**SECURITIES      AND EXCHANGE COMMISSION **

**FORM      10-QSB **

**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(D) OF **

**THE      SECURITIES EXCHANGE ACT OF 1934 **

**FOR      THE QUARTERLY PERIOD ENDED September 30, 2006 **

*COMMISSION      FILE NO. 0-09482 *

**COLORADO      WYOMING RESERVE COMPANY **

| Wyoming                                     |   | 83-0246080                         |
|---------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction |   | (IRS                Employer       |
| of                incorporation)            |   | Identification                No.) |

| 751                Horizon Court, Suite 205, Grand Junction, Colorado |   | 81506                     |
|----------------------------------------------------------------------------|--------|---------------------------|
| (Address                of principal executive offices)                    |   | (Zip                Code) |

Indicate      by check mark whether the issuer (1) filed all reports required to be filed      by      Section 13 or 15(d) of the Securities Exchange Act during the preceding 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 xNO      o

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**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements.**** **

**COLORADO      WYOMING RESERVE COMPANY**

**(A      DEVELOPMENT STAGE ENTERPRISE)**

**BALANCE      SHEET**

**September      30, 2006**

| CURRENT                  ASSETS:                                                                                                    |   |   |       |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|
|     Cash                  and cash equivalents                                                                  |   | $      | 975        |   |
|     Accounts                  receivable                                                                        |   |   | —    |   |
|                                                                                                                                |   |   |       |   |
| Total                  current assets                                                                                               |   |   | 975        |   |
|                                                                                                                                |   |   |       |   |
| PROPERTY                  AND EQUIPMENT:                                                                                            |   |   |       |   |
|     Unproved                  oil and gas properties                                                            |   |   | 62,570     |   |
|     Other                  property and equipment                                                               |   |   | 14,914     |   |
|                                                                                                                                |   |   |       |   |
|     Less                  accumulated depreciation, other property and equipment                                |   |   | (14,841    | ) |
|                                                                                                                                |   |   |       |   |
|         Net                  property and equipment                                         |   |   | 62,643     |   |
|                                                                                                                                |   |   |       |   |
|     Other                                                                                                       |   |   | 1,960      |   |
|                                                                                                                                |   |   |       |   |
| Total                  assets                                                                                                       |   | $      | 65,578     |   |
|                                                                                                                                |   |   |       |   |
| CURRENT                  LIABILITIES:                                                                                               |   |   |       |   |
|     Trade                  accounts payable                                                                     |   | $      | 82,260     |   |
|     Other                  accrued liabilities                                                                  |   |   | 244,450    |   |
|     Related                  party payables:                                                                    |   |   |       |   |
|       On                  account                                                                     |   |   | 802,568    |   |
|       Advances                  from Lightening Draw                                                  |   |   | 122,000    |   |
|       Note                  payable to joint venture                                                  |   |   | 305,000    |   |
|                                                                                                                                |   |   |       |   |
| Total                  current liabilities                                                                                          |   |   | 1,556,277  |   |
|                                                                                                                                |   |   |       |   |
| EQUITY                                                                                                                              |   |   |       |   |
| Common                    Stock, $.01 par value: authorized-75,000,000 shares; issued and                    outstanding-16,137,694 |   |   | 161,377    |   |
|     Additional                  paid-in capital                                                                 |   |   | 9,398,676  |   |
|     Warrants                                                                                                    |   |   | 148,100    |   |
|     Accumulated                  deficit:                                                                       |   |   |       |   |
|          Before                  entering the development stage                        |   |   | (4,441,242 | ) |
|          After                  entering the development stage                         |   |   | (6,757,610 | ) |
|                                                                                                                                |   |   |       |   |
| Total                  Equity                                                                                                       |   |   | (1,490,699 | ) |
|                                                                                                                                |   |   |       |   |
| Total                  liabilities and equity                                                                                       |   | $      | 65,578     |   |

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**COLORADO      WYOMING RESERVE COMPANY**

