[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]

                     U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
       [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended: March 31, 2006
                  ---------------------------------------------

       [  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                                  EXCHANGE ACT

  For the transition period from                        to
                                -----------------------    ---------------------
                        Commission file number 333-102930
              ----------------------------------------------------

                            Silver Star Energy, Inc.
  ----------------------------------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

                     Nevada                                  98-0385312
--------------------------------------------------------------------------------
             (State or other jurisdiction                 (IRS Employer
         of incorporation or organization)             Identification No.)

       9595 Wilshire Boulevard, Suite 900, Beverly Hills, California 90212
 -------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (310) 477-2211
                            Issuer's telephone number


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

         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


Indicate by check mark whether the  registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]


<PAGE>





                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS

         Check whether the registrant  filed all documents and reports  required
to be  filed  by  Section  12,  13 or  15(d)  of  the  Exchange  Act  after  the
distribution of securities under a plan confirmed by a court. Yes ----- No -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common equity,  as of the latest  practical  date:  March 31, 2006 85,021,035


         Transitional Small Business Disclosure Format (check one).
Yes      ;  No   X
    ----       -----



<PAGE>



                                     PART I

ITEM 1.  FINANCIAL STATEMENTS

                            SILVER STAR ENERGY, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                  (Unaudited)
                                                                                   March 31,         December 31,
ASSETS                                                                               2006               2005
------
                                                                              ------------------  -----------------
Current Assets
<S>                                                                           <C>                 <C>
  Cash                                                                        $          108,488  $       1,087,163
  Prepaid Expense                                                                         13,972             16,976
  Accounts Receivable                                                                    345,640            506,016
  Other Receivable                                                                       965,117            992,117
  Due from Related Party                                                                 183,900            183,900
                                                                              ------------------  -----------------

     Total Current Assets                                                              1,617,117          2,786,172
                                                                              ------------------  -----------------

Fixed Assets
  Furniture and Fixtures                                                                   7,751              7,751
  Computers                                                                                6,222              6,222
  Vehicles                                                                                64,087             64,087
   Accumulated Depreciation                                                              (15,663)           (11,553)
                                                                              ------------------  -----------------

     Net Fixed Assets                                                                     62,397             66,507
                                                                              ------------------  -----------------


Other Assets

   Oil and gas properties, full cost method, net of depletion
     $191,755 and $132,121, respectively                                               2,490,656          1,345,384
   Unproved oil and gas properties                                                     1,753,086          1,733,086
   Debt Issue Costs, net of amortization of $104,227
     and $47,973                                                                         375,973            432,227
                                                                              ------------------  -----------------

     Total Other Assets                                                                4,619,715          3,510,697
                                                                              ------------------  -----------------

     Total Assets                                                             $        6,299,229  $       6,363,376
                                                                              ==================  =================
</TABLE>











                                        3

<PAGE>



                            SILVER STAR ENERGY, INC.
                                 BALANCE SHEETS
                                   (Continued)


<TABLE>
<CAPTION>
                                                                                (Unaudited)
                                                                                 March 31,          December 31,
                                                                                   2006                 2005
                                                                            -------------------  ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
<S>                                                                         <C>                  <C>
  Accounts Payable                                                          $            53,973  $           30,930
  Accrued Liabilities                                                                   208,920             142,602
  Convertible debentures                                                                560,000             560,000
  Accrued interest                                                                       92,449              85,545
                                                                            -------------------  ------------------

     Total Current Liabilities                                                          915,342             819,077
                                                                            -------------------  ------------------

Long-Term Liabilities
  Asset retirement obligation                                                            45,000              45,000
  Convertible debentures                                                              3,430,000           3,430,000
  Accrued interest                                                                      228,447             160,786
  Beneficial conversion liability                                                     6,458,056           6,458,056
                                                                            -------------------  ------------------

     Total Long-Term Liabilities                                                     10,161,503          10,093,842
                                                                            -------------------  ------------------

      Total Liabilities                                                              11,076,845          10,912,919
                                                                            -------------------  ------------------

Stockholders' Equity
  Preferred stock (Par Value $.001), 5,000,000 shares
    authorized. -0- issued at March 31, 2006 and
    December 31, 2005                                                                         -                   -
  Common Stock (Par Value $.001), 300,000,000 shares
    authorized. 85,021,035 issued and outstanding at
    March 31, 2006 and December 31, 2005                                                 85,021              85,021
  Paid in Capital in Excess of Par Value                                              3,056,657           3,056,658
  Retained Deficit                                                                   (7,919,294)         (7,691,222)
                                                                            -------------------  ------------------

     Total Stockholders' Equity                                                      (4,777,616)         (4,549,543)
                                                                            -------------------  ------------------

     Total Liabilities and Stockholders' Equity                             $         6,299,229  $        6,363,376
                                                                            ===================  ==================
</TABLE>




                             See accompanying notes.

                                        4

<PAGE>



                            SILVER STAR ENERGY, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                          (Unaudited)
                                                                                  For the Three Months Ended
                                                                                           March 31,
                                                                                   2006                  2005
                                                                            ------------------  -------------------

<S>                                                                         <C>                 <C>
Oil Revenue                                                                 $           91,570  $            28,740
Gas Revenue                                                                            505,754                    -
                                                                            ------------------  -------------------
   Total Income                                                             $          597,324  $            28,740
                                                                            ------------------  -------------------

Expenses
  Production Costs                                                                     170,095                    -
  Consulting and Management Fees                                                       195,825               63,045
  General and Administrative                                                           183,569              133,082
  Professional Fees                                                                     78,041               16,675
                                                                            ------------------  -------------------
     Total Expenses                                                                    627,530              212,802
                                                                            ------------------  -------------------

Other Income ( Expense)
   Interest Expense                                                                   (130,818)             (47,645)
   Interest Income                                                                       1,552                    -
   Financing Penalty Payouts                                                           (68,600)                   -
                                                                            ------------------  -------------------
     Total Other Income (Expense)                                                     (197,866)             (47,645)
                                                                            ------------------  -------------------

Net Income (Loss)                                                           $         (228,072) $          (231,707)
                                                                            ==================  ===================

Income (Loss) per Common Share                                              $                -  $                 -
                                                                            ==================  ===================

Weighted Average Shares Outstanding                                                 85,021,035           85,021,035
                                                                            ==================  ===================
</TABLE>











                             See accompanying notes.

                                        5

<PAGE>



                            SILVER STAR ENERGY, INC.
                            STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                          (Unaudited)
                                                                                   For the Three Months Ended
                                                                                             March 31,
                                                                                    2006                  2005
                                                                             ------------------  ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                                          <C>                 <C>
Net Loss                                                                     $         (228,072) $         (231,707)
Adjustments used to reconcile net loss to net
  cash provided by (used in) operating activities:
   Depreciation, Amortization and Depletion                                             119,997              29,364
(Increase) decrease in other assets & prepaids                                            3,004             (11,715)
(Increase) decrease in accounts receivable                                              160,376             (28,740)
(Increase) decrease in other receivable                                                  27,000                   -
Increase (decrease) in accounts payable                                                  23,043             (44,689)
Increase (decrease) in accrued interest                                                  74,565                   -
Increase (decrease) in accrued liabilities                                               66,318              20,102
                                                                             ------------------  ------------------
Net cash used in operating activities                                                   246,231            (267,385)
                                                                             ------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of oil & gas property interests                                          (1,224,906)           (392,142)
Proceeds on sale of Netcash (net of cash)                                                     -                   -
                                                                             ------------------  ------------------
Net cash used by investing activities                                                (1,224,906)           (392,142)
                                                                             ------------------  ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debentures                                                          -             750,000
                                                                             ------------------  ------------------
Net Cash Provided by Financing  Activities                                                    -             750,000
                                                                             ------------------  ------------------
</TABLE>















                                        6

<PAGE>



                            SILVER STAR ENERGY, INC.
                            STATEMENTS OF CASH FLOWS
                                   (continued)


<TABLE>
<CAPTION>
                                                                                          (Unaudited)
                                                                                   For the Three Months Ended
                                                                                            March 31,
                                                                                     2006                2005
                                                                             ------------------  ------------------

Net Increase (Decrease) in
<S>                                                                          <C>                 <C>
   Cash  and Cash Equivalents                                                          (978,675)             90,473
Cash and Cash Equivalents at
   Beginning of the Period                                                            1,087,163             138,005
                                                                             ------------------  ------------------
Cash and Cash Equivalents at
   End of the Period                                                         $          108,488  $          228,478
                                                                             ==================  ==================

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
Interest                                                                     $                -  $                -
Income Taxes                                                                 $                -  $                -

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: NONE
</TABLE>






















                             See accompanying notes.

