<PAGE>   1
                     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, 1998

                 [ ] 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               (I.R.S. Employer
      incorporation 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:


<TABLE>
<CAPTION>
                                                   Name of each exchange on
       Title of each class                             which registered
       -------------------                         -------------------------
              <S>                                             <C>
              None                                            ----
</TABLE>


         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. [ ]

         STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR.  $3,899,490

         STATE THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON
         EQUITY HELD BY NONAFFILIATES COMPUTED BY REFERENCE TO THE PRICE AT
         WHICH THE COMMON EQUITY WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES
         OF SUCH COMMON EQUITY, AS OF A SPECIFIED DATE WITHIN THE PAST 60 DAYS.

                          $4,576,206 AS OF MAY 15, 1998

         STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
         OF COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE.

                           4,839,509 AS OF MAY 31, 1998

                       DOCUMENTS INCORPORATED BY REFERENCE

         Definitive Proxy Statement for Annual Meeting of Stockholders for 
         Fiscal Year  Ended  February  28, 1998 - Part III

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


<PAGE>   2
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                               PAGE 
                                                               ---- 
<S>                                                              <C>
PART I ..................................................        1

ITEM 1.  DESCRIPTION OF BUSINESS ........................        1
         Summary of Developments in Fiscal 1996, 1997
           and 1998 .....................................        1
         Oil and Gas Operations .........................        2
         Coal and Gravel Operations .....................        3
         Real Estate Held for Development ...............        3
         Competition and Markets ........................        5
         Regulation .....................................        6
         Environmental and Health Controls ..............        7
         Operating Hazards and Uninsured Risks ..........        8
         Employees ......................................        8

ITEM 2.  DESCRIPTION OF PROPERTY ........................        8
         Oil and Gas Properties .........................        8
           Reserves .....................................        9
           Production ...................................        9
           Lifting Costs and Average Sales Prices .......       10
           Sales Contracts and Major Customers ..........       10
           Developed Acreage and Productive Wells .......       11
           Undeveloped Acreage ..........................       12
           Drilling Activity ............................       12
           Coal and  Gravel Properties ..................       13
           Real Estate ..................................       14
           Office Building ..............................       14

ITEM 3.  LEGAL PROCEEDINGS ..............................       14

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF
           SECURITY HOLDERS .............................       14

PART II .................................................       15

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS ..........................       15

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
           PLAN OF OPERATION ............................       15
         Results of Operations ..........................       16
         Financial Condition and Liquidity ..............       19
         Death of Company's Parent, Principal Shareholder
           and Chief Executive Officer ..................       19
</TABLE>


                                       i

<PAGE>   3


<TABLE>
<S>                                                             <C>
ITEM 7.  FINANCIAL STATEMENTS ...........................       20
         Index to Financial Statements ..................       20
         Independent Auditors' Report ...................       21
         Balance Sheets as of February 28, 1998 and 1997        22
         Statements of Operations for the years ended
           February 28, 1998 and 1997 ...................       24
         Statements of Stockholders' Equity for the
           years ended February 28, 1998 and 1997 .......       25
         Statements of Cash Flows for the years ended
           February 28, 1998 and 1997 ...................       26
         Notes to Financial Statements ..................       27

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
           ON ACCOUNTING AND FINANCIAL DISCLOSURE .......       39

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

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

ITEM 10. EXECUTIVE COMPENSATION .........................       39

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
           OWNERS AND MANAGEMENT ........................       39

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
           TRANSACTIONS .................................       39

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K ...............       40

         Exhibits .......................................       40
         Reports on Form 8-K ............................       40

SIGNATURES ..............................................       41
</TABLE>


                                       ii

<PAGE>   4
Parts I and II of this Report contain forward looking statements that involve
risks and uncertainties. Accordingly, no assurances can be given that the actual
events and results will not be materially different than the anticipated results
described in the forward looking statements. See "Item 1. - Description of
Business-Competition and Markets," "Regulation," "Environmental and Health
Controls" and "Operating Hazards and Uninsured Risks" and "Item 6. -
Management's Discussion and Analysis or Plan of Operation - Death of Company's
Parent, Principal Shareholder and Chief Executive Officer" for a description of
various factors that could materially affect the ability of the Company to
achieve the results described in the forward looking statements.


                                     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 and, to a
much lesser extent, in the development of gravel in Colorado. In addition, the
Company holds certain real estate and coal deposits in Colorado for development.

         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.

SUMMARY OF DEVELOPMENTS IN FISCAL 1996, 1997 AND 1998

         In fiscal 1996, the Company continued its accelerated exploratory
drilling activity started in the prior fiscal year following the Company's sale
of its principal producing oil and gas leases covering lands in Edwards and
Sutton Counties, Texas and made substantial progress toward its goal of
rebuilding its revenue base by adding significant new proven developed oil and
gas reserves from two separate fields in East Texas. The Company also took
initial steps toward commencing a golf course/residential lots development on
2,020 acres of land owned by the Company adjacent to Durango, Colorado. In
fiscal 1997, the Company developed a substantial portion of the East Texas
reserves, which enabled the Company to return to profitability, and received a
land use permit enabling the Company to commence preliminary site work on the
golf course portion of its Colorado land development. During fiscal 1998, the
Company developed most of the remainder of the East Texas reserves, cleared the
major 



<PAGE>   5

brush off the land for the fairways portion of the golf course and secured the
water rights and applied for the necessary permits to install an irrigation
system for the golf course. Following the end of fiscal 1998, the Company sold
its interest in one of the two East Texas fields. In addition, on May 26, 1998
Noel Pautsky, the Company's parent, principal shareholder and long-time chief
executive officer, died unexpectedly in Durango, Colorado while on Company
business. See "Oil and Gas Operations," and "Real Estate Held for Development"
below and "Item 6. - Management's Discussion and Analysis or Plan of Operation -
Results of Operations" and "Death of Company's Parent, Principal Shareholder and
Chief Executive Officer."

OIL AND GAS OPERATIONS

         During fiscal 1998, the Company's oil and gas operations were primarily
conducted in Madison and Limestone Counties of East Texas and in various areas
of North Texas.

         The Company's President originates or selects most of the exploration
and development prospects in which the Company participates. See "Item 6. -
Management's Discussion and Analysis or Plan of Operation - Death of Company's
Parent, Principal Shareholder and Chief Executive Officer." Until recent fiscal
years, the Company typically utilized its own funds to acquire oil and gas
leases covering the lands comprising the prospects. The leases were obtained
directly from landowners as well as from lease brokers and other operators not
affiliated with the Company by direct purchase, farmin and option agreements.
The Company then conducted any additional geological and/or geophysical
operations considered appropriate. To share costs, the Company usually sold
interests in the prospects to a limited number of industry participants and
private investors.

         In fiscal 1995 through 1998, however, to broaden its exploratory
activity exposure, the Company purchased interests of varying size in a number
of exploration prospects which were originated by others (i.e., independent
geologists or other independent oil and gas companies). These prospects covered
lands in the States of Texas, Nevada, Mississippi, New Mexico and Kansas. In
each case, the originator of the prospect had already assembled the leases and
performed most, if not all, of the necessary geological and/or geophysical work
before the interest in the prospects were offered for sale to the Company. Under
such circumstances, the Company typically paid a percentage of the initial
prospect costs greater than the percentage of ownership interest in the prospect
which the Company acquired. See "Item 2. - Description of Property - Oil and Gas
Properties - Drilling Activity."

         On June 2, 1998, the Company completed the sale to 


                                       2
<PAGE>   6

Mitchell Energy Corporation of all of the Company's interest in its Limestone
County, Texas gas property effective as of March 1, 1998 for approximately
$3,100,000. The Company will invest the funds received from the sale back into
its oil and gas operations and into its golf course/real estate development in
Colorado. See "Item 6. - Management's Discussion and Analysis or Plan of
Operation - Results of Operations" and "Financial Condition and Liquidity."

COAL AND GRAVEL OPERATIONS

         The Company's principal coal and only gravel property is the Carbon
Junction mine located on a portion of the 2,020 acres of land owned by the
Company in fee in La Plata County, Colorado. The Company holds a coal mine
permit on 236.9 acres of the property. During fiscal 1998, the Company's gravel
mining permit on approximately 33 acres of the property was transferred to its
lessee, Durango Construction, Inc. ("Durango Construction"). See "Item 2 -
Description of Property - Coal and Gravel Properties." After the Company
obtained an updated appraisal of the coal deposits on the property at the end of
fiscal 1994 which concluded that the deposits had no value, the Company limited
its operations at the Carbon Junction mine in fiscal 1995 through 1998 to
maintenance and regulatory compliance activities, and it will continue to do so
in the future until the coal market improves substantially. The Company
continues to have posted with the State of Colorado a reclamation performance
bond in the amount of $816,526 for its Carbon Junction coal operations. The
current coal mine permit will expire in July 1998, and the Company expects to
renew the permit.

