**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
      quarterly period ended March 31, 2007





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 May 14,
      2007
      was 18,306,114.





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










**ITEM
      1. FINANCIAL STATEMENTS**





**CrossPoint
      Energy Company**


**Consolidated
      Balance Sheets**


**(Unaudited)**


**March
                  31,**
                **2007**
              
              **September
                    30,**
                  **2006****ASSETS****CURRENT
                  ASSETS:**Cash
                  and cash equivalents
              
              $
              1,042,710
              
              $
              6,073,298Restricted
                  cash
              
              
              240,892
              
              
              385,521Accounts
                  receivable
              
              
              1,322,372
              
              
              634,010Oil
                  and gas revenue receivable
              
              
              220,502
              
              
              273,764Prepaid
                  expenses
              
              
              224,541
              
              
              129,791Deferred
                  financing costs
              
              
              193,699
              
              
              260,621Total
                  current assets
              
              $
              3,244,716
              
              $
              7,757,005**PROPERTY
                  & EQUIPMENT**Oil
                  & gas property and equipment, successful efforts
                  method
              
              
              17,291,852
              
              
              12,722,224Less
                  accumulated impairment, depletion, depreciation &
                  amortization
              
              
              (5,996,671
              )
              
              (4,952,894
              )Net
                  oil & gas properties
              
              
              11,295,181
              
              
              7,769,330Other
                  property and equipment, net
              
              
              124,167
              
              
              110,831**OTHER
                  ASSETS**
              
              
              63,085
              
              
              30,860**Total
                  assets**
              
              $
              **14,727,149**
              ****
              **$**
              **15,668,026****LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES:**Accounts
                  payable
              
              $
              2,992,753
              
              $
              1,751,148Notes
                  payable, net of discount
              
              
              5,882,966
              
              
              4,101,439Oil
                  and gas revenues payable
              
              
              287,763
              
              
              326,859Oil
                  and gas joint interest prepayments
              
              
              7,463
              
              
              556,598Interest
                  payable
              
              
              227,912
              
              
              234,603Other
                  current liabilities
              
              
              19,518
              
              
              31,444Total
                  current liabilities
              
              $
              9,418,375
              
              $
              7,002,091**Convertible
                  debt, net of discount**
              
              
              8,020,484
              
              
              7,838,277**Asset
                  retirement obligation**
              
              
              181,251
              
              
              150,136**Other
                  long-term liabilities**
              
              
              52,047
              
              
              84,058**Total
                  liabilities**
              
              $
              **17,672,157**
              ****
              **$**
              **15,074,562****COMMITMENTS
                  AND CONTINGENCIES (Note 7)****Shares
                  subject to redemption, net of offering cost**
              
              $
              -
              
              $
              4,022,354**STOCKHOLDERS'
                  DEFICIT:**Capital
                  stock
              
              $
              1,813
              
              $
              -Capital
                  in excess of par value
              
              
              11,039,252
              
              
              6,290,872Treasury
                  Stock, 5,879 shares and 0 shares, respectively, at cost
              
              
              (17,985
              )
              
              -Accumulated
                  deficit
              
              
              (13,968,088
              )
              
              (9,719,762
              )Total
                  Stockholders' deficit
              
              
              (2,945,008
              )
              
              (3,428,890
              )**Total
                  liabilities and Stockholders' deficit**
              
              $
              **14,727,149**
              ****
              **$**
              **15,668,026**




***See
      accompanying notes to these financial statements.***




2


**CrossPoint
      Energy Company**


**Consolidated
      Statement of Operations**


**(Unaudited)**


**Three
                  Months Ended**
              
              **Six
                  Months Ended****March
                  31,**
              
              **March
                  31,****2007**
              
              **2006**
              
              **2007**
              
              **2006****OPERATING
                  REVENUES:**Crude
                  oil & natural gas sales
              
              $
              430,648
              
              $
              411,011
              
              $
              945,620
              
              $
              538,736Contract
                  services revenue
              
              
              131,012
              
              
              206,493
              
              
              409,682
              
              
              311,688Total
                  operating revenues
              
              
              561,660
              
              
              617,504
              
              
              1,355,302
              
              
              850,424**OPERATING
                  EXPENSES:**Lease
                  operating expenses
              
              
              130,958
              
              
              108,736
              
              
              243,460
              
              
              200,990Production
                  and ad valorem taxes
              
              
              21,276
              
              
              21,698
              
              
              55,803
              
              
              29,372Dry
                  hole & abandonment expenses
              
              
              51,743
              
              
              -
              
              
              567,193
              
              
              -Depreciation,
                  depletion and amortization
              
              
              463,418
              
              
              73,271
              
              
              1,069,209
              
              
              104,434Accretion
                  of asset retirement obligations
              
              
              6,428
              
              
              -
              
              
              12,857
              
              
              -Contract
                  services expense
              
              
              85,335
              
              
              118,845
              
              
              248,388
              
              
              180,287General
                  and administrative expenses, including stock compensation expense
                  reversal
                  of $227,779 and $0 in 2007 & 2006, respectively
              
              
              1,081,807
              
              
              696,053
              
              
              1,711,286
              
              
              1,297,412Total
                  operating expenses
              
              
              1,840,965
              
              
              1,018,603
              
              
              3,908,196
              
              
              1,812,495**OPERATING
                  LOSS**
              
              $
              (1,279,305
              )
              $
              (401,099
              )
              $
              (2,552,894
              )
              $
              (962,071
              )**OTHER
                  INCOME & EXPENSE:**Interest
                  income
              
              
              44,662
              
              
              3,722
              
              
              99,232
              
              
              3,722Interest
                  expense
              
              
              (287,417
              )
              
              (165,295
              )
              
              (614,142
              )
              
              (181,755
              )Merger
                  expense
              
              
              -
              
              
              -
              
              
              (119,672
              )
              
              -Liquidated
                  damages
              
              
              (1,060,850
              )
              
              -
              
              
              (1,060,850
              )
              
              -Total
                  other expenses
              
              
              (1,303,605
              )
              
              (161,573
              )
              
              (1,695,432
              )
              
              (178,033
              )**NET
                  LOSS**
              
              $
              (2,582,910
              )
              $
              (562,672
              )
              $
              (4,248,326
              )
              $
              (1,140,104
              )**Basic
                  and Diluted Net Loss per share**
              
