**United States**

**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 29, 2008**                        |
|                                                                         |
| **o****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 000-08532**

 

**OAKRIDGE ENERGY, INC.**

(Name of small businessissuer in its charter)

 
| **Utah**                                          | **87-0287176**       |
|---------------------------------------------------|----------------------|
| (State or other  jurisdiction of incorporation or | (I.R.S. Employer     |
| 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) ofthe Exchange Act:

**None**

 

Securities registered under Section 12(g) ofthe Exchange Act:

 

**Common Stock, $.04 par value**

(Title of class)

 

Checkwhether the issuer is not required to file reports pursuant to Section 13or 15(d) of the Exchange Act. **o**

 

Checkwhether the issuer (1) filed all reports required to be filed by Section 13or 15(d) of the Exchange Act during the past 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. **YES****x****  NO****o**

 

Checkif there is no disclosure of delinquent filers in response to Item 405 ofRegulation S-B contained in this form, and no disclosure will be contained, tothe best of registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-KSBor any amendment to this Form 10-KSB. **x**

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). **YES****o****  NO****x**

 

TheCompany’s revenues for its most recent fiscal year were $1,631,388.

 

The aggregate market value of the voting and non-voting common equityheld by nonaffiliates computed by reference to the price at which the commonequity was sold, or the average bid and asked prices of such common equity, was$13,483,475 as of May 9, 2008.

 

Asof May 8, 2008, there were 4,260,242 shares of common stock outstanding.

 

**DOCUMENTSINCORPORATED BY REFERENCE**

 

**None**

 

TransitionalSmall Business Disclosure Format (check one): **YES****o****  NO****x**

 

 

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**TABLE OFCONTENTS**

 
| ** **   | **Page**                                                                                                            |
|--------------|---------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                |
| PART I  | 3                                                                                                                   |
|         |                                                                                                                |
| ITEM 1.      | DESCRIPTION  OF BUSINESS                                                                                            | 3 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Oil and Gas  Operations | 3 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Gravel Operations | 4 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Carbon Junction  Coal Mine | 5 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Real Estate  Held for Sale | 6 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Competition and Markets | 8 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Regulation | 9 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Environmental and Health Controls | 10 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Operating Hazards and Uninsured Risks | 10 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Employees | 10 |
|         |                                                                                                                |   |   |
| ITEM 2.      | DESCRIPTION OF  PROPERTY                                                                                            | 10 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Oil and Gas Properties | 10 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Coal  and Gravel Properties | 12 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Real Estate | 13 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Office  Building | 13 |
|         |                                                                                                                |   |   |
| ITEM 3.      | LEGAL PROCEEDINGS                                                                                                   | 13 |
|         |                                                                                                                |   |   |
| ITEM 4.      | SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS                                                                | 13 |
|         |                                                                                                                |   |   |
| PART II | 13                                                                                                                  |
|         |                                                                                                                |   |   |
| ITEM 5.      | MARKET FOR  COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER  PURCHASES OF EQUITY SECURITIES | 13 |
|         |                                                                                                                |   |   |
| ITEM 6.      | MANAGEMENT’S  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                     | 14 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Results of Operations | 14 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Financial Condition and Liquidity | 16 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Critical Accounting Policies and Estimates | 16 |
|         |                                                                                                                |   |   |
|         |                                                                                                                | Forward-Looking  Statements | 18 |
|         |                                                                                                                |   |   |
| ITEM 7.      | FINANCIAL STATEMENTS                                                                                                | 19 |
|         |                                                                                                                |   |   |
| ITEM 8.      | CHANGES IN  AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                               | 39 |
|              |                                                                                                                     |  |  |  |

 

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| ITEM 8A.      | CONTROLS AND  PROCEDURES                                                                                                                          | 39                                                                            |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Disclosure Controls and Procedures                                            | 39 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Management’s Annual Report on Internal Control Over  Financial Reporting | 39 |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 8B.      | OTHER INFORMATION                                                                                                                                 | 40                                                                            |
|          |                                                                                                                                              |                                                                          |   |
| PART III | 41                                                                                                                                                |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 9.       | DIRECTORS, EXECUTIVE  OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE  WITH SECTION 16(a) OF THE EXCHANGE ACT | 41                                                                            |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Directors and Executive Officers                                              | 41 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Section 16(a) Beneficial Ownership Reporting  Compliance            | 41 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Audit Committee                                                               | 41 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Audit Committee Financial Expert                                              | 42 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Nomination Procedures                                                         | 42 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Code of Ethics                                                                | 42 |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 10.      | EXECUTIVE  COMPENSATION                                                                                                                           | 42                                                                            |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 11.      | SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER  MATTERS                                                  | 43                                                                            |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 12.      | CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                                                         | 44                                                                            |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 13.      | EXHIBITS                                                                                                                                          | 44                                                                            |
|          |                                                                                                                                              |                                                                          |   |
| ITEM 14.      | PRINCIPAL  ACCOUNTANT FEES AND SERVICES                                                                                                           | 45                                                                            |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Audit Fees                                                                    | 45 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Audit-Related Fees                                                            | 45 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Tax Fees                                                                      | 45 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | All Other Fees                                                                | 45 |
|          |                                                                                                                                              |                                                                          |   |
|          |                                                                                                                                              | Pre-Approval Policies and Procedures                                          | 45 |
|          |                                                                                                                                              |                                                                          |   |
| SIGNATURES    | 46                                                                                                                                                |
|          |                                                                                                                                              |                                                                          |   |
| EXHIBITS      |                                                                                                                                              |
|               |                                                                                                                                                   |                                                                               |  |  |

 

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**PART I**

 

**ITEM1.****                                               DESCRIPTIONOF BUSINESS.**

 

Oakridge Energy, Inc. (the “Company”) is engaged in theexploration for and development, production and sale of oil and gas primarilyin Texas.  The Company also holds certainreal estate in Colorado for sale, which lands cover gas, coal and other mineraldeposits. See “Oil and Gas Operations” and “Real Estate Held for Sale” belowand “Item 6. – Management’s Discussion and Analysis or Plan of Operation.”

 

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

 

The Company has restricted its oil and gas exploration activities inrecent fiscal years as it has conserved its limited resources for utilizationon (i) a secondary recovery water-flood project on its principal oil andgas producing property in Madison County, Texas, (ii) its proposed realestate development project adjacent to Durango, Colorado in La Plata County (the“Durango Property”), and (iii) reclamation of its Carbon Junction CoalMine in La Plata County, Colorado.  Infiscal 2008, the Company continued its participation in the water-flood projectstarted in the last quarter of fiscal 2003 as well as its other oil and gasoperations. See “Oil and Gas Operations” and “Real Estate Held for Sale” belowand “Item 6. – Management’s Discussion and Analysis or Plan of Operation.”

 

During mid-2004, Sandra Pautsky, the Company’s Chief Executive Officerand principal shareholder, received treatment for cancer that was diagnosed inlate 2003.  In latter 2007, Ms. Pautskyunderwent a second major procedure for her disease, has responded well totreatment and has resumed normal activities. Ms. Pautsky has been the principal force pushing the Company’sproposed real estate development project. Concerns regarding her health, theproject size, the significant financial requirement by the Company, the numberof years to complete, coupled with the risk involved to the Company incommitting so much of its limited financial resources to one project caused theCompany to decide after the end of fiscal 2004 to attempt to sell the Company’sapproximately 1,866 acres of land located in La Plata County, Colorado.

 

On April 4, 2006, the Company signed a contract to sell theDurango Property for $40,000,000, which contained an election by the buyer toterminate its contract in accordance with provisions in the agreement.  On June 12, 2006, the Company wasnotified of the buyer’s election to terminate its contract.

 

On October 18, 2006, the Company entered into a contract withanother buyer for $35,000,000, with no provision to terminate the contract withthe exception of proof of title.  On November 29,2006, the Company announced the failure of the buyer to make good delivery ofinstallment earnest money deposits following the death of the buyer’s principalthat resulted in the buyer’s contract default. The Company has not entered into any further contracts to sell theDurango Property.  See “Real Estate -Decision to Sell Property” below and “Item 6. – Management’s Discussion andAnalysis or Plan of Operation.”

 

**Oil and Gas Operations**

 

The Company’s oil and gas operations are primarily conducted in Madisonand other North Texas counties and to a lesser extent, Freestone, Red River,Panola, Gregg and Smith Counties of East Texas, Oklahoma, Colorado andMississippi. The Company is the operator of only the leases in NorthTexas.  All other oil and gas interestsowned are participation interests whereby the Company owns a working or royaltyinterest in a property that is operated and maintained by another interestowner under an operating agreement.  Forthe participation interests, the Company receives payment for its oil and gas salesfrom the purchaser or the operator and is billed by the operator for itsownership percentage of joint expenses relative to getting the oil and/or gasfrom the wells to a sales point.

 

The Company did not participate in the drilling of any exploratory ordevelopment wells in the fiscal year ended February 29, 2008; however,when the Company is offered a participation interest in a well or a lease, Ms. Pautskyand Danny Croker, the Company’s Vice President, select the exploration anddevelopment prospects in which the Company participates.

 

3

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The Company’sprincipal producing oil and gas property for the past nine fiscal years hasbeen its 25% working interest in the BSR (Sub-Clarksville) Field in MadisonCounty, Texas (the “Madison County, Texas Property”).  The Madison County, Texas Property wasresponsible for approximately 60% and 58%, respectively, of the Company’s totaloil and gas revenues for the 2007 and 2008 fiscal years.  The property consists of 24 producing wellswith proven developed reserves.

 

The MadisonCounty, Texas Property is fully developed for its primary oil and gas reservesand has been for approximately ten years. Only two wells currently remain as flowing wells and all others havebeen placed on the pump. Additionally, as a result of the aging of the field,tubing and rod replacements and other age-related issues have required higherthan normal maintenance costs in the last couple of years.  As the Madison County, Texas Property agedand production declined, a decision was made to install a secondary recoveryproject on the property. The Company’s independent petroleum engineers haveestimated that 464,885 barrels of proven undeveloped secondary oil reserves arerecoverable to the Company’s interest in the property by water-flooding thereservoir. In fiscal 2003, Texas Railroad Commission approval of thewater-flooding project was obtained, the property was unitized and the projectcommenced effective as of December 1, 2002.

 

As a part of thewater-flood process, there are currently three water injection wells and onewater supply well. The project may ultimately require converting a total ofnine producing wells to water injection wells and converting another producingwell to a water supply well. The operator of the Madison County, Texas Propertyis currently in the process of permitting two additional wells to be convertedto injection wells. The three current injection wells are down-dip in the fieldand the two new wells will be central to the field and more up-dip. If theinterior injection response is as expected, it is possible that some up-dipinfill drilling may be advantageous to the field.   Also, it is hoped that wells on the easternand western areas of the Madison County, Texas Property may respond morefavorably to the additional injection. When the field was set up for injection,infrastructure was installed that would permit injection at any well.  Wells that are located nearby and up-dip tocurrent injection wells have begun to respond to injection, although there canbe no assurance that the waterflood will be successful.

 

The Company’sremaining investment cost for the water-flooding project is estimated to beapproximately $375,000, which includes its share of the cost for a proposedwater plant and distribution system and conversion costs mentioned above. See “Item6. – Management’s Discussion and Analysis or Plan of Operation - Results ofOperations.”

 

**Gravel Operations**

 

**Surface ownership, gravel mining contract andsurface lease**:  TheCompany’s gravel property is located on approximately 63.5 acres of theapproximately 1,865.7 acres of land owned by the Company in fee in La PlataCounty, Colorado.  Four Corners Materials(“FCM”) mined sand, gravel and rock products from its Ewing Mesa Pit #1pursuant to a contract and surface lease effective January 1, 1994, for aterm of eight years.  After theexpiration of the contract, gravel mining continued pursuant to an oralagreement between the Company and FCM.

 

**Permit and permitted acres**: Theoriginal Ewing Mesa Pit #1 gravel permit area covered 33.06 acres, but, withthe Company’s consent, FCM added an adjacent 11.9 acres (9.9 acres in onetransaction, 2.0 acres in another transaction) of the Company’s land to thegravel permit area, providing FCM additional gravel reserves to mine.

 

In mid-2002, FCM filed a permit amendment with the Colorado Division ofReclamation, Mining, and Safety (the “CDRMS”) for a gravel permit to cover97.31 acres pursuant to an agreement between the Company and FCM regardingcomplete reclamation by FCM of the Company’s coal mine at the Company’s expenseand to allow for additional acres to be included in FCM’s gravel miningoperation.  The 97.31 acres included the33.06 acres included in the original gravel permit, the 9.9 acres additionalgravel acres included under FCM’s previous gravel permit and 54.35 acrespermitted under the Company’s coal permit. On June 12, 2003, the CDRMS approved Ewing Mesa Pit #1, Amendment#1 to expand the permit area from 33.06 to 97.31 acres.  On August 22, 2003, FCM requested thatthe CDRMS cease processing its financial warranty for its gravel permitamendment.  On September 2, 2003,the CDRMS stated that a permit would not be issued until the CDRMS received andapproved performance and financial warranties. Further, the CDRMS stated that the permit area for Ewing Mesa Pit #1remained at the original 33.06 acres, which had previously been mined.  Following this action by FCM, and theresulting

 

4

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action of the CDRMS,the Company required the cessation of FCM’s gravel mining operation on theproperty.  Thereafter, on September 10,2003, the CDRMS received from FCM a gravel mining permit application whichincluded the original 33.06 acres and an additional 31.45 acres, for a total of64.51 acres, which was approved by the CDRMS and FCM submitted financial warrantiesfor reclamation of the permit area. However, no further gravel mining occurredon the Durango Property. In May 2005, the permit area was reduced from64.51 acres to 63.5 acres, as the financial guarantee of 1.01 acres wasincluded under the Company’s Carbon Junction Coal Mine reclamation plan.

 

**Reclamation and financial warranty**:In fiscal 2006, FCM reclaimed its mining operation, as allowed under its permiton the property, at which time the CDRMS released a portion of FCM’s financialwarranty with regard to reclamation, retaining approximately $104,000 infinancial warranties awaiting CDRMS confirmation that environmental responses,vegetation and re-growth has stabilized. As of the Company’s February 29,2008 fiscal year end, the CDRMS continues to require FCM’s financial warrantyof approximately $104,000.  However,after the Company’s February 29, 2008 fiscal year end, FCM requested therelease of the balance of the financial warranty held by the CDRMS.

 

**Post mining activities**:Following the cessation of mining in fiscal 2004, sales of gravel were madefrom stockpiles accumulated prior to mining termination.  Thereafter through fiscal 2005, revenuesrelated to the gravel operation were received for road usage fees, use ofsurface land for operations, and stock pile sales.  The Company would consider leasing theproperty again for gravel operations but has no intention of conducting gravelmining operations itself on the property.

 

**Current activity and inspections**:Monthly inspection of the mine-site and its records are conducted by the CDRMSwho reports to FCM regarding compliance requirements under the permit as aresult of the inspection.  Inspectionsand resulting compliance operations will continue until the complete release ofthe reclamation liability and warranty.

 

**Carbon Junction Coal Mine**

 

**History: **In1979, the Company acquired leases on the Durango Property for a term of tenyears for the purpose of conducting mining operations. No mining occurredduring the term of these leases, although a Japanese firm tested the Company’scoal and indicated an interest in contracting for coal purchases during the early1980s. The mine had not been permitted at that time and two years were requiredfor permitting. After this delay, the steel market had changed and the Japanesefirm no longer had an interest in purchasing the Company’s coal.  In 1989, the Company’s leases expired, andthe land owners decided to sell the lands that are now the DurangoProperty.  In October 1990, theCompany purchased the Durango Property for the purpose of mining coal. ** **In fiscal 1994, anappraisal by a third party engineer determined that the coal deposits under theDurango Property could not be mined and marketed competitively.  Therefore, in accordance with requirements ofthe Securities and Exchange Commission, the Company records no reserves oreconomic value for coal deposits.

 

**Surfaceownership and coal leases: **Leasescovering coal deposits beneath the Durango Property were acquired in October 1990and have primary terms of twenty-five years, and unless renewed, expire in theyear 2015. The Company’s leases cover a 25% interest in the coal.  The Company owns a 75% interest in the coaland the surface estate of approximately 1,640 acres.  The Company has the executive rights (i.e.,the exclusive right to sign coal leases) on the leased 25% interest.****No annual delay rentals or advance minimumroyalties are required.  In 1991, theCompany purchased the surface estate, the 75% interest in the coal and theexecutive rights to the remaining 25% interest in the coal of approximately 190additional acres in La Plata County adjacent to the approximately 1,640 acrespreviously purchased.  The Company hasnot leased the remaining 25% interest in the coal.  By virtue of its fee and lease ownership andthe executive rights it holds, the Company controls 100% of the above describedtracts.

