**U.S. SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-KSB**

 

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR            THE FISCAL YEAR ENDED JUNE 30, 2006

 

Commission File Number 002-85602-D

 

| **CALDERA CORPORATION**                                                                                 |
|---------------------------------------------------------------------------------------------------------|
| (Name of small business issuer in its                            charter)                               |
|                                                                                                    |   |
| **Nevada**                                                                                              | **88-0478633** |
| (State or other jurisdiction of                                                                         | (I.R.S. Employer |
| incorporation or organization)                                                                          | Identification No.) |
|                                                                                                    |   |
| **8290 West Sahara Avenue, Suite 186**

**Las Vegas, Nevada**                                           | **89117** |
| (Address of principal executive offices)                                                                | (Zip Code) |
|                                                                                                    |
| **702-838-0716**                                                                                        |
| (Issuer’s telephone number)                                                                       |
|                                                                                                    |   |
| Securities registered pursuant to Section 12(b) of the                            Exchange Act:         |
| Title of each class                                                                                     | Name of each exchange on which registered |
| **None**                                                                                                | **None** |
|                                                                                                    |   |
| Securities registered pursuant to Section 12(g) of the                            Exchange Act:**None** |
| (Title of Class)                                                                                        |
|                                                                                                    |
| **Mid-Power Service Corporation**                                                                       |
| (Former name or former address, if changed since last                            report)                |

 

Check whether the issuer is not required to file reports pursuant to            Section 13 or 15(d) of the Exchange Act.x

 

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

 

Check if there is no disclosure of delinquent filers in response to Item            405 of Regulation S-B contained in this form, and no disclosure will be contained, to            the best of registrant’s knowledge, in definitive proxy or information statements            incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form            10-KSB.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

 

State issuer’s revenues for its most recent fiscal year.**$688,263**

 

State the aggregate market value of the voting and nonvoting common            equity held by nonaffiliates computed by reference to the price at which the common            equity was sold, or the average bid and asked prices of such common equity, as of a            specified date within the past 60 days.**As of January 17,            2008, the aggregate market value of the voting and nonvoting common equity held by            nonaffiliates of the issuer was $4,877.**

 

State the number of shares outstanding of each of the issuer’s            classes of common equity, as of the latest practicable date.**As of January 17, 2008, issuer had 10,840,468 shares of issued and            outstanding common stock, par value $0.001.**

 

DOCUMENTS INCORPORATED BY REFERENCE:**None.**

 

Transitional Small Business Disclosure Format: Yes o  No x

 

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**TABLE OF CONTENTS**

 

| **Item**      | **Description**                                                                                                                                                                               | **Page** |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|          |                                                                                                                                                                                          |     |
|          | Special Note on Forward-Looking Statements                                                                                                                                                    | 1        |
|          |                                                                                                                                                                                          |     |
|          | **Part I**                                                                                                                                                                                    |     |
| Items 1 and 2 | Description of Business and Property                                                                                                                                                          | 2        |
| Item 3        | Legal Proceedings                                                                                                                                                                             | 12       |
| Item 4        | Submission of Matters to a Vote of Security                            Holders                                                                                                                | 12       |
|          |                                                                                                                                                                                          |     |
|          | **Part II**                                                                                                                                                                                   |     |
| Item 5        | Market for Common Equity, Related Stockholder Matters                            and

Small Business Issuer Purchases of Equity                            Securities                         | 13       |
| Item 6        | Management’s Discussion and Analysis or Plan of                            Operation                                                                                                    | 15       |
| Item 7        | Financial Statements                                                                                                                                                                          | 17       |
| Item 8        | Changes in and Disagreements with Accountants                            on

Accounting and Financial Disclosure                                                                              | 17       |
| Item 8A       | Controls and Procedures                                                                                                                                                                       | 17       |
| Item 8B       | Other Information                                                                                                                                                                             | 17       |
|          |                                                                                                                                                                                          |     |
|          | **Part III**                                                                                                                                                                                  |     |
| Item 9        | Directors, Executive Officers, Promoters, Control                            Persons and

Corporate Governance; Compliance with Section                            16(a)

of the Exchange Act | 18       |
| Item 10       | Executive Compensation                                                                                                                                                                        | 19       |
| Item 11       | Security Ownership of Certain Beneficial Owners                            and

Management and Related Stockholder Matters                                                                    | 20       |
| Item 12       | Certain Relationships and Related                            Transactions,

Director Independence                                                                                             | 21       |
| Item 13       | Exhibits                                                                                                                                                                                      | 22       |
| Item 14       | Principal Accountant Fees and Services                                                                                                                                                        | 23       |
|          | Signatures                                                                                                                                                                                    | 24       |

 

 

i

 

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**SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS**

 

This report contains statements about the future, sometimes referred to            as “forward-looking” statements. Forward-looking statements are typically            identified by the use of the words “believe,” “may,”            “should,” “expect,” “anticipate,”            “estimate,” “project,” “propose,”            “plan,” “intend” and similar words and expressions. Statements            that describe our future strategic plans, goals, or objectives are also forward-looking            statements. We intend that the forward-looking statements will be covered by the safe            harbor provisions for forward-looking statements contained in Section 27A of the            Securities Act of 1933 and Section 21E of the Securities Exchange Act of            1934.

 

Readers of this document are cautioned that any forward-looking            statements, including those regarding us or our management’s current beliefs,            expectations, anticipations, estimations, projections, proposals, plans or intentions,            are not guarantees of future performance or results of events and involve risks and            uncertainties, such as:

 

|   | o | our ability to identify and acquire new exploration and                            development opportunities; |
|--------|---|---------------------------------------------------------------------------------------------------------------|

             

|   | o | the future results of drilling individual wells and                            other exploration and development activities; |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|

             

|   | o | our future ability to retain existing or attract new                            industry or financial partners to share the costs of exploration,                            exploitation, development and acquisition activities; and |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | o | the prices at which we may be able to sell gas, oil, or                            electrical power. |
|--------|---|------------------------------------------------------------------------------------------------------|

             

The forward-looking information is based on present circumstances and on            our predictions respecting events that have not occurred, that may not occur, or that            may occur with different consequences from those now assumed or anticipated. Actual            events or results may differ materially from those discussed in the forward-looking            statements as a result of various factors. The forward-looking statements included in            this document are made only as of the date of this document.

 

1

 

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**PART I**

 

 

**ITEMS 1 AND 2. DESCRIPTION OF BUSINESS AND PROPERTY**

 

**Introduction and History**

 

We were incorporated as Caplan Corporation under the laws of the state            of Delaware on July 5, 1983. We changed our name from Caplan Corporation to Mid-Power            Service Corporation in March 2001, and changed our corporate domicile to Nevada through            a merger with a corporate subsidiary in December 2001. In 1999 and 2000, our activities            were limited to maintaining an interest in 3,825 acres of leased and permitted lands in            Texas for the exploration and possible mining, production, and sale of bentonite,            zeolite, and other nonferrous minerals. In March 2000, we discontinued operations in            this business segment and thereafter were inactive with no material assets until the            change in management and control and infusion of additional equity during the year            ended June 30, 2001, as discussed below. On February 5, 2007, we changed our name from            Mid-Power Service Corporation to Caldera Corporation and our wholly-owned subsidiary,            Mid-Power Resource Corporation, changed its name to Caldera P & G            (collectively, “Caldera” or the “Company”).

 

We are currently implementing a plan to acquire gas and oil properties            for exploration and development and to develop energy-related technologies. We            initiated this plan following the acquisition of a controlling interest by a new group            of stockholders, the infusion of more than $5,500,000 of equity, and the appointment of            new directors during the year ended June 30, 2001. We are currently focusing            principally on the exploration and development of gas and oil by initiating exploration            of acquired property interests and by participating in exploration projects sponsored            by others.

 

On June 14, 2002, we completed our acquisition under a May 10, 2002,            option agreement of gas and oil leases on approximately 17,197 gross acres comprising            the Clear Creek Unit in Carbon and Emery Counties, Utah. The Clear Creek field was            originally discovered and developed during the mid-1950s, and approximately 136 billion            cubic feet of gas had been produced from the field by the mid-1970s. To acquire these            properties, we paid $5,500,000 in cash, agreed to pay $10,000,000 into escrow in            December 2002, and issued 17,125,365 shares of the Company’s common stock to            Edward Mike Davis, who as a result owned approximately 61.2% of our issued and            outstanding stock.

 

In order to fund this acquisition, we entered into a loan agreement with            SCRS Investors, LLC (“SCRS Investors”), a related entity, under which we            could borrow up to $25,500,000 to complete the acquisition and to engage in initial            exploration and development activities on the Clear Creek field. The loan was secured            by encumbrances on the assets acquired. The loan was repayable over ten years,            commenced on December 31, 2003, and is convertible into common stock at $1.50 per            share, subject to certain limitations; however, no conversions have occurred to date.            James (Jim) W. Scott, our president, chief executive officer and a director, is            approximately a 47% equity owner of SCRS Investors, which is also a stockholder of the            Company. Accordingly, this transaction was not the result of arm’s-length            negotiations.

 

2

 

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            On            January 24, 2003, we and our wholly owned subsidiary filed petitions in the United            States Bankruptcy Court for the District of Nevada in Las Vegas seeking protection            under Chapter 11 of the Bankruptcy Code. These Chapter 11 petitions were filed            following the termination of settlement negotiations with Mr. Davis and prior to            expiration of the temporary restraining order and the hearing on our motion for a            preliminary injunction in the pending action initiated by us against Mr. Davis.            That state court action, initiated by us in December 2002, included causes of action            for fraud, breach of warranty, and conversion associated with our acquisition of the            Clear Creek, Utah property and additional claims related to Colorado and Wyoming oil            and gas ventures with Mr. Davis. Mr. Davis also filed lawsuits in Colorado            and Wyoming against us respecting those ventures. The filing of the Chapter 11            petitions automatically stayed further proceedings in the pending Nevada, Colorado, and            Wyoming lawsuits. At the time, Mr. Davis was our single largest unsecured creditor            and owned approximately 61.2% of our outstanding common stock.

 

On March 19, 2003, we entered into a settlement agreement with            Mr. Davis that resulted in resolution of all disputes between both parties. As a            result of the settlement agreement, Mr. Davis returned to us for cancellation all            of his 17,125,365 shares of our common stock; cancelled our $10,000,000 promissory            note, including all accrued interest, fees and charges; disclaimed any interest in the            Lakeside Prospect in Louisiana; and reduced his overriding royalty interest in the            Clear Creek property from approximately 7.8% to 3%, which was assigned to a third            party. We agreed to terminate any interest in the Colorado, Wyoming, North Dakota,            Montana and Colusa County, California ventures; issued options to purchase 1,000,000            shares of our common stock at the price of $2.00 per share to certain third parties            designated by Mr. Davis (which expired unexercised on December 31, 2004); and            transferred ownership of two gas generators and a work-over rig to Mr. Davis. We            recorded a gain on extinguishment of debt of approximately $11,470,000.

 

On September 24, 2003, the judge in the United States Bankruptcy Court            for the District of Nevada signed an order approving our settlement with the unsecured            creditors and dismissed the Chapter 11 bankruptcy actions. To fund the settlement            with our creditors, we borrowed $384,898 from SCRS Investors, which is a 47%-controlled            entity of our president and a stockholder of the Company. The loan is unsecured, bears            interest at the rate of 8% per annum, and is payable on demand.

 

In February 2005, we entered into a farmout with Marion Energy, Inc.            (“Marion Energy”) for the Clear Creek Unit. Marion Energy agreed to spend            $5,000,000 a year for four years on the Clear Creek Unit, including $5,000,000 to carry            our share of the program.

 

On September 14, 2006, we sold the Clear Creek Unit to Marion Energy in            exchange for a 12.5% net profits interest, $1,000,000 in cash, 13,100,000 shares of            Marion Energy’s stock, which is traded on the Australian Stock Exchange, or ASX,            and options to purchase an additional 5,000,000 shares of Marion Energy’s stock            with an exercise price of AU$0.40 per share. The agreement provides for us to receive            options to purchase up to an additional 8,000,000 shares of Marion Energy’s stock            at AU$0.80 per share in the event Marion Energy discovers certain threshold levels of            proved and probable hydrocarbon reserves. No options have been received to date. On the            closing date, the closing price for Marion Energy’s ordinary shares on the ASX            was AU$0.84 per share.

 

Through our subsidiary, Sunray Petroleum, Inc. (“Sunray”),            we continue to engage in the exploration and development of oil and gas in Kern County,            California. Sunray, a Nevada corporation, is a wholly owned subsidiary of Caldera            P & G, formerly known as Mid-Power Resource Corporation, with operations            in Bakersfield, California. Since 2001, Sunray has been acquiring additional leases            bringing its well count to 128 wells. Of those 128 wells, 36 are currently considered            active and producing wells. Sunray has acquired several new nonproducing leases as well            and, currently, focuses on obtaining additional oil and gas properties in Kern County            and the surrounding areas that have oil and gas potential as well as real estate            development potential.

 

3

 

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We also own certain leases in Cameron Parish, Louisiana. Although we are            not currently involved in any activities there, we previously entered into a farmout            agreement with Denbury Resources, Inc. (“Denbury”). The initial well            drilled by Denbury was believed to be a success; however, our last report from Denbury            indicates that the well was shut in with no date set for workover.

 

Unless the context indicates otherwise, when used in this document, the            terms “we,” “our” and “us” refer to Caldera            (formerly known as Mid-Power Service Corporation) as well as our wholly owned            subsidiaries: Caldera P & G (formerly known as Mid-Power Resource            Corporation), a Nevada corporation, which holds our Clear Creek, Utah, and Lakeside,            Louisiana, properties, and Sunray (formerly known as MaxCo Oil Co., Inc.            (“MaxCo”)), a Nevada corporation, which owns our Kern County, California            property. We also own Emergency Power Systems, LLC, a Nevada limited liability company,            and a 50% interest in S-C Engines, LLC, a Nevada limited liability company, neither of            which has conducted activities, and, through Sunray, a 65% interest in Kern Landmark,            LLC (“Kern Landmark”), which is currently inactive. On April 12, 2004, and            April 20, 2004, we dissolved Wind Associates, Inc. and Mid-Power Energy Trading, LLC,            respectively, neither of which materialized into our plan.

 

Our executive offices are located at 8290 West Sahara Avenue, Suite 186,            Las Vegas, Nevada 89117. Our telephone number is (702) 838-0716, and our facsimile            number is (702) 838-5087.

 

We use various terms in this document that are common in the gas and oil            and energy industries but that may not be familiar to all investors. This document            contains a glossary of certain of these industry terms beginning on page 11.

 

**Gas and Oil Activities**

 

Since June 30, 2001, we have acquired minimal proved reserves and            undeveloped and unproved gas and oil interests, including some interests with only            nominal, noncommercial production. We have undertaken evaluation of these acquired gas            and oil interests and are drilling or conducting other exploration or are reworking            existing wells. We have minimal production and only minimal proved reserves.

 

**Clear Creek, Utah Property**

 

We currently hold a 12.5% net profits interest in the Clear Creek Unit            in Carbon and Emery Counties, Utah. Additionally, we own 13,100,000 shares of common            stock and options to purchase an additional 5,000,000 shares of common stock of Marion            Energy, which purchased the Clear Creek Unit from us in September 2006. If Marion            Energy discovers certain threshold levels of proved and probable hydrocarbons reserves,            we can receive options to purchase up to an additional 8,000,000 shares of Marion            Energy’s stock.