                                        7

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN

         The accompanying  financial  statements have been prepared on the basis
of accounting principles applicable to a "going concern",  which assume that the
Company  will  continue in  operation  for at least one year and will be able to
realize  its assets  and  discharge  its  liabilities  in the  normal  course of
operations.

         The unaudited  financial  statements as of March 31, 2006,  and for the
three month  period  then ended,  reflect,  in the  opinion of  management,  all
adjustments  (which  include  only normal  recurring  adjustments)  necessary to
fairly  state the  financial  position and results of  operations  for the three
months.  Operating results for interim periods are not necessarily indicative of
the results which can be expected for full years.

         The  Company's  general  business  strategy  is to acquire  oil and gas
properties either directly or through the acquisition of operating entities. The
continued  operations  of the  Company  and  the  recoverability  of oil and gas
property  acquisition,  exploration and development  costs is dependent upon the
existence of economically recoverable reserves and the ability of the Company to
obtain  necessary  financing to complete the development of those reserves,  and
upon future profitable  production.  The Company is planning  additional ongoing
equity  financing  by way of  private  placements  to fund its  obligations  and
operations.

         The Company's future capital  requirements will depend on many factors,
including  costs of exploration of the  properties,  cash flow from  operations,
costs to complete well  production,  if warranted,  and  competition  and global
market  conditions.  The Company's present cash flow from operations now exceeds
its monthly general and  administrative  and other operational  expenses.  As of
October  2005,  the  Company  has  closed and  received  the net  proceeds  of a
financing totaling a gross amount of $3,430,000.

         These  financial  statements do not reflect  adjustments  that would be
necessary  if the Company  were unable to continue as a "going  concern".  While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial  statements,  there can be
no assurance that these actions will be successful.

         If the  Company  were unable to  continue  as a "going  concern",  then
substantial adjustments would be necessary to the carrying values of assets, the
reported amounts of its liabilities, the reported revenues and expenses, and the
balance sheet classifications used.

Organization and Basis of Presentation

         Silver Star Energy,  Inc. (the "Company") was incorporated on September
25,  2002 in the State of Nevada and  commenced  operations  on October 3, 2002.
During the year ended  December  31,  2003,  the  Company  changed its name from
Movito Holdings Ltd. to Silver Star Energy Inc.

                                        8

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (continued)

Nature of Business

         The Company is in the production stage of the oil and gas industry. The
Company's  primary  objective  is to identify,  acquire and develop  significant
working interest  percentages in underdeveloped oil and gas projects that do not
meet the  requirements of the larger  producers and developers.  During 2003 and
2004 the Company was in the development stage and acquired  interests in several
oil and gas prospects and in 2005 and 2006 has set up the extraction process and
is further continuing that program.

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES

         This summary of  accounting  policies  for Silver Star Energy,  Inc. is
presented to assist in understanding  the Company's  financial  statements.  The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

Cash Equivalents

         For the purpose of  reporting  cash flows,  the Company  considers  all
highly liquid debt  instruments  purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.

Pervasiveness of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Reclassifications

         Certain   reclassifications  have  been  made  in  the  2005  financial
statements to conform with the 2006 presentation.

Concentration of Credit Risk

         The  Company has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.


                                        9

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Earnings per Share

         Basic loss per share has been  computed  by  dividing  net loss for the
year  applicable to the common  stockholders  by the weighted  average number of
shares  of  common  shares  outstanding  during  the  year.  Convertible  equity
instruments such as stock options,  warrants,  convertible  debentures and notes
payable are excluded  from the  computation  of diluted  loss per share,  as the
effect of the assumed exercises would be anti-dilutive.

Fixed Assets

         Fixed   assets  are  recorded  at  cost  and   depreciated   using  the
straight-line  method over the estimated  useful lives of the assets which range
from three to seven years.  Fixed assets consisted of the following at March 31,
2006 and December 31, 2005:


                                         (Unaudited)
                                          March 31,          December 31,
                                             2006                2005
                                      ------------------  ------------------
Furniture and Fixtures                $            7,751  $            7,751
Computers                                          6,222               6,222
Vehicles                                          64,087              64,087
Less: Accumulated Depreciation                   (15,663)            (11,553)
                                      ------------------  ------------------
Total                                 $           62,397  $           66,507
                                      ==================  ==================

         One-half  year  depreciation  is taken in the  year of  acquisition  on
certain fixed assets.

         Maintenance  and  repairs are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

         Total  depreciation  expense for the three  months ended March 31, 2006
and 2005 was $4,110 and $1,822, respectively.

Intangibles

         The  Company has adopted the  provisions  of the  Financial  Accounting
Standards  Board ("FASB")  Statement No. 142,  "Goodwill and Intangible  Assets"
("SFAS 142").  Under SFAS 142,  goodwill and intangible  assets with  indefinite
lives will no longer be amortized  and will be tested for  impairment  annually.
The  determination  of any  impairment  would  include a comparison of estimated
future operating cash flows  anticipated  during the remaining life with the net
carrying  value of the asset as well as a  comparison  of the fair  value to the
book value of the Company or the  reporting  unit to which the  goodwill  can be
attributed.

                                       10

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Oil and Gas Properties

         The Company  follows the full cost method of accounting for its oil and
gas  properties.  Under this  method,  all costs  associated  with  acquisition,
exploration,  and  development of oil and gas properties are  capitalized.  Such
costs  include land and lease  acquisition  costs,  annual  carrying  charges of
non-producing  properties,  geological and geophysical  costs, costs of drilling
and equipping  productive and non-productive  wells, asset retirement costs, and
direct  exploration  salaries  and  related  benefits.   Capitalized  costs  are
categorized as being subject to amortization or not subject to amortization. The
Company operates in two cost centers, being Canada and the U.S.A.

         The  capitalized  costs of oil and gas  properties are amortized on the
unit-of-production  method using  estimates of proved  reserves as determined by
independent  engineers.  Investments  in unproved  properties  are not amortized
until  proved  reserves  associated  with  projects can be  determined  or until
impairment occurs. If the results of an assessment  indicate that the properties
are impaired,  the amount of the impairment is added to the capitalized costs to
be  amortized.  Depletion  expense for the three months ended March 31, 2006 and
2005 was $59,634 and $0, respectively.

         The Company applies a ceiling test to capitalized  costs to ensure that
such costs do not exceed estimated future net revenues from production of proven
reserves  at year end market  prices  less  future  production,  administrative,
financing,  site  restoration,  and  income  tax costs plus the lower of cost or
estimated  market  value  of  unproved  properties.  If  capitalized  costs  are
determined to exceed  estimated  future net  revenues,  a write-down of carrying
value is charged to depletion in the period.

         Proceeds  from the sale of oil and gas  properties  are  recorded  as a
reduction of the related capitalized costs without recognition of a gain or loss
unless such sales involve a significant change in the relationship between costs
and the value of proved reserves or the underlying value of unproved properties,
in which case a gain or loss is recognized.

         The Company is in the process of exploring its unproved oil and natural
gas  properties  and has not yet  determined  whether these  properties  contain
reserves that are economically recoverable.  The recoverability of amounts shown
for  oil  and  natural  gas  properties  is  dependent  upon  the  discovery  of
economically recoverable reserves, confirmation of the Company's interest in the
underlying  oil and gas leases,  the ability of the Company to obtain  necessary
financing to complete their  exploration and  development and future  profitable
production or sufficient proceeds from the disposition thereof.






                                       11

<PAGE>



                             SILVER STAR ENERGY, INC
                          NOTES TO FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Asset Retirement Obligations

         Effective  January 1, 2003, the Company adopted  Statement of Financial
Accounting Standards No. 143, ACCOUNTING FOR ASSET RETIREMENT  OBLIGATIONS "SFAS
143"). This statement  applies to obligations  associated with the retirement of
tangible  long-lived  assets that result from the acquisition,  construction and
development of the assets.  SFAS 143 requires that the fair value of a liability
for a retirement  obligation  be recognized in the period in which the liability
is incurred.  For oil and gas properties,  this is the period in which an oil or
gas well is acquired or drilled. The asset retirement  obligation is capitalized
as part of the carrying  amount of our oil and gas  properties at its discounted
fair value.  The  liability is then  accreted each period until the liability is
settled or the well is sold, at which time the liability is reversed.