 

**Coal miningpermit dated July 31, 2003 expiring July 31, 2008**:   Coal deposits held under the DurangoProperty have been minimally permitted and disturbed by mining operations.  Of the approximately 1,830 acres owned andleased, approximately 192 acres have been permitted for coal mining. The termof the Company’s coal permit is five years and the Company’s current coalpermit expires July 31, 2008. The Company has applied to renew the permit(Permit Renewal 3 (RN-03)) for its Carbon Junction Coal Mine and a preliminaryreview of the submittal has been completed by the CDRMS. Minimal revisions tothe application were required and the Company is currently responding to thoserevisions.

 

5

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**Reclamation liability and financial warranties:**  The Company’s original bond****amount for the reclamation of the coal mine was$816,526.  In fiscal 2008, the Company’sLetter of Credit held for the benefit of the CDRMS as financial warranty forreclamation of its coal mine was decreased by $121,090. The current financialwarranty required by the Company is $695,436.

 

In March 2006, the Company put out a Final Reclamation Bid Packagefor its Carbon Junction Coal Mine.  On April 24,2006, the Company entered into a fixed-price contract in the amount of $567,000with C&J Gravel of Durango, Colorado to accomplish the work in the FinalReclamation Bid Package.  As of February 28,2006, the Company’s reclamation reserve was raised to $567,000 to reflect theamount contracted by the Company for the reclamation. Reclamation activitiespermissible under the terms of the coal permit were completed in fiscal 2006.Areas excluded from reclamation were topsoil piles 4, 7, and 8, sedimentcontrol ponds, various ditches and boreholes, and the equipment yard on whichequipment is stored. Remaining equipment (essentially dated in the 1970s) hasbeen sold or is being scrapped in fiscal year 2009.

 

On August 25, 2006, the Company filed a Phase 1 Bond ReleaseApplication with the CDRMS to cover the release from the coal permit ofapproximately 30 disturbed acres that had been reclaimed.  In response to the bond release application,on April 23, 2008, the CDRMS published its decision in the Durango Heraldto reduce the Company’s financial warranty for reclamation to $403,201.  Although the CDRMS has notified the Companyof its decision to reduce the Company’s financial warranty for reclamation, ithas not advised the Company when the reduction to its financial warranty willbe received.  Phase II and Phase III bondreleases are eligible for complete and final bond release after sedimentcontrol structures are reclaimed. However, the full release of the Company’s reclamation performance bondis subject to the CDRMS’s confirmation that environmental responses, groundcover, vegetative habitat and re-growth have stabilized and may require two ormore years to obtain.

 

**Current mining activities and inspections:**Activities on the coal mine site have ceased with the exception of monthly siteand records monitoring required under the terms of the coal permit and areconducted by the CDRMS. Inspections are conducted each month and the CDRMSreports to the Company regarding issues of its general mine compliance underthe terms of its coal permit. If needed, the Company then conducts operationsto respond to requirements by the CDRMS as a result of these inspections.  Inspections and operations will continueuntil the complete release of the reclamation liability and warranty. See “Item6. – Management’s Discussion and Analysis or Plan of Operation.”

 

**Real Estate Held for Sale**

 

**Location:**  The Durango Property is comprised ofapproximately 1,866 acres of land located in La Plata County, Colorado.  The major highways intersecting the City ofDurango and La Plata County are US Highway 550 running North and South and USHighway 160 running East and West.  TheCompany’s land is aligned with US Highway 160 and is located on a mesa adjacentto and above the City of Durango.  TheDurango Property is not currently within the city limits; however, certainportions of the Durango Property have common boundaries to the city.

 

**Current activity:**  In August 2007, the County of La Plata,Colorado (the “County”) adopted a new land use code to have an effective dateof January 6, 2008.  The new codewould place serious restrictions within the County on the creation of newparcels, location of building envelopes, view shed protections, hillside andridge top limits on development, and stricter standards related to roads andwater availability.  Although the Boardof County Commissioners delayed the effective date of the new code, it remainsvery likely that it will be put into effect in substantially the same form inthe near future.

 

In response to the expected changes to the County land use codes, theCompany established fifty-four 35 acre parcels on the Durango Property andfiled the plat with the County Clerk’s office before the effective date of thenew land use code.  The platting of theparcels established building envelopes that should ensure the right to build inthe identified areas with fewer restrictions than the new code willrequire.  The platting providedprotection of the Durango Property’s value for the Company or any purchaser ofthe Durango Property. In a recent article in the Durango Herald, the La PlataCounty Planner Kyle Dalton confirmed that the division of the Durango Property into35 acre parcels allows the ability to build one home on each of the parcelswithout approval of the Board of County Commissioners.”

 

6

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A portion of the Durango Property is mountainous, and the Companybelieves that the 35 acre lots were the appropriate manner to develop thisacreage.  However, the Company hasdivided the entirety of the Durango Property into 35 acre lots.  In the event a decision is made by theCompany or a new owner that annexation into the City of Durango and developmentunder the requirements of the City is not advantageous, options may beavailable for development.

 

The Company continues to have discussions with potential purchasers ofits Durango Property.  However, as aresult of the subprime loan dilemma resulting in mortgage loan defaults,foreclosures and adverse effects on major mortgage lenders, the trend has beentoward tighter lending standards and lower prices in the real estatemarket.  The Company continues to havestrong expectations for the Durango Property and is under no pressure to sellthe Durango Property during this period of market reversals. The opinion ofCompany management is that the 1,866 acre Durango Property is unique.  Although located in the County, it has commonboundaries to the City of Durango, is adjacent to and served by US Highway160/550 and State Highway 3, and the view from the mesa overlooks thecity.  The view is spectacular from themesa which is nestled within several mountain ranges. Two ski resorts, a golfresort, and a casino are in the area. Multiple National Forests in the area provide various opportunities forhunting, fishing, hiking and picnics. Durango is called a “Cycling Mecca” and mountain biking is availableadjacent to the Durango Property and through a portion of the Company’s landson 12 miles of trails that the Company gifted to the County for local residentsand tourists pleasure.  White waterrafting is available on the Animas River running alongside and through alimited portion of the Durango Property. On the east side, the Durango Property is bordered by lands of theBureau of Land Management (the “BLM”) and thus residents of the mesa whoseproperty adjoin the BLM have access to it for hunting and other recreationalpurposes.  The City of Durango is aregional health hub and Mercy Medical Hospital and a complex of medical doctor’soffices is within minutes of the property.

 

**Background and plan approval process:**  In September 2000, the Company filed anannexation application and the conceptual plan with the City of Durango forapproximately 1,100 acres of its property. The Company became aware that, prior to any action by the city regardingannexation, a plan had to be developed and approved by the city for the area inwhich the Durango Property is located (the “Area Plan”).  The Area Plan evaluates land uses within aspecific area to determine whether the uses will be compatible with eachother.  Properties adjacent and nearbythat may be impacted by the landowner requesting annexation are studied.  Impacts to resources of minerals, coal, oiland gas, as well as wildlife, archeological, geologic and environmentalhazards, traffic, public facilities and infrastructure are reviewed.  Public hearings on the Area Plan provide aforum for neighborhood discussion and comment. Public meetings were held infiscal years 2001, 2002 and 2003. The ideas, issues and concerns of the propertyowners, the Durango community, and city staff were used to prepare the AreaPlan.  The Area Plan provides guidancefor decisions in developing lands within the Area Plan consistent with thecommunity’s larger vision for Durango.

 

Significant issues that arose during the approval process were publicaccess across and through the mesa, the city’s desire for greater density, andthe Company’s desire for its land to be developed at a lower density.

 

The sole current access onto the Durango Property is located on thewestern end and serves incoming and outgoing traffic that in the past hasincluded gravel trucks.  The cityrequired that the Durango Property be served by two or more access roads.  The city’s 1997 US Highway 160/550 Area Planincluded a bypass from Highway 160/550 across the Durango Property connectingUS Highway 550 to Horse Gulch/Goeglein Road to the east.  The Company advised the city that it couldnot support a bypass through the Durango Property.  The issue ultimately was resolved by the Company’sagreement to accept the minor arterial roadway concept and the city’s agreementto shift the location of the roadway to the perimeter of its property so thatthe roadway would not cross the planned golf course.  Additional access may be required inaccordance with the Area Plan during the annexation process. However, no pavedsecondary access road serving the mesa is required until a traffic studydetermines the average daily traffic volume to and from the area will exceed5,000 vehicle trips per day.

 

With respect to the density of housing units, as issues arose duringthe Area Plan process, the Company proposed to build fewer residential unitsthan the city desired.  The DurangoProperty has been identified by the community as a very desirable location forgrowth.  The approved Area Plan supportsthe construction of approximately 1,500 to 3,000 residential units.

 

7

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**Plan concept:**  ConceptualPlans are subject to change.  Theguidelines within the Area Plan reflect the principles found in traditionalneighborhood developments.  The Company’smixed-use development concept, tentatively called “Oakridge at Durango,” is aneighborhood design where residential villages would be within convenientwalking or biking distance to nearby neighborhood squares offering life’s dailyessentials.  Each square would include asmall neighborhood business district intended as a transitional area of lightbusiness uses between residential areas and other features where shopping,services or office spaces would be provided to the nearby neighborhoods.  The center of each square would include asmall community park and plaza for resting, playing or eating. Houses ofworship and day care would be conveniently sited.  Residential densities would shift fromhigh-density in the center of the village to medium or less density as the golfcourse or rims of the mesa are approached. The Area Plan adopted by the City of Durango incorporates areas of openspace and preserves hillsides, gulches and other natural features of theterrain, while allowing residential, commercial and resort developmentopportunities around the proposed golf course and other recreationalproperties.  A substantial business parkis envisioned to attract corporate home offices and local businesses to thearea.

 

**Approval of Area Plan:** The Area Plan, contemplating that approximately 1,202 acres of theDurango Property would be annexed, was adopted by the City of Durango’sPlanning Commission in December 2003 and by the City Council in January 2004.

 

**Annexation:**  The next stepin the process will be for the City of Durango, when requested by the Companyor any new owner (see “Decision to Sell the Durango Property,” below), toapprove the Company’s annexation application. Once the Area Plan has been adopted, then an annexation impact report isrequired to address the physical analysis of the annexation issue.  The applicant will submit to the City ofDurango an annexation application, a master plan for infrastructure, and a planfor its initial phase of development. The city planners will review, hold public hearings, and then prepare arecommendation to the City Council to approve, approve with conditions or denythe annexation application and plan for development.   At this stage, the Company is unable toestimate the timetable for all of the foregoing to occur.

 

**Decision to sell the Durango Property:** After obtaining approval of the Area Plan, the Company concluded, duringthe first quarter of fiscal 2005, that it would be prudent for it to attempt tosell the Durango Property.  The Company’sdecision was based on several principal factors, one being the developmentswith respect to the health of Ms. Pautsky, the Chief Executive Officer andprincipal shareholder, who is the moving force behind the efforts to advancethe Durango Property towards development. In fiscal 2004, Ms. Pautsky wasdiagnosed with a life-threatening form of cancer. In mid-2004, Ms. Pautskyreceived specialized treatment for her disease. In November 2007, Ms. Pautsky received a second specializedtreatment for her disease, responded well to treatment and has resumed normalactivities. Concerns regarding her health, the size and significant financialrequirement of the Durango project by the Company, the number of years tocomplete the Durango project and the risk involved to the Company in committingso much of its limited financial resources to one project resulted in theCompany’s decision to attempt to sell the Durango Property.  The Company’s officers, other than Ms. Pautsky,have not been actively involved with respect to the Durango Property; however,in the event that the Company should not sell the Durango Property, the Companyanticipates that Chi Chi Ray, Ms. Pautsky’s daughter, a long-term employeeof the Company, would assume primary responsibility for the Durango Property..  Ms. Ray has been activelyinvolved historically and to date with the Company’s actions in Colorado.

 

**Competition and Markets**

 

**Real estate competitive conditions:** Two other Durango area developments are of significant size and couldcompete with the Durango development project. Three Springs is a 681 acredevelopment that includes approximately 300 acres of open space.  It is being developed as a traditionalneighborhood and its master plan provides for a multi-phase build-out that maystretch into the year 2030.  Thedevelopment includes commercial space and is the home of a regional medicalcenter and medical office complex. Edgemont Ranch is another development located near Durango.  Edgemont Ranch is situated to the northeastof Durango and is expected to include approximately 1,000 homes on 1,400acres.  Because of the size and theproximity of these projects to the Durango Property, they may compete with theDurango development project.

 

**Oil and gas competitive conditions:**  Alarge number of companies and individuals are engaged in the exploration foroil and gas, and most of the companies so engaged possess substantially greatertechnical and financial resources than the Company.  Competition for desirable leases and suitableprospects for oil and gas

 

8

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drillingoperations is intense, and in the past, the Company has experienced significantcompetition in obtaining the services of drilling contractors and in purchasingtubular goods and other materials necessary to drill and complete wells.  In fiscal 2007 and 2008, the Company did notexperience any difficulty in obtaining services and materials because of itslack of exploration and development activities.

 

**Coal and gravel competitive conditions:** The coal and gravel industries are alsohighly competitive.  Principal competitivefactors in both industries are the vertical thickness of the over-burden aboveand between seams, product price and transportation costs.  In addition, with regard to coal, its qualityis regulated by the Clean Air Act of 1990.  Also, the selling company must have the financial and organizationalability to meet long-term coal delivery requirements.  The Company has been unable to market itscoal competitively and in accordance with regulations of the Securities andExchange Commission does not account for coal reserves in its financialrecords.  The Company would considerleasing the Durango Property for gravel operations but has no intention ofconducting gravel mining operations itself on the Durango Property.

 

**Oil and gas market conditions:** The Company’s ability to produce and market oil and gas profitablydepends 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 ofadequate pipeline and other transportation facilities, the marketing ofcompetitive fuels and other factors affecting the availability of a readymarket, such as fluctuating supply and demand. Additional factors affecting themarketing of oil and gas include imports and actions by foreign producingnations.

 

Oil and gas prices have been on a generally upward trend since thefirst quarter of fiscal 2003 and such prices had a materially positive effecton the Company’s revenues in fiscal 2008 and on the amount and present value ofthe Company’s estimated proven oil and gas reserves at year end.  In fiscal 2008, the Company’s average oilprice received increased $14.05 per barrel (approximately 22.5%) from thatreceived in fiscal 2007.  The Company’saverage gas price received for fiscal 2008 was minimally higher than in fiscal2007 with an increase of $.81 per MCF (approximately 13.9%).  The Company’s revenues are significantlyweighted in favor of oil production.

 

While certain of the Company’s gas properties experience seasonalvariations in demand, the Company was not experiencing any significantcurtailment, or an inability to sell all of its deliverable gas, on an overallbasis at February 29, 2008. See “Item 6. – Management’s Discussion andAnalysis or Plan of Operation - Results of Operations.”

 

**Regulation**

 

**Oil and gas:**  The productionof oil and gas is subject to extensive federal and state laws, rules, ordersand regulations governing a wide variety of matters, including the drilling andspacing of wells, allowable rates of production, prevention of waste andpollution and protection of the environment. In addition to the direct costs borne in complying with suchregulations, operations and revenues may be impacted to the extent that certainregulations limit oil and gas production allowables to below economiclevels.  The regulations are generallydesigned to ensure that oil and gas operations are carried out in a safe andefficient manner and to ensure that similarly situated operators are providedwith reasonable opportunities to produce their respective fair shares ofavailable oil and gas reserves.  Sincethese regulations generally apply to all oil and gas producers, the Companybelieves that these regulations do not put the Company at a materialdisadvantage to other oil and gas producers.

 

Certain sales,transportation and re-sales of natural gas by the Company are subject to bothfederal and state laws and regulations, including, but not limited to, theNatural 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 regulationsthere-under, are complex and can affect all who produce, resell, transport,purchase or consume natural gas.

 

Although FERCtransportation regulations do not directly apply to the Company because it isnot engaged in rendering jurisdictional transportation services, theseregulations do affect the operations of the Company by virtue of the need todeliver its gas production to markets served by interstate or intrastatepipelines.

 

9

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**Coal and gravel:**  The Company’scoal operations in the past have been subject to extensive regulation under theSurface Mining Control and Reclamation Act of 1977 and the Colorado law of asimilar nature and the Clean Air Act of 1990. The effects of such regulations have been (i) to increasesignificantly the lead time to commence actual surface coal mining operations, (ii) tomake it more costly for the coal to be marketed and (iii) to limit thecustomers for the coal to certain types of power plants, and (iv) thateconomics are determined by quality parameters for coal. As a result of theselimiting factors, the Company has been unable to market its coal competitivelyand in accordance with SEC regulations, does not account for coal reserves inits financial records. The Company’s gravel reserves are subject to comparableregulation, but compliance standards are less rigid.

 

**Environmentaland Health Controls**

 

The Company’s operationsare subject to numerous federal, state and local laws and regulations relatingto environmental and health protection. These laws and regulations require the acquisition of a permit beforedrilling commences, restrict the type, quantities and concentration of varioussubstances that can be released into the environment in connection withdrilling and production activities, limit or prohibit drilling activities oncertain lands lying within wilderness, wetlands and other protected areas andimpose substantial liabilities for pollution resulting from oil and gasoperations.  These laws and regulationsmay also restrict air or other discharges resulting from the operation ofpipeline systems and other facilities in which the Company may own aninterest.  Although the Company believesthat compliance with environmental laws and regulations will not have a materialadverse effect on operations or earnings, risks of substantial costs andliabilities are inherent in oil and gas operations, and there can be noassurance that significant costs and liabilities will not be incurred.Moreover, it is possible that other developments, such as stricter environmentallaws and regulations or claims for damages to property or persons resultingfrom the Company’s operations, could result in substantial costs andliabilities.