 

The Clear Creek field was discovered in 1951 and developed during the            mid-1950s. A total of 20 wells were drilled, 17 of which were completed for production            and three of which were dry holes. By the mid-1970s, all but one well in the field had            been abandoned as noncommercial, apparently because of collapsed holes, excessive water            production, or low gas volume. One of the wells, the Utah Fuels No. 8, has produced            noncommercial quantities in order to maintain the leases in the approved unit. To date,            approximately 136 billion cubic feet of gas have been produced from the field. The gas            gathering and transmission system used to transport and market previous production            remains in place.

 

|   | Marion Energy is engaged in an active drilling program                            on the Clear Creek Unit. |
|--------|------------------------------------------------------------------------------------------------------------|

 

 

4

 

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**Lakeside Prospect, Cameron Parish, Louisiana**

 

On August 1, 2002, we agreed to provide approximately $1,000,000 in            funding for an initial test well drilled to test the Marg. Howei Sand formation at a            target depth of approximately 16,300 feet by Petrogulf Corporation, Denver, Colorado,            as operator, in the Lakeside Prospect in Cameron Parish, Louisiana.

 

We agreed to pay approximately $1,000,000 to participate in the prospect            and the prospect well for a 25% working interest in the well and the approximately 606            gross acre prospect. The earned 25% working interest equated to a 16.125% working            interest (11.77% net revenue interest) retained by us and an 8.875% working interest            (6.48% net revenue interest) received by Edward Mike Davis, a former principal            stockholder, who brought the prospect to us.

 

In September 2002, Petrogulf tendered its resignation as operator of the            well, as a result of its determination that the well was not capable of producing            commercial quantities of hydrocarbons. To avoid shutdown of all operations, we elected            to take over as operator of the well immediately following proper documentation with            the State of Louisiana and assume the entire obligation to attempt to test and complete            the well. We agreed to pay 100% of all costs incurred. Subject to certain conditions,            the former participants agreed to assign all rights, title, and interest to all oil and            gas leases in the Lakeside Prospect to us, with the exception of a 10% working interest            held by Petrogulf and a 40% working interest retained by Petrogulf in a 180-acre parcel            within the Lakeside Prospect referred to as the Western Lease. As operator, we            subsequently determined to plug and abandon the well.

 

In May 2003, we entered into a farmout agreement with Denbury on certain            leases that were part of the 606 gross acre prospect owned by us. Denbury commenced the            drilling of the test well at a legal location on the farmout acreage at a minimum depth            of 15,800 or to a depth sufficient to adequately test the Marg. Howei 4 Sand without            cost, expense, or risk to us. We retained an overriding royalty interest equal to 27%,            less the royalties and other overriding royalties reserved by the lessors in the            leases, which will convert to a working interest if and when Denbury obtains its            determined payout. Our last report from Denbury indicated that the well was shut-in            with no schedule for work-over.

 

**Kern County, California**

 

In an effort to obtain a source of fuel for possible future distributed            power-generation facilities, in August and December 2001, we purchased in two            transactions a total of 100% of the issued and outstanding stock of MaxCo (which we            changed to Sunray in March 2002), located in Bakersfield, California, with properties            in Kern County, California.

 

When we acquired the initial 70% of MaxCo, we paid $400,000 in cash,            agreed to pay an additional $53,000 within 12 months, entered into employment            agreements with MaxCo’s two remaining stockholders, and agreed to issue an            aggregate of 450,000 shares of our restricted common stock to those stockholders if            MaxCo were able to rework and return to commercial production an agreed number of            wells. When we acquired the remaining 30% of MaxCo’s stock, the employment            agreement and the right to receive 225,000 shares of our common stock of one of the two            MaxCo stockholders were terminated in consideration of $25,000 in cash and certain            equipment with a book value of $167,254. The other MaxCo stockholder agreed to            terminate his employment agreement and assume the $53,000 to be paid by us in            consideration of $40,384 in cash and the right to receive the 225,000 shares of our            common stock if the conditions preceding are met. However, on February 12, 2007, our            board of directors unanimously agreed that such conditions had not been satisfied and            approved the cancellation of the right to receive such shares. The second MaxCo            stockholder was sent written notification of this decision on February 13, 2007.            Accordingly, no shares of our common stock have been issued nor do we anticipate            issuing any shares under this agreement.

 

5

 

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            As            a result of this acquisition, we acquired leases to the gas and oil rights on 1,833            gross and net acres, equivalent to an 84% net revenue interest, which included over 50            wells at depths between 550 to 6,300 feet, of which one contains small reserves and the            balance of which currently produces small, noncommercial quantities. Based on the            current level of oil prices, we believe that we may be able to rework some of the            shut-in wells for production. In addition, we believe that some of these wells can be            reworked to produce gas in sufficient amounts.

 

|   | Sunray now has 36 producing wells and has acquired                            several new nonproducing leases. |
|--------|----------------------------------------------------------------------------------------------------------------|

 

***Sales to Well Pro***

             

In June 2004, Sunray sold an oil and gas lease and a workover production            rig to Well Pro, a related party in which an officer and director of the Company holds            a controlling interest. Well Pro gave Sunray a promissory note of $100,000 for the            lease and a promissory note of $65,000 for the workover production rig. Each note            accrued interest at the rate of 8% per annum and was due one year from the date of            execution. In May 2005, these notes were repaid by offsetting the amounts due from Well            Pro to Sunray against amounts due from Sunray to Well Pro. See Item 12. Certain            Relationships and Related Transactions.

 

Well Pro, in turn, sold the C&L, Crofton Coffee oil and gas lease to            an unrelated third party, while Sunray remained the operator of record until the third            party was able to apply for and obtain his own reclamation and operators bond through            the California Department of Oil and Gas. On May 18, 2007, the third party was            able to obtain his bond and Sunray was released from the lease reclamation liability.            This reduces the number of idle wells that Sunray is required to report and insure by            18 wells.

 

***Cal-Kern Development, LLC and Cal-Kern II, LLC***

             

In January 2005, Sunray sold the Muir lease in Bakersfield, California            to Cal-Kern Development, LLC (“Cal-Kern”). Cal-Kern agreed to pay            $4,400,000 for the property with a down payment of $400,000 and a note for $4,000,000,            which was paid in full in the fiscal year ended June 30, 2006.

 

In June 2005, Sunray sold the Spaulding property in Bakersfield,            California, to Cal-Kern II, LLC (“Cal-Kern II”). Cal-Kern II agreed to pay            $502,653 for the property with a down payment of $385,000 and the assumption of the            outstanding note and interest payable to Spaulding in the amount of $117,653. Sunray            initially purchased the property for oil development and future real estate            development. It was determined that the land was no longer viable for Sunray as an oil            development property as a result of problems with transporting the oil.

 

The sole member of Cal-Kern and Managing Member of Cal-Kern II is Mark            T. Davis, our former general counsel, who resigned from his position with Caldera in            December 2004 before we entered into the agreement.

 

***Other Transactions***

             

In August 2004, Sunray entered into a purchase contract to purchase 59            acres of land from an unaffiliated third party for future development and oil            production. Sunray obtained a loan of approximately $1.0 million for the purchase. With            the changing real estate market and Sunray’s unsuccessful attempt to participate            in the development of the oil resources, Sunray sold this asset in April 2005 for an            assumption of Sunray’s remaining debt on the property. This property was acquired            by Kern Landmark and then subsequently sold to Trimco, LLC (“Trimco”).            Sunray holds a 65% membership interest in Kern Landmark, which is currently inactive,            and Jim Scott is the Manager. Jim Scott and Mark T. Davis are both Managing            Members of Trimco.

 

6

 

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In October 2004, Sunray purchased certain leases from Bruce Batch d/b/a            Alexander Petroleum, an unrelated third party, for $200,000. Under the terms of the            agreement, Sunray paid Alexander Petroleum $40,000 in cash and executed a promissory            note for $160,000 payable at $7,091.30 per month for 24 months beginning May 1,            2005. Also, in November 2004, Sunray purchased certain leases from Emil Batch d/b/a            Sunwest Petroleum, an unrelated third party, for $220,000. Under the terms of the            agreement, Sunray paid Sunwest Petroleum $55,000 in cash and executed a promissory note            for $165,000 payable at $14,200.96 per month for 12 months beginning May 1, 2005.            Sunray made payments through June 1, 2006, to Alexander Petroleum, totaling $83,575.59            and to Sunwest totaling $143,946.26. Only two of the leases included in the purchase            agreement have been delivered to Sunray as agreed upon. Sunray is currently engaged in            litigation with Alexander Petroleum, Sunwest Petroleum, and the Estate of Emil Batch            for performance issues stipulated in the agreements.

 

**Other Opportunities**

 

We continue to review opportunities of which we become aware for            possible participation in additional gas and oil exploration, development, or            production.

 

**Limited Oil Production and Sales**

 

We had no gas or oil production prior to our acquisition of our Kern            County property in 2001 and the Clear Creek field in June 2002. With the exception of            36 wells in Kern County, California, our production is limited and noncommercial, and            each of our properties is in the exploration stage. Sunray has been acquiring            additional leases, bringing its well count to 128 wells. Of those 128 wells, 55 have            the ability to produce and are considered active. Of those 55 active wells, 36 are            running and producing at various times. Additionally, Sunray has acquired several new            nonproducing leases as well and, currently focuses on obtaining additional oil and gas            properties in Kern County and the surrounding areas that have oil and gas potential as            well as real estate development potential. While Sunray does not generate a profit from            the sale of oil, sales of assets have allowed Sunray to recoup much of its invested            capital. With the implementation of a current development plan, we hope to have Sunray            producing oil in commercial quantities and generating a profit in the near            future.

 

The following table sets forth our average net daily oil production,            average sales price, and average production costs associated with our oil production            attributable to our interest in the Kern County property, giving effect to the            acquisition of a 70% interest on August 30, 2001, and acquisition of the remaining 30%            interest on December 31, 2001, and excluding any nominal production from the Clear            Creek property acquired June 14, 2002:

 

|                                                              | **Year Ended                            June** **30,                            2006** |
|-------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
| Producing property data:                                          |                                                                                        |
| Average daily net oil production (barrels)                        | 31                                                                                          |
| Average sales price per barrel                                    | $52.00                                                                                      |
| Average production costs per                            barrel(1) | $85.00                                                                                      |

_______________

| (1) | Production costs include production costs (water                            disposal, repairs, maintenance, pumper, transportation, and similar                            items) and production taxes. Production costs do not include such items                            as general and administrative costs, depreciation, depletion, state                            income taxes, or federal income taxes. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

We sell oil at posted field prices to one of several purchasers in the            Kern County area. For the year ended June 30, 2006, all of our oil sales were to Delta            Trading. Posted prices are generally competitive among gas purchasers. We had no            commitments for the delivery or sale of gas or oil. In May 2007, we entered into an            agreement to sell all of our oil to Big West Oil, LLC.

 

7

 

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**Wells and Acreage**

 

|   | As of June 30, 2006, we had no producing gas wells and                            36 producing oil wells. |
|--------|-----------------------------------------------------------------------------------------------------------|

 

The following table sets forth our gross and net acres of undeveloped            gas and oil acreage as of June 30, 2006:

 

|                    | **Developed** |   | **Undeveloped** |
|-------------------------|---------------|--------|-----------------|
|                    | **Gross**     |   | **Net**         |   | **Gross** |   | **Net** |
|                    |          |   |            |   |   |   |   |
| Kern County, California | --            |   | --              |   | 1,833 |   | 1,833 |
|                    |          |   |            |   |   |   |   |
| Total                   | --            |   | --              |   | 1,833 |   | 1,833 |

 

**Drilling Activities**

 

As of September 13, 2002, the well in Cameron Parish, Louisiana had            reached total depth of 16,275. On that date, Petrogulf tendered its resignation as            operator of the well, as a result of its determination that the well was not capable of            producing commercial quantities of hydrocarbons. To avoid shutdown of all operations,            we elected to take over as operator of the well immediately following proper            documentation with the State of Louisiana and assume the entire obligation to attempt            to test and complete the well. We agreed to pay 100% of all costs incurred. Subject to            certain conditions, the former participants agreed to assign all rights, title, and            interest to all oil and gas leases in the Lakeside Prospect to us, with the exception            of a 10% working interest held by Petrogulf and a 40% working interest retained by            Petrogulf in a 180-acre parcel within the Lakeside Prospect referred to as the Western            Lease. As operator, we subsequently determined to plug and abandon the well.

 

On May 2, 2003, we entered into a farmout agreement with Denbury on            certain leases that were part of the 606 gross acre prospect owned by us. Denbury            commenced the drilling of the test well at a legal location on the farmout acreage at a            minimum depth of 15,800 or to a depth sufficient to adequately test the Marg. Howei 4            Sand without cost, expense, or risk to us. We retained an overriding royalty interest            equal to 27%, less the royalties and other overriding royalties reserved by the lessors            in the leases, which will convert to a working interest if and when Denbury obtains its            determined payout. Our last report from Denbury indicates the well was shut-in with no            date set for workover.

 

The Ridge Runner 13-17 well located in the Clear Creek Unit in Utah was            drilled and fracture stimulated in 2003, but was never really tested due to severe            winter weather conditions and other obstacles. In September 2005, we successfully            completed the Ridge Runner 13-17 well. The well was production tested and flowed            3,100,000 cubic feet per day over an extended testing period.

 

**Drilling Rig and Well Servicing Equipment**

 

As part of the acquisition of our Clear Creek property in August 2002,            we also acquired a well service rig, associated oilfield servicing equipment, and two            field vehicles. This equipment, with the exception of the two field vehicles, was            subsequently transferred back to Edward Mike Davis.

 

8

 

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**Turbine Engines**

 

On May 24, 2002, we purchased two Model GG4A-7 non-flight, Pratt and            Whitney turbine engines for a total of $1,164,000, including the purchase price and            commissions. The engines were spare engines that could be deployed within 24 hours for            use in 133 megawatt electric generating peaking plants owned by the sellers. The            engines had never been used and were never used by us. In June 2005, we sold one of the            engines to an unrelated third party for $175,000, receiving $30,000 upon execution of            the purchase agreement with $145,000 due within 90 days. In January 2007, we sold the            remaining engine to an unrelated party for $45,000 cash.

 

**Governmental Regulation**

 

The exploration for and production of oil in the United States are            subject to extensive regulation by both federal and state authorities. The following            discussion concerning regulation of the gas and oil industry is necessarily brief and            is not intended to constitute a complete discussion of the various statutes, rules,            regulations, and governmental orders to which our operations may be subject.

 

***Environmental Regulations***

             

Our operations are subject to comprehensive federal, state, and local            laws and regulations governing the storage, use, and discharge of materials into the            environment, the remediation of environmental impacts, and other matters relating to            environmental protection, all of which may adversely affect our operations and costs of            doing business. It is probable that state and federal environmental laws and            regulations or their interpretations will become more stringent in the future. There            can be no assurance that measures to further regulate the disposal of oil waste may not            be adopted. Environmental laws and regulations are frequently changed, so we are unable            to predict the ultimate cost of compliance. We do not believe that we will be required            in the near future to expend material amounts due to current environmental laws and            regulations.

 

We assumed liability for well plugging and abandonment and well-site            restoration costs for any of seven nonproducing gas wells on the Clear Creek property            that were not returned to production within five years. We posted with the State of            Utah a cash bond of $184,000 as security for this plugging, abandonment, and            restoration obligation. Subsequently, Marion Energy assumed this obligation as operator            under the terms of a farmout agreement dated February 2005 and the bond was released to            us in June 2006 by the State of Utah once Marion Energy had its bond in            place.

