##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to    Commission file number 0-17204
      Infinity Energy Resources,
    Inc.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

20-3126427(State of Incorporation
    or Organization)

(I.R.S. Employer
    Identification No.)633 Seventeenth Street, Suite 1800
    Denver, Colorado

80202(Address of principal executive
    office)

(Zip Code)  (720) 932-7800
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Common Stock
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller Reporting
    company o  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PART IItem 1 and Item 2.


Business and Properties


4Item 1A.


Risk Factors


18Item 1B.


Unresolved Staff Comments


28Item 3.


Legal Proceedings


28Item 4.


Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.


Market for Registrants Common Equity and
    Related Shareholder Matters


29Item 6.


Selected Financial Data


30Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


31Item 7A.


Quantitative and Qualitative Risk


42Item 8.


Financial Statements


43Item 9.


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


43Item 9A.


Controls and Procedures


43Item 9B.


Other Information


44PART IIIItem 10.


Directors and Executive Officers of the
    Registrant


45Item 11.


Executive Compensation


45Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


45Item 13.


Certain Relationships and Related Transactions


45Item 14.


Principal Accountant Fees and Services


45PART IVItem 15.


Exhibits and Financial Statement Schedules


46Second Forbearance AgreementSubsidiariesConsent of Ehrhardt Keefe Steiner & Hottman PCConsent of Netherland Sewell & Associates, Inc.Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Form 10-K
  
    Infinitys business strategy and anticipated trends in
    Infinitys business and its future results of operations;
    Infinitys ability to continue as a going concern;
    Infinitys ability to repay the significant Borrowing Base
    deficiency under the Revolving Credit Facility;
    possible requirement and efforts to sell assets of
    Infinity-Texas;
    the initiation of drilling under the Farmout Agreement and the
    timing of anticipated production from such wells in 2008;
    the impact of limitations relating to future general and
    administrative costs on future operations;
    the impact of cash flows on future operations;
    our plans with respect to the exploration and development of our
    offshore Nicaragua concessions;
    our ability to consummate the necessary ratifications to our
    Nicaragua contract and concessions;
    our planned capital expenditures in 2008;
    our plans to seek additional farmout opportunities with respect
    to our remaining undeveloped acreage in the Fort Worth,
    Green River and Piceance Basins in the continental United States;
    commencement and progress of exploration, drilling and
    completion activities;
    availability of drilling rigs and other support equipment;
    the connection of Infinitys wells to third party pipeline
    systems;
    the costs and results of dewatering operations, including
    drilling water disposal wells;
    the abandonment of wells and the costs associated therewith;
    the availability of financing on acceptable terms;
    the impact of governmental regulation;
    the timing of engineering and environmental impact studies and
    permitting;
    title to assets and related liens and encumbrances; and
    receipt of sufficient
    rights-of-way
    grants and permits to operate our business,    
    covenants and debt service obligations may adversely affect our
    cash flow and our ability to raise capital;
    failure to achieve success under the Farmout Agreement;
    fluctuations in oil and natural gas prices and production;
    inaccurate estimations of required capital expenditures;
    uncertainties inherent in estimating quantities of oil and gas
    reserves and projecting future rates of production and timing of
    development activities;
    operating hazards could result in substantial losses against
    which we not be adequately insured;
    an increase in the cost of oil and gas drilling, completion and
    production and of materials, fuel and labor costs;
    the availability, conditions and timing of required government
    approvals and third party financing;
    a decline in demand for Infinitys oil and gas
    production; and
    changes in general economic conditions. 3




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##### Table of Contents



PART I  ITEM 1.
    AND ITEM 2.
    BUSINESS
    AND PROPERTIES  GENERAL
  Infinity, we, us our
  PV-10
        (720) 932-7800. http://www.infinity-res.com. Form 10-K, Form 10-Q, Form 8-K, Form 10-K.
  Infinity-Texas
   4




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Infinity-Wyoming
              Nicaragua
   5




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##### Table of Contents



2-D
  Discontinued
    Operations
    Second
    Forbearance Agreement
    BUSINESS
    STRATEGY
     6




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##### Table of Contents



EXPLORATION
    AND PRODUCTION
  Properties
    Fort Worth
    Basin
    Erath and
    Hamilton Counties, Texas
    3-D
    Comanche
    County, Texas
    Greater
    Green River Basin
   7




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##### Table of Contents



Pipeline
    Field
      Labarge
    Field
        Northwest
    Colorado
    Sand Wash
    Prospect
       8




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##### Table of Contents



Piceance
    Basin Prospect
    Nicaragua
  sub-phases 2-D
    Oil
    and Natural Gas Reserves
    (PV-10
 9




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##### Table of Contents



Developed


Undeveloped


TotalNatural gas (Mcf)


3,735,422



497,697



4,233,119Crude oil (barrels)


473,832



120,543



594,375Total (Mcfe)


6,578,414



1,220,955



7,799,369Future net revenue before income taxes (in millions)

$
41.0


$
4.6


$
45.6Present value of future net revenue before income taxes (in
    millions)

$
25.0


$
1.1


$
26.1         PV-10 PV-10 PV-10
  2007


2006


2005Present value of future net revenue before income taxes

$
26.1


$
21.4


$
44.0Discounted future income taxes


(0.3
)






(0.5
)Standardized measure of discounted future net cash flows

$
25.8


$
21.4


$
43.5  10




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##### Table of Contents



Production,
    Prices and Production Costs
    2007


2006


2005Production:Natural gas (Mcf)


940,800



1,142,305



875,543Crude oil (barrels)


55,890



81,203



68,497Total (Mcfe)


1,276,140



1,629,524



1,286,525Average daily production:Natural gas (Mcf)


2,578



3,130



2,399Crude oil (barrels)


153



222



188Total (Mcfe)


3,496



4,464



3,525Average sales price per unit:Natural gas ($ per Mcf)

$
6.38


$
6.12


$
6.06Crude oil ($ per barrel)

$
61.25


$
64.94


$
56.74Total ($ per Mcfe)

$
7.38


$
7.53


$
7.14Production costs per Mcfe

$
4.74


$
3.31


$
3.44Depletion, depreciation and amortization per Mcfe

$
4.24


$
4.76


$
4.60     Development,
    Exploration and Acquisition Capital Expenditures
    2007


2006


2005Property acquisition costsProved

$



$



$
330Unproved


2,096



4,844



5,745Total property acquisition costs


2,096



4,844



6,075Development costs






892



17,099Exploration costs


18,098



24,942



18,490Total costs

$
20,194


$
30,678


$
41,664   Drilling
    Activity
   11




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##### Table of Contents



2007


2006


2005Gross


Net


Gross


Net


Gross


NetExploratory WellsProductive


7



7



13



13



6



5.7Nonproductive


4



4











1



1.0Total


11



11



13



13



7



6.7Development WellsService


















1



1.0Productive










1



1



5



5.0Nonproductive


















1



1.0Total










1



1



7



7.0     Acreage
    Data
    Developed Acreage


Undeveloped AcreageGross


Net


Gross


NetFort Worth Basin


10,000



9,000



60,000



49,000Greater Green River Basin:Wamsutter Arch


5,000



4,000



16,000



14,000Labarge


2,000



2,000



3,000



3,000Sand Wash Prospect


1,000



1,000



34,000



32,000Piceance Basin Prospect










7,000



7,000Total Onshore U.S.