 

**OperatingHazards and Uninsured Risks**

 

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

 

**Employees**

 

As of May 16, 2008, the Company had four full-time employees andone part-time employee.  Three of theemployees are located at the Company’s executive offices and two are fieldemployees located in North Texas.  TheCompany considers its relations with its employees to be satisfactory.

 

**ITEM 2.****                                                ****DESCRIPTION OF PROPERTY.**

 

**Oil andGas Properties.**

 

**Reserves:**** **Reference is made to “Supplemental Oiland Gas Data (Unaudited)” included as supplemental information to the FinancialStatements for additional information concerning:  (i) certain cost and revenue informationpertaining to the Company’s oil and gas producing activities; (ii) estimatesof the Company’s oil and gas reserves and changes in such reserves; and (iii) astandardized measure of the discounted future net cash flows from the Company’soil and gas reserves and the changes in such standardized measure.  The engineering report with respect to theCompany’s proved oil and gas reserves as of February 29, 2008 was preparedby Stephens Engineering, independent petroleum engineers, Wichita Falls, Texas(“Stephens Engineering”). At such date, all of the Company’s oil and gasreserves were located in the United States and in the states of Texas,Mississippi, Colorado and Oklahoma.

 

No reserve reports pertainingto the Company’s proved net oil or gas reserves were filed with any federalgovernmental authority or agency during the fiscal year ended February 29,2008, and no major discovery is

 

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believed to have caused asignificant change in the Company’s estimates of proved reserves since thatdate.

 

The following tablereflects Stephens Engineering’s estimate of those quantities of oil and gas asof February 29, 2008 which can be produced from the Company’s proveddeveloped reserves during the fiscal year ending February 28, 2009 usingequipment installed and under economic and operating conditions existing at February 29,2008:

 

| Oil (Bbls.) |   | 16,966 |   |
|-------------|--------|--------|--------|
| Gas (MCF)   |   | 22,833 |   |

 

The Company is notobligated to provide a fixed and determinable quantity of oil and gas in thefuture under any of its existing contracts or arrangements.

 

**Production**:  The following table shows for each of thelast three fiscal years the total production attributable to the Company’s oil andgas interests:

 

| **Fiscal Year Ended  February 28(9),** | ** ** | **Oil  (Bbls.)** | ** ** | **Gas  (MCF)** | ** ** |
|-------------------------------------------------------|------------|------------------|------------|----------------|------------|
| 2008                                                  |       | 17,293           |       | 20,843         |       |
| 2007                                                  |       | 18,707           |       | 20,749         |       |
| 2006                                                  |       | 21,587           |       | 38,732         |       |

 

**Liftingcosts and average sales prices:  **The Company’s production (lifting) costs and averagesales prices received during each of the last three fiscal years were as shownin the following table:

 
| ** **                   | ** ** | **Fiscal Year  Ended February 28(9),** | ** ** |
|------------------------------|------------|-------------------------------------------------------|------------|
| ** **                   | ** ** | **2008**                                              | ** ** | **2007** | ** ** | **2006** | ** ** |
| Lifting Costs                |       |                                                  |       |   |   |   |   |
|                         |       |                                                  |       |   |   |   |   |
| Per Equivalent  Unit (Bbls.) |       | $                                                     | 44.20      |   | $ | 39.69 |   | $ | 24.30 |   |
|                         |       |                                                  |       |   |   |   |   |
| Average Sales  Prices        |       |                                                  |       |   |   |   |   |
|                         |       |                                                  |       |   |   |   |   |
| Oil (per Bbl.)               |       | 76.57                                                 |       | 62.42 |   | 57.68 |   |
| Gas (per MCF)                |       | 6.63                                                  |       | 5.82 |   | 7.63 |   |
|                              |            |                                                       |            |  |  |  |  |  |  |  |

 

**Salescontracts and major customers**:  The Companydoes not own any refining facilities and sells its oil under short-term contractsat f.o.b. field prices posted by the principal purchasers of oil in the areasin which the Company’s producing properties are located.  During the fiscal year ended February 29,2008, approximately 70.3% of the Company’s oil sales were to Teppco Crude Oil,L.P. (“Teppco”) and approximately 23.7% were to Sunoco, Inc.  During fiscal 2008, approximately 56.9% ofthe Company’s gas sales were under short-term contracts to Orion Pipeline,L.L.C. (“Orion”), approximately 18.6% were to Chevron U.S.A., Inc., andapproximately 13.6% were to Targa North Texas LP.

 

Substantially all of theCompany’s oil sales to Teppco and its gas sales to Orion were from the Company’sMadison County, Texas Property.

 

In the opinion ofmanagement, the termination of any of the Company’s sales contracts would notadversely affect the Company’s ability to sell its oil and gas production atcomparable prices.

 

**Developedacreage and productive wells: **As of February 29, 2008, the Company ownedworking and overriding royalty interests in 8,884 gross (2,812 net) acres ofdeveloped oil and gas leases and 52 gross (17 net) productive oil and gaswells.

 

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The following tablesummarizes the Company’s developed acreage and productive wells as of February 29,2008:

 
| ** **     | ** ** | **Developed Acreage(1)** | ** ** | **Productive Wells(1)(3)** | ** ** |
|----------------|------------|-------------------------------|------------|---------------------------------|------------|
| ** **     | ** ** | **Gross(2)**                  | ** ** | **Net(2)**                      | ** ** | **Gross(2)** | ** ** | **Net(2)** | ** ** |
| ** **     | ** ** | **Oil**                       | ** ** | **Gas**                         | ** ** | **Oil** | ** ** | **Gas** | ** ** | **Oil** | ** ** | **Gas** | ** ** | **Oil** | ** ** | **Gas** | ** ** |
| Texas:         |       |                          |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Madison Co.    |       | 4,515                         |       | —                          |       | 1,129 |   | — |   | 24 |   | — |   | 6.00 |   | — |   |
| All Other Cos. |       | 3,000                         |       | 1,047                           |       | 1,426 |   | 252 |   | 22 |   | 3 |   | 9.86 |   | 1.07 |   |
| Mississippi    |       | 40                            |       | —                          |       | .26 |   | — |   | 1 |   | — |   | 0.01 |   | — |   |
| Colorado       |       | —                        |       | 242                             |       | — |   | 4 |   | — |   | 1 |   | — |   | 0.02 |   |
| Oklahoma       |       | 40                            |       | —                          |       | 1 |   | — |   | 1 |   | — |   | 0.03 |   | — |   |
|           |       |                          |       |                            |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Total          |       | 7,795                         |       | 1,289                           |       | 2,556 |   | 256 |   | 48 |   | 4 |   | 15.90 |   | 1.09 |   |

 

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(1)                                  Reversionary interests which may increaseor decrease the interest shown have been disregarded for purposes of thistable.

 

(2)                                  “Gross,” as it applies to acreage orwells, refers to the number of wells or acres in which an interest is owned bythe Company.    “Net,” as it applies toacreage or wells, refers to the sum of the fractional ownership interests ownedby the Company in gross wells or gross acres.

 

(3)                                  Excludes 9 gross (3.72 net) shut-inwells; excludes 7 gross (2.63 net) water injection wells and 1 gross (.25 net)water supply well.

 

**Undevelopedacreage**:  The followingtable shows the gross and net acres of undeveloped oil and gas leases held bythe Company at February 29, 2008:

 
| **State** | ** ** | **Gross Acres** | ** ** | **Net Acres** | ** ** |
|-----------|------------|----------------------|------------|--------------------|------------|
| Texas     |       | 551                  |       | 184                |       |

 

In the absence ofdrilling activity which establishes commercial reserves sufficient to justifyretention or renewal of leases, approximately 98.23% of the Company’s leaseswill expire in fiscal 2009 and 1.77% will expire in fiscal 2010.

 

**Drillingactivity**:  TheCompany did not participate in drilling any development wells during the lastthree fiscal years and, as of February 29, 2008, the Company was not inthe process of drilling or completing any wells.

 

**Coal andGravel Properties.**

 

**Coalleases**:  Leases covering coal deposits beneath theDurango Property were acquired in October 1990 and have primary terms oftwenty five years, and unless renewed, expire in the year 2015. The Company’sleases cover a 25% interest in the coal. The Company owns a 75% interest in the coal and the surface estate ofapproximately 1,640 acres.  The Companyalso has the executive rights (i.e., the exclusive right to sign coal leases)on the leased 25% interest.****Noannual delay rentals or advance minimum royalties are required.   In 1991, the Company purchased the surfaceestate, the interest in the coal and the executive rights to the remaining 25%interest in the coal of approximately 190 additional acres in La Plata Countyadjacent to the approximately 1,640 acres. The Company has not leased the remaining 25% interest in the coal on theapproximately 190 additional acres.  Byvirtue of its fee and lease ownership and the executive rights it holds, theCompany controls 100% of the above described tracts.

 

**Coalmining permit dated July 31, 2003, expiring July 31, 2008:**  Coal deposits held under the Durango Property have been minimallypermitted for coal mining and disturbed by mining operations.  Of the 1,830

 

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acres owned and leased,approximately 192 acres have been permitted for mining.  The term of the Company’s permit is fiveyears and the Company’s current permit expires July 31, 2008. The Companyhas applied to renew the permit (Permit Renewal 3 (RN-03)) for its CarbonJunction Coal Mine and a preliminary review of the submittal has been completedby the CDRMS. Minimal revisions to the application were required and theCompany is currently responding to those revisions.  The coal permit requires financial warrantyfor the disturbed acres under the coal permit, therefore the Company made thedecision to reclaim its permitted area, as allowed under permit conditions, inorder to obtain the substantial release of its financial warranty for reclamation.See “Item 1 - Description of Business - Carbon Junction Coal Mine.”

 

The Company also owns 55%of the gravel, oil, gas and other mineral rights with respect to theapproximate 1,640 acre tract in La Plata County, Colorado and has the executiverights on the remaining 45%.  The permitto mine gravel held by FCM, operator of the gravel mine, contains 63.5acres.  FCM is no longer mining sand,gravel and rock products from the permit area. In fiscal 2006, FCM reclaimedits gravel mining operation, as allowed under their permit, the lands disturbedby their activities.  The CDRMS releaseda portion of FCM’s financial warranty with regard to reclamation retainingapproximately $104,000 in financial warranties. As of the Company’s February 29, 2008 fiscal year end the CDRMScontinues to require FCM’s financial warranty of approximately $104,000.  However, after the Company’s fiscal year end,FCM requested the release of the balance of their financial warranty from theCDRMS.  See “Item 1. - Description of Business- Gravel Operations” and “Item 6. – Management’s Discussion and Analysis orPlan of Operation - Results of Operations.”

 

**RealEstate.**

 

The Durango Property heldfor sale by the Company contains 1,866 acres covering coal, gas and otherminerals including gravel as described above in “Coal and Gravel Properties”.  Approximately 1,202 acres of such land is thesubject of a planned mixed use development by the Company.  In the opinion of management, the DurangoProperty is adequately covered by insurance. See “Item 1. - Description of Business - Real Estate Held for Sale.”

 

**OfficeBuilding.**

 

The Company owns aone-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 landand contains 5,117 square feet of space. The building was built in 1974 and isin overall good condition.  In theopinion of management, the office building is adequately covered by insurance.

 

**ITEM 3.****                                                ****LEGAL PROCEEDINGS.**

 

The Company is not aparty to any pending litigation.  To thebest knowledge of the Company, there are no legal proceedings to which anydirector, officer or affiliate of the Company, any owner of record orbeneficially of more than five percent (5%) of any class of voting securitiesof the Company, or any associate of any such director, officer or securityholder is a party adverse to the Company or has a material interest adverse tothe Company.

 

**ITEM 4.****                                                ****SUBMISSION OF MATTERS TOA VOTE OF SECURITY HOLDERS.**

 

No matter was submittedduring the fourth quarter of the fiscal year ended February 29, 2008 to avote of the Company’s security holders, through the solicitation of proxies orotherwise.

 

**PART II**

 

**ITEM 5.****                                                ****MARKET FOR COMMON EQUITYAND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITYSESCURITIES.**

 

The Company’s commonstock, $.04 par value, is traded in the over-the-counter market.  The following table shows the range of bidquotations for the common stock during the two fiscal years ended February 28,2007 and February 29, 2008 by quarters. Such quotations were furnished to the Company by the National QuotationBureau, LLC and were supplied by The National Association of Securities Dealers(“NASD”) through the

 

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NASD OTC Bulletin Board,the NASD’s automated system for reporting NON-NASDAQ quotes and the NationalQuotation Bureau’s Pink Sheets.  Thequotations represent prices between dealers and do not include retail markups,markdowns or commissions and do not necessarily represent actual transactions.

** **

| **Period**                                 | ** ** | **High** | ** ** | **Low** | ** ** |
|--------------------------------------------|------------|----------|------------|---------|------------|
|                                       |       |     |       |    |       |
| Fiscal Year  Ended February 28, 2007: |       |     |       |    |       |
| Quarter Ended  May 31, 2006           |       | $        | 9.00       |    | $          | 4.00 |   |
| Quarter Ended  August 31, 2006        |       | 7.50     |       | 4.00    |       |
| Quarter Ended November 30,  2006      |       | 8.40     |       | 4.50    |       |
| Quarter Ended  February 28, 2007      |       | 8.00     |       | 5.00    |       |
|                                       |       |     |       |    |       |
| Fiscal Year  Ended February 29, 2008: |       |     |       |    |       |
| Quarter Ended  May 31, 2007           |       | $        | 7.00       |    | $          | 5.00 |   |
| Quarter Ended  August 31, 2007        |       | 8.75     |       | 5.80    |       |
| Quarter Ended  November 30, 2007      |       | 7.00     |       | 5.00    |       |
| Quarter Ended  February 29, 2008      |       | 7.25     |       | 5.00    |       |

 

As of May 7, 2008,the approximate number of holders of record of the common stock of the Companywas 405.

 

The Company did not payany dividends during the two fiscal years ended February 28, 2007 and February 29,2008.  There are currently norestrictions upon the Company’s ability to pay dividends. Our Board ofDirectors has not approved a dividend in connection with the proposed sale ofthe Durango Property.  Although our Boardof Directors will consider approving a dividend to distribute a portion of thenet proceeds received from the sale of the Durango Property, if the sale isaccomplished, we cannot assure you that such dividend will be approved ordeclared.

 

The following table showsall purchases of the Company’s shares of common stock made by the Companyduring the third quarter of the Company’s fiscal year ended February 29,2008:

 

Purchases ofEquity Securities

 
| **Period**                                              | ** ** | **Total Number of Shares  Purchased** | ** ** | **Average Price Paid Per Share** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------------------|------------|------------------------------------------------------|------------|
| September 1,  2007 through September 30, 2007 |       | 2,675                                                |       | $                                                    | 6.75       |   |
|                                                         |            |                                                      |            |                                                      |            |  |

 

The purchases of shareswere made in private transactions directly with the stockholders involved. TheCompany has no publicly announced plans or programs to purchase its shares ofcommon stock.

 

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

 

The following discussionand analysis should be read in conjunction with the Financial Statements andNotes thereto included in Item 7.

** **

**Resultsof Operations**

 

The Company had net income  of $72,544 ($.02 per share) in the fiscalyear ended February 29, 2008 compared to a net loss of $171,158 ($.04 pershare) in the fiscal year ended February 28, 2007. The Company experiencedlosses from operations in both the 2008 and 2007 fiscal periods, however, theloss from operations in fiscal 2008 was minimal and was offset by other incomeresulting in a profit in fiscal 2008.

 

Oil and gas revenuesincreased approximately $274,300 (20.2%) in the fiscal year ended February 29,2008.  Average oil price received duringthe year continued to rise and is the main reason for the increased oil revenueas sales volumes remained virtually unchanged. Fees in the amount of $36,600 received by the Company both in fiscal2008 and 2007 for serving as operator of most of the Company’s North Texas areaproperties are included in oil and gas revenues.