 

Sunray is responsible for costs associated with compliance with State of            California requirements for the plugging and abandonment of nonproducing wells. We are            complying with the abandonment requirements and remain in compliance for all            obligations under this program. We cannot assure that Sunray will continue in the            future to remain in compliance with the plugging and abandonment obligations. A bond of            $250,000 is posted with the State of California as security for the plugging,            abandonment, and restoration obligation.

 

Present and future legislation and regulations could cause additional            expenditures, restrictions, and delays in our business, the extent of which cannot be            predicted and which may require us to limit substantially, delay or cease operations in            some circumstances or subject us to various governmental controls. From time to time,            regulatory agencies have proposed or imposed price controls and limitations on            production by restricting the rate of flow of gas and oil wells below actual production            capacity in order to conserve supplies of gas and oil. Because federal energy and            taxation policies are subject to constant revisions, no prediction can be made as to            the ultimate effect of such governmental policies and controls on our            operations.

 

9

 

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***State and Local Regulation of Drilling and            Production***

             

State regulatory authorities have established rules and regulations            requiring permits for drilling, drilling bonds, and reports concerning drilling and            producing activities. Such regulations also cover the location of wells, the method of            drilling and casing wells, the surface use and restoration of well locations, the            plugging and abandoning of wells, the density of well spacing within a given area, and            other matters. States in which we have properties also have statutes and regulations            governing a number of environmental and conservation matters. We believe we are            currently in full compliance with all material provisions of such            regulations.

 

***Federal Leases***

             

We conduct significant portions of our activities under federal gas and            oil leases. These operations must be conducted in accordance with detailed federal            regulations and orders that regulate, among other matters, drilling and operations on            these leases and calculation and disbursement of delay rentals and royalty payments to            the federal government.

 

***Safety and Health Regulations***

             

We must also conduct our operations in accordance with various laws and            regulations concerning occupational safety and health. Currently, we do not foresee            expending material amounts to comply with these occupational safety and health laws and            regulations. However, since such laws and regulations are frequently changed, we are            unable to predict the future effect of these laws and regulations.

 

**Employees and Consultants**

 

We currently have 23 employees, all of whom are employed on a full-time            basis. Our employees are not represented by a collective bargaining organization. We            consider our relationship with our employees to be satisfactory. We also regularly            engage consultants to provide specific professional services, particularly to assist us            in our gas and oil exploration and related activities.

 

**Offices and Facilities**

 

Our headquarters at 8290 West Sahara Avenue, Suite 186, Las Vegas,            Nevada 89117, are leased on a year-to-year basis.

 

**Competition**

 

All aspects of the energy industry, including gas and oil production,            are extremely competitive, and we compete in the search for and acquisition of gas and            oil leases and the exploration for gas and oil with firms, including major gas and oil            companies, that possess substantially greater financial, technical, and managerial            resources than we do. In addition, the sale of gas and oil programs is extremely            competitive, and we are at a significant disadvantage in competing with companies that            have more extensive operating histories than we do, that benefit from repeat investors,            that have their own internal sales forces, and/or that have long-established            relationships with brokerage firms.

 

10

 

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            The            production and marketing of gas and oil are affected by a number of factors that are            beyond our control or the control of any operator of properties in which we have an            interest, the effect of which cannot be accurately predicted. These factors include            actions by foreign oil producing nations, crude oil imports, the availability of            adequate gas for airlines and other transportation facilities, availability and            marketing of competitive fuels and other matters affecting the ability of the market,            such as fluctuating supply and demand, the regulation of allowable production by            governmental authorities, and other regulations relating to the transportation and            marketing of gas transported or sold in interstate commerce. All of the factors are            variable and depend upon economical and political forces that cannot be            predicted.

 

**Glossary**

 

|   | The following terms have the indicated meaning when used                            in this report: |
|--------|-----------------------------------------------------------------------------------------------------|

 

**“Carried”**or**“Carry”**refers to an agreement under which one party (carrying party) agrees to            pay for all or a specified portion of costs of another party (carried party) on a            property in which both parties own a portion of the working interest.

             

**“Field”**means an area            consisting of a single reservoir or multiple reservoirs all grouped on or related to            the same individual geological structural feature and/or stratigraphic            conditions.

             

**“Formation”**means an            underground geological formation that is the portion of the larger formation that has            sufficient porosity and permeability to constitute a reservoir.

             

**“Gross”**means, when referring            to wells or acres,the total number of acres or wells, as the case may be, in which an            interest is owned, either directly or through a subsidiary or other enterprise in which            we have an interest.

             

**“Net”**means, when referring to            wells or acres, the fractional ownership working interests held by us, either directly            or through a subsidiary or other enterprise in which we have an interest, multiplied by            the gross wells or acres.

             

**“Net revenue interest”**means            the percentage of revenue due an interest holder in a property, net of royalties and            other burdens on the property.

             

**“Proved reserves”**means the            estimated quantities of crude oil, gas and gas liquids that geological and engineering            data demonstrate with reasonable certainty to be recoverable in future years fromknown            reservoirs under existing economic and operating conditions,*i.e.,*prices and costs as of the date the            estimate is made. “Proved reserves” may be developed or            undeveloped.

             

**“Reservoir”**means a porous and            permeable underground formation containing a natural accumulation of producible gas            and/or oil that is confined by impermeable rock or water barriers and that is distinct            and separate from other reservoirs.

             

**“Unit”**refers to an agreement,            established either voluntarily by various lease owners or at the insistence of            regulatory authorities, uniting all leases in a field or other common geological or            geophysical feature to operate under a cooperative or unit plan. Once the unit is            approved, all operations within the unit area are administered as if there were a            single lease.

             

**“Working interest”**is the            interest created by the execution of a gas and oil lease. The owner of 100% working            interest has the exclusive right to explore for gas and oil and the obligation to pay            100% of the costs of drilling, completion, and producing any gas or oil            discovered.

 

11

 

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**ITEM 3. LEGAL PROCEEDINGS**

 

On January 17, 2003, we were named as a defendant along with Edward Mike            Davis in a lawsuit filed by Thomas Kelly in the Seventh Judicial District Court in and            for Carbon County, Utah, regarding the overriding royalty interest of certain wells            located within the Clear Creek Unit. Mr. Kelly’s claim was that            Mr. Davis had committed fraud in connection with the transfer of an overriding            royalty interest. This lawsuit was dismissed in December 2006.

 

On July 21, 2006, our Sunray subsidiary filed suit in the Superior Court            of the State of California, Kern County, Metropolitan Division, against Bruce Batch            d/b/a Alexander Petroleum and Emil Batch d/b/a Sunwest Petroleum. Sunray purchased oil            and gas leases from the defendants and title to the leases was not delivered to Sunray            as required by the agreement. Sunray discontinued payment to the defendants after            filing the litigation. Subsequently, a portion of the leases were delivered to Sunray.            We have moved for this matter to be consolidated with the Hot Coffee matter described            below for arbitration.

 

On August 3, 2006, our Sunray subsidiary filed suit in the Superior            Court of the State of California, Kern County, Metropolitan Division, against Roy and            Lynn Kirkorian, seeking specific performance under an agreement that provided for            Sunray to acquire 60 acres of land. The parties have settled, subject to an approved            parcel map that will facilitate the transfer of the property in question from the            defendants to Sunray. We anticipate the closing of this purchase within the next 12            months from the filing date.

 

On March 14, 2007, Hot Coffee LLC filed suit against our Sunray            subsidiary in the Superior Court of the State of California, Kern County, Metropolitan            Division, related to the Armstrong lease, which is one of the leases Sunray contracted            to purchase as part of the Batch leases. Hot Coffee LLC does not recognize the Batch            lease or the transfer to Sunray of the Armstrong lease. We have moved for this matter            to be consolidated with the Batch matter described above for arbitration.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY            HOLDERS**

 

**Appointment of New Directors**

 

On March 2, 2005, Larry Rowland was elected to serve as director until a            successor is elected and qualified by majority written consent of our stockholders,            with stockholders representing 6,306,667, or approximately 57%, of the 11,071,952 then            issued and outstanding shares approving the action. On March 9, 2007, Mark T. Davis was            elected to serve as director by majority written consent of our stockholders of the            then issued and outstanding shares approving the action.

 

**Amendment to Articles of Incorporation and Approval of Stock            Splits**

 

On January 26, 2007, a majority of the stockholders voted in favor of a            one-for-100 reverse split of our common stock immediately followed by a 100-for-one            forward split of our common stock, with our authorized capital remaining unchanged at            each step, with those stockholders holding fewer than 100 of our shares of common stock            at the effective time of the reverse split receiving $1.00 for each pre-split share,            and with those stockholders holding 100 or more shares of common stock at the effective            time of the reverse split not being entitled to receive any cash for their fractional            interests resulting from the reverse split because the forward split will reconvert            their whole shares and fractional share interests back into the same number of shares            of common stock they held before the effective time of the reverse split.

 

12

 

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            The            board of directors, by its unanimous consent on January 26, 2007, deemed that it was in            our best interest to terminate our obligation to file periodic reports with the            Securities and Exchange Commission (“SEC”). In order to do so, we needed to            have fewer than 300 stockholders of record. Such a reduction in the number of            stockholders would also reduce our expenses related to communicating with our            stockholders. Accordingly, the board of directors determined that it was in our best            interest to effect a one-for-100 reverse split, immediately followed by a 100-for-one            forward split and submitted proposals to a majority of the stockholders for            approval.

 

Additionally, the stockholders voted in favor of amending our Articles            of Incorporation to change our name to Caldera (Mid-Power Resource Corporation, our            wholly-owned subsidiary, changed its name to Caldera P & G.)

 

The above elections were adopted by majority written consent of our            stockholders, with stockholders representing 6,006,667, or approximately 54% of the            11,071,952 then issued and outstanding shares approving the action.

 

**PART II**

 

**ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND            SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**

 

Our common stock has been quoted on the Pink Sheets since 2002. The            trading volume of the common stock is extremely limited. This limited trading volume            creates the potential for significant changes in the trading price of the common stock            as a result of relatively minor changes in the supply and demand. It is likely that            trading prices and volumes for the common stock will fluctuate in the future, without            regard to our business activities.

 

The following table sets forth for the fiscal year periods indicated the            high and low closing prices for our common stock as quoted under the symbol            “CLDE” on the Pink Sheets:

 

|                                     | **Low** |   | **High** |
|------------------------------------------|---------|--------|----------|
|                                     |    |   |     |
| **2008:**                                |    |   |     |
| Third Quarter (through January 17, 2008) | $0.0001 |   | $0.001   |
| Second Quarter                           | 0.01    |   | 0.12     |
| First Quarter                            | 0.05    |   | 0.12     |
|                                     |    |   |     |
| **2007:**                                |    |   |     |
| Fourth Quarter*                          | 0.05    |   | 0.05     |
| Third Quarter                            | 0.05    |   | 0.05     |
| Second Quarter                           | 0.15    |   | 0.15     |
| First Quarter                            | 0.15    |   | 0.15     |
| **2006:**                                |    |   |     |
| Fourth Quarter                           | 0.15    |   | 0.15     |
| Third Quarter*                           | 0.15    |   | 0.15     |
| Second Quarter*                          | 0.15    |   | 0.15     |
| First Quarter                            | 0.15    |   | 0.15     |

 

 

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|           | **Low** |   | **High** |
|----------------|---------|--------|----------|
|           |    |   |     |
| **2005:**      |    |   |     |
| Fourth Quarter | 0.15    |   | 0.15     |
| Third Quarter  | 0.15    |   | 0.15     |
| Second Quarter | 0.10    |   | 0.15     |
| First Quarter  | 0.10    |   | 0.10     |

________________

| * | There were no transactions in our common stock reported                            during these respective quarters. |
|---|----------------------------------------------------------------------------------------------------------------------|

 

|   | As of January 17, 2008, we had approximately 240                            stockholders of record. |
|--------|-----------------------------------------------------------------------------------------------------|

 

As a result of our name change to Caldera, NASDAQ assigned a new trading            symbol on March 5, 2007. The stock is quoted under the symbol CLDE and trades continue            to be reported on the Pink Sheets.

 

**Penny Stock Regulations**

 

Our stock is presently regulated as a penny stock and broker-dealers            will be subject to regulations that impose additional requirements on us and on            broker-dealers that want to publish quotations or make a market in our common stock.            The SEC has promulgated rules governing over-the-counter trading in penny stocks,            defined generally as securities trading below $5 per share that are not quoted on a            securities exchange or NASDAQ or which do not meet other substantive criteria. Under            these rules, our common stock is currently classified as a penny stock. As a penny            stock, our common stock is currently subject to rules promulgated by the SEC that            impose additional sales practice requirements on broker-dealers that sell such            securities to persons other than established customers and institutional accredited            investors. For transactions covered by the rule, the broker-dealer must make a special            suitability determination for the purchaser and receive the purchaser’s written            consent to the transaction prior to sale. Further, if the price of the stock is below            $5 per share and the issuer does not have $2,000,000 or more net tangible assets or is            not listed on a registered national securities exchange or NASDAQ, sales of such stock            in the secondary trading market are subject to certain additional rules promulgated by            the SEC. These rules generally require, among other things, that brokers engaged in            secondary trading of penny stocks provide customers with written disclosure documents,            monthly statements of the market value of penny stocks, disclosure of the bid and asked            prices, and disclosure of the compensation to the broker-dealer and the salesperson            working for the broker-dealer in connection with the transaction. These rules and            regulations may affect the ability of broker-dealers to sell our common stock, thereby            effectively limiting the liquidity of our common stock. These rules may also adversely            affect the ability of persons that acquire our common stock to resell their securities            in any trading market that may exist at the time of such intended sale.

 

**Dividend Policy**

 

We have never paid cash dividends on our common stock and do not            anticipate that we will pay dividends in the foreseeable future. We intend to reinvest            any future earnings to further expand our business.

 

**Transfer Agent**

 

Our stock transfer agent is Computershare Trust Company, N.A., 1745            Gardena, Second Floor, Glendale, California, 91204-2991, telephone number            818-502-1404.

 

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**Stock Options and Warrants**

 

|   | As of January 17, 2008, we do not have any stock options                            or warrants outstanding. |
|--------|--------------------------------------------------------------------------------------------------------------|

 

 

**ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF            OPERATION**

 

**General**

 

Our primary focus has been the acquisition of oil and gas properties for            exploration and development. The largest acquisition to date has been the Clear Creek            Unit. Clear Creek is comprised of 17,197 gross acres in Carbon and Emery Counties,            Utah. We have also acquired additional properties in Kern County, California, for            exploration and development.

 

|   | In order to implement our plan, we: |
|--------|-------------------------------------|

 

|   | **•** | completed, on June 14, 2002, our acquisition of gas and                            oil leases on approximately 17,197 gross acres comprising the Clear                            Creek Unit in Carbon and Emery Counties, Utah, for $5,500,000 in                            cash; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | **•** | continued conducting well exploration and development in                            the Clear Creek Unit through the years 2003, 2004 and 2005; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

             

|   | **•** | entered into a farmout agreement for the Clear Creek                            Unit with Marion Energy in February 2005; and |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | sold the Clear Creek Unit to Marion Energy and retained                            a 12.5% net profits interest in September 2006. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------|

 

We have not earned revenues under our license to trade and generate            electric power throughout the United States. While we continue to hold this license, we            are not reviewing opportunities in distributed power generation projects or            trading.

