**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-QSB**




(Mark
      One)




x
      QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      quarter ended **December
      31, 2006**




OR




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 **000-51699**




**CROSSPOINT
      ENERGY COMPANY** ****


(Exact
      name of registrant as specified in its charter)




**Nevada**
            **98-0434381**State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization
            Identification
                No.)




**2801
      Network Blvd., Suite 810, Frisco, Texas 75034**


(Address
      of principal executive offices)




**(972)
      818-1100** ****


Registrant’s
      telephone number, including area code




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




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
o
      No x




Number
      of
      shares outstanding of the registrant’s class of common stock as of February 9,
      2007 was 17,919,518




Transitional
      Small Business Disclosure Format (Check one): Yes o No x












**ITEM
      1. FINANCIAL STATEMENTS**




CrossPoint
      Energy
      Company


**Consolidated
      Balance Sheets** **(Unaudited)**




**December
                31,  2006**
            
            **September
                30, 2006****ASSETS****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            3,268,576
            
            
            6,073,298Restricted
                cash
            
            
            772,398
            
            
            385,521Accounts
                receivable
            
            
            640,321
            
            
            634,010Oil
                and gas revenue receivable
            
            
            268,247
            
            
            273,764Prepaid
                expenses
            
            
            491,616
            
            
            129,791Deferred
                financing costs
            
            
            193,654
            
            
            260,621Total
                current assets
            
            $
            5,634,812
            
            
            7,757,005**PROPERTY
                & EQUIPMENT**Oil
                & gas property and equipment, successful efforts method
            
            
            14,589,736
            
            
            12,722,224Less
                accumulated impairment, depletion, depreciation & amortization
            
            
            (5,544,104
            )
            
            (4,952,894
            )Net
                oil & gas properties
            
            
            9,045,632
            
            
            7,769,330Other
                property and equipment, net
            
            
            117,529
            
            
            110,831**OTHER
                ASSETS**
            
            
            63,085
            
            
            30,860**Total
                assets**
            
            **$**
            **14,861,058**
            
            
            **15,668,026****LIABILITIES
                AND STOCKHOLDERS' / MEMBERS' DEFICIT****CURRENT
                LIABILITIES:**Accounts
                payable
            
            
            2,318,863
            
            
            1,751,148Notes
                payable, net of discount
            
            
            4,667,252
            
            
            4,101,439Oil
                and gas revenues payable
            
            
            291,680
            
            
            326,859Oil
                and gas joint interest prepayments
            
            
            281,826
            
            
            556,598Interest
                payable
            
            
            422,844
            
            
            234,603Other
                current liabilities
            
            
            19,518
            
            
            31,444Total
                current liabilities
            
            $
            8,001,983
            
            
            7,002,091**Convertible
                debt, net of discount**
            
            
            7,929,381
            
            
            7,838,277**Asset
                retirement obligation**
            
            
            172,492
            
            
            150,136**Other
                long-term liabilities**
            
            
            56,927
            
            
            84,058**Total
                liabilities**
            
            **$**
            **16,160,783**
            
            
            **15,074,562****COMMITMENTS
                AND CONTINGENCIES (Note 6)****Shares
                subject to redemption, net of offering cost**
            
            $
            -
            
            $
            4,022,354**MEMBER'S
                DEFICIT**Member's
                Equity
            
            $
            -
            
            $
            6,290,872**STOCKHOLDERS'
                DEFICIT:**Capital
                stock
            
            $
            1,780Capital
                in excess of par value
            
            
            10,083,673Accumulated
                deficit
            
            
            (11,385,178
            )
            
            (9,719,762
            )Total
                Stockholders' / Members' deficit
            
            
            (1,299,725
            )
            
            (3,428,890
            )**Total
                liabilities and Stockholders’ / Members' deficit**
            
            **$**
            **14,861,058**
            
            
            **15,668,026**




*See
      accompanying notes to these financial
      statements.*


2


**CrossPoint
        Energy Company**
 **Consolidated
        Statement of Operations** **(Unaudited)**
  **Three
                  Months Ended December 31,****2006**
              
              **2005****OPERATING
                  REVENUES:**Crude
                  oil & natural gas sales
              
              $
              514,972
              
              $
              127,725Contract
                  services revenue
              
              
              278,670
              
              
              105,195Total
                  operating revenues
              
              
              793,642
              
              
              232,920**OPERATING
                  EXPENSES:**Lease
                  operating expenses
              
              
              112,502
              
              
              92,254Production
                  and ad valorem taxes
              
              
              34,527
              
              
              7,674Dry
                  hole & abandonment expenses
              
              
              515,450
              
              
              -Depreciation,
                  depletion and amortization
              
              
              605,791
              
              
              31,163Accretion
                  of asset retirement obligations
              
              
              6,429
              
              
              -Contract
                  services expense
              
              
              163,053
              
              
              61,442General
                  and administrative expenses, including stock compensation expense
                  reversal
                  of $227,779 and $0 in 2006 & 2005, respectively
              
              
              629,479
              
              
              601,359Total
                  operating expenses
              
              
              2,067,231
              
              
              793,892**OPERATING
                  LOSS**
              
              $
              (1,273,589
              )
              $
              (560,972
              )**OTHER
                  INCOME & EXPENSE:**Interest
                  income
              
              
              54,570
              
              
              -Interest
                  expense
              
              
              (326,725
              )
              
              (16,460
              )Merger
                  expense
              
              
              (119,672
              )
              
              -Total
                  other expenses
              
              
              (391,827
              )
              
              (16,460
              )**NET
                  LOSS**
              
              $
              (1,665,416
              )
              $
              (577,432
              )**Basic
                  and Diluted Net Loss per share**
              
              **$**
              **(0.10**
              **)**
              **$**
              **(0.06**
              **)****Weighted
                  Average Number of Shares Outstanding**
              
              
              **16,944,372**
              
              
              **9,971,613**




*See
      accompanying notes to these financial
      statements.*


3


**CrossPoint
        Energy Company**
 **Consolidated
        Statement of Shareholders' Deficit** **(Unaudited)**


**Common**
                **shares**
              
              **Member's**
                **Equity**
              
              **Capital**
                **Stock**
              
              **Capital
                  in**
                **Excess
                  of Par**
              
              **Accumulated**
                **Deficit**
              
              **Total****Balance,
                  September 30, 2006**
              
              
              **11,400,000**
              
              **$**
              **6,290,872**
              
              **$**
              **-**
              
              **$**
              **-**
              
              **$**
              **(9,719,762**
              **)**
              **$**
              **(3,428,890**
              **)****Merger
                  Adjustments:**Reclass
                  membership unts to common share ownership
              
              
              
              
              $
              (6,290,872
              )
              
              1,140
              
              
              6,289,732
              
              
              
              
              
              -Common
                  stock acquired in merger
              
              
              1,372,553
              
              
              
              
              
              137
              
              
              (137
              )
              
              -
              
              
              -**Other:**Reclass
                  shares subject to redemption to common
              
              
              5,051,667
              
              
              
              
              
              505
              
              
              4,021,849
              
              
              -
              
              
              4,022,354Stock
                  compensation expense
              
              
              (17,604
              )
              
              
              
              
              (2
              )
              
              9,994
              
              
              -
              
              
              9,992Forfieited
                  options/warrants
              
              
              
              
              
              
              
              
              
              
              
              (237,765
              )
              
              -
              
              
              (237,766
              )Net
                  loss
              
              
              
              
              
              
              
              
              -
              
              
              
              
              
              (1,665,416
              )
              
              (1,665,416
              )**Balance,
                  December 31, 2006**
              
              
              **17,806,616**
              
              **$**
              **-**
              
              **$**
              **1,780**
              
              **$**
              **10,083,673**
              
              **$**
              **(11,385,178**
              **)**
              **$**
              **(1,299,725**
              **)**





*See
      accompanying notes to these financial
      statements.*




4




**CrossPoint
        Energy Company** **Consolidated
          Statement of Cash Flows**
 **(Unaudited)**


Three
                  Months ended
                December
                  31,**2006**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (1,665,416
              )
              $
              (577,432
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depletion,
                  depreciation and amortiztion
              