 

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The following tablecompares the Company’s oil and gas revenues and average prices received by theCompany and its sales volumes of oil and gas during fiscal 2008 with those offiscal 2007:

 
| ** **                | ** ** | **Fiscal 2008** | ** ** | **Fiscal 2007** | ** ** | **Percentage  Difference** | ** ** |
|---------------------------|------------|----------------------|------------|----------------------|------------|----------------------------|------------|
| Oil:                      |       |                 |       |                 |       |                       |       |   |   |
|                      |       |                 |       |                 |       |                       |       |   |   |
| Revenues                  |       | $                    | 1,402,115  |                 | $          | 1,145,535                  |       |   | + | 22.4 | % |
| Volume (Bbls.)            |       | 18,312               |       | 18,322               |       |                       | -          |  01 | % |
| Average Price  (per Bbl.) |       | $                    | 76.57      |                 | $          | 62.52                      |       |   | + | 22.5 | % |
|                      |       |                 |       |                 |       |                       |       |   |   |
| Gas:                      |       |                 |       |                 |       |                       |       |   |   |
|                      |       |                 |       |                 |       |                       |       |   |   |
| Revenues                  |       | $                    | 174,307    |                 | $          | 171,070                    |       |   | + | 1.9 | % |
| Volume (MCF)              |       | 26,306               |       | 29,396               |       |                       | -          | 10.5 | % |
| Average Price  (per MCF)  |       | $                    | 6.63       |                 | $          | 5.82                       |       |   | + | 13.9 | % |

 

Non-material amounts ofnatural gas liquids revenues and sales volumes for both years are excluded fromthe foregoing table.

 

The Company’s revenues infiscal 2008 from the Madison County, Texas Property increased $124,871 (15.4%)as higher average oil prices of $14.88 (23.9%) per barrel received more thanoffset the decreased  oil volumes of 892(7.5%) barrels from the property.  TheMadison County, Texas Property has been fully developed for its primary oil andgas reserves for approximately ten years. The property was unitized in fiscal 2003 and a secondary recovery(waterflood) project on the property was commenced in the last quarter of thatyear.  Three injection and one watersupply wells are active currently.  Theoperator of the property is in the process of permitting two additionalinjection wells that are sited more centrally on the property and up-dip fromthe three current injection well sites. If the interior injection response isas expected, some up-dip infill drilling may be advantageous for the property.  Some wells nearby to the injection wells havebegun to respond to the waterflood and although the Company has continuedstrong expectations with respect to the waterflood project, it should again beemphasized that there can be no assurance that the secondary recovery projectwill be successful.

 

Expenses for the Company’soil and gas operations decreased $3,035 (.29%) in the fiscal year ended February 29,2008 as workover costs, field supervision, small tools and supplies,miscellaneous repairs, chemicals, and production tax increases offsetsignificant decreases in costs for pumping unit repairs, rods and wellservicing and the accretion of the Company’s asset retirement obligationrelated to the plugging, abandonment and remediation of oil and gasproperties.  Lease operations on theMadison County, Texas Property increased $32,265 and North Texas leaseoperations increased $9,676 and Red River County and Gregg County propertiesdecreased $8,514 and $6,539, respectively. The Company did not participate inthe drilling of any wells in fiscal 2008 or 2007, therefore no exploration ordry hole costs were incurred in these periods.

 

The expenses of theCompany’s coal and gravel operations decreased $43,586 (52.5%) in fiscal 2008,primarily as the result of decreased reclamation, legal expenses and ad valoremtaxes.

 

Real estate developmentexpense decreased $151,329 (59.4%) in fiscal 2008 primarily due to reducedpayroll, engineering, legal fees and ad valorem tax on the Durango Property.General and administrative expenses decreased $57,426 (10.6%) in fiscal 2008resulting from decreases in essentially all categories except auditing, legal,insurance, miscellaneous expense and computer expense.

 

Other income decreased$73,729 (29.1%) in fiscal 2008 compared to fiscal 2007. Other income consistsof  three primary components: (i) interestand dividend income, (ii) gains on sales of property and (iii) otherincome and expense, primarily partnership gains and losses. Lower interestrates and slightly lower portfolio values resulted in decreased interest incomein the amount of approximately $5,711 and decreased dividend income of$6,354.  The Company experienced a gainon the sale of assets of $95,778 in fiscal 2007 with only an $18,517 gainrealized from sales of assets in fiscal 2008. As to the remaining other net income components, the Company’s incomerelating to its interest in the limited partnership which operates a small gaspipeline in the East Texas area,

 

15

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was approximately $16,069more in fiscal 2008 than in fiscal 2007.

 

The Company’s provisionfor income tax, which was a benefit in fiscal 2007, became an expense in fiscal2008 resulting in an increase in income tax expense of  $212,244 in fiscal 2008 compared to fiscal2007.  This provision includes U.S.federal corporate and state income taxes.

 

The Company’s weightedaverage shares outstanding decreased approximately .11% in the fiscal yearended February 29, 2008 due to the purchase of 2,675 shares of the Company’scommon stock made by the Company from shareholders during the year.

 

**FinancialCondition and Liquidity**

 

During fiscal 2008, theCompany did not participate in any exploratory or development drilling andgenerally tried to restrict its expenditures on operational and investingactivities.    The Company’s cash andcash equivalents at year end decreased approximately $101,800 as the result ofthe cash provided by operating activities (approximately $67,800) being offsetby the cash used in investing (approximately $151,500) and financing activities(approximately $18,100).  At February 29,2008, the Company had no indebtedness and cash and cash equivalents aggregatedapproximately $2,309,100.

 

The Company’s decision toattempt to sell the Durango Property should eliminate the need for anysubstantial drawdown of the Company’s cash reserves or the need to obtainadditional debt or equity financing. The Company expects to fund itscontemplated oil and gas plugging and abandonment operations during fiscal 2009and any purchases of the Company’s stock that it makes from its cash and cashequivalents and any cash flow from its oil and gas properties.

 

The Company’s average oiland gas product prices received increased during fiscal 2008.  The Company has no assurance that its averageprice received for oil and gas in fiscal 2009 will be equivalent to or exceedthose received during fiscal 2008.  TheCompany’s fiscal 2009 operations should benefit from the $121,090 released bythe CDRMS of its coal mine reclamation bond in fiscal 2008, which will maturein July 2008, in addition to the fiscal 2009 decision of the CDRMS tofurther release a portion of the Company’s $695,436 coal mine reclamation bond to the State of Colorado.

 

**Critical Accounting Policies and Estimates**

 

The foregoing discussion and analysis of the Company’sresults of operations and financial condition and liquidity is based upon theCompany’s financial statements, which have been prepared in accordance withaccounting principles generally accepted in the United States of America.  The preparation of these financial statementsrequires the Company to make estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses.  The Company’s significant accounting policiesare described in Note B of the notes to financial statements.  In response to Securities and ExchangeCommission (the “Commission”) Release No. 33-8040, “Cautionary AdviceRegarding Disclosure About Critical Accounting Policies,” the Company hasidentified certain of these policies as being of particular importance to theportrayal of the Company’s results of operations and financial position andwhich require the application of significant judgment by management.  The Company analyzes its estimates, includingthose related to oil and gas revenues, oil and gas properties, income taxes,contingencies and litigation, and bases its estimates on historical experienceand various other assumptions that the Company believes to be reasonable underthe circumstances.  Actual results maydiffer from these estimates under different assumptions or conditions.  The Company believes the following criticalaccounting policies affect its more significant judgments and estimates used inthe preparation of the Company’s financial statements:

 

**Successful********efforts********method********of********accounting**:**** TheCompanyaccountsforitsnaturalgasandcrudeoilexplorationanddevelopmentactivitiesutilizingthesuccessfuleffortsmethodofaccounting.  Underthismethod,costsofproductiveexploratorywells,developmentdryholesandproductivewells,coststoacquiremineralinterestsandthree-dimensional(3-D)seismiccostsarecapitalized.  Explorationcosts,includingpersonnelcosts,certaingeologicalandgeophysicalexpensesincludingtwo-dimensional(2-D)seismiccostsanddelayrentalsforoilandgasleases,arechargedtoexpenseasincurred.  Exploratorydrillingcostsareinitiallycapitalized,butchargedtoexpenseifandwhenthewellisdeterminednottohavefoundreservesincommercialquantities.

 

16

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The application of thesuccessful efforts method of accounting requires managerial judgment todetermine the proper classification of wells designated as developmental orexploratory which will ultimately determine the proper accounting treatment ofthe costs incurred.  The results from adrilling operation can take considerable time to analyze and the determinationthat commercial reserves have been discovered requires both judgment andindustry experience.  Wells may becompleted that are assumed to be productive but actually deliver oil and gas inquantities insufficient to be economic, which may result in the abandonment ofthe wells at a later date.  Wells may bedrilled that target geologic structures that are both developmental andexploratory in nature and an allocation of costs is required to properlyaccount for the results.  The evaluationof oil and gas leasehold acquisition costs requires managerial judgment toestimate the fair value of these costs with reference to drilling activity in agiven area.  Drilling activities in anarea by other companies may also effectively condemn leasehold positions.

 

The successful effortsmethod of accounting can have a significant impact on the operational resultsreported when the Company is entering a new exploratory area in hopes offunding an oil and gas field that will be the focus of future developmentdrilling activity.  The initialexploratory wells may be unsuccessful and will be expensed.

 

**Reserveestimates**:** **The Company’s estimates of oil andgas reserves, by necessity, are projections based on geologic and engineeringdata, and there are uncertainties inherent in the interpretation of such dataas well as the projection of future rates of production and the timing ofdevelopment expenditures.  Reserveengineering is a subjective process of estimating underground accumulations ofoil and gas that are difficult to measure. The accuracy of any reserve estimate is a function of the quality ofavailable data, engineering and geological interpretation and judgment.  Estimates of economically recoverable oil andgas reserves and future net cash flows necessarily depend upon a number ofvariable factors and assumptions, such as historical production from the areacompared with production from other producing areas, the assumed effects ofregulations by governmental agencies and assumptions governing future oil andgas prices, future operating costs, severance taxes, development costs andworkover gas costs, all of which may in fact vary considerably from actualresults.  The future drilling costsassociated with reserves assigned to proved undeveloped locations mayultimately increase to an extent that these reserves may be later determined tobe uneconomic.  For these reasons,estimates of the economically recoverable quantities of oil and gasattributable to any particular group of properties, classifications of suchreserves based on risk of recovery and estimates of the future net cash flowsexpected there from may vary substantially. Any significant variance in the assumptions could materially affect theestimated quantity and value of the reserves, which could affect the carryingvalue of the Company’s oil and gas properties and/or the rate of depletion ofthe oil and gas properties.  Actualproduction, revenues and expenditures with respect to the Company’s reserveswill likely vary from estimates and such variances may be material.

 

**Impairmentof oil and gas properties**:** **The Company reviews its oil andgas properties for impairment at least annually and whenever events andcircumstances indicate a decline in the recoverability of their carryingvalue.  The Company estimates theexpected future cash flows of its oil and gas properties and compares suchfuture cash flows to the carrying amount of the properties to determine if thecarrying amount is recoverable.  If thecarrying amount exceeds the estimated undiscounted future cash flows, theCompany will adjust the carrying amount of the oil and gas properties to theirfair value.  The factors used to determinefair value include, but are not limited to, estimates of proved reserves,future commodity pricing, future production estimates, anticipated capitalexpenditures and a discount rate commensurate with the risk associated withrealizing the expected cash flows projected.

 

Given the complexitiesassociated with oil and gas reserve estimates and the history of pricevolatility in the oil and gas markets, events may arise that would require theCompany to record an impairment of the recorded book values associated with oiland gas properties.  The Company has notrecognized impairments this year or in the prior years, however, there can beno assurance that impairments will not be recognized in the future.

 

**Assetretirement obligations:** The Company’s recorded asset retirement obligations represent theestimated present value of the amounts expected to be incurred to plug,abandon, and remediate the producing properties at the end of their productivelives, in accordance with state laws, as well as the estimated costs associatedwith the reclamation of the property surrounding and including the Company’sprevious coal mining operations. The Company determines the asset retirementobligations by calculating the present value of estimated cash flows related tothe liability. The asset retirement obligations are recorded as a liability atthe estimated present value as of the

 

17

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asset’s inception, withan offsetting increase to producing properties. Periodic accretion of thediscount related to the estimated liability is recorded as an expense in thestatement of operations.

 

The estimated liabilityis determined using significant assumptions, including current estimates ofplugging and abandonment costs, annual inflation of these costs, the productivelives of wells, and a risk-adjusted interest rate. Changes in any of theseassumptions can result in significant revisions to the estimated assetretirement obligations. Revisions to the asset retirement obligations arerecorded with an offsetting change to producing properties, resulting inprospective changes to depletion and depreciation expense and accretion of thediscount.  Because of the subjectivity ofassumptions and the relatively long lives of most of the wells, the costs toultimately retire the Company’s wells may vary significantly from priorestimates.

 

**Forward-LookingStatements**

 

Certain informationincluded in this Annual Report on Form 10-KSB and other materials filed bythe Company with the Commission contain forward-looking statements relating tothe Company’s operations and the oil and gas industry.  Such forward-looking statements are based onmanagement’s current projections and estimates and are identified by words suchas “expects,” “intends,” “plans,” “believes,” “estimates,” “anticipates” andsimilar words.  These statements are notguarantees of future performance and involve certain risks, uncertainties andassumptions that are difficult to predict. Therefore, actual results may differ materially from what is expressedin such forward-looking statements.

 

Among the factors thatcould cause actual results to differ materially are crude oil and natural gasprice fluctuations, failure to achieve expected production and the timing ofreceipt of revenues from existing and future exploration and developmentprojects (including, particularly, the secondary recovery project on theMadison County, Texas Property), higher than estimated oil and gas and coalreclamation costs and delays with respect to, or failure to obtain,governmental permits and approvals necessary to proceed with real estatedevelopment.  In addition, theseforward-looking statements may be affected by general domestic andinternational economic and political conditions.

 

18

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**ITEM 7.                  FINANCIALSTATEMENTS.**

 

**Index toFinancial Statements**

 
| ** **                                                                                                 | **Page** |
|------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                       |     |
| Report  of Independent Registered Public Accounting Firm                                                   | 20       |
|                                                                                                       |     |
| Balance Sheets as of  February 28(9), 2008 and 2007                                                   | 21       |
|                                                                                                       |     |
| Statements of  Operations for the years endedFebruary 28(9),  2008 and 2007                           | 23       |
|                                                                                                       |     |
| Statements of Changes in Stockholders’ Equity for the  years ended February 28(9), 2008 and 2007 | 24       |
|                                                                                                       |     |
| Statements  of Cash Flows for the years ended February 28(9), 2008 and 2007                           | 25       |
|                                                                                                       |     |
| Notes  to Financial Statements                                                                             | 26       |
|                                                                                                       |     |
| Supplemental Oil and Gas Data (Unaudited)                                                                  | 36       |

 

19

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#### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

#### ** **

Tothe Board of Directors and Stockholders of

OakridgeEnergy, Inc.

 

We have audited the accompanying balance sheets ofOakridge Energy, Inc. as of February 29, 2008 and February 28,2007, and the related statements of operations, changes in stockholders’equity, and cash flows for the years then ended.  These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits.

 

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

 

In ouropinion, the financial statements referred to above present fairly, in allmaterial respects, the financial position of Oakridge Energy, Inc. as of February 29, 2008 and February 28,2007,and the results of its operations and its cash flows for the years then ended,in conformity with accounting principles generally accepted in the UnitedStates of America.

 

Asdiscussed in Note C to the financial statements, certain errors resulting inthe understatement of previously reported deferred tax assets as of February 28,2007, certain errors resulting in the overstatement of previously reportedasset retirement costs and the overstatement of unproven properties werediscovered by management of  OakridgeEnergy, Inc. during the current year. Accordingly, the 2007 financial statements have been restated andadjustments have been made to stockholders’ equity as of March 1, 2006 tocorrect the errors.

 

 

FortWorth, Texas

June12, 2008

 

20

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**OAKRIDGE ENERGY, INC.**

** **

**BALANCE SHEETS**

 
| ** **                                                                                             | ** ** | **February 29,** | ** ** | **February 28,** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                             | ** ** | **2008**              | ** ** | **2007**              | ** ** |
| ** **                                                                                             | ** ** | ** **            | ** ** | **(Restated)**        | ** ** |
| **Assets**                                                                                             |       |                  |       |                  |       |
| Current assets:                                                                                        |       |                  |       |                  |       |
| Cash and cash  equivalents                                                                             |       | $                     | 2,309,055  |                  | $          | 2,410,827 |   |
| Trade accounts  receivable                                                                             |       | 277,722               |       | 275,953               |       |
| Investment  securities available for sale                                                              |       | 77,252                |       | 101,138               |       |
| Prepaid expenses  and other                                                                            |       | 138,689               |       | 19,187                |       |
| Total current  assets                                                                                  |       | 2,802,718             |       | 2,807,105             |       |
|                                                                                                   |       |                  |       |                  |       |
| Oil and gas  properties, at cost, using the successful efforts method of accounting:                   |       |                  |       |                  |       |
| Proved developed  properties                                                                           |       | 7,069,215             |       | 7,007,229             |       |
| Less accumulated  depletion and depreciation                                                           |       | 6,430,729             |       | 6,389,017             |       |
| Proved developed  properties, net                                                                      |       | 638,486               |       | 618,212               |       |
| Unproved  properties                                                                                   |       | 104,702               |       | 102,569               |       |
| Net oil and gas  properties                                                                            |       | 743,188               |       | 720,781               |       |
|                                                                                                   |       |                  |       |                  |       |
| Coal and gravel  properties, at cost:                                                                  |       |                  |       |                  |       |
| Undeveloped  properties                                                                                |       | 5,850,424             |       | 5,850,424             |       |
| Mining and  service equipment                                                                          |       | 2,333,783             |       | 2,333,783             |       |
| Total coal and  gravel properties                                                                      |       | 8,184,207             |       | 8,184,207             |       |
| Less accumulated  depletion and depreciation                                                           |       | 7,923,719             |       | 7,923,719             |       |
| Net coal and  gravel properties                                                                        |       | 260,488               |       | 260,488               |       |
|                                                                                                   |       |                  |       |                  |       |
| Other property  and equipment, net of accumulated depreciation of $415,189 and $430,819,  respectively |       | 136,762               |       | 159,503               |       |
|                                                                                                   |       |                  |       |                  |       |
| Real estate held  for sale                                                                             |       | 3,135,073             |       | 3,074,857             |       |
|                                                                                                   |       |                  |       |                  |       |
| Deferred income  taxes                                                                                 |       | 382,996               |       | 432,961               |       |
|                                                                                                   |       |                  |       |                  |       |
| Other  non-current assets                                                                              |       | 741,540               |       | 852,079               |       |
|                                                                                                   |       |                  |       |                  |       |
| Total assets                                                                                           |       | $                     | 8,202,765  |                  | $          | 8,307,774 |   |

 

See accompanying notes to financial statements.