              **$**
              **(0.14**
              **)**
              **$**
              **(0.06**
              **)**
              **$**
              **(0.24**
              **)**
              **$**
              **(0.11**
              **)****Weighted
                  Average Number of Shares Outstanding**
              
              
              **17,963,739**
              
              
              **10,012,669**
              
              
              **17,448,532**
              
              
              **10,440,950**




***See
      accompanying notes to these financial statements.***




3


**CrossPoint
      Energy Company**


**Consolidated
      Statement of Stockholders' Deficit**


**(Unaudited)**





Common
                shares
            
            Capital
                Stock
            
            Capital
                  in
                Excess
                  of Par
            
            Treasury
                Stock
            
            Accumulated
                Deficit
            
            TotalBalance,
                September 30, 2006
            
            
            11,400,000
            
            $
            1,140
            
            $
            6,289,732
            
            $
            -
            
            $
            (9,719,762
            )
            $
            (3,428,890
            )Merger
                Adjustments:Common
                stock acquired in merger
            
            
            1,372,451
            
            
            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
            
            
            
            
            
            
            
            
            9,992Forfeited
                options/warrants
            
            
            
            
            
            
            
            
            (237,765
            )
            
            -
            
            
            -
            
            
            (237,765
            )Interest
                on convertible debt
            
            
            118,781
            
            
            12
            
            
            363,425
            
            
            
            
            
            
            
            
            363,437Liquidated
                damages
            
            
            207,233
            
            
            21
            
            
            592,154
            
            
            -
            
            
            -
            
            
            592,175Purchases
                of treasury stock
            
            
            (5,879
            )
            
            
            
            
            
            
            
            (17,985
            )
            
            
            
            
            (17,985
            )Net
                loss
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            (4,248,326
            )
            
            (4,248,326
            )Balance,
                March 31, 2007
            
            
            18,126,649
            
            $
            1,813
            
            $
            11,039,252
            
            $
            (17,985
            )
            $
            (13,968,088
            )
            $
            (2,945,008
            )





***See
      accompanying notes to these financial statements.***




4





**CrossPoint
      Energy Company**


**Consolidated
      Statement of Cash Flows**


**(Unaudited)**


Six
                  months ended
                March
                  31,**2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (4,248,326
              )
              $
              (1,140,104
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depletion,
                  depreciation and amortization
              
              
              1,069,209
              
              
              104,434Accretion
                  of asset retirement obligations
              
              
              12,857
              
              
              -Equity
                  issued in lieu of interest and liquidated damages
              
              
              955,597
              
              
              218,350Debt
                  received in lieu of services
              
              
              17,247
              
              
              -Amortization
                  of deferred financing costs
              
              
              208,451
              
              
              71,316Stock
                  compensation
              
              
              (227,773
              )
              
              -Deferred
                  rent amortization
              
              
              (42,031
              )
              
              74,331Other
                  non-cash items
              
              
              -
              
              
              (2,986
              )Changes
                  in assets and liabilities:Restricted
                  cash
              
              
              144,629
              
              
              (149,939
              )Accounts
                  receivable
              
              
              (635,101
              )
              
              (1,036,875
              )Prepaid
                  expenses
              
              
              (94,750
              )
              
              352,595Other
                  assets
              
              
              (32,209
              )
              
              9,595Accounts
                  payable
              
              
              1,202,509
              
              
              1,396,707Oil
                  and gas joint interest prepayments
              
              
              (549,135
              )
              
              540,812Interest
                  payable
              
              
              (6,691
              )
              
              -**Net
                  cash provided by (used in) operating
                  activities**
              
              **$**
              **(2,225,517**
              **)**
              **$**
              **438,236****CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Expenditures
                  for oil & gas property and equipment
              
              $
              (4,402,727
              )
              $
              (8,758,507
              )Purchases
                  of other fixed assets
              
              
              (38,768
              )
              
              (50,589
              )**Net
                  cash used in investing activities**
              
              **$**
              **(4,441,495**
              **)**
              **$**
              **(8,809,096**
              **)****CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from issuance of equity before the private placement
              
              $
              -
              
              $
              865,000Purchase
                  of treasury stock
              
              
              (17,985
              )
              
              -Proceeds
                  from notes payable
              
              
              1,866,481
              
              
              8,104,126Repayment
                  of notes payable
              
              
              (212,072
              )
              
              (4,117
              )**Net
                  cash provided by financing activities**
              
              **$**
              **1,636,424**
              
              **$**
              **8,965,009****NET
                  DECREASE IN CASH AND CASH EQUIVALENTS**
              
              **$**
              **(5,030,588**
              **)**
              **$**
              **594,149****CASH
                  AND CASH EQUIVALENTS**,
                  beginning of period
              
              **$**
              **6,073,298**
              
              **$**
              **845,792****CASH
                  AND CASH EQUIVALENTS**,
                  end of period
              
              **$**
              **1,042,710**
              
              **$**
              **1,439,941****SUPPLEMENTAL
                  DISCLOSURES of CASH FLOW INFORMATION**Cash
                  paid for interest
              
              $
              362,731
              
              $
              299,402




***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 for the year ended September 30, 2006 and
      notes thereto included in the Company's Form SB-2/A dated April 25,
      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.




6





***Going
      Concern***





Recently,
      we have experienced drilling and completion delays, well cost over-runs, dry
      holes and significant costs for SEC compliance and liquidated damages penalties
      for failure to meet SEC registration and filing requirements. We have a history
      of losses and limited liquidity and believe we may be in default under our
      senior credit facility. The
      Company recorded a net loss of $4,248,326 for the six months ended March 31,
      2007 and had an accumulated deficit at March 31, 2007 of $13,968,088. As further
      described in Note 7, Liquidated damages, our convertible debt and private
      placement of our stock were issued with registration rights agreements which
      required us to register the common shares and the common shares underlying
      the
      conversion features in a secondary offering in a timely manner or we could
      be
      assessed significant penalties. Despite
      our efforts, the Securities and Exchange Commission (“SEC”) has rejected the
      size of our registration as a secondary offering; specifically, the SEC has
      rejected the current registration of all shares underlying the investor
      documents.  We do not believe the registration of stock should proceed
      until the alternatives of the Company have become clearer.





