nine months ended November 30, 2009,
dividends of $406,849 were accrued and no cash dividends were paid. Aggregate
accrued and unpaid dividends totaled $1,583,409 as of November 30,
2009.





Effective
December 1, 2009, the company issued an aggregate 25,231,206 shares of
common stock and will issue an additional 8,868,059 shares of common
stock pursuant to the automatic conversion provisions of the 216,000 shares
of Series C Preferred Stock and the associated accumulated
dividends.




Common
Stock





Effective
August 17, 2009, the Company granted to its chairman 2,056,500 shares of the
Company’s $0.001 par value common stock, valued at $637,515, and a two year
option to acquire 1,250,000 shares of the Company’s Common Stock at a price of
$0.20 per share, valued at $231,647, for certain consulting services previously
rendered and as a structuring fee relating to the deposit of $500,000 into a
segregated account in connection with the Participation Agreement.





During
the quarter ended November 30, 2009, the Company conducted an offering on a
“best efforts” basis to exchange (the “Exchange Offers”) any and all of the
Company’s issued and outstanding (i) Series B 12% Cumulative Convertible
Preferred Stock (“Series B Preferred Stock”) and the accrued and unpaid
dividends thereunder and (ii) 2.5% Series C Cumulative Convertible Preferred
Stock (“Series C Preferred Stock”) and the accrued and unpaid dividends
thereunder, for newly issued shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”).On November 30, 2009, the Company
terminated the Exchange Offers without acquiring any Series B Preferred Stock or
Series C Preferred Stock in the Exchange Offers.





On or
about November 11, 2009, the Company held a closing on the sale (the "Offering")
to accredited investors of an aggregate of 3,500,000 shares of the Company's
$0.001 par value Common Stock sold at a price of $0.10 per share (the "Common
Stock"), effective as of November 9, 2009.  The Company received a
subscription for 6,500,000 shares of its Common Stock at a price of $0.10 per
share that was accepted on or about November 19, 2009.  The
subscription for 6,500,000 shares of the Company’s Common Stock is from Iris
Energy Holdings Limited, an affiliate of the Company whose sole director is
Samyak Veera, a director of the Company.  Upon the acceptance of the
additional subscription agreement, the Company will have received an aggregate
of $1,000,000 in gross proceeds from the sale of the Common
Stock.












On
January 12, 2010, the Company's Board of Directors approve the issuance to Mr.
Veera of 750,000 shares of the Company's common stock as compensation for Mr.
Veera's services for the period from December 1, 2009 to December 1, 2010. The
shares are to be issued in two tranches, with 375,000 in shares of the Company's
common stock to be issued on or about January 12, 2010 and 375,000 in shares of
the Company's common stock to be issued on or about June 1, 2010.





On
February 16, 2010, New Frontier Energy , Inc. held a closing on the sale (the
"Offering") to Iris Energy Holdings Limited ("Iris Energy") of an aggregate of
8,000,000 shares of the Company's $0.001 par value Common Stock sold a price of
$0.10 per share (The "Common Stock") for gross proceeds of
$800,000.  Iris Energy is an affiliate of the Company whose sole
director is Samyak Veera, a director of the Company.





Stock
Options and Warrants





The
Company recognized stock-based compensation expense of $566,058 and $2,042,820
during the three and nine months ended November 30, 2009, respectively, as
compared to $402,700 and $1,836,500 in the three and nine months ended November
30, 2008, respectively.
 
 On
November 10, 2006, the Company granted certain employees and agents of the
Company an aggregate of 3,950,000 options to acquire shares of the Company’s
Common Stock, which are exercisable at a price of $1.25. These stock options
vest at a rate of 12.5% each fiscal quarter ending November 30, February 28, May
31 and August 31; 2,250,000 options expire November 10, 2011 and 1,700,000
options expire on November 30, 2014. The Company’s stock closed at $1.24 on
November 10, 2006. The fair value of the options was estimated on the date of
the grant utilizing the Black-Scholes option pricing model with the following
assumptions: expected life of the options is 10 years, expected volatility of
81%, risk free interest rate of 5% and no dividend yield. The fair value for the
options granted was approximately $1.04 per share. The value of the options were
recorded at $4,124,400 and was amortized $515,000 per quarter as the options
vested. During the nine months ended November 30, 2008 the options were charged
to general and administrative stock compensation expense. The options were fully
vested and amortized during fiscal year ended February 28, 2009.
 
 On July
23, 2008, 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”).
Options representing 1,950,00 of 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. Options representing
2,250,000 of the Non-Qualified Stock Options have a five year life and vest
quarterly over three years commencing with the quarter ending May 31, 2009. 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 $870,900 was amortized in the nine months ended
November 30, 2009.
 
 On
November 13, 2009, the Company granted a director of the Company 2,000,000
options to acquire shares of the Company’s Common Stock.  Of the
options granted, 1,000,000 are exercisable at a price of $0.25 and expire on
December 31, 2010 and 1,000,000 are exercisable at a price of $0.50 per share
and expire on December 31, 2011. On or before December 31, 2010, Mr. Schafran
has the right, but not the obligation, to cancel these stock options in exchange
for a payment of $50,000. At the Company's election, this payment may be made
either in cash or a 2-year unsecured promissory note issued by the Company in
the principal amount of $50,000 (the "Note"). If the Company elects to issue the
Note to the director, the Note will accrue interest on a monthly basis at a rate
equal to the 1-month London Interbank Offered Rate, with such accrued and unpaid
interest to be paid on the maturity date of the Note.
 
 Compensation
expense related to stock-based compensation is calculated using the
Black-Scholes valuation model. Expected volatilities are based on the historical
volatility of NFEI’s stock over a period consistent with that of the expected
terms of the options. The expected terms of the options are estimated based on
factors such as vesting periods and contractual expiration dates. The risk-free
rates for periods within the contractual life of the options are based on the
yields of U.S. Treasury instruments with terms comparable to the estimated
option terms.
 
 In
connection with the sale of the Series C Preferred Stock, the Company issued the
investors in that offering three-year warrants to purchase an aggregate
21,166,658 shares of Common Stock at an exercise price of $1.50 per share (the
“AC Warrants”) and three year warrants to purchase an aggregate 10,583,545
shares of Common Stock at an exercise price of $2.00 per share (the “BC
Warrants”). The AC Warrants and the BC Warrants will expire pursuant to their
terms on December 1, 2009, December 17, 2009 and January 16,
2010.










