<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB
(Mark One)

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended February 28, 2005

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to _______.

                          Commission file number 0-8532

                              OAKRIDGE ENERGY, INC.
                 (Name of small business issuer in its charter)

                   Utah                                         87-0287176
(State or other jurisdiction of incorporation                (I.R.S. Employer
               or organization)                             Identification No.)

       4613 Jacksboro Highway
        Wichita Falls, Texas                                       76302
(Address of principal executive offices)                         (Zip Code)


                    Issuer's telephone number: (940) 322-4772

         Securities registered under Section 12(b) of the Exchange Act:

                                      None

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.04 par value
                                (Title of class)

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 [X] NO [ ]

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]

State issuer's revenues for its most recent fiscal year.  $1,278,350

State the aggregate market value of the voting and non-voting common equity held
by nonaffiliates computed by

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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.

                          $5,667,219 as of May 20, 2005

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

                          4,284,867 as of May 24, 2005

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


    Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]


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                                TABLE OF CONTENTS


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PART I...........................................................................................................                  1

      ITEM 1.     DESCRIPTION OF BUSINESS.........................................................................                 1

           Oil and Gas Operations................................................................................                  1

           Gravel Operations.....................................................................................                  2

           Carbon Junction Coal Mine.............................................................................                  3

           Real Estate Held for Development or Sale..............................................................                  3

           Competition and Markets...............................................................................                  5

           Regulation............................................................................................                  6

           Environmental and Health Controls.....................................................................                  6

           Operating Hazards and Uninsured Risks.................................................................                  7

           Employees.............................................................................................                  7

      ITEM 2.     DESCRIPTION OF PROPERTY.........................................................................                 7

           Oil and Gas Properties................................................................................                  7

                Reserves.........................................................................................                  7

                Production.......................................................................................                  7

                Lifting Costs and Average Sales Prices...........................................................                  8

                Sales Contracts and Major Customers..............................................................                  8

                Developed Acreage and Productive Wells...........................................................                  8

                Undeveloped Acreage..............................................................................                  9

                Drilling Activity................................................................................                  9

                      Coal and Gravel Properties.................................................................                  9

                      Real Estate...............................................................................                  10

                      Office Building...........................................................................                  10

      ITEM 3.     LEGAL PROCEEDINGS..............................................................................                 10

      ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................                 10


PART II..........................................................................................................                 10

      ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......................................                 10

      ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION......................................                 11

           Results of Operations................................................................................                  11

           Financial Condition and Liquidity....................................................................                  14

           Critical Accounting Policies and Estimates...........................................................                  14

           Forward-Looking Statements...........................................................................                  16

      ITEM 7.     FINANCIAL STATEMENTS...........................................................................                 17
</Table>


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<Table>
<Caption>
                                                                                                                                PAGE
<S>                                                                                                                             <C>
      ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...........                 39

      ITEM 8A.    CONTROLS AND PROCEDURES........................................................................                 39

      ITEM 8B.    OTHER INFORMATION..............................................................................                 39

PART III........................................................................................................                  39

      ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
                  16(a) OF THE EXCHANGE ACT.....................................................................                  39

           Directors and Executive Officers.....................................................................                  39

           Section 16(a) Beneficial Ownership Reporting Compliance..............................................                  40

           Audit Committee......................................................................................                  40

           Audit Committee Financial Expert.....................................................................                  40

           Nomination Procedures................................................................................                  40

           Code of Ethics.......................................................................................                  40

      ITEM 10.    EXECUTIVE COMPENSATION.........................................................................                 41

      ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
                  RELATED STOCKHOLDER MATTERS....................................................................                 41

      ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................                 42

      ITEM 13.    EXHIBITS.......................................................................................                 43

      ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................................................                 43

           Audit Fees...........................................................................................                  43

           Audit-Related Fees...................................................................................                  43

           Tax Fees.............................................................................................                  43

           All Other Fees.......................................................................................                  43

           Pre-Approval Policies and Procedures.................................................................                  44

SIGNATURES......................................................................................................                  45

EXHIBITS........................................................................................................                  46
</Table>


                                       ii
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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

                  Oakridge Energy, Inc. (the "Company") is engaged in the
exploration for and development, production and sale of oil and gas primarily in
Texas. The Company also receives royalty income and other fees from gravel
deposits in Colorado and holds certain real estate in Colorado for development
or sale.

                  The Company is a Utah corporation incorporated in 1969. The
Company's executive offices are located at 4613 Jacksboro Highway, Wichita
Falls, Texas 76302. The Company's telephone number is (940) 322-4772.

                  The Company has restricted its oil and gas exploration
activities in recent fiscal years as it has conserved its limited resources for
utilization on a secondary recovery waterflood project on its principal oil and
gas producing property in Madison County, Texas and its proposed real estate
development project adjacent to Durango, Colorado. In fiscal 2005, the Company
continued to participate in the tightly controlled implementation of the
waterflood project started in the last quarter of fiscal 2003. See "Oil and Gas
Operations" and "Real Estate Held for Development or Sale" below and "Item 6. -
Management's Discussion and Analysis or Plan of Operation."

                  In 2004, a dispute developed with Oldcastle SW Group, Inc. dba
Four Corners Materials ("Four Corners Materials"), which was conducting mining
operations on the Company's Colorado gravel property and performing coal mine
reclamation work on the Company's behalf, that caused the Company to take back
the responsibility for a portion of the coal reclamation work. This required the
Company to establish a reserve for related costs in both fiscal 2004 and 2005.
See "Gravel Operations" and "Carbon Junction Coal Mine" below and "Item 6. -
Management's Discussion and Analysis or Plan of Operation."

                  During mid 2004, Sandra Pautsky, the Company's Chief Executive
Officer and principal shareholder, received treatment for cancer that was
diagnosed in late 2003. Ms. Pautsky has responded well to treatment and has
resumed normal activities, although additional treatment will be necessary in
the future. Ms. Pautsky has been the principal force pushing the Company's
proposed real estate development project. Concerns regarding her health, the
project size, the significant financial requirement by the Company, the number
of years to complete, coupled with the risk involved to the Company in
committing so much of its limited financial resources to one project caused the
Company to decide after the end of fiscal 2004 to attempt to sell its land in
fiscal 2005. The sale of the real property was not consummated in fiscal 2005
and the Company is continuing its efforts to sell the property. See "Real Estate
Held for Development or Sale - Decision to Sell Property" below and "Item 6. -
Management's Discussion and Analysis or Plan of Operation."

Oil and Gas Operations

                  For more than the last three fiscal years, the Company's oil
and gas operations were primarily conducted in Madison, Freestone, Red River,
Panola, Gregg and Smith Counties of East Texas and in various areas of North
Texas.

                  Due to its decision to conserve its funds for expenditure on
other projects, the Company did not participate in the drilling of any
exploratory or development wells in the fiscal year ended February 28, 2005. In
previous periods, Sandra Pautsky, the Company's President, and Danny Croker, the
Company's Vice President, have selected the exploration and development
prospects in which the Company has participated. For some time, it has been the
Company's practice to purchase interests of varying size in exploration
prospects originated by others (i.e., independent geologists or other
independent oil and gas companies). In most cases, the originator of the
prospect has already assembled the oil and gas leases and performed most, if not
all, of the necessary geological and/or geophysical work before the interests in
the prospects are offered for sale to the Company. Under such circumstances, the
Company typically pays a percentage of the initial prospect costs greater than
the percentage of ownership interest in the prospect which the Company acquires.

                  The Company's principal producing oil and gas property for the
past eight fiscal years has been its 25% interest in the BSR (Sub-Clarksville)
Field in Madison County, Texas (the "Madison County, Texas property").


                                       1
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In fiscal 2005, the Madison County, Texas property was responsible for
approximately 62% of the Company's total oil and gas revenues. The property
consists of 26 wells with proven developed producing reserves and three water
injection wells. The property is fully developed for its primary oil and gas
reserves. As production declined, plans were made by the operator of the
property, the Company and the other working interest owners to install a
secondary recovery project on the property. The Company's independent petroleum
engineers have estimated that 555,221 barrels of proven undeveloped secondary
oil reserves are recoverable to the Company's interest in the property by
waterflooding the reservoir. In fiscal 2003, final royalty owner and Texas
Railroad Commission approvals of the project were obtained, the property was
unitized and the project commenced effective as of December 1, 2002. Produced
water from the property has been injected back into the reservoir since 1999
through a dry hole drilled on the property in the last stage of its development.
A third well on the property has now been converted into a water injection well.
The total flood life is expected to be approximately 16 years, and the project
may ultimately require converting a total of 10 producing wells to water
injection wells and converting two producing wells to water supply wells. The
Company's investment cost for the project is estimated to be approximately
$300,000, which includes its share of the cost for a proposed water plant and
water distribution system and the conversion costs mentioned above. See "Item 6.
- Management's Discussion and Analysis or Plan of Operation - Results of
Operations."

Gravel Operations

                  The Company's gravel property is located on approximately 45
acres of the 1,965 acres of land owned by the Company in fee in La Plata County,
Colorado. For some time, Four Corners Materials mined sand, gravel and rock
products from the gravel permit area pursuant to a gravel contract and surface
lease with the Company. The original permit area covered 33 acres, but, with the
Company's consent, Four Corners Materials added an adjacent 11.9 acres (9.9
acres in one transaction, 2.0 in another) of the Company's land to the permit
area in fiscal 2002 to give Four Corners Materials additional gravel reserves to
mine. Four Corners Materials' original contract and lease expired on January 1,
2002 and it had been operating since that time under the terms of an oral
extension of such contract and lease made between the Company's and Four Corners
Materials' managements which was not fully implemented until the fourth quarter
of fiscal 2003.

                  In consideration of the Company's inclusion of the additional
acreage under the contract and lease and the term extension, Four Corners
Materials, effective as of July 1, 2001, increased the royalty paid to the
Company with respect to tonnage mined from the additional 11.9 acres and paid a
road usage fee to the Company based on the tonnage mined. It also agreed to
perform, at the Company's expense on a "cost plus" basis, the required land
reclamation work on the Company's coal mine permit area located on other
portions of the property. However, a dispute developed in fiscal 2004 between
the Company and Four Corners Materials, which at the time was conducting gravel
mining operations on the Company's Colorado property. As a result of such
dispute, Four Corners Materials is no longer mining the property and the only
gravel sales made during fiscal 2005 were from stockpiles of gravel accumulated
prior to the cessation of mining. The Company received only road usage fees and
a small amount of income from gravel sales during fiscal 2005. The Company would
consider leasing the property again for gravel operations but has no intention
of conducting gravel mining operations itself on the property.

                  Approximately two days after informing Four Corners Materials
that it had violated its contractual obligation to the Company and that Four
Corners Materials was to cease operations and vacate the property, the Company
had a fly-over of the property completed for an aerial record to determine Four
Corners Materials' mining operations status, gravel mine reclamation liability,
remaining obligations with respect to the Company's coal mine reclamation
project, and stockpile volumes. The State of Colorado Division of Mining and
Geology (the "DMG") conducts monthly inspections of both the gravel mine and
coal mine to monitor activities and performance of reclamation responsibilities.
The DMG also periodically conducts aerial inspections to record observations.
The Company believes the most recent DMG aerial inspection was conducted on May
4, 2005.

                  Four Corners Materials is now reclaiming its mining operation
on the property. Four Corners Materials has recently unilaterally amended its
gravel permit to include again approximately 17 acres that were formerly
included in the Company's coal permit. The Company is awaiting completion of
Four Corners Materials' reclamation activities, gravel sales, and financial
obligations to the Company before it makes a final determination regarding
taking further action to enforce Four Corners Materials' obligations to the
Company.


                                       2
<PAGE>
                  On June 2, 2005, representatives of the DMG, Four Corners
Materials and the Company are scheduled to meet at the mining site to determine
Four Corners Materials' and the Company's remaining reclamation obligations and
to arrange implementation by each as is needed to conclude both Four Corners
Materials' and the Company's reclamation of the property. See "Carbon Junction
Coal Mine," below and "Item 6. - Management's Discussion and Analysis or Plan of
Operation - Results of Operations."

Carbon Junction Coal Mine

                  The Company owns the Carbon Junction coal mine which is also
located on its 1,965 acres of land in La Plata County, Colorado. The mine permit
currently covers 190 acres of the property. Although the Company abandoned any
further attempts to mine the coal deposits in fiscal 2000, Four Corners
Materials had been performing the required work at the Company's expense to
reclaim the land affected by the Company's prior surface mining operations. Four
Corners Materials' engineering staff had initially estimated that the
reclamation work could be completed for $413,000 and the Company had previously
recorded a reserve in that amount for costs associated with the reclamation of
the Carbon Junction mine and surrounding property. The Company's mine permit was
renewed in July 2003 for an additional five-year term so that the reclamation
work could be completed. As of February 28, 2005, such reclamation reserve had
been reduced to approximately $157,000 as a result of work performed by Four
Corners Materials and the Company.

                  As a result of the Company's dispute with Four Corners
Materials, the Company took back from Four Corners Materials the responsibility
to the DMG to perform the coal mine reclamation work. After such assumption of
responsibility, a study subsequently performed at the Company's request by the
Company's mining consultant estimated that the Company's previous reserve should
be increased by $100,000 to cover fully the remaining reclamation, and the
Company made such increase as of the end of fiscal year 2004, thereby bringing
the total reserve at February 29, 2004 to approximately $152,000.

                  Four Corners Materials has recently unilaterally amended its
gravel permit to include again approximately 17 acres that were formerly
included in the Company's coal permit. This action should allow the Company to
amend its coal permit to delete that acreage together with the additional
acreage that has been reclaimed to date and to obtain the release of a
substantial portion of the Company's $817,000 coal reclamation performance bond
posted with the State of Colorado. As stated in "Gravel Operations" above, the
Company has scheduled to meet with the DMG and Four Corners Materials on June 2,
2005 to determine actions required to conclude reclamation of the property. The
full release of the Company's reclamation performance bond is subject to the
DMG's confirmation that environmental responses, ground cover, vegetative
habitat and re-growth have stabilized. See "Item 6. - Management's Discussion
and Analysis or Plan of Operation."