We have
      engaged Energy Capital Solutions, Dallas, Texas, as a
      financial advisor to assist us in seeking strategic restructuring
      alternatives, including the marketing of one or all of the Company’s assets. In
      order to best facilitate strategic restructuring, we have resigned as operator
      of the Elkhart Prospect, Anderson County, Texas effective May 18, 2007. The
      working interest owners have elected on Elkhart Prospect working interest owner
      operator to be the successor operator the Elkhart Prospect. The Company is
      taking steps to reduce general and administrative costs which may also include
      the payment of severance to laid-off employees.





We
      are
      seeking to restructure to allow us to re-capitalize, reduce debt and seek other
      opportunities for growth.  Considering the amount of debt owed and the
      value of its assets, it is unknown if the existing common shareholders will
      receive any value for their shares.





As
      a
      result, there is substantial doubt as to our ability to continue as a going
      concern. The financial statements do not include any adjustments relating to
      the
      recoverability and classification of recorded assets, or the amounts and
      classifications of liabilities that might be necessary in the event the Company
      cannot continue as a going concern.





**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
      totaling $119,672 in the six months ended March 31, 2007 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. Subsequent to the merger, the Company had net
      operating losses. The deferred tax asset was fully reserved resulting in no
      provision at March 31, 2007.




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 shareholders equity reported for income tax purposes
      may
      differ from the balances reported for these same items in the accompanying
      financial statements.





Prior
      to
      the Merger, CrossPoint LLC was properly classified as a partnership for federal
      income tax purposes. CrossPoint LLC owned 100% of the membership interests
      of
      CrossPoint Energy Holdings, LLC and 100% of the stock of Dallas Operating
      Corp.




7





Pursuant
      to the Merger, CrossPoint LLC merged into CrossPoint Acquisition LLC. As a
      result of the Merger, CrossPoint Energy Holdings, LLC and Dallas Operating
      Corp.
      became wholly owned by CrossPoint Acquisition LLC as of the date of
      Merger.





As
      a
      result of the change in taxable entity status, (i.e., as a result of the
      Merger), CrossPoint LLC will file a final Form 1065 as of November 27, 2006.
      This filing will include the activity of CrossPoint LLC's 100% ownership
      interest in CrossPoint Holdings, LLC (a disregarded entity for federal income
      tax purposes). In addition, Dallas Operating Corp will file a short-year Form
      1120 as of November 27, 2006.





Subsequent
      to the Merger, we changed our name to CrossPoint Energy Company. CrossPoint
      Energy Company will file a consolidated corporate income tax return for its
      fiscal year ended September 30, 2007 and future years.




**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 3rd quarter of its fiscal
      2007 and is currently evaluating the impact of adopting SAB 108 on its financial
      statements.





**FIN
      48**




In
      July
      2006, the FASB issued FASB Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes — an Interpretation of FASB Statement 109
      (“FIN 48”), which clarifies the accounting for uncertainty in tax positions
      taken or expected to be taken in a tax return, including issues relating to
      financial statement recognition and measurement. FIN 48 provides that the
      tax effects from an uncertain tax position can be recognized in the financial
      statements only if the position is “more-likely-than-not” of being sustained if
      the position were to be challenged by a taxing authority. The assessment of
      the
      tax position is based solely on the technical merits of the position, without
      regard to the likelihood that the tax position may be challenged. If an
      uncertain tax position meets the “more-likely-than-not” threshold, the
      largest amount of tax benefit that is greater than 50 percent likely of
      being recognized upon ultimate settlement with the taxing authority, is
      recorded. The provisions of FIN 48 are effective for fiscal years beginning
      after December 15, 2006, with the cumulative effect of the change in
      accounting principle recorded as an adjustment to opening retained earnings.
      We
      expect to adopt FIN 48 for our fiscal year beginning October 1, 2006. At this
      time, we are currently evaluating the impact of adopting FIN 48 on our financial
      statements.





**SFAS
      No. 157**




In
      September 2006, the FASB issued SFAS No. 157, *“Fair
      Value Measurements.”* SFAS No. 157
      defines fair value, establishes a framework for measuring fair value under
      Generally Accepted Accounting Principles and requires enhanced disclosures
      about
      fair value measurements. It does not require any new fair value measurements.
      SFAS No. 157 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007 and interim periods within those
      fiscal years. SFAS No. 157 will not have a material impact on the
      Company.




**SFAS
      No. 159**




In
      February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option
      for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115 (“SFAS 159”). The fair value option established by SFAS 159
      permits all entities to choose to measure eligible items at fair value at
      specified election dates. A business entity will report unrealized gains and
      losses on items for which the fair value option has been elected in earnings
      (or
      another performance indicator if the business entity does not report earnings)
      at each subsequent reporting date. The fair value option: (a) may be applied
      instrument by instrument, with a few exceptions, such as investments otherwise
      accounted for by the equity method; (b) is irrevocable (unless a new election
      date occurs); and (c) is applied only to entire instruments and not to portions
      of instruments. FASB No. 159 is effective as of the beginning of fiscal years
      beginning after November 15, 2007.  The adoption of SFAS 159 is not
      expected to be material to the Company’s financial statements.




8


**3.
      Asset Retirement Obligation**





The
      following table shows changes in the Company's asset retirement obligations
      for
      the six month periods ended:





**March
                31,****2007**
            
            
            **2006**Asset
                retirement obligation at September 30
            
            $
            150,136
            
            $
            -Asset
                retirement accretion expense
            
            
            12,857
            
            
            -Additions
            
            
            18,258
            
            
            107,631Asset
                retirement obligation at March 31
            
            $
            181,251
            
            $
            107,631





**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***





See
      Note
      6 for discussion of the convertible note and interest payments.





**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.





Beginning
      March 31, 2006, the Company was subject to certain restrictive financial
      covenants that include debt coverage, fixed charge and current ratios, reserve
      ratios to total debt and net sales requirements. The Company was not in
      compliance with certain ratios at March 31, June 30, September 30, December
      31,
      2006 and March 31, 2007. The covenant violations have been waived and penalties
      of $125,000 and $75,000 were added to the debt for the periods March 31, 2006
      and the combined periods of December 31, 2006 and March 31, 2007. Penalties
      of
      $0 and $10,000 were paid by the Company for the quarters ending June 30 and
      September 30, 2006 respectively. The outstanding debt under the Credit
      Agreement is reflected as a current liability in the consolidated financial
      statements.