The
activity for options and warrants during the nine months ended November 30, 2009
is summarized in the following tables:





Exercisable
Non-Incentive Stock Option Plan Shares:


Shares
            
            Weighted
              Average
              Exercise
              PriceBeginning
      of period
            
            4,681,250
            
            $
            1.21Vested
            
            1,031,250
            
            $
            1.01Exercised
            
            —
            
            $
            —Expired
            
            (108,333)
            
            $
            1.01End
      of period
            
            5,604,167
            
            $
            1.18





Exercisable
Incentive Stock Option Plan Shares:




Shares
            
            
            Weighted
              Average
              Exercise
              PriceBeginning
      of period
            
            
            584,333
            
            
            $
            0.89Granted
            
            
            —
            
            
            $
            —Exercised
            
            
            —
            
            
            $
            —Cancelled/Expired
            
            
            (394,333
            )
            
            $
            1.07End
      of period
            
            
            190,000
            
            
            $
            0.94





Fixed-Price
Stock Options and Warrants:




Shares
            
            Weighted
              Average
              Exercise
              PriceBeginning
      of period
            
            33,000,203
            
            $
            1.68Granted
            
            3,250,000
            
            $
            .31Exercised
            
            —
            
            $
            —Expired
            
            —
            
            $
            —End
      of period
            
            36,250,203
            
            $
            1.56














The
following table summarizes the options and warrants outstanding and
exercisable:




Range
              of
              Exercise
              Price
            
            
            Number
              of
      Shares
              Outstanding
            
            Weighted
              Average
              Remaining
              Contractual
              Life
      in
              Years
            
            Weighted
              Average
              Exercise
              Price$0.20
      to $0.74
            
            
            3,250,000
            
            1.62
            
            $0.31$0.75
      to $1.50
            
            
            5,794,167
            
            5.20
            
            $1.17$1.51
      to $2.50
            
            
            33,000,203
            
            0.14
            
            $1.6842,044,370




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, 2009, no options have been granted under the
plan.




Note
10 - Related Parties





The
Company paid $24,000 during the nine months ended November, 2009 and 2008,
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 former president. The lease
provides for the payment of $2,667 per month plus utilities and other
incidentals. The former president of the Company owns 50% of
Spotswood.





The
Company paid a corporation controlled by one of the former directors and a
shareholder $15,625 and $50,000 for geological consulting during the nine months
ended November 30, 2009 and 2008, respectively.





Effective
July 7, 2009, the Company transferred legal title to the Steamboat Property to
the Company’s former President and Chief Executive Officer, as nominee, to
facilitate the refinancing of the Steamboat Property. See Note 7
above.





Effective
August 17, 2009, Mr. Veera was granted 2,056,500 shares of the Company’s $0.001
par value common stock, valued at $637,515 and a two year option to acquire
1,250,000 shares of the Company’s Common Stock at a price of $0.20 per share,
valued at $231,647 for certain consulting services previously rendered and as a
structuring fee relating to the deposit of $500,000 into a segregated account in
connection with the Participation Agreement.  See Note 5
above.





During
the quarter ended November 30, 2009, the Company sold 6,500,000 shares of its
Common Stock at a price of $0.10 per share to Iris Energy Holdings Limited, an
affiliate of the Company whose sole director is Samyak Veera, a director of the
Company.   See Note 9 above.





Note
11 - Legal Proceedings





Stull
Ranch Litigation and Stull Ranch Arbitration.




In June
2009, New Frontier Energy, Inc. (the “Company”), Stull Ranches, LLC, and Clayton
Williams Energy, Inc. entered into a settlement agreement (the “Settlement
Agreement”) relating to an Easement Agreement granted by Stull Ranches, LLC to
Clayton Williams Energy, Inc. which granted access to a road which serviced the
Federal 12-1 and Federal 3-1 wells in the Focus Ranch Unit.  Pursuant
to the terms of the Settlement Agreement, the Company is obligated to pay Stull
Ranches’ attorneys’ fees and litigation expense in connection with the lawsuit
to allow the assignment of the easement in an amount to be decided in an
arbitration (the “Stull Ranch Arbitration”). Pursuant to the Settlement
Agreement, the parties agreed on a range of between $350,000 and $1,000,000 of
the attorneys’ fees and litigation expense that Stull Ranches, LLC may collect
from the Company.





On
February 5, 2010, the arbitrator in the Stull Ranch Arbitration awarded the
attorneys for Stull Ranches, LLC attorneys’ fees in the amount of
$779,599.











Hedberg
& Howell, LLC Litigation
 
 On
November 25, 2009, Hedberg and Howell, LLC, a law firm that previously provided
legal services to the Company, filed a complaint in the District Court of
Arapahoe County, Colorado (Case No. 09CV2609) against the Company alleging
breach of contract for failure to pay certain legal fees.  The
plaintiff in this matter is seeking compensatory damages of $39,336, plus costs
and attorney fees.   The Company has disputed the legal fees that
are the subject matter of this litigation and has filed an answer in response to
the complaint asserting various defenses.   The Company cannot
predict at this time the outcome in this matter.
 On March
5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New
Frontier Energy, Inc. (Case No. 10-14517HRT) (the “Petition”) was filed against
New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court,
District of Colorado by five Petitioning Creditors (the “Petitioners”).
 The Petitioners alleged that they have debts that are not the subject of a
bona fide dispute as to liability or amount and that the Company is generally
not paying its debts as they come due. The Petitioners were seeking liquidation
of the Company’s assets and the appointment of a receiver.  The Company
believes that the Petitioners' claims are without merit.  After discussion
with the Petitioners, on March 18, 2010, the Company and the Petitioners filed a
joint motion to dismiss the Petition, and the motion is pending with the
bankruptcy court.  The Company believes that the joint motion to
dismiss is an affirmation of the Company’s position that the Petition was wholly
without merit.  In connection with the joint motion to dismiss, the
Company agreed not to seek or obtain judgment, sanctions or other relief against
the Petitioners for filing the Petition and any claims against any person or
entity that caused the dissemination of the filing to a certain oil and gas
publication.  In the event the bankruptcy court does not approve the
dismissal of the involuntary bankruptcy petition, the Company intends to
aggressively contest the involuntary bankruptcy petition.


Note
12 - 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, 2009 and 2008 are presented for the principal business segments as
follows:


Oil
      & Gas
            
            
            Gas
      Gathering
            
            
            ConsolidatedNovember 30, 2009Revenues
            
            $
            146,893
            
            
            $
            113,139
            
            
            $
            260,032(Loss)
      before taxes
            
            $
            (4,309,337
            )
            
            $
            73,300
            
            
            $
            (4,236,037
            )Total
      assets
            
            $
            16,019,352
            
            
            $
            2,249,090
            
            
            $
            18,268,442Property
      additions
            
            $
            19,708
            
            
            $
            —
            
            
            $
            19,708Interest
      expense
            
            $
            (53,313
            )
            
            $
            —
            
            
            $
            (53,313
            )Depreciation,
      depletion and amortization
            
            $
            265,788
            
            
            $
            97,869
            
            
            $
            363,657November 30, 2008Revenues
            
            $
            1,056,964
            
            
            $
            108,068
            
            
            $
            1,165,032Income
      (Loss) before taxes
            
            $
            (4,030,167
            )
            
            $
            (11,890
            )
            
            $
            (4,042,057
            )Total
      assets
            
            $
            23,327,889
            
            
            $
            2,235,722
            
            
            $
            25,563,611Property
      additions
            
            $
            2,158,476
            
            
            $
            —
            
            
            $
            2,158,476Interest
      expense
            
            $
            (62,914
            )
            
            $
            —
            
            
            $
            (62,914
            )Depreciation,
      depletion and amortization
            
            $
            639,372
            
            
            $
            97,869
            
            
            $
            737,241












Note
13 - Subsequent Events





The
Company has evaluated subsequent events through March 16, 2010 the date that
these financial statements were available to be issued.  The following
information is disclosed as a subsequent event:





In
December 2009, the Company issued an aggregate 34,099,265 shares of common stock
pursuant to the automatic conversion of 216,000 shares of series C preferred
stock and the associated accumulated dividends.