Fair Value of Financial Instruments

         In accordance  with the  requirements  of SFAS No. 107, the Company has
determined the estimated  fair value of financial  instruments  using  available
market information and appropriate  valuation  methodologies.  The fair value of
financial  instruments  classified as current assets or liabilities  approximate
carrying value due to the short-term maturity of the instruments.

Foreign currency transactions

         The financial  statements  are presented in United States  dollars.  In
accordance  with Statement of Financial  Accounting  Standards No. 52,  "Foreign
Currency  Translation",  foreign denominated monetary assets and liabilities are
translated  to their United  States dollar  equivalents  using foreign  exchange
rates that  prevailed  at the balance  sheet  date.  Revenue  and  expenses  are
translated at average  rates of exchange  during the year.  Related  translation
adjustments  are  reported  as a separate  component  of  stockholders'  equity,
whereas  gains or  losses  resulting  from  foreign  currency  transactions  are
included in results of operations.

Stock-based compensation

         In December  2002,  the  Financial  Accounting  Standards  Board issued
Financial Accounting Standard No. 148, "ACCOUNTING FOR STOCK-BASED  COMPENSATION
-  TRANSITION  AND  DISCLOSURE"  ("SFAS No.  148"),  an  amendment  of Financial
Accounting  Standard No. 123 "ACCOUNTING FOR STOCK- BASED  COMPENSATION"  ("SFAS
No. 123"). The purpose of SFAS No. 148 is to: (1) provide alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based  employee  compensation,  (2) amend the disclosure
provisions  to require  prominent  disclosure  about the effects on reported net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee compensation, and (3) to require disclosure of those effects in interim
financial information.  The disclosure provisions of SFAS No. 148 were effective
for the Company commencing December 31, 2002.



                                       12

<PAGE>



                             SILVER STAR ENERGY, INC
                          NOTES TO FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

Recent accounting pronouncements

         In April 2003, the Financial Accounting Standards Board issued SFAS No.
149,  "AMENDMENT  OF  STATEMENT  133  ON  DERIVATIVE   INSTRUMENTS  AND  HEDGING
ACTIVITIES",  which clarifies financial  accounting and reporting for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts  and for  hedging  activities  under  SFAS No.  133,  "ACCOUNTING  FOR
DERIVATIVE  INSTRUMENTS AND HEDGING  ACTIVITIES".  SFAS No. 149 is effective for
contracts  entered  into or  modified  after  June  30,  2003  and  for  hedging
relationships  designated after June 30, 2003. The adoption of SFAS 149 does not
affect the Company's financial position or results of operations.

         In May 2003, SFAS 150,  "ACCOUNTING FOR CERTAIN  FINANCIAL  INSTRUMENTS
WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY", was issued. This Statement
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances).  Many of those  instruments
were previously classified as equity. Generally, a financial instrument, whether
in the form of shares or otherwise,  that is mandatorily  redeemable,  i.e. that
embodies  an  unconditional  obligation  requiring  the  issuer  to redeem it by
transferring its shares or assets at a specified or determinable date (or dates)
or upon an event that is certain to occur, must be classified as a liability (or
asset in some  circumstances).  In some cases,  a financial  instrument  that is
conditionally  redeemable  may  also be  subject  to the  same  treatment.  This
Statement does not apply to features that are embedded in a financial instrument
that is not a derivative (as defined) in its entirety. For public entities, this
Statement is effective for financial  instruments entered into or modified after
May 31, 2003.  The adoption of SFAS 150 does not affect the Company's  financial
position or results of operations.

         In November 2004, the FASB issued  Statement No. 151,  INVENTORY COSTS,
to amend the  guidance  in  Chapter 4,  INVENTORY  PRICING,  of FASB  Accounting
Research  Bulletin  No. 43,  RESTATEMENT  AND  REVISION OF  ACCOUNTING  RESEARCH
BULLETINS,  which will  become  effective  for the  Company in fiscal year 2006.
Statement  151 clarifies the  accounting  for abnormal  amounts of idle facility
expense, freight, handling costs, and wasted material (spoilage).  The Statement
requires that those items be recognized as current-period charges. Additionally,
Statement 151 requires that allocation of fixed production overhead to the costs
of conversion be based on the normal capacity of the production facilities.  The
adoption of SFAS 151 will not affect the Company's financial position or results
of operations.






                                       13

<PAGE>



                             SILVER STAR ENERGY, INC
                          NOTES TO FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (continued)

         In  December  2004,  FASB  issued  Statement  No. 123 (R),  SHARE-BASED
PAYMENT,  which  establishes  accounting  standards for transactions in which an
entity receives employee services in exchange for (a) equity  instruments of the
entity  or (b)  liabilities  that are  based on the fair  value of the  entity's
equity instruments or that may be settled by the issuance of equity instruments.
Effective in the third quarter of 2005, SFAS 123(R) will require us to recognize
the grant-date fair value of stock options and equity based compensation  issued
to employees in the statement of  operations.  The statement  also requires that
such transactions be accounted for using the  fair-value-based  method,  thereby
eliminating  use of the  intrinsic  value  method of  accounting  in APB No. 25,
Accounting for STOCK ISSUED TO EMPLOYEES,  which was permitted  under  Statement
123, as originally  issued.  We currently are evaluating the impact of Statement
123 (R) on our financial condition and results of operations.

Revenue Recognition

         The  Company  recognizes  oil and gas  revenue  from its  interests  in
producing  wells as oil and gas is produced and sold from those  wells.  Oil and
gas sold is not significantly  different from the Company's share of production.
Revenues  from  the  purchase,  sale  and  transportation  of  natural  gas  are
recognized  upon  completion  of the  sale  and  when  transported  volumes  are
delivered.  Shipping and handling costs in connection  with such  deliveries are
included in  production  costs.  Revenue under  carried  interest  agreements is
recorded in the period when the net proceeds become  receivable,  measurable and
collection is reasonably  assured.  The time the net revenues become  receivable
and collection is reasonably  assured depends on the terms and conditions of the
relevant agreements and the practices followed by the operator. As a result, net
revenues may lag the production month by one or more months.

NOTE 3 - OIL AND GAS PROPERTIES

         The Company  entered into  agreements  to acquire  interests in various
unproven oil and gas properties as follows:

Alberta Prospects, Canada

         In October 2003, the Company  entered into two agreements  with 1048136
Alberta Ltd.  Pursuant to these  agreements,  the Company  acquired the right to
participate  and earn an interest in two oil and gas exploration and development
projects  located in the province of Alberta,  Canada known  respectively as the
Evi prospect and the Verdigris  prospect.  In February 2004, the Company entered
into  two  agreements  with  1048136  Alberta  Ltd.  to  acquire  the  right  to
participate  and earn an interest in two additional oil and gas  exploration and
development  projects  located in the  province of Alberta  known as the Joarcam
prospect  and the  Buffalo  Lake  prospect.  1048136  Alberta  Ltd. is a private
Alberta company (see Note 6).

                                       14

<PAGE>



                             SILVER STAR ENERGY, INC
                          NOTES TO FINANCIAL STATEMENTS

NOTE 3 - OIL AND GAS PROPERTIES (continued)

         Pursuant  to the  agreements,  the  Company  shall  advance  funds,  as
required, in connection with the drilling, testing,  completion,  capping and/or
abandonment of up to three wells on each of the properties. Once the Company has
completed its funding obligation,  it will have earned the following interest in
each prospect:


         Evi Prospect                                               66.67%
         Verdigris Prospect                                         66.67%
         Joarcam Prospect                                           70.00%
         Buffalo Lake Prospect                                      70.00%

         In the event the Company  does not provide the funds as  required,  the
Company will retain no interest in the prospects.

         During the year ended  December 31, 2004,  the Company paid  $1,283,149
towards the exploration and development of the oil and gas prospects in Alberta.
During the year ended December 31, 2005,  the Company paid $730,822  towards the
exploration  and  development  of the oil and gas prospects in Alberta.  For the
first quarter ended March 31, 2006 $285,975 was spent to install the  production
facilities at the EVI well. All of these costs have been capitalized.