**(A      DEVELOPMENT STAGE ENTERPRISE)**

**STATEMENTS      OF OPERATIONS**

**(UNAUDITED)**

|                                                                        |   |                                               |       | **PERIOD                  FROM**     |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------|------------|--------------------------------------|--------|
|                                                                        |   | **QUARTERS                    ENDED**SEPTEMBER 30, |       | **JANUARY                  1, 1999** |   |
|                                                                        |   | **2006**                                           |       | **2005**                             |   | **SEPTEMBER                  30, 2006** |   |
| REVENUES                                                                    |   | $                                                  | —    |                                 | $      | — |   | $ | — |   |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| EXPENSES                                                                    |   |                                               |       |                                 |   |   |   |   |   |   |
|    Exploration                  cost                         |   |                                               | 6,874      |                                 |   | — |   |   | 730,703 |   |
|    Depreciation,                  depletion and amortization |   |                                               |       |                                 |   |   |   |   | 6,320 |   |
|    General                  and administrative               |   |                                               | 99,124     |                                 |   | 101,854 |   |   | 5,911,649 |   |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| Total                  expenses                                             |   |                                               | 105,998    |                                 |   | 101,854 |   |   | 6,648,672 |   |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| Operating                  loss                                             |   |                                               | (105,998   | )                                    |   | (101,854 | ) |   | (6,648,672 | ) |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| OTHER                  INCOME (EXPENSE)                                     |   |                                               |       |                                 |   |   |   |   |   |   |
|    Interest                  income (expense), net           |   |                                               | (5,401     | )                                    |   | (5,350 | ) |   | (107,710 | ) |
|    Loss                  on sale of assets                   |   |                                               | —    |                                 |   | — |   |   | (1,231 | ) |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| Income                  (Loss) before income taxes                          |   |                                               | (111,399   | )                                    |   | (107,204 | ) |   | (6,757,613 | ) |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
| Provision                  for income taxes                                 |   |                                               | —    |                                 |   | — |   |   | — |   |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
|    Net                  loss                                 |   | $                                                  | (111,399   | )                                    | $      | (107,204 | ) | $ | (6,757,613 | ) |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
|    Basic                  and diluted loss per share         |   | $                                                  | (.01       | )                               | $      | (0.01 | ) |   |   |   |
|                                                                        |   |                                               |       |                                 |   |   |   |   |   |   |
|    Outstanding                  shares                       |   |                                               | 16,137,694 |                                 |   | 10,807,694 |   |   |   |   |

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**COLORADO          WYOMING RESERVE COMPANY**

**(A      DEVELOPMENT STAGE ENTERPRISE)**

**CASH      FLOW STATEMENTS**

|                                                                                                              |   |                                                 |     | **PERIOD                  FROM**        |   |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|----------|-----------------------------------------|--------|
|                                                                                                              |   | **QUARTERS                      ENDED**SEPTEMBER 30, |     | **JANUARY                  1, TO 1999** |   |
| **            **                                      |   | **2006**                                             |     | **2005**                                |   | **SEPTEMBER                  30, 2006** |   |
| Cash                  flows from operating activities:                                                            |   |                                                 |     |                                    |   |   |   |
| Net                  loss                                                                                         |   | $                                                    | (111,399 | )                                       | $      | (107,204 | ) |   | (6,757,613 | ) |
| Adjustments                  to reconcile net loss to net used in operating                  activities:          |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Stock                  based Compensation                   |   |                                                 |     |                                    |   |   |   |   | 95,600 |   |
|          Stock                  issued for Services                  |   |                                                 |     |                                    |   |   |   |   | 3,690,000 |   |
|          Stock                  based Deferred Compensation          |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Stock                  issued for Oil and Gas Properties    |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Warrants                  issued for Oil and Gas Properties |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Stock                  issued for Financing Costs           |   |                                                 |     |                                    |   |   |   |   | 27,000 |   |
|          Warrants                  issued for Financing Costs        |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Depletion,                  depreciation and amortization   |   |                                                 | —  |                                    |   | — |   |   | 6,320 |   |
|          Loss                  on asset sale                         |   |                                                 | —  |                                    |   | — |   |   | 1,231 |   |
|          Amortization                  of note payable discount      |   |                                                 | —  |                                    |   | — |   |   | 35,000 |   |
|          Loss                  from joint venture investment         |   |                                                 |          |                                    |   | — |   |   | 361,767 |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Changes                  in current assets and liabilities:                                                       |   |                                                 |     |                                    |   |   |   |   |   |   |
|          Receivables                                                 |   |                                                 | —  |                                    |   | — |   |   | 3,126 |   |
|         Payables                                                          |   |                                                 | 110,912  |                                    |   | 92,167 |   |   | 1,209,522 |   |
|         Other                                                             |   |                                                 |     |                                    |   | — |   |   | (436 | ) |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Net                  cash (used in) operating activities                                                          |   |                                                 | (487     | )                                       |   | (15,037 | ) |   | (1,328,483 | ) |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Cash                  flows from investing activities:                                                            |   |                                                 |     |                                    |   |   |   |   |   |   |
|    Additions                  to unproved properties                                               |   |                                                 | —  |                                    |   | — |   |   | (46,544 | ) |
|    Unproved                  property cost recovery                                                |   |                                                 |     |                                    |   | — |   |   | 191,467 |   |
|    Asset                  purchases                                                                |   |                                                 | —  |                                    |   | — |   |   | (1,269 | ) |
|    Proceeds                  from asset sale                                                       |   |                                                 | —  |                                    |   | — |   |   | (2,354 | ) |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Net                  cash (used in) provided by investing activities                                              |   |                                                 | 0        |                                    |   | 0 |   |   | 141,300 |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Cash                  flows from financing activities:                                                            |   |                                                 |     |                                    |   |   |   |   |   |   |
|    Sale                  of common stock                                                           |   |                                                 | —  |                                    |   | — |   |   | 1,184,456 |   |
|    Advances                  from joint venture                                                    |   |                                                 | —  |                                    |   |   |   |   | 130,509 |   |
|    Repayment                  of joint venture advances                                            |   |                                                 |          |                                    |   | — |   |   | — |   |
|    Repayment                  of notes payable                                                     |   |                                                 | —  |                                    |   | — |   |   | (130,000 | ) |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Net                  cash provided by financing activities                                                        |   |                                                 | —  |                                    |   | — |   |   | 1,184,965 |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Net                  increase (decrease) in cash and equivalents                                                  |   |                                                 | (487     | )                                       |   | (15,037 | ) |   | (2,218 | ) |
| Cash                  and equivalents at beginning of period                                                      |   |                                                 | 1,463    |                                    |   | 17,553 |   |   | 3,191 |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Rounding                                                                                                          |   |                                                 | (1       | )                                       |   |   |   |   | 2 |   |
| Cash                  and equivalents at end of period                                                            |   | $                                                    | 975      |                                    | $      | 2,516 |   | $ | 975 |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| **SUPPLEMENTAL                  SCHEDULE OF CASH FLOW INFORMATION**                                               |   |                                                 |     |                                    |   |   |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Cash                  paid for interest expense                                                                   |   | $                                                    | —  |                                    | $      | — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| **SUPPLEMENTAL                  DISCLOSURES OF NON-CASH INVESTING AND FINANCING                  ACTIVITIES**     |   |                                                 |     |                                    |   |   |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Stock                  based compensation                                                                         |   | $                                                    | —  |                                    | $      | — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Stock                  issued for services                                                                        |   | $                                                    | —  |                                    | $      | — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Stock                  based deferred compensation                                                                |   | $                                                    |     |                                    | $      |  — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Stock                  issued for oil and gas properties                                                          |   | $                                                    |     |                                    | $      |  — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Warrants                  issued for oil and gas property consulting                                              |   | $                                                    |     |                                    | $      |  — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Stock                  issued for financing costs                                                                 |   | $                                                    | —  |                                    | $      | — |   |   |   |   |
|                                                                                                              |   |                                                 |     |                                    |   |   |   |   |   |   |
| Warrants                  issued for financing costs                                                              |   | $                                                    |     |                                    | $      |  — |   |   |   |   |