 

As of June 30, 2006, we had an accumulated deficit of approximately            $36,163,000, substantial recurring losses, and only nominal revenues. Accordingly, the            report of our independent registered public accounting firm on our consolidated            financial statements as of June 30, 2006, and for the year then ended contains an            explanatory paragraph respecting our ability to continue as a going concern.

 

**Results of Operations**

 

During the year ended June 30, 2006, we had revenues of approximately            $688,000 from the sale of oil from our California producing properties, while during            the preceding fiscal year, we had revenues of approximately $398,000. We incurred total            costs and expenses of approximately $2,400,000 during the year ended June 30, 2006,            including $1,226,000 in general and administrative expenses, $1,000 in exploration            costs, and $1,162,000 in production expenses, for a loss from operations of            approximately $1,712,000. The substantial decrease in costs and expenses from the last            fiscal year is primarily due to no impairment of oil and gas properties which            approximated $26,295,000 in fiscal 2005.

 

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            We            recognized total other expenses of $712,000 in the year ended June 30, 2006, related to            the interest expense of approximately $877,000 exceeding the gain on sale of assets and            interest income in the amount of $165,000. This compares to net other income of            $2,832,000 in the year ended June 30, 2005, which primarily relates to the gain on sale            of assets of $3,810,000 netted against interest expense of $1,085,000.

 

**Liquidity and Capital Resources**

 

During the year ended June 30, 2006, we relied on cash provided by our            operating activities to fund our investing and financing activities. Operating            activities provided cash of approximately $2,257,000, principally to fund our debt            reduction of $2,196,000, and asset purchases in the amount of $439,000.

 

Our operating activities included non-cash expenses of approximately            $113,000 for depreciation, $79,000 for accretion expense, $284,000 for cash provided            from accounts receivable and prepaid expenses and $4,144,000 in cash provided from            notes receivable, and $26,000 for decreases in accounts payable and accrued            liabilities. Investing activities used cash of $440,000 for the purchase of equipment.            Decrease in cash from financing activities was due to a debt reduction of $2,196,000,            of which $2,000,000 was for the reduction of debt with SCRS Investors, arelated party which is 47% controlled by an officer and director of the            Company and this entity is a stockholder of the Company.. At June 30, 2006, we had cash            and cash equivalents of approximately $4,000.

 

As of June 30, 2006, we had current assets of approximately $282,000 and            current liabilities of $14,031,000, for a working capital deficit of approximately            $13,749,000. We require capital to fund our operating activities, exploration, and            development and related activities on our various gas and oil properties. We currently            estimate that our operating activities, excluding exploration expenses, require            approximately $600,000 in cash per quarter.

 

In April 2007 we established a new source of funding from All Capital            Funding, LLC (“All Capital Funding”), a related party solely owned by Jim            Scott, our president, chief executive officer, and a director. Prior to April 2007, our            only credit facility was with SCRS Investors.

 

We have not established any source of funding except for our credit            facility with All Capital Funding.

 

SCRS Investors does not have the cash or cash items available at this            time and has provided us with no assurances that it will have funds available to us for            continued funding of our activities.

 

|   | We are currently seeking additional capital from                            unaffiliated, independent sources. |
|--------|----------------------------------------------------------------------------------------------------------------|

 

We may also obtain funds for existing or new gas and oil projects from            strategic alliances with other energy or financial partners, including All Capital            Funding or other affiliates, which may dilute the interest of our existing stockholders            or our interest in the specific project financed. There can be no assurance that            additional funds could be obtained or, if obtained, would be on terms favorable to            us.

 

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**Commitments and Contingencies**

 

We remain responsible for costs associated with compliance with            comprehensive federal, state, and local laws and regulations governing the storage,            use, and discharge of materials into the environment, the remediation of environmental            impacts, and other matters relating to environmental protection. Our subsidiary owning            and operating our Clear Creek property assumed liability for well plugging and            abandonment and well-site restoration costs for any of seven nonproducing gas wells in            the field that were not returned to production within five years. We posted a cash bond            of $184,000 with the State of Utah as security for this plugging, abandonment and            restoration obligation. Upon the sale of the Clear Creek property, the liabilities            associated with well plugging and abandonment and well-site restoration costs were            assumed by Marion Energy. As such, the State of Utah released the cash bond in the            amount of $184,000 to us in June 2006.

 

Sunray is responsible for costs associated with compliance with State of            California requirements for the plugging and abandonment of nonproducing wells. We are            complying with the abandonment requirements and remain in compliance for all            obligations under this program. We cannot assure that the subsidiary will continue in            the future to remain in compliance with the plugging and abandonment obligations. A            bond of $250,000 is posted with the State of California as security for the plugging,            abandonment, and restoration obligation.

 

**ITEM 7. FINANCIAL STATEMENTS**

 

Our consolidated financial statements, including the report of            independent registered public accounting firm, are included beginning at page F-1            immediately following the signature page of this document.

 

**ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS**

**ON            ACCOUNTING AND FINANCIAL DISCLOSURE**

 

|   | None. |
|--------|-------|

 

 

**ITEM 8A. CONTROLS AND PROCEDURES**

 

We maintain disclosure controls and procedures that are designed to            ensure that information required to be disclosed by us in the reports that we file or            submit to the SEC under the Securities Exchange Act of 1934, as amended, is recorded,            processed, summarized, and reported within the time periods specified by the SEC rules            and forms, and that information is accumulated and communicated to our management,            including our principal executive and principal financial officer (whom we refer to in            this periodic report as our Certifying Officer), as appropriate to allow timely            decisions regarding required disclosure. Our management evaluated, with the            participation of our Certifying Officer, the effectiveness of our disclosure controls            and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) as of            June 30, 2006, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon            that evaluation, our Certifying Officer concluded that, as of June 30, 2006, our            disclosure controls and procedures were ineffective.

 

There were no changes in our internal control over financial reporting            that occurred during our most recently completed fiscal quarter that have materially            affected, or are reasonably likely to materially affect, our internal control over            financial reporting.

 

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**ITEM 8B. OTHER INFORMATION**

 

On February 17, 2005, Michael T. Maloney and Gary G. Lawley resigned            from the board of directors. On March 2, 2005, the stockholders, acting by majority            written consent, elected Larry Rowland to serve as a director. On March 9, 2007, the            stockholders, acting by majority written consent, elected Mark T. Davis to serve as a            director.

 

**PART III**

 

**ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND            CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**

 

**Executive Officers and Directors**

 

Our amended and restated articles of incorporation provide for the            election of one-third of our board of directors at each annual meeting of stockholders,            with each director to serve until the end of his or her three-year term and until such            director’s successor is elected and qualified. Officers are elected and serve at            the pleasure of the board of directors.

 

The following table sets forth the name, age, position, and term            expiration date of each of our current directors and executive officers:

 

| **Name**       |   | **Age** |   | **Title**                                                                  |
|----------------|--------|---------|--------|----------------------------------------------------------------------------|
|           |   |    |   |                                                                       |
| James W. Scott |   | 56      |   | Director, Chief Executive Officer and                            President |
| Larry Rowland  |   | 68      |   | Director                                                                   |
| Mark T. Davis  |   | 53      |   | Director                                                                   |

 

The principal occupation, title, and business experience of our            executive officers and directors during the past five years, including the names and            locations of employers, are indicated below.

 

James W. Scott was appointed our chief executive officer, president, and            chairman of the board in June 2001. From 1996 through early 2001, Mr. Scott served            as president, chief executive officer, and director of EARTHCO, a Nevada corporation            that owned and operated major developmental and mining properties and synthetic fuel            plants throughout the United States. Mr. Scott played a major role in the            identification of Section 29 tax credits for coal recovery and processing facilities,            which allowed EARTHCO to design and develop a process system. EARTHCO was one of the            very few companies that possessed a complete program for coal recovery, processing,            utilization, enhancement, and marketing. Previously, Mr. Scott has been involved            as the owner and operator of a real estate development company, a nonhazardous waste            remediation company that operated in California, Nevada, and Utah, and has been an            individual investor in several companies and projects.

 

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            Larry            Rowland was appointed director of Sunray, formerly known as MaxCo in September 2001 and            vice president in December 2002. He was then appointed director of Caldera and Caldera            P & G in March 2005. Mr. Rowland handles the daily operations of            Sunray and is responsible for the acquisition of additional leases on Sunray’s            behalf. Mr. Rowland has worked in the oil industry since 1964 and began his career            as an engineering technician. He then moved on as a drilling and production manager for            a medium-sized independent oil company. In 1986, Mr. Rowland formed his own            company and became an independent oil and drill consultant in Bakersfield, California.            During his career in the oil business, Mr. Rowland was responsible for designing,            drilling, and completing 350 oil wells located in Kern County and San Luis Obispo            County.

 

Mark T. Davis has served as our director since March 9, 2007, and brings            to the board his expertise in legal matters as well as knowledge in the financial            aspects of real property and resource acquisition and development. Prior to this            appointment, Mr. Davis served as our corporate counsel until his resignation on            December 14, 2004. Additionally, Mr. Davis has acted as corporate counsel to            public and private companies in the real estate, natural resources, banking and            insurance industries for over 20 years.

 

|   | The board of directors has no standing audit or                            compensation committees. |
|--------|-----------------------------------------------------------------------------------------------------|

 

**Compliance with Section 16(a) of the Securities Exchange            Act**

 

We do not have a class of equity securities registered under Section 12            of the Securities Exchange Act. Accordingly, our executive officers, directors, and            beneficial owners of more than 10% of stock are not subject to Section 16 of the            Securities Exchange Act.

 

**Code of Ethics**

 

We have adopted a code of ethics that applies to our chief executive            officer and chief financial officer, who also performs the functions of a chief            accounting officer. A copy of the code of ethics will be provided upon request, without            charge.

 

**ITEM 10. EXECUTIVE COMPENSATION**

 

**Summary Compensation**

 

The following table sets forth, for our last two fiscal years, the            annual compensation earned by, awarded to, or paid to the person who was our chief            executive officer as of the end of the last fiscal year:

 

| **Name and Principal Position** |   | **Year Ended                            June 30** |   |  

**Salary ($)** |
|---------------------------------|--------|---------------------------------------------------|--------|------------------------|
| James W. Scott                  |   | 2006                                              |   | 249,559                |
| President (CEO)                 |   | 2005                                              |   | 228,690                |

 

We employ James W. Scott under an employment agreement and related            confidentiality and noncompetition agreement dated May 8, 2002, at a salary at the rate            of $180,000 per annum for a term continuing through December 31, 2002, automatically            renewing annually for successive one-year terms unless terminated by either party upon            six months’ prior notice, with an annual salary increase of at least 10%. The            terms of our employment agreement with Mr. Scott were not the result of            arm’s-length negotiations. We are accruing Mr. Scott’s salary as an            expense, but Mr. Scott has agreed orally to defer payment until funds are            available from cash flow from operations.

 

19

 

----

**Director’s Compensation**

 

We reimburse our director who is not an employee for the costs of            attending meetings of the board of directors, but do not otherwise compensate our            directors.

 

**Options Granted to Officers, Directors, Employees and            Consultants**

 

We did not grant any options to officers, directors, employees, or            consultants in the fiscal years ended June 30, 2005, or 2006, and no such options are            currently outstanding.

 

**ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND            MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

Set forth below is the name of each person who owns of record, or is            known by us to own beneficially, 5% or more of the 10,840,468 shares of our issued and            outstanding common stock as of January 17, 2008:

 

| **Name of Person or Group**                                                    | **Nature of Ownership**       | **Amount** |   | **Percent** |
|--------------------------------------------------------------------------------|-------------------------------|------------|--------|-------------|
| **Principal Stockholders:**                                                    |                          |       |   |        |
| James W. Scott(1)                                                              | Common Stock                  | 5,283,473  |   | 48.8%       |
| 8290 W Sahara Avenue, Suite 186                                                |                          |       |   |        |
| Las Vegas, NV 89117                                                            |                          |       |   |        |
|                                                                           |                          |       |   |        |
| Debra M. Barnett(2)                                                            | Common Stock                  | 978,250    |   | 9.0         |
| 1126 2nd Street                                                                |                          |       |   |        |
| Sacramento, CA 95814                                                           |                          |       |   |        |
|                                                                           |                          |       |   |        |
| BNL Family Partners, Ltd.                                                      | Common Stock                  | 544,722    |   | 5.0         |
| 3753 Howard Hughes Parkway, Suite 135                                          |                          |       |   |        |
| Las Vegas, NV 89169                                                            |                          |       |   |        |
|                                                                           |                          |       |   |        |
| **Directors:**                                                                 |                          |       |   |        |
| James W. Scott                                                                 | ----------See above---------- |
|                                                                           |                          |       |   |        |
| Larry Rowland                                                                  | Common Stock                  | -          |   | -           |
| 8290 W Sahara Avenue, Suite 186                                                |                          |       |   |        |
| Las Vegas, NV 89117                                                            |                          |       |   |        |
|                                                                           |                          |       |   |        |
| Mark T. Davis(3)                                                               | Common Stock                  | 679,694    |   | 6.3         |
| 8290 W Sahara Avenue, Suite 186                                                |                          |       |   |        |
| Las Vegas, NV 89117                                                            |                          |       |   |        |
|                                                                           |                          |       |   |        |
|                                                                           |                          |       |   |        |
| **All Executive Officers and Directors as a                            Group** | Common Stock                  | 5,963,167  |   | 55.2        |
| **(3 persons):**                                                               | Total                         | 5,963,167  |   | 55.2%       |

                                                         

| (1) | Mr. Scott was the beneficial owner of 6,006,667                            shares owned by SCRS Investors, of which he owns approximately 47% and                            is still the beneficial owner of 300,000 shares owned by Nimitz                            Development, Inc., an affiliated corporation. On August 4, 2006,                            SCRS Investors transferred its 6,006,667 shares to EARTHCO as repayment                            of a debt and, subsequently, on January 19, 2007, EARTHCO distributed                            those shares to its five stockholders. Mr. Scott owns                            approximately 83% of EARTHCO and currently is the beneficial owner of                            4,983,473 of Caldera stock that was transferred and distributed by                            EARTHCO. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Ms. Barnett is an employee of Sunray. |
|-----|--------------------------------------------|

| (3) | Mr. Davis was a recipient of 360,694 shares of                            Caldera stock distributed by EARTHCO to its shareholders and is the                            beneficial owner of a total of 679,694 shares. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

20

 

----

**Equity Compensation Plan Information**

 

As of the end of our most recent fiscal year on June 30, 2006, we had            500,000 options authorized for issuance under equity compensation plans that had been            approved by the stockholders and none under equity compensation plans that were not            approved by the stockholders.

 

|                                                        |   | **Number                            of securities to be issued upon exercise of outstanding options,                            warrants and rights (a)** |   | **Weighted                            average exercise price of outstanding options, warrants and rights                            (b)** |   | **Number of securities remaining available for future                            issuance under equity compensation plans (excluding securities                            reflected in column (a) (c)** |
|-------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                        |   |                                                                                                                                                      |   |                                                                                                                                      |   |                                                                                                                                                                                                     |
| Equity compensation

plans approved by security holders     |   |  

--                                                                                                                                                |   |  

--                                                                                                                                |   |  

                             

  500,000                                                                                                                                               |
| Equity compensation

plans not approved by security holders |   |  

                             

   --                                                                                               |   |  

                             

   --                                                                               |   |  

                             

--                                                                                                                                                           |
| Total                                                       |   |    --                                                                                                                                           |   |                                                                                                                                      |   |   500,000                                                                                                                                                                                           |

 

In June 2002, the stockholders adopted the 2002 Stock Option and            Purchase Plan by majority written consent, with stockholders representing 52% of the            7,025,244 then-issued and outstanding shares approving the action. Under the plan, we            may grant options to purchase a total of 500,000 shares to our employees, directors,            consultants, and others.