         During 2005,  the Joarcam  property in Alberta was  determined  to have
proved oil reserves.  The total  capitalized costs for the Joarcam property were
removed from the unproved  properties and classified as proved  properties.  For
2005, the Company received  $305,235 in revenues from the Joarcam  property.  On
November  10, 2005,  the Company  sold its interest in the Joarcam  property for
$1,930,225. Total capitalized costs relating to the Joarcam property at November
10, 2005 were  $962,545,  and total  depletion  expense  relating to the Joarcam
property at November 10, 2005 was $73,811.  The Company recognized a gain on the
sale of the Joarcam  property of $1,041,491.  The Company  received  proceeds of
$965,108  and  recorded  a  receivable  of  $965,117  related to the sale of the
property.

California Prospects, U.S.A.

         On December 5, 2003,  the Company  entered  into two option  agreements
with Archer  Exploration,  Inc. (Archer) to acquire Archer's interest in certain
unproven oil and gas prospects located in the State of California, U.S.A., known
as North Franklin Prospect and Winter Pinchout Prospect.

         To  earn an  assignment  of 100% of  Archer's  interests  in the  North
Franklin Prospect, being a 100% working interest (76% net revenue interest), the
Company  made an initial  cash payment of $85,000 and is required to pay $15,000
at spud of the initial test well and $25,000 at  completion  of the initial test
well.  In  addition,  the  Company is  responsible  for all  expenses  for lease
extensions and rental of existing leases  (including a 20% fee),  acquisition of
any  additional  leases  (including  a 20% fee) and  costs  in  connection  with
drilling and completion of the initial test well.

                                       15

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 3 - OIL AND GAS PROPERTIES (continued)

         Pursuant to the agreement,  Archer retains a 2.5% overriding royalty, a
5% working  interest  through the  completion  of the initial  test well and the
right to participate in a 5% working interest.

         The Company has an agreement to farm-out a 35% working  interest in the
North Franklin Project to Fidelis Energy,  Inc. (see Note 6). Under the terms of
the  agreement,  Fidelis  will  contribute  $500,000  towards the  drilling  and
completion  of the  Archer-Whitney  #1 well and  participate  as a full  working
interest partner on all further costs including drilling of any additional wells
on the project.

         To earn an  assignment  of 100% of  Archer's  interests  in the  Winter
Pinchout Prospect, being a 100% working interest (76% net revenue interest), the
Company  made an initial cash payment of $100,000 and is required to pay $15,000
at spud of the  initial  test  well of the first  three  prospects  drilled  and
$25,000 at  completion  of the initial test well of each  prospect  drilled.  In
addition,  the Company is responsible for all expenses for acquisition of leases
acquired  (including  a 20% fee),  acquisition  and  analysis  of seismic  data,
drilling and completion of the initial test well on the first  prospect  drilled
and a monthly management fee in the amount of $10,000 commencing January 2004.

         Pursuant to the agreement,  Archer retains a 2.5% overriding royalty, a
5% working  interest  through the  completion  of the initial  test well and the
right to participate in a 10% working interest.

         In August 2004, the Company  executed  acquisition  and joint operating
agreements on five natural gas propects in California  with Archer  Exploration,
Inc. Pursuant to the agreements, the Company has acquired a 7.5% carried working
interest  on four  of the  prospects  and has  acquired  a 25%  carried  working
interest in the fifth  prospect.  The Company is carried on all costs related to
the prospect through the licensing,  permitting,  drilling and completion of the
first well on each project. In the event of a successful gas well being drilled,
the Company,  following  testing and  completion,  would be responsible  for the
working interest costs of well tie-in and pipeline.  The Company would also be a
working interest participant on any additional gas wells drilled.

         During the year ended December 31, 2003,  the Company  incurred a total
of $405,000 in  acquisition  and  exploration  costs  relating to the California
prospects. During the year ended December 31, 2004, the Company incurred a total
of $898,204 in acquisition,  exploration  and development  costs relating to the
California  prospects.  During the year ended  December  31,  2005,  the Company
incurred a total of $756,675 in acquisition,  exploration and development  costs
relating to the California  prospects.  As of March 31, 2006, total  capitalized
costs for the California prospects was $2,978,810.

         During 2005, the North Franklin  property was determined to have proved
gas  reserves.  Total  capitalized  costs for the North  Franklin  property were
removed from the unproved  properties and classified as proved  properties.  For
2005,  the Company  received  revenues  of  $1,372,675  from the North  Franklin
property.  As of December 31, 2005, the total  capitalized  costs related to the
North Franklin  property,  net of depletion of $132,121 was $1,345,384.  For the
first quarter  ending March 31, 2006 the Company  received  revenues of $505,754
from the North Franklin Property,

                                       16

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 3 - OIL AND GAS PROPERTIES (continued)

Kansas Prospects, U.S.A.

         During  2005,  the  Company  acquired  an  interest in some oil and gas
properties in Kansas.  As of December 31, 2005, the Company had spent $54,286 on
these properties.  During the quarter ended March 31, 2006, the Company incurred
$20,000 in costs related to this property.  These costs have been capitalized as
part of unproved properties.

NOTE 4 - ASSET RETIREMENT OBLIGATION

         Effective  January 1, 2003, the Company adopted  Statement of Financial
Accounting Standards No. 143, ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS ("SFAS
143"). This statement  applies to obligations  associated with the retirement of
tangible  long-lived  assets that result from the acquisition,  construction and
development of the assets.

         SFAS 143 requires  that the fair value of a liability  for a retirement
obligation be  recognized in the period in which the liability is incurred.  For
oil and gas  properties,  this is the  period  in  which  an oil or gas  well is
acquired or drilled.  The asset retirement  obligation is capitalized as part of
the carrying amount of the asset at its discounted fair value.  The liability is
then  accreted  each period until the liability is settled or the asset is sold,
at which time the liability is reversed.

         The  Company  identified  and  estimated  all of its  asset  retirement
obligations  for  tangible,  long-lived  assets as of  January  1,  2003.  These
obligations  were for  plugging and  abandonment  costs for depleted oil and gas
wells. The Company had no proved reserves in 2003 or 2004, therefore the Company
did not record an asset  retirement  obligation.  During the year ended December
31, 2005, the Company  estimated its asset retirement  obligation to be $45,000.
Upon recognition of this asset retirement obligation, a liability of $45,000 was
recorded  and the  capitalized  costs of  proved  properties  was  increased  by
$45,000.

NOTE 5 - CONCENTRATIONS

         At March 31, 2006,  85% of the  Company's  revenues come from three gas
wells in California. The loss of these wells, or a disruption in production from
these wells, would adversely effect the operations of the Company.

NOTE 6 - COMMON STOCK

         On November  20,  2003,  the  Company  restructured  its share  capital
whereby the total common shares  presently  issued and  outstanding  was forward
split on a 1 (old) to 12 (new)  basis.  Effective  January  5, 2004 the  Company
restructured  its share capital whereby the total common shares presently issued
and outstanding was forward split on a 1 (old) to 2 (new) basis.  All references
to common stock,  common shares  outstanding,  average  numbers of common shares
outstanding  and per share amounts in these  Financial  Statements  and Notes to
Financial  Statements  prior to the  effective  date of the forward stock splits
have been  restated  to reflect  the 12:1 and the 2:1 common  stock  splits on a
retroactive basis.

                                       17

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 6 - COMMON STOCK (continued)

         On December  5, 2003,  the Company  received  $500,000 in  subscription
proceeds  from a director and officer for the purchase of 444,444  common shares
of the company's  stock pursuant to a Regulation S Private  Placement  Financing
which was  announced on November 25, 2003 and whereby the Company plans to issue
up to  3,555,556  common  shares of its capital  stock.  During the three months
ended March 31, 2004,  the Company  received  subscription  proceeds of $750,000
pursuant to the Private Placement Financing. During the three months ended March
31, 2004,  1,112,102  shares were issued in  accordance  with the  $1,250,000 in
subscription proceeds received.

         On March 23,  2004,  the Company  entered  into an  agreement  with two
shareholders  for the  shareholders  to surrender  for  cancellation  24,600,000
regulation 144 restricted shares of the Company's common stock.

         During the three  months  ended June 30,  2004,  the  Company  received
subscription  proceeds of $630,000 pursuant to the Private Placement  Financing.
During the three  months  ended June 30,  2004,  661,915  shares  were issued in
accordance with the $630,000 in subscription proceeds received.

         On June 30, 2004, the Company received share  subscription  proceeds of
$275,000 for 500,000  shares of restricted  common stock pursuant to the Private
Placement  Financing  announced on November  25,  2003.  During the three months
ended  September 30, 2004,  500,000  shares were issued in  accordance  with the
$275,000 in subscription proceeds received.