         The Company received approximately $58,500 in royalty payments and
rentals during fiscal 1998 from its gravel contract and surface lease entered
into during 1993 with Durango Construction pursuant to which such company is
mining sand, gravel and rock products from the gravel permit area. The contract
and lease have remaining terms of approximately four years, and the terms may be
extended under certain conditions. The right obtained by the Company from
Durango Construction in the contract and lease to purchase gravel, asphalt and
cement at an attractive price should be beneficial to the Company's golf course
site work as well as the development of the real estate infrastructure in fiscal
1999 and 2000.

REAL ESTATE HELD FOR DEVELOPMENT

         In fiscal 1998, the Company proceeded with the preliminary site work on
the golf course portion of the golf course/residential lots development it
initiated in fiscal 1996 on approximately 300 acres of the 2,020 acres of land
owned by the Company in La Plata County, Colorado. The land is located 


                                       3
<PAGE>   7

adjacent to Durango, Colorado along the two principal highways leading into
Durango from the south. The entrance to the land is located approximately 2.5
miles southeast of the City. The land is not currently in the City limits of
Durango but possibly could be annexed in the future.

         During fiscal 1996, the draft design for the golf course was prepared.
The Company also retained a local engineering firm to assist it in interacting
with the City of Durango and La Plata County planners responsible for preparing
the City's comprehensive development plan and the City's and County's land use
and development plan for the South corridor area, in representing the Company at
town hall meetings at which the proposed plans were discussed and to begin the
preparation of a master plan for the Company's property. The firm also aided the
Company in preparing and submitting an application to the County for a land use
permit, which was granted in August 1996 with certain conditions attached.

         The permit allows preliminary site work only on the golf course, which
will cover approximately 170 of the 300-acre proposed golf course/residential
lots development. Clubhouse, pump and waterline construction and the further
work on the residential lots portion of the development will require the Company
to obtain a revised permit and master plan approval or annexation and approval
by the City. The Company expects to complete its master plan and submit it to
the County for approval during fiscal 1999. The time period to obtain approval
is unknown but could be lengthy. Any annexation of the land by the City could
further extend the time for approval.

         The Company had always planned on using its employees and the heavy
earth-moving equipment it acquired for its coal operations to perform as much of
the golf course work as possible. Consequently, after receipt of the permit,
during the remainder of fiscal 1997 the Company repaired such equipment to ready
it for commencement of work on the golf course in fiscal 1998 after the
conclusion of the winter season.

         During fiscal 1998, the Company commenced and completed clearing the
major brush off the land and commenced leveling the land for the golf course
fairways. The Company also secured the necessary rights to use water from the
nearby Animas River in the irrigation system to be installed for the golf course
and purchased an additional 10 acres of land adjacent to the Animas River as a
site for the construction of a station to pump the water from the Animas River
through a line to the system. The Company has applied for the permits from the
various federal agencies to construct the pumping station and waterline and
hopes to secure them in time to commence construction of the station, line and
system by September 1998. Fall and winter weather could limit such construction
activities during the remainder of fiscal 1999.


                                       4
<PAGE>   8


         In addition to such construction, during the remainder of fiscal 1999
the Company will be working on completing the remainder of the fairways,
installing the base part and then completing the remainder of the greens and
installing the necessary electrical power for the golf course. The Company has
not yet prepared definitive cost information for the golf course portion of the
project but expects the total cost, inclusive of the pumping station, waterline
and irrigation system, to be at least $2,000,000 to $2,500,000. The Company
expects to fund such cost from a combination of the sales proceeds from its
Limestone County, Texas gas property, the cash flow from its other oil and gas
properties and the use of its investment securities available for sale. See
"Item 6. - Management's Discussion and Analysis or Plan of Operations -
Financial Condition and Liquidity."

         It should continue to be emphasized that, although the Company believes
that it has a good working relationship with the City and County governments, no
assurances can be given that permits for the construction of the pumping station
and waterline and a revised permit allowing work beyond the preliminary site
work for the golf course can be obtained within satisfactory time frames and
without burdensome conditions attached.

COMPETITION AND MARKETS

         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
recent years, the Company has not experienced any significant difficulties in
obtaining services and materials although the product price increases which
occurred in the industry in fiscal 1997 caused demand for such services and
materials to rise.

         The coal and gravel 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. The principal competitive hurdles the Company faces in any future
coal 


                                       5
<PAGE>   9


operations it conducts are higher production costs resulting from greater
overburden levels, higher transportation costs caused by the lack of railroad
facilities in close proximity to its mine site and the additional costs that
would have to be incurred for its coal to meet acceptable quality standards.
These factors, coupled with the low sale price of coal, have currently
eliminated any value for the Company's coal deposits.

         MARKETS: The Company's ability to produce and market oil and gas and
coal 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, gas and coal include
imports and actions by foreign producing nations.

         During fiscal 1997 and a portion of fiscal 1998, the Company benefitted
from higher oil prices as compared to previous fiscal years. During the fourth
quarter of fiscal 1998, however, oil prices began a downward trend that has
continued into May 1998. As a result, the Company's average oil price received
during fiscal 1998 declined $4.34 per barrel (approximately 19.2%). A
continuation of the oil price environment currently being experienced will have
an adverse effect on the Company's revenues and operating cash flow and could
result in additional decreases in the carrying value of the Company's oil and
gas properties.

         The Company's average gas price received also fell $.22 per MCF
(approximately 8.7%) during fiscal 1998 from $2.52 per MCF to $2.30 per MCF.
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, 1998.

         The Company will not undertake any efforts to market its coal until it
believes its coal deposits once again have value. All of the Company's gravel
resources are currently being marketed through its contractual arrangements with
Durango Construction.

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 


                                       6
<PAGE>   10


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 are 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 Company's
coal to be marketed and effectively to limit the customers for the Company's
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 


                                       7
<PAGE>   11

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 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 May 31, 1998, the Company had nine full-time employees and one
part-time employee. Three of the employees and the part-time employee were
located at the Company's executive offices, four were located at the Company's
coal, gravel and real estate development operations office in Durango, Colorado,
and two were field employees located in North Texas. The Company considers its
relations with its employees to be satisfactory. See "Item 6. - Management's
Discussion and Analysis or Plan of Operation - Death of the Company's Parent,
Principal Shareholder and Chief Executive Officer."

ITEM 2.  DESCRIPTION OF PROPERTY.

         (a)      OIL AND GAS PROPERTIES.


                                       8
<PAGE>   12


RESERVES

         Reference is made to supplemental oil and gas data "Oil and Gas
Information (Unaudited)" included in the Notes to 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, 1998 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 New Mexico.

         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, 1998, 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 which can be produced from the Company's proved
developed reserves as of February 28, 1998 during the fiscal year ending
February 28, 1999, using equipment installed and under economic and operating
conditions existing at February 28, 1998:


<TABLE>
<S>                                                     <C>   
                           Oil (Bbls.)..............     81,178
                           Gas (MCF)................    288,051
</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, 1998 the total production attributable to the Company's oil and gas
interests:


<TABLE>
<CAPTION>
FISCAL YEAR ENDED          OIL              GAS
 FEBRUARY 28/29          (BBLS.)           (MCF)
-----------------        -------          -------
<S>                      <C>              <C>    
1998...................  147,911          437,064
1997...................   64,868          389,756
1996...................   19,920           99,396
</TABLE>


                                       9
<PAGE>   13

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, 1998 were as
shown in the following table:


<TABLE>
<CAPTION>
                                                FISCAL YEAR
                                            ENDED FEBRUARY 28/29
                                       1998         1997         1996
                                       ----         ----         ----
Lifting Costs
-------------
<S>                               <C>          <C>          <C>      
Per Equivalent Unit (Bbls.)       $    3.36    $    3.03    $    5.79

Average Sales Prices
--------------------
Oil (per Bbl.) ............           18.28        22.62        17.23
Gas (per MCF) .............            2.30         2.52         1.84
</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, 1998, approximately 46% of
the Company's oil sales were made to Scurlock Permian Corporation and
approximately 46% were made to Plains Marketing & Transportation.

