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

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

The number of shares of Common Stock, $0.001 par value, outstanding on November 9, 2007 was 22,203,256 shares.

				September 30,
				2007

Assets
Current assets:
	Cash			$	3,553,323
	Accounts receivable				124,731
	Prepaid expenses				12,597
		Total current assets			3,690,651

Fixed assets, net of accumulated depreciation of $13,313					77,828

Other assets:
	Oil and gas properties using full cost accounting:
		Properties not subject to amortization			22,171
		Properties subject to amortization			7,449,992
			Total other assets		7,472,163


				$	11,240,642

Liabilities and Stockholders' Equity

Current liabilities:
	Accounts payable				135,956
	Accrued liabilities				26,628
	Deferred payments from Euramerica for development				524,000
	Promissory notes payable				965,000
	Current portion of long term debt				370,566
			Total liabilities		2,022,150

Asset retirement obligation					378,060

Long term liabilities:
	Convertible note payable				25,000
	Long-term debt, less current portion				10,396,410
					10,421,410

Commitments and contingencies

Stockholders' Equity (Deficit):
	Preferred stock, $0.001 par value, 10,000,000
		shares authorized, no shares issued and outstanding			-
	Common stock, $0.001 par value, 100,000,000 shares authorized
		22,203,256 shares issued and outstanding			22,203
	Unamortized cost of stock, warrants & options issued for services				(132,977)
	Unamortized loan fees and interest				(4,430,493)
	Additional paid-in capital				8,798,284
	Accumulated (deficit)				(5,837,995)
					(1,580,978)

				$	11,240,642

				For the Three Months Ended				For the Six Months Ended
				September 30,				September 30,
				2007		2006		2007		2006


Revenue
	Oil and gas activities			$	418,590	$	31,292	$	564,793	$	49,823

Expenses:
	Direct costs				288,709		25,594		347,751		50,974
	Repairs on oil and gas equipment				-		50,703		-		165,594
	Professional fees				187,930		177,204		1,062,435		218,254
	Investor relations fees				82,879		-		82,879		-
	General and administrative expenses				99,056		142,941		1,348,964		179,509
	Depreciation, depletion and amortization				128,793		8,952		145,257		16,470
	Impairment of goodwill				-		687,000		-		687,000
		Total expenses			787,367		1,092,394		2,987,286		1,317,801

Net operating (loss)					(368,777)		(1,061,102)		(2,422,493)		(1,267,978)

Other income (expense):
	Interest expense				(213,448)		(1,203)		(283,190)		(1,683)
	Loan fees				(39,297)		-		(73,857)		-
	Loan interest accretion				(286,718)		-		(462,484)		-
	Interest income				-		1,605				3,077
	Reversal of loan penalty expense				2,126,271		-		-		-
	Loss on sale of asset				-		-		-		(3,854)
		Total other income (expense)			1,586,808		402		(819,531)		(2,460)


Net income (loss)				$	1,218,031	$	(1,060,700)	$	(3,242,024)	$	(1,270,438)


Weighted average number of
	common shares outstanding - basic				22,203,256		12,310,839		20,691,689		11,759,386
			- fully diluted		22,297,158		12,310,839		20,691,689		11,759,386
Net income (loss) per share - basic and fully diluted				$	0.05	$	(0.09)	$	(0.16)	$	(0.11)

			Six Months Ended
			September 30,
			2007		2006
Cash flows from operating activities
Net (loss)			$	(3,242,024)	$	(1,270,438)
Depreciation, depletion and amortization				145,257		24,033
Accretion of asset retirement obligation				7,152		1,440
Stock, warrants and options issued for services				1,822,373		138,000
Loan costs				536,341		-
Loss on sale of asset				-		3,854
Adjustments to reconcile net (loss) to cash
	used in operating activities:
		Accounts and notes receivable		(110,293)		(6,692)
		Prepaid expenses		(5,924)		2,532
		Accounts payable		93,657		(19,389)
		Accrued liabilities		(69,262)		-
		Deferred payments from Euramerica for development		524,000		-
Net cash used in operating activities				(298,723)		(1,126,660)

Cash flows from investing activities
	Purchase of fixed assets			(55,641)		(35,500)
	Proceeds from sale of assets			-		11,500
	Additions to oil and gas properties			(6,943,804)		(100,000)
Net cash used in investing activities				(6,999,445)		(124,000)

Cash flows from financing activities
	Payments received on notes receivable			23,100		(22,275)
	Proceeds from convertible note			-		25,000
	Proceeds from loans payable			6,765,141		-
	Payments on notes payable			(350,000)		-
	Stock issued for liabilities			-		306,000
	Proceeds from sale of common stock			4,313,757		414,800
Net cash provided from financing activities				10,751,998		723,525

Net increase (decrease) in cash				3,453,830		(527,135)
Cash - beginning				99,493		590,432
Cash - ending			$	3,553,323	$	63,297

Supplemental disclosures:
	Interest paid		$	283,190	$	65,710
	Income taxes paid			-		-

Non-cash transactions
	Stock, warrants and options issued for services		$	2,156,084	$	138,000
	Asset retirement obligation			347,000		-
	Stock issued for payment of liabilities net of asset in
		reverse merger	$	-	$	306,000

General: EnerJex Resources, Inc. (EnerJex) is an oil and natural gas acquisition, exploration and development company formed in December 2005. Operations are conducted solely through its wholly owned operating subsidiaries, Midwest Energy, Inc. (Midwest) and DD Energy, Inc. (DD Energy). DD Energy was formed in August 2007 to acquire and operate certain leases in Eastern Kansas (see note 6).

The unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year. Certain amounts in the prior year statements have been reclassified to conform to the current year presentations. The statements should be read in conjunction with the financial statements and footnotes thereto included in our Form 10KSB for the year ended March 31, 2007.

The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern. Our ability to continue as a going concern is dependent upon attaining profitable operations based on the development of products that can be sold. We intend to use borrowings and security sales to mitigate the affects of our cash position, however, no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue in existence.

On May 4, 2007, we issued 9,600 shares of common stock to a Director and chairman of our Audit Committee for services over the next year. For the six month period ended September 30, 2007, we recorded director compensation in the amount of $5,000 and unamortized stock-based compensation of $7,000 to be expensed over the remaining term of service.

On May 22, 2007, we issued 15,000 shares of common stock previously authorized and un-issued.

During the six months ended September 30, 2007 we issued 9,000,000 shares of our common stock pursuant to our “Mortgage Security Agreement’s” entered into on April 12, 2007 and June 8, 2007. We allocated $4,500,000 of the $9,000,000 to the equity portion of the transaction (See

Note 5). The transaction costs of the equity sale were $466,834 resulting in $4,033,135 in net proceeds.

On April 12, 2007, we granted a warrant to purchase 375,000 of our common stock to C.K. Cooper & Company as partial payment for services render in connection with our financing activities. The warrant has an exercise price of $0.60 and expires on April 11, 2010. The fair value of the warrant based on the Black-Scholes pricing model totaled $280,591. The following assumptions were used in the valuation: stock price-$1.00; exercise price-$0.60; life 3 years; volatility 106%; yield-4.66. We have included the value of the warrant with the loan and equity transaction costs (See Note 5).

On May 4, 2007, we granted an option to purchase 1,000,000 shares of our common stock to our President and CEO. The options are considered fully vested on grant. The options have an exercise price of $1.25 and they expire on May 3, 2011. The fair value of the option based on the Black-Scholes pricing model was $859,622. The following assumptions were used in the valuation: stock price-$1.25; exercise price-$1.25; life 4 years; volatility 95%; yield-4.55. At September 30, 2007, we recorded the full value as additional related – party compensation.