 

21

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| ** **                                                                                       | ** ** | **February 29,** | ** ** | **February 28,** | ** ** |
|--------------------------------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                                                                       | ** ** | **2008**              | ** ** | **2007**              | ** ** |
| ** **                                                                                       | ** ** | ** **            | ** ** | **(Restated)**        | ** ** |
| **Liabilities  and Stockholders’ Equity**                                                   |       |                  |       |                  |       |
| Current  liabilities:                                                                            |       |                  |       |                  |       |
| Accounts payable                                                                                 |       | $                     | 184,113    |                  | $          | 278,190 |   |
| Accrued expenses                                                                                 |       | 35,131                |       | 49,684                |       |
| Current portion  of asset retirement obligations                                                 |       | 236,695               |       | 80,155                |       |
| Total current  liabilities                                                                       |       | 455,939               |       | 408,029               |       |
|                                                                                             |       |                  |       |                  |       |
| Asset retirement  obligations                                                                    |       | 264,079               |       | 425,023               |       |
| Total  liabilities                                                                               |       | 720,018               |       | 833,052               |       |
|                                                                                             |       |                  |       |                  |       |
| Commitments and  contingencies                                                                   |       | —                |       | —                |       |
|                                                                                             |       |                  |       |                  |       |
| Stockholders’  equity:                                                                      |       |                  |       |                  |       |
| Common stock,  par value $.04 per share, 20,000,000 shares authorized, 10,157,803 shares  issued |       | 406,312               |       | 406,312               |       |
| Additional  paid-in capital                                                                      |       | 805,092               |       | 805,092               |       |
| Retained  earnings                                                                               |       | 16,694,809            |       | 16,622,265            |       |
| Accumulated  other comprehensive loss                                                            |       | (54,216               | )          | (7,753                | )          |
| Stockholders’  equity before treasury stock                                                 |       | 17,851,997            |       | 17,825,916            |       |
| Less treasury  stock, at cost; 5,897,561 shares and 5,894,886 shares, respectively               |       | 10,369,250            |       | 10,351,194            |       |
| Total  stockholders’ equity                                                                 |       | 7,482,747             |       | 7,474,722             |       |
|                                                                                             |       |                  |       |                  |       |
| Total  liabilities and stockholders’ equity                                                 |       | $                     | 8,202,765  |                  | $          | 8,307,774 |   |

 

Seeaccompanying notes to financial statements.

 

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**OAKRIDGE ENERGY, INC.**

** **

**STATEMENTS OF OPERATIONS**

 
| ** **                                             | ** ** | **For Year Ended February 28(9),** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                             | ** ** | **2008**                                               | ** ** | **2007** | ** ** |
| Oil and gas  revenues                                  |       | $                                                      | 1,631,388  |   | $ | 1,357,089 |   |
|                                                   |       |                                                   |       |   |   |
| Operating  expenses:                                   |       |                                                   |       |   |   |
| Oil and gas:                                           |       |                                                   |       |   |   |
| Depletion,  depreciation and accretion                 |       | 32,500                                                 |       | 70,073 |   |
| Lease operating                                        |       | 994,896                                                |       | 960,358 |   |
| Total oil and  gas                                     |       | 1,027,396                                              |       | 1,030,431 |   |
|                                                   |       |                                                   |       |   |   |
| Coal and gravel                                        |       | 39,469                                                 |       | 83,055 |   |
| Real estate  development                               |       | 103,267                                                |       | 254,596 |   |
| General and  administrative                            |       | 483,841                                                |       | 541,267 |   |
| Total operating  expenses                              |       | 1,653,973                                              |       | 1,909,349 |   |
|                                                   |       |                                                   |       |   |   |
| Loss from  operations                                  |       | (22,585                                                | )          | (552,260 | ) |
|                                                   |       |                                                   |       |   |   |
| Other income:                                          |       |                                                   |       |   |   |
| Interest and  dividend income                          |       | 150,419                                                |       | 162,484 |   |
| Gains on sale of  property                             |       | 18,517                                                 |       | 95,778 |   |
| Other income  (expense)                                |       | 10,550                                                 |       | (5,047 | ) |
|                                                   |       | 179,486                                                |       | 253,215 |   |
|                                                   |       |                                                   |       |   |   |
| Income (loss)  before income taxes                     |       | 156,901                                                |       | (299,045 | ) |
|                                                   |       |                                                   |       |   |   |
| Income tax  expense (benefit)                          |       | 84,357                                                 |       | (127,887 | ) |
|                                                   |       |                                                   |       |   |   |
| Net income  (loss)                                     |       | $                                                      | 72,544     |   | $ | (171,158 | ) |
|                                                   |       |                                                   |       |   |   |
| **Basic  and diluted income (loss) per common share:** |       |                                                   |       |   |   |
|                                                   |       |                                                   |       |   |   |
| Net income  (loss)                                     |       | $                                                      | 0.02       |   | $ | (0.04 | ) |
|                                                   |       |                                                   |       |   |   |
| Weighted average  shares outstanding                   |       | 4,261,718                                              |       | 4,266,395 |   |

 

Seeaccompanying notes to financial statements.

 

23

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**OAKRIDGE ENERGY, INC.**

** **

**STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

** **

**Years Ended February 28(9), 2008 and 2007**

 
| ** **                                                               | ** ** | **Common  Stock** | ** ** | **Additional  Paid-in  Capital** | ** ** | **Retained  Earnings** | ** ** | **Accumulated  Other  Comprehensive  Income (Loss)** | ** ** | **Treasury  Stock** | ** ** | **Total** | ** ** | **Comprehensive  Income (Loss)** | ** **  |
|--------------------------------------------------------------------------|------------|-------------------|------------|----------------------------------|------------|------------------------|------------|-----------------------------------------------------------|------------|---------------------|------------|-----------|------------|---------------------------------------|-------------|
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Balance at  March 1, 2006 (Restated)                                |       | $                 | 406,312    |                             | $          | 805,092                |       | $                                                         | 16,793,423 |                | $          | —    |       | $                                     | (10,297,319 | ) | $ | 7,707,508 |   |   |   |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Purchases of  treasury stock                                             |       | —            |       | —                           |       | —                 |       | —                                                    |       | (53,875             | )          | (53,875   | )          |                                  |        |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Net loss  (Restated)                                                     |       | —            |       | —                           |       | (171,158               | )          | —                                                    |       | —              |       | (171,158  | )          | $                                     | (171,158    | ) |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Change in  unrealized loss on investment securities, net of income taxes |       | —            |       | —                           |       | —                 |       | (7,753                                                    | )          | —              |       | (7,753    | )          | (7,753                                | )           |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Comprehensive  loss for year (Restated)                                  |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       | $                                     | (178,911    | ) |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Balance at  February 28, 2007 (Restated)                            |       | 406,312           |       | 805,092                          |       | 16,622,265             |       | (7,753                                                    | )          | (10,351,194         | )          | 7,474,722 |       |                                  |        |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Purchases of  treasury stock                                             |       | —            |       | —                           |       | —                 |       | —                                                    |       | (18,056             | )          | (18,056   | )          |                                  |        |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Net income                                                               |       | —            |       | —                           |       | 72,544                 |       | —                                                    |       | —              |       | 72,544    |       | $                                     | 72,544      |   |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Change in  unrealized loss on investment securities, net of income taxes |       | —            |       | —                           |       | —                 |       | (46,463                                                   | )          | —              |       | (46,463   | )          | (46,463                               | )           |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Comprehensive  income for year                                           |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       | $                                     | 26,081      |   |
|                                                                     |       |              |       |                             |       |                   |       |                                                      |       |                |       |      |       |                                  |        |
| Balance at  February 29, 2008                                       |       | $                 | 406,312    |                             | $          | 805,092                |       | $                                                         | 16,694,809 |                | $          | (54,216   | )          | $                                     | (10,369,250 | ) | $ | 7,482,747 |   |   |   |

 

Seeaccompanying notes to financial statements.

 

24

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**OAKRIDGE ENERGY, INC.**

** **

**STATEMENTS OF CASH FLOWS**

 
| ** **                                                                                          | ** ** | **Year Ended February 28(9),** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                          | ** ** | **2008**                                      | ** ** | **2007** | ** ** |
| **Operating  Activities**                                                                           |       |                                          |       |   |   |
| Net income  (loss)                                                                                  |       | $                                             | 72,544     |   | $ | (171,158 | ) |
| Adjustments to  reconcile net income (loss) to net cash provided by (used in) operating activities: |       |                                          |       |   |   |
| Depletion and  depreciation                                                                         |       | 64,471                                        |       | 77,285 |   |
| Accretion of  discount on asset retirement obligations                                              |       | 20,104                                        |       | 19,239 |   |
| Change in  estimate of asset retirement obligation                                                  |       | (29,317                                       | )          | — |   |
| Gain on sales of  coal and gravel property                                                          |       | (500                                          | )          | (24,350 | ) |
| Gain on sales of  other property and equipment                                                      |       | (18,017                                       | )          | (25,000 | ) |
| Gain on sales of  real estate held for sale                                                         |       | —                                        |       | (46,428 | ) |
| (Gain) loss on  investment in limited partnership                                                   |       | (10,551                                       | )          | 5,518 |   |
| Deferred income  taxes                                                                              |       | 77,895                                        |       | (146,391 | ) |
| Changes in  operating assets and liabilities:                                                       |       |                                          |       |   |   |
| Trade accounts  receivable                                                                          |       | (1,769                                        | )          | (71,816 | ) |
| Prepaid expenses  and other                                                                         |       | 1,592                                         |       | 4,158 |   |
| Accounts payable  and accrued expenses                                                              |       | (108,630                                      | )          | 174,926 |   |
| Asset retirement  obligations                                                                       |       | —                                        |       | (571,772 | ) |
| Net cash  provided by (used in) operating activities                                                |       | 67,822                                        |       | (775,789 | ) |
|                                                                                                |       |                                          |       |   |   |
| **Investing  Activities**                                                                           |       |                                          |       |   |   |
| Additions to  investment securities                                                                 |       | (50,506                                       | )          | (108,891 | ) |
| Additions to oil  and gas properties                                                                |       | (59,316                                       | )          | (47,688 | ) |
| Additions to  other property and equipment                                                          |       | —                                        |       | (68,860 | ) |
| Additions to  real estate held for sale                                                             |       | (60,216                                       | )          | — |   |
| Proceeds from  sales of coal and gravel property and equipment                                      |       | 500                                           |       | 24,350 |   |
| Proceeds from  sales of other property and equipment                                                |       | 18,000                                        |       | 25,000 |   |
| Proceeds from  sales of real estate held for sale                                                   |       | —                                        |       | 49,219 |   |
| Net cash used in  investing activities                                                              |       | (151,538                                      | )          | (126,870 | ) |
|                                                                                                |       |                                          |       |   |   |
| **Financing  Activity**                                                                             |       |                                          |       |   |   |
| Purchases of  treasury stock                                                                        |       | (18,056                                       | )          | (53,875 | ) |
|                                                                                                |       |                                          |       |   |   |
| Net decrease in  cash and cash equivalents                                                          |       | (101,772                                      | )          | (956,534 | ) |
| Cash and cash  equivalents at beginning of year                                                     |       | 2,410,827                                     |       | 3,367,361 |   |
|                                                                                                |       |                                          |       |   |   |
| Cash and cash  equivalents at end of year                                                           |       | $                                             | 2,309,055  |   | $ | 2,410,827 |   |
|                                                                                                |       |                                          |       |   |   |
| **Supplemental  Disclosure of Cash Flow Information**                                               |       |                                          |       |   |   |
| Income taxes  paid                                                                                  |       | $                                             | 18,590     |   | $ | — |   |
|                                                                                                |       |                                          |       |   |   |
| **Supplemental  Disclosure of Non-Cash Information**                                                |       |                                          |       |   |   |
| Change in  unrealized loss on investment securities, net of income taxes                            |       | $                                             | (46,463    | ) | $ | (7,753 | ) |
|                                                                                                |       |                                          |       |   |   |
| Additions to  asset retirement obligation                                                           |       | $                                             | 4,809      |   | $ | — |   |

 

    See accompanying notes to financialstatements.

 

25

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**OAKRIDGEENERGY, INC.**

**NOTES TO FINANCIAL STATEMENTS**

**February 28(9), 2008 and2007**

 

**A.   Nature of Business**

 

Oakridge Energy, Inc. (the “Company”) is engaged in theexploration for and development, production, and sale of oil and gas primarilyin Texas.  The Company has received leaseand royalty income from gravel deposits in Colorado and holds certain realestate in Colorado for sale.  The Companywas incorporated in Utah in 1969 and its executive offices are located inWichita Falls, Texas.

 

**B.   Summary of SignificantAccounting Policies**

 

A summary of the Company’s significant accounting policies consistentlyapplied in the preparation of the accompanying financial statements follows.

 

### **Basis of Accounting**

### ** **

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

 

### **Use of Estimates**

### ** **

The preparation of financial statements in conformity with accountingprinciples generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect certain reportedamounts in the financial statements and accompanying notes.  Actual results could differ from theseestimates and assumptions.

 

### **Comprehensive Income**

### ** **

The Companyreports comprehensive income in accordance with the provisions of Statement ofFinancial Accounting Standards (“SFAS”) No. 130, *Reporting Comprehensive Income.*  SFAS No. 130 established standards forreporting and presentation of comprehensive income and its components in a fullset of financial statements. Comprehensive income (loss) consists of net income (loss) and netunrealized gains (losses) on securities and is presented in the statements ofstockholders’ equity.  SFAS No. 130requires only additional disclosures in the financial statements; it does notaffect the Company’s financial position or results of operations.

 

### **Fair Value ofFinancial Instruments**

### ** **

In accordance withthe reporting requirements of SFAS No. 107, *Disclosures about Fair Value of Financial Instruments*, theCompany calculates the fair value of its assets and liabilities which qualifyas financial instruments under this statement and includes this additionalinformation in the notes to financial statements when the fair value isdifferent than the carrying value of those financial instruments.  The estimated fair value of cash equivalents,accounts receivable, and accounts payable approximates their carrying amountsdue to the relatively short maturity of these instruments.

 

26

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### ** **

### **Cash and CashEquivalents**

### ** **

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

 

**Trade Accounts Receivable**

 

The Companyperforms ongoing credit evaluations of its customers’ financial condition andextends credit to virtually all of its customers.  Credit losses to date have not beensignificant and have been within management’s expectations.  In the event of complete non-performance bythe Company’s customers, the maximum exposure to the Company is the outstandingaccounts receivable balance at the date of non-performance.

 

### **Investment Securities**

### ** **

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

 

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

 

·                  TradingSecurities - Debt and equity securities that are bought and held principallyfor the purpose of selling them in the near term are reported at fair value,with unrealized gains and losses included in earnings.

 

·                  Availablefor Sale Securities - Debt and equity securities not classified as held tomaturity securities or trading securities are reported at fair value, withunrealized gains and losses excluded from earnings and reported as a separatecomponent of stockholders’ equity (net of tax effects).

 

The Company didnot have any securities classified as held to maturity or trading as of February 28(9), 2008 and 2007.

 

A decline in themarket value of any available for sale security below cost that is deemed to beother than temporary results in a reduction of the carrying amount to fairvalue.  The impairment is charged toearnings and a new cost basis for the security is established.  No impairment charges were recorded during2008 or 2007.

 

Dividendand interest income are recognized when earned. Gains and losses on securities sold are computed under the specificidentification method.

 

### **Oil and Gas Properties**

### ** **

TheCompany uses the successful efforts method of accounting for oil and gasproducing activities.  Costs to acquiremineral interests in oil and gas properties, to drill exploratory wells thatfind proved reserves, and to drill and equip development wells arecapitalized.  Geological and geophysicalcosts, costs to drill exploratory wells that do not find proved reserves, andnon-producing leasehold abandonments are 

 

27

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

 

Uponsale or retirement of a proved property, the cost and related accumulateddepletion and depreciation are eliminated from the property accounts, and anyresulting gain or loss is recognized.