         During the fiscal year ended February 28, 1998, approximately 64% of
the Company's gas sales were from its Limestone County, Texas property. 57% of
the Company's total gas sales were made from this property on the spot market to
Texla Energy Management, Inc. See "Item 1. - Description of Business - Oil and
Gas Operations" and "Item 6. - Management's Discussion and Analysis or Plan of
Operation." An additional 32% of the Company's gas sales were from its Madison
County, Texas property. All of this production was sold on the spot market to
Enserch Energy Service, Inc. (19% of total gas sales) and to Scurlock Permian
Corporation (13% of total gas sales).

         In the opinion of management, the termination of any of 


                                       10
<PAGE>   14

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, 1998, the Company owned working and overriding
royalty interests in 15,128 gross (3,303 net) acres of developed oil and gas
leases and 94 gross (28.09 net) productive oil and gas wells.




         The following table summarizes the Company's developed acreage and
productive wells as of February 28, 1998:


<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
                            ---      ---      ---     ---    ---  ---    ---     ---
Texas:
<S>                        <C>      <C>      <C>      <C>    <C>  <C>    <C>     <C>
  Madison Co. .........    4,200     --      1,050    --     26    --    6.50     --
  Limestone Co(4) .....     --      6,212     --      743    --    18     --     1.70
  All Other Cos........    2,321    1,753    1,269    137    37     9   18.90     .47
Mississippi ...........       40     --          1    --      1    --     .01     --
Colorado ..............     --        242     --        4    --     1     --      .02
New Mexico ............       40      320        8     91     1     1     .20     .29
                           -----    -----    -----    ---    --    --   -----    ----

         Total ........    6,601    8,527    2,328    975    65    29   25.61    2.48
                           =====    =====    =====    ===    ==    ==   =====    ====
</TABLE>


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

(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 10 gross (2.65 net) shut-in wells.

(4)      Effective as of March 1, 1998, the Company sold all of its interest in
         this acreage and wells. See "Item 1. - Description of Business - Oil 
         and Gas Operations" and "Item 6. - Management's Discussion and Analysis
         or Plan of Operation."


                                       11
<PAGE>   15

UNDEVELOPED ACREAGE

         The following table shows the gross and net acres of undeveloped oil
and gas leases held by the Company at February 28, 1998:


<TABLE>
<CAPTION>
         STATE                         GROSS ACRES   NET ACRES
         -----                         -----------   ---------
<S>                                       <C>          <C>  
         Texas.......................     8,591        1,928
         Arkansas....................     2,428        1,214
         Kansas......................     1,280          256
                                         ------       ------

                          Total......    12,299        3,398
                                         ======       ======
</TABLE>


         All of the Company's undeveloped leases in the State of Arkansas cover
lands located in Miller County, and all of such leases in the State of Kansas
pertain to lands located in Greeley County. In the absence of drilling activity
which establishes commercial reserves sufficient to justify retention, the
Company's leases on approximately 16% of its net acres will expire in fiscal
1999, approximately 27% will expire in fiscal 2000, approximately 10% will
expire in fiscal 2001, 1% will expire in fiscal 2002 and 10% will expire in
fiscal 2003. The remaining 36% of the Company's undeveloped acreage, including
all of such acreage in the State of Arkansas, is currently held in force by
production from shallow depth horizons in which the Company has no ownership
interest.

DRILLING ACTIVITY

         The following table sets forth the results of the Company's drilling
activity for each of the three fiscal years ended February 28, 1998:


<TABLE>
<CAPTION>
                                        Exploratory Wells
                      ----------------------------------------------------
   Fiscal Year                 Gross                          Net
      Ended           ------------------------   -------------------------
 February 28/29       Productive   Dry   Total   Productive   Dry    Total
 ---------------      ----------   ---   -----   ----------   ---    -----
 <S>                  <C>         <C>    <C>        <C>      <C>      <C> 
 1996...........          2         8      10        .46     2.45     2.91
 1997...........          3         3       6        .50      .68     1.18
 1998...........          3         2       5        .38      .45      .83
                       ----      ----    ----       ----     ----     ----

      Total.....          8        13      21       1.34     3.58     4.92
                       ====      ====    ====       ====     ====     ====
</TABLE>


                                       12
<PAGE>   16


<TABLE>
<CAPTION>
                                       Development Wells
                      ----------------------------------------------------
  Fiscal Year                   Gross                      Net
     Ended            ------------------------   -------------------------
 February 28/29       Productive   Dry   Total   Productive   Dry    Total
 ---------------      ----------   ---   -----   ----------   ---    -----
<S>                    <C>       <C>      <C>       <C>      <C>     <C>
 1996...........          7         -       7       1.58       -     1.58
 1997...........         20         -      20       3.47       -     3.47
 1998...........         15         1      16       2.94      .25    3.19
                       ----      ----    ----       ----     ----    ----

      Total.....         42         1      43       7.99      .25    8.24
                       ====      ====    ====       ====     ====    ====
</TABLE>

As of February 28, 1998, the Company was in the process of drilling two gross
(.38 net) development wells.

    (b)  COAL AND GRAVEL PROPERTIES.

         As of February 28, 1998, the Company had 3,156 (1,787 net) acres of
coal leases as described in the following table:


<TABLE>
<CAPTION>
                                   GROSS ACRES  NET ACRES
                                   -----------  ---------
<S>                                   <C>           <C>
Colorado:
  La Plata Co.(1).............        1,825         456
  Routt Co.(2)................        1,331       1,331
                                      -----       -----
           Total..............        3,156       1,787
                                      =====       =====
</TABLE>


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

(1)      The lease was acquired in October 1990 and has a remaining primary term
         of approximately 17 years. No annual delay rentals or advance minimum
         royalties are required. See discussion following this table.

(2)      The lease was acquired in January 1991 and has a remaining primary term
         of approximately three years with annual delay rentals of $1 per acre
         and advance minimum royalties of $10 per acre.

         The Company's Carbon Junction coal mine is located upon the 1,825 acres
in La Plata County, Colorado described in the foregoing table. 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 leases described in note
(1) to the table cover a 25% interest in the coal under the 1,825 acres. The
Company owns the surface estate and a 75% interest in the coal and has the
executive rights (i.e., the exclusive right to sign coal leases) on the
remaining 25% interest in the coal.

         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 yet elected to obtain a lease on 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 no current plans to attempt to operate the Carbon
Junction coal mine.


                                       13
<PAGE>   17

         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 Durango Construction, which is currently mining sand, gravel and
rock products from the permit area pursuant to its contract and lease with the
Company. See "Item 1. - Description of Business - Coal and Gravel Operations."

    (c)  REAL ESTATE.

         The surface of the 2,025 acres of land in La Plata County, Colorado
described in "Coal and Gravel Properties" above is held for development by the
Company. Approximately 300 acres of such land is the subject of a golf
course/residential lots development by the Company. During fiscal 1998, the
Company purchased an additional 10 acres of land for use in the development but
donated approximately 15 acres of land to La Plata County for use as trails,
thereby reducing the total acreage in the development to 2,020 acres. See "Item
1.- Description of Business - Real Estate Held for Development."

    (d)  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.

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, 1998 to a vote of the Company's security holders, through the
solicitation of proxies or otherwise.


                                       14
<PAGE>   18


                                     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, 1998 by
quarters. Such quotations were furnished to the Company by the National
Quotation Bureau Incorporated and were from the National Daily Quotation Service
and the NASD Non-NASDAQ OTC Bulletin Board. 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 28, 1997:
         Quarter Ended May 31, 1996                $ 2.13        $ 1.75
         Quarter Ended August 31, 1996               2.13          2.00
         Quarter Ended November 30, 1996             2.00          2.00
         Quarter Ended February 28, 1997             2.25          2.00

Fiscal Year Ended February 28, 1998:
         Quarter Ended May 31, 1997                $ 2.50        $ 2.00
         Quarter Ended August 31, 1997               2.75          2.50
         Quarter Ended November 30, 1997             2.88          2.13
         Quarter Ended February 28, 1998             2.88          2.75
</TABLE>


         As of May 22, 1998, the approximate number of holders of record of the
common stock of the Company was 524.

         The Company did not pay any dividends during the two fiscal years ended
February 28, 1998. There are currently no restrictions upon the Company's
ability to pay dividends; however, the Company does not anticipate paying any
dividends in fiscal 1999.

         The Company did not make any sales of equity securities during the two
fiscal years ended February 28, 1998.

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


                                       15
<PAGE>   19


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

RESULTS OF OPERATIONS

         During the fiscal year ended February 28, 1998, the Company had net
income of $410,791 ($.08 per share) compared to net income of $499,432 ($.10 per
share) during the fiscal year ended February 28, 1997. Although the Company's
oil and gas revenues and income from operations both increased substantially in
fiscal 1998, a lower level of interest and dividend income, a writedown of the
carrying value of the Company's equity investment securities and a higher tax
burden resulted in lower net income than in fiscal 1997.