              
              605,791
              
              
              31,163Accretion
                  of asset retirement obligations
              
              
              6,429
              
              
              -Equity
                  issued in lieu of services
              
              
              
              
              
              30,000Debt
                  received in lieu of services
              
              
              -
              
              
              -Amortization
                  of deferred financing costs
              
              
              170,223
              
              
              14,551Stock
                  compensation
              
              
              (227,779
              )
              
              -Deferred
                  rent amortization
              
              
              (37,152
              )
              
              40,055Other
                  non-cash items
              
              
              -
              
              
              (2,990
              )Changes
                  in assets and liabilities:Restricted
                  cash
              
              
              (386,877
              )
              
              (19,925
              )Accounts
                  receivable
              
              
              (61,458
              )
              
              (350,717
              )Prepaid
                  expenses
              
              
              (301,162
              )
              
              256,559Other
                  assets
              
              
              (32,224
              )
              
              -Accounts
                  payable
              
              
              532,540
              
              
              276,003Oil
                  and gas joint interest prepayments
              
              
              (274,772
              )
              
              -Interest
                  payable
              
              
              188,241
              
              
              14,211**Net
                  cash used in operating activities**
              
              **$**
              **(1,483,616**
              **)**
              **$**
              **(288,522**
              **)****CASH
                  FLOWS FROM INVESTING ACTIVITIES -**Expenditures
                  for oil & gas property and equipment
              
              $
              (1,809,754
              )
              $
              (7,318,468
              )Purchases
                  of other fixed assets
              
              
              (21,277
              )
              
              (40,189
              )**Net
                  cash used in investing activities**
              
              **$**
              **(1,831,031**
              **)**
              **$**
              **(7,358,657**
              **)****CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from issuance of equity before the private placement
              
              $
              -
              
              $
              265,000Proceeds
                  from notes payable
              
              
              583,333
              
              
              6,744,330Repayment
                  of notes payable
              
              
              (73,408
              )
              
              27,405**Net
                  cash provided by financing activities**
              
              **$**
              **509,925**
              
              **$**
              **7,036,735****NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              **$**
              **(2,804,722**
              **)**
              **$**
              **(610,444**
              **)****CASH
                  AND CASH EQUIVALENTS**,
                  beginning of period
              
              **$**
              **6,073,298**
              
              **$**
              **845,792****CASH
                  AND CASH EQUIVALENTS**,
                  end of period
              
              **$**
              **3,268,576**
              
              **$**
              **235,348****SUPPLEMENTAL
                  DISCLOSURES of CASH FLOW INFORMATION**Cash
                  paid for interest
              
              $
              158,625
              
              $
              19,994
  *See accompanying notes to these financial
        statements.*


5




**CrossPoint
      Energy Company**


*Notes
        to Unaudited Financial Statements*




**1.
      Basis of Presentation and use of estimates**





The
      interim consolidated financial statements of CrossPoint Energy Company are
      unaudited and, in the opinion of management, contain adjustments (consisting
      primarily of normal recurring accruals) necessary for a fair statement of the
      results for the interim periods presented. Results for interim periods are
      not
      necessarily indicative of results to be expected for a full year or for
      previously reported years due, in part, to the volatility in prices for crude
      oil and natural gas, the success of drilling and completions of wells, product
      demand, market competition or interruption in production.. These consolidated
      interim financial statements should be read in conjunction with the audited
      consolidated financial statements and notes thereto included in the Company’s
      Form SB-2 dated January 26, 2007.





In
      preparing the accompanying financial statements, management has made certain
      estimates and assumptions that affect reported amounts in the financial
      statements and disclosure of contingencies. Actual results may differ from
      those
      estimates. Significant assumptions are required in the valuation of proved
      oil
      and gas reserves, which may affect the amount at which oil and gas properties
      are recorded, most significant is the estimate of oil and gas reserves and
      their
      value. These estimates may be revised in the future, and such revisions could
      be
      material.





***Organization
      and business***





CrossPoint
      Energy Company was incorporated in the State of Nevada on August 4, 2004 as
      "Electrum Mining Limited."  On November 27, 2006 we completed a merger
      between one of our subsidiaries, CrossPoint Acquisition, LLC, and CrossPoint
      Energy, LLC ("CrossPoint LLC") (the "Merger").  As a result of the Merger
      we changed our business to that of CrossPoint LLC's prior to the
      merger.




From
      inception until the merger with CrossPoint LLC,
      Electrum's business was as a start-up, exploration stage corporation, engaged
      in
      the search for mineral deposits or reserves which are not in either the
      development or production stage.  CrossPoint LLC was formed as a limited
      liability company under the laws of the State of Texas in November, 2004 and
      commenced operations in the first calendar quarter of 2005.  Prior to the
      Merger, CrossPoint LLC had two subsidiaries, CrossPoint Energy Holdings, LLC
      which was formed in August 2005 to hold CrossPoint LLC's oil and gas
      properties and Dallas Operating Corp. which was incorporated in 1993 and is
      an
      established service company, engaged in oil and gas operations for the Company
      and third parties, strategically to add to the Company's cashflow and/or reserve
      base.  As a result of the Merger we acquired both of these
      subsidiaries.




Subsequent
      to the Merger, we changed our name to
      "CrossPoint Energy Company" to reflect the change in our business to a petroleum
      and natural gas exploration, development and production company.




On
      June
      30, 2006, CrossPoint Energy, LLC (“CrossPoint LLC”) completed a private
      placement with gross proceeds of $15 million, for issuance of equity,
      convertible debt and warrant units. The placement included performance
      obligations including CrossPoint LLC becoming a publicly-traded company. On
      July
      7, 2006, CrossPoint LLC entered into an Agreement and Plan of Merger with
      Electrum Mining Limited, a Nevada corporation involved in the mining
      business.





Effective
      November 27, 2006, CrossPoint LLC merged with a subsidiary of Electrum Mining
      Limited (“Electrum”), a publicly-traded company, and CrossPoint LLC was
      dissolved. Pursuant to the merger, Electrum changed its name to CrossPoint
      Energy Company and acquired 100% of the outstanding membership interests in
      CrossPoint LLC. CrossPoint Energy Company issued, as consideration to the
      security holders of the CrossPoint LLC, aggregate consideration of 16,451,667
      shares of common stock, debt convertible into 5,051,667 shares of common stock,
      and warrants to acquire 2,525,833 shares of common stock. In accordance with
      the
      merger agreement, an additional 1,372,553 shares (6 percent of the issued and
      convertible shares) were issued to Electrum’s majority shareholder.





The
      merger was accounted for as a reverse merger, with CrossPoint Energy Company
      as
      the surviving public reporting entity. CrossPoint LLC, which previously had
      reported on a calendar year, adopted Electrum’s fiscal year end of September
      30 th .





All
      references to the Company refer to CrossPoint Energy Company or its predecessor
      CrossPoint Energy, LLC.




***Operations***





While
      the
      Company is not a development stage enterprise, the Company has a limited
      operating history upon which an evaluation of its business prospects can be
      based. The risks, expense, and difficulties encountered by early stage companies
      must be considered when evaluating the Company’s business prospects.




6




**CrossPoint
        Energy Company**
 *Notes
          to Unaudited Financial Statements*




The
      Company recorded a net loss of $1,665,416 for the quarter ended December 31,
      2006 and had an accumulated deficit at December 31, 2006 of $11,385,178. From
      the beginning of the Company’s operations in early 2005, the Company has
      expended considerable capital required in the initial stages of an oil and
      gas
      company with the acquisition of leases, prospects, seismic data and
      underdeveloped producing properties.





The
      Company’s development plan of these areas is strategically detailed for building
      reserves and obtaining cash flow from production. The front-end costs for
      acquiring and drilling the early phases of each of these projects, risks for
      execution, price volatility, and cost of capital and market conditions are
      all
      considered collectively.