 

**ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR            INDEPENDENCE**

 

The following transactions between related parties were not the result            of arm’s-length negotiations, but are on terms that, in the opinion of the board            of directors, are fair to us from a financial point of view. However, we have not            obtained any independent evaluation of the terms of the following transactions to            determine whether they were fair to us from a financial point of view.

 

**Additional Loans from SCRS Investors**

 

In addition to our $25,500,000 credit facility with SCRS Investors, we            have obtained funds from SCRS Investors on several other occasions.

 

|   | **•** | During our fiscal year 2005, we borrowed working capital                            funds from SCRS Investors at various times in the aggregate amount of                            $2,522,399. The loans are at 9% interest per annum, and have various                            maturity dates from April 2005 through June 30, 2007. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | During our fiscal year 2006, we paid down on the working                            capital funds from SCRS Investors at various times a net amount of                            $2,013,887. The loans are at 9% interest per annum, and have various                            maturity dates from April 2006 through June 30, 2007. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

21

 

----

**Sales to Well Pro**

 

In June 2004, Sunray sold an oil and gas lease (known as the C&L or            Crofton Coffee lease) and a workover production rig to Well Pro, a related party in            which Jim Scott, our chief executive officer and a director, holds a controlling            interest. Well Pro gave Sunray a promissory note of $100,000 for the lease and a            promissory note of $65,000 for the workover production rig. Each note accrued interest            at the rate of 8% per annum and was due one year from the date of execution. In May            2005, these notes were repaid by offsetting the amounts due from Well Pro to Sunray            against amounts due from Sunray to Well Pro.

 

In August 2004, Sunray entered into a purchase contract to purchase 59            acres of land from an unaffiliated third party for future development and oil            production. Sunray obtained a loan of approximately $1 million for the purchase. With            the changing real estate market and Sunray’s unsuccessful attempt to participate            in the development of the oil resources, Sunray sold this asset in April 2005 for an            assumption of Sunray’s remaining debt on the property. This property was acquired            by Kern Landmark and then subsequently sold to Trimco. Sunray holds a 65% membership            interest in Kern Landmark and Jim Scott is the Manager. Jim Scott and Mark T. Davis are            both Managing Members of Trimco.

 

**Possible Future Transactions**

 

We anticipate that in the future we may enter into additional agreements            with an affiliate or other related parties in transactions that will not be the result            of arm’s-length negotiations. We have not established any procedures for            resolving conflicts of interest between us and our officers, directors, and principal            stockholders or their respective affiliates. We do not have an audit or other committee            composed of independent directors to review transactions with affiliates to determine            whether they are fair to our stockholders.

 

**ITEM 13. EXHIBITS**

 

| **Exhibit**

**Number*** |   |  

**Title of Document**                                                                                                             |   |  

**Location**                                                                                                           |
|--------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|
|                     |   |                                                                                                                                      |   |                                                                                                                           |
| **Item 3**               |   | **Articles of Incorporation and Bylaws**                                                                                                  |   |                                                                                                                           |
| 3.01                     |   | Amended and Restated Articles of                            Incorporation                                                                 |   | Incorporated by reference from Form 8-K filed July 1,                            2002.

                                  |
| 3.02                     |   | Bylaws                                                                                                                                    |   | Incorporated by reference from Form 8-K filed July 1,                            2002.

                                  |
| 3.03                     |   | Certificate of Amendment to Articles of Incorporation                            (effective 02/16/07)

                              |   | This filing.                                                                                                                   |
| **Item 4**               |   | **Instruments Defining the Rights of Security Holders,                            Including Debentures**                                  |   |                                                                                                                           |
| 4.01                     |   | Specimen stock certificate                                                                                                                |   | Incorporated by reference from Form 10-K filed October                            5, 2001.

                              |

 

 

22

 

----

 

| **Item 10** |   | **Material Contracts**                                                                                                                                                                                                |   |                                                                                                                               |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                  |   |                                                                                                                               |
| 10.22       |   | Termination Agreement between Mid-Power Resource                            Corporation and Marion Energy, Inc.                                                                                                       |   | Incorporated by reference from Form 8-K/A filed                            September 21, 2006.

                              |
| 10.23       |   | Asset Purchase Agreement between and among Mid-Power                            Resource Corporation and Marion Energy, Inc. and Marion Energy                            Limited

                              |   | Incorporated by reference from Form 8-K/A filed                            September 21, 2006.                                     |
| **Item 16** |   | **Letter on Change in Certifying                            Accountant**                                                                                                                                              |   |                                                                                                                               |
| 16.01       |   | Letter from Tanner LC to the Securities and Exchange                            Commission regarding change in certifying accountant dated October 25,                            2006                                |   | Incorporated by reference from Form 8-K filed October                            25, 2006.                                         |
|        |   |                                                                                                                                                                                                                  |   |                                                                                                                               |
| **Item 21** |   | **Subsidiaries of the Registrant**                                                                                                                                                                                    |   |                                                                                                                               |
| 21.01       |   | Schedule of subsidiaries                                                                                                                                                                                              |   | This filing.

                                                                                                                |
| **Item 31** |   | **Rule 13a-14(a)/15d-14(a)                            Certifications**                                                                                                                                                |   |                                                                                                                               |
| 31.01       |   | Certification of Chief Executive Officer Pursuant to                            Rule 13a-14

                                                                                                                    |   | This filing.                                                                                                                       |
| 31.02       |   | Certification of Chief Financial Officer Pursuant to                            Rule 13a-14

                                                                                                                    |   | This filing.                                                                                                                       |
| **Item 32** |   | **Rule 13a-14(a)/15d-14(a)                            Certifications**                                                                                                                                                |   |                                                                                                                               |
| 32.01       |   | Certification of Chief Executive Officer Pursuant to                            Rule 13a-14

                                                                                                                    |   | This filing.                                                                                                                       |
| 32.02       |   | Certification of Chief Financial Officer Pursuant to                            Rule 13a-14                                                                                                                           |   | This filing.                                                                                                                       |

_______________

| * | All exhibits are numbered with the number preceding the                            decimal indicating the applicable SEC reference number in Item 601 and                            the number following the decimal indicating the sequence of the                            particular document. Omitted numbers in the sequence refer to documents                            previously filed as an exhibit, but no longer required. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

**Audit Fees**

 

The aggregate fees billed by Whitley Penn LLP (“Whitley            Penn”) for professional services rendered for the audit of our consolidated            financial statements for the fiscal years ended June 30, 2005 and 2006, are            $86,988.

 

**Audit Related Fees**

 

Whitley Penn did not bill us for any professional services that were            reasonably related to the performance of the audit or review of consolidated financial            statements for the fiscal years ended June 30, 2006 or 2005, that are not included            under audit fees above.

 

23

 

----

**Tax Fees**

 

Whitley Penn did not perform any tax services for us for the fiscal            years ended June 30, 2006 or 2005.

 

**All Other Fees**

 

Whitley Penn did not perform any services for us or charge any fees            other than the services described above under “Audit Fees” and “Tax            Fees” for the fiscal years ended June 30, 2006 or 2005.

 

**SIGNATURES**

 

In accordance with Section 13 or 15(d) of the Exchange Act, the            registrant caused this report to be signed on its behalf by the undersigned, thereunto            duly authorized.

 

|                   | CALDERA CORPORATION |
|------------------------|---------------------|
|                   |                |   |
|                   |                |   |
| Date: January 23, 2008 | By:                 | /s/ James W. Scott |
|                   |                | James W. Scott, President |
|                   |                | Its Principal Executive Officer |
|                   |                |   |
|                   | CALDERA CORPORATION |
|                   |                |   |
|                   |                |   |
| Date: January 23, 2008 | By:                 | /s/ James W. Scott |
|                   |                | James W. Scott, Principal Executive Officer                            and |
|                   |                | Principal Financial Officer |

 

 

In accordance with the Exchange Act, this report has been signed below            by the following persons on behalf of the registrant and in the capacities and on the            date indicated.

 

Dated: January 23, 2008

| /s/ James W. Scott        |
|---------------------------|
| James W. Scott, Director  |
|  

/s/ Larry Rowland |
| Larry Rowland, Director   |
|  

/s/ Mark T. Davis |
| Mark T. Davis, Director   |

 

 

24

 

 

----

 

**CALDERA CORPORATION**

 

**Index to Consolidated Financial Statements**

             

 

|                                                                               | **Page** |
|------------------------------------------------------------------------------------|----------|
|                                                                               |     |
| Report of Independent Registered Public Accounting                            Firm | F-2      |
|                                                                               |     |
| Consolidated Balance Sheets                                                        | F-3      |
|                                                                               |     |
| Consolidated Statements of Operations                                              | F-4      |
|                                                                               |     |
| Consolidated Statements of Stockholders’                            Deficit  | F-5      |
|                                                                               |     |
| Consolidated Statements of Cash Flows                                              | F-6      |
|                                                                               |     |
| Notes to the Consolidated Financial                            Statements          | F-7      |

 

             

F-1

 

----

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING            FIRM**

 

To            the Board of Directors and Stockholders of

Caldera Corporation

 

We            have audited the accompanying consolidated balance sheets of Caldera Corporation and            subsidiaries, as of June 30, 2006 and 2005, and the related consolidated statements of            operations, changes in stockholders’ deficit, and cash flows for the years then            ended. These consolidated financial statements are the responsibility of the            Company’s management. Our responsibility is to express an opinion on these            consolidated financial statements based on our audits.

 

We            conducted our audits in accordance with the standards of the Public Company Accounting            Oversight Board (United States). Those standards require that we plan and perform the            audit to obtain reasonable assurance about whether the consolidated financial            statements are free of material misstatement. The Company is not required to have, nor            were we engaged to perform, an audit of its internal control over financial reporting.            An audit includes consideration of internal control over financial reporting as a basis            for designing audit procedures that are appropriate in the circumstances, but not for            the purpose of expressing an opinion on the effectiveness of the Company’s            internal control over financial reporting. Accordingly, we express no such opinion. An            audit also includes examining, on a test basis, evidence supporting the amounts and            disclosures in the consolidated financial statements, assessing the accounting            principles used and significant estimates made by management, as well as evaluating the            overall financial statement presentation. We believe that our audits provide a            reasonable basis for our opinion.

 

In            our opinion, the consolidated financial statements referred to above present fairly, in            all material respects, the financial position of Caldera Corporation as of June 30,            2006 and 2005 and the results of their operations and their cash flows for the years            then ended, in conformity with accounting principles generally accepted in the United            States of America.

 

The            accompanying consolidated financial statements have been prepared assuming that the            Company will continue as a going concern. As discussed in Note 2 of the notes to            consolidated financial statements, the Company has suffered recurring losses from            operations, has a net working capital deficiency, and minimal cash, which raise            substantial doubt about its ability to continue as a going concern. Management’s            plans in regard to these matters are also described in Note 2. These consolidated            financial statements do not include any adjustments to reflect the possible future            effects on the recoverability and classification of assets or the amounts and            classification of liabilities that may result from the outcome of this            uncertainty.

 

/s/ Whitley Penn            LLP

 

Fort            Worth, Texas

January            23, 2008

 

             

F-2

 

----

| **CALDERA CORPORATION**                                                        |                                     |                                                                     |                                                     |              |
|--------------------------------------------------------------------------------|------------------------------------------|--------------------------------------------------------------------------|----------------------------------------------------------|-------------------|
| **CONSOLIDATED BALANCE SHEETS**                                                |                                     |                                                                     |                                                     |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
|                                                                           |                                     |                                                                     |                                                     | **June 30, 2006** |   | **June 30, 2005** |
| Assets                                                                         |                                     |                                                                     |                                                     |              |   |   |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Current Assets:                                                                |                                     |                                                                     |                                                     |              |   |
| Cash and cash equivalents                                                      |                                     | $          3,900  |                                                     | $ 381,994    |
| Accounts receivable                                                            |                                     | 64,947                                                              |                                                     | 58,357       |
| Accounts receivable, related party                                             | 12,923                              |                                                                     | 305,891                                             |
| Prepaids and other assets                                                      |                                     | 11,852                                                              |                                                     | 9,396        |
| Notes receivable                                                               |                                     |                                                                     | 178,945                                             |              | 4,323,945  |
| Note receivable, related party                                                 |                                     | 9,365                                                               |                                                     | 8,789        |
| Total Current Assets                                                           |                                     |                                                                     | 281,932                                             |              | 5,088,372  |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Deposits                                                                       |                                     |                                                                     |                                                     | 347,290      |   | 434,912  |
| Property and equipment, net                                                    |                                     | 4,300,015                                                           |                                                     | 3,973,649    |
| Equipment held for sale                                                        |                                     | 175,000                                                             |                                                     | 175,000      |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Total Assets                                                                   |                                     |                                                                     | $    5,104,237                  |              | $    9,671,933  |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Liabilities and Stockholders’ Deficit                                    |                                     |                                                                     |                                                     |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Current Liabilities:                                                           |                                     |                                                                     |                                                     |              |   |
| Accounts payable                                                               |                                     |                                                                     | $       485,050  |              | $    1,665,431  |
| Accounts payable, related party                                                | 121,810                             |                                                                     | -                                                   |
| Accrued liabilities                                                            |                                     |                                                                     | 3,603,299                                           |              | 2,571,089  |
| Notes payable, related party                                                   |                                     | 9,735,119                                                           |                                                     | 11,749,006   |
| Current portion of long-term debt                                              | 85,690                              |                                                                     | 214,391                                             |
| Total Current Liabilities                                                      |                                     | 14,030,968                                                          |                                                     | 16,199,917   |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Long-term debt                                                                 |                                     |                                                                     | 22,983                                              |              | 76,121  |
| Asset retirement obligations                                                   |                                     | 955,569                                                             |                                                     | 876,669      |
| Deferred income taxes                                                          |                                     | 872,000                                                             |                                                     | 872,000      |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Total Liabilities                                                              |                                     |                                                                     | 15,881,520                                          |              | 18,024,707  |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Stockholders’ Deficit                                                    |                                     |                                                                     |                                                     |              |   |
| Preferred stock; $.001 par value; 10,000,000                            shares |                                     |                                                                     |                                                     |
| authorized; none issued and outstanding                                        | -                                   |                                                                     | -                                                   |
| Common stock; $.001 par value; 100,000,000                            shares   |                                     |                                                                     |                                                     |
| authorized: 10,846,952 issued and outstanding                                  | 10,847                              |                                                                     | 10,847                                              |
| Additional paid-in capital                                                     |                                     | 25,375,270                                                          |                                                     | 25,375,270   |
| Accumulated deficit                                                            |                                     | (36,163,400)                                                             |                                                     | (33,738,891)      |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Total Stockholders’ Deficit                                              |                                     | (10,777,283)                                                             |                                                     | (8,352,774)       |
|                                                                           |                                     |                                                                     |                                                     |              |   |   |
| Total Liabilities and Stockholders’                            Deficit   | $    5,104,237  |                                                                     | $    9,671,933                  |

 

             

F-3

 