18,000



16,000



120,000



105,000Offshore Nicaragua










1,389,000



1,389,000Total


18,000



16,000



1,509,000



1,494,000     Customers
    and Markets
     12




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##### Table of Contents



Competition
      
    Marketing our oil and natural gas production; and
    Seeking to acquire the services, equipment, labor and materials
    necessary to explore, operate and develop those properties.    Delivery
    Commitments
      Government
    Regulation of the Oil and Gas Industry
  General
  and/or
 13




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Federal
    Regulation of the Sale of Oil and Gas
    636-A, 636-D
  Regulation
    of Operations
       14




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##### Table of Contents



Environmental
    and Land Use Regulation
    
    unit production expenses primarily related to the control and
    limitation of air emissions, spill prevention and the disposal
    of produced water;
    capital costs to drill development wells resulting from expenses
    primarily related to the management and disposal of drilling
    fluids and other oil and natural gas exploration wastes;
    capital costs to construct, maintain and upgrade equipment and
    facilities;
    operational costs associated with ongoing compliance and
    monitoring activities; and
    exit costs for operations that we are responsible for closing,
    including costs for dismantling and abandoning wells and
    remediating environmental impacts.  and/or and/or clean-up
    Discharges to Waters.
      Oil Spill Regulations.
 15




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##### Table of Contents



Air Emissions.
  clean-up
  Superfund.
  Abandonment and Remediation
    Requirements.
  Potentially Material Costs Associated with Environmental
    Regulation of Our Oil and Natural Gas
    Operations. (ii) clean-up
   16




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Title
    to Properties
  rights-of-way
  Operating
    Hazards and Insurance
    Employees
   17




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##### Table of Contents



ITEM 1A.
    RISK
    FACTORS  We
    have been unable to comply with certain requirements of our
    Revolving Credit Facility and may not be able to repay our
    borrowing base deficiency under the Revolving Credit Facility or
    satisfy other current liabilities.
      We
    have a history of losses and are currently experiencing
    substantial liquidity problems.
      We are
    continuing to negotiate with our creditors and may face
    additional claims in the future.
   18




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If we
    are unable to obtain lien releases on our Farmout properties,
    the commencement of drilling under the Farmout may continue to
    be delayed and the Farmout may be jeopardized.
    We may
    be unable to continue to operate due to our inability to obtain
    supplies and services.
    Our
    reduced exploration and development activities have caused us to
    lose certain leases and we may continue to lose substantial
    acreage.
    Our
    common stock may be delisted from the NASDAQ Stock Market if it
    is unable to regain compliance with the minimum closing bid
    price.
    Our
    Nicaraguan concessions and planned future exploration activities
    are in a country with a developing economy and are subject to
    the risks of political and economic instability associated with
    such economies.
    
    political instability and violence;
    war and civil disturbance;
    acts of terrorism;
    expropriation or nationalization;
    changing fiscal regimes; 19




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##### Table of Contents




    fluctuations in currency exchange rates;
    high rates of inflation;
    underdeveloped industrial and economic infrastructure; and
    unenforceability of contractual rights.      Oil
    and gas prices are volatile, and declines in prices would hurt
    our ability to achieve profitable operations.
      
    worldwide and domestic supplies of oil and gas;
    political instability or armed conflict in oil or gas producing
    regions;
    the ability of the members of the Organization of Petroleum
    Exporting Countries to agree to and maintain oil prices;
    production controls;
    the price and level of foreign imports;
    worldwide economic conditions;
    marketability of production;
    the level of consumer demand;
    the price, availability and acceptance of alternative fuels;
    the price, availability and capacity of commodity processing and
    gathering facilities, and pipeline transportation;
    weather conditions; and
    actions of federal, state, local and foreign authorities. 20




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
    further impairing our financial condition, cash flows and
    liquidity;
    limiting our ability to finance planned capital expenditures;
    reducing our revenue, operating income and
    profitability; and
    reducing the carrying value of our oil and natural gas
    properties;      Prices
    may be affected by regional factors.
    Forward
    sales and hedging transactions may limit our potential gains or
    expose us to losses.
    
    our production is less than expected;
    the counterparties to our contracts fail to perform under the
    contracts; or
    our production costs on the contracted production significantly
    increase. 21




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Exploration
    and development of our oil and gas projects will require large
    amounts of capital which we may not be able to
    obtain.
      
    our oil and gas projects in the Fort Worth Basin of Texas,
    Greater Green River Basin of Wyoming, and Sand Wash and Piceance
    Basins of Colorado achieving and maintaining a level of
    production that provides sufficient cash flow to support
    additional borrowings and to attract other forms of debt and
    equity capital;
    our success in locating and producing new reserves;
    prices of crude oil and natural gas;
    the level of production from existing wells; and
    amounts of necessary working capital and expenses.    
    all or a substantial portion of our operating cash flow, if any,
    being dedicated to the payment of principal and interest;
    an increase in interest expense as the amount of debt
    outstanding increases or as variable interest rates increase;
    increased vulnerability to competitive pressures and economic
    downturns; and
    restrictions on our operations that may be contained in any
    contract entered into with lenders.      Information
    concerning our reserves, future net cash flow estimates, and
    potential future ceiling write-downs is uncertain.
      
    the quality and quantity of available data;
    the interpretation of that data;
    the accuracy of various mandated economic assumptions; and 22




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##### Table of Contents




    the judgment of the persons preparing the estimate.        
    the amount and timing of actual production;
    the price for which that oil and gas production can be sold;
    supply and demand for oil and natural gas;
    curtailments or increases in consumption by natural gas and oil
    purchasers; and
    changes in government regulations or taxation.      The
    oil and gas exploration business involves a high degree of
    business and financial risk.
     23




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##### Table of Contents




    defects in title;
    the absence of producible quantities of oil and gas;
    insufficient formation attributes, such as porosity, to allow
    production;
    water production requiring disposal; and
    improperly pressured reservoirs from which to produce the
    reserves.    
    availability and cost of equipment and transportation for the
    production;
    demand for the oil and gas produced; and
    price for the oil and gas produced.  Our
    business is subject to operating hazards that could result in
    substantial losses against which we may not be
    insured.
    