The
      Company expects to make significant capital expenditures in the foreseeable
      future drilling existing proved and undeveloped reserves and the acquisition
      of
      other producing oil & gas properties. Management believes they will be
      successful in obtaining adequate sources of cash to fund its anticipated capital
      expenditures through the end of 2007 and to follow through with plans for
      continued investments in oil and gas properties.





The
      Company’s success, in part, depends on its ability to generate additional
      financing and on its ability to effectively manage growth and develop proven
      reserves. It is anticipated that these exploration activities together with
      others that may be entered into may impose financial requirements which may
      exceed the existing working capital of the Company. Management may raise
      additional equity and/or debt capital. However, if additional financing is
      not
      available, the Company may be compelled to reduce the scope of its business
      activities. If the Company is unable to fund planned expenditures from existing
      cash flow, it may be necessary to sell all or a portion of selected assets,
      effect a combination with an existing company in need of our resources and/or
      reduce general and administrative expenses.





**2.
      Summary of Significant Accounting Policies**




**Accounting
      for Merger Transaction**




In
      connection with the June 30, 2006 private placement, CrossPoint LLC was required
      to merge into a public company within 120 days of the receipt of approximately
      $15 million or incur penalties equal to a fixed percentage of the proceeds.
      The
      penalties escalated every 30 day period thereafter until 180 days. If the merger
      had not closed by 180 days following receipt of the private placement proceeds,
      the company could be required to repurchase the non debt portion of the private
      placement proceeds. As of September 30, 2006, the merger had not taken place.
      Thus the gross proceeds attributable to common stock shares, less the allocation
      of issuance costs to shares subject to redemption of $2,292,229, were recorded
      outside of permanent equity at September 30, 2006. On November 27, 2006,
      CrossPoint LLC merged into a subsidiary of Electrum Mining Limited and the
      common shares value of $6,314,583 was moved to permanent equity as $1,140 to
      capital stock and $6,289,732 to capital in excess of par value.





The
      costs
      totalling $119,672 in the quarter ended December 31, 2006 that were attributable
      to the merger were expensed as required in a reverse merger.





**Income
      taxes**




CrossPoint
      LLC had elected to be taxed as a partnership for federal income tax purposes
      and, accordingly, items of income and loss were reported to the members
      according to their ownership percentage. One of the Company’s subsidiaries, DOC,
      is a registered C corporation. However, it is not expected to have a tax
      liability and there are no material differences in the book and tax basis of
      assets and liabilities. Therefore, no provision for income taxes was necessary
      before November 27, 2006 and due to net operating losses there would be no
      material provision at December 31, 2006.




7




**CrossPoint
        Energy Company**
 *Notes
          to Unaudited Financial Statements*




Certain
      transactions of the Company may be subject to accounting methods for income
      tax
      purposes which differ from the accounting methods used in preparing these
      financial statements in accordance with accounting principles generally accepted
      in the United States of America. Accordingly, the net income or loss and the
      resulting balances in members equity reported for income tax purposes may differ
      from the balances reported for these same items in the accompanying financial
      statements.




Recent Accounting Pronouncements




SAB 108


In September, 2006, the Securities and Exchange Commission
      ("SEC") issued Staff Accounting Bulletin No. 108 (SAB 108) which provides
      interpretive guidance on how the effects of the carryover or reversal of prior
      year misstatements should be considered in quantifying a current year
      misstatement.  SAB 108 is effective for fiscal years ending after November
      15, 2006 and early application is encouraged for any interim period of the
      first
      fiscal year ending after that date.  The Company will adopt SAB 108 in
      the 1st quarter of its fiscal 2007 and is currently evaluating the impact
      of adopting SAB 108 on its financial statements.








**3.
      Asset Retirement Obligation**





The
      following table shows changes in the Company’s asset retirement obligations for
      the three month period ended December 31, 2006:





Asset
                retirement obligation at September 30, 2006
            
            $
            150,136Asset
                retirement accretion expense
            
            
            6,429Additions
            
            
            15,927Asset
                retirement obligation at December 31, 2006
            
            $
            172,492




**4.** **Private
      Placement**





On
      June
      30, 2006, the Company entered into a Securities Purchase Agreement for gross
      proceeds of $15,155,000. For every $3.00, the Company issued one membership
      common share at $1.25 per share, one warrant to purchase 0.25 membership common
      units in the Company at an exercise price of $1.95, and one convertible note
      in
      a principal amount of $1.75 per share. The proceeds were allocated as
      follows:





#
                Shares
            
            Price
                per Share
            
            ProceedsShares
                subject to redemption
            
            
            5,051,667
            
            $
            1.25
            
            $
            6,314,583Convertible
                debt
            
            
            5,051,667
            
            $
            1.75
            
            
            8,840,417Warrants
            
            
            
            
            
            
            
            
            1,874,133Less
                costs of issuance
            
            
            
            
            
            
            
            
            (3,385,473
            )Total
                net proceeds
            
            
            
            
            
            
            
            $
            13,643,660





***Shares
      subject to redemption***




The
      merger was completed on November 27, 2006, and the shares subject to redemption
      were reclassified to capital stock and capital in excess of par value for the
      proceeds of $6,314,583 less the issuance costs of $2,292,229.





***Convertible
      debt***




Convertible
      debt of $7,929,381, net of the unamortized discount of $911,036, was outstanding
      as of December 31, 2006.




**5.
      Note payable**





***Credit
      Agreement***




On
      September 2, 2005, the Company entered into a $40,000,000 credit agreement
      (the
“Credit Agreement”) with two participating lenders for the purpose of funding
      the Company’s development projects. The term of the agreement is three years.
      The Credit Agreement is facilitated by an Administrative Agent who approves
      the
      amounts and purposes for the advances under the Credit Agreement, referred
      to as
      the commitment. The Company’s oil and gas properties collateralize the Credit
      Agreement. According to the Credit Agreement, all of the Company’s production
      receipts have been assigned to a lock box administered by the Administrative
      Agent.




8




**CrossPoint
        Energy Company**
 *Notes
          to Unaudited Financial Statements*




Beginning
      March 31, 2006, the Company was subject to certain restrictive financial
      covenants that include debt coverage, fixed charge and current ratios and
      reserve ratios to total debt. The Company was not in compliance with certain
      ratios at March 31, June 30, or September 30, 2006. Previously, the covenant
      violations have been waived and penalties of $125,000, $0 and $10,000 were
      paid
      by the Company for the corresponding quarters, respectively. The Company is
      not
      in compliance for the quarter ended December 31, 2006 and is in the process
      of
      requesting a waiver. The outstanding debt under the Credit Agreement is
      reflected as a current liability in the consolidated financial statements.





At
      December 31, 2006, the balance of the note was $5,017,113, less the unamortized
      discount of $359,884. During the quarter ended December 31, 2006, the Company
      capitalized interest on development activities totalling $194,462.





**6.
      Commitments and Contingencies**





***Litigation***




The
      Company has had no litigation arising in the ordinary course of business since
      inception. Management does not believe that the ultimate resolution of any
      future litigation will have a material effect on our financial position or
      results of operations due to the existence of insurance coverage.





***Environmental***




To
      date,
      expenditures to comply with environmental or safety regulations have not been
      significant and are not expected to be significant in the future. However,
      new
      regulations, enforcement policies, claims for damages or other events could
      result in significant future costs.





***Operating
      leases***




The
      Company has an office lease agreement with unrelated third parties extending
      through 2010. The
      Company’s rent expense was $35,156 for the quarter ended Dec ember
      31,
      2006, which includes cash expenditures of $35,156.





***Employment
      Contracts***




Effective
      with the merger, new employment contracts were signed. The salaries were changed
      to reflect the current salaries of $195,242 and $189,132 for the Chief Executive
      Officer/President and Executive Vice President, respectively, with the same
      salary and bonus reviews by the board as previously discussed. The term of
      both
      contracts is five years.