Real Estate Held for Development or Sale

                  Location: The Company's planned real estate development now
pertains to approximately 1,400 acres of the 1,965 acres of land owned by the
Company in La Plata County, Colorado. The major highways intersecting the City
of Durango and La Plata County are US Highway 550 running north and south and US
Highway 160 running east and west. The Company's land is aligned with US Highway
160 and is located on a mesa adjacent to and above the City of Durango. The
property is not currently within the City limits; however, certain portions of
the property have common boundaries to the City.

                  Background and Plan Approval Process: In September 2000, the
Company filed an annexation application and Conceptual Plan with the City of
Durango, Colorado for 1,100 acres of the property. The Company became aware
that, prior to any action by the City regarding annexation, a plan had to be
developed and approved by the City for the area in which the Company's property
is located (an "Area Plan"). An Area Plan evaluates land uses within a specific
area to determine whether the uses will be compatible with each other.
Properties adjacent and nearby that may be impacted by the landowner requesting
annexation are studied. Impacts to resources of minerals, coal, oil and gas, as
well as wildlife, archeological, geologic and environmental hazards, traffic,
public facilities and infrastructure are reviewed. Public hearings on the Area
Plan provide a forum for neighborhood discussion and comment. Public meetings
were held in 2001, 2002, and 2003. The ideas, issues and concerns of the
property owners, the Durango community, and City staff were used to prepare the
Area Plan. The plan provides guidance for decisions in developing lands within
the Area Plan consistent with the community's larger vision for Durango.


                                       3
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                   Significant issues that arose during the approval process
were public access across and through the mesa, the City's desire for greater
density, and the Company's desire to develop a portion of its land at a lower
density.

                  The sole current access onto the Company's lands is located on
the western end of the property and serves incoming and outgoing traffic that in
the past has included gravel trucks. The City required that the Company's
property be served by two or more access roads. The City's 1997 US Highway
160/550 Area Plan included a bypass from Highway 160/550 across the Company's
property connecting U.S. Highway 550 to Horse Gulch/Goeglein Road to the east.
The Company advised the City that it could not support a bypass through the
Company's property. The issue ultimately was resolved by the Company's agreement
to accept the minor arterial roadway concept and the City's agreement to shift
the location of the roadway to the perimeter of the property so that the roadway
would not cross the planned golf course. Additional access may be required in
accordance with the Area Plan during the annexation process. However, no paved
secondary access road serving the mesa is required until a traffic study
determines the average daily traffic volume to and from the area will exceed
5,000 vehicle trips per day.

                  With respect to the density of housing units, as issues arose
during the Area Plan process, the Company proposed to build fewer residential
units than the City desired. The Company's Oakridge at Durango property has been
identified by the community as a very desirable location for growth. The
approved Area Plan supports the construction of anywhere from approximately
1,500 to 3,000 residential units.

                  Plan concept: Conceptual Plans are conceptual in nature and
subject to change. The guidelines within the Area Plan reflect the principles
found in traditional neighborhood developments. The Company's mixed use
development concept, tentatively called "Oakridge at Durango," is a neighborhood
design where residential villages would be within convenient walking or biking
distance to nearby neighborhood squares offering life's daily essentials. Each
square would include a small neighborhood business district intended as a
transitional area of light business uses between residential areas and other
features where shopping, services or office spaces would be provided to the
nearby neighborhoods. The center of each square would include a small community
park and plaza for resting, playing or eating. Houses of worship and day care
would be conveniently sited. Residential densities would shift from high-density
in the center of the village to medium or less density as the golf course or
rims of the mesa are approached. The Area Plan adopted by the City of Durango
incorporates areas of open space and preserves hillsides, gulches and other
natural features of the terrain, while allowing residential, commercial and
resort development opportunities around the proposed golf course and other
recreational properties. A substantial business park is envisioned to attract
corporate home offices and local businesses to the area.

                  The mountainous acres of the property that extend northeast
would remain unannexed into the Durango city limits for possible development
into 35-acre lots in the future.

                  Approval of Area Plan: The Plan was adopted by the City of
Durango Planning Commission in December 2003 and by the City Council in January
2004. The Company's management believes that the approval of a final Area Plan
constitutes a major step forward for the Company in its efforts to develop its
property.

                  Annexation: The next step in the process will be for the City
of Durango, when requested by the Company or any new owner (see "Decision to
Sell Property," below), to approve the Company's annexation application. Once an
Area Plan has been adopted, then an annexation impact report is required to
address the physical analysis of the annexation issue. The applicant will submit
to the City of Durango an annexation application, a Master Plan for
infrastructure, and a plan for its initial phase of development. The City
Planners will review, hold public hearings, and then prepare a recommendation to
the City Council to approve, approve with conditions or deny the annexation
application and plan for development. At this stage, the Company is unable to
estimate the timetable for all of the foregoing to occur.

                  Decision to Sell Property: After obtaining approval of the
Area Plan, the Company concluded, during the first quarter of fiscal 2005, that
it would be prudent for it to attempt to sell the property as a whole rather
than developing the property. The Company's decision was based on several
principal factors, one being the recent developments with respect to the health
of Sandra Pautsky, its Chief Executive Officer and principal shareholder,


                                       4
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who has been the moving force pushing the development of the property since the
death of her father, Noel Pautsky, in 1998. In fiscal 2004, Ms. Pautsky was
diagnosed with a life-threatening form of cancer. In mid-2004 Ms. Pautsky
received specialized treatment for her disease. She responded well and has
resumed normal activities. Additional treatment will be necessary in the future.
Concerns regarding her health, the size of the proposed development, the
significant financial requirement by the Company, the number of years to
complete, coupled with the risk involved to the Company in committing so much of
its limited financial resources to one project caused the Company to decide
after the end of fiscal 2004 to attempt to sell its land in fiscal 2005. The
Company's officers, other than Ms. Pautsky, have not been actively involved with
respect to the Colorado land; however, in the event that the Company should not
sell the property, the Company anticipates that Chi Chi Ray, Ms. Pautsky's
daughter, a long-term employee of the Company, would assume primary
responsibility for the Company's Durango development activities. Ms. Ray has
been actively involved historically and to date with the Company's actions in
Colorado.

                  During the period that the Company sought approval of an Area
Plan that would support its proposed development, the Company has been
approached by a number of parties, both locally based in Durango and located
elsewhere, who were interested in purchasing all or part of the property or
joint venturing in some respect with the Company in its development. Although
the Company consistently listened to such parties, it did not actively encourage
such parties or pursue any particular transaction with any of them. The Company,
after obtaining approval of the Area Plan in which the development will be
located, has been recontacted by interested parties to determine if a sale
transaction can be negotiated and consummated. Additional inquiries have also
been received by the Company. In order to consummate a sale transaction, the
Company may elect to employ consultants, brokers or other advisors to assist in
the Company's sale efforts. The Company hopes to be able to complete a sale
transaction in the remainder of fiscal 2006, but if it is unable to do so, it
reserves the right to proceed again with the development of the property, should
circumstances change. See "Item 6. - Management's Discussion and Analysis or
Plan of Operation - Financial Condition and Liquidity."

Competition and Markets

                  Competitive Conditions: Two other Durango area developments
are of significant size and could compete with Oakridge at Durango. Three
Springs is a large project that is being developed a few miles east of Oakridge
at Durango on the eastern edge of the City. A new hospital is proposed to be
included on this project. Edgemont Ranch is another development located nearby
Durango. Edgemont Ranch is situated to the northeast of the City and when
complete is expected to include approximately 1,000 homes on 1,400 acres.
Because of the size and the proximity of these projects to the Company's
development property, they may compete with Oakridge at Durango.

                  Competition: A large number of companies and individuals are
engaged in the exploration for oil and gas, and most of the companies so engaged
possess substantially greater technical and financial resources than the
Company. Competition for desirable leases and suitable prospects for oil and gas
drilling operations is intense, and in the past the Company has experienced
significant competition in obtaining the services of drilling contractors and in
purchasing tubular goods and other materials necessary to drill and complete
wells. In fiscal 2004 and 2005, the Company did not experience any difficulty in
obtaining services and materials because of its lack of exploration and
development activities.

                  The gravel and coal industries are also highly competitive. A
principal competitive factor in both industries is product price. In addition,
with respect to coal, its quality and, in regard to major sales agreements, the
financial and organizational ability of the selling company to meet long-term
coal delivery requirements of utility companies, are important. With regard to
quality of coal, the important criteria include BTU (heating value), sulfur and
ash content.

                  Markets: The Company's ability to produce and market oil and
gas profitably depends upon a number of factors which are beyond the control of
the Company, the effect of which cannot be accurately predicted or anticipated.
These factors include the availability of adequate pipeline and other
transportation facilities, the marketing of competitive fuels and other factors
affecting the availability of a ready market, such as fluctuating supply and
demand. Additional factors affecting the marketing of oil and gas include
imports and actions by foreign producing nations.


                                       5
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                  Oil and gas prices have been on a generally upward trend since
the first quarter of fiscal 2003 and such prices had a materially positive
effect on the Company's revenues in fiscal 2005 and on the amount and present
value of the Company's estimated proven oil and gas reserves at year end. In
fiscal 2005, the Company's average oil price received increased $12.32 per
barrel (approximately 40.8%) from that received in fiscal 2004. The Company's
average gas price received for fiscal 2005 finished the year higher than in
fiscal 2004 (an increase of $0.56 per MCF, or approximately 10.4%); however, the
effect of changes in gas prices on the Company's revenues and proven reserves is
not as great as changes in oil prices due to the Company's significant weighting
in favor of oil production.

                  While certain of the Company's gas properties experience
seasonal variations in demand, the Company was not experiencing any significant
curtailment, or an inability to sell all of its deliverable gas, on an overall
basis at February 28, 2005. See "Item 6. - Management's Discussion and Analysis
or Plan of Operation - Results of Operations."

Regulation

                  Oil and Gas: The production of oil and gas is subject to
extensive federal and state laws, rules, orders and regulations governing a wide
variety of matters, including the drilling and spacing of wells, allowable rates
of production, prevention of waste and pollution and protection of the
environment. In addition to the direct costs borne in complying with such
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels. The
regulations are generally designed to ensure that oil and gas operations are
carried out in a safe and efficient manner and to ensure that similarly situated
operators are provided with reasonable opportunities to produce their respective
fair shares of available oil and gas reserves. Since these regulations generally
apply to all oil and gas producers, the Company believes that these regulations
do not put the Company at a material disadvantage to other oil and gas
producers.

                  Certain sales, transportation and resales of natural gas by
the Company are subject to both federal and state laws and regulations,
including, but not limited to, the Natural Gas Act (the "NGA"), the Natural Gas
Policy Act of 1978 (the "NGPA") and regulations promulgated by the Federal
Energy Regulatory Commission ("FERC") under the NGA, the NGPA and other
statutes. The provisions of the NGA and the NGPA, as well as the regulations
thereunder, are complex and can affect all who produce, resell, transport,
purchase or consume natural gas.

                  Although FERC transportation regulations do not directly apply
to the Company because it is not engaged in rendering jurisdictional
transportation services, these regulations do affect the operations of the
Company by virtue of the need to deliver its gas production to markets served by
interstate or intrastate pipelines.

                  Coal and Gravel: The Company's coal operations in the past
have been subject to extensive regulation under the Surface Mining Control and
Reclamation Act of 1977 and the Colorado law of a similar nature and the Clean
Air Act of 1990. The effects of such regulation have been to increase
significantly the lead time to commence actual surface coal mining operations,
to make it more costly for the coal to be marketed and effectively to limit the
customers for the coal to certain types of power plants. The Company's gravel
operations are subject to comparable regulation, but compliance standards are
less rigid.

Environmental and Health Controls

                  The Company's operations are subject to numerous federal,
state and local laws and regulations relating to environmental and health
protection. These laws and regulations require the acquisition of a permit
before drilling commences, restrict the type, quantities and concentration of
various substances that can be released into the environment in connection with
drilling and production activities, limit or prohibit drilling activities on
certain lands lying within wilderness, wetlands and other protected areas and
impose substantial liabilities for pollution resulting from oil and gas
operations. These laws and regulations may also restrict air or other discharges
resulting from the operation of pipeline systems and other facilities in which
the Company may own an interest. Although the Company believes that compliance
with environmental laws and regulations will not have a material adverse effect
on operations or earnings, risks of substantial costs and liabilities are
inherent in oil and gas operations, and there can be no assurance that
significant costs and liabilities will not be incurred. Moreover, it is possible
that other developments, such as stricter environmental laws and regulations or
claims for damages to


                                       6
<PAGE>


property or persons resulting from the Company's operations, could result in
substantial costs and liabilities.

Operating Hazards and Uninsured Risks

                  The Company's oil and gas operations are subject to all of the
risks normally incident to the oil and gas exploration and production business,
including blowouts, cratering, explosions, pollution and other environmental
damage, any of which could result in substantial losses to the Company due to
injury or loss of life, damage to or destruction of wells, production facilities
and other property, clean-up responsibilities, regulatory investigations and
penalties and suspensions of operations. As is common in the oil and gas
industry, the Company is not fully insured against certain of these risks either
because insurance is not available or because the Company has elected not to
insure due to high premium costs. The Company maintains comparable insurance
coverage for its coal and gravel operations.

Employees

                  As of April 30, 2005, the Company had six full-time employees.
Four of the employees were located at the Company's executive offices and two
were field employees located in North Texas. The Company considers its relations
with its employees to be satisfactory.

ITEM 2. DESCRIPTION OF PROPERTY.

                  Oil and Gas Properties.

Reserves

                   Reference is made to "Supplemental Oil and Gas Data
(Unaudited)" included as supplemental information to the Financial Statements
for additional information concerning: (i) certain cost and revenue information
pertaining to the Company's oil and gas producing activities; (ii) estimates of
the Company's oil and gas reserves and changes in such reserves; and (iii) a
standardized measure of the discounted future net cash flows from the Company's
oil and gas reserves and the changes in such standardized measure. The
engineering report with respect to the Company's proved oil and gas reserves as
of February 28, 2005 was prepared by Stephens Engineering, independent petroleum
engineers, Wichita Falls, Texas ("Stephens Engineering"). At such date, all of
the Company's oil and gas reserves were located in the United States and in the
States of Texas, Mississippi, Colorado and Oklahoma.