In
connection with the sale of the Series C Preferred Stock, the Company issued the
investors in that offering three-year warrants to purchase 21,166,658 shares of
Common Stock at an exercise price of $1.50 per share (the “AC Warrants”) and
three year warrants to purchase 10,583,545 shares of Common Stock at an exercise
price of $2.00 per share (the “BC Warrants”). The AC Warrants and the BC
Warrants each expired pursuant to their terms on December 1, 2009, December 17,
2009 and January 16, 2010.





In
December 2009, the Company issued an aggregate 11,860 shares of common stock
pursuant to conversion of 51 shares of series B preferred stock.





On
December 22, 2009, the Company’s Board of Directors approved the payment of
$100,000 to Altius Business Services Pte. Ltd., an affiliate of Samyak Veera,
for services rendered to the Company in connection with the Entek Participation
Agreement the Company entered into in August 2009.




On
January 12, 2010, the Company's Board of Directors approved the issuance to Mr.
Veera of 750,000 shares of the Company's common stock as compensation for Mr.
Veera's services for the period from December 1, 2009 to December 1, 2010. The
shares are to be issued in two tranches, with 375,000 in shares of the Company's
common stock to be issued on or about January 12, 2010 and 375,000 in shares of
the Company's common stock to be issued on or about June 1, 2010.





On
February 5, 2010, the arbitrator in the Stull Ranch Arbitration awarded the
attorneys for Stull Ranches, LLC attorneys’ fees in the amount of
$779,599.  See Note 11 above.
 
 On
February 16, 2010, New Frontier Energy, Inc. held a closing on the sale (the
"Offering") to Iris Energy Holdings Limited ("Iris Energy") of an aggregate of
8,000,000 shares of the Company's $0.001 par value Common Stock sold a price of
$0.10 per share (The "Common Stock") for gross proceeds of
$800,000.  Iris Energy is an affiliate of the Company whose sole
director is Samyak Veera, a director of the Company.
  On March
5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New
Frontier Energy, Inc. (Case No. 10-14517HRT) was filed against New Frontier
Energy, Inc. (the “Company”) in the United States Bankruptcy Court, District of
Colorado by five alleged creditors (the “Petitioners”).  The Petitioners
have alleged that they have debts that are not the subject of a bona fide
dispute. The Petitioners are seeking liquidation and the appointment of a
receiver.  The Company believes that certain of the Petitioners claims are
without merit or are otherwise in dispute.  On March 18, 2010, the
Petitioners filed a motion to dismiss the involuntary bankruptcy petition and
the motion is pending with the bankruptcy court.  In the event the
bankruptcy court does not approve the dismissal of the involuntary bankruptcy
petition, the Company intends to aggressively contest the involuntary bankruptcy
petition.








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-K for the fiscal
year ended February 28, 2009 and the following:


•
            The
      general state of the economy;•
            Our
      ability to successfully implement our plan of
  operations;•
            Our
      ability to raise additional capital, as it may be affected by general
      economic conditions, 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-K for the year ended February 28, 2009, 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-K for the year ended February
28, 2009.





Overview





New
Frontier Energy is a natural resource exploration and production company engaged
in the exploration, acquisition, and development of oil and natural gas
properties in the United States. We are currently developing three significant
properties in Colorado and Wyoming:




AcresProperty
            Gross
            
            Net
            
            Stage
      of Development▪
            Focus
      Ranch Discovery
            33,242
            
            31,717
            
            Flow
      tested 12-1 vertical well.  1st
      Sales anticipated in 3rd
      quarter 2010.▪
            Slater
      Dome Producing Area
            32,620
            
            21,210
            
            Drilled
      R. 13-15T and BM 14-15 in November and December 2009.  1st
      Sales scheduled in 2ndquarter
      2010.▪
            Weitzel
      Prospect
            15,040
            
            11,355
            
            Preparing
      drilling plans now.  Analogous field to recent EOG Niobraradiscovery
      well.TOTAL Acreage
            80,902
            
            66,532*





On August
10, 2009, we entered into a Participation Agreement (the “Participation
Agreement”) with Entek GRB LLC (“Entek”), under which Entek irrevocably
committed to expend $3.0 million (the “Phase 1 Funds”) to earn 16.25% (the
“Phase 1 Interests”) of the Company’s interest in the Assets. Between the first
anniversary date and the second anniversary date of the Participation Agreement,
Entek has the right but not the obligation to expend $4.0 million (the “Phase 2
Funds”) and earn an additional 16.25% (the “Phase 2 Interests”) of the Company’s
interest in the Assets. Between the second anniversary date and the third
anniversary date of the Participation Agreement, Entek has the right but not the
obligation to expend approximately $4.5 million (the “Phase 3 Funds”) and earn
an additional 18.4375% (the “Phase 3 Interests”) of the Company’s interest in
the Assets. Entek will have the right to become the operator after the
completion of Phase 1 and the commencement of Phase 2, subject to certain
regulatory and other approvals.





Subsequent
to November 30, 2009, Entek completed its obligation for Phase I and earned an
additional 16.25% of the Company’s interest in the Assets for an aggregate of
20.3125% of the Company’s interest in the Assets.
 
 * Net
Acres figures do not take into account Entek’s acquisition of the Company’s
interest in the assets.
    
 The
Company is currently developing a plan of operations in conjunction with Entek
for the next 12 months of operations. The plan of operations may include the
development of a pipeline to the Focus Ranch Federal 12-1 well, putting the
Robidoux 13-15T and the Battle Mountain Federal 14-15 wells into production, as
well as potentially drilling one or more new wells.
 Plan of
Operations
 
 The
Company is currently developing a plan of operations in conjunction with Entek
for the next 12 months of operations. The plan of operations may include the
development of a pipeline to the Focus Ranch Federal 12-1 well, putting the
Robidoux 13-15T and the Battle Mountain Federal 14-15 wells into production and
potentially drilling one or more new wells.  The Company and Entek are
currently in discussions relating to the financing options for the development
of the pipeline.  The resolution of and outcome of these discussions
and the form and source of such financing are not determinable as of the date of
this Form 10-Q.
 
