SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended November 30, 2009
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________________to ____________________

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

For the quarterly period ended August 31, 2010

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

For the transition period from __________ to __________

Commission file number: 0-50472

NEW FRONTIER ENERGY, INC. ~~(Exact name of small business issuer as specified in its charter)~~

Colorado		84-1530098
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

(Exact name of small business issuer as specified in its charter)

1801 Broadway, Suite 920, Denver, CO 80203 (Address of principal executive offices) (303) 730-9994 (Issuer’s telephone number)

Colorado	84-1530098
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1801 Broadway Suite 920, Denver, CO 80202

(Address of principal executive offices)

(303) 730-9994

(Issuer's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

> Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

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

As of March 164, ~~2010~~2011, there were 4468,~~276~~624,~~306~~558 shares of common stock outstanding ~~(not including 17,243,059 shares that have not been issued~~.~~) See Note 9.~~

NEW FRONTIER ENERGY, INC.

Index

Part I - FINANCIAL INFORMATION

Item 1	Financial Statements	2
	Consolidated Balance Sheets at November 30, 2009 (unaudited) and February 28, 2009		3
	Condensed Consolidated Balance Sheet at August 31, 2010 (unaudited) and February 28, 2010	2
	Consolidated Statements of Operations (unaudited) for the three months ended November 30, 2009 and 2008		4
	Condensed Consolidated Statements of Operations (unaudited) for the three and six month period ended August 31, 2010 and 2009	3
	Consolidated Statements of Operations (unaudited) for the nine months ended November 30, 2009 and 2008		5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three and six month period ended August 31, 2010 and 2009	4
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended November 30, 2009 and 2008		6
	Notes to Condensed Consolidated Financial Statements (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)		7
Item 2	Management’s Discussion and Analysis or Plan of Operations	17
Item 2	Management’s Discussion and Analysis or Plan of Operations		17
Item 3	Quantitative and Qualitative Disclosures About Market Risk	27
Item 3	Quantitative and Qualitative Disclosures About Market Risk		23
Item 4	Controls and Procedures	27
Item 4	Controls and Procedures		23
Item 4T	Controls and Procedures		23

Part II - OTHER INFORMATION

Item 1	Legal Proceedings	28	24
Item 1A	Risk Factors	28	24
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	28	25
Item 3	Defaults Upon Senior Securities	28	26
Item 4	Submission of Matters of a Vote of Security Holders	28	26
Item 5	Other Information	28	26
Item 6	Exhibits	28	26
SIGNATURES		29	26
EXHIBITS

EXHIBITS

NEW FRONTIER ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	November 30, 2009			February 28, 2009
	August 31,			February 28,
	(Unaudited)
	2010			2010
ASSETS	(unaudited)
CURRENT ASSETS
Cash	$	14,~~311~~704,~~902~~747		$	~~856~~850,~~475~~202
Segregated arbitration funds, affiliates		500,100			—
Accounts receivable - trade, net of allowance for doubtful accounts of $958,429
Accounts receivable, trade, net of allowances		2,185,747			583,628
and $835,132, as of August 31, 2010, and February 28, 2010, respectively		722,824			909,268
Prepaid expenses		330,665			233,423
Subcription Receivable		-			20,401
Total current assets		4,328,414			1,673,526
Prepaid expenses		-			69,151
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION AND DEPLETION
Inventory		149,615			149,615
of $2,642,123 and $2,278,466 as of November 30, 2009 and February 28, 2009, respectively		13,575,697			14,949,366
Total current assets		5,577,186			1,998,637
PROPERTY AND EQUIPMENT (successful efforts method), at cost:
Oil and gas gathering facilities, net of accumulated depreciation and amortization
of $652,460 and $587,214 as of August 31, 2010, and February 28, 2010, respectively.		1,947,703			2,012,949
Unproved oil and gas properties, net of accumulated depletion, depreciation & amortization
of $1,901,036 and $1,780,486 as of August 31, 2010, and February 28, 2010,
respectively		3,020,204			3,064,345
Other property and equipment, net of accumulated depreciation of $173,366 and
$226,401 as of August 31, 2010 and February 28, 2010, respectively		123,990			105,871
		5,091,897			5,183,165
OTHER ASSETS
Deposits		160,000			160,000
Unproved oil and gas properties held for sale		-			577,629
Total assets	$	18,064,111		$	16,782,892
Other property and equipment held for sale, net of accumulated depreciation
LIABILITIES AND STOCKHOLDERS’ EQUITY
of $115,914 as of August 31, 2010, and February 28, 2010, respectively		800,890			851,890
Deposits		163,588			163,288
Total other assets		964,478			1,592,807
Total Assets	$	11,633,561		$	8,774,609
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	21,~~073~~212,~~395~~846		$	~~862~~1,~~248~~613,114
Segregated funds indemnification, affiliates		500,000			—
Notes payable, current portion		201,563			836,563
Notes payable, current portion, affiliates		201,562			403,125
Notes payable - affiliate		50,000			-
Notes payable, current portion		636,696			825,898
Dividends payable		1,138,889			1,030,565
Dividends payable		2,559,867			1,999,083
Total current liabilities		2,603,298			3,480,242
Accrued expenses		1,300,858			376,133
Accrued interest		—			2,459
Accounts payable, affiliates		43,989			38,142
Total current liabilities		7,316,367			4,507,088
LONG TERM LIABILITIES
Notes payable, affiliates		201,563			—
Derivative liability		550,000			480,000
Asset retirement obligation		290,000			290,000
Contingent liability - deferred gain		1,856,766			-
Total liabilities		7,807,930			4,797,088
Asset retirement obligation		80,898			77,000
STOCKHOLDERS’ EQUITY
Total long term liabilities		2,487,664			557,000
Preferred stock, $.001 par value, 25,000,000 shares authorized: Series A Convertible, 100,000
Total liabilities		5,090,962			4,037,242
shares authorized; none issued and outstanding		—			—
Commitements and contingencies (Notes 3 and 8)
Series B Convertible, 36,036 shares authorized; 19,000 and 19,040 shares issued and outstanding as
STOCKHOLDERS' EQUITY
of November 30, 2009 and February 28, 2009, respectively		19			20
New Frontier Energy, Inc stockholders' equity:
Series C Convertible, 230,000 shares authorized; 216,000 shares issued and outstanding as
Preferred stock, $.001 par value, 25,000,000 shares authorized:
of November 30, 2009 and February 28, 2009		216			216
Series A Convertible, 100,000 shares authorized, none issued and outstanding		-			-
Common stock, $.001 par value, 500,000,000 shares authorized; 25,504,537 and 13,441,884
Series B Convertible, 36,036 shares authorized, 18,798 and 18,949 issued and
shares issued and outstanding as of November 30, 2009 and February 28, 2009, respectively		25,504			13,441
as of August 31, 2010, and February 28, 2010, respectively, aggregate
Additional paid in capital		46,563,568			43,460,402
liquidation preference of $1,879,800		18			19
Accumulated deficit		(36,730,629	)		(31,904,791	)
Series C Convertible, 230,000 shares authorized, none issued and outstanding		-			-
Total New Frontier Energy, Inc stockholders’ equity		9,858,678			11,569,288
Common stock, $.001 par value, 500,000,000 shares authorized, 68,029,379 and
Noncontrolling interest		397,503			416,516
67,990,662 shares issued and outstanding as of August 31, 2010 and
Total stockholders’ equity		10,256,181			11,985,804
February 28, 2010, respectively		68,029			67,991
Total liabilities and stockholders’ equity	$	18,064,111		$	16,782,892
Additional paid in capital		26,114,480			26,001,033
Accumulated deficit		(20,141,063	)		(21,758,475	)
Total New Frontier Energy, Inc. stockholders' equity		6,041,464			4,310,568
Noncontrolling interest		501,135			426,799
Total stockholders' equity		6,542,599			4,737,367
Total liabilities and stockholders' equity	$	11,633,561		$	8,774,609

See accompanying notes to the condensed consolidated financial statements.

NEW FRONTIER ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)



	Six month period ended						Three month period ended
	August 31,						August 31,
	2010			2009			2010			2009
Operating revenues:
Oil and gas sales	$	65,930		$	102,382		$	31,650		$	14,560
Gathering and operating income		394,502			87,939			35,183			50,107
Total oil and gas revenue		460,432			190,321			66,833			64,667

Operating expenses:
Exploration costs, including dry holes		335,743			72,283			335,743			8,497
Lease operating expenses		38,774			273,895			25,023			85,667
Cost of gas gathering		-			651			-			-
General and administrative		648,973			2,193,042			332,653			1,522,166
Impairment expense		51,000			809,721			-			809,721
Depreciation, depletion and amortization		169,073			301,791			103,078			107,565
Total operating expenses		1,243,563			3,651,383			796,497			2,533,616

Loss from operations		(783,131	)		(3,461,062	)		(729,664	)		(2,468,949	)

Other income (expense):
Change in fair value of derivative financial instruments		(70,000	)		3,070,000			(230,000	)		3,900,000
Other income		2,691,064			-			2,668,866			-
Interest expense, net		(28,796	)		(26,803	)		(7,424	)		(9,501	)
Other income, net		2,592,268			3,043,197			2,431,442			3,890,499


Income (loss) before income taxes and noncontrolling interest		1,809,137			(417,865	)		1,701,778			1,421,550

Income taxes		-			-			-			-

Net income (loss) before noncontrolling interest		1,809,137			(417,865	)		1,701,778			1,421,550

Net (income) attributable noncontrolling interest		(74,336	)		(13,044	)		(39,256	)		(6,129	)

Net income (loss)		1,734,801			(430,909	)		1,662,522			1,415,421

Preferred stock dividends and distributions		(117,389	)		(371,187	)		(58,659	)		(193,616	)

Net income (loss) attributable to common shareholders	$	1,617,412		$	(802,096	)	$	1,603,863		$	1,221,805

Net income (loss) per common share
Basic	$	0.02		$	(0.06	)	$	0.02		$	0.09
Diluted	$	0.02		$	(0.06	)	$	0.02		$	0.03

Weighted average shares outstanding
Basic		68,251,887			13,600,430			68,400,358			13,758,976
Diluted		73,076,887			13,600,430			73,220,358			38,503,481

See accompanying notes to the condensed consolidated financial statements.

NEW FRONTIER ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH FLOWS

(~~UNAUDITED~~unaudited)

	Three Months Ended
	Six month period ended
	November 30, 2009			November 30, 2008
	August 31,
Operating revenues:
	2010			2010
Oil and gas sales	$	44,511		$	306,152
CASH FLOWS FROM OPERATING ACTIVITIES:
Gathering and operating fees		25,200			30,150
Net income (loss)	$	1,809,137		$	(417,865	)
Total revenue		69,711			336,302
Adjustments to reconcile net loss to net cash
Operating expenses:
(used in) provided by operating activities:
Exploration costs, including dry holes		4,128			82,334
Depreciation, depletion and amortization		169,073			301,791
Lease operating expenses		28,811			351,320
Bad debt expense		123,297			-
Cost of gas gathering		1,584			—
Impairment and abandonment of of oil and gas properties		51,000			809,721
General and administrative		233,579			401,481
Share-based compensation expenses, amortization and grants		163,485			1,476,762
Stock-based compensation		566,057			402,700
Increase (decrease) in liability fair value from derivative liability		70,000			(3,070,000	)
Depreciation, depletion and amortization		61,866			226,464
(Gain) Loss from sale of asset, net of deferred gain of $1.8 million		(2,679,053	)		-
Total operating expenses		896,025			1,464,299
(Increase) decrease in assets:
Loss from operations		(826,314	)		(1,127,997	)
Accounts receivable, trade		63,145			(383,651	)
Other income (expense):
Subscription receivable		20,401			-
Other income		103,294			—
Prepaid expense		69,151			(77,946	)
Interest income		3			12,490
Increase (decrease) in liabilities:
Interest expense		(25,155	)		(19,854	)
Accounts payable and accrued expenses		(400,268	)		258,818
Total other income (expense)		78,142			(7,364	)
Other		(300	)		-
Loss before income taxes		(748,172	)		(1,135,361	)
Net cash used in operating activities		(540,932	)		(1,102,370	)
Income tax benefit (expense)		—			—
CASH FLOWS FROM INVESTING ACTIVITIES:
Net loss		(748,172	)		(1,135,361	)
Proceeds from sale of oil and gas property		3,226,185			-
Less: net income attributable to noncontrolling interest		(13,933	)		(7,479	)
Proceeds from Entek participation agreement		-			1,000,000
Net loss		(762,105	)		(1,142,840	)
Purchase of property and equipment		(43,409	)		(19,708	)
Preferred stock dividends and distributions to noncontrolling interest		(191,638	)		(218,979	)
Net cash provided by investing activities		3,182,776			980,292
Net loss attributable to common shareholders	$	(953,743	)	$	(1,361,819	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net loss per common share Basic and diluted	$	(0.07	)	$	(0.10	)
Payment of notes payable		(635,000	)		(200,898	)
Weighted average shares outstanding Basic and diluted		17,592,449			13,204,945
Contingent repurchase option		1,856,766			-
Preferred stock dividends paid		(9,065	)		-
Distributions to minority interest holders in consolidated subsidiary		-			(45,991	)
Net cash provided by (used in) financing activities		1,212,701			(246,889	)
INCREASE (DECREASE) IN CASH		3,854,545			(368,967	)
BEGINNING BALANCE		850,202			856,475
ENDING BALANCE	$	4,704,747		$	487,508
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	13,181
Supplemental schedule of non-cash investing and financing activities:
Conversion of Series B Preferred Stock to Common Stock	$	29		$	2,063
Exchange of stock options for note payable	$	50,000		$	-

See accompanying notes to the condensed consolidated financial statements.

NEW FRONTIER ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Nine Months Ended
	November 30, 2009			November 30, 2008
Operating revenues:
Oil and gas sales	$	146,893		$	1,056,964
Gathering and operating fees		113,139			108,068
Total revenue		260,032			1,165,032
Operating expenses:
Exploration costs, including dry holes		76,411			179,044
Lease operating expenses		302,706			948,215
Cost of gas gathering		2,235			1,139
General and administrative		1,587,374			1,504,473
Stock-based compensation		1,405,304			1,836,500
Impairments and abandonments		809,721			—
Depreciation, depletion and amortization		363,657			737,241
Total operating expenses		4,547,408			5,206,612
Loss from operations		(4,287,376	)		(4,041,580	)
Other income (expense):
Other income		103,294			—
Interest income		1,358			62,437
Interest expense		(53,313	)		(62,914	)
Total other income (expense)		51,339			(477	)
Loss before income taxes		(4,236,037	)		(4,042,057	)
Income tax benefit (expense)		—			—
Net loss		(4,236,037	)		(4,042,057	)
Less: net income attributable to noncontrolling interest		(26,977	)		(31,767	)
Net loss	$	(4,263,014	)	$	(4,073,824	)
Preferred stock dividends and distributions		(562,825	)		(681,111	)
Net loss	$	(4,825,839	)	$	(4,754,935	)
Net loss per common share Basic and diluted	$	(0.32	)	$	(0.39	)
Weighted average shares outstanding Basic and diluted		14,921,425			12,246,778

See accompanying notes to the condensed consolidated financial statements.

NEW FRONTIER ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	November 30, 2009			November 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,236,037	)	$	(4,042,057	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		363,657			737,241
Impairment and abandonment of oil and gas properties		809,721			—
Stock-based compensation		2,042,820			1,937,500
Changes in current assets and liabilities:
Accounts receivable, trade		(1,602,119	)		316,251
Prepaid expense		(97,242	)		16,978
Accounts payable and accrued expenses		1,431,668			16,436
Other		(100	)		—
Net cash used in operating activities		(1,287,632	)		(1,017,651	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in other assets		—			33,300
Proceeds from sale of assets per the Participation Agreement with Entek		1,000,000			—
Purchase of property and equipment		(19,708	)		(2,158,476	)
Net cash provided by (used in) investing activities		980,292			(2,125,176	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of notes payable		(200,898	)		(227,031	)
Proceeds from sale of common stock		1,000,000			—
Proceeds from common stock warrant conversions		—			1,712,469
Proceeds from exercise of placement agent warrants		—			269,747
Preferred stock dividends paid		—			(298,443	)
Cost of issuance of equity for cash		—			(24,450	)
Noncontrolling interest in subsidiary		(45,991	)		77,950
Distributions to noncontrolling interest holders in consolidated subsidiary		—			(68,133	)
Other		9,656			—
Net cash provided by (used in) financing activities		762,767			1,442,109
INCREASE (DECREASE) IN CASH		455,427			(1,700,718	)
BEGINNING BALANCE		856,475			3,602,939
ENDING BALANCE	$	1,311,902		$	1,902,221
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	13,181		$	44,912
Supplemental schedule of non-cash investing and financing activities:
Series B and C preferred stock converted to common stock	$	2,063		$	1,348
Issuance of common stock – cashless exercise	$	—		$	3
Accrued settlement payable	$	780,000		$	—
Segregated arbitration funds and related indemnification agreement, affiliates	$	500,000		$	—

See accompanying notes to the condensed consolidated financial statements.

NEW FRONTIER ENERGY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~November 30~~August 31, ~~2009~~2010

Note 1 -– ~~Summary~~The ofCompany ~~Significant~~and ~~Accounting Policies~~Business

The Company and Business

New Frontier Energy, Inc. (“NFEI” or the “Company”) is an independent energy company engaged in the exploration, development, acquisition, and production of natural gas and crude oil. The Company’s operations are conducted entirely in the continental United States, principally in the Green River Basin (“GRB”) in Colorado and Wyoming, the Denver Julesburg Basin (“DJ Basin”) in Colorado and in the Calcasieu and Jefferson Davis Parishes in Louisiana (“Amazon Prospect”).

Note 2 -– Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of NFEI and Slater Dome Gathering, LLLP (“SDG”) and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring accruals) considered necessary to present fairly in all mutual respect the Company’s financial position as of ~~November~~August 3031, ~~2009~~2010, the Company’s results of operations for the ~~three~~six ~~and~~month ~~nine~~period ~~months~~ ended ~~November~~August 3031, ~~2009~~ 2010 and ~~2008~~2009, and cash flows for the ~~nine~~six ~~months~~month period ended ~~November~~August 3031, ~~2009~~2010 and ~~2008~~ 2009. Operating results for the ~~three~~six ~~and~~month ~~nine~~period ~~months~~ ended ~~November~~August 3031, ~~2009~~ 2010, are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, ~~2010~~2011, because of the impact of fluctuations in prices received for natural gas and crude oil, natural production declines, the uncertainty of exploration and development drilling results and other factors.

In connection with the preparation of the condensed consolidated financial statements of NFEI and in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent Events” (“ASC Topic 855”) the Company evaluated subsequent events after the balance sheet date of November 30, 2009, through the filing of this report.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in the Form 10-K for the year ended February 28, 2009, and are supplemented throughout the notes to this quarterly report on Form 10-Q.

The interim condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended February 28, 2009 included in the Form 10-K filed with the SEC.

Principles of Consolidation

The ~~November~~ 30August 31, ~~2009~~2010, unaudited condensed consolidated financial statements include the accounts of NFEI as of and for the reporting periods ended ~~November~~August 3031, and include the accounts of ~~Slater Dome Gathering, LLLP (“~~SDG”) as of and for the reporting periods ended ~~September~~June 30. SDG has a calendar ~~quarter~~fiscal year end, ~~September 30~~of December 31, which is consolidated with the Company effective ~~November~~February 3028. ~~All significant intercompany accounts and transactions were eliminated.~~ The creditors of SDG do not have recourse to the general credit of the Company. All significant intercompany transactions have been eliminated upon consolidation.

~~New Accounting~~Use ~~Pronouncements~~of Estimates in the Preparation of Financial Statements

~~In January~~The ~~2010,~~preparation of the ~~FASB~~consolidated ~~issued~~financial ~~Accounting~~statements ~~Standards~~in ~~Update~~conformity ~~No.~~with ~~2010-06,~~GAAP ~~Improving Disclosures~~requires ~~about~~management ~~Fair Value Measurements (“ASU 2010-06”), which provides amendments~~ to ~~FASB~~make ~~ASC~~estimates ~~topic Fair Value Measurements~~ and ~~Disclosures~~assumptions that ~~will provide~~affect ~~more robust disclosures about (i)~~ the ~~different~~reported ~~classes~~amounts of ~~assets~~oil and ~~liabilities~~ ~~measured~~gas ~~at fair value~~reserves, ~~(ii)~~assets ~~the valuation techniques~~ and ~~inputs used~~liabilities, ~~(iii)~~disclosure ~~the~~of ~~activity~~contingent inassets ~~Level~~and 3liabilities ~~fair~~at ~~value~~the ~~measurements,~~date ~~and~~of ~~(iv)~~ the ~~transfers~~ ~~between~~financial ~~Levels 1~~statements, 2 and ~~3. ASU~~the ~~2010-06~~reported isamounts ~~effective~~of ~~for fiscal~~revenues ~~years~~ and ~~interim~~expenses ~~periods~~during ~~beginning~~the ~~after~~reporting ~~December 15, 2009~~period. ~~The~~ ~~Company~~Actual isresults ~~currently~~could ~~assessing~~differ ~~the~~from ~~impact~~those ~~that the adoption will have on its disclosures~~estimates.