                  No reserve reports pertaining to the Company's proved net oil
or gas reserves were filed with any Federal governmental authority or agency
during the fiscal year ended February 28, 2005, and no major discovery is
believed to have caused a significant change in the Company's estimates of
proved reserves since that date.

                  The following table reflects Stephens Engineering's estimate
of those quantities of oil and gas as of February 28, 2005 which can be produced
from the Company's proved developed reserves during the fiscal year ending
February 28, 2006, using equipment installed and under economic and operating
conditions existing at February 28, 2005:

<Table>
<S>                                                  <C>
                  Oil (Bbls.)................        20,164
                  Gas (MCF)..................        27,030
</Table>

The Company is not obligated to provide a fixed and determinable quantity of oil
and gas in the future under any of its existing contracts or arrangements.

Production

                  The following table shows for each of the three fiscal years
ended February 28, 2005 the total production attributable to the Company's oil
and gas interests:


                                       7
<PAGE>


<Table>
<Caption>
     FISCAL YEAR ENDED                        OIL                        GAS
       FEBRUARY 28/29                       (BBLS.)                     (MCF)
----------------------------              ----------                  ----------
<S>                                           <C>                         <C>
2005 .......................                  23,852                      41,289
2004 .......................                  25,382                      36,879
2003 .......................                  28,015                      45,720
</Table>

Lifting Costs and Average Sales Prices

                  The Company's production (lifting) costs and average sales
prices received during each of the three fiscal years ended February 28, 2005
were as shown in the following table:

<Table>
<Caption>
                                           FISCAL YEAR
                                      ENDED FEBRUARY 28,/29,
                                 -------------------------------
                                   2005       2004       2003
                                 ---------  ---------  ---------
<S>                              <C>        <C>        <C>
Lifting Costs

Per Equivalent Unit (Bbls.) ...  $   20.36  $   17.70  $   15.48

Average Sales Prices

Oil (per Bbl.) ................      42.54      30.22      27.08
Gas (per MCF) .................       5.95       5.39       3.47
</Table>

Sales Contracts and Major Customers

                  The Company does not own any refining facilities and sells its
oil under short-term contracts at f.o.b. field prices posted by the principal
purchasers of oil in the areas in which the Company's producing properties are
located. During the fiscal year ended February 28, 2005, approximately 68% of
the Company's oil sales were made to Teppco Crude Oil, L.P. ("Teppco") and
approximately 25% were made to Sunoco, Inc. During fiscal 2005, approximately
66% of the Company's gas sales were made under short-term contracts to Orion
Pipeline, L.L.C. ("Orion") and approximately 14% were made to Red Cedar
Gathering Company.

                  Substantially all of the Company's oil sales to Teppco and its
gas sales to Orion were from the Company's Madison County, Texas property.

                  In the opinion of management, the termination of any of the
Company's sales contracts would not adversely affect the Company's ability to
sell its oil and gas production at comparable prices.

Developed Acreage and Productive Wells

                  As of February 28, 2005, the Company owned working and
overriding royalty interests in 8,999 gross (2,529 net) acres of developed oil
and gas leases and 68 gross (21.34 net) productive oil and gas wells.

                  The following table summarizes the Company's developed acreage
and productive wells as of February 28, 2005:

<Table>
<Caption>
                              Developed Acreage(1)                  Productive Wells(1)(3)
                      -----------------------------------      ----------------------------------
                          Gross(2)              Net(2)            Gross(2)              Net(2)
                      ---------------     ---------------      --------------        ------------
                       Oil       Gas        Oil       Gas       Oil       Gas          Oil    Gas
<S>                   <C>       <C>       <C>         <C>      <C>        <C>        <C>    <C>
Texas:
    Madison Co......  4,515        --     1,129        --        26        --         6.50     --
    All Other Cos...  2,248     1,914     1,219       177        26        13        12.47   2.31
Mississippi.........     40        --        --        --         1        --         0.01     --
Colorado............     --       242        --         4        --         1           --   0.02
Oklahoma............     40        --         1        --         1        --         0.03     --
                      -----     -----     -----      ----      ----       ---        -----   ----
    Total...........  6,843     2,156     2,349       181        54        14        19.01   2.33
                      =====     =====     =====      ====      ====       ===        =====   ====
</Table>


                                       8
<PAGE>


------------

(1)               Reversionary interests which may increase or decrease the
                  interest shown have been disregarded for purposes of this
                  table.

(2)               "Gross," as it applies to acreage or wells, refers to the
                  number of wells or acres in which an interest is owned by the
                  Company. "Net," as it applies to acreage or wells, refers to
                  the sum of the fractional ownership interests owned by the
                  Company in gross wells or gross acres.

(3)               Includes 14 gross (3.19 net) shut-in wells; excludes 7 gross
                  (3.05 net) water injection wells.

Undeveloped Acreage

                  The following table shows the gross and net acres of
undeveloped oil and gas leases held by the Company at February 28, 2005:

<Table>
<Caption>
STATE                                                   GROSS ACRES                NET ACRES
--------------------------------------------            -----------                ----------
<S>                                                     <C>                        <C>
Texas.......................................                 11,711                     3,896
Arkansas....................................                  2,428                     1,214
                                                        -----------                ----------
       Total.................................                14,139                     5,110
                                                        ===========                ==========
</Table>

                  All of the Company's undeveloped leases in the State of
Arkansas cover lands located in Miller County. In the absence of drilling
activity which establishes commercial reserves sufficient to justify retention,
the Company's leases on approximately 67.39% of its net acres will expire in
fiscal 2006, 2.26% will expire in fiscal 2007, .49% will expire in fiscal 2008
and .06% will expire in fiscal 2009. The remaining approximate 29.79% of the
Company's undeveloped acreage, which includes all of such acreage in the State
of Arkansas and a portion of such acreage in Gregg and Montague Counties, Texas,
is currently held in force by production. The Company has no ownership interest
in the Miller County, Arkansas productive acreage.

Drilling Activity

                  The Company did not participate in drilling any development
wells during the three fiscal years ended February 28, 2005, and, as of February
28, 2005, the Company was not in the process of drilling or completing any
wells.

                  Coal and Gravel Properties.

                  As of February 28, 2005, the Company held 1,825 (456 net)
acres of coal leases covering lands in La Plata County, Colorado. The leases
were acquired in October 1990 and have remaining primary terms of approximately
10 years. No annual delay rentals or advance minimum royalties are required.

                  The Company's Carbon Junction coal mine is located upon such
1,825 acres. The renewal mine permit issued by the State of Colorado for such
coal mine pertains to approximately 237 acres out of such 1,825 acres. The
Company's leases cover a 25% interest in the coal under the 1,825 acres. The
Company owns most of the surface estate and the other 75% interest in the coal
and has the executive rights (i.e., the exclusive right to sign coal leases) on
the 25% interest.

                  In 1991, the Company purchased the surface estate, a 75%
interest in the coal and the executive rights to the remaining 25% interest in
the coal of 200 additional acres in La Plata County adjacent to the 1,825 acre
tract. The Company has not leased the remaining 25% interest in the coal. By
virtue of its fee and lease ownership and the executive rights it holds, the
Company controls 100% of the above described 1,825 acre and 200 acre tracts. The
Company has ended any plans to attempt to operate the Carbon Junction coal mine
and renewed its mine permit in July 2003 only so that the required reclamation
work on the land affected by its prior mining operations can be


                                       9
<PAGE>


completed. See "Item 1 - Description of Business - Carbon Junction Coal Mine."
The Company expects, however, to continue the coal leases as they involve no
significant expense to it.

                  The Company also owns 55% of the gravel, oil, gas and other
mineral rights with respect to the 1,825 acre tract in La Plata County, Colorado
and has the executive rights on the remaining 45%. During fiscal 1998, the
Company's permit from the State of Colorado to mine gravel from 33 acres on such
tract was transferred to Four Corners Materials. The Company subsequently
allowed Four Corners Materials to extend the permitted area by an additional
11.9 acres. Four Corners Materials is no longer mining sand, gravel and rock
products from the permit area. See "Item 1. - Description of Business - Gravel
Operations" and "Item 6. - Management's Discussion and Analysis or Plan of
Operation - Results of Operations."

                  Real Estate.

                  The surface of most of the land in La Plata County, Colorado
described in "Coal and Gravel Properties" above and adjacent acreage totaling
1,965 acres is held for development or sale by the Company. Approximately 1,400
acres of such land is the subject of a planned mixed use development by the
Company. See "Item 1. - Description of Business - Real Estate Held for
Development or Sale."

                  Office Building.

                  The Company owns a one-story office building situated at 4613
Jacksboro Highway in Wichita Falls, Texas in which its executive offices are
located. The building is located on .519 acres of land and contains 5,117 square
feet of space. The building was built in 1974 and is in overall good condition.

ITEM 3. LEGAL PROCEEDINGS.

                  The Company is not a party to any pending litigation. To the
best knowledge of the Company, there are no legal proceedings to which any
director, officer or affiliate of the Company, any owner of record or
beneficially of more than five percent (5%) of any class of voting securities of
the Company, or any associate of any such director, officer or security holder
is a party adverse to the Company or has a material interest adverse to the
Company.

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

                  No matter was submitted during the fourth quarter of the
fiscal year ended February 28, 2005 to a vote of the Company's security holders,
through the solicitation of proxies or otherwise.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

                  The Company's common stock, $.04 par value, is traded in the
over-the-counter market. The following table shows the range of bid quotations
for the common stock during the two fiscal years ended February 28, 2005 by
quarters. Such quotations were furnished to the Company by the National
Quotation Bureau, LLC and were supplied by The National Association of
Securities Dealers ("NASD") through the NASD OTC Bulletin Board, the NASD's
automated system for reporting NON-NASDAQ quotes and the National Quotation
Bureau's Pink Sheets. The quotations represent prices between dealers and do not
include retail markups, markdowns or commissions and do not necessarily
represent actual transactions.

<Table>
<Caption>
PERIOD                                                      HIGH                LOW
------------------------------------                       -------          --------
<S>                                                        <C>              <C>
Fiscal Year Ended February 29, 2004:
     Quarter Ended May 31, 2003                            $  3.90          $   3.40
     Quarter Ended August 31, 2003                            4.40              3.40
     Quarter Ended November 30, 2003                          4.50              4.05
     Quarter Ended February 29, 2004                          4.35              4.20
</Table>


                                       10
<PAGE>


<Table>
<Caption>
PERIOD                                                      HIGH                LOW
------------------------------------                       -------          --------
<S>                                                        <C>              <C>
Fiscal Year Ended February 28, 2005:
     Quarter Ended May 31, 2004                            $  5.10          $   4.30
     Quarter Ended August 31, 2004                            6.00              4.50
     Quarter Ended November 30, 2004                          5.25              3.00
     Quarter Ended February 28, 2005                          4.25              3.00
</Table>

                  As of May 27, 2005, the approximate number of holders of
record of the common stock of the Company was 441.

                  The Company did not pay any dividends during the two fiscal
years ended February 28, 2005. There are currently no restrictions upon the
Company's ability to pay dividends; however, the Company does not anticipate
paying any dividends in fiscal 2006. The Company did not make any sales of its
equity securities during the three fiscal years ended February 28, 2005.

                  The following table shows all purchases of the Company's
shares of common stock made by the Company during each month of the fourth
quarter of the Company's fiscal year ended February 28, 2005:

<Table>
<Caption>
                                    TOTAL NUMBER                AVERAGE PRICE
          PERIOD                OF SHARES PURCHASED             PAID PER SHARE
----------------------------    -------------------             --------------
<S>                             <C>                             <C>
December 1, 2004                           -                      $      -
       through
December 31, 2004
January 1, 2005
       through
January 31, 2005                           -                             -
February 1, 2005
       through
February 28, 2005                        500                          4.25
                                -------------------             --------------
    Total                                500                      $   4.25
                                ===================             ==============
</Table>


                  The Company has no publicly announced plans or programs to
purchase its shares of common stock. The one purchase of shares was made in a
private transaction directly with the stockholder involved.

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

                  The following discussion and analysis should be read in
conjunction with the Financial Statements and Notes thereto included in Item 7.

Results of Operations

                  The Company had a net loss of $250,390 ($.06 per share) in the
fiscal year ended February 28, 2005 compared to a net loss of $266,974 ($.06 per
share) in the fiscal year ended February 29, 2004. The slight improvement in the
Company's results of operations in fiscal 2005 was due primarily to improved oil
and gas revenues accompanied by the lack of a cumulative effect of an accounting
change in fiscal 2005.

                  Oil and gas revenues increased approximately $244,590 (24.9%)
in the fiscal year ended February 28, 2005 due to increases in the Company's
average oil and gas prices received during the year as oil and gas production
sales volumes again declined. Fees in the amount of $36,600 received by the
Company both in fiscal 2005 and 2004 for serving as operator of most of the
Company's North Texas area properties are included in oil and gas revenues.

                  The following table compares the Company's oil and gas
revenues and average prices received by the


                                       11
<PAGE>


Company and its sales volumes of oil and gas during fiscal 2005 with those of
fiscal 2004:

<Table>
<Caption>
                                                                PERCENTAGE
                             FISCAL 2005      FISCAL 2004       DIFFERENCE
                           ---------------   --------------     ----------
<S>                        <C>               <C>                     <C>
Oil:

Revenues                   $   1,002,626     $     772,484        +  29.8%
Volume (Bbls.)                    23,569            25,565        -   7.8%
Average Price (per Bbl.)   $       42.54             30.22        +  40.8%

Gas:

Revenues                   $     179,326     $     166,750        +   7.5%
Volume (MCF)                      30,148            30,953        -   2.6%
Average Price (per MCF)    $        5.95     $        5.39        +  10.4%
</Table>

Non-material amounts of natural gas liquids revenues and sales volumes for both
years are excluded from the foregoing table.