 Pursuant
to the terms and conditions of the Participation Agreement, Entek has the right,
after agreeing to proceed with Phase II (as defined in the Participation
Agreement) of the Participation Agreement, to elect to become the operator of
the Focus Ranch Unit and the Slater Dome Field.  As of the date of
this Form 10-Q, Entek has elected to proceed with Phase II and has expressed a
desire to become the operator of the Focus Ranch Unit and the Slater Dome
Field.  The Company and Entek are in discussions on various matters
relating to the appointment of Entek as the operator of the Focus Ranch Unit and
the Slater Dome Field.


OVERVIEW
OF FINANCIAL CONDITION AND LIQUIDITY





Results
of Operation: Three months ended November 30, 2009 compared to the three months
ended November 30, 2008





For the
three months ended November 30, 2009 we reported a net loss attributable to
common shareholders of $953,743 or $0.07 per share on revenue of $69,711. This
compares to a net loss attributable to common shareholders of $1,361,819 or
$0.10 per share, on revenue of $336,302, for the comparable period of the
previous fiscal year. We expect to incur losses until such time as we complete
the rehabilitation of our existing wells, bring the Focus Ranch Unit wells into
production, and complete new productive wells in connection with the
Participation Agreement with Entek. There is no assurance that we will be
successful in these efforts.





We
anticipate that results of operations for future periods will be significantly
affected by the Participation Agreement. The agreement provides for Entek to
fund up to approximately $11.5 million over three years to earn up to 55% of our
interest in the underlying leases and certain other assets. As of March 8, 2010,
Entek is entitled to an interest of 20.3125%. For accounting purposes, we will
allocate to Entek their percentage share of revenues and expenses during the
term of the Participation Agreement, which is expected to reduce the amounts of
revenue and expenses reported by us in the future.





Revenues
for the three months ended November 30, 2009 were $69,711 compared with $336,302
for the three months ended November 30, 2008, a decrease of $266,591 or 79.3%.
Oil and gas revenues during the three months ended November 30, 2009 were
$44,511 compared with $306,152 during the three months ended November 30, 2008,
a decrease of $261,641 or 85.5%. The majority of this decrease can be attributed
to the decline of substantially all of our production during the period as a
result of our liquidity constraints.





Gathering
and operating fees were $25,200 for the three months ended November 30, 2009
compared with $30,150 for the three months ended November 30, 2008, a decrease
of $4,950 or 16.4%. These fees are generally fixed by agreement and, while they
generally do not exhibit significant variation on a period by period comparison,
they will vary somewhat based on production volume.




Exploration
costs for the three months ended November 30, 2009 were $4,128 compared with
$82,334 for the three months ended November 30, 2008, a decrease of $78,206 or
95%. The individual components of exploration costs are shown in the following
table:





Three
      months Ended November 30,
            
            Increase2009
            
            2008
            
            (Decrease)Geologic
      consulting
            
            $
            933
            
            
            $
            18,750
            
            
            $
            (17,817
            )Seismic
      consulting
            
            
            —
            
            
            
            51,218
            
            
            
            (51,218
            )Misc
      other costs
            
            
            —
            
            
            
            11,041
            
            
            
            (11,041
            )Delay
      rentals
            
            
            3,195
            
            
            
            1,325
            
            
            
            1,870$
            4,128
            
            
            $
            82,334
            
            
            $
            (78,206
            )


The
decrease in exploration costs is generally a result of decreased exploration
activity at the Slater Dome Field and Focus Ranch Unit. Certain activities were
suspended during the period pending receipt of additional funding.












Lease
operating expenses for the three months ended November 30, 2009 were $28,811
compared with $351,320 during the three months ended November 30, 2008, a
decrease of $322,509 or 91.8%. The changes are summarized as
follows:




Three
      months Ended November 30,
            
            Increase2009
            
            2008
            
            (Decrease)Lease
      operating expenses
            
            
            25,351
            
            
            
            345,596
            
            
            
            (320,245
            )Production
      taxes
            
            
            3,460
            
            
            
            5,724
            
            
            
            (2,264
            )$
            28,811
            
            
            $
            351,320
            
            
            $
            (322,509
            )





Lease
operating expenses decreased $320,245 compared to the same period ending in
2008. This reduction is largely due to reduced activities in response to our
lack of liquidity during the period and due to certain terms related to the
Participation Agreement between the Company and Entek, dated August 10, 2009,
whereby, all operating expenses shall be paid out of the parties net proceeds
from the underlying leases and in the event that there are not sufficient
proceeds, subject to other terms, Entek shall be solely responsible for the
remaining operating expenses through the conclusion of each development phase in
which Entek participates. The decrease in gas sales costs and production taxes
is consistent with the decrease in production and revenues.





General
and administrative expenses for the three months ended November 30, 2009 were
$233,579 compared with $401,481 in the three months ended November 30, 2008, a
decrease of $167,902 or 41.8%. As a result of our current lack of liquidity, we
worked to reduce our cash operating expenses, with the largest reduction coming
from decreased employee compensation as a result of reduced personnel and
decreases in salaries paid to officers. During the quarter ended August 31,
2009, we agreed to issue 2,056,500 shares of restricted common stock, valued at
$637,515, to our chairman as compensation for consulting services and as a
structuring fee relating to the deposit of the funds to be used as the
Segregated Arbitration Fund. Professional fees increased approximately $125,000
in the three months ended November 30, 2009 compared to the quarter ended in
2008.  This increase was largely due to an increase in legal and
accounting fees, primarily because of the Stull Ranch litigation and offset by a
decrease in other consulting fees primarily composed of decreased engineering
and landman fees resulting from our reduced level of exploration activity. The
decrease in all other general and administrative expenses reflects our lower
activity level in response to our liquidity constraints.





Issuance
of common stock options and warrants represents the pro-rata amortization of
estimated fair value of stock based compensation. During the quarter ended
November 30, 2009, costs increased to $566,057, an increase of $163,357, or
40.6%, as compared to costs of $402,700 incurred during the quarter ended
November 30, 2008. The costs reported during the quarter ended November 30,
2009, include the amortization of estimated fair value associated with 4,200,000
options issued during July 2008 which are being amortized over two years and the
amortization of estimated fair value associated with 2,000,000 options issued in
November 2009 to one of the Company’s independent board of directors. The costs
reported during the quarter ended November 30, 2008 include the amortization of
estimated fair value associated with 4,200,000 options issued during July
2008.





Depreciation,
depletion and amortization for the three months ended November 30, 2009 was
$61,866 compared with $226,464 during the three months ended November 30, 2008,
a decrease of $164,598 or 72.7%. The decrease in depletion on producing
properties is attributable to the decreased production from the Slater Dome
Field and a decrease in other depreciation, as certain assets became fully
depreciated.