***Indemnification
      Agreement***




The
      CEO
      and Executive Vice President (together with their spouses) have personally
      guaranteed P5 operator guaranty for all of the CrossPoint LLC’s wells with the
      Texas Railroad Commission. On February 15, 2006, the CrossPoint LLC and the
      aforementioned parties entered into an indemnification agreement with the
      CrossPoint LLC whereby the CrossPoint LLC will indemnify the aforementioned
      parties if the Texas Railroad Commission pursues collection of any amounts
      for
      any of them under such guaranties. No limit was specified with the
      indemnifications.





**7.
      Stockholders’ Deficit**





***Common
      Stock***




At
      December 31, 2006 there were 17,806,616 common shares issued and
      outstanding.





***Compensation
      expense for options and warrants***




In
      October 2006 a member of the Board of Directors of CrossPoint LLC resigned
      in
      anticipation of the merger and, as a result, forfeited a total of 858,710
      warrants of which 214,678 were vested. In accordance with SFAS 123(R), the
      company reversed previously recognized compensation expense of $216,583 during
      the three month period ended December 31, 2006 since the Board member had not
      served through the initial vesting period.




9




**CrossPoint
        Energy Company**
 *Notes
          to Unaudited Financial Statements*




The
      Chairman of the Board resigned in October, in anticipation of the merger with
      a
      publicly traded company. In accordance with SFAS 123(R), the company expensed
      $9,992 for his service in October 2006. He had previously been issued
      shares for the entire year of 2006.  Effective with his resignation, the
      Board agreed to compensate him for his services for January - October 2006.
      Accordingly, 17,604 shares were returned to the Company.


CrossPoint
        LLC had a stock option plan for management which terminated with the merger
        on
        November 27, 2006. As of date of the merger, 836,178 options had been granted,
        278,711 options had vested and none had been exercised. The options outstanding
        under the plan had a weighted average remaining contractual life of 3.56
        years.
        Pursuant to the merger, the plan for the aforementioned options
        terminated.  On March 29, 2006 an employee of the CrossPoint LLC
        received 88,019 options to purchase units at an exercise price of $1.14.
        The
        Company reversed previously recognized compensation expense of $21,188 in
        conjunction with the forfeited options.





As
      of
      December 31, 2006 the Company has not granted any equity awards.





**8.
      Related Party Transactions**





The
      CEO
      and Executive Vice President (together with their spouses) have personally
      guaranteed a subsidiary of the Company’s P5 operator guaranty for all of the
      Company’s wells with the Texas Railroad Commission. On February 15, 2006, the
      parties entered into an indemnification agreement with the Company whereby
      the
      Company will indemnify the parties if the Texas Railroad Commission pursues
      collection of any amounts for any of them under such guaranties.





The
      CEO
      and Executive Vice President are individual joint interest venture partners
      in
      certain production properties. Joint interest receivables from related parties
      at December 31, 2006 were $515.





The
      Chairman of the Board had previously guaranteed the Company’s office lease. In
      November, the lease guaranty was renegotiated and the Chairman of the Board
      was
      released from all associated liability. There were no fees paid related to
      that
      guaranty in the quarter ended December 31, 2006. ****




**9.
      Subsequent events**




***Convertible
      Note Interest Payment***




The
      Company accrued interest due from the convertible note, for the period from
      June
      30, 2006 to December 31, 2006. The convertible note provided for the election
      of
      the Company to issue registered common stock in lieu of cash through December
      31, 2007. The Company elected the stock issuance and calculated the number
      of
      shares using 90% of the volume weighted average price, or $3.06/share. While
      the
      majority of the investors agreed to the issuance of unregistered stock,
      $17,986 was paid in cash subsequent to December 31, 2006 and 112,902 shares
      were
      issued to the investors in the first week of January 2007.





***Penalties
      related to the Merger:***


***Securities
      Purchase Agreement - to be merged within 120 days of funding***




Included
      in the Securities Purchase Agreement was a put right that established financial
      penalties if the Company was not merged within 120 days of the private placement
      on June 30, 2006. The merger was consummated on November 27, 2006 which was
      outside the 120-day period. Penalties of $37,888 are due. Discussions with
      the
      investors and a proposal to pay with either (1) cash or (2) a payment in kind,
      in the same manner defined as a payment-in-kind (“PIK”) payment in the
      convertible note, using unregistered shares, has been consummated, with a
      majority of the investors accepting a PIK payment for the put. While the
      majority of the investors agreed to the issuance of unregistered stock, $1,875
      has been paid in cash subsequent to December 31, 2006 and 11,778 shares will
      be
      issued to the investors in the first quarter of 2007.




10




**CrossPoint
        Energy Company**
 *Notes
          to Unaudited Financial Statements*




***Registration
      Rights Agreement - to file with the SEC within 30
      days***




By
      the
      terms of the Registration Rights Agreement (“RRA”) Article 2.b. between the
      investors and the Company, the Company’s SB2 Filing was required to be filed on
      December 27, 2006.  In as much as the audit for the Company was not
      completed at such date, due to complexities in the merger, multiple company
      subsidiary considerations and the adoption of a September 30, 2006 fiscal year,
      the filing was delayed, and the Company is required to pay the investors 2%
      of
      their aggregate investment or $303,100. Discussions and a proposal to pay the investors with either (1) cash or (2)
      a
      payment in kind, in the same manner defined as a PIK payment in the convertible
      note, using unregistered shares, between the parties, has been consummated,
      with
      a majority of the investors accepting a PIK payment. While the majority of
      the
      investors agreed to the issuance of unregistered stock, $25,020 has been paid
      in
      cash subsequent to December 31, 2006 and 90,883 shares will be issued to the
      investors in the first quarter of 2007.





***Office
      Lease Guaranty***




The
      lease
      guaranty on the Company’s office space was renegotiated in November of 2006. The
      previous guarantor was released from his liability and the Company agreed to
      pre-pay six months rent. This prepayment will then be applied against future
      rent payments, on a semi-annual interval.




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS**




*The
      following discussion and analysis should be read in conjunction with the
      consolidated financial statements and related notes included elsewhere in this
      Report on Form 10-QSB. This discussion contains forward-looking statements
      reflecting our current expectations and estimates and assumptions concerning
      events and financial trends that may affect our future operating results or
      financial position. Actual results and the timing of events may differ
      materially from those contained in these forward-looking statements due to
      a
      number of factors, including those discussed in the “Cautionary Note Regarding
      Forward-Looking Statements” appearing elsewhere in this document.*




CrossPoint
      Energy Company is referred to herein as “we”, “us”, “our”, “its,” “the Company”
or “our Company”.




**Acquisition**




On
      November 27, 2006 we completed a merger between one of our subsidiaries,
      CrossPoint Acquisition, LLC, and CrossPoint Energy, LLC (“CrossPoint LLC”) (the
“Merger”). As a result of the Merger we changed our business to that of
      CrossPoint LLC’s prior to the merger.




From
      inception until the merger with CrossPoint LLC, our business was as a start-up,
      exploration stage corporation, engaged in the search for mineral deposits or
      reserves which are not in either the development or production stage. CrossPoint
      LLC was formed as a limited liability company under the laws of the State of
      Texas in November, 2004 and commenced operations in the first calendar quarter
      of 2005. Prior to the Merger, CrossPoint LLC had two subsidiaries, CrossPoint
      Energy Holdings, LLC which was formed in August 2005 to hold CrossPoint LLC's
      oil and gas properties and Dallas Operating Corp. which was incorporated in
      1993
      and is an established service company, engaged in oil and gas operations for
      the
      Company and third parties, strategically to add to the Company’s cash flow
      and/or reserve base. As a result of the Merger we acquired both of these
      subsidiaries.




Subsequent
      to the Merger, we changed our name to “CrossPoint Energy Company” to reflect the
      change in our business to a crude oil and natural gas exploration, development
      and production company.




11







The
      Merger is accounted for as a reverse merger with CrossPoint LLC deemed to be
      the
      accounting acquirer and we will be the legal acquirer.  Accordingly,
      the historical financial information presented in future financial statements
      will be that of CrossPoint LLC. The basis of the assets, liabilities and equity
      of CrossPoint LLC, the accounting acquirer, will be carried over in the Merger.