    well blowouts;
    craterings;
    explosions;
    uncontrollable flows of oil, natural gas or well fluids;
    fires;
    formations with abnormal pressures;
    pipeline ruptures or spills; and
    releases of toxic gas and other environmental hazards and
    pollution.     24




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##### Table of Contents



Our
    future production is contingent on successful exploration,
    development and acquisitions to maintain reserves and revenue in
    the future.
    Exploratory
    drilling is an uncertain process with many risks.
    
    unexpected drilling conditions;
    pressure or irregularities in formations;
    equipment failures or accidents;
    adverse weather conditions;
    defects in title;
    compliance with governmental requirements, rules and
    regulations; and
    shortages or delays in the availability of drilling rigs, the
    delivery of equipment and adequately trained personnel.    Our
    business depends on transportation facilities owned by
    others.
    The
    oil and gas industry is heavily regulated and we must comply
    with complex governmental regulations.
   25




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##### Table of Contents




    land use restrictions;
    drilling bonds and other financial responsibility requirements;
    spacing of wells;
    emissions into the air;
    unitization and pooling of properties;
    habitat and endangered species protection, reclamation and
    remediation;
    the containment and disposal of hazardous substances, oil field
    waste and other waste materials;
    the use of underground storage tanks;
    the use of underground injection wells, which affects the
    disposal of water from our wells;
    safety precautions;
    the prevention of oil spills;
    the closure of production facilities;
    operational reporting; and
    taxation.    
    personal injuries;
    property and natural resource damages;
    releases or discharges of hazardous materials;
    well reclamation costs;
    oil spill
    clean-up
    costs;
    other remediation and
    clean-up
    costs;
    plugging and abandonment costs, which may be particularly high
    in the case of offshore facilities;
    governmental sanctions, such as fines and penalties; and
    other environmental damages.   26




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##### Table of Contents




    the containment and disposal of hazardous substances, oilfield
    waste and other waste materials;
    the use of underground storage tanks; and
    the use of underground injection wells.    
    administrative, civil and criminal penalties;
    revocation of permits; and
    corrective action orders.      The
    oil and gas industry is highly competitive.
    
    acquisition of desirable producing properties or new leases for
    future exploration;
    marketing our oil and natural gas production;
    arranging for growth capital on attractive terms; and
    seeking to acquire or secure the equipment, service, labor,
    other personnel and materials necessary to explore, operate and
    develop those properties.    We
    depend on key personnel.
   27




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##### Table of Contents



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 3.
    LEGAL
    PROCEEDINGS          No. 591-06
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   28




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS  Principal
    Market and Price Range of Common Stock
    Quarter Ended

High


LowMarch 31, 2006

$
9.40


$
6.85June 30, 2006


8.45



6.03September 30, 2006


7.04



3.87December 31, 2006


4.00



3.20March 31, 2007

$
3.66


$
2.95June 30, 2007


3.93



3.06September 30, 2007


3.26



1.05December 31, 2007


1.40



0.41     Approximate
    Number of Holders of Common Stock
    Dividends
   29




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##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA    As of or For the Years Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share amounts)Statement of Operations DataRevenue:Oil and gas sales

$
9,426


$
12,292


$
9,192


$
6,267


$
6,589Costs and expenses:Oil and gas production expenses


5,561



4,583



3,548



1,914



2,162Oil and gas production taxes


493



806



877



722



759General and administrative expenses


3,479



3,619



3,002



2,748



2,839Depreciation, depletion, amortization and accretion


5,584



7,936



6,183



3,740



1,642Ceiling write-down of oil and gas properties


27,350



37,800



13,450



4,100



2,97542,467



54,744



27,060



13,224



10,377Operating loss


(33,041
)


(42,452
)


(17,868
)


(6,957
)


(3,788
)Other income (expense):Financing costs


(1,675
)


(31,598
)


(4,531
)


(2,983
)


(7,451
)Change in derivative fair value


3,795



14,971



2,908







Other, net


(20
)


291



(424
)


104



114Loss from continuing operations before income taxes


(30,941
)


(58,788
)


(19,915
)


(9,836
)


(11,125
)Income tax benefit


















Loss from continuing operations


(30,941
)


(58,788
)


(19,915
)


(9,836
)


(11,125
)Income from discontinued operations, net of tax






12,750



6,338



5,203



1,200Gain on sale of discontinued operations, net of tax


99



33,351











Net loss

$
(30,842
)

$
(12,687
)

$
(13,577
)

$
(4,633
)

$
(9,925
)Basic and diluted income (loss) per common shareContinuing operations

$
(1.73
)

$
(3.90
)

$
(1.54
)

$
(1.04
)

$
(1.38
)Discontinued operations






3.06



.49



.55



.15Net loss

$
(1.73
)

$
(0.84
)

$
(1.05
)

$
(0.49
)

$
(1.23
)Statement of Cash Flows DataNet cash provided by (used in):Operating activities

$
(4,208
)

$
14,917


$
9,650


$
5,463


$
2,845Investing activities


(17,010
)


18,020



(42,454
)


(9,942
)


(6,902
)Financing activities


21,087



(40,007
)


37,694



6,804



3,917Balance Sheet DataCash and cash equivalents

$
741


$
872


$
6,204


$
2,208


$
537Accounts receivable, net of allowance


1,164



1,511



2,004



793



675Net oil and gas properties


38,526



51,384



66,548



44,352



36,262Total assets


42,300



56,304



94,284



64,048



55,266Current portion of long-term debt


22,000



48



288



124



171Accounts payable


5,472



7,832



4,269



3,491



2,257Accrued liabilities


4,973



2,775



5,378



4,056



747Long-term debt, net of current portion










39,874



21,282



24,706Long-term derivative liabilities


194



5,895



9,837







Stockholders equity


7,725



37,617



30,217



28,822



22,911  30




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K.
           31




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##### Table of Contents



2007


2006


2005Production:Natural gas (MMcf)


940.8



1,142.3



875.5Oil (thousands of barrels)


55.9



81.2



68.5Total (MMcfe)


1,276.1



1,629.5



1,286.5Financial Data (in thousands):Total revenue

$
9,426


$
12,292


$
9,192Production expenses


5,561



4,583



3,548Production taxes


493



806



877Financial Data per Mcfe:Total revenue

$
7.38


$
7.54


$
7.14Production expenses


4.36



2.81



2.76Production taxes


0.39



0.50



0.68     2008
    Operational and Financial Objectives
        
    The availability of the capital resources required to fund the
    activity;
    The availability of third party contractors for completion
    services; and
    The approval by regulatory agencies of applications for permits
    to conduct exploration activities in a timely manner. 32