9




At
      March
      31, 2007, the balance of the note was $6,181,508, less the unamortized discount
      of $305,901. During the six months ended March 31, 2007, the Company capitalized
      interest on development activities totaling $475,708.





**6.
      Convertible Note**





Convertible
      debt of $8,020,484, net of the unamortized discount of $819,933, was outstanding
      as of March 31, 2007.





The
      Company paid 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 and 118,781 shares were issued to the investors in
      the
      first week of January 2007. Initially the interest was paid 100% in shares,
      however 2 investors required cash payments. Their certificates for 5,879 shares
      have been repurchased for cash and are recorded as treasury stock at March
      31,
      2007.





The
      Company accrued interest due from the convertible note, for the period from
      January 1 to March 31, 2007. 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,
      $22,178 was paid in cash and 58,052 shares were issued to the investors in
      the
      first week of April 2007.





**7.
      Liquidated Damages**





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





Included
      in the Securities Purchase Agreement were liquidated damages 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
      resulting in liquidated damages of $37,888. 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 and 11,778 shares were issued to the investors in the
      February of 2007.





***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’s failure to meet the deadline, defined
      in the RRA as an “Event”, the Company was required to pay the investors 2% of
      their aggregate investment of $15,155,000 or $303,100.





An
      amendment to the RRA was agreed upon on January 25, 2007 which allowed the
      Company to pay future Events through April 28, 2007 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.





While
      the
      majority of the investors agreed to the issuance of unregistered stock, the
      $303,100 liquidated damages were paid with $25,020 in cash and 90,883 shares
      in
      the February of 2007, using a stock price of $3.06, which was 90% of the
      volume-weighted-average-price (VWAP) of the common stock for the ten trading
      days immediately prior to the Event date.





***Registration
      Rights Agreement - requirement for the shares to be
      effective***





By
      the
      terms of the Registration Rights Agreement (“RRA”) Article 2.b.iv, as amended on
      January 25, 2007, between the investors and the Company, the Registration
      Statement filed under Company's SB2 must be declared effective by the Commission
      within 120 calendar  days
      following the date of the merger. The merger was consummated on November 27,
      2006, which required that the shares be effective on March 27, 2007. The Company
      filed the SB-2 to register the shares on January 27, 2007, however the SEC
      had
      not completed its review by March 27, 2007 and another Event of $303,100 was
      triggered.




10




While
      the
      majority of the investors agreed to the issuance of unregistered stock, $25,020
      was paid in cash and 104,572 shares were issued to the investors in March,
      using
      a stock price of $2.66, which was 90% of the volume-weighted-average-price
      (VWAP) of the common stock for the ten trading days immediately prior to the
      Event date.





The
      registration statement was not effective as of April 27, 2007 and liquidated
      damages of $303,100 were accrued. In April, the liquidated damages were paid
      $25,020 was paid in cash and 121,413 shares of unregistered common stock, using
      a stock price of $2.29, which was 90% of the volume-weighted-average-price
      (VWAP) of the common stock for the ten trading days immediately prior to the
      Event date. Liquidated damages of $757,750 have been accrued for the
      effectiveness Events that are expected, based on a probability-weighted
      calculation because of the SEC’s position of the number of shares allowed within
      our SB-2 filing.





**8.
      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 $64,620 for the six months ended
      March 31, 2007, which includes cash expenditures of $69,833.





***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. Effective January 1, 2007, a five percent cost of
      living and merit increase was approved, adjusting the salaries to $205,004
      and
      $198,589, respectively.





***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 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.





**9.
      Stockholders' Deficit**





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





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 six month period ended March 31, 2007 since the Board member had not
      served through the initial vesting period.




11




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.





Options





On
      March 29, 2006 an employee of the CrossPoint LLC received 88,019 options to
      purchase units at an exercise price of $1.14. 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.  The
      Company reversed previously recognized compensation expense of $21,188 in
      conjunction with the forfeited options.





As
      of
      March 31, 2007 the Company has not granted any equity awards.





**10.
      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 March 31, 2007 were $733.





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 six months ended March 31, 2007.





Effective
      January 1, 2007, J.W. Brown, the general partner of AJAE Limited Partnership,
      became a director of the Company. As a director, he receives the same
      compensation as each other outside director: (i) $1,000 per meeting attended,
      (ii) $40,000 annually in stock options; and (iii) $10,000 in stock options
      annually if he serves as Chairman of the Board of Directors, a member of any
      committee or as the audit committee financial expert. In addition, Mr. Brown
      has
      a 2.85% working interest in the Elkhart leases in which the Company has a
      40.375-43.275% working interest.





**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.*





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





On
      November 27, 2006, CrossPoint LLC merged with CrossPoint Acquisition, LLC,
      a
      wholly owned subsidiary of Electrum formed for the sole purpose of acquiring
      CrossPoint LLC. CrossPoint Acquisition, LLC survived the Merger and became
      the
      sole owner of CrossPoint Energy Holdings, LLC and Dallas Operating Corp. At
      the
      time of the merger, Electrum was a public company with limited operations.
      After
      the Merger, Electrum changed its name to CrossPoint Energy
      Company.





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.




12




**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 our business
      plan and growing it into a valuable exploration and production company. Our
      ability to create value for our shareholders is based on our 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.





**Recent
      Developments**





Over
      the
      past nine months, we have experienced drilling and completion delays, well
      cost
      over-runs, dry holes and significant costs for SEC compliance. We have a history
      of losses and limited liquidity and believe we may be in default under our
      senior credit facility. Management believes that there is substantial doubt
      as
      to our ability to continue as a going concern. We have engaged Energy
      Capital Solutions, Dallas, Texas, as a financial advisor to assist us
      in seeking strategic restructuring alternatives, including the marketing of
      one
      or all of the Company’s assets. In order to best facilitate strategic
      restructuring, we have resigned as operator of the Elkhart Prospect, Anderson
      County, Texas effective May 18, 2007. The working interest owners have elected
      on Elkhart Prospect working interest owner operator to be the successor operator
      of the Elkhart Prospect. The Company is taking steps to reduce general and
      administrative costs which may also include the payment of severance to laid-off
      employees.





Despite
      significant efforts, the Securities and Exchange Commission (“SEC”) has rejected
      the size of our registration as a secondary offering; specifically, the SEC
      has
      rejected the current registration of all shares underlying the investor
      documents.  We do not believe the registration of stock should proceed
      until the alternatives of the Company have become clearer.