         On August 18, 2004,  the Company issued  250,000  restricted  shares of
common stock for $25,000 in accounts payable.

         On October 18, 2004, the Company issued  156,000  restricted  shares of
common stock for consulting expense of $15,600.

         On November 23, 2004, the Company issued 362,394 shares of common stock
for debt issue  costs of  $350,000  associated  with the  Company's  issuance of
convertible debt.

         As of March 31,  2006,  the Company has not adopted a stock option plan
or granted any stock options and  accordingly  has not recorded any  stock-based
compensation.

Treasury Stock

         On  December  18,  2003,  upon the  resignation  of an  officer  of the
Company,  48,000,000 common shares were returned to Treasury,  for consideration
of $3,500. The shares were cancelled on January 23, 2004.


                                       18

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 7- RELATED PARTY TRANSACTIONS

         Pursuant  to  consulting   agreements   dated  November  15,  2003  and
renegotiated July 1, 2005 the Company agreed to pay $15,000 per month to the CFO
and director of the Company and $20,000 per month to the  President and director
of the Company.

         During 2003 and 2004,  the Company  entered  into  several  acquisition
agreements  with  1048136  Alberta  Ltd.  (see Note 4).  The  Company's  current
president,  Robert  McIntosh,  was a director of 1048136  Alberta  Ltd.  and had
resigned  from that  position  prior to his  involvement  with the Company.  Sak
Narwal, a shareholder of the Company, was also a director of 1048136 Alberta Ltd
and Scott  Marshall,  the majority  shareholder of 1048136  Alberta Ltd., is the
spouse of Naomi Patricia  Johnston,  owner of a 11.76%  interest in the Company.
Despite the  existence of these related  parties,  the  consideration  exchanged
under the  Agreements  described  above was negotiated at "arms length," and the
directors  and  executive  officers of the Company used criteria used in similar
uncompleted  proposals  involving  the Company in comparison to those of 1048136
Alberta Ltd.

         At March 31, 2006 and December  31, 2005,  the Company was due $183,900
from 1048136 Alberta Ltd. related to oil and gas development.

         The Company has a "working  interest"  relationship  with joint venture
partner Fidelis Energy Inc. (FDEI: OTC: BB) (see Note 4). Both companies have an
interest in the North  Franklin  gas  project in  Sacramento,  California.  More
recently  in  January  2005  Fidelis  entered  into an  agreement  to acquire an
interest in 2 oil wells at the Joarcam Project  located in Alberta  Canada.  The
Company is earning a 70% working interest in the entire Joarcam Project. Fidelis
has also entered into an agreement for the first right of refusal to acquire the
remaining  30% working  interest on all future  drilling  locations  at Joarcam.
Silver Star and Fidelis will  collectively have acquired a 100% working interest
at Joarcam.

         In  addition,  Silver Star and Fidelis  management  work closely in the
evaluation of other potential, jointly feasible exploration prospects. Also, the
two companies share a common origin in that certain  beneficial  shareholders of
both companies have contributed to their formation.

NOTE 8 - INCOME TAXES

         As of December 31, 2005, the Company has incurred  operating  losses of
approximately  $1,134,000  which, if utilized,  will expire through 2025. Future
tax benefits which may arise as a result of these losses and resource deductions
have not been recognized in these financial statements,  as their realization is
determined not likely to occur.





                                       19

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 9 - LEASE COMMITMENT

         On December 1, 2005,  the Company  entered into a lease  agreement  for
approximately 129 square feet of office space at 9595 Wilshire Bldv., Suite 900,
in Beverly Hills, California.  The lease expires November 30, 2006 and continues
on a month ot month after that date. The lease payments are $1,814 per month.

         The minimum  future lease payments under these leases for the next five
years are:


              Year Ended December 31,
                                       2006              $      19,954
                                       2007                          -
                                       2008                          -
                                       2009                          -
                                       2010                          -
                                                         -------------
 Total minimum future lease payments                     $      19,954
                                                         =============

NOTE 10 - CONVERTIBLE DEBENTURES

         On November 23, 2004,  the Company  issued a convertible  debenture and
warrents  to  Cornell  Capital  Partners,  L.P.  ("Cornell").  The  $750,000  in
convertible  debentures and 750,000 warrants require the Company to register the
resale of the  shares of common  stock  upon  conversion  or  exercise  of these
securities.

         The  convertible  debenture  carry's an interest  rate of 5% per annum.
Principal and interest will be due on November 23, 2007. At any time, Cornell is
entitled to convert all or any part of the  principal  amount of the  debenture,
plus accrued  interest,  into shares of the Company's  common stock. On November
23, 2007, at the Company's  option,  the entire principal amount and all accrued
interest shall be either (a) paid to Cornell or (b) converted to common stock.

         The Warrant's to purchase  750,000 of the  Company's  common stock will
expire on November  23, 2009.  The exercise  price of the warrant is one hundred
twenty percent (120%) of the closing bid price of the Company's  common stock on
the exercise date or as subsequently adjusted. The Company accounts for the fair
value of these  outstanding  warrants to purchase  common  stock and  conversion
feature of its convertible notes in accordance with SFAS No. 133 "Accounting For
Derivative  Instruments  and  Hedging  Activities"  and  EITF  Issue  No.  00-19
"Accounting  For Derivative  Financial  Instruments  Indexed To And  Potentially
Settled In A Company's Own Stock;"  which  requires the Company to bifurcate and
separately   account  for  the  conversion  feature  and  warrants  as  embedded
derivatives contained in the Company's convertible notes.




                                       20

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 10 - CONVERTIBLE DEBENTURES (continued)

         Pursuant to SFAS No. 133, the Company  bifurcated the fair value of the
conversion  feature from the convertible notes, since the conversion feature was
determined to not be clearly and closely  related to the debt host. In addition,
since the effective  registration  of the  securities  underlying the conversion
feature and warrants is an event outside of the control of the Company, pursuant
to EITF Issue No. 00-19,  the Company  recorded the fair value of the conversion
feature  and  warrants  as long- term  liabilities  as it was  assumed  that the
Company would be required to net-cash settle the underlying securities.

         The  Company is required to carry  these  embedded  derivatives  on its
balance  sheet at fair  value  and  unrealized  changes  in the  values of these
embedded derivatives are reflected in the consolidated statement of operation as
"Gain (loss) on value of warrants and conversion  feature.  In 2004, the Company
recognized a liability and expense of $835,315 related to these derivatives.  On
October 14, 2005, the Company paid $782,175 to pay-off the convertible note. The
warrants  were also  cancelled.  Since the  convertible  note  related  to these
derivatives was paid during 2005 and the warrants cancelled, the entry recording
the liability and expense was reversed in 2005.

         On November 23, 2004,  the Company paid $102,500 in cash for debt issue
costs. The Company also issued 362,394 shares of common stock valued at $350,000
for debt issue costs.  Total debt issue costs of $452,500  were  capitalized  in
financial  statements.  These debt issue costs were being  amortized  over three
years.  Since the convertible  debentures related to these debt issue costs were
paid-off in October 2005,  the Company  expensed the  remaining  $358,814 of the
debt issue costs related to these convertible debentures.

         On March 10, 2005,  the Company  executed a  Convertible  Debenture for
$550,000.  The note is due and  payable in full on or before  March 10, 2006 and
carries an  interest  rate of 5% per annum.  The notes are  convertible,  at the
discretion  of the  holder,  into  shares of common  stock of the  Company  at a
conversion  price of $1.00 per share. On March 30, 2005, the Company  executed a
Convertible  Debenture for  $200,000.  The note is due and payable in full on or
before  March 10, 2006 and carries an interest  rate of 5% per annum.  The notes
are convertible, at the discretion of the holder, into shares of common stock of
the Company at a conversion  price of $1.00 per share. On December 13, 2005, the
Company paid $134,424  towards this note. As of March 31, 2006, the total amount
due on this note was $652,449.

         On April 8, 2005,  the Company  executed a  Convertible  Debenture  for
$160,000.  The note is due and  payable  in full on or before  April 8, 2006 and
carries an  interest  rate of 5% per annum.  The notes are  convertible,  at the
discretion  of the  holder,  into  shares of common  stock of the  Company  at a
conversion  price of $1.00 per share.  On May 17, 2005,  the Company  executed a
Convertible  Debenture for  $150,000.  The note is due and payable in full on or
before May 17, 2006 and carries an interest rate of 5% per annum.  The notes are
convertible, at the discretion of the holder, into shares of common stock of the
Company at a conversion  price of $1.00 per share.  On December  13, 2005,  this
note was paid in full.  The Company paid a total of $319,880 for  principal  and
interest.