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##### Table of Contents



Corporate
    Activities
  2-D
  Results
    of operations for the year ended December 31, 2007 compared
    to the year 
    ended December 31, 2006
  Net
    Loss
    Revenue
  15-2-7-87 well
  Production
    Expenses
  15-2-7-87 well.
  Production
    Taxes
    General
    and Administrative Expenses
    Depreciation,
    Depletion, Amortization and Accretion
   33




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##### Table of Contents



Ceiling
    Write-down
    Other
    Income (Expense)
    Income
    Tax
    Discontinued
    Operations
    Results
    of operations for the year ended December 31, 2006 compared
    to the year ended December 31, 2005
    Net
    Loss
   34




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##### Table of Contents



Revenue
    Production
    Expenses
    Production
    Taxes
    General
    and Administrative Expenses
    Depreciation,
    Depletion, Amortization and Accretion
    Ceiling
    Write-down
   35




---



##### Table of Contents



Other
    Income (Expense)
    Income
    Tax
    Discontinued
    Operations
    Liquidity
    and Capital Resources
   36




---



##### Table of Contents



2006


2005Net cash provided by (used in)(in millions):Operating activities

$
13


$
8Investing activities

$
(5
)

$
(4
)Financing activities

$



$
(4
)    37




---



##### Table of Contents



Outlook
    for 2008
               38




---



##### Table of Contents



Critical
    Estimates
    Reserve
    Estimates
    Unproved
    Properties
    Fair
    Value of Derivatives
       39




---



##### Table of Contents



Asset
    Retirement Obligations
    Valuation
    of Tax Asset
    Critical
    Policies
    Oil and
    Gas Properties, Depreciation and Full Cost Ceiling
    Test
     40




---



##### Table of Contents



Regulation S-X Rule 4-10.
      Contractual
    Obligations
    Payments Due by PeriodTotal


2008


2009 & 2010


2011 & 2012


Thereafter(In thousands)Debt

$
22,000


$
22,000


$



$



$
Asset retirement obligations(a)


1,510



423



210







877Operating leases


457



198



259







Gas gathering commitments(b)


4,233



881



1,916



1,436



Non-current production and property taxes


403







403







Total contractual obligations

$
28,603


$
23,502


$
2,788


$
1,436


$
877     (a)
    
    The table above reflects the Companys estimate of the
    settlement of its asset retirement obligations; however, neither
    the timing nor the ultimate settlement amounts of such
    obligations can be determined in advance with any precision. See
    Note 3 of Notes to Consolidated Financial Statements.(b)
    
    Gathering commitments represent minimum estimated gathering fees
    under a gas gathering contract for gas production from the
    Companys Erath County, Texas properties; however, the
    ultimate settlement amounts of these obligations can not be
    determined in advance with any precision.  Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Pronouncements
  Fair Value Measurements
 41




---



##### Table of Contents



The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement No. 115 instrument-by-instrument
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 (FIN 39-1) Offsetting of Amounts Related to
    Certain Contracts FIN 39-1 FIN 39-1
  No. FIN 48-1, Definition of Settlement in FASB Interpretation
    No. 48 (FIN 48-1) FIN 48-1 FIN 48-1 FIN 48-1
  Business Combinations Accounting and Reporting of Noncontrolling Interest in
    Consolidated Financial Statements, an amendment of ARB
    No. 51 Business Combinations
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK     42




---



##### Table of Contents



NYMEX

NYMEXTerms of Arrangements

Bbls per Day

Floor Price

Ceiling PriceJanuary 1, 2008  March 31, 2008


50


$
62.00


$
85.60   NYMEXTerms of Arrangements

Bbls per Day


Swap PriceApril 1, 2008  December 31, 2008


65


$
57.40January 1, 2009  December 31, 2009


55


$
57.95January 1, 2010  December 31, 2010


50


$
58.90     MMBtu


WAHATerms of Arrangements

per Day


Swap PriceJanuary 1, 2008  December 31, 2008


800


$
7.235January 1, 2009  December 31, 2009


600


$
7.170January 1, 2010  December 31, 2010


500


$
6.865   MMBtu


CIG - RMTerms of Arrangements

per Day


Swap PriceJanuary 1, 2008  December 31, 2008


400


$
6.475January 1, 2009  December 31, 2009


400


$
6.810January 1, 2010  December 31, 2010


300


$
6.565     ITEM 8.
    FINANCIAL
    STATEMENTS  Form 8-K Form 10-K page F-1.
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
   43




---



##### Table of Contents



Form 10-K. Form 10-K,
  Managements
    Report on Internal Control over Financial Reporting
    
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of its assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of its financial statements in
    accordance with generally accepted accounting principles, and
    that its receipts and expenditures are being made only in
    accordance with authorizations of its management and
    directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on its
    financial statements.      Report of
    Independent Registered Public Accounting Firm
  Form 10-K
  Changes
    in Internal Control over Financial Reporting
    ITEM 9B.
    OTHER
    INFORMATION   44




---



##### Table of Contents



PART III  ITEM 10:
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11:
    EXECUTIVE
    COMPENSATION  Form 10-K.
  ITEM 12:
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  ITEM 13:
    CERTAIN
    RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Form 10-K.
  ITEM 14:
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K.
 45




---



##### Table of Contents



PART IV  ITEM 15:
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  Form 10-K
  Page F-1
    Form 10-K
  EXHIBITS
  ExhibitNumber

Description of Exhibits3
.1

Articles of Incorporation(1)3
.2

Bylaws(1)4
.1

Form of Placement Agent Warrant in connection with
    8% Convertible Subordinated Notes(2)4
.2

Form of Placement Agent Warrants in connection with
    7% Convertible Subordinated Notes(3)4
.3

Form of Warrant Agreement for 12% Bridge Note Financing(2)4
.4

Form of Registration Rights Agreement in connection with January
    2004 private placement(4)4
.5

Form of Registration Rights Agreement for November 2004 private
    placement(5)4
.6

Securities Purchase Agreement for Senior Secured Notes dated
    January 13, 2005(6)4
.7

Registration Rights Agreement dated January 13, 2005(6)4
.8

Form of Warrant in connection with Senior Secured Notes(6)10
.1

Stock Option Plan(2); 1999 Stock Option Plan(7); 2000 Stock
    Option Plan(8); 2001 Stock Option Plan(8); 2002 Stock Option
    Plan(9); 2003 Stock Option Plan(10); 2004 Stock Option Plan(11);
    2005 Equity Incentive Plan(12); 2006 Equity Incentive Plan(13)10
.2

Loan Agreement between Infinity Energy Resources, Inc., and
    Infinity Oil and Gas of Texas, Inc. and Infinity Oil &
    Gas of Wyoming, Inc. and Amegy Bank N.A., dated effective as of
    January 9, 2007(14)10
.3