On May 4, 2007, we granted options to purchase 125,000 shares of our common stock to two employees as a bonus for services. The options are considered fully vested on grant. The options have an exercise price of $1.25 and expire on May 3, 2011. The fair value of the options based on the Black-Scholes pricing model was $107,453. The following assumptions were used in the valuation: stock price-$1.25; exercise price-$1.25; life 4 years; volatility 95%; yield-4.55. At September 30, 2007, we recorded the full value as additional employee compensation.

On May 4, 2007, we granted an option to purchase 300,000 shares of our common stock to a service provider for services rendered. The option is considered fully vested on the date of grant. The options have an exercise price of $1.25 and expire on May 3, 2011. The fair value of the options based on the Black-Scholes pricing model was $257,887. The following assumptions were used in the valuation: stock price-$1.25; exercise price-$1.25; life 4 years; volatility 95%; yield-4.55. At September 30, 2007, we recorded the full value as capitalized contract labor.

On May 4, 2007, we granted options to purchase 600,000 shares of our common stock in total to our three Directors for their services to the Company. The options are considered fully vested on grant. The options have an exercise price of $1.25 and expire on May 3, 2011. The fair value of the options based on the Black-Scholes pricing model totaled $515,772. The following assumptions were used in the valuation: stock price-$1.25; exercise price-$1.25; life 4 years; volatility 95%; yield-4.55. At September 30, 2007, we recorded the full value as board compensation expense.

On June 14, 2007, we entered into a “Separation Agreement” with our former Chief Financial Officer. Pursuant to the agreement, 300,000 options were fully vested with a right to exercise any

time prior to September 13, 2007. As of September 30, 2007, the options were not exercised and have been cancelled. During the period ended September 30, 2007, we expensed the remaining value of the unamortized costs of options in the amount of $61,187 as compensation.

On August 1, 2007, we granted options to purchase 100,000 shares of our common stock to our Director of Finance pursuant to her employment agreement. The options have an exercise price of $1.50 and expire on July 31, 2011. The fair value of the options based on the Black-Scholes pricing model totaled $137,429. The following assumptions were used in the valuation: stock price-$1.50; exercise price-$1.50; life 4 years; volatility 164%; yield-4.26. At September 30, 2007, we recorded compensation expense of $11,452 and unamortized options of $125,977 to be amortized over the one year contract period.

Our asset retirement obligations relate to the abandonment of oil and natural gas wells. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates. The following shows the changes in asset retirement obligations:

On April 11, 2007, we entered into a Securities Purchase Agreement, Registration Rights Agreements, Senior Secured Debentures, a Pledge and Security Agreement, a Secured Guaranty, and other related agreements (the “Financing Agreements”), with DKR Soundshore Oasis Holding Fund Ltd., West Coast Opportunity Fund, LLC, Enable Growth Partners LP, Enable Opportunity Partners LP, Glacier Partners LP, and Frey Living Trust (the “Buyers”). Pursuant to the Financing Agreements, we authorized a new series of senior secured debentures (the “Debentures”). Under the terms of the Financing Agreements, we agreed to sell Debentures for a

total purchase price of $9,000,000. In connection with the purchase, we agreed to issue to each of the Buyers one share of our common stock for each dollar purchased for a total issuance of 9,000,000 shares. The first closing occurred on April 12, 2007 with a total of $6,300,000 in debentures being sold and the remaining $2,700,000 closing on June 21, 2007.

The proceeds from the debentures were allocated to the note payable and the stock issued based on the fair market value of each item that we calculated to be $9,000,000 for each item. Since each of the instruments had a value equal to 50% of the total, we allocated $4,500,000 to stock and $4,500,000 to the note. We have recorded the maturity value of the note at $9,000,000 and in the equity section we recorded the loan costs of $4,500,000 that will accrete as interest based on the interest method over the period of issue to maturity. The amount of interest accreted for the period ended September 30, 2007 was $462,484. The unamortized loan interest at September 30, 2007 was $4,037,516.

Net Proceeds from the debentures totaled $8,346,922 after payment of $653,078 of fees. Also included as fees relating to the debentures was the fair market value of the warrant of $280,591. We allocated $466,835 (50% of the costs) to unamortized loan fees and will amortize those fees over the life of the debentures. For the period ended September 30, 2007 we recorded as loan fee expense $73,857 and the unamortized loan fees were $392,978. The remaining fees of $466,834 were offset against paid in capital as these were costs associated with the equity portion of the debenture.

The Debentures have a three-year term, maturing on March 31, 2010, and bear interest at a rate equal to 10% per annum. Interest is payable quarterly in arrears on the first day of each succeeding quarter. We may pay interest in either cash or registered shares of our common stock. The Debenture has no prepayment penalty so long as we maintain an effective registration statement with the Securities Exchange Commission and provided we give six (6) business days prior notice of redemption to the Buyers. The Debentures are guaranteed, pursuant to the “Secured Guaranty” and “Pledge and Security Agreement” by us and secured by a security interest in all of our assets and assignments of production.

Pursuant to the agreements, during the term of the debentures, we are required to produce a minimum average daily quantity of oil and natural gas. The production thresholds will be measured at six month intervals beginning December 31, 2007 and ending on September 30, 2009. In the event that for any Measurement Date specified above, we do not meet the production thresholds applicable to such Measurement Date, then we shall issue to the Buyers an aggregate 3,000,000 shares of common stock for each threshold date (up to 12,000,000 shares total). Each Buyer may elect to receive common stock purchase warrants in lieu of its allocation of shares of common stock. Such warrants shall have an exercise price of $0.01 per share and be exercisable for a four year term. At September 30, 2007, we believe our production levels will be sufficient to meet the required threshold levels and the previously unamortized cost relating to loan penalty of $12,000,000 and the related loan penalty expense of $2,126,271 have been reversed.

Pursuant to the terms of the Registration Rights Agreement between us and the Buyers, we are obligated to file a minimum of three registration statements registering the 9,000,000 shares of common stock or shares of common stock underlying the common stock purchase warrants, 3,000,000 interest shares potentially due under the Debentures, and up to 12,000,000 production threshold shares. If we fail to obtain and maintain effectiveness of a registration statement, we will be obligated to pay cash to each Buyer equal to: (i) 0.5% of the aggregate purchase price allocable to such Buyer’s registrable securities included in such registration statement for the first 30 day period following such effectiveness failure or maintenance failure, (ii) 0.75% of the aggregate Purchase price allocable to such Buyer’s registrable securities in such registration statement for the following thirty day period; and (iii) 1% of the aggregate purchase price allocable to such Buyer’s registrable securities included in the registration statement for every thirty day period thereafter. These payments are capped at 10% of the Buyer’s original purchase price under the Debentures. The first registration statement, registering 3,000,000 shares of common stock, became effective on August 14, 2007.

On September 1, 2007, we entered into a purchase and sales contract between DD Energy and various entities and individuals for the acquisition of oil properties located in eastern Kansas (see note 6) for the total purchase price of $2,700,000. Pursuant to the agreement, we paid cash at closing in the amount of $1,735,000 and entered into promissory notes totaling $965,000. Each promissory note bears interest at a rate of 5% per annum and matures September 1, 2008. In connection with this acquisition, we obtained additional financing through Cornerstone Bank in the amount of $1,735,000. This note bears interest at 8.5% per annum and matures on September 27, 2011.

On September 28, 2007, we financed the purchase of vehicles totaling $31,976 through GE Money Bank. This note is for seven years and bears interest at 6.99% per annum.