In December 2008, the SEC issued Modernization of Oil and Gas Reporting: Final Rule, which published the final rules and interpretations updating its oil and gas reporting requirements. The final rule includes updates to definitions in the existing oil and gas rules to make them consistent with the petroleum resource management system, which is a widely accepted standard for the management of petroleum resources that was developed by several industry organizations. Key revisions include the ability to include nontraditional resources in reserves, the use of new technology for determining reserves, permitting disclosure of probable and possible reserves, and changes to the pricing used to determine reserves in that companies must use a 12-month average price. The average is calculated using the first-day-of-the-month price for each of the 12 months that make up the reporting period. The Company is in the process of evaluating the effect of these new requirements, and has not yet determined the impact that it will have on its financial statements upon full adoption on February 28, 2010.5

~~In January~~Earnings ~~2010,~~per ~~the~~Common FASB issued Accounting Standards Update No. 2010-03, Oil and Gas Reserve Estimation and Disclosures (“ASU 2010-03”), which provides amendments to FASB ASC topic Extractive Activities-Oil and Gas. The objective of ASU 2010-03 is to align the oil and gas reserve estimation and disclosure requirements of the FASB ASC with the requirements in the SEC’s Modernization of Oil and Gas Reporting: Final Rule. The Company is in the process of evaluating the effect of these new requirements, and has not yet determined the impact that it will have on its financial statements upon full adoption on February 28, 2010.Share

Basic net earnings per common share is calculated by dividing net earnings available to common stockholders by the weighted-average basic common shares outstanding for the respective period.

Diluted net earnings per common share of stock is calculated by dividing adjusted net earnings by the weighted-average diluted common shares outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for the diluted earnings per share calculation consist of outstanding in-the-money stock options and warrants to purchase the Company’s common stock and the Series B and C Preferred Stock (defined in Note 6 – Stockholders’ Equity).

The treasury stock method is used to measure the dilutive impact of stock options, warrants and Series B and C Preferred Stock. In accordance with FASB ASC Topic 260, “Earnings Per Share,” when there is a loss from continuing operations, all potentially dilutive shares will be anti-dilutive.

The following table sets forth the calculation of basic and diluted earnings per share attributable to common shareholders:

	For the six month period ended August 31,					For the three month period ended August 31,
	2010		2009			2010		2009
Net income (loss) available to common shareholder’s – Basic	$	1,617,412	$	(802,096	)	$	1,603,863	$	1,221,805
Plus: Preferred stock dividends		117,389		-			58,659		193,616
Net income (loss) available to common shareholder’s - Diluted	$	1,734,801	$	(802,096	)	$	1,662,522	$	1,415,421
Basic weighted-average common shares outstanding		68,251,887		13,600,430			68,400,358		13,758,976
Add: dilutive effect of preferred stock		4,825,000		-			4,820,000		23,494,505
Add: dilutive effect of stock options and warrants		-		-			-		1,250,000
Diluted weighted average common shares outstanding		73,076,887		13,600,430			73,220,358		38,503,481
Basic net income (loss) per common share	$	0.02	$	(0.06	)	$	0.02	$	0.09
Diluted net income (loss) per common share	$	0.02	$	(0.06	)	$	0.02	$	0.03

Pursuant to the automatic conversion provision of the Series C Preferred Stock, on December 1, 2009, all 216,000 shares of Series C Preferred Stock outstanding converted into 34,099,265 common shares. In addition, during fiscal year ended February 28, 2010, the Company issued 2,056,500 shares of common stock to one of the Company’s Director’s as a structuring fee and 375,000 to its President and CEO as compensation and an additional 18,000,000 shares of common stock were sold to two accredited investors, which included an affiliate to the Company.

Other Significant Accounting Policies

The accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in the 2010 Form 10-K, and are supplemented throughout the notes to these unaudited condensed consolidated financial statements in this report. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in the 2010 Form 10-K.

Accounting Standards Update

In January 2010, the Financial Accounting Standards Board (“FASB”) issued additional guidance intended to improve disclosure requirements related to fair value measurements and disclosures. Specifically, this guidance requires disclosures about transfers in and out of Level 1 and 2 fair value measurements, activity in Level 3 fair value measurements (see Note 7 for Level 1, 2 and 3 definitions), greater disaggregation of the amounts on the condensed consolidated balance sheets that are subject to fair value measurements and additional disclosures about the valuation techniques and inputs used in fair value measurements. This guidance is effective for interim and annual reporting periods beginning after December 31, 2009, except for disclosure of Level 3 fair value measurement roll forward activity, which is effective for annual reporting periods beginning after December 15, 2010. This guidance was adopted in the first quarter of 2011 and had no impact on the condensed consolidated financial statements other than the additional disclosures.

In April 2010, the FASB issued ASU 2010-14, "Accounting for Extractive Activities — Oil & Gas." ASU 2010-14 amends paragraph 932-10-S99-1 due to SEC Release No. 33-8995, "Modernization of Oil and Gas Reporting." The amendments to the guidance on oil and gas accounting did not have an impact on the Company's financial position.

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Note 3 – Acquisitions, Divestitures and Assets Held for Sale

Acquisitions

There were no significant acquisitions during the six month period ended August 31, 2009.

On September 1, 2010 (effective date of April 1, 2010), NFEI entered into a Joint Exploration Agreement (the “Agreement”) with Yuma Exploration and Production Company, Inc. (“Yuma”), whereby NFEI will participate as a ten percent working interest owner in the shooting, processing and interpretation of a 3-D seismic survey, the generation of prospects, the acquisition of leases, and the exploration, development and production of oil and gas prospects generated from the 3-D seismic in the Calcasieu and Jefferson Davis Parishes in Louisiana.

Divestitures

On June 4, 2010, NFEI entered into a Purchase and Sale Agreement with Carrizo Oil & Gas, Inc. (“Carrizo”) to sell its interest in certain oil and gas leases (the “Leases”) in the DJ Basin in Weld and Morgan Counties, Colorado.

Pursuant to the Purchase and Sale Agreement, Carrizo must drill not less than three Carry Wells (as defined in the Purchase and Sale Agreement) in the 18 months following the closing (the “Drilling Period”) on the sale of the interest in the Leases and carry the Company for a 33 1/3 percent working interest in each of these wells (subject to adjustment as provided in the Purchase and Sale Agreement). In the event that Carrizo fails to commence the drilling of the three Carry Wells during the Drilling Period, the Leases (except for 640 acre tracts) shall be reassigned back to the Company.

Pursuant to the Purchase and Sale Agreement, if Carrizo commences drilling three Carry Wells before the end of the Drilling Period, the Company has the option to repurchase an undivided one-third working interest in the Leases. To repurchase the one-third working interest in the Leases, the Company shall pay one-third of the total amount Carrizo paid to the Company, plus one-third of any amount Carrizo has paid to renew, extend or replace the Leases during the Drilling Period.

In connection with the Purchase and Sale Agreement, the Company and Carrizo also entered into an AMI Agreement whereby the Company and Carrizo agreed to create an area of mutual interest in all governmental sections within which the Company owns Leases as of June 4, 2010 (subject to certain exclusions)(the “AMI Territory”). Pursuant to the AMI Agreement, the Company and Carrizo granted the other party the option acquire its proportionate interest, (33 1/3% in the case of the Company and 66 2/3% in the case of Carrizo) in any oil and gas leases and other interests in the AMI Territory.

InThe ~~June 2009,~~Company ~~the~~received ~~FASB~~an ~~issued~~initial ~~SFAS~~advance ~~No.~~from ~~168,~~the ~~The~~sale ~~FASB~~of ~~Accounting~~the ~~Standards~~interest ~~Codification and~~in the ~~Hierarchy~~Leases of ~~Generally Accepted Accounting Principles~~$5,519,989 asand ~~codified~~an ~~in FASB~~additional ~~ASC topic Generally Accepted Accounting Principles~~$50,307 aupon ~~replacement~~verification of ~~FASB Statement~~certain NoLeases. ~~162. This~~The ~~standard~~Company ~~establishes~~treated ~~only~~this ~~two~~transaction ~~levels~~as a sale of ~~GAAP, authoritative~~a ~~and~~partial ~~nonauthoritative. The~~interest ~~FASB~~in ~~ASC~~an ~~was~~unproved ~~not~~property. ~~intended~~Pursuant to ~~change~~ orASC ~~alter~~470-40 ~~existing~~Product ~~GAAP~~Financing, ~~and~~when ~~the~~a ~~Company’s~~transaction ~~adoption~~in ~~effective~~which ~~September~~an ~~1, 2009~~entity ~~did~~sells ~~not~~inventory ~~therefore~~(oil ~~have~~and ~~any~~gas ~~impact~~property onin ~~its~~this ~~consolidated~~case) ~~financial~~and ~~statements other~~agrees ~~than~~ to ~~modify~~repurchase ~~certain~~the ~~existing~~inventory ~~disclosures. The~~with ~~FASB~~a ~~ASC~~repurchase ~~will become~~price ~~the~~equal ~~source~~to ofthe ~~authoritative,~~original ~~nongovernmental~~sales ~~GAAP~~price, ~~except~~a ~~for~~financing ~~rules~~arrangement ~~and interpretive~~exists. ~~releases~~Therefore, of the ~~SEC,~~Company ~~which~~recorded ~~are~~a ~~sources~~gain ofon ~~authoritative~~sale ~~GAAP~~to ~~for SEC~~the ~~registrants. All~~extent ~~other~~that ~~nongrandfathered, non~~two-~~SEC~~thirds ~~accounting literature~~of ~~not~~the ~~included~~proceeds in($3,713,531) ~~the~~are ~~FASB~~recognized ~~ASC~~as ~~will~~proceeds ~~become nonauthoritative~~received. ~~FASB~~ ~~ASC~~The isremaining ~~effective~~one-third ~~for~~($1,856,766) ~~financial~~was ~~statements~~treated ~~for interim~~as ora ~~annual~~financing ~~reporting~~arrangement, ~~periods~~resulting ~~ending~~in ~~after September 15~~$1, ~~2009. Upon adoption~~856,766 ~~the~~being ~~Company~~reflected ~~began~~as toa ~~use~~deferred ~~the~~gain ~~new~~on ~~guidelines~~the ~~and numbering~~unaudited ~~system~~condensed ~~prescribed~~consolidated bybalance ~~the~~sheet ~~FASB~~and ~~ASC~~as ~~when~~a ~~referring~~financing toactivity ~~GAAP~~ in the ~~third quarter~~unaudited condensed consolidated statement of ~~fiscal~~cash ~~2009~~flows.

InIf ~~May 2009,~~this ~~the~~option ~~FASB~~is ~~issued SFAS No. 165~~exercised, ~~Subsequent~~the ~~Events (“SFAS 165”), as codified in FASB ASC topic Subsequent Events. The~~ Company ~~adopted~~will ~~SFAS~~tender ~~165 effective June~~ $1, ~~2009~~856, ~~which did not have an impact on its consolidated financial statements~~766, ~~other~~plus ~~than~~1/3 ~~additional disclosures. This standard is intended to establish general standards~~ of ~~accounting~~any ~~for~~amount ~~and disclosure~~Carrizo ofhas ~~events~~paid ~~that occur after the balance sheet date but before financial statements are issued or are available~~ to ~~be issued. Specifically~~renew, ~~this~~extend ~~standard~~or ~~sets~~replace ~~forth~~ the ~~period~~Leases ~~after~~during the ~~balance~~ ~~sheet~~Drilling ~~date~~Period ~~during~~to ~~which~~Carrizo ~~management~~in ofexchange ~~a reporting entity should evaluate events or transactions that may occur~~ for ~~potential~~a ~~recognition~~33 or1/3 ~~disclosure~~interest assignment in the ~~financial statements~~Leases, ~~the circumstances under~~ which anwill ~~entity~~satisfy ~~should recognize events or transactions occurring after~~ the ~~balance~~contingent ~~sheet~~liability. ~~date in its financial statements~~However, ~~and~~if the ~~disclosures~~option ~~that~~expires anunexercised, ~~entity should make about events or transactions that occurred after~~ the ~~balance~~Company ~~sheet date. SFAS~~will ~~165~~recognize ~~was~~an ~~effective~~additional ~~for~~$1,856,766 ~~fiscal~~as ~~years~~a ~~and~~gain ~~interim~~on ~~periods ended~~sale ~~after~~of ~~June~~unproved ~~15, 2009~~property.

InOn ~~April~~ August 10, 2009, the ~~FASB~~Company ~~issued~~entered ~~two~~into ~~FASB~~a ~~Staff~~Participation ~~Positions~~Agreement (the “~~FSP~~Participation Agreement”) ~~intended~~with toEntek ~~provide additional~~GRB ~~application~~LLC ~~guidance~~(“Entek”) ~~and~~under ~~enhanced~~which ~~disclosures~~Entek ~~regarding~~has ~~fair~~the ~~value measurements~~right ~~and~~to ~~impairments~~participate ofand ~~securities. FSP~~earn ~~No.~~assignments ~~FAS~~of ~~157-4, Determining~~NFEI’s ~~Fair~~interest ~~Value~~up ~~When~~to ~~the~~55% ~~Volume~~through orthree ~~Level~~phases ofin ~~Activity for~~ the ~~Asset~~exploration ~~or Liability~~and ~~Have~~development ~~Significantly~~of ~~Decreased~~certain oil and ~~Identifying~~gas ~~Transactions~~properties ~~That~~within ~~Are~~approximately ~~Not Orderly~~66,000 asgross ~~codified~~acres in ~~FASB~~the ~~ASC~~Green ~~topic~~River ~~Fair~~Basin ~~Value~~(the ~~Measurement~~“Underlying Leases”) and ~~Disclosure, provides~~certain ~~additional~~of ~~guidelines~~its ~~for~~other ~~estimating~~assets, ~~fair~~including ~~value~~its inpartnership ~~accordance~~interests ~~with~~in ~~FASB SFAS~~Slater ~~No.~~Dome ~~157~~Gathering, ~~Fair~~LLLP ~~Value~~(collectively ~~Measurements~~the (“~~SFAS 157~~Assets”). The Company ~~adopted~~ ~~these~~and ~~FSPs~~Entek ~~effective~~also ~~June~~created 1,an ~~2009,~~area ~~which~~of ~~did~~mutual ~~not~~interest ~~have~~(the an“Area ~~impact~~of onMutual ~~its consolidated~~Interest”) ~~financial~~in ~~statements~~all lands located in Routt County, ~~other~~Colorado, ~~than~~Moffatt ~~additional disclosures. FSP~~County, ~~No.~~Colorado, ~~107-1~~Sweetwater County, Wyoming, and ~~APB~~Carbon ~~28-1,~~County ~~Interim~~Wyoming. ~~Disclosures~~Pursuant ~~about Fair~~to ~~Value~~the Area of ~~Financial~~Mutual ~~Instruments~~Interest, ~~increases~~Entek shall be entitled to participate for up to 55% in any additional interest acquired within the ~~frequency~~Area of ~~fair~~Mutual ~~value disclosures. These~~Interest ~~FSPs~~by ~~were~~the ~~effective~~Company and the Company shall be entitled to participate for ~~fiscal~~up ~~years~~to ~~and~~45% ~~interim periods~~in ~~ended~~any ~~after~~additional ~~June~~interest ~~15,~~acquired ~~2009~~within the Area of Mutual Interest.

~~The Company~~In ~~elected~~February ~~to implement SFAS 157 with the one-year deferral permitted by FSP No. FAS 157-2~~2010, ~~Effective~~Entek ~~Date~~completed ofits ~~FASB~~obligation ~~Statement~~for ~~No.~~Phase ~~157~~I ~~(“FSP 157-2”), issued February 2008~~ and ~~codified~~earned inan ~~FASB~~additional ~~ASC topic Fair Value Measurement and Disclosure~~16. ~~FSP~~25% ~~157-2 deferred the effective date~~ of ~~SFAS 157 for one year for certain non-financial assets and non-financial liabilities measured at fair value. Accordingly,~~ the Company’s ~~adopted~~interest ~~SFAS~~in ~~157~~the onAssets ~~March 1, 2009~~ for ~~its~~an ~~non-financial~~aggregate ~~assets~~of ~~and non-financial liabilities measured at fair value on a non-recurring basis~~20. ~~This~~3125% ~~deferred adoption~~ of ~~SFAS 157, however, did not have an impact on~~ the Company’s ~~consolidated~~interest ~~financial statements.~~in ~~As it relates to~~ the ~~Company,~~Assets ~~this delayed adoption applies to certain non-financial assets and liabilities~~ as ~~may be acquired in a business combination and thereby measured at fair value; impaired oil and gas property assessments; and the initial recognition~~ of ~~asset~~August ~~retirement~~31, ~~obligations for which fair value is used~~2010.

~~In December~~Assets ~~2007,~~Held ~~the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141(R)”), which replaces SFAS No. 141, as codified in FASB ASC topic Business Combinations. SFAS 141(R) is effective~~ for business combinations with acquisition dates on or after fiscal years beginning after December 15, 2008, and the Company adopted SFAS 141(R) effective February 1, 2009. SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements that will enable users to evaluate the nature and financial effects of the business combination. The adoption of SFAS 141® did not have an impact on the consolidated financial statements.Sale

~~Note 3~~In –accordance ~~Going~~with ~~Concern~~ASC Topic 360, “Property, Plant and Equipment” assets are classified as held for sale when the Company commits to a plan to sell the assets and there is reasonable certainty that the sale will take place within one year. Upon classification as held for sale, long-lived assets are no longer depreciated or depleted and a measurement for impairment is performed to expense any excess of carrying value over fair value less costs to sell. Subsequent changes to estimated fair value less the cost to sell will impact the measurement of assets held for sale for assets for which fair value is determined to be less than the carrying value of the assets.

~~The~~ As of August 31, 2010, the accompanying unaudited condensed consolidated ~~financial~~balance ~~statements~~sheet ~~have~~includes ~~been~~approximately ~~prepared~~$801,000 onin ~~the~~book ~~basis~~value ofrecorded ~~a going~~as ~~concern~~an ~~which~~asset ~~contemplates~~held ~~the~~for ~~realization~~sale, net of ~~assets~~accumulated ~~and~~DD&A, ~~the~~impairment ~~satisfaction of~~and ~~liabilities~~selling incosts. ~~the~~The ~~normal~~above ~~course~~asset ofheld ~~business.~~for Assale ~~shown~~is infor the ~~accompanying financial~~Steamboat ~~statements,~~Property. ~~the~~The Company ~~has~~recorded ~~incurred~~an ~~significant~~impairment ~~operating~~related ~~losses.~~to ~~As of~~this ~~November~~property ~~30,~~in ~~2009,~~ the ~~Company~~amount ~~has~~of ~~limited~~$51,000 ~~financial~~during ~~resources~~the ~~and~~six ~~has~~month ~~not been~~period ~~able~~ended toAugust ~~generate~~31, ~~positive~~2010. ~~cash~~There ~~flow~~were ~~from~~no ~~operations.~~assets ~~The~~held ~~Company~~for ~~had~~sale ~~a working~~during ~~capital~~the ~~deficiency~~six ofmonth ~~$2,987,953~~period atended ~~November~~August 3031, 2009 ~~and $2~~,~~833,562~~ ~~at February~~therefore ~~28,~~there ~~2009.~~was ~~These~~no ~~factors~~measurement ~~raise~~for ~~substantial~~impairment. ~~doubt~~The ~~about~~Company ~~our~~began ~~ability~~marketing ~~to continue~~this asasset ain ~~going~~the ~~concern.~~fourth ~~Our~~quarter ~~ability~~of tofiscal ~~achieve~~year ~~and~~ended ~~maintain~~February ~~profitability and~~28, ~~positive~~2010. ~~cash~~The ~~flow~~Company isdetermined ~~dependent~~that ~~upon~~this ~~our~~asset ~~ability~~does tonot ~~generate~~qualify ~~revenue~~for ~~from our~~discontinued ~~planned business~~ operations ~~and~~accounting ~~control~~under ~~exploration~~ASC ~~costs~~Topic 205.

Note 4 - Entek Participation Agreement

On August 10, 2009, the Company entered into a Participation Agreement (the “Participation Agreement”) with Entek GRB LLC (“Entek”) under which Entek agreed to purchase certain assets of the Company and spend up to an additional approximately $11.5 million over three years on exploration and development within approximately 66,000 gross acres (the “Underlying Leases”) to earn up to 55% of the Company’s interest in the Underlying Leases and certain of its other assets, including its partnership interests in Slater Dome Gathering, LLLP (collectively the “Assets”). The Company and Entek also created an area of mutual interest (the “Area of Mutual Interest”) in all lands located in Routt County, Colorado, Moffatt County, Colorado, Sweetwater County, Wyoming, and Carbon County Wyoming. Pursuant to the Area of Mutual Interest, Entek shall be entitled to participate for up to 55% in any additional interest acquired within the Area of Mutual Interest by the Company and the Company shall be entitled to participate for up to 45% in any additional interest acquired within the Area of Mutual Interest.

Pursuant to the Participation Agreement, on August 10, 2009, Entek purchased 4.0625% interest in the Assets for $1,000,000 (the “Initial Asset Purchase”). Further, Entek has the option to purchase an additional 8.125% interest in the Assets for $1,000,000, if, within 180 days, Entek reasonably believes that there exists a danger of NFEI Insolvency (as defined in the Participation Agreement). Entek did not exercise this option, which has subsequently lapsed.