                                       21

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 10 - CONVERTIBLE DEBENTURES (continued)

         On October 14, 2005,  we entered into a securities  purchase  agreement
with  H.C.  Wainwright  for  a  PIPE  Offering  which  is a  private  investment
opportunity in a public  company for an aggregate  purchase price of $3,430,000,
of  which  we  have  issued  (i) a  $3,430,000  secured  convertible  debenture,
convertible  into  shares of our  common  stock at a fixed  conversion  price of
$.315, par value $0.001,  with a Beneficial  Conversion  Liability of $1,034,439
and (ii) a warrant to purchase an aggregate of 34,408,717  additional  shares of
our  common  stock  at an  exercise  price of $.315  and $.63 per  share  with a
Beneficial  Conversion Liability of $5,423,617 and are exercisable until October
14, 2010.

         Beginning on the six (6) month  anniversary of the Closing,  and on the
first  business  day of each  month  thereafter  until  the  Notes are no longer
outstanding the Company shall pay 1/18th of the original principal amount of the
Notes and all accrued and unpaid interest.  The Company shall elect to make such
payments in shares of the Company's  common  stock.  Each share of the Company's
common stock will be valued at 92.5% of the five (5) day VWAP immediately  prior
to the payment date. The interest on the  convertible  debenture shall accrue on
the  outstanding  principal  balance at a rate of 8% per annum.  As of March 31,
2006, $125,547 has been charged as interest expense related to this debt.

         The Warrants to purchase  34,408,717 of the Company's common stock will
expire on October 14, 2010.  The exercise price of the warrant is fixed at $.315
and $.63 and has an exercise period of five years.  The Company accounts for the
fair  value of these  outstanding  warrants  to  purchase  common  stock and the
conversion  feature of its  convertible  notes in  accordance  with SFAS No. 133
"Accounting For Derivative  Instruments  And Hedging  Activities" and EITF Issue
No.  00-19  "Accounting  For  Derivative  Financial  Instruments  Indexed To And
Potentially  Settled In A Company's  Own Stock;"  which  requires the Company to
bifurcate  and  separately  account for the  conversion  feature and warrants as
embedded derivatives contained in the Company's convertible notes.

         Pursuant to SFAS No. 133, the Company  bifurcated the fair value of the
conversion feature from the convertible notes, since the conversion feature were
determined to not be clearly and closely  related to the debt host. In addition,
since the effective  registration  of the  securities  underlying the conversion
feature and warrants is an event outside of the control of the Company, pursuant
to EITF

         Issue No. 00-19,  the Company recorded the fair value of the conversion
feature and warrants as long-term liabilities as it was assumed that the Company
would be required to net-cash settle the underlying securities.

         The  Company is required to carry  these  embedded  derivatives  on its
balance  sheet at fair  value  and  unrealized  changes  in the  values of these
embedded derivatives are reflected in the consolidated statement of operation as
"Gain (loss) on value of warrants and conversion feature.



                                       22

<PAGE>



                            SILVER STAR ENERGY, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 10 - CONVERTIBLE DEBENTURES (continued)

         Beneficial  Conversion  expense of the debenture was  calculated by the
Company  based upon the  difference  between  the market  price of shares of the
Company's stock as of the date of issuance and the conversion  price  applicable
to the convertible debentures.
         The value of the warrants have been calculated using the  Black-Scholes
method as of the date of grant based on the  following  assumptions:  an average
risk free rate of 4.25; a dividend yield of 0.00%; an average  volatility factor
of the expected market price of the Company's  common stock of 102.61% for 2004;
and an expected life of 5 years.
         In addition 8,711,084 warrants have been issued to H.C Wainwright, John
R.  Clarke,  Scott  F.  Koch,  Ari  Fuchs,  Jason  A.  Stein  and  First SB Inc.
respectively,  with series A, and C each exercisable at $.315 and series B and D
each  exercisable  at $.63 with terms of 1 year from October 14, 2005. The value
of these warrants have also been calculated using the Black-Scholes method as of
the date of grant based on the following assumptions:  an average risk free rate
of 4.25; a dividend yield of 0.00%; an average volatility factor of the expected
market price of the Company's common stock of 102.61%; and an expected life of 5
years.


                                                      Warrants
                                                  -----------------
H.C. Wainwright & Co. Ltd.                                2,177,768
John R. Clarke                                              947,328
Scott F. Koch                                               947,328
Ari J. Fuchs                                                217,776
Jason A. Stein                                               65,332
1st SB Partners Ltd.                                      4,355,552
                                                  -----------------
     Total                                        $       8,711,084
                                                  =================

         On October 14, 2005,  the Company paid  $480,000 in cash for debt issue
costs related to the convertible debenture of $3,430,000. These debt issue costs
were  capitalized in the financial  statements and are being  amortized over two
years using the interest  method.  At March 31, 2006 and December 31, 2005,  net
debt issue costs  related to these  convertible  debentures  were  $375,973  and
$432,227, respectively.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

GENERAL  - This  discussion  should  be read in  conjunction  with  Management's
Discussion and Analysis of Financial  Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 2005.




                                       23

<PAGE>



PLAN OF OPERATIONS

         On January 5, 2006 the Company announced the December gas production at
the North Franklin Project, Sacramento California. Production from the Company's
two gas wells, the "Archer-Whitney #1" and  "Archer-Wildlands #1" totaled 92.443
Mmcf. The average daily  production rate for the month of November totaled 2.982
Mmcf per day. The  "Archer-Whitney  #1 well"  produced a total of 55.378 Mmcf up
from last months 51.094 Mmcf and the "Archer- Wildlands #1 well" produced 37.065
Mmcf, also up from last months 36.839 Mmcf.  Silver Star's 40% working  interest
in the two wells totals 36.977 Mmcf to the Company.  The  PGE-Citygate gas price
of Jan. 3 2006 was quoted at $8.92 per mcf.

         On January 10, Silver Star  reported on the EVI "7-11" oil quality.  It
had been analyzed by AGAT  Laboratories in Calgary and has returned a gravity of
36.5 degrees.  The oil is considered light crude and will sell at Imperial Light
crude  prices,  today  quoted at $59.53 per barrel.  The Company was informed by
Transaction  Oil and Gas the operator that the  construction of the surface site
facilities  began on  January  9th.  When  complete,  the well will be placed on
production  with the oil  initially  being trucked to Husky at their 7-1 battery
for shipping.  This facility is about 2 1/2 miles away.  Silver Star anticipates
the commencement of commercial production shortly, anticipated before the end of
January.  The gravity of the oil is compatible with Husky production in the Red-
Earth area. As production is monitored and consistent flow rates are established
during this initial  production  period,  the  construction of a pipeline to tie
into the Husky pipeline system will be planned at that time. The tie-in point is
one mile south of the "7-11" well.

         On January  17,  Silver Star  announced  the  appointment  of three new
directors to its board.  Reflective of the growth of Silver Star and in light of
our increasingly  complex  operations and growing revenue  potential,  it is now
prudent to appoint  additional  independent  directors  in order to broaden  the
breadth of experience  and expertise  presently  possessed by the Board.  We are
committed to a  progressive  transition to a management  structure  that is more
suited  to  a  maturing  oil  and  gas  exploration  and  development   company.
Accordingly,  we welcome the appointments of Mr. Gordon Samson,  Mr. Glen Harder
and Mr. William Marshall to our board.

         Mr. Samson is an accredited  accountant with  approximately 20 years of
experience in the financial  arena  including  positions with Canada Customs and
Revenue Agency  (formerly  Revenue  Canada);  a major Canadian  institution as a
senior banker; a regional, full service brokerage house; Chief Financial Officer
and Chief  Executive  Officer  positions in both the US and Canada  serving as a
director of a number of public corporations as well as being a member of various
audit committees. Mr. Samson has further served as a consultant,  performing due
diligence  for  acquisitions  and  other  corporate   transactions  for  various
reporting companies.  Mr. Samson's background spans both resource and technology
firms.
         Mr. Harder is a senior  securities  and corporate  finance  lawyer with
nearly 20 years of  experience  in  structuring  and  capitalizing  early  stage
corporations,  completing  acquisitions,  mergers,  takeovers and  arrangements,
corporate  governance  issues,  and completing public and private debt or equity
financing  transactions.  Mr. Harder's law practice is presently  focused on the
natural  resource  sector -  primarily  mining and oil and gas  exploration  and
production.  He  currently  represents  reporting  companies  in both the United
States and Canada.