**Overview**




We
      are a
      natural gas and petroleum exploration, development and production company
      engaged in finding and developing oil and gas prospects, primarily in East
      and
      Southeast Texas. Our current business strategy is to acquire and drill
      properties which yield significant growth opportunity and contain attractive
      reserve capabilities within and around established fields with multiple targets.
      Our people and way of doing business are vital to the success of its business
      plan and growing it into a valuable exploration and production company. Our
      ability to create value for its members is based on its employee’s valuable
      skills, extensive industry experience, their commitment to our core values,
      and
      passion for excellence in all that they do.




We
      are
      focused primarily on drilling new and development reserves within prolific
      east
      and southeast Texas fields. We are also continuously evaluating additional
      growth opportunities through acquisitions of producing and underdeveloped
      properties.




***Properties
      of the Company***




Our
      drilling activities, which are conducted in our subsidiary CrossPoint Energy
      Holdings, LLC, focus primarily on internally generated prospects utilizing
      its
      significant technological skills, and, opportunistically, on third party
      prospects and the acquisition of producing oil and gas assets. Our strategy
      for
      growth is to drill and develop relatively lower and moderate risk properties
      which contain as an upside, certain higher risk, very prolific reserves. We
      have
      many additional prospects identified for future drilling and development, which
      are in various stages of evaluation, land and leasing and assimilation. The
      Company’s initial development and exploration activities are located in east and
      southeast Texas.





The
      table
      below summarizes the Company’s areas of operations, including the number of
      gross and net wells as of December 31, 2006.





**Completed
                / Productive**
            
            **Pending
                Completion or Recompletion**
            
            **Currently
                Drilling**
            
            **Dry
                Hole**
            
            **Total****Field**
            
            **Oil**
            
            **Gas****Operated
                wells**Elkhart
            
            
            1
            
            
            1
            
            
            2
            
            
            1
            
            
            0
            
            
            5Hoskins
            
            
            4
            
            
            0
            
            
            0
            
            
            0
            
            
            1
            
            
            5Waskom
            
            
            0
            
            
            2
            
            
            0
            
            
            0
            
            
            0
            
            
            2Humber
            
            
            1
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            1**Total
                operated wells**
            
            
            **6**
            
            
            **3**
            
            
            **2**
            
            
            **1**
            
            
            **1**
            
            
            **13****Non-operated
                wells**Hoskins
            
            
            2
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            2NW
                Vienna
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            2
            
            
            2**Total
                non-operated wells**
            
            
            **2**
            
            
            **0**
            
            
            **0**
            
            
            **0**
            
            
            **2**
            
            
            **4****Total
                wells (gross)**
            
            
            **8**
            
            
            **3**
            
            
            **2**
            
            
            **1**
            
            
            **3**
            
            
            **17**




12







**Elkhart
      Dome Prospect, Anderson County, Texas**




The
      Elkhart Dome Project, located in East Texas in Anderson County, is primarily
      an
      exploration and development play with considerable reserve potential. The
      Company owns a 40.375%-43.275% working interest, and approximately 31% net
      revenue interest in, and is the operator of the Elkhart Dome Project. We have
      drilled and completed three wells on the Elkhart Prospect, are currently
      completing a fourth well, and drilling a fifth well. Numerous prospective pay
      zones targeted at Elkhart include Wilcox, Navarro, Woodbine, Rodessa, Pettet
      and
      Travis Peak. Our development plan for the Elkhart Dome Project includes the
      drilling of numerous wells to various depths, targeting multiple zones which
      have produced significant reserves on Elkhart Dome and/or regionally. The
      Company is presently preparing two additional drill sites and has evaluated
      and
      identified more than 20 additional potential well locations for future
      development at Elkhart. We are considering twin wells to accelerate shallow
      reserves and designing dual completion wells for the possibility of accelerating
      the production from multiple targeted reservoirs.




Since
      June 30, 2006, CrossPoint LLC and the Company have increased its total leasehold
      acreage position at Elkhart by approximately 60% - from approximately 1,000
      acres (gross) to a current total of approximately 1,600 acres (gross), or about
      650 acres (net). With 80 or 40 acre well spacing of the Pettet at a depth of
      9,500 feet and 80 acre well spacing in the Travis Peak at a depth of 10,000
      feet, and 40 acre shallow well spacing (i.e., the Wilcox, Pecan Gap, and
      Woodbine formations at depths of 1,700 feet, 4,000 feet and 5,000 feet,
      respectively - the Company may complete multiple horizons in the same well,
      or
      recomplete older wells). The Company has identified more than 20 well locations
      on its acreage at Elkhart. Each future deep well is projected to cost $1.25
      million net total to the Company for drilling and completion. In addition,
      these
      Travis Peak well locations may also contain significant additional reserves
      in
      the Woodbine, Pettet and other shallower zones. The economics of drilling and
      completing shallower objectives will be evaluated as we drill the deeper Travis
      Peak wells, which could provide upside from new reserves and future
      production.




As
      a
      result of the Covington #2 Travis Peak discovery completed by CrossPoint LLC
      in
      June 2006, a new field designation, named Indian Lake Travis Peak Field was
      approved on December 5, 2006. The Covington #2 also has multiple prospective
      zones in the Pettet (seen at approximately 9,800 feet on logs). Completion
      operations to add these Pettet zones are currently being implemented in the
      Covington #2 well. Historically, the Pettet “A” zone has alone produced nearly
      50 Bcf gas in Elkhart Field. The Covington A2-ST was drilled and completed
      in
      the Woodbine in June 2006 and currently produces at an approximate rate of
      1050
      Mcf/d gross.




In
      December 2006, the Company drilled the Covington #3 well to a depth of
      approximately 11,400 feet at Elkhart. The Covington #3 log data indicates
      favorable attributes for a completion attempt in multiple zones within each
      of
      the Woodbine (5,900 feet), Pettet (9,800 feet) and Travis Peak (11,000 feet)
      sections. Completion operations for the Covington #3 well are currently being
      implemented. We are currently drilling the Covington #6.




The
      Covington #4 location has been built and the Covington #5 location is being
      evaluated for surface considerations. The Company is evaluating horizontal
      applications for Elkhart, including the Pettet and Pecan Gap.




**Hoskins
      Mound, Brazoria County, Texas**




The
      Company owns interests in six wells and operates four wells on the Hoskins
      Dome
      Project. Additionally, we may earn between 40.625% and 100% working interest
      in
      all new wells drilled on the 12,295 gross acre farmout area. Available net
      revenue interests attributable to such working interests range between 28.4375%
      and 75% for these new wells. The Company owns approximately 65% of 101 square
      miles (64,640 gross acres) of proprietary 3D Seismic data over the Hoskins
      Dome
      Project area. The Hoskins Dome Project contains a historically significant
      oil
      field that has been underdeveloped and contains numerous development and
      exploration projects. The opportunities include multi-million barrel oil
      potential reservoirs (4,200-6,500’ zones) and possibly deeper gas sands with
      significant reserve potential. The Company has drilled three wells and completed
      two wells, and is presently evaluating additional wells to be drilled. We have
      identified and prepared more than fifteen (15) separate prospects on the Hoskins
      Dome Project for future drilling and development. Each prospect may contain
      one
      to five wells, depending upon well results and other factors.




13







In
      October 2006, the Chevron Texaco Fee #301 was drilled on an outer fault block
      to
      an approximate depth of 7,100 feet, in an attempt to access potentially
      significant Miocene oil reserves and Discorbis sands. The #301 reached the
      (BM
      1, BM 2 and BM 3) Miocene Sands, however, commercially viable hydrocarbons
      were
      not trapped by the fault and consequently the well was plugged. The #301 did
      not
      reach the deeper Discorbis target due to hole difficulties. The total well
      cost
      for the #301 was approximately $1.8 MM (gross). Chevron participated as a
      non-operator in drilling of the well. Although the #301 well likely eliminated
      the adjacent outer fault block at Hoskins, we believe the geology of this well
      is unrelated structurally to most of the remaining prospects in our Hoskins
      Mound property.