~~Pursuant to~~Note the Participation Agreement, Entek has the right to participate in the exploration and development of the Underlying Leases, and the right to earn assignments of interests in the Assets in three phases. On August 10, 2009, Entek irrevocably committed to expend $3.0 million (the “Phase 1 Funds”) to earn 16.25% (the “Phase 1 Interests”) of the Company’s interest in the Assets. Between the first anniversary date and the second anniversary date of the Participation Agreement, Entek has the right but not the obligation to expend $4.0 ~~million~~- ~~(the~~Notes “Phase 2 Funds”) and earn an additional 16.25% (the “Phase 2 Interests”) of the Company’s interest in the Assets. Between the second anniversary date and the third anniversary date of the Participation Agreement, Entek has the right but not the obligation to expend approximately $4.5 million (the “Phase 3 Funds”) and earn an additional 18.4375% (the “Phase 3 Interests”) of the Company’s interest in the Assets. Entek will have the right to become the operator after the completion of Phase 1 and the commencement of Phase 2, subject to certain regulatory and other approvals.payable

~~Pursuant to~~Natural ~~the~~Resource ~~Participation~~Group ~~Agreement,~~Gathering ~~the~~Note Company and Entek have established an operating committee that is responsible for the annual Work Program (as defined in the Participation Agreement) for each phase and the determination of a budget for each phase. The Phase 1 Funds, Phase 2 Funds and the Phase 3 Funds are to be used solely for the Work Program.Payable

InEffective December 31, 2007, the ~~event~~ ~~that~~Company ~~Entek~~entered ~~elects~~into ~~not~~a toPurchase ~~participate~~and Sale Agreement with Natural Resource Group Gathering, LLC (“NRGG”), whereby the Company increased its investment in ~~Phase~~Slater 2Dome Gathering, LLLP (“SDG”) by acquiring the ~~Participation Agreement~~general ~~shall~~partner’s ~~terminate~~interest ~~after~~for $1,075,000 consisting of $268,750 in cash and executing a promissory note (the ~~expenditure~~“Note”) in the amount of $806,250. The Note accrues interest at a rate of 2.5% per annum and is payable in quarterly installments of $201,562 plus interest. The terms of this note were modified on December 24, 2008, and subsequently on July 29, 2009, which extended the ~~Phase~~date 1and ~~Funds~~payment ~~paid~~terms, ~~by Entek~~whereby the then outstanding principal balance together with all accrued and unpaid interest will be due December 31, 2010. The Note may be prepaid at any time without penalty. At the option of the Company, ~~shall~~quarterly ~~have~~payments nomay ~~further~~be ~~obligation~~deferred tountil ~~assign~~the tomaturity date. The balance of this note payable at August 31, 2010, was $201,563. On December 31, 2010, Entek ~~any further~~made ~~interests~~a inpayment for the ~~Assets~~full ~~and~~amount ~~the~~on ~~Area~~behalf of ~~Mutual~~NFEI ~~Interest~~satisfying ~~shall~~this ~~terminate immediately~~debt as part of the Participation Agreement.

InPaul ~~the event~~G. ~~that Entek elects not to participate in Phase 3~~Laird, the ~~Participation Agreement shall immediately terminate, the~~ Company’s ~~shall~~former ~~have~~President noand ~~further obligation~~CEO tois ~~assign~~a tomanager ~~Entek any further interests in the Assets, provided that Entek shall retain any interest in the Assets from the Initial Asset Purchase, the Phase 1 Interest, the Phase 2 Interest~~ and ~~any~~owns ~~portion~~50% of the ~~Phase~~membership ~~3 Interests~~interest ~~earned by it and the Area~~ of ~~Mutual Interest shall terminate immediately~~NRGG.

~~The~~Steamboat ~~above description~~Property ofNote the Participation Agreement is qualified in its entirety by the full text of the Participation Agreement, attached as Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on August 21, 2009 and is incorporated herein by this reference.Payable

~~Subsequent to~~On ~~November~~June 3015, ~~2009~~2007, ~~Entek~~the ~~completed~~Company ~~its~~acquired ~~obligation~~real ~~for~~property ~~Phase~~in ISteamboat ~~and~~Springs, ~~earned~~CO ~~an additional~~(the 16“Steamboat Property”).~~25%~~ The purchase price for the Steamboat Property was $1,175,000. In connection with the purchase of the Steamboat Property, the Company’s ~~interest~~entered into a five-year mortgage in the ~~Assets~~principal amount of $881,250 (the “Steamboat Mortgage”). On July 7, 2009, the former President and CEO, as nominee for anthe ~~aggregate~~Company, entered into a new mortgage in the amount of 20 $635,000 (the “New Steamboat Mortgage”).~~3125~~ The New Steamboat Mortgage has a one year term due July 6, 2010, and accrues interest at the rate of prime plus 400 basis points with a floor of 10% and is collateralized by the Steamboat Property. As a condition of the ~~Company’s~~New Steamboat Mortgage, interest in the ~~Assets~~amount of $63,500 was prepaid. The Company had the option to prepay the New Steamboat Mortgage in full, or in part, without penalty with any the unamortized prepaid interest being returned to the Company.

~~Note 5~~In -June ~~Segregated~~2010, ~~Arbitration~~the ~~Funds~~former President and ~~Segregated~~CEO ~~Funds Indemnification~~executed a Quit Claim Deed assigning title for the Steamboat Property back to the Company. Concurrently with the execution of the Quit Claim Deed, NFEI made a payment in full satisfaction of the Steamboat Mortgage.

~~Pursuant to~~Note ~~the~~Payable ~~Entek~~- Participation Agreement, Samyak Veera, a director of the Company, agreed to deposit $500,000 into a segregated account (the “Segregated Arbitration Funds”). In the event the Company has insufficient funds available to satisfy the Company’s share of the arbitrator’s award in the arbitration conducted pursuant to the Stull Ranch Settlement Agreement (the “Arbitrator’s Award”), then the Company shall draw upon the funds in the Stull Ranch Account to satisfy the balance of the Arbitrator’s Award, unless earlier released to Mr. Veera pursuant to terms and conditions set forth in the Participation Agreement.affiliates

~~The~~ On December 31, 2010, one of the Company’s ~~and~~directors ~~Mr.~~elected ~~Veera~~to ~~also~~exchange ~~entered~~his ~~into~~stock anoptions ~~Indemnification~~for ~~Agreement~~a ~~dated August~~$50,000 7note payable, ~~2009~~with (an interest rate equal to the ~~“Veera~~1-month ~~Indemnification~~London ~~Agreement~~Interbank Offered Rate (“LIBOR”), ~~whereby~~with ~~the~~such ~~Company agreed~~accrued toand ~~indemnify~~unpaid ~~and~~interest ~~reimburse~~along ~~Mr.~~with ~~Veera~~the ifprincipal ~~any~~to ofbe ~~the~~paid ~~Segregated~~on ~~Arbitration Funds~~the ~~are~~maturity ~~released~~date ~~from~~of ~~the~~December ~~segregated~~31, ~~account~~2012.

~~On December~~Note ~~18,~~5 ~~2009,~~- ~~the~~Asset ~~Segregated~~Retirement ~~Arbitration Funds were returned to Mr. Veera after the satisfaction of the terms and conditions set forth in the Participation Agreement for the release of the Segregated Arbitration Funds.~~Obligations

The ~~Arbitrator’s~~ ~~Award~~Company recognizes an estimated liability for future costs associated with the abandonment of ~~$779,599~~its inoil and gas properties. A liability for the ~~Stull~~fair ~~Ranch~~value ~~Arbitration~~of ~~(as~~an ~~defined~~asset ~~below) was~~retirement ~~issued~~obligation onand ~~February~~a 4,corresponding ~~2010~~increase to the carrying value of the related long-lived asset are recorded at the time a well is completed or acquired. The increase in carrying value is included in proved oil and gas properties in the accompanying consolidated balance sheets. The Company ~~satisfied~~depletes the ~~Arbitration~~amount ~~Award on~~added ~~February~~to ~~17,~~proved ~~2010.~~oil ~~See~~and ~~Note~~gas 10property –costs ~~Stull~~and ~~Ranch~~recognizes ~~Litigation~~expense ~~for~~in ~~additional discussion~~connection with the accretion of ~~this~~the ~~litigation~~discounted liability over the remaining estimated economic lives of the respective oil and gas properties. Cash paid to settle asset retirement obligations is included in the ~~Stull~~operating ~~Ranch~~section ~~Arbitration~~of ~~(as~~the ~~defined below)~~Company’s accompanying unaudited condensed consolidated statements of cash flows.

Note 6 - Notes Payable, Affiliates

Effective December 31, 2007 the Company entered into a Purchase and Sale Agreement with Natural Resource Group Gathering, LLC (“NRGG”), whereby the Company increased its investment in Slater Dome Gathering, LLLP (“SDG”) by acquiring the general partner’s interest for $1,075,000 consisting of $268,750 in cash and executing a promissory note (the “Note”) in the amount of $806,250. The Note bears interest at a rate of 2.5% per annum and is payable in quarterly installments of $201,562 plus interest. On December 24, 2008, the note was extended under the same terms and conditions with a maturity date of December 31, 2009, and in connection with the extension of the maturity date, the Company paid principal in the amount of $201,562 together with accrued interest of $5,881. Effective July 29, 2009, the Company and NRGG entered into a Modification of Partnership Purchase Agreement whereby the Note was modified to extend the date and payment terms, whereby principal in the amount of $201,566 is due on December 31, 2009, and the principal balance together with all accrued and unpaid interest will be due December 31, 2010. The Note may be prepaid at any time without penalty. At the option of the Company, quarterly payments may be deferred until the maturity date. At November 30, 2009, the balance of the note payable was $403,125. On December 31, 2009 the Company made a payment on the principal together with all accrued and unpaid interest in the amount of $211,641.

Note 7 - Notes Payable

On June 15, 2007, the Company acquired a facility (the “Steamboat Property”). The purchase price for the Steamboat Property was $1,175,000. In connection with the purchase of the Steamboat Property, the Company entered into a five-year mortgage in the principal amount of $881,250 (the “Steamboat Mortgage”), which had an interest rate of 7.56% per annum. The Steamboat Mortgage required equal monthly payments during the term of the mortgage in the amount of $8,256, with the balance of $698,604 due on June 14, 2012. The Steamboat Mortgage terms were modified on February 26, 2009 whereby the maturity date was changed to September 1, 2009.

~~Effective July~~The 7Company’s estimated asset retirement obligation liability is based on historical experience in abandoning wells, ~~2009~~estimated economic lives, ~~the~~estimates ~~Company~~as ~~transferred~~to ~~legal~~the ~~title~~cost to abandon the ~~Steamboat~~wells ~~Property~~in to the ~~Company’s~~future, ~~former~~and ~~President~~federal and ~~Chief~~state ~~Executive~~regulatory ~~Officer,~~requirements. asThe ~~nominee,~~liability ~~to facilitate~~is discounted using the ~~refinancing~~credit-adjusted ofrisk-free ~~the~~rate ~~Steamboat~~estimated ~~Property;~~at ~~however,~~the time the ~~Company retains~~liability ~~equitable~~is ~~ownership~~incurred ofor ~~the~~revised. ~~Steamboat~~The ~~Property~~credit-adjusted ~~and~~risk-free ~~the~~rate ~~accompanying financial~~used ~~statements~~to ~~reflect~~discount the ~~rights~~Company’s ~~and~~abandonment ~~responsibilities~~liabilities ofis ~~ownership, including~~10.0 anpercent. ~~obligation~~Revisions ~~under~~to the ~~New~~liability ~~Steamboat~~could ~~Mortgage~~occur ~~described~~due to changes in ~~the following~~estimated ~~paragraph.~~abandonment ~~The~~costs ~~Company’s~~or ~~former~~well ~~President~~economic ~~and~~lives, ~~Chief~~or ~~Executive~~if ~~Officer and~~federal or state regulators enact new requirements regarding the ~~Company~~abandonment ~~anticipate~~of ~~entering~~wells. ~~into~~Asset aretirement ~~nominee~~obligations ~~agreement~~are tovalued ~~reflect~~using ~~this transaction~~Level 3 fair value measurement inputs.

OnA ~~July 7,~~reconciliation ~~2009,~~of the Company’s ~~completed~~asset ~~refinancing~~retirement ~~(the~~obligation ~~“New~~liability ~~Steamboat Mortgage”) the Steamboat Property. The New Steamboat Mortgage, in the amount of $635,000,~~ is ~~collateralized~~ byas ~~the Steamboat Property with a one term due July 7, 2010,~~follows: bearing interest at the rate of 10%. As a condition of the New Steamboat Mortgage, interest in the amount of $63,500 has been prepaid. The Company has the option to prepay the New Steamboat Mortgage in full, or in part, without penalty and should the Company prepay the New Steamboat Mortgage, the unamortized prepaid interest will be returned to the Company. Cash in the amount of $400,000 subject to an assignment security agreement collateralizing the original steamboat mortgage was released.

Note 8 – Impairment of long-lived assets

	August 31,
	2010
Beginning asset retirement obligation	$	77,000
Liabilities incurred		-
Revisions to estimated future plugging liability		-
Accretion expense		3,898
Total Asset retirement obligation	$	80,898

~~The Company~~Note ~~reviews~~6 ~~the carrying values of its long~~-~~lived~~ assets whenever events or changes in circumstances indicate that such carrying values may not be recoverable. If, upon review, the sum of the undiscounted pretax cash flows is less than the carrying value of the asset group, the carrying value is written down to the estimated fair value. Individual assets are grouped for impairment purposes at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, generally on a field-by-field basis. The fair value of impaired assets is determined based on quoted market prices in active markets, if available, or upon the present values of expected future cash flows using discount rates commensurate with the risks involved in the asset group. The long-lived assets of the Company, which are subject to periodic evaluation, consist primarily of oil and gas properties and undeveloped leaseholds. The CompanyStockholders’s ~~evaluation has resulted in a charge to operations for impairment in the amount of $809,721 and $0 during the nine months ended November 30, 2009 and 2008, respectively.~~Equity

Note 9 - Stockholders’ Equity

Series A Convertible Preferred Stock

There were no shares of Series A convertible ~~preferred~~Preferred ~~stock~~Stock, par value $0.001 issued or outstanding as of ~~November~~August 3031, ~~2009~~2010 and February 28, ~~2009~~2010. Such shares may be issued with such preferences and in such series as determined by the Board of Directors.

Series B Convertible Preferred Stock

The ~~Company~~ isSeries ~~authorized~~B toPreferred ~~issue~~Stock upcontain toan ~~36,036~~anti-dilution ~~shares~~provision ofwhich ~~Series~~provides Bfor ~~12%~~conversion ~~cumulative convertible~~price ~~preferred~~adjustments ~~stock par value $0.001~~ (~~the~~ “~~Series~~down Bround ~~Preferred~~protection”)., ~~The stated~~which ~~value~~requires ~~and~~the ~~issue~~fair ~~price~~value of ~~the~~these ~~series~~conversion Bfeatures ~~preferred~~to ~~stock~~be isbifurcated ~~$100.00~~and ~~per share.~~presented ~~Each~~separately ~~share~~as ofa ~~series~~derivative Bliability ~~preferred~~on ~~is convertible, at~~ the ~~option~~balance ofsheet. ~~the holder,~~The ~~into~~fair ~~that~~values ~~number~~ of ~~shares~~these offinancial ~~common~~instruments ~~stock~~are ~~determined~~remeasured byeach ~~dividing~~quarter ~~the issue~~with ~~price of~~ the ~~aggregate~~change ~~number of shares of series B preferred~~ being ~~converted~~ ~~plus~~reflected ~~any~~in ~~accrued~~the ~~and~~unaudited ~~unpaid~~condensed ~~dividends~~consolidated bystatements ~~$0.65~~of ~~per~~operations ~~share,~~as ~~unless otherwise adjusted. The series B preferred pays~~ a ~~cumulative,~~“Change ~~preferential cash dividend equal to 12% of the $100 issue price per year and is payable quarterly~~ in ~~arrears.~~fair ~~The~~value ~~dividend is payable out~~ of ~~funds~~derivative ~~legally~~financial ~~available~~instruments” ~~for~~(see ~~that purpose~~Note ~~and~~7 ~~will~~– ~~accumulate~~Fair ~~during~~Value ~~any period when it is not paid~~Measurements).

In ~~connection~~ ~~with~~March ~~the offer and sale of series B preferred stock~~2010, the ~~Company granted~~company aissued ~~warrant~~an toaggregate ~~purchase 24.75 units of the series B preferred stock offering at a purchase price of $13~~28,~~000~~717 ~~per unit (the “Placement Agent Warrant”). Each unit consists of (i) $13,000 of series B preferred stock, convertible into 20,000~~ shares of common stock atpursuant ~~the rate of $0.65 per share; and (ii) a three-year warrant~~ to ~~purchase~~conversion ~~27,131 shares~~ of ~~common~~112 stock at an exercise price of $1.11 per share on the same terms and conditions as the warrants issued to the series B preferred stockholders. The 18,562 outstanding Placement Agent Warrants were exercised on May 1, 2008 and the Company issued 2,698 shares of ~~series~~Series B ~~preferred~~Preferred ~~stock and received proceeds of $269,749~~Stock.

In ~~June 2009~~July 2010, the ~~Company~~company issued an aggregate ~~of 6~~10,~~153~~000 shares of common stock pursuant to ~~the~~ conversion of 4039 shares of ~~series B preferred stock. As of November 30, 2009 and February 28, 2009 there were 19,000 and 19,040 shares of~~ Series B ~~convertible~~ ~~preferred~~Preferred ~~stock issued and outstanding~~Stock. ~~During the nine months ended November 30, 2009, dividends of $155,976 were accrued and no cash dividends were paid. Aggregate accrued and unpaid dividends totaled $976,458 as of November 30, 2009.~~

OnAs ~~or about~~of ~~November~~August 1931, ~~2009~~2010, ~~the~~and ~~conversion~~February ~~price~~28, of2010, ~~the~~there ~~Series~~were B18,798 ~~Preferred~~and ~~Stock was~~18,949 ~~adjusted~~shares ~~from~~of ~~$0.65 to $0.43 pursuant to anti-dilution rights contained in the~~ Series B Preferred Stock ~~due~~issued toand ~~the~~outstanding. ~~issuance~~During ofthe ~~shares~~six ofmonth ~~Common~~period ~~Stock.~~ended ~~On or~~August ~~about February 16~~31, 2010, ~~the~~dividends ~~conversion price~~ of ~~the~~$117,389 ~~Series~~were Baccrued ~~Preferred~~and ~~Stock was~~$9,065 ~~adjusted~~cash ~~from~~dividends ~~$0.43~~were ~~to $0~~paid.39 ~~pursuant~~Aggregate toaccrued ~~anti-dilution~~and ~~rights~~unpaid ~~contained~~dividends ~~in the~~totaled ~~Series~~$1,138,889 Bas ~~Preferred Stock due to the issuance~~ of ~~shares~~August of31, ~~Common Stock~~2010.

In December 2009, the company issued an aggregate 11,860 shares of common stock pursuant to conversion of 51 shares of series B preferred stock.

In March 2010, the company issued an aggregate 28,717 shares of common stock pursuant to conversion of 112 shares of series B preferred stock.

In December 2009, $2,856 of dividends were paid on the Series B Preferred Stock.

Series C Convertible Preferred Stock

~~The Company~~Effective isDecember ~~authorized~~1, to2009, ~~issue~~pursuant up to ~~230,000~~the ~~shares~~automatic ofconversion ~~series~~provision, ~~C 2.5% cumulative convertible preferred stock par value $0.001 (~~the ~~“Series~~then Coutstanding ~~Preferred~~216,000 ~~Stock”). The~~shares ~~stated value and issue price~~ of ~~the~~ Series C ~~Preferred~~preferred ~~Stock~~stock ~~is $100.00 per share~~ and ~~holders~~the ~~are~~associated ~~entitled~~accumulated ~~to receive cumulative~~ dividends atwere ~~the~~converted ~~rate~~into ~~of 2.5%~~an ~~per~~aggregate ~~annum~~34, ~~payable quarterly~~099,265 ~~beginning January 31, 2007. The form of dividend payments may be, at the Company’s option, in cash or~~ shares of ~~the Company’s $0.001 par value~~ common stock ~~(the “Common Stock”), or a combination thereof~~. ~~The Series C Preferred Stock is convertible into shares of common stock at the rate of $1.05 per share, subject to adjustment.~~

~~The Series~~As ~~C Preferred Stock has customary weighted-average anti-dilution rights with respect to any subsequent issuance~~ of ~~common~~August ~~stock or common stock equivalents at a price less than $1.05 per share~~31, 2010 and ~~otherwise~~February ~~in connection with forward or reverse stock splits~~28, ~~stock dividends~~2010, ~~recapitalizations,~~there ~~and the~~were ~~like.~~no ~~The anti-dilution provisions shall not apply to employee stock options and~~ shares ~~issued in connection with certain mergers and acquisitions. On or about November 19, 2009, the conversion price~~ of ~~the~~ Series C Preferred Stock ~~was~~ ~~adjusted~~issued ~~from~~and $1outstanding.~~05 to $0.68 pursuant to anti-dilution rights contained in the Series C Preferred Stock due to the issuance of shares of Common Stock.~~

Except as otherwise provided in the series C preferred stock certificate of designation with respect to matters that adversely affect the rights of the holders of the series C preferred stock, and as otherwise required by law, the series C preferred stock has no voting rights.10

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the series C preferred stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of series C preferred stock an amount equal to the stated value ($100.00) of the series C preferred stock per share plus any accrued and unpaid dividends thereon and any other fees or liquidated damages owing. If the assets of the Company are insufficient to pay such amounts in full, then the entire assets to be distributed to the holders of the series C preferred stock shall be distributed among the holders of the series C preferred stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.

The Company has the right to redeem the series C preferred stock commencing six months from a final closing date in the event the closing bid price of the Company’s common stock has closed for 20 consecutive trading days at a price not less than $3.00 (subject to adjustment) by delivering notice to holders of the series C preferred stock. The maximum aggregate number of series C preferred stock which may be redeemed pursuant to any such redemption notice in any given week shall be that number of shares of series C preferred stock for which the underlying common stock (together with any accrued dividends payable in common stock thereon) are less than or equal to 25% of the average daily trading volume of the common stock for the 20 trading days preceding each such redemption notice date.

As of November 30, 2009, there were 216,000 shares of the series C preferred stock issued and outstanding. During the nine months ended November 30, 2009, dividends of $406,849 were accrued and no cash dividends were paid. Aggregate accrued and unpaid dividends totaled $1,583,409 as of November 30, 2009.

Effective December 1, 2009, the company issued an aggregate 25,231,206 shares of common stock and will issue an additional 8,868,059 shares of common stock pursuant to the automatic conversion provisions of the 216,000 shares of Series C Preferred Stock and the associated accumulated dividends.