On April 9, 2007, we entered into a “Joint Exploration Agreement” with a shareholder, MorMeg, LLC, whereby we agreed to advance $4,000,000 to a joint operating account for further development of MorMeg’s Black Oaks leaseholds in exchange for a 95% working interest in all production originating from the Black Oaks field until such point when total revenues are equal to development costs. Upon equalization of development cost and revenue, our working interest

will adjust downward to 70% and MorMeg will increase their working interest to 30%. In addition, we agreed to pay MorMeg, LLC a one time cash payment in the amount of $200,000 and issue 360,000 shares of our common stock pursuant to the original amended letter agreement dated December 15, 2006. As of September 30, 2007, we fulfilled this obligation.

On April 18, 2007, we entered into a “Purchase and Sale Agreement” with MorMeg, LLC, a related party, to acquire the lease interests of certain producing properties for cash in the amount of $400,000. We obtained an independent valuation of the properties that determined the fair market value exceeded the amount paid. Our obligation for payment has been fulfilled at September 30, 2007.

On August 10, 2007, we entered into an amended and restated “Letter Agreement” with Euramerica Energy, Inc. (“Euramerica”) whereby we granted an option to Euramerica for the purchase of our Gas City Property at a purchase price of $1,200,000 expiring March 1, 2008. For consideration of the option, Euramerica has paid $524,000 towards exploratory drilling costs associated with the development of the Gas City Property. We will receive a 10% management fee paid from net revenue interest for services provided during the development. If Euramerica exercises its purchase option on or before March 1, 2008, $300,000 would be due upon execution of the purchase agreement and the remaining $900,000 would be due in three equal installments of $300,000 payable quarterly. We will retain title on these properties until the purchase price has been paid in full. In addition, as part of this agreement, Euramerica will be required to provide up to $2,000,000 in additional well development funding for the project on or before August 31, 2008. If the well development funding is not paid on or before August 31, 2008, title to the property will revert back to us. We will continue to receive a 5% working interest in the properties until equalization of development cost and revenue, thereafter, our working interest will adjust upwards to 25% and Euramerica will decrease their working interest to 75%.

On September 14, 2007, we entered into a purchase agreement for the acquisition of a 100% working interest in leaseholds located in three counties in eastern Kansas for a cash purchase price of $800,000.

On September 27, 2007, we entered into a purchase and sale agreement with certain related parties through our wholly owned subsidiary, DD Energy, Inc. (“DD”), to acquire oil leases in eastern Kansas for a purchase price of $2.7 million. We obtained an independent valuation of the properties that determined the fair market value exceeded the amount paid.

On October 30, 2006, we entered into an agreement with a shareholder to sell the patent we received in the reverse merger. We received a note for $10,000 payable on December 31, 2006 for the patent. As of September 30, 2007 the principal amount of the note was repaid and we agreed to write off the accrued interest.

On June 14, 2007, we entered into a “Separation Agreement” with our former Chief Financial Officer Pursuant to the agreement, we agreed to pay a total of $56,000 as severance subject to

payment in full of the outstanding promissory note in the amount of $22,000 and accrued interest.

Pursuant to the terms of our financing agreement entered into on April 11, 2007, we have committed to various 30-day average production thresholds as follows: (1) the equivalent of 180 Barrel of Oil Equivalent Per Day (BOPDE) by December 31, 2007; (2) 182 BOPDE by June 30, 2008; (3) 170 BOPDE by December 31, 2008 (4) 206 BOPDE by June 30, 2009. If we do not meet those thresholds on any of the days we will be required to issue an additional 3,000,000 registered shares to the debenture holders for each period we fail to meet the thresholds. Based on our production at September 30, 2007, we believe that we will meet all production thresholds therefore not incur any penalties. In the first quarter we recorded a loan penalty expense of $2,126,271 when it was uncertain as to whether we would reach production thresholds. In the second quarter we have reversed this loan penalty expense and have recorded other income of $2,126,271. As of September 30, 2007, there is no provision for loan penalties.

In the event we are unable to meet registration requirements, we may have to pay a penalty, ranging from 0.5% to 10%, to the debenture holders.

On November 1, 2007, we entered into an employment agreement with Mr. Jay Schendel for a term of one year. Pursuant to his agreement, we granted options to purchase 50,000 shares of our common stock. The options have an exercise price of $1.25 and expire on October 31, 2011. The fair value of the options based on the Black-Scholes pricing model totaled $36,774. The following assumptions were used in the valuation: stock price-$0.80; exercise price-$1.25; life 4 years; volatility 181%; yield-4.02. The option value will be amortized over the term of the employment agreement.

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for in accordance with securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Factors That May Affect Our Results of Operation” in this document.

In this Form 10-QSB, references to “we”, “our”, “us”, “EnerJex”, “the Company”, and similar terms refer to EnerJex Resources, Inc. and its operating subsidiaries, Midwest Energy, Inc. and DD Energy, Inc.

EnerJex is an oil and natural gas acquisition, exploration and development company formed in December 2005. Operations, conducted through Midwest and DD Energy, its wholly owned operating subsidiaries, are focused on the mid-continent region of the United States. EnerJex acquires oil and natural gas assets that have existing production and cash flow.

Once acquired, EnerJex implements an exploration and development program to accelerate the recovery of the existing oil and natural gas as well as explore for additional reserves.

More information on EnerJex and its operations can be found on our website: www.EnerJexResources.com. However, the information on our website is not incorporated by reference or otherwise into this report.

Results of Operations for the Three Months Ended September 30, 2007 and 2006.

The following table summarizes selected items from the statement of operations at September 30, 2007 compared to September 30, 2006.

Revenues for the three months ended September 30, 2007 were $418,590 compared to revenues of $31,292 in the three months ended September 30, 2006. The increase in revenues is primarily the result of the sale of oil from leases acquired and developed during the period.

	Three Months Ended September 30,
	2007	2006	Increase / (Decrease)
	Amount	Amount
Expenses:
Direct costs	$288,709	$25,594	$263,115
Repairs on oil and gas equipment	-	50,703	(50,703)
Professional fees	187,930	177,204	10,726
Investor relations fees	82,879	-	82,879
General and administrative expenses	99,056	142,941	(43,885)
Depreciation, depletion and amortization	128,793	8,952	119,841
Impairment of goodwill	-	687,000	(687,000)
Total expenses	787,367	1,092,394	(305,027)

Net operating (loss)	(368,777)	(1,061,102)	(692,325)

Other income (expense):
Interest expense	(213,448)	(1,203)	212,245
Loan fee expense	(39,297)	-	39,297
Loan interest accretion	(286,718)	-	286,718
Interest income	-	1,605	(1,605)
Reversal of loan penalty expense	2,126,271	-	2,126,271
Loss on sale of asset	-	-	-
Total other income (expense)	1,586,808	402	1,586,406

Net income (loss)	$1,218,031	$(1,060,700)	$2,278,731

Direct costs for the three months ended September 30, 2007 were $288,709 compared to $25,594 for the three months ended September 30, 2006. The increase over the prior period reflects the operating costs on the oil leases acquired during the period.

Professional fees for the three months ended September 30, 2007 were $187,390 compared to $177,204 for the three months ended September 30, 2006. The increase in professional fees was a result of services rendered in connection with acquisition and financing activities.

Investor relations fees for the three months ended September 30, 2007 were $82,879 compared to $0 for the three months ended September 30, 2006. The increase in public and investor relations expenses in the current period was a result of costs associated with the annual meeting of stockholders in September 2007 and with development and implementation of our public relations strategy.