We
      are
      seeking to restructure to allow us to re-capitalize, reduce debt and seek other
      opportunities for growth.  Considering the amount of debt owed and the
      value of our assets, it is unknown if the existing common shareholders will
      receive any value for their shares. The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts and
      classifications of liabilities that might be necessary in the event the Company
      cannot continue as a going concern





**Liquidity
      and Capital Resources**





***Cash
      Flows***





At
      March
      31, 2007 we had $1,042,710 in cash and cash equivalents, which is a decrease
      of
      $2,225,866 from the balance at December 31, 2006 of $3,268,576 and which is
      a
      decrease of $5,030,588 from the balance at September 30, 2006 of
      $6,073,298.





Historically,
      our cash receipts from sales of oil and gas have been insufficient to cover
      our
      cash expenses. During the six month period ended March 31, 2007 net cash used
      in
      operations was $2,225,517. Our cash expenses primarily include lease operating
      expenses, including production and ad valorem taxes, contract services and
      general and administrative expenses.





During
      the six month period ended March 31, 2007, we spent $4,402,727 principally
      on
      the development of our oil and gas properties. Our 2007 operating cash flow
      shortfall and our capital expenditure program was funded in part from net
      proceeds of $13,643,660 from our June 2006 private placement and an additional
      $1,866,481 from borrowings under our credit agreement. We used $8,690,505 of
      the
      proceeds received in the private placement to repay part of our outstanding
      credit agreement indebtedness. During the six months ended March 31, 2006 we
      spent $8,758,507 on acquisitions of oil and gas properties. During the six
      months ended March 31, 2006 our operating cash shortfall and investing
      activities was funded by sale of membership units and long-term borrowings
      under
      our credit agreement.





***Financing
      and Investing Activities during the Six-Month Period Ended March 31,
      2007***




*Credit
      Agreement*





On
      September 2, 2005, we entered into a three year $40.0 million credit agreement,
      or the Credit Agreement. Loans under the Credit Agreement may only be used
      to
      fund development projects approved by the lenders, to pay commitment fees and
      administrative expenses under the Credit Agreement, to pay legal fees incurred
      by the lenders and administrative agent and to fund the acquisition of
      additional oil and gas properties that have been approved by the lenders. Under
      the terms of the Credit Agreement, we request additional advances from our
      lenders based on presentment of a project plan.




13




Beginning
      March 31, 2006, we were subject to restrictive financial covenants that include
      debt coverage, fixed charge and current ratios and reserve ratios to total
      debt
      and net sales requirements. The covenants must be met on June 30, September
      30,
      December 31 and March 31 of each year. We were not in compliance with certain
      of
      these ratios at June 30, September 30, December 31, 2006 and March 31, 2007.
      Previously, covenant violations were waived by the lenders, and we paid fees
      of
      $125,000, $0, and $10,000 to the lenders for the quarters ended March 31, June
      30, and September 30, 2006, respectively. The Company is not in compliance
      for
      the quarters ended December 31, 2006 and March 31, 2007. The violations have
      been waived and a penalty of $75,000 for both quarters has been added to the
      debt.





The
      outstanding debt under the Credit Agreement is reflected as a current liability
      in the consolidated financial statements. At March 31, 2007, we had $6.2 million
      of outstanding borrowings under the Credit Agreement. During the six months
      ended March 31, 2007 and the six months ended March 31, 2006, we paid the
      lenders under the Credit Agreement $344,745 and $299,402 in interest expenses
      and fees of $15,000 and $15,000, respectively.





Convertible
      Notes




As
      of
      March 31, 2007, we had $8.8 million of convertible notes outstanding. Each
      convertible note accrues interest at a rate of 8% per annum and has a maturity
      date of June 30, 2009. Each convertible note is convertible into shares of
      our
      common stock at a conversion price of $1.75 per share, subject to adjustment
      for
      stock splits, stock dividends, subsequent equity sales at a price per share
      lower than the conversion price and other similar transactions.





The
      interest is payable quarterly. Prior to December 31, 2007, we 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 we have on file an effective registration statement covering the resale
      of the shares of common stock underlying the convertible note, we may prepay
      the
      convertible notes, in whole and not in part, by payment of 110% of the principal
      amount then outstanding.





No
      payments of principal are due until June 30, 2009. Interest of $363,440 was
      accrued as of December 31, 2006 for the period June 30 through December 31,
      2006. We elected to pay it in shares. However since we did not have registered
      shares to offer, some holders of the notes requested cash. In January 2007,
      112,902 shares were issued and $17,986 was paid in cash. For the period January
      1 through March 31, 2007, interest of $176,808 was accrued as of March 31,
      2007.
      We elected the stock issuance and calculated the number of shares using 90%
      of
      the volume weighted average price, or $2.66/share. While the majority of the
      investors agreed to the issuance of unregistered stock, $22,178 was paid in
      cash
      and 58,052 shares were issued to the investors in the first week of April 2007.





***Capital
      Resources***





At
      this
      time, the cash flow from our oil & gas properties is not sufficient to cover
      operations and we have used the available equity from the private placement
      in
      our capital development program. We are in discussions with the lenders under
      the Credit Agreement, and we may be able to borrow additional funds under Credit
      Agreement to complete the wells that are currently in the completion stages.
      Subsequent to March 31, 2007, we engaged Energy Capital Solutions, Dallas,
      Texas, as a financial advisor to assist
      us
      in seeking strategic restructuring alternatives, including the marketing of
      one
      or all of the Company’s assets.





If
      debt
      financing is not available in sufficient amounts or on acceptable terms, our
      results of operations and financial condition may be adversely affected. Any
      debt financing obtained must be repaid regardless of whether or not we generate
      profits or cash flows from our business activities. In addition, equity
      financing, if available, may result in dilution to existing stockholders and
      may
      involve securities that have rights, preferences or privileges that are senior
      to our common stock. We are seeking to restructure to allow us to re-capitalize,
      reduce debt and seek other opportunities for growth.





***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. We have many additional prospects identified for future drilling
      and
      development, which are in various stages of evaluation, land and leasing and
      assimilation. Our development and exploration activities are located in east
      and
      southeast Texas.





14





The
      table
      below summarizes the Company's areas of operations, including the number of
      gross and net wells as of March 31, 2007.




