CONCENTRATION OF CREDIT RISK:
Substantially all of the Companys
trade accounts receivable result from crude oil sales or joint interest billings to its working interest partners. This concentration
of customers and joint interest owners may impact the Companys overall credit risk as these entities could be affected by
similar changes in economic conditions as well as other related factors. Trade accounts receivable are generally not collateralized.
There were no allowances for doubtful accounts for our trade accounts receivable at November 30, 2012 and February 29, 2012 as
all joint interest owners have a history of paying their obligations.
At the Companys East Slopes
Project, there is only one buyer available for the purchase of oil production. At November 30, 2012, this one customer represented
100% of crude oil sales receivable.
Allowances for doubtful accounts
in receivables of loan commitments and other receivables relate to amounts due from third parties that were involved in arranging
financing transactions for the Company that have not yet been consummated. The allowance balance at November 30, 2012 and February
29, 2012 for these receivables was $239,000 and $-0-, respectively.