----

| **CALDERA CORPORATION**                   |                                                                      |            |                                                                                  |                     |
|-------------------------------------------|---------------------------------------------------------------------------|-----------------|---------------------------------------------------------------------------------------|--------------------------|
| **CONSOLIDATED STATEMENTS OF OPERATIONS** |                                                                      |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
|                                      |                                                                      |            |                                                                                  | Year Ended June 30,      |
|                                      |                                                                      |            |                                                                                  | 2006                     |   | 2005 |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Revenues                                  |                                                                      |            | $      688,263                                     |                     | $         398,067  |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Costs and expenses:                       |                                                                      |            |                                                                                  |                     |
| Production expenses                       |                                                                      | 1,161,684  |                                                                                  | 669,733             |
| Exploration costs                         |                                                                      | 1,370      |                                                                                  | 1,299,163           |
| General and administrative                |                                                                      | 1,225,566  |                                                                                  | 1,205,030           |
| Research and development                  | 11,665                                                               |            | -                                                                                |
| Impairment of investment in equipment     | -                                                                    |            | 275,000                                                                          |
| Total costs and expenses                  |                                                                      | 2,400,285  |                                                                                  | 3,448,926           |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Loss from operations                      |                                                                      | (1,712,022)     |                                                                                  | (3,050,859)              |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Other income (expense):                   |                                                                      |            |                                                                                  |                     |
| Interest income                           |                                                                      |            | 9,252                                                                            |                     | 16,299  |
| Interest expense                          |                                                                      |            | (876,821)                                                                             |                     | (1,085,017) |
| Gain on sale of assets                    |                                                                      | 14,568     |                                                                                  | 3,809,663           |
| Other income                              |                                                                      |            | 140,514                                                                          |                     | 90,762  |
| Total other income (expense):             | (712,487)                                                                 |            | 2,831,707                                                                        |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Net loss                                  |                                                                      |            |                                                                                  | $  (2,424,509) |   | $       (219,152) |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Net loss per share - basic and diluted    | $           (0.22) |            | $             (0.02) |
|                                      |                                                                      |            |                                                                                  |                     |   |   |
| Weighted average shares outstanding -     |                                                                      |            |
| basic and diluted                         |                                                                      |            | 10,847,000                                                                       |                     | 10,847,000  |
|                                           |                                                                           |                 |                                                                                       |                          |  |  |  |  |

 

 

             

F-4

 

----

 

| **CALDERA CORPORATION**                                                               |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |
|---------------------------------------------------------------------------------------|--------|--------|--------|-----------------|----------------------------------------------------|----------------------------------------------------|------------|------------|---------------|---------------|-------------------|-------------------|---------------------|---------------------|---------------------|
| **CONSOLIDATED STATEMENTS OF STOCKHOLDERS’                            DEFICIT** |   |   |   |            |                                               |                                               |       |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| **Years ended June 30, 2006 and 2005**                                                |   |   |   |            |                                               |                                               |       |       |          |          |              |              |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              | Additional        |                |                |                |   |
|                                                                                  |   |   |   | Preferred Stock | Common Stock                                       |                                               | Paid-in    |       | Accumulated   |          |              |
|                                                                                  |   |   |   | Shares          |                                               | Amount                                             |       | Shares     |          | Amount        |              | Capital           |                | Deficit             |                | Total |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Balance, July 1, 2004                                                                 |   |   |   | -               |                                               | $        - |       | 10,846,952 |          | $ 10,847 |              | $ 25,208,100 |                | $ (33,519,739) |                | $   (8,300,792) |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Capital contributions                                                                 |   |   |   | -               |                                               | -                                                  |       | -          |          | -             |              | 167,170           |                | -              |                | 167,170  |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Net loss                                                                              |   |   |   | -               |                                               | -                                                  |       | -          |          | -             |              | -                 |                | (219,152)           |                | (219,152) |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Balance, June 30, 2005                                                                |   |   | -      |            | -                                                  |                                               | 10,846,952 |       | 10,847        |          | 25,375,270        |              | (33,738,891)        |                | (8,352,774)         |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Net loss                                                                              |   |   |   | -               |                                               | -                                                  |       | -          |          | -             |              | -                 |                | (2,424,509)         |                | (2,424,509) |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
| Balance, June 30, 2006                                                                |   |   | -      |            | $        - |                                               | 10,846,952 |       | $ 10,847 |          | $ 25,375,270 |              | $ (36,163,400) |                | $ (10,777,283) |
|                                                                                  |   |   |   |            |                                               |                                               |       |       |          |          |              |              |                |                |                |   |
|                                                                                       |        |        |        |                 |                                                    |                                                    |            |            |               |               |                   |                   |                     |                     |                     |  |  |

 

             

F-5

 

----

 

| **CALDERA CORPORATION**                                                         |            |                                                   |            |                                   |                 |
|---------------------------------------------------------------------------------|-----------------|--------------------------------------------------------|-----------------|----------------------------------------|----------------------|
| **CONSOLIDATED STATEMENTS OF CASH FLOWS**                                       |            |                                                   |            |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
|                                                                            |            |                                                   |            |                                   | Years Ended June 30, |
|                                                                            |            |                                                   |            |                                   | 2006                 |   | 2005 |
| Cash flows from operating activities:                                           |            |                                                   |            |                                   |
| Net loss                                                                        |            |                                                   |            | $(2,424,509)                           |                 | $   (219,152) |
| Adjustments to reconcile net loss to net cash                                   |            |                                                   |            |
| provided by (used in) operating activities:                                     |            |                                                   |            |
| Depreciation and depletion                                                      |            | 113,129                                           |            | 81,422                            |
| Gains on sale of oil & gas properties                                       |            | -                                                 |            | (4,069,421)                            |
| Gains on sales of property and equipment                                        | -          |                                                   | (15,103)        |
| Loss of sale of equipment held for sale                                         | -          |                                                   | 275,000    |
| Impairment of equipment held for sale                                           | -          |                                                   | 275,000    |
| Accretion of asset retirement obligations                                       | 78,900     |                                                   | 72,386     |
| Changes in operating assets and liabilities:                                    |            |                                                   |            |
| Accounts receivable                                                             |            |                                                   | (6,590)         |                                   | 3,530           |
| Accounts receivable, related party                                              |            | 292,968                                           |            | (305,891)                              |
| Prepaids and other assets                                                       |            | (2,456)                                                |            | (1,765)                                |
| Notes receivable                                                                |            |                                                   | 4,145,000  |                                   | (4,323,945)          |
| Notes receivable, related party                                                 |            | (576)                                                  |            | (1,589)                                |
| Deposits                                                                        |            |                                                   |            | 87,622                            |                 | (49,566) |
| Accounts payable                                                                |            |                                                   | (1,180,381)     |                                   | 1,069,914       |
| Accounts payable, related party                                                 |            | 121,810                                           |            | -                                 |
| Accrued liabilities                                                             |            |                                                   | 1,032,210  |                                   | 862,357         |
| Net cash provided by (used in) operating                            activities  | 2,257,127  |                                                   | (6,346,823)     |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
| Cash flows from investing activities:                                           |            |                                                   |            |                                   |
| Proceeds from sales of equipment held for                            sale       | -          |                                                   | 175,000    |
| Proceeds from sales of oil & gas                            properties      | -          |                                                   | 6,729,979  |
| Purchases of property and equipment                                             |            | (439,495)                                              |            | (3,130,023)                            |
| Net cash provided by (used in) investing                            activities  | (439,495)       |                                                   | 3,774,956  |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
| Cash flows from financing activities:                                           |            |                                                   |            |                                   |
| Proceeds from notes payable, related party                                      | 2,745,102  |                                                   | 3,311,170  |
| Payments on notes payable, related party                                        | (4,758,989)     |                                                   | (788,771)       |
| Proceeds from long-term debt                                                    |            |                                                   | 35,863     |                                   | 420,000         |
| Payments on long-term debt                                                      |            |                                                   | (217,702)       |                                   | (172,165)            |
| Capital contributions                                                           |            |                                                   | -          |                                   | 167,170         |
| Net cash provided by (used in) financing                            activities  | (2,195,726)     |                                                   | 2,937,404  |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
| Net increase (decrease) in cash and cash                            equivalents | (378,094)       |                                                   | 365,537    |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
| Cash and cash equivalents at beginning of                            year       | 381,994    |                                                   | 16,457     |
|                                                                            |            |                                                   |            |                                   |                 |   |   |
| Cash and cash equivalents at end of year                                        |            | $       3,900  |            | $    381,994  |
|                                                                            |            |                                                   |            |                                   |                 |   |   |

 

             

F-6

 

----

**CALDERA CORPORATION**

 

**Notes to Consolidated Financial Statements**

 

**June 30, 2006 and 2005**

 

| **1.**   **Organization**

**and**

**Summary of**

**Significant**

**Accounting**

**Policies** |   | ***Organization and Business***

Caldera Corporation (formerly known as Mid-Power Service                            Corporation) and affiliates (the “Company”) is incorporated                            under the laws of the state of Nevada. The Company holds gas and oil                            properties for exploration and development and is developing                            energy-related technologies, and to generate and trade electrical                            power. The Company currently focuses principally on the exploration and                            development of gas and oil by initiating exploration of acquired                            property interests and by participating in exploration projects                            sponsored by others.

                                                                                                                                                                                                                                                            |
|------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   | ***Principles of Consolidation***

The consolidated financial statements include the                            accounts of Caldera Corporation (formerly Mid-Power Service                            Corporation) and its wholly owned subsidiaries: Caldera P & G                            (formerly Mid-Power Resource Corporation), a Nevada corporation, Sunray                            Petroleum, Inc., a Nevada corporation (formerly MaxCo Inc.), and                            Emergency Power Systems, LLC, a Nevada limited liability company                            (collectively, “the Company”). All significant                            inter-company transactions have been eliminated in                            consolidation.

                                                                                                                                                                                                                                                                                                      |
|                                                                                                             |   | ***Cash and Cash Equivalents***

The Company considers all highly-liquid investments with                            a maturity of three months or less to be cash equivalents.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|                                                                                                             |   | ***Concentration of Credit Risk***

Financial instruments, which potentially subject the                            Company to concentration of credit risk, consist primarily of accounts                            receivables. Accordingly, the Company performs ongoing credit                            evaluations of its customers and maintains allowances for possible                            losses which, when realized, have been within the range of                            management’s expectations.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
|                                                                                                             |   | The Company maintains its cash in bank deposit accounts                            which, at times, may exceed federally insured limits. The Company has                            not experienced any losses in such accounts. The Company believes it is                            not exposed to any significant credit risk with respect to cash and                            cash equivalents.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
|                                                                                                             |   | ***Accounts Receivable***

The carrying value of the Company’s receivables,                            net of the allowance for doubtful accounts, represents their estimated                            net realizable value. The Company estimates its allowance for doubtful                            accounts based on historical collection trends, the age of outstanding                            receivables, customers’ financial condition and creditworthiness,                            and existing economic conditions. If events or changes in circumstances                            indicate that specific receivable balances may be impaired, further                            consideration is given to the collectibility of those balances and the                            allowance is adjusted accordingly. The Company charges off accounts                            receivable against the allowance for doubtful accounts when an account                            is deemed to be uncollectible.

                              |   |
|                                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

             

F-7

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **1.**   **Organization**

**and**

**Summary of**

**Significant                                   ****Accounting**

**Policies**

***Continued*** |   | ***Oil and Gas Producing                            Activities***

The Company utilizes the successful efforts method of                            accounting for its oil and gas producing activities. Under this method,                            all costs associated with productive exploratory wells and productive                            or nonproductive development wells are capitalized while the costs of                            nonproductive exploratory wells are expensed. If an exploratory well                            finds oil and gas reserves, but a determination that such reserves can                            be classified as proved is not made after one year following completion                            of drilling, the costs of drilling are charged to operations. Indirect                            exploratory expenditures, including geophysical costs and annual lease                            rentals, are expensed as incurred.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                  |   | Unproved oil and gas property costs are capitalized and                            are not amortized pending an evaluation of the exploration results. If                            unproved properties are determined to be productive the related costs                            are transferred to proved oil and gas properties. Oil and gas                            properties that are individually significant are periodically assessed                            for impairment of value. If it is determined that the asset is                            impaired, a loss is recognized at the time of impairment. Capitalized                            costs of producing oil and gas properties, after considering estimated                            dismantlement and abandonment costs and estimated salvage values, are                            depreciated and depleted by the units-of-production method. Support                            equipment and other property and equipment are depreciated over their                            estimated useful lives. The Company also evaluates its proven                            properties in accordance with Statement of Financial Accounting                            Standards (“SFAS”) No. 144, “Accounting for the                            Impairment of Long-Lived Assets.” Long-lived assets held and used                            by the Company are reviewed for impairment whenever events of changes                            in circumstances indicate that their net book value may not be                            recoverable.

                              |
|                                                                                                                                                                                                  |   | The continued carrying value of the Company’s oil                            and natural gas properties depends primarily upon the estimated                            reserves, all of which are currently unproved. If the Company’s                            future exploration efforts do not result in significant proved                            reserves, the Company may be required to record an impairment of its                            oil and natural gas properties.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                  |   | On the sale or retirement of a complete unit of a proved                            property, the cost and related accumulated depreciation, depletion, and                            amortization are eliminated from the property accounts, and the                            resulting gain or loss is recognized. On the retirement or sale of a                            partial unit of proved property, the cost is charged to accumulated                            depreciation, depletion, and amortization with any resulting gain or                            loss recognized in the operating results of the respective                            period.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                  |   | On the sale of an entire interest in an unproved                            property for cash or cash equivalents, any gain or loss on the sale is                            recognized, taking into consideration the amount of any recorded                            impairment if the property had been assessed individually. If a partial                            interest in an unproved property is sold, the amount received is                            treated as a reduction of the cost of the interest retained.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

             

F-8

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **1.**   **Organization**

**and**

**Summary of**

**Significant**

**Accounting**

**Policies**

***Continued*** |   | ***Property and Equipment***

Property and equipment are stated at cost less                            accumulated depreciation. Depreciation is provided using the                            straight-line method over the estimated useful lives of the assets.                            Expenditures for maintenance and repairs are expensed when incurred and                            betterments are capitalized. When assets are sold, retired or otherwise                            disposed of, the applicable costs and accumulated depreciation,                            depletion, and amortization are removed from the accounts, and the                            resulting gain or loss is reflected in operations.

                                                                            |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              |   | ***Income Taxes***

Deferred income taxes arise from temporary differences                            resulting from income and expense items reported for financial                            accounting and tax purposes in different periods. Deferred taxes are                            classified as current or non-current, depending on the classification                            of the assets and liabilities to which they relate. Deferred taxes                            arising from temporary differences that are not related to an asset or                            liability are classified as current or non-current depending on the                            periods in which the temporary differences are expected to                            reverse.

                              |
|                                                                                                                              |   | ***Revenue Recognition***

Revenue is recognized from oil sales at such time as the                            oil is delivered to the buyer. Revenue is recognized from gas sales                            when the gas passes through the pipeline at the wellhead. Oil and gas                            sales are reported net of royalty fees, which were $688,263, and                            $398,067 for the years ended June 30, 2006 and 2005, respectively.                            Revenues from services provided to other well operators are recognized                            when the services have been performed. The Company does not have any                            gas balancing arrangements.

                                                                                      |
|                                                                                                                              |   | ***Use of Estimates in the Preparation of Financial                            Statements***

The preparation of financial statements in conformity                            with accounting principles generally accepted in the United States of                            America requires management to make estimates and assumptions that                            affect the reported amounts of assets and liabilities and disclosure of                            contingent assets and liabilities at the date of the financial                            statements and the reported amounts of revenues and expenses during the                            reporting period. Actual results could differ from these                            estimates.