Common Stock

~~Effective August~~The ~~17,~~authorized ~~2009,~~common stock of the Company ~~granted~~consists toof ~~its chairman 2~~500,~~056~~000,~~500~~000 common shares ofwith ~~the Company’s~~a par value of $0.001. ~~par~~The ~~value~~holders ~~common~~of ~~stock,~~the ~~valued~~common atshares ~~$637,515,~~are ~~and~~entitled ato ~~two~~one ~~year option~~vote tofor ~~acquire~~each ~~1,250,000~~share ~~shares~~ of ~~the~~common ~~Company’s~~stock. ~~Common~~As ~~Stock~~of atAugust a31, ~~price~~2010 ~~of $0.20~~and ~~per~~February ~~share~~28, ~~valued~~2010, atthere ~~$231~~were 68,~~647~~029,379 ~~for~~shares ~~certain~~(78,864 ~~consulting~~which ~~services~~have ~~previously rendered~~not ~~and~~been asissued adue ~~structuring fee relating~~ to ~~the~~technical ~~deposit~~reasons) ofand ~~$500~~67,~~000~~990,662 ~~into~~outstanding, ~~a segregated account in connection with the Participation Agreement~~respectively.

During the quarter ended November 30, 2009, the Company conducted an offering on a “best efforts” basis to exchange (the “Exchange Offers”) any and all of the Company’s issued and outstanding (i) Series B 12% Cumulative Convertible Preferred Stock (“Series B Preferred Stock”) and the accrued and unpaid dividends thereunder and (ii) 2.5% Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) and the accrued and unpaid dividends thereunder, for newly issued shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”).On November 30, 2009, the Company terminated the Exchange Offers without acquiring any Series B Preferred Stock or Series C Preferred Stock in the Exchange Offers.

On or about November 11, 2009, the Company held a closing on the sale (the "Offering") to accredited investors of an aggregate of 3,500,000 shares of the Company's $0.001 par value Common Stock sold at a price of $0.10 per share (the "Common Stock"), effective as of November 9, 2009. The Company received a subscription for 6,500,000 shares of its Common Stock at a price of $0.10 per share that was accepted on or about November 19, 2009. The subscription for 6,500,000 shares of the Company’s Common Stock is from Iris Energy Holdings Limited, an affiliate of the Company whose sole director is Samyak Veera, a director of the Company. Upon the acceptance of the additional subscription agreement, the Company will have received an aggregate of $1,000,000 in gross proceeds from the sale of the Common Stock.

On January 12, 2010, the Company's Board of Directors approve the issuance to Mr. Veera of 750,000 shares of the Company's common stock as compensation for Mr. Veera's services for the period from December 1, 2009 to December 1, 2010. The shares are to be issued in two tranches, with 375,000 in shares of the Company's common stock to be issued on or about January 12, 2010 and 375,000 in shares of the Company's common stock to be issued on or about June 1, 2010.

On February 16, 2010, New Frontier Energy , Inc. held a closing on the sale (the "Offering") to Iris Energy Holdings Limited ("Iris Energy") of an aggregate of 8,000,000 shares of the Company's $0.001 par value Common Stock sold a price of $0.10 per share (The "Common Stock") for gross proceeds of $800,000. Iris Energy is an affiliate of the Company whose sole director is Samyak Veera, a director of the Company.

Stock Options and Warrants

The Company ~~recognized~~charged ~~stock-based compensation expense of~~ $~~566~~163,~~058~~485 and $21,~~042,820~~ 611 of stock based compensation during the ~~three~~six and ~~nine~~three ~~months~~month periods ended ~~November~~August 3031, ~~2009~~2010, respectively, ~~as compared~~and tocharged $~~402~~1,~~700~~476,762 and $1,~~836~~145,~~500~~962 induring the ~~three~~six and ~~nine~~three ~~months~~month periods ended ~~November 30~~August 31, ~~2008~~2009, respectively. Stock based compensation is included in general and administrative expense.

~~On November~~Effective 10May 11, ~~2006~~2010, the Company’s ~~granted~~Board ~~certain~~of ~~employees~~Directors ~~and~~approved ~~agents of~~ the ~~Company~~ anissuance ~~aggregate~~ of 3500,~~950,~~000 options to acquire shares of the Company’s ~~Common~~ ~~Stock,~~common ~~which~~stock ~~are~~ exercisable at a price of $10.~~25.~~50 ~~These~~per ~~stock~~share ~~options vest~~and at a ~~rate~~fair value of 12$0.5%06 ~~each~~per ~~fiscal~~share ~~quarter~~with ~~ending~~an ~~November~~expiration ~~30,~~date ~~February~~of ~~28,~~December ~~May~~ 31 ~~and August 31; 2~~,~~250,000~~ ~~options expire November 10,~~ 2011 ~~and 1~~,~~700,000 options~~ ~~expire~~to onthe ~~November 30, 2014. The~~ Company’s ~~stock~~Chief ~~closed~~Financial ~~at $1~~Officer.24 ~~on November~~These ~~10,~~shares ~~2006.~~vest ~~The fair value of the options was estimated~~ on ~~the~~December ~~date of the grant utilizing the Black-Scholes option pricing model with the following assumptions: expected life of the options is 10 years~~1, ~~expected~~2011 ~~volatility of 81%, risk free interest rate of 5%~~ and nothe ~~dividend yield. The~~ fair value ~~for the options granted was approximately $1.04 per share. The value~~ of ~~the options were recorded at~~ $430,~~124,400~~600 ~~and~~is ~~was~~being ~~amortized~~realized ~~$515,000~~over ~~per quarter as~~ the ~~options vested.~~requisite ~~During~~service ~~the~~period ~~nine~~and ~~months~~included ~~ended~~in ~~November 30, 2008 the options were charged to~~ general and administrative ~~stock compensation~~ expense. ~~The options were fully vested and amortized during fiscal year ended February 28, 2009.~~

OnThe ~~July 23,~~following ~~2008,~~assumptions ~~the~~were ~~Company~~used ~~granted~~for ~~certain employees and agents of~~ the ~~Company an aggregate of 4,200,000~~ options togranted ~~acquire~~during ~~shares of~~ the ~~Company’s~~six ~~Common~~month ~~Stock, which~~period ~~are~~ended ~~exercisable at a price of $1.01 (the “Non-Qualified Stock Options”). Options representing 1,950,00 of the Non-Qualified Stock Options vest at a rate of 12.5% each fiscal quarter ending~~ August 31, ~~November 30~~2010, ~~February 28, May 31 through November 30, 2010~~ and ~~expire~~for ~~on July 23, 2018. Options representing 2,250,000 of~~ the ~~Non-Qualified~~fiscal ~~Stock Options have a five~~ year ~~life~~ended ~~and~~February ~~vest quarterly over three years commencing with the quarter ending May 31~~28, 2009. The Company’s stock closed at $1.01 on July 23, 2008. The fair value of the Non-Qualified Stock Options was estimated on the date of the grant utilizing the Black-Scholes option pricing model with the following assumptions2010: ~~expected life~~ of the options is 10 years, expected volatility of 65%, risk free interest rate of 4.2% and no dividend yield. The fair value for the Non-Qualified Stock Options granted was approximately $0.77 per share. The value of the options was recorded at $3,221,600 and $870,900 was amortized in the nine months ended November 30, 2009.

On November 13, 2009, the Company granted a director of the Company 2,000,000 options to acquire shares of the Company’s Common Stock. Of the options granted, 1,000,000 are exercisable at a price of $0.25 and expire on December 31, 2010 and 1,000,000 are exercisable at a price of $0.50 per share and expire on December 31, 2011. On or before December 31, 2010, Mr. Schafran has the right, but not the obligation, to cancel these stock options in exchange for a payment of $50,000. At the Company's election, this payment may be made either in cash or a 2-year unsecured promissory note issued by the Company in the principal amount of $50,000 (the "Note"). If the Company elects to issue the Note to the director, the Note will accrue interest on a monthly basis at a rate equal to the 1-month London Interbank Offered Rate, with such accrued and unpaid interest to be paid on the maturity date of the Note.

	August 31, 2010	February 28, 2010
Expected option life (in years)	1.50	1 to 5
Expected annual volatility over option life	175%	87% to 214%
Risk-free interest rate	0.9%	0.3% to 3.8%
Pre-vesting forfeiture rate	0%	0%
Dividend yield	0%	0%

Compensation expense related to stock-based compensation is calculated using the Black-Scholes valuation model. Expected volatilities are based on the historical volatility of NFEI’s stock over a period consistent with that of the expected terms of the options. The ~~expected~~activity ~~terms~~for ~~of the~~ options ~~are~~during ~~estimated based on factors such as vesting periods and contractual expiration dates. The risk-free rates for periods within~~ the ~~contractual~~six ~~life~~month ofperiod ~~the~~ended ~~options~~August ~~are~~31, ~~based~~2010, onis ~~the yields~~summarized ofin ~~U.S. Treasury instruments with terms comparable to~~ the ~~estimated option~~following ~~terms.~~tables:

~~In connection with the sale of the Series C Preferred Stock, the Company issued the investors in that offering three~~Non-~~year~~Incentive ~~warrants to purchase an aggregate 21,166,658 shares of Common~~ Stock ~~at an exercise price of $1.50 per share (the “AC Warrants”) and three year warrants to purchase an aggregate 10~~Options,~~583,545 shares~~ ofAugust ~~Common Stock at an exercise price of $2.00 per share (the “BC Warrants”). The AC Warrants and the BC Warrants will expire pursuant to their terms on December 1~~31, ~~2009, December 17, 2009 and January 16,~~ 2010.:

Options	Number of shares			Weighted avg exercise price		Wtd avg remaining contractual term		Aggregate intrinsic value
Outstanding at February 28, 2010		7,854,166		$	1.13
Granted		500,000		$	0.50
Exercised		-		$	-
Forfeited or expired		(2,045,833	)	$	1.01
Outstanding at August 31, 2010		6,308,333		$	1.12		4.13	$	-
Exercisable at August 31, 2010		5,808,333		$	1.17		4.37	$	-

Incentive Stock Option Shares, August 31, 2010:

Options	Number of shares		Weighted avg exercise price		Wtd avg remaining contractual term		Aggregate intrinsic value
Outstanding at February 28, 2010		115,000	$	0.81
Granted		-	$	-
Exercised		-	$	-
Forfeited or expired		(115,000)	$	(0.81)
Outstanding at August 31, 2010		-	$	-		-	$	-
Exercisable at August 31, 2010		-	$	-		-	$	-

Fixed-Price Stock Options and Warrants, August 31, 2010:

Options	Number of shares		Weighted avg exercise price		Wtd avg remaining contractual term		Aggregate intrinsic value
Outstanding at February 28, 2010		4,300,000	$	0.52
Granted		-	$	-
Exercised		-	$	-
Forfeited or expired		-	$	-
Outstanding at August 31, 2010		4,300,000	$	0.52		1.20	$	-
Exercisable at August 31, 2010		4,300,000	$	0.52		1.20	$	-

The following table summarizes the options and warrants outstanding at August 31, 2010:

Range of Exercise Price	Weighted Average Remaining Contractual Life in Years		Number of Shares Outstanding		Number of Shares Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value

$0.20 to $0.74		1.35		4,250,000		3,750,000	$	0.33	$	-
$0.75 to $1.50		4.37		5,808,333		5,808,333	$	1.17	$	-
$1.51 to $2.50		0.21		550,000		550,000	$	2.00	$	-
Total		2.94		10,608,333		10,108,333	$	0.88	$	-

The total estimated unrecognized compensation cost from unvested stock options as of August 31, 2010, was $27,378, which is expected to be recognized over a weighted average period of approximately 1.25 years.

Note 7 – Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The guidance establishes a hierarchy for determining the fair values of assets and liabilities, based on the significance level of the following inputs:

·	Level 1 – Quoted prices in active markets for identical assets or liabilities

~~The activity~~· Level 2 – Quoted prices in active markets for ~~options~~similar assets and ~~warrants~~liabilities, ~~during~~quoted ~~the~~prices ~~nine~~for ~~months~~identical ~~ended~~or ~~November~~similar 30instruments in markets that are not active, ~~2009 is~~and ~~summarized~~model-derived invaluations ~~the~~whose ~~following~~inputs ~~tables:~~are observable or whose significant value drivers are observable

~~Exercisable Non-Incentive~~· ~~Stock~~Level ~~Option~~3 ~~Plan~~– ~~Shares:~~Significant inputs to the valuation model are unobservable.

	Shares	Weighted Average Exercise Price
Beginning of period	4,681,250	$	1.21
Vested	1,031,250	$	1.01
Exercised	—	$	—
Expired	(108,333)	$	1.01
End of period	5,604,167	$	1.18

An asset or liability subject to the fair value requirements is categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement. NFEI’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

~~Exercisable Incentive~~Both ~~Stock~~financial ~~Option~~and ~~Plan~~non-financial ~~Shares:~~assets and liabilities are categorized within the hierarchy based on the lowest level of input that is significant to the fair value measurement.

	Shares			Weighted Average Exercise Price
Beginning of period		584,333		$	0.89
Granted		—		$	—
Exercised		—		$	—
Cancelled/Expired		(394,333	)	$	1.07
End of period		190,000		$	0.94

The following is a listing of the Company’s financial liabilities measured on a recurring basis and where it is classified within the hierarchy as of August 31, 2010:

Fixed-Price Stock Options and Warrants:

Fair value measurements using:

Liabilities at fair values:

Total

Level 1

Level 2

Level 3

Derivative liability – Series B Preferred Stock

550,000

	Shares	Weighted Average Exercise Price
Beginning of period	33,000,203	$	1.68
Granted	3,250,000	$	.31
Exercised	—	$	—
Expired	—	$	—
End of period	36,250,203	$	1.56

There were no nonfinancial assets and liabilities measured at fair value on a nonrecurring basis at August 31, 2010.

The following is a listing of the Company’s assets and liabilities that are measured at fair value and where they are classified within the hierarchy as of February 28, 2010:

	Fair value measurements using:
	Total		Level 1		Level 2		Level 3
Assets:
Oil and gas properties (a)		1,206,366		-		-		1,206,366
Materials inventory (a)		149,615		-		149,615		-
Liabilities:
Derivative - Series B Preferred (b)		480,000		-		-		480,000

___________________________

(a)	This represents a nonfinancial asset that is measured at fair value on a nonrecurring basis.

(b)	This represents a financial liability that is measured at fair value on a recurring basis.

Proved Oil and Gas Properties

Proved oil and gas property costs will be evaluated for impairment and reduced to fair value if the sum of the expected undiscounted future cash flows is less than net book value pursuant to ASC Topic 360. The Company will use Level 3 inputs and the income valuation technique, which converts future amounts to a single present value amount, to measure the fair value of proved properties through an application of discount rates and price forecasts selected by the Company’s management based on current market conditions which includes the following factors: estimate of future cash payments, expectations of possible variations in the amount and/or timing of cash flows, the risk premium, and nonperformance risk. The Company currently has no proved oil and gas property at August 31, 2010 and 2009.

Unproved oil and gas property will be evaluated for impairment when the Company determines that either the property will not be developed or the carrying value is will not be realized. The ~~following~~ ~~table~~Company ~~summarizes~~will use Level 3 inputs based on management’s internal assessment of the ~~options~~valuation ~~and~~based ~~warrants~~on ~~outstanding~~current market conditions, which include observable and ~~exercisable:~~ unobservable inputs. Of the $5,422,461of unproved property, $1,206,366 was measured at fair value using Level 3 inputs at February 28, 2010. There were no unproved properties measured at fair value at August 31, 2010.

Range of Exercise Price	Number of Shares Outstanding	Weighted Average Remaining Contractual Life in Years	Weighted Average Exercise Price
$0.20 to $0.74	3,250,000	1.62	$0.31
$0.75 to $1.50	5,794,167	5.20	$1.17
$1.51 to $2.50	33,000,203	0.14	$1.68
	42,044,370

Materials Inventory

~~In October~~Materials ~~2006,~~inventory is valued at the ~~Board~~lower of ~~Directors~~cost ~~adopted~~or anmarket. ~~incentive~~The ~~stock~~Company ~~option~~uses ~~plan reserving~~Level 102 inputs to measure the fair value of materials inventory,~~000,000~~ ~~shares~~which is primarily comprised of ~~the~~tubular goods. The Company’s $0uses third party market quotes and compares the quotes to the book value of the materials inventory.~~001~~ ~~par~~If the book value ~~common~~exceeds ~~stock~~the ~~for issuance~~quoted ~~pursuant~~market price, the Company reduces the book value to the ~~plan~~market price. The ~~plan~~considered ~~was~~factors ~~adopted~~result byin ~~shareholders~~an onestimated ~~June~~exit-price ~~11, 2007~~that management believes provides a reasonable and consistent methodology for valuing materials inventory. AsThe ofCompany’s ~~November~~entire ~~30,~~materials ~~2009~~inventory was measured at fair value using Level 2 inputs at February 28, 2010. There were no ~~options~~materials ~~have~~inventory ~~been~~measured ~~granted~~at ~~under~~fair ~~the plan~~value at August 31, 2010.

~~Note 10~~Asset -Retirement ~~Related Parties~~Obligations

The Company ~~paid~~estimates ~~$24,000~~asset ~~during~~retirement obligations pursuant to the ~~nine~~provisions ~~months~~of ~~ended~~ASC ~~November,~~Topic ~~2009~~410. ~~and~~The ~~2008, respectively,~~income invaluation ~~connection~~technique ~~with~~is anutilized ~~office~~by ~~lease~~the ~~for~~Company ~~office~~to ~~space~~determine inthe ~~Littleton, Colorado~~fair ~~with~~value ~~Spotswood~~of ~~Properties,~~the ~~LLC,~~liability ~~(“Spotswood”),~~at the point of inception by applying a ~~Colorado~~credit-adjusted ~~limited liability~~risk-free ~~company~~rate, ~~and~~which antakes ~~affiliate~~into ofaccount the Company’s ~~former~~credit ~~president.~~risk, ~~The~~the ~~lease provides~~time ~~for~~value of money, and the ~~payment~~current ofeconomic $2state,~~667~~ ~~per~~to ~~month~~the ~~plus~~undiscounted ~~utilities~~expected ~~and~~abandonment ~~other incidentals~~cash flows. ~~The~~Given ~~former~~the ~~president~~unobservable nature of the ~~Company~~inputs, ~~owns~~the ~~50%~~initial measurement of ~~Spotswood~~ the asset retirement obligation liability is deemed to use Level 3 inputs. There were no asset retirement obligations measured at fair value at August 31, 2010.

~~The Company~~Conversion ~~paid~~Feature aEmbedded ~~corporation~~in ~~controlled by one of~~ the ~~former~~Series ~~directors~~B ~~and~~Preferred ~~a shareholder $15,625 and $50,000 for geological consulting during the nine months ended November 30, 2009 and 2008, respectively.~~Stock

~~Effective July~~The 7,estimated ~~2009,~~fair ~~the~~values ~~Company~~of ~~transferred~~the ~~legal~~derivative ~~title~~liabilities toembedded within the ~~Steamboat~~Series ~~Property~~B ~~to the~~preferred ~~Company’s~~shares ~~former~~were ~~President~~determined ~~and~~at ~~Chief~~each ~~Executive~~reporting ~~Officer,~~period asusing ~~nominee,~~a ~~to facilitate~~monte ~~the~~carlo ~~refinancing~~option ofpricing ~~the~~model ~~Steamboat~~with ~~Property.~~Level ~~See~~3 ~~Note 7 above~~inputs.

~~Effective August~~The ~~17,~~Company ~~2009,~~had ~~Mr.~~no ~~Veera~~Level ~~was~~1 ~~granted~~or Level 2~~,056,500~~ ~~shares~~financial ofassets ~~the~~or ~~Company’s~~liabilities ~~$0.001 par~~that ~~value~~were ~~common~~measured ~~stock, valued~~ at ~~$637,515~~fair ~~and~~value on a ~~two~~recurring ~~year~~basis ~~option~~as ~~to acquire 1,250,000 shares~~ of ~~the~~August ~~Company’s~~31, ~~Common~~2010. ~~Stock~~The atfollowing atable ~~price~~reflects ofthe ~~$0.20~~Level ~~per~~3 ~~share, valued~~activity ~~at $231,647~~ for ~~certain~~the ~~consulting~~conversion ~~services~~feature ~~previously~~measured ~~rendered~~at ~~and~~fair asvalue on a ~~structuring~~ ~~fee~~recurring ~~relating~~basis tofor the ~~deposit~~three ofand ~~$500,000~~six ~~into~~month aperiods ~~segregated~~ended ~~account~~August ~~in connection~~31, ~~with~~2010 ~~the~~and ~~Participation Agreement. See Note 5 above.~~2009:

During the quarter ended November 30, 2009, the Company sold 6,500,000 shares of its Common Stock at a price of $0.10 per share to Iris Energy Holdings Limited, an affiliate of the Company whose sole director is Samyak Veera, a director of the Company. See Note 9 above.

	For the Three Months							For the Six Months
	Ended August 31,							Ended August 31,
	2010			2009				2010			2009
Beginning balance		$	320,000		$	4,570,000			$	480,000		$	3,740,000
Net increase (decrease) in liability			230,000			(3,900,000	)			70,000			(3,070,000	)
Transfers in (out) of Level 3			-			-				-			-
Ending balance		$	550,000		$	670,000			$	550,000		$	670,000

~~Note 11~~The -fair ~~Legal~~values ~~Proceedings~~of the embedded derivative liabilities for the Series B preferred shares were determined using the following key assumptions:

Stull Ranch Litigation and Stull Ranch Arbitration.