**Completed
                / Productive**
            
            
            **Pending**
              **Completion
                or**
            
            
            **Currently**
            
            
            **Dry****Field**
            
            
            **Oil**
            
            
            **Gas**
            
            
            **Recompletion**
            
            
            **Drilling**
            
            
            **Hole**
            
            
            **Total****Operated
                wells**Elkhart
            
            
            1
            
            
            1
            
            
            2
            
            
            0
            
            
            0
            
            
            4Hoskins
            
            
            4
            
            
            0
            
            
            1
            
            
            0
            
            
            1
            
            
            6Waskom
            
            
            0
            
            
            2
            
            
            0
            
            
            0
            
            
            0
            
            
            2Humber
            
            
            1
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            1**Total
                operated wells**
            
            
            **6**
            
            
            **3**
            
            
            **3**
            
            
            **0**
            
            
            **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**
            
            
            **3**
            
            
            **0**
            
            
            **3**
            
            
            **17**




***Capital
      Development Plan***





We
      are
      currently completing the Covington #3 and #6. We are re-entering the Hoskins
      #209 and will evaluate future development once we have more information. The
      estimated costs for these plans are approximately $380,000, which we are looking
      to our credit facility for funding. At this time, we have no additional capital
      development plans.





**Results
      of Operations**





***Overall***





For
      the
      six months ended March 31, 2007, the Company had a loss applicable to common
      shares of $3,490,576, compared to the $1,140,104 loss for the same period ended
      March 31, 2006. The net loss for the three months ended March 31, 2007 was
      $1,825,371, compared to $562,672 for the same period ended March 31, 2006.





**Six
                Months ended March 31,**
            
            
            **Increase
                /****2007**
            
            
            **2006**
            
            
            **(Decrease**)******Results
                of oil & gas producing operations**
            
            $
            (1,002,902
            )
            $
            203,940
            
            $
            (1,206,842
            )**Plus
                contract services income, net**
            
            
            161,294
            
            
            131,401
            
            
            29,893**Less
                the following items**
            
            
            
            
            
            
            
            
            0General
                and administrative expense
            
            
            1,711,286
            
            
            1,297,412
            
            
            413,874Interest
                expense, net
            
            
            514,910
            
            
            178,033
            
            
            336,877Merger
                expenses and liquidated damages
            
            
            1,180,522
            
            
            -
            
            
            1,180,522Net
                loss
            
            $
            (4,248,326
            )
            $
            (1,140,104
            )
            $
            (3,108,222
            )




15




**Three
                Months ended March 31,**
            
            
            **Increase
                /****2007**
            
            
            **2006**
            
            
            **(Decrease**)******Results
                of oil & gas producing operations**
            
            $
            (243,175
            )
            $
            207,306
            
            $
            (450,481
            )**Plus
                contract services income, net**
            
            
            45,677
            
            
            87,648
            
            
            (41,971
            )**Less
                the following items**General
                and administrative expense
            
            
            1,081,807
            
            
            696,053
            
            
            385,754Interest
                expense, net
            
            
            242,755
            
            
            161,573
            
            
            81,182Merger
                expenses and liquidated damages
            
            
            1,060,850
            
            
            -
            
            
            1,060,850Net
                loss
            
            $
            (2,582,910
            )
            $
            (562,672
            )
            $
            (2,020,238
            )





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:





**Six
                Months ended March 31,**
            
            
            **Increase
                /****2007**
            
            
            **2006**
            
            
            **(Decrease**)****Revenues
                from oil & gas producing activities
            
            $
            945,620
            
            $
            538,736
            
            $
            406,884Less
                the following items:Lease
                operating costs and production taxes
            
            
            299,263
            
            
            230,362
            
            
            68,901Dry
                hole & abandonment expenses
            
            
            567,193
            
            
            -
            
            
            567,193Depreciation,
                depletion, accretion & amortization
            
            
            1,082,066
            
            
            104,434
            
            
            977,632Results
                from oil & gas operating activities
            
            $
            (1,002,902
            )
            $
            203,940
            
            $
            (1,206,842
            )




**Three
                Months ended March
                31,**
            
            
            **Increase
                /****2007**
            
            
            **2006**
            
            
            **(Decrease**)****Revenues
                from oil & gas producing activities
            
            $
            430,648
            
            $
            411,011
            
            $
            19,637Less
                the following items:Lease
                operating costs and production taxes
            
            
            152,234
            
            
            130,434
            
            
            21,800Dry
                hole & abandonment expenses
            
            
            51,743
            
            
            -
            
            
            51,743Depreciation,
                depletion, accretion & amortization
            
            
            469,846
            
            
            73,271
            
            
            396,575Results
                from oil & gas operating activities
            
            $
            (243,175
            )
            $
            207,306
            
            $
            (450,481
            )




***Operating
      Revenues***





Operating
      revenues increased in the six months ended March 31, 2007 from the same period
      by $406,884, due to the drilling and completion of new developmental
      wells.




16





The
      table
      below summarizes the operating revenues for the two six-month periods ending
      March 31, 2007 and the two three-month periods ending March 31,
      2007:




**Six
                Months ended****March
                31,**
            
            **Increase****/****2007**
            
            **2006**
            
            **Increase
                  (Decrease)**Operating
                revenues
            
            $
            945,620
            
            $
            538,736
            
            $
            406,884SalesOil
                (Bbls)
            
            
            9,204
            
            
            4,340
            
            
            4,864Gas
                (Mcf)
            
            
            93,300
            
            
            34,493
            
            
            58,807Total
                (BOE)
            
            
            24,754
            
            
            10,089
            
            
            14,665Average
                PriceOil
                ($/Bbl)
            
            $
            55.26
            
            $
            60.56
            
            $
            (5.30
            )Gas
                ($/Mcf)
            
            $
            5.93
            
            $
            7.66
            
            $
            (1.73
            )




**Three
                Months ended****March
                31,**
            
            **Increase
                /****2007**
            
            **2006**
            
            **Increase
                    (Decrease)**Operating
                revenues
            
            $
            430,648
            
            $
            411,011
            
            $
            19,637SalesOil
                (Bbls)
            
            
            3,023
            
            
            3,328
            
            
            (305
            )Gas
                (Mcf)
            
            
            43,260
            
            
            27,066
            
            
            16,194Total
                (BOE)
            
            
            10,233
            
            
            7,839
            
            
            2,394Average
                PriceOil
                ($/Bbl)
            
            $
            55.23
            
            $
            61.55
            
            $
            (6.32
            )Gas
                ($/Mcf)
            
            $
            6.28
            
            $
            8.08
            
            $
            (1.80
            )




***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 $299,263 for the six months ended March
      31,
      2007, from $230,362 for the six months ended March 31, 2006. There were
      exploratory dry hole expenses of $567,193 from a dry hole that began
      drilling in September 2006, compared to no dry hole costs for the six months
      ended March 31, 2006. The Company had no abandonment cost in either period
      of
      the six months ended March 31, 2007 or in the six months ended March 31, 2006.
      No impairment was taken on the Company's proved reserves for the six months
      ended March 31, 2007, similar to the six months ended March 31,
      2006.