 

**Coal and Gravel Properties**

 

Costs attributable to the acquisition and development of coal andgravel properties are capitalized, while costs incurred to maintain theproperties are expensed.  Undevelopedcoal and gravel properties, which are individually significant, areperiodically assessed for impairment of value and a loss is recognized at thetime of impairment by providing an impairment allowance. Capitalized costs ofproducing properties are depleted on a property-by-property basis using theunits-of-production method.

 

Depreciationon mining and service equipment is calculated using accelerated andstraight-line methods over the estimated useful lives of the assets. Upon saleor abandonment, the cost of the equipment and related accumulated depreciationare removed from the accounts and any gains or losses thereon are recognized.

 

**Other Property and Equipment**

 

Depreciationon other property and equipment is calculated using accelerated andstraight-line methods over the estimated useful lives of the assets. Upon saleor abandonment, the cost of the equipment and related accumulated depreciationare removed from the accounts and any gains or losses thereon are recognized.

 

**Real Estate Held for Sale**

 

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

 

**Impairment of Long-Lived Assets**

 

Thecarrying value of property and equipment is periodically evaluated under theprovisions of SFAS No. 144, *Accountingfor the Impairment or Disposal of Long-Lived Assets.*  SFAS No. 144 requires long-lived assetsand certain identifiable intangibles to be reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of anasset may not be recoverable.  When it isdetermined that the estimated future net cash flows of an asset will not besufficient to recover its carrying amount, an impairment loss must be recordedto reduce the carrying amount to its estimated fair value.

 

UnderSFAS No. 144, the Company evaluates impairment of proved oil and gasproperties on a field-by-field basis.  Onthis basis, certain fields may be impaired because they are not expected torecover their entire carrying value from future net cash flows.  During 2008 and 2007, the Company recorded noimpairment losses related to its proved oil and gas properties.  If estimated future cash flows are notachieved with respect to certain fields, write-downs may be required.

 

28

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### ** **

### **Investment inPartnership**

### ** **

The Company uses the equity method of accounting forits investment in a partnership.  The investmentin partnership of approximately $46,000 and $36,000 at February 28(9), 2008 and 2007, respectively, are included inother non-current assets in the accompanying balance sheets.  The Company recognized gains (losses)pertaining to its interest in the partnership of approximately $11,000 gain and$6,000 loss during 2008 and 2007, respectively, which are included in otherincome in the accompanying statements of operations.

 

### **Asset RetirementObligations**

### ** **

The Company accounts for asset retirement obligations under SFAS No. 143,*Accounting for Asset Retirement Obligations*.  SFAS No. 143 requires legal obligationsassociated with the retirement of long-lived assets to be recognized at theirfair value at the time that the obligations are incurred.  Oil and gas producing companies incur thisliability upon acquiring or drilling a well. Under SFAS No. 143, an asset retirement obligation is recorded as aliability at its estimated present value at the asset’s inception, with anoffsetting increase to producing properties on the accompanying balance sheetwhich is allocated to expense over the useful life of the asset.  Periodic accretion of the discount on assetretirement obligations is recorded as an expense in the accompanying statementof operations.

 

### **Revenue Recognition**

### ** **

The Company utilized the accrual method of accounting for natural gasand crude oil revenues, whereby revenues are recognized based on the Company’snet revenue interest in the wells.  Crudeoil inventories are immaterial and are not recorded.  Gas imbalances are accounted for using thesales method.  Under this method,revenues are recognized based on actual volumes of oil and gas sold topurchasers.  However, the Company has nohistory of significant gas imbalances.

 

### **Income Taxes**

### ** **

Deferred income taxes are determined using the liability method inaccordance with SFAS No. 109, *Accountingfor Income Taxes*.  Deferredtax assets and liabilities are recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts ofexisting assets and liabilities and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporarydifferences are expected to be recovered or settled.  The effect on deferred tax assets andliabilities of a change in tax rates is recognized in income in the period thatincludes the enactment date. In addition, a valuation allowance is establishedto reduce any deferred tax asset for which it is determined that it is morelikely than not that some portion of the deferred tax asset will not berealized.

 

**Earnings or Loss Per Common Share**

 

Basic earnings (loss) per common share is calculated by dividing netincome (loss) (available to common stockholders) by the weighted average numberof common shares outstanding for the period. Diluted earnings (loss) per common share reflects the potential dilutionthat could occur if accounts or other contracts to issue common stock wereexercised or converted into common stock or resulted in the issuance of commonstock that then shared in the earnings of the Company.  For the years and quarters 

 

29

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presented herein, basic and diluted earnings (loss) per common shareare the same as the Company has no common stock equivalents.

 

**Impact of Recently Issued Accounting Standards**

 

On July 13, 2006, the FASB released FIN 48, “*Accountingfor Uncertainty in Income Taxes – an Interpretation of FASB Statement 109”. *FIN 48 requires companies toevaluate and disclose material uncertain tax positions it has taken withvarious taxing jurisdictions.  Managementhas reviewed FIN 48 and determined the adoption of FIN 48 will not materiallyaffect the Company’s operating results, financial position, or future cashflows.  The Company adopted FIN 48effective January 1, 2007.

 

SFAS No. 157,”*Fair Value Measurements”,*(“SFAS No. 157”) was issued by the FASB in September 2006.  SFAS No. 157 defines fair values,establishes a framework for measuring fair value under accounting principlesgenerally accepted in the United States of America and expands disclosuresabout fair value measurements.  SFAS No. 157applies to other accounting pronouncements that require or permit fair valuemeasurement.  No new requirements areincluded in SFAS No. 157, but application of SFAS No. 157 will changecurrent practice.  SFAS No. 157 iseffective for consolidated financial statements issued for fiscal yearsbeginning after November 15, 2007. The Company does not expect the adoption of SFAS No. 157 will havea material impact on its financial position, results of operations or cashflows.

 

In February 2007, the FASB issued SFAS No. 159, “*The Fair Value Option for Financial Assets and Liabilities”*(“SFASNo. 159”).  SFAS No. 159provides the option to report certain financial assets and liabilities at fairvalue, with the intent to mitigate volatility in financial reporting that canoccur when related assets and liabilities are recorded on different bases andis effective for fiscal years beginning after November 15, 2007.  The Company is in the process of evaluatingthe impact of SFAS No. 159 on its results of operations and financialposition.

 

**Reclassification**

 

Certain 2007 amounts have been reclassified to conform to the 2008presentation.

 

**C.   Restatement**

 

The accompanying balance sheet at February 28, 2007 and thestatements of operations and stockholders’ equity for the year then ended havebeen restated to reflect prior years depletion of the Company’s assetretirement obligation in the amount of $113,405 and unproved oil and gasproperties have been written-off in the amount of $140,563.  Also, the accompanying balance sheet at February 28,2007 and the statements of operations and stockholders’ equity for the yearthen ended have been restated to properly reflect the deferred taxes inaccordance with SFAS 109, *Accounting for IncomeTaxes. *The effects of therestatement are summarized as follows:

 

30

----

 

**Balance Sheet as of February 28, 2007:**

 
| ** **                                                                          | ** ** | **As Previously  Reported** | ** ** | **Adjustment** | ** ** | **Restated  Balance** | ** ** |
|-------------------------------------------------------------------------------------|------------|-----------------------------|------------|----------------|------------|-----------------------|------------|
| Oil and gas  properties, at cost using the successful efforts method of accounting: |       |                        |       |           |       |                  |       |
| Accumulated  depletion and depreciation                                             |       | $                           | (6,275,612 | )              | $          | (113,405              | )          | $ | (6,389,017 | ) |
| Proved developed  properties, net                                                   |       | 731,617                     |       | (113,405       | )          | 618,212               |       |
| Unproved  properties                                                                |       | 243,132                     |       | (140,563       | )          | 102,569               |       |
| Net oil and gas  properties                                                         |       | 974,749                     |       | (253,968       | )          | 720,781               |       |
| Deferred income  taxes                                                              |       | 139,582                     |       | 293,379        |       | 432,961               |       |
| Total assets                                                                        |       | 8,268,363                   |       | 39,411         |       | 8,307,774             |       |
| Retained  earnings                                                                  |       | 16,582,854                  |       | 39,411         |       | 16,622,265            |       |
| Stockholders’  equity before treasury stock                                    |       | 17,786,505                  |       | 39,411         |       | 17,825,916            |       |
| Total  stockholders’ equity                                                    |       | 7,435,311                   |       | 39,411         |       | 7,474,722             |       |
| Total  liabilities and stockholders’ equity                                    |       | 8,268,363                   |       | 39,411         |       | 8,307,774             |       |
|                                                                                     |            |                             |            |                |            |                       |            |  |  |  |

 

**Statements of Operations and Stockholders’ Equity –Year Ended February 28, 2007:**

 
| ** **                                                  | ** ** | **As Previously  Reported** | ** ** | **Adjustment** | ** ** | **Restated  Balance** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|----------------|------------|-----------------------|------------|
| Oil and gas  operating expenses:                            |       |                             |       |           |       |                  |       |
| Depletion,  depreciation and accretion                      |       | $                                | 33,474     |           | $          | 36,599                |       | $ | 70,073 |   |
| Lease operating                                             |       | 979,597                          |       | (19,239        | )          | 960,358               |       |
| Total oil and  gas operating expense                        |       | 1,013,071                        |       | 17,360         |       | 1,030,431             |       |
| Total operating  expenses                                   |       | 1,891,989                        |       | 17,360         |       | 1,909,349             |       |
| Loss from  operations                                       |       | (534,900                         | )          | (17,360        | )          | (552,260              | )          |
| Income (loss)  before income taxes                          |       | (281,685                         | )          | (17,360        | )          | (299,045              | )          |
| Income tax  expense (benefit)                               |       | (107,005                         | )          | (20,882        | )          | (127,887              | )          |
| Net income  (loss)                                          |       | (174,680                         | )          | 3,522          |       | (171,158              | )          |
| Retained earnings  at March 1, 2006                    |       | 16,757,534                       |       | 35,889         |       | 16,793,423            |       |
| Comprehensive  (loss) for year ended February 28, 2007 |       | (182,433                         | )          | 3,522          |       | (178,911              | )          |
|                                                             |            |                                  |            |                |            |                       |            |  |  |  |

 

**D. Investment Securities**

 

The amortized cost and fair value of the Company’s investmentsecurities available for sale, as of February 29, 2008 was approximately$159,000 and $77,000, respectively.  Theamortized cost and fair value of the Company’s investment securities availablefor sale, as of February 28, 2007 was approximately $109,000 and $101,000,respectively.

 

# **E.   AssetRetirement Obligations**

# ** **

Pursuant to SFAS No. 143, *Accountingfor Asset Retirement Obligations*, the Company has recognized thefair value of its asset retirement obligations related to the plugging,abandonment, and remediation of oil and gas producing properties as well as thereclamation of the property surrounding the Company’s previous coal miningoperations.  The present value of theestimated asset retirement costs has been capitalized as part of the carryingamount of the related long-lived assets, which approximated $288,000.

 

The liability has been accreted to its present value as of the end ofeach year.  The Company evaluated 83wells, and has determined a range of abandonment dates between February 2008and March 2058.

 

31

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The following represents a reconciliation of the asset retirementobligations for the years ended February 28(9), 2008 and 2007:

 

| ** **                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------|------------|----------|------------|----------|------------|
| Asset retirement  obligations at beginning of year |       | $        | 505,178    |     | $          | 1,057,711 |   |
| Revision to  estimate                              |       | (29,317  | )          | —   |       |
| Additions to  asset retirement obligation          |       | 4,809    |       | —   |       |
| Liabilities  settled during the year               |       | —   |       | (571,772 | )          |
| Accretion of  discount                             |       | 20,104   |       | 19,239   |       |
| Asset retirement  obligations at end of year       |       | $        | 500,774    |     | $          | 505,178 |   |

 

# **F.     IncomeTaxes**

# ** **

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

 
| ** **                          | ** ** | **Current** | ** ** | **Deferred** | ** ** | **Total** | ** ** |
|-------------------------------------|------------|-------------|------------|--------------|------------|-----------|------------|
| Year ended  February 29, 2008: |       |        |       |         |       |      |       |
| U.S. Federal                        |       | $           | —     |         | $          | 51,150    |       | $ | 51,150 |   |
| State and local                     |       | 6,462       |       | 26,745       |       | 33,207    |       |
| Income tax  expense                 |       | $           | 6,462      |         | $          | 77,895    |       | $ | 84,357 |   |
|                                |       |        |       |         |       |      |       |
| Year ended  February 28, 2007: |       |        |       |         |       |      |       |
| U.S. Federal                        |       | $           | —     |         | $          | (110,844  | )          | $ | (110,844 | ) |
| State and local                     |       | 18,504      |       | (35,547      | )          | (17,043   | )          |
| Income tax  expense (benefit)       |       | $           | 18,504     |         | $          | (146,391  | )          | $ | (127,887 | ) |

 

Income tax expense (benefit) for the years presenteddiffers from the “expected” federal income tax benefit for those years,computed by applying the statutory U.S. Federal corporate tax rate of 34% topre-tax income (loss), as a result of the following:

 

| ** **                                                       | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------------------------------------------|------------|----------|------------|----------|------------|
| Computed  “expected” tax expense (benefit)             |       | $        | 53,346     |     | $          | (101,675 | ) |
| State and local  income taxes, net of federal income tax benefit |       | 4,266    |       | (17,043  | )          |
| Change in state  tax rate                                        |       | 26,745   |       | —   |       |
| Other, primarily  revision of prior year provision estimate      |       | —   |       | (9,169   | )          |
| Income tax  expense (benefit)                                    |       | $        | 84,357     |     | $          | (127,887 | ) |

 

32

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The tax effects of temporary differences that give riseto significant portions of the deferred tax assets and deferred taxliabilities, at February 28(9), 2008 and 2007 are presented below:

 

| ** **                                                                                                     | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| Deferred tax  assets:                                                                                          |       |     |       |     |       |
| Net operating  loss carryforward                                                                               |       | $        | 285,695    |     | $          | 320,162 |   |
| Alternative minimum  tax credit carryforward                                                                   |       | 98,033   |       | 133,580  |       |
| Fixed assets                                                                                                   |       | 23,712   |       | 35,317   |       |
| Marketable  securities                                                                                         |       | 27,929   |       | 2,866    |       |
| Asset retirement  obligations                                                                                  |       | 170,263  |       | 186,764  |       |
| Total deferred  tax assets                                                                                     |       | 605,632  |       | 678,689  |       |
|                                                                                                           |       |     |       |     |       |
| Deferred tax  liabilities:                                                                                     |       |     |       |     |       |
| Oil, gas and  coal properties and other property and equipment, principally due to  depletion and depreciation |       | (222,636 | )          | (245,728 | )          |
| Net deferred tax  asset                                                                                        |       | $        | 382,996    |     | $          | 432,961 |   |

 

| ** **                          | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------|------------|----------|------------|----------|------------|
| Included in the  balance sheet as:  |       |     |       |     |       |
| Deferred income  taxes, current     |       | $        | —     |     | $          | — |   |
| Deferred income  taxes, non-current |       | 382,996  |       | 432,961  |       |
| Net deferred tax  asset             |       | $        | 382,996    |     | $          | 432,961 |   |

 

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

 

At February 29, 2008,the Company has an alternative minimum tax credit carryforward of approximately$98,000, which has no expiration date and is available to reduce the Company’sfuture taxable income.  Additionally, at February 29,2008, the Company has a net operating loss carryforward for federal taxes ofapproximately $736,000 and a Texas net operating loss carryforward ofapproximately $36,000.  The net operatingloss carryforward for federal taxes will expire in fiscal 2027 and is availableto offset the Company’s future taxable income.