	Expected volatility		Expected dividend yield		Time to maturity		Credit-adjusted-risk-free-rate per annum		Strike Price		Fair value of underlying common shares (per share)
August 31, 2010	119% to 226%		0%		1 to 7 yrs		10%		$0.65		$ 0.12

In June 2009, New Frontier Energy, Inc. (the “Company”), Stull Ranches, LLC, and Clayton Williams Energy, Inc. entered into a settlement agreement (the “Settlement Agreement”) relating to an Easement Agreement granted by Stull Ranches, LLC to Clayton Williams Energy, Inc. which granted access to a road which serviced the Federal 12-1 and Federal 3-1 wells in the Focus Ranch Unit. Pursuant to the terms of the Settlement Agreement, the Company is obligated to pay Stull Ranches’ attorneys’ fees and litigation expense in connection with the lawsuit to allow the assignment of the easement in an amount to be decided in an arbitration (the “Stull Ranch Arbitration”). Pursuant to the Settlement Agreement, the parties agreed on a range of between $350,000 and $1,000,000 of the attorneys’ fees and litigation expense that Stull Ranches, LLC may collect from the Company.

On February 5, 2010, the arbitrator in the Stull Ranch Arbitration awarded the attorneys for Stull Ranches, LLC attorneys’ fees in the amount of $779,599.

~~Hedberg &~~Note ~~Howell,~~8 ~~LLC~~– ~~Litigation~~Commitments

~~On November~~The 25Company, ~~2009,~~along ~~Hedberg~~with ~~and~~the ~~Howell,~~other ~~LLC,~~working ainterest ~~law~~owners ~~firm~~at ~~that~~the ~~previously~~property ~~provided legal~~located ~~services~~at to the ~~Company,~~Slaterdome ~~filed~~field agreed to pay SDG a ~~complaint~~fee inof $0.50 per million British Thermal Units (“MMBtu”) of gas transported through the ~~District~~line ~~Court~~until two-thirds of ~~Arapahoe~~ ~~County~~the original construction costs amounting to $2,609,841 ~~Colorado~~were ~~(Case~~recovered Noand $0.25 ~~09CV2609)~~thereafter. ~~against~~At the ~~Company~~end ~~alleging breach~~of each of ~~contract~~the ~~for~~first ~~failure~~four toyears ~~pay~~beginning ~~certain~~June ~~legal~~3, ~~fees. The plaintiff~~2005, inif ~~this~~the ~~matter~~total gathering revenue for the preceding year is ~~seeking~~less ~~compensatory~~than ~~damages~~two-thirds of ~~$39,336,~~the ~~plus~~construction costs ~~and~~ ~~attorney~~divided ~~fees. The~~by ~~Company~~five, ~~has~~SDG ~~disputed~~may increase the ~~legal~~gathering ~~fees~~fee ~~that are~~for the ~~subject~~year ~~matter~~immediately following the year in which the shortfall occurs by the dollar amount per MMBtu necessary to make up the monetary equivalent of ~~this~~the ~~litigation~~annual ~~and~~shortfall ~~has~~or ~~filed~~charge an ~~answer~~annual inshortfall ~~response~~fee to ~~the~~ ~~complaint~~make ~~asserting~~up ~~various~~the ~~defenses~~difference. ~~The~~ ~~Company~~This ~~cannot predict~~obligation atended ~~this~~on ~~time~~May ~~the~~31, ~~outcome~~2010, which resulted in ~~this~~a ~~matter~~final shortfall payment of approximately $300,000.

OnOperating March 5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New Frontier Energy, Inc. (Case No. 10-14517HRT) (the “Petition”) was filed against New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court, District of Colorado by five Petitioning Creditors (the “Petitioners”). The Petitioners alleged that they have debts that are not the subject of a bona fide dispute as to liability or amount and that the Company is generally not paying its debts as they come due. The Petitioners were seeking liquidation of the Company’s assets and the appointment of a receiver. The Company believes that the Petitioners' claims are without merit. After discussion with the Petitioners, on March 18, 2010, the Company and the Petitioners filed a joint motion to dismiss the Petition, and the motion is pending with the bankruptcy court. The Company believes that the joint motion to dismiss is an affirmation of the Company’s position that the Petition was wholly without merit. In connection with the joint motion to dismiss, the Company agreed not to seek or obtain judgment, sanctions or other relief against the Petitioners for filing the Petition and any claims against any person or entity that caused the dissemination of the filing to a certain oil and gas publication. In the event the bankruptcy court does not approve the dismissal of the involuntary bankruptcy petition, the Company intends to aggressively contest the involuntary bankruptcy petition.Leases

~~Note 12~~For the six month period ended August 31, 2010 and 2009, month-to-month ~~Business~~office ~~Segment~~facilities ~~Information~~rental payments charged to expense were approximately $19,501 and $16,000, respectively. Future rental payments for office facilities under the terms of noncancelable operating leases were approximately $23,423 as of August 31, 2010.

~~The Company~~As ~~operates~~of inAugust ~~two~~31, ~~business~~2010, ~~segments:~~the ~~oil~~Company ~~and~~does ~~gas~~not ~~exploration~~have ~~and~~any ~~gas gathering.~~office ~~Operating~~facility ~~results~~leases ~~and~~in ~~other~~effect ~~financial data~~ for ~~the~~2013 ~~nine months ended November 30, 2009~~ and ~~2008 are presented for the principal business segments as follows:~~beyond.

	Oil & Gas			Gas Gathering			Consolidated
November 30, 2009
Revenues	$	146,893		$	113,139		$	260,032
(Loss) before taxes	$	(4,309,337	)	$	73,300		$	(4,236,037	)
Total assets	$	16,019,352		$	2,249,090		$	18,268,442
Property additions	$	19,708		$	—		$	19,708
Interest expense	$	(53,313	)	$	—		$	(53,313	)
Depreciation, depletion and amortization	$	265,788		$	97,869		$	363,657
November 30, 2008
Revenues	$	1,056,964		$	108,068		$	1,165,032
Income (Loss) before taxes	$	(4,030,167	)	$	(11,890	)	$	(4,042,057	)
Total assets	$	23,327,889		$	2,235,722		$	25,563,611
Property additions	$	2,158,476		$	—		$	2,158,476
Interest expense	$	(62,914	)	$	—		$	(62,914	)
Depreciation, depletion and amortization	$	639,372		$	97,869		$	737,241

Note 9 - Related Parties

The Company paid $0 and $16,000 during the six month period ended August 31, 2010 and 2009, respectively, in connection with an office lease for office space in Littleton, Colorado with Spotswood Properties, LLC, (“Spotswood”), a Colorado limited liability company and an affiliate of the Company’s former President and CEO. This lease was terminated in December 2009 and the Company has entered into a new lease with an unaffiliated company.

The Company paid a corporation controlled by one of the former directors and a shareholder $0 and $12,500 for geological consulting during the six month period ended August 31, 2010 and 2009, respectively.

See also Note 4 – Notes payable, Note 6 – Stockholders’ equity and Note 8 - Commitments

Note 10 - Legal Proceedings

Slaterdome Gas, Inc. Litigation

On or about July 20, 2010, the Company brought an action (the “Slaterdome Complaint”) for breach of contract, unjust enrichment and foreclosure of contractual liens against Slaterdome Gas, Inc. to recover unpaid debts in connection with an Operating Agreement that the Company and Slaterdome Gas, Inc. are parties to covering certain lands in Moffat County, Colorado and Carbon County, Wyoming (District Court, Moffat County, Colorado 2010CV65). The Company is seeking to recover damages in an amount to be proven at trial and for the foreclosure of a contractual lien on certain property owned by Slaterdome Gas, Inc. On November 7, 2010, Slaterdome Gas, Inc. filed an answer and counterclaim against the Company asserting various defenses to the Slaterdome Complaint and asserts a claim for specific performance for the assignment of certain oil and gas rights on certain lands in Moffat County, Colorado and Carbon County, Wyoming and to quiet title to such oil and gas rights. As of the date of this Interim Report, the outcome of this matter cannot be determined.

Note 13 -11 ~~Subsequent~~– ~~Events~~Business Segment Information

The Company ~~has~~operates ~~evaluated~~in ~~subsequent~~two ~~events~~business ~~through~~segments: ~~March~~oil ~~16,~~and ~~2010~~gas ~~the~~exploration ~~date~~and ~~that these~~gas gathering. Operating results and other financial ~~statements~~data ~~were~~for ~~available~~the tosix beand ~~issued. The~~three ~~following information~~month period ended August 31, 2010 and 2009, is ~~disclosed~~presented asfor athe ~~subsequent~~principal ~~event~~business segments as follows:

In December 2009, the Company issued an aggregate 34,099,265 shares of common stock pursuant to the automatic conversion of 216,000 shares of series C preferred stock and the associated accumulated dividends.

	Oil & Gas		Gas Gathering			Consolidated
Six months ended August 31, 2010:
Revenues	$	65,930	$	394,502		$	460,432
Income (loss) before taxes	$	1,581,649	$	227,488		$	1,809,137
Total assets	$	9,146,568	$	2,486,993		$	11,633,561
Property additions	$	43,409	$	-		$	43,409
Other income (expense)	$	3,043,997	$	48,271		$	3,092,268
Depreciation, depletion and amortization	$	(103,827)	$	(65,246	)	$	(169,073)

In connection with the sale of the Series C Preferred Stock, the Company issued the investors in that offering three-year warrants to purchase 21,166,658 shares of Common Stock at an exercise price of $1.50 per share (the “AC Warrants”) and three year warrants to purchase 10,583,545 shares of Common Stock at an exercise price of $2.00 per share (the “BC Warrants”). The AC Warrants and the BC Warrants each expired pursuant to their terms on December 1, 2009, December 17, 2009 and January 16, 2010.


	Oil & Gas			Gas Gathering			Consolidated
Six months ended August 31, 2009:
Revenues	$	102,382		$	87,939		$	190,321
Income (loss) before taxes	$	(412,535	)	$	(5,330	)	$	(417,865	)
Total assets	$	13,342,508		$	2,162,467		$	15,504,975
Property additions	$	19,708		$	-		$	19,708
Other income (expense)	$	3,043,197		$	-		$	3,043,197
Depreciation, depletion and amortization	$	(236,545)		$	(65,246)		$	(301,791)

In December 2009, the Company issued an aggregate 11,860 shares of common stock pursuant to conversion of 51 shares of series B preferred stock.


	Oil & Gas			Gas Gathering			Consolidated
Three months ended August 31, 2010:
Revenues	$	31,650		$	35,183		$	66,833
Income (loss) before taxes	$	1,834,316		$	(132,538	)	$	1,701,778
Total assets	$	9,146,568		$	2,486,993		$	11,633,561
Property additions	$	10,922		$	-		$	10,922
Other income (expense)	$	(132,030	)	$	-		$	(132,030	)
Depreciation, depletion and amortization	$	(70,455)		$	(32,623)		$	(103,078)

On December 22, 2009, the Company’s Board of Directors approved the payment of $100,000 to Altius Business Services Pte. Ltd., an affiliate of Samyak Veera, for services rendered to the Company in connection with the Entek Participation Agreement the Company entered into in August 2009.


	Oil & Gas		Gas Gathering		Consolidated
Three months ended August 31, 2009:
Revenues	$	14,560	$	50,107	$	64,667
Income (loss) before taxes	$	1,417,677	$	3,873	$	1,421,550
Total assets	$	13,342,508	$	2,162,467	$	15,504,975
Property additions	$	533	$	-	$	533
Other income (expense)	$	3,890,499	$	-	$	3,890,499
Depreciation, depletion and amortization	$	(74,942)	$	(32,623)	$	(107,565)

On January 12, 2010, the Company's Board of Directors approved the issuance to Mr. Veera of 750,000 shares of the Company's common stock as compensation for Mr. Veera's services for the period from December 1, 2009 to December 1, 2010. The shares are to be issued in two tranches, with 375,000 in shares of the Company's common stock to be issued on or about January 12, 2010 and 375,000 in shares of the Company's common stock to be issued on or about June 1, 2010.

On February 5, 2010, the arbitrator in the Stull Ranch Arbitration awarded the attorneys for Stull Ranches, LLC attorneys’ fees in the amount of $779,599. See Note 11 above.

On February 16, 2010, New Frontier Energy, Inc. held a closing on the sale (the "Offering") to Iris Energy Holdings Limited ("Iris Energy") of an aggregate of 8,000,000 shares of the Company's $0.001 par value Common Stock sold a price of $0.10 per share (The "Common Stock") for gross proceeds of $800,000. Iris Energy is an affiliate of the Company whose sole director is Samyak Veera, a director of the Company.

On March 5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New Frontier Energy, Inc. (Case No. 10-14517HRT) was filed against New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court, District of Colorado by five alleged creditors (the “Petitioners”). The Petitioners have alleged that they have debts that are not the subject of a bona fide dispute. The Petitioners are seeking liquidation and the appointment of a receiver. The Company believes that certain of the Petitioners claims are without merit or are otherwise in dispute. On March 18, 2010, the Petitioners filed a motion to dismiss the involuntary bankruptcy petition and the motion is pending with the bankruptcy court. In the event the bankruptcy court does not approve the dismissal of the involuntary bankruptcy petition, the Company intends to aggressively contest the involuntary bankruptcy petition.

~~Item~~Note 2.12 ~~Management’s Discussion~~– ~~and~~Subsequent ~~Analysis or Plan of Operation.~~Events

~~Forward Looking~~On ~~Information~~February 16, 2011, New Frontier Energy, Inc. (“NFE”) entered into a binding memorandum of understanding (MOU) with Emerald Oil and Gas, NL (“Emerald”) an Australian listed company (ASX: EMR) which provides for the following:

NFE will sell to Emerald the following assets (the “Assets”):

·	NFE’s leasehold interests located within Routt and Moffat counties, Colorado and Carbon and Sweetwater Counties, Wyoming,

·	any equipment or property used in connection with any oil and gas operations related to the assigned leases,

·	NFE’s limited partnership and general partnership interest in Slater Dome Gathering, LLLP,

·	NFE’s rights and claims under that certain Participation Agreement (as amended) between NFE and Entek GRB, LLC (Entek) dated on or about August 10, 2009,

·	NFE’s claims against Slaterdome Gas, Inc. pursuant to case file number 2010 CV 65 filed in the District Court in Moffat County Colorado, and

·	NFE’s claims against Slaterdome Gas, Inc. pursuant to case file number CV-10-202 filed in the District Court in Carbon County, Wyoming.

In addition, Emerald will assume all liabilities associated with the Assets except for environmental liabilities arising from the period prior to Closing Date.

The purchase price is USD 15,000,000 (Fifteen Million US Dollars) comprising of (i) AUD 5,000,000 (Five Million Australian Dollars) worth of free trading Emerald ordinary shares and (ii) the balance payable in cash in US dollars at Closing. Further, New Frontier has received certain undertakings relative to liquidity and value with respect to the shares of Emerald it will receive as part of the purchase price.

Conditions to closing include (i) the completion of due diligence by Emerald within 45 days of the MOU execution Date, (ii) Emerald shareholder approval of the transaction within 45 days of the MOU execution date; and (iii) Emerald’s completion of a capital raise within 50 days of the MOU execution date on terms acceptable to it, among others.

Management believes that the terms described herein are the relevant material terms of the MOU, however, there may be other terms and conditions in the MOU that other persons would consider material. Further disclosures will be forthcoming as and if necessary as negotiations and due diligence progress.

Due to the nature of the conditions to closing, it is not possible at this time to determine the likelihood that the transaction contemplated in the MOU will be concluded.

On March 1, 2011, the Board of Directors approved the payment of a cash award of $1,581,000 to the Chairman and CEO. The award provided for a clawback of up to $500,000 within a six-month period following the grant should a majority of the independent members of the Board of Directors determine that either the CEO has not performed in his role as CEO to the expectations of the voting board members or the Company requires such funds in order to maintain a prudent cash reserve level. The return of such funds will be payable within 10 business days from the date of the request.

Item 2. Management's Discussion and Analysis or Plan of Operation.

References to the “Company,” “us” or “we” refer to New Frontier Energy, Inc., a Colorado Corporation.

Information contained in the following discussion of results of operations and financial condition and in certain of the notes to the financial statements included in this document contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “estimate,” or “continue,” or variations thereon or comparable terminology. In addition, all statements other than statements of historical facts that address activities, events, or developments the Company expects, believes, or anticipates will or may occur in the future, and other such matters, are forward-looking statements. The following discussion should be read in conjunction with the Company’s unaudited financial statements and related notes included elsewhere herein.

The Company’s future operating results may be affected by various trends and factors, which are beyond the Company’s control. The important factors that could prevent us from achieving our stated goals and objectives include, but are not limited to, those set forth in our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2009~~2010 and the following:

•· The general state of the economy; • Our ability to successfully implement our plan of operations; • Our ability to raise additional capital, as it may be affected by general economic conditions, current conditions in the stock market and competition in the oil and gas industry for risk capital; • Environmental and other regulations, as the same presently exist and may hereafter be amended; • Our ability to identify, finance and integrate other acquisitions; • Volatility of our stock price; and • Actions of overseas producers of oil and natural gas over which we have no control.

·	Our ability to successfully implement our plan of operations;

·	Our ability to raise additional capital, as it may be affected by general economic conditions, current conditions in the stock market and competition in the oil and gas industry for risk capital;

·	Environmental and other regulations, as the same presently exist and may hereafter be amended;

·	Our ability to identify, finance and integrate other acquisitions;

·	Volatility of our stock price; and

·	Actions of overseas producers of oil and natural gas over which we have no control.

We undertake no responsibility or obligation to update publicly these forward-looking statements, but may do so in the future in written or oral statements. Investors should take note of any future statements made by or on our behalf.

The Company cautions the reader that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, including its 10-K for the year ended February 28, ~~2009~~2010, could affect the Company’s actual results and cause actual results to differ materially from those discussed in forward-looking statements. This information should be read in conjunction with our Annual Report on Form 10-K for the year ended February 28, ~~2009~~2010.

Overview

~~New Frontier~~We ~~Energy~~are isan aindependent ~~natural~~energy ~~resource exploration and production~~ company engaged in the exploration, development, acquisition, and ~~development~~production of ~~oil~~natural gas and ~~natural~~crude ~~gas properties~~oil. The Company’s operations are conducted entirely in the continental United States., Weprincipally ~~are~~in ~~currently~~the ~~developing~~Green ~~three~~River ~~significant properties~~Basin (“GRB”) in Colorado and Wyoming: and the Denver Julesburg Basin (“DJ Basin”) in Colorado and in the Calcasieu and Jefferson Davis Parishes in Louisiana (“Amazon Prospect”).

		Acres
	Property	Gross	Net	Stage of Development
▪	Focus Ranch Discovery	33,242	31,717	Flow tested 12-1 vertical well. 1st Sales anticipated in 3rd quarter 2010.
▪	Slater Dome Producing Area	32,620	21,210	Drilled R. 13-15T and BM 14-15 in November and December 2009. 1st Sales scheduled in 2nd quarter 2010.
▪	Weitzel Prospect	15,040	11,355	Preparing drilling plans now. Analogous field to recent EOG Niobrara discovery well.
	TOTAL Acreage	80,902	66,532*

We use a variety of financial and operational measurements to analyze our operating performance. These measurements include: (i) production levels, trends and prices,(ii) operating expenses and general and administrative expenses and (iii) operating cash flow. These measurements are to be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in our Annual Report on Form 10-K for the fiscal year ended February 28, 2010.

On August 10, 2009, we entered into a Participation Agreement (the “Participation Agreement”) with Entek GRB LLC (“Entek”), under which Entek irrevocably committed to expend $3.0 million (the “Phase 1 Funds”) to earn 16.25% (the “Phase 1 Interests”) of the Company’s interest in the Assets. Between the first anniversary date and the second anniversary date of the Participation Agreement, Entek has the right but not the obligation to expend $4.0 million (the “Phase 2 Funds”) and earn an additional 16.25% (the “Phase 2 Interests”) of the Company’s interest in the Assets. Between the second anniversary date and the third anniversary date of the Participation Agreement, Entek has the right but not the obligation to expend approximately $4.5 million (the “Phase 3 Funds”) and earn an additional 18.4375% (the “Phase 3 Interests”) of the Company’s interest in the Assets. Entek will have the right to become the operator after the completion of Phase 1 and the commencement of Phase 2, subject to certain regulatory and other approvals.

Subsequent to November 30, 2009, Entek completed its obligation for Phase I and earned an additional 16.25% of the Company’s interest in the Assets for an aggregate of 20.3125% of the Company’s interest in the Assets.

* Net Acres figures do not take into account Entek’s acquisition of the Company’s interest in the assets.

Plan of Operations

The Company is currently developing a plan of operations in conjunction with Entek for the next 12 months of operations. The plan of operations may include the development of a pipeline to the Focus Ranch Federal 12-1 well, putting the Robidoux 13-15T and the Battle Mountain Federal 14-15 wells into production and potentially drilling one or more new wells. The Company and Entek are currently in discussions relating to the financing options for the development of the pipeline. The resolution of and outcome of these discussions and the form and source of such financing are not determinable as of the date of this Form 10-Q.

OVERVIEW OF FINANCIAL CONDITION AND LIQUIDITY

Results of Operation: Three months ended November 30, 2009 compared to the three months ended November 30, 2008

For the three months ended November 30, 2009 we reported a net loss attributable to common shareholders of $953,743 or $0.07 per share on revenue of $69,711. This compares to a net loss attributable to common shareholders of $1,361,819 or $0.10 per share, on revenue of $336,302, for the comparable period of the previous fiscal year. We expect to incur losses until such time as we complete the rehabilitation of our existing wells, bring the Focus Ranch Unit wells into production, and complete new productive wells in connection with the Participation Agreement with Entek. There is no assurance that we will be successful in these efforts.

We anticipate that results of operations for future periods will be significantly affected by the Participation Agreement. The agreement provides for Entek to fund up to approximately $11.5 million over three years to earn up to 55% of our interest in the underlying leases and certain other assets. As of March 8, 2010, Entek is entitled to an interest of 20.3125%. For accounting purposes, we will allocate to Entek their percentage share of revenues and expenses during the term of the Participation Agreement, which is expected to reduce the amounts of revenue and expenses reported by us in the future.