The
      Miocene and Discorbis prospects surrounding the dome remain drilling targets
      for
      2007, pending additional evaluation. The location for the Welch Foundation
      #270
      well has been built and is planned to test the Miocene Sands and Discorbis.
      The
      #270 location is offset to the #300 well, which flowed gas from the
      overpressured Discorbis before hole difficulties prevented a completion attempt
      in the Discorbis.




Additional
      3D seismic data and other technical work have identified a new and potentially
      prolific Miocene Prospect called Summer Star. Summer Star is an untested fault
      block, proximate to historically significant Miocene production. We intend
      to
      test and develop Summer Star prospect in the future.




**Waskom
      Prospect, Harrison County, Texas**




The
      Waskom Project is primarily a development drilling project within a producing
      gas field in the Cotton Valley Trend located in Harrison County, Texas. The
      Waskom Project also has multiple prospective additional gas and oil zones.
      The
      Company has recompleted one existing well, successfully drilled and completed
      one in-fill wells. Additional wells are scheduled to be drilled in 2007. A
      well
      location has been built for the next well to be drilled, and three additional
      wellsites have been surveyed. Future development plans include increased density
      drilling pending well results and other factors. The Company owns a 55% working
      interest (501 gross acres), approximately 41.25% net revenue interest to 10,000’
and is the operator of the Waskom Project.




The
      Zack
      Abney #2 well, drilled in late 2005, continues
      to produce from the lower Cotton Valley at a rate of
      158
      Mcf/d (net). The Zack Abney #1 well continues to produce from the lower Cotton
      Valley at a rate of 35 Mcf/d (net).




The
      development of the Bossier shale, typically located at a depth of approximately
      11,000 feet, has been observed within 3 miles of the Zack Abney wells and is
      believed to be present beneath the Company’s acreage. Over 15 nearby wells have
      been drilled to the Bossier by other operators in Harrison County, Texas. The
      Company is evaluating the possible development of the Bossier shale within
      the
      Waskom Prospect area as well as the potential horizontal drilling and completion
      application for testing and development. The Company owns approximately 45%
      of
      the Bossier rights, beneath the Cotton Valley within the prospect.




**N.W.
      Vienna Prospect, Lavaca County, Texas**




The
      Company acquired a 10% non-operated working interest in an approximately 2,900
      gross acre prospect (including 3D seismic data) in Lavaca County, Texas. The
      prospect contains multiple Yegua and Wilcox prospects identified by 3D seismic
      data. In September and October, 2006, the operator drilled two Yegua wells
      to a
      depth of approximately 6,000 feet, and both wells were deemed non-commercial
      and
      were plugged as dry holes. The remaining deep Wilcox prospects are exploratory
      prospects nearby to a multi-Tcf gas field with significant Wilcox production.
      The Company, together with the operator, is considering selling or trading
      the
      Wilcox prospects to a third party, which may include a deep Wilcox well
      commitment and a non-cost basis interest to the Company in the well and
      prospects.




14







**Humber
      Prospect, Shackelford County, Texas**




In
      2005,
      CrossPoint LLC acquired the
      Humber Prospect with the intention of confirming additional prospects.  A
      single test well was drilled to test the Caddo and Ellenberger formations at
      a
      depth of approximately 6,300’.  Although completed in the Caddo, the Humber
      #1 well will require additional capital to attempt to increase production,
      and
      is viewed as marginal. The Company has no additional interests in the area
      and
      is considering selling the producing well and associated acreage.




**Additional
      Prospects**




The
      Company has evaluated title and is acquiring leasehold acreage in an East Texas
      prospect area with multi-zone, development and exploratory qualities
      commensurate with its business strategy. The target acreage is approximately
      2,000 acres. Target zones include Woodbine, Rodessa, Pettet, Travis Peak, Cotton
      Valley and Bossier.




The
      Company has recently acquired 100% of the farm-in acreage rights covering
      approximately 5,458.23 net acres covering an exploratory project in southeast
      Texas. The Company is exploring various partnership terms for drilling of a
      deep
      test well.




The
      Company is continuously developing new ideas and evaluating additional areas
      for
      acquisition that meet its criteria. The Company has identified several other
      potential areas for leasehold acquisition, which the Company is evaluating
      for
      drilling.




CrossPoint
      Energy Company has completed filings for operator status in Texas with the
      Texas
      Railroad Commission, and effective December 1, 2006 we became the operator
      of
      record for our properties, replacing our subsidiary, Dallas Operating Corp.,
      in
      name only.




***Capital
      Development Plan***





The
      Company plans to develop its existing prospects in order to increase cashflow
      and proved reserves from the multiple zones currently available within each
      prospect.   We also plan to continue acquiring leases / farm-in blocks
      and drill additional prospect areas which complement our existing asset
      base.





Capital
      to be deployed by the Company on projects during 2007 shall be dependent upon
      the level of success from operations being conducted currently, product prices,
      additional data being evaluated and available debt and equity capital. 
Currently, the Company has a development plan which includes a total of
      approximately $7.1 million in capital for drilling, completions, recompletion
      leasing costs over the first six months of 2007.   The Company’s
      prospects contain numerous additional potential drillsites which are available
      for development in the second half of 2007 through 2009.




15







The
      estimated distribution of capital between prospect areas for the first six
      (6)
      months of 2007 is as follows:




**Amount
                in $thousands**
            
            **For
                January - June 2007**ProspectElkhart
            
            $
            3,291Hoskins
            
            
            2,801Waskom
            
            
            797Acquisition
                of new leases
            
            
            200Total
                capital development program
            
            $
            7,089





The
      Company plans to expend approximately another $7 million in the second half
      of
      2007 by drilling and completion of wells, to continue building a solid base
      of
      cashflow and reserves.





The
      Company plans to fund these activities through our existing credit facility,
      working capital and may seek additional equity and debt financing. Based on
      our
      current cash resources and other current assets, management is contemplating
      additional financings and or transactions that if successful, would be
      sufficient to fund capital expenditures, potential property acquisitions and
      additional prospect leasing. There is no assurance that we will be successful
      in
      obtaining such funds. If we cannot obtain such financing, we will significantly
      curtail our capital development plan and/or acquisition plans.




**Results
      of Operations**




***Overall***





For
      the
      quarter ended December 31, 2006, the Company had a loss applicable to common
      shares of $1,665,416, compared to the $577,432 loss for the same period ended
      December 31, 2005.





**Period
                ended December 31,**
            
            **Increase
                (Decrease)****2006**
            
            **2005****Results
                of oil & gas producing operations**
            
            $
            (759,727
            )
            $
            (3,366
            )
            $
            (756,361
            )**Plus
                contract services income, net**
            
            
            115,617
            
            
            43,753
            
            
            71,864**Less
                the following items**
            
            
            -
            
            
            -
            
            
            -General
                and administrative expense
            
            
            629,479
            
            
            601,359
            
            
            28,120Interest
                expense, net
            
            
            272,155
            
            
            16,460
            
            
            255,695Preferred
                stock dividend
            
            
            -
            
            
            -
            
            
            -Other
            
            
            119,672
            
            
            -
            
            
            119,672Net
                loss
            
            $
            (1,665,416
            )
            $
            (577,432
            )
            $
            (1,087,984
            )




The
      Company is primarily involved in the development and production of oil and
      gas
      properties. The results of its oil and gas operations consist of the
      following:





**Period
                ended December 31,**
            
            **Increase
                (Decrease)****2006**
            
            **2005**Revenues
                from oil & gas producing activities
            
            $
            514,972
            
            $
            127,725
            
            $
            387,247Less
                the following items:Lease
                operating costs and production taxes
            
            
            147,029
            
            
            99,928
            
            
            47,101Dry
                hole & abandonment expenses
            
            
            515,450
            
            
            -
            
            
            515,450Impairment
                of oil & gas properties
            
            
            -
            
            
            -
            
            
            -Depreciation,
                depletion, accretion & amortization
            
            
            612,220
            
            
            31,163
            
            
            581,057Results
                from oil & gas operating activities
            
            $
            (759,727
            )
            $
            (3,366
            )
            $
            (756,361
            )




16







***Operating
      Revenues***





Operating
      revenues increased in the three months ended December 31, 2006 from the same
      period ended December 31, 2005 by $387,247, due to the drilling and completion
      of new developmental wells.