 

# **G. Segment Information**

# ** **

Thefollowing information is presented in accordance with SFAS No. 131, *Disclosures about Segments of an Enterprise andRelated Information.*  TheCompany is engaged in oil and gas, coal and gravel activities and real estatedevelopment.  The Company has identifiedsuch segments based on management responsibility and the nature of the Company’sproducts, services and costs.  There areno major distinctions in geographical areas served as all operations are in theUnited States.  The Company measuressegment profit (loss) as income (loss) from operations.  Business segment assets are those assetscontrolled by each reportable segment. The following table sets forth certain information about the financialinformation of each segment for the years ended February 28(9), 2008 and 2007:

 

33

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| ** **                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|------------------------------------|------------|----------|------------|----------|------------|
| Business segment  revenue:         |       |     |       |     |       |
| Oil and gas                        |       | $        | 1,631,388  |     | $          | 1,357,089 |   |
|                               |       |     |       |     |       |
| Business segment  profit (loss):   |       |     |       |     |       |
| Oil and gas                        |       | $        | 603,992    |     | $          | 326,658 |   |
| Coal and gravel                    |       | (39,469  | )          | (83,055  | )          |
| Real estate  development           |       | (103,267 | )          | (254,596 | )          |
| General  corporate                 |       | (483,841 | )          | (541,267 | )          |
| Loss from  operations              |       | (22,585  | )          | (552,260 | )          |
| Other income                       |       | 179,486  |       | 253,215  |       |
| Income (loss)  before income taxes |       | $        | 156,901    |     | $          | (299,045 | ) |

 

| Depreciation,  depletion and amortization:      |   |   |   |   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|
| Oil and gas                                     |   | $      | 32,500 |   | $      | 70,073 |   |
| Coal and gravel                                 |   | — |   | — |   |
| Real estate  development                        |   | — |   | — |   |
| General  corporate                              |   | 22,758 |   | 26,451 |   |
| Total  depreciation, depletion and amortization |   | $      | 55,258 |   | $      | 96,524 |   |

 

| ** **                  | ** ** | **2008**   | ** ** | **2007**   | ** ** |
|-----------------------------|------------|------------|------------|------------|------------|
| Capital  expenditures:      |       |       |       |       |       |
| Oil and gas                 |       | $          | 59,316     |       | $          | 47,688 |   |
| Real estate  development    |       | 60,216     |       | —     |       |
| General  corporate          |       | —     |       | 68,860     |       |
| Total capital  expenditures |       | $          | 119,532    |       | $          | 116,548 |   |
| ** **                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| Assets:                     |       |       |       |       |       |
| Oil and gas                 |       | $          | 3,836,317  |       | $          | 3,977,213 |   |
| Coal and gravel             |       | 260,488    |       | 260,488    |       |
| Real estate  development    |       | 3,135,073  |       | 3,074,857  |       |
| General  corporate          |       | 970,887    |       | 995,216    |       |
| Total assets                |       | $          | 8,202,765  |       | $          | 8,307,774 |   |

 

**H.   Related Party Transactions**

 

In the normal course of business, the Company owns interests in variousoil and gas properties in which certain stockholders and related parties alsoown interests.

 

# **I. Commitment and Contingency**

# ** **

As of February 28(9), 2008and 2007, the Company has pledged interest-bearing cash deposits of$695,436 ($816,526 reduced by $121,090) and $816,526, respectively, to secureletters of credit in favor of the Colorado Bureau of Land Management for staterequirements regarding land reclamation based on future operations with respectto coal and gravel properties.  Thesepledged cash deposits are included in other non-current assets in theaccompanying balance sheets.

 

34

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### **J.   RiskConcentrations**

### ** **

Financial instrumentsthat potentially subject the Company to concentration of credit risk consistprincipally of cash, cash equivalents, and investments.  Cash equivalents of approximately $2,309,000and $2,411,000 at February 28(9), 2008 and 2007, respectively, consistedof interest-bearing cash deposits.  TheCompany maintains deposits primarily in two financial institutions, which attimes may exceed amounts covered by insurance provided by the SecuritiesInvestor Protection Corporation and the U.S. Federal Deposit InsuranceCorporation, $500,000 for securities and $100,000 for cash balances.  At February 28(9),2008 and 2007 the Company had approximately $272,000 and $363,000 ofuninsured deposits, respectively.  TheCompany has not experienced any losses with respect to uninsured balances.

 

Oil sales to two customers,which accounted for more than 10% of the Company’s total oil sales,approximated $904,000 (64.5%) and $355,000 (25.3%) for the year ended February 28, 2007.  Two customers accounted for approximately$787,000 (68.7%) and $272,000 (23.7%) of the Company’s total oil sales for theyear ended February 29, 2008.  Gassales to three customers approximated $107,000 (61.6%), $28,000 (15.8%), and$19,000 (11.2%) of the Company’s total gas sales for the year ended February 28, 2009.  Three customers accounted for approximately$97,000 (56.9%), $32,000 (18.6%), and $23,000 (13.6%) of the Company’s gassales for the year ended February 29, 2008.  Lease operating payments primarily made to aprincipal operator on its oil and gas producing properties approximated $791,000and $545,000 in 2008 and 2007, respectively.

 

**K.   QuarterlyOperating Results (Unaudited)**

 

Quarterly results of operations for 2008 and 2007 were as follows:

 
| **2008**                                          | ** ** | **First  Quarter** | ** ** | **Second  Quarter** | ** ** | **Third  Quarter** | ** ** | **Fourth  Quarter** | ** ** | **Full  Year** | ** ** |
|---------------------------------------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|----------------|------------|
|                                              |       |               |       |                |       |               |       |                |       |           |       |
| Total revenues                                    |       | $                  | 336,953    |                | $          | 346,553            |       | $                   | 481,464    |           | $          | 466,418 |   | $ | 1,631,388 |   |
|                                              |       |               |       |                |       |               |       |                |       |           |       |
| Income (loss)  from operations                    |       | (86,769            | )          | (93,125             | )          | 71,539             |       | 85,770              |       | (22,585        | )          |
|                                              |       |               |       |                |       |               |       |                |       |           |       |
| Net income  (loss)                                |       | $                  | (19,868    | )                   | $          | (33,073            | )          | $                   | 86,509     |           | $          | 38,976 |   | $ | 72,544 |   |
|                                              |       |               |       |                |       |               |       |                |       |           |       |
| Basic and  diluted income (loss) per common share |       | $                  | (0.00      | )                   | $          | (0.01              | )          | $                   | 0.02       |           | $          | 0.01 |   | $ | 0.02 |   |

 
| **2007**                                 | ** ** | **First  Quarter** | ** ** | **Second  Quarter** | ** ** | **Third  Quarter** | ** ** | **Fourth  Quarter** | ** ** | **Full  Year** | ** ** |
|------------------------------------------|------------|--------------------|------------|---------------------|------------|--------------------|------------|---------------------|------------|----------------|------------|
|                                     |       |               |       |                |       |               |       |                |       |           |       |
| Total revenues                           |       | $                  | 347,317    |                | $          | 399,174            |       | $                   | 307,934    |           | $          | 302,664 |   | $ | 1,357,089 |   |
|                                     |       |               |       |                |       |               |       |                |       |           |       |
| Loss from  operations (restated)         |       | (125,795           | )          | (103,511            | )          | (122,848           | )          | (200,106            | )          | (552,260       | )          |
|                                     |       |               |       |                |       |               |       |                |       |           |       |
| Net loss  (restated)                     |       | $                  | (50,387    | )                   | $          | (8,337             | )          | $                   | (25,500    | )              | $          | (86,934 | ) | $ | (171,158 | ) |
|                                     |       |               |       |                |       |               |       |                |       |           |       |
| Basic and  diluted loss per common share |       | $                  | (0.01      | )                   | $          | (0.00              | )          | $                   | (0.01      | )              | $          | (0.02 | ) | $ | (0.04 | ) |

 

35

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**OAKRIDGE ENERGY, INC,**

** **

**L. SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED)**

** **

Thefollowing tables set forth supplementary disclosures for oil and gas producingactivities in accordance with SFAS No. 69, *Disclosures about Oil and Gas Producing Activities*.

 

**Costs Incurred**

** **

Asummary of costs incurred in oil and gas property acquisition, development, andexploration activities (both capitalized and charged to expense) for the yearsended February 28(9), 2008 and 2007, as follows:

 
| ** **                          | ** ** | **2008** | ** ** | **2007** | ** ** |
|-------------------------------------|------------|----------|------------|----------|------------|
| Acquisition of  proved properties   |       | $        | 57,183     |     | $          | 26,292 |   |
| Acquisition of  unproved properties |       | $        | 2,133      |     | $          | 21,396 |   |
| Exploration  costs                  |       | $        | —     |     | $          | — |   |

 

### **Results of Operations for ProducingActivities**

 

The following tablepresents the results of operations for the Company’s oil and gas producingactivities for the years ended February 28(9), 2008 and 2007:

 
| ** **                                                                                         | ** ** | **2008** | ** ** | **2007** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| Revenues                                                                                           |       | $        | 1,631,388  |     | $          | 1,357,089 |   |
| Production costs                                                                                   |       | (994,896 | )          | (960,358 | )          |
| Depletion,  depreciation, and valuation Provisions                                                 |       | (32,500  | )          | (70,073  | )          |
| Exploration  costs                                                                                 |       | —   |       | —   |       |
|                                                                                               |       | 603,992  |       | 326,658  |       |
| Income tax  expense                                                                                |       | (205,357 | )          | (111,064 | )          |
| Results of  operations for producing activities (excluding corporate overhead and  interest costs) |       | $        | 398,635    |     | $          | 215,594 |   |

### ** **

### **Reserve Quantity Information**

### ** **

The following table presentsthe Company’s estimate of its proved oil and gas reserves all of which arelocated in the United States.  TheCompany emphasizes that reserve estimates are inherently imprecise and thatestimates of reserves related to new discoveries are more imprecise than thosefor producing oil and gas properties. Accordingly, the estimates are expected to change as future informationbecomes available.  The estimates havebeen prepared with the assistance of an independent petroleum reservoirengineering firm.  Oil reserves, whichinclude condensate and natural gas liquids, are stated in barrels and gasreserves are stated in thousands of cubic feet.

 

36

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| ** **                                      | ** ** | **Oil  (Bbls.)** | ** ** | **Gas  (MCF)** | ** ** |
|-------------------------------------------------|------------|------------------|------------|----------------|------------|
| **Proved  developed and undeveloped reserves:** |       |             |       |           |       |
| Balance at  March 1, 2006                  |       | 656,148          |       | 180,046        |       |
| Revisions of  previous estimates                |       | 16,681           |       | 34,400         |       |
| Production                                      |       | (18,741          | )          | (21,092        | )          |
| Balance at  February 28, 2007              |       | 654,088          |       | 193,354        |       |
| Revisions of  previous estimates                |       | 38,900           |       | 61,487         |       |
| Production                                      |       | (17,293          | )          | (20,843        | )          |
| Balance at  February 29, 2008              |       | 675,695          |       | 233,998        |       |

 
| **Proved  developed reserves:** |   |    |   |    |   |
|---------------------------------|--------|---------|--------|---------|--------|
| February 28,  2006         |   | 183,007 |   | 180,046 |   |
| February 28,  2007         |   | 144,447 |   | 193,354 |   |
| February 29,  2008         |   | 210,810 |   | 233,998 |   |

 

### **Standardized Measure of Discounted FutureNet Cash Flow and Changes Therein Relating to Proved Oil and Gas Reserves**

### ** **

The following table,which presents a standardized measure of discounted future cash flows andchanges therein relating to proved oil and gas reserves, is presented pursuantto SFAS No. 69.  In computing thisdata, assumptions other than those required by the Financial AccountingStandards Board could produce different results.  Accordingly, the data should not be construedas being representative of the fair market value of the Company’s proved oiland gas reserves.

 

Futurecash inflows were computed by applying existing contract and year-end prices ofoil and gas relating to the Company’s proved reserves to the estimated year-endquantities of those reserves.  Futureprice changes were considered only to the extent provided by contractualarrangements in existence at year end. Future development and production costs were computed by estimating theexpenditures to be incurred in developing and producing the proved oil and gasreserves at the end of the year, based on year-end costs.  Future income tax expenses were computed byapplying the year-end statutory tax rate, with consideration of future taxrates already legislated, to the future pre-tax net cash flows relating to theCompany’s proved oil and gas reserves. The standardized measure of discounted future cash flows at February 28(9),2008 and 2007, which represents the present value of estimated future cashflows using a discount rate of 10% a year, follows:

 

37

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| ** **                                                | ** ** | **2008**    | ** ** | **2007**   | ** ** |
|-----------------------------------------------------------|------------|-------------|------------|------------|------------|
| Future cash  inflows                                      |       | $           | 62,755,404 |       | $          | 36,682,533 |   |
| Future  production and development costs                  |       | (16,179,666 | )          | (9,500,025 | )          |
| Future income  tax expenses                               |       | (7,492,192  | )          | (4,013,740 | )          |
| Future net cash  flows                                    |       | 39,083,546  |       | 23,168,768 |       |
| 10% annual  discount for estimated timing of cash flows   |       | (12,773,406 | )          | (6,843,008 | )          |
| Standardized  measure of discounted future net cash flows |       | $           | 26,310,140 |       | $          | 16,325,760 |   |

 
| Beginning of  year                                                    |   | $          | 16,325,760 |       | $      | 18,497,380 |   |
|-----------------------------------------------------------------------|--------|------------|------------|------------|--------|------------|--------|
| Sales of oil and  gas, net of production costs                        |   | (636,492   | )          | (377,492   | )      |
| Extensions,  discoveries, and improved recoveries, less related costs |   | —     |       | 341,415    |   |
| Accretion of  discount                                                |   | 1,632,576  |       | 1,849,738  |   |
| Net change in  sales and transfer prices, net of production costs     |   | 10,159,660 |       | (2,138,320 | )      |
| Changes in  estimated future development costs                        |   | —     |       | —     |   |
| Net change in  income taxes                                           |   | (3,479,900 | )          | 802,848    |   |
| Changes in  production rates (timing and other)                       |   | 369,393    |       | (3,169,664 | )      |
| Revisions of  previous quantities                                     |   | 1,939,143  |       | 519,855    |   |
| End of year                                                           |   | $          | 26,310,140 |       | $      | 16,325,760 |   |

 

38

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

 

The Company did not change its independent registered public accountingfirm or have any disagreements with them on accounting and financial disclosureissues in the fiscal year ended February 29, 2008.

 
| **ITEM 8A.** | ** ** | **CONTROLS  AND PROCEDURES.** |
|--------------|------------|-------------------------------|

** **

**Disclosure Controls and Procedures**

** **

The term “disclosurecontrols and procedures” is defined in Rules 13a-15(e) and 15d-15(e) ofthe Securities Exchange Act of 1934 (the “Exchange Act”).  This term refers to the controls andprocedures of a company that are designed to ensure that information requiredto be disclosed by a company in the reports that it files or submits under theExchange Act is recorded, processed, summarized and reported within the timeperiods specified by the Commission. In designing and evaluating our disclosurecontrols and procedures, management recognized that disclosure controls andprocedures, no matter how well conceived and operated, can provide onlyreasonable assurance of achieving the desired control objectives, and wenecessarily are required to apply our judgment in evaluating the cost-benefitrelationship of possible disclosure controls and procedures.

 

Our management, namelyour Chief Executive and Financial Officer, has evaluated the effectiveness ofour disclosure controls and procedures as of the end of the period covered bythis annual report.  Based upon thatevaluation, our Chief Executive and Financial Officer has concluded that ourdisclosure controls and procedures were not effective as of the end of theperiod covered by this annual report because of certain deficiencies involvinginternal controls over financial reporting that constituted material weaknessesas discussed below.  The materialweaknesses identified resulted in the restatement of previously reported financialstatements for the period ended February 28, 2007 (see Item C in the Notesto the Financial Statements).

 

**Management’s Annual Report on Internal Controlover Financial Reporting**

 

Our management is responsible for establishing and maintaining adequateinternal control over financial reporting, as such term is defined in Rules 13a-15(f) and15d-15(f) of the Exchange Act.  Ourinternal control system was designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financialstatements for external purposes, in accordance with generally acceptedaccounting principles.  Because ofinherent limitations, a system of internal control over financial reporting maynot prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periodsare subject to the risk that controls may become inadequate due to change inconditions, or that the degree of compliance with the policies or proceduresmay deteriorate.

 

Our management, namely our Chief Executive and Financial Officer,conducted an evaluation of the effectiveness of our internal control overfinancial reporting using the criteria set forth by the Committee of SponsoringOrganizations of the Treadway Commission (COSO) in Internal Control-IntegratedFramework.  Based on its evaluation, ourmanagement concluded that there are material weaknesses in our internal controlover financial reporting.  A materialweakness is a deficiency, or a combination of control deficiencies, in internalcontrol over financial reporting such that there is a reasonable possibilitythat a material misstatement of the Company’s annual or interim financialstatements will not be prevented or detected on a timely basis.

 

The material weaknesses identified are:

 

1.               The Company does not have the requiredtechnical expertise to properly calculate complex oil and gas requireddisclosures for FAS 109 income taxes.  Asa result, during the audit of the Company’s February 29, 2008 financialstatements, the Company’s independent registered public accounting firmproposed the restatement of items related to deferred income taxes for thefiscal years ended February 28, 2007 and February 28, 2006.

 

2.               The Company’s control process forcalculating the Company’s asset retirement obligation under SFAS No. 143failed to detect that the Company was not depleting the related asset.  As a result, during the audit of the Company’sFebruary 29, 2008 financial statements, the Company’s independentregistered public accounting firm proposed the restatement of

 

39

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accumulated depletion and depreciation for oil and gas properties forthe fiscal years ended February 28, 2007 and February 28, 2006.