                                       24

<PAGE>



         Mr.  Marshall is a financial  consultant  with over 15 years of venture
capital  experience in private and public  companies.  With an extensive related
history in natural resource matters,  Mr. Marshall brings a wealth of experience
to us in areas  ranging from  structuring  and arranging  financings,  corporate
filing  issues,  sourcing  and  retaining  appropriate  management,  and general
organizational  structure.  He has  served on many  public  company  boards as a
director and/or officer,  and some of the present or past positions held include
Chairman,  President,  Chief  Executive  Officer and  Corporate  Secretary.  Mr.
Marshall is currently  President of Fidelis Energy Inc. and Cascade Energy Inc.,
our joint venture partners at North Franklin and Kansas.

         Silver  Star  announced  that our Audit  Committee  will now consist of
David Naylor (director and Chief Financial  Officer),  Gordon Samson  (director)
and Glen Harder (director) and that the Company may add additional  directors as
circumstances require.

         On January  23, the Company  reported  that the EVI "7-11" oil well was
scheduled to begin  commercial  production  as of tomorrow,  January  24th.  The
construction  crew has completed the  installation  of oil storage tanks and has
installed the pump jack at the well head.  The operator has informed the Company
that the "7-11" is planned to be on  production  tomorrow and it will be closely
monitored as to the barrels per day oil produced. The operator,  Transaction Oil
and Gas of Calgary will  determine the maximum  production  rate best suited for
the well. On January 30, the EVI "7-11" oil well began commercial  production at
a rate of between 160 to 170 barrels per day.

         Husky Oil, one of Canada's  largest oil companies,  has been engaged to
operate the well,  located in the EVI field,  for Silver Star.  The first report
from Husky indicates that the IPR (initial  production  rate) for the first full
day of  production  is between 160 and 170 barrels per day. This exceeds the 150
barrels per day that was predicted based on testing.  Transaction Oil and Gas of
Calgary is coordinating  with Husky the  establishment  of a maximum  production
rate for the well.

         On February 3 Silver Star  announced the January gas  production at the
North Franklin Project.  Production from the two gas wells, the  "Archer-Whitney
#1" and  "Archer-Wildlands  #1" totaled 94.94 Mmcf. The average daily production
rate for the  month of  January  totaled  3.062  Mmcf per day from the two wells
combined.  Silver Star was also pleased to announce that it has been informed by
the operator  that a tentative  spud date for the  "Archer-F-1"  deep Forbes gas
well has been set for February 18th. Silver Star has been waiting for a drilling
rig and it is now  expected  to be onsite at the North  Franklin  Project on the
aforementioned  date.  The site and road have been  prepared,  casing and tubing
purchased and all necessary permits and licenses have been received.  The 12,000
foot  "Archer-F-1"  well has been  designed to test both the  producing  Winters
sands as well as the Forbes;  the primary  objective  of this well.  All parties
have advanced  funds in full for the drilling costs of the well. On February 21,
Silver Star updated the timing for drilling of the "Archer- F-1" deep Forbes gas
well.  Silver Star was informed by the  operator  that the drilling rig is being
mobilized to the North Franklin project site tomorrow, Wednesday, February 22nd.
After an  estimated  several day period for rig up,  drilling of the 12,000 foot
well will commence. The "Archer-F-1" drilling pad location,  site facilities and
all weather access road are prepared.  The required  casing and tubing have been
purchased and are onsite. As well, all the necessary permits and licenses are in
place.  The 12,000  foot  "Archer-F-1"  well has been  designed to test both the
producing  Winters  sands as well as the Forbes;  the primary  objective of this
well.  All parties have  advanced  funds in full for the  drilling  costs of the
well.


                                       25

<PAGE>



         Silver Star additionally announced that it had entered into a renewable
12-month  contract with Telperion  Business  Consultants,  LLC, an  arm's-length
entity,  pursuant to which Telperion will provide consulting services,  business
introductions  and  resulting  arrangements  that  may  include  small  cap fund
managers, buy-side stock brokers and money managers. Such services will include,
strategic  planning,  planning meetings,  road shows and assisting the Company's
management in developing  and  implementing  the  Company's  IR/PR  programs and
plans.  Telperion  will be paid  $15,000 per month and will be issued  1,200,000
shares of  restricted  stock  which will be  released  to  Telperion  based upon
certain significant strategic milestones.

         On March 7,  Silver  Star  announced  that  the  "Archer-F-1"  gas well
spudded March 5th and is drilling at North Franklin. The Company was informed by
the operator that the surface  casing had now been set and the depth has reached
1,400  feet.  The delay in the start  date was due to heavy rain and wind in the
Sacramento area causing a slower than expected rig up at the well site.

         On March 8, the Company  reported the February  gas  production  at the
North  Franklin  Project.  Production  from the  Company's  two gas  wells,  the
"Archer-Whitney #1" and "Archer- Wildlands #1" totaled 82.53 Mmcf for a total of
27 days. The average daily production rate for the month of January totaled 3.06
Mmcf per day from the two wells combined.

         On March 20,  Silver Star issued a preliminary  drilling  report on the
"Archer-F1"  gas well at North  Franklin.  The well is drilling ahead past 9,000
feet after  drilling  through  and  logging  the upper  Winters  objective.  The
"Archer-F 1" well, as in the previous two wells,  drilled  Winters sand pay with
excellent  gas  shows  in the mud  log.  The  suite  of  Resistivity  and  Sonic
electronic logs showed clean sand pay with 100% gas fill-up within the pay zone.
The  intersected  sand  pay and  gas  shows  exceeds  in pay  thickness  what is
producing at the "Archer-Whitney" and "Archer-Wildlands" wells. The drilling rig
continues  towards the total depth of 12,000 feet with an  anticipated  T.D. for
the well in 5 to 7 days. The 12,000 foot  "Archer-F-1" well was designed to test
both the producing Winters sands as well as the Forbes; the primary objective of
this well.

         On March 22,  Silver  Star  announced  that it has  reached a tentative
agreement respecting the acquisition of a minimum of a 25% interest in a private
Alberta oil and gas company ("Altaco"),  either by the purchase of shares or the
acquisition of an interest in specified assets. Altaco is presently undergoing a
formal valuation of its assets. Upon the completion of the valuation, details of
the  acquisition  will be finalized.  It is expected that the price paid for the
assets or shares acquired will include a combination of cash and equity.

         Altaco has a majority interest in a mid-stream natural gas play located
in Southeastern  Alberta.  The project targets one of few undeveloped gas fields
remaining  in  southern  Alberta  and  Altaco  has taken  advantage  of a unique
opportunity to develop a large lease package with significant reserves contained
in an area of  comparatively  shallow targets,  while  maintaining a position as
owner  and  operator  of a  significant  portion  of the  pipeline  and  related
infrastructure.  As weather  permits,  Altaco is planning to explore and develop
the  potentially  significant  reserves  contained in three  highly  prospective
zones. Altaco currently owns a majority interest in a natural gas plant facility
that is linked to a transporting pipeline that runs south near the U.S.-Canadian
border.  It also owns the  pipeline  infrastructure  that will be used to tie-in
targeted production areas.


                                       26

<PAGE>



         Altaco is currently  in  negotiations  with  several  major oil and gas
companies to  significantly  expand its area land position.  It is also expected
that, with control of the critical  infrastructure  in the area, other producers
will be obliged to deal directly  with Altaco.  Silver Star  estimates  that the
costs of  developing  the  project  will be an average of 40% lower  (based upon
prevailing industry rates) than would ordinarily be expected due to the position
of  Altaco  as  operator,  combined  with its  strategic  partnership  and close
alliance with a fully operational drilling company and its related personnel.