         Oil and gas revenues increased approximately $1,347,000 (54.9%) in
fiscal 1998 due to higher production levels from the Company's Madison County,
Texas property. The following table reflects the changes in the levels of sales
from the Madison County property between fiscal 1997 and 1998:


<TABLE>
<CAPTION>
              FISCAL 1997    FISCAL 1998     INCREASE   PERCENTAGE
              -----------    -----------     --------   ----------
<S>              <C>           <C>            <C>          <C> 
Oil (Bbls.)      48,272        133,897        85,625      +177%
Gas (MCF)        20,596        138,424       117,828      +572%
</TABLE>


During the last quarter of fiscal 1998, the Company drilled two gross (.50 net)
wells in Madison County, both of which were productive. At February 28, 1998,
the Company had 26 gross (6.50 net) productive wells in Madison County.

         The increase in oil and gas revenues during fiscal 1998 was
accomplished despite significantly lower average prices received by the Company
as compared to fiscal 1997. The Company's average oil and gas prices received in
the fiscal year ended February 28, 1998 were $18.28 per barrel of oil and $2.30
per MCF of gas, down from the $22.62 per barrel and $2.52 per MCF average prices
received in fiscal 1997. The impact of lower prices was most severe during the
fourth quarter of fiscal 1998 as the Company's average oil price received fell
to $16.20 per barrel, down $7.24 per barrel (30.8%) from the comparable fiscal
1997 quarter, and its average gas price received declined approximately 29.8%.
The lower prices, coupled with a decline in production from the Company's
Limestone County, Texas gas property, as compared to the quarter of the prior
fiscal year, caused oil and gas revenues to decrease approximately $341,000, or
30.2%, in the fourth quarter of fiscal 1998. With respect to the Madison County
property, although oil production increased approximately 6,300 


                                       16
<PAGE>   20

barrels (26.6%), revenues from the property were approximately $67,300 less
during the quarter due to the lower oil price received.

         The lower prices also had an adverse effect on the Company's proven oil
and gas reserves and their carrying value, as estimated by independent petroleum
engineers at fiscal 1998 yearend, and have continued to hold down revenues
during the first quarter of fiscal 1999. Fiscal 1999 oil and gas production
revenues will also be negatively impacted by the Company's sale of its Limestone
County gas property, which produced approximately 305,200 MCF of gas and
contributed gas revenues of approximately $690,200 (18.2% of total revenues)
during fiscal 1998. Although the Company intends to invest at least a portion of
the funds received from the sale back into its oil and gas operations, there can
be no assurance that the Company will be able to replace the Limestone County
property's contribution to revenues.

         Revenues from the Company's gravel operations in Colorado increased
approximately $3,500 (6.3%) in fiscal 1998 due to higher royalty income
resulting from a higher level of gravel sales by Durango Construction from the
Company's property as rentals received from the Company's surface lease with
such company were the same in both fiscal years. Other revenues in fiscal 1997
and 1998 consisted of overhead fees received by the Company from other interest
owners in the oil and gas properties located in the North Texas area for which
the Company serves as operator. Other revenues declined $3,900 in fiscal 1998
due to the continued reduction in the average number of active wells being
operated by the Company.

         Oil and gas operating expenses increased approximately $532,400 (28.3%)
in fiscal 1998 due to higher depletion and depreciation and lease operating
expenses and dry hole and abandonment charges. These increases were partially
offset by a much lower lease impairment charge and lower geological and
geophysical (i.e., exploration) expense during the year. As was the case in
fiscal 1997, a significant portion of the increased depletion and depreciation
and lease operating expenses was directly related to the greater level of oil
and gas revenues from the Madison County and Limestone County properties;
however, an additional approximate $100,700 of the depletion and depreciation
expense was related to a new well in Freestone County, Texas to which the
independent petroleum engineering firm did not assign any proven reserves at
February 28, 1998. Dry hole expense was approximately $18,700 lower in fiscal
1998 but an approximate $107,000 charge for abandoned or condemned leaseholds on
exploratory prospects in New Mexico and Kansas caused the combined dry hole and
abandonment charges for fiscal 1998 to increase by approximately $88,300 (32.8%)
as the Company did not incur any expense for abandoned leaseholds in fiscal
1997.


                                       17
<PAGE>   21

         The expenses of the Company's coal and gravel operations declined
approximately $10,800 (7.4%) during fiscal 1998 as lower testing and permitting
fees and advance royalties more than offset slightly higher mining fees and
engineering expenses. Real estate development expense increased approximately
$43,600 (85.7%) in fiscal 1998 mainly due to repair expense incurred on the
Company's earth moving equipment being used on the golf course the Company is
building on approximately 170 acres of the Company's 2,020 acres of land in La
Plata County, Colorado and increases in most other categories of such expense.
The Company expects real estate development expenses to continue to increase as
the golf course site work progresses.

         General and administrative expense increased approximately $46,200
(10.3%) in fiscal 1998 principally due to the value of approximately 15 acres of
the Company's land donated during the fourth quarter of the year by the Company
to La Plata County, Colorado for use as trails. Without such donation, general
and administrative expense would have been slightly lower in fiscal 1998 as the
increased expense of the annual independent petroleum engineering report
obtained with respect to the Company's proven oil and gas reserves and an
increase in bad debt expense offset lower payroll expense, the absence during
the year of any litigation expense and any administrative expenses associated 
with the Company's coal and gravel properties.

         Reversing a trend of recent years, other income (expense) became a net
expense item once again, changing from an approximate $557,400 income item in
fiscal 1997 to an approximate $59,600 expense item in fiscal 1998, a reversal of
approximately $617,000. The reversal was due to an approximate $240,700 (56.3%)
decline in interest and dividend income resulting from the lower level of funds
the Company had invested during the year, the absence during the year of any
gain on the sale of investment securities available for sale (as opposed to an
approximate $136,700 gain in fiscal 1997) and an approximate $262,100 writedown
of the carrying value of the Company's investment in an equity security, which
was made following a decline in the fair value of the security considered to be
other than temporary. Interest expense fell approximately $54,900 (82.9%) during
fiscal 1998, however, due to the lower level of margin account borrowings
against its investment securities available for sale used by the Company during
the year as compared to the prior year.

         The Company's provision for income taxes increased by approximately
$206,200 in fiscal 1998 due to the Company's higher level of income before
income taxes. The provision was approximately $52,100 higher than the
"expected" provision primarily due to the effect of state and local income taxes
and the capital gains rate.


                                       18
<PAGE>   22

         The Company's weighted average shares outstanding declined
approximately 3.0% during the fiscal year ended February 28, 1998 as a result of
continuing share purchases by the Company. Purchases during the year totaled
211,750 shares, 61,250 of which were made from an affiliate and an employee. The
balance of the shares purchased by the Company in fiscal 1997 and 1998 was from
unaffiliated shareholders. See "Death of Company's Parent, Principal Shareholder
and Chief Executive Officer," below.

FINANCIAL CONDITION AND LIQUIDITY

         During fiscal 1998, the Company's operating activities provided
approximately $2,937,000 in funds. Although the Company's investing activities
(principally additions to oil and gas properties and to real estate held for
development, reduced by net investment proceeds) and financing activities
(purchases of shares of the Company's stock) required approximately $1,617,500
and $638,100 in funds, respectively, the net result was that the Company's cash
and cash equivalents increased by approximately $681,400. At February 28, 1998,
the Company had no indebtedness and held investment securities aggregating
approximately $1,963,700.

         The Company expects to fund its contemplated operations in fiscal 1999
from a combination of the sale proceeds from its Limestone County, Texas gas
property, the cash flow from its other oil and gas properties and sales or
maturities of a portion of its investment securities available for sale or
margin account borrowings against their value. See "Death of Company's Parent,
Principal Shareholder and Chief Executive Officer," below.

DEATH OF COMPANY'S PARENT, PRINCIPAL SHAREHOLDER
  AND CHIEF EXECUTIVE OFFICER

         Noel Pautsky, the Company's parent, principal shareholder and chief
executive officer, died unexpectedly on May 26, 1998 in Durango, Colorado while
on Company business. Mr. Pautsky had been the mainstay of the Company's
operations for 25 years and his contributions to the Company will be greatly
missed.