Revolving Promissory Note between Infinity Energy Resources,
    Inc. and Amegy Bank N.A., dated January 9, 2007(14)10
.4

Form of Change in Control Agreement(15)10
.5

Forbearance Agreement with Amegy Bank N.A. dated August 31,
    2007(16)10
.6

Farmout and Acquisition Agreement by and between Infinity Oil
    and Gas of Texas, Inc. and Forest Oil Corporation dated as of
    December 27, 2007(17)10
.7

Asset Purchase and Sale Agreement by and between Infinity
    Oil & Gas of Wyoming, Inc. and Forest Oil Corporation
    dated effective October 1, 2007(17)10
.8

Second Forbearance Agreement with Amegy Bank N.A. dated
    March 27, 200821


Subsidiaries of the Registrant23
.1

Consent of Ehrhardt Keefe Steiner & Hottman PC23
.2

Consent of Netherland Sewell & Associates, Inc.31
.1

Certification of Chief Executive Officer of Periodic Report
    pursuant to Rule 13a14(a) and
    Rule 15d-14(a)
    (Section 302 of the Sarbanes-Oxley act of 2002)31
.2

Certification of Chief Financial Officer of Periodic Report
    pursuant to Rule 13a14(a) and
    Rule 15d-14(a)
    (Section 302 of the Sarbanes-Oxley act of 2002) 46




---



##### Table of Contents



ExhibitNumber

Description of Exhibits32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. Section 1350 (Section 906 of the
    Sarbanes-Oxley Act of 2002)32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. Section 1350 (Section 906 of the
    Sarbanes-Oxley Act of 2002)     (1)
    
    Incorporated by reference to our Registration Statement on
    Form 8-A
    filed on September 13, 2005.(2)
    
    Incorporated by reference to our Registration Statement
    (No. 33-17416-D).(3)
    
    Incorporated by reference to our Registration Statement on
    Form S-3
    filed on June 29, 2002 (File
    No. 333-96671).(4)
    
    Incorporated by reference to our Current Report on
    Form 8-K,
    filed on January 21, 2004.(5)
    
    Incorporated by reference to our Current Report on
    Form 8-K,
    filed on November 16, 2004.(6)
    
    Incorporated by reference to our Current Report on
    Form 8-K,
    filed on January 14, 2005.(7)
    
    Incorporated by reference to our Annual Report on
    Form 10-KSB
    for the fiscal year ended March 31, 2000.(8)
    
    Incorporated by reference to our Annual Report on
    Form 10-KSB
    for the fiscal year ended March 31, 2001.(9)
    
    Incorporated by reference to our Annual Report on
    Form 10-KSB
    for the transition period ended December 31, 2001.(10)
    
    Incorporated by reference to our Annual Report on
    Form 10-KSB
    for the fiscal year ended December 31, 2002.(11)
    
    Incorporated by reference to our Registration Statement on
    Form S-8
    filed on July 15, 2004 (File
    No. 333-117390).(12)
    
    Incorporated by reference to our Registration Statement on
    form S-8
    filed on August 29, 2005 (File
    No. 333-12794).(13)
    
    Incorporated by reference to our Proxy Statement on
    Schedule 14A, filed on May 2, 2006.(14)
    
    Incorporated by reference to our Current Report on
    Form 8-K,
    filed on January 17, 2007.(15)
    
    Incorporated by reference to our Quarterly Report on
    Form 10-Q,
    filed on August 10, 2006.(16)
    
    Incorporated by reference to our Current Report on
    Form 8-K,
    filed on September 7, 2007.(17)
    
    Incorporated by reference to our Current Report on
    Form 8-K
    filed on January 3, 2008. 47




---



##### Table of Contents



SIGNATURES
    INFINITY ENERGY RESOURCES, INC.
  By:
    /s/  STANTON
    E. ROSS   Chief Executive Officer
      Signature

Capacity

Date/s/  STANTON
    E. ROSSStanton
    E. Ross

Chief Executive Officer
    (Principal Executive Officer)
    and Director

March 27, 2008/s/  DANIEL
    F. HUTCHINSDaniel
    F. Hutchins

Chief Financial Officer 
    (Principal Financial and Accounting Officer)

March 27, 2008/s/  JAMES
    A. TUELLJames
    A. Tuell

Director

March 27, 2008/s/  ELLIOT
    M. KAPLANElliot
    M. Kaplan

Director

March 27, 2008/s/  ROBERT
    O. LORENZRobert
    O. Lorenz

Director

March 27, 2008/s/  LEROY
    C. RICHIELeroy
    C. Richie

Director

March 27, 2008  48




---



##### 



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
  
 Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Financial Statements:Consolidated Balance Sheets


F-4Consolidated Statements of Operations


F-5Consolidated Statements of Changes in
    Stockholders Equity


F-6Consolidated Statements of Cash Flows


F-7Notes to Consolidated Financial Statements


F-8   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM               F-2




---



##### Table of Contents



F-3




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2007


2006(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
741


$
872Accounts receivable


1,164



1,511Prepaid expenses and other


104



719Prepaid severance taxes


675



609Total current assets


2,684



3,711Oil and gas properties, using full cost accounting, net of
    accumulated depreciation, depletion, amortization and ceiling
    write-down:Proved


21,429



24,581Unproved


17,097



26,803Other assets, net


1,090



1,209Total assets

$
42,300


$
56,304LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Note payable and current portion of long-term debt

$
22,000


$
48Accounts payable


5,472



7,832Accrued liabilities


4,973



2,775Current portion of asset retirement obligations


423



466Total current liabilities


32,868



11,121Long-term liabilities:Production taxes payable and other liabilities


426



535Asset retirement obligations, less current portion


1,087



1,136Derivative liabilities


194



5,895Total liabilities


34,575



18,687Commitments and contingencies (Note 9)Stockholders equity:Preferred stock, par value $.0001, authorized
    10,000,000 shares, issued and outstanding -0-
    (2007) and -0- (2006) shares






Common stock, par value $.0001, authorized
    75,000,000 shares, issued and outstanding 17,871,157
    (2007) and 17,866,157 (2006) shares


2



2Additional
    paid-in-capital


79,371



78,303Accumulated other comprehensive income






118Accumulated deficit


(71,648
)


(40,806
)Total stockholders equity


7,725



37,617Total liabilities and stockholders equity

$
42,300


$
56,304    F-4




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years Ended December 31,2007


2006


2005(In thousands, except per share data)Revenue:Oil and gas sales

$
9,426


$
12,292


$
9,192Operating expenses:Oil and gas production expenses


5,561



4,583



3,548Oil and gas production taxes


493



806



877General and administrative expenses


3,479



3,619



3,002Depreciation, depletion, amortization and accretion


5,584



7,936



6,183Ceiling write-down of oil and gas properties


27,350



37,800



13,45042,467



54,744



27,060Operating loss


(33,041
)