Revenues for the three months ended November 30, 2009 were $69,711 compared with $336,302 for the three months ended November 30, 2008, a decrease of $266,591 or 79.3%. Oil and gas revenues during the three months ended November 30, 2009 were $44,511 compared with $306,152 during the three months ended November 30, 2008, a decrease of $261,641 or 85.5%. The majority of this decrease can be attributed to the decline of substantially all of our production during the period as a result of our liquidity constraints.

Gathering and operating fees were $25,200 for the three months ended November 30, 2009 compared with $30,150 for the three months ended November 30, 2008, a decrease of $4,950 or 16.4%. These fees are generally fixed by agreement and, while they generally do not exhibit significant variation on a period by period comparison, they will vary somewhat based on production volume.

Exploration costs for the three months ended November 30, 2009 were $4,128 compared with $82,334 for the three months ended November 30, 2008, a decrease of $78,206 or 95%. The individual components of exploration costs are shown in the following table:

	Three months Ended November 30,						Increase
	2009			2008			(Decrease)
Geologic consulting		$	933		$	18,750		$	(17,817	)
Seismic consulting			—			51,218			(51,218	)
Misc other costs			—			11,041			(11,041	)
Delay rentals			3,195			1,325			1,870
		$	4,128		$	82,334		$	(78,206	)

The decrease in exploration costs is generally a result of decreased exploration activity at the Slater Dome Field and Focus Ranch Unit. Certain activities were suspended during the period pending receipt of additional funding.

~~Lease operating expenses for the three months ended November 30, 2009 were $28,811 compared with $351,320 during the three months ended November 30, 2008, a decrease of $322,509 or 91.8%.~~ The ~~changes~~Participation ~~are summarized as follows:~~Agreement

	Three months Ended November 30,						Increase
	2009			2008			(Decrease)
Lease operating expenses			25,351			345,596			(320,245	)
Production taxes			3,460			5,724			(2,264	)
		$	28,811		$	351,320		$	(322,509	)

On August 10, 2009, we entered into a Participation Agreement (the “Participation Agreement”) with Entek GRB LLC (“Entek”) under which Entek agreed to purchase certain assets for $1.0 million and spend up to an additional $11.5 million over three years on exploration and development within approximately 66,000 gross acres (the “Underlying Leases”) to earn up to 55% of our interest in the Underlying Leases and certain other assets, including our partnership interests in Slater Dome Gathering, LLLP (collectively the “Assets”). We also created an area of mutual interest (the “Area of Mutual Interest”) with Entek in all lands located in Routt County, Colorado, Moffatt County, Colorado, Sweetwater County, Wyoming, and Carbon County Wyoming. Pursuant to the Area of Mutual Interest, Entek shall be entitled to participate for up to 55% in any additional interest acquired within the Area of Mutual Interest by us and we shall be entitled to participate for up to 45% in any additional interest acquired within the Area of Mutual Interest purchased by Entek.

~~Lease operating~~Pursuant ~~expenses decreased $320,245 compared~~ to the ~~same~~terms ~~period~~and ~~ending~~conditions ~~in 2008.~~of ~~This~~the ~~reduction~~Participation isAgreement, ~~largely~~Entek ~~due~~had tothe ~~reduced~~right, ~~activities~~after inagreeing ~~response~~ to ~~our lack~~proceed ofwith ~~liquidity~~Phase ~~during~~II ~~the~~(as ~~period~~defined ~~and~~in ~~due to certain terms related to~~ the Participation Agreement) ~~between~~of the ~~Company~~Participation ~~and Entek~~Agreement, ~~dated~~to ~~August~~elect ~~10,~~to ~~2009, whereby,~~become ~~all~~the ~~operating~~operator ~~expenses shall be paid out~~ of the ~~parties~~Focus ~~net~~Ranch ~~proceeds from~~Unit ~~the underlying leases~~ and in the ~~event~~Slaterdome ~~that~~Field. Entek ~~there~~made ~~are~~this ~~not~~election ~~sufficient proceeds,~~and ~~subject~~effective toMay ~~other~~1, ~~terms~~2010, ~~Entek~~we ~~shall~~filed bean ~~solely~~assignment ~~responsible~~with ~~for~~ the ~~remaining~~ ~~operating~~appropriate ~~expenses~~regulatory ~~through~~agencies ~~the~~naming ~~conclusion of each development phase in which~~ Entek ~~participates.~~as ~~The~~operator ~~decrease~~of inthe ~~gas~~Focus ~~sales~~Ranch ~~costs~~Unit and ~~production taxes is consistent with~~ the ~~decrease~~Slaterdome ~~in production and revenues~~Field.

~~General and~~Factors ~~administrative~~That ~~expenses~~Significantly ~~for~~Affect ~~the~~Our ~~three~~Financial months ended November 30, 2009 were $233,579 compared with $401,481 in the three months ended November 30, 2008, a decrease of $167,902 or 41.8%. As a result of our current lack of liquidity, we worked to reduce our cash operating expenses, with the largest reduction coming from decreased employee compensation as a result of reduced personnel and decreases in salaries paid to officers. During the quarter ended August 31, 2009, we agreed to issue 2,056,500 shares of restricted common stock, valued at $637,515, to our chairman as compensation for consulting services and as a structuring fee relating to the deposit of the funds to be used as the Segregated Arbitration Fund. Professional fees increased approximately $125,000 in the three months ended November 30, 2009 compared to the quarter ended in 2008. This increase was largely due to an increase in legal and accounting fees, primarily because of the Stull Ranch litigation and offset by a decrease in other consulting fees primarily composed of decreased engineering and landman fees resulting from our reduced level of exploration activity. The decrease in all other general and administrative expenses reflects our lower activity level in response to our liquidity constraints.Results

~~Issuance of~~Revenue, ~~common~~cash ~~stock~~flow ~~options~~from operations and ~~warrants~~future ~~represents~~growth ~~the~~depend ~~pro-rata~~substantially ~~amortization~~on ~~of estimated~~factors ~~fair~~beyond ~~value~~our ofcontrol, ~~stock~~such ~~based~~as ~~compensation.~~economic, ~~During~~political ~~the~~and ~~quarter~~regulatory ~~ended November~~developments ~~30,~~and ~~2009,~~competition ~~costs~~from ~~increased~~other tosources ~~$566,057, an increase~~ of ~~$163,357, or 40~~energy.~~6%,~~ asNatural ~~compared~~gas toand ~~costs~~crude ofoil ~~$402,700~~prices ~~incurred~~have ~~during~~historically ~~the~~been ~~quarter~~volatile ~~ended November~~and ~~30,~~may ~~2008.~~be ~~The~~expected ~~costs~~to ~~reported~~fluctuate ~~during~~widely in the ~~quarter~~future. ~~ended~~Sustained ~~November~~periods ~~30, 2009, include the amortization~~ of ~~estimated~~low ~~fair~~prices ~~value~~for ~~associated~~natural ~~with~~gas ~~4,200,000 options~~and ~~issued~~crude ~~during~~oil ~~July~~could ~~2008~~materially ~~which are being amortized over two years~~ and ~~the amortization~~adversely ofaffect ~~estimated~~our ~~fair~~financial ~~value associated with 2~~position,~~000,000~~ ~~options~~results ~~issued in November 2009 to one~~ of ~~the Company’s independent board of directors. The costs reported during the quarter ended November 30~~operations, ~~2008~~and ~~include~~quantities ~~the amortization~~ of ~~estimated~~ ~~fair~~oil ~~value~~and ~~associated~~gas ~~with~~that ~~4,200,000~~can ~~options~~be ~~issued~~economically ~~during July 2008~~produced.

~~Depreciation, depletion~~As ~~and~~of ~~amortization~~August ~~for~~31, ~~the~~2010 ~~three~~and ~~months ended November 30,~~ 2009 ~~was $61~~,~~866~~ ~~compared~~there ~~with~~were ~~$226,464~~no ~~during~~recoverable ~~the~~reserves ~~three~~from ~~months~~our ~~ended~~wells ~~November~~in 30GRB, ~~2008, a~~based ~~decrease~~upon ofthe ~~$164,598~~current oreconomic ~~72.7%.~~conditions, ~~The~~which ~~decrease~~primarily inrelate ~~depletion on producing properties is attributable~~ to the ~~decreased~~price ~~production~~of ~~from~~natural ~~the~~gas. ~~Slater~~There ~~Dome Field~~are ~~and~~no awells ~~decrease~~within inthe ~~other~~DJ ~~depreciation,~~Basin asor ~~certain~~Amazon ~~assets became fully depreciated~~prospect.

~~During the~~Recent three month period ended November 30, 2009, the Company successfully negotiated a reduction of approximately $100,000 with one of its vendors for previously charged field expenses and recorded the credit as other income.developments

~~Interest income~~On ~~decreased~~June ~~$12~~4,~~487~~ to2010, $3we ~~during~~entered ~~the~~into ~~three~~a ~~month~~Purchase ~~period~~and ~~ended~~Sale ~~November~~Agreement 30with Carrizo Oil & Gas, ~~2009,~~ ~~compared~~Inc. (“Carrizo”) to ~~$12,490~~sell ~~during~~our interest in certain oil and gas leases (the ~~three~~“Leases”) ~~months~~in ~~ended~~the ~~November~~DJ 30Basin in Weld and Morgan Counties, ~~2008~~ Colorado. ~~The~~ ~~decrease~~We inreceived ~~interest~~proceeds ~~income~~of isapproximately ~~due~~$5.0 tomillion ~~the~~(net ~~lower~~of ~~level~~related ~~of cash~~transaction ~~balances~~expenses) ~~held~~from bythe sale of the ~~Company~~interest ~~during~~in the ~~period~~Leases.

~~Interest expense~~Pursuant ~~for~~to the ~~three~~Purchase ~~months~~and ~~ended~~Sale ~~November 30~~Agreement, ~~2009~~Carrizo ~~was~~must ~~$25,155~~drill ~~compared~~not ~~with $19,854~~less inthan ~~the~~ three ~~months~~Carry ~~ended~~Wells ~~November~~(as ~~30,~~defined ~~2008,~~in anthe ~~increase~~Purchase ofand ~~$5,301~~Sale ~~or 26.7%.~~Agreement) ~~The increase~~ in ~~interest~~the ~~expense~~18 ismonths ~~due~~following to the ~~refinancing~~closing ~~and~~(the ~~transfer of~~“Drilling ~~title~~Period”) ofon the ~~Steamboat~~sale ~~Property~~of to the ~~Company’s~~interest ~~former~~in ~~President~~the Leases and ~~Chief Executive~~carry ~~Officer.~~us Onfor ~~July~~a 7,33 ~~2009~~1/3% ~~the~~working ~~Company~~interest ~~transferred~~in ~~the~~each ~~title~~ of ~~the Steamboat~~these ~~property~~wells (subject to ~~the~~adjustment ~~Company’s former President and Chief Executive Officer,~~ as ~~nominee,~~provided toin ~~facilitate~~ the ~~refinancing~~Purchase ofand ~~the Steamboat~~Sale ~~property~~Agreement). ~~The~~In ~~new~~the ~~Steamboat~~event ~~mortgage~~that ~~bears~~Carrizo ~~interest~~fails atto commence the ~~Wall~~ ~~Street~~drilling ~~Journal~~of ~~prime~~the ~~rate~~three ~~plus~~Carry ~~4.0%,~~Wells ~~subject~~during tothe aDrilling ~~minimum~~Period, ~~rate~~the ofLeases ~~10%.~~(except ~~One year~~for ~~interest~~a on640 ~~the~~acre ~~New~~tract) ~~Steamboat~~shall ~~Mortgage~~be ~~was~~reassigned ~~paid~~back ~~in advance~~to us.

~~The non~~If Carrizo commences drilling three Carry Wells before the end of the Drilling Period, we have the option to re-~~controlling~~acquire an undivided 1/3 working interest in the ~~income~~Leases. To ofreacquire the ~~consolidated~~1/3 ~~subsidiary~~working interest ~~for~~in the ~~three~~ ~~months~~Leases, ~~ended~~we ~~November~~shall ~~30,~~pay ~~2009~~1/3 ~~was~~of ~~$13,933~~to asthe ~~compared~~total amount Carrizo paid to ~~$7,479~~us ~~for~~to acquire the ~~three~~ ~~months~~interest ~~ended~~in ~~November~~the 30Leases, ~~2008,~~plus an1/3 ~~increase~~ of $6any amount Carrizo has paid to renew,~~454~~ extend or 86 replace the Leases during the Drilling Period.~~3%.~~

During the three months ended November 30, 2009, the Company accrued dividends on the series B and C convertible preferred stock in the amount of $191,638 compared with $218,979 during the three months ended November 30, 2008, a decrease of $27,341 or 12.5%. The decrease is attributable to the conversion of series B convertible preferred stock in June 2009.

~~Results~~ We also entered into an AMI Agreement with Carrizo, whereby both parties agreed to create an area of ~~Operation:~~mutual ~~nine~~interest ~~months~~in ~~ended~~all ~~November~~governmental 30sections within which we own Leases as of June 4, ~~2009~~2010 ~~compared~~(subject to certain exclusions) (the ~~nine~~“AMI ~~months ended~~Territory”) ~~November~~and 30whereby each party granted the other party the option to acquire its proportionate interest, ~~2008~~(33 1/3 in our case and 66 2/3 in the case of Carrizo) in any oil and gas leases and other interests within the AMI Territory.

~~For~~As ~~the nine months ended November 30, 2009 we reported a net loss attributable to common shareholders~~ of ~~$4,825,839~~August ~~or $0.32 per share on revenue of $260~~31,~~032. This~~ ~~compares to a net loss attributable to common shareholders of $4~~2010,~~754,935~~ ~~or $0.39~~there ~~per~~have ~~share,~~been onno ~~revenue of $1,165,032, for the comparable period of the previous fiscal year. We expect to incur losses until such time as we complete the rehabilitation of our existing~~ wells, ~~bring~~drilled ~~the~~within ~~Focus~~this ~~Ranch~~area ~~Unit wells into production,~~ and ~~complete~~there ~~new~~are ~~productive wells in connection with the Participation Agreement with Entek. There is~~ no ~~assurance~~proved ~~that we will be successful in these efforts~~reserves.

~~We anticipate~~On ~~that~~September ~~results~~1, of2010, ~~operations~~we ~~for~~entered ~~future~~into ~~periods~~a ~~will~~Joint beExploration ~~significantly affected~~Agreement by (the ~~Participation~~ “Agreement.”) ~~The~~with ~~agreement~~Yuma ~~provides~~Exploration ~~for~~and ~~Entek~~Production ~~to fund~~Company, ~~up to approximately $11~~Inc.5 ~~million~~(“Yuma”), ~~over~~whereby ~~three~~we ~~years~~will toparticipate ~~earn~~as upa to10 ~~55%~~percent ofworking ~~our~~ interest owner in the ~~underlying~~shooting, ~~leases~~processing and ~~certain~~interpretation ~~other~~of ~~assets.~~a ~~For~~3-D ~~accounting purposes~~seismic survey, wethe ~~will~~generation ~~allocate~~of toprospects, ~~Entek~~the ~~their~~acquisition ~~percentage share~~ of ~~revenues~~leases, and ~~expenses~~ ~~during~~ the ~~term~~exploration, ofdevelopment ~~the~~and ~~agreement,~~production ~~which~~of isoil ~~expected~~and togas ~~reduce~~prospects generated from the ~~amounts~~ of3-D ~~revenue~~seismic ~~and~~in ~~expenses~~the ~~reported~~Calcasieu byand usJefferson Davis Parishes in ~~the~~Louisiana ~~future~~(Project Area”).

~~Revenues for~~Results ~~the nine months ended November 30, 2009 were $260,032 compared with $1,165,032 for the nine months ended November 30, 2008, a decrease~~ of $905,000 or 77.7%. Oil and gas revenues during the nine months ended November 30, 2009 were $146,893 compared with $1,056,964 during the nine months ended November 30, 2008, a decrease of $910,071 or 86.1%. Substantially all of our production was curtailed during the period as a result of our liquidity constraints. These fields require minimum flow rates in order to power compression equipment. As these flow rates declined in the low commodity price environment, the additional capital investments necessary to maintain production above the minimum field flow rates did not generate adequate returns. As a result of our liquidity constraints, no additional capital has been expended and production levels have declined.Operation

~~Gathering and~~The ~~operating~~following ~~fees~~tables ~~were~~reflect ~~$113,139 for~~ the ~~nine~~components ~~months~~of ~~ended~~our ~~November~~sales 30volumes, ~~2009 compared~~sales ~~with $108~~prices,~~068~~ ~~for~~operating ~~the nine months ended November 30~~revenue, ~~2008,~~costs anand ~~increase of~~expenses ~~$5,071~~for orthe ~~5%.~~six ~~These fees are generally fixed by agreement~~ and, ~~while~~three ~~they generally~~month ~~do not exhibit significant variation on a~~ period byended ~~period~~August ~~comparison~~31, ~~they~~ ~~will~~2010 ~~vary~~and ~~somewhat based on production volume~~2009.

Exploration costs for the nine months ended November 30, 2009 were $76,411 compared with $179,044 for the nine months ended November 30, 2008, a decrease of $102,633 or 57.3%. The individual components of exploration costs are shown in the following table:

	Six month period
	ended August 31,
	2010		2009		$ Chg			% Chg
Sales volumes:
Natural gas sales (Mcf)		18,432		42,838		(24,406	)		(57	%)
Natural gas per day (Mcf/D)		100		233		(133	)		(57	%)

Average realized price ($Mcfe)	$	3.58	$	2.39	$	1.19			50	%

Net Sales:
Oil and gas sales	$	65,930	$	102,382	$	(36,452	)		(36	%)
Gas gathering income	$	394,502	$	87,939	$	306,563			349	%

Operating Expenses ($/Mcfe):
Exploration costs, including dry holes	$	335,743	$	72,283	$	263,460			364	%
Lease operating expenses	$	38,774	$	273,895	$	(235,121	)		(86	%)
Cost of gas gathering	$	-	$	651	$	(651	)		(100	%)
General and administrative	$	648,973	$	2,193,042	$	(1,544,069	)		(70	%)
Impairment expense	$	51,000	$	809,721	$	(758,721	)		(94	%)
Depreciation, depletion and amortization	$	169,073	$	301,791	$	(132,718	)		(44	%)
Other income (expense)	$	2,592,268	$	3,043,197	$	450,929			15	%
Noncontrolling interest	$	74,336	$	13,044	$	61,292			470	%
Preferred stock dividends	$	117,389	$	371,187	$	(253,798	)		(68	%)

	Nine months Ended November 30,						Increase
	2009			2008			(Decrease)
Geologic consulting		$	39,191		$	50,000		$	(10,809	)
Seismic consulting			—			86,081			(86,081	)
Misc other costs			—			27,143			(27,143	)
Delay rentals			37,220			15,820			21,400
		$	76,411		$	179,044		$	(102,633	)

The decrease in exploration cost is a result of decreased exploration activity at the Slater Dome Field and Focus Ranch Unit. Certain activities were suspended during the period pending receipt of additional funding. Increased delay rentals are attributable to contractual requirements for acreage at the Focus Ranch Unit.

Lease operating expenses for the nine months ended November 30, 2009 were $302,706 compared with $948,215 in the nine months ended November 30, 2008, a decrease of $645,509 or 68.1%. The changes are summarized as follows:

	Nine months Ended November 30,							Increase
	2009			2008			(Decrease)
Lease operating expenses			291,842			870,273			(578,431	)
Production taxes			10,864			77,942			(67,078	)
		$	302,706		$	948,215		$	(645,509	)

Lease operating expenses decreased $578,431 compared to the same period ending in 2008. This reduction is largely due to reduced activities in response to our lack of liquidity during the first six months of fiscal 2010 and during the three months ended November 30, 2009 due to certain terms related to the Participation Agreement between the Company and Entek, dated August 10, 2009. Pursuant to the Participation Agreement, all operating expenses shall be paid out of the parties net proceeds from the underlying leases and in the event that there are not sufficient proceeds, subject to other terms, Entek shall be solely responsible for the remaining operating expenses through the conclusion of each development phase in which Entek participates. The net proceeds were not sufficient to cover the operating expenses, therefore in accordance with the Participation Agreement Entek carried the Company on the remaining expenses. The decrease in gas sales costs and production taxes is consistent with the decrease in production and revenues.