The
      table
      below summarizes the operating revenues for the two periods:





**Period
                ended December 31,**
            
            **Increase
                (Decrease)****2006**
            
            **2005**Operating
                revenues
            
            $
            514,972
            
            $
            127,725
            
            $
            387,247SalesOil
                (Bbls)
            
            
            6,231
            
            
            1,012
            
            
            5,219Gas
                (Mcf)
            
            
            50,040
            
            
            7,427
            
            
            42,613Total
                (BOE)
            
            
            14,571
            
            
            2,250
            
            
            12,321Average
                PriceOil
                ($/Bbl)
            
            $
            56.65
            
            $
            57.31
            
            $
            (0.66
            )Gas
                ($/Mcf)
            
            $
            5.63
            
            $
            8.08
            
            $
            (2.45
            )





***Operating
      Expenses***





The
      Company’s cost to operate the producing wells has increased as a result of the
      increase in the number of wells, to $147,029 for the three months ended December
      31, 2006, from $99,928 for the three months ended December 31, 2005. There
      were
      additional exploratory dry hole expenses of $515,450 from a dry hole
      that began drilling in September 2006, compared to no dry hole costs for
      the three months ended December 31, 2005. The Company had no abandonment cost
      in
      either period of the three months ended September 30, 2006 or in the three
      months ended December 31, 2005. No impairment was taken on the Company’s proved
      reserves for the three months ended September 30, 2006, similar to the three
      months ended December 31, 2005.





Depreciation,
      depletion, accretion of the asset retirement obligation and amortization of
      intangible drilling costs was $612,220 for the three months ended September
      30,
      2006, which is an increase of $581,057 from the expense of $31,163 for the
      three
      months ended December 31, 2005. The increase is due to the increase in wells
      between 2005 and 2006 thus increasing the depreciable base and increased
      production.




17







The
      general and administrative expenses have increased to $629,479, after a reversal
      of stock compensation expense of $237,771 from forfeited warrants and terminated
      options, for the three months ended September 30, 2006, from $601,359 for the
      three months ended December 31, 2005 primarily to support the additional
      drilling activity and operations. The components of general and administrative
      costs and the comparison between periods are as follows:




**Period
                ended December 31,**
            
            **Increase
                (Decrease)****Costs
                as a percentage of the total**
            
            **2006**
            
            **2005**General
                and administrative costsPersonnel
                expense
            
            
            58
            %
            
            52
            %
            
            6
            %Stock
                compensation expense reversal
            
            
            -36
            %
            
            0
            %
            
            -36
            %Professional
                services
            
            
            62
            %
            
            27
            %
            
            35
            %Facilities
            
            
            9
            %
            
            19
            %
            
            -10
            %Start-up
                costs
            
            
            0
            %
            
            0
            %
            
            0
            %Other
            
            
            7
            %
            
            2
            %
            
            5
            %Total
            
            
            100
            %
            
            100
            %
            
            0
            %





***Interest
      income and expense***





In
      September 2005, the Company entered into a credit agreement to support
      CrossPoint LLC’s capital development program. We incurred interest expense of
      $166,128 on this debt for the three months ended December 31, 2006, compared
      to
      $34,222 for the three months ended December 31, 2005. The Company capitalized
      $194,462 for the three months ended December 31, 2006 and $89,637 for the three
      months ended December 31, 2005. The increase in the interest expense is due
      to
      the increase in the advances of $583,333 as we drilled more wells net of with
      the repayments of $70,800. The effective interest rate at December 31, 2006
      was 13.75%. The balance of the note was $5,017,113 at December 31,
      2006.





In
      connection with the private placement in June, 2006 of approximately $15
      million, CrossPoint LLC issued convertible debt at 8% interest per annum.
      Pursuant to the merger, the Company assumed the debt. The interest expense
      on
      the convertible debt was $180,737 for the three months ended December 31, 2006
      and $0 for the three months ended December 31, 2005.





The
      remaining interest expense is the amortization of the capitalized interest
      and
      the debt discount on the two previously discussed debt instruments of $82,970
      for the three months ended December 31, 2006 and $74,594 for the three months
      ended December 31, 2005.





***Penalty
      expense***





In
      conjunction with the Merger of CrossPoint LLC and Electrum, certain time
      constraints were put in the Securities and Purchase Agreement and the
      Registration Rights Agreement, requiring that the merger be completed within
      120
      days of June 30, 2006 and the initial filing of the shares to be within 30
      days
      of the date of the merger. These requirements were not met and thus the Company
      accrued the total penalty expense of $340,988. While the majority of the
      investors agreed to the issuance of restricted stock, $33,895 was paid in cash
      subsequent to December 31, 2006 and 102,661 shares are expected to be issued
      to
      the investors in February 2007.





***Equity***





The
      Company paid no dividends in three months ended December 31, 2006 or in the
      three months ended December 31, 2005.





CrossPoint
      LLC had a stock option plan for management which terminated with the merger
      on
      November 27, 2006. As of date of the merger, 836,178 options had been granted,
      278,711 options had vested and none had been exercised. The options outstanding
      under the plan had a weighted average remaining contractual life of 3.56 years.
      Pursuant to the merger, the plan for the aforementioned options terminated
      and
      $21,188 of stock compensation expense that had been expensed in 2006 was
      reversed. In addition, a board member who had received 858,710 warrants resigned
      from the board and forfeited 100% of his warrants before the first vesting
      period, resulting in a reversal of the previously expensed stock compensation
      expense of $216,583. Compensation expense of $9,992 was taken on the shares
      issued to the Chairman of the Board for his services in October 2006. He
      resigned in October and thus no additional expense was taken.




18







**ITEM
      3. CONTROLS AND PROCEDURES**




The
      management of CrossPoint, under the supervision and
      with the participation of the Company's Chief Executive Officer and Secretary
      (our principle financial officer) conducted an evaluation of the Company's
      "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-15(e)
      or 15d-15(e)) as of the end of the period covered by this report. Based on
      that
      evaluation, the Chief Executive Officer and Secretary concluded that the
      Company's disclosure controls and procedures were not effective with regard
      to
      the preparation of the financial reporting for a publicly-traded company,
      due to staff limitations and the recent entry into public reporting requirements
      as of the end of the period covered by this report.  Our accountants
      advised us of the material weaknesses in the internal controls over financial
      reporting for the reporting period of September 30, 2006 with regard to the
      lack of sufficient staff and procedures for preparing and filing financial
      statements for a publicly-traded and SEC-regulated company, which was
      repeated of the quarter ended December 31, 2006.  This weakness relates
      primarily to the accounting for complex issues an calculations that resulted
      in
      adjusting entries prior to the issuance of our financial
      statements.  It is related to the detail oil and gas operational
      accounting records of the Company.  To remedy the aforementioned weakness,
      the Company has increased its staff from 2 to 4 employees, of which 2 of the
      accountants are certified public accountants, has hired consultants to provide
      SEC financial reporting expertise and continues to gain financial reporting
      experience through outside educational opportunities.  The Company plans to
      augment the accounting group in the near future with emphasis on financial
      reporting.  The Chief Executive Officer and Secretary do conclude that this
      report is correct with regard to disclosures.




As
      previously disclosed by the Company in its Annual Report on Form 10-KSB for
      the
      year ended September 30, 2006, our accountants at the time, Cacciamatta
      Accountancy Corporation had advised the Company that it did not maintain
      effective internal control over financial reporting. It was determined that
      the
      Company was not able to independently prepare its financial reports to the
      standards of Generally Accepted Accounting Principals (“GAAP”) and the rules and
      regulations of the Securities and Exchange Commission. As a result, the
      Company’s disclosure controls and procedures related to internal control over
      financial reporting were determined to be a material weakness in internal
      control. At the time of the reportable event, the Company was known as "Electrum
      Mining Limited" and had only one employee, who was the sole officer (acting
      as
      both CEO and CFO) and director of the Company.  In addition, as of
      September 30, 2006, the Company did not have any business operations, and its
      sole activity was closing an acquisition of CrossPoint Energy, LLC ("CrossPoint
      LLC"), which was completed on November 27, 2006.  Because of the Company's
      then-limited operations, and limited financial capacity, it could not employ
      any
      additional employees.  The sole director and officer participated in the
      discussions of this material weakness in internal control.