General and administrative expenses for the three months ended September 30, 2007 were $99,056 compared to $142,941 in the three months ended September 30, 2006. The decrease is primarily due to a reduction in general start-up costs incurred.

Depreciation, depletion and amortization for the three months ended September 30, 2007 was $128,793 compared to $8,952 for the three months ended September 30, 2006. The increase was primarily a result of the depletion of oil reserves based upon production.

Impairment of goodwill for the three months ended September 30, 2007 was $0 as compared to $687,000 for the three months ended September 30, 2006, the period during which the goodwill was fully impaired.

Net operating loss for the three months ended September 30, 2007 was $368,777, compared to net operating loss of $1,061,102 for the three months ended September 30, 2006. The impairment of goodwill in the second quarter of 2006, together with an increase in revenues in the current quarter, were primary factors.

Interest expense for the three months ended September 30, 2007 was $213,448 compared to $1,203 for the three months ended September 30, 2006. The increase in interest expense is the result of increased financing.

Loan fee expense for the three months ended September 30, 2007 was $39,297 compared to $0 for the three months ended September 30, 2006. The increase in loan fee expense was a result of costs associated with the debentures.

Loan interest accretion for the three months ended September 30, 2007 was $286,718 compared $0 for the three months ended September 30, 2006. The increase in loan interest accretion was a result of costs associated with the debentures.

Interest income for the three months ended September 30, 2007 was $0 compared to $1,605 for the three months ended September 30, 2006. Any interest earned in the current period on proceeds from financing was offset against the related interest expense.

Loan penalty expense recorded in the prior quarter was reversed in the three months ended September 30, 2007, which resulted in income $2,126,271. The reversal of loan penalty expense was based on our determination that production levels are sufficient to meet required threshold levels.

Our net income for the three months ended September 30, 2007 was $1,218,031 compared to a net loss of $1,060,700 for the three months ended September 30, 2006. Our current production revenues and the reversal of loan penalty contributed significantly to this improvement in results.

Oil and gas revenues for the six months ended September 30, 2007 were $564,793 compared to revenues of $49,823 in the six months ended September 30, 2006. The increase in revenues is primarily the result of the sale of oil from leases acquired and developed during the period.

	Six Months Ended September 30,
	2007	2006	Increase / (Decrease)
	Amount	Amount	$
Expenses:
Direct costs	$347,751	$50,974	$296,777
Repairs on oil and gas equipment	-	165,594	(165,594)
Professional fees	1,062,435	218,254	844,181
Investor relations fees	82,879	-	82,879
General and administrative expenses	1,348,964	179,509	1,169,455
Depreciation, depletion and amortization	145,257	16,470	128,787
Impairment of goodwill	-	687,000	(687,000)
Total expenses	2,987,286	1,317,801	1,669,485

Net operating (loss)	(2,422,493)	(1,267,978)	1,154,515

Other income (expense):
Interest expense	(283,190)	(1,683)	281,507
Loan fee expense	(73,857)	-	73,857
Loan interest accretion	(462,484)	-	462,484
Interest income	-	3,077	(3,077)
Loan penalty expense	-	-	-
Loss on sale of asset	-	(3,854)	(3,854)
Total other income (expense)	(819,531)	(2,460)	817,071

Net income (loss)	$(3,242,024)	$(1,270,438)	$1,971,586

Direct costs for the six months ended September 30, 2007 were $374,751 compared to $50,974 for the six months ended September 30, 2006. The increase over the prior period reflects the operating costs on the oil leases acquired during the period

Professional fees for the six months ended September 30, 2007 were $1,062,435 compared to $218,254 for the six months ended September 30, 2006. The increase in professional fees was a result of non-cash charges related to options awarded to Board members and an outside consultant, together with services rendered in connection with acquisition and financing activities.

Investor relations fees for the six months ended September 30, 2007 was $82,879 compared to $0 for the six months ended September 30, 2006. The increase in public and investor relations expenses in the current period was a result of costs associated with the annual meeting of stockholders in September 2007 and with development and implementation of our public relations strategy.

General and administrative expenses for the six months ended September 30, 2007 was $1,348,964 compared to $179,509 in the six months ended September 30, 2006. The increase is primarily due to option transactions recorded as employee compensation in the period.

Depreciation, depletion and amortization for the six months ended September 30, 2007 was $145,257 compared to $16,470 for the six months ended September 30, 2006. The increase was primarily a result of the depletion of oil reserves based upon production.

Impairment of goodwill for the six months ended September 30, 2007 was $0 as compared to $687,000 for the six months ended September 30, 2006, the period during which the goodwill was fully impaired.

Net operating loss for the six months ended September 30, 2007 was $2,422,793compared to net operating loss of $1,267,978 for the six months ended September 30, 2006. The impairment of goodwill in the second quarter of 2006, together with an increase in revenues in the current quarter, were primary factors.

Interest expense for the six months ended September 30, 2007 was $283,190 compared to $1,683 for the six months ended September 30, 2006. The increase in interest expense is primarily the result of increased financing.

Loan fee expense for the six months ended September 30, 2007 was $73,857 compared to $0 for the six months ended September 30, 2006. The increase in loan fee expense was a result of costs associated with the debentures.

Loan interest accretion for the six months ended September 30, 2007 was $462,484 compared to $0 for the six months ended September 30, 2006. The increase in loan interest accretion was a result of costs associated with the debentures.

Interest income for the six months ended September 30, 2007 was $0 compared to $3,077 for the six months ended September 30, 2006. Any interest earned in the current period on proceeds from financing was offset against the related interest expense.

Loss on sale of asset for the six months ended September 30, 2007 was $0 compared to $3,854 for the six months ended September 30, 2006. The loss was a result of the sale of a vehicle in the prior year.

Our net loss for the six months ended September 30, 2007 was $3,242,024 compared to $1,270,438 for the six months ended September 30, 2006. The increase in net loss is primarily the result of start-up costs we continue to incur, together with significant acquisition, drilling, and completion activities during the period.

Because our operating expenses have greatly exceeded our revenues, we have not attributed any reserves to our properties for the six months ended September 30, 2007.

Our plan is to continue to acquire oil and natural gas assets primarily in the mid-continent region of the United States. However, over time we may expand our area of operations as opportunities to do so become available. Once these assets are acquired we plan to continue to focus our efforts on increasing production of oil and natural gas cash flows and enhancing our net asset value.

In April 2007 we completed a private placement of Senior Secured Debentures for $9 million (before fees and expenses) that has allowed us to continue to implement our business plan.

On September 14, 2007, we completed the purchase of nine leases in eastern Kansas for $800,000 in cash pursuant to a purchase and sale agreement. We acquired a 100% working interest in 1,100 gross acres of leaseholds located in Miami, Johnson and Franklin counties in eastern Kansas. Current production from the leases approximates 40 barrels of oil equivalent per day. A copy of the purchase agreement is attached hereto as Exhibit 10.33.

On September 27, 2007, DD Energy, Inc. (“DD”), our recently formed wholly owned subsidiary, entered into a purchase and sale agreement (the “Agreement”) with an effective date of September 1, 2007, whereby DD acquired seven oil leases and a 100% working interest in 1,500 gross acres of leaseholds for $2.7 million. The seven leases are in Johnson, Anderson and Linn counties in eastern Kansas. Current production from the leases approximates 50 barrels of oil equivalent per day. A copy of the Agreement was attached as Exhibit 10.32 to Form 8-K filed on October 10, 2007.