	Three month period
	ended August 31,
	2010		2009		$ Chg			% Chg
Sales volumes:
Natural gas sales (Mcf)		9,425		8,138		1,287			16	%
Natural gas per day (Mcf/D)		102		88		14			16	%

Average realized price ($Mcfe)	$	3.36	$	1.79	$	1.57			88	%

Net Sales:
Oil and gas sales	$	31,650		14,560	$	17,090			117	%
Gas gathering income	$	35,183	$	50,107	$	(14,924	)		(30	%)

Operating Expenses ($/Mcfe):
Exploration costs, including dry holes	$	335,743	$	8,497	$	327,246			3851	%
Lease operating expenses	$	25,023	$	85,667	$	(60,644	)		(71	%)
Cost of gas gathering	$	-	$	-	$	-			-	%
General and administrative	$	332,653	$	1,522,166	$	(1,189,513	)		(78	%)
Impairment expense	$	-	$	809,721	$	(809,721	)		(100	%)
Depreciation, depletion and amortization	$	103,078	$	107,565	$	(4,487	)		(4	%)
Other income (expense)	$	2,431,442	$	3,890,499	$	(1,459,057	)		(38	%)
Noncontrolling interest	$	39,256	$	6,129	$	33,127			540	%
Preferred stock dividends	$	58,659	$	193,616	$	(134,957	)		(70	%)

~~General and~~Oil administrative expenses for the nine months ended November 30, 2009 were $1,587,374 compared with $1,504,473 in the nine months ended November 30, 2008, an increase of $82,901 or 5.5%. As a result of our current lack of liquidity, we worked to reduce our cash operating expenses and ~~have~~Gas reduced employee compensation as a result of reduced personnel and decreases in salaries paid to officers. However, this decrease has been offset by professional and consulting services, which have increased approximately $600,000 during the nine months ended November 30, 2009. The largest increase is related to the Company issuing 2,056,500 shares of restricted common stock, valued at $637,515, to our chairman as compensation for consulting services and as a structuring fee relating to the deposit of the funds to be used as the Segregated Arbitration Fund. Legal services were also increased primarily because of the Stull Ranch litigation. All other general and administrative expenses decreased and reflect our lower activity level in response to our liquidity constraints and other cost saving measures.Sales

~~Issuance of~~Our ~~common~~oil ~~stock options~~ and ~~warrants~~gas ~~represents~~sales ~~the~~decreased ~~pro-rata~~$36,452 ~~amortization~~or of36% ~~the estimated~~to ~~fair~~$65,930 ~~value~~during ~~of stock based compensation. During~~ the ~~nine~~six ~~months~~month period ended ~~November~~ 30August 31, ~~2009~~2010, ~~costs~~compared ~~decreased~~ to ~~$1,405,304,~~oil aand ~~decrease~~gas ofsales ~~$431,196, or 23.5%, as compared to costs~~ of $1102,~~836,500~~382 ~~incurred~~ during the ~~nine~~six ~~months~~month ~~ended November~~period ~~30, 2008. The costs reported during the nine months~~ ended ~~November~~August 3031, 2009. ~~include~~During the ~~estimated~~three ~~fair~~month ~~value~~period ofended ~~options issued to our chairman on~~ August 1731, ~~2009 to purchase 1~~2010,~~250,000~~ ~~shares~~oil atand ~~$0.20~~gas ~~per~~sales ~~share,~~increased ~~valued at~~ $~~231~~17,~~647,~~090 ~~plus~~or ~~the~~117% ~~amortization~~to ~~of estimated fair value associated with 4~~$31,~~200~~650,~~000~~ ~~options~~compared ~~issued~~to ~~during~~oil ~~July~~and ~~2008~~gas ~~which~~sales ~~are being amortized over two years, plus the amortization~~ of $~~302~~14,~~739,~~560 during the ~~estimated~~three ~~fair~~month ~~value~~period ~~associated with~~ended 2August 31,~~000,000~~ ~~options issued in November~~ 2009 ~~to one of the Company’s independent directors~~.

~~Depreciation, depletion~~The decrease in oil and ~~amortization~~gas sales for the ~~nine~~six ~~months~~month period is primarily attributable to decreased production from Slaterdome Field during the three month period ended ~~November~~May 3031, ~~2009~~2010, ~~was $363~~which decreased 25,~~657~~693 Mcf (279 Mcf per day) or 74% compared ~~with~~to ~~$737,241~~the same period in the prior year. Sales volumes during the ~~nine~~three ~~months~~month period ended ~~November~~August 3031, ~~2008~~2010, a ~~decrease~~increased ~~of $373~~1,~~584~~287 Mcf (14 Mcf per day) or ~~50.7~~16%. ~~The~~to ~~decrease~~9,425 Mcf (102 Mcf per day), compared to 8,138 Mcf (88 Mcf per day) for the respective period in ~~depletion~~the onprior ~~producing properties~~year. The decline in production is ~~attributable~~primarily due to the ~~decreased~~current ~~production~~economic ~~from~~condition of the ~~Slater~~existing ~~Dome Field~~natural gas wells. ~~Other~~Given ~~depreciation~~the ~~decreased~~cost ~~during~~to operate these wells and the ~~nine~~suppressed ~~months~~price ~~ended~~of ~~November~~natural 30gas, ~~2009~~ aswe ~~compared~~have ~~with~~shut-in ~~the~~several ~~nine~~wells ~~months~~and ~~ended~~are ~~November~~only ~~30,~~producing ~~2008~~those aswells ~~certain~~that ~~assets became~~require ~~fully~~the ~~depreciated~~least amount of maintenance.

~~During the~~The ~~nine~~average ~~months~~sales ~~ended~~price ~~November 30, 2009, we incurred impairment~~ of ~~our~~natural ~~oil and~~ gas ~~properties~~sales infor the ~~amount~~six ofand ~~$809,721.~~three ~~Accounting~~month ~~rules~~periods ~~require~~ended ~~that~~August ~~we periodically~~31, ~~review~~2010, ~~the~~were ~~carrying~~$3.58 ~~value of our oil~~ and ~~natural~~$3.36 ~~gas~~per ~~properties~~Mcf, ~~and the~~respectively, ~~Gas~~compared ~~Gathering~~to ~~Pipeline for possible impairment~~$2.39 ~~Based on specific market factors~~ and ~~circumstances~~$1.79 atper ~~the~~Mcf, ~~time~~during of the ~~prospective~~six ~~impairment reviews,~~ and ~~the~~ ~~continuing~~three ~~evaluation~~month ofperiods ~~development~~ended ~~plans~~August 31, ~~production data~~2009, ~~rate~~respectively. ofThis ~~flow~~represented ~~of gas~~an ~~through~~increase for the ~~pipeline,~~six ~~economics~~ and ~~other~~three ~~factors,~~month weperiods ~~may~~of be$1.19 ~~required~~and ~~to further~~$1.57 ~~write~~per ~~down~~Mcf. ~~the~~The ~~carrying~~increase ~~value~~in ofthe ~~our~~price ~~oil~~of ~~and~~ natural gas ~~properties~~is ~~or the~~a ~~Gas~~function ~~Gathering~~of ~~Pipeline in~~ the ~~future.~~general ~~There~~market ~~was~~conditions ~~no provision~~ for ~~impairment during~~natural ~~the nine months ended November 30, 2008~~gas.

~~During the~~Gas ~~nine~~Gathering month period ended November 30, 2009, the Company successfully negotiated a reduction of approximately $100,000 with one of its vendors for previously charged field expenses and recorded the credit as other incomeIncome.

~~Interest income~~During ~~for~~ the ~~nine~~six ~~months~~and three month periods ended ~~November~~August 3031, ~~2009~~2010, ~~was~~SDG’s gathering fees from the Gas Gathering Pipeline were $1394,~~358~~502 ~~compared~~and ~~with~~ $6235,~~437~~183, inrespectively. ~~the~~This ~~nine~~represented ~~months~~an ~~ended~~increase ~~November~~of 30$306,563 ~~2008,~~or 349% for the six month period and a decrease of $6114,~~079~~924 or ~~97.8~~ 30%. ~~The~~for ~~decrease is~~ the ~~result~~three ofmonth ~~reduced~~period, ~~cash~~as ~~balances~~compared ~~held~~to by the ~~Company during~~respective ~~the~~periods ~~nine~~in ~~months~~the ~~ended~~prior ~~November 30, 2009~~year.

Interest expense for the nine months ended November 30, 2009 was $53,313 as compared to $62,914 during the nine months ended November 30, 2008, a decrease of $9,601 or 15%. Interest expense decreased because the outstanding principal balance has been reduced during the nine months ended November 30, 2009. On July 9, 2009 the Company transferred the title of the Steamboat property to the Company’s former President and Chief Executive Officer, as nominee, to facilitate the refinancing of the Steamboat property. The New Steamboat Mortgage, in the amount of $635,000, is collateralized by the Steamboat Property with a one year term due July 7, 2010, bearing interest at the rate of 10%. As a condition of the New Steamboat Mortgage, interest in the amount of $63,500 was prepaid.

The non-controlling interest in the income of the consolidated subsidiary for the nine months ended November 30, 2009 was $26,977 as compared to $31,767 for the nine months ended November 30, 2008, a decrease of $4,790 or 15.1%. This fluctuation principally relates to the decrease in production from the Slater Dome Field and corresponding decreased net income attributable to the non-controlling interest.

During the three months ended November 30, 2009, the Company accrued dividends on the series B and C convertible preferred stock in the amount of $562,825 compared with $681,111 during the nine months ended November 30, 2008, a decrease of $118,286 or 17.4%. The decrease is attributable to the conversion of series B convertible preferred stock in June 2009.

~~Liquidity~~ The increase in gathering fees for the six month period can be attributed to the Participation Agreement with Entek and ~~Capital~~the ~~Resources~~annual shortfall payment associated with the construction cost reimbursement guarantee that is part of the gathering agreement between SDG and its working interest owners. As part of the gathering agreement, the working interest owners in the Slaterdome Field agreed to pay SDG a fee of $0.50 per million British Thermal Units (“MMBtu”) of gas transported through the line until two-thirds of the original construction costs amounting to $2,609,841 were recovered and $0.25 thereafter. This obligation ended on May 31, 2010, which resulted in a final shortfall payment of approximately $300,000.

WeOur ~~are not~~portion ~~currently~~of ~~able~~the togas ~~generate~~gathering ~~positive~~fees, ~~cash~~including ~~flows~~the ~~from~~annual ~~operating~~shortfall ~~activities. During~~payment, ~~the~~are ~~nine~~included ~~months~~as ~~ended~~Qualifying ~~November~~Development ~~30,~~Expenses ~~2009,~~(as wedefined ~~experienced~~in athe ~~liquidity shortage~~Participation ~~and~~Agreement) ~~curtailed~~that ~~certain~~are ~~activities~~being carried by Entek in order to ~~conserve~~earn ~~cash~~up to a maximum of 55% of our working interest. AsPrior ~~discussed~~to ~~below,~~ the ~~principal~~Participation ~~source~~Agreement, ofour ~~funds~~portion ~~during~~of the ~~period~~fees ~~was~~eliminated $1in consolidation,~~000~~ however,~~000~~ ~~proceeds~~due ~~from~~to the ~~sale~~ ofParticipation ~~certain~~Agreement ~~assets~~and tothe ~~Entek~~carry ~~and~~for $1these costs beginning in August 2009,~~000,000~~ ~~proceeds~~they ~~from~~no ~~the~~longer ~~issuance~~eliminate ~~of common~~upon ~~stock~~consolidation and are recognized as gathering fee income in ~~November~~the ~~2009~~consolidated financial statements.

~~Historically, the~~The ~~primary~~decrease ~~sources~~in ofgathering ~~capital~~fee ~~have~~income ~~been~~for ~~from~~the ~~equity~~three ~~financings~~month ~~and,~~period toended aAugust ~~much lesser~~31, ~~extent~~2010, ~~loans~~can ~~and~~be attributed to the ~~sale~~lower offee ~~oil~~per ~~and~~MMBtu, ~~gas~~which was reduced from $0.50 ~~Our~~to ~~primary~~$0.25 ~~use~~per ofMMBtu ~~capital~~on ~~has historically~~May ~~been~~31, ~~for~~2010, due to the ~~acquisition,~~final ~~development~~shortfall ~~and~~payment ~~exploration~~related ofto ~~oil~~the ~~and gas~~construction ~~properties~~cost ~~and~~reimbursement ~~general~~guarantee ~~and~~discussed ~~administrative~~above. ~~expenses~~The decrease in the fee charged per MMBtu was slightly offset by increased volumes.

~~Our working~~Exploration ~~capital requirements are expected to increase in line with the planned growth of our business~~Costs. ~~We have no lines of credit or other bank or off balance sheet financing arrangements.~~

~~The Participation~~We ~~Agreement~~incurred ~~with~~$335,743 ~~Entek~~in ~~provided~~exploration ~~cash~~costs during the six month period ended August 31, 2010, of which all $1335,~~000,000~~743 ~~for~~were incurred during the ~~sale~~three ofmonth ~~a 4.0625%~~period ~~interest~~ended inAugust ~~certain~~31, ~~assets~~2010. ~~The~~All ~~agreement~~of ~~provides~~these ~~that~~costs ~~Entek~~can ~~may purchase~~be anattributed ~~additional~~to ~~8.125%~~the ~~interest~~Agreement ~~for~~with anYuma ~~additional~~in ~~$1,000,000 during~~ the ~~ensuing~~ ~~180~~Calcasieu ~~days~~and ifJefferson ~~Entek~~Davis ~~reasonably~~Parishes ~~believes~~in ~~that~~Louisiana. aThe ~~danger~~majority of ~~NFEI~~these ~~Insolvency (as~~costs ~~defined~~were infor 3-D seismic activity. Exploration costs incurred during the ~~Participation~~six ~~Agreement)~~and ~~exists.~~three ~~Entek~~month ~~did~~periods ~~not~~ended ~~exercise~~August ~~this option~~31, ~~which~~2009, ~~has~~were ~~subsequently~~primarily ~~lapsed~~made up of delay rentals and geologic and seismic consulting related to GRB.

~~The continued~~Under ~~operation~~the ofParticipation ~~our~~agreement ~~business~~Entek will ~~require~~carry anus ~~additional~~on ~~capital~~all ~~infusion~~ geologic and wegeophysical ~~plan to seek additional capital~~costs, ~~likely through debt or equity financings~~whereas, ~~to continue operations. We can give no assurance that~~ we ~~will~~participate ~~be able~~and topay ~~raise~~our ~~such~~pro-rata ~~capital~~share onof ~~such~~any ~~terms~~delay ~~and conditions we deem reasonable, if at all~~rentals. WeDelay ~~have~~rentals ~~limited financial resources until such time that we~~ are ~~able~~considered ~~to generate~~normal ~~such~~in ~~additional~~the ~~financing~~ordinary orcourse ~~additional~~of ~~cash flow from operations. Our ability to achieve profitability and positive cash flow is dependent upon our ability to exploit our oil and gas properties, generate revenue from our~~ business ~~operations and control our costs~~. ~~Should~~There wewere beno ~~unable~~delay torentals ~~raise~~payments ~~adequate capital~~due orduring ~~to meet~~ the ~~other~~six ~~above~~month ~~objectives,~~period itended isAugust ~~likely that we would have to substantially curtail our business activity or cease operating~~31, ~~and that our investors would incur substantial losses, if not a complete loss on of their investment~~2010.

~~The independent~~Lease ~~auditor’s~~Operating report accompanying the Company’s February 28, 2009 consolidated financial statements contains an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concernExpense. The audited February 28, 2009 consolidated financial statements have been prepared “assuming that the Company will continue as a going concern,” which contemplates that the Company will realize its assets and satisfy its liabilities and commitments in the ordinary course of business. Our accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

~~We entered~~Lease ~~into~~operating ~~the~~expenses ~~Participation~~were ~~Agreement~~$38,774 ~~whereby~~and ~~Entek may expend up to~~ $~~11.5 million~~25,023 ~~over~~during 3the ~~years~~six toand ~~develop~~three anmonth ~~agreed~~periods ~~area~~ended ofAugust ~~mutual~~31, ~~interest~~2010, ~~within our existing properties. In the initial year of the agreement~~respectively, ~~Entek~~as ~~has~~compared ~~agreed~~ to ~~expend~~ $3273,895 ~~million~~and to$85,667 ~~earn~~during ~~16.25%~~the ofsix ~~our~~and ~~interest~~three inmonth ~~the~~periods ~~aforementioned~~ended ~~prospects together~~August ~~with~~31, an2009, ~~interest~~respectively, inrepresenting ~~Slater~~a ~~Dome~~decrease ~~Gathering~~of $235,121 ~~LLLP.~~or ~~Subsequent~~86% toand ~~November 30~~$60,644 ~~2009~~or 71%, ~~Entek~~respectively. ~~completed~~This ~~its~~decrease ~~obligation~~in ~~for~~lease ~~Phase~~operating Iexpenses ~~and~~is ~~earned~~primarily anattributable ~~additional 16.25%~~to of the ~~Company’s~~Participation ~~interest~~Agreement inwith ~~the~~Entek, ~~Assets~~whereby ~~for~~Entek anwill ~~aggregate~~carry ofus ~~20.3125~~for 100% of ~~the~~ ~~Company’s~~Qualified ~~interest~~Development ~~in the Assets~~Expenses.

AsGas ~~of November~~Gathering ~~30, 2009, we had a cash balance of $1,311,901 and a working capital deficiency of $3,155,921~~Costs. ~~The following summarizes the Company’s capital resources at November 30, 2009 compared with February 28, 2009:~~

	November 30, 2009				February 28, 2009				Increase (Decrease)				Increase (Decrease)
Cash		$	1,311,901			$	856,475			$	455,426			53	%
Current assets		$	4,328,414			$	1,673,526			$	2,654,888			159	%
Current
liabilities		$	7,316,367			$	4,507,088			$	2,977,247			66	%
Working capital		$	(2,987,953	)		$	(2,833,562	)		$	(322,359	)		(11	)%

Gas gathering costs are related to the gathering system owned and operated by SDG. The gathering system services the Slaterdome Field and due to the decreased activity in this field there were no gathering costs incurred during the six month period ended August 31, 2010, and only $651 of gathering costs during the six month period ended August 31, 2009.

General and Administrative Expense.

Our general and administrative (“G&A”) expense decreased $1,544,069 or 70% and $1,189,513 or 78% for the six and three month periods ended August 31, 2010, as compared to the respective periods in the prior year. G&A expenses include both cash and non-cash charges. The decrease can be primarily attributed to non-cash charges, which decreased $1,189,978 or 81% and $1,034,959 or 90% during the six and three month periods, respectively. These decreases in non-cash G&A expenses were offset by increases in cash charges to G&A, which increased $145,909 or 20% and $345,446 or 92% for the six and three month periods, respectively.

~~Our capital~~Non-cash ~~resources~~charges ~~declined~~to ~~during~~G&A ~~the~~consist ~~period~~of ~~primarily~~bad ~~because~~debt ~~revenue~~expense ~~from~~and ~~the sale~~stock-based ofcompensation ~~oil~~arrangements associated with stock grants and ~~gas~~stock ~~significantly~~option ~~declined~~grants. ~~Net~~We ~~cash~~recognized ~~used~~$163,485 inand ~~operating activities~~$1,611 of stock-based compensation during the ~~nine~~six ~~months~~and three month periods ended ~~November~~August 3031, ~~2009~~2010, ~~was~~compared to $1,~~287~~476,~~632 compared~~762 toand $1,~~017~~145,~~651~~962 during the ~~comparable~~six ~~period~~and three month periods ended August 31, 2009. Stock-based compensation charges in the current fiscal year include the amortization of the estimated fair value of options associated with 4,200,000 options issued during July 2008, which are being amortized over two years and 500,000 options to acquire shares of the our common stock issued to our chief financial officer on May 11, 2010, exercisable at a price of $0.50 per share, an ~~increase~~expiration date of December 31, 2011, and an estimated fair value of $~~269~~30,~~981~~600. ~~For~~Stock-based compensation reported in the ~~most~~respective ~~part~~periods in the prior year included the estimated fair value of options issued to our chairman on August 17, 2009, to purchase 1,250,000 shares at $0.20 per share, valued at $231,647, the amortization of estimated fair value associated with 4,200,000 options issued during July 2008 which are being amortized over two years and 2,056,500 shares of restricted common stock, valued at $637,515, issued to our ~~revenues~~chairman ~~declined~~as ~~more~~compensation ~~rapidly~~for ~~than~~financial weconsulting ~~were able~~services and as consideration for providing funds to ~~reduce~~be used as the segregated arbitration fund. We recorded an allowance for bad debt of $123,299 for the six month period ended August 31, 2010, related to one of our ~~operating~~working ~~expenses~~interest owners. As of August 31, 2010, we have recorded a provision for doubtful accounts of $958,431 related to two working interest owners (see discussion on Slaterdome Gas, Inc. litigation in Note 10 – Legal Proceedings).

~~Investing activities~~Cash ~~provided~~G&A ~~net~~charges ~~cash~~include ofprofessional ~~$980~~fees,~~292~~ ~~during~~consulting ~~the nine months ended November 30~~fees, ~~2009~~employee compensation and ~~used~~general ~~net~~office ~~cash~~expense. ofG&A ~~$2,125,176~~expenses decreased during the ~~nine~~six ~~months~~and three month period ended ~~November 30~~August 31, ~~2008.~~2010, ~~During~~compared to the ~~nine~~same ~~months~~period ~~ended~~in ~~November~~the ~~30,~~prior ~~2009,~~year. weThe ~~reduced~~decrease ~~capital expenditures~~can tobe ~~$19,708~~attributed ~~compared~~ to ~~capital~~the ~~expenditures~~Participation ofAgreement ~~$2,158,476~~that ~~during the~~we ~~same~~entered ~~period~~into with Entek in ~~2008~~August 2009. ~~Furthermore,~~As ~~the~~part ~~Participation~~of ~~Agreement~~this ~~with~~agreement ~~Entek~~ a portion of certain G&A costs were included ~~the~~as ~~sale~~Qualified ofDevelopment aExpenses ~~4.0625%~~and ~~working~~reimbursed ~~interest~~to inus ~~exchange~~by ~~for $1,000,000~~Entek.

~~Financing activities~~The ~~provided~~remaining ~~net~~decrease ~~cash~~can ofbe ~~$762,767~~attributed ~~during~~to employee compensation and general office expense. Employee compensation decreased due to the ~~nine~~change ~~months~~in ~~ended~~the ~~November 30,~~Company’s CEO and CFO. The former CFO resigned in August 2009, ~~primarily~~and ~~from~~the ~~$1,000,000~~CFO ~~proceeds~~position ~~received~~was ~~from~~filled ~~the~~in ~~sale~~with ofcontract ~~common stock~~CFO’s, whose costs are included in consulting fees. In November 2009, ~~offset~~the byformer ~~payments~~CEO onresigned. The new CEO did not receive a cash salary during the ~~Steamboat~~six ~~mortgage~~and three month periods ended August 31, 2010. ~~During~~In ~~the comparable~~addition, ~~period~~on ofMay ~~2008~~7, ~~financing~~2010, ~~activities~~we ~~provided~~assigned ~~net~~the ~~cash~~operator status to Entek upon which occurrence four of ~~$1,442,109 primarily~~our employees resigned from NFEI and joined Entek to assist with the ~~exercise~~transition ofand ~~warrants~~future operations.