         Sandra Pautsky, the Company's Executive Vice President and the
beneficial owner of approximately 30% of the Company's outstanding shares of
common stock, will act as chief executive officer until the Company's Board of
Directors meets at a future date to select Mr. Pautsky's successor. Ms. Pautsky
will be responsible for the administration of Mr. Pautsky's estate as
independent executrix. In such capacity and combined with her existing
ownership, Ms. Pautsky will be the beneficial owner of a majority of the
Company's outstanding shares of common stock.


                                       19
<PAGE>   23

         It is expected that the Company will continue with its existing
business operations with Ms. Pautsky taking over the responsibility for
overseeing the Company's golf course/real estate development in Colorado and
administrative duties and with Danny Croker, the Company's Vice President,
taking over the responsibility for the Company's oil and gas operations.

ITEM 7.  FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                            PAGE
                                                            ----
<S>                                                          <C>
Independent Auditors' Report                                 21

Balance Sheets as of February 28, 1998 and 1997              22

Statements of Operations for the years ended
  February 28, 1998 and 1997                                 24

Statements of Stockholders' Equity for the
  years ended February 28, 1998 and 1997                     25

Statements of Cash Flows for the years ended
  February 28, 1998 and 1997                                 26

Notes to Financial Statements                                27
</TABLE>


                                       20

<PAGE>   24
                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Oakridge Energy, Inc.:

We have audited the accompanying balance sheets of Oakridge Energy, Inc. (the
Company) as of February 28, 1998 and 1997, 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 generally accepted auditing
standards. 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 examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.



                                       KPMG Peat Marwick LLP

Dallas, Texas
May 8, 1998, except as to note 7
     which is as of June 4, 1998


                                       21
<PAGE>   25
                              OAKRIDGE ENERGY, INC.

                                 Balance Sheets

                           February 28, 1998 and 1997


<TABLE>
<CAPTION>
                                Assets                                          1998              1997
                                ------                                          ----              ----
<S>                                                                        <C>               <C>
Current assets:
   Cash and cash equivalents                                               $    877,006      $    195,631
   Trade accounts receivable                                                    386,353           836,563
   Investment securities available for sale (note 2)                          1,637,047         1,399,344
   Federal income tax receivable                                                   --             230,602
   Deferred tax asset (note 3)                                                   81,729            44,303
   Prepaid expenses and other                                                    36,117            32,331
                                                                           ------------      ------------
                  Total current assets                                        3,018,252         2,738,774
                                                                           ------------      ------------

Investment securities available for sale (note 2)                               326,667         1,347,663

Oiland gas properties, at cost, using the successful efforts method of
   accounting:
      Proved developed properties                                             7,336,399         5,821,814
      Accumulated depletion and depreciation                                 (3,863,223)       (2,864,407)
                                                                           ------------      ------------
                                                                              3,473,176         2,957,407
      Unproved properties, net of impairment allowance of
        $70,296 in 1998 and $134,957 in 1997                                    261,728           222,877
                                                                           ------------      ------------
                  Net oil and gas properties                                  3,734,904         3,180,284
                                                                           ------------      ------------
Coal and gravel properties, at cost:
      Undeveloped properties                                                  6,062,042         6,060,710
      Mining and service equipment                                            2,674,069         2,674,069
                                                                           ------------      ------------
                                                                              8,736,111         8,734,779
      Accumulated depletion and depreciation                                 (8,347,878)       (8,330,649)
                                                                           ------------      ------------
                  Net coal and gravel properties                                388,233           404,130
                                                                           ------------      ------------

Real estate held for development                                              2,474,309         2,275,977

Other property and equipment, net of accumulated
   depreciation of $647,603 in 1998 and $733,429 in 1997                        188,876           172,611

Other noncurrent assets (note 6)                                              1,272,354         1,240,937
                                                                           ------------      ------------
                                                                           $ 11,403,595      $ 11,360,376
                                                                           ============      ============
</TABLE>


                                                                    (Continued)


                                       22
<PAGE>   26
                              OAKRIDGE ENERGY, INC.

                            Balance Sheets, Continued



<TABLE>
<CAPTION>
                   Liabilities and Stockholders' Equity              1998               1997
                   ------------------------------------              ----               ----
<S>                                                              <C>               <C>
Current liabilities:
   Accounts payable                                              $    281,209      $    239,906
   Accrued expenses                                                    59,194            56,008
                                                                 ------------      ------------
            Total current liabilities                                 340,403           295,914

Deferred federal income taxes (note 3)                                722,299           481,238
                                                                 ------------      ------------

            Total liabilities                                       1,062,702           777,152
                                                                 ------------      ------------

Stockholders' equity:
   Common stock, $.04 par value, 20,000,000
      shares authorized, 10,157,803 shares issued                     406,312           406,312
   Additional paid-in capital                                         805,092           805,092
   Retained earnings                                               17,599,170        17,188,379
   Unrealized loss on investment securities
      available for sale, net of income taxes                        (100,993)          (86,002)
                                                                 ------------      ------------
                                                                   18,709,581        18,313,781
   Less treasury stock, at cost; 5,286,194 shares
      in 1998 and 5,074,444 shares in 1997 (note 5)                (8,368,688)       (7,730,557)
                                                                 ------------      ------------
            Total stockholders' equity                             10,340,893        10,583,224

Commitments and contingencies (note 6)
                                                                 ------------      ------------
                                                                 $ 11,403,595      $ 11,360,376
                                                                 ============      ============
</TABLE>


See accompanying notes to financial statements.


                                       23
<PAGE>   27
                              OAKRIDGE ENERGY, INC.

                            Statements of Operations

                 For the years ended February 28, 1998 and 1997

<TABLE>
<CAPTION>
                                                                         1998              1997
                                                                         ----              ----
<S>                                                                 <C>               <C>
Revenues:
   Oil and gas (note 4)                                             $  3,798,393      $  2,451,839
   Gravel                                                                 58,497            55,023
   Other                                                                  42,600            46,500
                                                                    ------------      ------------
            Total revenues                                             3,899,490         2,553,362
                                                                    ------------      ------------
Operating expenses:
   Oil and gas:
      Depletion and depreciation                                       1,194,220           752,935
      Lease operating                                                    781,874           437,770
      Lease impairment (notes 1(d) and 1(h))                              35,500           355,274
      Exploration                                                         45,967            67,444
      Dry hole and abandonment costs                                     357,786           269,515
                                                                    ------------      ------------
                                                                       2,415,347         1,882,938
                                                                    ------------      ------------
   Coal and gravel:
      Operating                                                          117,357           130,718
      Depletion                                                           17,229            14,641
                                                                    ------------      ------------
                                                                         134,586           145,359
                                                                    ------------      ------------

   Real estate                                                            94,492            50,896
   General and administrative                                            494,023           447,774
                                                                    ------------      ------------
            Total operating expenses                                   3,138,448         2,526,967
                                                                    ------------      ------------
            Income from operations                                       761,042            26,395
                                                                    ------------      ------------
Other income (expense):
   Interest and dividend income                                          186,905           427,599
   Interest expense                                                      (11,359)          (66,230)
   Gain on sales of investment securities                                   --             136,681
   Writedown of investment securities and other, net (note 2)           (235,168)           59,382
                                                                    ------------      ------------
            Total other income (expense)                                 (59,622)          557,432
                                                                    ------------      ------------
            Income before income taxes                                   701,420           583,827

Income tax expense (note 3)                                              290,629            84,395
                                                                    ------------      ------------

            Net income                                              $    410,791      $    499,432
                                                                    ============      ============

Basic and diluted earnings per common share                         $        .08      $        .10
                                                                    ============      ============

Weighted average shares outstanding                                    4,957,329         5,108,733
                                                                    ============      ============
</TABLE>

See accompanying notes to financial statements.


                                       24
<PAGE>   28
                              OAKRIDGE ENERGY, INC.