SUBSEQUENT MATERIAL EVENTS

         On April 3, 2006 Silver Star  reported the results of the  "Archer-F-1"
gas well.  The well  reached a total depth of 10,567  feet.  The F-1 cut Winters
sand pay with  excellent  gas  shows  and the  suite of  Resistivity  and  Sonic
electronic logs showed clean sand with 100% gas fill-up within the pay zone. The
intersected sand pay and gas shows exceeds in thickness what is producing at the
"Archer-  Whitney" and  "Archer-Wildlands"  wells.  The Company now reports that
this  Winters  portion of the well is to be  completed  and put into  production
immediately.  Silver Star anticipates better production rates than the other two
Winters  wells in the field;  estimated to be between 1.5 to 2.0 MMCF per day. A
significant  section of Forbes Sand was encountered that contained excellent gas
shows.  However,  the Forbes sands were directly above other sand that contained
high pressure gas and salt water.  During this operational period, the well lost
circulation  during the open hole conditioning for electric logs. The hole broke
down within 100 feet of the shoe,  took  drilling  fluid and allowed the well to
flow gas and salt water,  from the target zones into the well bore.  The flow of
gas and water from the Forbes reduced the hydrostatic  column creating an unsafe
condition to log or drill any further. Several days of conditioning the drilling
fluid  (increasing  mud weight up to 15.9 lbs per gal) and numerous  attempts to
maintain a static  well  failed due to the salt  water and gas  cutting  the mud
weight needed to compensate  for the higher than expected  formation  pressures.
The Company and its project partners made a decision to plug the open hole below
the casing shoe that was set at the bottom of the  production  casing to protect
the Winters pay interval.  The plugging process included the setting of a cement
retainer  and the drill pipe was pulled out of the hole in  preparation  for rig
release.  By setting the retainer and cementing,  additional drilling operations
can be attempted  from the cased upper hole.  It is now possible to re-drill the
lower hole and evaluate the  excellent gas shows  encountered  within the Forbes
sands above the high  pressure  water  sands.  The  prospect  has not been fully
evaluated and still has the potential for a commercial gas discovery.  From this
well bore, or a new location,  it is possible to drill farther up- dip and there
is the possibility the lower sands are gas filled in that up-dip location.

RESULTS OF OPERATIONS

REVENUE

         Revenue  increased  to $597,324 for the first  quarter  ended March 31,
2006 up from  $28,740 in the same period in 2005.  This  increase is a result of
our  properties  continuing  production  at the North  Franklin  for  revenue of
$505,754  and the  addition  of our well at the EVI  that  produced  $91,570  in
revenue.

COST OF REVENUE

         The Company  recorded cost of revenue and depletion of $170,095  during
the first quarter ended March 31, 2006 up from $0 during the quarter ended March
31, 2005.  This  increase is  reflective  of the  commencement  of the producing
wells.

                                       27

<PAGE>



GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses consist  primarily of Accounting,
Legal,  depreciation  and  selling  and  marketing  expenses.  The  general  and
administrative expenses for the first quarter ended March 31, 2006 are $183,569.
This is an increase over 2005 of $50,487 and is  reflective of increased  travel
and expanded  operations of our company.  Professional  fees which include legal
and  accounting  were $78,041 for the quarter  ended March 31, 2006  compared to
$16,675 and this increase is due to  additional  legal fees incurred to file the
SB2 registration for our financing that closed in October 2005.

         Consulting  and  Management  fees were  $195,825 for the first  quarter
ended March 31,  2006 and  increased  over the same period in 2005 by  $132,780.
Other operational expenses for the first quarter include production royalties of
$65,811.  We expect to continue to incur general and administrative  expenses to
support the business.

INTEREST EXPENSE

         Interest  expense  increased  for the quarter ended March 31, 2006 with
$130,818  compared  to $47,645 for the quarter  ended  March 31,  2005.  This is
reflective of interest  charges that accrued from our  financing  that closed on
October 14, 2005.

LOSS PER SHARE AND NET LOSS

         The Company  ended the first  quarter of March 31, 2006 with a net loss
of ($228,072) compared to ($231,707) in 2005.

LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash  equivalents  from  inception have been  insufficient  to
provide the operating  capital  necessary to operate the Company.  The necessary
capital to operate the  Company was  initially  provided by the  principals  and
founders of the Company in the form of both debt and capital stock  issuances as
set forth in the financial  statements  incorporated herein. The working capital
necessary to operate the Company and provide for  acquisition  capital came from
the  proceeds  of loans,  a credit  line and  production  revenue as  previously
disclosed.

         In  summary,  the  Company  now has  sufficient  liquidity  and capital
resources to operate  profitably  due to the sale of gas from the tie-ins of the
Archer-Whitney #1 and Archer-Wildlands #1 gas wells in 2005. The Company expects
to continue to operate with cash flow and  anticipates  improving  its financial
position as production  increases in the future.  However,  currently  financing
sources are being  evaluated  that would expedite the expansion of the Company's
production.

         The  Company  had cash and cash  equivalents  of  $108,488  and working
capital  of  $701,775  at  March  31,  2006.  This  compares  to cash  and  cash
equivalents of $1,087,163 and working capital of 1,967,095 at December 31, 2005.

         During the quarter ended March 31, 2006,  the Company was provided cash
of  $246,231 in  operating  activities  compared to using  $267,385 in the prior
year.  As at March  31,  2006  the  company  had an  outstanding  receivable  of
$345,640.


                                       28

<PAGE>



         Net cash provided by financing  activities  was $0 for the three months
ended March 31, 2006, which compares to $750,000 for the same period in 2005.

ITEM 3.  CONTROLS AND PROCEDURES

         The Company's Chief Executive  Officer and Chief Financial  Officer are
responsible for establishing and maintaining  disclosure controls and procedures
for the Company.

         (a) Evaluation of Disclosure Controls and Procedures

         As of the end of the period covered by this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's management, including the Company's President, of the effectiveness of
the design and operation of the  Company's  disclosure  controls and  procedures
pursuant to Rule 13a-15 under the  Securities  Exchange Act of 1934,  as amended
(the  "Exchange  Act").  Based  upon the  evaluation,  the  Company's  President
concluded that, as of the end of the period, the Company's  disclosure  controls
and  procedures  were effective in timely  alerting him to material  information
relating to the Company  required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.

         (b) Changes in Internal Controls

         Based on his evaluation as of March 31, 2006, there were no significant
changes in the Company's  internal  controls over financial  reporting or in any
other areas that could  significantly  affect the  Company's  internal  controls
subsequent to the date of his most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         There are no legal proceedings pending or threatened against us.

ITEM 2.  CHANGES IN SECURITIES

    None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5.  OTHER INFORMATION

     None.


                                       29

<PAGE>



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit
Number          Title of Document

10.1     Robert McIntosh's  Consulting  Agreement dated November 15, 2003, filed
         on April 21, 2004 on Form 10KSB/A.

10.2     David Naylor's  Consulting  Agreement dated November 15, 2003, filed on
         April 21, 2004 on Form 10KSB/A.

10.3     Robert  McIntosh's  Loan Agreement  dated  December 31, 2003,  filed on
         April 21, 2004 on Form 10KSB/A.

10.4     Agreement  dated  October 21, 2003  between the Company and Adil Dinani
         disposing  of 657333 BC Ltd.  (Netcash),  filed on November 13, 2003 on
         Form 8-K.

10.5     Agreement  dated  October  29,  2003  between  the  Company and 1048136
         Alberta,  Ltd.  respecting  the  acquisition  of the  Evi  oil  and gas
         prospect, filed on November 13, 2003 on Form 8-K.

10.6     Agreement  dated  October  29,  2003  between  the  Company and 1048136
         Alberta,  Ltd.  respecting the acquisition of the Verdigris oil and gas
         prospect,  filed on November 13, 2003 on Form 8-K. 10.7 Agreement dated
         December  5, 2003  between the  Company  and Archer  Exploration,  Inc.
         respecting the North  Franklin oil and gas prospect,  filed on December
         23, 2003 on Form 8-K.

10.8     Agreement  dated  December  5, 2003  between  the  Company  and  Archer
         Exploration,  Inc.  respecting the Winter Pinchout oil and gas project,
         filed on December 23, 2003 on Form 8-K.

31.1     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.

31.2     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.

32.1     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.

32.2     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.

(b) Reports on Form 8-K filed.

         On April 10,  2006,  the Company  filed a report on Form 8-K under Item
1.01, Entry Into a Material Definitive Agreement.

         On May 5, 2006, the Company filed a report on Form 8-K under Item 5.02,
Departure of Directors or Principal Officers; Election of Directors; Appointment
of Principal Officers.






                                       30

<PAGE>



                                   SIGNATURES

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


                            Silver Star Energy, Inc.
                                  (Registrant)

DATE:       May 12, 2006


By:  /s/ Robert McIntosh
------------------------
Robert McIntosh
President, CEO & Director
(Principal Executive Officer)


By:  /s/ David Naylor
---------------------
David Naylor
Treasurer, Director
(Principal Financial Officer)




























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