We acquired an option to purchase and participate in the development of 1,980 acres in the Woodson and Greenwood counties of Kansas for $500,000 in stock and cash. In addition, as part of the agreement we established a joint operating account and funded it with $4 million specifically for the initial development of this field. In doing so, we acquired a 95% working interest in the Black Oaks Field which as of September 30, 2007 produced approximately 60 barrels of oil per day. The former owner of the field retained a 5% carried interest in the field. Once the net cash flow (revenues less operating expenses and capital expenditures) from the property has paid for our investment, plus the cost of the capital obtained to develop the property, this 5% carried interest will convert to a 30% working interest (non-carried). The cost of the capital will include the interest paid to the purchasers of the Senior Secured Debentures as well as the value of common stock issued to these purchasers that is ultimately allocated to the Black Oaks Field.

As part of the (Phase 1) initiative, we have drilled and completed twenty-three new producing wells and five injection wells. We have drilled and are working towards completion of seven additional producing wells. We received state approval and began water injection during this quarter.

The balance of the $4 million (Phase 1) investment will likely be made during the next two months completing the seven wells and drilling new development wells. We are beginning to recognize increased production and cash flow from the Black Oaks Field. Upon completion of the (Phase 1) investment in the Black Oaks Field, assuming capital is available, we plan to invest an additional $6 million to further develop the 1,980 acres. This additional $6 million investment would require additional funds to be acquired, through either a debt or equity offering. In addition, the option acquired for $500,000 allows us to participate in another 2,100 acre development and secondary recovery project with the same partner, in the same area, and

under similar terms. The total capital required for the second project, named the “Nickel Town Field,” is estimated to be approximately $15.4 million.

On April 27, 2007, we acquired a 240 acre lease in Douglas county Kansas for $400,000 (subject to customary closing adjustments). The acquisition included a 100% interest in and to all rights and easements incident or appurtenant to the Lease; 12 oil wells, 4 water injection wells, and one water supply well.

We acquired a .8476563 net revenue interest on production from the Lease. Production from the Lease at September 30, 2007 approximated 27 barrels of oil equivalent per day.

The terms of the sale agreement states that upon payout of the purchase price, including operating costs and total capital expenditures, including cost of capital from the cash flow from the Lease, the former owner of the lease shall be assigned a 25% working interest in the Lease.

We have nearly completed our original planned $600,000 development of the field, primarily by drilling an additional nineteen producing wells, seven water injection wells and equipment and infrastructure improvements needed to increase production. The geology and production to date continues to be encouraging.

In February 2006, we acquired approximately 8,105 acres of land held by leases, 11 recently (within the past three years) drilled wells, a gas gathering system and an interstate pipeline tap and a salt water disposal system for the field. The asset is located in Allen County, Kansas. Due to attrition and an attempt to centralize the acreage, we currently own approximately 6,600 acres of oil and gas leases, eleven (11) existing wells completed as natural gas producers, gas gathering system, compressor, tap and dehydration system tied to an interstate pipeline, and one (1) salt water disposal well along with a salt water disposal system for the field. We originally allocated $1 million from the debentures, however, we are currently in the process of a potential sale of the property to Euramerica Energy, Inc. pursuant to the Well Development Agreement and Option described below.

The reserves for the Gas City Field have been fully written-down on our financial statements as of September 30, 2007, and until such time as a financially viable operating plan can be finalized will be considered impaired.

On July 12, 2007, we entered into a letter agreement with Euramerica Energy Inc., describing the terms for proceeding with an exploration and development program on the leases on the Gas City Property. On August 10, 2007, we amended and restated the letter agreement and we agreed to commence a development initiative upon the property under certain terms. Additionally, we granted Euramerica an option to purchase the property through March 1, 2008

at a purchase price of $1,200,000, which value represents the original purchase price plus capital invested by us in the development of the property to date.

The following describes certain material terms of the Well Development Agreement and Option. The description below is not a complete description of all terms of the agreement and is qualified in its entirety by reference to the agreement attached as Exhibit 10.31 to Form 10-QSB filed on August 17, 2007.

Further, we are in discussions with Euramerica regarding potential development possibilities located on the property which may lead to an amendment of our agreement. If and when an agreement is reached, we will file a Form 8-K disclosing the terms of the agreement.

We have several other projects that are in various stages of discussions and we are continually evaluating oil and gas opportunities in the mid-continent region. We plan to bring multiple potential acquisitions to our current financial partner for evaluation. It is our vision to grow the business in a disciplined and well planned manner.

In addition to raising additional capital we plan to take on Joint Venture (JV) or Working Interest (WI) partners that will contribute to the capital costs of drilling and completion and then share in revenues derived from production. This economic strategy will allow us to utilize our own financial assets toward the growth of our leased acreage holdings, pursue the acquisition of strategic oil and gas producing properties or companies and generally expand our existing operations while further diversifying risks.

We began generating revenues from the sale of oil primarily during the three month period ended September 30, 2007. We expect our production to continue to increase, both through development of wells and through our acquisition strategy. Our future financial results will continue to depend on: (i) the ability to source and screen potential projects; (ii) the ability to discover commercial quantities of natural gas and oil; (iii) the market price for oil and natural gas; and (iv) the ability to fully implement our exploration and development program, which is dependent on the availability of capital resources. There can be no assurance that we will be successful in any of these respects, that the prices of oil and natural gas prevailing at the time of production will be at a level allowing for profitable production, or that we will be able to obtain additional funding to increase our currently limited capital resources. The board of directors has

implemented a Crude Oil and Natural Gas hedging strategy that will allow us to hedge up to 80% of our production to mitigate a majority of our exposure to changing prices in the intermediate term. However, as of September 30, 2007, we have not hedged any of our current production.

Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of stock and by borrowings. In the future we anticipate we will be able to provide some of the necessary liquidity we need by the revenues generated from our net interests in our oil and natural gas production, and sales of reserves in our existing properties, however, if we do not generate sufficient sales revenues we will continue to finance our operations through equity and/or debt financings.

The following table summarizes total current assets, total current liabilities and working capital at September 30, 2007 as compared to March 31, 2007.

Financing. On August 3, 2006, our subsidiary, Midwest Energy, Inc., executed a convertible note for the principal amount of $25,000. The note bears interest at 6% per annum and matures on August 2, 2010. The note is convertible at any time at the option of the holder into shares of our common stock at a conversion rate of $2.00 per share.

On October 30, 2006, we entered into an agreement with a shareholder to sell the patent we received in the reverse merger with Midwest Energy, Inc. We received a note for $10,000 payable due December 31, 2006 for the patent. As of the period ended September 30, 2007, the note has been paid in full.

On April 11, 2007, we completed a $9 million private placement of Senior Secured Debentures (the “Debentures”). In accordance with the terms of the Debentures, we received $6.3 million (before expenses and placement fees) at the first closing and an additional $2.7 million (before closing fees and expenses) at the second closing on June 21, 2007. In connection with the sale of the Debentures, we agreed to issue the Buyers 9,000,000 shares of common stock or common stock purchase warrants, (6,300,000 shares of common stock were issued on April 13, 2007) each warrant entitling the holder to purchase one share of our common stock at $0.01 per share (the “Closing Securities”). On the Second Closing date of June 21, 2007, we agreed to deliver to the Buyers, the remaining Debentures and Closing Securities equal to and in exchange of the purchase price of $2,700,000 (2,700,000 shares of common stock were issued on June 26, 2007). In addition, we may be required to issue the Buyers up to an additional

12,000,000 shares of common stock or warrants in the event Midwest fails to meet certain production thresholds over the term of the debentures. To avoid issuing these additional shares, we must have production of the equivalent to 180 Barrel of Oil Equivalent Per Day (BOPDE) by December 31, 2007; 182 BOPDE by June 30, 2008; 170 BOPDE by December 31, 2008 and 206 BOPDE by June 30, 2009.