                       Statements of Stockholders' Equity

                 For the years ended February 28, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                    Unrealized
                                                                                    gain (loss)
                                                                                   on investment
                                                  Additional                        securities
                                     Common         paid-in        Retained          available       Treasury
                                     stock          capital        earnings          for sale         stock             Total
                                  -----------     -----------     -----------      -----------      -----------      -----------
<S>                               <C>             <C>             <C>              <C>              <C>              <C>
Balance, February 29, 1996        $   406,312     $   805,092     $16,688,947      $    98,833      $(7,626,559)     $10,372,625

Net income                               --              --           499,432             --               --            499,432

Purchases of treasury stock              --              --              --               --           (103,998)        (103,998)

Change in unrealized gains
   (losses) on investment
   securities available for 
   sale, net of $95,218 
   deferred Federal income 
   taxes (note 2)                        --              --               --          (184,835)             --          (184,835)
                                  -----------     -----------     -----------      -----------      -----------      -----------

Balance, February 28, 1997            406,312         805,092      17,188,379          (86,002)      (7,730,557)      10,583,224

Net income                               --              --           410,791             --               --            410,791

Purchases of treasury stock
    (note 5)                             --              --              --               --           (638,131)        (638,131)

Change in unrealized losses
   on investment securities
   available for sale, net of
   deferred Federal
   income taxes (note 2)                 --              --               --           (14,991)             --           (14,991)
                                  -----------     -----------     -----------      -----------      -----------      -----------

Balance, February 28, 1998        $   406,312     $   805,092     $17,599,170      $  (100,993)     $(8,368,688)     $10,340,893
                                  ===========     ===========     ===========      ===========      ===========      ===========
</TABLE>


See accompanying notes to financial statements.


                                       25
<PAGE>   29
                              OAKRIDGE ENERGY, INC.

                            Statements of Cash Flows

                 For the years ended February 28, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                1998              1997
                                                                                ----              ----
<S>                                                                        <C>               <C>
Cash flows from operating activities:
   Net income                                                              $    410,791      $    499,432
   Adjustments to reconcile net income to net
      cash provided by (used in) operating activities:
          Depletion and depreciation                                          1,245,979           798,739
          Abandoned leaseholds                                                  107,055              --
          Lease impairment                                                       35,500           355,274
          Deferred income taxes                                                 188,644           246,082
          Gain on sales of investment securities                                   --            (136,681)
          Write-down of investment securities                                   262,087              --
          Other                                                                 (48,636)          (71,433)
          Net changes in assets and liabilities:
            Trade accounts receivable                                           450,210          (476,519)
            Prepaid expenses and other noncurrent assets                         10,272            12,417
            Federal income tax receivable                                       230,602           298,016
            Accounts payable and accrued expenses                                44,489          (133,666)
                                                                           ------------      ------------
               Net cash provided by operating activities                      2,936,993         1,391,661
                                                                           ------------      ------------

Cash flows from investing activities:
   Additions to oil and gas properties                                       (1,891,395)       (2,344,497)
   Additions to real estate held for development                               (218,856)         (147,323)
   Purchases of investment securities                                          (152,156)       (1,008,685)
   Proceeds from sales/redemptions of investment securities                     690,000         2,699,349
   Investments in limited partnerships                                          (45,475)         (337,362)
   Other                                                                            395             2,186
                                                                           ------------      ------------
               Net cash used in investing activities                         (1,617,487)       (1,136,332)
                                                                           ------------      ------------

Cash flows from financing activities - purchases of treasury stock             (638,131)         (103,998)
                                                                           ------------      ------------

Net increase in cash and cash equivalents                                       681,375           151,331
Cash and cash equivalents at beginning of year                                  195,631            44,300
                                                                           ------------      ------------
Cash and cash equivalents at end of year                                   $    877,006      $    195,631
                                                                           ============      ============
</TABLE>


See accompanying notes to financial statements.


                                       26
<PAGE>   30
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements

                           February 28, 1998 and 1997


(1)     Summary of Significant Accounting Policies

        (a)    General

               Oakridge Energy, Inc. (the "Company") is engaged in the
               exploration for and development, production and sale of oil and
               gas primarily in Texas and, to a much lesser extent, in the
               development of gravel in Colorado. In addition, the Company holds
               certain real estate and coal deposits in Colorado for
               development.

        (b)    Statements of Cash Flows

               Cash equivalents of $418,000 and $29,000 at February 28, 1998 and
               1997, respectively, consisted of interest-bearing cash deposits.
               For purposes of the statements of cash flows, the Company
               considers all cash and highly liquid investments with original
               maturities of three months or less to be cash equivalents.

               Supplemental disclosure of cash flow information:

                                                        1998              1997
                                                        ----              ----

                  Interest paid                      $   11,359         $ 66,230
                                                     ==========         ========

                  Income taxes paid (refund), net    $(159,802)         $ 68,915
                                                     =========          ========

        (c)    Investment Securities

               Investment securities consist of U.S. Government agency bonds and
               corporate 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 either 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 does not have any securities classified as held to
               maturity or trading as of February 28, 1998 and 1997.


                                       27
<PAGE>   31
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



               A decline in the market value of any available for sale or held
               to maturity 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. Premiums and discounts are
               amortized or accreted over the life of the related held to
               maturity security as an adjustment to yield using the effective
               interest method. Dividend and interest income are recognized when
               earned. Gains and losses from sale of investment securities are
               computed under the specific identification method.

        (d)    Oil and Gas Properties

               The Company uses the successful efforts method of accounting for
               oil and gas producing activities in accordance with Statement of
               Financial Accounting Standards (SFAS) No. 19. 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 nonproducing leasehold abandonments are expensed as
               incurred.

               Unproved oil and gas 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. During the year ended February 28, 1997, an
               impairment allowance of $134,957 was recorded on certain unproved
               oil and gas properties. During the year ended February 28, 1998,
               the Company reduced its impairment allowance to $70,296. Other
               unproved properties are amortized based on the Company's prior
               experience of successful drilling and average holding periods.
               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.

        (e)    Coal and Gravel Properties

               Costs attributable to the acquisition and development of the coal
               properties are capitalized, while costs incurred to maintain the
               properties are expensed. Undeveloped coal 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.

               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.


                                       28
<PAGE>   32
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



        (f)    Real Estate Held for Development

               Real estate held for development is carried at cost, which is not
               in excess of estimated net realizable value. Real estate
               development and construction costs directly identifiable with
               real estate held for development are capitalized.

        (g)    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.

        (h)    Impairment of Long-Lived Assets

               Effective March 1, 1996, the Company adopted the provisions of
               SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
               and for Long-Lived Assets to Be Disposed Of" ("Statement No.
               121"). Statement No. 121 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 an asset's estimated future net cash flows 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 Statement No. 121, the Company evaluates impairment of
               proved oil and gas properties on a field-by-field basis. On this
               basis, certain fields are impaired because they are not expected
               to recover their entire carrying value from future net cash
               flows. During the years ended February 28, 1998 and 1997, the
               Company recorded impairment losses of $35,500 and $220,317,
               respectively, related to its proved oil and gas properties. The
               fair values of the impaired proved oil and gas properties were
               determined by using the present value of expected future cash
               flows. If estimated future cash flows are not achieved with
               respect to certain fields, further writedowns may be required.

        (i)    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.


                                       29
<PAGE>   33
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



        (j)    Earnings Per Common Share

               The Company adopted the provisions of SFAS No. 128, "Earnings per
               Share", during 1998. SFAS No. 128 reporting requirements replace
               primary and fully-diluted earnings per share (EPS) with basic and
               diluted EPS. Basic EPS is calculated by dividing net income
               (available to common shareholders) by the weighted average number
               of common shares outstanding for the period. Diluted EPS reflects
               the potential dilution that could occur if accounts or other
               contracts to issue common stock were converted into common stock.
               There were no dilutive securities for 1998 and 1997.

        (k)    Revenue Recognition

               The Company recognizes revenue on oil and gas properties as
               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.

        (l)    Investment in Partnerships

               The Company uses the equity method of accounting for investments
               in partnerships where the Company has the ability to exercise
               significant influence over such entities.

        (m)    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 the
               financial statements when the fair value is different than the
               carrying value of those financial instruments.

        (n)    Management's Use of Estimates

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect (i) the reported
               amounts of assets and liabilities, (ii) disclosure of contingent
               assets and liabilities at the date of the financial statements,
               and (iii) the reported amounts of revenues and expenses during
               the reporting period. Actual results could differ from those
               estimates.

        (o)    New Accounting Pronouncements

               In June 1997, the Financial Accounting Standards Board issued
               SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
               "Disclosure about Segments of an Enterprise and Related
               Information". SFAS No. 130 establishes standards for reporting
               and display of comprehensive income and its components in
               financial statements. SFAS No. 131 establishes annual and interim
               reporting standards for an enterprise's operating segments and
               related disclosures about its products, services, geographic
               areas and major customers. Adoption of these statements will not
               impact the Company's financial position, results of operations or
               cash flows, and any effect will be limited to the form and
               content of its disclosures. Both statements are effective for
               fiscal years beginning after December 15, 1997.