                  The Company's oil and gas revenues in fiscal 2005 from the
Madison County, Texas property increased $154,039 (26.9%) as the higher average
oil and gas prices received for production from the property offset the effect
of lower sales volumes. The Madison County, Texas property has been fully
developed for its primary oil and gas reserves for some time. The property was
unitized in fiscal 2003 and a secondary recovery (waterflood) project on the
property was commenced in the last quarter of that year. The secondary recovery
project has been implemented in a tightly controlled manner by the operator of
the property, which intends to complete the project out of the property's cash
flow, if possible, rather than incurring a substantial part of the project's
installation expense upfront at one time. During the first quarter of fiscal
2005, a producing well was recompleted into a water supply well on the property.
The water supply wells have added approximately 650,000 barrels of makeup water
thus far and the producing wells have continued to produce approximately 1,200
to 1,500 barrels of water per day, which are reinjected into the formation. The
operator has advised the Company that it does not expect any significant
increase in oil production volumes from the property until the void in the
producing formation from prior oil and gas production, which is the equivalent
of roughly 3,000,000 barrels of oil, has been filled. Any increase in oil
production volumes from the property is now not expected to occur until fiscal
2008 at the earliest due to the substantial lag time for the buildup of
sufficient water volumes to push the incremental secondary oil reserves to
producing wells and the actual production of the incremental reserves.
Notwithstanding the Company's continued strong expectations with respect to the
waterflood project, it should again be emphasized that there can be no assurance
that the secondary recovery project will be successful.

                  The Company's gravel revenues for fiscal 2005 decreased by
$156,162 (75.7%). As a result of the Company's dispute with Four Corners
Materials which developed during the second quarter of fiscal 2004 and Four
Corners Materials' cessation of mining activities in the third quarter of fiscal
2004, the Company received substantially reduced revenues from gravel sales and
road usage fees in fiscal 2005. The Company received revenues of $47,616 in the
first three quarters of fiscal 2005 from the sale by Four Corners Materials of
gravel stockpiled on the property when its mining activities ceased. The Company
would lease the property again for gravel operations but has no intention of
conducting any operations itself. The Company had no coal revenues in either
fiscal 2004 or 2005.

                  The expenses of the Company's oil and gas operations increased
$18,079 (2.3%) in the fiscal year ended February 28, 2005 resulting from an
increase in lease operating expenses, despite a $50,194 (36.3%) decline in
depletion and depreciation expense. The decline in depletion and depreciation
expense was attributable to the Madison County, Texas property and was due to
lower sales production volumes for the year and a lower per barrel amortization
rate and a higher proven oil and gas reserves for the property at the fiscal
2005 year end as compared to the prior year. Depletion expense should continue
to reduce for this property as its depletable balance lowers. The Company
incurred no exploration costs in fiscal 2005 and only very nominal exploration
costs in fiscal 2004. There were no dry hole costs in either fiscal 2004 or 2005
as the Company did not participate in the drilling of any wells in these years.
The lease operating portion of overall oil and gas operating expenses increased
by $68,279 (10.4%) in


                                       12
<PAGE>


fiscal 2005. Such increase was mainly attributable to workovers in Madison
County and the North Texas area as well as increased production taxes due to
higher revenues.

                  The expenses of the Company's coal and gravel operations
decreased by $25,108 (23.5%) in fiscal 2005, primarily as the result of a
decrease in legal expenses, property taxes and depletion costs even though the
Company did experience an increase in engineering, testing and permitting
expenses. The Company's reserve as of the end of fiscal 2005 was $157,000
compared with a reserve of $152,000 as of the end of fiscal 2004. Both the
fiscal 2005 and 2004 reserves grew out of instructions given by Four Corners
Materials to the DMG in the second quarter of fiscal 2004 to stop processing the
bond that was to secure the amendment of the Company's gravel permit intended to
allow Four Corners Materials to perform coal mine reclamation work on the
Company's behalf. The Company believes that the actions of Four Corners
Materials breached the terms of its oral contract with the Company as well as
the Company's conditional right of entry grant and the gravel permit amendment
and notified Four Corners Materials to such effect at the time, but such actions
by Four Corners Materials nevertheless caused the Company to have to take back
the responsibility for the remaining coal mine reclamation work that had been
shifted to Four Corners Materials. While coal and gravel operating expenses
decreased from fiscal 2004, they were still adversely impacted by higher testing
and permitting expenses and legal expenses resulting from the Four Corners
Materials dispute and ad valorem tax expense.

                  Four Corners Materials is now reclaiming its mining operation
on the property. Four Corners Materials has recently unilaterally amended its
gravel permit to include a portion of the acreage (i.e., the so-called south pit
area) that was formerly included in the Company's coal permit. This action
should allow the Company to amend its coal permit to delete that acreage. The
Company has not yet made any determination as to whether Four Corners Materials'
recent action will affect the reduction of the amount of its coal reclamation
reserve. The Company is awaiting completion of Four Corners Materials'
reclamation activities, gravel sales, and financial obligations to the Company
before it makes a final determination regarding taking further actions to
enforce Four Corners Materials' obligations to the Company.

                  Real estate development expense declined approximately $9,641
(86.1%) in fiscal 2005 primarily due to a decrease in legal expenses due to
lessened activity as a result of the decision to attempt to sell the property.
General and administrative expenses increased $337,415 (72.1%) in fiscal 2005
resulting from a bonus of $315,000 which the Board of Directors of the Company
approved (with Ms. Pautsky abstaining) and the Company paid to Sandra Pautsky,
the Company's Chief Executive Officer, in consideration of her extraordinary
services over a number of years with respect to the Company's proposed Colorado
real estate development project which culminated with the Area Plan approval
obtained in January 2004. See "Item 10. - Executive Compensation."

                  Other income increased approximately $22,000 (77.1%) in fiscal
2005 compared to fiscal 2004. Other income consists of two primary components -
interest and dividend income and other net income. Other net income consists
primarily of the gain or loss on any sale of oil and gas properties, the gain or
loss on the sale of other assets and investment income or loss. Investment
income or loss is currently entirely attributable to the Company's interest in a
limited partnership which operates a small gas pipeline in the East Texas area.
The interest and dividend income remained relatively unchanged from fiscal 2004
amounts, with the difference being attributable to the fact that the Company
suffered an $18,600 loss on the sale of a trailer used in its real estate
operations in fiscal 2004, while the Company suffered no equivalent loss in
fiscal 2005. As to the remaining other net income components, the Company's loss
relating to its interest in the limited partnership was approximately $3,500
less in fiscal 2005 than in fiscal 2004.

                  The Company's provision for income tax benefit in fiscal 2005
was slightly lower and in fiscal 2004 was slightly higher than would be expected
to be the case if such provisions were computed by applying the U.S. Federal
corporate tax rate to the pretax loss in each year primarily as the result of a
revision of prior year provision estimate.

                  The Company's weighted average shares outstanding decreased
approximately 1% in the fiscal year ended February 28, 2005 due to the purchase
of approximately 21,100 shares of the Company's stock made by the Company from
other shareholders during the year. See "Item 7. - Financial Statements - Note
G. of Notes to Financial Statements."


                                       13
<PAGE>


Financial Condition and Liquidity

                  During fiscal 2005, notwithstanding that the Company did not
participate in any exploratory or development drilling for the third straight
year and generally tried to restrict its expenditures on operational and
investing activities, all aspects of the Company's activities were net users of
cash, resulting in a reduction in the Company's cash and cash equivalents at
year end of approximately $559,250.

                  The Company's operating activities, which traditionally have
been net providers of cash, instead used approximately $252,000 in cash in
fiscal 2005 despite the Company's slight increase in oil and gas revenues during
the year, primarily as a result of the increase in General and Administrative
expenses discussed in "Results of Operations" above.

                  The Company's investing activities used approximately $202,000
in funds (approximately $84,800 more than in fiscal 2004) as the Company made
additions to oil and gas properties, real estate held for development and
property and equipment with no offsetting sales of these items. The Company's
financing activities (entirely purchases of the Company's common stock) used
approximately $105,800 in funds in fiscal 2005, down from approximately $253,600
in fiscal 2004 due to decreases in the number of shares purchased and in the
Company's stock price during the year. At February 28, 2005, the Company still
had no indebtedness and cash, cash equivalents and investment securities
available for sale aggregated approximately $2,958,700.

                  Given the Company's decision to attempt to sell, rather than
develop, its Colorado real estate in fiscal 2006, which should eliminate the
need for any substantial drawdown of the Company's cash reserves or the need to
obtain additional debt or equity financing, the Company expects to fund its
contemplated oil and gas and coal reclamation operations during fiscal 2006 and
any purchases of the Company's stock that it makes from its cash and cash
equivalents, sales of all or a portion of its investment securities available
for sale and any cash flow from its oil and gas properties. The absence of
revenues from gravel operations in fiscal 2006 because of the cessation of
mining activities will further reduce the available funds, although more than
sufficient funds should be available to the Company for operations.

                  The Company's average oil and gas product prices received
increased significantly during fiscal 2005. The Company does not anticipate that
its average oil and gas prices received in fiscal 2006 will exceed, or perhaps
even be equivalent to, those received during fiscal 2005. The Company currently
believes that sales production volumes from the Madison County, Texas property
might be maintained at prior year levels for the first time in seven years. The
Company's fiscal 2006 operations should also benefit from the contemplated
release of a significant portion of the Company's $817,000 coal mine reclamation
bond to the State of Colorado sometime during the year, but there can be no
assurance that this will occur during fiscal 2006.

Critical Accounting Policies and Estimates

                  The foregoing discussion and analysis of the Company's results
of operations and financial condition and liquidity is based upon the financial
statements, which have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. The Company's significant accounting
policies are described in Note B to the financial statements. In response to
Securities and Exchange Commission (the "Commission") Release No. 33-8040,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies," the
Company has identified certain of these policies as being of particular
importance to the portrayal of the Company's results of operations and financial
position and which require the application of significant judgment by
management. The Company analyzes its estimates, including those related to oil
and gas revenues, oil and gas properties, income taxes, contingencies and
litigation, and bases its estimates on historical experience and various other
assumptions that the Company believes to be reasonable under the circumstances.
Actual results may differ from these estimates under different assumptions or
conditions. The Company believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of
the Company's financial statements:

                  SUCCESSFUL EFFORTS METHOD OF ACCOUNTING: The Company accounts
for its natural gas and crude oil exploration and development activities
utilizing the successful efforts method of accounting. Under this method,


                                       14
<PAGE>


costs of productive exploratory wells, development dry holes and productive
wells, costs to acquire mineral interests and three-dimensional (3-D) seismic
costs are capitalized. Exploration costs, including personnel costs, certain
geological and geophysical expenses including two-dimensional (2-D) seismic
costs and delay rentals for oil and gas leases, are charged to expense as
incurred. Exploratory drilling costs are initially capitalized, but charged to
expense if and when the well is determined not to have found reserves in
commercial quantities. The sale of a partial interest in a proved property is
accounted for as a cost recovery and no gain or loss is recognized.

                  The application of the successful efforts method of accounting
requires managerial judgment to determine the proper classification of wells
designated as developmental or exploratory which will ultimately determine the
proper accounting treatment of the costs incurred. The results from a drilling
operation can take considerable time to analyze and the determination that
commercial reserves have been discovered requires both judgment and industry
experience. Wells may be completed that are assumed to be productive but
actually deliver oil and gas in quantities insufficient to be economic, which
may result in the abandonment of the wells at a later date. Wells may be drilled
that target geologic structures that are both developmental and exploratory in
nature and an allocation of costs is required to properly account for the
results. The evaluation of oil and gas leasehold acquisition costs requires
managerial judgment to estimate the fair value of these costs with reference to
drilling activity in a given area. Drilling activities in an area by other
companies may also effectively condemn leasehold positions.

                  The successful efforts method of accounting can have a
significant impact on the operational results reported when the Company is
entering a new exploratory area in hopes of funding an oil and gas field that
will be the focus of future development drilling activity. The initial
exploratory wells may be unsuccessful and will be expensed.

                  RESERVE ESTIMATES: The Company's estimates of oil and gas
reserves, by necessity, are projections based on geologic and engineering data,
and there are uncertainties inherent in the interpretation of such data as well
as the projection of future rates of production and the timing of development
expenditures. Reserve engineering is a subjective process of estimating
underground accumulations of oil and gas that are difficult to measure. The
accuracy of any reserve estimate is a function of the quality of available data,
engineering and geological interpretation and judgment. Estimates of
economically recoverable oil and gas reserves and future net cash flows
necessarily depend upon a number of variable factors and assumptions, such as
historical production from the area compared with production from other
producing areas, the assumed effects of regulations by governmental agencies and
assumptions governing future oil and gas prices, future operating costs,
severance taxes, development costs and workover gas costs, all of which may in
fact vary considerably from actual results. The future drilling costs associated
with reserves assigned to proved undeveloped locations may ultimately increase
to an extent that these reserves may be later determined to be uneconomic. For
these reasons, estimates of the economically recoverable quantities of oil and
gas attributable to any particular group of properties, classifications of such
reserves based on risk of recovery and estimates of the future net cash flows
expected therefrom may vary substantially. Any significant variance in the
assumptions could materially affect the estimated quantity and value of the
reserves, which could affect the carrying value of the Company's oil and gas
properties and/or the rate of depletion of the oil and gas properties. Actual
production, revenues and expenditures with respect to the Company's reserves
will likely vary from estimates and such variances may be material.

                  IMPAIRMENT OF OIL AND GAS PROPERTIES: The Company reviews its
oil and gas properties for impairment at least annually and whenever events and
circumstances indicate a decline in the recoverability of their carrying value.
The Company estimates the expected future cash flows of its oil and gas
properties and compares such future cash flows to the carrying amount of the
properties to determine if the carrying amount is recoverable. If the carrying
amount exceeds the estimated undiscounted future cash flows, the Company will
adjust the carrying amount of the oil and gas properties to their fair value.
The factors used to determine fair value include, but are not limited to,
estimates of proved reserves, future commodity pricing, future production
estimates, anticipated capital expenditures and a discount rate commensurate
with the risk associated with realizing the expected cash flows projected.

                  Given the complexities associated with oil and gas reserve
estimates and the history of price volatility in the oil and gas markets, events
may arise that would require the Company to record an impairment of the recorded
book values associated with oil and gas properties. The Company has recognized
impairments this year and in prior years and there can be no assurance that
impairments will not be recognized in the future.