During
the three month period ended November 30, 2009, the Company successfully
negotiated a reduction of approximately $100,000 with one of its vendors for
previously charged field expenses and recorded the credit as other
income.





Interest
income decreased $12,487 to $3 during the three month period ended November 30,
2009, compared to $12,490 during the three months ended November 30,
2008.  The decrease in interest income is due to the lower level of
cash balances held by the Company during the period.
 
 Interest
expense for the three months ended November 30, 2009 was $25,155 compared with
$19,854 in the three months ended November 30, 2008, an increase of $5,301 or
26.7%. The increase in interest expense is due to the refinancing and transfer
of title of the Steamboat Property to the Company’s former President and Chief
Executive Officer. On July 7, 2009 the Company transferred the title of the
Steamboat property to the Company’s former President and Chief Executive
Officer, as nominee, to facilitate the refinancing of the
Steamboat property.  The new Steamboat mortgage bears interest at the
Wall Street Journal prime rate plus 4.0%, subject to a minimum rate of 10%. One
year interest on the New Steamboat Mortgage was paid in
advance.





The
non-controlling interest in the income of the consolidated subsidiary for the
three months ended November 30, 2009 was $13,933 as compared to $7,479 for the
three months ended November 30, 2008, an increase of $6,454 or
86.3%.
 
 During
the three months ended November 30, 2009, the Company accrued dividends on the
series B and C convertible preferred stock in the amount of $191,638 compared
with $218,979 during the three months ended November 30, 2008, a decrease of
$27,341 or 12.5%.  The decrease is attributable to the conversion of
series B convertible preferred stock in June 2009.





Results
of Operation: nine months ended November 30, 2009 compared to the nine months
ended November 30, 2008





For the
nine months ended November 30, 2009 we reported a net loss attributable to
common shareholders of $4,825,839 or $0.32 per share on revenue of $260,032.
This compares to a net loss attributable to common shareholders of $4,754,935 or
$0.39 per share, on revenue of $1,165,032, for the comparable period of the
previous fiscal year. We expect to incur losses until such time as we complete
the rehabilitation of our existing wells, bring the Focus Ranch Unit wells into
production, and complete new productive wells in connection with the
Participation Agreement with Entek. There is no assurance that we will be
successful in these efforts.





We
anticipate that results of operations for future periods will be significantly
affected by the Participation Agreement. The agreement provides for Entek to
fund up to approximately $11.5 million over three years to earn up to 55% of our
interest in the underlying leases and certain other assets. For accounting
purposes, we will allocate to Entek their percentage share of revenues and
expenses during the term of the agreement, which is expected to reduce the
amounts of revenue and expenses reported by us in the future.





Revenues
for the nine months ended November 30, 2009 were $260,032 compared with
$1,165,032 for the nine months ended November 30, 2008, a decrease of $905,000
or 77.7%. Oil and gas revenues during the nine months ended November 30, 2009
were $146,893 compared with $1,056,964 during the nine months ended November 30,
2008, a decrease of $910,071 or 86.1%. Substantially all of our production was
curtailed during the period as a result of our liquidity constraints. These
fields require minimum flow rates in order to power compression equipment. As
these flow rates declined in the low commodity price environment, the additional
capital investments necessary to maintain production above the minimum field
flow rates did not generate adequate returns. As a result of our liquidity
constraints, no additional capital has been expended and production levels have
declined.





Gathering
and operating fees were $113,139 for the nine months ended November 30, 2009
compared with $108,068 for the nine months ended November 30, 2008, an increase
of $5,071 or 5%. These fees are generally fixed by agreement and, while they
generally do not exhibit significant variation on a period by period comparison,
they will vary somewhat based on production volume.




Exploration
costs for the nine months ended November 30, 2009 were $76,411 compared with
$179,044 for the nine months ended November 30, 2008, a decrease of $102,633 or
57.3%. The individual components of exploration costs are shown in the following
table:


Nine
      months Ended November 30,
            
            Increase2009
            
            2008
            
            (Decrease)Geologic
      consulting
            
            $
            39,191
            
            
            $
            50,000
            
            
            $
            (10,809
            )Seismic
      consulting
            
            
            —
            
            
            
            86,081
            
            
            
            (86,081
            )Misc
      other costs
            
            
            —
            
            
            
            27,143
            
            
            
            (27,143
            )Delay
      rentals
            
            
            37,220
            
            
            
            15,820
            
            
            
            21,400$
            76,411
            
            
            $
            179,044
            
            
            $
            (102,633
            )





The
decrease in exploration cost is a result of decreased exploration activity at
the Slater Dome Field and Focus Ranch Unit. Certain activities were suspended
during the period pending receipt of additional funding. Increased delay rentals
are attributable to contractual requirements for acreage at the Focus Ranch
Unit.





Lease
operating expenses for the nine months ended November 30, 2009 were $302,706
compared with $948,215 in the nine months ended November 30, 2008, a decrease of
$645,509 or 68.1%. The changes are summarized as follows:


Nine
      months Ended November 30,
            
            
            Increase2009
            
            2008
            
            (Decrease)Lease
      operating expenses
            
            
            291,842
            
            
            
            870,273
            
            
            
            (578,431
            )Production
      taxes
            
            
            10,864
            
            
            
            77,942
            
            
            
            (67,078
            )$
            302,706
            
            
            $
            948,215
            
            
            $
            (645,509
            )


Lease
operating expenses decreased $578,431 compared to the same period ending in
2008. This reduction is largely due to reduced activities in response to our
lack of liquidity during the first six months of fiscal 2010 and during the
three months ended November 30, 2009 due to certain terms related to the
Participation Agreement between the Company and Entek, dated August 10, 2009.
Pursuant to the Participation Agreement, all operating expenses shall be paid
out of the parties net proceeds from the underlying leases and in the event that
there are not sufficient proceeds, subject to other terms, Entek shall be solely
responsible for the remaining operating expenses through the conclusion of each
development phase in which Entek participates. The net proceeds were not
sufficient to cover the operating expenses, therefore in accordance with the
Participation Agreement Entek carried the Company on the remaining expenses. The
decrease in gas sales costs and production taxes is consistent with the decrease
in production and revenues.





General
and administrative expenses for the nine months ended November 30, 2009 were
$1,587,374 compared with $1,504,473 in the nine months ended November 30, 2008,
an increase of $82,901 or 5.5%.  As a result of our current lack of
liquidity, we worked to reduce our cash operating expenses and have reduced
employee compensation as a result of reduced personnel and decreases in salaries
paid to officers. However, this decrease has been offset by professional and
consulting services, which have increased approximately $600,000 during the nine
months ended November 30, 2009. The largest increase is related to the Company
issuing 2,056,500 shares of restricted common stock, valued at $637,515, to our
chairman as compensation for consulting services and as a structuring fee
relating to the deposit of the funds to be used as the Segregated Arbitration
Fund. Legal services were also increased primarily because of the Stull Ranch
litigation. All other general and administrative expenses decreased and reflect
our lower activity level in response to our liquidity constraints and other cost
saving measures.