The $9 million Debentures mature on March 31, 2010, absent earlier redemption by Midwest, and carry an interest rate of 10%. Interest on the Debentures began accruing on April 11, 2007 and is payable quarterly in arrears on the first day of each succeeding quarter during the term of the Debentures, beginning on or about May 11, 2007 and ending on the Maturity Date of March 31, 2010. We may, under certain conditions specified in the Debentures, pay interest payments in shares of our registered common stock. Additionally, on the Maturity Date, Midwest is required to pay the amount equal to the principal, as well as all accrued but unpaid Interest.

A critical component of our operating plan is the ability to obtain capital through additional equity and/or debt financing and JV or WI partnerships. In the event we cannot obtain the necessary capital to pursue our strategic plan, however, this would materially impact our ability to continue to grow aggressively.

Since inception, we have financed cash flow requirements through debt financing and issuance of common stock for cash and services. As we have expanded operational activities, we are currently generating sufficient revenues to meet our operating needs. If we again experience cash flow deficiencies from operations, we would be required to obtain additional financing to fund operations through common stock offerings and debt borrowings to the extent necessary to provide working capital.

Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development and production, particularly companies in the oil and gas industry. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, we are continuing to implement and successfully execute our business and marketing strategy, develop and upgrade technology and products, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

The consolidated financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of EnerJex as a going concern. EnerJex may not have a sufficient amount of cash required to pay all of the costs associated with operating, production and marketing of products. Management intends to use borrowings and security sales to mitigate the effects of cash flow deficits, however

no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should EnerJex be unable to continue existence.

Summary of product research and development that we will perform for the term of our plan.

We do not anticipate performing any significant product research and development under our plan of operation until such time as we can raise adequate working capital to sustain our operations.

We anticipate that we will purchase the necessary equipment required to produce oil and natural gas during our normal course of operations over the next six months.

We currently have 5 full time employees and employ the services of several contract personnel. As drilling and production activities increase, we intend to hire additional technical, operational and administrative personnel as appropriate. We do not expect a significant change in the number of full time employees over the next 12 months. We are using and will continue to use the services of independent consultants and contractors to perform various professional services, particularly in the area of land services, reservoir engineering, drilling, water hauling, pipeline construction, well design, well-site monitoring and surveillance, permitting and environmental assessment. We believe that this use of third-party service providers may enhance our ability to contain general and administrative expenses.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

We have substantial indebtedness under the $9 Million Financing Agreements which are secured by all of our assets. If an event of default occurs under the Financing Agreements, the Buyers may foreclose on all of our assets and we may be forced to curtail our operations or sell some of our assets to repay the notes.

On April 11, 2007, we entered into a $9 million credit facility with certain Buyers pursuant to securities purchase agreement and related agreements. Subject to certain grace periods, the notes and agreements provide for the following events of default (among others):

In the event of a future default under our agreements with the Buyers, the Buyers may enforce their rights as a secured party and we may lose all or a portion of our assets or be forced to materially reduce our business activities.

There can be no assurance that we will satisfy all of the conditions of the agreements executed in the private placement with the Buyers.

Pursuant to the terms of certain agreements, we are obligated to file at least three registration statements registering the 9,000,000 shares of common stock or shares of common stock underlying the common stock purchase warrants, 3,000,000 interest shares potentially issuable under the Debentures, and up to 12,000,000 production threshold shares which may be issued pursuant to the Securities Purchase Agreement. The first two registration statements will each register 3,000,000 shares of common stock, or shares of common stock underlying common stock purchase warrants. The third registration statement will register the remaining 3,000,000 shares of common stock, and the interest shares issued or issuable pursuant to the terms of the Debentures. In addition, we are required to file a registration statement within 30 days of the issuance of any production threshold shares.

Although we believe that we will meet the deadlines for obtaining the effective registration statements, there can be no assurance that such statements will be declared effective within the time required. Failure to satisfy these conditions would constitute a default.

The issuance of threshold shares may cause immediate and substantial dilution to our existing stockholders.

We have to meet 30 day average production thresholds during the period the debentures are outstanding. We must have production of the equivalent of 180 Barrel of Oil Equivalent Per Day (BOPDE) by December 31, 2007; 182 BOPDE by June 30, 2008; 170 BOPDE by December 31, 2008 and 206 BOPDE by June 30, 2009. If we do not meet those thresholds on any of the periods highlighted we will be required to issue an additional 3,000,000 shares to the debenture holders for each period we fail to meet the thresholds. The issuance of threshold shares may cause immediate dilution to the interests of other stockholders. As of September 30, 2007 our management believed our current production would exceed the initial threshold requirements.

Our auditor’s report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.

As a result of our deficiency in working capital at our fiscal year ended March 31, 2007 and other factors, our auditors have included an explanatory paragraph in their audit report regarding substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments as a result of this uncertainty. The going concern qualification may adversely impact our ability to raise the capital necessary for the expansion and continuation of operations.

We have minimal operating history, which raises substantial doubt as to our ability to successfully develop profitable business operations.

We have a limited operating history. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a business in the oil and natural gas industries. As a result of our recent acquisition of mineral leases we have yet to generate significant revenues from operations and have been focused on organizational, start-up, market analysis, exploratory drilling and fund raising activities. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including:

To achieve profitable operations, we must, alone or with others, successfully execute on the factors stated above, along with continually developing ways to enhance our production efforts, when commenced. Despite our best efforts, we may not be successful in our development efforts or obtain required regulatory approvals. There is a possibility that some, or all, of our wells may never produce natural gas or oil.

At this stage of our business operations, even with our good faith efforts, potential investors have a high probability of losing their investment.

Because the nature of our business is expected to change as a result of shifts in the market price of oil and natural gas, competition, and the development of new and improved technology, management forecasts are not necessarily indicative of future operations and should not be relied upon as an indication of future performance.

While Management believes its estimates of projected occurrences and events are within the timetable of its business plan, our actual results may differ substantially from those that are currently anticipated.

We may need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.

We have and expect to continue to have substantial capital expenditure and working capital needs. We will need to rely on cash flow from operations or raise additional cash to fund our operations, to fund our anticipated reserve replacement needs and implement our growth strategy, or to respond to competitive pressures and/or perceived opportunities, such as investment, acquisition, exploration and development activities.

If low natural gas and oil prices, operating difficulties or other factors, many of which are beyond our control, cause our revenues or cash flows from operations to decrease, we may be limited in our ability to spend the capital necessary to complete our development, production exploitation and exploration programs. If our resources or cash flows do not satisfy our operational needs, we will require additional financing, in addition to anticipated cash generated from our operations, to fund our planned growth. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated

opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In such a capital restricted situation, we may curtail our acquisition, drilling, development, and exploration activities or be forced to sell some of our assets on an untimely or unfavorable basis.

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.

We are highly dependent on Steve Cochennet, our CEO, president and chairman. The loss of Mr. Cochennet, whose knowledge, leadership and technical expertise upon which we rely, would harm our ability to execute our business plan.

Our success depends heavily upon the continued contributions of Steve Cochennet, whose knowledge, leadership and technical expertise would be difficult to replace, and on our ability to retain and attract experienced engineers, geoscientists and other technical and professional staff. We have not entered into an employment agreement with Mr. Cochennet; nor do we maintain key person insurance on Mr. Cochennet. If we were to lose his services, our ability to execute our business plan would be harmed and we may be forced to cease operations until such time as we could hire a suitable replacement for Mr. Cochennet.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. More specifically, the Financial Industry Regulatory Authority ("FINRA") has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission. Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period, then we will be ineligible for quotation on the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Drilling wells is speculative, often involving significant costs that may be more than our estimates, and may not result in any addition to our production or reserves. Any material inaccuracies in drilling costs, estimates or underlying assumptions will materially affect our business.