                                       30
<PAGE>   34
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



(2)     Investment Securities

        The amortized cost and fair values of investment securities (available
        for sale) as of February 28, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                    Gross         Gross
                                                  Amortized      Unrealized     Unrealized        Fair
             Available for sale                      Cost           Gains         Losses          Value
             ------------------                   ----------     ----------     ----------      ----------
             <S>                                  <C>            <C>            <C>             <C>
             Current:
                 Equity securities                $  747,010           --         (136,263)        610,747
                 Corporate notes                   1,020,844          5,456           --         1,026,300
                                                  ----------     ----------     ----------      ----------
                       Total current               1,767,854          5,456       (136,263)      1,637,047
                                                  ----------     ----------     ----------      ----------
             Noncurrent:
                 U.S. Government
                    agency bonds, due
                    within 5 years                   222,016          3,265           --           225,281
                 Corporate notes,
                    due within 5 years               100,087          1,299           --           101,386
                                                  ----------     ----------     ----------      ----------
                       Total noncurrent              322,103          4,564           --           326,667
                                                  ----------     ----------     ----------      ----------

                       Total                      $2,089,957         10,020       (136,263)      1,963,714
                                                  ==========     ==========     ==========      ==========
</TABLE>

        The amortized cost and fair values of investment securities (available
        for sale) as of February 28, 1997 are as follows:

<TABLE>
<CAPTION>
                                                                    Gross         Gross
                                                  Amortized      Unrealized     Unrealized        Fair
             Available for sale                      Cost           Gains         Losses          Value
             ------------------                   ----------     ----------     ----------      ----------
             <S>                                  <C>            <C>            <C>             <C>
             Current:
                 Equity securities                $  861,006           --         (153,818)        707,188
                 Corporate notes                     686,573          5,583           --           692,156
                                                  ----------     ----------     ----------      ----------
                       Total current               1,547,579          5,583       (153,818)      1,399,344
                                                  ----------     ----------     ----------      ----------
             Noncurrent:
                 U.S. Government
                    agency bonds,
                    due within 5 years            $  219,914          4,735           --           224,649
                 Corporate notes,
                    due within 5 years             1,109,820         13,194           --         1,123,014
                                                  ----------     ----------     ----------      ----------
                       Total noncurrent            1,329,734         17,929           --         1,347,663
                                                  ----------     ----------     ----------      ----------
                       Total                      $2,877,313         23,512       (153,818)      2,747,007
                                                  ==========     ==========     ==========      ==========
</TABLE>


                                       31
<PAGE>   35
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



        At February 28, 1998, the Company wrote down to estimated fair market
        value certain equity security investments. The write-down amounted to
        approximately $262,000 and was due to a decline in fair value considered
        to be other than temporary. The write-down is included in write-down of
        investment securities and other on the accompanying 1998 statement of
        operations.

(3)     Income Taxes

        Income tax expense (benefit) attributable to income from operations
        consists of the following:

<TABLE>
<CAPTION>
                                              Current       Deferred        Total
                                             ---------      ---------     ---------
<S>                                          <C>            <C>           <C>
Year ended February 28, 1998:
      U.S. Federal                           $  76,247        163,416       239,663
      State and local                           25,738         25,228        50,966
                                             ---------      ---------     ---------
                                             $ 101,985        188,644       290,629
                                             =========      =========     =========
Year ended February 28, 1997:
      U.S. Federal                           $(191,128)       217,315        26,187
      State and local                           29,441         28,767        58,208
                                             ---------      ---------     ---------
                                             $(161,687)       246,082        84,395
                                             =========      =========     =========
</TABLE>

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

<TABLE>
<CAPTION>
                                                            1998              1997
                                                            ----              ----
<S>                                                    <C>               <C>
Computed "expected" tax expense (benefit)              $    238,483           198,501
   State and local income taxes,
      net of Federal income tax benefit                      33,638            38,417
   Effect of capital gains rate differential                 36,692              --
   Other, primarily revision of prior year
      provision estimate                                    (18,184)         (152,523)
                                                       ------------      ------------
                                                       $    290,629            84,395
                                                       ============      ============
</TABLE>


                                       32
<PAGE>   36
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



        The tax effects of temporary differences that give rise to significant
        portions of the deferred tax assets and deferred tax liabilities at
        February 28, 1998 and February 28, 1997 are presented below:

<TABLE>
<CAPTION>
                                                                               1998              1997
                                                                               ----              ----
              <S>                                                          <C>               <C>
              Deferred tax assets:
                 Unrealized loss on investment securities
                    available for sale                                     $     81,729            44,303
                 Statutory depletion                                             57,061            57,061
                 Alternative minimum tax credit carryforward                    124,407            44,348
                 Net operating loss carryforward                                 36,479              --
                 Other                                                           16,950            16,950
                                                                           ------------      ------------
                           Total gross deferred tax assets                      316,626           162,662
                                                                           ------------      ------------
              Deferred tax liabilities:
                 Oil and gas properties and other property
                    and equipment, principally due to
                    depletion and depreciation                                 (876,817)         (519,218)
                 Coal properties, principally due to
                    differences in depletion                                    (80,379)          (80,379)
                                                                           ------------      ------------
                           Total gross deferred tax liabilities                (957,196)         (599,597)
                                                                           ------------      ------------
                           Net deferred tax liability                      $   (640,570)         (436,935)
                                                                           ============      ============
</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.

(4)     Segment Information and Major Customers

        The Company is engaged in oil and gas and coal and gravel activities.
        Separate financial information with respect to these two business
        segments is included in the accompanying financial statements. All of
        the Company's operations are in the United States.

        For the year ended February 28, 1998, the Company had two customers
        which individually accounted for more than 10% of the Company's total
        oil sales. Sales to these customers aggregated approximately $2,470,000
        or 92% of the Company's total oil sales.

        In addition, the Company had three customers which individually
        accounted for more than 10% of the Company's total gas sales. Sales to
        these customers aggregated approximately $965,000 or 89% of the
        Company's total gas sales.

(5)     Related Party Transactions

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


                                       33
<PAGE>   37
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements



        During fiscal year 1998, the Company purchased 60,000 shares of the
        Company's common stock from the Company's Executive Vice President at
        $2.875 per share which approximated the market price at the time of the
        purchase.

        In addition, subsequent to February 28, 1998, the Company purchased
        20,000 shares of the Company's common stock from the Company's Executive
        Vice President at $3.20 per share which approximated the market price at
        the time of the purchase.

(6)     Commitments and Contingencies

        The Company is subject to certain claims. In the opinion of management,
        the outcome of such matters will not have a materially adverse effect on
        the financial statements of the Company.

        As of February 28, 1998 and 1997, the Company has pledged
        interest-bearing cash deposits of $875,681 to secure letters of credit
        in favor of the Colorado Bureau of Land Management for state
        requirements regarding land reclamation with respect to coal and gravel
        properties. These pledged cash deposits are included in other noncurrent
        assets in the accompanying balance sheets.

(7)     Subsequent Event

        On June 2, 1998, the Company sold its interest in an oil and gas field
        for approximately $3,100,000. At February 28, 1998, the Company had a
        net basis in this field of approximately $1,400,000.

(8)     Quarterly Operating Results (Unaudited)

        The quarterly results of operations for 1998 and 1997, follows:

<TABLE>
<CAPTION>
                                             First        Second         Third        Fourth          Full
                                            Quarter       Quarter       Quarter       Quarter         Year
                                            -------       -------       -------       -------         ----
        1998
        ----
<S>                                        <C>            <C>          <C>             <C>           <C>      
        Total revenues                     $ 919,967      1,027,489    1,144,033       808,001       3,899,490
        Income from operations               183,599        373,308      322,447      (118,312)        761,042
        Net income                           153,936        297,046      265,627      (305,815)        410,791
        Basic and diluted earnings
        per share                                .03           .06           .05          (.06)            .08
</TABLE>


                                       34
<PAGE>   38
                              OAKRIDGE ENERGY, INC.

                          Notes to Financial Statements


<TABLE>
<CAPTION>
                                             First        Second         Third        Fourth          Full
                                            Quarter       Quarter       Quarter       Quarter         Year
                                            -------       -------       -------       -------         ----
        1997
        ----
<S>                                        <C>              <C>          <C>          <C>            <C>      
        Total revenues                     $ 422,176        414,822      568,074      1,148,290      2,553,362
        Income (loss)
            from operations                  (32,085)      (149,315)      28,848        178,947         26,395
        Net income (loss)                     (7,110)       (66,205)      76,447        496,300        499,432
        Basic and diluted earnings
        per share                               (.00)         (.01)          .01            .10            .10
</TABLE>

        During the fourth quarter of fiscal 1998, the Company recorded an
        adjustment of approximately $262,000 (before income taxes) to increase
        realized loss on available-for-sale securities for an other than
        temporary decline in market value below cost of certain investment
        securities. The Company also recorded approximately $500,000 in
        depreciation and depletion during the fourth quarter of fiscal 1998
        ($692,341 recorded for the first three quarters), primarily due to
        reduction in reserve estimates associated with the decline in oil and
        gas prices.