                                                |
|                                                                                                                              |   | ***Earnings Per Share***

The computation of basic earnings per common share is                            based on the weighted average number of shares outstanding during the                            period. As of June 30, 2006 and 2005, there were no outstanding stock                            options or other common stock equivalents.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |

 

             

F-9

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **1.**   **Organization**

**and**

**Summary of**

**Significant**

**Accounting**

**Policies**

***Continued*** |   | ***Stock-Based Compensation***

When accounting for the issuance of stock options and                            warrants to employees and officers, financial accounting standards                            allow entities the choice between adopting a fair value method or an                            intrinsic value method with footnote disclosures of the pro forma                            effects as if the fair value method had been adopted. The Company has                            opted for the latter approach. Because no options and warrants were                            granted to employees and officers of the Company during the years ended                            June 30, 2006 and 2005, the results of operations would not have                            changed if the fair value method had been used.

                                                                                                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **2.**   **Going**

**Concern**                                                                                    |   | The accompanying consolidated financial statements have                            been prepared assuming that the Company will continue as a going                            concern. As of June 30, 2006, the Company had a working capital                            deficiency and an accumulated deficit and has had substantial recurring                            losses. The consolidated operations of the Company have not had                            sustained profitability and the Company has relied upon debt and equity                            financing, mainly from related parties, to satisfy its obligations.                            These conditions raise substantial doubt about the ability of the                            Company to continue as a going concern. The consolidated financial                            statements do not include any adjustments that might result from the                            outcome of these uncertainties.

                              |
|                                                                                                                              |   | The Company’s ability to continue as a going                            concern is subject to the attainment of profitable production                            operations of its undeveloped oil and gas properties or obtaining                            necessary funding from outside sources. Management’s plan with                            respect to this uncertainty include obtaining debt financing from the                            convertible loan discussed in Note 11, exploring its oil and gas                            properties to obtain proved reserves, evaluating new products and                            markets, and minimizing overhead costs. However, there can be no                            assurance that management will be successful in these                            efforts.                                                                                                                                                                                 |   |
|                                                                                                                                   |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  |

 

| **3.**   **Note**

**Receivable,** |   | As of June 30, note receivable to related parties                            consisted of the following: |
|---------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|
| **Related**                                       |   |                                                                                                     |
| **Party**                                         |   |                                                                                                     | **2006** | **2005** |
|                                              |   | Note receivable from an entity                                                                           |   |   |
|                                              |   | controlled by an officer and board                                                                       |   |   |
|                                              |   | member of the Company, with interest                                                                     |   |   |
|                                              |   | at 8%, due on demand and                                                                                 |   |   |
|                                              |   | unsecured.                                                                                               | $ 9,365 | $ 8,789 |
|                                              |   |                                                                                                     |   |   |
|                                              |   | Total                                                                                                    | $ 9,365 | $ 8,789 |
|                                              |   |                                                                                                     |   |   |

 

             

F-10

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **4.**   **Accrued** |   | Accrued liabilities consisted of the following at June                            30: |
|-------------------------------------|--------|---------------------------------------------------------------------------------------|
| **Liabilities**                     |   |                                                                                  |   |   |
|                                |   |                                                                                  | **2006** | **2005** |
|                                |   | Related party interest payable                                                        | $2,499,155  | $1,724,050  |
|                                |   | Salaries and wages payable                                                            | 916,280  | 659,175  |
|                                |   | Related party expense payable                                                         | 187,864  | 187,864  |
|                                |   |                                                                                  |   |   |
|                                |   | Total                                                                                 | $3,603,299  | $2,571,089  |

 

| **5.**   **Property** |   | As of June 30, property and equipment consisted of the                            following: |
|--------------------------------------|--------|----------------------------------------------------------------------------------------------|
| **and**                              |   |                                                                                         |   |   |
| **Equipment**                        |   |                                                                                         | **2006** | **2005** |
|                                 |   | Exploration and production:                                                                  |   |   |
|                                 |   | Unproved properties                                                                          | $2,806,630  | $2,806,630  |
|                                 |   | Gas and oil equipment                                                                        | 855,899  | 510,909  |
|                                 |   | Vehicles                                                                                     | 179,657  | 88,311  |
|                                 |   | Office furniture and equipment                                                               | 16,965  | 15,143  |
|                                 |   | Capitalized cost related to asset

retirement obligation                                     | 760,250  | 760,250  |
|                                 |   |                                                                                         | 4,619,401  | 4,181,243  |
|                                 |   | Less accumulated depreciation,

depletion, and amortization                                  | (319,386) | (207,594) |
|                                 |   | Total                                                                                        | $4,300,015  | $3,973,649  |

 

| **6.**   **Asset**

**Retirement**

**Obligations** |   | The Company adopted SFAS No. 143, “Accounting for                            Asset Retirement Obligations,” (“SFAS 143”),                            effective July 1, 2002. This accounting standard addresses the fair                            value accounting treatment of a liability for an asset retirement                            obligation (“ARO”) that is recorded when there is a legal                            obligation associated with the retirement of a tangible long-lived                            asset and the liability can be reasonably estimated. Obligations                            associated with the retirement of these assets require recognition in                            certain circumstances: (1) the present value of a liability and                            offsetting asset for an ARO, (2) the subsequent accretion of that                            liability and depreciation of the asset, and (3) the periodic review of                            the ARO liability estimates and discount rates. SFAS 143 primarily                            affects the Company’s accounting for crude oil and natural gas                            producing assets and differs in several respects from previous                            accounting under SFAS 19, “Financial Accounting and Reporting by                            Oil and Gas Producing Companies.”

                             

Prior to fiscal 2005, the Company recorded a liability                            for its asset retirement obligations of $987,529, with a corresponding                            increase to property and equipment. The Company performs periodic                            reviews of its oil and gas assets for any changes in facts and                            circumstances that might require recognition of or adjustment to a                            retirement obligation. The Company has approximately $347,000 of                            deposits at June 30, 2006 that are restricted for the purpose of                            settling this obligation. Upon settlement of the liability, the Company                            will reverse the obligation for the recorded amount and will recognize                            any resulting gain or loss at such time.

                              |
|--------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

             

F-11

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

|                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **6.**   **Asset**

**Retirement**

**Obligations**

***Continued*** |   | In March 2005, the Financial Accounting Standards Board                            (“FASB”) issued FASB Interpretation No. 47,                            “Accounting for Conditional Asset Retirement Obligations –                            An Interpretation of FASB Statement No. 143,” (“FIN                            47”), which was effective for the Company on July 1, 2005. FIN 47                            clarifies that the phrase “conditional asset retirement                            obligation,” as used in SFAS 143, refers to a legal obligation to                            perform an asset retirement activity for which the timing and/or method                            of settlement are conditional on a future event that may or may not be                            within the control of the Company. The obligation to perform the asset                            retirement activity is unconditional even though uncertainty exists                            about the timing and/or method of settlement.

                              |
|                                                                                |   | Uncertainty about the timing and/or method of settlement                            of a conditional asset retirement obligation should be factored into                            the measurement of the liability when sufficient information exists.                            SFAS 143 acknowledges that in some cases, sufficient information may                            not be available to reasonably estimate the fair value of an asset                            retirement obligation. FIN 47 also clarifies when an entity would have                            sufficient information to reasonably estimate the fair value of an                            asset retirement obligation. Upon adoption of FIN 47, the Company did                            not recognize any additional liabilities for conditional retirement                            obligations due to the inability to reasonably estimate the fair value                            of those obligations because of their indeterminate settlement                            dates.

                                                               |
|                                                                                |   | The following table indicates the changes to the                            Company’s asset retirement obligations in the years June 30, 2005                            and 2006:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **2006** | **2005** |
|                                                                                |   | Balance at July 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $876,669 | $1,076,407  |
|                                                                                |   | Liabilities incurred                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | - | 270,990  |
|                                                                                |   | Liabilities settled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | - | (543,113) |
|                                                                                |   | Accretion expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 78,900 | 72,385  |
|                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
|                                                                                |   | Balance at June 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $955,569 | $  876,669  |

 

| **7.**   **Oil and Gas**

**Properties** |   | ***Clear Creek Unit***

The Company held gas leasehold interests in the Clear                            Creek Unit in Carbon and Emery Counties in Utah, which is comprised of                            approximately 17,197 gross acres of land. Non-productive wells have                            been located on the property, and substantial expenditures will be                            required to re-complete these wells, therefore, the Company has                            accounted for the properties as undeveloped. The Company maintained a                            100% working interest in the leasehold of the Clear Creek Unit, and a                            75% net revenue interest, except for two well locations as noted                            below.

                              |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

             

F-12

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **7.**   **Oil and Gas**

**Properties**

***Continued*** |   | The leases were subject to approximately 25% royalty and                            overriding royalties. In addition, an assignee of the former owner held                            a 14.3% working interest, equivalent to a 10% net revenue interest, in                            the Oman #2-20 and the Utah fuel #8 wells. The Company was obligated to                            pay a former overriding royalty holder $200,000 solely out of 5% from                            the net revenue interest received by the Company from oil and gas                            production from certain wells on the Clear Creek Unit. At June 30,                            2004, the gas properties were being carried at a cost of $28,604,982.                            The capitalized cost is subject to impairment if future proved reserves                            cannot be substantiated or the fair value of the properties fall below                            the capitalized costs. No assurance can be given that the Company will                            be successful in its efforts to obtain proved reserves.

                              |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                     |   | The Company entered into a farmout agreement in                            February 2005, with Marion Energy, Inc. (“Marion                            Energy”) for its Clear Creek Unit. Marion Energy is a subsidiary                            of Marion Energy Limited, formerly known as Carpenter Pacific Resources                            Ltd., an Australian company traded on the Australian Stock                            Exchange.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                     |   | Under the terms of the farmout agreement, Marion Energy                            had the opportunity to earn up to a 75% working interest in the unit by                            spending up to $20,000,000 at the rate of $5,000,000 per year for four                            years, commencing with 2005, for pipeline construction, recompletion                            and workover of existing wells, drilling of new wells, and operational                            costs. Of the $20,000,000, $5,000,000 would be expended by Marion                            Energy in carrying the Company for its share of the program. The                            Company remained the operator of the unit, but the agreement                            contemplated making Marion Energy the operator in the future. The                            agreement permitted Marion Energy to elect to drill an exploration well                            deeper than current wells on the unit after the shallower formations                            are tested or at such earlier time as the parties agree.

                                                       |
|                                                                     |   | If Marion Energy carried the Company for $2,500,000 of                            carried expenditures, the Company would be granted options to purchase                            2,500,000 shares of common stock of Marion Energy’s parent                            corporation, Marion Energy Limited (formerly known as Carpenter Pacific                            Resources Ltd.), with an exercise price of AUS$0.40 per share                            (equivalent to $0.35 per share as of January 17, 2008). Options to                            purchase an additional 2,500,000 shares at the same exercise price                            would be granted to the Company in the event the carried expenditures                            reached an aggregate of $4,000,000.

                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                     |   | On September 14, 2006, the Company completed the sale of                            its Clear Creek Unit to Marion Energy Limited. Marion Energy had been                            working in the Company’s Clear Creek Unit under a farmout                            agreement since February 2005. Other than the relationship created                            by the farmout agreement, Marion Energy is an unrelated third party.                            This sale superseded the farmout agreement and, as such, the farmout                            agreement is no longer valid.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

             

F-13

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **7.**   **Oil and Gas**

**Properties**

***Continued***      |   | The Company has retained a 12.5% net profits interest in                            the Clear Creek Unit. In consideration for the sale of the Clear Creek                            Unit, Marion paid to the Company $1,000,000 in cash at closing,                            13,100,000 shares of Marion Energy’s stock, which is traded on                            the Australian Stock Exchange, or ASX, and options to purchase an                            additional 5,000,000 shares of Marion Energy’s stock with an                            exercise price of AU$0.40 per share. The agreement provides for the                            Company to receive options to purchase up to an additional 8,000,000                            shares of Marion Energy’s stock at AU$0.80 per share in the event                            Marion Energy discovers certain threshold levels of proved and probable                            hydrocarbon reserves. On the closing date, the closing price for Marion                            Energy’s ordinary shares on the ASX was AU$0.84 per                            share.

                              |
|-------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                          |   | ***Mountain View Field***

The Company has oil leaseholds in the Mountain View                            Field of the Arvin Area located in Kern County, California. The Company                            maintains a 100% working interest in the leaseholds, which are subject                            to a 16.97% royalty interest to former mineral rights owners on all                            production. The Mountain View Field has multiple leaseholds of oil and                            gas properties. Prior to fiscal 2005, the Company sold its mineral                            rights to two of the leaseholds, the C&L and Crofton Coffee Oil and                            Gas Lease, for a promissory note of $100,000 to an entity controlled by                            an officer of the Company. At June 30, 2006, the remaining leaseholds                            had a carrying value of $100,000.

                                                                                                                                                                                                                                                       |
| **8.**     **Equipment**

**Held for**

**Sale**     |   | As of June 30, 2004, the Company had two GG4A-7                            non-flight Pratt and Whitney turbine engines with a net carrying value                            of $900,000. The Company recorded this investment at the lower of cost                            or market. These engines were held for sale and could provide increased                            power capacity to certain power generating facilities at peak usage                            times. On June 2, 2005, the Company sold one of the engines for                            $175,000 for a loss of $275,000. The remaining engine was impaired by                            approximately $275,000 in the year ended June 30, 2005, to reflect the                            decrease in market value. On January 31, 2007, the Company sold the                            remaining engine for $45,000 for a loss of $130,000.