**PART
      1I - OTHER INFORMATION**




**ITEM
      1. LEGAL PROCEEDINGS**




The
      Company is currently not involved in any pending legal proceedings.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




On
      November 27, 2006, the Company completed its merger with CrossPoint Energy,
      LLC.
      Pursuant to that merger, the Company acquired 100% of the outstanding membership
      interests in CrossPoint Energy, LLC, and issued, as consideration to the
      security holders of CrossPoint Energy, LLC, aggregate consideration of
      16,451,667 shares of Company common stock, debt convertible into 5,051,667
      shares of Company common stock, and warrants to acquire 2,525,833 shares of
      Company common stock.




19







The
      warrants issued are each exercisable into 0.25 shares of common stock in the
      Company, with an exercise price per share of $1.95, subject to adjustment for
      stock splits, stock dividends, subsequent equity sales at a lower price per
      share than the exercise price of the warrant, and other similar transactions.
      Each warrant expires on June 30, 2011. The warrants provide that in the event
      that at any time after the one year anniversary of the date of issuance of
      that
      warrant there is no effective registration statement on file covering the resale
      of the common stock underlying that warrant, the holder of the warrant may
      exercise that warrant by means of a “cashless exercise.” In addition, each
      warrant allows the Company to call for the cancellation of all, or any part,
      of
      the warrants if, after one year and 180 days after a registration statement
      covering the resale of the common stock underlying the warrants is effective,
      the volume weighted average price for 20 out of 30 consecutive trading days
      exceeds $3.00 (subject to adjustment for stock splits, stock dividends and
      similar transactions) and the daily dollar trading for that period exceeds
      $100,000 per trading day.





Each
      convertible note accrues interest at a rate of 8% per annum, and has a maturity
      date of June 30, 2009. The conversion price is $1.75, subject to adjustment
      for
      stock splits, stock dividends, subsequent equity sales at a lower price per
      share than the conversion price, and other similar transactions. The interest
      payable on each convertible note is payable (i) on the third business day after
      December 31, 2006 and (ii) thereafter on the third business day after the last
      day of each calendar quarter. During the period beginning on the consummation
      of
      the merger and ending on the third business day after December 31, 2007, the
      Company may pay the interest on the convertible note in the form of shares
      of
      common stock. In addition, at any time prior to the maturity date of each
      convertible note and so long as the Company has on file an effective
      registration statement covering the resale of the shares of common stock
      underlying the convertible note, the Company may prepay the convertible notes,
      in whole and not in part, by payment of 110% of the principal amount then
      outstanding.





Each
      convertible note also requires its mandatory conversion into shares of common
      stock after the first trading day following (i) the date that the closing price
      for one share of common stock equals or exceeds $2.25 per share for 20
      consecutive trading days during which an aggregate of not less than 1,000,000
      shares were traded, and (ii) the resale of the shares of common stock underlying
      the convertible note is covered by an effective registration
      statement.





Each
      of
      the following items are considered events of default under the convertible
      notes, upon the occurrence of which a holder may either declare all of the
      outstanding principal and accrued and unpaid interest due and payable, or pursue
      any other remedies entitled to the holder at law or in equity:





·
            The
                Company defaults in the payment of the principal or interest which
                that
                principal or interest becomes due and
                payable;


·
            The
                Company fails to pay, to perform or to observe any obligation, agreement,
                covenant, term or condition contained in the convertible note, and
                such
                failure is not cured within 30 days after notice of the
                event;


·
            The
                Company declares bankruptcy or voluntarily agrees to the filing of
                any
                bankruptcy, arrangement or reorganization petition, the Company admits
                in
                writing of its inability to pay debts generally as they become due,
                a
                receiver is appointed for all or a material part of the Company’s assets,
                or the filing of any involuntary petition to reorganize or liquidate
                the
                Company, which petition is not dismissed or stayed within 30
                days;


·
            The
                amount of senior debt outstanding by the Company exceeds the greater
                of
                (i) $12,000,000 or (ii) an amount equal to 3.5 times the annualized
                earnings before interest, taxes, depreciation, amortization and
                exploration expenses of the Company for the most recently completed
                calendar quarter; and


·
            The
                Company issues any new class of security or debt that is senior to
                the
                convertible notes with respect to repayment without the written consent,
                other than certain senior debt and purchase money indebtedness secured
                only by the asset purchased.




20







The
      Company relied on Rule 506 of Regulation D and Section 4(2) of the Securities
      Act of 1933, as amended, for these issuances, which were to accredited
      investors. The Company did not engage in any public advertising or general
      solicitation in connection with the issuance of these shares of Company common
      stock.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




Not
      applicable.




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




On
      July
      7, 2006, Grove CrossPoint Investments, LLC, a Delaware limited liability
      company, and Peter G. Geddes, who collectively owned 1,885,000 shares of our
      common stock representing approximately 58% of the voting power of our common
      stock, approved resolutions to:




1.
            Change
                our name to “CrossPoint Energy Company.”2.
            Approve
                of the appointment of John A. Bailey, David C. Bradshaw, Daniel F.
                Collins, and Jeffrey A. Krakos as members of the board of directors
                of the
                Company.3.
            Adopt
                a 2006 Equity Incentive Plan4.
            Amend
                and restate our Articles of Incorporation.5.
            Effect
                a one for 2.368 reverse stock split of our common
                stock.




The
      Company mailed an Information Statement on Schedule 14C to each of its
      shareholders on October 11, 2006, and filed a copy of the Information Statement
      on Schedule 14C with the Securities and Exchange Commission on October 11,
      2006.
      These actions were taken by the Company on November 27, 2006.




**ITEM
      5. OTHER INFORMATION**




Not
      applicable.




21




**ITEM
      6. EXHIBITS**




**EXHIBIT****NUMBER**
            
            **DESCRIPTION
                OF EXHIBITS**3.1
            
            Amended
                and Restated Articles of Incorporation (2)3.2
            
            Amended
                and Restated Bylaws (2)10.1
            
            2006
                Equity Incentive Plan (1)10.2
            
            Employment
                Agreement, dated November 27, 2006 by and between the Company and
                Daniel
                F. Collins. (1)10.3
            
            Employment
                Agreement, dated November 27, 2006, by and between the Company and
                Jeffery
                A. Krakos. (1)10.4
            
            Credit
                Agreement, dated September 2, 2005, by and among CrossPoint Energy
                Holdings, LLC, D.B. Zwirn Special Opportunities Fund, L.P., and the
                lenders party thereto. (1)10.5
            
            Indemnification
                Agreement dated February 14, 2006 by and among CrossPoint Energy,
                LLC,
                Daniel F. Collins, Jeffery A. Krakos, Rosa L. Collins and DeAnn C.
                Krakos.
                (1)10.6
            
            Form
                of Convertible Debt. (1)10.7
            
            Form
                of Warrant. (1)31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification31.2
            
            Rule
                13a-14(a)/15d-14(c) Certification32.1
            
            Section
                1350 Certification




(1)
      Incorporated by reference to the Company’s Current Report on Form 8-K filed on
      December 1, 2006.




(2)
      Incorporated by reference to the Company’s Annual Report on Form 10-KSB for the
      fiscal year ended September 30, 2006.


22




**SIGNATURES**




14th day
      of
      February, 2007.




**CROSSPOINT
                ENERGY COMPANY**Date: February
              14, 2007
            By:
            /s/ Daniel F. CollinsDaniel
                F. Collins, President and Chief Executive
                Officer




By:
            /s/ Margaret R. Coughlin
              
              Margaret
                R. Coughlin, Secretary




23