Developing and exploring for natural gas and oil involves a high degree of operational and financial risk, which precludes definitive statements as to the time required and costs involved in reaching certain objectives. The budgeted costs of drilling, completing and operating wells are often exceeded and can increase significantly when drilling costs rise due to a tightening in the supply of various types of oilfield equipment and related services. Drilling may be unsuccessful for many reasons, including geological conditions, weather, cost overruns, equipment shortages and mechanical difficulties. Moreover, the successful drilling of a natural gas or oil well does not ensure a profit on investment. Exploratory wells bear a much greater risk of loss than development wells. A variety of factors, both geological and market-related, can cause a well to become uneconomical or only marginally economic. Our initial drilling and development sites, and any potential additional sites that may be developed, require significant additional exploration and development, regulatory approval and commitments of resources prior to commercial development. Any success that we may have with these wells or any future drilling operations will most likely not be indicative of our current or future drilling success rate, particularly, because we intend to emphasize on exploratory drilling. If our actual drilling and development costs are significantly more than our estimated costs, we may not be able to continue our business operations as proposed and would be forced to modify our plan of operation.

Development of our reserves, when established, may not occur as scheduled and the actual results may not be as anticipated. Drilling activity may result in downward adjustments in reserves or higher than anticipated costs. Our estimates will be based on various assumptions,

including assumptions required by the Securities and Exchange Commission relating to natural gas and oil prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The process of estimating our natural gas and oil reserves is anticipated to be extremely complex, and will require significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. Due to our inexperience in the oil and gas industry, our estimates may not be reliable enough to allow us to be successful in our intended business operations. Our actual production, revenues, taxes, development expenditures and operating expenses will likely vary from those anticipated. These variances may be material.

Natural Gas and Oil prices are volatile. This volatility may occur in the future, causing negative change in cash flows which may result in our inability to cover our capital expenditures.

Our future revenues, profitability, future growth and the carrying value of our properties is anticipated to depend substantially on the prices we may realize for our natural gas and oil production. Our realized prices may also affect the amount of cash flow available for capital expenditures and our ability to borrow and raise additional capital.

Natural gas and oil prices are subject to wide fluctuations in response to relatively minor changes in or perceptions regarding supply and demand. Historically, the markets for natural gas and oil have been volatile, and they are likely to continue to be volatile in the future. For example, natural gas and oil prices declined significantly in late 1998 and 1999 and, for an extended period of time, remained substantially below prices obtained in previous years. Among the factors that can cause this volatility are:

It is impossible to predict natural gas and oil price movements with certainty. Lower natural gas and oil prices may not only decrease our future revenues on a per unit basis but also may reduce the amount of natural gas and oil that we can produce economically. A substantial or extended decline in natural gas and oil prices may materially and adversely affect our future business enough to force us to cease our business operations. In addition, our financial condition, results of operations, liquidity and ability to finance planned capital expenditures will also suffer in such a price decline. Further, natural gas and oil prices do not necessarily move together.

We may incur substantial write-downs of the carrying value of our gas and oil properties, which would adversely impact our earnings.

We periodically review the carrying value of our gas and oil properties under the full cost accounting rules of the Securities and Exchange Commission. Under these rules, capitalized costs of proved gas and oil properties may not exceed the present value of estimated future net revenues from proved reserves, discounted at an annual rate of 10%. Application of this “ceiling” test requires pricing future revenue at the un-escalated prices in effect as of the end of each fiscal quarter and requires a write-down for accounting purposes if the ceiling is exceeded, even if prices were depressed for only a short period of time. We may be required to write down the carrying value of our gas and oil properties when natural gas and oil prices are depressed or unusually volatile, which would result in a charge against our earnings. Once incurred, a write-down of the carrying value of our natural gas and oil properties is not reversible at a later date.

Competition in our industry is intense. We are very small and have an extremely limited operating history as compared to the vast majority of our competitors, and we may not be able to compete effectively.

We intend to compete with major and independent natural gas and oil companies for property acquisitions. We will also compete for the equipment and labor required to operate and to develop natural gas and oil properties. The majority of our anticipated competitors have substantially greater financial and other resources than we do. In addition, larger competitors may be able to absorb the burden of any changes in federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position. These competitors may be able to pay more for natural gas and oil properties and may be able to define, evaluate, bid for and acquire a greater number of properties than we can. Our ability to acquire additional properties and develop new and existing properties in the future will depend on our ability to conduct operations, to evaluate and select suitable properties and to consummate transactions in this highly competitive environment. In addition, some of our competitors have been operating in our core areas for a much longer time than we have and have demonstrated the ability to operate through industry cycles.

The natural gas and oil business involves numerous uncertainties and operating risks that can prevent us from realizing profits and can cause substantial losses.

Our development, exploitation and exploration activities may be unsuccessful for many reasons, including weather, cost overruns, equipment shortages and mechanical difficulties. Moreover, the successful drilling of a natural gas and oil well does not ensure a profit on investment. A variety of factors, both geological and market-related, can cause a well to become uneconomical or only marginally economical. In addition to their cost, unsuccessful wells can hurt our efforts to replace reserves.

The natural gas and oil business involves a variety of operating risks, including:

If we experience any of these problems, it could affect well bores, gathering systems and processing facilities, which could adversely affect our ability to conduct operations. We could also incur substantial losses as a result of:

Because we intend to use third-party drilling contractors to drill our wells, we may not realize the full benefit of worker compensation laws in dealing with their employees. Our insurance does not protect us against all operational risks. We do not carry business interruption insurance at levels that would provide enough funds for us to continue operating without access to other funds. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. If a significant accident or other event occurs and is not fully covered by insurance, it could impact our operations enough to force us to cease our operations.

The high cost of drilling rigs, equipment, supplies, personnel and other services could adversely affect our ability to execute on a timely basis our development, exploitation and exploration plans within our budget.

Shortages or an increase in cost of drilling rigs, equipment, supplies or personnel could delay or interrupt our operations, which could impact our financial condition and results of operations. Drilling activity in the geographic areas in which we conduct drilling activities may increase, which would lead to increases in associated costs, including those related to drilling rigs, equipment, supplies and personnel and the services and products of other vendors to the industry. Increased drilling activity in these areas may also decrease the availability of rigs. We do not have any contracts with providers of drilling rigs and we cannot assure you that drilling

rigs will be readily available when we need them. Drilling and other costs may increase further and necessary equipment and services may not be available to us at economical prices.

Our lease ownership may be diluted due to financing strategies we may employ in the future due to our lack of capital.

To accelerate our development efforts we plan to take on working interest partners that will contribute to the costs of drilling and completion and then share in revenues derived from production. In addition, we may in the future, due to a lack of capital or other strategic reasons, establish joint venture partnerships or farm out all or part of our development efforts. These economic strategies may have a dilutive effect on our lease ownership and will more than likely reduce our operating revenues.

We are subject to complex laws and regulations, including environmental regulations, which can adversely affect the cost, manner or feasibility of doing business.