Issuance
of common stock options and warrants represents the pro-rata amortization of the
estimated fair value of stock based compensation. During the nine months ended
November 30, 2009, costs decreased to $1,405,304, a decrease of $431,196, or
23.5%, as compared to costs of $1,836,500 incurred during the nine months ended
November 30, 2008. The costs reported during the nine months ended November 30,
2009 include the estimated fair value of options issued to our chairman on
August 17, 2009 to purchase 1,250,000 shares at $0.20 per share, valued at
$231,647, plus the amortization of estimated fair value associated with
4,200,000 options issued during July 2008 which are being amortized over two
years, plus the amortization of $302,739, the estimated fair value associated
with 2,000,000 options issued in November 2009 to one of the Company’s
independent directors.





Depreciation,
depletion and amortization for the nine months ended November 30, 2009 was
$363,657 compared with $737,241 during the nine months ended November 30, 2008,
a decrease of $373,584 or 50.7%. The decrease in depletion on producing
properties is attributable to the decreased production from the Slater Dome
Field. Other depreciation decreased during the nine months ended November 30,
2009 as compared with the nine months ended November 30, 2008 as certain assets
became fully depreciated.





During
the nine months ended November 30, 2009, we incurred impairment of our oil and
gas properties in the amount of $809,721. Accounting rules require that we
periodically review the carrying value of our oil and natural gas properties and
the Gas Gathering Pipeline for possible impairment. Based on specific market
factors and circumstances at the time of the prospective impairment reviews, and
the continuing evaluation of development plans, production data, rate of flow of
gas through the pipeline, economics and other factors, we may be required to
further write down the carrying value of our oil and natural gas properties or
the Gas Gathering Pipeline in the future. There was no provision for impairment
during the nine months ended November 30, 2008.





During
the nine month period ended November 30, 2009, the Company successfully
negotiated a reduction of approximately $100,000 with one of its vendors for
previously charged field expenses and recorded the credit as other
income.





Interest
income for the nine months ended November 30, 2009 was $1,358 compared with
$62,437 in the nine months ended November 30, 2008, a decrease of $61,079 or
97.8%. The decrease is the result of reduced cash balances held by the Company
during the nine months ended November 30, 2009.





Interest
expense for the nine months ended November 30, 2009 was $53,313 as compared to
$62,914 during the nine months ended November 30, 2008, a decrease of $9,601 or
15%. Interest expense decreased because the outstanding principal balance has
been reduced during the nine months ended November 30, 2009. On July 9, 2009 the
Company transferred the title of the Steamboat property to the Company’s former
President and Chief Executive Officer, as nominee, to facilitate the refinancing
of the Steamboat property. The New Steamboat Mortgage, in the amount of
$635,000, is collateralized by the Steamboat Property with a one year term due
July 7, 2010, bearing interest at the rate of 10%. As a condition of the New
Steamboat Mortgage, interest in the amount of $63,500 was prepaid.




The
non-controlling interest in the income of the consolidated subsidiary for the
nine months ended November 30, 2009 was $26,977 as compared to $31,767 for the
nine months ended November 30, 2008, a decrease of $4,790 or 15.1%. This
fluctuation principally relates to the decrease in production from the Slater
Dome Field and corresponding decreased net income attributable to the
non-controlling interest.





During
the three months ended November 30, 2009, the Company accrued dividends on the
series B and C convertible preferred stock in the amount of $562,825 compared
with $681,111 during the nine months ended November 30, 2008, a decrease of
$118,286 or 17.4%.  The decrease is attributable to the conversion of
series B convertible preferred stock in June 2009.












Liquidity
and Capital Resources





We are
not currently able to generate positive cash flows from operating activities.
During the nine months ended November 30, 2009, we experienced a liquidity
shortage and curtailed certain activities to conserve cash. As discussed below,
the principal source of funds during the period was $1,000,000 proceeds from the
sale of certain assets to Entek and $1,000,000 proceeds from the issuance of
common stock in November 2009.





Historically,
the primary sources of capital have been from equity financings and, to a much
lesser extent, loans and the sale of oil and gas. Our primary use of capital has
historically been for the acquisition, development and exploration of oil and
gas properties and general and administrative expenses.





Our
working capital requirements are expected to increase in line with the planned
growth of our business. We have no lines of credit or other bank or off balance
sheet financing arrangements.





The
Participation Agreement with Entek provided cash of $1,000,000 for the sale of a
4.0625% interest in certain assets. The agreement provides that Entek may
purchase an additional 8.125% interest for an additional $1,000,000 during the
ensuing 180 days if Entek reasonably believes that a danger of NFEI Insolvency
(as defined in the Participation Agreement) exists. Entek did not exercise this
option, which has subsequently lapsed.





The
continued operation of our business will require an additional capital infusion
and we plan to seek additional capital, likely through debt or equity
financings, to continue operations. We can give no assurance that we will be
able to raise such capital on such terms and conditions we deem reasonable, if
at all. We have limited financial resources until such time that we are able to
generate such additional financing or additional cash flow from operations. Our
ability to achieve profitability and positive cash flow is dependent upon our
ability to exploit our oil and gas properties, generate revenue from our
business operations and control our costs. Should we be unable to raise adequate
capital or to meet the other above objectives, it is likely that we would have
to substantially curtail our business activity or cease operating, and that our
investors would incur substantial losses, if not a complete loss on of their
investment.
 
 The
independent auditor’s report accompanying the Company’s February 28, 2009
consolidated financial statements contains an explanatory paragraph expressing
substantial doubt about the Company’s ability to continue as a going concern.
The audited February 28, 2009 consolidated financial statements have been
prepared “assuming that the Company will continue as a going concern,” which
contemplates that the Company will realize its assets and satisfy its
liabilities and commitments in the ordinary course of business. Our accompanying
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should we be unable to
continue as a going concern.
 
 We
entered into the Participation Agreement whereby Entek may expend up to $11.5
million over 3 years to develop an agreed area of mutual interest within our
existing properties. In the initial year of the agreement, Entek has agreed to
expend $3 million to earn 16.25% of our interest in the aforementioned prospects
together with an interest in Slater Dome Gathering, LLLP. Subsequent to November
30, 2009, Entek completed its obligation for Phase I and earned an additional
16.25% of the Company’s interest in the Assets for an aggregate of 20.3125% of
the Company’s interest in the Assets.