(42,452
)


(17,868
)Other income (expense):Financing costs:Interest expense


(1,159
)


(3,147
)


(2,454
)Amortization of loan discount and costs


(516
)


(1,290
)


(1,066
)Early extinguishment of debt






(27,161
)


(1,011
)Change in derivative fair value


3,795



14,727



2,908Other


(20
)


535



(424
)Total other income (expense)


2,100



(16,336
)


(2,047
)Net loss from continuing operations


(30,941
)


(58,788
)


(19,915
)Income from discontinued operations






12,750



6,338Gain on sale of discontinued operations, net of tax


99



33,351



Net loss

$
(30,842
)

$
(12,687
)

$
(13,577
)Basic and diluted net loss per share:Net loss from continuing operations

$
(1.73
)

$
(3.90
)

$
(1.54
)Income from discontinued operations






0.85



0.49Gain on sale of discontinued operations






2.21



Net loss

$
(1.73
)

$
(0.84
)

$
(1.05
)Weighted average shares outstanding (basic and diluted)


17,871



15,085



12,936    F-5




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##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 For the
    years ended December 31, 2007, 2006 and 2005
  AccumulatedAdditional





OtherCommon Stock


Paid-In


Accumulated


Comprehensive


StockholdersShares


Amount


Capital


Deficit


Income (Loss)


Equity(In thousands, except share data)Balance, January 1, 2005


10,628,196


$
1


$
43,363


$
(14,542
)

$



$
28,822Reclassification of non-employee warrants to derivative
    liabilities










(6,090
)










(6,090
)Reclassification of non-employee warrants from derivative
    liabilities in connection with exercise










2,174











2,174Issuance of common stock upon the exercise of options and
    warrants


857,556







4,707











4,707Conversion of subordinated convertible notes and accrued
    interest into common stock


2,016,236







14,181











14,181Comprehensive loss:Net loss














(13,577
)


(13,577
)


(13,577
)Comprehensive loss

















$
(13,577
)Balance, December 31, 2005


13,501,988



1



58,335



(28,119
)






30,217Issuance of common stock upon conversion of senior secured notes
    and settlement of accrued interest


4,214,419



1



18,216











18,217Issuance of common stock upon the exercise of options


144,750







694











694Stock-based compensation










687











687Reclassification of non-employee warrants from derivative
    liabilities










341











341Other


5,000







30











30Comprehensive loss:Net loss














(12,687
)


(12,687
)


(12,687
)Reclassifications, net of income tax expense


















(29
)


(29
)Unrealized gain on effective commodity derivative instruments


















147



147Comprehensive loss

















$
(12,569
)Balance, December 31, 2006


17,866,157



2



78,303



(40,806
)


118



37,617Issuance of common stock


5,000



















Stock-based compensation










1,068











1,068Comprehensive loss:Net loss














(30,842
)


(30,842
)


(30,842
)Reclassifications, net of income tax expense


















(118
)


(118
)Comprehensive loss

















$
(30,960
)Balance, December 31, 2007


17,871,157


$
2


$
79,371


$
(71,648
)

$



$
7,725    F-6




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2007


2006


2005(In thousands)Cash flows from operating activities:Net loss

$
(30,842
)

$
(12,687
)

$
(13,577
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Depreciation, depletion, amortization, accretion and ceiling
    write-down


32,934



47,091



20,901Amortization of loan discount and costs


516



1,290



1,066Non-cash early extinguishment of loan cost






27,161



1,052Current interest expense settled by stock issuance, net of
    amounts capitalized






1,079



Interest expense added to principal






1,357



Non-cash stock-based compensation expense


1,068



717



Change in fair value of derivative liabilities


(5,701
)


(14,727
)


(2,908
)Gain on sale of sale of discontinued operations


(99
)


(33,851
)


Impairment of note receivable and other










530(Gain) loss on sales of other assets






(255
)


96Unrealized loss (gain) on commodity derivative instruments


2,389



(272
)


28Change in operating assets and liabilities:(Increase) decrease in accounts receivable


347



247



(1,273
)(Increase) in inventories






(197
)


(167
)(Increase) decrease in prepaid expenses and other


184



(574
)


232Increase (decrease) in accounts payable


(4,560
)


1,046



1,034Increase (decrease) in accrued liabilities


(444
)


(2,508
)


2,636Net cash (used in) provided by operating activities


(4,208
)


14,917



9,650Cash flows from investing activities:Capital expenditures  exploration and production


(17,109
)


(25,555
)


(39,271
)Capital expenditures  oilfield services






(5,569
)


(4,190
)Acquisitions  exploration and production










(330
)Proceeds from sale of discontinued operations, net of
    transaction costs


99



49,744



Proceeds from sale of fixed assets  exploration and
    production and other






280



133Proceeds from sale of fixed assets  oilfield services






8



31Increase in other assets






(888
)


(31
)Proceeds from note receivable










1,204Net cash (used in) provided by investing activities


(17,010
)


18,020



(42,454
)Cash flows from financing activities:Proceeds from notes payable










434Proceeds from borrowings on long-term debt


22,000



8,000



45,000Proceeds from issuance of common stock






694



4,707Debt and equity issuance costs


(865
)


(372
)


(2,751
)Repayment of notes payable


(48
)


(329
)


(406
)Repayment of long-term debt






(48,000
)


(9,290
)Net cash provided by (used in) financing activities


21,087



(40,007
)


37,694Net (decrease) increase in cash and cash equivalents


(131
)


(7,070
)


4,890Cash and cash equivalents, beginning of period


872



7,942



3,052Cash and cash equivalents, end of period

$
741


$
872


$
7,942Supplemental cash flow disclosures:Cash paid for interest, net of amounts capitalized

$
232


$
580


$
1,175Cash paid for income taxes


401







Non-cash transactions:Increase in accounts payable capitalized in the full cost pool
    for oil and gas properties


2,200



2,400



Non-cash costs capitalized in the full cost pool for oil and gas
    properties






2,446



764Property and equipment acquired through capital lease or
    assumption of debt










189Options and warrants granted in connection with debt, recorded
    as loan costs or debt discount






1,857



8,828Conversion of subordinated convertible notes and accrued
    interest to common stock






18,217



14,181    F-7




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##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Organization  Nature
    of Operations
    Basis
    of Presentation
        Note 2 
    Liquidity,
    Going Concern     F-8




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##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 3 
    Summary
    of Significant Accounting Policies  Management
    Estimates
    Cash
    and Cash Equivalents
   F-9




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Derivative
    Instruments
  Accounting for Derivative Instruments and Hedging Activities.
      Oil
    and Gas Properties
         F-10