                                       15
<PAGE>


                  ASSET RETIREMENT OBLIGATIONS: Effective March 1, 2003, the
Company adopted SFAS No. 143, Accounting for Asset Retirement Obligations. The
asset retirement obligations represent the estimated present value of the
amounts expected to be incurred to plug, abandon, and remediate the producing
properties at the end of their productive lives, in accordance with state laws,
as well as the estimated costs associated with the reclamation of the property
surrounding and including the Company's previous coal mining operations. The
Company determines the asset retirement obligations by calculating the present
value of estimated cash flows related to the liability. The asset retirement
obligations are recorded as a liability at the estimated present value as of the
asset's inception, with an offsetting increase to producing properties. Periodic
accretion of the discount related to the estimated liability is recorded as an
expense in the statement of operations.

                  The estimated liability is determined using significant
assumptions, including current estimates of plugging and abandonment costs,
annual inflation of these costs, the productive lives of wells, and a
risk-adjusted interest rate. Changes in any of these assumptions can result in
significant revisions to the estimated asset retirement obligations. Revisions
to the asset retirement obligations are recorded with an offsetting change to
producing properties, resulting in prospective changes to depletion and
depreciation expense and accretion of the discount. Because of the subjectivity
of assumptions and the relatively long lives of most of the wells, the costs to
ultimately retire the Company's wells may vary significantly from prior
estimates.

Forward-Looking Statements

                  Certain information included in this Annual Report on Form
10-KSB and other materials filed by the Company with the Commission contain
forward-looking statements relating to the Company's operations and the oil and
gas industry. Such forward-looking statements are based on management's current
projections and estimates and are identified by words such as "expects,"
"intends," "plans," "believes," "estimates," "anticipates" and similar words.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict. Therefore,
actual results may differ materially from what is expressed in such
forward-looking statements.

                  Among the factors that could cause actual results to differ
materially are crude oil and natural gas price fluctuations, failure to achieve
expected production and the timing of receipt of revenues from existing and
future exploration and development projects (including, particularly, the
secondary recovery project on the Madison County, Texas property), higher than
estimated oil and gas and coal reclamation costs and delays with respect to, or
failure to obtain, governmental permits and approvals necessary to proceed with
real estate development. In addition, these forward-looking statements may be
affected by general domestic and international economic and political
conditions.


                                       16
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS


<Table>
<Caption>
                                                            PAGE

<S>                                                         <C>
Report of Independent Registered Public Accounting Firm      18

Financial Statements:

     Balance Sheets ...................................      19

     Statements of Operations .........................      21

     Statements of Stockholders' Equity ...............      22

     Statements of Cash Flows .........................      23

Notes to Financial Statements .........................      24

Supplemental Oil and Gas Data (Unaudited) .............      36
</Table>


                                       17
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Oakridge Energy, Inc.

We have audited the accompanying balance sheets of Oakridge Energy, Inc., a Utah
corporation, as of February 28, 2005 and February 29, 2004, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these 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 financial
statements are free of material misstatement. 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of Oakridge Energy, Inc. as of
February 28, 2005 and February 29, 2004, and the results of its operations and
its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.


/s/ Whitley Penn


Fort Worth, Texas
April 22, 2005


                                       18

<PAGE>
                         OAKRIDGE ENERGY, INC.

                             BALANCE SHEETS



<Table>
<Caption>
                                                                                           FEBRUARY 28,      FEBRUARY 29,
                                                                                               2005              2004
                                                                                           ------------     ------------
<S>                                                                                        <C>              <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                              $  2,294,548     $  2,853,798
    Trade accounts receivable                                                                   150,459          150,564
    Investment securities available for sale                                                    664,199          436,378
    Prepaid expenses and other                                                                   20,492           20,698
                                                                                           ------------     ------------
Total current assets                                                                          3,129,698        3,461,438

Oil and gas properties, at cost, using the successful
    efforts method of accounting:
    Proved developed properties                                                               7,082,767        6,979,596
    Less accumulated depletion and depreciation                                               6,303,977        6,215,903
                                                                                           ------------     ------------
                                                                                                778,790          763,693
    Unproved properties                                                                         210,674          185,207
                                                                                           ------------     ------------
Net oil and gas properties                                                                      989,464          948,900

Coal and gravel properties, at cost:
    Undeveloped properties                                                                    5,850,424        5,850,424
    Mining and service equipment                                                              2,461,783        2,461,783
                                                                                           ------------     ------------
                                                                                              8,312,207        8,312,207
    Less accumulated depletion and depreciation                                               8,051,719        8,046,348
                                                                                           ------------     ------------
Net coal and gravel properties                                                                  260,488          265,859

Other property and equipment, net of accumulated
    depreciation of $402,903 and $376,406, respectively                                         142,076          138,540

Real estate held for development or sale                                                      3,029,759        2,986,658

Deferred income taxes                                                                           198,038           56,649

Other non-current assets                                                                        860,076          865,809
                                                                                           ------------     ------------

Total assets                                                                               $  8,609,599     $  8,723,853
                                                                                           ============     ============
</Table>


See accompanying notes to financial statements.


                                       19
<PAGE>


                              OAKRIDGE ENERGY, INC

                           BALANCE SHEETS (CONTINUED)



<Table>
<Caption>
                                                                                           FEBRUARY 28,      FEBRUARY 29,
                                                                                               2005              2004
                                                                                           ------------     ------------
<S>                                                                                        <C>              <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                                       $     58,671     $     67,492
    Accrued expenses                                                                             47,048           49,473
    Deferred income taxes                                                                       170,715           86,490
    Current portion of asset retirement obligations                                             223,708               --
                                                                                           ------------     ------------
Total current liabilities                                                                       500,142          203,455

Asset retirement obligations                                                                    407,748          606,105
                                                                                           ------------     ------------
Total liabilities                                                                               907,890          809,560

Commitments and contingencies                                                                        --               --

Stockholders' equity:
    Common stock, par value $.04 per share, 20,000,000
      shares authorized, 10,157,803 shares issued                                               406,312          406,312
    Additional paid-in capital                                                                  805,092          805,092
    Retained earnings                                                                        16,433,803       16,684,193
    Accumulated other comprehensive income                                                      291,053          147,457
                                                                                           ------------     ------------
                                                                                             17,936,260       18,043,054
Less treasury stock, at cost; 5,872,811 shares
    and 5,851,724 shares, respectively                                                       10,234,551       10,128,761
                                                                                           ------------     ------------
Total stockholders' equity                                                                    7,701,709        7,914,293
                                                                                           ------------     ------------

Total liabilities and stockholders' equity                                                 $  8,609,599     $  8,723,853
                                                                                           ============     ============
</Table>

See accompanying notes to financial statements.


                                       20
<PAGE>


                         OAKRIDGE ENERGY, INC

                        STATEMENTS OF OPERATIONS


<Table>
<Caption>
                                                                                            YEAR ENDED       YEAR ENDED
                                                                                           FEBRUARY 28,      FEBRUARY 29,
                                                                                               2005              2004
                                                                                           ------------     ------------
<S>                                                                                        <C>              <C>
Revenues:
    Oil and gas                                                                            $  1,228,088     $    983,498
    Gravel                                                                                       50,262          206,424
                                                                                           ------------     ------------
Total revenues                                                                                1,278,350        1,189,922

Operating expenses:
    Oil and gas:
      Depletion and depreciation                                                                 88,073          138,267
      Lease operating                                                                           724,840          656,561
      Exploration costs                                                                              --                6
                                                                                           ------------     ------------
    Total oil and gas                                                                           812,913          794,834

    Coal and gravel                                                                              81,715          106,823
    Real estate development                                                                       1,562           11,203
    General and administrative                                                                  805,303          467,888
                                                                                           ------------     ------------
Total operating expenses                                                                      1,701,493        1,380,748
                                                                                           ------------     ------------

Loss from operations                                                                           (423,143)        (190,826)

Other income                                                                                     50,700           28,627
                                                                                           ------------     ------------

Loss before income taxes and cumulative
    effect of accounting change                                                                (372,443)        (162,199)

Income tax benefit                                                                             (122,053)         (57,018)
                                                                                           ------------     ------------

Net loss before cumulative effect of accounting change                                         (250,390)        (105,181)

Cumulative effect of accounting change, net of tax benefit                                           --         (161,793)
                                                                                           ------------     ------------

Net loss                                                                                   $   (250,390)    $   (266,974)
                                                                                           ============     ============

BASIC AND DILUTED LOSS PER COMMON SHARE:
    Net loss before cumulative effect of accounting change                                 $      (0.06)    $      (0.02)

    Cumulative effect of accounting change, net of tax benefit                                       --            (0.04)
                                                                                           ------------     ------------

    Net loss                                                                               $      (0.06)    $      (0.06)
                                                                                           ============     ============

Weighted average common shares outstanding                                                    4,291,740        4,332,735
                                                                                           ============     ============
</Table>

See accompanying notes to financial statements.


                                       21
<PAGE>


                              OAKRIDGE ENERGY, INC.

                       STATEMENTS OF STOCKHOLDERS' EQUITY

               YEARS ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004


<Table>
<Caption>
                                                                           ACCUMULATED
                                               ADDITIONAL                     OTHER
                                  COMMON        PAID-IN       RETAINED     COMPREHENSIVE   TREASURY                    COMPREHENSIVE
                                   STOCK        CAPITAL       EARNINGS        INCOME         STOCK         TOTAL       INCOME (LOSS)
                               ------------   ------------  ------------   ------------- ------------   ------------   ------------

<S>                            <C>            <C>           <C>            <C>           <C>            <C>            <C>
Balance at March 1, 2003       $    406,312   $    805,092  $ 16,951,167   $     36,801  $ (9,875,117)  $  8,324,255

Purchases of treasury stock              --             --            --             --      (253,644)      (253,644)

Net loss                                 --             --      (266,974)            --            --       (266,974)  $   (266,974)

Change in unrealized gain
    on investment securities,
    net of income taxes                  --             --            --        110,656            --        110,656        110,656
                               ------------   ------------  ------------   ------------  ------------   ------------   ------------

Comprehensive loss for year                                                                                            $   (156,318)
                                                                                                                       ============

Balance at February 29, 2004        406,312        805,092    16,684,193        147,457   (10,128,761)     7,914,293

Purchases of treasury stock              --             --            --             --      (105,790)      (105,790)

Net loss                                 --             --      (250,390)            --            --       (250,390)  $   (250,390)

Change in unrealized gain
    on investment securities,
    net of income taxes                  --             --            --        143,596            --        143,596        143,596
                               ------------   ------------  ------------   ------------  ------------   ------------   ------------

Comprehensive loss for year                                                                                            $   (106,794)
                                                                                                                       ============

Balance at February 28, 2005   $    406,312   $    805,092  $ 16,433,803   $    291,053  $(10,234,551)  $  7,701,709
                               ============   ============  ============   ============  ============   ============
</Table>

See accompanying notes to financial statements.


                                       22
<PAGE>



                         OAKRIDGE ENERGY, INC.

                        STATEMENTS OF CASH FLOWS


<Table>
<Caption>
                                                                   YEAR ENDED     YEAR ENDED
                                                                  FEBRUARY 28,   FEBRUARY 29,
                                                                      2005           2004
                                                                  ------------   ------------
<S>                                                               <C>            <C>
OPERATING ACTIVITIES
    Net loss                                                      $   (250,390)  $   (266,974)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
      Cumulative effect of accounting change, net of tax benefit            --        161,793
      Depletion and depreciation                                       119,941        183,415
      Accretion of discount on asset retirement obligations             27,189         26,018
      Gain on sales of oil and gas properties                               --           (238)
      Gain on sales of property and equipment                               --         18,602
      Loss on investment in limited partnership                          5,733          9,265
      Abandoned leaseholds                                                  --              6
      Deferred income taxes                                           (141,389)       (76,779)
      Changes in operating assets and liabilities:
        Trade accounts receivable                                          105        124,305
        Prepaid expenses and other                                         206            498
        Accounts payable and accrued expenses                          (11,246)       (70,798)
        Asset retirement obligations                                    (1,838)      (260,140)
                                                                  ------------   ------------
Net cash used in operating activities                                 (251,689)      (151,027)

INVESTING ACTIVITIES
    Additions to oil and gas properties                               (128,637)       (52,459)
    Additions to real estate held for development or sale              (43,101)       (89,737)
    Additions to other property and equipment                          (30,033)            --
    Proceeds from sales of oil and gas properties                           --            238
    Proceeds from sales of property and equipment                           --         25,000
                                                                  ------------   ------------
Net cash used in investing activities                                 (201,771)      (116,958)

FINANCING ACTIVITY
    Purchases of treasury stock                                       (105,790)      (253,644)
                                                                  ------------   ------------

Net decrease in cash and cash equivalents                             (559,250)      (521,629)
Cash and cash equivalents at beginning of year                       2,853,798      3,375,427
                                                                  ------------   ------------

Cash and cash equivalents at end of year                          $  2,294,548   $  2,853,798
                                                                  ============   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Income taxes paid                                             $     16,253   $     23,388
                                                                  ============   ============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION
    Change in unrealized gain on investment
      securities, net of income taxes                             $    143,596   $    110,656
                                                                  ============   ============
</Table>

See accompanying notes to financial statements.



                                       23
<PAGE>

                              OAKRIDGE ENERGY, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     FEBRUARY 28, 2005 AND FEBRUARY 29, 2004


A. NATURE OF BUSINESS

Oakridge Energy, Inc. (the "Company") is engaged in the exploration for and
development, production, and sale of oil and gas primarily in Texas. The Company
also receives lease and royalty income from gravel deposits in Colorado and
holds certain real estate in Colorado for development or sale. The Company was
incorporated in Utah in 1969 and its executive offices are located in Wichita
Falls, Texas.


B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the Company's significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows.

BASIS OF ACCOUNTING

The accounts are maintained and the financial statements have been prepared
using the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America.

USE OF ESTIMATES

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 certain reported amounts in the financial
statements and accompanying notes. Actual results could differ from these
estimates and assumptions.

COMPREHENSIVE INCOME

The Company reports comprehensive income in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income. SFAS No. 130 established standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income (loss) consists of net income (loss)
and net unrealized gains (losses) on securities and is presented in the
statements of stockholders' equity. SFAS No. 130 requires only additional
disclosures in the financial statements; it does not affect the Company's
financial position or results of operations.

FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with the reporting requirements of SFAS No. 107, Disclosures about
Fair Value of Financial Instruments, the Company calculates the fair value of
its assets and liabilities which qualify as financial instruments under this
statement and includes this additional information in the notes to financial
statements when the fair value is different than the carrying value of those
financial instruments. The estimated fair value of cash equivalents, accounts
receivable, and accounts payable approximates their carrying amounts due to the
relatively short maturity of these instruments.



                                       24
<PAGE>




                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

CASH AND CASH EQUIVALENTS

The Company considers all cash and highly liquid investments with original
maturities of three months or less to be cash equivalents.

TRADE ACCOUNTS RECEIVABLE

The Company performs ongoing credit evaluations of its customers' financial
condition and extends credit to virtually all of its customers. Credit losses to
date have not been significant and have been within management's expectations.
In the event of complete non-performance by the Company's customers, the maximum
exposure to the Company is the outstanding accounts receivable balance at the
date of non-performance.

INVESTMENT SECURITIES

The Company reports investments in accordance with SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities. The Company's investments are
classified at the time of purchase into one of three categories as follows:

     o   Held to Maturity Securities - Debt securities that the Company has the
         positive intent and ability to hold to maturity are reported at
         amortized cost, adjusted for the amortization or accretion of premiums
         and discounts.

     o   Trading Securities - Debt and equity securities that are bought and
         held principally for the purpose of selling them in the near term are
         reported at fair value, with unrealized gains and losses included in
         earnings.

     o   Available for Sale Securities - Debt and equity securities not
         classified as held to maturity securities or trading securities are
         reported at fair value, with unrealized gains and losses excluded from
         earnings and reported as a separate component of stockholders' equity
         (net of tax effects).

The Company did not have any securities classified as held to maturity or
trading as of February 28, 2005 or February 29, 2004.

A decline in the market value of any available for sale security below cost that
is deemed to be other than temporary results in a reduction of the carrying
amount to fair value. The impairment is charged to earnings and a new cost basis
for the security is established. No impairment charges were recorded during 2005
or 2004.

Dividend and interest income are recognized when earned. Gains and losses on
securities sold are computed under the specific identification method.





                                       25
<PAGE>

                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

OIL AND GAS PROPERTIES

The Company uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill exploratory wells that find proved reserves, and to drill
and equip development wells are capitalized. Geological and geophysical costs,
costs to drill exploratory wells that do not find proved reserves, and
non-producing leasehold abandonments are expensed as incurred.

Unproved oil and gas properties are periodically assessed for impairment of
value and a loss is recognized at the time of impairment by providing an
impairment allowance. Capitalized costs of producing oil and gas properties are
depleted and depreciated by the units-of-production method based on proved oil
and gas reserves as estimated by an independent petroleum reservoir engineering
firm.

Upon sale or retirement of a proved property, the cost and related accumulated
depletion and depreciation are eliminated from the property accounts, and any
resulting gain or loss is recognized.

COAL AND GRAVEL PROPERTIES

Costs attributable to the acquisition and development of coal and gravel
properties are capitalized, while costs incurred to maintain the properties are
expensed. Undeveloped coal and gravel properties, which are individually
significant, are periodically assessed for impairment of value and a loss is
recognized at the time of impairment by providing an impairment allowance.
Capitalized costs of producing properties are depleted on a property-by-property
basis using the units-of-production method.

In 1994, the Company recorded an impairment allowance for substantially all the
carrying value of the undeveloped coal properties and related assets. The
Company also has an asset retirement obligation approximating $157,000 and
$152,000 at February 28, 2005 and February 29, 2004, respectively, for the
estimated costs associated with the reclamation of the property surrounding and
including the Company's previous coal mining operations. The reserve is based on
an outside engineer's estimate and is included as a long-term liability in the
accompanying balance sheets.

Depreciation on mining and service equipment is calculated using accelerated and
straight-line methods over the estimated useful lives of the assets. Upon sale
or abandonment, the cost of the equipment and related accumulated depreciation
are removed from the accounts and any gains or losses thereon are recognized.

OTHER PROPERTY AND EQUIPMENT

Depreciation on other property and equipment is calculated using accelerated and
straight-line methods over the estimated useful lives of the assets. Upon sale
or abandonment, the cost of the equipment and related accumulated depreciation
are removed from the accounts and any gains or losses thereon are recognized.




                                       26
<PAGE>

                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



B.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

REAL ESTATE HELD FOR DEVELOPMENT OR SALE

Real estate held for development or sale is carried at cost, which does not
exceed net realizable value. Real estate development and construction costs
directly identifiable with such property are capitalized. The cost of the
property remains as a non-current asset since the Company may proceed with the
development if it is unable to complete a sales transaction.

IMPAIRMENT OF LONG-LIVED ASSETS

The carrying value of property and equipment is periodically evaluated under the
provisions of SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. SFAS No. 144 requires long-lived assets and certain
identifiable intangibles to be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. When it is determined that the estimated future net cash flows
of an asset will not be sufficient to recover its carrying amount, an impairment
loss must be recorded to reduce the carrying amount to its estimated fair value.

Under SFAS No. 144, the Company evaluates impairment of proved oil and gas
properties on a field-by-field basis. On this basis, certain fields may be
impaired because they are not expected to recover their entire carrying value
from future net cash flows. During 2005 and 2004, the Company recorded no
impairment losses related to its proved oil and gas properties. If estimated
future cash flows are not achieved with respect to certain fields, further
write-downs may be required.

INVESTMENT IN PARTNERSHIP

The Company uses the equity method of accounting for its investment in
partnership. The investment in partnership of approximately $44,000 and $49,000
at February 28, 2005 and February 29, 2004, respectively, are included in other
non-current assets in the accompanying balance sheets. The Company recognized
losses pertaining to its interest in the partnership of approximately $6,000 and
$9,000 during 2005 and 2004, respectively, which are included in other income in
the accompanying statements of operations.

ASSET RETIREMENT OBLIGATIONS

Effective March 1, 2003, the Company adopted SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires legal obligations associated with
the retirement of long-lived assets to be recognized at their fair value at the
time that the obligations are incurred. Oil and gas producing companies incur
this liability upon acquiring or drilling a well. Under SFAS No. 143, an asset
retirement obligation is recorded as a liability at its estimated present value
at the asset's inception, with an offsetting increase to producing properties on
the accompanying balance sheet which is allocated to expense over the useful
life of the asset.




                                       27
<PAGE>

                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

ASSET RETIREMENT OBLIGATIONS - CONTINUED

Periodic accretion of the discount on asset retirement obligations is recorded
as an expense in the accompanying statement of operations. Prior to adoption of
SFAS No. 143, the Company accrued for any estimated asset retirement
obligations, net of estimated salvage value, as part of the calculation of
depletion and depreciation. This method resulted in recognition of the
obligation over the life of the property on a unit-of-production basis, with the
estimated obligation netted in property costs as part of the accumulated
depletion and depreciation balance. See Note D.

REVENUE RECOGNITION

The Company recognizes revenue as oil and gas are produced based on contracted
or estimated sales prices. Estimated revenue is subject to adjustments based on
final settlement. Such adjustments are reflected in revenue when received.

INCOME TAXES

Deferred income taxes are determined using the liability method in accordance
with SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. In addition, a valuation allowance is
established to reduce any deferred tax asset for which it is determined that it
is more likely than not that some portion of the deferred tax asset will not be
realized.

EARNINGS OR LOSS PER COMMON SHARE

Basic earnings (loss) per common share is calculated by dividing net income
(loss) (available to common stockholders) by the weighted average number of
common shares outstanding for the period. Diluted earnings (loss) per common
share reflects the potential dilution that could occur if accounts or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
Company. For the years and quarters presented herein, basic and diluted earnings
(loss) per common share are the same.





                                       28
<PAGE>



                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



C. INVESTMENT SECURITIES

The amortized cost and fair values of investment securities available for sale,
as of February 28, 2005 and February 29, 2004 are as follows:


<Table>
<Caption>
                                      GROSS          GROSS
                      AMORTIZED     UNREALIZED     UNREALIZED        FAIR
      2005              COST          GAINS          LOSSES          VALUE
-----------------   ------------   ------------   ------------   ------------

<S>                 <C>            <C>            <C>            <C>
Equity securities   $    202,430   $    461,769   $         --   $    664,199
                    ============   ============   ============   ============
</Table>



<Table>
<Caption>
                                      GROSS          GROSS
                      AMORTIZED     UNREALIZED     UNREALIZED        FAIR
      2004              COST          GAINS          LOSSES          VALUE
-----------------   ------------   ------------   ------------   ------------

<S>                 <C>            <C>            <C>            <C>
Equity securities   $    202,430   $    233,948   $         --   $    436,378
                    ============   ============   ============   ============
</Table>


D. ASSET RETIREMENT OBLIGATIONS

Pursuant to SFAS No. 143, Accounting for Asset Retirement Obligations, the
Company has recognized the fair value of its asset retirement obligations
related to the plugging, abandonment, and remediation of oil and gas producing
properties as well as the reclamation of the property surrounding the Company's
previous coal mining operations from March 1, 2003 (implementation date)
forward. The present value of the estimated asset retirement costs has been
capitalized as part of the carrying amount of the related long-lived assets,
which approximated $283,000.

The liability has been accreted to its present value as of the end of each year.
Upon initial implementation, the Company recognized an additional long-term
liability of approximately $421,000 and a cumulative effect of the change in
accounting principle, net of an income tax benefit of approximately $162,000 due
to accretion from the acquisition date to the implementation date less depletion
recapture related to the estimated salvage values of the properties as well as
oil and gas equipment. The Company evaluated 82 wells, and has determined a
range of abandonment dates between May 2005 and August 2024 and a present value
of the estimated total salvage value of $318,000. The following represents a
reconciliation of the asset retirement obligations for the years ended February
28, 2005 and February 29, 2004:


<Table>
<Caption>
                                                        2005            2004
                                                    ------------    ------------

<S>                                                 <C>             <C>
Asset retirement obligations at beginning of year   $    606,105    $    580,087
Liabilities settled during the year                       (1,838)             --
Accretion of discount                                     27,189          26,018
                                                    ------------    ------------

Asset retirement obligations at end of year         $    631,456    $    606,105
                                                    ============    ============
</Table>




                                       29
<PAGE>



                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


E. INCOME TAXES


The Company's income tax expense (benefit) attributable to income (loss) from
continuing operations consists of the following:

<Table>
<Caption>
                                                                      CURRENT        DEFERRED         TOTAL
                                                                   ------------    ------------    ------------

<S>                                                                <C>             <C>             <C>
Year ended February 28, 2005:
     U.S. Federal                                                  $      2,754    $   (137,349)   $   (134,595)
     State and local                                                     16,582          (4,040)         12,542
                                                                   ------------    ------------    ------------

                                                                   $     19,336    $   (141,389)   $   (122,053)
                                                                   ============    ============    ============


Year ended February 29, 2004:
     U.S. Federal                                                  $      3,498    $    (73,674)   $    (70,176)
     State and local                                                     16,265          (3,107)         13,158
                                                                   ------------    ------------    ------------

                                                                   $     19,763    $    (76,781)   $    (57,018)
                                                                   ============    ============    ============
</Table>

Income tax expense (benefit) for the years presented differs from the "expected"
federal income tax benefit for those years, computed by applying the statutory
U.S. Federal corporate tax rate of 34% to pre-tax income (loss), as a result of
the following:

<Table>
<Caption>
                                                          2005            2004
                                                      ------------    ------------

<S>                                                   <C>             <C>
Computed "expected" tax expense (benefit)             $   (126,631)   $    (55,148)
State and local income taxes, net of federal income
  tax benefit                                                8,182           8,684
Other, primarily revision of prior year provision
  estimate                                                  (3,604)        (10,554)
                                                      ------------    ------------

Income tax benefit                                    $   (122,053)   $    (57,018)
                                                      ============    ============
</Table>




                                       30
<PAGE>


                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


E. INCOME TAXES - CONTINUED

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities, at February 28, 2005
and February 29, 2004 are presented below:

<Table>
<Caption>
                                                         2005            2004
                                                     ------------    ------------
<S>                                                  <C>             <C>
Deferred tax assets:
   Net operating loss carryforward                   $    326,632    $    179,147
   Alternative minimum tax credit carryforward             99,293          98,739
   Asset retirement obligations                           233,449         224,077
                                                     ------------    ------------
Total deferred tax assets                                 659,374         501,963

Deferred tax liabilities:
   Oil and gas properties and other property and
     equipment, principally due to depletion and
     depreciation                                        (416,141)       (400,119)
   Coal properties, principally due to differences
     in depletion                                         (45,195)        (45,195)
   Unrealized gain on investment securities
     available for sale                                  (170,715)        (86,490)
                                                     ------------    ------------
Total deferred tax liabilities                           (632,051)       (531,804)
                                                     ------------    ------------
Net deferred tax asset (liability)                   $     27,323    $    (29,841)
                                                     ============    ============


Included in the balance sheet as:
  Deferred income taxes, current                     $   (170,715)   $    (86,490)
  Deferred income taxes, non-current                      198,038          56,649
                                                     ------------    ------------
Net deferred tax asset (liability)                   $     27,323    $    (29,841)
                                                     ============    ============
</Table>

Based on the future reversal of existing taxable temporary differences and
future earnings expectations, management of the Company believes it is more
likely than not that deferred tax assets will be realized or settled, and
accordingly, no valuation allowance has been recorded.

At February 28, 2005, the Company has an alternative minimum tax credit
carryforward of approximately $99,000, which has no expiration date and is
available to reduce the Company's future taxable income. Additionally, the
Company has a net operating loss carryforward of approximately $906,000, which
will expire in fiscal 2024 and is available to reduce the Company's future
taxable income.