                                                                                                                                                                                                                                                                           |
| **9.**     **Related Party**

**Notes**

**Payable** |   | As of June 30, 2005 and 2006, the Company had various                            notes payable to SCRS Investors, LLC (“SCRS Investors”), a                            related party which is 47% controlled by an officer and director of the                            Company and this entity is a stockholder of the Company. The notes are                            unsecured, bear interest at 9%, and mature from April 2005 through June                            30, 2007. Some of these notes are in default, however the Company has                            not received notice of any demand or proceedings. The balances as of                            June 30 were as follows:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                          |   | As of June 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **2006** | **2005** |
|                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|                                                                          |   | Note payable—SCRS Investors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $9,735,119 | $11,749,006 |
|                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|                                                                          |   | Interest payable—SCRS Investors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 2,499,155 | 1,724,050 |
|                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
|                                                                          |   | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $12,234,274 | $13,473,056 |
|                                                                               |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |  |  |

 

             

F-14

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **10.**   **Long-Term**

**Debt** |   | Long-term debt consisted of the following at June                            30:

                                                                                                                       |
|--------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             |   |                                                                                                                                                                                                          | **2006** | **2005** |
|                                             |   | Note payable to a financial institution payable in                            monthly payments of $1,561 including interest at 8.99%, due in                            September 2006, secured by vehicles.* | $     5,222  | $   24,810  |
|                                             |   | Note payable to a financial institution payable in                            monthly payments of $1,073 including interest at 4.9%, due in April                            2009, secured by vehicles.       | 34,450  | -  |
|                                             |   | Note payable to Bruce Batch payable in monthly payments                            of $7,091 including interest at 6.0%, due in April 2007, secured by oil                            property.**             | 69,001  | 141,031  |
|                                             |   | Note payable to Sunwest Petroleum payable in monthly                            payments of $14,201 including interest at 6.0%, matured in April 2006,                            secured by oil property.**  | -  | 124,671  |
|                                             |   |                                                                                                                                                                                                          |   |   |
|                                             |   | Total debt                                                                                                                                                                                                    | 108,673  | 290,512  |
|                                             |   |                                                                                                                                                                                                          |   |   |
|                                             |   | Less current portion                                                                                                                                                                                          | (85,690) | (214,391) |
|                                             |   |                                                                                                                                                                                                          |   |   |
|                                             |   | Total long-term debt                                                                                                                                                                                          | $   22,983  | $   76,121  |
|                                             |   |                                                                                                                                                                                                          |   |   |
|                                             |   | *    This note was paid when                            due.                                                                                                                              |   |   |
|                                             |   | **   These notes are the subject of                            current litigation. See Part I. Item 3. Legal Proceedings.                                                                      |

 

|   |   | Future maturities of long-term debt are as                            follows: |
|--------|--------|--------------------------------------------------------------------------------|
|   |   |                                                                           |   |
|   |   | Year ending June 30:                                                           | **Amounts** |
|   |   |                                                                           |   |   |
|   |   | 2007                                                                           | $ | 85,690  |
|   |   | 2008                                                                           |   | 12,042  |
|   |   | 2009                                                                           |   | 10,941  |
|   |   |                                                                           | $ | 108,673  |
|   |   |                                                                           |   |   |

 

             

F-15

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **11.**   **Related Party**

**Convertible**

**Loan** |   | The Company has entered into a convertible loan                            agreement with SCRS Investors, a related party that is 47% controlled                            by an officer and director of the Company and this entity is a                            stockholder of the Company. The Company may borrow up to $25,500,000,                            payable in 20 consecutive equal quarterly payments of principal and                            interest at 10% per annum commencing on December 31, 2007. The balance                            on the loan and accrued interest related thereto is convertible into                            the Company’s common stock any time at the option of SCRS                            Investors at $1.50 per share. The loan is secured by the                            Company’s interest in the Clear Creek Unit properties. As of June                            30, 2006 and 2005, there was no outstanding balance on the                            loan. |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **12.**   **Income**

**Taxes**                        |   | The provision for income taxes differs from the amount                            computed at federal statutory rates as follows at June 30:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **2006** | **2005** |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                  |   | Income tax benefit at statutory rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $ 824,000  | $ 75,000  |
|                                                                  |   | True-up of NOL expiration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | (6,000) | (19,000) |
|                                                                  |   | Permanent difference–meals adjustment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | -  | (1,000) |
|                                                                  |   | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (2,000) | (4,000) |
|                                                                  |   | Change in valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (816,000) | (51,000) |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $ -  | $ - |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                  |   | Deferred tax assets (liabilities) are comprised of the                            following at June 30:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **2006** | **2005** |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                  |   | Net operating loss carry forward                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $4,956,000  | $4,165,000  |
|                                                                  |   | Book basis in excess of tax basis on gas and oil                            properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | (872,000) | (872,000) |
|                                                                  |   | Depreciation and depletion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 53,000  | 27,000  |
|                                                                  |   | Impairment on oil properties and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 317,000  | 317,000  |
|                                                                  |   | Accrued wages                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | -  | -  |
|                                                                  |   | Depletion carry forward                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 5,000  | 5,000  |
|                                                                  |   | Research and development credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 6,000  | 6,000  |
|                                                                  |   | Alternative minimum tax credit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 55,000  | 55,000  |
|                                                                  |   | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -  | 1,000  |
|                                                                  |   | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (5,392,000) | (4,576,000) |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |   |
|                                                                  |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $  (872,000) | $  (872,000) |
|                                                                       |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  |  |

 

             

F-16

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **13.**   **Sales to**

**Major** |   | Approximate revenues from significant customers for the                            years ended June 30, are as follows: |
|--------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------|
| **Customers**                                    |   |                                                                                                                         |   |   |
|                                             |   | Year ended June 30,                                                                                                          | **2006** | **2005** |
|                                             |   |                                                                                                                         |   |   |
|                                             |   | Customer A                                                                                                                   | $688,263  | $382,050  |

 

| **14.**   **Related Party Transactions** |   | The Company had accrued liabilities of approximately                            $187,000 due to SCRS Investors, a related party that is 47% controlled                            by an officer and director of the Company and this entity is a                            stockholder of the Company, related to well abandonment bond costs paid                            by SCRS Investors for and on behalf of the Company as of June 30, 2005                            and 2006.

                                                                                                                                                                                                                   |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                    |   | The Company had accrued interest related to notes                            payable due to SCRS Investors of approximately $2,499,155 and                            $1,724,050 for the years ended June 30, 2006 and 2005, respectively.                            These amounts are included in accrued liabilities. There were no                            interest payments made to SCRS Investors during the fiscal years ended                            June 30, 2005 and 2006.

                                                                                                                                                                                                                  |
|                                                    |   | The Company had accrued wages payable due to an officer                            of the Company of approximately $916,280 and $659,175 as of June 30,                            2006 and 2005, respectively. These amounts are included in accrued                            liabilities and there have been no wages paid to this officer during                            the fiscal years ended June 30, 2005 and 2006.

                                                                                                                                                                                                                                                                              |
|                                                    |   | The Company incurred expenses for field services                            performed on oil and gas leaseholds by an entity controlled by an                            officer of the Company. Expenses included in accounts payable for these                            related party field services as of June 30, 2006 and 2005, were                            approximately $270,179 and $1,414,499, respectively. Expenses incurred                            for field services by the related party for fiscal years ended June 30,                            2006 and 2005, were approximately $542,487 and $1,277,441,                            respectively.

                              |
|                                                    |   | The Company has a month-to-month operating lease for its                            corporate facility with an entity controlled by an officer of the                            Company. Total rent paid during the years ended June 30, 2006 and 2005,                            approximated $28,000 and $13,000, respectively.

                                                                                                                                                                                                                                                                                                                                                                          |

 

             

F-17

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **15.**   **Commitments and Contingencies** |   | The Company has assumed substantially all abandonment                            and environmental liabilities for the Clear Creek Unit. In June 2002                            the Company was required to post a bond with the State of Utah for                            approximately $184,000 to secure certain abandoned well violations and                            provide a five-year compliance period to either bring certain wells                            into production or properly plug and abandon the wells in accordance                            with state law. Upon the sale of the Clear Creek Unit to Marion Energy                            Limited on September 14, 2006, all of the abandonment and environmental                            liabilities have been assumed by Marion Energy Limited and the bond of                            $184,000 with the State of Utah has been returned during fiscal                            2007.

                              |
|------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **16.** **Supplemental**

**Disclosures**             |   | Operations reflect actual amounts paid for interest and                            income taxes as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **of Cash Flow**                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
| **Information**                                            |   | Year ended June 30,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **2006** | **2005** |
|                                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
|                                                       |   | Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $102,293 | $419,865 |
|                                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |
|                                                       |   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ - | $ - |
|                                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                       |   | During the year ended June 30, 2005:

                             

**•**     The                            Company sold two properties in Bakersfield with a cost of $2,638,058                            for cash and debt assumption of $2,729,325 and a note receivable for                            $4,000,000 resulting in a gain on sale of assets of                            $4,069,421.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

             

F-18

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

| **17.**   **Stock Options and**                   |   | A summary of the stock option and warrant activity is as                            follows:

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Warrants**                                                     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Number**

**of Shares** | **Weighted**

**Average**

**Exercise**

**Price** |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                             |   | Outstanding at July 1, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 1,000,000  | $ | 2.00 |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                             |   | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -  |   | - |
|                                                             |   | Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | (1,000,000) |   | 2.00 |
|                                                             |   | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   |   |   |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                             |   | Outstanding at June 30, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | -  |   | - |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                             |   | Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -  |   | - |
|                                                             |   | Expired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | -  |   | - |
|                                                             |   | Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | -  |   | - |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
|                                                             |   | Outstanding at June 30, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | -  | $ | - |
|                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |
| **18.**   **Fair Value of Financial Instruments** |   | The Company’s financial instruments consist of                            accounts receivable, notes receivable, accounts payables, accrued                            liabilities and notes payable. The carrying amounts of accounts                            receivable, accounts payable, and accrued liabilities approximate fair                            value because of the short-term nature of these items. The aggregate                            carrying amounts of notes receivable and notes payable approximate fair                            value as the individual borrowings bear interest at market interest                            rates.

                                                                        |
| **19.**   **Environmental Regulation**            |   | Various federal, state and local laws and regulations                            covering discharge of materials into the environment, or otherwise                            relating to the protection of the environment, may affect the                            Company’s operations and the costs of its oil and natural gas                            exploration, development and production operations. The Company does                            not anticipate that it will be required in the near future to expend                            amounts material in relation to the financial statements taken as a                            whole by reason of environmental laws and regulations.

                              |
|                                                             |   | Because these laws and regulations are constantly being                            changed, the Company is unable to predict the conditions and other                            factors, over which it does not exercise control, that may give rise to                            environment liabilities affecting the Company.

                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

 

             

F-19

 

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**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **20.**   **Recent Accounting Pronounce-ments** |   | In December 2003, the FASB issued Interpretation No. 46R                            (“FIN 46R”) (revised December 2003),                            “Consolidation of Variable Interest Entities, an Interpretation                            of Accounting Research Bulletin No. 51 (“ARB 51”)”,                            which addresses how a business enterprise should evaluate whether it                            has a controlling interest in an entity through means other than voting                            rights and accordingly should consolidate the entity. FIN 46R replaces                            FASB Interpretation No. 46 (“FIN 46”), which was issued in                            January 2003. Before concluding that it is appropriate to apply ARB 51                            voting interest consolidation model to an entity, an enterprise must                            first determine that the entity is not a variable interest entity                            (“VIE”). As of the effective date of FIN 46R, an enterprise                            must evaluate its involvement with all entities or legal structures                            created before February 1, 2003, to determine whether consolidation                            requirements of FIN 46R apply to those entities. There is no                            grandfathering of existing entities. Public companies must apply either                            FIN 46 or FIN 46R immediately to entities created after                            January 31, 2003 and no later than the end of the first reporting                            period that ends after March 15, 2004. There was no material impact on                            the Company consolidated financial position or results of operations                            upon adoption of FIN 46R.

                              |
|----------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                           |   | In December 2003, the Securities and Exchange Commission                            (“SEC”) issued Staff Accounting Bulletin                            (“SAB”) No. 104, “Revenue Recognition.” SAB 104                            revises or rescinds portions of the interpretive guidance included in                            Topic 13 of the codification of staff accounting bulletins in order to                            make this interpretive guidance consistent with current authoritative                            accounting and auditing guidance and SEC rules and regulations. The                            adoption of SAB 104 did not have a material effect on the                            Company’s results of operations or financial                            condition.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                           |   | In December 2004, the FASB issued SFAS No. 153,                            “Exchanges of Nonmonetary Assets,” which amends Accounting                            Principles Board (“APB”) Opinion No. 29, “Accounting                            for Nonmonetary Transactions.” The guidance in APB Opinion 29 is                            based on the principle that exchanges of nonmonetary assets should be                            measured based on the fair value of the assets exchanged. The guidance                            in APB Opinion 29, however, included certain exceptions to that                            principle. SFAS 153 amends APB Opinion 29 to eliminate the exception                            for nonmonetary exchanges of similar productive assets and replaces it                            with a general exception for exchanges of nonmonetary assets that do                            not have commercial substance. A nonmonetary exchange has commercial                            substance if the future cash flows of the entity are expected to change                            significantly as a result of the exchange. SFAS 153 is effective for                            fiscal periods beginning after June 15, 2005. The adoption of SFAS 153                            had no material impact on the Company’s consolidated financial                            position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

             

F-20

 

----

**CALDERA CORPORATION**

**Notes to Consolidated Financial Statements**

***Continued***

             

 

 

| **20.**   **Recent Accounting Pronounce-ments**

***Continued*** |   | In December 2004, the FASB issued SFAS No. 123R,                            “Share−Based Payment,” which requires companies to                            measure and recognize compensation expense for all stock−based                            payments at fair value. SFAS 123R is effective for all interim periods                            beginning after June 15, 2005 and, thus, was effective for the Company                            beginning with the first quarter of its fiscal year ended June 30,                            2006. Early adoption is encouraged and retroactive application of the                            provisions of SFAS 123R to the beginning of the fiscal year that                            includes the effective date is permitted, but not required. As the                            Company has no outstanding options or warrants and none were granted                            during the fiscal years presented, the adoption of SFAS 123R had no                            material impact on the Company’s consolidated financial position                            or results of operations.

                              |
|---------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

             

F-21

 

----

**CALDERA CORPORATION**

 

**Schedule of Supplementary Information on Oil and Gas            Operations**

**(Unaudited)**

             

 

The            information on the Company’s oil and gas operations as shown in this schedule is            based on the successful efforts method of accounting and is presented in conformity            with the disclosure requirements of SFAS No. 69 “Disclosures about Oil and Gas            Producing Activities.”

 

**Capitalized Costs Relating to Oil and Gas Producing            Activities**

 

| Year ended June 30,                                                                                      | **2006** | **2005**             |
|----------------------------------------------------------------------------------------------------------|----------|----------------------|
| Proved oil and gas properties                                                                            | $        | 75,000          | $ | 75,000  |
| Unproved oil and gas properties                                                                          |     | 41,024,786      |   | 41,024,786  |
|                                                                                                     |     |                 |   |   |
| Subtotal                                                                                                 |     | 41,099,786      |   | 41,099,786  |
|                                                                                                     |     |                 |   |   |
| Accumulated depreciation, depletion and amortization and                            valuation allowances |     |  

(38,293,156) |   |  

(38,293,156) |
|                                                                                                     |     |                 |   |   |
|                                                                                                     | $        | 2,806,630       | $ | 2,806,630  |

 

 

**Costs Incurred in Oil and Gas Acquisition,**

**Exploration, and Development Activities**

 

| Year ended June 30,        | **2006** | **2005**  |
|----------------------------|----------|-----------|
|                       |     |      |   |   |
| Acquisition of properties: |     |      |   |   |
| Proved                     | $        | -         | $ | - |
| Unproved                   |     | -         |   | 2,806,630 |
| Exploration costs          |     | 1,370     |   | 1,299,163 |
| Production expenses        |     | 1,161,684 |   | 669,733 |
|                       |     |      |   |   |

 

             

F-22

 

----

**CALDERA CORPORATION**

 

**Schedule of Supplementary Information on Oil and Gas            Operations**

**(Unaudited)**

***Continued***

 

 

**Results of Operations for Producing Activities**

 

| Year ended June 30,                                                                                                          | **2006** | **2005**      |
|------------------------------------------------------------------------------------------------------------------------------|----------|---------------|
|                                                                                                                         |     |          |   |   |
| Oil and gas sales, net                                                                                                       | $        | 688,263  | $ | 398,067  |
| Production costs                                                                                                             |     | (1,161,684)   |   | (669,733) |
| Exploration costs                                                                                                            |     | (1,370)       |   | (1,299,163) |
| Impairment on properties                                                                                                     |     | -        |   | (26,294.602) |
| Depreciation, depletion and amortization                            provisions                                               |     | (113,129)     |   | (81,422) |
|                                                                                                                         |     |          |   |   |
| Net loss before income taxes                                                                                                 |     | (587,920)     |   | (27,946,853) |
|                                                                                                                         |     |          |   |   |
| Income tax provision                                                                                                         |     | -        |   | -  |
|                                                                                                                         |     |          |   |   |
| Results of operations from producing activities                            (excluding corporate overhead and interest costs) | $        | (587,920)     | $ | (27,946,853) |

 

 

             

F-23