As of
November 30, 2009, we had a cash balance of $1,311,901 and a working capital
deficiency of $3,155,921. The following summarizes the Company’s capital
resources at November 30, 2009 compared with February 28, 2009:


November
      30, 2009
            
            February
      28, 2009
            
            Increase
              (Decrease)
            
            Increase
              (Decrease)Cash
            
            $
            1,311,901
            
            
            $
            856,475
            
            
            $
            455,426
            
            
            53
            %Current
      assets
            
            $
            4,328,414
            
            
            $
            1,673,526
            
            
            $
            2,654,888
            
            
            159
            %Currentliabilities
            
            $
            7,316,367
            
            
            $
            4,507,088
            
            
            $
            2,977,247
            
            
            66
            %Working
      capital
            
            $
            (2,987,953
            )
            
            $
            (2,833,562
            )
            
            $
            (322,359
            )
            
            (11
            )%








Our
capital resources declined during the period primarily because revenue from the
sale of oil and gas significantly declined. Net cash used in operating
activities during the nine months ended November 30, 2009 was $1,287,632
compared to $1,017,651 during the comparable period of 2008, an increase of
$269,981. For the most part, our revenues declined more rapidly than we were
able to reduce our operating expenses.





Investing
activities provided net cash of $980,292 during the nine months ended November
30, 2009 and used net cash of $2,125,176 during the nine months ended November
30, 2008. During the nine months ended November 30, 2009, we reduced capital
expenditures to $19,708 compared to capital expenditures of $2,158,476 during
the same period in 2008. Furthermore, the Participation Agreement with Entek
included the sale of a 4.0625% working interest in exchange for
$1,000,000.





Financing
activities provided net cash of $762,767 during the nine months ended November
30, 2009, primarily from $1,000,000 proceeds received from the sale of common
stock in November 2009 offset by payments on the Steamboat mortgage. During the
comparable period of 2008, financing activities provided net cash of $1,442,109
primarily from the exercise of warrants.





The
balance of cash and equivalents increased to $1,311,901 as of November 30, 2009
from $856,475 as of February 28, 2009, a net increase in cash of $455,426. We
continue to refine our liquidity and capital resource requirements. As a company
that is currently experiencing a liquidity shortage, there is significant
uncertainty in our estimates. We may require additional capital to continue our
plan of operations.





Critical
Accounting Policies





There
have been no material changes in our critical accounting policies since February
28, 2009.





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. We have not entered into natural gas
derivative contracts to manage our exposure to natural gas price volatility.





Item
4. Controls and Procedures





Not
applicable.





Item
4T. 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.












PART
II--OTHER INFORMATION





Item
1. Legal Proceedings





Stull
Ranch Litigation and Stull Ranch Arbitration.


In June
2009, New Frontier Energy, Inc. (the “Company”), Stull Ranches, LLC, and Clayton
Williams Energy, Inc. entered into a settlement agreement (the “Settlement
Agreement”) relating to an Easement Agreement granted by Stull Ranches, LLC to
Clayton Williams Energy, Inc. which granted access to a road which serviced the
Federal 12-1 and Federal 3-1 wells in the Focus Ranch Unit.  Pursuant
to the terms of the Settlement Agreement, the Company is obligated to pay Stull
Ranches’ attorneys’ fees and litigation expense in connection with the lawsuit
to allow the assignment of the easement in an amount to be decided in an
arbitration (the “Stull Ranch Arbitration”). Pursuant to the Settlement
Agreement, the parties agreed on a range of between $350,000 and $1,000,000 of
the attorneys’ fees and litigation expense that Stull Ranches, LLC may collect
from the Company.
  The
Arbitrator’s Award of $779,599 in the Stull Ranch Arbitration (as defined below)
was issued on February 4, 2010 and the Company satisfied the Arbitration Award
on February 17, 2010.
 
 Hedberg
& Howell, LLC Litigation
 
 On
November 25, 2009, Hedberg and Howell, LLC, a law firm that previously provided
legal services to the Company, filed a complaint in the District Court of
Arapahoe County, Colorado (Case No. 09CV2609) against the Company alleging
breach of contract for failure to pay certain legal fees.  The
plaintiff in this matter is seeking compensatory damages of $39,336, plus costs
and attorney fees.   The Company has disputed the legal fees that
are the subject matter of this litigation and has filed an answer in response to
the complaint asserting various defenses.   The Company cannot
predict at this time the outcome in this matter.
 
 Involuntary
Bankruptcy Filing
 
 On March
5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New
Frontier Energy, Inc. (Case No. 10-14517HRT) (the “Petition”) was filed against
New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court,
District of Colorado by five Petitioning Creditors (the “Petitioners”).
 The Petitioners alleged that they have debts that are not the subject of a
bona fide dispute as to liability or amount and that the Company is generally
not paying its debts as they come due. The Petitioners were seeking liquidation
of the Company’s assets and the appointment of a receiver.  The Company
believes that the Petitioners' claims are without merit.  After discussion
with the Petitioners, on March 18, 2010, the Company and the Petitioners filed a
joint motion to dismiss the Petition, and the motion is pending with the
bankruptcy court.  The Company believes that the joint motion to
dismiss is an affirmation of the Company’s position that the Petition was wholly
without merit.  In connection with the joint motion to dismiss, the
Company agreed not to seek or obtain judgment, sanctions or other relief against
the Petitioners for filing the Petition and any claims against any person or
entity that caused the dissemination of the filing to a certain oil and gas
publication.  In the event the bankruptcy court does not approve the
dismissal of the involuntary bankruptcy petition, the Company intends to
aggressively contest the involuntary bankruptcy petition.


Item
1A. Risk Factors





Except as
set forth below, there have been no material changes in our Risk Factors from
those reported in Item 1A of Part I of our Annual Report on Form 10-K for the
fiscal year ended February 28, 2009 filed with the Securities and Exchange
Commission, which we incorporate by reference herein.





Risks
Relating to Our Business, Supplementing the “Risk Factors” in Our Form 10-K/A
for the fiscal year ended February 28, 2009.





Entek
may not make additional investments pursuant to the Participation
Agreement.





On August
10, 2009, New Frontier Energy, Inc. (the “Company”) entered into a Participation
Agreement with Entek GRB LLC (“Entek”) under which Entek agreed to purchase
certain assets of the Company and spend up to an additional approximately $11.5
million over three years on exploration and development within approximately
66,000 gross acres (the “Underlying Leases”) to earn up to 55% of the Company’s
interest in the Underlying Leases and certain of its other assets, including its
partnership interests in Slater Dome Gathering, LLLP (collectively the
“Assets”). For a complete discussion of the terms of the Participation
Agreement, see the Form 8-K we filed with the SEC on August 21, 2009, which is
incorporated herein by this reference. Pursuant to the Participation Agreement,
Entek has the right to participate in the exploration and development of the
underlying leases, and the right to earn assignments of interests in the Assets
in three phases. However, Entek is not obligated to expend additional funds to
earn additional interest in the Assets. Further, the Company may not use the
funds expended by Entek for working capital purposes. There can be no assurance
that the Entek will make additional payments to the Company pursuant to the
Participation Agreement or that the Company will further explore or develop its
properties.