                                       31
<PAGE>
                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


F. SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. The Company
is engaged in oil and gas, coal and gravel activities and real estate
development. The Company has identified such segments based on management
responsibility and the nature of the Company's products, services and costs.
There are no major distinctions in geographical areas served as all operations
are in the United States. The Company measures segment profit (loss) as income
(loss) from operations. Business segment assets are those assets controlled by
each reportable segment. The following table sets forth certain information
about the financial information of each segment for the years ended February 28,
2005 and February 29, 2004:

<Table>
<Caption>
                                                   2005            2004
                                               ------------    ------------

<S>                                            <C>             <C>
Business segment revenue:
   Oil and gas                                 $  1,228,088    $    983,498
   Gravel                                            50,262         206,424
                                               ------------    ------------

                                               $  1,278,350    $  1,189,922
                                               ============    ============


Business segment profit (loss):
   Oil and gas                                 $    415,175    $    188,664
   Coal and gravel                                  (31,453)         99,601
   Real estate development                           (1,562)        (11,203)
   General corporate                               (805,303)       (467,888)
                                               ------------    ------------

Loss from operations                               (423,143)       (190,826)
Other income                                         50,700          28,627
                                               ------------    ------------
Loss before income taxes and cumulative
   effect of accounting change                 $   (372,443)   $   (162,199)
                                               ============    ============



Business segment assets:
   Depreciation, depletion and amortization:
     Oil and gas                               $     88,073    $    138,267
     Coal and gravel                                  5,371          19,339
     Real estate development                             --           1,465
     General corporate                               26,497          24,344
                                               ------------    ------------

                                               $    119,941    $    183,415
                                               ============    ============
</Table>




                                       32
<PAGE>



                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


F. SEGMENT INFORMATION - CONTINUED

<Table>
<Caption>
                                   2005           2004
                               ------------   ------------

<S>                            <C>            <C>
Capital expenditures:
     Oil and gas               $    128,637   $     52,459
     Real estate development         43,101         89,737
     General corporate               30,033             --
                               ------------   ------------

                               $    201,771   $    142,196
                               ============   ============

Total assets:
     Oil and gas               $  4,340,258   $  4,495,572
     Coal and gravel                260,488        265,859
     Real estate development      3,029,759      2,986,658
     General corporate              979,094        975,764
                               ------------   ------------

                               $  8,609,599   $  8,723,853
                               ============   ============
</Table>


G. RELATED PARTY TRANSACTIONS

In the normal course of business, the Company owns interests in various oil and
gas properties in which certain stockholders and related parties also own
interests.

During fiscal 2004, the Company purchased 47,500 shares of the Company's common
stock from related parties at prices ranging from $3.65 to $4.33 per share,
which approximated the share price paid by the Company to other unaffiliated
stockholders at the time of each purchase. There were no shares purchased from
related parties during fiscal 2005.


H. COMMITMENTS AND CONTINGENCIES

The Company is subject to certain claims and litigation arising in the normal
course of business. In the opinion of management, the outcome of such matters
will not have a materially adverse effect on the results of operations or
financial position of the Company.

As of February 28, 2005 and February 29, 2004, the Company has pledged
interest-bearing cash deposits approximating $817,000 to secure letters of
credit in favor of the Colorado Bureau of Land Management for state requirements
regarding land reclamation based on future operations with respect to coal and
gravel properties. These pledged cash deposits are included in other non-current
assets in the accompanying balance sheets.


                                       33
<PAGE>

                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


I. RISK CONCENTRATIONS

Financial instruments that potentially subject the Company to concentration of
credit risk consist principally of cash, cash equivalents, and investments. Cash
equivalents of approximately $2,193,000 and $2,818,000 at February 28, 2005 and
February 29, 2004, respectively, consisted of interest-bearing cash deposits.

The Company maintains deposits primarily in two financial institutions, which at
times may exceed amounts covered by insurance provided by the U.S. Federal
Deposit Insurance Corporation and the Securities Investor Protection
Corporation, $500,000 for securities and $100,000 for cash balances. At February
28, 2005, the Company had approximately $164,000 of securities and $565,000 of
cash equivalent balances that were uninsured. The Company had approximately
$2,718,000 of uninsured cash equivalent balances at February 29, 2004. There
were no uninsured securities amounts at February 29, 2004. The Company has not
experienced any losses with respect to uninsured balances.

Oil sales to two customers, which accounted for more than 10% of the Company's
total oil sales, approximated $686,000 (68%) and $247,000 (25%) for the year
ended February 28, 2005. Two customers accounted for approximately $522,000
(68%) and $191,000 (25%) of the Company's total oil sales for the year ended
February 29, 2004. Gas sales to three customers approximated $119,000 (66%),
$25,000 (14%) and $23,000 (13%) of the Company's total gas sales for the year
ended February 28, 2005. Two customers accounted for approximately $123,000
(74%) and $22,000 (13%) of the Company's gas sales for the year ended February
29, 2004. Lease operating payments primarily made to a principal operator on its
oil and gas producing properties approximated $518,000 and $413,000 in 2005 and
2004, respectively.


J. QUARTERLY OPERATING RESULTS (UNAUDITED)

Quarterly results of operations for 2005 and 2004 were as follows:

<Table>
<Caption>
             2005                 FIRST QUARTER     SECOND QUARTER     THIRD QUARTER    FOURTH QUARTER     FULL YEAR
-------------------------------   --------------    --------------    --------------    --------------   --------------

<S>                               <C>               <C>               <C>               <C>              <C>
Total revenues                    $      291,685    $      343,254    $      336,492    $      306,919   $    1,278,350

Income (loss) from operations           (387,193)          (25,375)          (29,431)           18,856         (423,143)

Net income (loss)                 $     (238,181)   $       (9,428)   $      (11,093)   $        8,312   $     (250,390)
                                  ==============    ==============    ==============    ==============   ==============

Basic and diluted income (loss)
   per common share               $        (0.06)   $        (0.00)   $        (0.00)   $         0.00   $        (0.06)
                                  ==============    ==============    ==============    ==============   ==============
</Table>




                                       34

<PAGE>

                              OAKRIDGE ENERGY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



J.   QUARTERLY OPERATING RESULTS (UNAUDITED) - CONTINUED

<Table>
<Caption>
                   2004                   FIRST QUARTER    SECOND QUARTER   THIRD QUARTER    FOURTH QUARTER     FULL YEAR
----------------------------------------  --------------   --------------   --------------   --------------   --------------

<S>                                       <C>              <C>              <C>              <C>              <C>
 Total revenues                           $      280,123   $      334,674   $      310,575   $      264,550   $    1,189,922

 Loss from operations                            (83,804)         (32,460)         (31,395)         (43,167)        (190,826)

 Net loss before cumulative
    effect of accounting change                  (58,913)         (17,135)          (2,006)         (27,127)        (105,181)

 Cumulative effect of accounting
    change, net of income tax
    benefit                                     (161,793)              --               --               --         (161,793)
                                          --------------   --------------   --------------   --------------   --------------

 Net loss                                 $     (220,706)  $      (17,135)  $       (2,006)  $      (27,127)  $     (266,974)
                                          ==============   ==============   ==============   ==============   ==============

 Basic and diluted loss per common share:

    Net loss before cumulative
    effect of accounting change           $        (0.01)  $        (0.00)  $        (0.00)  $        (0.01)  $        (0.02)

    Cumulative effect of
    accounting change, net of
    income tax benefit                             (0.04)              --               --               --            (0.04)
                                          --------------   --------------   --------------   --------------   --------------

    Net loss                              $        (0.05)  $        (0.00)  $        (0.00)  $        (0.01)  $        (0.06)
                                          ==============   ==============   ==============   ==============   ==============
</Table>





                                       35
<PAGE>



                              OAKRIDGE ENERGY, INC.

                    SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED)


The following tables set forth supplementary disclosures for oil and gas
producing activities in accordance with SFAS No. 69, Disclosures about Oil and
Gas Producing Activities.

COSTS INCURRED

A summary of costs incurred in oil and gas property acquisition, development,
and exploration activities (both capitalized and charged to expense) for the
years ended February 28, 2005 and February 29, 2004, as follows:

<Table>
<Caption>
                                         2005           2004
                                     ------------   ------------

<S>                                  <C>            <C>
Acquisition of proved properties     $    103,170   $     45,080
                                     ============   ============

Acquisition of unproved properties   $     25,467   $      7,379
                                     ============   ============

Exploration costs                    $         --   $          6
                                     ============   ============
</Table>


RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES

The following table presents the results of operations for the Company's oil and
gas producing activities for the years ended February 28, 2005 and February 29,
2004:

<Table>
<Caption>
                                                          2005            2004
                                                      ------------    ------------

<S>                                                   <C>             <C>
Revenues                                              $  1,228,088    $    983,498
Production costs                                          (724,840)       (656,561)
Depletion, depreciation, and valuation provisions
                                                           (88,073)       (138,267)
Exploration costs                                               --              (6)
                                                      ------------    ------------
                                                           415,175         188,664
Income tax expense                                         141,160          64,146
                                                      ------------    ------------
Results of operations for producing activities
  (excluding corporate overhead and interest costs)
                                                      $    274,015    $    124,518
                                                      ============    ============
</Table>

RESERVE QUANTITY INFORMATION

The following table presents the Company's estimate of its proved oil and gas
reserves all of which are located in the United States. The Company emphasizes
that reserve estimates are inherently imprecise and that estimates of reserves
related to new discoveries are more imprecise than those for producing oil and
gas properties. Accordingly, the estimates are expected to change as future
information becomes available. The estimates have been prepared with the
assistance of an independent petroleum reservoir engineering firm. Oil reserves,
which include condensate and natural gas liquids, are stated in barrels and gas
reserves are stated in thousands of cubic feet.






                                       36
<PAGE>


                              OAKRIDGE ENERGY, INC.

              SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED) (CONTINUED)



RESERVE QUANTITY INFORMATION - CONTINUED

<Table>
<Caption>
                                                                               OIL             GAS

                                                                             (Bbls.)          (MCF)
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
PROVED DEVELOPED AND UNDEVELOPED RESERVES:

  Balance at March 1, 2003                                                     695,214         141,154
     Revisions of previous estimates                                             5,755         (11,389)
     Production                                                                (25,382)        (36,879)
                                                                          ------------    ------------

  Balance at February 29, 2004                                                 675,587          92,886
     Revisions of previous estimates                                             2,855         120,658
     Production                                                                (23,852)        (41,289)
                                                                          ------------    ------------

  Balance at February 28, 2005                                                 654,590         172,255
                                                                          ============    ============




PROVED DEVELOPED RESERVES:

  February 28, 2003                                                            100,899         141,154
                                                                          ============    ============

  February 29, 2004                                                             90,226          92,886
                                                                          ============    ============

  February 28, 2005                                                             99,369         172,255
                                                                          ============    ============
</Table>


STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOW
     AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES

The following table, which presents a standardized measure of discounted future
cash flows and changes therein relating to proved oil and gas reserves, is
presented pursuant to SFAS No. 69. In computing this data, assumptions other
than those required by the Financial Accounting Standards Board could produce
different results. Accordingly, the data should not be construed as being
representative of the fair market value of the Company's proved oil and gas
reserves.

Future cash inflows were computed by applying existing contract and year-end
prices of oil and gas relating to the Company's proved reserves to the estimated
year-end quantities of those reserves. Future price changes were considered only
to the extent provided by contractual arrangements in existence at year end.
Future development and production costs were computed by estimating the
expenditures to be incurred in developing and producing the proved oil and gas
reserves at the end of the year, based on year-end costs. Future income tax
expenses were computed by applying the year-end statutory tax rate, with
consideration of future tax rates already legislated, to the future pre-tax net
cash flows relating to the Company's proved oil and gas reserves. The
standardized measure of discounted future cash flows at



                                       37
<PAGE>

                              OAKRIDGE ENERGY, INC.

              SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED) (CONTINUED)




STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOW
     AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES - CONTINUED

February 28, 2005 and February 29, 2004, which represents the present value of
estimated future cash flows using a discount rate of 10% a year, follows:


<Table>
<Caption>
                                                                         2005            2004
                                                                     ------------    ------------

<S>                                                                  <C>             <C>
Future cash inflows                                                  $ 30,652,937    $ 22,303,757
Future production and development costs                                (6,706,146)     (5,820,350)
Future income tax expenses                                             (3,558,888)     (2,484,501)
                                                                     ------------    ------------

Future net cash flows                                                  20,387,903      13,998,906

10% annual discount for estimated timing of cash flows                 (6,067,533)     (4,235,816)
                                                                     ------------    ------------

Standardized measure of discounted future net cash flows             $ 14,320,370    $  9,763,090
                                                                     ============    ============



Beginning of year                                                    $  9,763,090    $ 11,357,720
  Sales of oil and gas, net of production costs                          (503,248)       (346,414)
  Extensions, discoveries, and improved recoveries, less related
     costs                                                                273,132         331,949
  Accretion of discount                                                   976,309       1,135,772
  Net change in sales and transfer prices, net of production costs
                                                                        4,557,731        (663,461)
  Changes in estimated future development costs                            58,817         (36,295)
  Net change in income taxes                                           (1,686,511)        564,677
  Changes in production rates (timing and other)                          689,365      (2,772,188)
  Revisions of previous quantities                                        191,685         191,330
                                                                     ------------    ------------

End of year                                                          $ 14,320,370    $  9,763,090
                                                                     ============    ============
</Table>



                                       38






<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

                  The Company did not change its independent public accounting
firm or have any disagreements with them on accounting and financial disclosure
issues in the fiscal year ended February 28, 2005.

ITEM 8A. CONTROLS AND PROCEDURES.

                  The term "disclosure controls and procedures" is defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the
Exchange Act. This term refers to the controls and procedures of a company that
are designed to ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the
Securities and Exchange Commission. Our management, including our Chief
Executive Officer and Principal Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this annual report. Based upon that evaluation, our Chief
Executive Officer and Principal Financial Officer have concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this annual report.

                  There were no changes to our internal control over financial
reporting during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 8B. OTHER INFORMATION.

                  None.