Depreciation,
      depletion, accretion of the asset retirement obligation and amortization of
      intangible drilling costs was $1,082,066 for the six months ended March 31,
      2007, which is an increase of $977,632 from the expense of $104,434 for the
      six
      months ended March 31, 2006. 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 $1,711,286, after a
      reversal of stock compensation expense of $227,779 from forfeited warrants
      and
      terminated options, for the six months ended March 31, 2007, from $1,297,412
      for
      the six months ended March 31, 2006 primarily to support the additional drilling
      activity and operations. The components of general and administrative costs
      and
      the comparison between periods are as follows:




**Six
                Months ended****March
                31,**
            
            **Increase
                /****2007**
            
            **2006**
            
            **(Decrease)**General
                and administrative costsPersonnel
                expense
            
            
            49
            %
            
            55
            %
            
            26
            %Stock
                compensation expense reversal
            
            
            (13
            )%
            
            0
            %
            
            (46
            )%Professional
                services
            
            
            53
            %
            
            22
            %
            
            124
            %Facilities
            
            
            6
            %
            
            14
            %
            
            (13
            )%Operator
                overhead
            
            
            (6
            )%
            
            (2
            )%
            
            0
            %Insurance
            
            
            6
            %
            
            1
            %
            
            16
            %Penalties,
                fees and taxes
            
            
            5
            %
            
            10
            %
            
            (7
            )%Total
            
            
            100.00
            %
            
            100.00
            %
            
            100.00
            %




**Three
                Months ended****March
                31,**
            
            **Increase
                /****2007**
            
            **2006**
            
            **(Decrease)**General
                and administrative costsPersonnel
                expense
            
            
            44
            %
            
            57
            %
            
            19
            %Stock
                compensation expense reversal
            
            
            48
            %
            
            0
            %
            
            122
            %Professional
                services
            
            
            5
            %
            
            20
            %
            
            (20
            )%Facilities
            
            
            3
            %
            
            8
            %
            
            (5
            )%Operator
                overhead
            
            
            (6
            )%
            
            (4
            )%
            
            0
            %Insurance
            
            
            0
            %
            
            1
            %
            
            (2
            )%Penalties,
                fees and taxes
            
            
            6
            %
            
            18
            %
            
            (14
            )%Total
            
            
            100.00
            %
            
            100.00
            %
            
            100.00
            %





***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
      $381,126 on this debt for the six months ended March 31, 2007, compared to
      $299,419 for the six months ended March 31, 2006. The Company capitalized
      $475,708 for the six months ended March 31, 2007 and $283,451 for the six months
      ended March 31, 2006. The increase in the interest expense is due to the
      increase in the advances of $1,866,481 as we drilled more wells net of with
      the
      repayments of $136,000. The effective interest rate at March 31, 2007 was
      13.75%. The balance of the note was $6,181,508 at March 31,
      2007.





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 $357,546 for the six months ended March 31, 2007 and
      $0
      for the six months ended March 31, 2006.





The
      remaining interest expense is the amortization of the capitalized interest
      and
      the debt discount on the two previously discussed debt instruments of $351,178
      for the six months ended March 31, 2007 and $151,053 for the six months ended
      March 31, 2006.




18





***Liquidated
      damages***





In
      conjunction with the private placement, certain time constraints were put in
      the
      Securities Purchase Agreement and the Registration Rights Agreement,
      requiring that a merger be completed within 120 days of June 30, 2006 and the
      initial filing for registration of the shares to be within 30 days of the date
      of the merger. These requirements were not met and thus CrossPoint LLC accrued
      liquidated damages of $340,988 at September 30, 2006. The liquidated damages
      were both calculated from the aggregate purchase price of $15,155,000, as
      follows:




Damages
                per Securities Purchase Agreement
            
            $
            37,888(calculated
                at 0.25% of the purchase price)Damages
                per Registration Rights Agreement
            
            
            303,100(calculated
                at 2.0% of the purchase price)Total
                liquidated damages at September 30, 2006
            
            $
            340,988Damages
                at March 27, 2007 per Registration Rights Agreement(calculated
                at 2.0% of the purchase price)
            
            
            303,100Accrued
                damages per Registration Rights Agreement for April and
                probability-weighted for the other expected event dates
            
            $
            757,550Total
                liquidated damages at March 31, 2007
            
            $
            1,060,650





While
      we
      can request that the shareholders accept shares in lieu of cash, some
      shareholders took cash. The damages described above have been paid with $51,915
      in cash and 207,233 shares. The number of shares was derived by a share price
      of
      90% of the volume weighted average trading price of $3.06 for the 10 days prior
      to the “event” date.





We
      have
      satisfied the requirements of the Securities Purchase Agreement and will not
      incur any additional damages. The potential liquidated damages payments per
      the
      Registration Rights Agreement continue through the shares becoming and remaining
      effective and partial liquidated damages are in effect until all of the
      requirements are met. We face damages payments on each 30 day anniversary of
      the
      merger for which the registration is not filed and within 120 days of the
      merger, on each anniversary that the registered shares are not effective at
      2%
      of the aggregate purchase price in each instance up to an aggregate maximum
      24%.
      Additional events are (i) if we fail to file an acceleration request letter
      within five trading days after the SEC alerts us that the registration statement
      is not subject to further review, (ii) if we do not file a pre-effective
      amendment and otherwise respond in writing to SEC comments within 21 calendar
      days after receipt of comments or notice from the SEC that an amendment is
      required in order for the registration statement to be declared effective or
      (iii) after the registration statement is declared effective, it ceases to
      be
      effective for more than 15 consecutive calendar days or more than an aggregate
      of 20 calendar days during any 12 month period. The damages are capped at 24%
      of
      the aggregate purchase price, or $3,637,200. The Registration Rights
      Agreement has been amended to extend the registration filing from 90 days
      to 120 days and to allow the damages payments to be paid with shares, through
      April 28, 2007.