 

As a result of limited time since the discovery of the materialweakness related to FAS 109 calculations and disclosures, we have notimplemented a control to prevent the reoccurrence.  We have documented the control process andadded an employee checklist for calculating the Company’s asset retirementobligation under SFAS No. 143 and the related depletion.  At any time, if it appears that a control canbe implemented to mitigate such material weaknesses, the Company expects toimplement the control. This Annual Report does not include an attestationreport of the Company’s independent registered public accounting firm regardinginternal control over financial reporting. Management’s report was not subject to attestation by the Company’sindependent registered public accounting firm pursuant to temporary rules ofthe Securities and Exchange Commission that permit the Company to provide onlymanagement’s report in this annual report.

 

This report shall not be deemed to be filed for purposes of Section 18of the Securities Exchange Act of 1934, or otherwise subject to the liabilitiesof that section, and is not incorporated by reference into any filing of theCompany, whether made before or after the date hereof, regardless of anygeneral incorporation language in such filing.

 

**ITEM 8B.****                                           ****OTHER INFORMATION.**

 

None.

 

40

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**PART III**

** **

**ITEM 9.****    ****DIRECTORS AND EXECUTIVEOFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OFTHE EXCHANGE ACT.**

** **

**Directors and Executive Officers**

** **

The following table provides certain information pertaining to theCompany’s directors and executive officers:

 
| **Name  and Age**         | ** ** | **Business Experience  and Current Positions  With Company**                                                                                                                                                              | ** ** | **Year First  Became Director** |
|---------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------|
| ** **                | ** ** | ** **                                                                                                                                                                                                                | ** ** | ** **                      |
| Sandra Pautsky —  66 |       | Chairperson of  the Board of Directors of the Company since July 1998, President and  Chief Executive Officer since June 1998 and Secretary-Treasurer since  May 1992                                      |       | 1986                            |
| Danny Croker —  58   |       | Member of the  Board of Directors, Vice President and Assistant Secretary - Treasurer of the  Company since May 1992 and owner of Exlco, Inc., oil and gas  operations                                          |       | 1992                            |
| Randy Camp — 55      |       | Member of the  Board of Directors, partner in the firm of Moore, Camp, Phillips &  Co., L.L.P. (or its predecessor firms), Certified Public Accountants, Wichita  Falls, Texas for more than the past five years |       | 1992                            |

 

Mr. Croker is Ms. Pautsky’s stepbrother.  There are no other family relationships amongany of the directors or executive officers of the Company.  Ms. Pautsky may be considered to be thecontrolling  stockholder of the Companyby virtue of her beneficial ownership of approximately 55.88% of the Company’soutstanding common stock and her positions with the Company.  See “Item 11.-Security Ownership of CertainBeneficial Owners and Management and Related Stockholder Matters.”  Each of the directors and executive officersholds office from the date of his or her election for a period of one year oruntil his or her successor has been elected. None of the directors or executive officers is involved in any legalproceedings in which he or she is a party adverse or has a material interestadverse to the Company.  None of thedirectors or executive officers has been involved in any legal proceedingswhich are material to an evaluation of his or her ability or integrity.

 

**Section 16(a) Beneficial OwnershipReporting Compliance**

** **

Section 16(a) of the Exchange Act requires the Company’sexecutive officers, directors and persons who beneficially own more than 10% ofthe Company’s common stock to file with the Commission initial reports ofbeneficial ownership and reports of changes in beneficial ownership of theCompany’s common stock.  The rules promulgatedby the Commission under Section 16(a) of the Exchange Act requirethose persons to furnish the Company with copies of all reports filed with theCommission pursuant to Section 16(a).

 

Based solely on the Company’s review of copies of forms it received andon written representations from the foregoing persons, the Company believesthat during the fiscal year ended February 29, 2008 all filing requirementsunder Section 16(a) of the Exchange Act were met on a timely basis bysuch persons.

 

**Audit Committee**

 

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

 

41

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** **

**Audit Committee Financial Expert**

** **

Although the Company does not have a separately-designated auditcommittee, a member of the Company’s Board of Directors, Mr. Camp, meetsthe requirements to be considered an audit committee financial expert and isindependent as defined in Rule 4200(a)(15) of the National Association ofSecurities Dealers, Inc. listing standards.

 

**Nomination Procedures**

** **

The Company has not made any changes to the procedures by whichsecurity holders may recommend nominees to the Company’s Board of Directorssince the Company last provided disclosure to security holders in response tothe requirements of Item 7 of Schedule 14A of the Exchange Act.

 

**Code of Ethics**

** **

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

** **

**ITEM 10.****                                             ****EXECUTIVE COMPENSATION.**

 

The following table sets forth information regarding compensation forservices in all capacities to the Company for each of the last three fiscalyears of the Company’s Chief Executive Officer. No other executive officer of the Company received total annual salaryand bonus exceeding $100,000 in any of such years.

 
| ** **                                 | ** ** | **Summary Compensation Table** | ** ** |
|--------------------------------------------|------------|------------------------------------------|------------|
| **Name and  Principal Position** | ** ** | **Year**                                 | ** ** | **Salary** | ** ** | **Bonus** | ** ** | **All Other  Compensation(1)** | ** ** | **Total** | ** ** |
| ** **                                 | ** ** | ** **                               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Sandra Pautsky                             |       | 2008                                     |       | $ | 125,000 |   | $ | 10,417 |   | $ | 163 |   | $ | 135,580 |   |
| President and                              |       | 2007                                     |       | 101,667 |   | 10,417 |   | 174 |   | $ | 112,258 |   |
| Chief Executive  Officer                   |       | 2006                                     |       | 85,000 |   | 7,083 |   | 204 |   | $ | 92,287 |   |
|                                            |            |                                          |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

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

 

The Company does not have employment agreements with any of itsexecutive officers, has no material bonus, profit-sharing or stock option plansor pension or retirement benefits.  TheCompany has a group health insurance plan which it makes available to allemployees of the Company and their family members on a non-discriminatorybasis.  Pursuant to such plan, $25,000 inlife insurance benefits are provided for all employees of the Company, with theexception of Ms. Pautsky who would receive a benefit of $18,750 asbenefits decrease as certain age levels are reached.

 

Executive officers of the Company who are also directors do not receiveany fee or remuneration for services as members of the Board of Directors.  Mr. Camp, the only director who is notan employee of the Company, received an annual fee of $3,000 for serving as adirector in the fiscal year ended February 29, 2008.

 

The following table setsforth information concerning compensation of our director who is not also anexecutive officer for fiscal 2008:

 
| Director  Compensation Table as of February 29, 2008 | ** ** |
|-----------------------------------------------------------|------------|
| ** **                                                | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Name**                                                  | ** ** | **Fees Earned or Paid in Cash** | ** ** | **Total** | ** ** |
| Randy Camp                                           |       | $ |  3,000 |   | $ |  3,000 |   |
|                                                           |            |  |  |  |  |  |  |

 

42

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

 

The following table shows the beneficial ownership of the Company’scommon stock as of May 8, 2008 by:  (i) eachperson known by the management of the Company to own more than 5% of theCompany’s outstanding common stock; (ii) each executive officer anddirector; and (iii) the executive officers and directors of the Company asa group.

 
| **Name and Address  of  Beneficial Owner**  | ** ** | **Amount  Beneficially  Owned** | ** ** | **Percent  of  Class** | ** ** |
|------------------------------------------------------------|------------|---------------------------------|------------|------------------------|------------|
| Sandra Pautsky                                        |       | 2,380,912                       | (1)        | 55.88                  | %          |
| 4613 Jacksboro Highway                           | ** ** | ** **                      | ** ** | ** **             | ** ** |
| Wichita Falls, Texas 76302                  |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| Flem Noel  Pautsky, Jr. Trust                         |       | 908,247                         |       | 21.31                  |       |
| 4613 Jacksboro  Highway                                    |       |                            |       |                   |       |
| Wichita Falls,  Texas 76302                                |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| West Coast Asset  Management                               |       | 648,614                         |       | 15.22                  |       |
| 2151 Alessandro  Drive                                     |       |                            |       |                   |       |
| Ventura, CA  93001                                         |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| Noel Pautsky  Trust                                        |       | 536,062                         |       | 12.58                  |       |
| 4613 Jacksboro  Highway                                    |       |                            |       |                   |       |
| Wichita Falls,  Texas 76302                                |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| Danny Croker                                               |       | —                          |       | —                 |       |
| 4613 Jacksboro  Highway                                    |       |                            |       |                   |       |
| Wichita Falls,  Texas 76302                                |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| Randy Camp                                                 |       | 100                             |       | *                      |       |
| 1400 Eleventh  St.                                         |       |                            |       |                   |       |
| Wichita Falls,  Texas 76301                                |       |                            |       |                   |       |
|                                                       |       |                            |       |                   |       |
| Executive  officers and directors as a group (two persons) |       | 2,381,012                       | (2)        | 55.88                  | %          |

 

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| *                                                                                                   |   | Represents less  than 1% of outstanding common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (1)                                                                                                 |   | Includes:  (i) 681,635 shares owned directly by Ms. Pautsky; (ii) 536,062  owned by the Noel Pautsky Trust of which Ms. Pautsky is the Trustee and  one of four beneficiaries; (iii) 140,464 shares owned by the Noel  Pautsky Marital Trust, of which Ms. Pautsky is the Trustee;  (iv) 908,247 shares owned by the Flem Noel Pautsky, Jr. Trust, of  which Ms. Pautsky is the Trustee and, (v) 114,504 shares owned by  the Jimmy Pautsky Trust, of which Ms. Pautsky is the Trustee.  Ms. Pautsky disclaims any beneficial ownership of the shares owned by  the Noel Pautsky Trust in excess of 125,000 shares. Ms. Pautsky also  disclaims any beneficial ownership of the shares owned by the Flem Noel  Pautsky, Jr. Trust, the Noel Pautsky Marital Trust and the Jimmy Pautsky  Trust. |
|                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| (2)                                                                                                 |   | Includes all  shares beneficially owned by Ms. Pautsky and Mr. Camp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| The Company does  not have any securities authorized for issuance under equity compensation  plans. |

 

43

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**ITEM 12.****                                             ****CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.**

 

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

 

Ms. Pautsky is the trustee of the Flem Noel Pautsky, Jr.Trust, the Noel Pautsky Trust, the Noel Pautsky Marital Trust and the JimmyPautsky Trust.  Ms. Pautsky and theFlem Noel Pautsky, Jr. Trust each own undivided working interests incertain of the oil and gas leases in the North Texas area in which the Companyalso owns an undivided working interest and of which the Company serves as theoperator.  In accordance with standardoperating procedures, the Company submits joint interest billings to suchrelated parties and the other unaffiliated working interest owners in theproperties which the Company operates on a monthly basis for their respectivepro-rata shares of the costs incurred on the properties and the Company’s feefor serving as operator for the preceding month.  In addition, Exlco, Inc. (“Exlco”), 100%of whose outstanding stock is owned by Mr. Croker, an executive officerand director, is allocated and bears a portion of the Company’s office rent andsupplies.  Ms. Pautsky, the FlemNoel Pautsky, Jr. Trust, the Noel Pautsky Marital Trust, the Jimmy PautskyTrust and Shawn Price (Ms. Pautsky’s son) are allocated and bear a portionof the Company’s accounting expense.

 

At February 28, 2006, Ms. Pautsky, the Flem Noel Pautsky, Jr.Trust, and Exlco had accounts payable to the Company, representing their thenunpaid joint interest and other billings, aggregating $2,385. During the twofiscal years ended February 29, 2008, the Company submitted monthly jointinterest and other billings to such three parties, the Noel Pautsky Estate andthe three new entities listed above (the Noel Pautsky Marital Trust, the JimmyPautsky Trust and Shawn Price) totaling $58,426, and such parties paid theCompany an aggregate of $58,863 with respect to such joint interest and otherbillings, leaving a balance of $1,948 owed to the Company at February 29,2008.

 

**ITEM 13.****                                             ****EXHIBITS.**

 
| **Exhibit No.** | ** ** | **Document  Description**                                                                                                                                                                                                                                                                                                                 |
|----------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)(a)              |       | Articles of  Incorporation of the Company dated May 9, 1969 filed as  Exhibit A(1) to the Company’s Form 10 and incorporated herein  by reference.                                                                                                                                                               |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 3(i)(b)              |       | Amendment to Articles  of Incorporation of the Company dated October 22, 1982 filed as  Exhibit 3.(I)(B) Form 10-KSB for the period ending  February 28, 2005 and incorporated herein by reference.                                                                                                                   |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 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                   |       | Contract to Buy and  Sell Real Estate and Counterproposal related thereto, dated as of  October 18, 2006, by and among First City Realty Development Corp. and  Oakridge Energy, Inc. (Exhibit 2.1 to Oakridge Energy, Inc.’s  Form 8-K dated October 18, 2006 and incorporated herein by  reference). |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 14                   |       | Code of Ethical Conduct  of Senior Officers filed as Exhibit 14 to the Company’s Form 10-KSB  for the period ending February 28, 2005 and incorporated herein by  reference.                                                                                                                                          |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 31(i)                |       | Certifications of Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 (filed herewith).                                                                                                                                                                                                              |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 31(ii)               |       | Certifications of  Principal Financial Officer Pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                          |
|                 |       |                                                                                                                                                                                                                                                                                                                                      |
| 32                   |       | Certifications of Chief  Executive Officer and Principal Financial Officer Pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                              |

 

44

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**ITEM 14.****                                             ****PRINCIPAL ACCOUNTANTFEES AND SERVICES.**

 

The independent registered public accounting firm of Whitley Penn LLP (“WhitleyPenn”) audited the financial statements of the Company for the fiscal yearended February 29, 2008.  WhitleyPenn has audited the Company’s financial statements for each of the nine fiscalyears ended February 29, 2008.

 

**Audit Fees**

** **

Fees paid to Whitley Penn for the fiscal year 2007 and 2008 audits ofthe Company’s financial statements and the reviews of quarterly reports on Form 10-QSBduring such years were $47,827 and $51,347, respectively.

 

**Audit-Related Fees**

** **

The Company did not incur any audit-related fees from Whitley Pennduring the fiscal year ended February 28(9), 2007 or 2008.

 

**Tax Fees**

** **

Fees paid to Whitley Penn by the Company for preparation of the Company’sfederal income tax return for the fiscal year ended February 28, 2007 andfiscal year ended February 29, 2008 were $11,685 and $11,950,respectively.

** **

**All Other Fees**

** **

Fees paid to Whitley Penn by the Company for consulting servicesrelated to its Durango Property for the fiscal year ended February 28,2007 and fiscal year ended February 29, 2008 were $5,200 and $2,724respectively.

 

**Pre-Approval Policies and Procedures**

** **

As indicated under Item 9, the Company does not have aseparately-designated audit committee and the Board of Directors of the Companyacts in that capacity.  Prior to theCompany’s engagement of Whitley Penn to render the audit and non-audit servicesset forth above, such engagement was approved by the Company’s Board ofDirectors.

 

45

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**SIGNATURES**

 

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

 

 

OAKRIDGE ENERGY, INC.

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

 

DATE: June 13, 2008

 

In accordance with theExchange Act, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.

 
| By:    | /s/  Sandra Pautsky              |   | By:    | /s/  Danny Croker                      |   |
|--------|---------------------------------------|--------|--------|---------------------------------------------|--------|
|   | Sandra Pautsky,  President,           |   |   | Danny Croker, Director,  Vice President and |   |
|   | Chief Executive Officer  and Director |   |   | Assistant Secretary  Treasurer              |   |

 

 
| DATE: June 13, 2008 |   | DATE: June 13, 2008 |
|---------------------|--------|---------------------|

 

 
| By:    | /s/  Randy Camp |   |
|--------|----------------------|--------|
|   | Randy Camp, Director |
|        |                      |        |  |

 

DATE: June 13, 2008

 

46

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**EXHIBITS.**

 
| **Exhibit No.** | ** ** | **Document  Description**                                                                                                                                                                                                                                                                                                                  |
|----------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3(i)(a)              |       | Articles of  Incorporation of the Company dated May 9, 1969 filed as  Exhibit A(1) to the Company’s Form 10 and incorporated herein  by reference.                                                                                                                                                                |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 3(i)(b)              |       | Amendment to Articles  of Incorporation of the Company dated October 22, 1982 filed as  Exhibit 3.(I)(B) Form 10-KSB for the period ending February 28,  2005 and incorporated herein by reference.                                                                                                               |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 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                   |       | Contract to Buy and  Sell Real Estate and Counterproposal related thereto, dated as of  October 18, 2006, by and among First City Realty Development Corp. and  Oakridge Energy, Inc. (Exhibit 2.1 to Oakridge Energy, Inc.’s  Form 8-K dated October 18, 2006, and incorporated herein by  reference). |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 14                   |       | Code of Ethical Conduct  of Senior Officers filed as Exhibit 14 to the Company’s Form 10-KSB  for the period ending February 28, 2005 and incorporated herein by  reference.                                                                                                                                           |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 31(i)                |       | Certifications of Chief  Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of  2002 (filed herewith).                                                                                                                                                                                                               |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 31(ii)               |       | Certifications of  Principal Financial Officer Pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                           |
|                 |       |                                                                                                                                                                                                                                                                                                                                       |
| 32                   |       | Certifications of Chief  Executive Officer and Principal Financial Officer Pursuant to Section 906  of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                               |

 

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