Proposed
federal legislation and regulatory initiatives relating to hydraulic fracturing
could result in increased costs and additional operating restrictions or
delays.


The U.S.
Congress is currently considering legislation that would amend the Safe Drinking
Water Act to eliminate an existing exemption from federal regulation of
hydraulic fracturing activities.  Hydraulic fracturing is a common
process in our industry of creating artificial cracks, or fractures, in deep
underground rock formations through the pressurized injection of water, sand and
other additives to enable oil or natural gas to move more easily through the
rock pores to a production well.  This process is often necessary to
produce commercial quantities of oil and natural gas from many reservoirs.
Currently, regulation of hydraulic fracturing is primarily conducted at the
state level through permitting and other compliance requirements.  If
adopted, the proposed amendment to the Safe Drinking Water Act could result in
additional regulations and permitting requirements at the federal
level.  Those additional regulations and permitting requirements, as
well as other regulatory developments at the state level, could lead to
significant operational delays and increased operating costs, and make it more
difficult to perform hydraulic fracturing.




A
petition for involuntary bankruptcy was filed against New Frontier Energy, Inc.,
which could adversely affect the our operations and financial
condition
 
 On March
5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New
Frontier Energy, Inc. (Case No. 10-14517HRT) (the “Petition”) was filed against
New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court,
District of Colorado by five Petitioning Creditors (the “Petitioners”).
 The Petitioners alleged that they have debts that are not the subject of a
bona fide dispute as to liability or amount and that the Company is generally
not paying its debts as they come due. The Petitioners were seeking liquidation
of the Company’s assets and the appointment of a receiver.  The Company
believes that the Petitioners' claims are without merit.  After discussion
with the Petitioners, on March 18, 2010, the Company and the Petitioners filed a
joint motion to dismiss the Petition, and the motion is pending with the
bankruptcy court.  The Company believes that the joint motion to
dismiss is an affirmation of the Company’s position that the Petition was wholly
without merit.  In connection with the joint motion to dismiss, the
Company agreed not to seek or obtain judgment, sanctions or other relief against
the Petitioners for filing the Petition and any claims against any person or
entity that caused the dissemination of the filing to a certain oil and gas
publication.  In the event the bankruptcy court does not approve the
dismissal of the involuntary bankruptcy petition, the Company intends to
aggressively contest the involuntary bankruptcy petition.


There can
be no assurance that the Company will be successful in having the involuntary
bankruptcy petition dismissed.  If the Company is not successful in
having the involuntary bankruptcy petition dismissed, the Company may become
subject to a bankruptcy proceeding under either Chapter 7 or Chapter 11 of the
United States Bankruptcy Code and will be subject to the risks and uncertainties
associated with such bankruptcy cases.   These risks include, but
are not limited to, our ability to continue as a going concern, our ability to
operate within the restrictions of the bankruptcy court, our ability to obtain
bankruptcy court approval with respect to motions filed in the bankruptcy
proceeding from time to time; our ability to develop, confirm and consummate a
plan of reorganization (with respect to a Chapter 11 proceeding), and the
ability of third parties to seek and obtain court approval to liquidate our
assets (with respect to a Chapter 7 proceeding).
 
 Further,
in the event that the involuntary bankruptcy  petition is not
dismissed within 60 days from its date of commencement, it may be deemed to be a
Triggering Event (as defined in the certificate of designation of the Company’s
Series B Preferred Stock), which may, among other things, allow its holders, at
their option, to require the Company to redeem all of the Preferred Stock then
held by such holder for a redemption price, in shares of Common Stock, equal to
a number of shares of Common Stock equal to the Triggering Redemption Amount (as
defined in the certificate of designation of the Company’s Series B Preferred
Stock) divided by $0.65 or (B) increase the dividend on all of the outstanding
Series B Preferred Stock held by such holder to equal 18% per annum
thereafter.
 
 Further,
negative events or publicity associated with a bankruptcy case could adversely
affect our relationships with our vendors and employees, as well as with
customers and other third parties, which in turn could adversely affect our
operations and financial condition.  Also, pursuant to the United
States Bankruptcy Code, we would need bankruptcy court approval for transactions
outside the ordinary course of business, which may limit our ability to respond
timely to events or take advantage of opportunities.  Because of the
risks and uncertainties associated with bankruptcy cases, we cannot predict or
quantify the ultimate impact that events occurring during the filing of the
involuntary bankruptcy petition process may have on our business, financial
condition and results of operations, and there is no certainty as to our ability
to continue as a going concern.




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





On November 13, 2009, the Company
granted Lazar G. Schafran 2,000,000 options to acquire shares of the Company’s
Common Stock.  Of the options granted, 1,000,000 are exercisable at a
price of $0.25 and expire on December 31, 2010 and 1,000,000 are exercisable at
a price of $0.50 per share and expire on December 31, 2011. On or before
December 31, 2010, Mr. Schafran has the right, but not the obligation, to cancel
these stock options in exchange for a payment of $50,000. At the Company's
election, this payment may be made either in cash or a 2-year unsecured
promissory note issued by the Company in the principal amount of $50,000 (the
"Note"). If the Company elects to issue the Note to Mr. Schafran, the Note will
accrue interest on a monthly basis at a rate equal to the 1-month London
Interbank Offered Rate, with such accrued and unpaid interest to be paid on the
maturity date of the Note.




Entek may
become the Operator of the Slater Dome Field and the Focus Ranch
Unit.
 
 Pursuant
to the terms and conditions of the Participation Agreement, Entek has the right,
after agreeing to proceed with Phase II (as defined in the Participation
Agreement) of the Participation Agreement, to elect to become the operator of
the Focus Ranch Unit and the Slater Dome Field.  As of the date of
this Form 10-Q, Entek has elected to proceed with Phase II and has expressed a
desire to become the operator of the Focus Ranch Unit and the Slater Dome
Field.  The Company and Entek are in discussions on various matters
relating to the appointment of Entek as the operator of the Focus Ranch Unit and
the Slater Dome Field.  In the event Entek becomes the operator of the
Focus Ranch Unit and the Slater Dome Field, it will have control over the
management of operations on these properties and make decisions regarding
development.  These decisions may affect our capital requirements and
may have a material adverse affect upon the Company and its
shareholders.
    
 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





Not applicable.





Item
6. Exhibits





Exhibits:
      The following exhibits are filed with this report: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.














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:
      March 22, 2010
            By:
            /s/
      Samyak VeeraSamyak
      Veera,President
      and Chief Executive OfficerBy:
            /s/
      Tristan R. FarelTristan
      R. Farel,Chief
      Financial Officer