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Prepaid
    Severance Taxes
    Other
    Assets, Net
    Asset
    Retirement Obligations
  Accounting for Asset Retirement
    Obligations
  2007


2006


2005(In thousands)Asset retirement obligations at January 1

$
1,602


$
1,413


$
635Accretion expense


105



112



70Liabilities incurred


63



30



51Liabilities assumed










17Liabilities settled


(385
)






(199
)Revision in estimates


125



47



839Asset retirement obligations at December 31


1,510



1,602



1,413Less: current portion of asset retirement obligations


(423
)


(466
)


(284
)Asset retirement obligations at December 31, less current
    portion

$
1,087


$
1,136


$
1,129  F-11




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Capitalized
    Interest
    Intangible
    Assets
    Revenue
    Recognition
    Transportation
    Costs
  00-10, Accounting for Shipping and Handling Fees and Costs
  Per
    Share Information
    Stock
    Options
  Share-Based Payment Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation
 F-12




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Taxes
    Comprehensive
    Income (Loss)
    Recently
    Issued Accounting Pronouncements
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial Liabilities
    Including an Amendment of FASB Statement No. 115 instrument-by-instrument
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 (FIN 39-1) Offsetting of Amounts Related to
    Certain Contracts FIN 39-1 FIN 39-1
 F-13




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. FIN 48-1, Definition of Settlement in FASB Interpretation
    No. 48 (FIN 48-1) FIN 48-1 FIN 48-1 FIN 48-1
    Note 4 
    Accrued
    Liabilities    December 31,2007


2006(In thousands)Commodity derivatives

$
2,144


$
Oil and gas revenue payable to oil and gas property owners


814



742Production taxes payable  current portion


494



692Accrued interest


927



Accrued income taxes






500Other accrued liabilities


594



841$
4,973


$
2,775   Note 5 
    Debt    December 31,2007


2006(In thousands)Credit Facility

$
22,000


$
Other






4822,000



48Less current portion


(22,000
)


(48
)Long-term debt

$



$
  F-14




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Revolving
    Credit Facility
       F-15




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Senior
    Secured Notes Facility
    paid-in-capital, paid-in-capital
  Debt
    Discount
    Note 6 
    Derivative
    Instruments  Commodity
    Derivatives
    NYMEX


NYMEXTerms of Arrangements

Bbls per Day


Floor Price


Ceiling PriceJanuary 1, 2008  March 31, 2008


50


$
62.00


$
85.60   NYMEXTerms of Arrangements

Bbls per Day


Swap PriceApril 1, 2008  December 31, 2008


65


$
57.40January 1, 2009  December 31, 2009


55


$
57.95January 1, 2010  December 31, 2010


50


$
58.90     MMBtu


WAHATerms of Arrangements

per Day


Swap PriceJanuary 1, 2008  December 31, 2008


800


$
7.235January 1, 2009  December 31, 2009


600


$
7.170January 1, 2010  December 31, 2010


500


$
6.865   F-16




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  MMBtu


CIG-RMTerms of Arrangements

per Day


Swap PriceJanuary 1, 2008  December 31, 2008


400


$
6.475January 1, 2009  December 31, 2009


400


$
6.810January 1, 2010  December 31, 2010


300


$
6.565       Other
    Derivatives
  EITF 00-19
  EITF 00-19,
 F-17




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 7 
    Stockholders
    Equity  Non-Employee
    Warrants and Options
        Weighted Average


Weighted AverageExercise


Grant Date FairNumber of Shares


Price per Share


Value per ShareOutstanding, January 1, 2005


2,157,896


$
8.17


$Granted


2,507,363



9.87



3.38Exercised


(546,850
)


6.97Outstanding, December 31, 2005


4,118,409



9.36Granted


3,351,571



5.00



3.35Outstanding, December 31, 2006


7,469,980



5.75Expired


(608,800
)


8.64Outstanding and exercisable, December 31, 2007


6,861,180



5.49  F-18




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NumberOutstanding andExercisable at


Weighted AverageDecember 31,


Remaining


Weighted AverageRange of Exercise Prices

2007


Contractual Life


Exercise Price$5.00


5,829,726



2.4 years


$
5.00$7.13


306,954



0.5 years


$
7.13$8.75


724,500



0.5 years


$
8.756,861,180   Options
    Under Employee Option Plans
      2007

2006

2005Expected term (in years)

5.5  10

5.5  10

10Expected stock price volatility

55%  62%

58%  62%

67%Expected dividends





Risk-free rate

4.5%  5.1%

4.71%  5.15%

4.00%  4.13%Forfeiture rate

25%

22.5%

  F-19




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted





WeightedAverage


Aggregate


AverageExercise


Intrinsic


RemainingNumber of Options


Price per Share


Value


Contractual Term(In thousands)Outstanding at January 1, 2007


1,021,000


$
6.58Granted


450,000



3.68Exercised






Expired


(90,500
)


8.70Forfeited


(154,000
)


6.11Outstanding at December 31, 2007


1,226,500



5.42


$




8.3 yearsExercisable at December 31, 2007


865,250



6.11


$




7.8 years     2007


2006


2005Weighted average grant-date fair value of options granted

$
2.08


$
3.71


$
6.00Total intrinsic value of options exercised





$
291,000


$
1,858,000Compensation expense recognized

$
1,068,000


$
687,000



Cash received from the exercise of stock options





$
694,000


$
957,000Stock-based compensation expense capitalized










Tax benefits recognized related to stock-based compensation










       2005Net loss as reported

$
(13,577
)Deduct: Total stock-based employee compensation expense,
    determined under fair value based method for all awards


(3,177
)Pro forma net loss

$
(16,754
)Basic and diluted loss per share  as reported

$
(1.05
)Basic and diluted loss per share  as reported

$
(1.30
)  F-20




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 8 
    Income
    Taxes    For the Years Ended December 31,2007


2006


2005(In thousands)Current income tax expense

$



$



$
Deferred income tax benefit


(9,814
)


(1,616
)


(5,464
)Change in valuation allowance


9,814



1,616



5,464Total income tax benefit

$



$



$
     For the Years Ended December 31,2007


2006


2005(In thousands)Federal income tax rate


34.0
%


34.0
%


34.0
%State income tax rate


2.0



4.5



4.5Non-deductible debt extinguishment expenses






(51.3
)


Non-deductible / taxable change in derivative fair value


6.3



46.5



(1.9
)Non-deductible interest expense and debt discount






(21.4
)


Other permanent differences


(10.6
)


1.0



3.6Change in valuation allowance


(31.7
)


(13.3
)


(40.2
)Effective tax rate



%



%



%     December 31,2007


2006(In thousands)Deferred tax assetsAccruals and other

$
1,316


$
262Property and equipment


10,190



9,101Alternative minimum tax credit carry-forward


405



500Statutory depletion carry-forward


1,556



Net operating loss carry-forward


9,751



3,541Gross deferred tax assets


23,218



13,404Less valuation allowance


(23,218
)