                                       35
<PAGE>   39
                              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 Statement of Financial
        Accounting Standards No. 69 ("Statement No. 69").

        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, 1998 and February 28, 1997
        follows:

<TABLE>
<CAPTION>
                                                                  1998            1997
                                                                  ----            ----
<S>                                                            <C>               <C>
                Acquisition of unproved properties             $   147,158        155,232
                                                               ===========      =========
                Development costs                              $ 1,744,237      2,189,265
                                                               ===========      =========
                Exploration costs                              $   403,753        336,959
                                                               ===========      =========
</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, 1998
        and February 28, 1997.

<TABLE>
<CAPTION>
                                                                  1998             1997
                                                                  ----             ----
<S>                                                            <C>              <C>
Revenues                                                       $ 3,798,393       2,451,839
Production costs                                                  (781,874)       (437,770)
Depletion, depreciation, and valuation
   provisions                                                   (1,229,720)     (1,108,209)
Exploration costs                                                 (403,753)       (336,959)
                                                               -----------      ----------
                                                                 1,383,046         568,901
Income tax expense                                                (470,236)       (193,426)
                                                               -----------      ----------
Results of operations for producing
   activities (excluding corporate
   overhead and interest costs)                                    912,810         375,475
                                                               ===========      ==========
</TABLE>


                                       36
<PAGE>   40
                              OAKRIDGE ENERGY, INC.

                    Supplemental Oil and Gas Data (Unaudited)


        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.

<TABLE>
<CAPTION>
                                                               Oil            Gas
                                                               ---            ---
Proved developed and undeveloped reserves:
<S>                                                          <C>          <C>    
   Balance, February 29, 1996                                106,103        869,150
      Revisions of previous estimates                         35,741        156,736
      Extensions and discoveries                             525,796      1,436,790
      Production                                             (64,868)      (389,756)
                                                            --------      ---------
   Balance, February 28, 1997                                602,772      2,072,920

      Revisions of previous estimates                        303,628       (159,043)
      Extensions and discoveries                             113,653        342,204
      Production                                            (147,911)      (437,064)
                                                            --------      ---------
   Balance, February 28, 1998                                872,142      1,819,017
                                                            ========      =========

                                                               Oil            Gas
                                                               ---            ---
Proved developed reserves:
   February 29, 1996                                         106,103        869,150
                                                            ========      =========
   February 28, 1997                                         314,277      1,908,674
                                                            ========      =========
   February 28, 1998                                         325,946      1,684,528
                                                            ========      =========
</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 net 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 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


                                       37
<PAGE>   41
                              OAKRIDGE ENERGY, INC.

                    Supplemental Oil and Gas Data (Unaudited)


        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 adjusted for tax credits, with
        consideration of future tax rates already legislated, to the future
        pretax net cash flows relating to the Company's proved oil and gas
        reserves, less the tax basis of the properties involved. The
        standardized measure of discounted future cash flows at February 28,
        1998 and February 28, 1997, which represent the present value of
        estimated future cash flows using a discount rate of 10% a year,
        follows:

<TABLE>
<CAPTION>
                                                                                1998             1997
                                                                                ----             ----
            <S>                                                            <C>               <C>
            Future cash inflows                                            $ 14,563,635        15,861,328
            Future production and development costs                          (8,006,427)       (7,468,032)
            Future income tax expenses                                       (1,033,620)       (1,002,950)
                                                                           ------------      ------------
            Future net cash flows                                             5,523,588         7,390,346
            10% annual discount for estimated
               timing of cash flows                                          (1,651,108)       (1,602,116)
                                                                           ------------      ------------
            Standardized measure of discounted
               future net cash flows                                       $  3,872,480      $  5,788,230
                                                                           ============      ============

            Beginning of year                                              $  5,788,230      $  1,621,656
               Sales of oil and gas, net of production costs                 (3,016,519)       (2,014,069)
               Extensions, discoveries, and improved
                  recoveries, less related costs                                504,289         7,221,876
               Accretion of discount                                            578,823           162,166
               Net change in sales and transfer prices, net of
                  production costs                                             (949,921)          746,573
               Changes in estimated future development costs                     93,187        (1,522,377)
               Net change in income taxes                                       650,733        (1,354,531)
               Changes in production rates (timing and other)                (1,139,944)          441,966
               Revisions of previous quantities                               1,363,602           484,970
                                                                           ------------      ------------
            End of year                                                    $  3,872,480      $  5,788,230
                                                                           ============      ============
</TABLE>


                                       38
<PAGE>   42
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE.

         The Company did not change its principal independent accounting firm
nor have any disagreements with such firm on accounting and financial disclosure
matters during the two fiscal years ended February 28, 1998.

                                    PART III

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

         The information required by this item is incorporated by reference to
the definitive proxy statement for the Company's Annual Meeting of Stockholders
for the fiscal year ended February 28, 1998 to be filed with the Securities and
Exchange Commission ("SEC") not later than 120 days after the end of such year.

ITEM 10. EXECUTIVE COMPENSATION.

         The information required by this item is incorporated by reference to
the definitive proxy statement for the Company's Annual Meeting of Stockholders
for the fiscal year ended February 28, 1998 to be filed with the SEC not later
than 120 days after the end of such year.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
           OWNERS AND MANAGEMENT.

         The information required by this item is incorporated by reference to
the definitive proxy statement for the Company's Annual Meeting of Stockholders
for the fiscal year ended February 28, 1998 to be filed with the SEC not later
than 120 days after the end of such year.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information required by this item is incorporated by reference to
the definitive proxy statement for the Company's Annual Meeting of Stockholders
for the fiscal year ended February 28, 1998 to be filed with the SEC not later
than 120 days after the end of such year.


                                       39
<PAGE>   43
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

   (a)   EXHIBITS

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

         (10)    Purchase and Sale Agreement dated March 25, 1998 between the
                 Company as seller and Mitchell Energy Corporation as buyer
                 pertaining to the Company's Limestone County, Texas gas
                 property.

         (27)    Financial Data Schedule.

   (b)   REPORTS ON FORM 8-K - There were no reports on Form 8-K filed by the
         Company during the last quarter of the period covered by this report.



                                       40
<PAGE>   44
                                   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, Executive
     Vice President

DATE:  June 12, 1998


         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                                     By /s/ Sandra Pautsky
   --------------------------------       --------------------------------
   Noel Pautsky, Chairman                 Sandra Pautsky, Executive
     of Board of Directors,                 Vice President and
         President and Director*            Secretary-Treasurer
                                            (Acting Chief Executive
                                            Officer, Chief Financial
                                            Officer and Chief
                                            Accounting Officer)
                                            and Director

DATE:  June __, 1998                        DATE:  June 12, 1998


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

DATE:  June 12, 1998                        DATE:  June 12, 1998



*Mr. Pautsky died on May 26, 1998, and his successors as President (Chief
Executive Officer) and as a Director have not yet been named.


                                      41
<PAGE>   45
                                INDEX TO EXHIBITS

         The exhibits filed with this Registration Statement are filed in
accordance with the requirements of Item 601 of Regulation S-B for filings on
Form 10-KSB. For convenient reference, each exhibit is listed according to the
number assigned to it in the Exhibit Table of such Item 601.

         (2)      Plan of acquisition, reorganization, arrangement, liquidation,
                  or succession - not applicable.

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

         (4)      Instruments defining the rights of security holders, including
                  indentures - not applicable.

         (9)      Voting trust agreement - not applicable.

        (10)      Material contracts - Purchase and Sale Agreement dated March
                  25, 1998 between the Registrant as seller and Mitchell Energy
                  Corporation as buyer pertaining to the Registrant's Limestone
                  County, Texas gas property.

        (11)      Statement re computation of per share earnings - not
                  applicable.

        (13)      Annual or quarterly reports, Form 10-Q - not applicable.

        (16)      Letter on change in certifying accountant - not applicable.

        (18)      Letter on change in accounting principles - not applicable.

        (19)      Previously unfiled documents - not applicable.

        (21)      Subsidiaries of the registrant - not applicable.

        (22)      Published report regarding matters submitted to vote -not
                  applicable.

        (23)      Consent of experts and counsel - not applicable.

        (24)      Power of attorney - not applicable.

        (27)      Financial Data Schedule.

        (99)      Additional exhibits - not applicable.