~~The balance~~Impairment ~~of cash and equivalents increased to $1,311,901 as of November 30, 2009 from $856,475 as of February 28, 2009, a net increase in cash of $455,426~~Expense. We continue to refine our liquidity and capital resource requirements. As a company that is currently experiencing a liquidity shortage, there is significant uncertainty in our estimates. We may require additional capital to continue our plan of operations.

~~Critical Accounting~~We ~~Policies~~recorded $51,000 and $809,721 of impairment expense during the Six month periods ended August 31, 2010 and 2009, respectively. The $51,000 impairment expense in 2010 was related to our Steamboat Property (asset held for sale), which is recorded at fair value less the costs to sell. The $809,721 impairment expense in the prior year is related to our unproved property, which was written down to fair market value using Level 3 inputs.

~~There have~~Depreciation, ~~been~~Depletion noand ~~material~~Amortization ~~changes in our critical accounting policies since February 28, 2009~~Expense.

Depreciation, depletion and amortization decreased $132,718 or 44% and $4,487 or 4% to $169,073 and $103,078 during the six and three month periods ended August 31, 2010, respectively, compared to $301,791 and $107,565 during the six and three month periods ended August 31, 2009. We do not have any proved reserves, therefore our producing properties were all impaired and we did not record any depletion expense during the six and three month periods ended August 31, 2010, and we only recorded depreciation and amortization expense related to our gathering facilities.

Other Income (Expense).

Other income (expense) includes the change in fair value of financial derivative instruments, interest expense, net of interest income and gains (losses) on sales of assets. The following table represents the components of other income (expense):

	Six month period
	ended August 31,
	2010			2009			$ Chg			% Chg
Other income (expense):
Change in fair value of derivative financial instruments	$	(70,000	)	$	3,070,000		$	(3,140,000	)		(102	%)
Other income	$	2,691,064		$	-		$	2,691,064			100	%
Interest expense, net	$	(28,796	)	$	(26,803	)	$	(1,993	)		7	%
Total other income (expense)	$	2,592,268		$	3,043,197		$	450,929			15	%

	Three month period
	ended August 31,
	2010			2009			$ Chg			% Chg
Other income (expense):
Change in fair value of derivative financial instruments	$	(230,000	)	$	3,900,000		$	(4,130,000	)		(106	%)
Other income	$	2,668,866		$	-		$	2,668,866			100	%
Interest expense, net	$	(7,424	)	$	(9,501	)	$	(2,077	)		(22	%)
Total other income (expense)	$	2,431,442		$	3,890,499		$	1,459,057			(38	%)

Derivative liability. On March 1, 2009, we adopted EITF 07-05: Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock (“EITF 07-05”). Upon its effectiveness, contracts (warrants, conversion features in debt, etc) that embody or embodied full-ratchet or reset provisions (that is, the strike, exercise or conversion prices adjust to pricing in subsequent sales or issuances of the Company’s common stock) no longer meet the definition of Indexed to a Company’s Own Stock and, accordingly, do not meet the exemptions for equity classification provided in ASC 815 Derivatives and Hedging (“ASC 815”). The Series B and Series C Preferred stock contain an anti-dilution provision which provides for conversion price adjustments (“down round protection”), which requires the embedded conversion feature to be bifurcated and presented separately as a derivative liability on the consolidated balance sheets. During the six and three month periods ended August 31, 2010, we recorded losses of $70,000 and $230,000, respectively, related to the change in the fair value of the derivative financial instruments, compared to recording gains of $3,070,000 and $3,900,000 during the respective periods in the prior year. The primary reason for the change in valuation from period to period is due to the conversion of the Series C Preferred stock on December 1, 2009.

Other income. Other income is the result of gains (losses) recognized for the sale of assets. We received proceeds of $5,070,296 from Carrizo, net of transaction costs related to the termination of a 2-D seismic licensing agreement with a third party, which required a one-time termination payment of $500,000, for the sale of our interest in the Leases located within the DJ Basin in June 2010. Pursuant to the agreement we have the option to re-acquire an undivided 1/3 working interest in the Leases, whereby, we shall pay 1/3 of to the total amount Carrizo paid to acquire the interest in the Leases plus 1/3 of any amount Carrizo has paid to renew, extend or replace the Leases during the Drilling Period.

In accordance with accounting standards generally accepted in the United States, we treated this option as a financing arrangement and recorded a gain on sale to the extent that two-thirds of the proceeds are recognized as proceeds received. The remaining one-third was treated as a financing arrangement, resulting in $1,856,766 being reflected as a deferred gain on the unaudited condensed consolidated balance sheet and as a financing activity in the unaudited condensed consolidated statement of cash flows within the condensed consolidated financial statements.

If this option is exercised, we will tender $1,856,766, plus 1/3 of any amount Carrizo has paid to renew, extend or replace the Leases during the Drilling Period to Carrizo in exchange for a 33 1/3 interest assignment in the Leases, and if the option expires unexercised, we will recognize an additional $1,856,766 as a gain on sale of unproved property.

Interest expense, net. Interest expense, net of interest income remained flat during the six and three month periods ended August 31, 2010, compared to the same period in the prior year. We had no new borrowings and no significant payments on our outstanding notes payable that would materially affect our interest expense.

Noncontrolling Interest.

The noncontrolling interest related to the consolidated subsidiary, SDG, LLLP, was $74,336 and 39,256 during the six and three month periods ended August 31, 2010, respectively. This represented an increase of $61,292 or 470% and $33,127 or 540%, compared to the same period in the prior year. This fluctuation relates to the change in activity in SDG for the respective periods, such fluctuation is considered normal in the ordinary course of business. Distributions of approximately $74,000 were made in fiscal year 2009, while there have been no distributions made in the current fiscal year.

Preferred Stock.

Series B Convertible Preferred Stock. We charged dividends on the Series B Convertible Preferred Stock in the amount of $117,389 and $58,659 during the six and three month periods ended August 31, 2010, respectively, against net income (loss) attributable to common shares. During the same periods in the prior year, we charged $98,968 and $57,506 against net income (loss) attributable to common shareholders.

Series C Preferred Stock. Effective December 1, 2009, the 216,000 outstanding shares of Series C Preferred Stock converted into an aggregate 34,099,265 shares of common stock pursuant to the automatic conversion provisions of the Series C Preferred Stock, therefore there were no dividends charged against net income (loss) attributable to common shares during the six and three month periods ended August 31, 2010. During the six and three month periods ended August 31, 2009, we charged $272,219 and $136,110 against net income (loss) attributable to common shares, respectively.

Liquidity and Capital Resources

In order to meet our goals and objectives, we will have to effectively invest capital into our existing projects and into new projects and acquisitions that are low to medium risk. We will need to seek additional capital, likely through asset sales and debt or equity financings, to continue our proposed operations. We can give no assurance that we will be able to raise such capital on such terms and conditions we deem reasonable, if at all. We will have limited financial resources until such time that we are able to generate such additional financing or additional cash flow from operations. Our ability to achieve profitability and positive cash flow is dependent upon our ability to exploit our oil and gas properties, generate revenue from our business operations and control our costs. Should we be unable to raise adequate capital or to meet the other above objectives, it is likely that we would have to substantially curtail our business activity or cease operating, and that our investors would incur substantial losses of their investment.

We expect that working capital requirements will be funded through a combination of our existing funds, asset sales, cash flow from operations, and issuance of equity and debt securities. Management believes that current cash balances will be sufficient to fund our capital and liquidity needs until at least February 28, 2012.

On June 4, 2010, the Company entered into a Purchase and Sale Agreement with Carrizo Oil & Gas, Inc. (“Carrizo”) to sell its interest in certain leases (“Leases”) in the DJ Basin. The Company received proceeds of approximately $5.0 million (net of related transaction expenses) from the sale of the interest in the Leases.

The following table summarizes the Company’s cash flows from operating, investing and financing activities and the amounts and percentage changes between years. The following analysis should be read in conjunction with our condensed consolidated financial statement of cash flows.

	August 31, 2010			August 31, 2009			Increase (Decrease)
Net cash used in operating activities	$	(540,932	)	$	(1,102,370	)	$	(561,438) or (51%)
Net cash used in investing activities	$	3,182,776		$	980,292		$	2,202,484 or 225%
Net cash used in financing activities	$	1,212,701		$	(246,889	)	$	1,459,590 or 591%

Operating Activities

Cash used in operating activities decreased $(561,438) or (51%) to $540,932 during the six month period ended August 31, 2010, compared to $1,102,370 used during the six month period ended August 31, 2009. This is primarily the result of paying down the Company’s trade accounts payable, offset by collections made on accounts receivable. In addition, revenues from oil and gas production decreased slightly. However, this decrease was offset by increased revenues from gathering activities, which are primarily the result of the annual shortfall fee (discussed in Note 8 – Commitments and also under Gas Gathering Income above) and the Participation Agreement and lower lease operating expense.

Investing Activities

During the six month period ended August 31, 2010, investing activities provided cash of $3,182,776 compared to net cash provided by investing activities of $980,292 during the six month period ended August 31, 2009, an increase of $2,202,484 or 225%. This increase is due to the Carrizo transaction in June 2004, which provided cash of $5,570,297, of which $3,713,531 is reflected as an investing activity and the remaining $1,856,766 is reflected as a financing activity (See discussion above under the heading Other Income and in Note 3 - Acquisitions, Divestitures and Assets Held for Sale).

Financing Activities

Financing activities provided cash of $1,212,701 during the six month period ended August 31, 2010, compared to net cash used in financing activities of $246,889 during the six month period ended August 31, 2009, an increase of $1,459,590 or 591%. The transaction with Carrizo is the primary responsibility for the increase. We categorized $1,856,766 of the $5,070,297 (net of transaction costs) of proceeds received as financing activities during the six month period ended August 31, 2010. This was offset by a cash payment of $635,000 in full satisfaction of the Steamboat note payable and an additional $9,065 for dividends related to the conversion of some Series B Preferred stock in to common shares.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements or special purpose entities as of August 31, 2010. Accordingly, we are not materially exposed to any financing, liquidity, market or credit risk that could arise from these transactions if we had engaged in such financing arrangements.

Contractual Obligations

The following sets forth information with respect to our contractual obligations as of August 31, 2010.

	FY 2011		FY 2012		Thereafter		Total
Notes payable (1)	$	201,563	$	50,000	$	-	$	251,563
Office and lease equipment	$	5,253	$	16,765	$	1,405	$	23,423
Total	$	206,816	$	66,765	$	1,405	$	274,986

(1)	Includes the balance on the NRGG note payable of $201,563 and a note payable to an affiliate (director) of $50,000.

Critical Accounting Policies and Estimates.

We refer you to the corresponding section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended February 28, 2010, and to the footnote disclosures included in Part I, Item 1 of this report.

Accounting Standards Update

Please see Note 2 - Basis of Presentation and Significant Accounting Policies under the heading Accounting Standards Update.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Interest Rate~~Oil ~~Risks~~and Gas Price Risk

Our primary market risk exposure is in the pricing applicable to our natural gas and oil production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot market prices applicable to our U.S. natural gas production. Pricing for natural gas and oil production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The ~~Company~~prices ~~pays~~we areceive ~~fixed~~for ~~rate~~production depend on many factors outside of ~~interest~~our oncontrol ~~its~~including ~~outstanding~~volatility ~~debt~~in the differences between product prices at sales points and ~~accordingly~~ the applicable index price. These factors include, ~~there~~but isare nonot ~~interest~~limited ~~rate~~to: changes in market demands, the general state of the economy, weather, pipeline activity and capacity and inventory storage levels. We are not currently using derivatives at this time to mitigate the risk of adverse changes in commodity prices, however, we may consider using them in the future.

Commodity Price Risks

Our major market risk exposure is in the pricing applicable to our natural gas production. Pricing is primarily driven by the prevailing spot market prices applicable to our U.S. natural gas production. Pricing for natural gas has been volatile and unpredictable for several years. The prices we receive for production depend on many factors outside of our control. We have not entered into natural gas derivative contracts to manage our exposure to natural gas price volatility.

Item 4. Controls and Procedures

~~Not applicable~~As of the end of the period covered by this report, an evaluation was carried out by New Frontier Energy, Inc. , with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were not effective as of the end of the period covered by this report. In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Item~~27 ~~4T. Controls and Procedures~~

As of the end of the period covered by this report, an evaluation was carried out by New Frontier Energy, Inc., with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II--OTHER INFORMATION

Item 1. Legal Proceedings

~~Stull Ranch~~ For ~~Litigation~~a ~~and~~description ~~Stull~~of ~~Ranch~~legal ~~Arbitration~~proceedings in which the Company has been involved with during the current fiscal year, see the Company’s Form 10-K for the fiscal year ended February 28, 2010 filed with the Commission on December 7, 2010.

The Arbitrator’s Award of $779,599 in the Stull Ranch Arbitration (as defined below) was issued on February 4, 2010 and the Company satisfied the Arbitration Award on February 17, 2010.

Hedberg & Howell, LLC Litigation

On November 25, 2009, Hedberg and Howell, LLC, a law firm that previously provided legal services to the Company, filed a complaint in the District Court of Arapahoe County, Colorado (Case No. 09CV2609) against the Company alleging breach of contract for failure to pay certain legal fees. The plaintiff in this matter is seeking compensatory damages of $39,336, plus costs and attorney fees. The Company has disputed the legal fees that are the subject matter of this litigation and has filed an answer in response to the complaint asserting various defenses. The Company cannot predict at this time the outcome in this matter.

Involuntary Bankruptcy Filing

On March 5, 2010, a petition for involuntary Chapter 7 bankruptcy entitled In re New Frontier Energy, Inc. (Case No. 10-14517HRT) (the “Petition”) was filed against New Frontier Energy, Inc. (the “Company”) in the United States Bankruptcy Court, District of Colorado by five Petitioning Creditors (the “Petitioners”). The Petitioners alleged that they have debts that are not the subject of a bona fide dispute as to liability or amount and that the Company is generally not paying its debts as they come due. The Petitioners were seeking liquidation of the Company’s assets and the appointment of a receiver. The Company believes that the Petitioners' claims are without merit. After discussion with the Petitioners, on March 18, 2010, the Company and the Petitioners filed a joint motion to dismiss the Petition, and the motion is pending with the bankruptcy court. The Company believes that the joint motion to dismiss is an affirmation of the Company’s position that the Petition was wholly without merit. In connection with the joint motion to dismiss, the Company agreed not to seek or obtain judgment, sanctions or other relief against the Petitioners for filing the Petition and any claims against any person or entity that caused the dissemination of the filing to a certain oil and gas publication. In the event the bankruptcy court does not approve the dismissal of the involuntary bankruptcy petition, the Company intends to aggressively contest the involuntary bankruptcy petition.

Item 1A. Risk Factors

~~Except~~Not as set forth below, there have been no material changes in our Risk Factors from those reported in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended February 28, 2009 filed with the Securities and Exchange Commission, which we incorporate by reference hereinApplicable.

Risks Relating to Our Business, Supplementing the “Risk Factors” in Our Form 10-K/A for the fiscal year ended February 28, 2009.

Entek may not make additional investments pursuant to the Participation Agreement.

On August 10, 2009, New Frontier Energy, Inc. (the “Company”) entered into a Participation Agreement with Entek GRB LLC (“Entek”) under which Entek agreed to purchase certain assets of the Company and spend up to an additional approximately $11.5 million over three years on exploration and development within approximately 66,000 gross acres (the “Underlying Leases”) to earn up to 55% of the Company’s interest in the Underlying Leases and certain of its other assets, including its partnership interests in Slater Dome Gathering, LLLP (collectively the “Assets”). For a complete discussion of the terms of the Participation Agreement, see the Form 8-K we filed with the SEC on August 21, 2009, which is incorporated herein by this reference. Pursuant to the Participation Agreement, Entek has the right to participate in the exploration and development of the underlying leases, and the right to earn assignments of interests in the Assets in three phases. However, Entek is not obligated to expend additional funds to earn additional interest in the Assets. Further, the Company may not use the funds expended by Entek for working capital purposes. There can be no assurance that the Entek will make additional payments to the Company pursuant to the Participation Agreement or that the Company will further explore or develop its properties.

Proposed federal legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

The U.S. Congress is currently considering legislation that would amend the Safe Drinking Water Act to eliminate an existing exemption from federal regulation of hydraulic fracturing activities. Hydraulic fracturing is a common process in our industry of creating artificial cracks, or fractures, in deep underground rock formations through the pressurized injection of water, sand and other additives to enable oil or natural gas to move more easily through the rock pores to a production well. This process is often necessary to produce commercial quantities of oil and natural gas from many reservoirs. Currently, regulation of hydraulic fracturing is primarily conducted at the state level through permitting and other compliance requirements. If adopted, the proposed amendment to the Safe Drinking Water Act could result in additional regulations and permitting requirements at the federal level. Those additional regulations and permitting requirements, as well as other regulatory developments at the state level, could lead to significant operational delays and increased operating costs, and make it more difficult to perform hydraulic fracturing.

A petition for involuntary bankruptcy was filed against New Frontier Energy, Inc., which could adversely affect the our operations and financial condition

There can be no assurance that the Company will be successful in having the involuntary bankruptcy petition dismissed. If the Company is not successful in having the involuntary bankruptcy petition dismissed, the Company may become subject to a bankruptcy proceeding under either Chapter 7 or Chapter 11 of the United States Bankruptcy Code and will be subject to the risks and uncertainties associated with such bankruptcy cases. These risks include, but are not limited to, our ability to continue as a going concern, our ability to operate within the restrictions of the bankruptcy court, our ability to obtain bankruptcy court approval with respect to motions filed in the bankruptcy proceeding from time to time; our ability to develop, confirm and consummate a plan of reorganization (with respect to a Chapter 11 proceeding), and the ability of third parties to seek and obtain court approval to liquidate our assets (with respect to a Chapter 7 proceeding).

Further, in the event that the involuntary bankruptcy petition is not dismissed within 60 days from its date of commencement, it may be deemed to be a Triggering Event (as defined in the certificate of designation of the Company’s Series B Preferred Stock), which may, among other things, allow its holders, at their option, to require the Company to redeem all of the Preferred Stock then held by such holder for a redemption price, in shares of Common Stock, equal to a number of shares of Common Stock equal to the Triggering Redemption Amount (as defined in the certificate of designation of the Company’s Series B Preferred Stock) divided by $0.65 or (B) increase the dividend on all of the outstanding Series B Preferred Stock held by such holder to equal 18% per annum thereafter.

Further, negative events or publicity associated with a bankruptcy case could adversely affect our relationships with our vendors and employees, as well as with customers and other third parties, which in turn could adversely affect our operations and financial condition. Also, pursuant to the United States Bankruptcy Code, we would need bankruptcy court approval for transactions outside the ordinary course of business, which may limit our ability to respond timely to events or take advantage of opportunities. Because of the risks and uncertainties associated with bankruptcy cases, we cannot predict or quantify the ultimate impact that events occurring during the filing of the involuntary bankruptcy petition process may have on our business, financial condition and results of operations, and there is no certainty as to our ability to continue as a going concern.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

OnNot ~~November 13, 2009, the Company granted Lazar G~~Applicable. Schafran 2,000,000 options to acquire shares of the Company’s Common Stock. Of the options granted, 1,000,000 are exercisable at a price of $0.25 and expire on December 31, 2010 and 1,000,000 are exercisable at a price of $0.50 per share and expire on December 31, 2011. On or before December 31, 2010, Mr. Schafran has the right, but not the obligation, to cancel these stock options in exchange for a payment of $50,000. At the Company's election, this payment may be made either in cash or a 2-year unsecured promissory note issued by the Company in the principal amount of $50,000 (the "Note"). If the Company elects to issue the Note to Mr. Schafran, the Note will accrue interest on a monthly basis at a rate equal to the 1-month London Interbank Offered Rate, with such accrued and unpaid interest to be paid on the maturity date of the Note.

Entek may become the Operator of the Slater Dome Field and the Focus Ranch Unit.

Pursuant to the terms and conditions of the Participation Agreement, Entek has the right, after agreeing to proceed with Phase II (as defined in the Participation Agreement) of the Participation Agreement, to elect to become the operator of the Focus Ranch Unit and the Slater Dome Field. As of the date of this Form 10-Q, Entek has elected to proceed with Phase II and has expressed a desire to become the operator of the Focus Ranch Unit and the Slater Dome Field. The Company and Entek are in discussions on various matters relating to the appointment of Entek as the operator of the Focus Ranch Unit and the Slater Dome Field. In the event Entek becomes the operator of the Focus Ranch Unit and the Slater Dome Field, it will have control over the management of operations on these properties and make decisions regarding development. These decisions may affect our capital requirements and may have a material adverse affect upon the Company and its shareholders.

Item 3. Defaults Upon Senior Securities.

Not Applicable.

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

Not Applicable.

Item 5. Other Information

~~Not applicable~~None.

Item 6. Exhibits

Exhibits: The following exhibits are filed with this report: 31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as amended. 31.2 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as amended. 32. Certifications pursuant to 18 U.S.C section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~SIGNATURES~~31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934 as amended.

~~In accordance~~31.2 ~~with~~Certification ~~the~~pursuant ~~requirements~~to ofRule ~~the~~13a-14(a) or 15d-14(a) under The Securities Exchange Act of 1934, as ~~amended,~~ ~~the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized~~amended.

	New Frontier Energy, Inc.
Date: March 22, 2010	By:	/s/ Samyak Veera
		Samyak Veera,
		President and Chief Executive Officer
	By:	/s/ Tristan R. Farel
		Tristan R. Farel,
		Chief Financial Officer

32.	Certifications pursuant to 18 U.S.C section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

2628

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	New Frontier Energy, Inc.

Date: March 4, 2011	By:	/s/ Samyak Veera
		Samyak Veera, President and Chief Executive Officer



	By:	/s/ Tristan R. Farel
		Tristan R. Farel, Chief Financial Officer

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