(13,404
)Deferred tax asset

$



$
      F-21




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. FIN 48-1, FIN 48-1) FIN 48-1 FIN 48-1
  Note 9 
    Commitments
    and Contingencies  Litigation
      Delivery
    Commitments
     F-22




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Lease
    Agreements
    Year Ending December 31,

Operating Lease(In thousands)2008

$
1982009


1982010


61Total minimum lease payments

$
457     Regulations
    Environmental
    Note 10 
    Retirement
    Plan    Note 11 
    Significant
    Customers    Note 12 
    Fair
    Value of Financial Instruments       F-23




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 13 
    Earnings
    Per Share    Note 14 
    Supplemental
    Oil and Gas Information  Estimated
    Proved Oil and Gas Reserves (Unaudited)
      Natural Gas


Crude Oil(Mcf)


(Barrels)Proved reserves as of January 1, 2005


8,042,946



193,577Purchases of reserves in place






140,591Revisions of previous estimates


(2,887,783
)


550,832Extension, discoveries and other additions


6,819,586



20,262Production


(875,543
)


(68,497
)Proved reserves as of December 31, 2005


11,099,206



836,765Purchases of reserves in place






Revisions of previous estimates


(7,778,519
)


(111,442
)Extension, discoveries and other additions


1,600,803



4,342Production


(1,142,305
)


(81,203
)Proved reserves as of December 31, 2006


3,779,185



648,462Purchases of reserves in place






Revisions of previous estimates


1,034,701



1,718Extension, discoveries and other additions


360,033



85Production


(940,800
)


(55,890
)Proved reserves as of December 31, 2007


4,233,119



594,375Proved Developed Reserves as of:December 31, 2005


5,031,235



712,094December 31, 2006


3,779,185



648,462December 31, 2007


3,735,422



473,832  F-24




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Costs
    Incurred in Oil and Gas Activities
    For the Years Ended December 312007


2006


2005(In thousands)Property acquisition costsProved

$



$



$
330Unproved


2,096



4,844



5,745Total property acquisition costs


2,096



4,844



6,075Development costs






892



17,099Exploration costs


18,098



24,942



18,490Total costs

$
20,194


$
30,678


$
41,664     Aggregate
    Capitalized Costs
    December 31,2007


2006(In thousands)Proved oil and gas properties

$
131,532


$
101,920Unproved oil and gas properties


17,097



26,803Total


148,629



128,723Less accumulated depreciation, depletion, amortization and
    ceiling write-down


(110,103
)


(77,339
)Net capitalized costs

$
38,526


$
51,384  F-25




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Costs
    Not Being Amortized
    Year Ended December 31,

(In thousands)2007

$
4,0782006


5,1142005


4,842Prior


3,063Total costs not being amortized

$
17,097     Standardized
    Measure of Discounted Future Net Cash Flows Relating to Proved
    Oil and
    Gas Reserves (Unaudited)
  Disclosures about Oil and Gas
    Producing Activities.
    For the Years Ended December 312007


2006


2005(In thousands)Future cash inflows

$
79,186


$
52,897


$
141,982Future production costs


(29,945
)


(20,386
)


(49,010
)Future development costs


(3,636
)


(300
)


(16,785
)Future income tax expense


(441
)






(656
)Future net cash flows


45,164



32,211



75,53110% annual discount for estimated timing on cash flows


(19,363
)


(10,835
)


(32,014
)Standardized measure of discounted future cash flows

$
25,801


$
21,376


$
43,517  F-26




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 312007


2006


2005Weighted average gas price per Mcf

$
7.21


$
5.66


$
8.21Weighted average oil price per barrel

$
81.89


$
48.56


$
60.74     For the Years Ended December 312007


2006


2005Beginning of period

$
21,376


$
43,517


$
23,712Extensions, discoveries and other additions


838



4,788



12,328Purchases of reserves in place










442Net change in sales and transfer prices, net of production costs


7,653



(18,284
)


(1,305
)Revision of previous quantity estimates


5,510



(15,735
)


12,809Development costs incurred during the period










1,525Sales of oil and gas, net of production costs and taxes


(3,372
)


(6,879
)


(4,767
)Changes in future development costs


(3,020
)


15,718



402Net change in income taxes


(269
)


462



(156
)Changes in production rates and other


(5,053
)


(6,609
)


(3,875
)Accretion of discount


2,138



4,398



2,402End of period

$
25,801


$
21,376


$
43,517    F-27




---



##### Table of Contents



INFINITY
    ENERGY RESOURCES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 15 
    Quarterly
    Consolidated Financial Information (Unaudited)    QuarterFirst


Second


Third


Fourth(In thousands, except per share amounts)2007Total revenue

$
2,099


$
2,533


$
2,460


$
2,334Gross profit

$
(94
)

$
1,105


$
1,119


$
1,242Net income (loss)

$
(3,780
)

$
(16,059
)

$
3,223


$
(14,226
)Earnings (loss) per share

$
(0.21
)

$
(0.90
)

$
0.18


$
(0.80
)2006Total revenue

$
2,364


$
3,356


$
3,742


$
2,830Gross profit

$
1,020


$
2,184


$
2,586


$
1,113Net income (loss)

$
(11,306
)

$
2,655


$
(28,289
)

$
24,253Earnings (loss) per share from continuing operations

$
(1.06
)

$
(0.08
)

$
(2.15
)

$
(0.61
)Earnings (loss) per diluted share from continuing operations

$
(1.06
)

$
(0.08
)

$
(2.15
)

$
(0.61
)Earnings per share from discontinued operations

$
0.24


$
0.26


$
0.28


$
2.05Earnings per diluted share from discontinued operations

$
0.24


$
0.26


$
0.28


$
2.05          F-28




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Exhibits10
.8

Second Forbearance Agreement with Amegy Bank N.A. dated
    March 27, 200821


Subsidiaries of the Registrant23
.1

Consent of Ehrhardt Keefe Steiner & Hottman PC23
.2

Consent of Netherland Sewell & Associates, Inc.31
.1

Certification of Chief Executive Officer of Periodic Report
    Pursuant to Rule 13a14(a) and
    Rule 15d-14(a)
    (Section 302 of the Sarbanes-Oxley act of 2002)31
.2

Certification of Chief Financial Officer of Periodic Report
    Pursuant to Rule 13a14(a) and
    Rule 15d-14(a)
    (Section 302 of the Sarbanes-Oxley act of 2002)32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350 (Section 906 of the
    Sarbanes-Oxley Act of 2002)32
.2

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350 (Section 906 of the
    Sarbanes-Oxley Act of 2002)