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**COLORADO      WYOMING RESERVE COMPANY **

**NOTES      TO FINANCIAL STATEMENTS**

**Periods      Ended September 30, 2006 and 2005 **

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In      December 2004, the FASB issued SFAS 123(R), "Share-Based Payment," which is      a      revision of SFAS No. 123, Accounting for Stock-Based Compensation. SFAS 123(R)      is effective for public companies for interim or annual periods beginning after      June 15, 2005, supersedes APB Opinion 25, Accounting for Stock Issued to      Employees, and amends SFAS 95, Statement of Cash Flows. 

**ITEM      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS      OF      OPERATIONS **

**UNCERTAINTY      OF FORWARD-LOOKING INFORMATION**

**PLAN      OF OPERATIONS **

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**LIQUIDITY      AND CAPITAL RESOURCES **

**RESULTS      OF OPERATIONS **

**Item 4.      CONTROLS AND PROCEDURES **

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**PART      II. **

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings.**

**Item 1A      — RISK FACTORS **

**Item      2. Changes in Securities and Use of Proceeds.**

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders. **

**Item      5. Other Information.**

**Item      6. Exhibits**

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**SIGNATURES**

**COLORADO      WYOMING RESERVE COMPANY **

|                                    |                                                                                            |                                  |
|-----------------------------------------|-------------------------------------------------------------------------------------------------|---------------------------------------|
|                                    |                                                                                            |
|                               |                                                                                       |                             |
| Dated:                November 13, 2006 | By:                                                                                   | /s/ Waseem              A. Sayed |
|                                    | Waseem                A. Sayed                                                                  |
|                                    | President,                Chief Executive Officer(Principal                  Executive Officer) |

|         |                                                                                 |                                 |
|--------------|--------------------------------------------------------------------------------------|--------------------------------------|
|         |                                                                                 |
|    |                                                                            |                            |
|         | By:                                                                        | /s/ Rafiq              A. Sayed |
|         | Rafiq              A. Sayed                                                          |
|         | Chief                Financial Officer(Principal                  Financial Officer) |

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