Development, production and sale of natural gas and oil in the United States are subject to extensive laws and regulations, including environmental laws and regulations. We may be required to make large expenditures to comply with environmental and other governmental regulations. Matters subject to regulation include:

Under these laws and regulations, we could be liable for personal injuries, property damage, oil spills, discharge of hazardous materials, remediation and clean-up costs and other environmental damages. Failure to comply with these laws and regulations also may result in the suspension or termination of our operations and subject us to administrative, civil and criminal penalties. Moreover, these laws and regulations could change in ways that substantially increase our costs. Accordingly, any of these liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations enough to possibly force us to cease our business operations.

Any leakage of crude oil and/or gas from the subsurface portions of our wells, our gathering system or our storage facilities could cause degradation of fresh groundwater resources, as well as surface damage, potentially resulting in suspension of operation of the

wells, fines and penalties from governmental agencies, expenditures for remediation of the affected resource, and liabilities to third parties for property damages and personal injuries. In addition, any sale of residual crude oil collected as part of the drilling and recovery process could impose liability on us if the entity to which the oil was transferred fails to manage the material in accordance with applicable environmental health and safety laws.

Our Chief Executive Officer and Principal Financial Officer, Steve Cochennet, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on that evaluation, Mr. Cochennet concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

We implemented an oil and gas accounting system during the quarter ended September 30, 2007, which should enhance our internal control over financial reporting. There were no other changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We may become involved in various routine legal proceedings incidental to our business. However, to our knowledge as of the date of this report, there are no material pending legal proceedings to which we are a party or to which any of our property is subject.

On August 1, 2007, we granted Dede Jones, Director of Finance and Accounting of the Company, an option to purchase 100,000 shares of our restricted common stock at $1.50 per share for a period of four years expiring on July 31, 2011. We believe that the grant of options were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The recipient of the options was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make her investment decision, including the Company’s financial statements and 34 Act reports. We reasonably believe that the recipient, immediately prior to granting the options, had such knowledge and experience in their financial and business matters that she was capable of evaluating the merits and risks of her investment. The recipient had the opportunity to speak with the Company’s president and directors on several occasions prior to her investment decision.

We did not repurchase any of our equity securities during the six months ended September 30, 2007 or 2006.

We held our annual meeting of stockholders on September 4, 2007. Business conducted at the meeting included the following proposals:

Each share of Common Stock was entitled to one vote. Only stockholders of record at the close of business on July 20, 2007, were entitled to vote. The number of outstanding shares at the time was 22,203,256 held by approximately 1,148 stockholders. The required quorum of stockholders was present at this meeting.

On November 9, 2007, we issued a press release announcing an update to operating activity completed by our wholly owned subsidiary Midwest Energy, Inc. through the period ended October 31, 2007. A copy of the press release is attached hereto as Exhibit 99.7.

Incorporated by reference

Exhibit

number

Exhibit description

Filed

herewith

Form

Period

ending

Exhibit No.

Filing

date

10.11

Securities Purchase Agreement – dated 4/11/07

8-K

10.11

4/16/07

10.12

Registration Rights Agreement – dated 4/11/07

8-K

10.12

4/16/07

10.13

Senior Secured Debenture – ($3,500,000) West Coast Opportunity Fund, LLC, dated 4/11/07

8-K

10.13

4/16/07

10.14

Senior Secured Debenture – ($700,000) DKR Soundshore Oasis Holding Fund Ltd., dated 4/11/07

8-K

10.14

4/16/07

10.15

Senior Secured Debenture – ($1,050,000) Enable Growth Partners, LP, dated 4/11/07

8-K

10.15

4/16/07

10.16

Senior Secured Debenture – ($350,000) Enable Opportunity Partners LP, dated 4/11/07

8-K

10.16

4/16/07

10.17

Senior Secured Debenture – ($350,000) Glacier Partners LP, dated 4/1/07

8-K

10.17

4/16/07

10.18

Senior Secured Debenture – ($350,000) Frey Living Trust, dated 4/11/07

8-K

10.18

4/16/07

10.19

Secured Guaranty – dated 4/11/07

8-K

10.19

4/16/07

10.20

Pledge and Security Agreement – dated 4/11/07

8-K

10.20

4/16/07

10.21

Joint Exploration Agreement – dated 3/30/07

8-K

10.21

4/16/07

10.22

Purchase and Sale Agreement with MorMeg, LLC dated 4/18/07

8-K

10.22

5/02/07

10.23

Amended and Restated 2002/2003 Stock Option Plan

8-K

10.23

5/11/07

10.24

Senior Secured Debenture – ($1,500,000)West Coast Opportunity Fund, LLC,

dated June 21, 2007

8-K

10.24

6/25/07

10.25

Senior Secured Debenture – ($300,000) DKR Soundshore Oasis Holding Fund Ltd., dated, June 21, 2007

8-K

10.25

6/25/07

10.26

Senior Secured Debenture – ($450,000) Enable Growth Partners LP, dated June 21, 2007

8-K

10.26

6/25/07

10.27

Senior Secured Debenture – ($150,000) Enable Opportunity Partners LP, dated June 21, 2007

8-K

10.27

6/25/07

10.28

Senior Secured Debenture – ($150,000) Glacier Partners LP, dated June 21, 2007

8-K

10.28

6/25/07

10.29

Senior Secured Debenture – ($150,000) Frey Living Trust, dated June 21, 2007

8-K

10.29

6/25/07

10.30

Mortgage, Security Agreement and Assignment of Production, dated June 21, 2007.

8-K

10.30

6/25/07

10.31

Amended and Restated Well Development Agreement and Option for “Gas City Property (Iola & Teats)”, dated August 10, 2007

10-QSB

6/30/07

10.31

8/17/07

10.32

Purchase and Sale Contract dated September 27, 2007

8-K

10.32

10/02/07

10.33

Purchase and Sale Contract dated September 14, 2007

31.1

Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act

32.1

Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act

99.3

Governance, Compensation and Nominating Committee Charter

8-K

99.1

5/11/07

99.4

Audit Committee Charter

8-K

99.2

5/11/07

99.5

Corporate Governance Guidelines

10-KSB

3/31/07

99.5

6/13/07

99.6

Code of Ethics

10-KSB

3/31/07

99.6

6/13/07

99.7

Press Release dated November 9, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Nevada	88-0422242
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

	Options	Weighted Ave Price	Warrants	Weighted Ave Price
Outstanding 03/31/07	300,000	$1.00	-	$ -
Granted	2,125,000	1.26	375,000	0.60
Cancelled	(300,000)	1.00	-	-
Exercised	-	-	-	-
Outstanding 09/30/07	2,125,000	$1.26	375,000	$0.60

	September 30,
	2007
Asset retirement obligation, beginning of period	$ 23,908
Liabilities incurred during the period	347,000
Liabilities settled during the period	-
Accretion	7,152
Asset retirement obligations, end of period	$ 378,060

	September 30, 2007	March 31, 2007	Increase / (Decrease)
	September 30, 2007	March 31, 2007	$

Current Assets	$ 3,690,651	$ 120,604	$ 3,570,047

Current Liabilities	$ 2,022,150	$ 488,189	$ 1,533,961

Working Capital (deficit)	$ 1,668,501	$ (367,585)	$ 2,036,086

Director	For	Against	Withheld or Broker Non-Votes
Steve Cochennet	12,425,053	0	9,778,203
Robert (Bob) Wonish	12,425,053	0	9,778,203
Daran G. Dammeyer	12,425,053	0	9,778,203
Darrel G. Palmer	12,425,053	0	9,778,203

	September 30, 2007
Long term debenture	$ 9,000,000
Note payable – Cornerstone	1,735,000
Promissory notes payable	965,000
Note payable	31,976
Convertible note payable	25,000
Total loans and notes payable	$ 11,756,976