The
      total
      possible payments for liquidated damages for the first year are as
      follows:





Damages
                per Securities Purchase Agreement
            
            $
            37,888Damages
                per Registration Rights Agreement
            
            
            1,515,500Total
                possible liquidated damages
            
            $
            1,553,388





The
      total
      possible net proceeds from the sale of convertible notes are as
      follows:





Total
                proceeds from the sale of convertible notes
            
            $
            8,840,417Total
                possible interest at 8% for 3 years
            
            
            (2,121,700
            )Total
                possible damages from the SPA
            
            
            (
                37,888
            )Total
                possible damages from the RRA
            
            
            (3,637,200
            )Total
                net proceeds from the sale of convertible notes
            
            $
            3,043,629





***Equity***





The
      Company paid no dividends in six months ended March 31, 2007 or in the six
      months ended March 31, 2006.





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.




19




**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 effective as of the end of the period covered by this
      report.





In
      response to our material weaknesses in our disclosure controls and procedures
      as
      of September 30, and December 31, 2006, during the quarter ended March 31,
      2007,
      we (i) completed the assimilation of our new staff to allow for proper
      review and documentation of our accounting procedures and (ii) hired
      outside consultants to assist with our Securities and Exchange Commission
      reports.  These actions materially affected or are reasonably likely to
      materially affect our internal control over financial reporting.




**PART
      II - 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**





***Interest
      payment on Convertible Note***





The
      Company paid 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. The
      majority of the investors agreed to the issuance of unregistered stock,
      which resulted in the issuance of 118,781 shares to the investors in the first
      week of January 2007. Initially the interest was paid 100% in shares, however
      two investors required cash payments. Their certificates for 5,879 shares have
      been returned into treasury stock.





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





Included
      in the Securities Purchase Agreement were liquidated damages 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
      resulting in liquidated damages of $37,888. 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 liquidated damages
      which resulted in 11,778 shares being issued to the investors in the February
      2007 using a stock price of $3.06, which was 90% of the
      volume-weighted-average-price (VWAP) of the common stock for the ten trading
      days immediately prior to the Event date.





***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’s failure to meet the deadline, defined
      in the RRA as an “Event,” caused the Company to be required to pay the investors
      2% of their aggregate investment of $15,155,000 or $303,100.





An
      amendment to the RRA was agreed upon on January 25, 2007 which allowed the
      Company to pay future Events through April 28, 2007 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. The majority of the investors
      agreed to the issuance of unregistered stock, which resulted in the issuance
      of
      90,883 shares to the investors in February 2007, using a stock price of $3.06,
      which was 90% of the volume-weighted-average-price (VWAP) of the common stock
      for the ten trading days immediately prior to the Event date.





20





***Registration
      Rights Agreement - requirement for the shares to be
      effective***





By
      the
      terms of the Registration Rights Agreement (“RRA”) Article 2.b.iv, as amended on
      January 25, 2007, between the investors and the Company, the Registration
      Statement filed under Company's SB2 must be declared effective by the Commission
      within 120 calendar  days
      following the date of the merger. The merger was consummated on November 27,
      2006, which required that the shares be effective on March 27, 2007. The Company
      filed the SB-2 to register the shares on January 27, 2007, however the SEC
      had
      not completed its review by March 27, 2007 and another Event was
      triggered.





The
      majority of the investors agreed to the issuance of unregistered stock, which
      resulted in the issuance of 104,572 shares to the investors in March, using
      a
      stock price of $2.66, which was 90% of the volume-weighted-average-price (VWAP)
      of the common stock for the ten trading days immediately prior to the Event
      date.





The
      Company issued the following shares in January through March, 2007:





Securities
                Purchase Agreement
            
            
            11,778Registration
                Rights Agreement: Filing Event as of December 27, 2006
            
            
            90,883Interest
                on convertible note for the period June 30 through December 31, 2006
                (net
                of Treasury stock)
            
            
            112,902Registration
                Rights Agreement: Event as of March 27, 2007
            
            
            104,572Total
                shares issued in the three months ended March 31, 2007
            
            
            320,135





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.





***Repurchase
      of Equity Securities***





As
      described above, the Company elected to pay interest on the convertible note
      in
      unregistered common stock and issued 118,781 to investors in January 2007.
      However, two investors elected not to accept the shares. In January 2007, we
      paid these two investors $22,178 as interest and received 5,879 shares back
      from
      the investors.





**Period**
            
            **Total
                Number of**
              **Shares
                Purchased**
            
            **Average
                Price Paid**
              **Per
                Share**
            
            **Total
                Number of Shares Purchased as Part of Publicly Announced Plans or
                Programs**
            
            **Maximum
                Number of Shares that May Yet Be Purchased Under the Plans or
                Programs**January
                1 -January
                31
            
            
            5,879
            
            $
            3.77
            
            
            N/A
            
            
            N/AFebruary
                1-February
                28
            
            
            0
            
            
            0
            
            
            N/A
            
            
            N/AMarch
                1 -March
                31
            
            
            0
            
            
            0
            
            
            N/A
            
            
            N/ATotal
            
            
            5,879
            
            $
            3.77
            
            
            N/A
            
            
            N/A




21




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





Not
      applicable.





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





Not
      applicable.





**ITEM
      5. OTHER INFORMATION**





Not
      applicable.





**ITEM
      6. EXHIBITS**





**EXHIBIT**
              **NUMBER**
            
            **DESCRIPTION
                OF EXHIBITS**10.1
            
            Amendment
                No. 1 to Registration Rights Agreement dated January 2007, by and
                among
                CrossPoint Energy Company and the several purchasers thereto(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 from Exhibit 10.10 to Registration Statement on Form
                SB-2
                (SEC No. 333-140266) filed on March 16,
                2007.





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**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized, on this 17th day of May,
      2007.




**CROSSPOINT
              ENERGY COMPANY**Date:May
              17, 2007
            By:
            /s/
              Daniel F. CollinsDaniel F. Collins,
              President and Chief Executive Officer By:
            /s/
              Margaret R. CoughlinMargaret R. Coughlin,
              Secretary


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