                                    PART III

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

Directors and Executive Officers

                  The following table provides certain information pertaining to
the Company's directors and executive officers:

<Table>
<Caption>
                                                        BUSINESS EXPERIENCE
                                                       AND CURRENT POSITIONS                         YEAR FIRST
           NAME AND AGE                                    WITH COMPANY                            BECAME DIRECTOR
------------------------------------    ----------------------------------------------------    ----------------------
<S>                                     <C>                                                     <C>
Sandra Pautsky - 63                     Chairperson of the Board of Directors of the                    1986
                                        Company since July 1998, President since
                                        June 1998 and Secretary-Treasurer since
                                        May 1992
Danny Croker - 55                       Vice President and Assistant Secretary - Treasurer              1992
                                        of the Company since May 1992 and owner of Exlco,
                                        Inc., oil and gas operations
Randy Camp - 52                         Partner in the firm of Moore, Camp, Phillips &                  1992
                                        Co., L.L.P. (or its predecessor firms), Certified
                                        Public Accountants, Wichita Falls, Texas for more
                                        than the past five years
Carol J. Cooper - 58                    Certified Public Accountant, Principal Accounting                N/A
                                        Officer of the Company since July 1998 and
                                        Principal Financial Officer of the Company since
                                        October 2002
</Table>



                                       39
<PAGE>


                  Danny Croker is Sandra Pautsky's stepbrother. There are no
other family relationships among any of the directors or executive officers of
the Company. Sandra Pautsky may be considered to be the controlling stockholder
of the Company by virtue of her beneficial ownership of approximately 70% of the
Company's outstanding common stock and her positions with the Company. See "Item
11.-Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters." Each of the directors and executive officers holds office
from the date of his or her election for a period of one year or until his or
her successor has been elected. None of the directors or executive officers is
involved in any legal proceedings in which he or she is a party adverse or has a
material interest adverse to the Company. None of the directors or executive
officers has been involved in any legal proceedings which are material to an
evaluation of his or her ability or integrity.

Section 16(a) Beneficial Ownership Reporting Compliance

                  Section 16(a) of the Exchange Act requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's common stock to file with the Commission initial reports of
beneficial ownership and reports of changes in beneficial ownership of the
Company's common stock. The rules promulgated by the Commission under Section
16(a) of the Exchange Act require those persons to furnish the Company with
copies of all reports filed with the Commission pursuant to Section 16(a).

                  Based solely on the Company's review of copies of forms it
received and on written representations from the foregoing persons, the Company
believes that during the fiscal year ended February 28, 2005 all filing
requirements under Section 16(a) of the Exchange Act were met on a timely basis
by such persons.

Audit Committee

                  The Company does not have a separately-designated standing
audit committee. Instead, the entire Board of Directors acts as the audit
committee for the Company.

Audit Committee Financial Expert

                  Although the Company does not have a separately-designated
audit committee, a member of the Company's Board of Directors, Randy Camp, meets
the requirements to be considered an audit committee financial expert and is
independent as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers, Inc. listing standards.

Nomination Procedures

                  The Company has not made any changes to the procedures by
which security holders may recommend nominees to the Company's Board of
Directors since the Company last provided disclosure to security holders in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A of the
Exchange Act.

Code of Ethics

                  Pursuant to the requirements of Item 406 of Regulation S-B,
the Company's "Code of Ethical Conduct for Senior Officers," which is currently
in effect, is filed as Exhibit 14 to this report.



                                       40
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION.

                  The following table sets forth information regarding
compensation for services in all capacities to the Company for the three fiscal
years ended February 28, 2005 of the Company's Chief Executive Officer. No
executive officer of the Company received total annual salary and bonus
exceeding $100,000 in any of such years.

<Table>
<Caption>
                                                              Annual Compensation
                                                      -----------------------------------
          Name and                                                                                  All Other
     Principal Position                Year               Salary              Bonus              Compensation(1)
-----------------------------     ---------------     ---------------     ---------------        ---------------
<S>                               <C>                 <C>                 <C>                    <C>
Sandra Pautsky                         2005           $        85,000     $       322,083(2)     $           204
President and                          2004                    85,000               7,083                    204
  Principal Executive Officer          2003                    85,000               7,083                    204
</Table>

(1) All other compensation consisted of Company paid life insurance premiums.

(2) In the first quarter of fiscal 2005, the Board of Directors of the Company
approved (with Ms. Pautsky abstaining) and the Company paid Sandra Pautsky, the
Company's Chief Executive Officer, a bonus of $315,000 in consideration of her
extraordinary services over a number of years with respect to the Company's
proposed real estate development project at Durango, Colorado, which culminated
with the Area Plan approval obtained in January 2004.

                  The Company does not have employment agreements with any of
its executive officers, has no material bonus, profit-sharing or stock option
plans or pension or retirement benefits. The Company has a group health
insurance plan which it makes available to all employees of the Company and
their family members on a non-discriminatory basis. Pursuant to such plan,
$25,000 in life insurance benefits are provided for all employees of the
Company, with the amount of such benefits provided decreasing as certain age
levels are reached.

                  Executive officers of the Company who are also directors do
not receive any fee or remuneration for services as members of the Board of
Directors. Randy Camp, the one director who is not an employee of the Company,
received an annual fee of $3,000 for serving as a director in the fiscal year
ended February 28, 2005.

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

                  The following table shows the beneficial ownership of the
Company's common stock as of May 24, 2005 by: (i) each person known by the
management of the Company to own more than 5% of the Company's outstanding
common stock; (ii) each executive officer and director; and (iii) the executive
officers and directors of the Company as a group.

<Table>
<Caption>
                    NAME AND ADDRESS                                      AMOUNT                       PERCENT
                           OF                                          BENEFICIALLY                       OF
                    BENEFICIAL OWNER                                      OWNED                         CLASS
----------------------------------------------------------    -------------------------------    ---------------------
<S>                                                           <C>                                <C>
Sandra Pautsky
4613 Jacksboro Highway
Wichita Falls, Texas 76302                                               3,025,385(1)                     70.26%
Estate of Noel Pautsky,
  Deceased
4613 Jacksboro Highway
Wichita Falls, Texas 76302                                                 696,091                        16.17
Flem Noel Pautsky, Jr. Trust
4613 Jacksboro Highway
Wichita Falls, Texas 76302                                                 908,247                        21.09
</Table>



                                       41
<PAGE>


<Table>
<Caption>
                    NAME AND ADDRESS                                      AMOUNT                       PERCENT
                           OF                                          BENEFICIALLY                       OF
                    BENEFICIAL OWNER                                      OWNED                         CLASS
----------------------------------------------------------    -------------------------------    ---------------------
<S>                                                           <C>                                <C>
Noel Pautsky Trust
4613 Jacksboro Highway
Wichita Falls, Texas 76302                                                 680,062                        15.79
Robert S. Allen
125 Ashlyn Ridge
McDonough, Georgia 30252                                                   256,700                         5.96
Danny Croker                                                                     -                            -
Randy Camp                                                                     100                            *
Carol J. Cooper                                                                  -                            -
Executive officers and
directors as a group
(four persons)                                                           3,025,485(2)                     70.26
</Table>

--------------------------

*        Represents less than 1% of outstanding common stock.

(1)      Includes: (i) 740,985 shares owned directly by Ms. Pautsky; (ii)
         696,091 shares owned by the Estate of Noel Pautsky, Deceased (the "Noel
         Pautsky Estate"), of which Ms. Pautsky is the Independent Executrix;
         (iii) 680,062 shares owned by the Noel Pautsky Trust of which Ms.
         Pautsky is the Trustee and one of four beneficiaries; and (iv) 908,247
         shares owned by the Flem Noel Pautsky, Jr. Trust, of which Ms. Pautsky
         is the Trustee. Ms. Pautsky disclaims any beneficial ownership of the
         shares owned by the Noel Pautsky Estate and the Noel Pautsky Trust in
         excess of 90,698 and 175,000 shares, respectively. Ms. Pautsky also
         disclaims any beneficial ownership of the shares owned by the Flem Noel
         Pautsky, Jr. Trust.

(2)      Includes all shares beneficially owned by Sandra Pautsky, Danny Croker,
         Randy Camp and Carol J. Cooper. The Company does not have any
         securities authorized for issuance under equity compensation plans.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                  Sandra Pautsky is an executive officer, director and
beneficial owner of in excess of 5% of the Company's outstanding common stock.
In addition, the Noel Pautsky Estate, the Flem Noel Pautsky, Jr. Trust and the
Noel Pautsky Trust are the beneficial owners of in excess of 5% of the Company's
outstanding common stock.

                  Ms. Pautsky is the executrix of the Noel Pautsky estate and
the trustee of the Flem Noel Pautsky, Jr. Trust and the Noel Pautsky Trust. Ms.
Pautsky, the Noel Pautsky Estate, the Flem Noel Pautsky, Jr. Trust and the Noel
Pautsky Trust each own undivided working interests in certain of the oil and gas
leases in the North Texas area in which the Company also owns an undivided
working interest and of which the Company serves as the operator. In accordance
with standard operating procedures, the Company submits joint interest billings
to such related parties and the other unaffiliated working interest owners in
the properties which the Company operates on a monthly basis for their
respective pro-rata shares of the costs incurred on the properties and the
Company's fee for serving as operator for the preceding month. In addition,
Exlco, Inc. ("Exlco"), 100% of whose outstanding stock is owned by Danny Croker,
an executive officer and director, is allocated and bears a portion of the
Company's office rent and supplies and bills the Company periodically for costs
incurred on the Company's behalf, which billings are offset against the
Company's billings to Exlco.

                  At February 28, 2003, Ms. Pautsky, the Noel Pautsky Estate,
the Flem Noel Pautsky, Jr. Trust, the Noel Pautsky Trust and Exlco had accounts
payable to the Company, representing their then unpaid joint interest and other
billings, aggregating $3,365. During the two fiscal years ended February 28,
2005, the Company submitted monthly joint interest and other billings to such
five parties totaling $46,249, and such parties paid the Company an aggregate of
$47,995 with respect to such joint interest and other billings, leaving a
balance of $1,619 owed to the Company at February 28, 2005.



                                       42
<PAGE>


ITEM 13. EXHIBITS.

<Table>
<Caption>
     Exhibit No.       Document Description
     -----------       ---------------------------------------------------------
<S>                    <C>
      (3)(i)(a)        Articles of Incorporation of the Company dated May 9,
                       1969 filed as Exhibit A(1) to the Company's Form 10 and
                       incorporated herein by reference.

      (3)(i)(b)        Amendment to Articles of Incorporation of the Company
                       dated October 22, 1982 filed as Exhibit 28(a) to the
                       Company's Current Report on Form 8-K dated November 4,
                       1982 (Filed herewith).

       (3)(ii)         By-Laws of the Company dated May 23, 1975 filed as
                       Exhibit A(4) to Form 10 and incorporated herein by
                       reference.

        (14)           Code of Ethical Conduct of Senior Officers (Filed
                       herewith).

       (31)(i)         Certifications of Chief Executive Officer Pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
                       herewith).

      (31)(ii)         Certifications of Principal Financial Officer Pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
                       herewith).

        (32)           Certifications of Chief Executive Officer and Principal
                       Financial Officer Pursuant to Section 906 of the
                       Sarbanes-Oxley Act of 2002 (Filed herewith).
</Table>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

                  The independent registered public accounting firm of Whitley
Penn audited the financial statements of the Company for the fiscal year ended
February 28, 2005. Whitley Penn has audited the Company's financial statements
for the five fiscal years ended February 28, 2005.

Audit Fees

                  Whitley Penn's fees for the fiscal year 2004 and 2005 audits
of the Company's financial statements and the reviews of quarterly reports on
Form 10-QSB during such years were $44,503 and $28,056 to date, respectively.

Audit-Related Fees

                  The Company did not incur any audit-related fees from Whitley
Penn during the fiscal years ended February 29, 2004 and February 28, 2005.

Tax Fees

                  Fees billed by Whitley Penn to the Company for preparation of
the Company's federal income tax returns for the fiscal years ended February 29,
2004 and February 28, 2005 were $10,000 and $5,930 to date, respectively.

All Other Fees

                  No other services were rendered by Whitley Penn during the
fiscal years ended February 29, 2004 and February 28, 2005.



                                       43
<PAGE>


Pre-Approval Policies and Procedures

                  As indicated under Item 9, the Company does not have a
separately-designated audit committee and the Board of Directors of the Company
acts in that capacity. Prior to the Company's engagement of Whitley Penn to
render the audit and non-audit services set forth above, such engagement was
approved by the Company's Board of Directors.



                                       44


<PAGE>

                                   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.


OAKRIDGE ENERGY, INC.

 By:   /s/  Sandra Pautsky
       ---------------------------------
       Sandra Pautsky, President

DATE: May 31, 2005


                  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 dates indicated.


 By:   /s/  Sandra Pautsky                     By:   /s/  Carol J. Cooper
       ---------------------------------             ---------------------------
       Sandra Pautsky, President,                    Carol J. Cooper, Principal
       Chief Executive                               Financial Officer and
       Officer and Director                          Accounting Officer

DATE: May 31, 2005                                DATE: May 31, 2005


 By:   /s/  Danny Croker                       By:   /s/  Randy Camp
       ---------------------------------             ---------------------------
       Danny Croker, Director                        Randy Camp, Director

DATE: May 31, 2005                                DATE: May 31, 2005



                                       45
<PAGE>


EXHIBITS.

<Table>
<Caption>
     Exhibit No.       Document Description
     -----------       ---------------------------------------------------------
<S>                    <C>
      (3)(i)(a)        Articles of Incorporation of the Company dated May 9,
                       1969 filed as Exhibit A(1) to the Company's Form 10 and
                       incorporated herein by reference.

      (3)(i)(b)        Amendment to Articles of Incorporation of the Company
                       dated October 22, 1982 filed as Exhibit 28(a) to the
                       Company's Current Report on Form 8-K dated November 4,
                       1982 (Filed herewith).

       (3)(ii)         By-Laws of the Company dated May 23, 1975 filed as
                       Exhibit A(4) to Form 10 and incorporated herein by
                       reference.

        (14)           Code of Ethical Conduct of Senior Officers (Filed
                       herewith).

       (31)(i)         Certifications of Chief Executive Officer Pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
                       herewith).

      (31)(ii)         Certifications of Principal Financial Officer Pursuant to
                       Section 302 of the Sarbanes-Oxley Act of 2002 (Filed
                       herewith).

        (32)           Certifications of Chief Executive Officer and Principal
                       Financial Officer Pursuant to Section 906 of the
                       Sarbanes-Oxley Act of 2002 (Filed herewith).
</Table>



                                       46